Document/ExhibitDescriptionPagesSize 1: 485BPOS Post-Effective Amendment of a Form N-1 or N-1A HTML 2.68M Registration
2: EX-99.(G)(6) Appendix A to the Custodian Agreement HTML 40K
3: EX-99.(G)(9) Appendix A to the Delegation Agreement HTML 44K
5: EX-99.(H)(10) Appendix A to the Sub-Administration Agreement HTML 38K
6: EX-99.(H)(12) Amendment Five to the Sub-Administrative HTML 19K
Services Agreement
4: EX-99.(H)(2) First Amendment to the Services Agreement HTML 21K
7: EX-99.(H)(24) Form of Schedule Vii.A to the Master Repurchase HTML 203K
Agreement
8: EX-99.(H)(27) Expense Limitation Agreement HTML 19K
9: EX-99.(J)(1) Consent of Deloitte & Touche LLP HTML 12K
10: EX-99.(J)(3) Power of Attorney HTML 13K
11: EX-99.(J)(4) Power of Attorney HTML 12K
12: EX-99.(J)(5) Power of Attorney HTML 12K
13: EX-99.(P)(1) Code of Ethics for the Trust, Mml Advisers, and HTML 221K
Mml Distributors, LLC
14: EX-99.(P)(3) Code of Ethics for Barings and Biil HTML 208K
20: R1 Document and Entity Information HTML 65K
21: R2 Risk/Return Summary- MassMutual Global Floating HTML 172K
Rate Fund
22: R9 Risk/Return Detail Data- MassMutual Global HTML 285K
Floating Rate Fund
23: R10 Risk/Return Summary- MassMutual Global Credit HTML 170K
Income Opportunities Fund
24: R17 Risk/Return Detail Data- MassMutual Global Credit HTML 276K
Income Opportunities Fund
25: R18 Risk/Return Summary- MassMutual Emerging Markets HTML 158K
Debt Blended Total Return Fund
26: R25 Risk/Return Detail Data- MassMutual Emerging HTML 270K
Markets Debt Blended Total Return Fund
27: R26 Risk/Return Summary- MassMutual Global Emerging HTML 151K
Markets Equity Fund
28: R33 Risk/Return Detail Data- MassMutual Global HTML 257K
Emerging Markets Equity Fund
29: R34 Risk/Return Detail Data HTML 14K
31: XML IDEA XML File -- Filing Summary XML 39K
30: XML XBRL Instance -- tm2233760-1_485bpos_htm XML 508K
19: EX-101.CAL XBRL Calculations -- ck0001859808-20230125_cal XML 23K
15: EX-101.DEF XBRL Definitions -- ck0001859808-20230125_def XML 1.53M
16: EX-101.LAB XBRL Labels -- ck0001859808-20230125_lab XML 555K
17: EX-101.PRE XBRL Presentations -- ck0001859808-20230125_pre XML 1.57M
18: EX-101.SCH XBRL Schema -- ck0001859808-20230125 XSD 73K
32: JSON XBRL Instance as JSON Data -- MetaLinks 140± 385K
33: ZIP XBRL Zipped Folder -- 0001104659-23-008675-xbrl Zip 818K
‘485BPOS’ — Post-Effective Amendment of a Form N-1 or N-1A Registration
It is proposed that
this filing become effective on iFebruary1, 2023 pursuant to paragraph (b) of rule 485.
TO THE SECURITIES AND EXCHANGE COMMISSION:
Registrant submits this
Post-Effective Amendment No. 2 to its Registration Statement No. 333-256698 under the Securities Act of 1933, as amended, and this Amendment
No. 5 to its Registration Statement No. 811-23703 under the Investment Company Act of 1940, as amended. This Post-Effective Amendment
relates to each series of the Registrant.
MassMutual
Global Credit Income Opportunities Fund
iBXITX
iBXIYX
iBXIAX
iBXICX
MassMutual
Emerging Markets Debt Blended Total Return Fund
iBXEIX
iBXEYX
iBXEAX
iBXECX
MassMutual
Global Emerging Markets Equity Fund
iBXQIX
iBXQYX
iBXQAX
iBXQCX
The Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the adequacy of this Prospectus. Any statement to the contrary is a crime.
This Fund seeks a high level of current income. iPreservation
of capital is a secondary goal.
/
iFEES AND EXPENSES OF THE FUND
i
This table describes the fees and expenses that you
may pay if you buy, hold, and sell shares of the Fund. You may pay brokerage commissions and other fees to financial intermediaries which
are not reflected in the tables and examples below. iFor Class L shares,
you may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $i100,000
in the Fund./ More information about these and other discounts is available in the section titled Sales
Charges by Class beginning on page 65 of the Fund’s Prospectus or from your financial professional.
/
iShareholder
Fees (fees paid directly from your investment)
Class I
Class Y
Class L
Class C
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)
iNone
iNone
i3.00%
iNone
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or redemption proceeds)
iNone
iNone
iNone
iNone
Maximum Contingent Deferred Sales Charge (Load)
(CDSC) (as % of the lower of the original offering price or redemption proceeds)
iNone
iNone
i1.00%(1)
i1.00%(2)
(1)
iApplies only to certain redemptions of shares bought with no initial
sales charge. Class L shares purchased without an initial sales charge in accounts aggregating $500,000 or more are subject to a 1.00%
CDSC if the shares are tendered and accepted for repurchase within 18 months of purchase. The 18-month period begins on the day on which
the purchase is made.
(2)
iThe CDSC on Class C Shares is 1.00% for shares tendered and accepted
for repurchase within the first 12 months of purchase. There is no CDSC on Class C Shares thereafter.
iAnnual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Class I
Class Y
Class L
Class C
Management
Fees
i0.65%
i0.65%
i0.65%
i0.65%
Distribution and Service (Rule 12b-1) Fees
iNone
iNone
i0.25%
i1.00%
Other
Expenses
i0.23%
i0.30%
i0.27%
i0.26%
Total Annual Fund Operating Expenses
i0.88%
i0.95%
i1.17%
i1.91%
Class I
Class Y
Class L
Class C
Expense
Reimbursement
(i0.11%)
(i0.18%)
(i0.15%)
(i0.14%)
Total Annual Fund Operating Expenses after Expense
Reimbursement(1)
i0.77%
i0.77%
i1.02%
i1.77%
(1)
The expenses in the above table reflect a written agreement by MML
Advisers to cap the fees and expenses of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses,
interest expense, expenses related to borrowings, securities lending, leverage, taxes, and brokerage, short sale dividend and loan expense,
or other non-recurring or unusual expenses such as organizational expenses and shareholder meeting expenses, as applicable) through iJanuary31, 2024, to the extent that Total Annual Fund Operating Expenses after Expense Reimbursement would otherwise exceed 0.75%,
0.75%, 1.00%, and 1.75% for Classes I, Y, L, and C respectively. The Total Annual Fund Operating Expenses after Expense Reimbursement
shown in the above table may exceed these amounts, because, as noted in the previous sentence, certain fees and expenses are excluded
from the cap. The agreement can only be terminated by mutual consent of the Board of Trustees on behalf of the Fund and MML Advisers.
iExample
i
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. It assumes that you invest $10,000 in each share class of the Fund for the time
periods indicated and then redeem all of your shares at the end of those periods. For Class L shares, the example includes the initial
sales charge. The example also assumes that your investment earns a 5% return each year and that the Fund’s operating expenses are
exactly as described in the preceding table. Although your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 Year
3 Years
5 Years
10 Years
Class I
$
i79
$
i270
$
i477
$
i1,074
Class Y
$
i79
$
i285
$
i508
$
i1,150
Class L
$
i401
$
i646
$
i910
$
i1,665
Class C
$
i280
$
i586
$
i1,019
$
i2,221
iYou
would pay the following expenses if you did not redeem your shares:
1 Year
3 Years
5 Years
10 Years
Class L
$
i401
$
i646
$
i910
$
i1,665
Class C
$
i180
$
i586
$
i1,019
$
i2,221
iPortfolio
Turnover
i
The Fund pays transaction costs, such as commissions,
when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example,
affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate, which includes the
turnover of the Barings Global Floating Rate Fund (the “Predecessor Fund”) prior to December 13, 2021, was i40%
of the average value of its portfolio. For more information regarding the Predecessor Fund, please see the discussion under Performance
Information.
iINVESTMENTS, RISKS, AND PERFORMANCE
i
Principal Investment Strategies
Under normal circumstances, the Fund invests at least 80% of its net assets
(plus the amount of any borrowings for investment purposes) in incomeproducing floating rate debt securities, consisting of floating rate
loans, bonds, and notes, issued primarily by North American and Western European companies. For this purpose, debt instruments issued
by issuers based in the Channel Islands, Cayman Islands, and Bermuda are considered North American and Western European companies. Such
instruments are primarily, at the time of purchase, rated below investment grade (“junk” or “high yield”) by at
least one credit rating agency (below Baa3 by Moody’s Investors Service, Inc. or below BBB- by either S&P Global Ratings, a
subsidiary of S&P Global, or Fitch Ratings, Inc.) or, if unrated, determined to be of comparable quality by the Fund’s subadviser,
Barings LLC (“Barings”), or sub-subadviser, Baring
International Investment Limited (“BIIL”).
The Fund may invest in a wide range of incomeproducing
floating rate loans, bonds, and notes of issuers based in U.S. and non-U.S. markets, but primarily invests in senior secured loans of
North American and Western European corporate issuers that are of below investment grade quality. Under normal market conditions, the
Fund allocates its assets among various regions and countries (but in no less than three different countries) and invests at least 40%
of its net assets in securities of non-U.S. issuers (or, if less, at least the percentage of net assets that is 5 percentage points less
than the percentage of the market-capitalization weighted average of the Credit Suisse Leveraged Loan Index and the Credit Suisse Western
European Leveraged Loan Index, represented by non-U.S. issuers). A significant portion of the Fund’s investments in floating rate
debt securities is denominated in a currency other than the U.S. dollar. Although the Fund’s investments in non-U.S. dollar denominated
assets
may be on a currency hedged or unhedged basis, under normal market
conditions, the Fund seeks to hedge substantially all of its exposure to non-U.S. currencies. The Fund may at times have significant exposure
to one or more industries or sectors.
The Fund seeks to take advantage of inefficiencies between geographies,
primarily the North American and Western European loan and other debt markets. For example, the Fund seeks to take advantage of differences
in pricing between senior secured loans of an issuer denominated in U.S. dollars and substantially similar senior secured loans of the
same issuer denominated in Euros, potentially allowing the Fund to achieve a higher relative return for the same credit risk exposure.
The Fund invests primarily in senior secured loans (consisting
of assignments and participations). By purchasing a participation, the Fund acquires some or all of the interest of a bank or other lending
institution in a loan to a borrower. Participations typically will result in the Fund having a contractual relationship only with the
lender and not the borrower. When the Fund purchases assignments from lenders, the Fund will acquire direct rights against the borrower
on the loan. The Fund may invest in both floating rate debt instruments and debt instruments that pay a fixed rate of interest; listed
and unlisted corporate debt obligations; convertible securities; structured products (consisting of collateralized bond and loan obligations);
bank obligations; U.S. government securities; preferred securities and trust preferred securities; unsecured loans; delayed funding loans
and revolving credit facilities; when-issued securities, delayed delivery purchases, and forward commitments; zero-coupon bonds, step-up
bonds, and payment-in-kind securities; commercial paper; repurchase agreements; and other investment companies. The instruments in which
the Fund invests are primarily below investment grade quality, and may include investments in the lowest rating category of the applicable
rating agency. The Fund may invest in distressed loans and bonds that are in default at the time of purchase in an effort to protect the
Fund’s existing investments in securities of the same issuers. The Fund also may invest in equity securities (consisting of common
and preferred stocks, warrants and rights, and limited partnership interests), but invests in such equity investments only for the preservation
of capital. The Fund may also use over-the-counter and exchange-traded derivatives for hedging purposes or speculative
purposes—as substitutes for investments in securities in which
the Fund can invest—provided that, at the time the Fund enters into a derivative transaction, the Fund segregates assets determined
to be liquid by Barings or BIIL in accordance with procedures established by the Fund’s Board of Trustees, in an amount at least
equal to any payment or delivery obligation of the Fund in connection with such derivative transaction. The Fund’s use of derivatives
may consist primarily of total return swaps, options, index swaps or swaps on components of an index, interest rate swaps, credit default
swaps, and foreign currency forward contracts and futures. The Fund may hold a portion of its assets in cash or cash equivalents.
The Fund may invest in investments of any duration or maturity.
The Fund may borrow up to one-third of its assets (including the amount
borrowed) to fund redemptions, post collateral for hedges, or to purchase loans, bonds, or structured products prior to settlement of
pending sale transactions.
Securities may be sold when Barings or BIIL believes they no longer represent
relatively attractive investment opportunities.
iPrincipal
Risks
i
The following are the Principal Risks of the Fund. The value of your investment
in the Fund could go down as well as up. iYou can lose money by investing in the
Fund. References in this section to the Fund’s subadviser may include any sub-subadvisers as applicable. Certain
risks relating to instruments and strategies used in the management of the Fund are placed first. The significance of any specific risk
to an investment in the Fund will vary over time, depending on the composition of the Fund’s portfolio, market conditions, and other
factors. You should read all of the risk information presented below carefully, because any one or more of these risks may result in losses
to the Fund.
Variable
and Floating Rate Securities Risk During periods of increasing interest rates, changes in the coupon rates of variable or
floating rate securities may lag behind the changes in market rates or may have limits on the maximum increases in coupon rates. Alternatively,
during periods of declining interest rates, the coupon rates on such securities will typically readjust downward resulting in a lower
yield. In addition, investment in derivative variable rate securities, such as inverse floaters, whose rates vary inversely with
/
market rates of interest, or range floaters or capped floaters, whose
rates are subject to periodic or lifetime caps, or in securities that pay a rate of interest determined by applying a multiple to the
variable rate involves special risks as compared to investment in a fixed-rate security and may involve leverage. Floating rate notes
are generally subject to legal or contractual restrictions on resale, may trade infrequently, and their value may be impaired when the
Fund needs to liquidate such securities.
Fixed
Income Securities Risk The values of fixed income securities typically will decline during periods of rising interest rates,
and can also decline in response to changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral
assets, or changes in market, economic, industry, political, regulatory, public health, and other conditions affecting a particular type
of security or issuer or fixed income securities generally. Certain events, such as market or economic developments, regulatory or government
actions, natural disasters, pandemics, terrorist attacks, war, and other geopolitical events can have a dramatic adverse effect on the
debt market and the overall liquidity of the market for fixed income securities. During those periods, the Fund may experience high levels
of shareholder redemptions, and may have to sell securities at times when the Fund would otherwise not do so, and potentially at unfavorable
prices. Certain securities may be difficult to value during such periods. Fixed income securities are subject to interest rate risk (the
risk that the value of a fixed income security will fall when interest rates rise), extension risk (the risk that the average life of
a security will be extended through a slowing of principal payments), prepayment risk (the risk that a security will be prepaid and the
Fund will be required to reinvest at a less favorable rate), duration risk (the risk that longer-term securities may be more sensitive
to interest rate changes), inflation risk (the risk that as inflation increases, the present value of the Fund’s fixed income investment
typically will decline), and credit risk.
Bank Loans Risk Many
of the risks associated with bank loans are similar to the risks of investing in below investment grade debt securities. Changes in the
financial condition of the borrower or economic conditions or other circumstances may reduce the capacity of the borrower to make principal
and interest payments on such instruments and may lead to defaults. Senior secured bank loans are typically supported by collateral; however
the value of the collateral may
be insufficient to cover the amount owed to the Fund, or the Fund may be prevented or delayed
from realizing on the collateral. Some loans may be unsecured; unsecured loans generally present a greater risk of loss to the Fund if
the issuer defaults. If the Fund relies on a third party to administer a loan, the Fund is subject to the risk that the third party will
fail to perform its obligations. In addition, if the Fund holds only a participation interest in a loan made by a third party, the Fund’s
receipt of payments on the loan will depend on the third party’s willingness and ability to make those payments to the Fund. The
settlement time for certain loans is longer than the settlement time for many other types of investments, and the Fund may not receive
the payment for a loan sold by it until well after the sale; that cash would be unavailable for payment of redemption proceeds or for
reinvestment. Interests in some bank loans may not be readily marketable and may be subject to restrictions on resale. In some cases,
negotiations involved in disposing of indebtedness may require weeks to complete. Consequently, some indebtedness may be difficult or
impossible to dispose of readily at what the Fund believes to be a fair price. Some loans may not be considered “securities”
for certain purposes under the federal securities laws, and purchasers, such as the Fund, therefore may not be entitled to rely on the
anti-fraud protections of the federal securities laws.
Below Investment Grade
Debt Securities Risk Below investment grade debt securities, commonly known as “junk” or “high yield”
bonds, have speculative characteristics and involve greater volatility of price and yield, greater risk of loss of principal and interest,
and generally reflect a greater possibility of an adverse change in financial condition that could affect an issuer’s ability to
honor its obligations.
Credit Risk Credit
risk is the risk that an issuer, guarantor, or liquidity provider of a fixed income security held by the Fund may be unable or unwilling,
or may be perceived (whether by market participants, ratings agencies, pricing services or otherwise) as unable or unwilling, to make
timely principal and/or interest payments, or to otherwise honor its obligations. The Fund may also be exposed to the credit risk of its
counterparty to repurchase agreements, reverse repurchase agreements, swap transactions, and other derivatives transactions, and to the
counterparty’s ability or willingness to perform in accordance with the terms of the transaction. The value of
such transactions to the Fund will depend on the willingness and ability of the counterparty
to perform its obligations, including among other things the obligation to return collateral or margin to the Fund. If a counterparty
becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may
experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding.
The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.
Derivatives Risk Derivatives
can be highly volatile and involve risks different from, and potentially greater than, direct investments, including risks of imperfect
correlation between the value of derivatives and underlying assets, counterparty default, potential losses that partially or completely
offset gains, and illiquidity. Derivatives can create investment leverage. Losses from derivatives can be substantially greater than the
derivatives’ original cost and can sometimes be unlimited. If the value of a derivative does not correlate well with the particular
market or asset class the derivative is designed to provide exposure to, the derivative may not have the effect or benefit anticipated.
Derivatives can also reduce the opportunity for gains or result in losses by offsetting positive returns in other investments. Many derivatives
are traded in the over-the-counter market and not on exchanges.
Foreign
Investment Risk; Emerging Markets Risk; Currency Risk Investments in securities of foreign issuers, securities of companies
with significant foreign exposure, and foreign currencies can involve additional risks relating to market, industry, political, regulatory,
public health, and other conditions. Political, social, diplomatic, and economic developments, U.S. and foreign government action, or
threat thereof, such as the imposition of currency or capital blockages, controls, or tariffs, economic and trade sanctions or embargoes,
security trading suspensions, entering or exiting trade or other intergovernmental agreements, or the expropriation or nationalization
of assets in a particular country, can cause dramatic declines in certain or all securities with exposure to that country and other countries.
In the event of nationalization, expropriation, confiscation, or other government action, intervention, or restriction, the Fund could
lose its entire investment in a particular foreign issuer or country. There may be quotas or other limits on the
ability of the Fund (or clients of the Fund’s investment adviser
or subadviser) to invest or maintain investments in securities of issuers in certain countries. Enforcing legal rights can be more difficult,
costly, and limited in certain foreign countries and with respect to certain types of investments, and can be particularly difficult against
foreign governments. Because non-U.S. securities are normally denominated and traded in currencies other than the U.S. dollar, the value
of the Fund’s assets may be affected favorably or unfavorably by changes in currency exchange rates, exchange control regulations,
and restrictions or prohibitions on the repatriation of non-U.S. currencies. Income and gains with respect to investments in certain countries
may be subject to withholding and other taxes. There may be less information publicly available about a non-U.S. company than about a
U.S. company, and many non-U.S. companies are not subject to accounting, auditing, and financial reporting standards, regulatory framework
and practices comparable to those in the U.S. The securities of some non-U.S. companies, especially those in emerging markets, are less
liquid and at times more volatile than securities of comparable U.S. companies. Emerging markets securities are subject to greater risks
than securities issued in developed foreign markets, including less liquidity, less stringent investor protection and disclosure standards,
less reliable settlement practices, greater price volatility, higher relative rates of inflation, greater political, economic, and social
instability, greater custody and operational risks, greater risk of new or inconsistent government treatment of or restrictions on issuers
and instruments, and greater volatility in currency exchange rates, and are more susceptible to environmental problems. Many emerging
market countries are highly reliant on international trade and exports, including the export of commodities. Their economies may be significantly
impacted by fluctuations in commodity prices and the global demand for certain commodities. In addition, pandemics and outbreaks of contagious
diseases may exacerbate pre-existing problems in emerging market countries with less established health care systems. Frontier markets,
a subset of emerging markets, generally have smaller economies and less mature capital markets than emerging markets. As a result, the
risks of investing in emerging market countries are magnified in frontier market countries. Frontier markets are more susceptible to having
abrupt changes in currency values, less mature markets and settlement practices, and lower trading volumes
that could lead to greater price volatility and illiquidity. Non-U.S.
transaction costs, such as brokerage commissions and custody costs, may be higher than in the United States. In addition, foreign markets
can react differently to market, economic, industry, political, regulatory, geopolitical, public health, and other conditions than the
U.S. market.
Structured Notes Risk Structured
notes and other related instruments purchased by the Fund are generally privately negotiated debt obligations where the principal and/or
interest is determined by reference to the performance of a specific asset, benchmark asset, market, or interest rate (“reference
measure”). The purchase of structured notes exposes the Fund to the credit risk of the issuer of the structured product. Structured
notes may be leveraged, increasing the volatility of each structured note’s value relative to the change in the reference measure.
Structured notes may also be less liquid and more difficult to price accurately than less complex securities and instruments or more traditional
debt securities.
Cash Position Risk If
the Fund holds a significant portion of its assets in cash or cash equivalents, its investment returns may be adversely affected and the
Fund may not achieve its investment objective.
Convertible Securities
Risk Convertible securities are subject to the risks of both debt instruments and equity securities. The price of a convertible
security may change in response to changes in price of the underlying equity security, the credit quality of the issuer, and interest
rates. In general, the values of convertible securities tend to decline as interest rates rise and to rise when interest rates fall. A
convertible security generally has less potential for gain or loss than the underlying equity security.
Covenant Lite Loans Risk Loans
in which the Fund invests include covenant lite loans, which may carry more risk to the lender than traditional loans as they may contain
fewer restrictive covenants on the borrower than traditionally included in loan documentation or may contain other borrower-friendly characteristics.
The Fund may experience relatively greater difficulty or delays in enforcing its rights on its holdings of certain covenant lite loans
and debt securities than its holdings of loans or securities with the usual covenants.
Defaulted and Distressed
Securities Risk Because the issuer of such securities is in default and is likely to be in distressed financial condition,
repayment of defaulted securities and obligations of distressed issuers (including insolvent
issuers or issuers in payment or covenant default, in workout or restructuring, or in bankruptcy or insolvency proceedings) is uncertain.
To the extent the Fund is invested in distressed securities, its ability to achieve current income for its shareholders may be diminished.
Equity Securities Risk Although
stocks may have the potential to outperform other asset classes over the long term, their prices tend to fluctuate more dramatically over
the shorter term. These movements may result from factors affecting individual companies, or from broader influences like changes in interest
rates, market conditions, or investor confidence, or announcements of economic, political, or financial information.
Hedging Risk The
Fund’s attempts at hedging and taking long and short positions in currencies may not be successful and could cause the Fund to lose
money or fail to get the benefit of a gain on a hedged position. If expected changes to securities prices, interest rates, currency values,
and exchange rates, or the creditworthiness of an issuer are not accurately predicted, the Fund could be in a worse position than if it
had not entered into such transactions.
Inflation
Risk The value of assets or income from the Fund’s investments will be less in the future as inflation decreases the
value of money. As inflation increases, the value of the Fund’s assets can decline as can the value of the Fund’s distributions.
Inflation rates may change frequently and drastically as a result of various factors, including unexpected shifts in the domestic or global
economy (or expectations that such policies will change), and the Fund’s investments may not keep pace with inflation, which may
result in losses to the Fund’s investors.
Leveraging Risk Instruments
and transactions, including derivatives transactions, that create leverage may cause the value of an investment in the Fund to be more
volatile, could result in larger losses than if they were not used, and tend to compound the effects of other risks.
LIBOR
Risk Certain instruments in which the Fund may invest rely in some fashion upon the London-Interbank Offered Rate (“LIBOR”).
On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR
by the end of 2021. The administrator of LIBOR ceased
publication of most LIBOR settings on a representative basis at the
end of 2021 and is expected to cease publication of remaining U.S. dollar LIBOR settings on a representative basis after June 30, 2023.
In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after
2021. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Market
participants are focused on the transition mechanisms by which the reference rate in existing contracts or instruments may be amended,
whether through market wide protocols, fallback contractual provisions, bespoke negotiations or amendments, or otherwise. Markets are
developing in response to these new rates, and questions around liquidity in these rates and how to appropriately adjust these rates to
eliminate any economic value transfer at the time of transition remain a significant concern for the Fund. Neither the effect of the transition
process nor its ultimate success can yet be known. The transition process may involve, among other things, increased volatility or illiquidity
in markets for instruments that rely on LIBOR. In addition, uncertainty and volatility arising from the transition may result in a reduction
in the value of certain LIBOR-based instruments held by the Fund or reduce the effectiveness of related transactions such as hedges. Any
such effects of the transition away from LIBOR, as well as other unforeseen effects, could result in losses to the Fund.
Liquidity Risk Certain
securities may be difficult (or impossible) to sell or certain positions may be difficult to close out at a desirable time and price,
and the Fund may be required to hold an illiquid investment that is declining in value, or it may be required to sell certain illiquid
investments at a price or time that is not advantageous in order to meet redemptions or other cash needs. Some securities may be subject
to restrictions on resale. There can be no assurance that there will be a liquid market for instruments held by the Fund at any time.
The Fund may not receive the proceeds from the sale of certain investments for an extended period.
Management Risk The
Fund relies on the manager’s investment analysis and its selection of investments to achieve its investment objective. There can
be no assurance that the Fund will achieve the intended results and the Fund may incur significant losses.
Market Risk The
value of the Fund’s portfolio securities may decline, at times sharply and
unpredictably, as a result of unfavorable market-induced changes affecting particular industries,
sectors, or issuers. Stock and bond markets can decline significantly in response to issuer, market, economic, industry, political, regulatory,
geopolitical, public health, and other conditions, as well as investor perceptions of these conditions. The Fund is subject to risks affecting
issuers, such as management performance, financial leverage, industry problems, and reduced demand for goods or services.
Preferred Stock Risk Like
other equity securities, preferred stock is subject to the risk that its value may decrease based on actual or perceived changes in the
business or financial condition of the issuer. In addition, changes in interest rates may adversely affect the value of a preferred stock
that pays a fixed dividend. Preferred stocks are also subject to additional risks, such as potentially greater volatility and risks related
to deferral, non-cumulative dividends, subordination, liquidity, limited voting rights, and special redemption rights.
Reinvestment Risk Income
from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded, or called debt obligations
at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the Fund’s
overall return.
Repurchase Agreement
Risk These transactions must be fully collateralized, but involve credit risk to a Fund if the other party should default
on its obligation and the Fund is delayed or prevented from recovering the collateral.
Restricted Securities
Risk The Fund may hold securities that are restricted as to resale under the U.S. federal securities laws, such as securities
in certain privately held companies. Such securities may be highly illiquid and their values may experience significant volatility. Restricted
securities may be difficult to value.
Risk of Investment in
Other Funds or Pools The Fund is indirectly exposed to all of the risks of the underlying funds, including exchange-traded
funds (“ETFs”), in which it invests, including the risk that the underlying funds will not perform as expected. ETFs are subject
to additional risks, including secondary market trading risks and the risk that an ETF’s shares may trade above or below net asset
value. The Fund indirectly pays a portion of the expenses incurred by the underlying funds.
Sector Risk The Fund may
allocate more of its assets to particular industries or to particular economic, market, or industry sectors than to others. This could
increase the volatility of the Fund’s portfolio, and the Fund’s performance may be more susceptible to developments affecting
issuers in those industries or sectors than if the Fund invested more broadly.
U.S. Government Securities
Risk Obligations of certain U.S. Government agencies and instrumentalities are not backed by the full faith and credit of
the U.S. Government, and there can be no assurance that the U.S. Government would provide financial support to such agencies and instrumentalities.
Valuation Risk The
Fund is subject to the risk of mispricing or improper valuation of its investments, in particular to the extent that its securities are
fair valued.
When-Issued, Delayed Delivery,
TBA, and Forward Commitment Transaction Risk These transactions may create leverage and involve a risk of loss if the value
of the securities declines prior to settlement.
iPerformance
Information
i
iThe
following bar chart and table provide some indication of the risks of investing in the Fund. The Fund is the successor
to the Predecessor Fund, a mutual fund with substantially similar investment objectives, policies, and restrictions, as a result of the
reorganization of the Predecessor Fund into the Fund on December 13, 2021. The performance provided in the bar chart and table is that
of the Predecessor Fund prior to December 13, 2021, and is that of the Fund after December 13, 2021. The bar chart shows changes in the
Fund’s (or Predecessor Fund’s, as applicable) performance from year to year for Class I shares. The table shows how the Fund’s
(or Predecessor Fund’s, as applicable) average annual returns for 1 and 5 years, and since inception, compare with those of a broad
measure of market performance and two additional indexes, the Credit Suisse Western European Leveraged Loan Index and a custom index which
comprises the market-capitalization weighted average of the Credit Suisse Leveraged Loan Index and the Credit Suisse Western European
Leveraged Loan Index (Custom Global Loan Index). Performance shown for Class L shares prior to December 13, 2021 reflects the performance
of Class A shares of the Predecessor Fund. Performance for Class L and Class C shares
reflects any applicable sales charge. iPast
performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More
up-to-date performance information is available at ihttps://www.massmutual.com/funds
or by calling i1-888-309-3539.
i
Annual Performance
Class I Shares
i
iHighest
Quarter:
2Q ’20,
i11.62%
iLowest
Quarter:
1Q ’20,
–i15.38%
/i
iAfter-tax
returns are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of
state and local taxes.iActual after-tax
returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who
hold Fund shares through taxadvantaged arrangements, such as 401(k) plans or individual retirement accounts.iAfter-tax
returns are shown for Class I only. After-tax returns for other classes will vary.
Return
After Taxes on Distributions and Sales of Fund Shares
-i2.75
%
i1.10
%
i1.53
%
Class Y
Return
Before Taxes
-i4.66
%
i2.51
%
i3.21
%
Class L
Return
Before Taxes
-i8.59
%
i1.64
%
i2.61
%
Class C
Return
Before Taxes
-i6.48
%
i1.51
%
i2.19
%
Credit Suisse Leveraged Loan Index i(reflects
no deductions for fees, expenses, or taxes)(1)
-i1.06
%
i3.24
%
i3.60
%
One Year
Five Years
Since Inception (09/16/13)
Credit Suisse Western European Leveraged Loan Index (reflects no deductions for fees,
expenses, or taxes)
-i1.20
%
i3.90
%
i4.41
%
Custom
Global Loan Index (reflects no deductions for fees, expenses, or taxes)
-i1.11
%
i3.38
%
i3.80
%
(1)
iEffective February 1, 2023, the Fund’s primary performance
benchmark index will be the Credit Suisse Leveraged Loan Index because it is an appropriate broad-based securities market index. Information
is also provided for the Custom Global Loan Index, a custom index which comprises the market-capitalization weighted average of the Credit
Suisse Leveraged Loan Index and the Credit Suisse Western European Leveraged Loan Index, which MML Advisers believes may provide a more
useful comparison.
Sub-subadviser(s):
Baring International Investment Limited (“BIIL”)
Portfolio Manager(s):
Sean Feeley,
CFA is a Managing Director and portfolio manager for Barings’ U.S. High Yield Investments Group. He has managed the
Fund since September 2013.
Martin
Horne is a Managing Director and the Head of, and a portfolio manager for, Barings’ Global Public Fixed Income. He
has managed the Fund since September 2013.
Casey
McKinney is a Managing Director and a portfolio manager for Barings’ U.S. High Yield Investments Group. He has managed
the Fund since January 2022.
Chris
Sawyer is a Managing Director and the Head of, and a portfolio manager for, Barings’ European High Yield Investments
Group. He has managed the Fund since March 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares of the Fund are generally available through distribution
channels, such as broker-dealers or financial institutions, and to retirement plans, other institutional investors, and individual retirement
accounts. Fund shares are redeemable on any business day by written request, telephone, or internet (available to certain customers).
The
Fund reserves the right to change or waive the investment minimums. For retirement plans, the investment minimum is $250 for each of the
initial investment and subsequent investments.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income,
qualified dividend income, or capital gains, unless you are an investor eligible for preferential tax treatment.
PAYMENTS TO BROKER-DEALERS AND
OTHER FINANCIAL INTERMEDIARIES
If you purchase the Fund through a broker-dealer or other financial intermediary,
the intermediary may receive a one-time or continuing payments from the Fund, MML Advisers or its affiliates, or others for the sale of
Fund shares or continuing shareholder services provided by the intermediary. These payments may create a conflict of interest by influencing
the broker-dealer or other intermediary to recommend the Fund over another investment. You should contact your intermediary to obtain
more information about the compensation it may receive in connection with your investment.
iMassMutual
Global Credit Income Opportunities Fund
iINVESTMENT
OBJECTIVE
i
This Fund seeks an absolute return, primarily through current income iand
secondarily through capital appreciation.
/
iFEES AND EXPENSES OF THE FUND
i
This table describes the fees and expenses that you
may pay if you buy, hold, and sell shares of the Fund. You may pay brokerage commissions and other fees to financial intermediaries which
are not reflected in the tables and examples below. iFor Class L shares,
you may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $i100,000
in the Fund./ For Class L shares, you may qualify for sales charge discounts if you and your family invest, or agree to
invest in the future, at least $100,000 in the Fund. More information about these and other discounts is available in the section titled
Sales Charges by Class beginning on page 65 of the Fund’s Prospectus or from your financial
professional.
/
iShareholder
Fees (fees paid directly from your investment)
Class I
Class Y
Class L
Class C
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)
iNone
iNone
i4.00%
iNone
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or redemption proceeds)
iNone
iNone
iNone
iNone
Maximum Contingent Deferred Sales Charge (Load)
(CDSC) (as % of the lower of the original offering price or redemption proceeds)
iNone
iNone
i1.00%(1)
i1.00%(2)
(1)
iApplies only to certain redemptions of shares bought with no initial
sales charge. Class L shares purchased without an initial sales charge in accounts aggregating $500,000 or more are subject to a 1.00%
CDSC if the shares are tendered and accepted for repurchase within 18 months of purchase. The 18-month period begins on the day on which
the purchase is made.
(2)
iThe CDSC on Class C Shares is 1.00% for shares tendered and accepted
for repurchase within the first 12 months of purchase. There is no CDSC on Class C Shares thereafter.
iAnnual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Class I
Class Y
Class L
Class C
Management
Fees
i0.75%
i0.75%
i0.75%
i0.75%
Distribution and Service (Rule 12b-1) Fees
iNone
iNone
i0.25%
i1.00%
Other
Expenses
i0.37%
i0.42%
i0.43%
i0.40%
Class I
Class Y
Class L
Class C
Total Annual Fund Operating Expenses
i1.12%
i1.17%
i1.43%
i2.15%
Expense
Reimbursement
(i0.25%)
(i0.25%)
(i0.25%)
(i0.18%)
Total Annual Fund Operating Expenses after Expense
Reimbursement(1)
i0.87%
i0.92%
i1.18%
i1.97%
(1)
The expenses in the above table reflect a written agreement by MML
Advisers to cap the fees and expenses of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses,
interest expense, expenses related to borrowings, securities lending, leverage, taxes, and brokerage, short sale dividend and loan expense,
or other non-recurring or unusual expenses such as organizational expenses and shareholder meeting expenses, as applicable) through iJanuary31, 2024, to the extent that Total Annual Fund Operating Expenses after Expense Reimbursement would otherwise exceed 0.85%,
0.90%, 1.16%, and 1.95% for Classes I, Y, L, and C respectively. The Total Annual Fund Operating Expenses after Expense Reimbursement
shown in the above table may exceed these amounts, because, as noted in the previous sentence, certain fees and expenses are excluded
from the cap. The agreement can only be terminated by mutual consent of the Board of Trustees on behalf of the Fund and MML Advisers.
iExample
i
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. It assumes that you invest $10,000 in each share class of the Fund for the time
periods indicated and then redeem all of your shares at the end of those periods. For Class L shares, the example includes the initial
sales charge. The example also assumes that your investment earns a 5% return each year and that the Fund’s operating expenses are
exactly as described in the preceding table. Although your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 Year
3 Years
5 Years
10 Years
Class I
$
i89
$
i331
$
i593
$
i1,341
Class Y
$
i94
$
i347
$
i620
$
i1,398
Class L
$
i515
$
i811
$
i1,128
$
i2,024
Class C
$
i300
$
i656
$
i1,138
$
i2,469
iYou
would pay the following expenses if you did not redeem your shares:
1 Year
3 Years
5 Years
10 Years
Class L
$
i515
$
i811
$
i1,128
$
i2,024
Class C
$
i200
$
i656
$
i1,138
$
i2,469
iPortfolio
Turnover
i
The Fund pays transaction costs, such as commissions,
when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs
and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate, which includes the turnover of the Barings Global Credit
Income Opportunities Fund (the “Predecessor Fund”) prior to December 13, 2021, was i44%
of the average value of its portfolio. For more information regarding the Predecessor Fund, please see the discussion under Performance
Information.
iINVESTMENTS, RISKS, AND PERFORMANCE
i
Principal Investment Strategies
The Fund is managed using an absolute return investment objective, which means
that it is not managed relative to the performance of a specific bond index, but rather seeks to generate positive returns over the course
of a full market cycle while managing volatility through security selection and possibly hedging to reduce overall exposure to credit
and interest rate risk. The Fund seeks absolute total return through a combination of current income and capital appreciation.
Under normal circumstances, the Fund invests at least 80% of its net assets
(plus the amount of any borrowings for investment purposes) in debt instruments (consisting of loans, bonds, and notes). The Fund may
invest in a wide range of debt instruments of issuers based in U.S. and non-U.S. markets, including emerging markets, as well as over-the-counter
and exchange-traded derivatives. Investments may be issued or guaranteed by governments and their agencies, corporations, financial institutions,
and supranational organizations that the Fund believes have the potential to provide a high total return over time. A significant portion
of the Fund’s investments in debt instruments are denominated in a currency other than the U.S. dollar. Although the Fund’s
investment in non-U.S. dollar denominated assets may be on a currency hedged or unhedged basis, under normal market conditions, the Fund
seeks to hedge substantially all of its exposure to non-U.S. currencies. The Fund may at times have significant exposure to one or more
industries or sectors.
Under normal market conditions, the Fund allocates its assets among various
regions and countries (but in no less than three different countries) and invests at least 40% of its net assets in securities of non-U.S.
issuers (or, if less, at least the percentage of net assets that is 5 percentage
points less than the percentage of the ICE BofA Non-Financial Developed Markets High Yield
Constrained Index, represented by non-U.S. issuers, as determined by the provider of the index). Although the ICE BofA Non-Financial Developed
Markets High Yield Constrained Index is representative of the Fund’s investable universe, the Fund does not seek to be correlated
with that index.
The Fund seeks to take advantage of inefficiencies between geographies,
primarily the North American and Western European high yield bond and loan markets and within capital structures between bonds and loans.
For example, the Fund seeks to take advantage of differences in pricing between bonds or loans of an issuer denominated in U.S. dollars
and substantially similar bonds or loans of the same issuer denominated in Euros, potentially allowing the Fund to achieve a higher relative
return for the same credit risk exposure.
The Fund invests primarily in high yield debt instruments (consisting of
bonds, loans, and notes) of North American and Western European corporate issuers that are of below investment grade quality. The Fund
invests in instruments that are, at the time of purchase, rated below investment grade (“junk” or “high yield”)
by at least one credit rating agency (below Baa3 by Moody’s Investors Service, Inc. or below BBB- by either S&P Global Ratings,
a subsidiary of S&P Global, or Fitch Ratings, Inc.) or, if unrated, determined to be of comparable quality by the Fund’s subadviser,
Barings LLC (“Barings”), or sub-subadviser, Baring
International Investment Limited (“BIIL”).
The Fund invests primarily in high yield bonds, loans, and notes, but also
makes use of a wide range of debt instruments. The Fund may invest in both fixed and floating rate instruments; listed and unlisted corporate
debt obligations; convertible securities; structured products (consisting of collateralized bond and loan obligations); bank obligations;
U.S. and non-U.S. government securities; preferred securities and trust preferred securities; asset-backed securities; unsecured loans;
delayed funding loans and revolving credit facilities; when-issued securities, delayed delivery purchases, and forward commitments; zero-coupon
bonds, step-up bonds, and payment-in-kind securities; commercial paper; repurchase agreements; and other investment companies. The Fund’s
investments may include investments in the lowest rating category of the applicable rating agency. The Fund may invest in distressed bonds
and loans that are in default at the time of purchase
in an effort to protect the Fund’s existing investment in securities of the same issuers.
The Fund also may invest in equity securities (consisting of common and preferred stocks, warrants and rights, and limited partnership
interests), but will invest in such equity investments only for the preservation of capital. The Fund may hold a portion of its assets
in cash or cash equivalents.
The Fund may invest in fixed income securities or debt instruments issued
by emerging market entities or sovereign nations. Emerging market countries are defined to include any country that did not become a member
of the Organization for Economic Cooperation and Development (O.E.C.D.) prior to 1975 and Turkey.
The Fund may also use derivatives to a significant extent for risk management
and hedging purposes, or for speculative purposes – as substitutes for investments in securities in which the Fund can invest –
in order to achieve the Fund’s absolute return objective and manage volatility. The Fund may use over-the-counter and exchange-traded
derivatives for a variety of purposes, consisting of: as a hedge against adverse changes in the market price of securities, interest rates,
or currency exchange rates; as a substitute for purchasing or selling securities; and to increase the Fund’s yield or return as
a non-hedging strategy that may be considered speculative. The Fund may establish, through derivatives, net short positions for individual
sectors, markets, currencies, or securities, or as a means of adjusting the Fund’s portfolio duration, credit quality, and maturity.
The Fund may invest in over-the-counter and exchange-traded derivative instruments provided that, at the time the Fund enters into a derivative
transaction, the Fund segregates assets determined to be liquid by Barings or BIIL in accordance with procedures established by the Fund’s
Board of Trustees, in an amount at least equal to any payment or delivery obligation of the Fund in connection with such derivative transaction.
The Fund’s use of derivatives may consist primarily of total return swaps, options, index swaps or swaps on components of an index,
interest rate swaps, credit default swaps, and foreign currency forward contracts and futures.
The Fund may invest in investments of any duration or maturity.
The Fund may borrow up to one-third of its assets (including the amount
borrowed) to fund redemptions, post collateral for hedges, or to purchase loans, bonds, or structured products prior to settlement of
pending sale transactions.
Securities may be sold when Barings or BIIL believes they no longer represent relatively attractive
investment opportunities.
iPrincipal
Risks
i
The following are the Principal Risks of the Fund. The value of your investment
in the Fund could go down as well as up. iYou can lose money by investing in the
Fund. References in this section to the Fund’s subadviser may include any sub-subadvisers as applicable. Certain
risks relating to instruments and strategies used in the management of the Fund are placed first. The significance of any specific risk
to an investment in the Fund will vary over time, depending on the composition of the Fund’s portfolio, market conditions, and other
factors. You should read all of the risk information presented below carefully, because any one or more of these risks may result in losses
to the Fund.
Fixed
Income Securities Risk The values of fixed income securities typically will decline during periods of rising interest rates,
and can also decline in response to changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral
assets, or changes in market, economic, industry, political, regulatory, public health, and other conditions affecting a particular type
of security or issuer or fixed income securities generally. Certain events, such as market or economic developments, regulatory or government
actions, natural disasters, pandemics, terrorist attacks, war, and other geopolitical events can have a dramatic adverse effect on the
debt market and the overall liquidity of the market for fixed income securities. During those periods, the Fund may experience high levels
of shareholder redemptions, and may have to sell securities at times when the Fund would otherwise not do so, and potentially at unfavorable
prices. Certain securities may be difficult to value during such periods. Fixed income securities are subject to interest rate risk (the
risk that the value of a fixed income security will fall when interest rates rise), extension risk (the risk that the average life of
a security will be extended through a slowing of principal payments), prepayment risk (the risk that a security will be prepaid and the
Fund will be required to reinvest at a less favorable rate), duration risk (the risk that longer-term securities may be more sensitive
to interest rate changes), inflation risk (the risk that as inflation increases, the present value of the Fund’s fixed income investment
typically will decline), and credit risk.
Bank Loans Risk Many
of the risks associated with bank loans are similar to the risks of investing
in below investment grade debt securities. Changes in the financial condition of the borrower
or economic conditions or other circumstances may reduce the capacity of the borrower to make principal and interest payments on such
instruments and may lead to defaults. Senior secured bank loans are typically supported by collateral; however the value of the collateral
may be insufficient to cover the amount owed to the Fund, or the Fund may be prevented or delayed from realizing on the collateral. Some
loans may be unsecured; unsecured loans generally present a greater risk of loss to the Fund if the issuer defaults. If the Fund relies
on a third party to administer a loan, the Fund is subject to the risk that the third party will fail to perform its obligations. In addition,
if the Fund holds only a participation interest in a loan made by a third party, the Fund’s receipt of payments on the loan will
depend on the third party’s willingness and ability to make those payments to the Fund. The settlement time for certain loans is
longer than the settlement time for many other types of investments, and the Fund may not receive the payment for a loan sold by it until
well after the sale; that cash would be unavailable for payment of redemption proceeds or for reinvestment. Interests in some bank loans
may not be readily marketable and may be subject to restrictions on resale. In some cases, negotiations involved in disposing of indebtedness
may require weeks to complete. Consequently, some indebtedness may be difficult or impossible to dispose of readily at what the Fund believes
to be a fair price. Some loans may not be considered “securities” for certain purposes under the federal securities laws,
and purchasers, such as the Fund, therefore may not be entitled to rely on the anti-fraud protections of the federal securities laws.
Below Investment Grade
Debt Securities Risk Below investment grade debt securities, commonly known as “junk” or “high yield”
bonds, have speculative characteristics and involve greater volatility of price and yield, greater risk of loss of principal and interest,
and generally reflect a greater possibility of an adverse change in financial condition that could affect an issuer’s ability to
honor its obligations.
Credit Risk Credit
risk is the risk that an issuer, guarantor, or liquidity provider of a fixed income security held by the Fund may be unable or unwilling,
or may be perceived (whether by market participants, ratings agencies, pricing services or otherwise) as unable or unwilling, to make
timely
principal and/or interest payments, or to otherwise honor its obligations. The Fund may
also be exposed to the credit risk of its counterparty to repurchase agreements, reverse repurchase agreements, swap transactions, and
other derivatives transactions, and to the counterparty’s ability or willingness to perform in accordance with the terms of the
transaction. The value of such transactions to the Fund will depend on the willingness and ability of the counterparty to perform its
obligations, including among other things the obligation to return collateral or margin to the Fund. If a counterparty becomes bankrupt
or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant
delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain
only a limited recovery or may obtain no recovery in such circumstances.
Derivatives Risk Derivatives
can be highly volatile and involve risks different from, and potentially greater than, direct investments, including risks of imperfect
correlation between the value of derivatives and underlying assets, counterparty default, potential losses that partially or completely
offset gains, and illiquidity. Derivatives can create investment leverage. Losses from derivatives can be substantially greater than the
derivatives’ original cost and can sometimes be unlimited. If the value of a derivative does not correlate well with the particular
market or asset class the derivative is designed to provide exposure to, the derivative may not have the effect or benefit anticipated.
Derivatives can also reduce the opportunity for gains or result in losses by offsetting positive returns in other investments. Many derivatives
are traded in the over-the-counter market and not on exchanges.
Foreign
Investment Risk; Emerging Markets Risk; Currency Risk Investments in securities of foreign issuers, securities of companies
with significant foreign exposure, and foreign currencies can involve additional risks relating to market, industry, political, regulatory,
public health, and other conditions. Political, social, diplomatic, and economic developments, U.S. and foreign government action, or
threat thereof, such as the imposition of currency or capital blockages, controls, or tariffs, economic and trade sanctions or embargoes,
security trading suspensions, entering or exiting trade or other intergovernmental agreements, or the expropriation or nationalization
of assets in a particular country, can cause dramatic declines in certain
or all securities with exposure to that country and other countries. In the event of nationalization, expropriation, confiscation, or
other government action, intervention, or restriction, the Fund could lose its entire investment in a particular foreign issuer or country.
There may be quotas or other limits on the ability of the Fund (or clients of the Fund’s investment adviser or subadviser) to invest
or maintain investments in securities of issuers in certain countries. Enforcing legal rights can be more difficult, costly, and limited
in certain foreign countries and with respect to certain types of investments, and can be particularly difficult against foreign governments.
Because non-U.S. securities are normally denominated and traded in currencies other than the U.S. dollar, the value of the Fund’s
assets may be affected favorably or unfavorably by changes in currency exchange rates, exchange control regulations, and restrictions
or prohibitions on the repatriation of non-U.S. currencies. Income and gains with respect to investments in certain countries may be subject
to withholding and other taxes. There may be less information publicly available about a non-U.S. company than about a U.S. company, and
many non-U.S. companies are not subject to accounting, auditing, and financial reporting standards, regulatory framework and practices
comparable to those in the U.S. The securities of some non-U.S. companies, especially those in emerging markets, are less liquid and at
times more volatile than securities of comparable U.S. companies. Emerging markets securities are subject to greater risks than securities
issued in developed foreign markets, including less liquidity, less stringent investor protection and disclosure standards, less reliable
settlement practices, greater price volatility, higher relative rates of inflation, greater political, economic, and social instability,
greater custody and operational risks, greater risk of new or inconsistent government treatment of or restrictions on issuers and instruments,
and greater volatility in currency exchange rates, and are more susceptible to environmental problems. Many emerging market countries
are highly reliant on international trade and exports, including the export of commodities. Their economies may be significantly impacted
by fluctuations in commodity prices and the global demand for certain commodities. In addition, pandemics and outbreaks of contagious
diseases may exacerbate pre-existing problems in emerging market countries with less established health care systems. Frontier
markets, a subset of emerging markets, generally have smaller economies
and less mature capital markets than emerging markets. As a result, the risks of investing in emerging market countries are magnified
in frontier market countries. Frontier markets are more susceptible to having abrupt changes in currency values, less mature markets and
settlement practices, and lower trading volumes that could lead to greater price volatility and illiquidity. Non-U.S. transaction costs,
such as brokerage commissions and custody costs, may be higher than in the United States. In addition, foreign markets can react differently
to market, economic, industry, political, regulatory, geopolitical, public health, and other conditions than the U.S. market.
Mortgage- and Asset-Backed
Securities Risk Investments in mortgage- and asset-backed securities subject the Fund to credit risk, interest rate risk,
extension risk, and prepayment risk, among other risks. Mortgage-backed and asset-backed securities not issued by a government agency
generally involve greater credit risk than securities issued by government agencies. Payment of principal and interest generally depends
on the cash flows generated by the underlying assets and the terms of the security. The types of mortgages (for example, residential or
commercial mortgages) underlying securities held by the Fund may differ and be affected differently by market factors. Investments that
receive only the interest portion or the principal portion of payments on the underlying assets may be highly volatile. Litigation with
respect to the representations and warranties given in connection with the issuance of mortgage-backed securities can be an important
consideration in investing in such securities, and the outcome of any such litigation could significantly impact the value of the Fund’s
mortgage-backed investments.
Structured Notes Risk Structured
notes and other related instruments purchased by the Fund are generally privately negotiated debt obligations where the principal and/or
interest is determined by reference to the performance of a specific asset, benchmark asset, market, or interest rate (“reference
measure”). The purchase of structured notes exposes the Fund to the credit risk of the issuer of the structured product. Structured
notes may be leveraged, increasing the volatility of each structured note’s value relative to the change in the reference measure.
Structured notes may also be less liquid and more difficult to price accurately than less complex securities and instruments or more traditional
debt securities.
Cash Position Risk If the
Fund holds a significant portion of its assets in cash or cash equivalents, its investment returns may be adversely affected and the Fund
may not achieve its investment objective.
Convertible Securities
Risk Convertible securities are subject to the risks of both debt instruments and equity securities. The price of a convertible
security may change in response to changes in price of the underlying equity security, the credit quality of the issuer, and interest
rates. In general, the values of convertible securities tend to decline as interest rates rise and to rise when interest rates fall. A
convertible security generally has less potential for gain or loss than the underlying equity security.
Covenant Lite Loans Risk Loans
in which the Fund invests include covenant lite loans, which may carry more risk to the lender than traditional loans as they may contain
fewer restrictive covenants on the borrower than traditionally included in loan documentation or may contain other borrower-friendly characteristics.
The Fund may experience relatively greater difficulty or delays in enforcing its rights on its holdings of certain covenant lite loans
and debt securities than its holdings of loans or securities with the usual covenants.
Defaulted and Distressed
Securities Risk Because the issuer of such securities is in default and is likely to be in distressed financial condition,
repayment of defaulted securities and obligations of distressed issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring, or in bankruptcy or insolvency proceedings) is uncertain. To the extent the Fund is invested in
distressed securities, its ability to achieve current income for its shareholders may be diminished.
Equity Securities Risk Although
stocks may have the potential to outperform other asset classes over the long term, their prices tend to fluctuate more dramatically over
the shorter term. These movements may result from factors affecting individual companies, or from broader influences like changes in interest
rates, market conditions, or investor confidence, or announcements of economic, political, or financial information.
Hedging Risk The
Fund’s attempts at hedging and taking long and short positions in currencies may not be successful and could cause the Fund to lose
money or fail to get the benefit of a gain on a hedged position. If expected changes to securities prices, interest rates, currency values,
and exchange
rates, or the creditworthiness of an issuer are not accurately predicted, the Fund could
be in a worse position than if it had not entered into such transactions.
Inflation
Risk The value of assets or income from the Fund’s investments will be less in the future as inflation decreases the
value of money. As inflation increases, the value of the Fund’s assets can decline as can the value of the Fund’s distributions.
Inflation rates may change frequently and drastically as a result of various factors, including unexpected shifts in the domestic or global
economy (or expectations that such policies will change), and the Fund’s investments may not keep pace with inflation, which may
result in losses to the Fund’s investors.
Leveraging Risk Instruments
and transactions, including derivatives transactions, that create leverage may cause the value of an investment in the Fund to be more
volatile, could result in larger losses than if they were not used, and tend to compound the effects of other risks.
LIBOR
Risk Certain instruments in which the Fund may invest rely in some fashion upon the London-Interbank Offered Rate (“LIBOR”).
On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR
by the end of 2021. The administrator of LIBOR ceased publication of most LIBOR settings on a representative basis at the end of 2021
and is expected to cease publication of remaining U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition,
global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Actions
by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Market participants
are focused on the transition mechanisms by which the reference rate in existing contracts or instruments may be amended, whether through
market wide protocols, fallback contractual provisions, bespoke negotiations or amendments, or otherwise. Markets are developing in response
to these new rates, and questions around liquidity in these rates and how to appropriately adjust these rates to eliminate any economic
value transfer at the time of transition remain a significant concern for the Fund. Neither the effect of the transition process nor its
ultimate success can yet be known. The transition process may involve, among other things, increased
volatility or illiquidity in markets for instruments that rely on LIBOR.
In addition, uncertainty and volatility arising from the transition may result in a reduction in the value of certain LIBOR-based instruments
held by the Fund or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR,
as well as other unforeseen effects, could result in losses to the Fund.
Liquidity Risk Certain
securities may be difficult (or impossible) to sell or certain positions may be difficult to close out at a desirable time and price,
and the Fund may be required to hold an illiquid investment that is declining in value, or it may be required to sell certain illiquid
investments at a price or time that is not advantageous in order to meet redemptions or other cash needs. Some securities may be subject
to restrictions on resale. There can be no assurance that there will be a liquid market for instruments held by the Fund at any time.
The Fund may not receive the proceeds from the sale of certain investments for an extended period.
Management Risk The
Fund relies on the manager’s investment analysis and its selection of investments to achieve its investment objective. There can
be no assurance that the Fund will achieve the intended results and the Fund may incur significant losses.
Market Risk The
value of the Fund’s portfolio securities may decline, at times sharply and unpredictably, as a result of unfavorable market-induced
changes affecting particular industries, sectors, or issuers. Stock and bond markets can decline significantly in response to issuer,
market, economic, industry, political, regulatory, geopolitical, public health, and other conditions, as well as investor perceptions
of these conditions. The Fund is subject to risks affecting issuers, such as management performance, financial leverage, industry problems,
and reduced demand for goods or services.
Preferred Stock Risk Like
other equity securities, preferred stock is subject to the risk that its value may decrease based on actual or perceived changes in the
business or financial condition of the issuer. In addition, changes in interest rates may adversely affect the value of a preferred stock
that pays a fixed dividend. Preferred stocks are also subject to additional risks, such as potentially greater volatility and risks related
to deferral, non-cumulative dividends, subordination, liquidity, limited voting rights, and special redemption rights.
Reinvestment Risk Income
from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded, or called debt obligations
at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the Fund’s
overall return.
Repurchase Agreement
Risk These transactions must be fully collateralized, but involve credit risk to a Fund if the other party should default
on its obligation and the Fund is delayed or prevented from recovering the collateral.
Restricted Securities
Risk The Fund may hold securities that are restricted as to resale under the U.S. federal securities laws, such as securities
in certain privately held companies. Such securities may be highly illiquid and their values may experience significant volatility. Restricted
securities may be difficult to value.
Risk of Investment in
Other Funds or Pools The Fund is indirectly exposed to all of the risks of the underlying funds, including exchange-traded
funds (“ETFs”), in which it invests, including the risk that the underlying funds will not perform as expected. ETFs are subject
to additional risks, including secondary market trading risks and the risk that an ETF’s shares may trade above or below net asset
value. The Fund indirectly pays a portion of the expenses incurred by the underlying funds.
Sector Risk The
Fund may allocate more of its assets to particular industries or to particular economic, market, or industry sectors than to others. This
could increase the volatility of the Fund’s portfolio, and the Fund’s performance may be more susceptible to developments
affecting issuers in those industries or sectors than if the Fund invested more broadly.
Sovereign Debt Obligations
Risk Investments in debt securities issued by governments or by government agencies and instrumentalities involve the risk
that the governmental entities responsible for repayment may be unable or unwilling to pay interest and repay principal when due. Many
sovereign debt obligations may be rated below investment grade (“junk” or “high yield” bonds). Any restructuring
of a sovereign debt obligation held by the Fund will likely have a significant adverse effect on the value of the obligation. In the event
of default of sovereign debt, the Fund may be unable to pursue legal action against the sovereign issuer or to realize on collateral securing
the debt.
U.S. Government Securities Risk Obligations
of certain U.S. Government agencies and instrumentalities are not backed by the full faith and credit of the U.S. Government, and there
can be no assurance that the U.S. Government would provide financial support to such agencies and instrumentalities.
Valuation Risk The
Fund is subject to the risk of mispricing or improper valuation of its investments, in particular to the extent that its securities are
fair valued.
When-Issued, Delayed
Delivery, TBA, and Forward Commitment Transaction Risk These transactions may create leverage and involve a risk of loss
if the value of the securities declines prior to settlement.
iPerformance
Information
i
iThe
following bar chart and table provide some indication of the risks of investing in the Fund. The Fund is the successor
to the Predecessor Fund, a mutual fund with substantially similar investment objectives, policies, and restrictions, as a result of the
reorganization of the Predecessor Fund into the Fund on December 13, 2021. The performance provided in the bar chart and table is that
of the Predecessor Fund prior to December 13, 2021, and is that of the Fund after December 13, 2021. The bar chart shows changes in the
Fund’s (or Predecessor Fund’s, as applicable) performance from year to year for Class I shares. The table shows how the Fund’s
(or Predecessor Fund’s, as applicable) average annual returns for 1 and 5 years, and since inception, compare with those of a broad
measure of market performance. Performance shown for Class L shares prior to December 13, 2021 reflects the performance of Class A shares
of the Predecessor Fund. Performance for Class L and Class C shares reflects any applicable sales charge. iPast
performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More
up-to-date performance information is available at ihttps://www.massmutual.com/funds
or by calling i1-888-309-3539.
/
i
Annual Performance
Class I Shares
i
iHighest
Quarter:
2Q ’20,
i14.18%
iLowest
Quarter:
1Q ’20,
–i18.37%
/i
iAfter-tax
returns are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of
state and local taxes.iActual after-tax
returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who
hold Fund shares through taxadvantaged arrangements, such as 401(k) plans or individual retirement accounts.iAfter-tax
returns are shown for Class I only. After-tax returns for other classes will vary.
Sub-subadviser(s): Baring
International Investment Limited (“BIIL”)
Portfolio Manager(s):
Sean Feeley, CFA is
a Managing Director and portfolio manager for Barings’ U.S. High Yield Investments Group. He has managed the Fund since September
2013.
Martin Horne is
a Managing Director and the Head of, and a portfolio manager for, Barings’ Global Public Fixed Income. He has managed the Fund since
March 2016.
Omotunde Lawal, CFA is
a Managing Director and the Head of, and a portfolio manager for, Barings’ Emerging Markets Corporate Debt Group. She has managed
the Fund since May 2021.
Brian
Pacheco, CFA is a Managing Director and portfolio manager for Barings’ U.S. High Yield Investments Group. He has managed
the Fund since February 2023.
Scott Roth, CFA is
a Managing Director and the Co-Head of, and a portfolio manager for, Barings’ U.S. High Yield Investments Group. He has managed
the Fund since September 2013.
Chris
Sawyer is a Managing Director and the Head of, and a portfolio manager for, Barings’ European High Yield Investments
Group. He has managed the Fund since May 2021.
PURCHASE AND SALE OF FUND SHARES
Shares of the Fund are generally available through distribution channels,
such as broker-dealers or financial institutions, and to retirement plans, other institutional investors, and individual retirement accounts.
Fund shares are redeemable on any business day by written request, telephone, or internet (available to certain customers).
Purchase Minimums*
Class I
Class Y
Class L
Class C
Initial Investment
$500,000
$100,000
$1,000
$1,000
Subsequent Investment
$250
$250
$250
$250
*
The
Fund reserves the right to change or waive the investment minimums. For retirement plans, the investment minimum is $250 for each of the
initial investment and subsequent investments.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income,
qualified dividend income, or capital gains, unless you are an investor eligible for preferential tax treatment.
PAYMENTS TO
BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase the Fund through a broker-dealer or other financial intermediary,
the intermediary may receive a one-time or continuing payments from the Fund, MML Advisers or its affiliates, or others for the sale of
Fund shares or continuing shareholder services provided by the intermediary. These payments may create a conflict of interest by influencing
the broker-dealer or other intermediary to recommend the Fund over another investment. You should contact your intermediary to obtain
more information about the compensation it may receive in connection with your investment.
iMassMutual
Emerging Markets Debt Blended Total Return Fund
iINVESTMENT
OBJECTIVE
i
This Fund seeks to achieve maximum total return, consistent with preservation
of capital and prudent investment management, through high current income generation and, where appropriate, capital appreciation.
iFEES AND EXPENSES OF THE FUND
i
This table describes the fees and expenses that you may
pay if you buy, hold, and sell shares of the Fund. You may pay brokerage commissions and other fees to financial intermediaries which
are not reflected in the tables and examples below. iFor Class L shares,
you may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $i100,000
in the Fund./ For Class L shares, you may qualify for sales charge discounts if you and your family invest, or agree to
invest in the future, at least $100,000 in the Fund. More information about these and other discounts is available in the section titled
Sales Charges by Class beginning on page 65 of the Fund’s Prospectus or from your financial
professional.
/
iShareholder
Fees (fees paid directly from your investment)
Class I
Class Y
Class L
Class C
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)
iNone
iNone
i4.00%
iNone
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or redemption proceeds)
iNone
iNone
iNone
iNone
Maximum Contingent Deferred Sales Charge (Load)
(CDSC) (as % of the lower of the original offering price or redemption proceeds)
iNone
iNone
i1.00%(1)
i1.00%(2)
(1)
iApplies only to certain redemptions of shares bought with no initial
sales charge. Class L shares purchased without an initial sales charge in accounts aggregating $500,000 or more are subject to a 1.00%
CDSC if the shares are tendered and accepted for repurchase within 18 months of purchase. The 18-month period begins on the day on which
the purchase is made.
(2)
iThe CDSC on Class C Shares is 1.00% for shares tendered and accepted
for repurchase within the first 12 months of purchase. There is no CDSC on Class C Shares thereafter.
iAnnual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Class I
Class Y
Class L
Class C
Management
Fees
i0.75%
i0.75%
i0.75%
i0.75%
Class I
Class Y
Class L
Class C
Distribution and Service (Rule 12b-1) Fees
iNone
iNone
i0.25%
i1.00%
Other
Expenses
i0.51%
i0.57%
i0.53%
i0.51%
Total Annual Fund Operating Expenses
i1.26%
i1.32%
i1.53%
i2.26%
Expense
Reimbursement
(i0.29%)
(i0.35%)
(i0.31%)
(i0.29%)
Total Annual Fund Operating Expenses after Expense
Reimbursement(1)
i0.97%
i0.97%
i1.22%
i1.97%
(1)
The expenses in the above table reflect a written agreement by MML
Advisers to cap the fees and expenses of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses,
interest expense, expenses related to borrowings, securities lending, leverage, taxes, and brokerage, short sale dividend and loan expense,
or other non-recurring or unusual expenses such as organizational expenses and shareholder meeting expenses, as applicable) through iJanuary31, 2024, to the extent that Total Annual Fund Operating Expenses after Expense Reimbursement would otherwise exceed 0.95%,
0.95%, 1.20%, and 1.95% for Classes I, Y, L, and C respectively. The Total Annual Fund Operating Expenses after Expense Reimbursement
shown in the above table may exceed these amounts, because, as noted in the previous sentence, certain fees and expenses are excluded
from the cap. The agreement can only be terminated by mutual consent of the Board of Trustees on behalf of the Fund and MML Advisers.
iExample
i
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. It assumes that you invest $10,000 in each share class of the Fund for the time
periods indicated and then redeem all of your shares at the end of those periods. For Class L shares, the example includes the initial
sales charge. The example also assumes that your investment earns a 5% return each year and that the Fund’s operating expenses are
exactly as described in the preceding table. Although your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 Year
3 Years
5 Years
10 Years
Class I
$
i99
$
i371
$
i664
$
i1,497
Class Y
$
i99
$
i384
$
i690
$
i1,560
Class L
$
i519
$
i835
$
i1,173
$
i2,125
Class C
$
i300
$
i679
$
i1,184
$
i2,573
iYou
would pay the following expenses if you did not redeem your shares:
The Fund pays transaction costs, such as commissions,
when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate, which includes the turnover of the Barings Emerging Markets Debt Blended Total Return Fund (the “Predecessor Fund”)
prior to December 13, 2021, was i55%
of the average value of its portfolio. For more information regarding the Predecessor Fund, please see the discussion under Performance
Information.
/
iINVESTMENTS, RISKS, AND PERFORMANCE
i
Principal Investment Strategies
The Fund invests in debt securities, derivatives, and other instruments
that are economically tied to emerging market countries or countries with relatively low gross national product per capita and with the
potential for rapid economic growth. Under normal circumstances, the Fund will invest at least 80% of its net assets (plus the amount
of any borrowings for investment purposes) in (i) securities denominated in currencies of the emerging market countries, (ii) fixed income
securities or debt instruments issued by emerging market entities or sovereign nations, and/or (iii) debt instruments denominated in or
based on the currencies, interest rates, or issues of emerging market countries. Emerging market countries are defined to include any
country that did not become a member of the O.E.C.D. prior to 1975 and Turkey. Certain emerging market countries are referred to as “frontier”
market countries. The Fund focuses its investments in Asia, Africa, the Middle East, Latin America, and the developing countries of Europe.
The Fund will invest in debt instruments of all types, including bonds,
notes, U.S. and Group of Ten (commonly referred to as “G10”) country treasury obligations, sovereign issues, covered bonds,
commercial paper, and other fixed and floating rate income securities and are either secured or unsecured, and either senior or subordinated.
To a limited extent, the Fund may invest in (i) securities that are convertible into equity securities, (ii) equity securities (including
warrants and common stock), (iii) certificates of
deposit, (iv) bankers’ acceptances, and (v) loan participations and loan assignments
which are un-securitized. Although the Fund’s investment in non-U.S. dollar denominated assets may be on a currency hedged or unhedged
basis, under normal market conditions, the Fund seeks to hedge substantially all of its exposure to non-U.S. currencies. The Fund may
at times have significant exposure to one or more industries or sectors. The Fund may hold a portion of its assets in cash or cash equivalents.
The Fund may purchase and sell securities on a when-issued, delayed delivery, to-be-announced, or forward commitment basis.
The Fund expects to achieve certain exposures primarily through derivative
transactions, including without limitation, forward foreign currency exchange contracts; futures on securities, indexes, currencies, commodities,
swaps, and other investments; options; and interest rate swaps, crosscurrency swaps, total return swaps, and credit default swaps, which
may create economic leverage in the Fund. The Fund may engage in derivative transactions to enhance total return, to seek to hedge against
fluctuations in securities prices, interest rates, or currency exchange rates, to change the effective duration of its portfolio, to manage
certain investment risks, and/or as a substitute for the purchase or sale of securities, currencies, or commodities. Derivatives instruments
that provide exposure to debt securities that are economically tied to emerging market countries or to a country the Fund’s subadviser,
Barings LLC (“Barings”), or sub-subadviser, Baring
International Investment Limited (“BIIL”) considers to be equivalent to such countries or have economic characteristics
similar to such investments may be used to satisfy the Fund’s 80% policy.
The Fund may invest in both investment grade and below investment grade (“junk”
or “high yield” bonds) debt securities. Investment grade debt securities are rated Baa3 or higher by Moody’s Investors
Service, Inc. (“Moody’s) or BBBor higher by either S&P Global Ratings, a subsidiary of S&P Global (“S&P”),
or Fitch Ratings, Inc. (“Fitch”), or, if unrated, determined to be of comparable quality by Barings or BIIL. Below investment
grade debt securities are rated below Baa3 by Moody’s and BBB- by S&P and Fitch or, if unrated, determined by Barings or BIIL
to be of comparable quality.
The following are the Principal Risks of the Fund. The value of your investment
in the Fund could go down as well as up. iYou can lose money by investing in the
Fund. References in this section to the Fund’s subadviser may include any sub-subadvisers as applicable. Certain
risks relating to instruments and strategies used in the management of the Fund are placed first. The significance of any specific risk
to an investment in the Fund will vary over time, depending on the composition of the Fund’s portfolio, market conditions, and other
factors. You should read all of the risk information presented below carefully, because any one or more of these risks may result in losses
to the Fund.
Fixed
Income Securities Risk The values of fixed income securities typically will decline during periods of rising interest rates,
and can also decline in response to changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral
assets, or changes in market, economic, industry, political, regulatory, public health, and other conditions affecting a particular type
of security or issuer or fixed income securities generally. Certain events, such as market or economic developments, regulatory or government
actions, natural disasters, pandemics, terrorist attacks, war, and other geopolitical events can have a dramatic adverse effect on the
debt market and the overall liquidity of the market for fixed income securities. During those periods, the Fund may experience high levels
of shareholder redemptions, and may have to sell securities at times when the Fund would otherwise not do so, and potentially at unfavorable
prices. Certain securities may be difficult to value during such periods. Fixed income securities are subject to interest rate risk (the
risk that the value of a fixed income security will fall when interest rates rise), extension risk (the risk that the average life of
a security will be extended through a slowing of principal payments), prepayment risk (the risk that a security will be prepaid and the
Fund will be required to reinvest at a less favorable rate), duration risk (the risk that longer-term securities may be more sensitive
to interest rate changes), inflation risk (the risk that as inflation increases, the present value of the Fund’s fixed income investment
typically will decline), and credit risk.
Sovereign Debt Obligations
Risk Investments in debt securities issued by governments or by government agencies and instrumentalities involve the risk
that the governmental entities responsible
/
for repayment may be unable or unwilling to pay interest and repay principal when due. Many
sovereign debt obligations may be rated below investment grade (“junk” or “high yield” bonds). Any restructuring
of a sovereign debt obligation held by the Fund will likely have a significant adverse effect on the value of the obligation. In the event
of default of sovereign debt, the Fund may be unable to pursue legal action against the sovereign issuer or to realize on collateral securing
the debt.
Foreign
Investment Risk; Emerging Markets Risk; Currency Risk Investments in securities of foreign issuers, securities of companies
with significant foreign exposure, and foreign currencies can involve additional risks relating to market, industry, political, regulatory,
public health, and other conditions. Political, social, diplomatic, and economic developments, U.S. and foreign government action, or
threat thereof, such as the imposition of currency or capital blockages, controls, or tariffs, economic and trade sanctions or embargoes,
security trading suspensions, entering or exiting trade or other intergovernmental agreements, or the expropriation or nationalization
of assets in a particular country, can cause dramatic declines in certain or all securities with exposure to that country and other countries.
In the event of nationalization, expropriation, confiscation, or other government action, intervention, or restriction, the Fund could
lose its entire investment in a particular foreign issuer or country. There may be quotas or other limits on the ability of the Fund (or
clients of the Fund’s investment adviser or subadviser) to invest or maintain investments in securities of issuers in certain countries.
Enforcing legal rights can be more difficult, costly, and limited in certain foreign countries and with respect to certain types of investments,
and can be particularly difficult against foreign governments. Because non-U.S. securities are normally denominated and traded in currencies
other than the U.S. dollar, the value of the Fund’s assets may be affected favorably or unfavorably by changes in currency exchange
rates, exchange control regulations, and restrictions or prohibitions on the repatriation of non-U.S. currencies. Income and gains with
respect to investments in certain countries may be subject to withholding and other taxes. There may be less information publicly available
about a non-U.S. company than about a U.S. company, and many non-U.S. companies are not subject to accounting, auditing, and financial
reporting standards, regulatory framework and practices comparable to
those in the U.S. The securities of some non-U.S. companies, especially
those in emerging markets, are less liquid and at times more volatile than securities of comparable U.S. companies. Emerging markets securities
are subject to greater risks than securities issued in developed foreign markets, including less liquidity, less stringent investor protection
and disclosure standards, less reliable settlement practices, greater price volatility, higher relative rates of inflation, greater political,
economic, and social instability, greater custody and operational risks, greater risk of new or inconsistent government treatment of or
restrictions on issuers and instruments, and greater volatility in currency exchange rates, and are more susceptible to environmental
problems. Many emerging market countries are highly reliant on international trade and exports, including the export of commodities. Their
economies may be significantly impacted by fluctuations in commodity prices and the global demand for certain commodities. In addition,
pandemics and outbreaks of contagious diseases may exacerbate pre-existing problems in emerging market countries with less established
health care systems. Frontier markets, a subset of emerging markets, generally have smaller economies and less mature capital markets
than emerging markets. As a result, the risks of investing in emerging market countries are magnified in frontier market countries. Frontier
markets are more susceptible to having abrupt changes in currency values, less mature markets and settlement practices, and lower trading
volumes that could lead to greater price volatility and illiquidity. Non-U.S. transaction costs, such as brokerage commissions and custody
costs, may be higher than in the United States. In addition, foreign markets can react differently to market, economic, industry, political,
regulatory, geopolitical, public health, and other conditions than the U.S. market.
Bank Loans Risk Many
of the risks associated with bank loans are similar to the risks of investing in below investment grade debt securities. Changes in the
financial condition of the borrower or economic conditions or other circumstances may reduce the capacity of the borrower to make principal
and interest payments on such instruments and may lead to defaults. Senior secured bank loans are typically supported by collateral; however
the value of the collateral may be insufficient to cover the amount owed to the Fund, or the Fund may be prevented or delayed from realizing
on the collateral. Some loans may be unsecured; unsecured loans generally present a
greater risk of loss to the Fund if the issuer defaults. If the Fund relies on a third party
to administer a loan, the Fund is subject to the risk that the third party will fail to perform its obligations. In addition, if the Fund
holds only a participation interest in a loan made by a third party, the Fund’s receipt of payments on the loan will depend on the
third party’s willingness and ability to make those payments to the Fund. The settlement time for certain loans is longer than the
settlement time for many other types of investments, and the Fund may not receive the payment for a loan sold by it until well after the
sale; that cash would be unavailable for payment of redemption proceeds or for reinvestment. Interests in some bank loans may not be readily
marketable and may be subject to restrictions on resale. In some cases, negotiations involved in disposing of indebtedness may require
weeks to complete. Consequently, some indebtedness may be difficult or impossible to dispose of readily at what the Fund believes to be
a fair price. Some loans may not be considered “securities” for certain purposes under the federal securities laws, and purchasers,
such as the Fund, therefore may not be entitled to rely on the anti-fraud protections of the federal securities laws.
Below Investment Grade
Debt Securities Risk Below investment grade debt securities, commonly known as “junk” or “high yield”
bonds, have speculative characteristics and involve greater volatility of price and yield, greater risk of loss of principal and interest,
and generally reflect a greater possibility of an adverse change in financial condition that could affect an issuer’s ability to
honor its obligations.
Credit Risk Credit
risk is the risk that an issuer, guarantor, or liquidity provider of a fixed income security held by the Fund may be unable or unwilling,
or may be perceived (whether by market participants, ratings agencies, pricing services or otherwise) as unable or unwilling, to make
timely principal and/or interest payments, or to otherwise honor its obligations. The Fund may also be exposed to the credit risk of its
counterparty to repurchase agreements, reverse repurchase agreements, swap transactions, and other derivatives transactions, and to the
counterparty’s ability or willingness to perform in accordance with the terms of the transaction. The value of such transactions
to the Fund will depend on the willingness and ability of the counterparty to perform its obligations, including among other things the
obligation to return collateral or margin
to the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations
under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under
the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain
no recovery in such circumstances.
Derivatives Risk Derivatives
can be highly volatile and involve risks different from, and potentially greater than, direct investments, including risks of imperfect
correlation between the value of derivatives and underlying assets, counterparty default, potential losses that partially or completely
offset gains, and illiquidity. Derivatives can create investment leverage. Losses from derivatives can be substantially greater than the
derivatives’ original cost and can sometimes be unlimited. If the value of a derivative does not correlate well with the particular
market or asset class the derivative is designed to provide exposure to, the derivative may not have the effect or benefit anticipated.
Derivatives can also reduce the opportunity for gains or result in losses by offsetting positive returns in other investments. Many derivatives
are traded in the over-the-counter market and not on exchanges.
Cash Position Risk If
the Fund holds a significant portion of its assets in cash or cash equivalents, its investment returns may be adversely affected and the
Fund may not achieve its investment objective.
Convertible Securities
Risk Convertible securities are subject to the risks of both debt instruments and equity securities. The price of a convertible
security may change in response to changes in price of the underlying equity security, the credit quality of the issuer, and interest
rates. In general, the values of convertible securities tend to decline as interest rates rise and to rise when interest rates fall. A
convertible security generally has less potential for gain or loss than the underlying equity security.
Equity Securities Risk Although
stocks may have the potential to outperform other asset classes over the long term, their prices tend to fluctuate more dramatically over
the shorter term. These movements may result from factors affecting individual companies, or from broader influences like changes in interest
rates, market conditions, or investor confidence, or announcements of economic, political, or financial information.
Hedging Risk The
Fund’s attempts at hedging and taking long and short positions in currencies may
not be successful and could cause the Fund to lose money or fail to get the benefit of a
gain on a hedged position. If expected changes to securities prices, interest rates, currency values, and exchange rates, or the creditworthiness
of an issuer are not accurately predicted, the Fund could be in a worse position than if it had not entered into such transactions.
Inflation
Risk The value of assets or income from the Fund’s investments will be less in the future as inflation decreases the
value of money. As inflation increases, the value of the Fund’s assets can decline as can the value of the Fund’s distributions.
Inflation rates may change frequently and drastically as a result of various factors, including unexpected shifts in the domestic or global
economy (or expectations that such policies will change), and the Fund’s investments may not keep pace with inflation, which may
result in losses to the Fund’s investors.
Leveraging Risk Instruments
and transactions, including derivatives transactions, that create leverage may cause the value of an investment in the Fund to be more
volatile, could result in larger losses than if they were not used, and tend to compound the effects of other risks.
LIBOR
Risk Certain instruments in which the Fund may invest rely in some fashion upon the London-Interbank Offered Rate (“LIBOR”).
On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR
by the end of 2021. The administrator of LIBOR ceased publication of most LIBOR settings on a representative basis at the end of 2021
and is expected to cease publication of remaining U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition,
global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Actions
by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Market participants
are focused on the transition mechanisms by which the reference rate in existing contracts or instruments may be amended, whether through
market wide protocols, fallback contractual provisions, bespoke negotiations or amendments, or otherwise. Markets are developing in response
to these new rates, and questions around liquidity in these rates and how to appropriately adjust these rates to eliminate any economic
value transfer at the time of transition
remain a significant concern for the Fund. Neither the effect of the
transition process nor its ultimate success can yet be known. The transition process may involve, among other things, increased volatility
or illiquidity in markets for instruments that rely on LIBOR. In addition, uncertainty and volatility arising from the transition may
result in a reduction in the value of certain LIBOR-based instruments held by the Fund or reduce the effectiveness of related transactions
such as hedges. Any such effects of the transition away from LIBOR, as well as other unforeseen effects, could result in losses to the
Fund.
Liquidity Risk Certain
securities may be difficult (or impossible) to sell or certain positions may be difficult to close out at a desirable time and price,
and the Fund may be required to hold an illiquid investment that is declining in value, or it may be required to sell certain illiquid
investments at a price or time that is not advantageous in order to meet redemptions or other cash needs. Some securities may be subject
to restrictions on resale. There can be no assurance that there will be a liquid market for instruments held by the Fund at any time.
The Fund may not receive the proceeds from the sale of certain investments for an extended period.
Management Risk The
Fund relies on the manager’s investment analysis and its selection of investments to achieve its investment objective. There can
be no assurance that the Fund will achieve the intended results and the Fund may incur significant losses.
