MassMutual Guaranteed Interest Account Product Features

1

The MassMutual Guaranteed Interest Account (or “GIA”) is a stable value investment with a guaranteed rate of return and a guarantee of principal that is backed by the Massachusetts Mutual Life Insurance Company (“MassMutual”) general investment account. The GIA is provided through a group annuity contract issued by MassMutual to a retirement plan. Under the contract, a crediting rate is established for a six-month period of time (a “rate period”) and all assets invested in the GIA are credited with that rate. At the expiration of each rate period, a new crediting rate is declared. MassMutual assumes market, credit, and interest rate risks for the assets supporting the GIA. The GIA offers participants these stable value features: • Guarantee of principal • Guaranteed credited rate that is set in advance for six-month period • Guarantee of principal and crediting rate are backed by the financial strength of MassMutual • Safeguard against potential adverse market volatility • Investment management expertise of MassMutual • Full liquidity at book value for participant-directed benefit payments and transfers to non-competing investments2

Investor Profiles The GIA may be suitable for a variety of investor types, including the following: • Pre-retirees who are interested in protecting their assets in case

This information is provided for financial intermediary and plan sponsor use. It is not intended for distribution to participants.

of a market downturn • Risk-averse investors of any age who desire a stable value investment with a stated rate of return • Investors with various risk tolerances and an asset alloca­­tion strategy that includes a guaranteed rate component

(Continued)

Retirement Strategies

Determination of the Guaranteed Rate

transfers to competing fixed income investments are not

MassMutual re-sets GIA guaranteed rates semiannually, taking

allowed. Employer-initiated events such as layoffs, a sale of

into consideration a number of factors, including the following:

a business unit, a company merger, or a change in the stable

• Investment Year Method (IYM) experience of the contract or pool. For each contract (if individually rated) or pool (if not individually rated), MassMutual tracks the cash flow into and out of the GIA during the calendar year and the investment results for the overall GIA segment of the MassMutual general investment account for that “investment year.” • Projected levels of cash flows within the current interest rate environment. MassMutual estimates the impact of current interest rates on future cash flows using historical data and potential adjustments in asset levels. • Projected maturity of the underlying investments. By investing in a range of maturities, MassMutual is able to provide a more gradual change in credited rates. This provides some protection against a negative impact from changing interest rates. Generally speaking, the GIA crediting rates will typically show

value option offered under a plan are considered market value events and are subject to the plan sponsor liquidity provisions discussed below.

Plan Sponsor Liquidity Upon full or partial contract or plan termination and certain other sponsor-initiated events, distributions from the GIA may be subject to a liquidation value (market value) adjustment pursuant to a formula specified in the contract. The market value formula may produce a value that is more or less than the book value of the plan’s investment in the GIA. For 403(b) plans with the GIA: If the market value of a plan’s investment in the GIA is greater than the book value, the market value may be paid in one sum according to contract provisions. If the market value of a plan’s investment in the GIA is less than the book value, the book value of GIA assets will be liquidated in annual installment payments. While this is required for 403(b) plans, other plan sponsors have the choice to elect this installment payment method.

less volatility than current market rates. In a rising interest rate

Management Team

environment, credited rates will lag market rates because much

Most of the assets in MassMutual’s general investment

of the contract’s or pool’s assets are backed by investments

account, including those backing the Guaranteed Interest

made in prior years with earnings that reflect the lower rates

Account, are managed by Babson Capital Management LLC

that prevailed in those years. Over time, as new contributions

(“Babson Capital”), a subsidiary of MassMutual. Babson

are made and investments mature and are reinvested at current

Capital’s investment professionals specialize in various fixed

interest rates, rates could be expected to move toward market

income sectors, including Treasuries, agencies, public bonds,

levels. Conversely, as market rates decrease, the GIA crediting

private placements, bank loans, commercial mortgage loans,

rates would also be expected to fall, but generally more slowly

mortgage-backed securities, and other types of debt. Sector

than market rates.

managers discuss the relative attractiveness of different areas

Participant Liquidity

of the market on an ongoing basis to decide where to deploy new cash and how to manage current holdings. Analysts

All bona fide participant-initiated withdrawals from the GIA,

within each sector perform bottom-up analyses of potential

including benefit payments at termination or retirement, loans

investments and choose those with the best risk/reward

and transfers to other non-competing investment options, are

tradeoffs from the available alternatives.

paid at book value. Similar to other stable value alternatives,

Babson Capital structures portfolios with reference to their associated liabilities, so product specifications and obligations

GIA Performance

to clients can be met with a high degree of certainty, even in

The table below illustrates sample rates of return of the GIA

very unusual market conditions. Investment risk management

versus a blended benchmark index and 91-day U.S. Treasury

is a high priority. Strict diversification among industries and

bills, which have a high degree of safety and liquidity. Past

individual issuers helps mitigate credit risk. Babson Capital

performance does not guarantee future results.

utilizes various quantitative tools and systems to manage interest rate risk and liquidity risk.

