2002 Annual Report
MASSMUTUAL
CORPORATE INVESTORS
------------------------------------------
[BACKGROUND PHOTO]
GROWTH STRENGTH DIVERSITY [LOGO]
[BACKGROUND PHOTO]
MassMutual Corporate Investors
is a closed-end investment company,
first offered to the public over
30 years ago and is listed on the
New York Stock Exchange.
MASSMUTUAL ADVISER
CORPORATE INVESTORS David L. Babson & Company Inc.,
1500 Main Street, Suite 1100 a member of the MassMutual
Springfield, MA 01115 Financial Group
(413) 226-1516 1500 Main Street
www.massmutual.com/mci Springfield, MA 01115
AUDITOR TRANSFER AGENT & REGISTRAR
Deloitte & Touche LLP Shareholder Financial Services, Inc.
New York, NY 10281 P.O. Box 173673
Denver, CO 80217
CUSTODIAN 1-800-647-7374
Citibank, N.A.
New York, NY 10043
MCI
Listed
NYSE
MASSMUTUAL CORPORATE INVESTORS
INVESTMENT OBJECTIVE AND POLICY
------------------------------------------
MassMutual Corporate Investors (the "Trust"), a non-diversified closed-end
investment company, was offered to the public in September 1971 and its shares
are listed on the New York Stock Exchange. The share price of Corporate
Investors can be found in the financial section of most newspapers as "MassCp"
or "MassMuInv" under the New York Stock Exchange listings. The Trust's New York
Stock Exchange trading symbol is "MCI".
The Trust's investment objective is to maintain a portfolio of securities
providing a fixed yield and at the same time offering an opportunity for capital
gains. The Trust's principal investments are privately placed, below-investment
grade, long-term corporate debt obligations with equity features such as
warrants, conversion rights, or other equity features and, occasionally,
preferred stocks. The Trust typically purchases these investments, which are not
publicly tradable, directly from their issuers, which tend to be smaller
companies. In addition, the Trust may temporarily invest, subject to certain
limitations, in marketable investment grade debt securities, other marketable
debt securities (including high yield securities) and marketable common stocks.
David L. Babson & Company Inc. manages the Trust on a total return basis. The
Trust distributes substantially all of its net income to shareholders each year.
Accordingly, the Trust pays dividends to shareholders quarterly in January, May,
August, and November. The Trust pays dividends to its shareholders in cash,
unless the shareholder elects to participate in the Dividend Reinvestment and
Share Purchase Plan.
In this report you will find a complete listing of the Trust's holdings. We
encourage you to read this section carefully for a better understanding of the
Trust. We cordially invite all shareholders to attend the MassMutual Corporate
Investors Annual Meeting of Shareholders, which will be held on April 11, 2003
at 2:00 P.M. in Springfield, Massachusetts.
[PHOTO]
-1-
[PHOTO OF CHAIRMAN LEFT TO RIGHT:
AND PRERSIDENT] Robert E. Joyal, CFA President
Stuart H. Reese, CFA Chairman
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Accumulated value of $100 reinvested in MassMutual
Corporate Investors vs. the average of stocks and bonds
[LINE CHART APPEARS HERE]
Hypothetical value of $100 invested 01/01/77
01/77 1980 1984 1998 1992 1996 2000 2002
MassMutual Corporate Investors(1)
S&P Industrial Index(2)
50% S&P Industrial Index and
50% Lehman Brothers Government/
Credit Bond Index
Lehman Brothers Government/
Credit Bond Index(3)
1 The Trust's return reflects change in the net asset value per share assuming
reinvestment of all distributions. Past performance is no indicator of future
results.
2 The S&P Industrial Index is a capitalization-weighted index of stocks designed
to measure the performance of the industrial sector of the Standard and Poor's
500 Index(R) (the S&P 500 Index(R) minus financials, utilities and
transportation stocks). The index does not incur expenses and cannot be
purchased directly by investors.
3 The Lehman Brothers Government/Credit Bond Index (formerly Lehman Brothers
Government/Corporate Bond Index) is an unmanaged measure of major U.S.
Government and investment grade corporate bonds with more than one year
remaining until the scheduled payment of principal. The index does not incur
expenses and cannot be purchased directly by investors.
-2-
MASSMUTUAL CORPORATE INVESTORS
TO OUR SHAREHOLDERS
------------------------------------------
I am pleased to share with you MassMutual Corporate Investors' (the "Trust")
Annual Report covering the year ended December 31, 2002. This past year was,
once again, a challenging one at all levels. The economy was soft, as corporate
and accounting scandals ran rampant, unemployment rose and concerns about
additional terrorism or possible war in the Middle East affected the market's
performance. Investor confidence was down, as the S&P 500 declined for the third
year in a row and the fixed income market suffered a large number of defaults
and a record number of credit downgrades. Interest rates were the lowest we had
seen in nearly 40 years. These challenging factors added up to create seemingly
endless volatility and a most difficult environment for the small to mid-sized
companies in which the Trust traditionally invests.