Market Risk The
value of the Fund’s portfolio securities may decline, at times sharply and unpredictably, as a result of unfavorable market-induced
changes affecting particular industries, sectors, or issuers. Stock and bond markets can decline significantly in response to issuer,
market, economic, industry, political, regulatory, geopolitical, public health, and other conditions, as well as investor perceptions
of these conditions. The Fund is subject to risks affecting issuers, such as management performance, financial leverage, industry problems,
and reduced demand for goods or services.
Reinvestment Risk Income
from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded, or called debt obligations
at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the Fund’s
overall return.
Restricted Securities
Risk The Fund may hold securities that are restricted as to resale under the
U.S. federal securities laws, such as securities in certain privately held companies.
Such securities may be highly illiquid and their values may experience significant volatility. Restricted securities may be difficult
to value.
Sector Risk The
Fund may allocate more of its assets to particular industries or to particular economic, market, or industry sectors than to others. This
could increase the volatility of the Fund’s portfolio, and the Fund’s performance may be more susceptible to developments
affecting issuers in those industries or sectors than if the Fund invested more broadly.
Valuation Risk The
Fund is subject to the risk of mispricing or improper valuation of its investments, in particular to the extent that its securities are
fair valued.
When-Issued, Delayed
Delivery, TBA, and Forward Commitment Transaction Risk These transactions may create leverage and involve a risk of loss
if the value of the securities declines prior to settlement.
iPerformance
Information
i
iThe
following bar chart and table provide some indication of the risks of investing in the Fund. The Fund is the successor
to the Predecessor Fund, a mutual fund with substantially similar investment objectives, policies, and restrictions, as a result of the
reorganization of the Predecessor Fund into the Fund on December 13, 2021. The performance provided in the bar chart and table is that
of the Predecessor Fund prior to December 13, 2021, and is that of the Fund after December 13, 2021. The bar chart shows changes in the
Fund’s (or Predecessor Fund’s, as applicable) performance from year to year for Class I shares. The table shows how the Fund’s
(or Predecessor Fund’s, as applicable) average annual returns for 1 and 5 years, and since inception, compare with those of a broad
measure of market performance. Performance shown for Class L shares prior to December 13, 2021 reflects the performance of Class A shares
of the Predecessor Fund. Performance for Class L and Class C shares reflects any applicable sales charge. iPast
performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More
up-to-date performance information is available at ihttps://www.massmutual.com/funds
or by calling i1-888-309-3539.
iAfter-tax
returns are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of
state and local taxes.iActual after-tax
returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who
hold Fund shares through taxadvantaged arrangements, such as 401(k) plans or individual retirement accounts.iAfter-tax
returns are shown for Class I only. After-tax returns for other classes will vary.
Return
After Taxes on Distributions and Sales of Fund Shares
-i10.78
%
-i0.95
%
i0.99
%
Class Y
Return
Before Taxes
-i18.35
%
-i0.01
%
i2.67
%
Class L
Return
Before Taxes
-i22.54
%
-i1.06
%
i1.84
%
Class C
Return
Before Taxes
-i19.83
%
-i0.95
%
i1.69
%
Bloomberg Emerging Markets Hard Currency (USD) Aggregate Index i(reflects
no deduction for fees, expenses, or taxes)(1)
-i16.60
%
-i1.09
%
i1.49
%
Custom Emerging Markets Debt Blended Total Return Index(2)
(reflects no deductions for fees, expenses, or taxes)
-i13.06
%
-i1.14
%
i1.66
%
(1)
iEffective
February 1, 2023, the Fund’s performance benchmark index will be the Bloomberg Emerging Markets Hard Currency (USD) Aggregate Index
rather than the Custom Emerging Markets Debt Blended Total Return Index
because the Bloomberg Emerging Markets Hard Currency (USD) Aggregate Index is an appropriate broad-based
securities market index and is well aligned with the Fund’s investment strategy.
(2)
iThe Custom Emerging Markets Debt Blended Total Return Index is
a blend of 50% JPMorgan Government Bond Index—Emerging Markets Global Diversified
(GBIEMGD), 30% JPMorgan EMBI Global Diversified and 20% JPMorgan CEMBI Broad Diversified.
Sub-subadviser(s):
Baring International Investment Limited (“BIIL”)
Portfolio Manager(s):
Ricardo
Adrogué is Managing Director and the Head of, and a portfolio manager for, Barings’ Global Sovereign Debt and
Currencies Group. He has managed the Fund since October 2015.
Cem Karacadag is
Managing Director and the Head of, and a portfolio manager for, Barings’ Emerging Markets Sovereign Debt Group. He has managed the
Fund since October 2015.
Natalia
Krol is a Managing Director and portfolio manager for Barings’ Emerging Markets Blended Total Return strategies. She
has managed the Fund since August 2018.
PURCHASE
AND SALE OF FUND SHARES
Shares of the Fund are generally available through distribution
channels, such as broker-dealers or financial institutions, and to retirement plans, other institutional investors, and individual retirement
accounts. Fund shares are redeemable on any business day by written request, telephone, or internet (available to certain customers).
Purchase Minimums*
Class I
Class Y
Class L
Class C
Initial Investment
$500,000
$100,000
$1,000
$1,000
Subsequent Investment
$250
$250
$250
$250
*
The
Fund reserves the right to change or waive the investment minimums. For retirement plans, the investment minimum is $250 for each of the
initial investment and subsequent investments.
TAX
INFORMATION
The Fund intends to make distributions that may be taxed
as ordinary income, qualified dividend income, or capital gains, unless you are an investor eligible for preferential tax treatment.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARIES
If you purchase the Fund through a broker-dealer or other financial intermediary,
the intermediary may receive a one-time or continuing payments from the Fund, MML Advisers or its affiliates, or others for the sale of
Fund shares or continuing shareholder services provided by the intermediary.
These payments may create a conflict of interest by influencing the broker-dealer or other
intermediary to recommend the Fund over another investment. You should contact your intermediary to obtain more information about the
compensation it may receive in connection with your investment.
This Fund seeks to achieve long-term capital growth.
iFEES AND EXPENSES OF THE FUND
i
This table describes the fees and expenses that you may
pay if you buy, hold, and sell shares of the Fund. You may pay brokerage commissions and other fees to financial intermediaries which
are not reflected in the tables and examples below. iFor Class L shares,
you may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $i100,000
in the Fund./ For Class L shares, you may qualify for sales charge discounts if you and your family invest, or agree to
invest in the future, at least $100,000 in the Fund. More information about these and other discounts is available in the section titled
Sales Charges by Class beginning on page 65 of the Fund’s Prospectus or from your financial
professional.
/
iShareholder
Fees (fees paid directly from your investment)
Class I
Class Y
Class L
Class C
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)
iNone
iNone
i4.00%
iNone
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or redemption proceeds)
iNone
iNone
iNone
iNone
Maximum Contingent Deferred Sales Charge (Load)
(CDSC) (as % of the lower of the original offering price or redemption proceeds)
iNone
iNone
i1.00%(1)
i1.00%(2)
(1)
iApplies only to certain redemptions of shares bought with no initial
sales charge. Class L shares purchased without an initial sales charge in accounts aggregating $500,000 or more are subject to a 1.00%
CDSC if the shares are tendered and accepted for repurchase within 18 months of purchase. The 18-month period begins on the day on which
the purchase is made.
(2)
iThe CDSC on Class C Shares is 1.00% for shares tendered and accepted
for repurchase within the first 12 months of purchase. There is no CDSC on Class C Shares thereafter.
iAnnual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Class I
Class Y
Class L
Class C
Management
Fees
i0.90%
i0.90%
i0.90%
i0.90%
Distribution and Service (Rule 12b-1) Fees
iNone
iNone
i0.25%
i1.00%
Other
Expenses
i1.83%
i1.86%
i1.85%
i1.83%
Class I
Class Y
Class L
Class C
Acquired
Fund Fees and Expenses
i0.02%
i0.02%
i0.02%
i0.02%
Total Annual Fund Operating Expenses(1)
i2.75%
i2.78%
i3.02%
i3.75%
Expense
Reimbursement
(i1.81%)
(i1.84%)
(i1.83%)
(i1.81%)
Total Annual Fund Operating Expenses after Expense
Reimbursement(2)
i0.94%
i0.94%
i1.19%
i1.94%
(1)
iBecause Total Annual Fund Operating Expenses include Acquired Fund
Fees and Expenses, they may not correspond to the ratios of expenses to average daily net assets shown in the “Financial Highlights”
tables in the Prospectus, which reflect the operating expenses of the Fund and do not include Acquired Fund Fees and Expenses.
?
(2)
The expenses in the above table reflect a written agreement by
MML Advisers to cap the fees and expenses of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses,
interest expense, expenses related to borrowings, securities lending, leverage, taxes, and brokerage, short sale dividend and loan expense,
or other non-recurring or unusual expenses such as organizational expenses and shareholder meeting expenses, as applicable) through iJanuary31, 2024, to the extent that Total Annual Fund Operating Expenses after Expense Reimbursement would otherwise exceed 0.90%,
0.90%, 1.15%, and 1.90% for Classes I, Y, L, and C respectively. The Total Annual Fund Operating Expenses after Expense Reimbursement
shown in the above table may exceed these amounts, because, as noted in the previous sentence, certain fees and expenses are excluded
from the cap. The agreement can only be terminated by mutual consent of the Board of Trustees on behalf of the Fund and MML Advisers.
iExample
i
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. It assumes that you invest $10,000 in each share class of the Fund for the time
periods indicated and then redeem all of your shares at the end of those periods. For Class L shares, the example includes the initial
sales charge. The example also assumes that your investment earns a 5% return each year and that the Fund’s operating expenses are
exactly as described in the preceding table. Although your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 Year
3 Years
5 Years
10 Years
Class I
$
i96
$
i681
$
i1,293
$
i2,947
Class Y
$
i96
$
i687
$
i1,305
$
i2,975
Class L
$
i516
$
i1,130
$
i1,769
$
i3,479
Class C
$
i297
$
i980
$
i1,782
$
i3,877
iYou
would pay the following expenses if you did not redeem your shares:
The Fund pays transaction costs, such as commissions,
when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate, which includes the turnover of the Barings Global Emerging Markets Equity Fund (the “Predecessor Fund”) prior
to December 13, 2021, was i22%
of the average value of its portfolio. For more information regarding the Predecessor Fund, please see the discussion under Performance
Information.
/
iINVESTMENTS, RISKS, AND PERFORMANCE
i
Principal Investment Strategies
Under normal market conditions, the Fund will invest at least 80% of its
net assets (plus the amount of any borrowings for investment purposes) in equity and equity-related securities, including convertible
securities, preferred stocks, options, and warrants, of issuers that are economically tied to one or more emerging market countries. The
Fund may invest in fixed income securities or debt instruments issued by emerging market entities or sovereign nations. Emerging market
countries are defined to include any country that did not become a member of the Organization for Economic Cooperation and Development
(O.E.C.D.) prior to 1975 and Turkey.
For purposes of the 80% policy discussed above, a determination that an issuer
is economically tied to an emerging market country is based on factors including, but not limited to, whether the issuer is incorporated
or listed in one or more emerging market countries, has a significant proportion of its assets or other interests in one or more emerging
market countries, or carries on its principal business in or from one or more emerging market countries. The Fund may include exchange-traded
funds (“ETFs”) that provide exposure to certain emerging markets for purposes of its 80% policy.
The Fund may invest in all types of securities, many of which will be denominated
in currencies other than the U.S. dollar. The securities may be listed on a U.S. or non-U.S. stock exchange or traded in U.S. or non-U.S.
over-the-counter markets. In addition to common stocks, the Fund may also
invest in other types of equity securities, such as depositary receipts (including American
Depositary Receipts and Global Depositary Receipts), ETFs, and participation rights. Although the Fund’s investment in non-U.S.
dollar denominated assets may be on a currency hedged or unhedged basis, under normal market conditions, the Fund seeks to hedge substantially
all of its exposure to non-U.S. currencies. The Fund may also invest in fixed income securities and cash and cash equivalents.
The Fund may invest in different regions, countries, industries, and sectors.
Under normal market conditions, the Fund allocates its assets among various regions and countries (but in no less than three different
countries). The Fund may invest without limit in Russia and China.
In selecting investments for the Fund, the Fund’s subadviser, Barings
LLC (“Barings”), or subsubadviser, Baring International Investment Limited (“BIIL”),
evaluate investment opportunities on a company-by-company basis. This approach includes seeking to identify growth potential unrecognized
by market participants through the analysis of factors such as the company’s future financial performance, business model, and management
style, while incorporating wider economic and social trends. Barings or BIIL monitors individual issuers for changes in the factors above,
which may trigger a decision to sell a security. These factors may vary in particular cases and may change over time.
The Fund has the flexibility to achieve certain exposures through derivative
transactions, including without limitation, forward foreign currency exchange contracts; futures on securities, indexes, currencies, commodities,
swaps, and other investments; options; participation notes; and interest rate swaps, cross-currency swaps, total return swaps, and credit
default swaps, which may create economic leverage in the Fund. The Fund may engage in derivative transactions to enhance total return,
to seek to hedge against fluctuations in securities prices, interest rates, or currency exchange rates, to change the effective duration
of its portfolio, to manage certain investment risks, and/or as a substitute for the purchase or sale of securities, currencies, or commodities.
Derivatives instruments that provide exposure to equity securities that are economically tied to emerging market countries or to a country
Barings or BIIL considers to be equivalent to such countries or have economic characteristics similar to such investments may be used
to satisfy the Fund’s 80% policy.
The Fund is non-diversified, which means that it may hold larger positions in a smaller
number of issuers than a diversified fund.
iPrincipal
Risks
i
The following are the Principal Risks of the Fund. The value of your investment
in the Fund could go down as well as up. iYou can lose money by investing in the
Fund. References in this section to the Fund’s subadviser may include any sub-subadvisers as applicable. Certain
risks relating to instruments and strategies used in the management of the Fund are placed first. The significance of any specific risk
to an investment in the Fund will vary over time, depending on the composition of the Fund’s portfolio, market conditions, and other
factors. You should read all of the risk information presented below carefully, because any one or more of these risks may result in losses
to the Fund.
Equity Securities Risk Although
stocks may have the potential to outperform other asset classes over the long term, their prices tend to fluctuate more dramatically over
the shorter term. These movements may result from factors affecting individual companies, or from broader influences like changes in interest
rates, market conditions, or investor confidence, or announcements of economic, political, or financial information.
Foreign
Investment Risk; Emerging Markets Risk; Currency Risk Investments in securities of foreign issuers, securities of companies
with significant foreign exposure, and foreign currencies can involve additional risks relating to market, industry, political, regulatory,
public health, and other conditions. Political, social, diplomatic, and economic developments, U.S. and foreign government action, or
threat thereof, such as the imposition of currency or capital blockages, controls, or tariffs, economic and trade sanctions or embargoes,
security trading suspensions, entering or exiting trade or other intergovernmental agreements, or the expropriation or nationalization
of assets in a particular country, can cause dramatic declines in certain or all securities with exposure to that country and other countries.
In the event of nationalization, expropriation, confiscation, or other government action, intervention, or restriction, the Fund could
lose its entire investment in a particular foreign issuer or country. There may be quotas or other limits on the ability of the Fund (or
clients of the Fund’s investment adviser or subadviser) to invest or maintain investments in securities of issuers in
/
certain countries. Enforcing legal rights can be more difficult, costly,
and limited in certain foreign countries and with respect to certain types of investments, and can be particularly difficult against foreign
governments. Because non-U.S. securities are normally denominated and traded in currencies other than the U.S. dollar, the value of the
Fund’s assets may be affected favorably or unfavorably by changes in currency exchange rates, exchange control regulations, and
restrictions or prohibitions on the repatriation of non-U.S. currencies. Income and gains with respect to investments in certain countries
may be subject to withholding and other taxes. There may be less information publicly available about a non-U.S. company than about a
U.S. company, and many non-U.S. companies are not subject to accounting, auditing, and financial reporting standards, regulatory framework
and practices comparable to those in the U.S. The securities of some non-U.S. companies, especially those in emerging markets, are less
liquid and at times more volatile than securities of comparable U.S. companies. Emerging markets securities are subject to greater risks
than securities issued in developed foreign markets, including less liquidity, less stringent investor protection and disclosure standards,
less reliable settlement practices, greater price volatility, higher relative rates of inflation, greater political, economic, and social
instability, greater custody and operational risks, greater risk of new or inconsistent government treatment of or restrictions on issuers
and instruments, and greater volatility in currency exchange rates, and are more susceptible to environmental problems. Many emerging
market countries are highly reliant on international trade and exports, including the export of commodities. Their economies may be significantly
impacted by fluctuations in commodity prices and the global demand for certain commodities. In addition, pandemics and outbreaks of contagious
diseases may exacerbate pre-existing problems in emerging market countries with less established health care systems. Frontier markets,
a subset of emerging markets, generally have smaller economies and less mature capital markets than emerging markets. As a result, the
risks of investing in emerging market countries are magnified in frontier market countries. Frontier markets are more susceptible to having
abrupt changes in currency values, less mature markets and settlement practices, and lower trading volumes that could lead to greater
price volatility and illiquidity. Non-U.S. transaction costs, such as brokerage commissions and custody costs, may be
higher than in the United States. In addition, foreign markets can
react differently to market, economic, industry, political, regulatory, geopolitical, public health, and other conditions than the U.S.
market.
China
Investment Risk Investments in China (including Chinese companies listed on U.S. and Hong Kong exchanges), Hong Kong, and
Taiwan, involve certain risks and considerations not typically associated with investments in U.S. companies, such as greater government
control over the economy, political and legal uncertainty, currency fluctuations or blockages, the risk that the Chinese government may
decide not to continue to support economic reform programs, and the risk of nationalization or expropriation of assets. Additionally,
the securities markets of China, Hong Kong, and Taiwan are emerging markets subject to the special risks applicable to emerging market
countries.
Credit Risk Credit
risk is the risk that an issuer, guarantor, or liquidity provider of a fixed income security held by the Fund may be unable or unwilling,
or may be perceived (whether by market participants, ratings agencies, pricing services or otherwise) as unable or unwilling, to make
timely principal and/or interest payments, or to otherwise honor its obligations. The Fund may also be exposed to the credit risk of its
counterparty to repurchase agreements, reverse repurchase agreements, swap transactions, and other derivatives transactions, and to the
counterparty’s ability or willingness to perform in accordance with the terms of the transaction. The value of such transactions
to the Fund will depend on the willingness and ability of the counterparty to perform its obligations, including among other things the
obligation to return collateral or margin to the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations
under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under
the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain
no recovery in such circumstances.
Derivatives Risk Derivatives
can be highly volatile and involve risks different from, and potentially greater than, direct investments, including risks of imperfect
correlation between the value of derivatives and underlying assets, counterparty default, potential losses that partially or completely
offset gains, and illiquidity. Derivatives can create investment leverage. Losses from derivatives
can be substantially greater than the derivatives’ original cost and can sometimes be unlimited. If the value of a derivative does
not correlate well with the particular market or asset class the derivative is designed to provide exposure to, the derivative may not
have the effect or benefit anticipated. Derivatives can also reduce the opportunity for gains or result in losses by offsetting positive
returns in other investments. Many derivatives are traded in the over-the-counter market and not on exchanges.
Growth Company Risk The
prices of growth securities are often highly sensitive to market fluctuations because of their heavy dependence on future earnings or
cash flow expectations, and can be more volatile than the market in general.
Large Company Risk Large-capitalization
stocks as a group could fall out of favor with the market, causing the Fund’s investments in large capitalization stocks to underperform
investments that focus on small- or medium-capitalization stocks. Larger, more established companies may be slow to respond to challenges
and may grow more slowly than smaller companies.
Non-Diversification RiskiBecause
the Fund may invest a relatively large percentage of its assets in a single issuer or small number of issuers than a diversified
fund, the Fund’s performance could be closely tied to the value of one issuer or a small number of issuers and could be more volatile
than the performance of a diversified fund.
Small and Mid-Cap Company
Risk Market risk and liquidity risk are particularly pronounced for securities of small and medium-sized companies, which
may trade less frequently and in smaller volumes than more widely-held securities, and may fluctuate in price more than other securities.
Their shares can be less liquid than those of larger companies, especially during market declines. Small and medium-sized companies may
have limited product lines, markets, or financial resources and may be dependent on a limited management group; they may have been recently
organized and have little or no track record of success.
Stock Connect Risk The
Fund may invest in China A Shares through Stock Connect, which is subject to sudden changes in quota limitations, application of trading
suspensions, price fluctuations during times when Stock Connect is not trading, operational risk, clearing and settlement risk, and regulatory
and taxation risk.
Cash Position Risk If the
Fund holds a significant portion of its assets in cash or cash equivalents, its investment returns may be adversely affected and the Fund
may not achieve its investment objective.
Fixed
Income Securities Risk The values of fixed income securities typically will decline during periods of rising interest rates,
and can also decline in response to changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral
assets, or changes in market, economic, industry, political, regulatory, public health, and other conditions affecting a particular type
of security or issuer or fixed income securities generally. Certain events, such as market or economic developments, regulatory or government
actions, natural disasters, pandemics, terrorist attacks, war, and other geopolitical events can have a dramatic adverse effect on the
debt market and the overall liquidity of the market for fixed income securities. During those periods, the Fund may experience high levels
of shareholder redemptions, and may have to sell securities at times when the Fund would otherwise not do so, and potentially at unfavorable
prices. Certain securities may be difficult to value during such periods. Fixed income securities are subject to interest rate risk (the
risk that the value of a fixed income security will fall when interest rates rise), extension risk (the risk that the average life of
a security will be extended through a slowing of principal payments), prepayment risk (the risk that a security will be prepaid and the
Fund will be required to reinvest at a less favorable rate), duration risk (the risk that longer-term securities may be more sensitive
to interest rate changes), inflation risk (the risk that as inflation increases, the present value of the Fund’s fixed income investment
typically will decline), and credit risk.
Geographic Focus Risk When
the Fund focuses investments on a particular country, group of countries, or geographic region, its performance will be closely tied to
the market, currency, economic, political, or regulatory conditions and developments in those countries or that region, and could be more
volatile than the performance of more geographically diversified funds.
Hedging Risk The
Fund’s attempts at hedging and taking long and short positions in currencies may not be successful and could cause the Fund to lose
money or fail to get the benefit of a gain on a hedged position. If expected changes to securities prices, interest rates, currency values,
and exchange
rates, or the creditworthiness of an issuer are not accurately predicted, the Fund could
be in a worse position than if it had not entered into such transactions.
Leveraging Risk Instruments
and transactions, including derivatives transactions, that create leverage may cause the value of an investment in the Fund to be more
volatile, could result in larger losses than if they were not used, and tend to compound the effects of other risks.
LIBOR
Risk Certain instruments in which the Fund may invest rely in some fashion upon the London-Interbank Offered Rate (“LIBOR”).
On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR
by the end of 2021. The administrator of LIBOR ceased publication of most LIBOR settings on a representative basis at the end of 2021
and is expected to cease publication of remaining U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition,
global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Actions
by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Market participants
are focused on the transition mechanisms by which the reference rate in existing contracts or instruments may be amended, whether through
market wide protocols, fallback contractual provisions, bespoke negotiations or amendments, or otherwise. Markets are developing in response
to these new rates, and questions around liquidity in these rates and how to appropriately adjust these rates to eliminate any economic
value transfer at the time of transition remain a significant concern for the Fund. Neither the effect of the transition process nor its
ultimate success can yet be known. The transition process may involve, among other things, increased volatility or illiquidity in markets
for instruments that rely on LIBOR. In addition, uncertainty and volatility arising from the transition may result in a reduction in the
value of certain LIBOR-based instruments held by the Fund or reduce the effectiveness of related transactions such as hedges. Any such
effects of the transition away from LIBOR, as well as other unforeseen effects, could result in losses to the Fund.
Liquidity Risk Certain
securities may be difficult (or impossible) to sell or certain positions may be difficult to close out at a desirable time and price,
and the Fund may be required to hold an illiquid investment that is declining in value,
or it may be required to sell certain illiquid investments at a price or time that is not advantageous in order to meet redemptions or
other cash needs. Some securities may be subject to restrictions on resale. There can be no assurance that there will be a liquid market
for instruments held by the Fund at any time. The Fund may not receive the proceeds from the sale of certain investments for an extended
period.
Management Risk The
Fund relies on the manager’s investment analysis and its selection of investments to achieve its investment objective. There can
be no assurance that the Fund will achieve the intended results and the Fund may incur significant losses.
Market Risk The
value of the Fund’s portfolio securities may decline, at times sharply and unpredictably, as a result of unfavorable market-induced
changes affecting particular industries, sectors, or issuers. Stock and bond markets can decline significantly in response to issuer,
market, economic, industry, political, regulatory, geopolitical, public health, and other conditions, as well as investor perceptions
of these conditions. The Fund is subject to risks affecting issuers, such as management performance, financial leverage, industry problems,
and reduced demand for goods or services.
Middle East Risk Middle
Eastern economies tend to be highly reliant on the exportation of commodities. There is limited democratic tradition and many countries
are led by family structures. This dynamic may foster dissidence and militancy, which could result in significant disruptions in securities
markets. Middle Eastern economies may be subject to acts of terrorism, political strife, religious, ethnic, or socioeconomic unrest, and
sudden outbreaks of hostilities with neighboring countries.
Reinvestment Risk Income
from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded, or called debt obligations
at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the Fund’s
overall return.
Risk of Investment in
Other Funds or Pools The Fund is indirectly exposed to all of the risks of the underlying funds, including ETFs, in which
it invests, including the risk that the underlying funds will not perform as expected. ETFs are subject
to additional risks, including secondary market trading risks and the risk that an ETF’s
shares may trade above or below net asset value. The Fund indirectly pays a portion of the expenses incurred by the underlying funds.
Russian
Securities Risk In response to political and military actions undertaken by Russia, including Russia’s military invasion
of Ukraine in February 2022, the United States, other countries, and certain international organizations instituted numerous sanctions
against certain Russian individuals and Russian corporate entities. These sanctions, and any additional sanctions or other intergovernmental
actions that may be undertaken against Russia in the future, may result in the devaluation of Russian currency, a downgrade in the country’s
credit rating, and a decline in the value and liquidity of securities offered by Russian issuers. These sanctions and any other intergovernmental
actions could result in the immediate freeze of Russian securities, including securities in the form of depositary receipts, impairing
the ability of the Fund to buy, sell, receive, or deliver those securities. Retaliatory action by the Russian government could involve
the seizure of U.S. and/or European residents’ assets and any such actions are likely to impair the value and liquidity of such
assets. Any or all of these potential results could push Russia’s economy into a recession. These sanctions and any other intergovernmental
actions, and the continued disruption of the Russian economy, could have a negative effect on the performance of funds that have significant
exposure to Russia.
Sector Risk The
Fund may allocate more of its assets to particular industries or to particular economic, market, or industry sectors than to others. This
could increase the volatility of the Fund’s portfolio, and the Fund’s performance may be more susceptible to developments
affecting issuers in those industries or sectors than if the Fund invested more broadly.
Valuation Risk The
Fund is subject to the risk of mispricing or improper valuation of its investments, in particular to the extent that its securities are
fair valued.
iPerformance
Information
i
iThe
following bar chart and table provide some indication of the risks of investing in the Fund. The Fund is the successor
to the Predecessor Fund, a mutual fund with substantially similar investment objectives, policies, and restrictions, as a result
of the reorganization of the Predecessor Fund into the Fund on December13, 2021. The performance provided in the bar chart and table is that of the Predecessor Fund prior to December 13, 2021, and is that
of the Fund after December 13, 2021. The bar chart shows changes in the Fund’s (or Predecessor Fund’s, as applicable) performance
from year to year for Class I shares. The table shows how the Fund’s (or Predecessor Fund’s, as applicable) average annual
returns for 1 year, and since inception, compare with those of a broad measure of market performance. Performance shown for Class L shares
reflects the performance of Class A shares of the Predecessor Fund prior to December 13, 2021. Performance for Class L and Class C shares
reflects any applicable sales charge. iPast performance
(before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date
performance information is available at ihttps://www.massmutual.com/funds
or by calling i1-888-309-3539.
i
Annual Performance
Class I Shares
i
iHighest
Quarter:
2Q ’20,
i16.82%
iLowest
Quarter:
1Q ’20,
–i23.70%
/i
iAfter-tax
returns are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact of
state and local taxes.iActual after-tax
returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who
hold Fund shares through taxadvantaged arrangements, such as 401(k) plans or individual retirement accounts.iAfter-tax
returns are shown for Class I only. After-tax returns for other classes will vary.
Sub-subadviser(s): Baring
International Investment Limited (“BIIL”)
Portfolio Manager(s):
Isabelle Irish, CFA is
a portfolio manager for Barings’ Global Emerging Markets Equity Team. She has managed the Fund since May 2021.
Michael Levy is
a Managing Director and the Co-Head of, and a portfolio manager for, Barings’ Emerging Equities Team. He has managed the Fund since
September 2018.
William Palmer is
a Managing Director and the Co-Head of, and a portfolio manager for, Barings’ Emerging Equities Team. He has managed the Fund since
September 2018.
PURCHASE AND SALE
OF FUND SHARES
Shares of the Fund are generally available through distribution channels,
such as broker-dealers or financial institutions, and to retirement plans, other
institutional investors, and individual retirement accounts. Fund shares are redeemable
on any business day by written request, telephone, or internet (available to certain customers).
Purchase Minimums*
Class I
Class Y
Class L
Class C
Initial Investment
$500,000
$100,000
$1,000
$1,000
Subsequent Investment
$250
$250
$250
$250
*
The
Fund reserves the right to change or waive the investment minimums. For retirement plans, the investment minimum is $250 for each of the
initial investment and subsequent investments.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income,
qualified dividend income, or capital gains, unless you are an investor eligible for preferential tax treatment.
PAYMENTS TO BROKER-DEALERS AND
OTHER FINANCIAL INTERMEDIARIES
If you purchase the Fund through a broker-dealer or other financial intermediary,
the intermediary may receive a one-time or continuing payments from the Fund, MML Advisers or its affiliates, or others for the sale of
Fund shares or continuing shareholder services provided by the intermediary. These payments may create a conflict of interest by influencing
the broker-dealer or other intermediary to recommend the Fund over another investment. You should contact your intermediary to obtain
more information about the compensation it may receive in connection with your investment.
Additional Information
Regarding Investment Objectives and Principal Investment Strategies
Changes to Investment Objectives and Strategies.
Each Fund’s investment objective and strategies are non-fundamental
and may be changed by the Board of Trustees (the “Trustees”) of the MassMutual Advantage Funds (the “Trust”) without
shareholder approval.
Note Regarding Percentage Limitations.
All percentage limitations on investments in this Prospectus will apply
at the time of investment, and will not be considered violated unless an excess or deficiency occurs or exists immediately after and as
a result of the investment. (As a result, the actual investments making up a Fund’s portfolio may not at a particular time comport
with any such limitation due to increases or decreases in the values of securities held by the Fund.) However, if, through a change in
values, net assets, or other circumstances, a Fund were in a position where more than 15% of its net assets was invested in illiquid securities,
the Fund would take appropriate orderly steps, as deemed necessary, to protect liquidity. With respect to a Fund whose name suggests that
the Fund focuses its investments in a particular type of investment or investments, or in investments in a particular industry or group
of industries, and that has adopted a policy under Rule 35d-1 under the Investment Company Act of 1940, as amended (the “1940 Act”),
such Fund’s policy to invest at least 80% of its net assets in certain investments may be changed by the Trustees upon at least
60 days’ prior written notice to shareholders.
Credit Ratings.
Security ratings are determined at the time of investment based on ratings
published by nationally recognized statistical rating organizations; if a security is not rated, it will be deemed to have the same rating
as a security determined by the investment adviser or subadviser to be of comparable quality. Unless otherwise stated, if a security is
rated by more than one nationally recognized statistical rating organization, the highest rating is used. The Fund may retain any security
whose rating has been downgraded after purchase.
Duration.
Duration is a measure of the expected life of a debt security that is used
to determine the sensitivity of the security’s value to changes in interest rates. The longer a security’s duration, the
more sensitive it will be to changes in interest rates. For example, if interest rates rise
by 1%, the value of a debt security with a duration of two years would be expected to decline 2% and the value of a debt security with
a duration of four years would be expected to decline 4%. Unlike the maturity of a debt security, which measures only the time until final
payment is due, duration takes into account the time until all payments of interest and principal on a security are expected to be made,
including how these payments are affected by prepayments and by changes in interest rates. Determining duration may involve estimates
of future economic parameters, which may vary from actual future values.
Leverage.
Leverage generally has the effect of increasing the amount of loss or gain
a Fund might realize, and may increase volatility in the value of a Fund’s investments. Adverse changes in the value or level of
the underlying asset, rate, or index may result in a loss substantially greater than the amount invested in the derivative itself.
Temporary Defensive Positions.
At times, a Fund’s investment adviser or subadviser may determine that
market conditions make pursuing a Fund’s basic investment strategy inconsistent with the best interests of its shareholders. At
such times, the investment adviser or subadviser may (but will not necessarily), without notice, temporarily use alternative strategies
primarily designed to reduce fluctuations in the values of a Fund’s assets. In implementing these defensive strategies, a Fund may
hold assets without limit in cash and cash equivalents and in other investments that the investment adviser or subadviser believes to
be consistent with the Fund’s best interests. If such a temporary defensive strategy is implemented, a Fund may not achieve its
investment objective.
Portfolio Turnover.
Changes are made in a Fund’s portfolio whenever the investment adviser
or subadviser believes such changes are desirable. Portfolio turnover rates are generally not a factor in making buy and sell decisions.
A high portfolio turnover rate will result in higher costs from brokerage commissions, dealer-mark-ups, bid-ask spreads, and other transaction
costs and may also result in a higher
percentage of short-term capital gains and a lower percentage of long-term capital gains
as compared to a fund that trades less frequently (short-term capital gains generally receive less favorable tax treatment in the hands
of shareholders than do long-term capital gains). Such costs are not reflected in the Funds’ Total Annual Fund Operating Expenses
set forth in the fee tables but do have the effect of reducing a Fund’s investment return.
Non-Principal Investments; Use of Derivatives; Securities
Loans; Repurchase Agreements.
A Fund may hold investments that are not included in its principal investment
strategies. These non-principal investments are described in the Statement of Additional Information (“SAI”) or below under
“Additional Information Regarding Principal Risks.” A Fund also may choose not to invest in certain securities described in
this Prospectus and in the SAI, even though it has the ability to do so. Certain Funds may engage in transactions involving derivatives
as part of their principal investment strategies; the disclosures of the principal investment strategies of those Funds include specific
references to those derivatives transactions. Any of the other Funds may engage in derivatives transactions not as part of their principal
investment strategies, and Funds that may use certain derivatives as part of their principal investment strategies may use other derivatives
(not as part of their principal investment strategies), as well. A Fund may use derivatives for hedging purposes, as a substitute for
direct investment, to earn additional income, to adjust portfolio characteristics, including duration (interest rate volatility), to gain
exposure to securities or markets in which it might not be able to invest directly, to provide asset/liability management, or to take
long or short positions on one or more indexes, securities, or foreign currencies. If a Fund takes a short position with respect to a
particular index, security, or currency, it will lose money if the index, security, or currency appreciates in value, or an expected credit
or other event that might affect the value of the index, security, or currency fails to occur. Losses could be significant. Derivatives
transactions may include, but are not limited to, foreign currency exchange transactions, options, futures contracts, interest rate swaps,
interest rate futures contracts, forward contracts, total return swaps, credit default swaps, and hybrid instruments. A Fund may use derivatives
to create investment leverage. See “Additional Information Regarding Principal Risks,” below, and the SAI for more information
regarding those transactions.
A Fund may make loans of portfolio securities to broker-dealers and other financial intermediaries
of up to 33% of its total assets, and may enter into repurchase agreements. These transactions must be fully collateralized at all times,
but involve some risk to a Fund if the other party should default on its obligation and the Fund is delayed or prevented from recovering
the collateral, or if the Fund is required to return collateral to a borrower at a time when it may realize a loss on the investment of
that collateral. Any losses from the investment of cash collateral received by the Fund will be for the Fund’s account and may exceed
any income the Fund receives from its securities lending activities. A repurchase agreement is a transaction in which a Fund purchases
a security from a seller, subject to the obligation of the seller to repurchase that security from the Fund at a higher price. A Fund
may enter into securities loans and repurchase agreements as a non-principal investment strategy.
Foreign Securities.
The globalization and integration of the world economic system and related
financial markets have made it increasingly difficult to define issuers geographically. Accordingly, the Funds intend to construe geographic
terms such as “foreign,”“non-U.S.,”“European,”“Latin American,”“Asian,”
and “emerging markets” in the manner that affords to the Funds the greatest flexibility in seeking to achieve the investment
objective(s) of the relevant Fund. Specifically, unless otherwise stated, in circumstances where the investment objective and/or strategy
is to invest (a) exclusively in “foreign securities,”“non-U.S. securities,”“European securities,”“Latin American securities,”“Asian securities,” or “emerging markets” (or similar directions)
or (b) at least some percentage of the Fund’s assets in foreign securities, etc., the Fund will take the view that a security
meets this description so long as the issuer of a security is tied economically to the particular country or geographic region indicated
by words of the relevant investment objective and/or strategy (the “Relevant Language”). For these purposes the issuer of
a security is deemed to have that tie if:
(i) the issuer is organized under the laws of the country or a country within
the geographic region suggested by the Relevant Language or maintains its principal place of business in that country or region; or
(ii) the securities are traded principally in the country or region suggested
by the Relevant Language; or
(iii) the issuer, during its most recent fiscal year, derived at least 50% of its revenues
or profits from goods produced or sold, investments made, or services performed in the country or region suggested by the Relevant Language
or has at least 50% of its assets in that country or region.
In addition, the Funds intend to treat derivative securities (e.g., call
options) for this purpose by reference to the underlying security. Conversely, if
the investment objective and/or strategy of a Fund limits the percentage of assets
that may be invested in “foreign securities,” etc. or prohibits such investments altogether, a Fund intends to categorize
securities as “foreign,” etc. only if the security possesses all of the attributes described above in clauses (i), (ii), and
(iii).
A description of the Funds’ policies and procedures with respect to
the disclosure of each Fund’s portfolio securities is available in the Funds’ SAI.
Additional Information
Regarding Principal Risks
A Fund, by itself, generally is not intended to provide a complete investment
program. Investment in the Funds is intended to serve as part of a diversified portfolio of investments. An investment in a Fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The value of your investment in a Fund changes with the values of the investments
in the Fund’s portfolio. Many things can affect those values. Factors that may have an important or significant effect on a particular
Fund’s portfolio as a whole are called “Principal Risks.” The Principal Risks of each Fund are identified in the foregoing
Fund Summaries and are described in this section. Certain Funds may be more susceptible to some risks than others. Although the Funds
strive to reach their stated goals, they cannot offer guaranteed results. The value of your investment in a Fund could go down as well
as up. You can lose money by investing in the Funds. References in this section to a Fund’s subadviser may include any sub-subadvisers
as applicable.
The SAI contains further information about the Funds, their investments and
their related risks.
•
Bank Loans Risk
Many of the risks associated with bank
loans are similar to the risks of investing in below investment grade debt securities, although bank loans are typically (though not always)
senior and secured, while below investment grade debt securities or investments are often subordinated and unsecured. Senior loans are
subject to the risk that a court could subordinate a senior loan, which typically holds the most senior position in the issuer’s
capital structure, to presently existing or future indebtedness or take other action detrimental to the holders of senior loans. Changes
in the financial condition of the borrower or economic conditions or other circumstances may reduce the capacity of the borrower to make
principal and interest payments on such
instruments and may lead to defaults. The value of
any collateral securing a bank loan may decline after a Fund invests, and there is a risk that the value of the collateral may not be
sufficient to cover the amount owed to the Fund. In addition, collateral securing a loan may be found invalid, may be used to pay other
outstanding obligations of the borrower under applicable law, or may be difficult to sell. In the event that a borrower defaults, a Fund’s
access to the collateral may be limited by bankruptcy and other insolvency laws. There is also the risk that the collateral may be difficult
to liquidate, or that a majority of the collateral may be illiquid. In addition, some loans may be unsecured. Unsecured loans generally
present a greater risk of loss to the Fund if the issuer defaults. In some cases, the Fund may rely on a third party to administer its
interest in a loan, and so is subject to the risk that the third party will be unwilling or unable to perform its obligations. The Fund
may invest in a loan by purchasing an indirect interest in the loan held by a third party. In that case, the Fund will be subject to both
the credit risk of the borrower and of the third party, and the Fund may be unable to realize some or all of the value of its interest
in the loan in the event of the insolvency of the third party. The settlement time for certain loans is longer than the settlement time
for many other types of investments, and the Fund may not receive the payment for a loan sold by it until well after the sale; that cash
would be unavailable for payment of redemption proceeds or for reinvestment. Interests in some bank loans may not be readily marketable
and may be subject to restrictions on resale. In some cases, negotiations involved in disposing of indebtedness may require weeks to complete.
Consequently, some indebtedness may be difficult or impossible to dispose of readily at what the Fund believes to be a fair price. Some
bank loans may be illiquid, and bank loans generally tend to be less liquid than many other debt securities. The lack of a liquid secondary
market may make it more difficult for the Fund to assign a value to such instruments for purposes of valuing the Fund’s portfolio
and calculating its net asset value (“NAV”). Some loans may not be considered “securities” for certain purposes
under the federal securities laws, and purchasers, such as the Fund, therefore may not be entitled to rely on the anti-fraud protections
of the federal securities laws.
Below investment grade debt securities, which are also
known as “junk” or “high yield” bonds, and comparable unrated securities in which a Fund may invest, have speculative
characteristics, and changes in economic conditions, the financial condition of the issuer, and/or an unanticipated rise in interest rates
or other circumstances are more likely to lead to a weakened capacity to make principal and interest payment than in the case of higher
grade securities. Below investment grade debt securities involve greater volatility of price and yield and greater risk of loss of principal
and interest than do higher quality securities. In the past, economic downturns or increases in interest rates have, under certain circumstances,
resulted in a higher incidence of default by the issuers of these instruments and are likely to do so in the future, especially in the
case of highly leveraged issuers. The prices for these instruments may be affected by legislative and regulatory developments. Some below
investment grade debt securities are issued in connection with management buy-outs and other highly leveraged transactions, and may entail
substantial risk of delays in payments of principal or interest or of defaults. The inability (or perceived inability) of issuers to make
timely payment of interest and principal would likely make the values of securities held by the Fund more volatile and could limit the
Fund’s ability to sell its securities at prices approximating the values the Fund has placed on such securities. In the absence
of a liquid trading market for securities held by it, a Fund at times may be unable to establish the fair value of such securities. To
the extent a Fund invests in securities in the lower rating categories, the achievement of the Fund’s goals is more dependent on
the Fund investment adviser’s or subadviser’s investment analysis than would be the case if the Fund were investing in securities
in the higher rating categories. Securities that are rated CCC or below by Standard & Poor’s or Caa or below by Moody’s
Investors Service, Inc. are generally regarded by the rating agencies as having extremely poor prospects of ever attaining any real investment
standing.
•
Cash Position
Risk
A Fund may hold a significant portion of its assets in cash
or cash equivalents at the sole
discretion of the Fund’s investment adviser or subadviser, based
on such factors as it may consider appropriate under the circumstances. The portion of a Fund’s assets invested in cash and cash
equivalents may at times exceed 25% of the Fund’s net assets. To the extent a Fund holds a significant portion of its assets in
cash or cash equivalents, its investments returns may be adversely affected and the Fund may not achieve its investment objective.
•
China Investment
Risk
Investments in China (including Chinese
companies listed on U.S. and Hong Kong exchanges), Hong Kong, and Taiwan, involve certain risks and considerations not typically associated
with investments in U.S. companies, including, among others, greater government control over the economy, political and legal uncertainty,
currency fluctuations or blockages, the risk that the Chinese government may decide not to continue to support economic reform programs,
the risk of nationalization or expropriation of assets, more frequent trading suspensions and government interventions, limits on the
use of brokers and on foreign ownership, higher dependence on exports and international trade, potential for increased trade tariffs,
embargoes and other trade limitations, and custody risks associated with programs used to access Chinese securities. Additionally, the
securities markets of China, Hong Kong, and Taiwan are emerging markets subject to the special risks applicable to emerging market countries.
Significant portions of the Chinese securities markets may become rapidly illiquid, as Chinese issuers have the ability to suspend the
trading of their equity securities, and have shown a willingness to exercise that option in response to market volatility and other events.
U.S. sanctions or other investment restrictions could preclude a Fund from investing in certain Chinese issuers or cause a Fund to sell
investments at a disadvantageous time.
The Chinese economy is generally
considered an emerging and volatile market. Although China has experienced a relatively stable political environment in recent years,
there is no guarantee that such stability will be maintained in the future. Political, regulatory, and diplomatic events, such as the
U.S.-China “trade war” that intensified in 2018, could have an adverse effect on the Chinese, Taiwanese, or Hong Kong economies
and on
investments made through China Connect programs.
In addition, if China were to exert its authority so as to alter the economic, political, or legal structures or the existing social policy
of Hong Kong, investor and business confidence in Hong Kong could be negatively affected, which in turn could negatively affect markets
and business performance and have an adverse effect on a Fund’s investments. Similarly, although the relationship between China
and Taiwan has been improving, there is the potential for future political or economic disturbances between China and Taiwan that may
have an adverse impact on the values of investments in either China or Taiwan, or make investments in China and/or Taiwan impractical
or impossible.
•
China Bond Risk
A Fund may invest in the China Interbank Bond market via
the CIBM Initiative or Bond Connect and is subject to any other rules and regulations and administrative procedures as promulgated by
Chinese authorities. Under the prevailing regulations in China, foreign institutional investors who wish to invest directly in the China
Interbank Bond Market (“CIBM”) may do so via an onshore settlement agent (as in the CIBM initiative) or offshore custody agent
(as in Bond Connect), and such agent will carry out the relevant filings and account opening with the relevant authorities. There is no
quota limitation. As such, a Fund may be subject to the risks of default or errors on the part of such agents. There are distinct operational
and regulatory risks inherent in investing in debt securities traded on the CIBM in addition to the risks typically associated with investing
in emerging markets. The prices of debt securities traded on the CIBM may fluctuate significantly due to low trading volume and potential
lack of liquidity. The rules to access debt securities that trade on the CIBM or through Bond Connect are relatively new and subject to
change, which may adversely affect a Fund’s ability to invest in these securities and to enforce its rights as a beneficial owner
of these securities. Trading through Bond Connect is subject to a number of restrictions that may affect a Fund’s investments and
returns.
•
Convertible Securities
Risk
Convertible securities are bonds, debentures, notes or
other debt securities that may be
converted at either a stated price or stated rate into shares of common
or preferred stock (or cash or other securities of equivalent value), and so are subject to the risks of investments in both debt securities
and equity securities. The price of a convertible security may change in response to changes in price of the underlying equity security,
the credit quality of the issuer, and interest rates. Due to the conversion feature, convertible debt securities generally yield less
than non-convertible securities of similar credit quality and maturity. The values of convertible securities may be interest-rate sensitive
and tend to decline as interest rates rise and to rise when interest rates fall. A Fund may invest at times in securities that have a
mandatory conversion feature, pursuant to which the securities convert automatically into stock at a specified date and conversion ratio,
or that are convertible at the option of the issuer. When conversion is not at the option of the holder, a Fund may be required to convert
the security into the underlying stock even at times when the value of the underlying common stock has declined substantially or it would
otherwise be disadvantageous to do so.
•
Covenant Lite Loans
Risk
Loans in which a Fund invests include covenant lite loans,
which may carry more risk to the lender than traditional loans as they may contain fewer restrictive covenants on the borrower than traditionally
included in loan documentation or may contain other borrower-friendly characteristics. A Fund may experience relatively greater difficulty
or delays in enforcing its rights on its holdings of certain covenant lite loans and debt securities than its holdings of loans or securities
with the usual covenants.
•
Credit Risk
Credit risk is the risk that an issuer, guarantor, or liquidity
provider of a fixed income security held by a Fund may be unable or unwilling, or may be perceived (whether by market participants, ratings
agencies, pricing services or otherwise) as unable or unwilling, to make timely principal and/or interest payments, or to otherwise honor
its obligations. It includes the risk that the security will be downgraded by a credit rating agency; generally, lower credit quality
issuers present higher credit risks. An actual or perceived decline in creditworthiness
of an issuer of a fixed income security held by the Fund may result in
a decrease in the value of the security. It is possible that the ability of an issuer to meet its obligations will decline substantially
during the period when the Fund owns securities of the issuer or that the issuer will default on its obligations or that the obligations
of the issuer will be limited or restructured. The credit rating assigned to any particular investment does not necessarily reflect the
issuer’s current financial condition and does not reflect an assessment of an investment’s volatility or liquidity. Securities
rated in the lowest category of investment grade are considered to have speculative characteristics. In addition, below investment grade
debt securities (i.e., “junk” or “high yield” bonds) involve greater credit risk, are more volatile, involve greater
risk of price declines and may be more susceptible to economic downturn than investment grade securities. If a security held by the Fund
loses its rating or its rating is downgraded, the Fund may nonetheless continue to hold the security in the discretion of the investment
adviser or subadviser. In the case of asset-backed or mortgage-related securities, changes in the actual or perceived ability of the obligors
on the underlying assets or mortgages may affect the values of those securities.
The Fund may also be exposed to the
credit risk of its counterparty to repurchase agreements, reverse repurchase agreements, swap transactions, and other derivatives transactions,
and to the counterparty’s ability or willingness to perform in accordance with the terms of the transaction. The value of such transactions
to the Fund will depend on the willingness and ability of the counterparty to perform its obligations, including among other things the
obligation to return collateral or margin to the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations
under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under
the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain
no recovery in such circumstances. In the event of a counterparty’s (or its affiliate’s) insolvency, the possibility exists
that a Fund’s ability to exercise remedies, such as the termination of transactions, netting of obligations, and
realization on collateral, could be stayed or eliminated
under special resolution regimes adopted in the United States, the European Union, the United Kingdom, and various other jurisdictions.
Among other things, such regimes provide government authorities with broad authority to intervene when a financial institution is experiencing
financial difficulty.
•
Currency Risk
Because foreign securities normally are denominated and
traded in foreign currencies, the value of a Fund’s assets may be affected favorably or unfavorably by changes in currency exchange
rates, currency exchange control regulations, intervention (or failure to intervene) by the U.S. or foreign governments in currency markets,
foreign withholding taxes, and restrictions or prohibitions on the repatriation of foreign currencies. A Fund may, but will not necessarily,
engage in foreign currency transactions in order to protect against fluctuations in the values of holdings denominated in or exposed to
other currencies, or, for certain Funds, to generate additional returns. Derivatives transactions providing exposure to foreign currencies
may create investment leverage. A Fund’s investment in foreign currencies may increase the amount of ordinary income recognized
by the Fund.
Officials in foreign countries may from time to time take
actions in respect of their currencies which could significantly affect the value of a Fund’s assets denominated in those currencies
or the liquidity of such investments. For example, a foreign government may unilaterally devalue its currency against other currencies,
which would typically have the effect of reducing the U.S. dollar value of investments denominated in that currency. A foreign government
may also limit the convertibility or repatriation of its currency or assets denominated in its currency, which would adversely affect
the U.S. dollar value and liquidity of investments denominated in that currency. In addition, although at times most of a Fund’s
income may be received or realized in foreign currencies, the Fund will be required to compute and distribute its income in U.S. dollars.
As a result, if the exchange rate for any such currency declines after the Fund’s income has been earned and translated into U.S.
dollars but before payment to shareholders, the Fund could be required to sell portfolio investments to make such
distributions. Similarly, if a Fund incurs an expense in a foreign currency
and the exchange rate changes adversely to the Fund before the expense is paid, the Fund would have to convert a greater amount of U.S.
dollars to pay for the expense at that time than it would have had to convert at the time the Fund incurred the expense. Investments in
foreign currencies themselves (directly or through derivatives transactions) may be highly volatile and may create investment leverage.
•
Cyber Security
and Technology Risk
The Funds and their service providers (including the Funds’
investment adviser, subadvisers, custodian, and transfer agent) are subject to operational and information security risks, including those
resulting from cyber-attacks and other technological issues. Technological issues or failures, or interference or attacks by “hackers”
or others, may have the effect of disabling or hindering the Funds’ operations or the operations of a service provider to the Funds.
There are inherent limitations in business continuity plans and technology systems designed to prevent cyber-attacks and avoid operational
incidents, including the possibility that certain risks have not been identified. The Funds’ investment adviser does not control
the cyber security plans and systems put in place by third-party service providers, and such third-party service providers may have limited
indemnification obligations to the Funds’ investment adviser or the Funds, each of whom could be negatively impacted as a result.
Similar risks also are present for issuers of securities in which the Funds invest, which could result in material adverse consequences
for such issuers, and may cause a Fund’s investment in such securities to lose value.
•
Defaulted and Distressed
Securities Risk
Defaulted securities risk refers to the uncertainty of repayment
of defaulted securities and obligations of distressed issuers. Because the issuer of such securities is in default and is likely to be
in distressed financial condition, repayment of defaulted securities and obligations of distressed issuers (including insolvent issuers
or issuers in payment or covenant default, in workout or restructuring, or in bankruptcy or insolvency proceedings) is subject to significant
uncertainties. The market will likely be less liquid for distressed
or defaulted securities than for other types of securities. Reduced liquidity
can affect the valuations of distressed or defaulted securities, make their valuation and sale more difficult, and result in greater volatility.
Insolvency laws and practices in foreign countries are different than those in the U.S. and the effect of these laws and practices cannot
be predicted with certainty. Investments in defaulted securities and obligations of distressed issuers are considered speculative. To
the extent a Fund is invested in distressed securities, its ability to achieve current income for its shareholders may be diminished.
•
Derivatives Risk
Derivatives are financial contracts whose values depend
upon, or are derived from, the value of an underlying asset, reference rate, or index. Derivatives may relate to stocks, bonds, interest
rates, currencies, credit exposures, currency exchange rates, commodities, related indexes, or other assets. The use of derivative instruments
may involve risks different from, or greater than, the risks associated with investing directly in securities and other more traditional
investments. Derivatives can be highly volatile and are subject to a number of potential risks described in this Prospectus, including
market risk, credit risk, management risk, liquidity risk, and leveraging risk. Derivative products are highly specialized instruments
that may require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative
requires an understanding not only of the underlying instrument or index but also of the derivative itself, often without the benefit
of observing the performance of the derivative under all possible market conditions. (For example, successful use of a credit default
swap may require, among other things, an understanding of both the credit of the company to which it relates and of the way the swap is
likely to respond to changes in various market conditions and to factors specifically affecting the company.) The use of derivatives involves
the risk that a loss may be sustained as a result of the failure of another party to the contract (typically referred to as a “counterparty”)
to make required payments or otherwise to comply with the contract’s terms. Derivative transactions can create investment leverage.
Losses from derivatives can be substantially
greater than the derivatives’ original cost and can sometimes be
unlimited. Since the values of derivatives are calculated and derived from the values of other assets, reference rates, or indexes, there
is greater risk that derivatives will be improperly valued. Derivatives also involve the risk that changes in the value of a derivative
may not correlate perfectly with changes in the value of its underlying asset, rate, or index, and the risk that a derivative transaction
may not have the effect or benefit the Fund’s investment adviser or subadviser anticipated. Also, suitable derivative transactions
may not be available in all circumstances, and there can be no assurance that a Fund will engage in these transactions when that would
be beneficial. A liquid secondary market may not always exist for a Fund’s derivative positions at any time. If a derivative transaction
is particularly large or if the relevant market is illiquid (as is the case with many privately negotiated derivatives), it may not be
possible to initiate a transaction or liquidate a position at an advantageous price or at all. Although the use of derivatives is intended
to enhance a Fund’s performance, it may instead reduce returns and increase volatility.
Recent U.S. and non-U.S. legislative and regulatory reforms,
including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, have resulted in, and may in the future result
in, new regulation of derivative instruments and the Funds’ use of such instruments. Such regulations can, among other things, restrict
a Fund’s ability to engage in derivative transactions (for example, by making certain types of derivative instruments or transactions
no longer available to a Fund), establish additional margin requirements and/or increase the costs of derivatives transactions, and a
Fund may as a result be unable to execute its investment strategies in a manner its investment adviser or subadviser might otherwise choose.
Counterparty risk with respect to derivatives has been and may continue to be affected by rules and regulations concerning the derivatives
market. Some derivatives transactions are centrally cleared, and a party to a cleared derivatives transaction is subject to the credit
risk of the clearing house and the clearing member through which it holds the position. Credit risk of market participants with respect
to derivatives that are centrally
cleared is concentrated in a few clearing houses and clearing members,
and it is not clear how an insolvency proceeding of a clearing house or clearing member would be conducted, what effect the insolvency
proceeding would have on any recovery by a Fund, and what impact an insolvency of a clearing house or clearing member would have on the
financial system more generally.
•
Futures
Contract Risk. A Fund may enter into futures contracts, in which the Fund agrees to buy or sell certain financial instruments
or index units or other assets on a specified future date at a specified price or rate. A Fund may also enter into contracts to deliver
in the future an amount of one currency in return for an amount of another currency. If a Fund’s investment adviser or subadviser
misjudges the direction of interest rates, markets, or foreign exchange rates, a Fund’s overall performance could suffer. The risk
of loss could be far greater than the investment made because a futures contract requires only a small deposit to take a large position.
A small change in a futures contract could have a substantial impact on a Fund, favorable or unfavorable. An investor could also suffer
losses if it is unable to close out a futures contract because of an illiquid market. Futures are subject to the creditworthiness of the
futures commission merchants or brokers and clearing organizations involved in the transactions. In the event of the insolvency of its
futures commission merchant or broker, a Fund may be delayed or prevented from recovering some or all of the margin it has deposited with
the merchant or broker, or any increase in the value of its futures positions held through that merchant or broker.
•
Emerging Markets
Risk
Investing in emerging market securities poses risks different
from, and/or greater than, risks of investing in domestic securities or in the securities of foreign, developed countries. These risks
may include, for example, smaller market-capitalizations of securities markets; significant price volatility; illiquidity; limits on foreign
investment; and possible limits on repatriation of investment income and capital. Future economic or political events or crises could
lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization, or the creation of government
monopolies. The currencies of emerging
market countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in those currencies by a Fund. Inflation and rapid fluctuations in inflation
rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.
Although many of the emerging market securities in which a Fund may invest are traded on securities exchanges, they may trade in limited
volume, and the exchanges may not provide all of the conveniences or protections provided by securities exchanges in more developed markets.
Additional risks of emerging market
securities may include greater social, economic, and political uncertainty and instability; more substantial governmental involvement
in the economy; less governmental supervision and regulation; greater custody and operational risks; unavailability of currency hedging
techniques; less stringent investor protection and disclosure standards; less reliable settlement practices; companies that are newly
organized and small; differences in auditing and financial reporting standards, which may result in unavailability or unreliability of
material information about issuers or instruments; less developed legal, regulatory, and accounting systems; and greater environmental
risk. Many emerging market countries are highly reliant on international trade and exports, including the export of commodities. Their
economies may be significantly impacted by fluctuations in commodity prices and the global demand for certain commodities. In addition,
pandemics and outbreaks of contagious diseases may exacerbate pre-existing problems in emerging market countries with less established
health care systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable
to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement of securities
transactions in emerging markets may be subject to risk of loss and may be delayed more often than transactions settled in the United
States, in part because a Fund will need to use brokers and counterparties that are less well capitalized, and custody and registration
of assets in some countries may be unreliable compared to more developed
countries. Settlement problems may cause a Fund to
miss attractive investment opportunities, hold a portion of its assets in cash pending settlement, or be delayed in disposing of a portfolio
security. It may be more difficult to obtain and/or enforce a judgment in a court outside the U.S., and a judgment against a foreign government
may be unenforceable.
Frontier markets, a subset of emerging markets, generally
have smaller economies and less mature capital markets than emerging markets. As a result, the risks of investing in emerging market countries
are magnified in frontier market countries. Frontier markets are more susceptible to having abrupt changes in currency values, less mature
markets and settlement practices, and lower trading volumes that could lead to greater price volatility and illiquidity.
•
Equity Securities
Risk
Although stocks may have the potential to outperform other
asset classes over the long term, their prices tend to fluctuate more dramatically over the shorter term. These movements may result from
factors affecting individual companies, or from broader influences like changes in interest rates, market conditions, or investor confidence,
or announcements of economic, political, or financial information.
•
Fixed Income
Securities Risk
The values of debt securities change in response to interest
rate changes. In general, as interest rates rise, the value of a debt security is likely to fall. This risk is generally greater for obligations
with longer maturities or for debt securities that do not pay current interest (such as zero-coupon securities). Debt securities with
variable and floating interest rates can be less sensitive to interest rate changes, although, to the extent a Fund’s income is
based on short-term interest rates that fluctuate over short periods of time, income received by the Fund may decrease as a result of
a decline in interest rates. The value of a debt security also depends on the issuer’s actual or perceived credit quality or ability
to pay principal and interest when due. The value of a debt security is likely to fall if an issuer or the guarantor of a security is
unable or unwilling (or is perceived to be unable or unwilling) to make timely principal
and/or interest payments or otherwise to honor its obligations or if the
debt security’s rating is downgraded by a credit rating agency. The value of a debt security can also decline in response to changes
in market, economic, industry, political, regulatory, public health, and other conditions that affect a particular type of debt security
or issuer or debt securities generally. Certain events, such as market or economic developments, regulatory or government actions, natural
disasters, pandemics, terrorist attacks, war, and other geopolitical events can have a dramatic adverse effect on the debt market and
the overall liquidity of the market for fixed income securities.
•
Extension
Risk. During periods of rising interest rates, the average life of certain types of securities may be extended because of
slower than expected principal payments. This may lock in a below-market interest rate, increase the security’s duration, and reduce
the value of the security.
•
Prepayment
Risk. Prepayment risk is the risk that principal of a debt obligation will be repaid at a faster rate than anticipated. In
such a case, a Fund may lose the benefit of a favorable interest rate for the remainder of the term of the security in question, and may
only be able to reinvest the amount of the prepayment at a less favorable rate.
?
•
Interest
Rate Risk. The values of bonds and other debt instruments usually rise and fall in response to changes in interest rates.
The values of debt instruments generally increase in response to declines in interest rates and decrease in response to rises in interest
rates. Interest rates can also change in response to the supply and demand for credit, government and/or central bank monetary policy
and action, inflation rates, and other factors. Interest rate risk is generally greater for fixed-rate instruments than floating-rate
instruments and for investments with longer durations or maturities. Some investments give the issuer the option to call or redeem an
investment before its maturity date. If an issuer calls or redeems an investment during a time of declining interest rates, a Fund might
have to reinvest the proceeds in an investment offering a lower yield, and therefore might not benefit from any increase in value as a
result of declining interest rates. Negative or very low
interest rates could magnify the risks associated
with changes in interest rates. In general, changing interest rates, including rates that fall below zero, could have unpredictable effects
on markets and may expose fixed income and related markets to heightened volatility.
•
Foreign Investment
Risk
Investments in securities of foreign
issuers, securities of companies with significant foreign exposure, and foreign currencies can involve additional risks relating to market,
industry, political, regulatory, public health, and other conditions. Political, social, diplomatic, and economic developments, U.S. and
foreign government action, or threat thereof, such as the imposition of currency or capital blockages, controls, or tariffs, economic
and trade sanctions or embargoes, security trading suspensions, entering or exiting trade or other intergovernmental agreements, or the
expropriation or nationalization of assets in a particular country, can cause dramatic declines in certain or all securities with exposure
to that country and other countries. Economic or other sanctions imposed on a foreign country or issuer by the U.S., or on the U.S. by
a foreign country, could impair a Fund’s ability to buy, sell, hold, receive, deliver, or otherwise transact in certain securities.
In the event of nationalization, expropriation, confiscation, or other government action, intervention, or restriction, a Fund could lose
its entire investment in a particular foreign issuer or country. There may be quotas or other limits on the ability of a Fund (or clients
of a Fund’s investment adviser or subadviser) to invest or maintain investments in securities of issuers in certain countries. Enforcing
legal rights can be more difficult, costly, and limited in certain foreign countries and with respect to certain types of investments,
and can be particularly difficult against foreign governments. Because non-U.S. securities are normally denominated and traded in currencies
other than the U.S. dollar, the value of a Fund’s assets may be affected favorably or unfavorably by changes in currency exchange
rates, exchange control regulations, and restrictions or prohibitions on the repatriation of non-U.S. currencies.
Income and gains with respect to investments in certain
countries may be subject to withholding and other taxes. There may be less information publicly available about a
non-U.S. company than about a U.S. company, and many non-U.S. companies
are not subject to accounting, auditing, and financial reporting standards, regulatory framework and practices comparable to those in
the United States. The securities of some non-U.S. companies are less liquid and at times more volatile than securities of comparable
U.S. companies. Non-U.S. transaction costs, such as brokerage commissions and custody costs may be higher than in the United States. In
addition, foreign markets can perform differently from U.S. markets and can react differently to market, economic, industry, political,
regulatory, geopolitical, public health, and other conditions than the U.S. market.
The willingness and ability of foreign governmental entities
to pay principal and interest on government securities depends on various economic factors, including for example the issuer’s balance
of payments, overall debt level, and cash-flow considerations related to the availability of tax or other revenues to satisfy the issuer’s
obligations. If a foreign governmental entity defaults on its obligations on the securities, a Fund may have limited recourse available
to it. The laws of some foreign countries may limit a Fund’s ability to invest in securities of certain issuers located in those
countries. Special tax considerations apply to a Fund’s investments in foreign securities. A Fund’s investments in foreign
securities or foreign currencies may increase or accelerate the Fund’s recognition of ordinary income and may affect the amount,
timing, or character of the Fund’s distributions.
A Fund may invest in foreign securities
known as depositary receipts, in the form of American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”),
Global Depositary Receipts (“GDRs”), or other similar securities. An ADR is a U.S. dollar-denominated security issued by a
U.S. bank or trust company that represents, and may be converted into, a foreign security. An EDR or a GDR is generally similar but is
issued by a non-U.S. bank. Depositary receipts are subject to the same risks as direct investment in foreign securities. Depositary receipts
may not necessarily be denominated in the same currency as the underlying securities into which they may be converted, and changes in
currency exchange rates may affect the value
of an ADR investment in ways different from direct
investments in foreign securities. Funds may invest in both sponsored and unsponsored depositary receipts. Unsponsored depositary receipts
are organized independently and without the cooperation of the issuer of the underlying securities. As a result, available information
concerning the issuers may not be as current for unsponsored depositary receipts and the prices of unsponsored depositary receipts may
be more volatile than if such instruments were sponsored by the issuer. In addition, the underlying issuers of certain depositary receipts,
particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the
holders of such receipts or to pass through to them any voting rights with respect to the deposited securities. A Fund may therefore receive
less timely information or have less control than if it invested directly in the foreign issuer. An investment in an ADR is subject to
the credit risk of the issuer of the ADR.
•
Geographic Focus
Risk
When a Fund invests a relatively large percentage of its
assets in issuers located in a single country, a small number of countries, or a particular geographic region, the Fund’s performance
could be closely tied to the market, currency, economic, political, or regulatory conditions and developments in those countries or that
region, and could be more volatile than the performance of more geographically diversified funds.
•
Growth Company
Risk
Growth company securities tend to be more volatile in
terms of price swings and trading volume than many other types of equity securities. Growth companies, especially technology related companies,
have seen dramatic rises and falls in stock valuations. Funds that invest in growth companies are subject to the risk that the market
may deem these companies’ stock prices over-valued, which could cause steep and/or volatile price swings. Also, since investors
buy these stocks because of their expected superior earnings growth, earnings disappointments often result in sharp price declines.
•
Hedging Risk
There can be no assurance that a Fund’s hedging
transactions will be effective. If a
Fund takes a short position in a particular currency, security, or bond
market, it will lose money if the currency, security, or bond market appreciates in value, or an expected credit event fails to occur.
Any efforts at buying or selling currencies could result in significant losses for the Fund. Further, foreign currency transactions that
are intended to hedge the currency risk associated with investing in foreign securities and minimize the risk of loss that would result
from a decline in the value of the hedged currency may also limit any potential gain that might result should the value of such currency
increase.
•
Inflation Risk
The value of assets or income from
a Fund’s investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of
a Fund’s assets can decline as can the value of the Fund’s distributions. Inflation rates may change frequently and drastically
as a result of various factors, including unexpected shifts in the domestic or global economy (or expectations that such policies will
change), and a Fund’s investments may not keep pace with inflation, which may result in losses to the Fund’s investors. The
market prices of debt securities generally fall as inflation increases because the purchasing power of the future income and repaid principal
is expected to be worth less when received by the Fund. Debt securities that pay a fixed rather than variable interest rate are especially
vulnerable to inflation risk because variable-rate debt securities may be able to participate, over the long term, in rising interest
rates which have historically accompanied long-term inflationary trends.
•
Large Company
Risk
Large-capitalization stocks as a group could fall out
of favor with the market, causing a Fund’s investments in large-capitalization stocks to underperform investments that focus on
small- or medium-capitalization stocks. Larger, more established companies may be slow to respond to challenges, including changes to
technology or consumer tastes, and may grow more slowly than smaller companies, especially during market cycles corresponding to periods
of economic expansion. Market capitalizations of companies change over time.
•
Leveraging Risk
The use of leverage has the potential to increase returns
to shareholders, but also
involves additional risks. A Fund may create leverage by borrowing money
(through traditional borrowings or by means of so-called reverse repurchase agreements); certain transactions, including, for example,
when-issued, delayed-delivery, to-be-announced, and forward commitment purchases, loans of portfolio securities, dollar roll transactions,
and the use of some derivatives, can also result in leverage. Leverage will increase the volatility of the Fund’s investment portfolio
and could result in larger losses than if it were not used. The use of leverage is considered to be a speculative investment practice
and may result in losses to a Fund. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment.
A Fund will typically pay interest or incur other borrowing costs in connection with leverage transactions.
•
LIBOR Risk
Certain instruments in which a Fund
may invest rely in some fashion upon LIBOR. LIBOR is an average interest rate, determined by the ICE Benchmark Administration, that banks
charge one another for the use of short-term money. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority
announced a desire to phase out the use of LIBOR by the end of 2021. The administrator of LIBOR ceased publication of most LIBOR settings
on a representative basis at the end of 2021 and is expected to cease publication of remaining U.S. dollar LIBOR settings on a representative
basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should
be entered into after 2021. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major
currencies. Various financial industry groups have been planning for transition away from LIBOR, but there are obstacles to converting
certain instruments to new reference rates. Markets are developing but questions around liquidity in these rates and how to appropriately
adjust these rates to mitigate any economic value transfer at the time of transition remain a significant concern. It is difficult to
predict the full impact of the transition away from LIBOR on a Fund. The transition process may involve, among other things, increased
volatility or illiquidity in
markets for instruments that rely on LIBOR, particularly
insofar as the documentation governing such instruments does not include “fall back” provisions addressing the transition
from LIBOR. In addition, uncertainty and volatility arising from the transition may result in a reduction in the value of certain LIBOR-based
instruments held by a Fund or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away
from LIBOR, as well as other unforeseen effects, could result in losses to a Fund.
•
Liquidity Risk
Liquidity risk is the risk that particular
investments may be difficult to sell or terminate at approximately the price at which the Fund is carrying the investments. The ability
of a Fund to dispose of illiquid positions at advantageous prices may be greatly limited, and a Fund may have to continue to hold such
positions during periods when the investment adviser or subadviser otherwise would have sold them. Some securities held by a Fund may
be restricted as to resale, may trade in the over-the-counter (“OTC”) market, or may not have an active trading market due
to adverse market, economic, industry, political, regulatory, geopolitical, public health, or other conditions. In addition, a Fund, by
itself or together with other accounts managed by the investment adviser or subadviser, may hold a position in a security that is large
relative to the typical trading volume for that security, which can make it difficult for the Fund to dispose of the position at an advantageous
time or price.
Market values for illiquid securities
may not be readily available, and there can be no assurance that any fair value assigned to an illiquid security at any time will accurately
reflect the price a Fund might receive upon the sale of that security. It is possible that, during periods of extreme market volatility
or unusually high and unanticipated levels of redemptions or in the case of a liquidation of a Fund, a Fund may be forced to sell large
amounts of securities or terminate outstanding transactions at a price or time that is not advantageous in order to meet redemptions or
other cash needs or to pay liquidation proceeds. In such a case, the sale proceeds received by a Fund may be substantially less than if
the Fund had been able to sell the
securities or terminate the transactions in more
orderly transactions, and the sale price may be substantially lower than the price previously used by the Fund to value the securities
for purposes of determining the Fund’s NAV. To the extent a Fund holds illiquid securities, it may be more likely to pay redemption
proceeds in kind.
•
Management Risk
Each Fund is subject to management risk because it relies
on the investment adviser’s and/or subadviser’s investment analysis and its selection of investments to achieve its investment
objective. A Fund’s investment adviser or subadviser manages the Fund based on its assessment of economic, financial, and market
factors and its investment judgment. The investment adviser or subadviser may fail to ascertain properly the appropriate mix of securities
for any particular economic cycle. A Fund’s investment adviser or subadviser applies its investment techniques and risk analyses
in making investment decisions for the Fund, but there can be no guarantee that they will produce the intended result. Management risk
includes the risk that poor security selection will cause a Fund to underperform relative to other funds with similar investment objectives,
or that the timing of movements from one type of security to another could have a negative effect on the overall investment performance
of the Fund. There can be no assurance that there will be a liquid market for instruments held by the Fund at any time.
•
Market Risk
The values of a Fund’s portfolio
securities may decline, at times sharply and unpredictably, as a result of unfavorable broad market developments, which may affect securities
markets generally or particular industries, sectors, or issuers. The values of a Fund’s investments may decline as a result of a
number of such factors, including actual or perceived changes in general economic and market conditions, industry, political, regulatory,
geopolitical, public health, and other developments, including the imposition of tariffs or other protectionist actions, changes in interest
rates, currency rates, or other rates of exchange, and changes in economic and competitive industry conditions. Likewise, terrorism, war,
natural and environmental disasters, and epidemics or
pandemics may be highly disruptive to economies and
markets. For example, the global pandemic outbreak of the novel coronavirus known as COVID-19 and efforts to contain its spread have produced,
and will likely continue to produce, substantial market volatility, severe market dislocations and liquidity constraints in many markets,
exchange trading suspensions and closures, higher default rates, and global business disruption, and they may result in future significant
adverse effects. Such factors, and the effects of other infectious illness outbreaks, epidemics, or pandemics, may have a significant
adverse effect on a Fund’s performance and have the potential to impair the ability of a Fund’s investment adviser, subadviser,
or other service providers to serve the Fund and could lead to disruptions that negatively impact the Fund. Different parts of the market
and different types of securities can react differently to these conditions. The possibility that security prices in general will decline
over short or even extended periods subjects a Fund to unpredictable declines in the value of its shares, as well as potentially extended
periods of poor performance. In addition, the increasing popularity of passive index-based investing may have the potential to increase
security price correlations and volatility. As passive strategies generally buy or sell securities based simply on inclusion and representation
in an index, securities’ prices will have an increasing tendency to rise or fall based on whether money is flowing into or out of
passive strategies rather than based on an analysis of the prospects and valuation of individual securities. This may result in increased
market volatility as more money is invested through passive strategies.
Federal, state, and other governments, their regulatory
agencies, or self-regulatory organizations may take actions that affect the regulation of the securities in which a Fund invests or the
issuers of such securities in ways that are unforeseeable. The uncertainty surrounding the sovereign debt of a significant number of European
Union countries, as well as the status of the Euro, the European Monetary Union, and the European Union itself, has disrupted and may
continue to disrupt markets in the U.S. and around the world. The risks associated with investments in Europe may be heightened due to
the United Kingdom’s exit from the European Union
on January 31, 2020. An agreement between the United Kingdom and the European
Union governing their future trade relationship became effective on January 1, 2021. Significant uncertainty remains in the market regarding
the ramifications of that development and the arrangements that will apply to the United Kingdom’s relationship with the European
Union and other countries following its withdrawal; the range and potential implications of possible political, regulatory, economic,
and market outcomes are difficult to predict. There is the potential for decreased trade, capital outflows from the United Kingdom, devaluation
of the pound sterling, decreased business and consumer spending and decreased foreign investment in the United Kingdom, and negative effects
on the value of a Fund’s investments and/or on a Fund’s ability to enter into certain transactions or value certain investments.
If one or more additional countries leave the European Union, or the European Union partially or completely dissolves, the world’s
economies and securities markets may be significantly disrupted and adversely affected. Legislation or regulation also may change the
way in which a Fund, the investment adviser, or subadviser is regulated. Such legislation, regulation, or other government action could
limit or preclude a Fund’s ability to achieve its investment objective and affect the Fund’s performance.
In addition, military action by Russia
in Ukraine could adversely affect global energy and financial markets, and therefore could affect the value of a Fund’s investments,
including beyond the Fund’s direct exposure to Russian issuers or nearby geographic regions. The extent and duration of the military
action, sanctions, and resulting market disruptions are impossible to predict and could be substantial.
•
Middle East Risk
Middle Eastern economies tend to be highly reliant on
the exportation of commodities. There is limited democratic tradition and many countries are led by family structures. This dynamic may
foster dissidence and militancy, which could result in significant disruptions in securities markets. Middle Eastern economies may be
subject to acts of terrorism, political strife, religious, ethnic, or socioeconomic unrest, and sudden outbreaks of hostilities with neighboring
countries.
Investments in mortgage-related and other asset-backed securities
are subject to the risk of severe credit downgrades, illiquidity and defaults to a greater extent than many other types of fixed income
investments. Mortgage-backed securities, including collateralized mortgage obligations and certain stripped mortgage-backed securities,
represent a participation in, or are secured by, mortgage loans. Asset-backed securities are generally structured like mortgage-backed
securities, but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle
installment sale or installment loan contracts, leases of various types of real and personal property, receivables from credit card agreements,
and student loan payments. Asset-backed securities also may be backed by pools of corporate or sovereign bonds, loans made to corporations,
or a combination of these bonds and loans, commonly referred to as “collateralized debt obligations,” including collateralized
bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”). The assets backing collateralized debt
obligations may consist in part or entirely of high risk, below investment grade debt obligations (or comparable unrated obligations).
In the case of CBOs and certain other collateralized debt obligations, those may include, by way of example, high yield debt, residential
privately issued mortgage-related securities, commercial privately issued mortgage-related securities, trust preferred securities, and
emerging market debt. In the case of CLOs, they may include, among other things, domestic and foreign senior secured loans, senior unsecured
loans, and subordinate corporate loans, any or all of which may be rated below investment grade or may be comparable unrated obligations.
Traditional debt investments typically
pay a fixed rate of interest until maturity, when the entire principal amount is due. By contrast, payments on mortgage-backed and many
asset-backed investments typically include both interest and partial payment of principal. Principal may also be prepaid voluntarily,
or as a result of refinancing or foreclosure. The Fund may have to invest the proceeds from prepaid investments in other investments with
less attractive terms and yields. As a result, these securities may have less potential for
capital appreciation during periods of declining
interest rates than other securities of comparable maturities, although they may have a similar risk of decline in market value during
periods of rising interest rates. Because the prepayment rate generally declines as interest rates rise, an increase in interest rates
will likely increase the duration, and thus the volatility, of mortgage-backed and asset-backed securities. (Duration is a measure of
the expected life of a fixed income security that is used to determine the sensitivity of the security’s price to changes in interest
rates. Unlike the maturity of a fixed income security, which measures only the time until final payment is due, duration takes into account
the time until all payments of interest and principal on a security are expected to be made, including how these payments are affected
by prepayments and by changes in interest rates.) Prepayment rates are difficult to predict and the potential impact of prepayments on
the value of a mortgage-related or other asset-backed security depends on the terms of the instrument and can result in significant volatility.
In addition to interest rate risk (as described under “Interest Rate Risk”), investments in mortgage-backed securities composed
of subprime mortgages and investments in CDOs and CLOs backed by pools of high-risk, below investment grade debt securities may be subject
to a higher degree of credit risk, valuation risk, and liquidity risk (as described under “Credit Risk,”“Valuation
Risk,” and “Liquidity Risk”). During periods of deteriorating economic conditions, such as recessions or periods of
rising unemployment, delinquencies and losses generally increase, sometimes dramatically, with respect to securitizations involving loans,
sales contracts, receivables, and other obligations underlying mortgage-related and other asset-backed securities. Litigation with respect
to the representations and warranties given in connection with the issuance of mortgage-backed securities can be an important consideration
in investing in such securities, and the outcome of any such litigation could significantly impact the value of the Fund’s mortgage-backed
investments.
The types of mortgages underlying securities held by the
Fund may differ and may be affected differently by market factors. For example, the Fund’s investments in residential mortgage-backed
securities will likely be
affected significantly by factors affecting residential real estate markets
and mortgages generally; similarly, investments in commercial mortgage-backed securities will likely be affected significantly by factors
affecting commercial real estate markets and mortgages generally.
Some mortgage-backed and asset-backed investments receive
only the interest portion (“IOs”) or the principal portion (“POs”) of payments on the underlying assets. The yields
and values of these investments are extremely sensitive to changes in interest rates and in the rate of principal payments on the underlying
assets. IOs tend to decrease in value if interest rates decline and rates of repayment (including prepayment) on the underlying mortgages
or assets increase; it is possible that the Fund may lose the entire amount of its investment in an IO due to a decrease in interest rates.
Conversely, POs tend to decrease in value if interest rates rise and rates of repayment decrease. Moreover, the market for IOs and POs
may be volatile and limited, which may make them difficult for the Fund to buy or sell. The values of mortgage-related and other asset-backed
securities may be substantially dependent on the servicing of the underlying asset pools, and are therefore subject to risks associated
with the negligence or malfeasance by their servicers and to the credit risk of their servicers. In certain situations, the mishandling
of related documentation may also affect the rights of securities holders in and to the benefits of the underlying collateral. There may
be legal and practical limitations on the enforceability of any security interest granted with respect to underlying assets, or the value
of the underlying assets, if any, may be insufficient if the issuer defaults.