Portfolio

Sample Performance as of December 31, 2014

The discussion below is focused on the MassMutual General Investment Account portfolio that backs the GIA contract.

Year

GIA Crediting Rate4

Blended 91-Day U.S. Benchmark Treasury Index5 Bills5

1999

5.37%

3.90%

4.74%

Underlying Investments: MassMutual believes that broad

2000

6.61%

6.97%

5.96%

diversification across asset classes, sectors, and individual

2001

5.96%

6.18%

4.09%

issuers is key to successful management and an important

2002

5.46%

3.72%

1.70%

safeguard against many investment risks. We believe that

2003

4.97%

1.49%

1.07%

diversification adds both strength and safety to the portfolio.

2004

4.93%

1.08%

1.24%

Among the asset types included in the GIA portfolio are:

2005

4.54%

2.33%

3.00%

2006

4.71%

4.36%

4.76%

• Long-term bonds

2007

4.38%

6.02%

4.74%

• Mortgage loans

2008

4.19%

4.18%

1.80%

• Short-term investments and cash

2009

3.63%

0.48%

0.13%

• Small positions of common stock, partnership

2010

3.36%

1.23%

0.13%

2011

3.85%

0.81%

0.08%

Duration: The duration of the general account assets

2012

3.45%

0.25%

0.06%

supporting the GIA varies over time and is managed

2013

3.38%

0.20%

0.05%

investment risk.

1 Year Average Return

1.70%

0.32%

0.03%

Credit Quality: The fixed income securities in MassMutual’s

3 Year Average Annual Return

1.57%

0.26%

0.05%

5 Year Average Annual Return

2.81%

0.56%

0.07%

10 Year Average Annual Return

2.89%

2.00%

1.46%

arrangements, and real estate.

with the objective of meeting liabilities and limiting

general investment account have historically been managed to ensure investment-grade quality. Credit Quality of MassMutual: As mentioned above MassMutual stands behind all GIA guarantees. MassMutual is proud to say that our financial strength ratings are among the highest in our industry.3

About MassMutual MassMutual’s Retirement Services Division has been

company headquartered in Springfield, Mass. MassMutual’s

serving retirement plans for more than 65 years. It offers

major affiliates include: OppenheimerFunds, Inc.; Babson

a full range of products and services for corporate, union,

Capital Management LLC; Baring Asset Management

nonprofit and governmental employers’ defined benefit,

Limited; Cornerstone Real Estate Advisers LLC; The First

defined contribution and nonqualified deferred compensation

Mercantile Trust Company; MML Investors Services,

plans. It serves approximately 3 million participants.

LLC, member FINRA and SIPC (www.finra.org and

Founded in 1851, MassMutual is a mutually owned financial protection, accumulation and income management

www.sipc.org); MassMutual International LLC and The MassMutual Trust Company, fsb.

The product features discussed here describe MassMutual’s current GIA product offering backed by the Massachusetts Mutual Life Insurance Company (MassMutual) general investment account. Although much of the material presented here is applicable to earlier contracts, some details may not apply for contracts issued prior to 2004. The focus in this piece is also on the GIA within defined contribution plans; some statements may not apply to defined benefit plans. Plans may also refer to this investment option as Guaranteed Fund, Fixed Interest Account, Experience Account, Active Life Fund, or some other variation of these names. 2 Competing investments are subject to asset transfer restrictions with regard to other investments in a retirement plan. Competing investments for the GIA include certain fixed-income investments and self-directed brokerage accounts. 3 Ratings are for Massachusetts Mutual Life Insurance Company and do not apply to any separate investment accounts or mutual funds offered by MassMutual or its affiliates. For current ratings, please visit www.massmutual.com/ratings. 4 This investment is only available through a MassMutual group annuity contract (the “Contract”). Actual historical crediting rates may vary from those shown due to fees and expenses associated with individually rated Contracts. These rates are based on an initial lump-sum deposit made on January 1, 1999 (for years 1999-2014); and at the beginning of the indicated periods (for 1-, 3-, 5-, and 10-year returns). Past performance does not guarantee future results. Performance is based on the book value account; a higher or lower return might have been realized had the contract been discontinued by the plan sponsor and, consequently, the market value adjustment would be applied to the book value upon distribution. 5 Source Morningstar® Direct and Zephyr Style ADVISOR – Indexes are unmanaged, do not incur expenses, and cannot be purchased directly. 91-Day U.S. Treasury bills are a measure of short-term investments representing the average yield of three-month U.S. Treasury bills. Blended Benchmark Index comprises 50% Citigroup 3-month Treasury bill and 50% Merrill Lynch 1–3 year Treasury note. 1

© 2015 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001. All rights reserved. www.massmutual.com. MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) [of which Retirement Services is a division] and its affiliated companies and sales representatives. RS4193 315

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