The year closed with the S&P 500 Index down 22.10%, the NASDAQ down 31.13% and
the Dow Jones Industrial Average down 14.98% for the year. On a positive note,
inflation continued to be low, as did interest rates. The low rates helped the
Lehman Brothers Government/Credit Bond Index achieve an increase of 11.04% for
the year.
The economy continued to affect Initial Public Offering (IPO) activity
throughout 2002, as it did in 2001. IPO volume numbered just 83 deals,* a
two-decade low, due to skepticism that new offerings would generate strong
earnings in such a difficult market. The third quarter in particular experienced
little action, with only seven companies brought to the public market, the
lowest number of new offerings in a quarter in twenty-two years.
The first half of the year was also quiet for leveraged buyouts. However,
because valuations were low, the buyout market sat ready for an increase in
activity. We started to see this increase during the fourth quarter and we
expect that increased deal flow will continue into 2003.
*Source: The Wall Street Journal, January 2, 2003.
The Trust ended the year with an annual total rate of return of 4.80%, as
measured by the change in the net asset value with reinvested dividends. These
results compare favorably to the average of the S&P 500 Index at negative 22.10%
and the Lehman Brothers Government/Credit Bond Index at a positive 11.04%.
-3-
[PHOTO] LEFT TO RIGHT:
Clifford M. Noreen, Vice President,
Roger W. Crandall, CFA, Vice President,
Stephen L. Kuhn, Vice President and Secretary,
Charles C. McCobb, CFA,
Vice President and Chief Financial Officer
--------------------------------------------------------------------------------
Although 2002 was a particularly difficult year, it was not unlike the early
1990's, when we saw a major downturn followed by a decade of growth in the
economy and the Trust. Our experience through other challenging times shows us
the way - and brings home to us the fundamental beliefs with which we manage the
Trust on a daily basis. We believe in dealing with ethical, professional people
who are committed to success. We believe in investing in companies with a strong
business proposition, good cash flow and talented, experienced management and we
believe in diversifying our investments over a wide range of industries and
issuers. These beliefs and our goals for the Trust do not change with the
economic environment, but enable us to select the best investments available in
order to take advantage of future market potential. We believe the current
market presents an excellent opportunity for us to build the strength of the
Trust, and position it for continued success in the future.
The Trust ended the year with an annual total rate of return of 4.80%, as
measured by the change in the net asset value with reinvested dividends. These
results compare favorably to the average of the S&P 500 Index at negative 22.10%
and the Lehman Brothers Government/Credit Bond Index at a positive 11.04%. The
Trust's total net assets as of the end of 2002 were $171,028,431. Although the
Trust continued to report good relative performance, the Board of Trustees did
find it necessary to reduce the quarterly dividend to 36 cents per share to
bring it more in line with the current earnings level of the portfolio. The net
asset value per share of the Trust decreased slightly in 2002 to $19.40 from
$20.07 at December 31, 2001.
Total Annual Return (as of 12/31 each year)
[BAR CHART APPEARS HERE]
MassMutual Corporate 17.12 7.53 7.28 5.91 4.80
Investors (Based on change
in the net asset value with
reinvested dividends)
S&P Industrial Index 33.77 25.89 -16.26 -11.67 -23.51
Lehman Brothers Government/ 9.46 -2.15 11.84 8.50 11.04
Credit Bond Index*
1998 1999 2000 2001 2002
*Formerly Lehman Brothers Government/Corporate Bond Index
-4-
MASSMUTUAL CORPORATE INVESTORS
Officers of the Trust (LEFT TO RIGHT): [PHOTO]
Richard C. Morrison, Michael P. Hermsen, CFA,
Michael L. Klofas, CFA, Richard E. Spencer, II, CFA
--------------------------------------------------------------------------------
Overall, the Trust closed 12 private placement transactions in 2002, including
10 new investments: Ames True Temper, Beacon Medical Products, C&M Conveyor,
Eagle Window & Door Holdings, Mustang Ventures Company, Nyloncraft, Inc., PHI
Holding, Sabex 2002, Selig Acquisition and Shelter Acquisition and 2 additions:
Moss, Inc. and Tidewater Holdings to current positions.
Below are some of the descriptions of the new holdings in the portfolio:
BEACON MEDICAL PRODUCTS, a designer, manufacturer and marketer of medical air
and gas distribution systems.
C&M CONVEYOR, INC., a manufacturer and supplier of material handling systems to
the corrugated sheet and container industry.
EAGLE WINDOW & Door Holdings Co., a manufacturer of wood and aluminum-clad wood
windows and doors.
NYLONCRAFT, INC., a supplier of engineered plastic components for the automotive
industry.