The Fund may gain investment exposure to mortgage-backed
and asset-backed investments by entering into agreements with financial institutions to buy the investments at a fixed price at a future
date. The Fund may or may not take delivery of the investments at the termination date of such an agreement, but will nonetheless be exposed
to changes in value of the underlying investments during the term of the agreement. These transactions may create investment leverage.
•
Non-Diversification
Risk
A “non-diversified” mutual fund may purchase
larger positions in a smaller number of issuers
than may a diversified mutual fund. Therefore, an increase or decrease
in the value of the securities of a single issuer or a small number of issuers may have a greater impact on the Fund’s NAV and the
Fund’s performance could be more volatile than the performance of diversified funds.
•
Preferred Stock
Risk
Like other equity securities, preferred stock is subject
to the risk that its value may decrease based on actual or perceived changes in the business or financial condition of the issuer. In
addition, if interest rates rise, the dividends on preferred stocks may be less attractive, causing the prices of preferred stocks to
decline. Preferred stock may have mandatory sinking fund provisions or call/redemption provisions that can negatively affect its value.
In addition, in the event of liquidation of a corporation’s assets, the rights of preferred stock generally are subordinate to the
rights associated with a corporation’s debt securities. Preferred stocks are also subject to additional risks, such as potentially
greater volatility and risks related to deferral, non-cumulative dividends, subordination, liquidity, limited voting rights, and special
redemption rights.
•
Redemptions
by Affiliated Funds and by Other Significant Investors
A Fund may be an investment option for other MassMutual
Funds that are managed as “funds of funds” and for other investors who may make substantial investments in the Fund. As a
result, from time to time, a Fund may experience a relatively large redemption and could be required to liquidate assets at inopportune
times or at a loss or depressed value, which could cause the value of your investment to decline. Similarly, large Fund share purchases
may adversely affect a Fund’s performance to the extent that the Fund is delayed in investing new cash and is required to maintain
a larger cash position than it ordinarily would, or if the Fund is unable to invest the cash in portfolio securities that it considers
as desirable as the Fund’s portfolio securities.
•
Reinvestment
Risk
Income from a Fund’s portfolio will decline if and
when the Fund invests the proceeds from matured, traded, or called debt obligations at market interest rates that are below the portfolio’s
current earnings rate. A decline in income could affect a Fund’s overall return.
A Fund may enter into repurchase agreements. These transactions
must be fully collateralized, but involve credit risk to a Fund if the other party should default on its obligation and the Fund is delayed
or prevented from recovering the collateral, or if the Fund is required to return collateral to a borrower at a time when it may realize
a loss on the investment of that collateral.
•
Restricted Securities
Risk
A Fund may hold securities that are restricted as to resale
under the U.S. federal securities laws, such as securities in certain privately held companies. There can be no assurance that a trading
market will exist at any time for any particular restricted security. Limitations on the resale of these securities may prevent the Fund
from disposing of them promptly at reasonable prices or at all. Restricted securities may be highly illiquid. A Fund may have to bear
the expense of registering the securities for resale and the risk of substantial delays in effecting the registration. Restricted securities
may be difficult to value because market quotations may not be readily available, and there may be little publicly available information
about the securities or their issuers. The values of restricted securities may be highly volatile.
•
Risk of Investment
in other Funds or Pools
A Fund may invest in other investment companies or pooled
vehicles, including closed-end funds, trusts, and exchange-traded funds (“ETFs”), that are advised by the Fund’s investment
adviser or subadviser, as applicable, their affiliates, or by unaffiliated parties, to the extent permitted by applicable law. As a shareholder
in an investment company or other pool, the Fund, and indirectly that Fund’s shareholders, bear a ratable share of the investment
company’s or pool’s expenses, including, but not limited to, advisory and administrative fees, and the Fund at the same time
continues to pay its own fees and expenses. Investment companies or pools in which the Funds may invest may change their investment objectives
or policies without the approval of a Fund, in which case a Fund may be forced to withdraw its investment from the investment company
or pool at a disadvantageous time. Private investment pools in which the Funds may
invest are not registered under the 1940 Act, and so will not offer all
of the protections provided by the 1940 Act (including, among other things, independent oversight, protections against certain conflicts
of interest, and custodial risks). A Fund is exposed indirectly to all of the risks applicable to any other investment company or pool
in which it invests, including that the investment company or pool will not perform as expected. Investments in other investment companies
or private pools may be illiquid, may be leveraged, and may be highly volatile.
Investing in other investment companies or private investment
vehicles sponsored or managed by the investment adviser or subadviser, as applicable, or affiliates of the investment adviser or subadviser,
as applicable, involves potential conflicts of interest. For example, the investment adviser or subadviser, as applicable, or their affiliates
may receive fees based on the amount of assets invested in such other investment vehicles, which fees may be higher than the fees the
investment adviser or subadviser, as applicable, receives for managing the investing Fund. Investment by a Fund in those other vehicles
may be beneficial in the management of those other vehicles, by helping to achieve economies of scale or enhancing cash flows. Due to
this and other factors, the investment adviser or subadviser, as applicable, will have an incentive to invest a portion of a Fund’s
assets in investment vehicles sponsored or managed by the investment adviser or subadviser, as applicable, or their affiliates in lieu
of investments by the Fund directly in portfolio securities, and will have an incentive to invest in such investment vehicles over non-affiliated
investment companies. The investment adviser or subadviser, as applicable, will have no obligation to select the least expensive or best
performing funds available to serve as an underlying investment vehicle. Similarly, the investment adviser or subadviser, as applicable,
will have an incentive to delay or decide against the sale of interests held by the Fund in investment vehicles sponsored or managed by
the investment adviser or subadviser, as applicable, or their affiliates.
ETFs are subject to many of the same
risks applicable to investments in mutual funds generally, including that an ETF will not perform as anticipated, that a Fund will bear
its proportionate share of the ETF’s fees and
expenses, and that the ETF will lose money. ETFs are also subject to additional risks, including, among others, the risk that the market
price of an ETF’s shares may trade above or below its NAV, the risk that an active trading market for an ETF’s shares may
not develop or be maintained, the risk that trading of an ETF’s shares may be halted, and the risk that the ETF’s shares may
be delisted from the listing exchange. Some ETFs engage in derivatives strategies and use leverage, and as a result their values can be
highly volatile. It is possible that an ETF’s performance will diverge from the performance of any index or indexes it seeks to
replicate. Because shares of ETFs may be actively traded, their values may be affected in unanticipated ways by the effects of supply
and demand in the market for shares of ETFs, activities of short sellers, or unusual speculative activity in their shares. Some ETFs may
experience periods of reduced liquidity due to restrictions on trading activity or due to a general lack of investor interest in the asset
class represented by the ETF. Unlike shares of a mutual fund, which can be bought and redeemed from the issuing fund by all shareholders
at a price based on NAV, shares of an ETF may be purchased or redeemed directly from the ETF solely by Authorized Participants (“APs”)
and only in aggregations of a specified number of shares (“Creation Units”). ETFs may have a limited number of financial institutions
that act as APs. To the extent that those APs exit the business, or are unable to or choose not to process creation and/or redemption
orders for Creation Units, and no other AP steps forward to create and redeem ETF shares, the ETF’s shares may be more likely to
trade at a premium or discount to NAV and possibly face trading halts or delisting.
•
Russian Securities
Risk
In response to political and military
actions undertaken by Russia, including Russia’s military invasion of Ukraine in February 2022, the United States, other countries
and certain international organizations instituted numerous sanctions against certain individuals and Russian corporate entities. These
sanctions and any additional sanctions or other intergovernmental actions that may be undertaken against Russia in the future, may result
in the devaluation of Russian currency,
a downgrade in the country’s credit rating, and
a decline in the value and liquidity of securities offered by Russian issuers. These sanctions and any other intergovernmental actions
could result in the immediate freeze of Russian securities, including securities in the form of depositary receipts, impairing the ability
of a Fund to buy, sell, receive, or deliver those securities. Retaliatory action by the Russian government could involve the seizure of
U.S. and/or European residents’ assets, and any such actions are likely to impair the value and liquidity of such assets. Any or
all of these potential results could push Russia’s economy into a recession. These sanctions and any other intergovernmental actions,
and the continued disruption of the Russian economy, could have a negative effect on the performance of a fund that has significant exposure
to Russia.
•
Sector Risk
If a Fund allocates a substantial amount of its assets to
one or more particular industries or to particular economic, market, or industry sectors, then economic, business, regulatory, or other
developments affecting issuers in those industries or sectors may affect the Fund adversely to a greater extent than if the Fund had invested
more broadly. Examples might include investments in the technology, health care, or financial sectors or in one or more industries within
those sectors. A substantial investment in one or more such industries or sectors has the potential to increase the volatility of a Fund’s
portfolio, and may cause the Fund to underperform other mutual funds.
•
Small and Mid-Cap
Company Risk
Small and medium-sized companies may have limited product
lines, markets, or financial resources or they may depend on a few key employees. Such companies may have been recently organized and
have little or no track record of success. Also, a Fund’s investment adviser or subadviser may not have had an opportunity to evaluate
such newer companies’ performance in adverse or fluctuating market conditions. Market risk and liquidity risk are particularly pronounced
for stocks of small and medium-sized companies. The securities of small and medium-sized companies may trade less frequently and in smaller
volume than more widely held securities. The prices of
these securities may fluctuate more sharply than those of other securities,
and a Fund may experience some difficulty in establishing or closing out positions in these securities at prevailing market prices. There
may be less publicly available information about the issuers of these securities or less market interest in such securities than in the
case of larger companies, both of which can cause significant price volatility. Some securities of small and medium-sized issuers may
be illiquid or may be restricted as to resale.
•
Sovereign Debt
Obligations Risk
Investments in debt securities issued by governments or
by government agencies and instrumentalities involve the risk that the governmental entities responsible for repayment may be unable or
unwilling to pay interest and repay principal when due. A governmental entity’s willingness or ability to pay interest and repay
principal in a timely manner may be affected by a variety of factors, including its cash flow, the size of its reserves, its access to
foreign exchange, the relative size of its debt service burden to its economy as a whole, and political constraints. A governmental entity
may default on its obligations or may require renegotiation or rescheduling of debt payments. Any restructuring of a sovereign debt obligation
held by the Fund will likely have a significant adverse effect on the value of the obligation. In the event of default of sovereign debt,
the Fund may be unable to pursue legal action against the sovereign issuer or to realize on collateral securing the debt. The sovereign
debt of many non-U.S. governments, including their sub-divisions and instrumentalities, is rated below investment grade (“junk”
or “high yield” bonds). Sovereign debt risk may be greater for debt securities issued or guaranteed by emerging and/or frontier
market countries. At times, certain emerging and frontier market countries have declared moratoria on the payment of principal and interest
on external debt. Certain emerging and frontier market countries have experienced difficulty in servicing their sovereign debt on a timely
basis, which has led to defaults and the restructuring of certain indebtedness to the detriment of debtholders.
•
Stock Connect
Risk
A Fund may invest in China A Shares, which are equity
securities of companies domiciled
in China that are denominated and traded in Renminbi on the Shanghai or
Shenzhen Stock Exchanges. A Fund may invest in A Shares listed and traded on the Shanghai Stock Exchange or Shenzhen Stock Exchange through
the Stock Connect program. A Fund’s investments in Stock Connect A Shares are generally subject to Chinese securities regulations
and listing rules, among other restrictions that may affect the Fund’s investments and returns, including transfer restrictions,
trading suspensions, and daily limits on net purchases, which are subject to change. Such investments are also subject to heightened operational,
tax, and settlement risk and the risk of price fluctuations of A Shares during times when Stock Connect is not trading. Stock Connect
is a relatively new program. Further developments are likely and there can be no assurance as to the program’s continued existence
or whether future developments regarding the program may restrict or adversely affect the Fund’s investments or returns.
•
Structured Notes
Risk
Structured notes and other related instruments purchased
by a Fund are generally privately negotiated debt obligations where the principal and/or interest is determined by reference to the performance
of a specific asset, benchmark asset, market, index, or interest rate (“reference measure”). The interest rate or the principal
amount payable upon maturity or redemption may increase or decrease, depending upon changes in the value of the reference measure. The
terms of a structured note may provide that, in certain circumstances, no principal is due at maturity and, therefore, may result in a
loss of invested capital by the Fund.
Structured notes may be positively or negatively indexed,
so the appreciation of the reference measure may produce an increase or a decrease in the interest rate or the value of the principal
at maturity. The rate of return on structured notes may be determined by applying a multiplier to the performance or differential performance
of reference measures. Application of a multiplier involves leverage that will serve to magnify the potential for gain and the risk of
loss.
The purchase of structured notes exposes a Fund to the credit
risk of the issuer of the structured product. Structured notes may also
be more volatile, less liquid, and more difficult to price accurately
than less complex securities and instruments or more traditional debt securities.
•
U.S. Government
Securities Risk
U.S. Government securities include
a variety of securities that differ in their interest rates, maturities, and dates of issue. While securities issued or guaranteed by
some agencies or instrumentalities of the U.S. Government (such as the Government National Mortgage Association) are supported by the
full faith and credit of the United States, securities issued or guaranteed by certain other agencies or instrumentalities of the U.S.
Government (such as Federal Home Loan Banks) are supported only by the right of the issuer to borrow from the U.S. Government.
Securities issued or guaranteed by certain other agencies and instrumentalities of the U.S. Government (such as Fannie Mae and Freddie
Mac) are not supported by the full faith and credit of the U.S. Government and are supported only by the credit of the issuer itself.
There is no assurance that the U.S. Government would provide financial support to its agencies and instrumentalities if not required to
do so. For securities not backed by the full faith and credit of the United States, a Fund must look principally to the agency or instrumentality
issuing or guaranteeing the securities for repayment and may not be able to assert a claim against the United States if the agency or
instrumentality does not meet its commitment. Such securities may involve increased risk of loss of principal and interest compared to
government debt securities that are backed by the full faith and credit of the United States. From time to time, uncertainty regarding
the status of negotiations in the U.S. Government to increase the statutory debt ceiling could increase the risk that the U.S. Government
may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase
volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase
the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action (or
lack thereof), is unable to meet its obligations, or its creditworthiness declines, the performance of each Fund that holds securities
of the entity will be adversely impacted. In addition,
certain governmental entities have been subject to regulatory scrutiny regarding their accounting policies and practices and other concerns
that may result in legislation, changes in regulatory oversight and/or other consequences that could adversely affect the credit quality,
availability, or investment character of securities issued by these entities. Investments in these securities are also subject to, among
other things, interest rate risk, prepayment risk, extension risk, and the risk that the value of the securities will fluctuate in response
to political, market, or economic developments.
•
Valuation Risk
A portion of a Fund’s assets may be valued at fair
value pursuant to guidelines that have been approved by the Trustees. A Fund’s assets may be valued using prices provided by a pricing
service or, alternatively, a broker-dealer or other market intermediary (sometimes just one broker-dealer or other market intermediary)
when other reliable pricing sources may not be available. The Fund, or persons acting on its behalf, may determine a fair value of a security
based on such other information as may be available to them. There can be no assurance that any fair valuation of an investment held by
a Fund will in fact approximate the price at which the Fund might sell the investment at the time. Technological issues or other service
disruption issues involving third-party service providers may limit the ability of the Fund to value its investment accurately or timely.
To the extent a Fund sells a security at a price lower than the price it has been using to value the security, its NAV will be adversely
affected. If a Fund has overvalued securities it holds, you may pay too much for the Fund’s shares when you buy into the Fund. If
a Fund underestimates the price of its portfolio securities, you may not receive the full market value for your Fund shares when you sell.
•
Value Company Risk
A Fund may purchase some equity securities at prices below
what the investment adviser or subadviser considers to reflect their actual or potential fundamental values. The Fund bears the risk that
the prices of these securities may not increase to reflect what the investment adviser or subadviser believes to be their
fundamental value or that the investment adviser or subadviser may have
overestimated the securities’ fundamental value or that it may take a substantial period of time to realize that value.
?
•
Variable
and Floating Rate Securities Risk
Variable or floating rate securities
are debt securities with variable or floating interest rates payments. Variable or floating rate securities bear rates of interest that
are adjusted periodically according to formulae intended generally to reflect market rates of interest and allow a Fund to participate
(determined in accordance with the terms of the securities) in increases in interest rates through upward adjustments of the coupon rates
on the securities. However, during periods of increasing interest rates, changes in the coupon rates may lag behind the changes in market
rates or may have limits on the maximum increases in coupon rates. Alternatively, during periods of declining interest rates, the coupon
rates on such securities will typically readjust downward resulting in a lower yield.
In addition, investment in derivative
variable rate securities, such as inverse floaters, whose rates vary inversely with market rates of interest, or range floaters or capped
floaters, whose rates are subject to periodic or lifetime caps, or in securities that pay a rate of interest determined by applying a
multiple to the variable rate involves special risks as compared to investment in a fixed-rate security and may involve leverage. The
extent of increases and decreases in the values of derivative variable
rate securities and the corresponding change to the
net asset value of a Fund in response to changes in market rates of interest generally may be larger than comparable changes in the value
of an equal principal amount of a fixed-rate security having similar credit quality, redemption provisions, and maturity. The markets
for such securities may be less developed and may have less liquidity than the markets for conventional securities.
•
When-Issued,
Delayed Delivery, TBA, and Forward Commitment Transaction Risk
A Fund may purchase securities on a when-issued, delayed
delivery, to-be-announced, or forward commitment basis. These transactions involve a commitment by a Fund to purchase securities for a
predetermined price or yield, with payments and delivery taking place more than seven days in the future, or after a period longer than
the customary settlement period for that type of security. These transactions involve a risk of loss if the value of the securities declines
prior to the settlement date. These transactions may create investment leverage. Recently finalized rules of the Financial Industry Regulatory
Authority impose mandatory margin requirements for certain types of when-issued, TBA, or forward commitment transactions, with limited
exceptions. Such transactions historically have not been required to be collateralized, and mandatory collateralization could increase
the cost of such transactions and impose added operational complexity and may increase the credit risk of such transactions to a Fund.
MML Investment Advisers,
LLC (“MML Advisers”), a Delaware limited liability company, located at 1295 State Street, Springfield, Massachusetts01111-0001, is the Funds’ investment adviser and is responsible for providing all necessary investment management and administrative
services. MML Advisers, formed in 2013, is a wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company (“MassMutual”).
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 September 30, 2022, MML Advisers had assets under management
of approximately $41.9 billion.
In 2022, each Fund paid MML Advisers an investment
management fee based on a percentage of each Fund’s average daily net assets as follows: 0.65% for the Global Floating Rate Fund,
0.75% for the Global Credit Income Opportunities Fund, 0.75% for the Emerging Markets Debt Blended Total Return Fund, and 0.90% for the
Global Emerging Markets Equity Fund.
A discussion regarding the basis for the Trustees approving
any investment advisory contract of the Funds is available in the Funds’ semiannual report to shareholders dated March 31, 2022.
Each Fund also pays MML Advisers an administrative and shareholder services
fee to compensate it for providing general administrative services to the Funds and for providing or causing to be provided ongoing shareholder
servicing to direct and indirect investors in the Funds. MML Advisers pays substantially all of the fee to third parties who provide shareholder
servicing. The fee is calculated and paid based on the average daily net assets attributable to each share class of the Fund separately,
and is paid at the following annual rates: a range from 0.03% to 0.07% for Class Y shares; a range from 0.02% to 0.06% for Class L shares;
and a range from 0.00% to 0.03% for Class C shares. Class I shares do not pay any administrative and shareholder services fee.
Subadviser and Portfolio Managers
MML Advisers contracts with the following subadviser to help manage the
Funds. Subject to the oversight of the Trustees, MML Advisers has the ultimate responsibility to oversee subadvisers and recommend their
hiring, termination, and replacement. This responsibility includes, but is not limited to, analysis and review of subadviser performance,
as well as assistance in the identification and vetting of new or replacement subadvisers. In addition, MML Advisers maintains responsibility
for a number of other important obligations, including, among other things, board reporting, assistance in the annual advisory contract
renewal process, and, in general, the performance of all obligations not delegated to a subadviser. MML Advisers also provides advice
and recommendations to the Trustees, and performs such review and oversight functions as the Trustees may reasonably request, as to the
continuing appropriateness of the investment objective, strategies, and policies of each Fund, valuations of portfolio securities, and
other matters relating generally to the investment program of each Fund.
Barings LLC (“Barings”),
an indirect, wholly-owned subsidiary of MassMutual, with principal offices located at 300 South Tryon Street, Charlotte, North Carolina28202, manages the investments of the Global Floating Rate Fund, Global Credit Income
Opportunities Fund, Emerging Markets Debt Blended Total Return Fund, and Global
Emerging Markets Equity Fund. In addition, Baring International Investment Limited (“BIIL”) serves as sub-subadviser
for the Global Floating Rate Fund, Global Credit Income Opportunities Fund, Emerging
Markets Debt Blended Total Return Fund, and Global Emerging Markets Equity Fund
and, subject to the supervision of Barings, is authorized to conduct securities transactions on behalf of the Funds. BIIL is a wholly-owned
subsidiary of Barings and its address is 20 Old Bailey, London, EC4M 7BF, United Kingdom. Barings has provided investment advice to individual
and institutional investors for more than 75 years and, with its subsidiaries, had assets under management as of September 30, 2022 of
approximately $338.4 billion.
Ricardo Adrogué
is a Managing Director and the Head of, and a portfolio manager for, Barings’
Global Sovereign Debt and Currencies Group. Dr. Adrogué shares primary responsibility for the day-to-day management of the Emerging
Markets Debt Blended Total Return Fund. Dr. Adrogué has worked in the industry since
1992 and his experience has encompassed portfolio management, economic strategy, and academia. Prior to
joining Barings in 2013, Dr. Adrogué was at Cabezon Investment Group,
LLC, as well as at Wellington Management Company, where he oversaw the Emerging Markets Local Debt program. Prior to that, Dr. Adrogué
worked at the International Monetary Fund conducting inflation modeling work for central banks and was country desk for Brazil, Costa
Rica, and Trinidad and Tobago. He also worked with Salomon Smith Barney/Citigroup as a vice president of markets and economic analysis,
a senior economist and a strategist for Panama and Peru, and New York University as an adjunct professor of Latin American Economics.
Sean Feeley, CFA
is a Managing Director and portfolio manager for Barings’ U.S. High
Yield Investments Group. Mr. Feeley shares primary responsibility for the day-to-day management of the Global
Floating Rate Fund and Global Credit Income Opportunities Fund.
Mr. Feeley is also a member of Barings’ U.S. High Yield Investment Committee and Global High Yield Allocation Committee. His responsibilities
include portfolio management for various high yield bond total return strategies. Mr. Feeley has worked in the industry since 1996. Prior
to joining Barings in 2003, he worked at Cigna Investment Management in project finance and at Credit Suisse in its leveraged finance
group.
Martin Horne
is a Managing Director and the Head of, and a portfolio
manager for, Barings’ Global Public Fixed Income, a group that incorporates the Global High Yield, Investment Grade, Structured
Credit, and Emerging Markets currency, rates, sovereign, and corporate debt investment teams. Mr. Horne shares primary responsibility
for the day-to-day management of the Global Floating Rate Fund and Global
Credit Income Opportunities Fund. Mr. Horne is also the chairperson of the European High
Yield Investment Committee, chairperson of the Global High Yield Allocation Committee, a member of the European Management Team, and a
member of Barings’ Senior Leadership Team. Mr. Horne has worked in the industry since 1993, encompassing the mid-cap, structured
credit, investment grade, and leverage finance markets. Prior to joining Barings in 2002, Mr. Horne was a member of the European Leverage
Team at Dresdner Kleinwort Wasserstein. He also held positions at KPMG Corporate Finance, where he advised on complex debt transactions,
National Australia Bank, on their corporate and structured credit team, and National Westminster Bank, in the corporate banking unit.
Isabelle Irish, CFA
is a portfolio manager for Barings’ Global
Emerging Markets Equity Team. Ms. Irish shares primary responsibility for the day-to-day management of the Global
Emerging Markets Equity Fund. Ms. Irish has worked in the industry since 2004. Prior to joining Barings in 2013, she spent eight
years at Pictet Asset Management, initially as an Analyst on the Global Emerging Markets Team before becoming a Portfolio Manager.
Cem Karacadag
is a Managing Director and the Head of, and a portfolio
manager for, Barings’ Emerging Markets Sovereign Debt Group. Mr. Karacadag shares primary responsibility for the day-to-day management
of the Emerging Markets Debt Blended Total Return Fund.
Mr. Karacadag has worked in the industry since 1994 and his experience has encompassed sovereign credit analysis, macroeconomic policy
research and advice, and emerging markets fixed income strategy. Prior to joining Barings in 2014, Mr. Karacadag was at OppenheimerFunds,
where he worked on sovereign hard currency and local currency investments in Eastern Europe and Asia. Before Oppenheimer, Mr.Karacadag
worked at Credit Suisse covering emerging market sovereigns in Asia and Latin America, and at the International Monetary Fund, where he
focused on monetary policy instruments, exchange rate policy, and bank restructuring in China, Indonesia, and Eastern Europe. He also
held positions at Standard & Poor’s, and the Federal Reserve Bank of New York.
Natalia Krol
is a Managing Director and portfolio manager for Barings’ Emerging
Markets Blended Total Return strategies. Ms. Krol shares primary responsibility for the day-to-day management of the Emerging
Markets Debt Blended Total Return Fund. Ms. Krol is also a research analyst for the Barings
Emerging Markets Corporate Debt Team, and is responsible for covering global metals & mining and energy corporates. Ms. Krol has worked
in the industry since 2002. Prior to joining Barings in 2014, Ms. Krol was employed at Schroders Investment Management as a credit analyst
and Barclays Capital as a research analyst.
is a Managing Director and the Head of, and a portfolio
manager for, Barings’ Emerging Markets Corporate Debt Group. Ms. Lawal shares primary responsibility for the day-to-day management
of the Global Credit Income Opportunities Fund.
Ms. Lawal is also the lead portfolio manager for the Emerging Markets Corporate Debt and Emerging Markets Short Duration strategies, as
well as chair of the Emerging Markets Corporate Investment Committee, and a member of the Barings’ Global High Yield Allocation
Committee and Global Investment Grade Allocation Committee. Ms. Lawal has worked in the industry since 2000. Prior to joining Barings
in 2014, Ms. Lawal was employed at Cosford Capital Management as a portfolio manager focusing on high yield and distressed LATAM and CEEMEA
corporates, following positions at Standard Bank, Barclays Capital, and Deloitte & Touche/Arthur Andersen.
Michael Levy
is a Managing Director and the Co-Head of, and a
portfolio manager for, Barings’ Emerging Equities Team, overseeing the LATAM and EMEA investment functions. Mr. Levy shares primary
responsibility for the day-to-day management of the Global Emerging Markets Equity Fund.
Mr. Levy is also co-manager on a number of global emerging markets mandates and was previously an investment manager in the EMEA and Global
Frontier Markets Equity Team. Mr. Levy has worked in the industry since 1992. Mr. Levy joined Barings in 2012 after 17 years at AllianceBernstein,
where he held a number of equity portfolio management and research roles. He previously worked at Grant Thornton Chartered Accountants
as a Partner Trainee.
Casey McKinney
is a Managing Director and a portfolio manager for
Barings’ U.S. High Yield Investments Group. Mr. McKinney shares primary responsibility for the day-to-day management of the Global
Floating Rate Fund. His responsibilities include portfolio management for senior secured
loan strategies and directing research efforts as the Head of U.S. High Yield Research. Mr. McKinney has worked in the industry since
1998. Prior to joining Barings in 2005, Mr. McKinney worked for Bank of America as a Vice President in the Leveraged Finance Group where
he focused on structuring and syndicating debt used for leveraging recapitalizations and buyouts.
Brian Pacheco, CFA
is a Managing Director and a portfolio manager for
Barings’ U.S. High Yield Investments Group. Mr. Pacheco shares primary responsibility for the day-to-day management of the Global
Credit Income Opportunities Fund. Mr. Pacheco is also responsible for portfolio management for senior secured loan and multi-asset
credit strategies. Prior to his current role, Mr. Pacheco was the sector head for commodities and provided lead research coverage of the
exploration and production and oilfield services segments within energy. Mr. Pacheco has worked in the industry since 2000. Prior to joining
Barings in 2018, Mr. Pacheco held senior investment analyst roles at UBS O’Connor LLC, Bardin Hill Investment Partners, and Chicago
Fundamental Investment Partners. Before transitioning to the buy-side, Mr. Pacheco was employed by J.P. Morgan in both leveraged finance
and industry coverage.
William Palmer
is a Managing Director and the Co-Head of, and a portfolio manager for,
Barings’ Emerging Equities Team and oversees Barings’ Asia ex Japan investment function. Mr. Palmer shares primary responsibility
for the day-to-day management of the Global Emerging Markets Equity Fund.
He is also co-manager on a number of global emerging market mandates. Prior to joining Barings in 2011, Mr. Palmer was Senior Asset Manager/Head
of Asia ex Japan at KBC Asset Management in Dublin.
Scott Roth, CFA
is a Managing Director and the Co-Head of, and a
portfolio manager for, Barings’ U.S. High Yield Investments Group. Mr. Roth shares primary responsibility for the day-to-day management
of the Global Credit Income Opportunities Fund.
Mr. Roth is also chair of Barings’ U.S. High Yield Investment Committee and a member of the Global High Yield Allocation Committee.
Mr. Roth has worked in the industry since 1993. Prior to joining Barings in 2002, Mr. Roth was employed by Webster Bank, was a high yield
analyst at Times Square Capital Management, and was an underwriter at Chubb Insurance Company.
Chris Sawyer
is a Managing Director and the Head of, and a portfolio
manager for, Barings’ European High Yield Investments Group. Mr. Sawyer shares primary responsibility for the day-to-day management
of the Global
Credit
Income Opportunities Fund and Global Floating Rate Fund.
Mr. Sawyer is also a member of Barings’ European High Yield Investments Committee and Barings’ Global High Yield Allocation
Committee. His responsibilities include portfolio management for various high yield strategies. Mr. Sawyer has worked in the industry
since 2005. Prior to joining Barings’ trading team in 2008, Mr. Sawyer was a member of Barings’ portfolio monitoring team,
where he was responsible for the performance analysis of individual portfolio assets.
The Funds’ SAI provides additional information about each portfolio
manager’s compensation, other accounts managed by the portfolio managers, and each portfolio manager’s ownership of securities
in the relevant Fund.
MML Advisers has received exemptive relief from the Securities and Exchange
Commission (“SEC”) to permit it to change subadvisers or hire new subadvisers for a number of the series of the Trust from
time to time without obtaining shareholder approval. (In the absence of that exemptive relief, shareholder approval might otherwise be
required.) Several other mutual fund companies have received similar relief. MML Advisers believes having this authority is important,
because it allows MML Advisers to remove and replace a subadviser in a quick, efficient, and cost-effective fashion when, for example,
the subadviser’s performance is inadequate or the subadviser no longer is able to meet a Trust series’ investment objective
and strategies. Pursuant to the exemptive relief, MML Advisers will provide to a Fund’s shareholders, within 90 days of the
hiring of a new subadviser, an information statement describing the new subadviser. MML Advisers will not rely on this authority for any
Fund unless the Fund’s shareholders have approved this arrangement. As of the date of this Prospectus, this exemptive relief is
available to each Fund.
About the Classes of Shares
– I, Y, L, and C Shares
Choosing a Share Class.
Each Fund offers four classes of shares.
The only differences among the various classes are
that (a) each class is subject to different expenses specific to that class, including any expenses under a Rule 12b-1 Plan and administrative
and shareholder service expenses; (b) each Class has a different class designation; (c) each class has exclusive voting rights with respect
to matters solely affecting such class; and (d) each class has different exchange privileges. Not all of the classes of a Fund are available
in every state.
Determining which share class is best for you depends
on the dollar amount you are investing and the number of years for which you are willing to invest. Based on your personal situation,
your financial intermediary can help you decide which class of shares makes the most sense for you. A financial intermediary is entitled
to receive compensation for purchases made through the financial intermediary. The Funds, the transfer agent, and ALPS Distributors, Inc.
(the “Distributor”) do not provide investment advice.
Investors may receive different levels of service in
connection with investments in different classes of shares, and intermediaries may receive different levels of compensation in connection
with selling different classes of shares. For additional information, call us toll free at 1-888-309-3539 or contact a sales representative
or financial intermediary who offers the classes.
Fees and Expenses.
Different classes of shares are subject to different
fees and expenses. A class’s fees and expenses will affect the performance of that class.
?
•
Administrative
and Shareholder Services Fee: Shares of all classes, except Class I shares, are subject
to an administrative and shareholder services fee. This fee is described above under “Management of the Funds – Investment
Adviser.”
?
•
Servicing
or Distribution Fees: Class L and Class C shares are subject to servicing or distribution fees paid under a Rule 12b-1 Plan. These
fees are described below in “Distribution Plan, Shareholder Servicing, and Payments to Intermediaries.”
?
•
Certain
Class I Share Fees: Eligible Class I investors will not bear any commission
payments, account servicing fees, recordkeeping fees,
Rule 12b-1 fees, transfer agent fees, so called “finder’s fees,” administrative fees, or other similar fees on Class
I shares.
For actual past expenses of each share class of each
Fund, and for certain prior years, Barings Global Floating Rate Fund, Barings Global Credit Income Opportunities Fund, Barings Emerging
Markets Debt Blended Total Return Fund, and Barings Global Emerging Markets Equity Fund, see the “Financial Highlights” tables
later in this Prospectus.
Purchasing Shares.
Different classes of shares are available to different
investors and from different sources. Shares of Class L and Class C do not have any share class eligibility requirements.
?
•
Institutional
Distribution Channels: Class I shares are offered primarily to institutional investors through institutional distribution channels.
These channels include employer-sponsored retirement plans or through broker-dealers, financial institutions, and insurance companies.
Additionally, advisory or fee-based programs sponsored by a broker- dealer or financial institution, such as a bank or trust company,
may, by agreement with the Distributor or MML Advisers, make Class I shares available to its program participants.
Class Y, Class L, and Class C shares
are offered primarily through other distribution channels, such as broker-dealers or financial institutions.
?
•
Investment
Accounts and Plans: Class I shares are available for purchase by insurance company separate investment accounts, qualified plans
under Section 401(a) of the Code, Code Section 403(b) plans, Code Section 457 plans, non-qualified deferred compensation plans, and other
institutional investors.
?
•
Funds:
Class I shares are available for purchase by mutual funds and collective trust funds.
A plan or institutional investor will be permitted to
purchase Class I shares based upon the expected size (over time), servicing needs, or distribution or servicing costs for the plan or
institutional investor as determined by the Distributor or a financial intermediary, as applicable.
A financial intermediary may, by agreement with the Distributor or
MML Advisers, make available to its plan or institutional clients or its advisory or fee-based program participants shares of one class
or a limited number of classes of the Funds. An investor should consult its financial intermediary for information (including expense
information) regarding the share class(es) the intermediary will make available for purchase by the investor.
Additional Information Regarding
the Classes of Shares.
Purchases of Class Y shares require an initial minimum
investment of $100,000; purchases of Class L and Class C shares require an initial minimum investment of $1,000; and purchase
of Class I shares require an initial minimum investment of $500,000 (waived for retirement plan service provider platforms). For
retirement plans, the investment minimum is $250 for each of the initial investment and subsequent investments. Purchases of $500,000
or more cannot be made in Class C shares.
Class Y Shares
Present and former officers, directors, trustees, and
employees (and their eligible family members) of each Fund, MassMutual and its affiliates, and retirement plans established for the benefit
of such individuals, are permitted to purchase Class Y shares of each Fund.
Class Y shares are sold at the NAV per share without
a sales charge through financial intermediaries that have special agreements with MML Advisers or its affiliates or the Distributor
for that purpose. A financial intermediary that buys Class Y shares
for its customers’ accounts may impose charges on those accounts. The procedures for buying, selling, exchanging, and transferring
a Fund’s other classes of shares (other than the time those orders must be received by the transfer agent) and some of the special
account features available to investors buying other classes of shares do not apply to Class Y shares. Instructions for buying, selling,
exchanging, or transferring Class Y shares must be submitted by a financial intermediary, not by its customers for whose benefit the shares
are held.
Class I Shares
Class I shares are only available to eligible institutional
investors, as described in the “Purchasing Shares” section above, who meet the initial minimum investment and trade through
an omnibus, trust, or similar pooled account. Class I shares are not available directly to individual investors. Individual investors
who purchase Class I shares through retirement plans or other intermediaries will not be eligible to hold Class I shares outside of their
respective retirement plan or intermediary platform.
Class I shares are sold at the NAV per share without
a sales charge. An institutional investor that buys Class I shares for its customers’ accounts may impose charges on those accounts.
The procedures for buying, selling, exchanging, and transferring each Fund’s other classes of shares (other than the time those
orders must be received by the transfer agent), and most of the special account features available to investors buying other classes of
shares, do not apply to Class I shares.
Your purchases of Class L shares are made at the
public offering price for these shares, that is, the NAV per share for Class L shares plus a front-end sales charge that is based
on the amount of your initial investment when you open your account.
The front-end sales charge you pay on an additional
investment is based on your total net investment in a Fund, including the amount of your additional purchase. Shares you purchase with
reinvested dividends or other distributions are not subject to a sales charge. As shown in the table below, a portion of the sales charge
is paid as a commission to your financial intermediary on the sale of Class L shares. The total amount of the sales charge, if any,
differs depending on the amount you invest, as shown in the table below.
Front-End Sales Charge (As a Percentage of the Public Offering
Price)/ Front-End Sales Charge (As a Percentage of Your Net Investment)/ Percentage of Offering Price Paid to Financial Intermediary:
Price Breakpoints
Global Floating Rate Fund
Other Funds
Less than $100,000
3.00
%/
4.00
%/
3.09
%/
4.17
%/
2.50
%
3.50
%
$100,000 – $249,999
2.50
%/
3.25
%/
2.56
%/
3.36
%/
2.00
%
2.75
%
$250,000 – $499,999
2.00
%/
2.75
%/
2.04
%/
2.83
%/
1.50
%
2.25
%
$500,000 or more
None
/
None
/
None
/
None
/
Up to 1.00%
Up to 1.00%
No sales charge is payable at the time of purchase
on investments of $500,000 or more. The Distributor will pay a commission to financial intermediaries on sales of $500,000
or more as follows: 1.00% on amounts up to $1 million; plus 0.75% on amounts of $1 million or more but less than $3 million; plus
0.65% on amounts of $3 million or more but less than $5 million; plus 0.50% on amounts of $5 million or more.
Contingent Deferred
Sales Charges for Class L Shares
Class L shares of a Fund bought without an initial
sales charge in accounts aggregating $500,000 or more at the time of purchase are subject to a 1.00% contingent deferred sales charge
if the shares are
sold within 18 months of purchase. The 18-month period begins on the
day the purchase is made. The contingent deferred sales charge does not apply to load waived shares purchased for certain retirement plans
or other eligible fee-based programs. Prior to the thirteenth month, the Distributor will retain distribution and service fees described
in the “Distribution Plan, Shareholder Servicing, and Payments to Intermediaries”
section.
Reduced Class L Sales Charges for Larger
Investments
You may pay a lower sales charge when purchasing Class
L shares through Rights of Accumulation, which work as follows: if the combined value (determined at the current public offering price)
of your accounts in all classes of shares of a Fund and other Participating Funds (as defined below) maintained by you, your spouse, or
your minor children, together with the value (also determined at the current public offering price) of your current purchase, reaches
a sales charge discount level (according to the above chart), your current purchase will receive the lower sales charge, provided that
you have notified the Distributor and your financial intermediary, if any, in writing of the identity of such other accounts and your
relationship to the other account holders and submitted information (such as account statements) sufficient to substantiate your eligibility
for a reduced sales charge. Such reduced sales charge will be applied upon confirmation of such shareholders’ holdings by the Funds’
transfer agent. A Fund may terminate or amend this Right of Accumulation at any time without notice. As used herein, “Participating
Funds” refers to any of the Funds in this Prospectus, Classes Y and C of the MassMutual High Yield Fund, and Classes Y, L, and C
of the MassMutual Short-Duration Bond Fund. You may also pay a lower sales charge when purchasing Class L shares and shares of other Participating
Funds by signing a Letter of Intent within 90 days of your purchase. By doing so, you would be able to pay the lower sales charge on all
purchases by agreeing to invest a total of at least $100,000 within 13 months. If your Letter of Intent purchases are not completed within
13 months, your account will be adjusted by redemption of the amount of shares needed to pay the higher initial sales charge level for
the amount actually purchased. Upon your request, a Letter of Intent may reflect purchases within the previous 90 days. See the SAI for
additional information
about this privilege. In addition, certain investors may purchase shares
at no sales charge or at a reduced sales charge. For example, Class L shares are offered at no sales charge to investors who are clients
of financial intermediaries who have entered into an agreement with the Distributor to offer Fund shares through self-directed investment
brokerage accounts without charging transaction fees to their clients or through other platforms. See Appendix A of this Prospectus and
the SAI for a description of this and other situations in which sales charges are reduced or waived. Information regarding reduced sales
charges can be found on the MassMutual website at https://www.massmutual.com/funds.
Class
C Shares
Initial Sales Charges
Your purchases of Class C shares are made at the NAV
per share for Class C shares.
Contingent Deferred
Sales Charges for Class C Shares
Although Class C shares have no front-end sales charge,
they carry a contingent deferred sales charge of 1.00% that is applied to shares sold within the first year after they are purchased.
After holding Class C shares for one year, you may sell them at any time without paying a contingent deferred sales charge. Shares you
purchase with reinvested dividends or other distributions are not subject to a sales charge. The Distributor pays your financial intermediary
an up-front commission of 1.00% on sales of Class C shares.
Conversion of Certain
Class C Shares
Class C shares held through a financial intermediary in an omnibus account
will be converted into Class L shares only if the intermediary can document that the shareholder has met the required holding period.
In certain circumstances, for example, when shares are invested through retirement plans or omnibus accounts, a financial intermediary
may not have transparency into how long a shareholder has held Class C shares for purposes of determining whether such Class C shares
are eligible for automatic conversion into Class L shares. Thus, the financial intermediary may not have the ability to track
purchases to credit individual shareholders’ holding periods. In these circumstances,
a Fund may not be able to automatically convert Class C shares into Class L shares as described above. In order to determine eligibility
for conversion in these circumstances, it is the responsibility of the shareholder or its financial intermediary to notify the Fund that
the shareholder is eligible for the conversion of Class C shares to Class L shares, and the shareholder or their financial intermediary
may be required to maintain and provide the Fund with records that substantiate the holding period of Class C shares. For clients of financial
intermediaries, it is the financial intermediary’s responsibility (and not the Funds’) to keep records and to ensure that
the shareholder is credited with the proper holding period. Please consult with your financial intermediary about your shares’ eligibility
for this conversion feature. In addition, for shareholders invested in Class C shares through a financial intermediary, Class C shares
may be automatically exchanged for Class L shares of the Fund under the policies of the financial intermediary, as described in Appendix
A of this Prospectus. It is solely the responsibility of the respective financial intermediary to administer and support such transactions.
Please consult your financial intermediary for more information.
Contingent
Deferred Sales Charges for Class L and Class C Shares
As described above, certain investments in Class L
and Class C shares are subject to a contingent deferred sales charge. You will pay the contingent deferred sales charge only on shares
you redeem within the prescribed amount of time after purchase. The contingent deferred sales charge is applied to the NAV at the time
of purchase or redemption, whichever is lower. For purposes of calculating the contingent deferred sales charge, the start of the holding
period is the date on which the purchase is made. Shares you purchase with reinvested dividends or capital gains are not subject to a
contingent deferred sales charge. When shares are redeemed, the Funds will automatically redeem those shares (if any) not subject to a
contingent deferred sales charge and then those you have held the longest. In certain circumstances, contingent deferred sales charges
may be waived, as described below and in the SAI.
Distribution Plan, Shareholder Servicing,
and Payments to Intermediaries
Shares of all classes of the Funds, other than Class L shares, are sold without a front-end
sales charge, and none of the Funds’ shares, other than Class L and Class C shares, are subject to a deferred sales charge. Class
L shares are sold at NAV per share plus an initial sales charge and any contingent deferred sales charge, and Class C shares are sold
at NAV per share plus any contingent deferred sales charge.
Rule 12b-1 fees.
The Funds have adopted a Rule 12b-1 Plan (the “Plan”). Under the
Plan, a Fund may make payments at an annual rate of up to 0.25% of the average daily net assets attributable to its Class L shares and
up to 1.00% of the average daily net assets attributable to its Class C shares. The Plan is a compensation plan, under which the Funds
make payments to the Distributor for the services it provides and for the expenses it bears in connection with the distribution of Class
L and Class C shares, and for the servicing of Class L and Class C shareholders. Because Rule 12b-1 fees are paid out of the Funds’
Class L and Class C assets on an ongoing basis, they will increase the cost of your investment and may cost you more than paying other
types of sales loads. All Class L and Class C shareholders share in the expense of Rule 12b-1 fees paid by those classes. A Fund may pay
distribution fees and other amounts described in this Prospectus at a time when shares of that Fund are unavailable for purchase.
Shareholder servicing payments.
MML Advisers pays all or a portion of the administrative and shareholder services
fee it receives from each Fund, as described above under “Management of the Funds – Investment Adviser,” to intermediaries
as compensation for, or reimbursement of expenses relating to, services provided to shareholders of the Funds.
Payments to intermediaries.
The Distributor and MML Advisers may make payments to financial intermediaries
for distribution and/or shareholder services provided by them. Financial intermediaries are firms that, for compensation, sell shares
of mutual funds, including the Funds, and/or provide certain administrative and account maintenance services
to mutual fund shareholders. Financial intermediaries may include, among others, brokers,
financial planners or advisers, banks, and insurance companies. In some cases, a financial intermediary may hold its clients’ Fund
shares in nominee or street name. Shareholder services provided by a financial intermediary may (though they will not necessarily) include,
among other things: processing and mailing trade confirmations, periodic statements, prospectuses, annual reports, semiannual reports,
shareholder notices, and other SEC-required communications; capturing and processing tax data; issuing and mailing dividend checks to
shareholders who have selected cash distributions; preparing record date shareholder lists for proxy solicitations; collecting and posting
distributions to shareholder accounts; and establishing and maintaining systematic withdrawals and automated investment plans and shareholder
account registrations.
The Distributor and MML Advisers may retain a portion of the Rule 12b-1
payments and/or shareholder servicing payments received by them, or they may pay the full amount to intermediaries. Rule 12b-1 fees
may be paid to financial intermediaries in advance for the first year after Class L and Class C shares are sold. After the first year,
those fees will be paid on a quarterly basis.
The compensation paid to a financial intermediary is typically paid continually
over time, during the period when the intermediary’s clients hold investments in the Funds. The amount of continuing compensation
paid to different financial intermediaries for distribution and/or shareholder services varies. The compensation is typically a percentage
of the value of the financial intermediary’s clients’ investments in the Funds or a per account fee. The variation in compensation
may, but will not necessarily, reflect enhanced or additional services provided by the intermediary.
Additional information.
The Distributor may directly, or through an affiliate, pay a sales concession
of up to 1.00% of the purchase price of Class Y, Class L, and Class C shares to broker-dealers or other financial intermediaries at the
time of sale. However, the total amount paid to broker-dealers or other financial intermediaries at the time of sale,
including any advance of Rule 12b-1 service fees or shareholder services fees, may not be
more than 1.00% of the purchase price.
In addition to the various payments described above, MML Advisers in its discretion
may directly, or through an affiliate, pay up to 0.35% of the amount invested to intermediaries who provide services on behalf of shareholders
of the Funds. This compensation is paid by MML Advisers from its own assets. The payments will be based on criteria established by MML
Advisers and will be paid quarterly, in arrears.
The Distributor, MML Advisers, or MassMutual may also directly, or through
an affiliate, make payments, out of its own assets, to intermediaries, including broker-dealers, insurance agents, and other service providers,
that relate to the sale of shares of the Funds or certain of MassMutual’s variable annuity contracts for which the Funds are underlying
investment options. This compensation may take the form of:
•
Payments to administrative service
providers that provide enrollment, recordkeeping, and other services to pension plans;
•
Cash and non-cash benefits, such
as bonuses and allowances or prizes and awards, for certain broker-dealers, administrative service providers, and MassMutual insurance
agents;
•
Payments to intermediaries for,
among other things, training of sales personnel, conference support, marketing, or other services provided to promote awareness of MassMutual’s
products;
•
Payments to broker-dealers and other intermediaries that enter into
agreements providing the Distributor with access to representatives of those firms or with other marketing or administrative services;
and
•
Payments under agreements with
MassMutual not directly related to the sale of specific variable annuity contracts or the Funds, such as educational seminars and training
or pricing services.
In some instances, compensation may be made available only to certain financial
intermediaries whose representatives have sold or are expected to sell significant amounts of shares. Dealers may not use sales of the
Funds’ shares to qualify for this compensation to the extent prohibited by the laws or rules of any state or any self-regulatory
agency, such as the Financial Industry Regulatory Authority.
These compensation arrangements are not offered to all intermediaries and
the terms of the arrangements may differ among intermediaries.
These arrangements may provide an intermediary with an incentive to recommend
one mutual fund over another, one share class over another, or one insurance or annuity contract over another. You may want to take these
compensation arrangements into account when evaluating any recommendations regarding the Funds or any contract using the Funds as investment
options. You may contact your intermediary to find out more information about the compensation they may receive in connection with your
investment.
The Funds sell their shares at a price equal to their NAV plus any initial sales charge that
applies (see “Determining Net Asset Value” below). The Funds have authorized one or more broker-dealers or other intermediaries
to receive purchase orders on their behalf. Such broker-dealers or other intermediaries may themselves designate other intermediaries
to receive purchase orders on the Funds’ behalf. Your purchase order will be priced at the next NAV calculated after your order
is received in good order by the transfer agent, MML Advisers, such a broker-dealer, or another intermediary authorized for this purpose.
If you purchase shares through a broker-dealer or other intermediary, then, in order for your purchase to be based on a Fund’s next
determined NAV, the broker-dealer or other intermediary must receive your request before the close of regular trading on the New York
Stock Exchange (“NYSE”) (normally, 4:00 p.m. Eastern time), and the broker-dealer or other intermediary must subsequently
communicate the request properly to the Funds. Shares purchased through a broker-dealer or other intermediary may be subject to transaction
and/or other fees. The Funds will suspend selling their shares during any period when the determination of NAV is suspended. The Funds
can reject any purchase order and can suspend purchases if they believe it is in their best interest.
The Funds have authorized one or more broker-dealers
or other intermediaries to receive redemption requests on their behalf. Such broker-dealers or other intermediaries may themselves designate
other intermediaries to receive redemption requests on the Funds’ behalf. The Funds redeem their shares at their next NAV computed
after your redemption request is received by the transfer agent, MML Advisers, such a broker-dealer, or another intermediary. If you redeem
shares through a broker-dealer or other intermediary, then, in order for your redemption price to be based on a Fund’s next determined
NAV, the broker-dealer or other intermediary must receive your request before the close of regular trading on the NYSE, and the broker-dealer
or other intermediary must subsequently communicate the request properly to the Funds. Shares redeemed through a broker-dealer or other
intermediary may be subject to transaction and/or other fees. You will usually receive payment for
your shares within seven days after your redemption request is received
in good order. If, however, you request redemption of shares recently purchased by check, you may not receive payment until the check
has been collected, which may take up to 15 days from time of purchase. Under unusual circumstances, the Funds can also suspend or
postpone payment, when permitted by applicable law and regulations. The Funds’ transfer agent may temporarily delay for more than
seven days the disbursement of redemption proceeds from the Fund account of a “Specified Adult” (as defined in Financial
Industry Regulatory Authority Rule 2165) based on a reasonable belief that financial exploitation of the Specified Adult has occurred,
is occurring, has been attempted, or will be attempted, subject to certain conditions. Under normal circumstances, each Fund expects to
meet redemption requests by using cash or cash equivalents in its portfolio and/or selling portfolio assets to generate cash. Under stressed
market conditions, a Fund may pay redemption proceeds using cash obtained through borrowing arrangements that may be available from time
to time. To the extent consistent with applicable laws and regulations, the Funds reserve the right to satisfy all or a portion of a redemption
request by distributing securities or other property in lieu of cash (“in-kind” redemptions), under both normal and stressed
market conditions. Some Funds may be limited in their ability to use assets other than cash to meet redemption requests due to restrictions
on ownership of their portfolio assets. The securities distributed in an in-kind redemption will be valued in the same manner as they
are valued for purposes of computing the Fund’s NAV. These securities are subject to market risk until they are sold and may increase
or decrease in value prior to converting them into cash. You may incur brokerage and other transaction costs, and could incur a taxable
gain or loss for income tax purposes when converting the securities to cash.
The USA PATRIOT Act may require a Fund, a financial intermediary,
or its authorized designee to obtain certain personal information from you which will be used to verify your identity. If you do not provide
the information, it may not be possible to open an account. If a Fund, a financial intermediary, or authorized designee is unable to
verify your customer information, the Fund reserves the right to close
your account or to take such other steps as it deems reasonable.
Risk of Substantial Redemptions.
If substantial numbers of shares in a Fund were to be redeemed at the same
time or at approximately the same time, the Fund might be required to liquidate a significant portion of its investment portfolio quickly
to meet the redemptions. A Fund might be forced to sell portfolio securities at prices or at times when it would otherwise not have sold
them, resulting in a reduction in the Fund’s NAV; in addition, a substantial reduction in the size of a Fund may make it difficult
for the investment adviser or subadviser to execute its investment program successfully for the Fund for a period following the redemptions.
Similarly, the prices of the portfolio securities of a Fund might be adversely affected if one or more other investment accounts managed
by the investment adviser or subadviser in an investment style similar to that of the Fund were to experience substantial redemptions
and those accounts were required to sell portfolio securities quickly or at an inopportune time.
Exchanges
Generally, you can exchange shares of one Fund for the
same class of shares of another MassMutual Fund, except in the case of the MassMutual U.S. Government
Money Market Fund, MassMutual Total Return Bond Fund, and MM S&P 500®
Index Fund and, with respect to certain series of the MassMutual Premier Funds, in those cases when exchanges are not permitted,
as described in the applicable Prospectus under “Placing Transaction Orders—For Shareholders
holding shares of the Trust prior to November 1, 2004.” Any share class of another series may be exchanged for Class
R5 shares of the MassMutual U.S. Government Money Market Fund. If Class R5 shares of the MassMutual U.S. Government Money Market Fund
are exchanged for Class A shares of another series, any sales charge applicable to those Class A shares will typically apply. For individual
retirement accounts described in Code Section 408, Class R5 shares of the MassMutual U.S. Government Money Market Fund may only be
exchanged for Class A shares of another series (in which case any sales charge applicable to those Class A shares will typically
apply), Class R4 shares of the MassMutual Total Return Bond Fund and MM S&P 500 Index Fund may only be
exchanged for Class A shares of another series (in which case any sales
charge applicable to those Class A shares will typically apply), and Class A shares of any other series may only be exchanged for Class
R4 shares of the MassMutual Total Return Bond Fund and MM S&P 500 Index Fund. An exchange is treated as a sale of shares in one
series and a purchase of shares in another series at the NAV next determined after the exchange request is received and accepted by the
transfer agent, MML Advisers, a broker-dealer, or another intermediary authorized for this purpose. You can only exchange into shares
of another series if you meet any qualification requirements of the series into which you seek to exchange (for example, shares of some
series are not available to purchasers through certain investment channels, and some may be available only to certain types of shareholders).
In addition, in limited circumstances, such as those described above, for certain series the share class available for exchange may not
be the same share class as the series from which you are exchanging. Exchange requests involving a purchase into any series (except the
Global Floating Rate Fund, Global Credit Income Opportunities Fund, Emerging Markets Debt Blended Total Return Fund, MassMutual Strategic
Bond Fund, MassMutual U.S. Government Money Market Fund, MassMutual Inflation-Protected and Income Fund, MassMutual Core Bond Fund, MassMutual
Diversified Bond Fund, MassMutual Short-Duration Bond Fund, and MassMutual High Yield Fund), however, will not be accepted if you have
already made a purchase followed by a redemption involving the same series within the last 60 days. This restriction does not apply
to rebalancing trades executed by any of the MassMutual RetireSMARTSM
by JPMorgan Funds, MassMutual Select T. Rowe Price Retirement Funds, and MassMutual Target Allocation Funds. This restriction also does
not apply to exchanges made pursuant to certain asset allocation programs, systematic exchange programs, and dividend exchange programs.
If you place an order to exchange shares of one series for another through a broker-dealer or other intermediary then, in order for your
exchange to be effected based on the series’ next determined NAVs, the broker-dealer or other intermediary must receive your request
before the close of regular trading on the NYSE, and the broker-dealer or other intermediary must subsequently communicate the request
properly to the MassMutual Funds.
Your right to exchange shares is subject to applicable regulatory requirements or contractual
obligations. The Funds may limit, restrict, or refuse exchange purchases, if, in the opinion of MML Advisers:
•
you have engaged in excessive
trading;
•
a Fund receives or expects simultaneous
orders affecting significant portions of the Fund’s assets;
•
a pattern of exchanges occurs
which coincides with a market timing strategy; or
•
the Fund would be unable to invest
the funds effectively based on its investment objectives and policies or if the Fund would be adversely affected.
The Funds reserve the right to modify or terminate the exchange privilege
as described above on 60 days written notice.
The Funds do not accept purchase, redemption, or exchange orders or compute their NAVs on
days when the NYSE is closed. This includes: weekends, Good Friday, and all federal holidays other than Columbus Day and Veterans Day.
Certain foreign markets may be open on days when the Funds do not accept orders or price their shares. As a result, the NAV of a Fund’s
shares may change on days when you will not be able to buy or sell shares.
Transaction Orders
by Telephone and in Writing
In general, you may purchase, exchange, or sell (redeem) shares on any business
day through your financial intermediary or by contacting the transfer agent in writing or by telephone (“MassMutual Advantage Funds
– (Fund Name),” Attn: Transfer Agent, P.O. Box 1920, Denver, CO80201 or by telephone: 1-855-439-5459).
How to Invest
Outlined below are various methods for buying shares of the Funds:
Method
Instructions
Through your financial intermediary
Your financial intermediary can help you
establish your account and buy shares on your behalf. To receive the current trading day’s price, your financial intermediary must
receive your request in good order prior to the close of regular trading on the New York Stock Exchange, usually 4:00 p.m., Eastern
time. Your financial intermediary may charge you fees for executing the purchase for you.
By exchange
You or your financial
intermediary may acquire shares of a Fund for your account by exchanging shares you own in certain other funds advised by MML Advisers
for shares of the same class of a Fund, subject to the conditions described in “Exchanges” above. In addition, you or your
financial intermediary may exchange shares of a class of a Fund you own for shares of a different class of the same Fund, subject to the
conditions described in “Exchanges.” To exchange, send written instructions to the applicable Fund, at the address noted below(1)
or call 1-855-439-5459.
By wire
You may purchase shares of a Fund by wiring money from your bank account to your Fund account.
Prior to sending wire transfers, please contact Shareholder Services at 1-855-439-5459 for specific wiring instructions and to facilitate
prompt and accurate credit upon receipt of your wire.
To receive the current trading day’s price, your wire, along with a valid account number, must be received
in your Fund account prior to the close of regular trading on the New York Stock Exchange, usually 4:00 p.m., Eastern time.
If your initial purchase of shares is by wire, you must first complete a new account application and promptly
mail it to MassMutual Advantage Funds – (Fund Name), at the address noted below.(1)
After completing a new account application, please call 1-855-439-5459 to obtain your account number. Please include your account number
on the wire.
By electronic funds transfer via an automated
clearing house (“ACH”) transaction(2)
You may purchase shares of a Fund by electronically
transferring money from your bank account to your Fund account by calling 1-855-439-5459. An electronic funds transfer may take up to
two business days to settle and be considered in good order. You must set up this feature prior to your telephone request. Be sure to
complete the appropriate section of the application.
To purchase shares of a
Fund by check, make your check payable to ‘MassMutual Advantage Funds’. Your checks should include the fund name which you
would like to purchase along with your account number (if previously established). Your request should be mailed to the address listed
below.(1)
The Funds will accept purchases only in U.S. dollars drawn from U.S. financial institutions. Cashier’s checks, third party checks,
money orders, credit card convenience checks, cash or equivalents, or payments in foreign currencies are not acceptable forms of payment.
Overnight
Mail: “MassMutual Advantage Funds – (Fund Name),” Attn: Transfer Agent, 1290 Broadway, Suite 1000, Denver, CO80203
(2)
The
redemption of shares purchased by ACH transaction is subject to certain limitations (see “Redemption of Shares”). Any purchase
by ACH transaction that does not clear may be cancelled, and the investor will be responsible for any associated expenses and losses to
the applicable Fund.
Cost Basis Reporting
In the case of individuals holding shares in a Fund directly, upon the redemption or exchange
of shares in a Fund, the Fund or, if a shareholder purchased shares through a financial intermediary, the financial intermediary generally
will be required to provide the shareholder and the Internal Revenue Service (“IRS”) with cost basis and certain other related
tax information about the
Fund shares redeemed or exchanged. Please contact the Funds by calling 1-888-309-3539 or consult
your financial intermediary, as appropriate, for more information regarding available methods for cost basis reporting and how to select
or change a particular method. Please consult your tax adviser to determine which available cost basis method is best for you.
Frequent Trading Policies
Purchases and exchanges of shares of the Funds should be made for investment purposes only.
The Funds discourage, and do not accommodate, excessive trading and/or market timing activity. Excessive trading and/or market timing
activity involving the Funds can disrupt the management of the Funds. These disruptions, in turn, can result in increased expenses and
can have an adverse effect on Fund performance.
The Trustees, on behalf of the Funds, have approved the policies and procedures
adopted by MML Advisers to help identify those individuals or entities MML Advisers determines may be engaging in excessive trading and/or
market timing activities. MML Advisers monitors trading activity to uniformly enforce its procedures. However, those who engage in such
activities may employ a variety of techniques to avoid detection. Therefore, despite MML Advisers’ efforts to prevent excessive
trading and/or market timing trading activities, there can be no assurance that MML Advisers will be able to identify all those who trade
excessively or employ a market timing strategy and curtail their trading in every instance.
The monitoring process involves scrutinizing transactions in fund shares that
exceed certain monetary thresholds or numerical limits within a
specified period of time. Trading activity identified by either, or a combination, of these
factors, or as a result of any other information actually available at the time, will be evaluated to determine whether such activity
might constitute excessive trading and/or market timing activity. When trading activity is determined by a Fund or MML Advisers, in their
sole discretion, to be excessive in nature, certain account-related privileges, such as the ability to place purchase, redemption, and
exchange orders over the internet, may be suspended for such account.
Omnibus Account Limitations. Omnibus
accounts, in which shares are held in the name of an intermediary on behalf of multiple investors, are a common form of holding shares
among retirement plans and other financial intermediaries such as broker-dealers, advisers, and third-party administrators. Not all omnibus
accounts apply the policies and procedures adopted by the Funds and MML Advisers. Some omnibus accounts may have different or less restrictive
policies and procedures regarding frequent trading, or no trading restrictions at all. If you hold your Fund shares through an omnibus
account, that financial intermediary may impose its own restrictions or limitations to discourage excessive trading and/or
market timing activity. You should consult your financial intermediary to find out what trading
restrictions, including limitations on exchanges, may apply. The Funds’ ability to identify and deter excessive trading and/or market
timing activities through omnibus accounts is limited, and the Funds’ success in accomplishing the objectives of the policies concerning
frequent trading of Fund shares in this context depends significantly upon the cooperation of the financial intermediaries. Because the
Funds receive these orders on an aggregated basis and because the omnibus accounts may trade with numerous fund families with differing
frequent trading policies, the Funds are limited in their ability to identify or deter those individuals or entities that may be engaging
in excessive trading and/or market timing activities. While the Funds and MML Advisers encourage those financial intermediaries to apply
the Funds’
policies to their customers who invest indirectly in the Funds, the Funds and MML Advisers
may need to rely on those intermediaries to monitor trading in good faith in accordance with its or the Funds’ policies, since individual
trades in omnibus accounts are often not disclosed to the Funds. While the Funds will generally monitor trading activity at the omnibus
account level to attempt to identify excessive trading and/or market timing activity, reliance on intermediaries increases the risk that
excessive trading and/or market timing activity may go undetected. If evidence of possible excessive trading and/or market timing activity
is observed by the Funds, the financial intermediary that is the registered owner will be asked to review the account activity, and to
confirm to the Funds that appropriate action has been taken to limit any excessive trading and/or market timing activity.
The NAV of each Fund’s shares is determined once daily as of the
close of regular trading on the NYSE, on each Business Day. A “Business Day” is every day the NYSE is open. The NYSE normally
closes at 4:00 p.m. Eastern Time, but may close earlier on some days. If the NYSE is scheduled to close early, the Business Day will be
considered to end as of the time of the NYSE’s scheduled close. A Fund will not treat an intraday disruption in NYSE trading or
other event that causes an unscheduled closing of the NYSE as a close of business of the NYSE for these purposes; instead, MML Advisers
will determine the fair value of a Fund’s securities in accordance with MML Advisers’ fair valuation policy and procedures.
The NYSE currently is not open for trading on New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial
Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Each Fund calculates the
NAV of each of its classes of shares by dividing the total value of the assets attributable to that class, less the liabilities attributable
to that class, by the number of shares of that class that are outstanding. On holidays and other days when the NYSE is closed, each Fund’s
NAV generally is not calculated and the Funds do not anticipate accepting buy or sell orders. However, the value of each Fund’s
assets may still be affected on such days to the extent that a Fund holds foreign securities that trade on days that foreign securities
markets are open.
Equity securities and derivative contracts that are actively
traded on a national securities exchange or contract market are valued on the basis of information furnished by a pricing service, which
provides the last reported sale price, or, in the case of futures contracts, the settlement price, for securities or derivatives listed
on the exchange or contract market or the official closing price on the NASDAQ National Market System (“NASDAQ System”), or
in the case of OTC securities for which an official closing price is unavailable or not reported on the NASDAQ System, the last reported
bid price. Portfolio securities traded on more than one national securities exchange are valued at the last price at the close of the
exchange representing the principal market for such securities. Debt securities are valued on the basis of valuations furnished by a pricing
service, which generally determines
valuations taking into account factors such as institutional-size trading
in similar securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. Shares of
other open-end mutual funds are valued at their closing NAVs as reported on each Business Day.
Investments for which market quotations are readily available
are marked to market daily based on those quotations. Market quotations may be provided by third-party vendors or market makers, and may
be determined on the basis of a variety of factors, such as broker quotations, financial modeling, and other market data, such as market
indexes and yield curves, counterparty information, and foreign exchange rates. U.S. Government and agency securities may be valued on
the basis of market quotations or using a model that may incorporate market observable data such as reported sales of similar securities,
broker quotes, yields, bids, offers, quoted market prices, and reference data. The fair values of OTC derivative contracts, including
forward, swap, and option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices,
or commodity prices, may be based on market quotations or may be modeled using a series of techniques, including simulation models, depending
on the contract and the terms of the transaction. The fair values of asset-backed securities and mortgage-backed securities are estimated
based on models that consider the estimated cash flows of each debt tranche of the issuer, established benchmark yield, and estimated
tranche-specific spread to the benchmark yield based on the unique attributes of the tranche including, but not limited to, prepayment
speed assumptions and attributes of the collateral.
The Trustees have designated MML Advisers as the Funds’
“valuation designee,” responsible for determining the fair value, in good faith, of securities and other instruments held
by the Funds for which market quotations are not readily available or for which such market quotations or values are considered by MML
Advisers or a subadviser to be unreliable (including, for example, certain foreign securities, thinly-traded securities, certain restricted
securities, certain initial public offerings, or securities whose values may have been affected by a significant event). It is possible
that a significant amount of a Fund’s assets will be
subject to fair valuation in accordance with MML Advisers’ fair
valuation policy and procedures. The fair value determined for an investment by MML Advisers may differ from recent market prices for
the investment and may be significantly different from the value realized upon the sale of such investment.
The Funds may invest in securities that are traded principally
in foreign markets and that trade on weekends and other days when the Funds do not price their shares. As a result, the values of the
Funds’ portfolio securities may change on days when the prices of the Funds’ shares are not calculated. The prices of the
Funds’ shares will reflect any such changes when the prices of the Funds’ shares are next calculated, which is the next Business
Day. The Funds may use fair value pricing more frequently for securities primarily traded in foreign markets because, among other things,
most
foreign markets close well before the Funds value their securities. The
earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred
in the interim. The Funds’ investments may be priced based on fair values provided by a third-party vendor, based on certain factors
and methodologies applied by such vendor, in the event that there is movement in the U.S. market, between the close of the foreign market
and the time the Funds calculate their NAVs. All assets and liabilities expressed in foreign currencies are converted into U.S. dollars
at the mean between the buying and selling rates of such currencies against the U.S. dollar at the end of each Business Day.
The Funds’ valuation methods are also described in the SAI.
Taxation and Distributions
Each Fund intends to qualify each year for treatment as a regulated investment
company under Subchapter M of the Code. As a regulated investment company, a Fund will not be subject to U.S. federal income taxes on
its ordinary income and net realized capital gains that are distributed in a timely manner to its shareholders. A Fund’s failure
to qualify as a regulated investment company would result in corporate level taxation, and consequently, a reduction in income available
for distribution to shareholders. In addition, a Fund that fails to distribute at least 98% of its ordinary income for a calendar year
and 98.2% of its capital gain net income recognized during the one-year period ending October 31 plus any retained amount from the
prior year generally will be subject to a non-deductible 4% excise tax on the undistributed amount.
Certain investors, including most tax-advantaged plan
investors, may be eligible for preferential U.S. federal income tax treatment on distributions received from a Fund and dispositions of
Fund shares. This Prospectus does not attempt to describe such preferential tax treatment. Any prospective investor that is a trust or
other entity eligible for special tax treatment under the Code that is considering purchasing shares of a Fund, including either directly
or in connection with a life insurance company separate investment account, should consult its tax advisers about the U.S. federal, state,
local, and foreign tax consequences particular to it, as should persons considering
whether to have amounts held for their benefit
by such trusts or other entities in shares of a Fund.
Investors are generally subject to U.S. federal income
taxes on distributions received in respect of their shares. Distributions are taxed to investors in the manner described herein whether
distributed in cash or additional shares of the Fund. Taxes on distributions of capital gains are determined by how long the Fund owned
(or is deemed to have owned) the investments that generated them, rather than by how long the shareholder held the shares. Distributions
of a Fund’s ordinary income and short-term capital gains (i.e., gains from capital assets held for one year or less) are taxable
to a shareholder as ordinary income. Certain dividends may be eligible for the dividends-received deduction for corporate shareholders
to the extent they are reported as such. Dividends properly reported as capital gain dividends (relating to gains from the sale of capital
assets held by a Fund for more than one year) are taxable in the hands of an investor as long-term capital gain includible in net capital
gain and taxed to individuals at reduced rates. Distributions of investment income reported by a Fund as derived from “qualified
dividend income” will be taxed in the hands of individuals at the rates applicable to long-term capital gain, provided that holding
period and other requirements are met at both the shareholder and Fund level. Distributions from REITs generally do not qualify as qualified
dividend income. Funds investing primarily in fixed income instruments generally do
not expect a significant portion of their distributions to be derived
from qualified dividend income.
The Code generally imposes a 3.8% Medicare contribution tax on the net investment
income of certain individuals, trusts, and estates to the extent their income exceeds certain threshold amounts. For this purpose “net
investment income” generally includes: (i) dividends paid by a Fund, including any capital gain dividends, and (ii) net capital
gains recognized on the sale, redemption, exchange, or other taxable disposition of shares of a Fund. Shareholders are advised to consult
their tax advisers regarding the possible implications of this additional tax on their investment in a Fund.
The nature of each Fund’s distributions will be affected by its investment
strategies. A Fund whose investment return consists largely of interest, dividends, and capital gains from short-term holdings will distribute
largely ordinary income. A Fund whose return comes largely from the sale of long-term holdings will distribute largely capital gain dividends.
Distributions are taxable to a shareholder even though they are paid from income or gains earned by a Fund prior to the shareholder’s
investment and thus were included in the price paid by the shareholder for his or her shares.
Each Fund intends to pay out as dividends substantially all of its net investment
income (which comes from dividends and any interest it receives from its investments). Each Fund also intends to distribute at least annually
substantially all of its net realized long- and short-term capital gains, if any, after giving effect to any available capital loss carryforwards.
For the Global Emerging Markets Equity Fund, distributions, if any, are declared and paid at least annually. For the Global Floating Rate
Fund, Global Credit Income Opportunities Fund, and Emerging Markets Debt Blended Total Return Fund, except with respect to any capital
gains, each Fund intends to declare a dividend daily and to pay out any dividends to shareholders at least monthly. Distributions may
be taken either in cash or in additional shares of the respective Fund at the Fund’s NAV on the first Business Day after the record
date for the distribution, at the option of the shareholder. A shareholder that itself qualifies as a regulated investment company is
permitted to report a portion of its distributions as “qualified dividend income,” provided certain requirements are met.
Any gain resulting from an exchange or redemption of an investor’s
shares in a Fund will generally be subject to tax as long-term or short-term capital gain. A loss incurred with respect to the disposition
of shares of a Fund held for six months or less will be treated as a long-term capital loss to the extent of long-term capital gains
dividends received with respect to such shares.
A Fund’s investments in foreign securities may
be subject to foreign withholding or other taxes. In that case, the Fund’s yield on those securities would be decreased. Shareholders
of a Fund, other than a Fund that makes the election referred to below, generally will not be entitled to claim a credit or deduction
with respect to such foreign taxes. If more than 50% of a Fund’s assets at taxable year end consists of the securities of foreign
corporations, the Fund may be able to elect to “pass through” to its shareholders foreign income taxes that it pays directly
or, under certain circumstances, indirectly through its investments in ETFs or other investment companies that are regulated investment
companies for U.S. federal income tax purposes. If any Fund makes this election, a shareholder of the Fund must include its share of those
taxes in gross income as a distribution from the Fund and the shareholder will be allowed to claim a credit (or a deduction, if the shareholder
itemizes deductions) for such amounts on its U.S. federal tax return subject to certain limitations. Shareholders that are not subject
to U.S. federal income tax, and those who invest in a Fund through tax-advantaged accounts (including those who invest through individual
retirement accounts or other tax-advantaged retirement plans), generally will receive no benefit from any tax credit or deduction passed
through by a Fund. A shareholder that itself qualifies for treatment as a regulated investment company and that qualifies as a “qualified
fund of funds” may elect to pass through to its shareholders a tax credit or deduction passed through by a Fund.
In addition, a Fund’s investments in foreign securities, fixed income
securities, derivatives, or foreign currencies may increase or accelerate the Fund’s recognition of ordinary income and may affect
the timing, amount, or character of the Fund’s distributions.
Certain of a Fund’s investments, including certain debt instruments,
could cause the Fund to recognize taxable income in excess of the cash generated by such investments; a Fund could be required to sell
other investments, including when
not otherwise advantageous to do so, in order to make required distributions.
Distributions by a Fund to shareholders that are not
“United States persons” within the meaning of the Code (“foreign persons”) properly reported by the Fund as (i) capital
gain dividends, (ii) “interest-related dividends” (i.e., U.S.-source interest income that, in general, would not be
subject to U.S. federal income tax if earned directly by an individual foreign shareholder), and (iii) “short-term capital gain
dividends” (i.e., net short-term capital gains in excess of net long-term capital losses), in each case to the extent such
distributions were properly reported as such by the Fund generally are not subject to withholding of U.S. federal income tax. Distributions
by a Fund to
foreign persons other than capital gain dividends, interest-related dividends,
and short-term capital gain dividends generally are subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable
treaty rate). Foreign persons should refer to the SAI for further information, and should consult their tax advisors as to the tax consequences
to them of owning Fund shares.
The discussion above is very general. Shareholders should
consult their tax advisers for more information about the effect that an investment in a Fund could have on their own tax situations,
including possible U.S. federal, state, local, and foreign taxes. Also, as noted above, this discussion does not apply to Fund shares
held through tax-advantaged retirement plans.
The financial highlights
tables are intended to help you understand the Funds’ financial performance for the past 5 years (or shorter periods for newer Funds).
Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor
would have earned on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited
by Deloitte & Touche LLP, an independent registered public accounting firm, whose reports, along with each Fund’s financial
statements, are included in the Trust’s Annual Report, and are incorporated by reference into the SAI, and are available upon request.
MASSMUTUAL GLOBAL FLOATING RATE FUND
Income
(loss) from investment operations
Less
distributions to shareholders
Ratios
/ Supplemental Data
Net
asset value, beginning of the period
Net
investment income (loss)c,j
Net
realized and unrealized gain (loss) on investments
Total
income (loss) from investment operations
From
net investment income
From
net realized gains
Tax
return of capital
Total
distributions
Net
asset value, end of the period
Total
returnm
Net
asset value, end of the period
Ratio
of expenses to average daily net assets before expense waivers (including interest
expense)p
Ratio
of expenses to average daily net assets after expense waivers (including interest
expense)j,p
Ratio
of expenses to average daily net assets after expense waivers (excluding interest
expense)j
Net
investment income (loss) to average daily net assets (including interest expense)p
On December 13, 2021,
the Barings Global Floating Rate Fund (the “Predecessor Fund”) was reorganized into the MassMutual Global Floating Rate Fund
(the “Fund”) and shareholders of the Predecessor Fund received a proportional distribution of the same class of shares, or
Class L shares in the case of Class A shares, of the Fund. Information shown prior to December 13, 2021 is that of the Predecessor Fund,
and is that of the Fund after December 13, 2021. The Predecessor Fund changed its fiscal year end to September 30th
prior to the reorganization.
a
Annualized.
b
Percentage represents
the results for the period and is not annualized.
c
Per share amount calculated
on the average shares method.
j
Computed after giving
effect to agreements by MML Advisers and Barings LLC to waive certain fees and expenses of the Fund and the Predecessor Fund (Note 1),
respectively.
m
Total return excludes
sales charges, if any, and would be lower for the period presented if it reflected these charges.
o
Net expenses reflect
a voluntary expense reimbursement to prevent a negative yield.
p
Interest expense incurred
as a result of entering into line of credit transactions is included in the Fund’s net expenses in the Statements of Operations.
C:
– 79 –
MASSMUTUAL GLOBAL CREDIT INCOME OPPORTUNITIES
FUND
Income
(loss) from investment operations
Less
distributions to shareholders
Ratios
/ Supplemental Data
Net
asset value, beginning of the period
Net
investment income (loss)c,j
Net
realized and unrealized gain (loss) on investments
Total
income (loss) from investment operations
From
net investment income
From
net realized gains
Tax
return of capital
Total
distributions
Net
asset value, end of the period
Total
returnm
Net
asset value, end of the period
Ratio
of expenses to average daily net assets before expense waivers (including interest
expense)p
Ratio
of expenses to average daily net assets after expense waivers (including interest
expense)j,p
Ratio
of expenses to average daily net assets after expense waivers (excluding interest
expense)j
Net
investment income (loss) to average daily net assets (including interest expense)p
On December 13, 2021,
the Barings Global Credit Income Opportunities Fund (the “Predecessor Fund”) was reorganized into the MassMutual Global Credit
Income Opportunities Fund (the “Fund”) and shareholders of the Predecessor Fund received a proportional distribution of the
same class of shares, or Class L shares in the case of Class A shares, of the Fund. Information shown prior to December 13, 2021 is that
of the Predecessor Fund, and is that of the Fund after December 13, 2021. The Predecessor Fund changed its fiscal year end to September
30th prior to the reorganization.
a
Annualized.
b
Percentage represents
the results for the period and is not annualized.
c
Per share amount calculated
on the average shares method.
j
Computed after giving
effect to agreements by MML Advisers and Barings LLC to waive certain fees and expenses of the Fund and the Predecessor Fund (Note 1),
respectively.
m
Total return excludes
sales charges, if any, and would be lower for the period presented if it reflected these charges.
p
Interest expense incurred
as a result of entering into line of credit transactions is included in the Fund’s net expenses in the Statements of Operations.
C:
– 80 –
MASSMUTUAL EMERGING MARKETS DEBT BLENDED TOTAL
RETURN FUND
Income
(loss) from investment operations
Less
distributions to shareholders
Ratios
/ Supplemental Data
Net
asset value, beginning of the period
Net
investment income (loss)c,j
Net
realized and unrealized gain (loss) on investments
Total
income (loss) from investment operations
From
net investment income
From
net realized gains
Tax
return of capital
Total
distributions
Net
asset value, end of the period
Total
returnm
Net
asset value, end of the period
Ratio
of expenses to average daily net assets before expense waivers
Ratio
of expenses to average daily net assets after expense waiversj
Net
investment income (loss) to average daily net assets
On December 13, 2021,
the Barings Emerging Markets Debt Blended Total Return Fund (the “Predecessor Fund”) was reorganized into the MassMutual Emerging
Markets Debt Blended Total Return Fund (the “Fund”) and shareholders of the Predecessor Fund received a proportional distribution
of the same class of shares, or Class L shares in the case of Class A shares, of the Fund. Information shown prior to December 13, 2021
is that of the Predecessor Fund, and is that of the Fund after December 13, 2021. The Predecessor Fund changed its fiscal year end to
September 30th prior to the reorganization.
a
Annualized.
b
Percentage represents
the results for the period and is not annualized.
c
Per share amount calculated
on the average shares method.
j
Computed after giving
effect to agreements by MML Advisers and Barings LLC to waive certain fees and expenses of the Fund and the Predecessor Fund (Note 1),
respectively.
m
Total return excludes
sales charges, if any, and would be lower for the period presented if it reflected these charges.
o
Net expenses reflect
a voluntary expense reimbursement to prevent a negative yield.
C:
– 81 –
MASSMUTUAL GLOBAL EMERGING MARKETS EQUITY FUND
Income
(loss) from investment operations
Less
distributions to shareholders
Ratios
/ Supplemental Data
Net
asset value, beginning of the period
Net
investment income (loss)c,j
Net
realized and unrealized gain (loss) on investments
Total
income (loss) from investment operations
From
net investment income
From
net realized gains
Tax
return of capital
Total
distributions
Net
asset value, end of the period
Total
returnm
Net
asset value, end of the period
Ratio
of expenses to average daily net assets before expense waivers
Ratio
of expenses to average daily net assets after expense waiversj
Net
investment income (loss) to average daily net assets
On December 13, 2021,
the Barings Global Emerging Markets Equity Fund (the “Predecessor Fund”) was reorganized into the MassMutual Global Emerging
Markets Equity Fund (the “Fund”) and shareholders of the Predecessor Fund received a proportional distribution of the same
class of shares, or Class L shares in the case of Class A shares, of the Fund. Information shown prior to December 13, 2021 is that of
the Predecessor Fund, and is that of the Fund after December 13, 2021. The Predecessor Fund changed its fiscal year end to September 30th
prior to the reorganization.
a
Annualized.
b
Percentage represents
the results for the period and is not annualized.
c
Per share amount calculated
on the average shares method.
Total return excludes
sales charges, if any, and would be lower for the period presented if it reflected these charges.
j
Computed after giving
effect to agreements by MML Advisers and Barings LLC to waive certain fees and expenses of the Fund and the Predecessor Fund (Note 1),
respectively.
s
Ratio of net expenses
to average net assets does not include expenses of the underlying fund in which the Predecessor Fund invested.
The 3 Month USD LIBOR (London Interbank
Offered Rate) measures the performance of the U.S. dollardenominated ICE LIBOR rate with a maturity of 3 months. LIBOR indicates the interest
rate that banks pay when they borrow from each other on an unsecured basis. It is fundamental to the operation of both the United Kingdom
and international financial markets, including markets in interest rate derivatives contracts. It is used to determine payments made under
derivatives by a wide range of counterparties including small businesses, large financial institutions, and public authorities. LIBOR
is unmanaged, does not reflect any deduction for fees, expenses, or taxes, and cannot be purchased directly by investors.
The Bloomberg Emerging
Markets Hard Currency (USD) Aggregate Index measures the performance of USD, EUR, and GBP-denominated debt from sovereign, quasi-sovereign,
and corporate Emerging Markets issuers. Country eligibility and classification as Emerging Markets is rules-based and reviewed annually
using the World Bank income group and International Monetary Fund country classifications. The Index does not reflect any deduction for
fees, expenses, or taxes and cannot be purchased directly by investors.
The Credit Suisse Leveraged
Loan Index is designed to mirror the investable universe of the U.S. dollar-denominated leveraged loan market. The Index does not
reflect any deduction for fees, expenses, or taxes and cannot be purchased directly by investors.
The Credit Suisse Western
European Leveraged Loan Index is designed to mirror the investable universe of the Western European leveraged loan market, with
loans denominated in U.S. and Western European currencies. The Index does not reflect any deduction for fees, expenses, or taxes and cannot
be purchased directly by investors.
The Custom Emerging Markets Debt Blended Total
Return Index is a blend of 50% JPMorgan Government Bond Index—Emerging Markets Global Diversified (GBI-EMGD), 30% JPMorgan
EMBI Global Diversified, and 20% JPMorgan CEMBI Broad Diversified. The Index does not reflect any deduction for fees, expenses, or taxes
and cannot be purchased directly by investors.
The Custom Global Loan
Index comprises the market-capitalization weighted average of the Credit Suisse Leveraged Loan Index and the Credit Suisse Western
European Leveraged Loan Index. The Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the U.S. dollar-denominated
leveraged loan market. The Credit Suisse Western European Leveraged Loan Index is designed to mirror the investable universe of the Western
European leveraged loan market, with loans denominated in U.S. and Western European currencies. The Index does not reflect any deduction
for fees, expenses, or taxes and cannot be purchased directly by investors.
The JPMorgan CEMBI Broad Diversified
tracks U.S. dollar-denominated corporate debt issued in emerging market countries. The Index does not reflect any deduction for fees,
expenses, or taxes and cannot be purchased directly by investors.
The JPMorgan EMBI Global Diversified
measures the performance of fixed rate, U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign
entities, including Brady bonds, loans, and Eurobonds. The Diversified version limits the weights of those index countries with larger
debt stocks by only including a specified portion of these countries eligible current face amounts of debt outstanding. The Index does
not reflect any deduction for fees, expenses, or taxes and cannot be purchased directly by investors.
The JPMorgan Government Bond Index—Emerging
Markets Global Diversified (GBI-EMGD) measures the performance of fixed-rate, investment grade local currency debt securities,
including regularly traded, liquid fixed-rate, domestic currency government bonds. The GBI-EMGD consists of treasury securities from emerging
markets and is diversified weighted. The Index does not reflect any deduction for fees, expenses, or taxes and cannot be purchased directly
by investors.
The MSCI Emerging Markets Index measures
the performance of the large- and mid-cap segments of emerging market equity securities. It is free float-adjusted market-capitalization
weighted. The Index does not reflect any deduction for fees or expenses and cannot be purchased directly by investors.
Appendix A: Intermediary-Specific Sales
Charge Reductions and Waivers
Specific intermediaries may have different policies and procedures regarding
the availability of sales charge reductions and waivers, which are discussed below. In all instances, it is the shareholder’s responsibility
to notify the Fund or the shareholder’s financial intermediary at the time of purchase of any relationship or other facts qualifying
the shareholder for sales charge reductions or waivers. For sales charge reductions and waivers not available through a particular intermediary,
shareholders will have to purchase Fund shares directly from the Fund or through another intermediary to receive such reductions or waivers.
JANNEY MONTGOMERY
SCOTT LLC
Effective May 1, 2020, shareholders purchasing fund shares through a Janney
Montgomery Scott LLC (“Janney”) account will be eligible only for the following load waivers (front-end sales charge waivers
and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s
Prospectus or SAI.
Front-end sales charge waivers on Class L shares available
at Janney
•
Shares purchased through reinvestment
of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund
family).
•
Shares purchased by employees
and registered representatives of Janney or its affiliates and their family members as designated by Janney.
•
Shares purchased from the proceeds
of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right
of reinstatement).
•
Class C shares that are no longer
subject to a contingent deferred sales charge and are converted to Class L shares of the same fund pursuant to Janney’s policies
and procedures.
Sales charge waivers on Class L and C shares available at
Janney
Shares sold upon the death or disability of the shareholder.
•
Shares sold as part of a systematic
withdrawal plan as described in the fund’s Prospectus.
•
Shares purchased in connection
with a return of excess contributions from an IRA account.
?
•
Shares sold
as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching a qualified age based
on applicable IRS regulations.
•
Shares sold to pay Janney fees
but only if the transaction is initiated by Janney.
•
Shares acquired through a right
of reinstatement.
Front-end load discounts available at Janney: breakpoints,
and/or rights of accumulation
•
Breakpoints as described in
the fund’s Prospectus.
•
Rights of accumulation (“ROA”),
which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at Janney. Eligible fund family assets not held at Janney may be included in the
ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
Shareholders purchasing Fund shares through a Merrill Lynch platform or account
are eligible only for the following load (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and
discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class L Shares available
at Merrill Lynch
•
Employer-sponsored retirement,
deferred compensation and employee benefits plans (including health savings accounts) and trusts used to fund those plans, provided that
the shares are not held in a commissionbased brokerage account and shares are held for the benefit of the plan.
•
Shares purchased by a 529 Plan
(does not include 529 Plan units or 529-specific share classes or equivalents).
•
Shares purchased through a Merrill
Lynch affiliated investment advisory program.
•
Shares exchanged due to the holdings
moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill
Lynch’s policies relating to sales load discounts and waivers.
•
Shares purchased by third party
investment advisors on behalf of their advisory clients through Merrill Lynch’s platform.
•
Shares of funds purchased through
the Merrill Edge Self-Directed platform (if applicable).
•
Shares purchased through reinvestment
of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund
family).
•
Shares exchanged from Class C
(i.e. level-load) shares of the same fund pursuant to Merrill Lynch’s policies relating to sales load discounts and waivers.
•
Employees and registered representatives
of Merrill Lynch or its affiliates and their family members.
•
Directors or Trustees of the Fund,
and employees of the Fund’s investment adviser or any of its affiliates, as described in the prospectus.
•
Eligible shares purchased from
the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption,
(2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales
load (known as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases made after shares
are automatically sold to pay Merrill Lynch’s account maintenance fees are not eligible for reinstatement.
Contingent Deferred Sales Charge Waivers
on Class L and C Shares available at Merrill Lynch
•
Death or disability of the shareholder.
•
Shares sold as part of a systematic
withdrawal plan as described in this Prospectus.
•
Return of excess contributions
from an IRA Account.
•
Shares sold as part of a required
minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
•
Shares sold to pay Merrill Lynch
fees but only if the transaction is initiated by Merrill Lynch.
•
Shares acquired through a right
of reinstatement.
•
Shares held in retirement brokerage
accounts, that are exchanged for a lower cost share class due to transfer to certain fee based accounts or platforms (applicable to L
and C shares only).
•
Shares received through an exchange
due to the holdings moving from a Merrill Lynch affiliated investment advisory program to a Merrill Lynch brokerage (non-advisory) account
pursuant to Merrill Lynch’s policies relating to sales load discounts and waivers.
Other Discounts available at Merrill Lynch: Breakpoints,
Rights of Accumulation and Letters of Intent
•
Breakpoints as described in
this Prospectus.
•
Rights of Accumulation (ROA) which
entitle shareholders to breakpoint discounts as described in the Fund’s prospectus will be automatically calculated based on the
aggregated holding of fund family assets
held by accounts (including 529 program holdings, where applicable) within
the purchaser’s household at Merrill Lynch. Eligible fund family assets not held at Merrill Lynch may be included in the ROA calculation
only if the shareholder notifies his or her financial advisor about such assets.
•
Letters of Intent (LOI) which
allow for breakpoint discounts based on anticipated purchases within a fund family, through Merrill Lynch, over a 13-month period of time
(if applicable).
MORGAN STANLEY
Shareholders purchasing Fund shares through a Morgan Stanley Wealth Management
transactional brokerage account will be eligible only for the following front-end sales charge waivers with respect to Class L shares,
as applicable, which may differ from and may be more limited than those disclosed elsewhere in this Fund’s Prospectus or SAI.
Front-end Sales Charge Waivers on Class L Shares available
at Morgan Stanley Wealth Management
•
Employer-sponsored retirement
plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer- sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs, or Keogh
plans
•
Morgan Stanley employee and employee-related
accounts according to Morgan Stanley’s account linking rules
•
Shares purchased through reinvestment
of dividends and capital gains distributions when purchasing shares of the same fund
•
Shares purchased through a Morgan
Stanley self-directed brokerage account
•
Class C (i.e., level-load) shares
that are no longer subject to a contingent deferred sales charge and are converted to Class L shares of the same fund, as applicable,
pursuant to Morgan Stanley Wealth Management’s share class conversion program
•
Shares purchased from the proceeds
of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption
and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
RAYMOND JAMES
Intermediary-Defined Sales Charge Waiver Policies
The availability of certain initial or deferred sales charge waivers and discounts
may depend on the particular financial intermediary or type of account through which you purchase or hold Fund shares.
Intermediaries may have different policies and procedures
regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load waivers, which are discussed below.
In all instances, it is the purchaser’s responsibility to notify the fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts. For waivers and discounts
not available through a particular intermediary, shareholders will have to purchase fund shares directly from the fund or through another
intermediary to receive these waivers or discounts.
Raymond James & Associates, Inc., Raymond James Financial
Services, Inc. and each entity’s affiliates (“Raymond James”)
Effective March 1, 2019, shareholders purchasing fund shares through a Raymond
James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James
provides trade execution, clearance, and/or custody services, will be eligible only for the following load waivers (front-end sales charge
waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in
this fund’s prospectus or SAI.
Front-end sales load waivers on Class L shares available
at Raymond James
•
Shares purchased in an investment
advisory program.
•
Shares purchased within the same
fund family through a systematic reinvestment of capital gains and dividend distributions.
Employees and registered representatives of Raymond James or its
affiliates and their family members as designated by Raymond James.
•
Shares purchased from the proceeds
of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption
and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of
Reinstatement).
?
•
A shareholder
in the Fund’s Class C shares will have their shares converted at net asset value to Class L shares (or the appropriate share class)
of the Fund if the shares are no longer subject to a contingent deferred sales charge and the conversion is in line with the policies
and procedures of Raymond James.
Contingent Deferred Sales Charge Waivers
on Classes L and C shares available at Raymond James
•
Death or disability of the shareholder.
•
Shares sold as part of a systematic
withdrawal plan as described in the fund’s prospectus.
•
Return of excess contributions
from an IRA Account.
•
Shares sold as part of a required
minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations
as described in the fund’s prospectus.
•
Shares sold to pay Raymond James
fees but only if the transaction is initiated by Raymond James.
•
Shares acquired through a right
of reinstatement.
Front-end load discounts available at Raymond James: breakpoints,
rights of accumulation, and/or letters of intent
•
Breakpoints as described in
this prospectus.
•
Rights of accumulation which entitle
shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts
within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the
calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets.
•
Letters of intent which allow
for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets
not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial
advisor about such assets.
UBS
Class Y shares may also be available on UBS’s brokerage platform since
it has entered into an agreement with the Funds’ distributor to offer such shares solely when acting as an agent for the investor.
An investor transacting in Class Y may be required to pay a commission and/or other forms of compensation to the broker. Shares of the
Funds are available in other share classes that have different fees and expenses.
WELLS FARGO
Shareholders purchasing Fund shares through a Wells Fargo platform or account
are eligible only for the following load (front-end sales charges waivers and contingent deferred, or back-end sales charge waivers) and
discounts, which may different from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Effective November 1, 2019, Class C Shares of each Fund will automatically
convert into Class L Shares of the same Fund after they have been held for ten years. This automatic conversion will be executed without
any sales charge, fee or other charge. After the conversion takes place, the shares will be subject to all features and expenses of Class
L Shares.
You can learn more about the Funds by reading the Funds’ Annual
and Semiannual Reports and the SAI. You may obtain free copies of this information from
the Funds or from the SEC using one or more of the methods set forth below. In the Annual and Semiannual Reports, you will find a discussion
of market conditions and investment strategies that significantly affected each Fund’s performance during the period covered by
the Report and a listing of each Fund’s portfolio securities as of the end of such period. The SAI provides additional information
about the Funds and will provide you with more detail regarding the organization and operation of the Funds, including their investment
strategies. The SAI is incorporated by reference into this Prospectus and is therefore legally considered a part of this Prospectus.
How to Obtain Information
From the Funds:
You may request information about the Funds free of charge
(including the Annual/Semiannual Reports and the SAI) or make shareholder inquiries by calling 1-888-309-3539 or by writing the Funds,
c/o Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, Massachusetts01111-0001, Attention:
Investment Management Solutions. You may also obtain copies of the Annual/Semiannual Reports and the SAI free of charge at https://www.massmutual.com/funds.
From the SEC:
Information about the Funds (including the Annual/Semiannual Reports and the
SAI) is available on the SEC’s EDGAR database on its Internet site at http://www.sec.gov. You can also get copies of this information,
upon payment of a copying fee, by electronic request at publicinfo@sec.gov.
When obtaining information about the Funds from the SEC, you may find it useful
to reference the
THIS
STATEMENT OF ADDITIONAL INFORMATION (“SAI”) IS NOT A PROSPECTUS. IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS OF
MASSMUTUAL ADVANTAGE FUNDS (THE “TRUST”) DATED FEBRUARY 1, 2023, AS AMENDED FROM TIME TO TIME (THE “PROSPECTUS”).
THIS SAI INCORPORATES HEREIN THE FINANCIAL STATEMENTS OF THE FUNDS BY REFERENCE TO THE TRUST’S ANNUAL REPORT AS OF SEPTEMBER 30,2022 (THE “ANNUAL REPORT”). TO OBTAIN A PROSPECTUS OR AN ANNUAL REPORT, CALL TOLL-FREE 1-888-309-3539, OR WRITE THE TRUST
AT THE ABOVE ADDRESS.
This
SAI relates to the following Funds:
Fund Name
Class
I
Class
Y
Class
L
Class
C
MassMutual Global Floating Rate Fund
BXFIX
BXFYX
BXFAX
BXFCX
MassMutual Global Credit Income Opportunities
Fund
BXITX
BXIYX
BXIAX
BXICX
MassMutual Emerging Markets Debt Blended Total Return Fund
BXEIX
BXEYX
BXEAX
BXECX
MassMutual Global Emerging Markets Equity Fund
BXQIX
BXQYX
BXQAX
BXQCX
No
dealer, salesman or any other person has been authorized to give any information or to make any representations, other than those contained
in this SAI or in the related Prospectus, in connection with the offer contained herein, and, if given or made, such other information
or representation must not be relied upon as having been authorized by the Trust or ALPS Distributors, Inc. (the “Distributor”).
This SAI and the related Prospectus do not constitute an offer by the Trust or by the Distributor to sell or a solicitation of any offer
to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction.
MassMutual
Advantage Funds (the “Trust”) is a professionally managed, open-end investment company. This Statement of Additional Information
(“SAI”) describes the following three diversified series of the Trust: (1) MassMutual Global Floating Rate Fund (“Global
Floating Rate Fund”), (2) MassMutual Global Credit Income Opportunities Fund (“Global Credit Income Opportunities Fund”),
and (3) MassMutual Emerging Markets Debt Blended Total Return Fund (“Emerging Markets Debt Blended Total Return Fund”);
and one non-diversified series of the Trust: MassMutual Global Emerging Markets Equity Fund (“Global Emerging Markets Equity Fund”)
(each individually referred to as a “Fund” or collectively as the “Funds”). Currently, the Trustees have authorized
a total of four separate series. Additional series may be created by the Trustees from time-to-time.
The
Trust is organized under the laws of The Commonwealth of Massachusetts as a Massachusetts business trust pursuant to an Agreement and
Declaration of Trust dated April 26, 2021, as it may be amended from time to time (the “Declaration of Trust”). The investment
adviser for each of the Funds is MML Investment Advisers, LLC (“MML Advisers”). The subadviser for the Funds is Barings
LLC (“Barings”). Barings is an indirect subsidiary of Massachusetts Mutual Life Insurance Company (“MassMutual”).
In addition, Baring International Investment Limited (“BIIL”) serves as a sub-subadviser for the Funds. MML Advisers, Barings,
and BIIL are registered with the Securities and Exchange Commission (the “SEC”) as investment advisers. References in this
SAI to a Fund’s subadviser may include any sub-subadvisers as applicable.
On
December 13, 2021, the assets of each of the Barings Global Floating Rate Fund, Barings Global Credit Income Opportunities Fund, Barings
Emerging Markets Debt Blended Total Return Fund, and Barings Global Emerging Markets Equity Fund (each, a “Predecessor Fund,”
and together the “Predecessor Funds”) were transferred to the Global Floating Rate Fund, Global Credit Income Opportunities
Fund, Emerging Markets Debt Blended Total Return Fund, and Global Emerging Markets Equity Fund (each an “Acquiring Fund”),
respectively, in exchange for shares of the Acquiring Fund and the assumption by that Acquiring Fund of all of the liabilities of the
corresponding Predecessor Fund. Shareholders of the Predecessor Funds received a proportional distribution of shares of the corresponding
Acquiring Fund. At the time of this reorganization, each of the Funds was a newly formed series of the Trust, which at the time, was itself
a newly created Massachusetts business trust.
ADDITIONAL INVESTMENT POLICIES
Each
Fund has a distinct investment objective which it pursues through separate investment policies, as described in the Prospectus and below.
The fundamental investment policies and fundamental investment restrictions of a Fund may not be changed without the vote of a majority
of that Fund’s outstanding voting securities (which, under the Investment Company Act of 1940, as amended (the “1940 Act”)
and the rules thereunder and as used in this SAI and in the Prospectus, means the lesser of (l) 67% of the shares of that Fund present
at a meeting if the holders of more than 50% of the outstanding shares of that Fund are present in person or by proxy, or (2) more
than 50% of the outstanding shares of that Fund). The Board of Trustees of the Trust (the “Board”) may adopt new or amend
or delete existing non-fundamental investment policies and restrictions without shareholder approval. There is no guarantee that any Fund
will achieve its investment objective.
Unless
otherwise specified, each Fund may engage in the investment practices and techniques described below to the extent consistent with such
Fund’s investment objective and fundamental investment restrictions. Not all Funds necessarily will utilize all or any of these
practices and techniques at any one time or at all. Investment policies and restrictions described below are non-fundamental and may be
changed by the Trustees without shareholder approval, unless otherwise noted. For a description of the ratings of corporate debt securities
and money market instruments in which the various Funds may invest, reference should be made to Appendix A.
Asset-Based Securities
A
Fund may invest in debt, preferred, or convertible securities, the principal amount, redemption terms, or conversion terms of which are
related to the market price of some natural resource asset such as gold bullion. These securities are referred to as “asset-based
securities.” If an asset-based security is backed by a bank letter of credit or other similar facility, the investment adviser
or subadviser may take such backing into account in determining the creditworthiness of the issuer. While the market prices for an asset-based
security and the related natural resource asset generally are expected to move in the same direction, there may not be perfect correlation
in the two price movements. Asset-based securities may not be secured by a security interest in or claim on the underlying natural resource
asset. The asset-based securities in which a Fund may invest may bear interest or pay preferred dividends at below market (or even relatively
nominal) rates. Certain asset-based securities may be payable at maturity in cash at the stated principal amount or, at the option of
the holder,
directly in a stated amount
of the asset to which it is related. In such instance, because no Fund presently intends to invest directly in natural resource assets,
a Fund would sell the asset-based security in the secondary market, to the extent one exists, prior to maturity if the value of the stated
amount of the asset exceeds the stated principal amount and thereby realize the appreciation in the underlying asset. Certain restrictions
imposed on the Funds by the Internal Revenue Code of 1986, as amended (the “Code”), may limit the Funds’ ability
to invest in certain natural resource-based securities.
Precious
Metal-Related Securities. A Fund may invest in the equity securities of
companies that explore for, extract, process, or deal in precious metals (e.g., gold, silver, and platinum), and in asset-based securities
indexed to the value of such metals. Such securities may be purchased when they are believed to be attractively priced in relation to
the value of a company’s precious metal-related assets or when the values of precious metals are expected to benefit from inflationary
pressure or other economic, political, or financial uncertainty or instability. Based on historical experience, during periods of economic
or financial instability the securities of companies involved in precious metals may be subject to extreme price fluctuations, reflecting
the high volatility of precious metal prices during such periods. In addition, the instability of precious metal prices may result in
volatile earnings of precious metal-related companies, which may, in turn, adversely affect the financial condition of such companies.
The
major producers of gold include the Republic of South Africa, Russia, Canada, the United States, Brazil, and Australia. Sales of gold
by Russia are largely unpredictable and often relate to political and economic considerations rather than to market forces. Economic,
financial, social, and political factors within South Africa may significantly affect South African gold production.
Bank Capital Securities
A
Fund may invest in bank capital securities. Bank capital securities are issued by banks to help fulfill their regulatory capital requirements.
Many bank capital securities are commonly thought of as hybrids of debt and preferred stock. Some bank capital securities are perpetual
(with no maturity date), callable, and have a cumulative interest deferral feature. This means that under certain conditions, the issuer
bank can withhold payment of interest until a later date, likely increasing the credit and interest rate risks of an investment in those
securities. Investments in bank capital securities are subject to the risks of other debt investments, such as default and non-payment,
as well as certain other risks, such as the risk that bank regulators may force the bank to dissolve, merge, restructure its capitalization,
or take other actions intended to prevent its failure or ensure its orderly resolution. Bank regulators in certain jurisdictions have
broad authorities they may use to prevent the failure of banking institutions or to stabilize the banking industry, all of which may adversely
affect the values of investments in bank capital securities and other bank obligations, including those of other banks.
Bank Loans
A
Fund may invest in bank loans including, for example, corporate loans, loan participations, direct debt, bank debt, and bridge debt. A
Fund may invest in a loan by lending money to a borrower directly as part of a syndicate of lenders. In a syndicated loan, the agent that
originated and structured the loan typically administers and enforces the loan on behalf of the syndicate. In such cases, the agent is
normally responsible for the collection of principal and interest payments from the borrower and the apportionment of these payments to
the credit of all institutions that are parties to the loan agreement. A Fund will generally rely on the agent to receive and forward
to the Fund its portion of the principal and interest payments on the loan. Failure by the agent to fulfill its obligations may delay
or adversely affect receipt of payment by a Fund.
A
Fund may invest in loans through novations, assignments, and participation interests. In a novation, a Fund typically assumes all of the
rights of a lending institution in a loan, including the right to receive payments of principal and interest and other amounts directly
from the borrower and to enforce its rights as a lender directly against the borrower. When a Fund takes an assignment of a loan, the
Fund acquires some or all of the interest of another lender (or assignee) in the loan. In such cases, the Fund may be required generally
to rely upon the assignor to demand payment and enforce rights under the loan. (There may be one or more assignors prior in time to the
Fund.) If a Fund acquires a participation in the loan made by a third party loan investor, the Fund typically will have a contractual
relationship only with the loan investor, not with the borrower. As a result, a Fund may have the right to receive payments of principal,
interest, and any fees to which it is entitled only from the loan investor selling the participation and only upon receipt by such loan
investor of such payments from the borrower. In connection with participations, a Fund generally will have no right to enforce compliance
by the borrower with the terms of the loan agreement, nor any rights with respect to any funds acquired by other loan investors through
set-off against the borrower, and the Fund may not directly benefit from the collateral supporting the loan in which it has purchased
the participation. As a result, a Fund assumes the credit risk of both the borrower and the loan investor selling the participation. In
the event of the insolvency of the loan investor selling a participation, a Fund may be treated as a general creditor of such loan investor.
In addition, because loan participations are not generally rated by
independent credit rating
agencies, a decision by a Fund to invest in a particular loan participation will depend almost exclusively on its investment adviser’s
or subadviser’s credit analysis of the borrower.
Loans
in which a Fund may invest are subject generally to the same risks as debt securities in which the Fund may invest. In addition, loans
in which a Fund may invest, including bridge loans, are generally made to finance internal growth, mergers, acquisitions, stock repurchases,
leveraged buy-outs, and other corporate activities, including bridge loans. A significant portion of the loans purchased by a Fund may
represent interests in loans made to finance highly leveraged corporate acquisitions, known as “leveraged buy-out” transactions,
leveraged recapitalization loans, and other types of acquisition financing. The highly leveraged capital structure of the borrowers in
such transactions may make such loans especially vulnerable to adverse changes in economic or market conditions.
Loans
generally are subject to restrictions on transfer, and only limited opportunities may exist to sell loans in secondary markets. In some
cases, negotiations involved in disposing of indebtedness may require weeks to complete. As a result, a Fund may be unable to sell loans
at a time when it may otherwise be desirable to do so or may be able to sell them only at a price that is less than their fair market
value. The settlement time for certain loans is longer than the settlement time for many other types of investments, and a Fund may not
receive the payment for a loan sold by it until well after the sale; that cash would be unavailable for payment of redemption proceeds
or for reinvestment.
Certain
of the loans acquired by a Fund may involve revolving credit facilities under which a borrower may from time to time borrow and repay
amounts up to the maximum amount of the facility. In such cases, the Fund would have an obligation to advance its portion of such additional
borrowings upon the terms specified in the loan participation. A Fund may be required to fund such advances at times and in circumstances
where the Fund might not otherwise choose to make a loan to the borrower.
The
value of collateral, if any, securing a loan can decline, or may be insufficient to meet the borrower’s obligations or difficult
to liquidate, or a Fund may be prevented or delayed from realizing the collateral. In addition, a Fund’s access to collateral may
be limited by bankruptcy or other insolvency laws. If a secured loan is foreclosed, a Fund could become part owner of any collateral,
and would bear the costs and liabilities associated with owning and disposing of the collateral. A bankruptcy or restructuring can result
in the loan being converted to an equity ownership interest in the borrower. In addition, under legal theories of lender liability, a
Fund potentially might be held liable as a co-lender.
Loans
may not be considered “securities,” and a Fund that purchases a loan may not be entitled to rely on anti-fraud and other
protections under the federal securities laws.
Below Investment Grade Debt Securities
A
Fund may purchase below investment grade debt securities, sometimes referred to as “junk” or “high yield”
bonds. The lower ratings of certain securities held by a Fund reflect a greater possibility that adverse changes in the financial condition
of the issuer, or in general economic conditions, or both, or an unanticipated rise in interest rates, may impair the ability of the issuer
to make payments of interest and principal. The inability (or perceived inability) of issuers to make timely payment of interest and principal
would likely make the values of securities held by the Fund more volatile and could limit the Fund’s ability to sell its securities
at prices approximating the values a Fund had placed on such securities. In the absence of a liquid trading market for securities held
by it, the Fund may be unable at times to establish the fair market value of such securities. The rating assigned to a security by S&P
Global Ratings (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”) does not reflect an
assessment of the volatility of the security’s market value or of the liquidity of an investment in the security. (The term “below
investment grade debt securities” includes securities that are not rated but are considered by a Fund’s investment adviser
or subadviser to be of comparable quality to other below investment grade debt securities.)
Like
those of other fixed income securities, the values of below investment grade debt securities fluctuate in response to changes in interest
rates. Thus, a decrease in interest rates generally will result in an increase in the value of a Fund’s fixed income securities.
Conversely, during periods of rising interest rates, the value of a Fund’s fixed income securities generally will decline. In addition,
the values of such securities are also affected by changes in general economic conditions and business conditions, which are more likely
to lead to a weakened capacity to make principal and interest payments than in the case of higher grade securities. Changes by recognized
rating services in their ratings of any fixed income security and in the ability of an issuer to make payments of interest and principal
may also affect the value of these investments. Changes in the values of portfolio securities generally will not affect cash income derived
from such securities, but will affect the Fund’s net asset value (“NAV”).
Issuers
of below investment grade debt securities are often highly leveraged, so their ability to service their debt obligations during an economic
downturn or during sustained periods of rising interest rates may be impaired. In the past,
economic downturns or increases
in interest rates have, under certain circumstances, resulted in a higher incidence of default by the issuers of these instruments and
are likely to do so in the future, especially in the case of highly leveraged issuers. In addition, such issuers may not have more traditional
methods of financing available to them, and may be unable to repay debt at maturity by refinancing. The risk of loss due to default in
payment of interest or principal by such issuers is significantly greater because such securities frequently are unsecured and subordinated
to the prior payment of senior indebtedness. Certain of the below investment grade debt securities in which a Fund may invest are issued
to raise funds in connection with the acquisition of a company, in so-called “leveraged buy-out” transactions. The highly
leveraged capital structure of such issuers may make them especially vulnerable to adverse changes in economic conditions.
Under
adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, a Fund could find it
more difficult to sell below investment grade debt securities when the Fund’s investment adviser or subadviser believes it advisable
to do so or may be able to sell such securities only at prices lower than might otherwise be available. Consolidation in the financial
services industry has resulted in there being fewer market makers for high yield bonds, which may result in further risk of illiquidity
and volatility with respect to high yield bonds held by a Fund, and this trend may continue in the future. Furthermore, high yield bonds
held by a Fund may not be registered under the Securities Act of 1933, as amended (the “1933 Act”), and, unless so registered,
a Fund will not be able to sell such high yield bonds except pursuant to an exemption from registration under the 1933 Act. This may further
limit the Fund’s ability to sell high yield debt securities or to obtain the desired price for such securities. In many cases,
below investment grade debt securities may be purchased in private placements and, accordingly, will be subject to restrictions on resale
as a matter of contract or under securities laws. Under such circumstances, it may also be more difficult to determine the fair values
of such securities for purposes of computing a Fund’s NAV. In order to enforce its rights in the event of a default by an issuer
of below investment grade debt securities, a Fund may be required to take possession of and manage assets securing the issuer’s
obligations on such securities, which may increase the Fund’s operating expenses and adversely affect the Fund’s NAV. A
Fund may also be limited in its ability to enforce its rights and may incur greater costs in enforcing its rights in the event an issuer
becomes the subject of bankruptcy proceedings. In addition, the Funds’ intention or ability to qualify as “regulated investment
companies” under the Code may limit the extent to which a Fund may exercise its rights by taking possession of such assets.
Certain
securities held by a Fund may permit the issuer at its option to “call,” or redeem, its securities. If an issuer were to
redeem securities held by a Fund during a time of declining interest rates, the Fund may not be able to reinvest the proceeds in securities
providing the same investment return as the securities redeemed.
The
prices for below investment grade debt securities may be affected by legislative and regulatory developments. Below investment grade debt
securities may also be subject to certain risks not typically associated with “investment grade” securities, such as the
following: (i) reliable and objective information about the value of below investment grade debt securities may be difficult to obtain
because the market for such securities may be thinner and less active than that for investment grade obligations; (ii) adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of lower than investment
grade obligations, and, in turn, adversely affect their market; (iii) companies that issue below investment grade debt securities may
be in the growth stage of their development, or may be financially troubled or highly leveraged, so they may not have more traditional
methods of financing available to them; (iv) when other institutional investors dispose of their holdings of below investment grade debt
securities, the general market and the prices for such securities could be adversely affected; and (v) the market for below investment
grade debt securities could be impaired if legislative proposals to limit their use in connection with corporate reorganizations or to
limit their tax and other advantages are enacted.
Borrowings
A
Fund is required at all times to maintain its assets at a level at least three times the amount of all of its borrowings (the “300%
asset coverage test”). Any borrowings that come to exceed the 300% asset coverage requirement will be reduced within three days
(not including Sundays and holidays) to the extent necessary to comply with this requirement.
Money
Market Instruments Generally. The Funds may invest in money market securities,
including money market funds. Money market securities are high-quality, short-term debt instruments that may be issued by the U.S. Government,
corporations, banks, or other entities. They may have fixed, variable, or floating interest rates. Some money market securities in which
the Funds may invest are described below. During the 2008 global financial downturn and the market volatility caused by the coronavirus
outbreak beginning in March 2020, many money market instruments that were thought to be highly liquid became illiquid and lost value.
The U.S. Government and the Federal Reserve System, as well as certain foreign governments and central banks, have taken extraordinary
actions with respect to the financial markets generally and money market instruments in particular. While these actions have stabilized
the markets for these instruments, there can be no assurances that those actions will continue or continue to be effective. If a Fund’s
money market instruments become illiquid, the Fund may be unable to satisfy certain of its obligations or may only be able to do so by
selling other securities at prices or times that may be disadvantageous to do so.
Bank
Obligations. The Funds may invest in bank obligations, including certificates
of deposit, time deposits, bankers’ acceptances, and other short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of foreign banks, domestic savings and loan associations,
and other banking institutions.
Certificates
of deposit (“CDs”) are negotiable certificates evidencing the obligations of a bank to repay funds deposited with it for
a specified period of time. Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time
at a stated interest rate. Time deposits which may be held by the Funds will not benefit from insurance from the Bank Insurance Fund or
the Savings Association Insurance Fund administered by the Federal Deposit Insurance Corporation. Bankers’ acceptances are credit
instruments evidencing the obligation of a bank to pay a draft drawn on it by a customer. These instruments reflect the obligation both
of the bank and the drawer to pay the face amount of the instrument upon maturity. The other short-term obligations may include uninsured,
direct obligations, bearing fixed, floating, or variable interest rates.
The
Funds may invest in certificates of deposit and bankers’ acceptances of U.S. banks and savings and loan associations, London branches
of U.S. banks, and U.S. branches of foreign banks. Obligations of foreign banks and of foreign branches of U.S. banks may be affected
by foreign governmental action, including imposition of currency controls, interest limitations, withholding or other taxes, seizure of
assets, or the declaration of a moratorium or restriction on payments of principal or interest. Foreign banks and foreign branches of
U.S. banks may provide less public information than, and may not be subject to the same accounting, auditing, and financial recordkeeping
standards as, domestic banks.
Cash,
Short-Term Instruments, and Temporary Investments. The Funds may hold a
significant portion of their assets in cash or cash equivalents at the sole discretion of the Fund’s investment adviser or subadviser.
The Funds’ investment adviser or subadvisers will determine the amount of the Funds’ assets to be held in cash or cash equivalents
at their sole discretion, based on such factors as they may consider appropriate under the circumstances. The Funds may hold a portion
of their assets in cash, for example, in order to provide for expenses or anticipated redemption payments or for temporary defensive purposes.
The Funds may also hold a portion of their assets in cash as part of the Funds’ investment programs or asset allocation strategies,
in amounts considered appropriate by the Funds’ investment adviser or subadvisers. To the extent the Funds hold assets in cash
and otherwise uninvested, its investment returns may be adversely affected and the Funds may not achieve their respective investment objectives.
The Funds may invest in high quality money market instruments. The instruments in which the Funds may invest include, without limitation:
(i) short-term obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities (including government-sponsored
enterprises); (ii) CDs, bankers’ acceptances, fixed time deposits, and other obligations of domestic banks (including foreign branches);
(iii) non-convertible corporate debt securities (e.g., bonds and debentures) with remaining maturities at the date of purchase of not
more than one year; (iv) repurchase agreements; and (v) short-term obligations of foreign banks (including U.S. branches).
Commercial
Paper and Short-Term Corporate Debt Instruments. The Funds may invest in
commercial paper (including variable amount master demand notes) consisting of short-term, unsecured promissory notes issued by corporations
to finance short-term credit needs. Commercial paper is usually sold on a discount basis and, other than asset-backed commercial paper,
usually has a maturity at the time of issuance not exceeding nine months. Variable amount master demand notes are demand obligations that
permit the investment of fluctuating amounts at varying market rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the right to vary the amount of the outstanding indebtedness
on the notes. The investment
adviser or subadvisers monitor
on an ongoing basis the ability of an issuer of a demand instrument to pay principal and interest on demand. The Funds also may invest
in non-convertible corporate debt securities (e.g., bonds and debentures) with not more than one year remaining to maturity at the date
of settlement.
Letters
of Credit. Certain of the debt obligations (including municipal securities,
certificates of participation, commercial paper, and other short-term obligations) which the Funds may purchase may be backed by an unconditional
and irrevocable letter of credit of a bank, savings and loan association, or insurance company which assumes the obligation for payment
of principal and interest in the event of default by the issuer.
Commodities
A
Fund may invest directly or indirectly in commodities (such as precious metals or natural gas). Commodity prices can be more volatile
than prices of other types of investments and can be affected by a wide range of factors, including changes in overall market movements,
speculative investors, real or perceived inflationary trends, commodity index volatility, changes in interest rates or currency exchange
rates, population growth and changing demographics, nationalization, expropriation, or other confiscation, changes in the costs of discovering,
developing, refining, transporting, and storing commodities, the success of commodity exploration projects, temporary or long-term price
dislocations and inefficiencies in commodity markets generally or in the market for a particular commodity, international or local regulatory,
political, and economic developments (for example, regime changes and changes in economic activity levels), and developments affecting
a particular region, industry, or commodity, such as drought, floods, or other weather conditions, livestock disease, epidemics, trade
embargoes, energy conservation, competition from substitute products, transportation bottlenecks or shortages, fluctuations in supply
and demand, and tariffs. Exposure to commodities can cause the NAV of a Fund’s shares to decline or fluctuate in a rapid and unpredictable
manner. Commodity prices may be more or less volatile than securities of companies engaged in commodity-related businesses. Investments
in commodity-related companies are subject to the risk that the performance of such companies may not correlate with the broader equity
market or with returns on commodity investments to the extent expected by the investment adviser or subadviser. Such companies may be
significantly affected by import controls, worldwide competition, changes in consumer sentiment, and spending, and can be subject to liability
for, among other things, environmental damage, depletion of resources, and mandated expenditures for safety and pollution control. A liquid
secondary market may not exist for certain commodity investments, which may make it difficult for the Fund to sell them at a desirable
price or at the price at which it is carrying them.
A
Fund may also directly or indirectly use commodity-related derivatives. The values of these derivatives may fluctuate more than the relevant
underlying commodity or commodities or commodity index. A Fund’s investments in commodities or commodity-related derivatives can
be limited by the Fund’s intention to qualify as a regulated investment company for U.S. federal income tax purposes, and can bear
on the Fund’s ability to qualify as such.
Common and Preferred Stocks
Stocks
represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common
stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied,
common stockholders participate in company profits on a pro-rata basis. Profits may be paid out in dividends or reinvested in the company
to help it grow. Increases and decreases in earnings are usually reflected in a company’s stock price, so common stocks generally
have the greatest appreciation and depreciation potential of all corporate securities. Like other equity securities, preferred stock is
subject to the risk that its value may decrease based on actual or perceived changes in the business or financial condition of the issuer.
In addition, changes in interest rates may adversely affect the value of a preferred stock that pays a fixed dividend.
Concentration Policy
For
purposes of each Fund’s concentration limitation as disclosed in this SAI, the Funds apply such policy to direct investments in
the securities of issuers in a particular industry, as determined by a Fund’s investment adviser or subadviser. A Fund’s
investment adviser or subadviser may analyze the characteristics of a particular issuer and security and assign an industry or sector
classification consistent with those characteristics in the event that the third party classification provider used by the investment
adviser or subadviser does not assign a classification or the investment adviser or subadviser, in consultation with the Fund’s
Chief Compliance Officer, determines that another industry or sector classification is more appropriate.
Convertible Securities
The
Funds may invest in debt or preferred equity securities convertible into, or exchangeable for, common stock at a stated price or rate.
Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks
but lower than nonconvertible
securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but
to a lesser degree. In recent years, convertibles have been developed which combine higher or lower current income with options and
other features. Convertible securities are subject to the risks of debt and equity securities.
Cyber Security and Technology
With
the increased use of technologies such as the Internet and the dependence on computer systems to perform business and operational functions,
investment companies (such as the Funds) and their service providers (such as the Funds’ investment adviser, subadvisers, custodian,
and transfer agent) may be prone to operational and information security risks resulting from cyber-attacks and/or technological malfunctions.
In general, cyber-attacks are deliberate, but unintentional events may have similar effects. Cyber-attacks include, among others, stealing
or corrupting data maintained online or digitally, preventing legitimate users from accessing information or services on a website, releasing
confidential information without authorization, and causing operational disruption. Successful cyber-attacks against, or security breakdowns
of, a Fund, the investment adviser, subadviser, custodian, transfer agent, or service provider may adversely affect the Fund or its shareholders.
For instance, cyber-attacks may interfere with the processing of shareholder transactions, affect a Fund’s ability to calculate
its NAV, cause the release of private shareholder information or confidential Fund information, impede trading, cause reputational damage,
and subject the Fund to regulatory fines, penalties or financial losses, reimbursement or other compensation costs, and additional compliance
costs. Cyber-attacks may render records of Fund assets and transactions, shareholder ownership of Fund shares, and other data integral
to the functioning of the Fund inaccessible or inaccurate or incomplete. A Fund may also incur substantial costs for cyber security risk
management in order to prevent cyber incidents in the future. A Fund and its shareholders could be negatively impacted as a result. There
are inherent limitations in business continuity plans and systems designed to minimize the risk of cyber-attacks through the use of technology,
processes, and controls, including the possibility that certain risks have not been identified given the evolving nature of this threat.
The Funds rely on third-party service providers for many of their day-to-day operations, and will be subject to the risk that the protections
and protocols implemented by those service providers will be ineffective to protect the Funds from cyber-attack. The Funds’ investment
adviser does not control the cyber security plans and technology systems put in place by third-party service providers, and such third-party
service providers may have limited indemnification obligations to the Funds’ investment adviser or the Funds, each of whom could
be negatively impacted as a result. Similar types of cyber security risks also are present for issuers of securities in which the Funds
invest, which could result in material adverse consequences for such issuers, and may cause a Fund’s investment in such securities
to lose value.
Debtor-in-Possession Financings
The
Funds may invest in debtor-in-possession financings (commonly known as “DIP financings”) through participation interests
in direct loans, purchase of assignments, and other means. DIP financings are arranged when an entity seeks the protections of the bankruptcy
court under Chapter 11 of the U.S. Bankruptcy Code (“Chapter 11”). These financings allow the entity to continue its
business operations while reorganizing under Chapter 11. Such financings constitute senior liens on an unencumbered security (i.e., a
security not subject to other creditors’ claims). DIP financings are generally subject to the same risks as investments in senior
bank loans and similar debt instruments, but involve a greater risk of loss of principal and interest. For example, there is a risk that
the entity will not emerge from Chapter 11 and be forced to liquidate its assets under Chapter 7 of the U.S. Bankruptcy Code, as well
as a risk that the bankruptcy court will not approve a proposed reorganization plan or will require substantial and unfavorable changes
to an initial plan. In the event of liquidation, a Fund’s only recourse will be against the property securing the DIP financing.
Companies in bankruptcy may also be undergoing significant financial and operational changes that may cause their financial performance
to have elevated levels of volatility. DIP financings may involve payment-in-kind interest or principal interest payments, and a Fund
may receive securities of a reorganized issuer (e.g., common stock, preferred stock, warrants) in return for its investment, which may
include illiquid investments and investments that are difficult to value.
General. Derivatives
are financial instruments whose values are based on the values of one or more underlying indicators, such as a security, asset, currency,
interest rate, or index. Derivative transactions can create investment leverage and may be highly volatile. Losses from derivatives can
be substantially greater than the derivatives’ original cost and can sometimes be unlimited. A Fund may not be able to close out
a derivative transaction at a favorable time or price.
A
Fund’s use of derivative instruments involves risks different from, and possibly greater than, the risks associated with investing
directly in securities and other more traditional investments. Derivative products can be highly specialized instruments that may require
investment techniques and risk analyses different from those associated with investing directly in securities and other more traditional
investments. Derivatives are subject to a number of risks, such as potential changes in value in response to interest rate changes or
other market developments or as a result of the counterparty’s credit quality and the risk that a derivative transaction may not
have the effect or benefit a Fund’s investment adviser or subadviser anticipated. Derivatives also involve the risk of mispricing
or improper valuation and the risk that changes in the value of a derivative may not correlate perfectly with the underlying asset, rate,
or index. When a Fund invests in a derivative instrument, it could lose more than the principal amount invested. Also, suitable derivative
transactions may not be available in all circumstances, and there can be no assurance that a Fund will engage in these transactions to
reduce exposure to other risks when that would be beneficial. Many derivative transactions are entered into “over the counter”
(not on an exchange or contract market); as a result, the value of such a derivative transaction will depend on the ability and
the willingness of the Fund’s counterparty to perform its obligations under the transaction. A liquid secondary market may not
always exist for a Fund’s derivative positions at any time. Use of derivatives may affect the amount, timing, and character of
distributions to shareholders. Although the use of derivatives is intended to enhance a Fund’s performance, it may instead reduce
returns and increase volatility.
A
Fund may be subject to the credit risk of its counterparty to derivative transactions (including repurchase and reverse repurchase agreements)
and to the counterparty’s ability or willingness to perform in accordance with the terms of the transaction. A Fund may be negatively
impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations under such a transaction. A Fund may experience
significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding and a Fund may obtain only limited recovery
or may obtain no recovery in such circumstances. In the event of a counterparty’s (or its affiliate’s) insolvency, the possibility
exists that a Fund’s ability to exercise remedies, such as the termination of transactions, netting of obligations, and realization
on collateral, could be stayed or eliminated under special resolution regimes adopted in the United States, the European Union, the United
Kingdom, and various other jurisdictions. Such regimes provide government authorities with broad authority to intervene when a financial
institution is experiencing financial difficulty. In particular, the regulatory authorities could reduce, eliminate, or convert to equity
the liabilities to a Fund of a counterparty who is subject to such proceedings in the European Union (sometimes referred to as a “bail
in”).
A
Fund may enter into cleared derivatives transactions and/or exchange-traded futures contracts. When a Fund enters into a cleared derivative
transaction and/or an exchange-traded futures contract, it is subject to the credit risk of the clearinghouse and the clearing member
through which it holds its position. The clearing member or the clearinghouse could also fail to perform its obligations, causing losses
to the Fund. Credit risk of market participants with respect to derivatives that are centrally cleared is concentrated in a few clearinghouses
and clearing members. Under current Commodity Futures Trading Commission (“CFTC”) regulations, a clearing member is required
to maintain customers’ assets in omnibus accounts for all of its customers segregated from the clearing member’s proprietary
assets. If, for example, a clearing member fails to segregate customer assets, is unable to satisfy a substantial deficit in a customer
account, or in the event of fraud or misappropriation of customer assets by a clearing member, clearing member customers may be subject
to risk of loss of their funds in the event of that clearing member’s bankruptcy. A Fund might not be fully protected in the event
of the bankruptcy of a Fund’s clearing member because the Fund would be limited to recovering only a pro rata share of the funds
held by the clearing member on behalf of customers. It is not entirely clear how an insolvency proceeding of a clearinghouse, or the clearing
member through which the Fund holds its positions at a clearinghouse, would be conducted, what effect the insolvency proceeding would
have on any recovery by a Fund, and what impact an insolvency of a clearinghouse or clearing member would have on the financial system
more generally.
U.S.
and non-U.S. legislative and governmental authorities, various exchanges, and regulatory and self-regulatory authorities have undertaken
reviews of derivatives trading in recent periods. Among the actions that have been taken or proposed to be taken are new position limits
and reporting requirements, new or more stringent daily price fluctuation limits for futures and options transactions, new or increased
margin and reserve requirements for various types of derivatives transactions, and mandatory clearing, trading, and reporting requirements
for many derivatives. Additional
measures
are under active consideration and as a result there may be further actions that adversely affect the regulation of instruments in which
the Funds invest. Such legislative and regulatory measures may reduce the availability of some types of derivative instruments, may increase
the cost of trading in or maintaining other instruments or positions, and may cause uncertainty in the markets for a variety of derivative
instruments. It is also possible that these or similar measures could potentially limit or completely restrict the ability of a Fund to
use these instruments as a part of its investment strategy. For example, the SEC recently finalized new Rule 18f-4 under the 1940 Act
providing for the regulation of registered investment companies’ use of derivatives and certain related instruments. The ultimate
impact, if any, of the regulation remains unclear, but the new rule, among other things, limits derivatives exposure through one of two
value-at-risk tests and eliminates the asset segregation framework for covering derivatives and certain financial instruments arising
from the SEC’s Release 10666 and ensuing staff guidance. Limited derivatives users (as determined by Rule 18f-4), however, are
not subject to the full requirements under the rule. Legislative and regulatory measures like this and others are evolving and still being
implemented and their effects on derivatives market activities cannot be reliably predicted.
The
CFTC and domestic futures exchanges have established (and continue to evaluate and revise) limits (“position limits”) on
the maximum net long or net short positions which any person, or group of persons acting in concert, may hold or control in particular
contracts. In addition, starting January 1, 2023, federal position limits will apply to swaps that are economically equivalent to futures
contracts that are subject to CFTC-set speculative limits. All positions owned or controlled by the same person or entity, even if in
different accounts, must be aggregated for purposes of complying with position limits. Thus, even if a Fund does not intend to exceed
applicable position limits, it is possible that different clients managed by the investment adviser or subadviser may be aggregated for
this purpose. Therefore, the trading decisions of the investment adviser or subadviser may have to be modified and positions held by a
Fund liquidated in order to avoid exceeding such limits. Any modification of trading decisions or elimination of open positions that may
be required to avoid exceeding such limits may adversely affect the performance of a Fund. A violation of position limits could also lead
to regulatory action materially adverse to a Fund’s investment strategy.
No
Fund has the obligation to enter into derivatives transactions at any time or under any circumstances. In addition, nothing in this SAI
is intended to limit in any way any purpose for which a Fund may enter into any type of derivatives transaction; a Fund may use derivatives
transactions for hedging purposes or generally for purposes of enhancing its investment return.
Foreign Currency
Exchange Transactions
A
Fund may enter into foreign currency exchange transactions for hedging purposes in order to protect against uncertainty in the level of
future foreign currency exchange rates, or for other, non-hedging purposes—for example, a Fund may take a long or short position
with respect to a foreign currency in which none of the Fund’s assets or liabilities are denominated, or where the position is
in excess of the amount of any such assets or liabilities, in order to take advantage of anticipated changes in the relative values of
those currencies. There can be no assurance that appropriate foreign currency transactions will be available for a Fund at any time or
that a Fund will enter into such transactions at any time or under any circumstances even if appropriate transactions are available to
it. A Fund may purchase or sell a foreign currency on a spot (i.e.,
cash) basis at the prevailing spot rate. A Fund may also enter into contracts to deliver in the future an amount of one currency in return
for an amount of another currency (“forward contracts”) and may purchase and sell foreign currency futures contracts. (Foreign
currency futures contracts are similar to financial futures contracts, except that they typically contemplate the delivery of foreign
currencies; see “Financial Futures Contracts,” below.) A Fund may also purchase or sell options on foreign currencies or
options on foreign currency futures contracts.
A
Fund may enter into foreign currency exchange transactions in order to hedge against a change in the values of assets or liabilities denominated
in one or more foreign currencies due to changes in currency exchange rates.
A
Fund may also enter into foreign currency transactions to adjust generally the exposure of its portfolio to various foreign currencies.
For example, a Fund with a large exposure to securities denominated in euros might want to continue to hold those securities, but to trade
its exposure to the euro to exposure to, say, the Japanese Yen. In that case, the Fund might take a short position in the euro and a long
position in the Yen. A Fund may also use foreign currency transactions to hedge the value of the Fund’s portfolio against the Fund’s
benchmark index.
The
value of any currency, including U.S. dollars and foreign currencies, may be affected by complex political and economic factors applicable
to the issuing country. In addition, the exchange rates of foreign currencies (and therefore the values of foreign currency options, forward
contracts, and futures contracts) may be affected significantly, fixed, or supported directly or indirectly by U.S. and foreign government
actions. Government intervention may increase risks involved in purchasing or selling foreign currency options, forward contracts, and
futures contracts, since exchange rates
may not be free to fluctuate
in response to other market forces. Foreign governmental restrictions or taxes could result in adverse changes in the cost of acquiring
or disposing of foreign currencies.
Because
foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in
the use of foreign currency options, investors may be disadvantaged by having to deal in an odd lot market (generally consisting of transactions
of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.
There
is no systematic reporting of last-sale information for foreign currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis. Available quotation information is generally representative
of very large transactions in the interbank market and thus may not reflect relatively smaller transactions (less than $1 million)
where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market.
Currency
Forward and Futures Contracts. A foreign currency forward contract involves
an obligation to deliver in the future, which may be any fixed number of days from the date of the contract as agreed by the parties,
an amount of one currency in return for an amount of another currency, at an exchange rate set at the time of the contract. The contracts
are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A
foreign currency futures contract is a standardized contract for the future delivery of a specified amount of a foreign currency at a
future date at an exchange rate set at the time of the contract. Foreign currency futures contracts traded in the United States are designed
by and traded on exchanges regulated by the CFTC, such as the Chicago Mercantile Exchange. Foreign currency futures contracts will typically
require a Fund to post both initial margin and variation margin.
Foreign
currency forward contracts differ from foreign currency futures contracts in certain respects. For example, the maturity date of a forward
contract may be any fixed number of days from the date of the contract agreed upon by the parties, rather than a predetermined date in
a given month. Forward contracts may be in any amounts agreed upon by the parties rather than predetermined amounts. Also, forward foreign
exchange contracts are traded directly between counterparties, exposing a Fund to credit risk with respect to its counterparty, whereas
foreign currency futures contracts are traded on regulated exchanges. Because foreign currency forward contracts are private transactions
between a Fund and its counterparty, any benefit of such contracts to the Fund will depend upon the willingness and ability of the counterparty
to perform its obligations. In the case of a futures contract, a Fund is subject to the credit risk of the clearinghouse and the clearing
member through which it holds its position as well as the risk that the clearing member or the clearinghouse could also fail to perform
its obligations.
At
the maturity of a forward or futures contract, a Fund will make delivery of the currency or currencies specified in the contract in return
for the other currency or currencies specified in the contract (or, if the contract is a non-deliverable or cash-settled contract, settle
the contract on a net basis) or, at or prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original
forward contract. Closing transactions with respect to futures contracts are effected on a commodities exchange and a clearinghouse associated
with the exchange assumes responsibility for closing out such contracts.
Positions
in foreign currency futures contracts and related options may be closed out only on an exchange or board of trade which provides a market
in such contracts or options. Although a Fund will normally purchase or sell foreign currency futures contracts and related options only
on exchanges or boards of trade where there appears to be an active market, there is no assurance that an active market on an exchange
or board of trade will exist for any particular contract or option or at any particular time. In such event, it may not be possible to
close a futures or related option position and, in the event of adverse price movements, a Fund would continue to be required to make
daily cash payments of variation margin on its futures positions. A Fund’s ability to close out a foreign currency forward contract
will depend on the willingness of its counterparty to engage in an offsetting transaction.
Foreign
Currency Options. Options on foreign currencies operate similarly to options
on securities, and are traded primarily in the over-the-counter (“OTC”) market, although certain options on foreign currencies
may be listed on several exchanges. Although such options will be purchased or written only when an investment adviser or subadviser believes
that a liquid secondary market exists for such options, there can be no assurance that a liquid secondary market will exist for a particular
option at any specific time. Options on foreign currencies are affected by all of those factors which influence exchange rates and investments
generally.
The
value of a foreign currency option is dependent upon the value of the foreign currency and the U.S. dollar, and may have no relationship
to the investment merits of a foreign security.
Foreign Currency
Conversion. Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the “spread”) between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one rate, while offering a lesser rate of exchange should
a Fund desire to resell that currency to the dealer.
Foreign
Currency Swap Agreements. A Fund may enter into currency swaps to protect
against adverse changes in exchange rates between the U.S. dollar and other currencies or as a means of making indirect investments in
foreign currencies. Currency swaps involve the individually negotiated exchange by a Fund with another party of a series of payments in
specified currencies in amounts determined pursuant to the terms of the swap agreement. (See “Swap Agreements and Options on Swap
Agreements,” below.)
Foreign
currency derivatives transactions may be highly volatile and may give rise to investment leverage.
Financial Futures
Contracts
A
Fund may enter into futures contracts, including interest rate futures contracts, securities index futures contracts, and futures contracts
on fixed income securities (collectively referred to as “financial futures contracts”).
A
Fund may use interest rate futures contracts to adjust the interest rate sensitivity (duration) of its portfolio or the credit exposure
of the portfolio. Interest rate futures contracts obligate the long or short holder to take or make delivery of a specified quantity of
a financial instrument, such as a specific fixed income security, during a specified future period at a specified price.
A
Fund may use index futures contracts to hedge against broad market risks to its portfolio or to gain broad market exposure when it holds
uninvested cash or as an inexpensive substitute for cash investments directly in securities or other assets, including commodities and
precious metals. Securities index futures contracts are contracts to buy or sell units of a securities index at a specified future
date at a price agreed upon when the contract is made and are settled in cash.
Positions
in financial futures contracts may be closed out only on an exchange or board of trade which provides a market for such futures.
There
are special risks associated with entering into financial futures contracts. The skills needed to use financial futures contracts effectively
are different from those needed to select a Fund’s investments. There may be an imperfect correlation between the price movements
of financial futures contracts and the price movements of the securities in which a Fund invests. There is also a risk that a Fund will
be unable to close a position in a financial futures contract when desired because there is no liquid market for it.
The
risk of loss in trading financial futures contracts can be substantial due to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. Relatively small price movements in a financial futures contract could have an immediate
and substantial impact, which may be favorable or unfavorable to a Fund. It is possible for a price-related loss to exceed the amount
of a Fund’s margin deposit. An investor could also suffer losses if it is unable to close out a futures contract because of an
illiquid market. Futures are subject to the creditworthiness of the clearing members (i.e., futures commission merchants) and clearing
organizations involved in the transactions.
Although
some financial futures contracts by their terms call for the actual delivery or acquisition of securities at expiration, in most cases
the contractual commitment is closed out before expiration. The offsetting of a contractual obligation is accomplished by purchasing (or
selling as the case may be) on a futures exchange an identical financial futures contract calling for delivery in the same month. Such
a transaction offsets the obligation to make or take delivery. A Fund will incur brokerage fees when it purchases or sells financial futures
contracts, and will be required to maintain margin deposits. If a liquid market does not exist when a Fund wishes to close out a financial
futures contract, it will not be able to do so and will continue to be required to make daily cash payments of variation margin in the
event of adverse price movements.
The
investment adviser has claimed with respect to each Fund an exclusion from the definition of the term “commodity pool operator”
under the Commodity Exchange Act (the “CEA”) and, therefore, is not subject to registration or regulation as a pool operator
under the CEA. For the investment adviser to be eligible to claim such an exclusion, a Fund may only use futures contracts, options on
such futures, commodity options and certain swaps solely for “bona fide hedging purposes” (as defined by the CFTC),
or must limit its use of such instruments for non-bona fide hedging purposes to certain de minimis amounts, as provided by CFTC Rule 4.5.
It is possible that that exclusion may in the future cease to be available with respect to one or more Funds. In any case where the exclusion
is unavailable with respect to a Fund, additional requirements, including CFTC and National Futures Association (“NFA”)-mandated
disclosure, reporting, and
recordkeeping obligations,
would apply with respect to that Fund. Compliance with the CFTC’s regulatory requirements and NFA rules could increase Fund expenses
and potentially adversely affect a Fund’s total return.
Margin
Payments. When a Fund purchases or sells a financial futures contract, it
is required to deposit with the clearing member an amount of cash, U.S. Treasury bills, or other permissible collateral equal to a small percentage
of the amount of the financial futures contract. This amount is known as “initial margin.” The nature of initial margin
is different from that of margin in security transactions in that it does not involve borrowing money to finance transactions. Rather,
initial margin is similar to a performance bond or good faith deposit that is returned to a Fund upon termination of the contract, assuming
the Fund satisfies its contractual obligations.
Subsequent
payments to and from the clearing member occur on a daily basis in a process known as “marking to market.” These payments
are called “variation margin” and are made as the value of the underlying financial futures contract fluctuates. For example,
when a Fund sells an index futures contract and the price of the underlying index rises above the delivery price, the Fund’s position
declines in value. The Fund then pays the clearing member a variation margin payment equal to the difference between the delivery price
of the index futures contract and the value of the index underlying the index futures contract. Conversely, if the price of the underlying
index falls below the delivery price of the contract, the Fund’s futures position increases in value. The clearing member then
must make a variation margin payment equal to the difference between the delivery price of the index futures contract and the value of
the index underlying the index futures contract.
When
a Fund terminates a position in a financial futures contract, a final determination of variation margin is made, additional cash is paid
by or to the Fund, and the Fund realizes a loss or a gain. Such closing transactions involve additional commission costs.
Options
on Financial Futures Contracts. A Fund may purchase and write call and put
options on financial futures contracts. An option on a financial futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a financial futures contract (a long position if the option is a call and a short position if the option
is a put) at a specified exercise price at any time during the period of the option or only at expiration of the option, depending on
the option’s terms. Upon exercise of the option, the holder would assume the underlying futures position and would receive a variation
margin payment of cash or securities approximating the increase in the value of the holder’s option position. If an option is exercised
on the last trading day prior to the expiration date of the option, the settlement will be made entirely in cash. Purchasers of options
who fail to exercise their options prior to or on the exercise date suffer a loss of the premium paid.
Options
on Swaps. Options on swaps (“swaptions”) are similar to options
on securities except that they are traded over-the-counter (i.e., not on an exchange) and the premium paid or received is to buy or grant
the right to enter into a previously agreed upon swap transaction, such as an interest rate or credit default contract. Forward premium
swaption contracts include premiums that have extended settlement dates. The delayed settlement of the premiums is factored into the daily
valuation of the swaption contracts. In the case of interest rate cap and floor contracts, in return for a premium, ongoing payments between
two parties are based on interest rates exceeding a specified rate, in the case of a cap contract, or falling below a specified rate,
in the case of a floor contract.
Special
Risks of Transactions in Financial Futures Contracts and Related Options. Financial
futures contracts entail risks. The risks associated with purchasing and writing put and call options on financial futures contracts can
be influenced by the market for financial futures contracts. An increase in the market value of a financial futures contract on which
the Fund has written an option may cause the option to be exercised. In this situation, the benefit to a Fund would be limited to the
value of the exercise price of the option and the Fund may realize a loss on the option greater than the premium the Fund initially received
for writing the option. In addition, a Fund’s ability to close out an option it has written by entering into an offsetting transaction
depends upon the market’s demand for such financial futures contracts. If a purchased option expires unexercised, a Fund would
realize a loss in the amount of the premium paid for the option.
If
an investment adviser’s or subadviser’s judgment about the general direction of interest rates or markets is wrong, the
overall performance may be poorer than if no financial futures contracts had been entered into.
Liquidity Risks. Positions
in financial futures contracts may be closed out only on the exchange on which such contract is listed. Although the Funds intend to purchase
or sell financial futures contracts for which there appears to be an active market, there is no assurance that a liquid market will exist
for any particular contract or at any particular time. If there is not a liquid market at a particular time, it may not be possible to
close a position in a financial futures contract at such time and, in the event of adverse price movements, a Fund would continue to be
required to make daily cash payments of variation margin.
The
ability to establish and close out positions in options on financial futures contracts will be subject to the development and maintenance
of a liquid market. It is not certain that such a market will develop. Although a Fund generally will purchase only those options for
which there appears to be an active market, there is no assurance that a liquid market on an exchange will exist for any particular option
or at any particular time. In the event no such market exists for particular options, it might not be possible to effect closing transactions
in such options, with the result that a Fund would have to exercise the options in order to realize any profit.
Hedging
Risks. There are several risks in connection with the use by a Fund of financial
futures contracts and related options as a hedging device. One risk arises because of the imperfect correlation between movements in the
prices of the financial futures contracts and options and movements in the underlying securities or index or movements in the prices of
a Fund’s securities which are the subject of a hedge.
Successful
use of financial futures contracts and options by a Fund for hedging purposes is also subject to an investment adviser’s or subadviser’s
ability to predict correctly movements in the direction of the market. It is possible that, where a Fund has purchased puts on financial
futures contracts to hedge its portfolio against a decline in the market, the securities or index on which the puts are purchased may
increase in value and the value of securities held in the portfolio may decline. If this occurred, the Fund would lose money on the puts
and also experience a decline in the value of its portfolio securities. In addition, the prices of financial futures contracts, for a
number of reasons, may not correlate perfectly with movements in the underlying securities or index due to certain market distortions.
First, all participants in the futures market are subject to margin deposit requirements. Such requirements may cause investors to close
financial futures contracts through offsetting transactions which could distort the normal relationship between the underlying security
or index and futures markets. Second, the margin requirements in the futures markets are less onerous than margin requirements in the
securities markets in general, and as a result the futures markets may attract more speculators than the securities markets do. Increased
participation by speculators in the futures markets may also cause temporary price distortions. Due to the possibility of price distortion,
even a correct forecast of general market trends by an investment adviser or subadviser still may not result in a successful hedging transaction
over a very short time period.
Other
Risks. A Fund will incur brokerage fees in connection with its transactions
in financial futures contracts and related options. In addition, while financial futures contracts and options on financial futures contracts
will be purchased and sold to reduce certain risks, those transactions themselves entail certain other risks. Thus, while a Fund may benefit
from the use of financial futures contracts and related options, unanticipated changes in interest rates or stock price movements may
result in a poorer overall performance for the Fund than if it had not entered into any financial futures contracts or options transactions.
Moreover, in the event of an imperfect correlation between the position in the financial futures contract and the portfolio position that
is intended to be protected, the desired protection may not be obtained and the Fund may be exposed to risk of loss.
Swap Agreements and
Options on Swap Agreements
A
Fund may engage in swap transactions, including interest rate swap agreements, credit default swaps, and total return swaps.
Swap
agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than
one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments or rates, which may be adjusted for an interest factor. The
gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional
amount” (i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate
or in a “basket” of securities representing a particular index). When a Fund enters into an interest rate swap, it typically
agrees to make payments to its counterparty based on a specified long- or short-term interest rate, and will receive payments from its
counterparty based on another interest rate. Other forms of swap agreements include, among others, interest rate caps, under which, in
return for a specified payment stream, one party agrees to make payments to the other to the extent that interest rates exceed a specified
rate, or “cap”; interest rate floors, under which, in return for a specified payment stream, one party agrees to make payments
to the other to the extent that interest rates fall below a specified rate, or “floor”; interest rate collars, under which
a party sells a cap and purchases a floor or vice versa in an
attempt to protect itself
against interest rate movements exceeding given minimum or maximum levels; and curve cap swaps, under which a party might buy or sell
protection against an increase in long-term interest rates relative to shorter-term rates. A Fund may enter into an interest rate swap
in order, for example, to hedge against the effect of interest rate changes on the value of specific securities in its portfolio, or to
adjust the interest rate sensitivity (duration) or the credit exposure of its portfolio overall, or otherwise as a substitute for a direct
investment in debt securities.
A
Fund may enter into total return swaps. In a total return swap, one party typically agrees to pay to the other a short-term interest rate
in return for a payment at one or more times in the future based on the increase in the value of an underlying security or other asset,
or index of securities or assets; if the underlying security, asset, or index declines in value, the party that pays the short-term interest
rate must also pay to its counterparty a payment based on the amount of the decline. A Fund may take either side of such a swap, and so
may take a long or short position in the underlying security, asset, or index. A Fund may enter into a total return swap to hedge against
an exposure in its portfolio (including to adjust the duration or credit quality of a Fund’s bond portfolio) or generally to put
cash to work efficiently in the markets in anticipation of, or as a replacement for, cash investments. A Fund may also enter into a total
return swap to gain exposure to securities or markets in which it might not be able to invest directly (in so-called market access transactions).
A Fund may also enter into contracts for difference, which are similar to total return swaps.
A
Fund also may enter into credit default swap transactions. In a credit default swap, one party provides what is in effect insurance against
a default or other adverse credit event affecting an issuer of debt securities (typically referred to as a “reference entity”).
In general, the protection “buyer” in a credit default swap is obligated to pay the protection “seller” an
upfront amount or a periodic stream of payments over the term of the swap. If a “credit event” occurs, the buyer has the
right to deliver to the seller bonds or other obligations of the reference entity (with a value up to the full notional value of the swap),
and to receive a payment equal to the par value of the bonds or other obligations. Credit events that would trigger a request that the
seller make payment are specific to each credit default swap agreement, but generally include bankruptcy, failure to pay, restructuring,
obligation acceleration, obligation default, or repudiation/moratorium. A Fund may be either the buyer or seller in a credit default swap
transaction. When a Fund buys protection, it may or may not own securities of the reference entity. If it does own securities of the reference
entity, the swap serves as a hedge against a decline in the value of the securities due to the occurrence of a credit event involving
the issuer of the securities. If the Fund does not own securities of the reference entity, the credit default swap may be seen to create
a short position in the reference entity. If a Fund is a buyer and no credit event occurs, the Fund will typically recover nothing under
the swap, but will have had to pay the required upfront payment and stream of continuing payments under the swap. When a Fund sells protection
under a credit default swap, the position may have the effect of creating leverage in the Fund’s portfolio through the Fund’s
indirect long exposure to the issuer or securities on which the swap is written. When a Fund sells protection, it may do so either to
earn additional income or to create such a “synthetic” long position. Credit default swaps involve general market risks,
illiquidity risk, counterparty risk, and credit risk.
A
Fund may also enter into options on swap agreements (“swaptions”). A swaption is a contract that gives a counterparty the
right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap
agreement, at some designated future time on specified terms. A Fund may write (sell) and purchase put and call swaptions. Depending on
the terms of the particular option agreement, a Fund will generally incur a greater degree of risk when it writes a swaption than it will
incur when it purchases a swaption. When a Fund purchases a swaption, it risks losing only the amount of the premium it has paid should
it decide to let the option expire unexercised. However, when a Fund writes a swaption, upon exercise of the option the Fund will become
obligated according to the terms of the underlying agreement. A Fund may enter into swaptions for the same purposes as swaps.
Whether
a Fund’s use of swap agreements or swaptions will be successful will depend on the investment adviser’s or subadviser’s
ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Moreover,
a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of
a swap agreement counterparty. Certain restrictions imposed on the Funds by the Code may limit the Funds’ ability to use swap agreements.
Swaps
are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated
with traditional investments. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index but
also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. Because they
are two party contracts that may be subject to contractual restrictions on transferability and termination and because they may have terms
of greater than seven days, swap agreements may be considered to be illiquid and subject to a Fund’s limitation on investments
in illiquid securities. To the extent that a swap is not liquid, it may not be possible to initiate a transaction or liquidate a position
at an advantageous time or price, which may result in significant losses.
Like most
other investments, swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to
a Fund’s interest. A Fund bears the risk that an investment adviser or subadviser will not accurately forecast future market trends
or the values of assets, reference rates, indexes, or other economic factors in establishing swap positions for the Fund. If an investment
adviser or subadviser attempts to use a swap as a hedge against, or as a substitute for, a portfolio investment, the Fund will be exposed
to the risk that the swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial
losses for the Fund. While hedging strategies involving swap instruments can reduce the risk of loss, they can also reduce the opportunity
for gain or even result in losses by offsetting favorable price movements in other Fund investments. Many swaps are complex and often
valued subjectively.
When
a Fund enters into swap agreements, it is subject to the credit risk of its counterparty and to the counterparty’s ability or willingness
to perform in accordance with the terms of the agreement. A Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise
fails to perform its obligations under a swap agreement. A Fund may experience significant delays in obtaining any recovery in a bankruptcy
or other reorganization proceeding and a Fund may obtain only limited recovery or may obtain no recovery in such circumstances.
Options, Rights,
and Warrants
A
Fund may purchase and sell put and call options on securities to enhance investment performance or to protect against changes in market
prices. A Fund that invests in debt securities may also purchase and sell put and call options to adjust the interest rate sensitivity
of its portfolio or the credit exposure of the portfolio.
Call
Options. A Fund may write call options on portfolio securities to realize
a greater current return through the receipt of premiums. Such option transactions may also be used as a limited form of hedging against
a decline in the price of securities owned by the Fund.
A
call option gives the holder the right to purchase, and obligates the writer to sell, a security at the exercise price at any time before
the expiration date in the case of an American-style option or only on the expiration date in the case of a European-style option. A Fund
may write covered call options or uncovered call options. A call option is “covered” if the writer, at all times while obligated
as a writer, either owns the underlying securities (or comparable securities satisfying the cover requirements of the securities exchanges),
or has the right to acquire such securities through immediate conversion of securities. When a Fund has written an uncovered call option,
the Fund will not necessarily hold securities offsetting the risk to the Fund. As a result, if the call option were exercised, the Fund
might be required to purchase the security that is the subject of the call at the market price at the time of exercise. The Fund’s
exposure on such an option is theoretically unlimited. There is also a risk, especially with less liquid preferred and debt securities,
that the security may not be available for purchase.
A
Fund will receive a premium from writing a call option, which increases the Fund’s return in the event the option expires unexercised
or is closed out at a profit. The amount of the premium reflects, among other things, the relationship between the exercise price and
the current market value of the underlying security, the volatility of the underlying security, the amount of time remaining until expiration,
current interest rates, and the effect of supply and demand in the options market and in the market for the underlying security.
In
return for the premium received when it writes a covered call option, a Fund takes the risk during the life of the option that it will
be required to deliver the underlying security at a price below the current market value of the security or, in the case of a covered
call option, to give up some or all of the opportunity to profit from an increase in the market price of the securities covering the call
option.
In
the case of a covered option, the Fund also retains the risk of loss should the price of the securities decline. If the covered option
expires unexercised, the Fund realizes a gain equal to the premium, which may be offset by a decline in price of the underlying security.
If the option is exercised, the Fund realizes a gain or loss equal to the difference between the Fund’s cost for the underlying
security and the proceeds of sale (exercise price minus commissions) plus the amount of the premium.
A
Fund may enter into closing purchase transactions in order to realize a profit or limit a loss on a previously written call option or,
in the case of a covered call option, to free itself to sell the underlying security or to write another call on the security, or protect
a security from being called in an unexpected market rise. Any profits from a closing purchase transaction in the case of a covered call
option may be offset by a decline in the value of the underlying security. Conversely, because increases in the market price of a call
option will generally reflect increases in the market price of the underlying security, any loss resulting from a closing purchase transaction
relating to a covered call option is likely to be offset in whole or in part by unrealized appreciation of the underlying security owned
by the Fund.
Put Options. A
Fund may write put options in order to enhance its current return by taking a long directional position as to a security or index of securities.
Such options transactions may also be used as a limited form of hedging against an increase in the price of securities that the Fund plans
to purchase. A put option gives the holder the right to sell, and obligates the writer to buy, a security at the exercise price. A Fund
may write covered or uncovered put options. A put option is “covered” if the writer segregates cash and high-grade short-term
debt obligations or other permissible collateral equal to the price to be paid if the option is exercised.
By
writing a put option, the Fund assumes the risk that it may be required to purchase the underlying security for an exercise price higher
than its then current market value, resulting in a potential capital loss unless the security later appreciates in value. A Fund may terminate
a put option that it has written before it expires by entering into a closing purchase transaction. Any loss from this transaction may
be partially or entirely offset by the premium received on the terminated option.
Purchasing
Put and Call Options. A Fund may also purchase put options to protect portfolio
holdings against a decline in market value. This protection lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any decline in its market price. A Fund may also purchase
a put option hoping to profit from an anticipated decline in the value of the underlying security. In order for a put option to be profitable,
the market price of the underlying security must decline sufficiently below the exercise price to cover the premium and transaction costs
that the Fund must pay. If the Fund holds the security underlying the option, these costs will reduce any profit the Fund might have realized
had it sold the underlying security instead of buying the put option.
A
Fund may purchase call options to hedge against an increase in the price of securities that the Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Fund, as holder of the call option, is able to buy the underlying
security at the exercise price regardless of any increase in the underlying security’s market price. A Fund may also purchase a
call option as a long directional investment hoping to profit from an anticipated increase in the value of the underlying security. In
order for a call option to be profitable, the market price of the underlying security must rise sufficiently above the exercise price
to cover the premium and transaction costs. These costs will reduce any profit the Fund might have realized had it bought the underlying
security at the time it purchased the call option.
A
Fund may also buy and sell combinations of put and call options on the same underlying security to earn additional income.
A
Fund may purchase or sell “structured options,” which may comprise multiple option exposures within a single security. The
risk and return characteristics of a structured option will vary depending on the nature of the underlying option exposures. The Fund
may use such options for hedging purposes or as a substitute for direct investments in options or securities. The Fund’s use of
structured options may create investment leverage.
Options
on Foreign Securities. A Fund may purchase and sell options on foreign securities
if an investment adviser or subadviser believes that the investment characteristics of such options, including the risks of investing
in such options, are consistent with the Fund’s investment objective. It is expected that risks related to such options will not
differ materially from risks related to options on U.S. securities. However, position limits and other rules of foreign exchanges may
differ from those in the United States. In addition, options markets in some countries, many of which are relatively new, may be less
liquid than comparable markets in the United States.
Options
on Securities Indexes. A Fund may write or purchase options on securities
indexes, subject to its general investment restrictions regarding options transactions. Index options are similar to options on individual
securities in that the purchaser of an index option acquires the right to buy (in the case of a call) or sell (in the case of a put),
and the writer undertakes the obligation to sell or buy (as the case may be), units of an index at a stated exercise price during the
term of the option. Instead of giving the right to take or make actual delivery of securities, the holder of an index option has the right
to receive a cash “exercise settlement amount.” This amount is equal to the amount by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a call) the closing value of the underlying index on the date
of the exercise, multiplied by a fixed “index multiplier.” If the Fund has written an index call option, it will lose money
if the index level rises above the option exercise price (plus the amount of the premium received by the Fund on the option). If the Fund
has written an index put option, it will lose money if the index level falls below the option exercise price (less the amount of the premium
received by the Fund).
In
cases where a Fund uses index options for hedging purposes, price movements in securities which a Fund owns or intends to purchase probably
will not correlate perfectly with movements in the level of a securities index and, therefore, a Fund bears the risk of a loss on a securities
index option which is not completely offset by movements in the price of such securities. Because securities index options are settled
in cash, a call writer cannot determine the amount of its settlement
obligations in advance and,
unlike call writing on a specific security, cannot provide in advance for, or cover, its potential settlement obligations by acquiring
and holding underlying securities. A Fund may, however, cover call options written on a securities index by holding a mix of securities
which substantially replicate the movement of the index or by holding a call option on the securities index with an exercise price no
higher than the call option sold.
A
Fund may purchase or sell options on stock indexes in order to close out its outstanding positions in options on stock indexes which it
has purchased. A Fund may also allow such options to expire unexercised.
Risks
Involved in the Sale of Options. The successful use of a Fund’s options
strategies depends on the ability of an investment adviser or subadviser to forecast correctly interest rate and market movements. For
example, if a Fund were to write a covered call option based on an investment adviser’s or subadviser’s expectation that
the price of the underlying security would fall, but the price were to rise instead, the Fund could be required to sell the security upon
exercise at a price below the current market price. Similarly, if a Fund were to write a put option based on an investment adviser’s
or subadviser’s expectation that the price of the underlying security would rise, but the price were to fall instead, the Fund
could be required to purchase the security upon exercise at a price higher than the current market price.
When
a Fund purchases an option, it runs the risk that it will lose its entire investment in the option in a relatively short period of time,
unless the Fund exercises the option or enters into a closing sale transaction before the option’s expiration. If the price of
the underlying security does not rise (in the case of a call) or fall (in the case of a put) to an extent sufficient to cover the option
premium and transaction costs, the Fund will lose part or all of its investment in the option. This contrasts with an investment by a
Fund in the underlying security, since the Fund will not realize a loss if the security’s price does not change.
The
effective use of options also depends on a Fund’s ability to terminate option positions at times when an investment adviser or
subadviser deems it desirable to do so. There is no assurance that a Fund will be able to effect closing transactions at any particular
time or at an acceptable price.
If
a secondary market in options were to become unavailable, a Fund could no longer engage in closing transactions. Lack of investor interest
might adversely affect the liquidity of the market for particular options or series of options. A market may discontinue trading of a
particular option or options generally. In addition, a market could become temporarily unavailable if unusual events—such as volume
in excess of trading or clearing capability—were to interrupt its normal operations.
A
market may at times find it necessary to impose restrictions on particular types of options transactions, such as opening transactions.
If an underlying security ceases to meet qualifications imposed by the market or the Options Clearing Corporation, new series of options
on that security will no longer be opened to replace expiring series, and opening transactions in existing series may be prohibited. If
an options market were to become unavailable, a Fund as a holder of an option would be able to realize profits or limit losses only by
exercising the option, and the Fund, as option writer, would remain obligated under the option until expiration or exercise.