SELIG ACQUISITION CORPORATION, a manufacturer of container sealing materials for
bottles used in consumer products.
You will find details of all the Trust's holdings in the Consolidated Schedule
of Investments.
Although we see signs that the economy is improving, we do not believe that a
dramatic change will take place over the next twelve months. In the meantime,
the Trust will continue to look at the current economic environment as an
opportune time to invest.
-5-
MASSMUTUAL CORPORATE INVESTORS
THE OUTLOOK FOR 2003
------------------------------------------
Although we see signs that the economy is improving, we do not believe that a
dramatic change will take place over the next twelve months. In the meantime,
the Trust will continue to look at the current economic environment as an
opportune time to invest. Prices are attractive and leverage is lower leading to
issuers having more conservative capital structures. By following our
fundamental beliefs and continuing our disciplined approach to investing, we
believe that the Trust is well-positioned to take advantage of a future upturn
in the economy.
Sincerely,
/s/ Robert Joyal
Robert Joyal
President
Tax Information
2002 Record Net Investment Short-Term Tax
Dividends Date Income Gains Effect
------------------------------------------------------------------------------
Regular 5/03/02 0.2876 0.1824
8/01/02 0.4300 -
10/31/02 0.3600 -
12/31/02 0.3600 -
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Total Dividends 1.4376 0.1824 $1.62
The Trust did not have net long-term capital gains in 2002.
Qualified for Dividend Interest Earned on
Annual Dividend Received Deduction* Gov't. Obligations
Amount per Share Percent Amount per Share Percent Amount per Share
------------------------------------------------------------------------------
$1.62 3.70395% 0.060004 0.00% 0.0000
*Not available to individual shareholders
-6-
FINANCIAL REPORT
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Consolidated Statements of Assets and Liabilities 8
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Consolidated Statements of Operations 9
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Consolidated Statements of Cash Flows 10
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Consolidated Statements of Changes in Net Assets 11
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Consolidated Selected Financial Highlights 12
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Consolidated Schedule of Investments 13-32
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Notes to Consolidated Financial Statements 33-35
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Interested Trustees 36
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Independent Trustees 37
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Officers of the Trust 38-39
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Independent Auditors' Report 40
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MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2002 AND 2001
2002 2001
ASSETS:
Investments
(See Consolidated Schedule of Investments)
Corporate restricted securities at fair value
(Cost 2002 - $195,404,009; 2001 - $197,075,841) $ 162,254,000 $ 165,049,591
Corporate public securities at market value
(Cost 2002 - $21,510,992; 2001 - $21,113,626) 16,437,003 17,867,779
Short-term securities at cost plus earned discount which
approximates market value 10,820,751 10,543,243
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189,511,754 193,460,613
Cash 1,051,378 2,279,910
Interest and dividends receivable, net 3,318,383 4,197,482
Receivable for investments sold 1,255,569 233,314
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TOTAL ASSETS $ 195,137,084 $ 200,171,319
===================================================================================================================
LIABILITIES:
Dividend payable $ 3,173,891 $ 4,100,864
Management fee payable 643,771 658,419
Note payable 20,000,000 20,000,000
Interest payable 187,711 187,711
Accrued expenses 103,280 101,295
Accounts payable -- 10,483
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TOTAL LIABILITIES 24,108,653 25,058,772
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NET ASSETS:
Common shares, par value $1.00 per share; an unlimited number authorized 8,816,363 8,725,242
Additional paid-in capital 100,717,801 98,991,865
Retained net realized gain on investments, prior years 100,547,585 100,547,585
Undistributed net investment income 1,825,555 863,483
Undistributed net realized (loss) gain on investments (2,654,875) 1,256,469
Net unrealized depreciation of investments (38,223,998) (35,272,097)
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TOTAL NET ASSETS 171,028,431 175,112,547
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TOTAL LIABILITIES AND NET ASSETS $ 195,137,084 $ 200,171,319
===================================================================================================================
COMMON SHARES ISSUED AND OUTSTANDING 8,816,363 8,725,242
===================================================================================================================
NET ASSET VALUE PER SHARE $ 19.40 $ 20.07
===================================================================================================================
See Notes to Consolidated Financial Statements.
-8-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
INVESTMENT INCOME:
Interest $ 17,708,857 $ 19,005,030
Dividends 529,015 484,706
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TOTAL INVESTMENT INCOME 18,237,872 19,489,736
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EXPENSES:
Management fees 2,658,551 2,704,609
Trustees' fees and expenses 111,704 132,122
Transfer agent/registrar's expenses 38,000 36,000
Interest 1,515,500 1,515,397
Reports to shareholders 112,800 105,000
Audit and legal 163,800 80,688
Other 132,785 58,786
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TOTAL EXPENSES 4,733,140 4,632,602
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NET INVESTMENT INCOME (2002 - $1.53 PER SHARE; 2001 - $1.70 PER SHARE) 13,504,732 14,857,134
===============================================================================================================
NET REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS:
Net realized (loss) gain on investments (2,296,178) 2,340,659
Net change in unrealized depreciation of investments (2,951,901) (6,972,666)
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NET LOSS ON INVESTMENTS (5,248,079) (4,632,007)
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 8,256,653 $ 10,225,127
===============================================================================================================
See Notes to Consolidated Financial Statements.