Disruptions
in the markets for the securities underlying options purchased or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security is normally halted as well. As a result, a Fund as purchaser
or writer of an option will be unable to close out its positions until options trading resumes, and it may be faced with considerable
losses if trading in the security reopens at a substantially different price. In addition, the Options Clearing Corporation or other options
markets may impose exercise restrictions. If a prohibition on exercise is imposed at the time when trading in the option has also been
halted, a Fund as purchaser or writer of an option will be locked into its position until one of the two restrictions has been lifted.
If the Options Clearing Corporation were to determine that the available supply of an underlying security appears insufficient to permit
delivery by the writers of all outstanding calls in the event of exercise, it may prohibit indefinitely the exercise of put options. A
Fund, as holder of such a put option, could lose its entire investment if the prohibition remained in effect until the put option’s
expiration.
Foreign-traded
options are subject to many of the same risks presented by internationally-traded securities. In addition, because of time differences
between the United States and various foreign countries, and because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when U.S. markets are closed. As a result, option premiums may not reflect the
current prices of the underlying interest in the United States.
Exchanges
have established limits on the maximum number of options an investor or group of investors acting in concert may write. The Funds, an
investment adviser or subadviser, and other clients of the investment adviser or subadviser may constitute such a group. These limits
restrict a Fund’s ability to purchase or sell particular options.
Over-the-Counter
Options. A Fund may purchase or sell OTC options. OTC options are not traded
on securities or options exchanges or backed by clearinghouses. Rather, they are entered into directly between a Fund and the counterparty
to the option. In the case of an OTC option purchased by the Fund, the value of the option to the Fund will depend on the willingness
and ability of the option writer to perform its obligations to the Fund. In addition, OTC options may not be transferable and there may
be little or no secondary market for them, so they may be considered illiquid. It may not be possible to enter into closing transactions
with respect to OTC options or otherwise to terminate such options, and as a result a Fund may be required to remain obligated on an unfavorable
OTC option until its expiration. It may be difficult under certain circumstances to value OTC options.
Rights
and Warrants to Purchase Securities; Index Warrants; International. A Fund
may invest in rights and warrants to purchase securities. Rights or warrants generally give the holder the right to receive, upon exercise,
a security at a stated price. Funds typically use rights and warrants in a manner similar to their use of options on securities, as described
above. Risks associated with the use of rights or warrants are generally similar to risks associated with the use of options. Rights and
warrants typically do not carry with them dividend or voting rights with respect to the underlying securities, or any rights in the assets
of the issuer. In addition, the value of a right or a warrant will likely, but will not necessarily, change with the value of the underlying
securities, and a right or a warrant ceases to have value if it is not exercised prior to its expiration date.
Bonds
issued with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some
degree, reflect the performance of the underlying stock. Bonds also may be issued with warrants attached to purchase additional fixed
income securities.
A
Fund may also invest in equity-linked warrants. A Fund purchases equity-linked warrants from a broker, who in turn is expected to purchase
shares in the local market. If the Fund exercises its warrant, the shares are expected to be sold and the warrant redeemed with the proceeds.
Typically, each warrant represents one share of the underlying stock. Therefore, the price and performance of the warrant are directly
linked to the underlying stock, less transaction costs. In addition to the market risk related to the underlying holdings, a Fund bears
counterparty risk with respect to the issuing broker. There is currently no active trading market for equity-linked warrants, and they
may be highly illiquid.
In
addition to warrants on securities, a Fund may purchase put warrants and call warrants whose values vary depending on the change in the
value of one or more specified securities indexes (“index-linked warrants”). Index-linked warrants are generally issued
by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise
of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value
of the underlying index rises above the exercise price of the index-linked warrant, the holder of a call warrant will be entitled to receive
a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant;
if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon
exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not
be entitled to any payments from the issuer at any time when, in the case of a call warrant, the exercise price is greater than the value
of the underlying index, or, in the case of a put warrant, the exercise price is less than the value of the underlying index. If a Fund
were not to exercise an index-linked warrant prior to its expiration, then the Fund would lose the amount of the purchase price paid by
it for the warrant.
A
Fund using index-linked warrants would normally do so in a manner similar to its use of options on securities indexes. The risks of a
Fund’s use of index-linked warrants are generally similar to those relating to its use of index options. Unlike most index options,
however, index-linked warrants are issued in limited amounts and are not obligations of a regulated clearing agency, but are backed only
by the credit of the bank or other institution that issues the warrant. Also, index-linked warrants may have longer terms than index options.
Index-linked warrants are not likely to be as liquid as certain index options backed by a recognized clearing agency. In addition, the
terms of index-linked warrants may limit a Fund’s ability to exercise the warrants at such time, or in such quantities, as the
Fund would otherwise wish to do.
A
Fund may make indirect investments in foreign equity securities, through international warrants, participation notes, low exercise price
warrants, or other products that allow the Fund to access investments in foreign markets that would otherwise be unavailable to them.
International warrants are financial instruments issued by banks or other financial institutions, which may or may not be traded on a
foreign exchange. International warrants are a form of derivative security that may give holders the right to buy or sell an underlying
security or a basket of securities from or to the issuer for a particular price or may entitle holders to receive a cash payment relating
to the value of the underlying security or basket of securities. International warrants are similar to options in that they are exercisable
by the holder for an underlying security or securities or the value of the security or securities, but are generally exercisable over
a longer term than typical options.
These types of instruments
may be American style exercise, which means that they can be exercised at any time on or before the expiration date of the international
warrant, or European style exercise, which means that they may be exercised only on the expiration date. International warrants have an
exercise price, which is typically fixed when the warrants are issued.
A
Fund may invest in low exercise price warrants, which are warrants with an exercise price that is very low relative to the market price
of the underlying instrument at the time of issue (e.g.,
one cent or less). The buyer of a low exercise price warrant effectively pays the full value of the underlying common stock at the outset.
In the case of any exercise of warrants, there may be a time delay between the time a holder of warrants gives instructions to exercise
and the time the price of the common stock relating to exercise or the settlement date is determined, during which time the price of the
underlying security could change significantly. These warrants entail substantial credit risk, since the issuer of the warrant holds the
purchase price of the warrant (approximately equal to the value of the underlying investment at the time of the warrant’s issue)
for the life of the warrant.
The
exercise or settlement date of the warrants and other instruments described above may be affected by certain market disruption events,
such as difficulties relating to the exchange of a local currency into U.S. dollars, the imposition of capital controls by a local
jurisdiction or changes in the laws relating to foreign investments. These events could lead to a change in the exercise date or settlement
currency of the instruments, or postponement of the settlement date. In some cases, if the market disruption events continue for a certain
period of time, the warrants may become worthless, resulting in a total loss of the purchase price of the warrants.
A
participation note or “P-note” is typically a debt instrument issued by a bank or broker-dealer, where the amount of the
bank’s or broker-dealer’s repayment obligation is tied to changes in the value of an underlying security or index of securities.
A P-note is a general unsecured contractual obligation of the bank or broker-dealer that issues it. A Fund must rely on the creditworthiness
of the issuer for repayment of the P-note and for any return on the Fund’s investment in the P-note and would have no rights against
the issuer of the underlying security.
There
is no assurance that there will be a secondary trading market for any of the instruments described above. They may by their terms be non-transferable
or otherwise be highly illiquid and difficult to price. Issuers of such instruments or the calculation agent named in respect of such
an instrument may have broad authority and discretion to adjust the instrument’s terms in response to certain events or to interpret
an instrument’s terms or to make certain determinations relating to the instrument, which could have a significant adverse effect
on the value of the instrument to a Fund. If the issuer or other obligor on an instrument is unable or unwilling to perform its obligations
under such an instrument, a Fund may lose some or all of its investment in the instrument and any unrealized return on that investment.
Certain of these instruments may be subject to foreign investment risk and currency risk.
Equity-Linked Notes
An
equity-linked note (ELN) is a debt instrument whose value changes based on changes in the value of a single equity security, basket of
equity securities, or an index of equity securities. An equity-linked note may or may not pay interest. See “Hybrid Instruments,”
below.
Hybrid Instruments
Hybrid
instruments are generally considered derivatives and include indexed or structured securities, and combine elements of many derivatives
transactions with those of debt, preferred equity, or a depositary instrument. A Fund may use a hybrid instrument as a substitute for
any type of cash or derivative investment which it might make for any purpose.
A
hybrid instrument may be a debt security, preferred stock, warrant, convertible security, certificate of deposit, or other evidence of
indebtedness on which a portion of or all interest payments, and/or the principal or stated amount payable at maturity, redemption or
retirement, is determined by reference to prices, changes in prices, or differences between prices, of securities, currencies, intangibles,
goods, articles, or commodities (collectively, “underlying assets”), or by another index, economic factor, or other measure,
including interest rates, currency exchange rates, or commodities or securities indexes (collectively, “benchmarks”). Hybrid
instruments may take a number of forms, including, for example, debt instruments with interest or principal payments or redemption terms
determined by reference to the value of an index, security, or other measure at a future time, preferred stock with dividend rates determined
by reference to the value of a currency, or convertible securities where the conversion terms relate to a particular commodity.
The
risks of investing in a hybrid instrument may, depending on the nature of the instrument, reflect a combination of the risks of investing
in securities, options, futures, currencies, or other types of investments. An investment in a hybrid
instrument as a debt instrument
may entail significant risks that are not associated with a similar investment in a traditional debt instrument. The risks of a particular
hybrid instrument will depend upon the terms of the instrument, but may include the possibility of significant changes in the level of
the benchmark(s) or the prices of the underlying assets to which the instrument is linked. Such risks generally depend upon factors unrelated
to the operations or credit quality of the issuer of the hybrid instrument, and may not be foreseen by the purchaser, such as financial
or market developments, economic and political events, the supply and demand of the underlying assets, and interest rate movements. Hybrid
instruments may be highly volatile and their use by a Fund may not be successful.
Hybrid
instruments are potentially more volatile and carry greater market risks than traditional debt instruments. Hybrid instruments may be
highly leveraged. Depending on the structure of the particular hybrid instrument, changes in a benchmark may be magnified by the terms
of the hybrid instrument and have an even more dramatic and substantial effect upon the value of the hybrid instrument. Also, the prices
of the hybrid instrument and the benchmark or underlying asset may not move in the same direction or at the same time.
Hybrid
instruments may also carry liquidity risk since they typically trade OTC, and are not backed by a central clearing organization. The instruments
are often “customized” to meet the portfolio needs of a particular investor, and therefore, the number of investors that
are willing and able to buy such instruments in the secondary market may be smaller than that for more traditional debt securities. Under
certain conditions, the value of such an investment could be zero. In addition, because the purchase and sale of hybrid investments would
likely take place in an OTC market without the backing of a central clearing organization, or in a transaction between a Fund and the
issuer of the hybrid instrument, the instruments will not likely be actively traded. Hybrid instruments also may not be subject to regulation
by the CFTC, the SEC, or any other governmental regulatory authority.
When
a Fund invests in a hybrid instrument, it also takes on the credit risk of the issuer of the hybrid instrument. In that respect, a hybrid
instrument may create greater risks than investments directly in the securities or other assets underlying the hybrid instrument because
the Fund is exposed both to losses on those securities or other assets and to the credit risk of the issuer of the hybrid instrument.
A hybrid instrument may also pose greater risks than other derivatives based on the same securities or assets because, when it purchases
the instrument, a Fund may be required to pay all, or most, of the notional amount of the investment by way of purchase price, whereas
many other derivatives require a Fund to post only a relatively small portion of the notional amount by way of margin or similar arrangements.
Structured Investments
A
structured investment is typically issued by a specially created corporation or trust that purchases one or more securities or other assets
(“underlying instruments”), and that in turn issues one or more classes of securities (“structured securities”)
backed by, or representing different interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued structured securities to create securities with different investment characteristics, such as varying maturities,
payment priorities, and interest rate provisions, and the extent of such payments made with respect to structured securities is dependent
on the extent of the cash flow on the underlying instruments. Because structured securities typically involve no credit enhancement, their
credit risk generally will reflect that of the underlying instruments. Investments in a structured security may be subordinated to the
right of payment of another class of securities. Subordinated structured securities typically have higher yields and present greater risks
than unsubordinated structured securities. Structured securities are typically sold in private placement transactions, and there currently
is no active trading market for structured securities, and they may be highly illiquid and difficult to value. Because the purchase and
sale of structured securities would likely take place in an OTC market without the backing of a central clearing organization, or in a
transaction between a Fund and the issuer of the structured securities, the creditworthiness of the counterparty of the issuer of the
structured securities would be an additional risk factor the Fund would have to consider and monitor.
Commodity-Linked
“Structured” Securities. Certain structured products may provide
exposure to the commodities markets. Commodity-linked structured securities may be equity or debt securities, may be leveraged or unleveraged,
and may present investment characteristics and risks of an investment in a security and one or more underlying commodities. Certain restrictions
imposed on the Funds by the Code may limit the Funds’ ability to invest in certain commodity-linked structured securities.
Credit-Linked
Securities. Credit-linked securities are typically issued by a limited purpose
trust or other vehicle that, in turn, invests in a basket of derivative instruments, such as credit default swaps, interest rate swaps,
and other securities or transactions, in order to provide exposure to certain high yield or other fixed income issuers or markets. For
example, a Fund may invest in credit-linked securities in order to gain exposure to the high yield markets pending investment of cash
and/or to remain fully invested when more traditional income producing securities are not available. A Fund’s return on its investments
in credit-linked securities will depend on the investment performance of the investments held in the trust or other vehicle. A Fund’s
investments in these instruments are indirectly subject to the risks associated with the derivative instruments in which the trust or
other vehicle invests, including, among others, credit risk, default, or similar event risk, counterparty risk, interest rate risk, leverage
risk, and management risk. There will likely be no established trading market for credit-linked securities and they may be illiquid.
Event-Linked
Securities. Event-linked securities are typically fixed income securities
for which the return of principal and payment of interest is contingent on the non-occurrence of a trigger event, such as a hurricane,
earthquake, or other event that leads to physical or economic loss. If the trigger event occurs prior to maturity, a Fund may lose all
or a portion of its principal and unpaid interest. Event-linked securities may expose a Fund to certain other risks, including issuer
default, adverse regulatory or jurisdictional interpretations, liquidity risk, and adverse tax consequences.
Structured
Hybrid Instruments. Because the performance of structured hybrid instruments
is linked to the performance of an underlying commodity, commodity index, or other economic variable, those investments are subject to
“market risks” with respect to the movements of the commodity markets and may be subject to certain other risks that do
not affect traditional equity and debt securities. If the interest payment on a hybrid instrument is linked to the value of a particular
commodity, commodity index, or other economic variable and the underlying investment loses value, the purchaser might not receive the
anticipated interest on its investment. If the amount of principal to be repaid on a structured hybrid instrument is linked to the value
of a particular commodity, commodity index, or other economic variable, the purchaser might not receive all or any of the principal at
maturity of the investment.
The
values of structured hybrid instruments may fluctuate significantly because the values of the underlying investments to which they are
linked are themselves extremely volatile, and the Fund may lose most or all of the value of its investment in a hybrid instrument. Additionally,
the particular terms of a structured hybrid instrument may create economic leverage by contemplating payments that are based on a multiple
of the price increase or decrease of the underlying commodity, commodity index, or other economic variable. A liquid secondary market
may not exist for structured hybrid instruments, which may make it difficult to sell such instruments at an acceptable price or to value
them accurately.
A
Fund’s investment in structured products may be subject to limits under applicable law.
When-Issued, Delayed-Delivery,
To-Be-Announced, Forward Commitment, and Standby Commitment Transactions
A
Fund may enter into when-issued, delayed-delivery, to-be-announced (“TBA”), or forward commitment transactions in order
to lock in the purchase price of the underlying security or in order to adjust the interest rate exposure of the Fund’s existing
portfolio. In when-issued, delayed-delivery, or forward commitment transactions, a Fund commits to purchase or sell particular securities,
with payment and delivery to take place at a future date. In the case of TBA purchase commitments, the unit price and the estimated principal
amount are established when the Fund enters into a commitment, with the actual principal amount being within a specified range of the
estimate. Although a Fund does not typically pay for the securities in these types of transactions until they are delivered, it immediately
assumes the risks of ownership, including the risk of price fluctuation. As a result, each of these types of transactions may create investment
leverage in a Fund’s portfolio and increase the volatility of the Fund. If a Fund’s counterparty fails to deliver a security
purchased on a when-issued, delayed-delivery, TBA, or forward commitment basis, there may be a loss, and the Fund may have missed an opportunity
to make an alternative investment.
A
Fund may also enter into standby commitment agreements, obligating the Fund, for a specified period, to buy a specified amount of a security
at the option of the issuer, upon the issuance of the security. The price at which the Fund would purchase the security is set at the
time of the agreement. In return for its promise to purchase the security, a Fund receives a commitment fee. The Fund receives this fee
whether or not it is ultimately required to purchase the security. The securities subject to a standby commitment will not necessarily
be issued, and, if they are issued, the value of the securities on the date of issuance may be significantly less than the price at which
the Fund is required to purchase them.
Recently
finalized Financial Industry Regulatory Authority (“FINRA”) rules include mandatory margin requirements for the TBA market
with limited exceptions. TBA trades historically have not been required to be collateralized. The
collateralization of TBA trades
is intended to mitigate counterparty credit risk between trade and settlement, but could increase the cost of TBA transactions and impose
added operational complexity. As of the date of this SAI, it is expected these FINRA rules will be implemented in the near future but
it is not clear the full impact the rules will have on the Funds.
Distressed Securities
A
Fund may invest in securities, including loans purchased in the secondary market, that are the subject of bankruptcy proceedings or otherwise
in default or in risk of being in default as to the repayment of principal and/or interest at the time of acquisition by the Fund or that
are rated in the lower rating categories by one or more nationally recognized statistical rating organizations (for example, Ca or lower
by Moody’s and CC or lower by S&P or Fitch Ratings, Inc. (“Fitch”)) or, if unrated, are in the judgment of the
investment adviser or subadviser of equivalent quality (“Distressed Securities”). Investment in Distressed Securities is
speculative and involves significant risks and a Fund could lose all of its investment in any Distressed Security.
Distressed
Securities are subject to greater credit and liquidity risks than other types of loans. Reduced liquidity can affect the values of Distressed
Securities, make their valuation and sale more difficult, and result in greater volatility. A bankruptcy proceeding or other court proceeding
could delay or limit the ability of the Fund to collect the principal and interest payments on Distressed Securities or adversely affect
the Fund’s rights in collateral relating to a Distressed Security. If a lawsuit is brought by creditors of a borrower under a Distressed
Security, a court or a trustee in bankruptcy could take certain actions that would be adverse to a Fund. For example:
•
Other
creditors might convince the court to set aside a loan or the collateralization of the loan as a “fraudulent conveyance”
or “preferential transfer.” In that event, the court could recover from the Fund the interest and principal payments that
the borrower made before becoming insolvent. There can be no assurance that the Fund would be able to prevent that recapture.
•
A
bankruptcy court may restructure the payment obligations under the loan so as to reduce the amount to which the Fund would be entitled.
•
The
court might discharge the amount of the loan that exceeds the value of the collateral.
•
The
court could subordinate the Fund’s rights to the rights of other creditors of the borrower under applicable law, decreasing, potentially
significantly, the likelihood of any recovery on the Fund’s investment.
A
Fund may, but will not necessarily, invest in a Distressed Security when the investment adviser or subadviser believes it is likely that
the issuer of the Distressed Securities will make an exchange offer or will be the subject of a plan of reorganization pursuant to which
the Fund will receive new securities in return for the Distressed Securities. There can be no assurance that such an exchange offer will
be made or that such a plan of reorganization will be adopted. In addition, a significant period of time may pass between the time at
which a Fund makes its investment in Distressed Securities and the time that any such exchange offer or plan of reorganization is completed.
Even if an exchange offer is made or plan of reorganization is adopted with respect to Distressed Securities held by a Fund, there can
be no assurance that the securities or other assets received by a Fund in connection with such exchange offer or plan of reorganization
will not have a lower value or income potential than may have been anticipated when the investment was made. If a Fund participates in
negotiations with respect to any exchange offer or plan of reorganization with respect to an issuer of Distressed Securities, the Fund
may be restricted from disposing of such securities.
Dollar Roll Transactions
A
Fund may enter into dollar roll transactions, in which the Fund sells mortgage-backed securities for delivery in the current month and
simultaneously contracts to purchase substantially similar securities on a specified future date from the same party. A Fund may invest
in dollar rolls in order to benefit from anticipated changes in pricing for the mortgage-backed securities during the term of the transaction,
or for the purpose of creating investment leverage.
In
a dollar roll, the securities that are to be purchased will be of the same type as the securities sold, but will be supported by different
pools of mortgages. A Fund that engages in a dollar roll forgoes principal and interest paid on the sold securities during the roll period,
but is compensated by the difference between the current sales price and the lower forward price for the future purchase. In addition,
a Fund may benefit by investing the transaction proceeds during the roll period. Dollar roll transactions generally have the effect of
creating leverage in a Fund’s portfolio.
Dollar
rolls involve the risk that the Fund’s counterparty will be unable to deliver the mortgage-backed securities underlying the dollar
roll at the fixed time. If the counterparty files for bankruptcy or becomes insolvent, the counterparty
or its representative may
ask for and receive an extension of time to decide whether to enforce the Fund’s repurchase obligation. A Fund’s use of
the transaction proceeds may be restricted pending such decision. A Fund may enter into dollar roll transactions without limit up to the
amount permitted under applicable law.
Exchange Traded Notes (ETNs)
ETNs
are senior, unsecured, debt securities typically issued by financial institutions. An ETN’s return is typically based on the performance
of a particular market index, and the value of the index may be impacted by market forces that affect the value of ETNs in unexpected
ways. ETNs are similar to Structured Investments, except that they are typically listed on an exchange and traded in the secondary market.
See “Structured Investments” in this SAI. The return on an ETN is based on the performance of the specified market index,
and an investor may, at maturity, realize a negative return on the investment. ETNs typically do not make periodic interest payments and
principal is not protected. The repayment of principal and any additional return due either at maturity or upon repurchase by the issuer
depends on the issuer’s ability to pay, regardless of the performance of the underlying index. Accordingly, ETNs are subject to
credit risk that the issuer will default or will be unable to make timely payments of principal. Certain events can impact an ETN issuer’s
financial situation and ability to make timely payments to ETN holders, including economic, political, legal, or regulatory changes and
natural disasters. Event risk is unpredictable and can significantly impact ETN holders.
The
market value of an ETN may be influenced by, among other things, time to maturity, level of supply and demand of the ETN, volatility and
lack of liquidity in the underlying assets, changes in the applicable interest rates, the current performance of the market index to which
the ETN is linked, and the credit rating of the ETN issuer. The market value of an ETN may differ from the performance of the applicable
market index and there may be times when an ETN trades at a premium or discount. This difference in price may be due to the fact that
the supply and demand in the market for ETNs at any point in time is not always identical to the supply and demand in the market for the
securities underlying the market index that the ETN seeks to track. A change in the issuer’s credit rating may also impact the
value of an ETN without regard to the level of the underlying market index. ETNs are also subject to tax risk. No assurance can be given
that the Internal Revenue Service (“IRS”) will accept, or a court will uphold, how the Funds characterize and treat ETNs
for tax purposes.
A
Fund’s ability to sell its ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN
may be listed on an exchange, the issuer may not be required to maintain the listing and there can be no assurance that a secondary market
will exist for an ETN. Some ETNs may be relatively illiquid and may therefore be difficult to purchase or sell at a fair price. Leveraged
ETNs may offer the potential for greater return, but their values may be highly volatile.
Financial Services Companies
A
Fund may invest in financial services companies. Financial services companies are subject to extensive government regulation that may
affect their profitability in many ways, including by limiting the amount and types of loans and other commitments they can make, and
the interest rates and fees they can charge. A financial services company’s profitability, and therefore its stock price, is especially
sensitive to interest rate changes as well as the ability of borrowers to repay their loans. Changing regulations, continuing consolidations,
and development of new products and structures all are likely to have a significant impact on financial services companies.
Fixed Income Securities
Certain
of the debt securities in which the Funds may invest may not offer as high a yield as may be achieved from lower quality instruments having
less safety. If a Fund disposes of an obligation prior to maturity, it may realize a loss or a gain. An increase in interest rates will
generally reduce the value of debt securities, and a decline in interest rates will generally increase the value of debt securities. In
addition, debt securities are subject to the ability of the issuer to make payment at maturity. As inflation increases, the present value
of a Fund’s fixed income investment typically will decline. Investors’ expectation of future inflation can also adversely
affect the current value of portfolio investments, resulting in lower asset values and potential losses.
To
the extent that a Fund invests in debt securities, interest rate fluctuations will affect its NAV, but not the income it receives from
its debt securities. In addition, if the debt securities contain call, prepayment, or redemption provisions, during a period of declining
interest rates, those securities are likely to be redeemed, and a Fund would probably be unable to replace them with securities having
as great a yield. Certain events, such as market or economic developments, regulatory or government actions, natural disasters, pandemics,
terrorist attacks, war, and other geopolitical events can have a dramatic adverse effect on the debt market and the overall liquidity
of the market for fixed income securities.
Investment
in medium- or lower-grade debt securities involves greater investment risk, including the possibility of issuer default or bankruptcy.
An economic downturn could severely disrupt this market and adversely affect the value of outstanding bonds and the ability of the issuers
to repay principal and interest. In addition, lower-quality bonds are less sensitive to interest rate changes than higher-quality instruments
and generally are more sensitive to adverse economic changes or individual corporate developments. During a period of adverse economic
changes, including a period of rising interest rates, issuers of such bonds may experience difficulty in servicing their principal and
interest payment obligations. Furthermore, medium- and lower-grade debt securities tend to be less marketable than higher-quality debt
securities because the market for them is less broad. The market for unrated debt securities is even narrower. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to increase significantly, and a Fund may have greater difficulty
selling its portfolio securities. The market value of these securities and their liquidity may be affected by adverse publicity and investor
perceptions.
Foreign Securities
Each
Fund may invest in foreign securities. Foreign securities include securities of foreign companies and foreign governments (or agencies
or subdivisions thereof). If a Fund’s securities are held abroad, the countries in which such securities may be held and the sub-custodian
holding them must be approved by the Board or its delegate under applicable rules adopted by the SEC. In buying foreign securities, each
Fund may convert U.S. dollars into foreign currency.
The
globalization and integration of the world economic system and related financial markets have made it increasingly difficult to define
issuers geographically. Accordingly, the Funds intend to construe geographic terms such as “foreign,”“non-U.S.,”“European,”“Latin American,”“Asian,” and “emerging markets” in the manner that
affords to the Funds the greatest flexibility in seeking to achieve the investment objective(s) of the relevant Fund. Specifically, unless
otherwise stated, in circumstances where the investment objective and/or strategy is to invest (a) exclusively in “foreign
securities,”“non-U.S. securities,”“European securities,”“Latin American securities,”“Asian securities,” or “emerging markets” (or similar directions) or (b) at least some percentage
of the Fund’s assets in foreign securities, etc., the Fund will take the view that a security meets this description so long as
the issuer of a security is tied economically to the particular country or geographic region indicated by words of the relevant investment
objective and/or strategy (the “Relevant Language”). For these purposes the issuer of a security is deemed to have that
tie if:
(i)
the
issuer is organized under the laws of the country or a country within the geographic region suggested by the Relevant Language or maintains
its principal place of business in that country or region; or
(ii)
the
securities are traded principally in the country or region suggested by the Relevant Language; or
(iii)
the
issuer, during its most recent fiscal year, derived at least 50% of its revenues or profits from goods produced or sold, investments made,
or services performed in the country or region suggested by the Relevant Language or has at least 50% of its assets in that country or
region.
In
addition, the Funds intend to treat derivative securities (e.g., call options) by reference to the underlying security. Conversely, if
the investment objective and/or strategy of a Fund limits the percentage of assets that may be invested in “foreign securities,”
etc. or prohibits such investments altogether, a Fund intends to categorize securities as “foreign,” etc. only if the security
possesses all of the attributes described above in clauses (i), (ii), and (iii).
Foreign
securities also include a Fund’s investment in foreign securities through depositary receipts, in the form of American Depositary
Receipts (“ADRs”), European Depositary Receipts (“EDRs”), Global Depositary Receipts (“GDRs”),
or other similar securities. An ADR is a U.S. dollar-denominated security issued by a U.S. bank or trust company that represents, and
may be converted into, a foreign security. An EDR or a GDR is generally similar but is issued by a non-U.S. bank. Depositary receipts
are subject to the same risks as direct investment in foreign securities. Depositary receipts may not necessarily be denominated in the
same currency as the underlying securities into which they may be converted, and changes in currency exchange rates may affect the value
of an ADR investment in ways different from direct investments in foreign securities. Funds may invest in both sponsored and unsponsored
depositary receipts. Unsponsored depositary receipts are organized independently and without the cooperation of the issuer of the underlying
securities. As a result, available information concerning the issuers may not be as current for unsponsored depositary receipts and the
prices of unsponsored depositary receipts may be more volatile than if such instruments were sponsored by the issuer. In addition, the
underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation
to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to
the deposited securities. A Fund may therefore receive less timely information or have less control than if it invested directly in the
foreign issuer. An investment in an ADR is subject to the credit risk of the issuer of the ADR.
Investments
in foreign securities involve special risks and considerations. Foreign companies are not generally subject to uniform accounting, auditing,
and financial reporting standards, practices, and requirements comparable to those
applicable to domestic companies,
and such practices and standards may vary significantly from country to country. There may be less publicly available information about
a foreign company than about a domestic company. The U.S. Public Company Accounting Oversight Board (“PCAOB”), which regulates
auditors of U.S. public companies, is unable to inspect audit work papers in certain foreign countries. Investors in foreign countries
often have limited rights and few practical remedies to pursue shareholder claims, including class actions or fraud claims, and the ability
of the SEC, the U.S. Department of Justice, and other authorities to bring and enforce actions against foreign issuers or foreign persons
is limited. Foreign markets have different clearance and settlement procedures. Delays in settlement could result in temporary periods
when assets of a Fund are uninvested. The inability of a Fund to make intended security purchases due to settlement problems could cause
it to miss certain investment opportunities. Foreign securities may also entail certain other risks, such as the possibility of one or
more of the following: imposition of dividend or interest withholding or confiscatory taxes, higher brokerage costs, thinner trading markets,
currency blockages or transfer restrictions, expropriation, nationalization, military coups, economic sanctions, or other adverse political
or economic developments; less government supervision and regulation of securities exchanges, brokers and listed companies; and the difficulty
of enforcing obligations in other countries, and are more susceptible to environmental problems. Purchases of foreign securities are usually
made in foreign currencies and, as a result, a Fund may incur currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. Further, it may be more difficult for a Fund’s agents to keep
currently informed about corporate actions which may affect the prices of portfolio securities. Communications between the United States
and foreign countries may be less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities. Certain markets may require payment for securities before delivery. In
addition, there may be a possibility of nationalization or expropriation of assets, imposition of currency exchange controls, confiscatory
taxation, political or financial instability, diplomatic developments that could adversely affect the values of the Fund’s investments
in certain non-U.S. countries, and quotas or other limits on the ability of the Fund (or clients of the Fund’s investment adviser
or subadviser) to invest or maintain investments in securities of issuers in certain countries.
A
number of current significant political, demographic, and economic developments may affect investments in foreign securities and in securities
of companies with operations overseas. The course of any one or more of these events and the effect on trade barriers, competition, and
markets for consumer goods and services are uncertain. Similar considerations are of concern with respect to developing countries. For
example, the possibility of revolution and the dependence on foreign economic assistance may be greater in these countries than in developed
countries. Management seeks to mitigate the risks associated with these considerations through diversification and active professional
management.
In
addition to the general risks of investing in foreign securities, investments in emerging markets involve special risks. Securities of
many issuers in emerging markets may have less stringent investor protection and disclosure standards, and may be less liquid and more
volatile than securities of comparable domestic issuers. Shares of companies that only trade on an emerging market securities exchange
are not likely to file reports with the SEC. The availability of material financial information about such companies and its reliability
may be limited since such companies are generally not subject to the same regulatory, accounting, auditing, or auditor oversight requirements
applicable to companies that file reports with the SEC. In addition, the PCAOB is unable to inspect audit work papers in certain emerging
market countries. Emerging markets may have different clearance and settlement procedures, and in certain markets there have been times
when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when a portion of the assets of a Fund is uninvested and no return is earned thereon.
The inability of a Fund to make intended security purchases due to settlement problems could cause a Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement problems could result in losses to a Fund due to subsequent
declines in values of the portfolio securities, decrease in the level of liquidity in a Fund’s portfolio, or, if a Fund has entered
into a contract to sell the security, possible liability to the purchaser. Certain markets may require payment for securities before delivery,
and in such markets a Fund bears the risk that the securities will not be delivered and that the Fund’s payments will not be returned.
In addition, securities markets of emerging market countries are subject to the risk that such markets may close, sometimes for extended
periods of time, due to market, economic, political, regulatory, geopolitical, environmental, public health, or other conditions. Securities
prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In particular, countries with emerging markets may have relatively
unstable governments, present the risk of nationalization of businesses, or may have restrictions on foreign ownership or prohibitions
of repatriation of assets, and may have less protection of property rights than more developed countries. Investors in emerging markets
may not have the ability to seek certain legal remedies in U.S. courts as private plaintiffs. As a practical matter, investors may have
to rely on domestic legal remedies that are available in the emerging market and such remedies are often limited and difficult for international
investors to pursue. Shareholder claims,
including
class action and securities law and fraud claims, generally are difficult or unavailable to pursue as a matter of law or practicality
in many emerging market countries. In addition, the SEC, U.S. Department of Justice, and other U.S. authorities often have substantial
difficulties in bringing and enforcing actions against non-U.S. companies and non-U.S. persons, including company officers and directors,
in certain emerging markets due to jurisdictional limitations and various other factors. The economies of countries with emerging markets
may be predominantly based on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may
suffer from extreme and volatile debt burdens or inflation rates. Local securities markets may trade a small number of securities and
may be unable to respond effectively to increases in trading volume, potentially making prompt liquidation of substantial holdings difficult
or impossible at times. Securities of issuers located in countries with emerging markets may have limited marketability and may be subject
to more abrupt or erratic price movements. In addition, many emerging market countries with less established health care systems have
experienced outbreaks of pandemics or contagious diseases from time to time.
Certain
emerging markets may require governmental approval for the repatriation of investment income, capital, or the proceeds of sales of securities
by foreign investors. In addition, if a deterioration occurs in an emerging market’s balance of payments or for other reasons,
a country could impose temporary restrictions on foreign capital remittances. A Fund could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation of capital, as well as by the application to that Fund of any restrictions
on investments.
Russia,
the Middle East, and many other emerging market countries are highly reliant on income from oil sales. Oil prices can have a major impact
on these economies. Other commodities such as base and precious metals are also important to these economies. As global supply and demand
for commodities fluctuates, these economies can be significantly impacted by the prices of such commodities.
Investment
in certain foreign emerging market debt obligations may be restricted or controlled to varying degrees. These restrictions or controls
may at times preclude investment in certain foreign emerging market debt obligations and increase the expenses of a Fund.
China
Investment Risk. Investments in securities of companies domiciled in the
People’s Republic of China (“China” or the “PRC”) involve a high degree of risk and special considerations
not typically associated with investing in the U.S. securities markets. Such heightened risks include, among others, an authoritarian
government, popular unrest associated with demands for improved political, economic, and social conditions, the impact of regional conflict
on the economy, and hostile relations with neighboring countries.
Military
conflicts, either in response to internal social unrest or conflicts with other countries, could disrupt economic development. The Chinese
economy is vulnerable to the long-running disagreements and religious and nationalist disputes with Tibet and the Xinjiang region. Since
1997, there have been tensions between the Chinese government and many people in Hong Kong who perceive China as tightening control over
Hong Kong’s semi-autonomous liberal political, economic, legal, and social framework. Recent protests and unrest have increased
tensions even further. Due to the interconnected nature of the Hong Kong and Chinese economies, this instability in Hong Kong may cause
uncertainty in the Hong Kong and Chinese markets. China has a complex territorial dispute regarding the sovereignty of Taiwan and has
made threats of invasion; Taiwan-based companies and individuals are significant investors in China. Military conflict between China and
Taiwan may adversely affect securities of Chinese issuers. In addition, China has strained international relations with Japan, India,
Russia, and other neighbors due to territorial disputes, historical animosities, and other defense concerns. Additionally, China is alleged
to have participated in state-sponsored cyberattacks against foreign companies and foreign governments. Actual and threatened responses
to such activity and strained international relations, including purchasing restrictions, sanctions, tariffs, or cyberattacks on the Chinese
government or Chinese companies, may impact China’s economy and Chinese issuers of securities in which a Fund invests. China could
be affected by military events on the Korean peninsula or internal instability within North Korea. These situations may cause uncertainty
in the Chinese market and may adversely affect the performance of the Chinese economy.
The
Chinese government has implemented significant economic reforms in order to liberalize trade policy, promote foreign investment in the
economy, reduce government control of the economy, and develop market mechanisms. However, there can be no assurance that these reforms
will continue or that they will be effective. Despite reforms and privatizations of companies in certain sectors, the Chinese government
still exercises substantial influence over many aspects of the private sector and may own or control many companies. Chinese companies,
such as those in the financial services or technology sectors, and potentially other sectors in the future, are subject to the risk that
Chinese authorities can intervene in their operations and structure. The Chinese government continues to maintain a major role in economic
policy making and investing in China involves risks of losses due to expropriation, nationalization, confiscation of assets and property,
and the imposition of restrictions on foreign investments and on repatriation of capital invested.
The Chinese
government may intervene in the Chinese financial markets, such as by the imposition of trading restrictions, a ban on “naked”
short selling, or the suspension of short selling for certain stocks. This may affect market price and liquidity of these stocks, and
may have an unpredictable impact on the investment activities of the Funds. Furthermore, such market interventions may have a negative
impact on market sentiment which may in turn affect the performance of the securities markets and as a result the performance of the Funds.
In
addition, there is less regulation and monitoring of the securities markets and the activities of investors, brokers, and other participants
in China than in the United States. Accordingly, issuers of securities in China are not subject to the same degree of regulation as those
in the United States with respect to such matters as insider trading rules, tender offer regulation, stockholder proxy requirements, and
the requirements mandating timely and accurate disclosure of information. Stock markets in China are in the process of change and further
development. This may lead to trading volatility, and difficulties in the settlement and recording of transactions and interpretation
and application of the relevant regulations. Custodians may not be able to offer the level of service and safe-keeping in relation to
the settlement and administration of securities in China that is customary in more developed markets. In particular, there is a risk that
a Fund may not be recognized as the owner of securities that are held on behalf of the Fund by a sub-custodian.
The
Chinese government has taken positions that prevent the PCAOB from inspecting the audit work and practices of accounting firms in mainland
China and Hong Kong for compliance with U.S. law and professional standards. Audits performed by PCAOB-registered accounting firms in
mainland China and Hong Kong may be less reliable than those performed by firms subject to PCAOB inspection. Accordingly, information
about the Chinese securities in which the Funds invest may be less reliable or complete. Under amendments to the Sarbanes-Oxley Act enacted
in December 2020, which requires that the PCAOB be permitted to inspect the accounting firm of a U.S.-listed Chinese issuer, Chinese companies
with securities listed on U.S. exchanges may be delisted if the PCAOB is unable to inspect the accounting firm.
The
Renminbi (“RMB”) is currently not a freely convertible currency and is subject to foreign exchange control policies and
repatriation restrictions imposed by the Chinese government. The imposition of currency controls may negatively impact performance and
liquidity of the Funds as capital may become trapped in the PRC. The Funds could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation of capital, as well as by the application to the Funds of any restrictions on investments.
Investing in entities either in, or which have a substantial portion of their operations in, the PRC may require the Funds to adopt special
procedures, seek local government approvals, or take other actions, each of which may involve additional costs and delays to the Funds.
While
the Chinese economy has grown rapidly in recent years, there is no assurance that this growth rate will be maintained. China may experience
substantial rates of inflation or economic recessions, causing a negative effect on its economy and securities market. China’s
economy is heavily dependent on export growth. Reduction in spending on Chinese products and services, institution of tariffs or other
trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the securities
of Chinese issuers. The tax laws and regulations in the PRC are subject to change, including the issuance of authoritative guidance or
enforcement, possibly with retroactive effect. The interpretation, applicability, and enforcement of such laws by the PRC tax authorities
are not as consistent and transparent as those of more developed nations, and may vary over time and from region to region. The application
and enforcement of the PRC tax rules could have a significant adverse effect on a Fund and its investors, particularly in relation to
capital gains withholding tax imposed upon non-residents. In addition, the accounting, auditing, and financial reporting standards and
practices applicable to Chinese companies may be less rigorous, and may result in significant differences between financial statements
prepared in accordance with PRC accounting standards and practices and those prepared in accordance with international accounting standards.
From
time to time, China has experienced outbreaks of infectious illnesses and the country may be subject to other public health threats, infectious
illnesses, diseases, or similar issues in the future. Any spread of an infectious illness, public health threat, or similar issue could
reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant
impact on the Chinese economy, which in turn could adversely affect a Fund’s investments.
Investments
in Hong Kong. In 1997, the United Kingdom handed over control of Hong Kong
to China. Since that time, Hong Kong has been governed by a quasi-constitution known as the Basic Law, while defense and foreign affairs
are the responsibility of the central government in Beijing. The chief executive of Hong Kong is appointed by the Chinese government.
However, Hong Kong is able to participate in international organizations and agreements and it continues to function as an international
financial center, with no exchange controls, free convertibility of the Hong Kong dollar, and free inward and outward movement of capital.
By treaty, China has committed to preserve Hong Kong’s high degree of autonomy in certain matters until 2047. However, as demonstrated
by Hong Kong protests in recent years over political,
economic,
and legal freedoms, and the Chinese government’s response to them, there continues to exist political uncertainty within Hong Kong.
For example, in June 2020, China adopted a new security law that severely limits freedom of speech in Hong Kong and expands police powers
to seize electronic devices and intercept communications of suspects. Hong Kong has experienced strong economic growth in recent years
due, in part, to its close ties with China and a strong service sector, but the decline in growth rates in China could limit Hong Kong’s
future growth. In addition, if China exerts its authority so as to alter the economic, political, or legal structures, or further alters
the existing social policy of Hong Kong, investor and business confidence in Hong Kong could be negatively affected, which in turn could
negatively affect markets and business performance. These and other factors could have a negative impact on a Fund’s performance.
Investments
in Taiwan. For decades, a state of hostility has existed between Taiwan
and China. Although tensions have lowered, exemplified by improved relations in recent years, the relationship with China remains a divisive
political issue within Taiwan. As an export-oriented economy, Taiwan depends on a free-trade regime and remains vulnerable to downturns
in the world economy. Taiwanese companies continue to compete mostly on price, producing generic products or branded merchandise on behalf
of multinational companies. Accordingly, these businesses can be particularly vulnerable to currency volatility and increasing competition
from neighboring lower-cost countries. Moreover, many Taiwanese companies are heavily invested in mainland China and other countries throughout
Southeast Asia, making them susceptible to political events and economic crises in the region. Significantly, Taiwan and China have entered
into agreements covering banking, securities, and insurance. Closer economic links with mainland China may bring greater opportunities
for the Taiwanese economy, but such arrangements also pose new challenges. For example, foreign direct investment in China has resulted
in Chinese import substitution away from Taiwan’s exports and a constriction of potential job creation in Taiwan. Likewise, the
Taiwanese economy has experienced slow economic growth as demand for Taiwan’s exports has weakened due, in part, to declines in
growth rates in China. Taiwan has sought to diversify its export markets and reduce its dependence on the Chinese market by increasing
exports to the United States, Japan, Europe, and other Asian countries by, among other things, entering into free-trade agreements. The
Taiwanese economy’s long-term challenges include a rapidly aging population, low birth rate, and the lingering effects of Taiwan’s
diplomatic isolation. These and other factors could have a negative impact on a Fund’s performance.
Risk
of Investing in China through Stock Connect and Bond Connect. China A-shares
are equity securities of companies domiciled in China that trade on Chinese stock exchanges such as the Shanghai Stock Exchange (“SSE”)
and the Shenzhen Stock Exchange (“SZSE”) (“A-shares”) and are denominated and traded in RMB whereas China
B-shares are traded on Chinese stock exchanges and are denominated in RMB but traded in either U.S. dollars or Hong Kong dollars (“B-shares”).
Foreign investment in A-shares on the SSE and SZSE has historically not been permitted, other than through a license granted under regulations
in the PRC known as the Qualified Foreign Institutional Investor (“QFII”) and Renminbi Qualified Foreign Institutional
Investor (“Renminbi QFII”) systems. Foreign investors may invest in B-shares directly. A Fund’s exposure to
B-shares may be obtained through indirect exposure through investment in participation notes.
Investment
in eligible A-shares listed and traded on the SSE or SZSE is also permitted through the Shanghai-Hong Kong Stock Connect program or the
Shenzhen-Hong Kong Stock Connect program, as applicable (each, a “Stock Connect” and collectively, “Stock Connects”).
Each Stock Connect is a securities trading and clearing links program established by The Stock Exchange of Hong Kong Limited (“SEHK”),
the Hong Kong Securities Clearing Company Limited (“HKSCC”), the SSE or SZSE, as applicable, and China Securities Depository
and Clearing Corporation Limited (“CSDCC”) that aims to provide mutual stock market access between the PRC and Hong Kong
by permitting investors to trade and settle shares on each market through their local securities brokers. Under Stock Connects, a Fund’s
trading of eligible A-shares listed on the SSE or SZSE, as applicable, would be effectuated through its Hong Kong broker and a securities
trading service company established by SEHK.
Although
no individual investment quotas or licensing requirements apply to investors in Stock Connects, trading through a Stock Connect’s
Northbound Trading Link is subject to daily investment quota limitations which require that buy orders for A-shares be rejected once the
daily quota is exceeded (although a Fund will be permitted to sell A-shares regardless of the quota). These limitations may restrict a
Fund from investing in A-shares on a timely basis, which could affect the Fund’s ability to effectively pursue its investment strategy.
Investment quotas are also subject to change. Investment in eligible A-shares through a Stock Connect is subject to trading, clearance
and settlement procedures that could pose risks to a Fund. A-shares purchased through Stock Connects generally may not be sold or otherwise
transferred other than through Stock Connects in accordance with applicable rules. For example, the PRC regulations require that in order
for an investor to sell any A-share on a certain trading day, there must be sufficient A-shares in the investor’s account before
the market opens on that day. If there are insufficient A-shares in the investor’s account, the sell order will be rejected by
the SSE or SZSE, as applicable. SEHK carries out pre-trade checking on sell orders of certain stocks listed on
the SSE market (“SSE
Securities”) or SZSE market (“SZSE Securities”) of its participants (i.e., stock brokers) to ensure that this requirement
is satisfied. While shares must be designated as eligible to be traded under a Stock Connect, those shares may also lose such designation,
and if this occurs, such shares may be sold but cannot be purchased through a Stock Connect. In addition, Stock Connects will only operate
on days when both the Chinese and Hong Kong markets are open for trading, and banking services are available in both markets on the corresponding
settlement days. Therefore, an investment in A-shares through a Stock Connect may subject a Fund to a risk of price fluctuations on days
when the Chinese market is open, but a Stock Connect is not trading. Moreover, day (turnaround) trading is not permitted on the A-shares
market. If an investor buys A-shares on day “T,” the investor will only be able to sell the A-shares on or after day T+1.
Further, since all trades of eligible A-shares must be settled in RMB, investors must have timely access to a reliable supply of offshore
RMB, which cannot be guaranteed. There is also no assurance that RMB will not be subject to devaluation. Any devaluation of RMB could
adversely affect a Fund’s investments. If a Fund holds a class of shares denominated in a local currency other than RMB, the Fund
will be exposed to currency exchange risk if the Fund converts the local currency into RMB for investments in A-shares. A Fund may also
incur conversion costs.
A-shares
held through the nominee structure under a Stock Connect will be held through HKSCC as nominee on behalf of investors. The precise nature
and rights of a Fund as the beneficial owner of the SSE Securities or SZSE Securities through HKSCC as nominee is not well defined under
the PRC laws. There is a lack of a clear definition of, and distinction between, legal ownership and beneficial ownership under the PRC
laws and there have been few cases involving a nominee account structure in the PRC courts. The exact nature and methods of enforcement
of the rights and interests of a Fund under the PRC laws is also uncertain. In the unlikely event that HKSCC becomes subject to winding
up proceedings in Hong Kong, there is a risk that the SSE Securities or SZSE Securities may not be regarded as held for the beneficial
ownership of a Fund or as part of the general assets of HKSCC available for general distribution to its creditors. Notwithstanding the
fact that HKSCC does not claim proprietary interests in the SSE Securities or SZSE Securities held in its omnibus stock account in the
CSDCC, the CSDCC as the share registrar for SSE- or SZSE-listed companies will still treat HKSCC as one of the shareholders when it handles
corporate actions in respect of such SSE Securities or SZSE Securities. HKSCC monitors the corporate actions affecting SSE Securities
and SZSE Securities and keeps participants of Central Clearing and Settlement System (“CCASS”) informed of all such corporate
actions that require CCASS participants to take steps in order to participate in them. Investors may only exercise their voting rights
by providing their voting instructions to HKSCC through participants of CCASS. All voting instructions from CCASS participants will be
consolidated by HKSCC, who will then submit a combined single voting instruction to the relevant SSE- or SZSE-listed company.
A
Fund’s investments through a Stock Connect’s Northbound Trading Link are not covered by Hong Kong’s Investor Compensation
Fund. Hong Kong’s Investor Compensation Fund is established to pay compensation to investors of any nationality who suffer pecuniary
losses as a result of default of a licensed intermediary or authorized financial institution in relation to exchange-traded products in
Hong Kong. In addition, since a Fund carries out Northbound Trading through securities brokers in Hong Kong but not PRC brokers, it is
not protected by the China Securities Investor Protection Fund in the PRC.
Market
participants are able to participate in Stock Connects subject to meeting certain information technology capability, risk management and
other requirements as may be specified by the relevant exchange and/or clearinghouse. Further, the “connectivity” in Stock
Connects requires routing of orders across the border of Hong Kong and the PRC. This requires the development of new information technology
systems on the part of SEHK and exchange participants. There is no assurance that the systems of SEHK and market participants will function
properly or will continue to be adapted to changes and developments in both markets. In the event that the relevant systems fail to function
properly, trading in A-shares through Stock Connects could be disrupted.
The
Shanghai-Hong Kong Stock Connect program launched in November 2014 and the Shenzhen-Hong Kong Stock Connect program launched in December
2016 and are both in their initial stages. The current regulations are relatively untested and there is no certainty as to how they will
be applied or interpreted going forward. In addition, the current regulations are subject to change and there can be no assurance that
a Stock Connect will not be discontinued. New regulations may be issued from time to time by the regulators and stock exchanges in China
and Hong Kong in connection with operations, legal enforcement and cross-border trades under Stock Connects. A Fund may be adversely affected
as a result of such changes. Furthermore, the securities regimes and legal systems of China and Hong Kong differ significantly and issues
may arise from the differences on an ongoing basis. In the event that the relevant systems fail to function properly, trading in both
markets through Stock Connects could be disrupted and a Fund’s ability to achieve its investment objective may be adversely affected.
In addition, a Fund’s investments in A-shares through Stock Connects are generally subject to Chinese securities regulations and
listing rules, among other restrictions. Further, different fees, costs and taxes
are imposed on foreign investors
acquiring A-shares through Stock Connects, and these fees, costs and taxes may be higher than comparable fees, costs and taxes imposed
on owners of other securities providing similar investment exposure.
Some
Funds may invest in onshore China bonds via a QFII license awarded to the Fund’s subadviser or through a China Interbank Bond Market
(“CIBM”) registration through the Bond Connect program. CIBM is an OTC market outside the two main stock exchanges in the
PRC, SSE, and SZSE, and was established in 1997. On CIBM, institutional investors (including domestic institutional investors but also
QFIIs, Renminbi QFIIs as well as other offshore institutional investors, subject to authorization) trade certain debt instruments on a
one-to-one quote-driven basis. CIBM accounts for a vast majority of outstanding bond values of total trading volume in the PRC. The main
debt instruments traded on CIBM include government bonds, financial bonds, corporate bonds, bond repo, bond lending, and People’s
Bank of China bills.
Investors
should be aware that trading on CIBM exposes the applicable Fund to increased risks. CIBM is still in its development stage, and the market
capitalization and trading volume may be lower than those of more developed markets. Market volatility and potential lack of liquidity
due to low trading volume of certain debt securities may result in the prices of debt securities traded on such market to fluctuate significantly.
Funds investing in such a market therefore may incur significant trading, settlement, and realization costs and may face counterparty
default, liquidity, and volatility risks, resulting in significant losses for the Funds and their investors. Further, since a large portion
of CIBM consists of Chinese state-owned entities, the policy priorities of the Chinese government, the strategic importance of the industry,
and the strength of a company’s ties to the local, provincial, or central government may and will affect the pricing of such securities.
The
Bond Connect program is a relatively new program and may be subject to further interpretation and guidance. There can be no assurance
as to the program’s continued existence or whether future developments regarding the program may restrict or adversely affect a
Fund’s investments or returns. In addition, the application and interpretation of the laws and regulations of Hong Kong and China,
and the rules, policies, or guidelines published or applied by relevant regulators and exchanges in respect of the Bond Connect program
are uncertain, and they may have a detrimental effect on a Fund’s investments and returns.
A-Share
Market Suspension Risk. A-shares may only be bought from, or sold to, a
Fund at times when the relevant A-shares may be sold or purchased on the relevant Chinese stock exchange. The A-shares market has a higher
propensity for trading suspensions than many other global equity markets. Trading suspensions in certain stocks could lead to greater
market execution risk and costs for a Fund. The SSE and SZSE currently apply a daily price limit, generally set at 10%, of the amount
of fluctuation permitted in the prices of A-shares during a single trading day. The daily price limit refers to price movements only and
does not restrict trading within the relevant limit. There can be no assurance that a liquid market on an exchange will exist for any
particular A-share or for any particular time.
Risks
of Investing in China through Variable Interest Entities. Investments in
Chinese companies may be made through a special structure known as a variable interest entity (“VIE”) that is designed to
provide foreign investors, such as a Fund, with exposure to Chinese companies that operate in certain sectors in which China restricts
or prohibits foreign investments. Investments in VIEs may pose additional risks because the investment is made through an intermediary
shell company that has entered into service and other contracts with the underlying Chinese operating company in order to provide investors
with exposure to the operating company, and therefore does not represent equity ownership in the operating company. The value of the shell
company is derived from its ability to consolidate the VIE into its financials pursuant to contractual arrangements that allow the shell
company to exert a degree of control over, and obtain economic benefits arising from, the VIE without formal legal ownership. The contractual
arrangements between the shell company and the operating company may not be as effective in providing operational control as direct equity
ownership, and the rights of a foreign investor (such as a Fund) may be limited, including by actions of the Chinese government that could
determine that the underlying contractual arrangements are invalid. While VIEs are a longstanding industry practice and Chinese regulators
have permitted such arrangements to proliferate, the structure has not been formally recognized under Chinese law and it is uncertain
whether Chinese regulators will withdraw their implicit acceptance of the structure. It is also uncertain whether the contractual arrangements,
which may be subject to conflicts of interest between the legal owners of the VIE and foreign investors, would be enforced by Chinese
courts or arbitration bodies. Prohibitions of these structures by the Chinese government, or the inability to enforce such contracts,
from which the shell company derives its value, would likely cause the VIE-structured holding(s) to suffer significant, detrimental, and
possibly permanent loss, and in turn, adversely affect a Fund’s returns and net asset value.
Investments
in the Middle East. The economies of countries in the Middle East are all
considered emerging markets economies and tend to be highly reliant on the exportation of commodities. Many Middle Eastern economies have
little or no democratic tradition and are led by family structures. Opposition parties are often banned, leading to dissidence and militancy.
Such developments, if they were to occur, could result in significant disruptions in securities markets. Certain Middle Eastern countries
have strained relations with other Middle Eastern countries due to territorial disputes, historical animosities, international alliances,
defense concerns, or other reasons, which may adversely affect the economies of these Middle Eastern countries. Certain Middle Eastern
countries may be heavily dependent upon international trade, and consequently have been and may continue to be negatively affected by
trade barriers, exchange controls, managed adjustments in relative currency values, and other protectionist measures imposed by the countries
with which they trade. In addition, certain issuers in Middle Eastern countries in which a Fund invests may operate in, or have dealings
with, countries subject to sanctions and/or embargoes imposed by the U.S. Government as state sponsors of terrorism. As a result, an issuer
may sustain damage to its reputation if it is identified as an issuer operating in, or having dealings with, such countries.
The
manner in which foreign investors may invest in companies in certain Middle Eastern countries, as well as limitations on those investments,
may have an adverse impact on the operations of a Fund. For example, in certain of these countries, a Fund may be required to invest initially
through a local broker or other entity and then have the shares that were purchased re-registered in the name of the Fund. Re-registration
in some instances may not be possible on a timely basis. This may result in a delay during which the Fund may be denied certain of its
rights as an investor, including rights to dividends or to be made aware of certain corporate actions. There also may be instances where
the Fund places a purchase order but is subsequently informed, at the time of re-registration, that the permissible allocation of the
investment to foreign investors has been filled.
Investments
in Saudi Arabia. A Fund generally expects to conduct transactions in a manner
in which it would not be limited by regulations to a single broker. However, there may be a limited number of brokers who can provide
services to the Fund in Saudi Arabia, which may have an adverse impact on the prices, quantity, or timing of Fund transactions.
A
Fund’s ability to invest in Saudi Arabian equity securities depends on the ability of the investment adviser or subadviser, as
a Foreign Portfolio Manager, and the Fund, as a Qualified Foreign Investor (“QFI”), to obtain and maintain such authorizations
from the Saudi Arabia Capital Market Authority (“CMA”). Even though a Fund may obtain a QFI approval, the Fund does not
have an exclusive investment quota and is subject to foreign investment limitations and other regulations imposed by the CMA on QFIs,
as well as local market participants. Any change in the QFI system generally, including the possibility of the investment adviser or subadviser
or the Fund losing its respective Foreign Portfolio Manager or QFI status with the CMA, may adversely affect the Fund.
A
Fund is required to use a trading account to buy and sell securities in Saudi Arabia. This trading account can be held directly with a
broker or held with a custodian, which is known as the Independent Custody Model (“ICM”). The ICM approach is generally
regarded as preferable because securities are under the safekeeping and control of the custodian and would be recoverable in the event
of the bankruptcy of the custodian. When a Fund utilizes the ICM approach, it relies on a broker standing instruction letter to authorize
the Fund’s sub-custodian to move securities to a trading account for settlement, based on the details supplied by the broker. However,
an authorized broker could potentially either fraudulently or erroneously sell a Fund’s securities, although opportunities for
a local broker to conduct fraudulent transactions are limited due to short trading hours (trading hours in Saudi Arabia are generally
between 10 a.m. to 3 p.m.). In addition, the risk of fraudulent or erroneous transactions is further mitigated by a manual pre-matching
process conducted by the custodian, which validates the Fund’s settlement instructions with the local broker contract note and
the transaction report from the depositary. Similar risks also apply to using a direct broker trading account. When a Fund utilizes a
direct broker trading account, the account is set up in the Fund’s name, and the assets are likely to be treated as ring-fenced
and separated from any other accounts at the broker. However, if the broker defaults, there may be a delay in recovering the Fund’s
assets that are held in the broker account, and legal proceedings may need to be initiated in order to do so.
Health Care Companies
A
Fund may invest in health care companies. The activities of health care companies may be funded or subsidized by federal and state governments.
If government funding and subsidies are reduced or discontinued, the profitability of these companies could be adversely affected. Health
care companies may also be affected by government policies on health care reimbursements, regulatory approval for new drugs and medical
instruments, and similar matters. They are also subject to legislative risk, i.e., the risk of a reform of the health care system through
legislation.
Each
Fund may invest not more than 15% of its net assets in “illiquid securities,” which are investments that the Fund reasonably
expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly
changing the market value of the investment. A Fund may not be able to dispose of such securities in a timely fashion and for a fair price,
which could result in losses to a Fund. In addition, illiquid securities are generally more difficult to value. Illiquid securities may
include repurchase agreements with maturities greater than seven days, futures contracts and options thereon for which a liquid secondary
market does not exist, time deposits maturing in more than seven calendar days, and securities of new and early stage companies whose
securities are not publicly traded. The Funds may also purchase securities eligible for resale to qualified institutional buyers pursuant
to Rule 144A under the 1933 Act. Such securities may be determined to be liquid based on an analysis taking into account, among other
things, trading activity for such securities and the availability of reliable pricing information, among other factors. If there is a
lack of trading interest in particular Rule 144A securities, a Fund’s holdings of those securities may be illiquid, resulting
in undesirable delays in selling these securities at prices representing fair value.
Index-Related Securities (Equity Equivalents)
The
Funds may invest in certain types of securities that enable investors to purchase or sell shares in a portfolio of securities that seeks
to track the performance of an underlying index or a portion of an index. Such Equity Equivalents include, among others, DIAMONDS (interests
in a portfolio of securities that seeks to track the performance of the Dow Jones Industrial Average), SPDRs or Standard & Poor’s
Depositary Receipts (interests in a portfolio of securities that seeks to track the performance of the S&P 500®
Index), and the Nasdaq-100 Trust (interests in a portfolio of securities of the largest and most actively traded non-financial companies
listed on the Nasdaq Stock Market). Such securities are similar to index mutual funds, but they are traded on various stock exchanges
or secondary markets. The value of these securities is dependent upon the performance of the underlying index on which they are based.
Thus, these securities are subject to the same risks as their underlying indexes as well as the securities that make up those indexes.
For example, if the securities comprising an index that an index-related security seeks to track perform poorly, the index-related security
will lose value.
Equity
Equivalents may be used for several purposes, including to simulate full investment in the underlying index while retaining a cash balance
for fund management purposes, to facilitate trading, to reduce transaction costs, or to seek higher investment returns where an Equity
Equivalent is priced more attractively than securities in the underlying index. Because the expense associated with an investment in Equity
Equivalents may be substantially lower than the expense of small investments directly in the securities comprising the indexes they seek
to track, investments in Equity Equivalents may provide a cost-effective means of diversifying the fund’s assets across a broad
range of equity securities.
The
prices of Equity Equivalents are derived and based upon the securities held by the particular investment company. Accordingly, the level
of risk involved in the purchase or sale of an Equity Equivalent is similar to the risk involved in the purchase or sale of traditional
common stock, with the exception that the pricing mechanism for such instruments is based on a basket of stocks. The market prices of
Equity Equivalents are expected to fluctuate in accordance with both changes in the NAVs of their underlying indexes and the supply and
demand for the instruments on the exchanges on which they are traded. Substantial market or other disruptions affecting an Equity Equivalent
could adversely affect the liquidity and value of the shares of the fund investing in such instruments.
Inflation-Linked Securities
Inflation-linked
securities are typically fixed income securities whose principal values are periodically adjusted according to a measure of inflation.
If the index measuring inflation falls, the principal value of an inflation-linked security will be adjusted downward, and consequently
the interest payable on the security (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original
principal of the security upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-linked securities.
For securities that do not provide a similar guarantee, the adjusted principal value of the security repaid at maturity may be less than
the original principal.
Alternatively,
the interest rates payable on certain inflation-linked securities may be adjusted according to a measure of inflation. As a result, the
principal values of such securities do not adjust according to the rate of inflation, although the interest payable on such securities
may decline during times of falling inflation.
The
values of inflation-linked securities are expected to change in response to changes in real interest rates. Real interest rates are tied
to the relationship between nominal interest rates and the rate of inflation. If nominal interest rates increase at a faster rate than
inflation, real interest rates may rise, leading to a decrease in value of inflation-linked securities. Inflation-linked securities may
cause a potential cash flow mismatch to investors, because an increase in the
principal amount of an inflation-linked
security will be treated as interest income currently subject to tax at ordinary income rates even though investors will not receive repayment
of principal until maturity. If a Fund invests in such securities, it will be required to distribute such interest income in order to
qualify for treatment as a regulated investment company and eliminate the Fund-level tax, without a corresponding receipt of cash, and
therefore may be required to dispose of portfolio securities at a time when it may not be advantageous to do so in order to make such
distributions.
While
the values of inflation-linked securities are expected to be largely protected from long-term inflationary trends, short-term increases
in inflation may lead to declines in value. In addition, if interest rates rise due to reasons other than inflation (for example, due
to changes in currency exchange rates), investors in inflation-linked securities may not be protected to the extent that the increase
is not reflected in the securities’ inflation measure.
The
periodic adjustment of U.S. Treasury inflation-linked securities is tied to the Consumer Price Index for All Urban Consumers (“CPI-U”),
which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made
up of components such as housing, food, transportation, and energy. Inflation-linked securities issued by a foreign government or a private
issuer are generally adjusted to reflect an inflation measure specified by the issuer. There can be no assurance that the CPI-U or any
other inflation measure will accurately measure the real rate of inflation in the prices of goods and services.
IPOs and Other Limited Opportunities
A
Fund may purchase securities of companies that are offered pursuant to an initial public offering (“IPO”) or other similar
limited opportunities. Although companies can be any age or size at the time of their IPO, they are often smaller and have a limited operating
history, which involves a greater potential for the value of their securities to be impaired following the IPO. The price of a company’s
securities may be highly unstable at the time of its IPO and for a period thereafter due to factors such as market psychology prevailing
at the time of the IPO, the absence of a prior public market, the small number of shares available, and limited availability of investor
information. Securities purchased in IPOs have a tendency to fluctuate in value significantly shortly after the IPO relative to the price
at which they were purchased. These fluctuations could impact the NAV and return earned on a Fund’s shares. Investors in IPOs can
be adversely affected by substantial dilution in the value of their shares, by sales of additional shares, and by concentration of control
in existing management and principal shareholders. In addition, all of the factors that affect the performance of an economy or equity
markets may have a greater impact on the shares of IPO companies. IPO securities tend to involve greater risk due, in part, to public
perception and the lack of publicly available information and trading history.
Master Limited Partnerships
A
Fund may invest in master limited partnerships (“MLPs”), which are limited partnerships in which ownership units are publicly
traded. MLPs often own or own interests in properties or businesses that are related to oil and gas industries, including pipelines, although
MLPs may invest in other types of investments, including credit-related investments. Generally, an MLP is operated under the supervision
of one or more managing general partners. Limited partners (like a Fund when it invests in an MLP) are not involved in the day-to-day
management of the partnership. A Fund also may invest in companies who serve (or whose affiliates serve) as MLP general partners.
Investments
in MLPs are generally subject to many of the risks that apply to partnerships. For example, holders of the units of MLPs may have limited
control and limited voting rights on matters affecting the partnership. There may be fewer corporate protections afforded investors in
an MLP than investors in a corporation. Conflicts of interest may exist among unit holders, subordinated unit holders, and the general
partner of an MLP, including those arising from incentive distribution payments. MLPs that concentrate in a particular industry or region
are subject to risks associated with such industry or region. MLPs holding credit-related investments are subject to interest rate risk
and the risk of default on payment obligations by debt issuers. Investments held by MLPs may be illiquid. MLP units may trade infrequently
and in limited volume, and they may be subject to more abrupt or erratic price movements than securities of larger or more broadly based
companies.
A
Fund may also hold investments in limited liability companies that have many of the same characteristics and are subject to many of the
same risks as master limited partnerships.
The
manner and extent of a Fund’s investments in MLPs and limited liability companies may be limited by its intention to qualify as
a regulated investment company under the Code, and any such investments by the Fund may adversely affect the ability of the Fund to qualify
as such.
Mortgage- and Asset-Backed Securities
Mortgage-backed
securities, including collateralized mortgage obligations (“CMOs”) and certain stripped mortgage-backed securities, represent
a participation in, or are secured by, mortgage loans. Asset-backed securities are structured like
mortgage-backed securities,
but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle installment
sales or installment loan contracts, leases of various types of real and personal property, receivables from credit card agreements, home
equity loans, and student loans. Asset-backed securities may also include collateralized debt obligations as described below.
A
Fund may invest in mortgage-backed securities issued or guaranteed by (i) U.S. Government agencies or instrumentalities such as the
Government National Mortgage Association (“GNMA”) (also known as Ginnie Mae), the Federal National Mortgage Association
(“FNMA”) (also known as Fannie Mae), and the Federal Home Loan Mortgage Corporation (“FHLMC”) (also known
as Freddie Mac) or (ii) other issuers, including private companies. Under the Federal Housing Finance Agency’s “Single Security
Initiative,” Fannie Mae and Freddie Mac have entered into a joint initiative to develop a common securitization platform for the
issuance of Uniform Mortgage-Backed Securities (“UMBS”), which would generally align the characteristics of Fannie Mae and
Freddie Mac mortgage-backed securities. In June 2019, Fannie Mae and Freddie Mac started to issue UMBS in place of their current offerings
of TBA-eligible mortgage-backed securities. The effect of the issuance of UMBS on the market for mortgage-backed securities is uncertain.
Privately issued mortgage-backed securities may include securities backed by commercial mortgages, which are mortgages on commercial,
rather than residential, real estate. Privately issued mortgage-backed securities are not traded on an exchange and there may be a limited
market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active
trading market, mortgage-backed securities held in a Fund’s portfolio may be particularly difficult to value because of the complexities
involved in assessing the value of the underlying mortgage loans. There is no assurance that the U.S. Government would provide financial
support to its agencies and instrumentalities if not required to do so. In addition, certain governmental entities have been subject to
regulatory scrutiny regarding their accounting policies and practices and other concerns that may result in legislation, changes in regulatory
oversight and/or other consequences that could adversely affect the credit quality, availability, or investment character of securities
issued by these entities.
Mortgage-backed
securities have yield and maturity characteristics corresponding to the underlying assets. Unlike traditional debt securities, which may
pay a fixed rate of interest until maturity, when the entire principal amount comes due, payments on certain mortgage-backed securities
include both interest and a partial repayment of principal. Besides the scheduled repayment of principal, repayments of principal may
result from the voluntary prepayment, refinancing, or foreclosure of the underlying mortgage loans. If property owners make unscheduled
prepayments of their mortgage loans, these prepayments will result in early payment of the applicable mortgage-related securities. In
that event a Fund may be unable to invest the proceeds from the early payment of the mortgage-related securities in an investment that
provides as high a yield as the mortgage-related securities. Consequently, early payment associated with mortgage-related securities may
cause these securities to experience significantly greater price and yield volatility than that experienced by traditional fixed income
securities. The occurrence of mortgage prepayments is affected by factors including the level of interest rates, general economic conditions,
the location and age of the mortgages, and other social and demographic conditions. During periods of falling interest rates, the rate
of mortgage prepayments tends to increase, thereby tending to decrease the life of mortgage-related securities. During periods of rising
interest rates, the rate of mortgage prepayments usually decreases, thereby tending to increase the life of mortgage-related securities.
If the life of a mortgage-related security is inaccurately predicted, a Fund may not be able to realize the rate of return the investment
adviser or subadviser expected.
Mortgage-backed
and asset-backed securities are less effective than other types of securities as a means of “locking in” attractive long-term
interest rates. One reason is the need to reinvest prepayments of principal; another is the possibility of significant unscheduled prepayments
resulting from declines in interest rates. These prepayments would have to be reinvested at lower rates. As a result, these securities
may have less potential for capital appreciation during periods of declining interest rates than other securities of comparable maturities,
although they may have a similar or greater risk of decline in market value during periods of rising interest rates. Prepayments may also
significantly shorten the effective maturities of these securities, especially during periods of declining interest rates. Conversely,
during periods of rising interest rates, a reduction in prepayments may increase the effective maturities of these securities, subjecting
them to a greater risk of decline in market value in response to rising interest rates than traditional debt securities, and, therefore,
potentially increasing the volatility of the Funds. The terms of certain asset-backed securities may require early prepayment in response
to certain credit events potentially affecting the values of the asset-backed securities.
At
times, some mortgage-backed and asset-backed securities will have higher than market interest rates and therefore will be purchased at
a premium above their par value. Prepayments may cause losses on securities purchased at a premium. Ongoing developments in the residential
and commercial mortgage markets may have additional consequences for the market for mortgage-backed securities. Asset-backed securities
also involve the risk that borrowers may default on the obligations backing them and that the values of and interest earned on such investments
will decline as a result. Loans made to lower quality borrowers, including those of sub-prime quality, involve a higher risk of default.
Therefore, the
values
of asset-backed securities backed by lower quality assets, such as lower quality loans, including those of sub-prime quality, may suffer
significantly greater declines in value due to defaults, payment delays, or a perceived increased risk of default, especially during periods
when economic conditions worsen. During periods of deteriorating economic conditions, such as recessions or periods of rising unemployment,
delinquencies and losses generally increase, sometimes dramatically, with respect to securitizations involving loans, sales contracts,
receivables, and other obligations underlying asset-backed securities. The effects of the COVID-19 virus and governmental responses to
the effects of the virus, as well as the effects of and responses to other pandemics and epidemics, may result in increased delinquencies
and losses and have other, potentially unanticipated, adverse effects on such investments and the markets for those investments. There
are fewer investors in mortgage- and asset-backed securities markets and those investors are more homogenous than in markets for other
kinds of securities. If a number of market participants are impacted by negative economic conditions, forced selling of mortgage- or asset-backed
securities unrelated to fundamental analysis could depress market prices and liquidity significantly and for a longer period of time than
in markets with greater liquidity.
CMOs
may be issued by a U.S. Government agency or instrumentality or by a private issuer. Although payment of the principal of, and interest
on, the underlying collateral securing privately issued CMOs may be guaranteed by the U.S. Government or its agencies or instrumentalities,
these CMOs represent obligations solely of the private issuer and are not insured or guaranteed by the U.S. Government, its agencies or
instrumentalities, or any other person or entity.
CMOs
typically issue multiple classes of securities, having different maturities, interest rates, and payment schedules, and with the principal
and interest on the underlying mortgages allocated among the several classes in various ways. Payment of interest or principal on some
classes or series of CMOs may be subordinated to payments on other classes or series and may be subject to contingencies; or some classes
or series may bear some or all of the risk of default on the underlying mortgages. CMOs of different classes or series are generally retired
in sequence as the underlying mortgage loans in the mortgage pool are repaid. If enough mortgages are repaid ahead of schedule, the classes
or series of a CMO with the earliest maturities generally will be retired prior to their maturities. Thus, the early retirement of particular
classes or series of a CMO would have the same effect as the prepayment of mortgages underlying other mortgage-backed securities. Conversely,
slower than anticipated prepayments can extend the effective maturities of CMOs, subjecting them to a greater risk of decline in market
value in response to rising interest rates than traditional debt securities, and, therefore, potentially increasing their volatility.
Certain classes or series of CMOs may experience high levels of volatility in response to changes in interest rates and other factors.
Stripped
mortgage-backed securities are usually structured with two classes that receive payments of interest or principal on a pool of mortgage
loans. Stripped mortgage-backed securities may experience very high levels of volatility in response to changes in interest rates. The
yield to maturity on an interest only or “IO” class of stripped mortgage-backed securities is extremely sensitive not only
to changes in prevailing interest rates but also to the rate of principal payments (including prepayments) on the underlying assets. A
rapid rate of principal prepayments will typically result in a substantial decline in the value of IOs and may have a significant adverse
effect on a Fund’s yield to maturity to the extent it invests in IOs. If the assets underlying the IO experience greater than anticipated
prepayments of principal, the Fund may fail to recoup fully, or at all, its initial investment in these securities. Conversely, principal
only securities or “POs” tend to increase in value if prepayments are greater than anticipated and decline if prepayments
are slower than anticipated.
The
secondary market for stripped mortgage-backed securities may be more volatile and less liquid than that for other mortgage-backed securities,
potentially limiting a Fund’s ability to buy or sell those securities at any particular time.
Subprime
mortgage loans, which typically are made to less creditworthy borrowers, have a higher risk of default than conventional mortgage loans.
Therefore, mortgage-backed securities backed by subprime mortgage loans may suffer significantly greater declines in value due to defaults,
and may experience high levels of volatility.
A
Fund may invest in collateralized debt obligations (“CDOs”), including collateralized bond obligations (“CBOs”),
collateralized loan obligations (“CLOs”), and other similarly structured securities. CBOs, CLOs, and other CDOs are types
of asset-backed securities. A CBO is typically an obligation of a trust backed (or collateralized) by a pool of securities, often including
high risk, below investment grade debt securities. The collateral may include many different types of debt securities such as high yield
debt, residential privately issued mortgage-related securities, commercial privately issued mortgage-related securities, trust preferred
securities, and emerging market debt. A CLO is typically an obligation of a trust backed (or collateralized) by a pool of loans, which
may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including
loans that may be rated below investment grade or equivalent unrated loans. Other types of CDOs may include, by way of example, obligations
of trusts backed by other types of assets representing obligations of various types, and may include high risk, below investment grade
debt obligations. CBOs, CLOs, and other CDOs may pay management fees and administrative expenses. The risk profile of an investment in
a CBO, CLO, or other CDO depends largely on the type of the collateral securities and the class of the instrument in which a Fund invests.
For CBOs,
CLOs, and other CDOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and yield. The
riskiest portion is the “equity” tranche which typically bears the effects of defaults from the bonds or loans in the trust
in the first instance and may serve to protect other, senior tranches from defaults. Typically, the more senior the tranche in a CBO,
CLO, or other CDO, the higher its rating, although senior tranches can experience substantial losses due to actual defaults. The market
values of CBO, CLO, and CDO obligations may be affected by a number of factors, including, among others, changes in interest rates, defaults
affecting junior tranches, market anticipation of defaults, and general market aversion to CBO, CLO, or other CDO securities as a class,
or to the collateral backing them.
CBOs,
CLOs, and other CDOs may be illiquid. In addition to the risks associated with debt securities discussed elsewhere in this SAI and the
Funds’ Prospectus (e.g., interest rate risk and the risk of default), CBOs, CLOs, and other CDOs carry additional risks including,
but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other
payments on a CBO’s, CLO’s, or other CDO’s obligations; (ii) the collateral may decline in value or be in default;
(iii) the risk that Funds may invest in tranches of CBOs, CLOs, or other CDOs that are subordinate to other classes; and (iv) the
complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected
investment results.
Some
of the loans in which a Fund may invest or to which a Fund may gain exposure through its investments in CDOs, CLOs, or other types of
structured securities may be covenant-lite loans, which contain fewer or less restrictive constraints on the borrower than certain other
types of loans. Covenant-lite loans generally do not include terms that allow the lender to monitor the performance of the borrower and
declare a default or force a borrower into bankruptcy restructuring if certain criteria are breached. Under such loans, lenders typically
must rely on covenants that restrict a company from incurring additional debt or engaging in certain actions. Such covenants can only
be breached by an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly,
a Fund may have fewer rights against a borrower when it invests in or has exposure to such loans and, accordingly, may have a greater
risk of loss on such investments as compared to investments in or exposure to loans with additional or more conventional covenants.
Other Income-Producing Securities
Other
types of income-producing securities the Funds may purchase, include, but are not limited to, the following:
?
•
Variable
and floating rate obligations. Variable and floating
rate securities are debt instruments that provide for periodic adjustments in the interest rate paid on the security and, under certain
limited circumstances, may have varying principal amounts. Variable rate securities provide for a specified periodic adjustment in the
interest rate, while floating rate securities have interest rates that may change with change to the level of prevailing interest rates
or the issuer’s credit quality. These types of securities are relatively long-term instruments that often carry demand features
permitting the holder to demand payment of principal at any time or at specified intervals prior to maturity. There is a risk that the
current interest rate on variable and floating securities may not accurately reflect current market interest rates or adequately compensate
the holder for the current creditworthiness of the issuer. Due to their variable- or floating-rate features, these instruments will generally
pay higher levels of income in a rising interest rate environment and lower levels of income as interest rates decline. For the same reason,
the market value of a variable- or floating-rate instrument is generally expected to have less sensitivity to fluctuations in market interest
rates than a fixed-rate instrument, although the value of a floating-rate instrument may nonetheless decline as interest rates rise and
due to other factors, such as changes in credit quality. Some variable or floating rate securities are structured with liquidity features
such as (1) put options or tender options that permit holders (sometimes subject to conditions) to demand payment of the unpaid principal
balance plus accrued interest from the issuers or certain financial intermediaries or (2) auction rate features, remarketing provisions,
or other maturity-shortening devices designed to enable the issuer to refinance or redeem outstanding debt securities (market-dependent
liquidity features). The market-dependent liquidity features may not operate as intended as a result of the issuer’s declining
creditworthiness, adverse market conditions, or other factors or the inability or unwillingness of a participating broker-dealer to make
a secondary market for such securities. As a result, variable or floating rate securities that include market-dependent liquidity features
may lose value and the holders of such securities may be required to retain them for an extended period of time or until maturity.
In
order to use these investments most effectively, a Fund’s investment adviser or subadviser must correctly assess probable movements
in interest rates. This involves different skills than those used to select most portfolio securities. If the investment adviser or subadviser
incorrectly forecasts such movements, a Fund could be adversely affected by the use of variable or floating rate obligations.
Many financial
instruments use or may use a floating rate based on the London Interbank Offered Rate (“LIBOR”), which is the offered rate
for short-term Eurodollar deposits between major international banks. On July 27, 2017, the head of the United Kingdom’s Financial
Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. The administrator of LIBOR ceased publication of
most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of remaining U.S. dollar LIBOR settings
on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based
contracts should be entered into after 2021. Actions by regulators have resulted in the establishment of alternative reference rates to
LIBOR in most major currencies. Market participants are focused on the transition mechanisms by which the reference rate in existing contracts
or instruments may be amended, whether through market wide protocols, fallback contractual provisions, bespoke negotiations, or amendments,
or otherwise. Markets are developing in response to these new rates, and questions around liquidity in these rates and how to appropriately
adjust these rates to eliminate any economic value transfer at the time of transition remain a significant concern for a Fund. Neither
the effect of the transition process nor its ultimate success can yet be known. A Fund may have investments linked to other interbank
offered rates which may also cease to be published. The transition process might lead to increased volatility and illiquidity in markets
that currently rely on LIBOR to determine interest rates. It could also lead to a reduction in the value of some LIBOR-based investments
and reduce the effectiveness of new hedges placed against existing LIBOR-based instruments. Since the usefulness of LIBOR as a benchmark
could deteriorate during the transition period, these effects could occur prior to the cessation of LIBOR.
•
Standby
commitments. These instruments, which are similar
to a put, give a Fund the option to obligate a broker, dealer, or bank to repurchase a security held by the Fund at a specified price.
•
Tender
option bonds. Tender option bonds are relatively
long-term bonds that are coupled with the agreement of a third party, such as a broker, dealer, or bank, to grant the holders of such
securities the option to tender the securities to the institution at periodic intervals.
•
Inverse
floaters. Inverse floaters have variable interest
rates that typically move in the opposite direction from movements in prevailing interest rates, most often short-term rates. Accordingly,
the value of inverse floaters, or other obligations or certificates structured to have similar features, generally moves in the opposite
direction from interest rates. The value of an inverse floater can be considerably more volatile than the value of other debt instruments
of comparable maturity and credit quality. Inverse floaters incorporate varying degrees of leverage. Generally, greater leverage results
in greater price volatility for any given change in interest rates. Inverse floaters may be subject to legal or contractual restrictions
on resale and therefore may be less liquid than other types of securities. Similar to variable and floating rate obligations, effective
use of inverse floaters requires skills different from those needed to select most portfolio securities. If movements in interest rates
are incorrectly anticipated, a Fund could lose money or the NAV of its shares could decline by the use of inverse floaters.
•
Strip
bonds. Strip bonds are debt securities that are stripped
of their interest, usually by a financial intermediary, after the securities are issued. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturities.
Standby
commitments, tender option bonds, and instruments with demand features are primarily used by the Funds for the purpose of increasing the
liquidity of a Fund’s portfolio.
Other Investment Companies
A
Fund may invest in securities of other open- or closed-end investment companies, including exchange-traded funds (“ETFs”),
traded on one or more national securities exchanges, as well as private investment vehicles. Provisions of the 1940 Act may limit the
ability of a Fund to invest in certain registered investment companies or private investment vehicles or may limit the amount of its assets
that a Fund may invest in any investment vehicle.
A
Fund may, for example, invest in other open- or closed-end investment companies, including ETFs, during periods when it has large amounts
of uninvested cash, when its investment adviser or subadviser believes share prices of other investment companies offer attractive values,
or to gain or maintain exposure to various asset classes and markets or types of strategies and investments. A Fund may invest in shares
of another registered investment company or private investment vehicle in order to gain indirect exposure to markets in a country where
the Fund is not able to invest freely, or to gain indirect exposure to one or more issuers whose securities it may not buy directly. As
a shareholder in an investment vehicle, a Fund would bear its ratable share of that vehicle’s expenses and would remain subject
to payment of the Fund’s
management fees with respect
to assets so invested. Shareholders would therefore be subject to duplicative expenses to the extent a Fund invests in other investment
vehicles. Shares of registered open-end investment companies traded on a securities exchange may not be redeemable by a Fund in all cases.
Private investment vehicles in which a Fund may invest are not registered under the 1940 Act, and so will not offer all of the protections
provided by the 1940 Act (including, among other things, independent oversight, protections against certain conflicts of interest, and
custodial risks).
If
a Fund invests in another investment vehicle, it is exposed to the risk that the other investment vehicle will not perform as expected.
A Fund is exposed indirectly to all of the risks applicable to an investment in such other investment vehicle. In addition, lack of liquidity
in the other investment vehicle could result in its value being more volatile than the underlying portfolio of securities, and may limit
the ability of a Fund to sell or redeem its interest in the investment vehicle at a time or at a price it might consider desirable. A
Fund may not be able to redeem its interest in private investment vehicles except at certain designated times. The investment policies
and limitations of the other registered investment company or private investment vehicle may not be the same as those of the investing
Fund; as a result, the Fund may be subject to additional or different risks, or may achieve a reduced investment return, as a result of
its investment in another investment vehicle. If the other investment company is an ETF or other product traded on a securities exchange
or otherwise actively traded, its shares may trade at a premium or discount to their NAV, an effect that might be more pronounced in less
liquid markets. ETFs are also subject to additional risks, including, among others, the risk that the market price of an ETF’s
shares may trade above or below its NAV, the risk that an active trading market for an ETF’s shares may not develop or be maintained,
the risk that trading of an ETF’s shares may be halted, and the risk that the ETF’s shares may be delisted from the listing
exchange. Unlike shares of a mutual fund, which can be bought and redeemed from the issuing fund by all shareholders at a price based
on NAV, shares of an ETF may be purchased or redeemed directly from the ETF solely by Authorized Participants (“APs”) and
only in aggregations of a specified number of shares (“Creation Units”). ETFs may have a limited number of financial institutions
that act as APs. To the extent that those APs exit the business, or are unable to or choose not to process creation and/or redemption
orders for Creation Units, and no other AP steps forward to create and redeem ETF shares, the ETF’s shares may be more likely to
trade at a premium or discount to NAV and possibly face trading halts or delisting.
A
Fund’s investment adviser or subadviser or their affiliates may serve as investment adviser to a registered investment company
or private investment vehicle in which the Fund may invest, leading to conflicts of interest. For example, a Fund’s investment
adviser or subadviser may receive fees based on the amount of assets invested in the other investment vehicle. Investment by a Fund in
another registered investment company or private investment vehicle will typically be beneficial to its investment adviser or subadviser
in the management of the other investment vehicle, by helping to achieve economies of scale or enhancing cash flows. Due to this and other
factors, a Fund’s investment adviser or subadviser will have an incentive to invest the Fund’s assets in an investment vehicle
sponsored or managed by it or its affiliates in lieu of investments by the Fund directly in portfolio securities, and will have an incentive
to invest in such an investment vehicle over a non-affiliated investment vehicle. The investment adviser or subadviser will have no obligation
to select the least expensive or best performing investment companies available to serve as an underlying investment vehicle. Similarly,
a Fund’s investment adviser or subadviser will have an incentive to delay or decide against the sale of interests held by the Fund
in an investment company sponsored or managed by it or its affiliates. It is possible that other clients of a Fund’s investment
adviser or subadviser or its affiliates will purchase or sell interests in an investment company sponsored or managed by it at prices
and at times more favorable than those at which the Fund does so.
New
SEC Rule 12d1-4 under the 1940 Act, which became effective on January 19, 2022, is designed to streamline and enhance the regulatory framework
for fund of funds arrangements. Rule 12d1-4 permits an investment company to invest in other investment companies beyond the statutory
limits, subject to certain conditions. In connection with this Rule, the SEC rescinded Rule 12d1-2 under the 1940 Act and most fund of
funds exemptive orders, effective January 19, 2022.
The
Rule could affect a Fund’s ability to redeem its investments in other investment companies, make such investments less attractive,
cause the Fund to incur losses, realize taxable gains distributable to shareholders, incur greater or unexpected expenses, or experience
other adverse consequences.
Partly Paid Securities
These
securities are paid for on an installment basis. A partly paid security trades net of outstanding installment payments—the buyer
“takes over payments.” The buyer’s rights are typically restricted until the security is fully paid. If the value
of a partly paid security declines before a Fund finishes paying for it, the Fund will still owe the payments, but may find it hard to
sell and as a result will incur a loss.
A
Fund’s investment adviser or subadviser uses trading as a means of managing the portfolio of the Fund in seeking to achieve its
investment objective. Transactions will occur when a Fund’s investment adviser or subadviser believes that the trade, net of transaction
costs, will improve interest income or capital appreciation potential, or will lessen capital loss potential. Whether the goals discussed
above will be achieved through trading depends on the Fund’s investment adviser’s or subadviser’s ability to evaluate
particular securities and anticipate relevant market factors, including interest rate trends and variations from such trends. If such
evaluations and expectations prove to be incorrect, a Fund’s income or capital appreciation may be reduced and its capital losses
may be increased. In addition, high turnover in a Fund could result in additional brokerage commissions to be paid by that Fund. See also
“Taxation” below.
The
Funds may pay brokerage commissions to affiliates of one or more affiliates of the Funds’ investment adviser or subadvisers.
Portfolio Turnover
Portfolio
turnover involves brokerage commissions and other transaction costs, which the relevant Fund will bear directly, and could involve realization
of taxable capital gains. To the extent that portfolio turnover results in realization of net short-term capital gains, such gains ordinarily
are treated as ordinary income when distributed to shareholders. Portfolio turnover rates are shown in the “Fees and Expenses of
the Fund” and “Financial Highlights” sections of the Prospectus. See the “Taxation” and “Portfolio
Transactions and Brokerage” sections in this SAI for additional information.
Real Estate-Related Investments; Real Estate Investment
Trusts
Factors
affecting the performance of real estate may include excess supply of real property in certain markets, changes in zoning laws, environmental
regulations and other governmental action, completion of construction, changes in real estate value and property taxes, losses from casualty,
condemnation, or natural disaster, sufficient level of occupancy, adequate rent to cover operating expenses, and local and regional markets
for competing assets. The performance of real estate may also be affected by changes in interest rates, prudent management of insurance
risks, and social and economic trends.
Real
estate investment trusts (“REITs”) that may be purchased by a Fund include equity REITs, which own real estate directly,
mortgage REITs, which make construction, development, or long-term mortgage loans, and hybrid REITs, which share characteristics of equity
REITs and mortgage REITs. Equity REITs will be affected by, among other things, changes in the value of the underlying property owned
by the REITs, while mortgage REITs will be affected by, among other things, the value of the properties to which they have extended credit.
REITs are dependent upon the skill of each REIT’s management.
A
Fund could, under certain circumstances, own real estate directly as a result of a default on debt securities it owns or from an in-kind
distribution of real estate from a REIT. Risks associated with such ownership could include potential liabilities under environmental
laws and the costs of other regulatory compliance. If a Fund has rental income or income from the direct disposition of real property,
the receipt of such income may adversely affect its ability to retain its tax status as a regulated investment company and thus its ability
to avoid taxation on its income and gains distributed to its shareholders. REITs are also subject to substantial cash flow dependency,
defaults by borrowers, self-liquidation, and the risk of failing to qualify for favorable tax treatment under the Code and/or to maintain
exempt status under the 1940 Act. If a Fund invests in REITs, investors would bear not only a proportionate share of the expenses of that
Fund, but also, indirectly, expenses of the REITs.
Repurchase Agreements
A
repurchase agreement is a contract under which a Fund acquires a security for a relatively short period (usually not more than one week)
subject to the obligation of the seller to repurchase and the Fund to resell such security at a fixed time and price (representing the
Fund’s cost plus interest). Repurchase agreements may also be viewed as loans made by a Fund which are collateralized by the securities
subject to repurchase. The investment adviser or subadviser will monitor such transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total amount of the repurchase obligation, including the interest factor. If the
seller defaults, a Fund could realize a loss on the sale of the underlying security to the extent that the proceeds of the sale including
accrued interest are less than the resale price provided in the agreement including interest. In addition, if the seller should be involved
in bankruptcy or insolvency proceedings, the Fund may incur delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the Fund is treated as an unsecured creditor and required to return the underlying collateral to the seller’s
estate. There is no limit on the Funds’ investment in repurchase agreements.
Restricted
securities are subject to legal restrictions on their sale. Difficulty in selling securities may result in a loss or be costly to a Fund.
Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the
1933 Act, or in a registered public offering. Where registration is required, the holder of a registered security may be obligated to
pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and
the time it may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions
were to develop, the holder might obtain a less favorable price than prevailed when it decided to seek registration of the security.
Reverse Repurchase Agreements and Treasury Rolls
A
Fund may enter into reverse repurchase agreements or Treasury rolls with banks and broker-dealers to enhance return. Reverse repurchase
agreements involve sales by a Fund of portfolio securities concurrently with an agreement by the Fund to repurchase the same securities
at a later date at a fixed price (typically equal to the original sale price plus interest). During the reverse repurchase agreement period,
the Fund continues to receive principal and interest payments on the securities and also has the opportunity to earn a return on the purchase
price received by it from the counterparty. Similarly, in a Treasury roll transaction, a Fund sells a Treasury security and simultaneously
enters into an agreement to repurchase the security from the buyer at a later date, at the original sale price plus interest. The repurchase
price is typically adjusted to provide the Fund the economic benefit of any interest that accrued on the Treasury security during the
term of the transaction. The Fund may use the purchase price received by it to earn additional return during the term of the Treasury
roll transaction. Reverse repurchase agreements and Treasury rolls are similar to a secured borrowing of a Fund and generally create investment
leverage. A Fund might lose money both on the security subject to the reverse repurchase agreement and on the investments it makes with
the proceeds of the reverse repurchase agreement. If the counterparty in such a transaction files for bankruptcy or becomes insolvent,
a Fund’s use of the proceeds from the sale of its securities may be restricted or forfeited, and the counterparty may fail to return/resell
the securities in question to the Fund. A Fund may enter into reverse repurchase agreements or Treasury rolls without limit up to the
amount permitted under applicable law. Pursuant to Rule 18f-4 under the 1940 Act, a Fund has the option to treat all reverse repurchase
agreements and similar financing transactions as “derivatives transactions,” or to include all such transactions in the
Fund’s asset coverage ratio for borrowings.
Securities Lending
A
Fund may lend its portfolio securities. The Fund expects that, in connection with any securities loan: (1) the loan will be secured
continuously by collateral consisting of U.S. Government securities, cash, or cash equivalents adjusted daily to have market value at
least equal to the current market value of the securities loaned; (2) the Fund will have the right at any time on reasonable notice
to call the loan and regain the securities loaned; (3) the Fund will receive an amount equal to any interest or dividends paid on
the loaned securities; and (4) the aggregate market value of securities the Fund has loaned will not at any time exceed one-third
(or such other lower limit as the Board may establish) of the total assets of the Fund. The risks in lending portfolio securities, as
with other extensions of credit, include a possible delay in recovering the loaned securities or a possible loss of rights in the collateral
should the borrower fail financially. Regulations adopted by global prudential regulators that are now in effect require certain bank-regulated
counterparties and certain of their affiliates to include in certain financial contracts, including many securities lending agreements,
terms that delay or restrict the rights of counterparties, such as the Funds, to terminate such agreements, foreclose upon collateral,
exercise other default rights, or restrict transfers of credit support in the event that the counterparty and/or its affiliates are subject
to certain types of resolution or insolvency proceedings. It is possible that these new requirements, as well as potential additional
government regulation and other developments in the market, could adversely affect a Fund’s ability to terminate existing securities
lending agreements or to realize amounts to be received under such agreements. Voting rights or rights to consent with respect to the
loaned securities pass to the borrower, although a Fund would retain the right to call the loans at any time on reasonable notice, and
may do so in order that the securities may be voted in an appropriate case.
A
Fund’s securities loans will be made by a third-party agent appointed by the Fund, although the agent is only permitted to make
loans to borrowers previously approved by the Fund’s Board. Any cash collateral securing a loan of securities by a Fund will typically
be invested by the agent. The investment of the collateral will be at the risk and for the account of the Fund. The earnings on the investment
of collateral will be split between the Fund and the agent; as a result, the agent may have an incentive to invest the collateral in riskier
investments than if it were not to share in the earnings. It is possible that any loss on the investment of collateral for a securities
loan will exceed (potentially by a substantial amount) the Fund’s earnings on the loan.
A
short sale is a transaction in which a fund sells a security it does not own in anticipation that the market price of that security will
decline. When a fund makes a short sale on a security, it must borrow the security sold short and deliver it to a broker dealer through
which it made the short sale as collateral for its obligation to deliver the security upon the conclusion of the sale. A fund may have
to pay a fee to borrow particular securities and is often obligated to pay over any accrued interest and dividends on such borrowed securities.
If the price of the security sold short increases between the time of the short sale and the time a fund replaces the borrowed security,
a fund will incur a loss, which could be unlimited, in cases where a fund is unable for whatever reason to close out its short position;
conversely, if the price declines, a fund will realize a capital gain. Any gain will be decreased, and any loss increased, by the transaction
costs described above. The successful use of short selling may be adversely impacted by imperfect correlation between movements in the
price of the security sold short and the securities being hedged.
Selling
short “against-the-box” refers to the sale of securities actually owned by the seller but held in safekeeping. In such short
sales, while the short position is open, a fund must own an equal amount of such securities, or by virtue of ownership of securities have
the right, without payment of further consideration, to obtain an equal amount of securities sold short. Short sales against-the-box generally
produce current recognition of gain (but not loss) for U.S. federal income tax purposes on the constructive sale of securities “in
the box” prior to the time the short position is closed out.
Terrorism, War, Natural Disasters, and Epidemics
Terrorism,
war, and related geopolitical events (and their aftermath) have led, and in the future may lead, to increased short-term market volatility
and may have adverse long-term effects on U.S. and world economies and markets generally. For example, in February 2022, Russia commenced
a large-scale military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict
and could have a severe adverse effect on the regional and the global financial markets and economies. In addition, sanctions imposed
on Russia, Russian individuals, including politicians, and Russian corporate and banking entities by the U.S. and other countries, and
any sanctions imposed in the future, may have a significant adverse impact on the Russian economy and related markets. Such actions may
also result in a decline in the value and liquidity of Russian securities, and a weakening of the ruble, and will impair a Fund’s
ability to buy, sell, receive, or deliver Russian securities. In addition, securities market trading halts related to the conflict could
adversely impact the value and liquidity of a Fund’s holdings, and could impair a Fund’s ability to transact in and/or value
portfolio securities. The ramifications of the conflict and related sanctions may negatively impact other regional and global financial
markets (including in Europe, Asia, and the U.S.), companies in other countries (including those that have done business in Russia), and
various sectors, industries, and markets for securities and commodities, such as oil and natural gas. The price and liquidity of a Fund’s
investments may fluctuate widely as a result of this and other geopolitical conflicts and related events. The extent and duration of any
military conflict or future escalation of such hostilities (including cyberattacks), the extent and impact of existing and future sanctions,
market disruptions and volatility, and the result of any diplomatic negotiations, cannot be predicted. These and any related or similar
future events could have a significant adverse impact on a Fund’s performance and the value of an investment in a Fund.
Natural
and environmental disasters, such as, for example, earthquakes, fires, floods, hurricanes, tsunamis, and weather-related phenomena generally,
as well as widespread epidemics, can be highly disruptive to economies and markets, adversely affecting individual companies, sectors,
industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value
of the Funds’ investments. For example, the spread of the novel strain of coronavirus and its variants (known as COVID-19) has
caused volatility, severe market dislocations and liquidity constraints in many markets, and may adversely affect the Funds’ investments
and operations. The transmission of COVID-19 and efforts to contain its spread have resulted in, among other things, travel restrictions
and disruptions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in
healthcare service preparation and delivery, quarantines, event and service cancellations or interruptions, and disruptions to business
operations (including staff reductions), supply chains, and consumer activity, as well as general concern and uncertainty that has negatively
affected the economic environment.
The
COVID-19 virus has negatively affected the global economy, the economies of many countries, and the financial performance of individual
issuers, sectors, industries, asset classes, and markets in significant and unforeseen ways. In addition, actions taken by governmental
and quasi-governmental authorities and regulators throughout the world in response to the COVID-19 outbreak, including significant fiscal
and monetary policy changes, have affected the values, volatility, and liquidity of securities or other assets. The effects of the outbreak
in developing or emerging market countries may be greater due to less established health care systems, financial systems and institutions,
and government institutions. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty. The foregoing
could have a
significant
adverse effect on a Fund’s performance and have the potential to impair a Fund’s ability to maintain operational standards
(such as with respect to satisfying redemption requests), disrupt the operations of a Fund’s service providers, adversely affect
the values and liquidity of a Fund’s investments, and negatively impact a Fund’s performance and a shareholder’s
investment in a Fund. Other infectious illness outbreaks, epidemics or pandemics that may arise in the future, could adversely affect
the economies of many nations or the entire global economy, the financial performance of individual issuers, borrowers and sectors, and
the health of the markets generally in potentially significant and unforeseen ways.
Trade Claims
A
Fund may purchase trade claims and other obligations of, or claims against, companies in bankruptcy proceedings. Trade claims are claims
for payment by vendors and suppliers for products and services previously furnished to the companies in question. Other claims may include,
for example, claims for payment under financial or derivatives obligations. Trade claims may be purchased directly from the creditor or
through brokers or from dealers, and are typically purchased at a significant discount from their face amounts. There is no guarantee
that a debtor will ever be able to satisfy its obligations on such claims. Trade claims are subject to the risks associated with low-quality
and distressed obligations.
Trust Preferred Securities
Trust
preferred securities are typically issued by corporations, generally in the form of interest bearing notes with preferred securities characteristics,
or by an affiliated trust, generally in the form of beneficial interests in subordinated debentures or similarly structured securities.
Trust preferred securities may pay interest at either fixed or adjustable rates. Trust preferred securities may be issued with a final
maturity date, or may be perpetual.
Trust
preferred securities are typically junior and fully subordinated liabilities of an issuer and benefit from a guarantee that is junior
and fully subordinated to the other liabilities of the guarantor. In addition, trust preferred securities typically permit an issuer to
defer the payment of income for five years or more without triggering an event of default. Because of their subordinated position
in the capital structure of an issuer, the ability to defer payments for extended periods of time without default consequences to the
issuer, and certain other features (such as restrictions on common dividend payments by the issuer or ultimate guarantor when full cumulative
payments on the trust preferred securities have not been made), these trust preferred securities are often treated as close substitutes
for traditional preferred securities, both by issuers and investors.
Many
trust preferred securities are issued by trusts or other special purpose entities established by operating companies and are not a direct
obligation of an operating company. At the time the trust or special purpose entity sells such preferred securities to investors, it purchases
debt of the operating company (with terms comparable to those of the trust or special purpose entity securities). The trust or special
purpose entity is generally required to be treated as transparent for U.S. federal income tax purposes, and the holders of the trust preferred
securities are treated for tax purposes as owning beneficial interests in the underlying debt of the operating company. Accordingly, payments
on the trust preferred securities are treated as interest rather than dividends for U.S. federal income tax purposes. The trust or special
purpose entity in turn would be a holder of the operating company’s debt and would typically be subordinated to other classes of
the operating company’s debt.
U.S. Government Securities
The
Funds may invest in U.S. Government securities. These include obligations issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities. Payment of principal and interest on U.S. Government obligations (i) may be backed by the full faith and credit
of the United States (as with U.S. Treasury obligations and GNMA certificates) or (ii) may be backed solely by the issuing or guaranteeing
agency or instrumentality itself (as with FNMA notes). In the latter case, the investor must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the United States if the agency
or instrumentality does not meet its commitment. Such securities may involve increased risk of loss of principal and interest compared
to government debt securities that are backed by the full faith and credit of the United States. Such agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government would provide financial support to its agencies or instrumentalities
where it is not obligated to do so. From time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase
the statutory debt ceiling could: increase the risk that the U.S. Government may default on payments on certain U.S. Government securities;
cause the credit rating of the U.S. Government to be downgraded or increase volatility in both stock and bond markets; result in higher
interest rates; reduce prices of U.S. Treasury securities; and/or increase the costs of certain kinds of debt.
U.S.
Government securities are subject to interest rate risk, and, in some cases, may be subject to credit risk. Although FHLMC and FNMA are
now under conservatorship by the Federal Housing Finance Agency, and are benefiting from a
liquidity
backstop of the U.S. Treasury, no assurance can be given that these initiatives will be successful. As a general matter, the value of
debt instruments, including U.S. Government obligations, declines when market interest rates increase and rises when market interest rates
decrease. Certain types of U.S. Government obligations are subject to fluctuations in yield or value due to their structure or contract
terms.
Utility Industries
Risks
that are intrinsic to the utility industries include difficulty in obtaining an adequate return on invested capital, difficulty in financing
large construction programs during an inflationary period, restrictions on operations and increased cost and delays attributable to environmental
considerations and regulation, difficulty in raising capital in adequate amounts on reasonable terms in periods of high inflation and
unsettled capital markets, technological innovations that may render existing plants, equipment, or products obsolete, the potential impact
of natural or man-made disasters, increased costs and reduced availability of certain types of fuel, occasionally reduced availability
and high costs of natural gas for resale, the effects of energy conservation, the effects of a national energy policy and lengthy delays
and greatly increased costs and other problems associated with the design, construction, licensing, regulation, and operation of nuclear
facilities for electric generation, including, among other considerations, the problems associated with the use of radioactive materials
and the disposal of radioactive wastes. There are substantial differences among the regulatory practices and policies of various jurisdictions,
and any given regulatory agency may make major shifts in policy from time to time. There is no assurance that regulatory authorities will,
in the future, grant rate increases or that such increases will be adequate to permit the payment of dividends on common stocks issued
by a utility company. Additionally, existing and possible future regulatory legislation may make it even more difficult for utilities
to obtain adequate relief. Certain of the issuers of securities held in the Fund’s portfolio may own or operate nuclear generating
facilities. Governmental authorities may from time to time review existing policies and impose additional requirements governing the licensing,
construction and operation of nuclear power plants. Prolonged changes in climatic conditions can also have a significant impact on both
the revenues of an electric and gas utility as well as the expenses of a utility, particularly a hydro-based electric utility.
Utility
companies in the United States and in foreign countries are generally subject to regulation. In the United States, most utility companies
are regulated by state and/or federal authorities. Such regulation is intended to ensure appropriate standards of service and adequate
capacity to meet public demand. Generally, prices are also regulated in the United States and in foreign countries with the intention
of protecting the public while ensuring that the rate of return earned by utility companies is sufficient to allow them to attract capital
in order to grow and continue to provide appropriate services. There can be no assurance that such pricing policies or rates of return
will continue in the future.
The
nature of regulation of the utility industries continues to evolve both in the United States and in foreign countries. In recent years,
changes in regulation in the United States increasingly have allowed utility companies to provide services and products outside their
traditional geographic areas and lines of business, creating new areas of competition within the industries. In some instances, utility
companies are operating on an unregulated basis. Because of trends toward deregulation and the evolution of independent power producers
as well as new entrants to the field of telecommunications, non-regulated providers of utility services have become a significant part
of their respective industries. The investment adviser or subadviser believes that the emergence of competition and deregulation will
result in certain utility companies being able to earn more than their traditional regulated rates of return, while others may be forced
to defend their core business from increased competition and may be less profitable. Reduced profitability, as well as new uses of funds
(such as for expansion, operations, or stock buybacks) could result in cuts in dividend payout rates. The investment adviser or subadviser
seeks to take advantage of favorable investment opportunities that may arise from these structural changes. Of course, there can be no
assurance that favorable developments will occur in the future.
Foreign
utility companies are also subject to regulation, although such regulations may or may not be comparable to those in the United States.
Foreign utility companies may be more heavily regulated by their respective governments than utilities in the United States and, as in
the United States, generally are required to seek government approval for rate increases. In addition, many foreign utilities use fuels
that may cause more pollution than those used in the United States, which may require such utilities to invest in pollution control equipment
to meet any proposed pollution restrictions. Foreign regulatory systems vary from country to country and may evolve in ways different
from regulation in the United States.
A
Fund’s investment policies are designed to enable it to capitalize on evolving investment opportunities throughout the world. For
example, the rapid growth of certain foreign economies will necessitate expansion of capacity in the utility industries in those countries.
Although many foreign utility companies currently are government-owned, thereby limiting current investment opportunities for a Fund,
the investment adviser or subadviser believes that, in order to attract significant capital for growth, foreign governments are likely
to seek global investors through the privatization of their
utility industries. Privatization,
which refers to the trend toward investor ownership of assets rather than government ownership, is expected to occur in newer, faster-growing
economies and in mature economies. Of course, there is no assurance that such favorable developments will occur or that investment opportunities
in foreign markets will increase.
The
revenues of domestic and foreign utility companies generally reflect the economic growth and development in the geographic areas in which
they do business. The investment adviser or subadviser will take into account anticipated economic growth rates and other economic developments
when selecting securities of utility companies.
Zero-Coupon, Step Coupon and Pay-In-Kind Securities
Other
debt securities in which the Funds may invest include zero coupon, step coupon, and pay-in-kind instruments. Zero coupon bonds are issued
and traded at a discount from their face value. They do not entitle the holder to any periodic payment of interest prior to maturity.
Step coupon bonds trade at a discount from their face value and pay coupon interest. The coupon rate is low for an initial period and
then increases to a higher coupon rate thereafter. The discount from the face amount or par value depends on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security, and the perceived credit quality of the issue. Pay-in-kind
securities are debt or preferred stock securities that require or permit payment of interest in the form of additional securities. Payment-in-kind
securities allow the issuer to avoid or delay the need to generate cash to meet current interest payments and, as a result, may involve
greater risk than securities that pay interest currently or in cash.
Current
U.S. federal income tax law requires holders of zero coupon and step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even though holders receive no cash payments of interest during
the year. In order to qualify as a regulated investment company under the Code, a Fund must distribute its investment company taxable
income, including the original issue discount accrued on zero coupon or step coupon bonds. Because a Fund will not receive cash payments
on a current basis in respect of accrued original issue discount on zero coupon or step coupon bonds during the period before interest
payments begin, and may not receive cash payments on payment-in-kind securities until maturity or redemption, in some years that
Fund may have to distribute cash obtained from other sources in order to satisfy the distribution requirements under the Code. A Fund
might obtain such cash from selling other portfolio holdings which might cause a Fund to incur capital gains or losses on the sale. Additionally,
these actions are likely to reduce the assets to which Fund expenses could be allocated and to reduce the rate of return for a Fund. In
some circumstances, such sales might be necessary in order to satisfy cash distribution requirements even though investment considerations
might otherwise make it undesirable for a Fund to sell the securities at the time.
Generally,
the market prices of zero coupon, step coupon, and pay-in-kind securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates to a greater degree than other types of debt securities.
DISCLOSURE OF PORTFOLIO HOLDINGS
The
Trustees of the Funds, including a majority of Trustees who are not “interested persons” of the Funds (as defined in the
1940 Act), have adopted policies and procedures with respect to the disclosure of the Funds’ portfolio holdings. These policies
and procedures generally provide that no disclosure of portfolio holdings information may be made unless publicly disclosed as described
below or made as part of the daily investment activities of the Funds to the Funds’ investment adviser, subadviser(s), as applicable,
or any of their designates who provide services to the Funds, which by explicit agreement or by virtue of their respective duties to the
Funds, are required to maintain confidentiality of the information disclosed. Certain limited exceptions pursuant to the Funds’
policies and procedures are described below. The Funds’ portfolio holdings information may not be disseminated for compensation.
Any exceptions to the Funds’ policies and procedures may be made only if approved in writing by the Funds’ Principal Executive
Officer and the Funds’ Chief Compliance Officer as being in the best interests of the relevant Fund, and then only if the recipients
are subject to a written confidentiality agreement specifying that the relevant Fund’s portfolio holdings information is the confidential
property of the Fund and may not be used for any purpose except in connection with the provision of services to the Fund and, in particular,
that such information may not be traded upon. Any such exceptions must be reported to the Funds’ Board at its next regularly scheduled
meeting. It was determined that these policies and procedures are reasonably designed to ensure that disclosure of portfolio holdings
information is in the best interests of a Fund’s shareholders and appropriately address the potential for conflicts between the
interests of a Fund’s shareholders, on the one hand, and those of MML Advisers or any affiliated person of the Fund or MML Advisers
on the other.
Acting
pursuant to the policies and procedures adopted by the Trustees of the Funds, the Funds’ investment adviser and subadviser(s),
as applicable, are primarily responsible for compliance with these policies and procedures, which
includes maintaining such
internal informational barriers (e.g., “Chinese walls”) as each believes are reasonably necessary for preventing the unauthorized
disclosure of portfolio holdings information. Pursuant to Rule 38a-1 under the 1940 Act, the Trustees will periodically (as needed,
but at least annually) receive reports from the Funds’ Chief Compliance Officer regarding the operation of these policies and procedures,
including a confirmation by the Chief Compliance Officer that the investment adviser’s and the subadviser(’s/s’),
as applicable, policies, procedures, and/or processes are reasonably designed to comply with the Funds’ policies and procedures
in this regard.
Public Disclosures
The
Funds’ portfolio holdings are currently disclosed to the public through required filings with the SEC and as described below. The
Funds file their portfolio holdings with the SEC as of the end of the second and fourth quarters of the Funds’ fiscal year on Form
N-CSR (with respect to each semiannual period and annual period) no later than 70 days after the end of the applicable quarter. In addition,
monthly reports of all of the Funds’ portfolio holdings are filed quarterly with the SEC on Form N-PORT no later than 60 days after
the end of each quarter of the Funds’ fiscal year, and the monthly report for the third month of each quarter will be made publicly
available by the SEC upon filing. Shareholders may obtain the Funds’ Form N-CSR and N-PORT filings on the SEC’s website
at http://www.sec.gov. In addition, the Funds’ annual and semiannual reports and complete schedule of portfolio holdings from their
filings on Form N-PORT for the first and third quarters of each fiscal year are made available to shareholders at https://www.massmutual.com/funds
after the end of the applicable quarter. The Funds’ annual and semiannual reports are also mailed to shareholders after the end
of the applicable quarter.
The
Funds’ most recent portfolio holdings as of the end of each quarter are available on https://www.massmutual.com/funds
no earlier than 15 calendar days after the end of each quarter. Because such information is updated quarterly, it will generally be available
for viewing for approximately three months after the posting.
A
Fund’s portfolio holdings may also be made available on https://www.massmutual.com/funds at other times as approved in writing
by the Funds’ Principal Executive Officer and the Funds’ Chief Compliance Officer as being in the best interests of the
relevant Fund.
Other Disclosures
Acting
pursuant to the policies and procedures adopted by the Trustees of the Funds, and to the extent permitted under the 1933 and 1940 Acts,
the Funds, the Funds’ investment adviser, and the Funds’ subadviser(s), as applicable, may distribute (or authorize the
Funds’ custodian to distribute) information regarding the Funds’ portfolio holdings more frequently than as provided to
the public on a confidential basis to various service providers and others who require such information in order to fulfill their contractual
duties with respect to the routine investment activities or operations of the Funds. Such service providers or others must, by explicit
agreement or by virtue of their respective duties to the Funds, be required to maintain confidentiality of the information disclosed.
These service providers include, but are not limited to, the Funds’ custodian (State Street Bank and Trust Company (“State
Street”)), the Funds’ sub-administrators (State Street and MassMutual), the Funds’ independent registered public
accounting firm (Deloitte & Touche LLP), filing agents, legal counsel (Ropes & Gray LLP), financial printer (Toppan Merrill, LLC),
any portfolio liquidity classification vendor, any proxy voting service employed by the Funds, MML Advisers or any of the Funds’
subadviser(s), as applicable, providers of portfolio analysis tools, any pricing services employed by the Funds, and any providers of
transition management services. The Funds or the Funds’ investment adviser may also periodically provide non-public information
about their portfolio holdings to rating and ranking organizations, such as Lipper Inc. and Morningstar Inc., in connection with those
firms’ research on and classification of the Funds and in order to gather information about how the Funds’ attributes (such
as volatility, turnover, and expenses) compared with those of peer funds.
The
Funds, the Funds’ investment adviser, or the Funds’ subadviser(s), as applicable, may distribute (or authorize the Funds’
custodian to distribute) information regarding the Funds’ portfolio holdings more frequently than as provided to the public on
a confidential basis to various service providers and others who require such information in order to fulfill non-routine legitimate business
activities related to the management, investment activities, or operations of the Funds. Such disclosures may be made only if (i) the
recipients of such information are subject to a written confidentiality agreement specifying that the Funds’ portfolio holdings
information is the confidential property of the Funds and may not be used for any purpose except in connection with the provision of services
to the Funds and, in particular, that such information may not be traded upon; and (ii) if the Funds’ Chief Compliance Officer
(or a person designated by the Chief Compliance Officer) determines that, under the circumstances, disclosure is in the best interests
of the relevant Fund’s shareholders. The information distributed is limited to the information that the Funds, MML Advisers, or
the relevant subadviser(s), as applicable, believes is reasonably necessary in connection with the services provided by the recipient
receiving the information.
The
following is a description of certain fundamental restrictions on investments of the Funds which may not be changed without a vote of
a majority of the outstanding shares of the applicable Fund. Investment restrictions that appear below or elsewhere in this SAI and in
the Prospectus which involve a maximum percentage of securities or assets shall not be considered violated unless an excess over
the percentage occurs immediately after, and is caused by, an acquisition or encumbrance of securities or assets of, or borrowings
by or on behalf of, a Fund. Each Fund may not:
(1)
with
the exception of the Global Emerging Markets Equity Fund, purchase securities (other than securities issued, guaranteed or sponsored by
the U.S. Government or its agencies or instrumentalities or securities issued by investment companies) of any one issuer if, as a result,
more than 5% of a Fund’s total assets would be invested in the securities of such issuer or the Fund would own more than 10% of
the outstanding voting securities of such issuer, except that up to 25% of the Fund’s total assets may be invested without regard
to these limitations.
(2)
purchase
commodities or commodity contracts, except that a Fund may enter into futures contracts, options, options on futures, and other financial
or commodity transactions to the extent consistent with applicable law and the Fund’s Prospectus and SAI at the time.
(3)
purchase
or sell real estate except that it may dispose of real estate acquired as a result of the ownership of securities or other instruments.
(This restriction does not prohibit a Fund from investing in securities or other instruments backed by real estate or in securities of
companies engaged in the real estate business.)
(4)
participate
in the underwriting of securities, except to the extent that a Fund may be deemed an underwriter under federal securities laws by reason
of acquisitions or distributions of portfolio securities (e.g., investments in restricted securities and instruments subject to such limits
as imposed by the Board and/or law).
(5)
make
loans, except to the extent permitted by the 1940 Act, the rules and regulations thereunder (as such statute, rules or regulations may
be amended from time to time) or by guidance regarding or interpretations of, or exemptive orders under, the 1940 Act or the rules or
regulations thereunder published by appropriate regulatory authorities.
(6)
borrow
money or issue senior securities, except to the extent permitted by the 1940 Act, the rules and regulations thereunder (as such statute,
rules or regulations may be amended from time to time) or by guidance regarding or interpretations of, or exemptive orders under, the
1940 Act or the rules or regulations thereunder published by appropriate regulatory authorities.
(7)
concentrate
its investments in any one industry, as determined by the Board, and in this connection a Fund will not acquire securities of companies
in any one industry if, immediately after giving effect to any such acquisition, 25% or more of the value of the total assets of the Fund
would be invested in such industry, with the following exceptions:
(a)
There
is no limitation for securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities.
(b)
There
is no limitation for securities issued by other investment companies.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
OF THE FUNDS
In
addition to the investment restrictions adopted as fundamental policies set forth above, the Funds operate with certain non-fundamental
policies that may be changed by a vote of a majority of the Board members at any time.
In
accordance with such policies, each Fund may not:
(1)
to
the extent required by applicable law at the time, purchase additional securities when its borrowings, less amounts receivable on sales
of portfolio securities, exceed 5% of its total assets.
(2)
sell
securities short, but reserves the right to sell securities short against the box.
(3)
invest
more than 15% of its net assets in illiquid securities. This restriction does not limit the purchase of securities eligible for resale
to qualified institutional buyers pursuant to Rule 144A under the 1933 Act, provided that such securities are determined to be liquid
by MML Advisers or the subadviser pursuant to Board approved guidelines.
(4)
to
the extent that shares of the Fund are purchased or otherwise acquired by other series of the Trust or other
series of
registered open-end investment companies in the Trust’s “group of investment companies” (as such term is
defined in Section 12(d)(1)(G) of the 1940 Act), acquire any securities of registered open-end investment companies or registered unit
investment trusts in reliance on Section 12(d)(1)(F) or Section 12(d)(1)(G) of the 1940 Act.
With
respect to limitation (3) above, if there is a lack of trading interest in particular Rule 144A securities, a Fund’s
holdings of those securities may be illiquid, resulting in the possibility of undesirable delays in selling these securities at prices
representing fair value. If, through a change in values, net assets, or other circumstances, the Fund were in a position where more than
15% of its net assets was invested in illiquid securities, it would take appropriate orderly steps, as deemed necessary, to protect liquidity.
MANAGEMENT OF THE TRUST
The
Trust has a Board comprised of 10 Trustees, a majority of which are not “interested persons” (as defined in the
1940 Act) of the Trust. The Board is generally responsible for the management and oversight of the business and affairs of the Trust.
The Trustees formulate the general policies of the Trust and the Funds, approve contracts, and authorize Trust officers to carry out the
decisions of the Board. To assist them in this role, the Trustees who are not “interested persons” of the Trust, the adviser,
or any subadviser (“Independent Trustees”) have retained independent legal counsel. As investment adviser and subadvisers
to the Funds, respectively, MML Advisers and Barings and BIIL may be considered part of the management of the Trust. The Trustees and
principal officers of the Trust are listed below together with information on their positions with the Trust, address, and year of birth,
as well as their principal occupations during at least the past five years and their other current principal business affiliations.
The
Board has appointed an Independent Trustee Chairperson of the Trust. The Chairperson presides at Board meetings and may call a Board or
committee meeting when he or she deems it necessary. The Chairperson participates in the preparation of Board meeting agendas and may
generally facilitate communications among the Trustees, and between the Trustees and the Trust’s management, officers, and independent
legal counsel, between meetings. The Chairperson may also perform such other functions as may be requested by the Board from time to time.
The Board has established the three standing committees described below, and may form working groups or ad hoc committees as needed.
The
Board believes this leadership structure is appropriate because it allows the Board to exercise informed and independent judgment, and
allocates areas of responsibility among committees or working groups of Trustees and the full Board in a manner that enhances effective
oversight. The Board also believes that having a majority of Independent Trustees is appropriate and in the best interest of the Funds’
shareholders. However, in the Board’s opinion, having interested persons serve as Trustees brings both corporate and financial
viewpoints that are significant elements in its decision-making process. The Board reviews its leadership structure at least annually
and may make changes to it at any time, including in response to changes in the characteristics or circumstances of the Trust.
Independent Trustees
Allan W. Blair 1295
State Street Springfield, MA01111‑0001 Year of birth: 1948 Trustee of the Trust since 2021 Trustee
of 110 portfolios in fund complex
Trustee of the Trust
Retired;
Trustee (since 2003), MassMutual Select Funds (open-end investment company); Trustee (since 2012), MassMutual Premier Funds (open-end
investment company); Trustee (since 2021), MassMutual Advantage Funds (open-end investment company); Trustee (since 2003), MML Series Investment
Fund (open-end investment company); Trustee (since 2012), MML Series Investment Fund II (open-end investment company).
Nabil N. El‑Hage 1295
State Street Springfield, MA01111‑0001 Year of birth: 1958 Trustee of the Trust since 2021 Trustee
of 110 portfolios in fund complex
Trustee of the Trust
Founder
and CEO (since 2018), AEE International LLC (a Puerto Rico LLC); Founder and sole member (2016-2018), PR Academy of Executive Education
LLC (a Puerto Rico LLC); Trustee (since 2012), MassMutual Select Funds (open-end investment company); Trustee (since 2003), Chairman (2006-2012),
MassMutual Premier Funds (open-end investment
company);
Trustee (since 2021), MassMutual Advantage Funds (open-end investment company); Trustee (since 2012), MML Series Investment Fund
(open-end investment company); Trustee (since 2005), Chairman (2006-2012), MML Series Investment Fund II (open-end investment
company).
Maria D. Furman 1295
State Street Springfield, MA01111‑0001 Year of birth: 1954 Trustee of the Trust since 2021 Trustee
of 110 portfolios in fund complex
Trustee of the Trust
Retired;
Trustee (since 2012), MassMutual Select Funds (open-end investment company); Trustee (since 2004), MassMutual Premier Funds (open-end
investment company); Trustee (since 2021), MassMutual Advantage Funds (open-end investment company); Trustee (since 2012), MML Series Investment
Fund (open-end investment company); Trustee (since 2005), MML Series Investment Fund II (open-end investment company).
R. Bradford Malt 1295
State Street Springfield, MA01111‑0001 Year of birth: 1954 Trustee of the Trust since 2022 Trustee of 110
portfolios in fund complex
Trustee of the Trust
Chairman
(2004-2019), Management Committee (1993-2019), Partner (1987-2019), Associate (1979-1987), Ropes & Gray LLP (counsel to the Trust
and MassMutual); Trustee (since 2022), MassMutual Select Funds (open-end investment company); Trustee (since 2022), MassMutual Premier
Funds (open-end investment company); Trustee (since 2022), MassMutual Advantage Funds (open-end investment company); Trustee (since 2022),
MML Series Investment Fund (open-end investment company); Trustee (since 2022), MML Series Investment Fund II (open-end investment company).
C. Ann Merrifield 1295
State Street Springfield, MA01111‑0001 Year of birth: 1951 Trustee of the Trust since 2021 Trustee
of 110 portfolios in fund complex
Trustee of the Trust
Retired;
Director (since 2020), Lead Director (2020-2022), Chairperson (since 2020) of the Nominating and Governance Committee, Member (since 2020)
and Chairperson (2020-2022) of the Compensation Committee, and Member (2020-2022) of the Audit Committee, Lyra Therapeutics (a clinical-stage
specialty pharmaceutical company); Director (since 2014), Chairperson (since 2017), Lead Director (2015-2017), Member (since 2014) and
Chairperson (since 2015) of the Nominating and Governance Committee, Member (since 2019) of the Compensation Committee, and Member (2014-2019)
of the Audit Committee, InVivo Therapeutics (research and clinical-stage biomaterials and biotechnology company); Trustee (since 2012),
MassMutual Select Funds (open-end investment company); Trustee (since 2004), MassMutual Premier Funds (open-end investment company); Trustee
(since 2021), MassMutual Advantage Funds (open-end investment company); Trustee (since 2012), MML Series Investment Fund (open-end
investment company); Trustee (since 2005), MML Series Investment Fund II (open-end investment company).
Cynthia R. Plouché 1295
State Street Springfield, MA01111‑0001 Year of birth: 1957 Trustee of the Trust since 2022 Trustee
of 110 portfolios in fund complex
Jason J. Price 1295
State Street Springfield, MA01111‑0001 Year of birth: 1973 Trustee of the Trust since 2022 Trustee
of 110 portfolios in fund complex
Trustee of the Trust
Co-Founder
and Chairman of the Board (2017-2021), NXTHVN (arts organization); Trustee (since 2022), MassMutual Select Funds (open-end investment
company); Trustee (since 2022), MassMutual Premier Funds (open-end investment company); Trustee (since 2022), MassMutual Advantage Funds
(open-end investment company); Trustee (since 2022), MML Series Investment Fund (open-end investment company); Trustee (since 2022), MML
Series Investment Fund II (open-end investment company).
Susan B. Sweeney 1295
State Street Springfield, MA01111‑0001 Year of birth: 1952 Chairperson of the Trust since 2022 Trustee
of the Trust since 2021 Trustee of 112 portfolios in fund complex1
Michael R. Fanning2 1295 State Street Springfield, MA01111‑0001 Year of birth: 1963
Trustee of the Trust since 2021 Trustee of 110 portfolios in fund complex
Trustee of the Trust
Director
(since 2016), MML Advisers; Head of MassMutual U.S. (since 2016), Executive Vice President (2016-2018), Member of MassMutual’s
Executive Leadership Team (since 2008), MassMutual; Trustee (since 2021), MassMutual Select Funds (open-end investment company); Trustee
(since 2021), MassMutual Premier Funds (open-end investment company); Trustee (since 2021), MassMutual Advantage Funds (open-end investment
company); Trustee (since 2021), MML Series Investment Fund (open-end investment company); Trustee (since 2021), MML Series Investment
Fund II (open-end investment company).
1
Barings
Participation Investors and Barings Corporate Investors are deemed to be a part of the Fund Complex, because they are managed by Barings
LLC, an affiliate of MML Advisers.
2
Mr.
Fanning is an “Interested Person,” as that term is defined in the 1940 Act, as an employee of MassMutual.
Clifford M. Noreen3 1295 State Street Springfield, MA01111‑0001 Year of birth: 1957
Trustee of the Trust since 2021 Trustee of 112 portfolios in fund complex4
Trustee of the Trust
Head
of Global Investment Strategy (since 2019), Deputy Chief Investment Officer and Managing Director (2016-2018), MassMutual; President (2008-2016),
Vice Chairman (2007-2008), Member of the Board of Managers (2006-2016), Managing Director (2000-2016), Barings LLC; Chairman (since 2009),
Trustee (since 2005), President (2005-2009), CI Subsidiary Trust and PI Subsidiary Trust; Chairman and Trustee (since 2009), President
(2005-2009), Vice President (1993-2005), Barings Corporate Investors (closed-end investment company); Chairman and Trustee (since 2009),
President (2005-2009), Vice President (1993-2005), Barings Participation Investors (closed-end investment company); Trustee (since 2021),
MassMutual Select Funds (open-end investment company); Trustee (since 2021), MassMutual Premier Funds (open-end investment company); Trustee
(since 2021), MassMutual Advantage Funds (open-end investment company); Trustee (since 2021), MML Series Investment Fund (open-end investment
company); Trustee (since 2021), MML Series Investment Fund II (open-end investment company).
Principal Officers
Andrea Anastasio 1295
State Street Springfield, MA01111‑0001 Year of birth: 1974 Officer of the Trust since 2021 Officer
of 110 portfolios in fund complex
Vice President
Vice
President (since 2021), MML Advisers; Head of Investment Management Solutions (since 2021), MassMutual; Head of Investment Strategy and
Research, North America (2019-2021), Head of Investment Product Management (2016-2019), State Street Global Advisors; Vice President (since
2021), MassMutual Select Funds (open-end investment company); Vice President (since 2021), MassMutual Premier Funds (open-end investment
company); Vice President (since 2021), MassMutual Advantage Funds (open-end investment company); Vice President (since 2021), MML Series
Investment Fund (open-end investment company); Vice President (since 2021), MML Series Investment Fund II (open-end investment company).
Andrew M. Goldberg 1295
State Street Springfield, MA01111‑0001 Year of birth: 1966 Officer of the Trust since 2021 Officer
of 110 portfolios in fund complex
Vice President, Secretary,
and Chief Legal Officer of the Trust
Lead
Counsel, Investment Adviser & Mutual Funds (since 2018), Assistant Vice President and Counsel (2004-2018), MassMutual; Secretary (since
2015), Assistant Secretary (2013-2015), MML Advisers; Vice President, Secretary, and Chief Legal Officer (since 2008), Assistant Secretary
(2001-2008), MassMutual Select Funds (open-end investment company); Vice President, Secretary (formerly known as “Clerk”),
and Chief Legal Officer (since 2008), Assistant Clerk (2004-2008), MassMutual Premier Funds (open-end investment company); Vice President,
Secretary, and Chief Legal Officer (since 2021), MassMutual Advantage Funds (open-end investment company); Vice President, Secretary,
and Chief Legal Officer (since 2008), Assistant Secretary (2001-2008), MML Series Investment Fund (open-end investment company);
Vice President, Secretary (formerly known as “Clerk”), and Chief Legal Officer (since 2008), Assistant Clerk (2005-2008),
MML Series Investment Fund II (open-end investment company).
3
Mr.
Noreen is an “Interested Person,” as that term is defined in the 1940 Act, as an employee of MassMutual.
4
Barings
Participation Investors and Barings Corporate Investors are deemed to be a part of the Fund Complex, because they are managed by Barings
LLC, an affiliate of MML Advisers.
Renee Hitchcock 1295
State Street Springfield, MA01111‑0001 Year of birth: 1970 Officer of the Trust since 2021 Officer
of 110 portfolios in fund complex
Chief Financial Officer and Treasurer of the
Trust
Head
of Mutual Fund Administration (since 2018), Assistant Vice President (2015-2018), MassMutual; Chief Financial Officer and Treasurer (since
2016), Assistant Treasurer (2007-2016), MassMutual Select Funds (open-end investment company); Chief Financial Officer and Treasurer (since
2016), Assistant Treasurer (2007-2016), MassMutual Premier Funds (open-end investment company); Chief Financial Officer and Treasurer
(since 2021), MassMutual Advantage Funds (open-end investment company); Chief Financial Officer and Treasurer (since 2016), Assistant
Treasurer (2007-2016), MML Series Investment Fund (open-end investment company); Chief Financial Officer and Treasurer (since 2016),
Assistant Treasurer (2007-2016), MML Series Investment Fund II (open-end investment company).
Paul LaPiana 1295
State Street Springfield, MA01111‑0001 Year of birth: 1969 Officer of the Trust since 2021 Officer
of 110 portfolios in fund complex
President of the Trust
President
(since 2021), MML Advisers; Head of MassMutual U.S. Product (since 2019), Head of Field Management (2016-2019), MassMutual; President
(since 2021), MassMutual Select Funds (open-end investment company); President (since 2021), MassMutual Premier Funds (open-end investment
company); President (since 2021), MassMutual Advantage Funds (open-end investment company); President (since 2021), MML Series Investment
Fund (open-end investment company); President (since 2021), MML Series Investment Fund II (open-end investment company).
Jill Nareau Robert 1295
State Street Springfield, MA01111‑0001 Year of birth: 1972 Officer of the Trust since 2021 Officer
of 110 portfolios in fund complex
Vice President and Assistant Secretary of
the Trust
Lead
Counsel, Investment Adviser & Mutual Funds (since 2018), Assistant Vice President and Counsel (2009-2018), MassMutual; Assistant Secretary
(since 2015), MML Advisers; Vice President and Assistant Secretary (since 2017), Assistant Secretary (2008-2017), MassMutual Select Funds
(open-end investment company); Vice President and Assistant Secretary (since 2017), Assistant Secretary (formerly known as “Assistant
Clerk”) (2008-2017), MassMutual Premier Funds (open-end investment company); Vice President and Assistant Secretary (since 2021),
MassMutual Advantage Funds (open-end investment company); Vice President and Assistant Secretary (since 2017), Assistant Secretary
(2008-2017), MML Series Investment Fund (open-end investment company); Vice President and Assistant Secretary (since 2017), Assistant
Secretary (formerly known as “Assistant Clerk”) (2008-2017), MML Series Investment Fund II (open-end investment
company).
Douglas Steele 1295
State Street Springfield, MA01111‑0001 Year of birth: 1975 Officer of the Trust since 2021 Officer
of 110 portfolios in fund complex
Vice President of the Trust
Head
of Product Management (since 2021), Vice President (since 2017), Head of Manager Research (2021), Head of Investment Management (2017-2021),
Head of Investment Due Diligence (2016-2017), MML Advisers; Head of Product Management (since 2021), Head of Manager Research (2021),
Head of Investment Management (2017-2021), Assistant Vice President (2013-2017), MassMutual; Vice President (since 2016), MassMutual Select
Funds (open-end investment company); Vice President (since 2016), MassMutual Premier Funds (open-end investment company); Vice President
(since 2021), MassMutual Advantage Funds (open-end investment company); Vice President (since 2016), MML Series Investment Fund (open-end
investment company); Vice President (since 2016), MML Series Investment Fund II (open-end investment company).
Philip S. Wellman 1295
State Street Springfield, MA01111‑0001 Year of birth: 1964 Officer of the Trust since 2021 Officer
of 110 portfolios in fund complex
Vice President and Chief
Compliance Officer of the Trust
Vice
President and Chief Compliance Officer (since 2013), MML Advisers; Head of Mutual Funds & RIA Compliance (since 2018), Vice President,
Associate General Counsel, and Chief Compliance Officer (Mutual Funds) (2014-2018), MassMutual; Vice President and Chief Compliance Officer
(since 2007), MassMutual Select Funds (open-end investment company); Vice President and Chief Compliance Officer (since 2007), MassMutual
Premier Funds (open-end investment company); Vice President and Chief Compliance Officer (since 2021), MassMutual Advantage Funds (open-end
investment company); Vice President and Chief Compliance Officer (since 2007), MML Series Investment Fund (open-end investment company);
Vice President and Chief Compliance Officer (since 2007), MML Series Investment Fund II (open-end investment company).
Each
Trustee of the Trust serves until the next meeting of shareholders called for the purpose of electing Trustees and until the election
and qualification of his or her successor or until he or she dies, resigns, or is removed. Notwithstanding the foregoing, unless the Trustees
determine that it is desirable and in the best interest of the Trust that an exception to the retirement policy of the Trust be made,
a Trustee shall retire and cease to serve as a Trustee upon the conclusion of the calendar year in which such Trustee attains the age
of seventy-five years, however, an interested Trustee of the Trust shall no longer serve as a Trustee if or when they are no longer
an employee of MassMutual or an affiliate.
The
Chairperson is elected to hold such office for a term of three years or until their successor is elected and qualified to carry out
the duties and responsibilities of their office, or until he or she retires, dies, resigns, is removed, or becomes disqualified, and any
such Chairperson may not serve more than two consecutive terms.
The
President, Treasurer, and Secretary and such other officers as the Trustees may in their discretion from time to time elect are elected
to hold such office until their successor is elected and qualified to carry out the duties and responsibilities of their office, or until
he or she dies, resigns, is removed, or becomes disqualified.
Each
officer and the Chairperson shall hold office at the pleasure of the Trustees.
The
Chairperson of any of the Trust’s Committees shall serve a term of three years or until he or she retires, dies, resigns, is removed,
or becomes disqualified.
Additional Information About the Trustees
In
addition to the information set forth above, the following specific experience, qualifications, attributes, and skills apply to each Trustee.
Each Trustee was appointed to serve on the Board based on his or her overall experience and the Board did not identify any specific qualification
as all-important or controlling. The information in this section should not be understood to mean that any of the Trustees is an “expert”
within the meaning of the federal securities laws.
Allan
W. Blair — As a former trustee and audit and compliance committee member
of a large healthcare system, Mr. Blair has experience with financial, regulatory, and operational issues. He also has served as
president and/or CEO of several non-profit and quasi-public organizations for over 30 years. Mr. Blair holds a BA from the University
of Massachusetts at Amherst and a JD from Western New England College School of Law.
Nabil
N. El-Hage — As a former CEO or CFO of various public and private companies,
Mr. El-Hage has experience with financial, regulatory, and operational issues. He has also taught corporate finance at the graduate
level, and has served as a director for more than a dozen public and private companies and as an associate at a venture capital firm.
Mr. El-Hage holds a BS in Electronic Engineering from Yale University and an MBA with high distinction from Harvard University.
Michael
R. Fanning — As an executive and/or director of financial services and
insurance companies, Mr. Fanning has experience with financial, regulatory, and operational issues. He also has served as an audit committee
member for financial services and insurance companies. Mr. Fanning holds a BA in Economics and a BA in Organizational Behavior and Management
from Brown University.
Maria
D. Furman — As a trustee and chairperson or member of the audit and
investment committees of various educational organizations, and as a former managing director, director, and portfolio manager at an investment
management firm, Ms. Furman has experience with financial, regulatory, and operational issues. She also has served as an audit and
investment committee member and a director, treasurer, and investment committee chair for environmental, educational, and healthcare organizations.
Ms. Furman is a CFA charterholder and holds a BA from the University of Massachusetts at Dartmouth.
R.
Bradford Malt — As a current Chairman Emeritus, a former Chairman, and
a former partner of a corporate law firm, which serves as counsel to the Trust and to MML Advisers, with over 40 years of financial services
experience, Mr. Malt has expertise in financial, regulatory, and operational issues. He has also served as a director for several public
and private companies. Mr. Malt holds an AB in Applied Mathematics from Harvard College and a JD from Harvard Law School.
C.
Ann Merrifield — As a trustee of a healthcare organization, current
and former director of specialty pharmaceutical companies, former biotechnology executive, former partner of a consulting firm, and investment
officer at a large insurance company, Ms. Merrifield has experience with financial, regulatory, and operational issues. She also
has served as an audit committee member for a manufacturing company and three public life sciences companies. Ms. Merrifield holds
a BA and M. Ed. from the University of Maine and an MBA from Amos Tuck School of Business Administration at Dartmouth College.
Clifford
M. Noreen — As an executive of financial services companies with over
35 years of investment management experience, a director of several private companies, an investment committee member of two non-profit
organizations, and a director and/or officer of various investment companies and private funds, Mr. Noreen has experience with financial,
regulatory, and operational issues. Mr. Noreen holds a BA from the University of Massachusetts and an MBA from American International
College.
Cynthia
R. Plouché — As a former assessor of a township, a former portfolio
manager for asset management firms, and a former chief investment officer and managing director of an asset management firm with over
32 years of financial services experience, Ms. Plouché has experience with financial, regulatory, and operational issues. She has
also served as a trustee and audit committee member for open-end investment companies and a trustee for a closed-end investment company.
Ms. Plouché holds a BA in Psychology and Social Relations from Harvard University and an MBA from the Wharton School at the University
of Pennsylvania.
Jason
J. Price — As a former executive with over 25 years of financial services
experience, Mr. Price has experience with financial, regulatory, and operational issues. He served as a Senior Vice President of Cigna
Investment Management from 2009 to 2012 and as Head of Private Equity for the State of Connecticut Office of the Treasurer from 2005 to
2009. Mr. Price holds a BA in Business Administration from Morehouse College and an MBA from Harvard Business School.
Susan
B. Sweeney — As a former executive and investment officer of a property
and casualty company and a former executive of a financial services company with over 35 years of financial services experience,
Ms. Sweeney has experience with financial, regulatory, and operational issues. From 2010 to 2014, she was Chief Investment Officer
and Senior Vice President of Selective Insurance Company of America. She also served as Chief Investment Officer for the State of
Connecticut Pension Fund from 2002 to 2007, directing a multi-asset portfolio. Ms. Sweeney holds a BS in Business Studies from Connecticut
Board for State Academic Awards, an MBA from Harvard Business School, and a Doctor of Humane Letters from Charter Oak State College.
Board Committees and Meetings
The
full Board met eight times during the fiscal year ended September 30, 2022.
Audit
Committee. The Trust has an Audit Committee, consisting of Trustees who
are not “interested persons” (as defined in the 1940 Act) of the Trust. The Audit Committee, whose members are Messrs.
Blair, El-Hage, Malt, and Price and Mses. Furman, Merrifield, and Plouché, 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; evaluates the independence of the Trust’s independent
registered public accounting firm; evaluates the overall performance and compensation of the Chief Compliance Officer; acts as liaison
between the Trust’s independent registered public accounting firm and the full Board; 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. During the fiscal year ended September 30, 2022, the Audit Committee met four times.
Nominating
and Governance Committee. The Trust has a Nominating and Governance Committee,
consisting of each Trustee who is not an “interested person” of the Trust. The Nominating and Governance Committee meets
at least twice per calendar year. During the fiscal year ended September 30, 2022, the Nominating and Governance Committee met twice.
The Nominating and Governance Committee (a) identifies, and evaluates the qualifications of, individuals to become independent members
of the Funds’ Board in the event that a position currently filled by an Independent Trustee is vacated or created; (b) nominates
Independent Trustee nominees for election or appointment to the Board; (c) sets any necessary standards or qualifications for service
on the Board; (d) recommends periodically to the full Board an Independent Trustee to serve as Chairperson; (e) evaluates at
least annually the independence and overall performance of counsel to the Independent Trustees; (f) annually reviews the compensation
of the Independent Trustees; and (g) oversees board governance issues including, but not limited to, (i) evaluating the board
and committee structure and the performance of Trustees, (ii) considering and addressing any conflicts, (iii) considering the retirement
policies of the Board, and (iv) considering and making recommendations to the Board at least annually concerning the Trust’s directors
and officers liability insurance coverage.
The
Nominating and Governance Committee will consider and evaluate nominee candidates properly submitted by shareholders of the Trust in the
same manner as it considers and evaluates candidates recommended by other sources. The Nominating and Governance 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, including, without limitation, the value of the Funds’ securities owned by the shareholder and the length of time such
shares have been held by the shareholder. A recommendation of a shareholder of the Trust must be submitted as described below to be considered
properly submitted for purposes of the Nominating and Governance Committee’s consideration. The shareholders of the Trust must
submit any such recommendation (a “Shareholder Recommendation”) in writing to the Trust’s Nominating and Governance
Committee, to the attention of the Secretary, at the address of the principal executive offices of the Trust, which is 1295 State Street,
Springfield, MA01111-0001. The Shareholder Recommendation must be delivered to or mailed and received at the principal executive offices
of the Trust at least 60 calendar days before the date of 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, nationality, and pertinent qualifications of the person recommended
by the shareholder (the “Shareholder Candidate”), including an explanation of why the shareholder believes the Shareholder
Candidate will make a good Trustee; (B) the class or series and number of all shares of the Funds owned of record or beneficially by the
Shareholder Candidate, as reported to such shareholder by the Shareholder Candidate; (C) any other information regarding the Shareholder
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 Securities Exchange Act of 1934, as amended (the
“Exchange Act”), adopted by the SEC (or the corresponding provisions of any regulation or rule subsequently adopted by the
SEC or any successor agency applicable to the Funds); (D) any other information regarding the Shareholder Candidate that would be required
to be disclosed if the Shareholder 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 Shareholder Candidate is or will be an “interested
person” (as defined in Section 2(a)(19) of the 1940 Act) of the Funds and, if not an “interested person,”
information regarding the Shareholder Candidate that will be sufficient for the Funds to make such determination; (ii) the written and
signed consent of the Shareholder Candidate to be named as a nominee, consenting to (1) the disclosure, as may be necessary or appropriate,
of such Shareholder Candidate’s information submitted in accordance with (i) above; and (2) service as a Trustee if elected;
(iii) the recommending shareholder’s name as it appears on the Funds’ books, the number of all shares of each series of
the Funds owned beneficially and of record by the recommending shareholder; (iv) a description of all arrangements or understandings between
the recommending shareholder and the Shareholder Candidate and any other person or persons (including their names) pursuant to which the
Shareholder Recommendation is being made by the recommending shareholder; and (v) such other information as the Nominating and Governance
Committee may require the Shareholder Candidate to furnish as the Nominating and Governance Committee may reasonably require or deem necessary
to determine the eligibility of such Shareholder Candidate to serve as a Trustee or to satisfy applicable law.
Shareholders
may send other communications to the Trustees by addressing such correspondence directly to the Secretary of the Trust, c/o Massachusetts
Mutual Life Insurance Company, 1295 State Street, Springfield, MA01111-0001. When writing to the Board, shareholders should identify
themselves, the fact that the communication is directed to the Board, the Fund they are writing about, and any relevant information regarding
their Fund holdings. Except as provided below, the Secretary shall either (i) provide a copy of each shareholder communication to
the Board at its next regularly scheduled meeting or (ii) if the Secretary determines that the communication requires more immediate attention,
forward
the communication
to the Board promptly after receipt. The Secretary will also provide a copy of each shareholder communication to the Trust’s Chief
Compliance Officer.
The
Secretary 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 Funds or is otherwise ministerial in nature (such as a request for Fund literature, share data, or financial
information). The Secretary 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.
Contract
Committee. The Trust has a Contract Committee, consisting of each Trustee
who is not an “interested person” of the Trust. During the fiscal year ended September 30, 2022, the Contract Committee
met twice. The Contract Committee performs the specific tasks assigned to independent trustees by the 1940 Act, including the periodic
consideration of the Trust’s investment management agreements and subadvisory agreements.
Risk Oversight
As
registered investment companies, the Funds are subject to a variety of risks, including, among others, investment risks, financial risks,
compliance risks, and operational risks. The Funds’ investment adviser and administrator, MML Advisers, has primary responsibility
for the Funds’ risk management on a day-to-day basis as part of its overall responsibilities. The Funds’ subadvisers are
primarily responsible for managing investment risk as part of their day-to-day investment management responsibilities, as well as operational
risks at their respective firms. The Funds’ investment adviser and Chief Compliance Officer also assist the Board in overseeing
the significant investment policies of the Funds and monitor the various compliance policies and procedures approved by the Board as a
part of its oversight responsibilities.
In
discharging its oversight responsibilities, the Board considers risk management issues throughout the year by reviewing regular reports
prepared by the Funds’ investment adviser and Chief Compliance Officer, as well as special written reports or presentations provided
on a variety of risk issues, as needed. For example, the investment adviser reports to the Board quarterly on the investment performance
of each of the Funds, the financial performance of the Funds, overall market and economic conditions, and legal and regulatory developments
that may impact the Funds. The Funds’ Chief Compliance Officer, who reports directly to the Board’s Independent Trustees,
provides presentations to the Board at its quarterly meetings and an annual report to the Board concerning (i) compliance matters
relating to the Funds, the Funds’ investment adviser and subadvisers, and the Funds’ other key service providers; (ii) regulatory
developments; (iii) business continuity programs; and (iv) various risks identified as part of the Funds’ compliance program assessments.
The Funds’ Chief Compliance Officer also meets at least quarterly in executive session with the Independent Trustees, and communicates
significant compliance-related issues and regulatory developments to the Audit Committee between Board meetings.
In
addressing issues regarding the Funds’ risk management between meetings, appropriate representatives of the investment adviser
communicate with the Chairperson of the Trust, the Chairperson of the Audit Committee, or the Funds’ Chief Compliance Officer.
As appropriate, the Trustees confer among themselves, or with the Funds’ Chief Compliance Officer, the investment adviser, other
service providers, and independent legal counsel, to identify and review risk management issues that may be placed on the full Board’s
agenda.
The
Board also relies on its committees to administer the Board’s oversight function. The Audit Committee assists the Board in reviewing
with the investment adviser and the Funds’ independent auditors, at various times throughout the year, matters relating to the
annual audits, financial accounting and reporting matters, and the internal control environment at the service providers that provide
financial accounting and reporting for the Funds. The Audit Committee also meets annually with representatives of the investment adviser’s
Corporate Audit Department to review the results of internal audits of relevance to the Funds. This and the Board’s other committees
present reports to the Board that may prompt further discussion of issues concerning the oversight of the Funds’ risk management.
The Board may also discuss particular risks that are not addressed in the committee process.
Share Ownership of Trustees and Officers of the Trust
The
table below sets forth information regarding the Trustees’ beneficial ownership of Fund shares, based on the value of such shares
as of December 31, 2022.
Name of Trustee
The Dollar Range of Equity Securities Beneficially Owned in
the Trust
Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen
by Trustee in Family of Investment
Companies
Independent Trustees
Allan W. Blair
None
over $100,000
Nabil N. El-Hage
None
None
Maria D. Furman
None
None
R. Bradford Malt
None
None
C. Ann Merrifield
None
None
Cynthia R. Plouché
None
None
Jason J. Price
None
None
Susan B. Sweeney
None
None
Interested Trustees
Michael R. Fanning
None
None
Clifford M. Noreen
None
None
The
ownership information shown above does not include units of separate investment accounts that invest in one or more registered investment
companies overseen by a Trustee in the family of investment companies held in a 401(k) plan or amounts held under a deferred compensation
plan that are valued based on “shadow investments” in one or more such registered investment companies. As of December 31,2022, these amounts were as follows: Mr. Blair, over $100,000; Mr. El-Hage, over $100,000; Mr. Fanning, $10,001-$50,000; Ms. Furman, None;
Mr. Malt, None; Ms. Merrifield, None; Mr. Noreen, over $100,000; Ms. Plouché, None; Mr. Price, None; and Ms. Sweeney, None.
As
of January 3, 2023, the Trustees and officers of the Trust, individually and as a group, did not beneficially own outstanding shares of
any of the Funds.
To
the knowledge of the Trust, as of December 31, 2022, the Independent Trustees and their immediate family members did not own beneficially
or of record securities of the investment adviser, subadviser(s), principal underwriter, or sponsoring insurance company of the Funds
or a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with
the investment adviser, subadviser(s), principal underwriter, or sponsoring insurance company of the Funds.
Trustee Compensation
Effective
January 1, 2023 the Trust, on behalf of each Fund, pays each of its Trustees who is not an officer or employee of MassMutual a fee
of $605 per quarter plus a fee of $88 per in-person meeting attended plus a fee of $88 for the annual Contract Committee meeting. The
Chairperson of the Board is paid an additional 40% of the quarterly fee, the in-person meeting fee, and the Contract Committee meeting
fee. The Chairpersons of each of the Audit Committee and the Contract Committee are paid an additional 10% of the quarterly fee, the in-person
meeting fee, and the Contract Committee meeting fee. The Chairperson of the Nominating and Governance Committee is paid an additional
7% of the quarterly fee, the in-person meeting fee, and the Contract Committee meeting fee. Such Trustees who serve on the Audit Committee,
other than the Chairperson, are paid an additional 4% of the quarterly fee, the in-person meeting fee, and the Contract Committee meeting
fee. No additional fees are paid for attending any other committee meetings or any special telephonic meetings. In addition, the Trust
reimburses out-of-pocket business travel expenses to such Trustees. Trustees who are officers or employees of MassMutual receive no fees
from the Trust.
During
2022, the Trust, on behalf of each Fund, paid each of its Trustees who was not an officer or employee of MassMutual a fee of $715 per
quarter plus a fee of $104 per in-person meeting attended plus a fee of $104 for the annual Contract Committee meeting. The Chairperson
of the Board was paid an additional 40% of the quarterly fee, the in-person meeting fee, and the Contract Committee meeting fee. The Chairpersons
of each of the Audit Committee and the Contract Committee were paid an additional 10% of the quarterly fee, the in-person meeting fee,
and the Contract Committee
meeting
fee. The Chairperson of the Nominating and Governance Committee was paid an additional 7% of the quarterly fee, the in-person meeting
fee, and the Contract Committee meeting fee. Such Trustees who served on the Audit Committee, other than the Chairperson, were paid an
additional 4% of the quarterly fee, the in-person meeting fee, and the Contract Committee meeting fee. No additional fees were paid for
attending any other committee meetings or any special telephonic meetings. In addition, the Trust reimbursed out-of-pocket business travel
expenses to such Trustees. Trustees who were officers or employees of MassMutual received no fees from the Trust.
The
following table discloses actual compensation paid to Trustees of the Trust during the 2022 fiscal year. The Trust has no pension or retirement
plan, but does have a deferred compensation plan. The plan provides for amounts deferred, plus or minus earnings, to be “shadow
invested.” These amounts are valued based on changes in the values of one or more registered investment companies overseen by a
Trustee.
Name of Trustee
Aggregate Compensation from the Trust
Total Compensation from the Trust and Fund Complex Paid to Trustees
CONTROL PERSONS AND PRINCIPAL HOLDERS
OF SECURITIES
As
of January 3, 2023, to the Trust’s knowledge, the following persons owned of record or beneficially 5% or more of the outstanding
shares of the indicated classes of the Funds set forth below. Such ownership may be beneficially held by individuals or entities other
than the owner listed. To the extent that any listed shareholder beneficially owns more than 25% of a Fund, it may be deemed to “control”
such Fund within the meaning of the 1940 Act. The effect of such control may be to reduce the ability of other shareholders of the Fund
to take actions requiring the affirmative vote of holders of a plurality or majority of the Fund’s shares without the approval
of the controlling shareholder.
As
of January 3, 2023, Morgan Stanley Smith Barney LLC, 1 New York Plaza, Floor 12, New York, NY10004, owned 26.13% of MassMutual Global
Floating Rate Fund and therefore may be presumed to “control” the Fund, as that term is defined in the 1940 Act. However,
such ownership may be beneficially held by individuals or entities other than Morgan Stanley Smith Barney LLC. Morgan Stanley Smith Barney
LLC is organized under the laws of New York.
?
2
As
of January 3, 2023, Charles Schwab & Company, Inc., 211 Main Street, San Francisco, CA94105, owned 42.34% of MassMutual Global Credit
Income Opportunities Fund and therefore may be presumed to “control” the Fund, as that term is defined in the 1940 Act.
However, such ownership may be beneficially held by individuals or entities other than Charles Schwab & Company, Inc. Charles Schwab
& Company, Inc. is organized under the laws of California.
?
3
As
of January 3, 2023, Barings LLC, 300 South Tryon Street, Suite 2500, Charlotte, NC28202, owned 33.59% of MassMutual Emerging Markets
Debt Blended Total Return Fund and therefore may be presumed to “control” the Fund, as that term is defined in the 1940
Act. However, such ownership may be beneficially held by individuals or entities other than Barings LLC. Barings LLC is organized under
the laws of Delaware.
?
4
As
of January 3, 2023, Barings LLC, 300 South Tryon Street,Suite 2500, Charlotte, NC28202, owned 98.72% of MassMutual Global Emerging Markets
Equity Fund and therefore may be presumed to “control” the Fund, as that term is defined in the 1940 Act. However, such
ownership may be beneficially held by individuals or entities other than Barings LLC. Barings LLC is organized under the laws of Delaware.
MML
Advisers, a wholly-owned subsidiary of MassMutual, serves as investment adviser to each Fund pursuant to Investment Management Agreements
with the Trust on behalf of the Funds (each, an “Advisory Agreement”). Under each Advisory Agreement, MML Advisers is obligated
to provide for the management of each Fund’s portfolio of securities, subject to policies established by the Trustees of the Trust
and in accordance with each Fund’s investment objective, policies, and restrictions as set forth herein and in the Prospectus,
and has the right to select subadvisers to the Funds pursuant to an investment subadvisory agreement (the “Subadvisory Agreement”).
The
Advisory Agreement with each Fund may be terminated by the Board or by MML Advisers without penalty: (i) at any time for cause or
by agreement of the parties or (ii) by either party upon sixty days’ written notice to the other party. In addition, each Advisory
Agreement automatically terminates if it is assigned or if its continuance is not specifically approved at least annually (after its initial
2 year period) by the Board or by the holders of a majority of the outstanding voting securities of the applicable Fund, and in either
case by a majority of the Trustees who are not parties to the Advisory Agreement or interested persons of any such party. MML Advisers’
liability regarding its investment management obligations and duties is limited to situations involving its willful misfeasance, bad faith,
gross negligence, or reckless disregard of such obligations and duties.
MML
Advisers also serves as investment adviser to: MassMutual Total Return Bond Fund, MassMutual Strategic Bond Fund, MassMutual Diversified
Value Fund, MassMutual Fundamental Value Fund, MM S&P 500®Index
Fund, MassMutual Equity Opportunities Fund, MassMutual Fundamental Growth Fund, MassMutual Blue Chip Growth Fund, MassMutual Growth Opportunities
Fund, MassMutual Mid Cap Value Fund, MassMutual Small Cap Value Equity Fund, MassMutual Small Company Value Fund, MassMutual Mid Cap Growth
Fund, MassMutual Small Cap Growth Equity Fund, MassMutual Overseas Fund, MassMutual Select T. Rowe Price International Equity Fund, MassMutual
20/80 Allocation Fund, MassMutual 40/60 Allocation Fund, MassMutual 60/40 Allocation Fund, MassMutual 80/20 Allocation Fund, MassMutual
RetireSMARTSM
by JPMorgan In Retirement Fund, MassMutual RetireSMARTSM
by JPMorgan 2020 Fund, MassMutual RetireSMARTSM
by JPMorgan 2025 Fund, MassMutual RetireSMARTSM
by JPMorgan 2030 Fund, MassMutual RetireSMARTSM
by JPMorgan 2035 Fund, MassMutual RetireSMARTSM
by JPMorgan 2040 Fund, MassMutual RetireSMARTSM
by JPMorgan 2045 Fund, MassMutual RetireSMARTSM
by JPMorgan 2050 Fund, MassMutual RetireSMARTSM
by JPMorgan 2055 Fund, MassMutual RetireSMARTSM
by JPMorgan 2060 Fund, MassMutual RetireSMARTSM
by JPMorgan 2065 Fund, MassMutual Select T. Rowe Price Retirement Balanced Fund, MassMutual Select T. Rowe Price Retirement 2005 Fund,
MassMutual Select T. Rowe Price Retirement 2010 Fund, MassMutual Select T. Rowe Price Retirement 2015 Fund, MassMutual Select T. Rowe
Price Retirement 2020 Fund, MassMutual Select T. Rowe Price Retirement 2025 Fund, MassMutual Select T. Rowe Price Retirement 2030 Fund,
MassMutual Select T. Rowe Price Retirement 2035 Fund, MassMutual Select T. Rowe Price Retirement 2040 Fund, MassMutual Select T. Rowe
Price Retirement 2045 Fund, MassMutual Select T. Rowe Price Retirement 2050 Fund, MassMutual Select T. Rowe Price Retirement 2055 Fund,
MassMutual Select T. Rowe Price Retirement 2060 Fund, MassMutual Select T. Rowe Price Retirement 2065 Fund, MM Equity Asset Fund, MassMutual
Select T. Rowe Price Bond Asset Fund, MassMutual Select T. Rowe Price Emerging Markets Bond Fund, MassMutual Select T. Rowe Price Large
Cap Blend Fund, MassMutual Select T. Rowe Price Limited Duration Inflation Focused Bond Fund, MassMutual Select T. Rowe Price Real Assets
Fund, MassMutual Select T. Rowe Price Small and Mid Cap Blend Fund, and MassMutual Select T. Rowe Price U.S. Treasury Long-Term Index
Fund, which are series of MassMutual Select Funds, an open-end management investment company; MassMutual U.S. Government Money Market
Fund, MassMutual Short-Duration Bond Fund, MassMutual Inflation-Protected and Income Fund, MassMutual Core Bond Fund, MassMutual Diversified
Bond Fund, MassMutual High Yield Fund, MassMutual Balanced Fund, MassMutual Disciplined Value Fund, MassMutual Main Street Fund, MassMutual
Disciplined Growth Fund, MassMutual Small Cap Opportunities Fund, MassMutual Global Fund, MassMutual International Equity Fund, and MassMutual
Strategic Emerging Markets Fund, which are series of MassMutual Premier Funds, an open-end management investment company; MML Aggressive
Allocation Fund, MML American Funds Core Allocation Fund, MML American Funds Growth Fund, MML Balanced Allocation Fund, MML Blue Chip
Growth Fund, MML Conservative Allocation Fund, MML Equity Income Fund, MML Equity Index Fund, MML Focused Equity Fund, MML Foreign Fund,
MML Fundamental Equity Fund, MML Fundamental Value Fund, MML Global Fund, MML Growth Allocation Fund, MML Income & Growth Fund, MML
International Equity Fund, MML Large Cap Growth Fund, MML Managed Volatility Fund, MML Mid Cap Growth Fund, MML Mid Cap Value Fund, MML
Moderate Allocation Fund, MML Small Cap Growth Equity Fund, MML Small Company Value Fund, MML Small/Mid Cap Value Fund, MML Sustainable
Equity Fund, and MML Total Return Bond Fund, which are series of MML Series Investment Fund, an open-end management investment company;
MML Blend Fund, MML Dynamic Bond Fund,
MML Equity
Fund, MML Equity Rotation Fund, MML High Yield Fund, MML Inflation-Protected and Income Fund, MML iShares®
60/40 Allocation Fund, MML iShares®
80/20 Allocation Fund, MML Managed Bond Fund, MML Short-Duration Bond Fund, MML Small Cap Equity Fund, MML Strategic Emerging Markets
Fund, and MML U.S. Government Money Market Fund, which are series of MML Series Investment Fund II, an open-end management investment
company; certain wholly-owned subsidiaries of MassMutual; and various employee benefit plans and separate investment accounts in which
employee benefit plans invest.