-9-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
NET (DECREASE) INCREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received $ 17,868,331 $ 18,409,290
Interest expense paid (1,515,500) (1,515,397)
Operating expenses paid (3,240,786) (3,410,757)
Federal income tax paid -- (1,160,120)
--------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 13,112,045 12,323,016
--------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Decrease from short-term portfolio securities, net (119,205) (3,257,071)
Purchase of portfolio securities (62,989,467) (47,296,277)
Proceeds from disposition of portfolio securities 62,035,837 60,339,624
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NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES (1,072,835) 9,786,276
--------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES 12,039,210 22,109,292
--------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in receipts for shares issued on reinvestment of dividends 1,885,841 3,097,428
Cash dividends paid from net investment income (13,538,417) (16,379,360)
Cash dividends paid from net realized gain on investments (1,615,166) (7,625,149)
--------------------------------------------------------------------------------------------------------------
NET CASH USED FOR FINANCING ACTIVITIES (13,267,742) (20,907,081)
--------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH (1,228,532) 1,202,211
Cash - beginning of year 2,279,910 1,077,699
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CASH - END OF YEAR $ 1,051,378 $ 2,279,910
==============================================================================================================
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES:
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 8,256,653 $ 10,225,127
--------------------------------------------------------------------------------------------------------------
Decrease in investments 3,948,859 12,651,650
Decrease in interest and dividends receivable, net 879,099 403,881
(Increase) decrease in receivable for investments sold (1,022,255) 1,008,094
Decrease in payable for investments purchased -- (725,788)
(Decrease) increase in management fee payable (14,648) 61,314
Increase (decrease) in accrued expenses 1,985 (11,833)
Decrease in accounts payable (10,483) (343,033)
Decrease in accrued taxes -- (1,160,120)
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TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS 3,782,557 11,884,165
--------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES $ 12,039,210 $ 22,109,292
==============================================================================================================
See Notes to Consolidated Financial Statements.
-10-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 13,504,732 $ 14,857,134
Net realized (loss) gain on investments (2,296,178) 2,340,659
Net change in unrealized depreciation of investments (2,951,901) (6,972,666)
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Net increase in net assets resulting from operations 8,256,653 10,225,127
Net increase in shares of beneficial interest transactions 1,885,841 3,097,428
Dividends to shareholders from:
Net investment income (2002 - $1.44 per share; 2001 - $1.79 per share) (12,611,444) (15,594,798)
Net realized gains on investments (2002 - $.18 per share; 2001 - $.09 per share) (1,615,166) (745,707)
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TOTAL DECREASE IN NET ASSETS (4,084,116) (3,017,950)
NET ASSETS, BEGINNING OF YEAR 175,112,547 178,130,497
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NET ASSETS, END OF YEAR (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME IN 2002 - $1,825,555; 2001 - $863,483) $ 171,028,431 $ 175,112,547
=============================================================================================================================
See Notes to Consolidated Financial Statements.