The
Trust, on behalf of each Fund, pays MML Advisers an investment advisory fee monthly, at an annual rate based upon the average daily net
assets of that Fund as follows:
Fund
Global Floating Rate Fund
0.65%
Global Credit Income Opportunities Fund
0.75%
Emerging Markets Debt Blended Total Return Fund
0.75%
Global Emerging Markets Equity Fund
0.90%
Affiliated Subadviser
Barings
MML
Advisers has entered into Subadvisory Agreements with Barings pursuant to which Barings serves as a subadviser for the Global Floating
Rate Fund, Global Credit Income Opportunities Fund, Emerging Markets Debt Blended Total Return Fund, and Global Emerging Markets Equity
Fund. These agreements provide that Barings manage the investment and reinvestment of the assets of the Funds. Barings is located at 300
South Tryon Street, Charlotte, North Carolina28202. Barings is a wholly-owned subsidiary of MM Asset Management Holding LLC, itself a
wholly-owned subsidiary of MassMutual Holding LLC, a controlled subsidiary of MassMutual. Barings receives a subadvisory fee from MML
Advisers, based upon each Fund’s average daily net assets, at the following annual rates:
Global Floating Rate Fund
0.30%
Global Credit Income Opportunities Fund
0.30%
Emerging Markets Debt Blended Total Return
Fund
0.35%
Global Emerging Markets Equity Fund
0.35%
Barings
also provides subadvisory services for the MassMutual U.S. Government Money Market Fund, MassMutual Short-Duration Bond Fund, MassMutual
Inflation-Protected and Income Fund, MassMutual Core Bond Fund, MassMutual Diversified Bond Fund, and MassMutual High Yield Fund, each
of which is a series of MassMutual Premier Funds, a registered, open-end investment company for which MML Advisers serves as investment
adviser and for the MML High Yield Fund, MML Inflation-Protected and Income Fund, MML Managed Bond Fund, MML Short-Duration Bond Fund,
and MML U.S. Government Money Market Fund, each of which is a series of MML Series Investment Fund II, a registered, open-end investment
company for which MML Advisers serves as investment adviser.
In
addition, BIIL serves as a sub-subadviser for the Global Floating Rate Fund, Global Credit Income Opportunities Fund, Emerging Markets
Debt Blended Total Return Fund, and Global Emerging Markets Equity Fund. BIIL is a wholly owned subsidiary of Barings. Barings has entered
into sub-subadvisory agreements with BIIL under which, subject to the supervision of Barings, BIIL is authorized to conduct securities
transactions on behalf of the Global Floating Rate Fund, Global Credit Income Opportunities Fund, Emerging Markets Debt Blended Total
Return Fund, and Global Emerging Markets Equity Fund. BIIL is located at 20 Old Bailey, London, EC4M 7BF, United Kingdom. BIIL receives
a sub-subadvisory fee from Barings, based upon a portion of the subadvisory fee Barings receives from MML Advisers, in an amount equal
to the following percentage of the subadvisory fee received by Barings: 35% of the subadvisory fee for Global Floating Rate Fund, 35%
of the subadvisory fee for Global Credit Income Opportunities Fund, 50% of the subadvisory fee for Emerging Market Debt Blended Total
Return Fund, and 50% of the subadvisory fee for Global Emerging Markets Equity Fund. BIIL also provides sub-subadvisory services for the
MassMutual Short-Duration Bond Fund, MassMutual Inflation-Protected and Income Fund, MassMutual Core Bond Fund, MassMutual Diversified
Bond Fund, and MassMutual High Yield Fund, each of which is a series of MassMutual Premier Funds, a registered, open-end investment company
for which MML Advisers serves as investment adviser and for the MML High Yield Fund, MML Inflation-Protected and Income Fund, MML Managed
Bond Fund, and MML Short-Duration Bond Fund, each of which is a series of MML Series Investment Fund II, a registered, open-end investment
company for which MML Advisers serves as investment adviser.
The Funds’
subadvisory fees are paid by MML Advisers out of the advisory fees previously disclosed above.
Information
about each portfolio manager’s compensation, other accounts managed by the portfolio managers, and each portfolio manager’s
ownership of securities in the relevant Fund can be found in Appendix C.
Administrator, Sub-Administrators, and Shareholder Servicing
Agent
MML
Advisers has entered into an administrative and shareholder services agreement (the “Administrative and Shareholder Services Agreement”)
with the Trust, on behalf of each Fund, pursuant to which MML Advisers is obligated to provide certain administrative and shareholder
services. MML Advisers may, at its expense, employ others to supply all or any part of the services to be provided to the Funds pursuant
to the Administrative and Shareholder Services Agreement. MML Advisers has entered into sub-administration agreements with both State
Street and MassMutual pursuant to which State Street and MassMutual each assist in many aspects of fund administration. Pursuant to a
letter agreement between the Trust, MML Advisers, and State Street, the Trust has agreed to pay State Street for the services it provides
pursuant to the sub-administration agreement with MML Advisers, although MML Advisers remains ultimately responsible for the payment of
any such fees owed to State Street. The Trust, on behalf of each Fund, pays MML Advisers an administrative services fee monthly at an
annual rate based upon the average daily net assets of the applicable class of shares of each Fund as shown in the table below:
Class I
Class Y
Class L
Class C
Global Floating Rate Fund
None
0.07%
0.04%
0.03%
Global Credit Income Opportunities Fund
None
0.05%
0.06%
0.03%
Emerging Markets Debt Blended Total Return Fund
None
0.06%
0.02%
None
Global Emerging Markets Equity Fund
None
0.03%
0.02%
None
Pursuant
to the Advisory Agreements, Subadvisory Agreements, and Administrative and Shareholder Services Agreement described above, for the fiscal
year ended September 30, 2022, the amount of advisory fees paid by each Fund, the amount of subadvisory fees paid by each Fund, the amount
of any advisory fees waived by MML Advisers, the amount of administrative fees paid by each Fund, and the amount of any fees reimbursed
by MML Advisers are as follows:
Commenced
operations on December 13, 2021. The expenses in the above table reflect a written agreement by MML Advisers to cap the fees and expenses
of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses, interest expense, expenses related to
borrowings, securities lending, leverage, taxes, and brokerage, short sale dividend and loan expense, or other non-recurring or unusual
expenses such as organizational expenses and shareholder meeting expenses, as applicable) through September 30, 2022, to the extent that
Total Annual Fund Operating Expenses after Expense Reimbursement would otherwise exceed 0.75%, 0.75%, 1.00%, and 1.75% for Classes I,
Y, L, and C respectively.
?
2
Commenced
operations on December 13, 2021. The expenses in the above table reflect a written agreement by MML Advisers to cap the fees and expenses
of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses, interest expense, expenses related to
borrowings, securities lending, leverage, taxes, and brokerage, short sale dividend and loan expense, or other non-recurring or unusual
expenses such as organizational expenses and shareholder meeting expenses, as applicable) through September 30, 2022, to the extent that
Total Annual Fund Operating Expenses after Expense Reimbursement would otherwise exceed 0.85%, 0.90%, 1.16%, and 1.95% for Classes I,
Y, L, and C respectively.
?
3
Commenced
operations on December 13, 2021. The expenses in the above table reflect a written agreement by MML Advisers to cap the fees and expenses
of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses, interest expense, expenses related to
borrowings, securities lending, leverage, taxes, and
brokerage,
short sale dividend and loan expense, or other non-recurring or unusual expenses such as organizational expenses and shareholder meeting
expenses, as applicable) through September 30, 2022, to the extent that Total Annual Fund Operating Expenses after Expense Reimbursement
would otherwise exceed 0.95%, 0.95%, 1.20%, and 1.95% for Classes I, Y, L, and C respectively.
?
4
Commenced
operations on December 13, 2021. The expenses in the above table reflect a written agreement by MML Advisers to cap the fees and expenses
of the Fund (other than extraordinary legal and other expenses, Acquired Fund Fees and Expenses, interest expense, expenses related to
borrowings, securities lending, leverage, taxes, and brokerage, short sale dividend and loan expense, or other non-recurring or unusual
expenses such as organizational expenses and shareholder meeting expenses, as applicable) through September 30, 2022, to the extent that
Total Annual Fund Operating Expenses after Expense Reimbursement would otherwise exceed 0.90%, 0.90%, 1.15%, and 1.90% for Classes I,
Y, L, and C respectively.
The
Funds’ shares are continuously distributed by ALPS Distributors, Inc. (the “Distributor”), located at 1290 Broadway,
Suite 1000, Denver, Colorado80203, pursuant to a Distribution Agreement with the Trust (the “Distribution Agreement”).
The
Distributor has agreed to act in good faith and to exercise commercially reasonable care and diligence to sell shares of the Funds but
has not agreed to sell any specific number of shares of the Funds. The Distributor’s compensation for serving as such is the amounts
received by it from time to time under the Funds’ Rule 12b-1 plan. In addition, the Distributor receives any front-end sales charges
imposed on the sales of Class L shares of the Funds. Sales loads paid to the Distributor in respect of the Funds during the fiscal year
ended September 30, 2022 were $353. The Funds commenced operations on December 13, 2021.
Shares
of each Fund may be purchased through agents of the Distributor who are registered representatives and licensed by the Distributor to
sell Fund shares, and through registered representatives of selected broker-dealers which are members of FINRA and which have entered
into selling agreements with the Distributor. The Distributor may reallow up to 100% of any sales load on shares sold by dealers with
whom it has sales agreements. Broker-dealers with which the Distributor has entered into selling agreements may charge their customers
a processing or service fee in connection with the purchase or redemption of Fund shares. The amount and applicability of such a fee is
determined and disclosed to such customers by each individual broker-dealer.
The
Distribution Agreement will continue in effect for an initial two-year period, and thereafter continues in effect for successive annual
periods, provided such continuance is specifically approved at least annually (i) by the Board or (ii) by a vote of a majority of the
outstanding voting securities of the relevant portfolio of the Trust, provided that in either event the continuance is also approved by
the majority of the Trustees of the Trust who are not “interested persons” (as defined in the 1940 Act) of any party
to the Distribution Agreement by vote cast in person at a meeting called for the purpose of voting on such approval.
DISTRIBUTION AND SERVICE PLAN
The
Trust has adopted, with respect to the Class I, Class Y, Class L, and Class C shares of each Fund, a Rule 12b-1 Plan (the “Plan”)
pursuant to Rule 12b-1 under the 1940 Act. The Trustees of the Trust, including a majority of the Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest in the operation of the Plan, by vote cast in person at a meeting
called for the purpose of voting on the Plan, approved the Plan for each Fund and share class.
Continuance
of the Plan is subject to annual approval by a vote of the Trustees, including a majority of the Independent Trustees, cast in person
at a meeting called for that purpose. All material amendments to the Plan must be likewise approved by the Trustees and the Independent
Trustees. The Plan may not be amended in order to increase materially the costs which a Fund may bear for distribution pursuant to the
Plan without also being approved by a majority of the outstanding voting securities of the relevant class of the Fund. The Plan terminates
automatically in the event of its assignment and may be terminated without penalty, at any time, by a vote of a majority of the Independent
Trustees or by a vote of a majority of the outstanding voting securities of the relevant class of the Fund. The Plan provides that the
Distributor shall provide to the Trustees, and the Board shall review at least quarterly, a written report of the amounts expended and
the purposes for which such expenditures were made.
The
Plan is a compensation plan, authorizing payments to the Distributor up to the following annual rates: Class L shares — 0.25% of
the average daily net assets of the class and Class C shares — 1.00% of the average daily net assets of the class. A Fund may make
payments under the Plan to compensate the Distributor for services provided and expenses incurred by it for purposes of promoting the
sale of the relevant class of shares, reducing redemptions of shares, or maintaining or improving services provided to shareholders.
MML
Advisers may pay amounts in respect of the distribution or servicing of a Fund’s shares out of administrative or advisory fees
received by it from that Fund. The Plan authorizes such payments for Class I and Class Y shares of each Fund, although MML Advisers may
make such payments in respect of shares of any class. No additional fees are paid by a Fund under the Plan.
The following
table discloses the 12b-1 fees paid in the fiscal year ending September 30, 2022 by the Trust under the Plan for Class L and Class
C shares of the Funds:
For
the fiscal year ending September 30, 2022, the Distributor paid the 12b-1 fees it received to various unaffiliated financial intermediaries
as compensation for distribution services and/or shareholder services provided by them.
PAYMENTS TO FINANCIAL INTERMEDIARIES
Financial
intermediaries may receive various forms of compensation from a Fund in the form of distribution and service (12b-1) plan payments as
described above. They may also receive payments or concessions from the Distributor, derived from sales charges paid by the financial
intermediary’s clients. In addition, MML Advisers and the Distributor (including their affiliates) may make payments to financial
intermediaries in connection with the intermediaries’ offering and sales of Fund shares and shares of other funds, or their provision
of marketing or promotional support, transaction processing or administrative services. Among the financial intermediaries that may receive
these payments are brokers or dealers who sell or hold shares of a Fund, banks (including bank trust departments), registered investment
advisers, insurance companies, retirement plan or qualified tuition program administrators, third party administrators, recordkeepers,
or other institutions that have selling, servicing or similar arrangements with MML Advisers or the Distributor. The payments to financial
intermediaries vary by the types of product sold, the features of a Fund share class, and the role played by the intermediary.
Types
of payments to financial intermediaries may include, without limitation, all or portions of the following: Payments made by a Fund, or
by an investor buying or selling shares of a Fund, including:
•
an
initial front-end sales charge, all or a portion of which is payable by the Distributor to financial intermediaries;
•
ongoing
asset-based distribution and/or service fees;
•
shareholder
servicing expenses that may be paid from Fund assets to reimburse financial intermediaries, MML Advisers, or the Distributor for Fund
expenses they incur for providing omnibus accounting, recordkeeping, networking, sub-transfer agency, or other administrative or shareholder
services (including retirement plan and 529 plan administrative services fees).
In addition,
MML Advisers may, at its discretion, make the following types of payments from its own resources, which may include profits MML Advisers
derives from investment advisory fees paid by a Fund. Payments are made based on guidelines established by the MML Advisers, subject to
applicable law. These payments are often referred to as “revenue sharing” payments, and may include:
•
compensation
for marketing support, support provided in offering shares in a Fund through certain trading platforms and programs, and transaction processing
or other services;
•
other
compensation, to the extent the payment is not prohibited by law or by any self-regulatory agency, such as FINRA.
Although
a broker or dealer that sells Fund shares may also act as a broker or dealer in connection with the purchase or sale of portfolio securities
by a Fund, MML Advisers does not consider a financial intermediary’s sales of shares of a Fund when choosing brokers or dealers
to effect portfolio transactions for a Fund.
Revenue sharing
payments can pay for distribution-related or asset retention items including, without limitation:
•
transactional
support, one-time charges for setting up access for a Fund on particular trading systems, and paying the financial intermediary’s
networking fees;
•
program
support, such as expenses related to including the Funds in retirement plans, college savings plans, fee-based advisory or wrap fee programs,
fund “supermarkets,” bank or trust company products or insurance companies’ variable annuity or variable life insurance
products;
•
placement
on the dealer’s list of offered funds and providing representatives of MML Advisers or the Distributor with access to a financial
intermediary’s sales meetings, sales representatives, and management representatives; or
•
firm
support, such as business planning assistance, advertising, or educating a financial intermediary’s sales personnel about the Funds
and shareholder financial planning needs.
These
payments may provide an incentive to financial intermediaries to actively market or promote the sale of shares of a Fund, or to support
the marketing or promotional efforts of the Distributor in offering shares of a Fund. In addition, some types of payments may provide
a financial intermediary with an incentive to recommend a Fund or a particular share class. Financial intermediaries may earn profits
on these payments, since the amount of the payments may exceed the cost of providing the services. Certain of these payments are subject
to limitations under applicable law. Financial intermediaries may categorize and disclose these arrangements to their clients and to members
of the public in a manner different from the disclosures in a Fund’s Prospectus and this SAI. You should ask your financial intermediary
for information about any payments it receives from a Fund, MML Advisers, or the Distributor and any services it provides, as well as
the fees and commissions it charges.
CUSTODIAN, DIVIDEND DISBURSING AGENT,
AND TRANSFER AGENT
State
Street, located at 1 Iron Street, Boston, Massachusetts02210, is the custodian of each Fund’s investments (the “Custodian”)
and ALPS Fund Services, Inc., located at 1290 Broadway, Suite 1000, Denver, Colorado80203, is the Funds’ transfer agent and dividend
disbursing agent (the “Transfer Agent”). As custodian, State Street has custody of the Funds’ securities and maintains
certain financial and accounting books and records. As Custodian and Transfer Agent, respectively, State Street and ALPS Fund Services,
Inc. do not assist in, and are not responsible for, the investment decisions and policies of the Funds.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Deloitte
& Touche LLP, located at 200 Berkeley Street, Boston, Massachusetts02116, is the Trust’s independent registered public accounting
firm. Deloitte & Touche LLP provides audit and related services, and assistance in connection with various SEC filings.
CODES OF ETHICS
The
Trust, MML Advisers, the Distributor, Barings, and BIIL have each adopted a code of ethics (the “Codes of Ethics”) pursuant
to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940, as amended. The Codes of Ethics permit Fund
personnel to invest in securities, including securities that may be purchased or held by a Fund, for their own accounts, but require compliance
with various pre-clearance requirements (with certain exceptions). The Codes of Ethics are on public file with, and are available from,
the SEC.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Transactions
on stock exchanges, commodities markets and futures markets and other agency transactions involve the payment by the Funds of negotiated
brokerage commissions. Such commissions may vary among different brokers. A particular broker may charge different commissions according
to such factors as execution venue and exchange. Although the Funds do not typically pay commissions for principal transactions in the
OTC markets, such as the markets for most fixed income securities and certain derivatives, an undisclosed amount of profit or “mark-up”
is included in the price a Fund pays. In underwritten offerings, the price paid by a Fund includes a disclosed, fixed commission or discount
retained by the underwriter or dealer.
The
primary consideration in placing portfolio security transactions with broker-dealers for execution is to obtain the best execution of
orders. Each Fund’s investment adviser or subadviser attempts to achieve this result by selecting broker-dealers to execute portfolio
transactions on the basis of their professional capability, the value and quality of their brokerage services, including anonymity and
trade confidentiality, and the level of their brokerage commissions.
Under each
Advisory or Subadvisory Agreement and as permitted by Section 28(e) of the Exchange Act and to the extent not otherwise prohibited by
applicable law, an investment adviser or subadviser may cause a Fund to pay a broker-dealer that provides brokerage and research services
to the investment adviser or subadviser an amount of commission for effecting a securities transaction for a Fund in excess of the amount
other broker-dealers would have charged for the transaction if the investment adviser or subadviser determines in good faith that the
greater commission is reasonable in relation to the value of the brokerage and research services provided by the executing broker-dealer
viewed in terms of either a particular transaction or the investment adviser’s or subadviser’s overall responsibilities
to the Trust and to its other clients. The term “brokerage and research services” includes: providing advice as to the value
of securities, the advisability of investing in, purchasing, or selling securities, and the availability of securities or of purchasers
or sellers of securities; furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts; and effecting securities transactions and performing functions incidental thereto such as clearance
and settlement.
The
investment adviser or subadvisers may obtain third-party research from broker-dealers or non-broker-dealers by entering into commission
sharing arrangements (“CSAs”). Under a CSA, the executing broker-dealer agrees that part of the commissions it earns on
certain equity trades will be allocated to one or more research providers as payment for research. CSAs allow an investment adviser or
subadviser to direct broker-dealers to pool commissions that are generated from orders executed at that broker-dealer, and then periodically
direct the broker-dealer to pay third party research providers for research.
Brokerage
and research services provided by brokers are used for the benefit of all of the investment adviser’s or subadviser’s clients
and not solely or necessarily for the benefit of the Trust. The investment adviser or subadvisers attempt to evaluate the quality of brokerage
and research services provided by brokers. Results of this effort are sometimes used by the investment adviser or subadvisers as a consideration
in the selection of brokers to execute portfolio transactions.
The
investment advisory fee that the Trust pays on behalf of each Fund to MML Advisers will not be reduced as a consequence of an investment
adviser’s or subadviser’s receipt of brokerage and research services. To the extent the Trust’s portfolio transactions
are used to obtain such services, the brokerage commissions paid by the Trust will exceed those that might otherwise be paid, provided
that the investment adviser or subadviser determines in good faith that such excess amounts are reasonable in relation to the services
provided. Such services would be useful and of value to an investment adviser or subadviser in serving both the Trust and other clients
and, conversely, such services obtained by the placement of brokerage business of other clients would be useful to an investment adviser
or subadviser in carrying out its obligations to the Trust.
Subject
to the overriding objective of obtaining the best execution of orders, the Funds may use broker-dealer affiliates of their respective
investment adviser or subadvisers to effect portfolio brokerage transactions under procedures adopted by the Trustees. Pursuant to these
procedures, the commission, fee, or other remuneration paid to the affiliated broker-dealer in connection with a portfolio brokerage transaction
effected on a securities exchange must be reasonable and fair in comparison to those of other broker-dealers for comparable transactions
involving similar securities being purchased or sold on a securities exchange during a comparable time period. This standard would allow
the affiliated broker or dealer to receive no more than the remuneration which would be expected to be received by an unaffiliated broker.
The
Funds may allocate brokerage transactions to broker-dealers (including affiliates of their respective investment adviser or subadvisers)
who have entered into arrangements with the Trust under which the broker-dealer allocates a portion of the commissions paid back to the
Fund. The transaction quality must, however, be comparable to that of other qualified broker-dealers.
The
revised European Union (“EU”) Markets in Financial Instruments Directive (“MiFID II”), which became effective
January 3, 2018, requires EU investment managers in the scope of the EU Markets in Financial Instruments Directive to pay for research
services from brokers and dealers directly out of their own resources or by establishing “research payment accounts” for
each client, rather than through client commissions. MiFID II’s research requirements present various compliance and operational
considerations for investment advisers and broker-dealers serving clients in both the United States and the EU. It is possible that an
investment adviser or subadviser subject to MiFID II will cause a Fund to pay for research services through client commissions in circumstances
where the investment adviser or subadviser is prohibited from causing its other client accounts to do so, including where the investment
adviser or subadviser aggregates trades on behalf of a Fund and those other client accounts. In such situations, the Fund would bear the
additional amounts for the research services and the Fund’s investment adviser’s or subadviser’s other client accounts
would not, although the investment adviser’s or subadviser’s other client accounts might nonetheless benefit from those
research services.
The
following table discloses the brokerage commissions paid by the following Funds for the fiscal year ended September 30, 2022.
For
the fiscal year ended September 30, 2022, the Funds did not pay brokerage commissions to an affiliate of the Funds’ investment
adviser or subadviser.
For
the fiscal year ended September 30, 2022, the Funds did not have any trades directed to a broker or dealer because of research services
provided.
For
the fiscal year ended September 30, 2022, the Funds did not hold any securities issued by one or more “regular brokers or dealers”
(as defined in the 1940 Act) or their parent companies.
DESCRIPTION OF SHARES
The
Trust, an open-end, management investment company, is organized as a Massachusetts business trust under the laws of Massachusetts by an
Agreement and Declaration of Trust dated April 26, 2021. A copy of the Declaration of Trust is on file with the Secretary of The Commonwealth
of Massachusetts. The fiscal year for each Fund ends on September 30.
The
Declaration of Trust permits the Trustees, without shareholder approval, to issue an unlimited number of shares and divide those shares
into an unlimited number of series of shares, representing separate investment portfolios with rights determined by the Trustees. Shares
of the Funds are transferable and have no preemptive, subscription, or conversion rights. Shares of the Funds are entitled to dividends
as declared by the Trustees. In the event of liquidation of a Fund, the Trustees would distribute, after paying or otherwise providing
for all charges, taxes, expenses, and liabilities belonging to the Fund, the remaining assets belonging to the Fund among the holders
of outstanding shares of the Fund. The Trustees have currently authorized the issuance of an unlimited number of full and fractional shares
of four series, each of which is described in this SAI.
The
Trustees may divide the shares of any series into two or more classes having such preferences or special or relative rights and privileges
as the Trustees may determine, without obtaining shareholder approval. The Trustees have currently authorized the establishment and designation
of four classes of shares for each series of the Trust: Class I Shares, Class Y Shares, Class L Shares, and Class C Shares. All shares
of a particular class of each series represent an equal proportionate interest in the assets and liabilities belonging to that series
allocable to that class.
The
Trustees may also, without shareholder approval, combine two or more existing series (or classes) into a single series (or class).
The
Declaration of Trust provides for the perpetual existence of the Trust. The Declaration of Trust, however, provides that the Trust may
be terminated at any time by vote of at least 50% of the shares of each series entitled to vote and voting separately by series or by
the Trustees by written notice to the shareholders. Any series of the Trust may be terminated by vote of at least 50% of shareholders
of that series or by the Trustees by written notice to the shareholders of that series.
Shares
of the Funds entitle their holders to one vote per share, with fractional shares voting proportionally, in the election of Trustees and
on other matters submitted to the vote of shareholders. On any matter submitted to a vote of shareholders, all shares of the Trust then
entitled to vote shall, except as otherwise provided in the Declaration of Trust or the Bylaws, be voted in the aggregate as a single
class without regard to series or class, except that: (i) when required by the 1940 Act or when the Trustees shall have determined that
the matter affects one or more series or classes materially differently, shares will be voted by individual series or class; and (ii)
when the Trustees have determined that the matter affects only the interests of one or more series or classes, then only shareholders
of such series or classes shall be entitled to vote thereon. A separate vote will be taken by the applicable Fund on matters affecting
the particular Fund, as determined by the Trustees. For example, a change in a fundamental investment policy for a particular Fund would
be voted upon only by shareholders of that Fund. In addition, a separate vote will be taken by the applicable class of a Fund on matters
affecting the particular class, as determined by the Trustees. For example, the adoption of a distribution plan relating to a particular
class and requiring shareholder approval would be voted upon only by shareholders of that class. Shares of each Fund have noncumulative
voting rights with respect to the election of trustees.
The Trust
is not required to hold annual meetings of its shareholders. However, special meetings of the shareholders may be called for the purpose
of electing Trustees and for such other purposes as may be prescribed by law, by the Declaration of Trust, or by the Bylaws. There will
normally be no meetings of shareholders for the purpose of electing Trustees except that the Trust will hold a shareholders’ meeting
as required by applicable law or regulation.
The
Declaration of Trust may be amended by the Trustees without a shareholder vote, except to the extent a shareholder vote is required by
applicable law, the Declaration of Trust or the Bylaws, or as the Trustees may otherwise determine.
Under
Massachusetts law, shareholders of a Massachusetts business trust could, under certain circumstances, be held personally liable for the
obligations of the Trust. However, the Declaration of Trust disclaims liability of the shareholders, Trustees, or officers for acts or
obligations of the Trust, which are binding only on the assets and property of the Trust, and require that notice of such disclaimer be
given in each note, bond, contract, instrument, certificate, or undertaking made or issued on behalf of the Trust by the Trustees or officers.
In addition, the Declaration of Trust provides that shareholders of a Fund are entitled to indemnification out of the assets of their
Fund to the extent that they are held personally liable for the obligations of their Fund solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder of a Fund incurring financial loss on account of shareholder liability is considered remote since it is
limited to circumstances in which the disclaimer is inoperative and his or her Fund is unable to meet its obligations.
The
Declaration of Trust also permits the Trustees to charge shareholders directly for custodial, transfer agency, and servicing expenses,
but the Trustees have no present intention to charge shareholders directly for such expenses.
The
Declaration of Trust further provides that a Trustee will not be personally liable for errors of judgment or mistakes of fact or law.
The Declaration of Trust additionally provides that a Trustee may be liable for his or her own willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his or her office, and for nothing else. The Declaration of Trust also
provides for indemnification of each of its Trustees and officers, except that such Trustees and officers may not be indemnified against
any liability to the Trust or its shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.
The
Declaration of Trust also provides that unless the Trust consents in writing to the selection of an alternative forum, the forum for the
adjudication of the following disputes shall be the state or federal courts sitting within the Commonwealth of Massachusetts: (1) any
derivative action brought on behalf of the Trust; (2) any action asserting a claim against the Trust or against any Trustee, officer,
or other employee of the Trust, whether arising under federal law, the law of any state, or the law of a non-U.S. jurisdiction; (3) any
action arising under or to interpret or enforce the Declaration of Trust or the Bylaws; or (4) any action asserting a claim governed by
the internal affairs doctrine. In addition, the Declaration of Trust specifies that any action asserting a claim arising pursuant to any
provision of the Massachusetts Business Corporation Act, the statutory or common law of the Commonwealth of Massachusetts, or the Declaration
of Trust or the Bylaws must be brought in the state or federal courts located within the Commonwealth of Massachusetts unless the Trust
consents in writing to the selection of an alternative forum.
Shareholders
of the Trust must obtain authorization from the Trustees prior to bringing a court action or other proceeding against the Trust, the Trustees,
or officers asserting a claim based upon alleged violations of a shareholder’s individual rights independent of any harm to the
Trust, except for shareholder actions expressly provided by U.S. federal securities laws.
PROGRAMS FOR REDUCING OR ELIMINATING
SALES CHARGES
The
following information supplements the discussion of methods for reducing or eliminating sales charges for Class L and Class C shares of
the Funds found in the Prospectus.
Right of Accumulation (Class L Shares Only)
Reduced
sales charges on Class L shares of the Funds can be obtained by combining a current purchase with prior purchases of all classes of shares
of any Participating Funds (as defined in the Prospectus). The applicable sales charge is based on the combined total of:
(1)
the
current purchase of Class L shares; and
(2)
the
value at the public offering price at the close of business on the previous day of a Fund’s and any classes of a Participating
Fund’s shares held by the shareholder, the shareholder’s spouse, or the shareholder’s minor children.
MML Advisers,
the Distributor, or a financial intermediary must be promptly notified of each purchase that entitles a shareholder to a reduced sales
charge. Such reduced sales charge will be applied upon confirmation of the shareholder’s holdings by the Transfer Agent. The Funds
may terminate or amend this Right of Accumulation at any time without notice.
Letter of Intent (Class L Shares Only)
Any
person may qualify for reduced sales charges on purchases of Class L shares of a Fund made within a 13-month period pursuant to a Letter
of Intent (“Letter”). A shareholder may include, as an accumulation credit toward the completion of such Letter, the value
of all shares (of any class) of any Participating Funds held by the shareholder on the date of the Letter. The value is determined at
the public offering price on the date of the Letter. Purchases made through reinvestment of distributions do not count toward satisfaction
of the Letter. Upon request, a Letter may reflect purchases within the previous 90 days.
During
the term of the Letter, the Transfer Agent will hold shares in escrow to secure payment of the higher sales charges applicable to Class
L shares actually purchased if the terms of the Letter are not satisfied. Dividends and capital gains will be paid on all escrowed shares,
and these shares will be released (upon satisfaction of any amount owed for sales charges if the terms of the Letter are not satisfied)
when the amount indicated has been purchased or at the end of the period covered by the Letter, whichever occurs first. A Letter does
not obligate the investor to buy or the Funds to sell the amount specified in the Letter.
If
a shareholder exceeds the amount specified in the Letter and reaches an amount that would qualify for a further quantity discount, a retroactive
price adjustment will be made at the time of expiration of the Letter. The resulting difference in offering price will purchase additional
shares for the shareholder’s account at the applicable offering price. As a part of this adjustment, a financial intermediary shall
return to the Distributor the excess commission previously paid to the financial intermediary during the 13-month period.
If
the amount specified in the Letter is not purchased, the shareholder shall remit to the Distributor an amount equal to the difference
between the sales charge paid and the sales charge that should have been paid. If the shareholder fails within 20 days after a written
request to pay such a difference in sales charge, the Transfer Agent will redeem that number of escrowed Class L shares to equal such
difference. The additional amount of a financial intermediary’s commission from the applicable offering price shall be remitted
by the Distributor to the financial intermediary.
Additional
information about, and terms of, Letters of Intent are available from a financial intermediary, or from the Transfer Agent at 1-855-439-5459.
Reinstatement Privilege (Class L and Class C Shares Only)
A
shareholder who has redeemed Class L or Class C shares of a Fund may, upon request, reinstate within one year a portion or all of the
proceeds of such sale in Class L shares or Class C shares, respectively, of the Fund or another Participating Fund at the NAV next determined
after receipt by MML Advisers or the Distributor of a reinstatement request and receipt by the Transfer Agent of payment for such shares.
The Distributor will not pay a financial intermediary a commission on any reinvested amount. Any contingent deferred sales charge (“CDSC”)
paid at the time of the redemption will be credited to the shareholder upon reinstatement. The period between the redemption and the reinstatement
will not be counted in aging the reinstated shares for purposes of calculating any CDSC or conversion date. Shareholders who desire to
exercise this privilege should contact MML Advisers, the Distributor, or a financial intermediary. Shareholders may exercise this privilege
an unlimited number of times. Exercise of this privilege does not alter the U.S. federal income tax treatment of any capital gains realized
on the prior sale of Fund shares, but to the extent any such shares were sold at a loss, some or all of the loss may be disallowed for
tax purposes. Please consult your tax adviser.
Privileges of Financial Intermediaries
Class
L shares of a Fund may be sold at NAV, without a sales charge, to registered representatives and employees of financial intermediaries
(including their affiliates) and such persons’ families and their beneficial accounts.
Class
L shares of a Fund may be purchased at a reduced or zero sales charge pursuant to sponsored arrangements, which include programs under
which an organization makes recommendations to, or permits group solicitation of, its employees, members, or participants in connection
with the purchase of shares of the Fund on an individual basis. The amount of the sales charge reduction will reflect the anticipated
reduction in sales expense associated with sponsored arrangements. The reduction in sales expense, and therefore the reduction in sales
charge, will vary depending on factors such as the size and stability of the organization’s group, the term of the organization’s
existence, and certain characteristics of the members of its group. The Funds reserve the right to revise the terms of or to suspend or
discontinue sales pursuant to sponsored arrangements at any time.
Class
L shares of a Fund also may be purchased at a reduced or zero sales charge by (i) clients of any financial intermediary that has entered
into an agreement with MML Advisers or the Distributor pursuant to which the Fund is included as an investment option in programs involving
fee-based compensation arrangements; (ii) clients of any financial intermediary that has entered into an agreement with MML Advisers or
the Distributor pursuant to which such financial intermediary offers Fund shares through self-directed investment brokerage accounts that
do not charge transaction fees to its clients; and (iii) participants in employer-sponsored retirement plans (e.g. 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit sharing and money purchase pension plans, and defined benefit plans). For purposes of this waiver,
employer-sponsored retirement plans do not include Simplified Employee Pension Plan IRAs (“SEP IRAs”), Simple IRAs, Salary
Reduction Simplified Employee Pension Plans (“SAR-SEPs”), or Keogh plans.
Waiver of CDSCs
CDSCs
may be waived on redemptions in the following situations with the proper documentation:
(1)
Death.
CDSCs may be waived on redemptions within one year following the death of (i) the sole shareholder on an individual account, (ii) a joint
tenant where the surviving joint tenant is the deceased’s spouse, or (iii) the beneficiary of a Uniform Gifts to Minors Act (“UGMA”),
Uniform Transfers to Minors Act (“UTMA”), or other custodial account. If, upon the occurrence of one of the foregoing, the
account is transferred to an account registered in the name of the deceased’s estate, the CDSC will be waived on any redemption
from the estate account occurring within one year after the death. If Class L or Class C shares are not redeemed within one year of the
death, they will remain subject to the applicable CDSC when redeemed from the transferee’s account. If the account is transferred
to a new registration and then a redemption is requested, the applicable CDSC will be charged.
(2)
Disability.
CDSCs may be waived on redemptions occurring within one year after the sole shareholder on an individual account or a joint tenant on
a spousal joint tenant account becomes disabled (as defined in Section 72(m)(7) of the Code). To be eligible for such waiver, (i) the
disability must arise after the purchase of shares, (ii) the disabled shareholder must have been under age 65 at the time of the initial
determination of disability, and (iii) a letter must be produced from a physician signed under penalty of perjury stating the nature of
the disability. If the account is transferred to a new registration and then a redemption is requested, the applicable CDSC will be charged.
(3)
Death
of a Trustee. CDSCs may be waived on redemptions occurring upon dissolution of a revocable
living or grantor trust following the death of the sole trustee where (i) the grantor of the trust is the sole trustee and the sole life
beneficiary, (ii) death occurs following the purchase of shares, and (iii) the trust document provides for dissolution of the trust upon
the trustee’s death. If the account is transferred to a new registration (including that of a successor trustee), the applicable
CDSC will be charged upon any subsequent redemption.
(4)
Return
of Excess Contributions. CDSCs may be waived on redemptions required to return excess contributions
made to retirement plans or individual retirement accounts, so long as the financial intermediary agrees to return all or the agreed-upon
portion of the commission received on the shares being redeemed.
(5)
Qualified
Retirement Plans. CDSCs may be waived on redemptions required to make distributions from
qualified retirement plans following normal retirement age (as stated in the plan document).
The
CDSC also may be waived if a financial intermediary agrees to return all or an agreed-upon portion of the commission received on the sale
of the shares being redeemed.
SECURITIES LENDING
State
Street serves as securities lending agent to the Trust. As securities lending agent, State Street is responsible for the implementation
and administration of the securities lending program pursuant to the Securities Lending Agency
Agreement
(“Securities Lending Agreement”). State Street acts as agent to the Trust to lend available securities with any person on
its list of approved borrowers. State Street determines whether a loan shall be made per the agreed upon parameters with the Trust and
negotiates and establishes the terms and conditions of the loan with the borrower. State Street ensures that all substitute interest,
dividends, and other distributions paid with respect to loan securities are credited to the applicable Fund’s relevant account
on the date such amounts are delivered by the borrower to State Street. State Street receives and holds, on the Fund’s behalf,
collateral from borrowers to secure obligations of borrowers with respect to any loan of available securities. State Street marks loaned
securities and collateral to their market value each business day in order to maintain the value of the collateral at no less than 102%
(for domestic) and 105% (for foreign) of the market value of the loaned securities. At the termination of the loan, State Street returns
the collateral to the borrower upon the return of the loaned securities to State Street. State Street invests cash collateral in accordance
with the Securities Lending Agreement. State Street maintains such records as are reasonably necessary to account for loans that are made
and the income derived therefrom and makes available to the Funds daily, monthly, and quarterly statements describing the loans made,
and the income derived from the loans, during the period. State Street performs compliance monitoring and testing of the securities lending
program. The Board receives information quarterly describing the outstanding loans and income made on such loans during the period.
The dollar amounts of gross and net income from securities lending activities received and the related
fees and/or compensation paid by each applicable Fund during the fiscal year ended September 30, 2022 were as follows:
FUND
Gross income earned by the Fund from securities lending
activities
Fees paid to securities lending agent from a revenue split
Fees paid for any cash collateral management service (including fees
deducted from a pooled cash collateral reinvestment vehicle) that are not included in a revenue
split
Administrative fees not included in a revenue
split
Indemnification fees not included in
a revenue split
Rebate (paid to borrower)
Other fees not included in a revenue split, if applicable, including
a description of those other
fees
Aggregate fees/ compensation paid by the Fund for securities lending
activities
With respect to each Fund, the Trustees may suspend the right of redemption, postpone the date of
payment, or suspend the determination of NAV: (a) for any period during which the NYSE is closed (other than for customary weekend
and holiday closing); (b) for any period during which trading in the markets the Fund normally uses is, as determined by the SEC,
restricted; (c) when an emergency exists as determined by the SEC so that disposal of the Fund’s investments or a determination
of its NAV is not reasonably practicable; or (d) for such other periods as the SEC by order may permit for the protection of the
Trust’s shareholders. Under normal circumstances, each Fund expects to meet redemption requests by using cash or cash equivalents
in its portfolio and/or selling portfolio assets to generate cash. Under stressed market conditions, a Fund may pay redemption proceeds
using cash obtained through borrowing arrangements that may be available from time to time. To the extent consistent with applicable laws
and regulations, the Funds reserve the right to satisfy all or a portion of a redemption request by distributing securities or other property
in lieu of cash (“in-kind” redemptions), under both normal and stressed market conditions. In-kind redemptions are typically
used to meet redemption requests that represent a large percentage of the Fund’s net assets in order to minimize the effect
of the large redemption on the Fund and its remaining shareholders. Some Funds may be limited in their ability to use assets other than
cash to meet redemption requests
due to restrictions on ownership of their portfolio assets. Any in-kind redemption will be effected through a distribution of all publicly
traded portfolio securities or securities for which quoted bid prices are available, subject to certain exceptions. The securities distributed
in an in-kind redemption will be valued in the same manner as they are valued for purposes of computing the Fund’s NAV. These securities
are subject to market risk until they are sold and may increase or decrease in value prior to converting them into cash. You may incur
brokerage and other transaction costs, and could incur a taxable gain or loss for income tax purposes when converting the securities to
cash.
VALUATION OF PORTFOLIO SECURITIES
The
NAV of each Fund’s shares is determined once daily as of the close of regular trading on the NYSE, on each day the NYSE is open
for trading (a “business day”). The NYSE normally closes at 4:00 p.m. Eastern Time, but may close earlier on some days.
If the NYSE is scheduled to close early, the business day will be considered to end as of the time of the NYSE’s scheduled close.
A Fund will not treat an intraday disruption in NYSE trading or other event that causes an unscheduled closing of the NYSE as a close
of business of the NYSE for these purposes; instead, MML Advisers will determine the fair value of a Fund’s securities in accordance
with MML Advisers’ fair valuation policy and procedures. The NYSE currently is not open for trading on New Year’s Day, Martin
Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day. Each Fund calculates the NAV of each of its classes of shares by dividing the total value of
the assets attributable to that class, less the liabilities attributable to that class, by the number of shares of that class that are
outstanding. On holidays and other days when the NYSE is closed, each Fund’s NAV generally is not calculated and the Funds do not
anticipate accepting buy or sell orders. However, the value of each Fund’s assets may still be affected on such days to the extent
that a Fund holds foreign securities that trade on days that foreign securities markets are open.
Equity
securities and derivative contracts that are actively traded on a national securities exchange or contract market are valued on the basis
of information furnished by a pricing service, which provides the last reported sale price, or, in the case of futures contracts, the
settlement price, for securities or derivatives listed on the exchange or contract market or the official closing price on the NASDAQ
National Market System (“NASDAQ System”), or in the case of OTC securities for which an official closing price is unavailable
or not reported on the NASDAQ System, the last reported bid price. Portfolio securities traded on more than one national securities exchange
are valued at the last price at the close of the exchange representing the principal market for such securities. Debt securities are valued
on the basis of valuations furnished by a pricing service, which generally determines valuations taking into account factors such as institutional-size
trading in similar securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. Shares
of other open-end mutual funds are valued at their closing NAVs as reported on each business day.
Investments
for which market quotations are readily available are marked to market daily based on those quotations. Market quotations may be provided
by third-party vendors or market makers, and may be determined on the basis of a variety of factors, such as broker quotations, financial
modeling, and other market data, such as market indexes and yield curves, counterparty information, and foreign exchange rates. U.S. Government
and agency securities may be valued on the basis of market quotations or using a model that may incorporate market observable data such
as reported sales of similar securities, broker quotes, yields, bids, offers, quoted market prices, and reference data. The fair values
of OTC derivative contracts, including forward, swap, and option contracts related to interest rates, foreign currencies, credit standing
of reference entities, equity prices, or commodity prices, may be based on market quotations or may be modeled using a series of techniques,
including simulation models, depending on the contract and the terms of the transaction. The fair values of asset-backed securities and
mortgage-backed securities are estimated based on models that consider the estimated cash flows of each debt tranche of the issuer, established
benchmark yield, and estimated tranche-specific spread to the benchmark yield based on the unique attributes of the tranche including,
but not limited to, prepayment speed assumptions and attributes of the collateral.
The
Board has designated MML Advisers as the Funds’ “valuation designee,” responsible for determining the fair value,
in good faith, of securities and other instruments held by the Funds for which market quotations are not readily available or for which
such market quotations or values are considered by MML Advisers or a subadviser to be unreliable (including, for example, certain foreign
securities, thinly-traded securities, certain restricted securities, certain initial public offerings, or securities whose values may
have been affected by a significant event). It is possible that a significant amount of a Fund’s assets will be subject to fair
valuation in accordance with MML Advisers’ fair valuation policy and procedures. The fair value determined for an investment by
MML Advisers may differ from recent market prices for the investment and may be significantly different from the value realized upon the
sale of such investment.
The
Funds may invest in securities that are traded principally in foreign markets and that trade on weekends and other days when the Funds
do not price their shares. As a result, the values of the Funds’ portfolio securities may change on days
when the prices of the Funds’
shares are not calculated. The prices of the Funds’ shares will reflect any such changes when the prices of the Funds’ shares
are next calculated, which is the next business day. The Funds may use fair value pricing more frequently for securities primarily traded
in foreign markets because, among other things, most foreign markets close well before the Funds value their securities. The earlier close
of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the
interim. The Funds’ investments may be priced based on fair values provided by a third-party vendor, based on certain factors and
methodologies applied by such vendor, in the event that there is movement in the U.S. market, between the close of the foreign market
and the time the Funds calculate their NAVs.
The
prices of foreign securities are quoted in foreign currencies. All assets and liabilities expressed in foreign currencies are converted
into U.S. dollars at the mean between the buying and selling rates of such currencies against the U.S. dollar at the end of each business
day. Changes in the exchange rate, therefore, if applicable, will affect the NAV of shares of a Fund even when there has been no change
in the values of the foreign securities measured in terms of the currency in which they are denominated.
The
proceeds received by each Fund for each issue or sale of its shares, all net investment income, and realized and unrealized gain will
be specifically allocated to such Fund and constitute the underlying assets of that Fund. The underlying assets of each Fund will be segregated
on the Trust’s books of account, and will be charged with the liabilities in respect of such Fund and with a share of the general
liabilities of the Trust. Expenses with respect to any two or more Funds are to be allocated in proportion to the NAVs of the respective
Funds except where allocations of direct expenses can otherwise be fairly made. Each class of shares of a Fund will be charged with liabilities
directly attributable to such class, and other Fund expenses will be allocated in proportion to the NAVs of the respective classes.
TAXATION
Taxation of the Funds: In General
Each
Fund has elected and intends to qualify each year to be treated as a regulated investment company under Subchapter M of the Code. In order
to qualify as a regulated investment company, a Fund must, among other things:
(a)
derive
at least 90% of its gross income for each taxable year from:
(i)
dividends,
interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities, or foreign currencies,
and other income (including, but not limited to, gains from options, futures, or forward contracts) derived with respect to its business
of investing in such stock, securities, or currencies; and
(ii)
net
income derived from interests in “qualified publicly traded partnerships” (as defined below);
(b)
distribute
with respect to each taxable year at least 90% of the sum of its investment company taxable income (generally taxable ordinary income
and the excess, if any, of net short-term capital gains over net long-term capital losses) and its net tax-exempt income, if any, for
such year in a manner qualifying for the dividends-paid deduction; and
(c)
diversify
its holdings so that, at the close of each quarter of its taxable year:
(i)
at
least 50% of the value of its total assets consists of cash, cash items, U.S. Government securities, securities of other regulated investment
companies, and other securities limited generally with respect to any one issuer to not more than 5% of the total assets of the Fund and
not more than 10% of the outstanding voting securities of such issuer; and
(ii)
not
more than 25% of the value of its total assets is invested, including through corporations in which the Fund owns a 20% or more voting
stock interest, (x) in the securities of any one issuer or two or more issuers which the Fund controls and that are engaged in the same,
similar, or related trades or businesses (other than U.S. Government securities), or (y) in the securities of one or more qualified publicly
traded partnerships (as defined below).
For
purposes of the 90% gross income requirement described in (a) above, income derived from a partnership will be treated as qualifying income
only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized directly
by the regulated investment company. However, 100% of the net income derived from an interest in a “qualified publicly traded partnership”
will be treated as qualifying income. A “qualified publicly traded partnership” is a partnership (x) the interests in which
are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof, and
(y) that derives less than 90% of its income from the qualifying income described in paragraph (a)(i) above. In general, such entities
will be treated as
partnerships for U.S. federal
income tax purposes because they meet the passive income requirement under Code section 7704(c)(2). Certain of a Fund’s investments
in MLPs and ETFs, if any, may qualify as interests in qualified publicly traded partnerships, as described further below. In addition,
although in general the passive loss rules of the Code do not apply to regulated investment companies, such rules do apply to a regulated
investment company with respect to items attributable to an interest in a qualified publicly traded partnership.
For
purposes of the diversification test in (c) above, the term “outstanding voting securities of such issuer” will include
the equity securities of a qualified publicly traded partnership. Also for purposes of the diversification test in (c) above, the identification
of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment.
In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance
by the IRS with respect to identification of the issuer for a particular type of investment may adversely affect the Fund’s ability
to meet the diversification test in (c) above.
The
90% gross income requirement described in (a) above and the diversification test described in (c) above may limit the extent to which
a Fund can engage in certain derivative transactions, as well as the extent to which it can invest in commodities, commodities-related
investments, and MLPs.
In
general, if a Fund qualifies as a regulated investment company that is accorded special tax treatment, that Fund will not be subject to
U.S. federal income tax on income or gains distributed in a timely manner to its shareholders in the form of dividends (including capital
gain dividends). As long as a Fund qualifies as a regulated investment company, the Fund under present law will not be subject to any
excise or income taxes imposed by Massachusetts.
If
a Fund were to fail to meet the income, diversification or distribution test described above, the Fund could in some cases cure such failure,
including by paying a Fund-level tax, paying interest, making additional distributions, or disposing of certain assets. If a Fund were
ineligible to or otherwise did not cure such failure for any year, or if a Fund were otherwise to fail to qualify as a regulated investment
company in any taxable year, that Fund would be subject to tax on its taxable income at corporate rates. In addition, all distributions
from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to shareholders
as ordinary income. Some portions of such distributions may be eligible for the dividends-received deduction in the case of corporate
shareholders or possibly to be treated as qualified dividend income to shareholders taxed as individuals. Finally, the Fund could be required
to recognize unrealized gains, pay substantial taxes and interest, and make substantial distributions before requalifying as a regulated
investment company.
The
Global Emerging Markets Equity Fund intends to distribute at least annually, and each of the Global Floating Rate Fund, Global Credit
Income Opportunities Fund, and Emerging Markets Debt Blended Total Return Fund intends to declare a dividend daily and to pay out any
dividends at least monthly to its shareholders all or substantially all of its investment company taxable income (computed without regard
to the dividends-paid deduction) and its net tax-exempt income (if any). Each Fund intends to distribute at least annually net capital
gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any
loss carryforwards). Investment company taxable income or net capital gain that is retained by a Fund will be subject to tax at regular
corporate rates. However, a Fund may designate any retained net capital gain amount as undistributed capital gains in a timely notice
to its shareholders who (i) will be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their
shares of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the tax paid by the Fund on
such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds
such liabilities. If a Fund makes this designation, the tax basis of shares owned by a shareholder of a Fund will, for U.S. federal income
tax purposes, be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder’s
gross income under clause (i) of the preceding sentence and the tax deemed paid by the shareholder under clause (ii) of the preceding
sentence. A Fund is not required to, and there can be no assurance the Fund will, make this designation if it retains all or a portion
of its net capital gain in a taxable year.
In
determining its net capital gain, including in connection with determining the amount available to support a capital gain dividend, its
taxable income, and its earnings and profits, a regulated investment company may elect to treat part or all of any post-October capital
loss (defined as any net capital loss attributable to the portion of the taxable year after October 31 or, if there is no such loss, the
net long-term capital loss or net short-term capital loss attributable to such portion of the taxable year) and certain late-year ordinary
losses (generally, the sum of its (i) net ordinary losses from the sale, exchange or other taxable disposition of property, attributable
to the portion of the taxable year after October 31, and its (ii) other net ordinary losses attributable to the portion of the taxable
year after December 31) as if incurred in the succeeding taxable year.
Capital
losses in excess of capital gains (“net capital losses”) are not permitted to be deducted against a Fund’s net investment
income. If a Fund has a net capital loss for any year, the amount thereof may be carried forward to offset capital
gains in future years, thereby
reducing the amount the Fund would otherwise be required to distribute in such future years to qualify for the special tax treatment accorded
regulated investment companies and avoid a Fund-level tax. If a Fund incurs or has incurred net capital losses, those losses will be carried
forward to one or more subsequent taxable years without expiration; any such carryforward losses will retain their character as short-term
or long-term. See the most recent annual shareholder report for each Fund’s capital loss carryforwards as of the end of its most
recently ended fiscal year.
A
nondeductible excise tax at the rate of 4% will be imposed on the excess, if any, of each Fund’s “required distribution”
over its actual distributions in any calendar year. The “required distribution” is 98% of the Fund’s ordinary income
for the calendar year plus 98.2% of its capital gain net income recognized during the one-year period ending on October 31 (or November
30 or December 31, if the Fund is permitted to elect and so elects) plus undistributed amounts from prior years. For these purposes, ordinary
gains and losses from the sale, exchange or other taxable disposition of property that would be properly taken into account after October
31 (or November 30, if the Fund makes the election referred to above) are treated as arising on January 1 of the following calendar year;
in the case of a Fund with a December 31 year end, no such gains or losses will be so treated. Each Fund intends to make distributions
sufficient to avoid imposition of the excise tax, although there can be no assurance that it will be able to do so. Distributions declared
by a Fund during October, November, or December to shareholders of record on a date in any such month and paid by the Fund during the
following January will be treated for U.S. federal tax purposes as paid by the Fund and received by shareholders on December 31 of the
year in which declared.
Under
current law, a Fund may treat the portion of redemption proceeds paid to redeeming shareholders that represents the redeeming shareholders’
portion of the undistributed investment company taxable income and net capital gain of the Fund as a distribution of investment company
taxable income and net capital gain on the Fund’s tax return. This practice, which involves the use of tax equalization, will have
the effect of reducing the amount of income and gains that a Fund is required to distribute as dividends to shareholders in order for
the Fund to avoid U.S. federal income tax and excise tax. This practice may also reduce the amount of the distributions required to be
made to non-redeeming shareholders. The amount of any undistributed income will be reflected in the value of the shares of the Fund, and
thus the total return on a shareholder’s investment will not be reduced as a result of this practice.
Fund Distributions
Except
in the case of certain shareholders eligible for preferential tax treatment, e.g., qualified retirement or pension trusts, shareholders
of each Fund generally will be subject to U.S. federal income taxes on Fund distributions as described herein. Distributions are taxable
whether shareholders receive them in cash or reinvest them in additional shares through a dividend reinvestment plan. A shareholder whose
distributions are reinvested in shares will be treated as having received a dividend equal to the fair market value of the new shares
issued to the shareholder.
Distributions
are taxable to shareholders even if they are paid from income or gains earned by a Fund before a shareholder’s investment (and
thus were included in the price the shareholder paid for his or her shares), even though such dividends and distributions may economically
represent a return of a particular shareholder’s investment. Such distributions are likely to occur in respect of shares purchased
at a time when a Fund’s NAV reflects gains that are unrealized, or income or gains that are realized but not distributed. Such
realized income or gains may be required to be distributed even when the Fund’s NAV also reflects unrealized losses.
Distributions
by each Fund of investment income generally will be taxable to shareholders as ordinary income. Taxes on distributions of capital gains
are determined by how long the Fund owned (or is deemed to have owned) the investments that generated them, rather than by how long a
shareholder has owned (or is deemed to have owned) his or her shares. Distributions of gains from the sale of investments that the Fund
owned for one year or less will be taxable as ordinary income. Properly reported distributions of long-term capital gains, if any, are
taxable in the hands of an investor as long-term gain includible in net capital gain and taxed to individuals at reduced rates. Tax rules
can alter a Fund’s holding period in investments and thereby affect the tax treatment of gain or loss on such investments.
The
IRS and the Department of the Treasury have issued regulations that impose special rules in respect of capital gain dividends received
through partnership interests constituting “applicable partnership interests” under Section 1061 of the Code.
Distributions
of investment income reported by a Fund as derived from “qualified dividend income” will be taxed in the hands of individuals
at the rates applicable to long-term capital gains, provided that both the shareholder and the Fund meet certain holding period and other
requirements. In order for some portion of the dividends received by a Fund shareholder to be “qualified dividend income,”
the Fund must meet certain holding period and other requirements with respect to some portion of the dividend-paying stocks in its portfolio
and the shareholder must meet certain holding period
and other requirements with
respect to the Fund’s shares. A dividend will not be treated as qualified dividend income (at either the Fund or shareholder level)
(1) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121-day period beginning on
the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain
preferred stock, 91 days during the 181-day period beginning 90 days before such date), (2) to the extent that the recipient is under
an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar
or related property, (3) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation
on deductibility of investment interest, or (4) if the dividend is received from a foreign corporation that is (a) not eligible for the
benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign
corporation that is readily tradable on an established securities market in the United States) or (b) treated as a passive foreign investment
company.
In
general, distributions of investment income reported by each Fund as derived from qualified dividend income will be treated as qualified
dividend income by a shareholder taxed as an individual, provided the shareholder meets the holding period and other requirements described
above with respect to the Fund’s shares. If the aggregate qualified dividends received by a Fund during any taxable year are 95%
or more of its gross income (excluding net long-term capital gain over net short-term capital loss), then 100% of the Fund’s dividends
(other than dividends properly reported as capital gain dividends) will be eligible to be treated as qualified dividend income. In general,
Funds investing primarily in fixed income investments do not expect a significant portion of their distributions to be derived from qualified
dividend income.
Dividends
of net investment income received by corporate shareholders of each Fund will qualify for the dividends-received deduction generally available
to corporations to the extent those dividends are reported as being attributable to qualifying dividends received by the Fund from domestic
corporations for the taxable year. In general, a dividend received by a Fund will not be treated as a dividend eligible for the dividends-received
deduction (1) if it has been received with respect to any share of stock that the Fund has held for less than 46 days (91 days in the
case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes
ex-dividend with respect to such dividend (during the 181-day period beginning 90 days before such date in the case of certain preferred
stock) or (2) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property. Moreover, the dividends-received deduction may otherwise be disallowed
or reduced (1) if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of the Fund or (2)
by application of various provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a dividend
received on debt-financed portfolio stock (generally, stock acquired with borrowed funds)). In general, Funds investing primarily in fixed
income investments do not expect a significant portion of their distributions to qualify for the dividends-received deduction.
A
portion of the interest paid or accrued on certain high yield discount obligations owned by a Fund may be treated as a dividend for purposes
of the corporate dividends-received deduction. In such cases, if the issuer of the high yield discount obligations is a domestic corporation,
dividend payments by a Fund may be eligible for the dividends received deduction to the extent of the deemed dividend portion of such
accrued interest.
Any
distribution of income that is attributable to (i) income received by a Fund in lieu of dividends with respect to securities on loan pursuant
to a securities lending transaction, or (ii) dividend income received by the Fund on securities it temporarily purchased from a counterparty
pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified
dividend income to individual shareholders and will not be eligible for the dividends-received deduction for corporate shareholders. Distributions
by a Fund to its shareholders that the Fund properly reports as “section 199A dividends,” as defined and subject to certain
conditions described below, are treated as qualified REIT dividends in the hands of non-corporate shareholders. Non-corporate shareholders
are permitted a U.S. federal income tax deduction equal to 20% of qualified REIT dividends received by them, subject to certain limitations.
Very generally, a “section 199A dividend” is any dividend or portion thereof that is attributable to certain dividends received
by the regulated investment company from REITs, to the extent such dividends are properly reported as such by the regulated investment
company in a written notice to its shareholders. A section 199A dividend is treated as a qualified REIT dividend only if the shareholder
receiving such dividend holds the dividend-paying regulated investment company shares for at least 46 days of the 91-day period beginning
45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in substantially
similar or related property. A Fund is permitted to report such part of its dividends as section 199A dividends as are eligible, but is
not required to do so.
The
Code generally imposes a 3.8% Medicare contribution tax on the net investment income of certain individuals, trusts, and estates to the
extent their income exceeds certain threshold amounts. For these purposes, “net investment income” generally includes, among
other things, (i) distributions paid by a Fund of net investment income and capital gains
as described above, and (ii)
any net gain from the sale, redemption, exchange, or other taxable disposition of Fund shares. Shareholders are advised to consult their
tax advisers regarding the possible implications of this additional tax on their investment in the Fund.
If
a Fund makes a distribution to a shareholder in excess of its current and accumulated “earnings and profits” in and with
respect to any taxable year, the excess distribution will be treated as a return of capital to the extent of the shareholder’s
tax basis in his or her shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces a shareholder’s
tax basis in his or her shares, thus reducing any loss or increasing any gain on the shareholder’s subsequent taxable disposition
of his or her shares.
Sales, Redemptions, and Exchanges
Sales,
redemptions, and exchanges of each Fund’s shares are taxable events and, accordingly, shareholders subject to U.S. federal income
taxes may realize gains and losses on these transactions. If shares have been held for more than one year, gain or loss realized generally
will be long-term capital gain or loss, provided the shareholder holds the shares as a capital asset. Otherwise, the gain or loss on a
taxable disposition of Fund shares will be treated as short-term capital gain or loss. However, a loss on a sale of Fund shares held by
a shareholder for six months or less will be treated as a long-term capital loss to the extent of any long-term capital gain dividend
paid to the shareholder with respect to such shares. Further, no loss will be allowed on a sale of Fund shares to the extent the shareholder
acquires identical shares of the same Fund within 30 days before or after the disposition. In such case, the basis of the newly purchased
shares will be adjusted to reflect the disallowed loss. In the case of individuals holding shares in a Fund directly, upon the sale, redemption
or exchange of Fund shares, the Fund or, in the case of shares purchased through a financial intermediary, the financial intermediary
may be required to provide the shareholder and the IRS with cost basis and certain other related tax information about the Fund shares
sold, redeemed, or exchanged. See the Funds’ Prospectus for more information.
Under
Treasury regulations, if a shareholder recognizes a loss with respect to Fund shares of $2 million or more for an individual shareholder
or $10 million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on IRS Form 8886.
Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders
of a regulated investment company are not excepted. Future guidance may extend the current exception from this reporting requirement to
shareholders of most or all regulated investment companies. The fact that a loss is reportable under these regulations does not affect
the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisers
to determine the applicability of these regulations in light of their individual circumstances.
Certain Investments in Debt Obligations
Some
debt obligations with a fixed maturity date of more than one year from the date of issuance (and all zero-coupon debt obligations with
a fixed maturity date of more than one year from the date of issuance) that are acquired by a Fund will be treated as being issued with
original issue discount (“OID”). Generally, the amount of the OID is treated as interest income and is included in taxable
income (and required to be distributed) over the term of the debt security, even though payment of that amount is not received until a
later time, usually when the debt security matures. Payment-in-kind securities will also give rise to income which is required to be distributed
and is taxable even though a Fund holding the security receives no interest payment in cash on the security during the year.
Some
debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by a Fund in the secondary
market may be treated as having “market discount.” Very generally, market discount is the excess of the stated redemption
price of a debt obligation (or in the case of an obligation issued with OID, its “revised issue price”) over the purchase
price of such obligation. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt security
having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the “accrued
market discount” on such debt security. Alternatively, the Fund may elect to accrue market discount currently, in which case the
Fund will be required to include the accrued market discount in the Fund’s income (as ordinary income) and thus distribute it over
the term of the debt security, even though payment of that amount is not received until a later time, upon partial or full repayment or
disposition of the debt security. The rate at which the market discount accrues, and thus is included in the Fund’s income, will
depend in part upon which of the permitted accrual methods the Fund elects.
Some
debt obligations with a fixed maturity date of one year or less from the date of issuance that are acquired by a Fund may be treated as
having OID, or acquisition discount (very generally, the excess of the stated redemption price over the purchase price) in the case of
certain types of debt obligations. Generally, the Fund will be required to include the OID,
or acquisition discount, as
ordinary income over the term of the debt security, even though payment of that amount is not received until a later time, usually when
the debt security matures. A Fund may make one or more of the elections applicable to debt obligations having acquisition discount, or
OID, which could affect the character and timing of recognition of income by the Fund.
As
indicated above, a Fund that invests in certain debt instruments may be required to pay out as an income distribution each year an amount
which is greater than the total amount of cash interest the Fund actually received. Such distributions may be made from the cash assets
of the Fund or by liquidation of portfolio securities, if necessary. The Fund may realize gains or losses from such liquidations. In the
event a Fund realizes net capital gains from such transactions, its shareholders may receive a larger capital gain distribution than they
would in the absence of such transactions.
Investments
in debt obligations that are at risk of or in default present special tax issues for a Fund. Tax rules are not entirely clear about issues
such as when a Fund may cease to accrue interest, OID, or market discount; whether and to what extent a Fund should recognize market discount
on such a debt obligation; when and to what extent a Fund may take deductions for bad debts or worthless securities; and how a Fund should
allocate payments received on obligations in default between principal and interest. These and other related issues will be addressed
by each Fund when, and if, it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve
its status as a regulated investment company and does not become subject to U.S. federal income or excise tax.
Derivative Transactions
If
a Fund engages in derivative transactions, including transactions in options, futures contracts, forward contracts, swap agreements, foreign
currencies, and straddles, or other similar transactions, including for hedging purposes, it will be subject to special tax rules (including
constructive sale, mark-to-market, straddle, wash sale, and short sale rules), the effect of which may be to accelerate income to the
Fund, defer losses to the Fund, cause adjustments in the holding periods of the Fund’s securities, convert long-term capital gains
into short-term capital gains, or convert short-term capital losses into long-term capital losses. These rules could therefore affect
the amount, timing, and character of distributions to shareholders.
A
Fund’s transactions in foreign currency-denominated debt instruments and certain of its derivative activities may produce a difference
between its book income and its taxable income. If a Fund’s book income exceeds its taxable income, the distribution (if any) of
such excess generally will be treated as (i) a dividend to the extent of the Fund’s remaining earnings and profits (including earnings
and profits arising from tax-exempt income), (ii) thereafter, as a return of capital to the extent of the recipient’s basis in
its shares, and (iii) thereafter, as gain from the sale or exchange of a capital asset. If a Fund’s book income is less than taxable
income, the Fund could be required to make distributions exceeding book income to qualify as a regulated investment company and to eliminate
fund-level income tax.
Investments in Regulated Investment Companies and Other
Investment Funds
To
the extent a Fund invests its assets in shares of ETFs or other investment companies that are regulated investment companies (“underlying
funds”), its distributable income and gains will normally consist of distributions from such underlying funds and gains and losses
on the disposition of shares of such underlying funds. To the extent that such an underlying fund realizes net losses on its investments
for a given taxable year, the Fund will not be able to recognize its share of those losses to offset capital gains the Fund realized from
other sources until and only to the extent that it disposes of shares of the underlying fund in a transaction qualifying for sale or exchange
treatment (although such losses of an underlying fund may reduce distributions to the Fund from that underlying fund in future taxable
years). Moreover, even when a Fund does make a disposition of shares of an underlying fund, a portion of its loss may be recognized as
a long-term capital loss, which the Fund will not be able to offset against its ordinary income (including distributions of any net short-term
capital gains realized by the underlying fund).
As
a result of the foregoing rules, and certain other special rules, the amounts of net investment income and net capital gains that a Fund
will be required to distribute to shareholders may be greater than such amounts would have been had the Fund invested directly in the
securities held by the underlying funds. For similar reasons, the character of distributions from the Fund will not necessarily be the
same as it would have been had the Fund invested directly in the securities held by the underlying funds. Investing through underlying
funds can therefore affect the amount, timing and character of distributions to shareholders, and may increase the amount of taxes payable
by shareholders.
If
at the close of each quarter of a Fund’s taxable year, at least 50% of its total assets consists of interests in other regulated
investment companies, the Fund will be a “qualified fund of funds.” In that case, the Fund is permitted to elect to pass
through to its shareholders foreign income and other similar taxes paid by the Fund in respect of foreign securities
held directly by the Fund
or by a regulated investment company in which its invests that itself elected to pass such taxes through to its shareholders, so that
shareholders of the Fund will be eligible to claim a tax credit or deduction for such taxes. However, even if a Fund qualifies to make
such election for any year, it may determine not to do so. See “Foreign Taxes and Investments” below.
To
the extent a Fund invests in commodity-related ETFs that qualify as qualified publicly traded partnerships, the net income derived from
such ETFs will constitute qualifying income for purposes of the 90% gross income test (as noted above). If such an ETF were to fail to
qualify as a qualified publicly traded partnership, a portion of the gross income derived from that ETF could constitute nonqualifying
income to the Fund for purposes of the 90% gross income test.
The
foregoing is only a general description of certain U.S. federal tax consequences of investing in ETFs and other underlying funds.
Foreign Taxes and Investments
Income
proceeds and gains received by a Fund from sources outside the United States might be subject to foreign taxes that are withheld at the
source or other foreign taxes. The effective rate of these foreign taxes cannot be determined in advance because it depends on the specific
countries in which a Fund’s assets will be invested, the amount of the assets invested in each such country and the possibility
of treaty relief.
If
more than 50% of a Fund’s assets at taxable year end consists of the securities of foreign corporations, the Fund may be eligible
to make an election under Section 853 of the Code so that any of its shareholders subject to federal income taxes will be able to claim
a credit or deduction on their income tax returns for, and will be required to treat as part of the amounts distributed to them, their
pro rata portion of qualified taxes paid by the Fund to foreign countries. If such an election is made, the ability of shareholders of
the Fund to claim a foreign tax credit will be subject to limitations imposed by the Code, which in general limits the amount of foreign
tax that may be used to reduce a shareholder’s U.S. tax liability to that amount of U.S. tax which would be imposed on the amount
and type of income in respect of which the foreign tax was paid. In addition, the ability of shareholders to claim a foreign tax credit
is subject to a holding period requirement. A shareholder who for U.S. income tax purposes claims a foreign tax credit in respect of Fund
distributions may not claim a deduction for foreign taxes paid by the Fund, regardless of whether the shareholder itemizes deductions.
Also, no deduction for foreign taxes may be claimed by shareholders who do not itemize deductions on their federal income tax returns.
It should also be noted that a tax-exempt shareholder, like other shareholders, will be required to treat as part of the amounts distributed
to it a pro rata portion of the income taxes paid by the Fund to foreign countries. However, that income will generally be exempt from
U.S. taxation by virtue of such shareholder’s tax-exempt status and such a shareholder will not be entitled to either a tax credit
or a deduction with respect to such income. A Fund that makes the election referred to above will notify its shareholders each year of
the amount of dividends and distributions and the shareholders’ pro rata shares of qualified taxes paid by the Fund to foreign
countries.
A
Fund may invest in one or more “passive foreign investment companies” (“PFICs”). A PFIC is generally
any foreign corporation: (i) 75% or more of the income of which for a taxable year in the Fund’s holding period is passive income,
or (ii) the average percentage of the assets of which (generally by value, but by adjusted tax basis in certain cases) that produce or
are held for the production of passive income is at least 50%. Generally, passive income for this purpose means dividends, interest (including
income equivalent to interest), royalties, rents, annuities, the excess of gain over losses from certain property transactions and commodities
transactions, and foreign currency gains.
Investment
by a Fund in PFICs could subject the Fund to a U.S. federal income tax or other charge on distributions received from PFICs or on the
proceeds from the sale of its investments in the PFICs. This tax cannot be eliminated by making distributions to Fund shareholders. However,
a Fund may be able to make an election that would avoid the imposition of that tax. For example, a Fund may in certain cases elect to
treat a PFIC as a “qualified electing fund” (a “QEF election”), in which case the Fund will be required
to include in its income its share of the company’s income and net capital gains annually, regardless of whether it receives any
distribution from the company. A Fund also may make an election to mark the gains (and to a limited extent losses) in a PFIC “to
the market” as though it had sold and repurchased its holdings in the PFIC on the last day of the Fund’s taxable year. Such
gains and losses are generally treated as ordinary income and loss. The QEF and mark-to-market elections may accelerate the recognition
of income by the Fund (without the receipt of cash) and increase the amount required to be distributed by a Fund to avoid taxation. Making
either of these elections therefore may require a Fund to liquidate other investments (including when it is not advantageous to do so)
to meet its distribution requirement, which also may accelerate the recognition of gain and affect a Fund’s total return. Dividends
paid by PFICs will not be eligible to be treated as “qualified dividend income.” Because it is not always possible to identify
a foreign corporation as a PFIC, a Fund may incur the tax and other charges described above in some instances.
Finally,
a Fund’s transactions in foreign currencies, foreign currency-denominated debt obligations, and certain foreign currency options,
futures contracts, and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income
or loss results from fluctuations in the value of the foreign currency concerned. Such ordinary income treatment may increase the distributions
taxed to shareholders as ordinary income. Any net ordinary losses resulting from such transactions cannot be carried forward by a Fund
to offset income or gains earned in subsequent taxable years.
Certain Investments in Real Estate Investment Trusts
If
a Fund invests in equity securities of REITs, such investments may result in the fund’s receipt of cash in excess of the REIT’s
earnings. If a Fund distributes such amounts, such distribution could constitute a return of capital to the Fund’s shareholders
for federal income tax purposes. Dividends received by a Fund from a REIT will not qualify for the corporate dividends-received deduction
and generally will not constitute qualified dividend income.
Certain Investments in Mortgage-Related Securities
A
Fund may invest directly or indirectly in residual interests in real estate mortgage investment conduits (“REMICs”) (including
by investing in residual interests in CMOs with respect to which an election to be treated as a REMIC is in effect) or equity interests
in taxable mortgage pools (“TMPs”). Under a notice issued by the IRS and Treasury regulations that have not yet been issued,
but may apply retroactively, a portion of a Fund’s income that is attributable to a REIT’s residual interest in a REMIC
or an equity interest in a TMP (referred to in the Code as an “excess inclusion”) will be subject to federal income tax
in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a regulated investment
company, such as the Funds, will be allocated to shareholders of the regulated investment company in proportion to the dividends received
by such shareholders, with the same consequences as if the shareholders held the related REMIC or TMP interest directly.
In
general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception
for certain thrift institutions), (ii) will constitute unrelated business taxable income (“UBTI”) to entities (including
a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan, or other tax-exempt entity) subject to tax on
UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file
a tax return, to file a tax return and pay tax on such income, and (iii) in the case of a non-U.S. shareholder, will not qualify for any
reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding
any exemption from such income tax otherwise available under the Code.
Unrelated Business Taxable Income
Income
of a regulated investment company that would be UBTI if earned directly by a tax-exempt entity generally will not constitute UBTI when
distributed to a tax-exempt shareholder of the regulated investment company. Notwithstanding this “blocking” effect, a tax-exempt
shareholder of a Fund could realize UBTI by virtue of its investment in a Fund if shares in that Fund constitute debt-financed property
in the hands of the tax-exempt shareholder within the meaning of Section 514(b) of the Code. A tax-exempt shareholder may also recognize
UBTI if a Fund recognizes “excess inclusion income” derived from direct or indirect investments in residual interests in
REMICs or equity interests in TMPs as described above, if the amount of such income recognized by a Fund exceeds the Fund’s investment
company taxable income (after taking into account deductions for dividends paid by the Fund).
Special
tax consequences also apply to charitable remainder trusts (“CRTs”) that invest in regulated investment companies that invest
directly or indirectly in residual interests in REMICs or equity interests in TMPs. Under legislation enacted in December 2006, a CRT,
as defined in Section 664 of the Code, that realizes UBTI for a taxable year must pay an excise tax annually of an amount equal to such
UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI solely as a result of investing in a Fund that recognizes
“excess inclusion income” (which is described earlier). Rather, if at any time during any taxable year a CRT or
one of certain other tax-exempt shareholders (such as the United States, a state or political subdivision, or an agency or instrumentality
thereof, and certain energy cooperatives) is a record holder of a share in a Fund that recognizes “excess inclusion income,”
then such Fund will be subject to a tax on that portion of its “excess inclusion income” for the taxable year that is allocable
to such shareholders at the highest federal corporate income tax rate. The extent to which the IRS guidance in respect of CRTs remains
applicable in light of the December 2006 CRT legislation is unclear. To the extent permitted under the 1940 Act, the Funds may elect to
allocate any such tax specially to the applicable CRT, or other shareholder, and thus reduce such shareholder’s distributions for
the year by the amount of the tax that relates to such shareholder’s interest in the Funds. CRTs and other tax-exempt investors
are urged to consult their tax advisers concerning the consequences of investing in the Funds.
Some
amounts received by a Fund from its investments in MLPs will likely be treated as returns of capital because of accelerated deductions
available with respect to the activities of MLPs. On the disposition of an investment in such an MLP, the Fund will likely realize taxable
income in excess of economic gain from that asset (or, in later periods, if a Fund does not dispose of the MLP, the Fund will likely realize
taxable income in excess of cash flow received by the Fund from the MLP), and the Fund must take such income into account in determining
whether the Fund has satisfied its regulated investment company distribution requirements. The Fund may have to borrow or liquidate securities
to satisfy its distribution requirements and meet its redemption requests, even though investment considerations might otherwise make
it undesirable for the Fund to borrow money or sell securities at the time. In addition, distributions attributable to gain from the sale
of MLPs that are characterized as ordinary income under the Code’s recapture provisions will be taxable to Fund shareholders, when
distributed to them, as ordinary income.
As
noted above, certain of the MLPs in which a Fund may invest qualify as qualified publicly traded partnerships. In such cases, the net
income derived from such investments will constitute qualifying income for purposes of the 90% gross income requirement described earlier
for qualification as a regulated investment company. If, however, such a vehicle were to fail to qualify as a qualified publicly traded
partnership in a particular year, a portion of the gross income derived from it in such year could constitute non-qualifying income to
a Fund for purposes of the 90% gross income requirement and thus could adversely affect the Fund’s ability to qualify as a regulated
investment company for a particular year. In addition, as described above, the diversification requirement for regulated investment company
qualification will limit a Fund’s investments in one or more vehicles that are qualified publicly traded partnerships to 25% of
the Fund’s total assets as of the end of each quarter of the Fund’s taxable year.
Subject
to any future regulatory guidance to the contrary, distributions attributable to qualified publicly traded partnership income from a Fund’s
investments in MLPs will ostensibly not qualify for the deduction available to non-corporate taxpayers in respect of such amounts received
directly from an MLP.
Backup Withholding
Each
Fund generally is required to withhold and remit to the U.S. Treasury a percentage of the taxable dividends and other distributions paid
to and proceeds of share sales, exchanges, or redemptions made by any individual shareholder who fails to furnish the Fund with a correct
taxpayer identification number (TIN), who has under-reported dividend or interest income, or who fails to certify to the Fund that he
or she is not subject to such withholding.
Non U.S. Shareholders
Distributions
by a Fund to shareholders that are not “U.S. persons” within the meaning of the Code (“foreign shareholders”)
properly reported by the Fund as (1) capital gain dividends, (2) short-term capital gain dividends, and (3) interest-related dividends,
each as defined and subject to certain conditions described below, generally are not subject to withholding of U.S. federal income tax.
In
general, the Code defines (1) “short-term capital gain dividends” as distributions of net short-term capital gains in excess
of net long-term capital losses and (2) “interest-related dividends” as distributions from U.S. source interest income of
types similar to those not subject to U.S. federal income tax if earned directly by an individual foreign shareholder, in each case to
the extent such distributions are properly reported as such by a Fund in a written notice to shareholders.
The
exceptions to withholding for short-term capital gain dividends and capital gain dividends do not apply to (A) distributions to an individual
foreign shareholder who is present in the United States for a period or periods aggregating 183 days or more during the year of the distribution
and (B) distributions attributable to gain that is treated as effectively connected with the conduct by the foreign shareholder of a trade
or business within the United States under special rules regarding the disposition of U.S. real property interests.
The
exception to withholding for “interest-related dividends” does not apply to distributions to a foreign shareholder (A) that
has not provided a satisfactory statement that the beneficial owner is not a U.S. person, (B) to the extent that the dividend is attributable
to certain interest on an obligation if the foreign shareholder is the issuer or is a 10% shareholder of the issuer, (C) that is within
certain foreign countries that have inadequate information exchange with the United States, or (D) to the extent the dividend is attributable
to interest paid by a person that is a related person of the foreign shareholder and the foreign shareholder is a controlled foreign corporation.
If
a Fund invests in a regulated investment company that pays capital gain dividends, short-term capital gain dividends, or interest-related
dividends to the Fund, such distributions retain their character as not subject to withholding if properly reported when paid by the Fund
to foreign shareholders.
A Fund is
permitted to report such part of its dividends as interest-related and/or short-term capital gain dividends as are eligible, but is not
required to do so. In the case of shares held through an intermediary, the intermediary may withhold even if a Fund reports all or a portion
of a payment as an interest-related or short-term capital gain dividend to shareholders. Foreign shareholders should contact their intermediaries
regarding the application of these rules to their accounts.
Distributions
by a Fund to foreign shareholders other than capital gain dividends, short-term capital gain dividends, and interest-related dividends
(e.g., dividends attributable to dividend and foreign-source interest income or to short-term capital gains or U.S. source interest income
to which the exception from withholding described above does not apply) are generally subject to withholding of U.S. federal income tax
at a rate of 30% (or lower applicable treaty rate).
Under
U.S. federal income tax law, a beneficial holder of shares who or which is a foreign person is not, in general, subject to U.S. federal
income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of a Fund unless (i) such gain is effectively
connected with the conduct of a trade or business carried on by such holder within the United States, (ii) in the case of an individual
holder, the holder is present in the United States for a period or periods aggregating one hundred eighty-three (183) days or more during
the year of the sale and certain other conditions are met, or (iii) the special rules relating to gain attributable to the sale or exchange
of “U.S. real property interests” (“USRPIs”) apply to the foreign shareholder’s sale of shares
of the Fund (as described below).
Beneficial
holders that are foreign persons with respect to whom income from a Fund is effectively connected with a trade or business conducted by
the foreign shareholder within the United States will in general be subject to U.S. federal income tax on the income derived from the
Fund at the graduated rates applicable to U.S. citizens, residents, or domestic corporations, whether such income is received in cash
or reinvested in shares of the Fund and, in the case of a foreign corporation, may also be subject to a branch profits tax. If a foreign
shareholder is eligible for the benefits of a tax treaty, any effectively connected income or gain will generally be subject to U.S. federal
income tax on a net basis only if it is also attributable to a permanent establishment maintained by the shareholder in the United States.