-11-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH COMMON SHARE OUTSTANDING:
For the years ended December 31,
2002 2001 2000 1999 1998 1997 1996 1995 1994 1993
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Net asset value:
Beginning of year $ 20.07 $ 20.74 $ 22.00 $ 23.87 $ 22.65 $ 20.23 $ 19.80 $ 16.47 $ 17.47 $ 15.38
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Net investment income 1.53 1.70 1.96 1.80 1.62 1.49 1.32 1.32 1.16 1.08
Net realized and
unrealized (loss)
gain on investments (0.59) (0.53) (0.46) (0.94) 1.51 2.87 0.92 3.88 (0.76) 2.41
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Total from investment
operations 0.94 1.17 1.50 0.86 3.13 4.36 2.24 5.20 0.40 3.49
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Dividends from net
investment income to
common shareholders (1.44) (1.79) (1.96) (1.73) (1.60) (1.42) (1.35) (1.32) (1.16) (1.08)
Dividends from net
realized gain on
investments to
common shareholders (0.18) (0.09) (0.80) (1.00) (0.31) (0.52) (0.46) (0.55) (0.24) (0.32)
Change from issuance
of shares 0.01 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.61) (1.84) (2.76) (2.73) (1.91) (1.94) (1.81) (1.87) (1.40) (1.40)
------------------------------------------------------------------------------------------------------------------------------
Net asset value: End
of year $ 19.40 $ 20.07 $ 20.74 $ 22.00 $ 23.87 $ 22.65 $ 20.23 $ 19.80 $ 16.47 $ 17.47
------------------------------------------------------------------------------------------------------------------------------
Per share market
value: End of year $ 19.49 $ 20.70 $ 22.00 $ 21.38 $ 23.31 $ 25.75 $ 19.25 $ 17.88 $ 15.57 $ 14.88
==============================================================================================================================
Total investment return
Market value 1.35% 1.88% 17.55% 7.35% 0.77% 52.43% 22.44% 29.19% 14.03% 24.84%
Net asset value 4.80% 5.91% 7.28% 7.53% 17.12% 27.14% 15.42% 33.76% 2.36% 23.41%
Net assets (in millions):
End of year $171.03 $175.11 $178.13 $188.96 $205.02 $192.86 $172.27 $168.56 $140.20 $148.70
Ratio of operating expenses
to average net assets 1.82% 1.72% 1.47% 1.30% 1.62% 1.69% 1.70% 1.78% 1.76% 1.63%
Ratio of interest expense
to average net assets 0.86% 0.84% 0.58% 0.52% 0.52% 0.56% 0.61% 0.67% 0.72% 1.30%
Ratio of total expenses
to average net assets 2.68% 2.56% 2.05% 1.82% 2.14% 2.25% 2.31% 2.45% 2.48% 2.93%
Ratio of net investment
income to average net
assets 7.65% 8.20% 8.56% 7.63% 6.76% 6.66% 6.44% 7.09% 6.75% 6.61%
Portfolio turnover 34.02% 24.48% 59.75% 68.04% 60.14% 66.23% 64.89% 66.90% 46.68% 76.01%
All per share amounts have been restated after giving effect to the two-for-one
split on the Trust's common shares authorized on December 19, 1997 effective
January 20, 1998.
See Notes to Consolidated Financial Statements.
-12-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES - 94.87%:(A) or Principal Amount Date Cost Fair Value
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PRIVATE PLACEMENT INVESTMENTS - 91.96%
ADORN, INC
A manufacturer of wall panels, cabinets, moldings and countertops for houses and recreational vehicles.
12.5% Subordinated Note due 2010 $ 2,125,000 2/29/00 $ 1,873,865 $ 2,188,750
Warrant, exercisable until 2010, to purchase
common stock at $.02 per share (B) 364 shs. 2/29/00 307,759 31,275
---------------------------------------------------------------------------------------------------------------------------------
2,181,624 2,220,025
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ADVENTURE ENTERTAINMENT CORPORATION
An owner and operator of themed family entertainment centers
19% Senior Subordinated Note due 2004 (B) $ 207,048 12/9/99 207,048 20,705
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ALPHA SHIRT COMPANY
A domestic distributor of imprintable apparel and other related items.
12% Senior Subordinated Note due 2007 $ 3,181,500 4/30/99 2,879,088 3,245,130
Common Stock (B) 1,060 shs. 4/30/99 1,059,950 2,091,069
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 576 shs. 4/30/99 445,410 1,137,097
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4,384,448 6,473,296
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AMERICA'S BODY CO., INC. /LCP HOLDING CO
A designer and manufacturer of commercial work vehicles
12% Senior Subordinated Note due 2007 $ 3,500,000 11/2/98 3,160,379 3,150,000
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 58 shs. 11/2/98 513,333 1
---------------------------------------------------------------------------------------------------------------------------------
3,673,712 3,150,001
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AMES TRUE TEMPER GROUP
A leading manufacturer and distributor of non-powered lawn and garden tools and accessories in North America.
13% Senior Subordinated Note due 2010 $ 1,888,889 1/14/02 1,883,871 1,924,338
10% Preferred Stock 161 shs. 2/28/02 161,093 156,755
Class A Common Stock (B) 2,105 shs. 2/28/02 2,105 1,684
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 5,018 shs. 1/14/02 5,018 50
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2,052,087 2,082,827
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BEACON MEDICAL PRODUCTS, INC
A designer, manufacturer and marketer of medical air and gas distribution systems.
Senior Secured Floating Rate Revolving Credit Facility due 2007 $ 62,847 4/9/02 62,847 62,284
Senior Secured Tranche A Floating Rate Note due 2008 $ 1,133,307 4/9/02 1,133,307 1,133,307
12% Senior Secured Note due 2010 $ 721,196 4/9/02 599,857 723,618
Limited Partnership Interest of Riverside Capital
Appreciation Fund IV, L.P. (B) 2.29% int. 4/9/02 152,329 121,863
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 1,390 shs. 4/9/02 127,497 14
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2,075,837 2,041,086
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-13-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
BETA BRANDS, INC. - T.S.E.
A manufacturer of hard candy and chocolate-coated products sold primarily to the Canadian market.