More generally, foreign shareholders who are residents in a country with an income tax treaty with the United States may obtain different
tax results than those described herein, and are urged to consult their tax advisers.
Special
rules would apply if a Fund were a qualified investment entity (“QIE”) because it is either a “U.S. real property
holding corporation” (“USRPHC”) or would be a USRPHC but for the operation of certain exceptions to the definition
of USRPIs described below. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value of which equals
or exceeds 50% of the sum of the fair market values of the corporation’s USRPIs, interests in real property located outside the
United States, and other trade or business assets. USRPIs generally are defined as any interest in U.S. real property and any interest
(other than solely as a creditor) in a USRPHC or, very generally, an entity that has been a USRPHC in the last five years. A Fund that
holds, directly or indirectly, significant interests in REITs may be a USRPHC. Interests in domestically controlled QIEs, including REITs
and regulated investment companies that are QIEs, not-greater-than-10% interests in publicly traded classes of stock in REITs and not-greater-than-5%
interests in publicly traded classes of stock in regulated investment companies generally are not USRPIs, but these exceptions do not
apply for purposes of determining whether a Fund is a QIE.
If
an interest in a Fund were a USRPI, the Fund would be required to withhold U.S. tax on the proceeds of a share redemption by a greater-than-5%
foreign shareholder, in which case such foreign shareholder generally would also be required to file U.S. tax returns and pay any additional
taxes due in connection with the redemption.
If
a Fund were a QIE, under a special “look-through” rule, any distributions by the Fund to a foreign shareholder (including,
in certain cases, distributions made by the Fund in redemption of its shares) attributable directly or indirectly to (i) distributions
received by the Fund from a lower-tier regulated investment company or REIT that the Fund is required to treat as USRPI gain in its hands
and (ii) gains realized on the disposition of USRPIs by the Fund would retain their character as gains realized from USRPIs in the hands
of the Fund’s foreign shareholders and would be subject to U.S. tax withholding. In addition, such distributions could result in
the foreign shareholder being required to file a U.S. tax return and pay tax on the distributions at regular U.S. federal income tax rates.
The consequences to a foreign shareholder, including the rate of such withholding and character of such distributions (e.g., as ordinary
income or USRPI gain), would vary depending upon the extent of the foreign shareholder’s current and past ownership of the Fund.
Foreign
shareholders of a Fund also may be subject to “wash sale” rules to prevent the avoidance of the tax-filing and payment obligations
discussed above through the sale and repurchase of Fund shares.
Beneficial
holders that are foreign persons should consult their tax advisers and, if holding shares through intermediaries, their intermediaries,
concerning the application of these rules to their investment in the Funds.
Sections
1471-1474 of the Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, “FATCA”) generally require
a Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable intergovernmental
agreement (an “IGA”) between the United States and a foreign government. If a shareholder fails to provide the requested
information or otherwise fails to comply with FATCA or an IGA, the Fund may be required to withhold under FATCA at a rate of 30% with
respect to that shareholder on ordinary dividends it pays. The IRS and the Department of Treasury have issued proposed regulations providing
that these withholding rules will not apply to the gross proceeds of share redemptions or capital gain dividends a Fund pays. If a payment
by a Fund is subject to FATCA withholding, the Fund is required to withhold even if such payment would otherwise be exempt from withholding
under the rules applicable to foreign shareholders described above (e.g., short-term capital gain dividends and interest-related dividends).
Each
prospective investor is urged to consult its tax adviser regarding the applicability of FATCA and any other reporting requirements with
respect to the prospective investor’s own situation, including investments through an intermediary.
General Considerations
Special
tax rules apply to investments through defined contribution plans and other tax-qualified plans or tax-advantaged arrangements. Shareholders
should consult their tax adviser to determine the suitability of shares of a Fund as an investment through such plans and arrangements
and the precise effect of an investment on their particular tax situation.
The
foregoing discussion of the U.S. federal income tax consequences of investment in the Funds is a general and abbreviated summary based
on the applicable provisions of the Code, U.S. Treasury regulations, and other applicable authority currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and regulations. The Code and regulations are subject to change by
legislative or administrative action, possibly with retroactive effect. This discussion of the federal income tax treatment of the Funds
and their shareholders does not describe in any respect the tax treatment of any particular arrangement, e.g., tax-exempt trusts or insurance
products, pursuant to which or by which investments in the Funds may be made. Shareholders should consult their tax advisers as to their
own tax situation, including possible foreign, state, and local taxes.
EXPERTS
Ropes
& Gray LLP, The Prudential Tower, 800 Boylston Street, Boston, Massachusetts02199-3600 serves as counsel to the Trust.
The
financial statements of the Funds incorporated herein by reference from the Trust’s Annual
Report as of September 30, 2022 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm,
as stated in its reports which are also incorporated herein by reference. Such financial statements have been so incorporated in reliance
upon the reports of Deloitte & Touche LLP given on the authority of that firm as experts in accounting and auditing. Copies of the
Trust’s Annual Report as of September 30, 2022 are available, without charge, upon request by calling 1-888-309-3539.
Although
the ratings of fixed income securities by S&P, Moody’s, and Fitch are a generally accepted measurement of credit risk, they
are subject to certain limitations. For example, ratings are based primarily upon historical events and do not necessarily reflect the
future. Furthermore, there is a period of time between the issuance of a rating and the update of the rating, during which time a published
rating may be inaccurate.
The
descriptions of the S&P, Moody’s, and Fitch’s commercial paper and bond ratings are set forth below.
Commercial Paper Ratings:
S&P
commercial paper ratings are graded into four categories, ranging from A for the highest quality obligations to D for the lowest. Issues
assigned the highest rating of A are regarded as having the greatest capacity for timely payment. Issues in this category are further
refined with the designations 1, 2, and 3 to indicate the relative degree of safety. The A-1 and A-2 categories are described as follows:
A-1—This
designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong
safety characteristics will be noted with a plus (+) sign designation.
A-2—Capacity
for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues
designated A-1.
Moody’s
employs three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers. The two highest
designations are as follows:
Issuers
(or supporting institutions) rated Prime-1 (or P-1) have a superior ability for repayment of senior short-term debt obligations. Prime-1
(or P-1) repayment ability will normally be evidenced by many of the following characteristics:
•
Leading
market positions in well-established industries.
•
High
rates of return on funds employed.
•
Conservative
capitalization structure with moderate reliance on debt and ample asset protection.
•
Broad
margins in earnings coverage of fixed financial charges and high internal cash generation.
•
Well-established
access to a range of financial markets and assured sources of alternate liquidity.
Issuers
(or supporting institutions) rated Prime-2 (or P-2) have a strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound,
may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Fitch’s
Short-Term Credit Ratings are graded into six categories, ranging from ‘F-1’ for the highest quality obligations to ‘D’
for the lowest. The F-1 and F-2 categories are described as follows:
F-1—Indicates
the strongest capacity for timely payment of financial commitments; may have an added “+” to denote any exceptionally strong
credit feature.
F-2—A
satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher
ratings.
Bond Ratings:
S&P describes its four highest ratings
for corporate debt as follows:
AAA—Debt
rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA—Debt
rated AA has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in a small degree.
A—Debt
rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated categories.
BBB—Debt
rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas such debt normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated categories.
The
ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
Moody’s describes its four highest
corporate bond ratings as follows:
Aaa—Bonds
which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred
to as “gilt-edged.” Interest payments are protected by a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa—Bonds
which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they compose what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A—Bonds
which are rated A possess many favorable investment attributes and may be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment in
the future.
Baa—Bonds
which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as
well.
Moody’s
applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
Fitch describes its four highest long-term
credit ratings as follows:
AAA—“AAA”
ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for timely payment
of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
AA—“AA”
ratings denote a very low expectation of credit risk. They indicate very strong capacity for timely payment of financial commitments.
This capacity is not significantly vulnerable to foreseeable events.
A—“A”
ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity
may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.
BBB—“BBB”
ratings indicate that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is
considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is
the lowest investment grade category.
A
“+” or “–” may be appended to a rating to denote relative status within major rating categories. Such
suffixes are not added to the “AAA” category or to categories below “CCC.”
S&P describes its below investment
grade ratings for corporate debt as follows:
BB,
B, CCC, CC, C—Debt rated “BB,”“B,”“CCC,”“CC,” and “C” is regarded, on balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation, “BB” indicates the lowest degree of speculation, and
“C” the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse conditions.
BB—Debt
rated “BB” has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties
or exposure to adverse business, financial, or economic conditions which could lead to
inadequate
capacity to meet timely interest and principal payments. The “BB” rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied “BBB–” rating.
B—Debt
rated “B” has a greater vulnerability to default but currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal.
The “B” rating category is also used for debt subordinated to senior debt that is assigned an actual or implied “BB”
or “BB–” rating.
CCC—Debt
rated “CCC” has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial,
and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or
economic conditions, it is not likely to have the capacity to pay interest and repay principal. The “CCC” rating category
is also used for debt subordinated to senior debt that is assigned an actual or implied “B” or “B–”
rating.
CC—The
rating “CC” is typically applied to debt subordinated to senior debt that is assigned an actual or implied “CCC”
rating.
C—The
rating “C” is typically applied to debt subordinated to senior debt which is assigned an actual or implied “CCC–”
debt rating. The “C” rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
D—Debt
rated “D” is in payment default. The “D” rating category is used when interest payments or principal payments
are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made
during such grace period. The “D” rating also will be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
Moody’s describes its below investment
grade corporate bond ratings as follows:
Ba—Bonds
which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate
and thereby not well safeguarded during other good and bad times over the future. Uncertainty of position characterizes bonds in this
class.
B—Bonds
which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long
period of time may be small.
Caa—Bonds
which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to principal or interest.
Ca—Bonds
which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C—Bonds
which are rated C are the lowest rated class of bonds
and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Fitch describes its below investment
grade long-term credit ratings as follows:
BB—“BB”
ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category
are not investment grade.
B—“B”
ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently
being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
CCC,
CC, C—Default is a real possibility. Capacity for meeting financial commitments is
solely reliant upon sustained, favorable business or economic developments. A “CC” rating indicates that default of some
kind appears probable. “C” ratings signal imminent default.
DDD,
DD, D—The ratings of obligations in this category are based on their prospects for
achieving partial or full recovery in a reorganization or liquidation of the obligor. While expected recovery values are highly speculative
and cannot be estimated with any precision, the following serve as general guidelines. “DDD” obligations have the highest
potential for recovery, around 90%-100% of outstanding amounts and accrued interest. “DD” indicates potential recoveries
in the range of 50%-90% and “D” the lowest recovery potential, i.e., below 50%.
Entities
rated in this category have defaulted on some or all of their obligations. Entities rated “DDD” have the highest prospect
for resumption of performance or continued operation with or without a formal reorganization process.
Entities rated
“DD” and “D” are generally undergoing a formal reorganization or liquidation process; those rated “DD”
are likely to satisfy a higher portion of their outstanding obligations, while entities rated “D” have a poor prospect of
repaying all obligations.
The
following represents the proxy voting policies (the “Policies”) of the MassMutual Advantage Funds (the “Funds”)
with respect to the voting of proxies on behalf of each series of the Funds (the “Series”). It is the policy of the Funds
and MML Investment Advisers, LLC (the “Adviser”), as investment manager to the Series, to delegate (with certain exceptions)
voting responsibilities and duties with respect to all proxies to the subadvisers (the “Subadvisers”) of the Series. All
references to votes by proxy in this policy shall be interpreted to include both votes by proxy and votes and consents that do not involve
proxies. The Adviser will vote proxies on behalf of any Fund of Funds or Feeder Funds for which it serves as investment adviser, as well
as for any special situations where the Adviser is in the best position to vote the proxy (“Special Situations”).
I. GENERAL
PRINCIPLES
In
voting proxies, the Adviser and Subadvisers will be guided by general fiduciary principles and their respective written proxy voting policies.
The Adviser and Subadvisers will act prudently and solely in the best interest of the beneficial owners of the accounts they respectively
manage, and for the exclusive purpose of providing benefit to such persons.
II. SUBADVISERS
TO WHICH THE FUNDS AND ADVISER HAVE DELEGATED PROXY VOTING RESPONSIBILITIES
1. The
Subadvisers each have the duty to provide a copy of their written proxy voting policies to the Adviser and Funds annually. The Subadvisers’
written proxy voting policies will maintain procedures that address potential conflicts of interest.
2. The
Subadvisers will each maintain a record of all proxy votes exercised on behalf of each series of the Funds for which they act as subadviser
and will furnish such records to the Adviser and Funds annually.
3. The
Subadvisers will report proxy votes that deviated from their normal proxy voting policies and any exceptions to their proxy voting policies
to the Adviser quarterly.
4. The
Subadvisers will provide the Adviser and Funds with all such information and documents relating to the Subadvisers’ proxy voting
in a timely manner, as necessary for the Adviser and Funds to comply with applicable laws and regulations.
III. THE FUNDS
AND ADVISER
1. The
Chief Compliance Officer of the Funds will annually update the Trustees after a review of proxy voting records.
2. The
Trustees of the Funds will not vote proxies on behalf of the Funds or any Series.
3. The
Adviser will not vote proxies on behalf of the Funds or any Series, except that the Adviser will vote proxies on behalf of any Fund of
Funds or Feeder Fund for which it serves as investment adviser or in Special Situations.
Information
regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available,
without charge, upon request, on the MassMutual website at https://www.massmutual.com/funds
and on the Securities and Exchange Commission’s website at http://www.sec.gov.
As Investment
Adviser to the MassMutual Select Funds, MassMutual Premier Funds, MassMutual Advantage Funds, MML Series Investment Fund, and MML
Series Investment Fund II (November 4, 2022)
General Overview
Policy
It
is the policy of MML Investment Advisers, LLC (“MML Investment Advisers” or the “Company”) to fulfill its
responsibilities under Rule 206(4)-6 (the “Rule”) under the Investment Advisers Act of 1940, as amended (the “Advisers
Act”), by delegating to subadvisers for each series of the MassMutual Select Funds, MassMutual Premier Funds, MassMutual Advantage
Funds, MML Series Investment Fund, and MML Series Investment Fund II (each, a “Trust”) proxy voting related to the securities
in each subadviser’s respective portfolio, with the following exceptions: (i) each series of a Trust operating as a “fund
of funds” where MML Investment Advisers has not delegated proxy voting responsibility to a subadviser (each a “Fund of Funds”
and, collectively, the “Funds of Funds”); (ii) each series of the Trusts operating as a “feeder fund” (each,
a “Feeder Fund”) to a “master fund” (“Master Fund”); and (iii) in certain other special
situations (“Special Situations”). For these exceptions, MML Investment Advisers will act on behalf of the Trusts to vote
proxies (including Information Statements) (“Proxies”), as described below.
Background
MML
Investment Advisers currently serves as investment adviser to each of the Trusts, including those series that are Funds of Funds and Feeder
Funds. The Funds of Funds may invest in other series of the Trusts, funds advised by affiliates of MML Investment Advisers, and/or funds
or exchange-traded funds advised by an unaffiliated investment adviser.
MML
Investment Advisers will vote Proxies of the underlying funds held by the Funds of Funds, of the related Master Fund for a Feeder Fund,
and in certain other Special Situations in accordance with the following procedure.
Procedure
1.
When a Fund of Funds holds shares of an underlying fund advised by MML Investment Advisers, MML Investment Advisers will generally vote
in favor of proposals recommended by the underlying fund’s Board of Trustees and by a majority of the Trustees of the underlying
fund who are not interested persons of the underlying fund or of MML Investment Advisers. However, MML Investment Advisers may alternatively,
in its discretion, (i) seek instruction from the Fund of Fund’s Board of Trustees (or any member or committee thereof (provided
that such member, or each member of such committee, as the case may be, is not an interested person of the underlying fund or of MML Investment
Advisers) delegated authority to provide such instructions to MML Investment Advisers and vote in accordance with such instructions, or
(ii) vote in accordance with the recommendation of an independent proxy advisor or consultant retained by MML Investment Advisers to provide
a recommendation, on the basis solely of the best interest of the Fund of Funds and its shareholders, as to the matter; provided, however,
that prior to taking the action described in clause (ii) above, MML Investment Advisers is required to seek and obtain the prior approval
of its Board of Directors. When a quorum is present at any meeting, a majority of the Board members present may take any action. If it
is not possible to obtain a quorum of such Board, any action may be taken without a meeting if all Board members consent to the action
in writing and such written consents are filed with the records of the meetings of the Board.
2.
When a Fund of Funds holds shares of an underlying fund advised by a control affiliate of MML Investment Advisers, MML Investment Advisers
will generally vote the shares held by the Fund of Funds in the same proportions (for, against, abstain) as the votes of all other shareholders
(other than MML Investment Advisers or a control affiliate of MML Investment Advisers) of such underlying fund. However, MML Investment
Advisers may alternatively, in its discretion, (i) seek instruction from the Fund of Funds’ Board of Trustees (or any member or
committee thereof (provided that such member, or each member of such committee, as the case may be, is not an interested person of the
underlying fund or of MML Investment Advisers) delegated authority to provide such instructions to MML Investment Advisers) and vote in
accordance with such instructions, or (ii) vote in accordance with the recommendation of an independent proxy advisor or consultant retained
by MML Investment Advisers to provide a recommendation, on the basis solely of the best interest of the Fund of Funds and its shareholders,
as to the matter; provided, however, that prior to taking the action described in clause (ii) above, MML Investment Advisers is required
to seek and obtain the prior approval of its Board of Directors. When a quorum is present at any meeting, a majority of the Board members
present may take any action. If it is not possible to obtain a quorum of such Board, any action may be taken without a meeting if all
Board members consent to the action in writing and such written consents are filed with the records of the meetings of the Board.
3. When a
Fund of Funds holds shares of an underlying fund not advised by MML Investment Advisers or a control affiliate of MML Investment Advisers,
MML Investment Advisers will generally vote the shares held by the Fund of Funds in the same proportions (for, against, abstain) as the
votes of all other shareholders of such underlying fund. However, MML Investment Advisers may alternatively, in its discretion, (i) seek
instruction from the Fund of Funds’ Board of Trustees (or any member or committee thereof delegated authority to provide such instructions
to MML Investment Advisers) and vote in accordance with such instructions, or (ii) vote in accordance with the recommendation of an independent
proxy advisor or consultant retained by MML Investment Advisers to provide a recommendation, on the basis solely of the best interest
of the Fund of Funds and its shareholders, as to the matter; provided, however, that prior to taking the action described in clause (ii)
above, MML Investment Advisers is required to seek and obtain the prior approval of its Board of Directors. When a quorum is present at
any meeting, a majority of the Board members present may take any action. If it is not possible to obtain a quorum of such Board, any
action may be taken without a meeting if all Board members consent to the action in writing and such written consents are filed with the
records of the meetings of the Board.
4.
Notwithstanding paragraph 3 above, (i) in the event a Fund of Funds is investing in an underlying fund pursuant to an exemptive order
from the U.S. Securities and Exchange Commission, MML Investment Advisers will vote the shares held by the Fund of Funds in accordance
with any conditions set forth in the order; or (ii) in the event a Fund of Funds is investing in an underlying fund pursuant to Section
12(d)(1)(F) of the Investment Company Act of 1940, as amended, MML Investment Advisers will vote the shares held by the Fund of Funds
either by seeking instructions from the Fund of Funds’ shareholders or vote the shares in the same proportions (for, against, abstain)
as the votes of all other shareholders of the underlying fund.
5.
When a fund is structured as a Feeder Fund that is an interest holder of a Master Fund and is requested to vote on any matter submitted
to interest holders of the Master Fund, MML Investment Advisers will, on behalf of the Feeder Fund, generally vote the shares held by
the Feeder Fund in the same proportions (for, against, abstain) as the votes of all other interest holders of such Master Fund. However,
if the Feeder Fund elects to hold a meeting of its own shareholders to consider such matters, MML Investment Advisers will, on behalf
of the Feeder Fund, vote the shares held by the Feeder Fund in proportion to the votes received from its shareholders, with shares for
which a Feeder Fund receives no voting instructions being voted in the same proportion as the votes received from the other Feeder Fund
shareholders.
6.
Although rare, there is a possibility of Special Situations presented where MML Investment Advisers is in the best position to vote Proxies.
In those Special Situations, which are determined by the Investment Management team in consultation with MML Investment Advisers’
Chief Compliance Officer and/or legal counsel, MML Investment Advisers (i) will, when the Special Situation involves a proxy for a Funds’
investment in another mutual fund or pooled investment vehicle, generally vote the shares held in the same proportions (for, against,
abstain) as the votes of all other shareholders of such underlying fund; (ii) may seek instruction from the relevant Trust’s
Board of Trustees (or any member or committee thereof delegated authority to provide such instructions to MML Investment Advisers) and
vote in accordance with such instructions; or (iii) may vote in accordance with the recommendation of an independent proxy advisor or
consultant retained by MML Investment Advisers to provide a recommendation, on the basis solely of the best interest of the Trust and
its shareholders, as to the matter; provided, however, that prior to taking the action described in clause (iii) above, MML Investment
Advisers is required to seek and obtain the prior approval of its Board of Directors. When a quorum is present at any meeting, a majority
of the Board members present may take any action. If it is not possible to obtain a quorum of such Board, any action may be taken without
a meeting if all Board members consent to the action in writing and such written consents are filed with the records of the meetings of
the Board.
Operating Procedures
MML
Investment Advisers exercises its proxy voting responsibility with respect to the Funds of Funds, Feeder Funds, and Special Situations
through the Investment Management team.
All
proxy statements, including Information Statements (“Proxy Statements”) and proxy cards received by associates relating
to a Fund of Funds, Feeder Fund, or Special Situations are to be immediately forwarded to the Investment Management team. The head of
Investment Management or that person’s designee, then is responsible for (i) logging, reviewing and casting the vote for all Proxies
solicited and received, (ii) voting such Proxies in a manner consistent with these policies and procedures, (iii) documenting the
method followed in determining how to cast the vote, and (iv) maintaining the records required by Rule 204-2 under the Advisers Act.
The
Investment Management team will retain for such time periods as set forth in Rule 204-2:
•
Copies
of all policies and procedures required by the Rule;
•
A
copy of each Proxy Statement that MML Investment Advisers receives regarding a Fund of Fund’s or Feeder Fund’s investments;
•
A
copy of each Proxy Statement that MML Investment Advisers receives regarding a Special Situation;
•
A
record of each vote cast by MML Investment Advisers on behalf of a Fund of Funds, a Feeder Fund, or in a Special Situation; and
•
A
copy of any document created by MML Investment Advisers that was material to making a decision how to vote Proxies on behalf of a Fund
of Funds, a Feeder Fund, or in a Special Situation or that otherwise memorializes the basis for that decision.
Barings
LLC (“Barings”) has established a Proxy Voting Policy to establish the manner in which Barings fulfills its proxy voting
responsibilities and complies with applicable regulations
•
Any
proxies received by Barings should be forwarded as soon as possible to the Proxy Voting Team for timely processing and voting
•
Barings
has a responsibility to oversee any service providers it may engage to facilitate proxy voting on behalf of its clients
Introduction/Policy Statement
As
an investment adviser or manager, Barings has a fiduciary duty to vote proxies on behalf of its clients (“Clients”). Regulations
that apply to Barings, including Rule 206(4)-6 of the Investment Advisers Act of 1940 applicable to US regulated investment advisers,
requires that Barings adopt and implement written policies and procedures that are reasonably designed to ensure that proxies are voted
in the best interest of its Clients. The policies and procedures must:
•
Describe
how Barings addresses material conflicts that may arise between Barings’ interests and those of its Clients;
•
Disclose
to Clients how they may obtain information regarding how Barings voted with respect to their securities; and
•
Describe
to Clients Barings’ proxy voting policies and procedures and, upon request, furnish a copy of the policies and procedures.
The
purpose of this Global Proxy Voting Policy (“Policy”) is to establish the manner in which Barings will fulfill its proxy
voting responsibilities and comply with applicable regulatory requirements. Barings understands that voting proxies is part of its investment
advisory and management responsibilities and believes that as a general principle proxies should be acted upon (voted or abstained) solely
in the best interests of its Clients (i.e., in a manner that is most likely to enhance the economic value of the underlying securities
held in Client accounts).
No
Barings associate (“Associate”), officer, board of managers/directors of Barings or its affiliates (other than those assigned
such responsibilities under the Policy) can influence how Barings votes proxies, unless such person has been requested to provide assistance
from an authorized investment person or designee (“Proxy Analyst”) or from a member of the Governance and Conflicts Committee
(“GCC”) and has disclosed any known Material Conflict, as discussed in the Procedures section below.
Requirements
Standard Proxy Procedures
Barings
engages a proxy voting service provider (“Service Provider”) responsible for processing and maintaining records of proxy
votes. In addition, the Service Provider, a recognized authority on proxy voting and corporate governance, provides research and recommendations
(including environmental, social and governance topics) on proxies to Barings as its research provider (“Research Provider”).
Barings’ policy is to generally vote all Client proxies for which it has proxy voting discretion in accordance with the recommendations
of the Research Provider or with the Research Provider’s proxy voting guidelines (“Guidelines”), in the absence of
a recommendation. In circumstances where the Research Provider has not provided a recommendation, the proxy will be analyzed on a case-by-case
basis.
Barings
recognizes that there may be times when it is in the best interests of Clients to vote proxies, (i) against the Research Provider’s
recommendations; or (ii) in instances where the Research Provider has not provided a recommendation, against the Guidelines. Barings can
vote, in whole or part, against the Research Provider’s recommendations or Guidelines as it deems appropriate. Procedures are designed
to ensure that votes against the Research Provider’s recommendations or Guidelines are made in the best interests of Clients and
are not the result of any material conflict of interest (“Material Conflict”). For purposes of this Policy, a Material Conflict
is defined as any position, relationship or interest, financial or otherwise, of Barings or Associate that could reasonably be expected
to affect the independence or judgment concerning proxy voting.
In
determining whether to retain, or continue the retention of, the Service Provider and/or Research Provider Barings should consider, among
other things:
•
if
the Service Provider and/or Research Provider have the capacity and competency to adequately analyze the matters for which Barings is
responsible for voting by, for example, reviewing the adequacy and quality of the Service Provider’s and/or Research Provider’s
staffing, personnel, and/or technology;
•
if
the Research Provider has an effective process for seeking timely input from issuers and Research Provider clients with respect to such
matters as its proxy voting policies, methodologies, and if applicable, its peer group constructions. If peer group comparisons are a
component of the Research Provider’s substantive evaluation, Barings should consider how the Research Provider incorporates appropriate
input in formulating its methodologies and construction of issuer peer groups, and how, in constructing peer groups, the Research Provider
takes into account the unique characteristics regarding the issuer, to the extent available, such as the issuer’s size; its governance
structure; its industry and any particular practices unique to that industry; and its history;
•
whether
the Research Provider has adequately disclosed to Barings its methodologies in formulating voting recommendations, such that Barings can
understand the factors underlying the Research Provider’s voting recommendations. In addition, Barings should consider the nature
of any third-party information sources that the Research Provider uses as a basis for its voting recommendations;
•
whether
the Research Provider has adequate policies and procedures to identify, disclose, and address actual and potential conflicts of interest,
including (1) conflicts relating to the provision of proxy voting recommendations and proxy voting services generally, (2) conflicts relating
to activities other than providing proxy voting recommendations and proxy voting services, and (3) conflicts presented by certain affiliations;
•
the
effectiveness of the Research Provider’s firm’s policies and procedures for obtaining current and accurate information relevant
to matters included in its research and on which it makes voting recommendations. In assessing such matters, Barings should consider:
the Research Provider’s engagement with issuers, including the firm’s process for ensuring that it has complete and accurate
information about the issuer and each particular matter, and the firm’s process, if any, for investment advisers to access the
issuer’s views about the firm’s voting recommendations in a timely and efficient manner; and
•
Barings
should consider requiring the Research Provider to update Barings regarding business changes Barings considers relevant (i.e.,
with respect to the Research Provider’s capacity and competency to provide independent proxy voting advice or carry out voting
instructions), and should consider whether the Research Provider appropriately updates its methodologies, guidelines, and voting recommendations
on an ongoing basis, including in response to feedback from issuers and their shareholders.
Other Considerations
There
could be circumstances where Barings is unable or determines not to vote a proxy on behalf of its Clients. The following is a non-inclusive
list of examples whereby Barings may decide not to vote proxies on behalf of its Clients:
•
The
cost of voting a proxy for a foreign security outweighs the expected benefit to the Client, so long as refraining from voting does not
materially harm the Client;
•
Barings
is not given enough time to process the vote (i.e., receives a meeting notice and proxy from the issuer too late to permit voting);
•
Barings
may hold shares on a company’s record date, but sells them prior to the company’s meeting date;
•
Barings
has outstanding sell orders on a particular security and the decision to refrain from voting may be made in order to facilitate such sale;
•
The
underlying securities have been lent out pursuant to a security lending program; or
•
The
company has participated in share blocking, which would prohibit Barings ability to trade or loan shares for a period of time.
Barings
has designated the Proxy Voting Team to ensure the responsibilities set forth in this Policy are satisfied.
Handling of Proxies
Proxy
statements and ballots are typically routed directly to Barings’ proxy voting Service Provider. In the event that an Associate
receives a proxy statement or ballot, the Associate should immediately forward the statement or ballot to the Proxy Voting Team who will
record receipt of the proxy, route the materials for review, maintain a record of all action taken and process votes.
Voting of Proxies
Typically,
Barings will vote all Client proxies for which it has proxy voting discretion, where no Material Conflict exists, in accordance with the
Research Provider’s recommendation or Guidelines, unless (i) Barings is unable or determines not to vote a proxy in accordance
with the Policy; or (ii) a Proxy Analyst determines that it is in the Clients’ best interests to vote against the Research Provider’s
recommendation or Guidelines. In the event a Proxy Analyst believes a proxy should be voted against the Research Provider’s recommendations
or Guidelines, the Proxy Voting Team will vote the proxy in accordance with the Proxy Analyst’s recommendation so long as (i) no
other Proxy Analyst disagrees with such recommendation; and (ii) no known Material Conflict is identified by the Proxy Analyst(s) or the
Proxy Voting Team. If a Material Conflict is identified by a Proxy Analyst or the Proxy Voting Team, the proxy will be submitted to the
GCC to determine how the proxy is to be voted in order to achieve the Clients’ best interests.
Pre-vote
communications with proxy-solicitors are prohibited. In the event that a pre-vote communication occurs, it should be reported to the GCC,
the relevant Head of Compliance and/or General Counsel prior to voting. Any questions or concerns regarding proxy-solicitor arrangements
should be addressed to the relevant Head of Compliance and/or General Counsel, or the respective designees.
Oversight
Compliance
will review the Policy at least annually and recommend any necessary changes to Barings’ GCC. Compliance or the GCC will be responsible
for (i) approving proxy voting forms as needed; and (ii) reviewing and approving any proposed changes to disclosures. In addition to the
above, the Proxy Voting Team will provide materials to the relevant Barings’ governance committees or Compliance on the following
matters:
•
The
extent to which potential credible factual errors, potential incompleteness, or potential methodological weaknesses in the Service Provider
and or Research Provider (that Barings becomes aware of and deems relevant) are materially affecting the research or recommendations that
Barings used or is using in voting;
?
•
Confirm
to Compliance that it believes that Barings is casting votes on behalf of its clients consistently with the Policy.This confirmation will
be based on the Proxy Voting Team, at least annually, sampling the proxy votes cast on behalf of its clients. The review will consist
of sampling of proxy votes that relate to proposals that may require more issuer-specific analysis (e.g.,
mergers and acquisition transactions, dissolutions, conversions, or consolidations) and providing the results of this testing to Compliance.
Any identified issues will be escalated as necessary to the relevant governance committee;
?
•
Periodically
reviewing the Service Provider’s guidelines used in the voting of proxies and notify the GCC of any material changes;
•
Confirm
that Barings is casting votes when a conflict of interest exists in compliance with the Policy;
?
•
Escalating
any issues relating to proxy voting identified during internal or external audits or assessments or reviews to Compliance and or the relevant
governance committee; and
?
•
In
circumstances where either the Proxy Voting Team has not provided a recommendation or has not contemplated an issue within its Guidelines
and the proxy is analyzed on a case-by-case basis, or the matter subject to the proxy was contested or highly controversial, considering
whether a higher degree of analysis was necessary to assess whether any votes cast on behalf of Barings’ clients were cast in the
clients’ best interest will be presented to the GCC.
Investment
management agreements generally delegate the authority to Barings to vote proxies in accordance with its Policy. In the event that an
investment management agreement is silent on proxy voting, Barings should obtain written instructions from the Client as to their voting
preference. However, when the Client does not provide written instructions as to their voting preference, Barings will assume proxy voting
responsibilities. In the event that a Client makes a written request regarding proxy voting, Barings will vote as instructed.
Required Disclosures and Client Request
for Information
Barings
will include a summary of this Policy in the Form ADV Part 2A for its US registered investment advisers, as well as provide instructions
as to how a Client may request a copy of this Policy and/or a record of how Barings voted the Client’s proxies.
Requests will be directed to the Proxy Voting Team, who will provide the information to the appropriate client service representative
in order to respond to the Client in a timely manner.
Conflict Resolution and Escalation Process
Associates
should immediately report any issues they believe are a potential or actual breach of this Policy to their relevant business unit management
and to the relevant Chief Compliance Officer (or relevant designee). The relevant Chief Compliance Officer (or relevant designee) will
review the matter and determine whether the issue is an actual breach and whether to grant an exception, and/or the appropriate course
of action. When making such determination, the relevant Chief Compliance Officer (or relevant designee) may, as part of his/her review,
discuss the matter with relevant business unit management, members of the Senior Leadership Team, governance committees or other parties
(i.e. legal counsel, auditor, etc).
The
relevant Compliance Department can grant exceptions to any provision of this Policy so long as such exceptions are consistent with the
purpose of the Policy and applicable law, are documented and such documentation is retained for the required retention period. Any questions
regarding the applicability of this Policy should be directed to the appropriate Compliance Department or the relevant Chief Compliance
Officer (or relevant designee).
Books and Records Retained
The
table below identifies each Record that is required to be retained as it relates to this Policy unless a different retention period is
required by local regulations in the relevant jurisdiction. Records may be unique to the relevant jurisdiction or combined with records
maintained by Barings.
Description/Requirement
Barings Record
Creator
Owner
Retention Period
Source
The Compliance review and any approvals needed by GCC of Policy, proxy activity,
and approval of Proxy Voting Forms
Compliance and GCC meeting materials
Proxy Voting Team and Compliance
GCC Representative
7 Years
Barings Policy Requirement and Investment Advisers Act of 1940, Rule 206(4)-6 Barings
Policy requirement for Barings US regulated Advisers
Proxy statements, research, recommendations, and records of votes cast
Proxy Records
Service Provider or Proxy Voting Team
Service Provider or Proxy Voting Team
7 Years
Barings Policy Requirement and Investment Advisers Act of 1940, Rule 206(4)-6 Barings
Policy requirement for Barings US regulated Advisers
Proxy Voting Forms (including supporting documentation used in deciding how to vote)
Proxy Voting Forms
Proxy Voting Team and/or Proxy Analyst
Proxy Voting Team
7 Years
Barings Policy Requirement and Investment Advisers Act of 1940, Rule 206(4)-6 Barings
Policy requirement for Barings US regulated Advisers
Client written requests for proxy voting information and responses thereto
Client Proxy Requests
Proxy Voting Team
Proxy Voting Team
7 Years
Barings Policy Requirement and Investment Advisers Act of 1940, Rule 206(4)-6 Barings
Policy requirement for Barings US regulated Advisers
Form N-PX, for proxies voted on behalf of an investment company for which Barings
serves as investment adviser and is responsible for making such filing on behalf of its Clients
Form N-PX
Proxy Voting Team
Proxy Voting Team
7 Years
Barings Policy requirement and Investment Advisers Act of 1940, Rule 206(4)‑6
for Barings US regulated Advisers Rule 30b1‑4
The Proxy Voting Policy, associated procedures and any amendments thereto
Proxy Voting Policy
Compliance Department
Compliance Department
7 Years
Barings Policy requirement
A copy of the Research Provider’s proxy voting guidelines
As
of September 30, 2022, the portfolio managers did not own any shares of the Global Floating Rate Fund. The portfolio managers do not directly
own any shares of the Fund, but may have an economic interest in the Fund due to their participation in a deferred compensation plan and/or
401(k) plan.
The
portfolio managers of the Global Credit Income Opportunities Fund are Sean Feeley, Martin Horne, Omotunde Lawal, Brian Pacheco, Scott
Roth, and Chris Sawyer.
Does
not include the Global Credit Income Opportunities Fund.
Ownership of
Securities:
As
of September 30, 2022, the portfolio managers did not own any shares of the Global Credit Income Opportunities Fund. The portfolio managers
do not directly own any shares of the Fund, but may have an economic interest in the Fund due to their participation in a deferred compensation
plan and/or 401(k) plan.
The
portfolio managers of the Emerging Markets Debt Blended Total Return Fund are Ricardo Androgué, Cem Karacadag, and Natalia Krol.
Does
not include the Emerging Markets Debt Blended Total Return Fund.
Ownership of
Securities:
As
of September 30, 2022, the portfolio managers did not own any shares of the Emerging Markets Debt Blended Total Return Fund. The portfolio
managers do not directly own any shares of the Fund, but may have an economic interest in the Fund due to their participation in a deferred
compensation plan and/or 401(k) plan.
The
portfolio managers of the Global Emerging Markets Equity Fund are Isabelle Irish, Michael Levy, and William Palmer.
Other Accounts
Managed:
Number of Accounts Managed*
Total Assets*
Number of Accounts Managed for which Advisory Fee is Performance- Based*
Does not include the Global
Emerging Markets Equity Fund.
Ownership of
Securities:
As
of September 30, 2022, the portfolio managers did not own any shares of the Global Emerging Markets Equity Fund. The portfolio managers
do not directly own any shares of the Fund, but may have an economic interest in the Fund due to their participation in a deferred compensation
plan and/or 401(k) plan.
Conflicts of
Interest:
The
potential for material conflicts of interest may exist when a portfolio manager has responsibilities for the day-to-day management of
multiple accounts. These conflicts may be heightened to the extent a portfolio manager, Barings, BIIL and/or an affiliate has an investment
in one or more of such accounts or an interest in the performance of one or more such accounts. Barings and BIIL have identified (and
summarized below) areas where material conflicts of interest are most likely to arise, and have adopted policies and procedures that they
believe are reasonably designed to address such conflicts.
It
is possible that an investment opportunity may be suitable for both a fund and other accounts managed by a portfolio manager, but may
not be available in sufficient quantities for both the fund and the other accounts to participate fully. Similarly, there may be limited
opportunity to sell an investment held by a fund and another account. A conflict may arise where the portfolio manager may have an incentive
to treat an account preferentially as compared to a fund because the account pays Barings and BIIL a performance-based fee or the portfolio
manager, Barings, BIIL or an affiliate has an interest in the account. Barings and BIIL have adopted an investment allocation policy and
trade allocation procedures to address allocation of portfolio transactions and investment opportunities across multiple clients. These
policies are designed to achieve fair and equitable treatment of all clients over time, and specifically prohibit allocations based on
performance of an account, the amount or structure of the management fee, performance fee or profit sharing allocations, participation
or investment by an employee, Barings, BIIL or an affiliate, and whether the account is public, private, proprietary or third party.
Potential
material conflicts of interest may also arise related to the knowledge and timing of a fund’s trades, investment opportunities
and broker selection. Portfolio managers may have information about the size, timing and possible market impact of a fund’s trades.
It is theoretically possible that portfolio managers could use this information for their personal advantage and/or the advantage of other
accounts they manage, or to the possible detriment of a fund. For example, a portfolio manager could front run a fund’s trade or
short sell a security for an account immediately prior to a fund’s sale of that security. To address these conflicts, Barings and
BIIL have adopted policies and procedures governing employees’ personal securities transactions, the use of short sales, and trading
between the fund and other accounts managed by the portfolio manager or accounts owned by Barings, BIIL or its affiliates.
With
respect to securities transactions for the funds, Barings and BIIL determine which broker to use to execute each order, consistent with
their duty to seek best execution of the transaction. Barings and BIIL manage certain other accounts, however, where Barings and BIIL
may be limited by the client with respect to the selection of brokers or directed to trade such client’s transactions through a
particular broker. In these cases, trades for a fund in a particular security may be placed separately from, rather than aggregated with,
such other accounts. Placing separate transaction orders for a security may temporarily affect the market price of the security or otherwise
affect the execution of the transaction to the possible detriment of a fund or the other account(s) involved. Barings and BIIL have policies
and procedures that address best execution and directed brokerage.
A
portfolio manager may also face other potential conflicts of interest in managing a fund, and the above is not a complete description
of every conflict of interest that could be deemed to exist in managing both a fund and the other accounts listed above.
Compensation:
The
discussion below describes the portfolio managers’ compensation as of September 30, 2022.
Compensation
packages at Barings and BIIL are structured such that key professionals have a vested interest in the continuing success of each firm.
Portfolio managers’ compensation is comprised of base salary, and a discretionary, performance-driven annual bonus. Certain key
individuals may also receive a long-term incentive award and/or a performance fee award. As part of each firm’s continuing effort
to monitor retention, Barings and BIIL participate in annual compensation surveys of investment management firms and subsidiaries to ensure
that Barings’ and BIIL’s compensation are competitive with industry standards.
The
base salary component is generally positioned at mid-market. Increases are tied to market, individual performance evaluations and budget
constraints.
Portfolio
managers may receive a yearly bonus. Factors impacting the potential bonuses include but are not limited to: i) investment performance
of funds/accounts managed by a portfolio manager, ii) financial performance of Barings and BIIL, iii) client satisfaction, and iv) teamwork.
Long-term
incentives are designed to share the long-term success of the firm and take the form of deferred cash awards, which may include an award
that resembles phantom restricted stock; linking the value of the award to a formula which includes Barings’ and BIIL’s
overall earnings. A voluntary separation of service will result in a forfeiture of unvested long-term incentive awards.
(3) Incorporated
by reference to Registrant’s Post-Effective Amendment No. 1 to the Registration Statement filed via EDGAR on January 31, 2022.
ITEM 29.
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Not
applicable.
ITEM 30.
INDEMNIFICATION
Article
VIII, Sections 1, 2, 3, 4, and 5 of the Trust’s Agreement and Declaration of Trust, which is incorporated by reference to Exhibit
(a)(1) of the Trust’s Registration Statement filed via EDGAR on June 2, 2021, provide as follows with respect to indemnification
of the Trustees and officers of the Trust against liabilities which may be incurred by them in such capacities:
Agreement
and Declaration of Trust
Section
1. Trustees, Officers, Etc.
The Trust shall indemnify every person who is or has been a Trustee or officer (including persons who serve at the Trust’s request
as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise)
(hereinafter referred to as a “Covered Person”) against all liabilities and expenses, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees, reasonably incurred or paid by any Covered
Person in connection with the defense or disposition of any claim, action, suit or other proceeding, whether civil, criminal, or other,
including appeals, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have been threatened, while in office or thereafter, by reason
of being or having been such a Covered Person except with respect to any matter as to which such Covered Person shall have been finally
adjudicated in a decision on the merits in any such action, suit or other proceeding to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered
Person’s office. Expenses, including counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties), shall be paid from time to time by the Trust in advance of the final disposition
of any such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Covered Person to repay amounts so paid
to the Trust if it is ultimately determined that indemnification of such expenses is not authorized under this Article, provided, however,
that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust shall be insured against
losses arising from any such advance payments, or (c) either a majority of the disinterested Trustees acting on the matter (provided that
a majority of the disinterested Trustees then in office act on the matter), or independent legal counsel, in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a full trial type inquiry) that there is reason to believe
that such Covered Person will be found entitled to indemnification under this Article.
Section
2. Compromise Payment. As to any matter disposed of (whether by a compromise payment,
pursuant to a consent decree or otherwise) without an adjudication on the merits by a court, or by any other body before which the proceeding
was brought, that such Covered Person is liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her office, indemnification shall be provided if (a) approved, after
notice that it involves such indemnification, by at least a majority of the disinterested Trustees acting on the matter (provided that
a majority of the disinterested Trustees then in office act on the matter) upon a determination, based upon a review of readily available
facts (as opposed to a full trial type inquiry) that such Covered Person is not liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office (the disinterested
Trustees to take final action on the consideration of such approval within 60 days of a request thereof by a Covered Person), or (b) there
has been obtained an opinion in writing of independent legal counsel, based upon a review of readily available facts (as opposed to a
full trial type inquiry), to the effect that such indemnification would not protect such Covered Person against any liability to the Trust
to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office (which opinion the Trustees shall use reasonable diligence to obtain within 60 days
of a request therefor by a Covered Person). Any approval pursuant to this Section shall not prevent the recovery from any Covered Person
of any amount paid to such Covered Person in accordance with this Section as indemnification if such Covered Person is subsequently adjudicated
by a court of competent jurisdiction to have been liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person’s office.
C:
Section
3. Rebuttable Presumption. For purposes of the determination or opinion referred
to in clause (c) of Section 1 of this Article VIII or clauses (a) or (b) of Section 2 of this Article VIII, the majority of disinterested
Trustees acting on the matter or independent legal counsel, as the case may be, shall be entitled to rely upon a rebuttable presumption
that the Covered Person has not engaged in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved
in the conduct of such Covered Person’s office.
Section
4. Indemnification Not Exclusive. The right of indemnification hereby provided shall
not be exclusive of or affect any other rights to which such Covered Person may be entitled. As used in this Article VIII, the term “Covered
Person” shall include such person’s heirs, executors and administrators and a “disinterested Trustee” is a
Trustee who is not an “interested person” of the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been exempted
from being an “interested person” by any rule, regulation or order of the Commission), and against whom none of such actions,
suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending. Nothing
contained in this Article shall affect any rights to indemnification to which personnel of the Trust, other than Trustees or officers,
and other persons may be entitled by contract or otherwise under law, nor the power of the Trust to purchase and maintain liability insurance
on behalf of any such person.
Section
5. No Presumption. The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that a Covered Person did not
act in good faith and in a manner which the person reasonably believed to be in the best interests of the Trust or that the person had
reasonable cause to believe that the person’s conduct was lawful.
Trustees and officers of the Trust are also
indemnified by MassMutual pursuant to its by-laws. No indemnification is provided with respect to any liability to any entity which is
registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”) or to the security
holders thereof, where the basis for such liability is willful misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of office.
MassMutual’s directors’ and
officers’ liability insurance program, which covers the Trust’s Trustees and officers, consists of two distinct coverages.
The first coverage reimburses MassMutual, subject to specified limitations, for amounts which MassMutual is legally obligated to pay out
under its indemnification by-law, discussed above. The second coverage directly protects a Trustee or officer of the Trust against liability
from shareholder derivative and similar lawsuits which are not indemnifiable under the law. There are, however, specific acts giving rise
to liability which are excluded from this coverage. For example, no Trustee or officer is insured against personal liability for libel
or slander, acts of deliberate dishonesty, fines or penalties, illegal personal profit or advantage at the expense of the Trust or its
shareholders, violation of employee benefit plans, regulatory statutes, and similar acts which would traditionally run contrary to public
policy and hence reimbursement by insurance.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended (the “1933 Act”) may be permitted to trustees, officers and controlling
persons of the Trust pursuant to the foregoing provisions, or otherwise, the Trust has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the Trust of expenses incurred or paid
by a Trustee, officer or controlling person of the Trust in the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being registered, the Trust will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue.
C:
ITEM 31.
BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
a. The Investment Adviser
MML Advisers is the investment adviser for the
Trust. MML Advisers is responsible for providing all necessary investment management and administrative services to the Trust. MML Advisers,
a Delaware limited liability company, was formed in 2013 and is a wholly-owned subsidiary of MassMutual. 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.
The directors and officers of MML Advisers, which
is located at 1295 State Street, Springfield, Massachusetts01111-0001, their positions with MML Advisers, and their other principal business
affiliations and business experience for the past two years are as follows:
ANDREA ANASTASIO, Vice President (since 2021)
Head of Investment Management
Solutions (since 2021), MassMutual; Head of Investment Strategy and Research, North America (2019-2021), State Street Global Advisors;
Vice President (since 2021), MassMutual Select Funds (open-end investment company); Vice President (since 2021), MassMutual Premier Funds
(open-end investment company); Vice President (since 2021), MassMutual Advantage Funds (open-end investment company); Vice President (since
2021), MML Series Investment Fund (open-end investment company); Vice President (since 2021), MML Series Investment Fund II (open-end
investment company).
PABLO CABRERA, Assistant Treasurer (since 2021)
Head of Cash Operations
(since 2020), MassMutual; Assistant Vice President (2000-2020), FM Global; Assistant Treasurer (since 2021), MML Distributors, LLC; Assistant
Treasurer (since 2021), C.M. Life Insurance Company; Assistant Treasurer (since 2021), MML Bay State Life Insurance Company; Assistant
Treasurer (since 2021), Athens Fund Management LLC; Assistant Treasurer (since 2021), Berkshire Way LLC; Assistant Treasurer (since 2021),
Blueprint Income LLC; Assistant Treasurer (since 2021), EM Opportunities LLC; Assistant Treasurer (since 2021), Fern Street LLC; Assistant
Treasurer (since 2021), Glidepath Holdings Inc.; Assistant Treasurer (since 2021), HITPS LLC; Assistant Treasurer (since 2021), Insurance
Road LLC; Assistant Treasurer (since 2021), ITPS Holding LLC; Assistant Treasurer (since 2021), MassMutual Capital Partners LLC; Assistant
Treasurer (since 2021), MassMutual External Benefits Group LLC; Assistant Treasurer (since 2021), MassMutual Global Business Services
India LLP; Assistant Treasurer (since 2021), MassMutual Global Business Services Romania S.R. L.; Assistant Treasurer (since 2021), MassMutual
Holding LLC; Assistant Treasurer (since 2021), MassMutual Holding MSC, Inc.; Assistant Treasurer (since 2021), MassMutual Intellectual
Property LLC; Assistant Treasurer (since 2021), MassMutual International Holding MSC, Inc.; Assistant Treasurer (since 2021), MassMutual
International LLC; Assistant Treasurer (since 2021), MassMutual Mortgage Lending LLC; Assistant Treasurer (since 2021), MassMutual Private
Equity Funds LLC; Assistant Treasurer (since 2021), MassMutual Private Equity Funds Subsidiary LLC; Assistant Treasurer (since 2021),
MassMutual Ventures Holding LLC; Assistant Treasurer (since 2021), MassMutual Ventures Management LLC; Assistant Treasurer (since 2021),
MassMutual Ventures SEA Management Private Limited; Assistant Treasurer (since 2021), MassMutual Ventures Southeast Asia I LLC; Assistant
Treasurer (since 2021), MassMutual Ventures Southeast Asia II LLC; Assistant Treasurer (since 2021), MassMutual Ventures UK LLC; Assistant
Treasurer (since 2021), MassMutual Ventures US I LLC; Assistant Treasurer (since 2021), MassMutual Ventures US II LLC; Assistant Treasurer
(since 2021), MassMutual Ventures US III LLC; Assistant Treasurer (since 2021), MM Asset Management Holding LLC; Assistant Treasurer (since
2021), MM Catalyst Fund LLC; Assistant Treasurer (since 2021), MM Cooper Hill Road; Assistant Treasurer (since 2021), MM Global Capabilities
I LLC; Assistant Treasurer (since 2021), MM Global Capabilities II LLC; Assistant Treasurer (since 2021), MM Global Capabilities III LLC;
Assistant Treasurer (since 2021), MM Global Capabilities (Netherlands) BV; Assistant Treasurer (since 2021), MM Private Equity Intercontinental
LLC; Assistant Treasurer (since 2021), MM Rothesay Holdco US LLC; Assistant Treasurer (since 2021), MML CM LLC; Assistant Treasurer (since
2021), MML Management Corporation; Assistant Treasurer (since 2021), Open Alternatives LLC; Assistant Treasurer (since 2021), Pioneers
Gate LLC; Assistant Treasurer (since 2021), Sleeper Street LLC; Assistant Treasurer (since 2021), Trad Investments I LLC.
GEOFFREY CRADDOCK, Director (since 2017)
Chief Risk Officer,
Enterprise Risk Management (since 2017), MassMutual; Director (since 2017), Barings LLC; Director (since 2017), Haven Life Insurance Agency,
LLC; Director (since 2017), LifeScore Labs, LLC; Director (since 2018), MassMutual International LLC; Director (since 2017), MM Asset
Management Holding LLC; Director (since 2017), MML Investors Services, LLC; Director (since 2018), MassMutual MCAM Insurance Company,
Inc.; Director (since 2017), MML Strategic Distributors, LLC; Director (since 2022), Blueprint Income, LLC; Director (since 2021), Annuity
Investors Life Insurance Company; Director (since 2021), Manhattan National Life Insurance Company; Director (since 2021), MM Ascend Life
Insurance Company.
MICHAEL R. FANNING, Director (since 2016)
Head of MassMutual U.S.
(since 2016), Member of MassMutual’s Executive Leadership Team (since 2008), MassMutual; Trustee (since 2021), MassMutual Select
Funds (open-end investment company); Trustee (since 2021), MassMutual Premier Funds (open-end investment company); Trustee (since 2021),
MassMutual Advantage Funds (open-end investment company); Trustee (since 2021), MML Series Investment Fund (open-end investment company);
Trustee (since 2021), MML Series Investment Fund II (open-end investment company); GBH Board of Advisors (since 2018); MassChallenge Board
of Directors (since 2020); FinTech Sandbox Board (since 2020); Member (since 2014), MassMutual Ventures LLC; Director (since 2009), C.M.
Life Insurance Company; Director (since 2009), Member of Audit Committee (since 2009), MML Bay State Life Insurance Company; Member Representative
(since 2009), MML Distributors, LLC; Director (since 2007), Member of Executive Committee (since 2008), Member of Audit Committee (since
2008), MML Investors Services, LLC.
BRIAN FINUCANE, Assistant Treasurer (since 2021)
Head of Debt Financing
and Liquidity (since 2021), MassMutual; Assistant Treasurer (since 2021), C.M. Life Insurance Company; Assistant Treasurer (since 2021),
MML Bay State Life Insurance Company; Assistant Treasurer (since 2021), Athens Fund Management LLC; Assistant Treasurer (since 2021),
Berkshire Way LLC; Assistant Treasurer (since 2021), Blueprint Income LLC; Assistant Treasurer (since 2021), EM Opportunities LLC; Assistant
Treasurer (since 2021), Fern Street LLC; Assistant Treasurer (since 2021), Glidepath Holdings Inc.; Assistant Treasurer (since 2021),
HITPS LLC; Assistant Treasurer (since 2021), Insurance Road LLC; Assistant Treasurer (since 2021), ITPS Holding LLC; Assistant Treasurer
(since 2021), MassMutual Capital Partners LLC; Assistant Treasurer (since 2021), MassMutual External Benefits Group LLC; Assistant Treasurer
(since 2021), MassMutual Global Business Services India LLP; Assistant Treasurer (since 2021), MassMutual Global Business Services Romania
S.R. L.; Assistant Treasurer (since 2021), MassMutual Holding LLC; Assistant Treasurer (since 2021), MassMutual Holding MSC, Inc.; Assistant
Treasurer (since 2021), MassMutual Intellectual Property LLC; Assistant Treasurer (since 2021), MassMutual International Holding MSC,
Inc.; Assistant Treasurer (since 2021), MassMutual International LLC; Assistant Treasurer (since 2021), MassMutual Mortgage Lending LLC;
Assistant Treasurer (since 2021), MassMutual Private Equity Funds LLC; Assistant Treasurer (since 2021), MassMutual Private Equity Funds
Subsidiary LLC; Assistant Treasurer (since 2021), MassMutual Ventures Holding LLC; Assistant Treasurer (since 2021), MassMutual Ventures
Management LLC; Assistant Treasurer (since 2021), MassMutual Ventures SEA Management Private Limited; Assistant Treasurer (since 2021),
MassMutual Ventures Southeast Asia I LLC; Assistant Treasurer (since 2021), MassMutual Ventures Southeast Asia II LLC; Assistant Treasurer
(since 2021), MassMutual Ventures UK LLC; Assistant Treasurer (since 2021), MassMutual Ventures US I LLC; Assistant Treasurer (since 2021),
MassMutual Ventures US II LLC; Assistant Treasurer (since 2021), MassMutual Ventures US III LLC; Assistant Treasurer (since 2021), MM
Asset Management Holding LLC; Assistant Treasurer (since 2021), MM Catalyst Fund LLC; Assistant Treasurer (since 2021), MM Cooper Hill
Road; Assistant Treasurer (since 2021), MM Global Capabilities I LLC; Assistant Treasurer (since 2021), MM Global Capabilities II LLC;
Assistant Treasurer (since 2021), MM Global Capabilities III LLC; Assistant Treasurer (since 2021), MM Global Capabilities (Netherlands)
BV; Assistant Treasurer (since 2021), MM Private Equity Intercontinental LLC; Assistant Treasurer (since 2021), MM Rothesay Holdco US
LLC; Assistant Treasurer (since 2021), MML CM LLC; Assistant Treasurer (since 2021), MML Management Corporation; Assistant Treasurer (since
2021), Open Alternatives LLC; Assistant Treasurer (since 2021), Pioneers Gate LLC; Assistant Treasurer (since 2021), Sleeper Street LLC;
Assistant Treasurer (since 2021), Trad Investments I LLC.
C:
ANDREW M. GOLDBERG, Secretary (since 2015)
Assistant Secretary
(2013-2015), MML Advisers; Lead Counsel, Investment Adviser & Mutual Funds (since 2018), MassMutual; Vice President, Secretary, and
Chief Legal Officer (since 2008), MassMutual Select Funds (open-end investment company); Vice President, Secretary (formerly known as
“Clerk”), and Chief Legal Officer (since 2008), MassMutual Premier Funds (open-end investment company); Vice President,
Secretary, and Chief Legal Officer (since 2021), MassMutual Advantage Funds (open-end investment company); Vice President, Secretary,
and Chief Legal Officer (since 2008), MML Series Investment Fund (open-end investment company); Vice President, Secretary (formerly known
as “Clerk”), and Chief Legal Officer (since 2008), MML Series Investment Fund II (open-end investment company); Vice President,
Secretary, and Chief Legal Officer (2021-2022), MassMutual AccessSM Pine Point Fund (closed-end investment company).
PAUL LAPIANA, President (since 2021)
Head of MassMutual
U.S. Product (since 2019), MassMutual; President (since 2021), MassMutual Select Funds (open-end investment company); President (since
2021), MassMutual Premier Funds (open-end investment company); President (since 2021), MassMutual Advantage Funds (open-end investment
company); President (since 2021), MML Series Investment Fund (open-end investment company); President (since 2021), MML Series Investment
Fund II (open-end investment company); CEO & President (since 2020) MML Distributors, LLC.
Lead Counsel, Investment
Adviser & Mutual Funds (since 2018), MassMutual; Vice President and Assistant Secretary (since 2017), MassMutual Select Funds (open-end
investment company); Vice President and Assistant Secretary (since 2017), MassMutual Premier Funds (open-end investment company); Vice
President and Assistant Secretary (since 2021), MassMutual Advantage Funds (open-end investment company); Vice President and Assistant
Secretary (since 2017), MML Series Investment Fund (open-end investment company); Vice President and Assistant Secretary (since 2017),
MML Series Investment Fund II (open-end investment company); Vice President and Assistant Secretary (2021-2022), MassMutual AccessSM
Pine Point Fund (closed-end investment company).
SEAN NEWTH, Director (since 2021)
Corporate Controller (since 2017), MassMutual; Director (since 2021),
MML Investor Services, LLC; Director (since 2021), MML Strategic Distributors, LLC; Director (since 2020), MassMutual Asset Finance, LLC;
Senior Vice President (since 2019), MM Asset Management Holding LLC; Senior Vice President and Controller (since 2018), MassMutual Holding
LLC; Senior Vice President and Controller (since 2018), MassMutual Holding MSC, Inc.; Senior Vice President and Controller (since 2018),
MassMutual International Holding MSC, Inc.; Vice President and Controller (since 2018), MassMutual MCAM Insurance Company, Inc.; Director
(since 2018), The MassMutual Trust Company; Senior Vice President and Controller (since 2017), C.M. Life Insurance Company; Senior Vice
President and Controller (since 2017), MML Bay State Life Insurance Company.
FRANK RISPOLI, Chief
Financial Officer and Treasurer (since 2022)
Head of Broker-Dealer
Finance (since 2022), MassMutual; Chief Financial Officer and Treasurer (since 2022), MML Investors Services, LLC; Chief Financial Officer
and Treasurer (since 2022), MML Distributors, LLC; Chief Financial Officer and Treasurer (since 2022), MML Strategic Distributors, LLC;
Chief Financial Officer (since 2022), MML Insurance Agency, LLC; Chief Financial Officer (since 2022), Flourish Financial, LLC; Chief
Financial Officer and Comptroller (since 2022), MassMutual Trust Company; Associate Partner (2022) and Director of Finance and Administration
(2020-2021), Centinel Financial Group, LLC.
Treasurer (since 2022),
DPI-ACRES Capital LLC; Treasurer (since 2022), Flourish Holding Company LLC; Treasurer (since 2022), Flourish Insurance Agency LLC; Treasurer,
Corporate-CFO Office (since 2021), MassMutual; Assistant Treasurer (since 2021), MML Distributors, LLC; VP and Treasurer (since 2021),
C.M. Life Insurance Company; VP and Treasurer (since 2021), MML Bay State Life Insurance Company; Treasurer (since 2021), Athens Fund
Management LLC; Treasurer (since 2021), Berkshire Way LLC; Treasurer (since 2021), Blueprint Income LLC; Treasurer (since 2021), EM Opportunities
LLC; Treasurer (since 2021), Fern Street LLC; VP and Treasurer (since 2021), Glidepath Holdings Inc.; VP and Treasurer (since 2021), Haven
Life Insurance Agency, LLC; Treasurer (since 2021), HITPS LLC; Treasurer (since 2021), Insurance Road LLC; Treasurer (since 2021), ITPS
Holding LLC; Treasurer (since 2021), LifeScore Labs, LLC; VP (since 2021), MassMutual Ascend Life Insurance Company; Treasurer (since
2021), MassMutual Assignment Company; Treasurer (since 2021), MassMutual Capital Partners LLC; Treasurer (since 2021), MassMutual External
Benefits Group LLC; Treasurer (since 2021), MassMutual Global Business Services India LLP; Treasurer (since 2021), MassMutual Global Business
Services Romania S.R. L.; VP and Treasurer (since 2021), MassMutual Holding LLC; VP and Treasurer (since 2021), MassMutual Holding MSC,
Inc.; VP and Treasurer (since 2021), MassMutual Intellectual Property LLC; VP and Treasurer (since 2021), MassMutual International Holding
MSC, Inc.; Treasurer (since 2021), MassMutual International LLC; Treasurer (since 2021), MassMutual Mortgage Lending LLC; Treasurer (since
2021), MassMutual Trad Private Equity LLC; Treasurer (since 2021), MassMutual Ventures Holding LLC; Treasurer (since 2021), MassMutual
Ventures Management LLC; Treasurer (since 2021), MassMutual Ventures SEA Management Private Limited; Treasurer (since 2021), MassMutual
Ventures Southeast Asia I LLC; Treasurer (since 2021), MassMutual Ventures Southeast Asia II LLC; Treasurer (since 2022), MassMutual Ventures
Southeast Asia III LLC; Treasurer (since 2021), MassMutual Ventures UK LLC; Treasurer (since 2021), MassMutual Ventures US I LLC; Treasurer
(since 2021), MassMutual Ventures US II LLC; Treasurer (since 2021), MassMutual Ventures US III LLC; Treasurer (since 2021), MassMutual
Ventures US IV LLC; Treasurer (since 2021), MM Asset Management Holding LLC; Treasurer (since 2021), MM Catalyst Fund LLC; Treasurer (since
2021), MM Copper Hill Road; Treasurer (since 2021), MM Direct Private Investments Holding LLC; Treasurer (since 2021), MM Direct Private
Investments UK Limited; Treasurer (since 2021), MM Global Capabilities I LLC; Treasurer (since 2021), MM Global Capabilities II LLC; Treasurer
(since 2021), MM Global Capabilities III LLC; Treasurer (since 2021), MM Global Capabilities (Netherlands) B.V.; VP and Treasurer (since
2021), MM Private Equity Intercontinental LLC; VP and Treasurer (since 2021), MM Rothesay Holdco US LLC; Treasurer (since 2021), MML CM
LLC; Assistant Treasurer (since 2021), MML Management Corporation; Treasurer (since 2022), MMV Digital I LLC; VP and Treasurer (since
2021), Pioneers Gate LLC; VP and Treasurer (since 2021), Sleeper Street LLC; Treasurer (since 2021), Trad Investments I LLC.
DOUGLAS STEELE, Vice
President (since 2017) and Head of Product Management (since 2021)
Head of Manager Research
(2021), Head of Investment Management (2017-2021), MML Advisers; Head of Product Management (since 2021), Head of Manager Research (2021),
Head of Investment Management (2017-2021), MassMutual; Vice President (since 2016), MassMutual Select Funds (open-end investment company);
Vice President (since 2016), MassMutual Premier Funds (open-end investment company); Vice President (since 2021), MassMutual Advantage
Funds (open-end investment company); Vice President (since 2016), MML Series Investment Fund (open-end investment company); Vice President
(since 2016), MML Series Investment Fund II (open-end investment company).
PHILIP S. WELLMAN, Vice President and Chief Compliance Officer (since
2013)
Head of Mutual Funds
& RIA Compliance (since 2018), MassMutual; Vice President and Chief Compliance Officer (since 2007), MassMutual Select Funds (open-end
investment company); Vice President and Chief Compliance Officer (since 2007), MassMutual Premier Funds (open-end investment company);
Vice President and Chief Compliance Officer (since 2021), MassMutual Advantage Funds (open-end investment company); Vice President and
Chief Compliance Officer (since 2007), MML Series Investment Fund (open-end investment company); Vice President and Chief Compliance Officer
(since 2007), MML Series Investment Fund II (open-end investment company); Vice President and Chief Compliance Officer (2021-2022), MassMutual
AccessSM Pine Point Fund (closed-end investment company).
C:
C:
b. The Investment Subadviser
BARINGS LLC (“BARINGS”)
Barings is the subadviser to certain series of the Trust. The members
of the Board of Managers and the Senior Management team of Barings, their positions with Barings, and their other principal business affiliations
and business experience for the past two years are listed below. The addresses of the offices of Barings, and unless otherwise stated,
each Manager and member of the Senior Management Team, is 300 South Tryon Street, Charlotte, North Carolina28202.
Board of Managers
Susan M. Cicco, Member of the Board of Managers
Ms. Cicco is Head of Human Resources (since January 2017) &
Employee Experience of MassMutual. Previously, Ms. Cicco held the position of Chief of Staff to the Chief Executive Officer from
July 2012 to January 2017. Ms. Cicco joined the Company in 1993.
M. Timothy
Corbett, Member of the Board of Managers
Mr. Corbett is the Chief Investment Officer of MassMutual. He
joined the Company in July 2011. Previously, Mr. Corbett was the Chief Investment Officer of the State of Connecticut. In that
role, he was the head of the Pension Fund Management Division of the Office of the State Treasurer, directing policy and strategic planning,
and implementation and supervision of the investment programs of the Connecticut Retirement Plans and Trust Funds.
Geoffrey Craddock, Member of the Board of
Managers
Mr. Craddock joined MassMutual in October 2017 as the Chief
Risk Officer. Previously, he was the leader of risk management and asset allocation at MassMutual’s subsidiary, OppenheimerFunds, Inc.
(“OFI”), having joined OFI in 2008. Prior to OFI, he oversaw global market risk management at the Canadian Imperial Bank
of Commerce.
Roger W. Crandall, Member of the Board of Managers
Mr. Crandall is Chairman (since December 2010), President (since
December 2008) and Chief Executive Officer (since January 2010) of Massachusetts Mutual Life Insurance Company in Springfield, Massachusetts.
He has been with MassMutual since 1988 and previously held the titles of Chief Operating Officer and Chief Investment Officer. Mr. Crandall
joined the Board in 2008 and presently serves as a member of the Investment and Technology & Governance Committees and is the Chair
of the Executive Committee. He is a member of the Board of Directors of the Business Roundtable, the Federal Reserve Bank of Boston and
the Financial Services Roundtable, and also serves on the Smithsonian National Board, American Council of Life Insurers Executive Committee,
the Massachusetts Competitive Partnership, the Wharton Board of Leadership Advisors, the University of Vermont Foundation Leadership Council
and the Lahey Hospital & Medical Center Board of Trustees.
Michael Freno,
Chairman, Member of the Board of Managers, and Chief Executive Officer
Mr. Freno is Chairman
and CEO of Barings LLC, a $387+ billion global financial services firm with offices across the U.S., Europe, Australia and Asia. He is
also Chair of the Barings Board of Directors and a member of the MassMutual Executive Leadership Team. His experience canvasses two decades
on the buy-side, focusing on both equity and debt investments. Previously, he was President overseeing Barings’ investments, sales,
operations and technology and Chairman of the Board of Barings BDC, Inc., (NYSE: BBDC), an external business development company managed
by Barings. Mr. Freno holds a B.A. from Furman University and an M.B.A. from Wake Forest University.
C:
Sears Merritt, Member of the Board of Managers
Mr. Merritt is the Head of Data, Strategy & Architecture
– Enterprise Technology & Experience of MassMutual. He joined the company in 2013 and is responsible for leading the technology
strategy, enterprise architecture, and data science functions throughout the organization. Mr. Merritt also leads LifeScore Labs,
a wholly owned insurtech subsidiary focused on mortality risk.
Michael O’Connor, Member of the Board
of Managers
Mr. O’Connor is the General Counsel of MassMutual, a
role he assumed in February 2017. He joined the Company in 2005 as a member of the Law department and in 2008, assumed responsibility
for the Corporate Law and Government Relations team. Following that role, he led the Company’s corporate development function,
served as President of MassMutual International, LLC, and was the prior Chief of Staff to the Chief Executive Officer.
Elizabeth A. Ward, Member of the Board of
Managers
Ms. Ward has been the Company’s Chief Financial Officer
since June 2016. She also held the roles of Chief Actuary from May 2016 through October 20, 2019, and Chief Enterprise
Risk Officer from 2007, when she joined the Company, through May 2016. Previously, Ms. Ward was a Managing Director in Babson
Capital Management LLC’s Quantitative Management Group.
Senior Management
Michael Freno, Chairman, Member of the Board
of Managers and Chief Executive Officer
See above.
Steve Boehm, Chief Operating Officer
Steve Boehm is Barings’
Chief Operating Officer and a member of Barings’ Senior Leadership Team. He leads Barings’ data, technology and operations
teams, focused on end-to-end customer experience and growth. Mr. Boehm has more than two decades of experience in technology-driven businesses,
financial services, global operations, digital payments and merger integration. Prior to joining the firm in 2020, Mr. Boehm was a Senior
Vice President and Chief Operating Officer at AvidXchange, where he led the company’s transformation through a period of hypergrowth
and customer experience redesign. Previously, Mr. Boehm served for six years as Senior Vice President, Global Customer Experience at eBay.
Earlier in his career, he was Senior Vice President, Global Product Management and Innovation at First Data Corp. and Executive Vice President,
Merger Integration for the Wells Fargo/Wachovia merger. He held other senior leadership roles at Wachovia and at Visa. Mr. Boehm holds
a B.B.A. from James Madison University and an M.B.A. from George Mason University.
Chris Cary, Managing Director and Global Treasurer
Chris Cary is a member
of Barings’ Finance Team and the firm’s Global Treasurer responsible for Barings’ financial risk management strategies,
including foreign exchange, interest rate, and credit risk and liability management. Mr. Cary has worked in the industry since 2001. Prior
to joining the firm in 2018, Mr. Cary worked for Regions Bank | Regions Securities, where he sourced and underwrote nonbank credit facilities.
Before that, Mr. Cary worked at S&P Global Ratings, NorOdin Investment Management LP, and at The Coca-Cola Company. He holds an Honorary
Bachelor of Commerce degree in Accounting and Finance from the University of Johannesburg in South Africa and is a Chartered and Certified
Public Accountant.
C:
Christopher DeFrancis, Chief Compliance Officer & Global Head
of Compliance
Christopher DeFrancis
is Barings’ Global Head of Compliance, responsible for overseeing the firm’s global compliance program. Mr. DeFrancis has
worked in the industry since 2001 and his experience has encompassed securities and investment advisory matters, hedge fund and CDO formation,
derivatives trading and private finance transactions. Prior to joining the firm in 2001, he worked for Hill & Barlow, where he concentrated
his practice on commercial and securities litigation. Mr. DeFrancis began his legal career as a law clerk to The Honorable Sandra L. Lynch
on the U.S. Court of Appeals for the First Circuit. He holds a B.A. from Dartmouth College and a J.D. from the University of Pennsylvania.
Sheldon M. Francis, Chief
Administration Officer
Sheldon Francis is
Barings’ Chief Administrative Officer and Chief Legal Officer and a member of Barings’ Senior Leadership Team. He is responsible
for the general legal affairs, compliance, enterprise risk, internal audit, procurement and vendor management, and facilities. He is also
the Chairman of Barings Europe. Prior to his current role, he served as a Co-General Counsel and lead in-house attorney for Babson Capital
Management’s U.S. Bank Loan, High Yield and Distressed Investments groups. Mr. Francis has more than 22 years of legal experience,
encompassing all aspects of the investment management industry, corporate finance and corporate restructurings. Prior to joining the firm
in 2006, he was a member of Helms Mulliss and Wicker (n/k/a McGuire Woods), and began his legal career as an associate at Bass, Berry
and Sims PLC. Mr. Francis is a member of the Charlotte Sports Foundation, a 501c(3) dedicated to providing leadership for sports-based
initiatives that result in a positive impact on the economy and quality of life in the Charlotte region. He is also an Executive Sponsor
of the Barings Black Alliance employee resource group. Mr. Francis holds a B.A. from Duke University and a J.D. from the University of
North Carolina at Chapel Hill School of Law.
Patrick Hoefling, Chief Financial Officer
Patrick Hoefling is
Barings’ Chief Financial Officer, providing oversight and direction for all of corporate finance functions, including, treasury,
financial planning and analysis, corporate accounting/tax, public fund accounting, and corporate strategy. Mr. Hoefling is also a member
of Barings’ Senior Leadership Team. Prior to becoming CFO, Mr. Hoefling served as the client portfolio services liaison with MassMutual,
covering their entire portfolio. He also held the title of Corporate Treasurer and Global Head of Financial Planning and Analysis. Those
roles coordinated daily operational, cash and accounting needs for the firm’s investment teams, sales function, and other operational
and support areas. He helped develop Barings Social Impact, which oversees our community involvement and charitable spend. He is a board
member and the Treasurer of Barings’ Social Impact Fund. Prior to joining the firm in 2008, he worked in the Private Client Advisory
Tax Group at Deloitte (then known as Deloitte & Touche) and a Charlotte-based hedge fund. Mr. Hoefling holds a B.S. in Accountancy
from Villanova University and a Master of Accountancy from North Carolina State University.
Eric Lloyd, President
Eric Lloyd is President
of Barings where he leads and manages cross-asset class investment teams, corporate strategy, business development, product management,
investment business management, research analytics and quant, permanent capital, special situations, marketing and communications. He
also works closely with all the investment teams. Prior to his current role, Mr. Lloyd served as Head of Private Assets. Mr. Lloyd is
a member of Barings’ Senior Leadership Team and serves as Chairman of the Board and Chief Executive Officer of Barings BDC, Inc.
(NYSE: BBDC). Mr. Lloyd is an Executive Sponsor of the Out & Allies employee resource group. Mr. Lloyd has worked in the industry
since 1990 and his experience has encompassed leadership positions in investment management, investment banking, leveraged finance and
risk management. Prior to joining Barings in 2013, he served as Head of Market and Institutional Risk for Wells Fargo, was on Wells Fargo’s
Management Committee and was a member of the Board of Directors of Wells Fargo Securities. Before the acquisition of Wachovia, Mr. Lloyd
worked in Wachovia’s Global Markets Investment Banking division and served on the division’s Operating Committee, where
he held various leadership positions, including Head of Wachovia’s Global Leveraged Finance Group. Mr. Lloyd holds a B.S. in Finance
from the University of Virginia, McIntire School of Commerce.
C:
BARING INTERNATIONAL INVESTMENT
LIMITED
(“BIIL”)
The following are the names, principal occupations and addresses of
the principal executive officers and each director of BIIL. The business addresses of the principal officers are 300 South Tryon Street,
Suite 2500 Charlotte, North Carolina28202 and 20 Old Bailey London, EC4M 7BF, United Kingdom.
(a) ALPS
Distributors, Inc., whose principal office is 1290 Broadway, Suite 1000, Denver, CO80203, serves as principal underwriter to MassMutual
Advantage Funds. ALPS Distributors, Inc. also acts as the distributor for the following investment companies: 1WS Credit Income Fund,
1290 Funds, abrdn ETFs, Alpha Alternative Assets Fund, ALPS Series Trust, Alternative Credit Income Fund, Apollo Diversified Credit Fund
(fka Griffin Institutional Access Credit Fund), Apollo Diversified Real Estate Fund (fka Griffin Institutional Access Real Estate Fund),
The Arbitrage Funds, AQR Funds, Axonic Alternative Income Fund, Axonic Funds, BBH Trust, Bluerock High Income Institutional Credit Fund,
Bluerock Total Income+ Real Estate Fund, Brandes Investment Trust, Bridge Builder Trust, Broadstone Real Estate Access Fund, Cambria ETF
Trust, Centre Funds, CIM Real Assets & Credit Fund, CION Ares Diversified Credit Fund, Columbia ETF Trust, Columbia ETF Trust I, Columbia
ETF Trust II, CRM Mutual Fund Trust, DBX ETF Trust, Emerge ETF Trust, ETF Series Solutions, Flat Rock Core Income Fund, Flat Rock Opportunity
Fund, Financial Investors Trust, Firsthand Funds, FS Credit Income Fund, FS Energy Total Return Fund, FS Series Trust, FS Multi-Alternative
Income Fund, Goehring & Rozencwajg Investment Funds, Goldman Sachs ETF Trust, Graniteshares ETF Trust, Hartford Funds Exchange-Traded
Trust, Hartford Funds NextShares Trust, Heartland Group, Inc., IndexIQ Active ETF Trust, IndexIQ ETF Trust, Investment Managers Series
Trust II (AXS-Advised Funds), Janus Detroit Street Trust, Lattice Strategies Trust, Litman Gregory Funds Trust, Longleaf Partners Funds
Trust, Manager Directed Portfolios (Spyglass Growth Fund), MassMutual High Yield Fund, MassMutual Short-Duration Bond Fund, Meridian Fund,
Inc., MVP Private Markets Fund, Natixis ETF Trust, Natixis ETF Trust II, Opportunistic Credit Interval Fund, PRIMECAP Odyssey Funds, Principal
Exchange-Traded Funds, Reality Shares ETF Trust, RiverNorth Funds, RiverNorth Opportunities Fund, Inc., RiverNorth/DoubleLine Strategic
Opportunity Fund, Inc., SPDR Dow Jones Industrial Average ETF Trust, SPDR S&P 500 ETF Trust, SPDR S&P MidCap 400 ETF Trust, Sprott
Funds Trust, Stone Harbor Investment Funds, Stone Ridge Trust, Stone Ridge Trust II, Stone Ridge Trust III, Stone Ridge Trust IV, Stone
Ridge Trust V, Stone Ridge Trust VI, Stone Ridge Residential Real Estate Income Fund I, Inc., Thrivent ETF Trust, USCF ETF Trust, Valkyrie
ETF Trust II, Wasatch Funds, WesMark Funds, Wilmington Funds, XAI Octagon Credit Trust, X-Square Balanced Fund X-Square Series Trust,
and YieldStreet Prism Fund.
(b) The
following are the names and positions of the officers and directors of ALPS Distributors, Inc.:
Stephen J. Kyllo, President,
Chief Operating Officer, Director, Chief Compliance Officer, ALPS Distributors, Inc.:
Patrick J. Pedonti*,
Vice President, Treasurer and Assistant Secretary, ALPS Distributors, Inc.
Eric Parsons, Vice President,
Controller and Assistant Treasurer, ALPS Distributors, Inc.
Jason White**, Secretary,
ALPS Distributors, Inc.
Richard C. Noyes, Senior
Vice President, General Counsel, Assistant Secretary, ALPS Distributors, Inc.
Liza Orr, Vice President,
Senior Counsel, ALPS Distributors, Inc.
Jed Stahl, Vice President,
Senior Counsel, ALPS Distributors, Inc.
Terence Digan, Vice
President, ALPS Distributors, Inc.
James Stegall, Vice
President, ALPS Distributors, Inc.
Gary Ross, Senior Vice
President, ALPS Distributors, Inc.
Hilary Quinn, Vice President,
ALPS Distributors, Inc.
Except as otherwise
noted, the principal business address for the officers and directors of ALPS Distributors, Inc. is 1290 Broadway, Suite 1000, Denver,
CO80203.
*
The principal business address for Mr. Pedonti is 333 W. 11th
Street, 5th Floor, Kansas City, MO64105.
**
The principal business address for Mr. White is 4 Times Square,
New York, NY10036.
(c) Not Applicable.
C:
ITEM 33.
LOCATION OF ACCOUNTS AND RECORDS
Each account, book, or other document required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are maintained as follows:
There are no management-related service contracts not discussed in
Part A or Part B.
ITEM 35.
UNDERTAKINGS
Not applicable.
C:
NOTICE
A copy of the Agreement and Declaration of Trust of the Trust, as may
be amended from time to time, is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trust by an officer of the Trust as an officer and not individually and the obligations of or
arising out of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets
and property of the relevant series of the Trust.
C:
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933, and the Registrant has duly caused this Post-Effective Amendment No. 2 to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Springfield and the Commonwealth of Massachusetts as of the 31st day of January,
2023.
MASSMUTUAL ADVANTAGE FUNDS
By:
/s/
PAUL LAPIANA
Paul LaPiana
President
Pursuant to the requirements
of the Securities Act of 1933, as amended, this Post-Effective Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities as indicated as of the 31st day of January 2023.