Senior Secured Tranche A Floating Rate Note due 2004 (B) $ 2,127,412 12/23/97 $ 2,127,411 $ 531,853
17.75% Senior Secured Tranche B Note due 2005 (B) $ 802,824 12/23/97 802,823 200,706
Preference Shares (B) 360,018 shs. 2/14/02 2 --
Limited Partnership Interest of CM Equity Partners (B) 6.27% int. 12/22/97 832,197 --
Warrant, exercisable until 2005, to purchase
common stock at $.81 per share (B) 214,419 shs. 12/23/97 -- --
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3,762,433 732,559
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BETTER MINERALS & AGGREGATES
A producer of high grade industrial and specialty silica sands.
14% Redeemable Preferred Stock 997 shs. 9/30/99 545,858 147,622
Convertible Preferred Stock Series A and B, convertible
into common stock at $9.26 per share (B) 126,003 shs. 12/19/96 1,166,700 --
Common Stock (B) 20,027 shs. 9/30/99 799,068 --
Warrants, exercisable until 2005 and 2010, to
purchase common stock at $.01 per share (B) 11,399 shs. * 128,502 --
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*12/19/96 and 9/30/99. 2,640,128 147,622
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C & K FINANCING COMPANY LLC
A holding company formed to hold C & K Manufacturing
8% Senior Note due 2004 $ 67,637 12/24/02 67,637 33,818
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C & M CONVEYOR, INC.
A manufacturer and supplier of material handling systems to the corrugated sheet and container industry.
9.5% Senior Secured Term Note due 2007 $ 1,233,434 9/13/02 1,233,434 1,214,884
11% Senior Subordinated Note due 2010 $ 838,102 9/13/02 779,619 822,186
Common Stock (B) 316,265 shs. 9/13/02 316,265 253,012
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 137,175 shs. 9/13/02 60,250 1,372
---------------------------------------------------------------------------------------------------------------------------------
2,389,568 2,291,454
---------------------------------------------------------------------------------------------------------------------------------
CAINS FOODS, L.P.
A producer of mayonnaise and sauce products for both the retail and food service markets.
8% Junior Subordinated Convertible Note due 2004,
convertible into partnership points at $1,388.89 per point $ 108,108 9/29/95 108,108 112,854
Warrant, exercisable until 2006, to purchase
partnership points at $.01 per point (B) 39 pts. 9/29/95 50,261 --
---------------------------------------------------------------------------------------------------------------------------------
158,369 112,854
---------------------------------------------------------------------------------------------------------------------------------
-14-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
CAPESUCCESS LLC
A provider of diversified staffing services
Common Stock (B) 6,855 shs. 4/29/00 $ 37,702 $ 1,885
Preferred Membership Interests (B) 1,882 int. 4/29/00 8,396 420
Common Membership Interests (B) 24,318 int. 4/29/00 108,983 5,442
---------------------------------------------------------------------------------------------------------------------------------
155,081 7,747
---------------------------------------------------------------------------------------------------------------------------------
CAPITOL SPECIALTY PLASTICS, INC
A producer of desiccant strips used for packaging pharmaceuticals products.
Common Stock (B) 109 shs. * 503 403
---------------------------------------------------------------------------------------------------------------------------------
*12/30/97 and 5/29/99.
CHAPARRAL RESOURCES, INC. - O.T.C.
An international oil and gas exploration and production company.
Common Stock (B) 164 shs. 12/3/97 6,395 148
---------------------------------------------------------------------------------------------------------------------------------
COINING CORPORATION OF AMERICA
A manufacturer of close tolerance parts and metal stampings
Senior Secured Floating Rate Revolving Credit Facility due 2006 $ 43,210 1/7/02 43,210 42,238
Senior Secured Floating Rate Tranche A Note due 2007 $ 1,296,297 6/26/01 1,296,297 1,259,844
12% Senior Secured Tranche B Note due 2008 $ 648,148 6/26/01 579,788 654,907
Limited Partnership Interest (B) 324 shs. 6/26/01 324,074 259,259
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 107,036 shs. 6/26/01 79,398 1,070
---------------------------------------------------------------------------------------------------------------------------------
2,322,767 2,217,318
---------------------------------------------------------------------------------------------------------------------------------
COLIBRI HOLDINGS CORPORATION
A manufacturer and distributor of wild bird feeders and accessories.
12.5% Senior Subordinated Note due 2008 $ 1,593,750 9/22/00 1,373,217 1,548,102
28% Preferred Stock 71 shs. 11/2/01 70,833 70,050
Common Stock (B) 1,429 shs. 9/22/00 531,250 478,120
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 843 shs. 9/22/00 265,625 8
---------------------------------------------------------------------------------------------------------------------------------
2,240,925 2,096,280
---------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCT ENTERPRISES, INC.
A manufacturer of colored acrylic felt for consumer use
Senior Secured Floating Rate Revolving Credit Note due 2003 $ 353,740 12/8/95 353,740 141,496
10.75% Senior Secured Term Note due 2003 $ 413,630 12/8/95 413,630 165,452
Senior Secured Floating Rate Term Note due 2003 $ 207,630 12/8/95 207,630 83,052
12% Senior Subordinated Note due 2005 $ 800,575 12/8/95 781,515 160,115
Common Stock (B) 184,560 shs. 12/8/95 184,560 --
Warrant, exercisable until 2005, to purchase
common stock at $.01 per share (B) 138,420 shs. 12/8/95 50,853 --
---------------------------------------------------------------------------------------------------------------------------------
1,991,928 550,115
---------------------------------------------------------------------------------------------------------------------------------
-15-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
CORVEST GROUP, INC.
A manufacturer and distributor of promotional products
12% Senior Subordinated Note due 2007 $ 3,863,636 * $ 3,668,283 $ 3,513,998
Common Stock (B) 56 shs. * 96,591 57,949
Limited Partnership Interest (B) 19.32% int. * 286,772 172,061
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 183 shs. * 297,203 189,347
---------------------------------------------------------------------------------------------------------------------------------
*3/5/99 and 3/24/99 4,348,849 3,933,355
---------------------------------------------------------------------------------------------------------------------------------
DELSTAR HOLDINGS CORP.
A manufacturer of plastic netting for a wide variety of industries.
Convertible Preferred Stock, convertible into common
stock at $12.16 per share (B) 3,514 shs. 10/5/01 427,153 342
---------------------------------------------------------------------------------------------------------------------------------
DEXTER MAGNETICS TECHNOLOGIES, INC.
A designer, fabricator, assembler, and distributor of industrial magnets and subassemblies in North America and Europe.
12% Senior Subordinated Note due 2006 $ 1,231,884 7/19/01 1,068,930 1,181,572
Common Stock (B) 585 shs. 7/19/01 585,145 409,605
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 297 shs. 7/19/01 250,611 3
---------------------------------------------------------------------------------------------------------------------------------
1,904,686 1,591,180
---------------------------------------------------------------------------------------------------------------------------------
DHD HEALTHCARE, INC.
A designer, manufacturer and distributor of plastic, non-invasive medical devices used for respiratory care.
Senior Secured Floating Rate Tranche A Note due 2008 $ 1,160,741 2/8/01 1,160,741 1,164,904
12% Senior Secured Tranche B Note due 2009 $ 451,173 2/8/01 386,721 463,536
Limited Partnership Interest of Riverside
Capital Appreciation Fund III L.P. (B) 2.81% int. 2/8/01 163,896 131,117
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 927 shs. 2/8/01 82,030 9
---------------------------------------------------------------------------------------------------------------------------------
1,793,388 1,759,566
---------------------------------------------------------------------------------------------------------------------------------
DIRECTED ELECTRONICS, INC.
A designer and distributor of brand name automotive security systems, audio products and installation accessories.
12% Senior Subordinated Note due 2007 $ 3,355,267 12/22/99 3,047,271 3,422,373
8% Convertible Class B Subordinated Promissory Note due 2008 $ 89,442 12/22/99 89,061 91,884
Class B Common Stock (B) 26,097 shs. 12/22/99 260,965 234,869
Limited Partnership Interest 8.70% int. 12/22/99 539,268 485,342
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 45,255 shs. 12/22/99 413,816 453
---------------------------------------------------------------------------------------------------------------------------------
4,350,381 4,234,921
---------------------------------------------------------------------------------------------------------------------------------
-16-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
DIVERSCO, INC./DHI HOLDINGS, INC.
A contract provider of janitorial and equipment maintenance services and temporary production labor to industrial customers.
Membership Interests of MM/Lincap
Diversco Investments Ltd. LLC (B) 27.19% int. 8/27/98 $ 734,090 $ --
Preferred Stock (B) 3,278 shs. 12/14/01 2,784,133 1,113,655
Warrants, exercisable until 2011, to purchase
common stock of DHI Holdings, Inc. at $.01 per share (B) 13,352 shs. * 403,427 --
---------------------------------------------------------------------------------------------------------------------------------
*10/24/96 and 8/28/98. 3,921,650 1,113,655
---------------------------------------------------------------------------------------------------------------------------------
DT INDUSTRIES, INC.
A designer and manufacturer of automated production systems used to assemble, test or package industrial and consumer products.
7.16% Convertible Preferred Stock, convertible into
common stock at $14 per share (B) 20,000 shs. 6/12/97 1,000,000 400,000
---------------------------------------------------------------------------------------------------------------------------------
EAGLE WINDOW & DOOR HOLDINGS CO.
A manufacturer of wood and aluminum-clad wood windows and doors.
12% Senior Subordinated Note due 2010 $ 1,900,000 5/6/02 1,627,251 1,949,418
Common Stock (B) 225 shs. 5/6/02 225,000 202,500
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 441 shs. 5/6/02 285,000 4
---------------------------------------------------------------------------------------------------------------------------------
2,137,251 2,151,922
---------------------------------------------------------------------------------------------------------------------------------
EAST RIVER VENTURES I, L.P.
An acquirer of controlling or substantial interests in other entities.
Limited Partnership Interest (B) 36,221 int. 1/1/01 31,000 39,814
---------------------------------------------------------------------------------------------------------------------------------
ENZYMATIC THERAPY, INC.
A manufacturer and distributor of branded natural medicines and nutritional supplements.
13% Senior Subordinated Note due 2004 (B) $ 1,593,750 9/17/02 1,349,781 1,115,625
Limited Partnership Interest (B) 1.32% int. 3/30/00 531,250 53,125
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 478 shs. 3/30/00 255,000 5
---------------------------------------------------------------------------------------------------------------------------------
2,136,031 1,168,755
---------------------------------------------------------------------------------------------------------------------------------
EVANS CONSOLES, INC.
A designer and manufacturer of consoles and control center systems.
Senior Secured Tranche A Floating Rate Note due 2005 $ 974,300 3/2/98 974,300 633,295
8.85% Senior Secured Tranche A Note due 2005 $ 974,300 3/2/98 974,300 633,295
11.75% Senior Secured Tranche B Note due 2006 $ 700,000 3/2/98 642,037 455,000
Senior Secured Floating Rate Revolving Credit Facility due 2005 $ 984,242 3/2/98 984,242 639,758
Common Stock (B) 26,906 shs. 2/11/98 94,880 9,488
Limited Partnership Interest of CM Equity Partners (B) 126,445 int. 2/11/98 126,648 12,665
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 34,783 shs. 3/2/98 112,000 348
---------------------------------------------------------------------------------------------------------------------------------
3,908,407 2,383,849
---------------------------------------------------------------------------------------------------------------------------------
-17-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
EVOLVE SOFTWARE, INC.
A provider of software for automating professional services organizations.
Common Stock (B) 4 shs. 4/20/01 $ 735 $ 16
---------------------------------------------------------------------------------------------------------------------------------
EXAMINATION MANAGEMENT SERVICES, INC.
A national full-service evidence provider to the insurance industry and a provider of occupational health testing.
12% Senior Subordinated Note due 2007 $ 2,109,637 3/16/99 1,993,997 1,104,634
Limited Partnership Interest (B) 5.27% int. 3/2/99 2,140,363 1,284,218
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 77,233 shs. 3/16/99 175,803 772
---------------------------------------------------------------------------------------------------------------------------------
4,310,163 2,389,624
---------------------------------------------------------------------------------------------------------------------------------
FAIRMARKET, INC.
A developer and deliverer of e-business selling and marketing solutions for retailers, distributors, and manufacturers.
Common Stock (B) 217 shs. 4/20/01 371 314
---------------------------------------------------------------------------------------------------------------------------------
FASTENERS FOR RETAIL, INC.
A designer and marketer of low-cost fasteners for point of purchase displays and signage in retail environments.
12.5% Senior Subordinated Note due 2007 $ 3,650,000 12/22/99 3,302,993 3,723,000
Class B Common Stock (B) 600 shs. 12/22/99 600,000 1,057,752
Warrant, exercisable until 2007, to purchase
common stock at $.02 per share (B) 589 shs. 12/22/99 462,927 1,037,873
---------------------------------------------------------------------------------------------------------------------------------
4,365,920 5,818,625
---------------------------------------------------------------------------------------------------------------------------------
G C-SUN HOLDINGS, L.P.
A value-added national distributor of maintenance, repair and operating supplies such as fasteners, electrical components and tools.
12% Senior Subordinated Note due 2008 (B) $ 1,725,000 3/2/00 1,451,784 1,293,750
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 880 shs. 3/2/00 347,288 9
---------------------------------------------------------------------------------------------------------------------------------
1,799,072 1,293,759
---------------------------------------------------------------------------------------------------------------------------------
GRAND EXPEDITIONS, INC.
A luxury travel tour operation provider
Preferred Stock (B) 21,250 shs. 6/21/01 1,117,466 850,000
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 282,443 shs. 6/21/01 1,007,534 2,824
---------------------------------------------------------------------------------------------------------------------------------
2,125,000 852,824
---------------------------------------------------------------------------------------------------------------------------------
HAMILTON FUNERAL SERVICES CENTERS, INC.
The largest privately held owner and operator of funeral homes in the United States.
16.5% Senior Subordinated Note due 2007 (B) $ 3,802,712 * 3,697,924 380,271
Warrant, exercisable until 2007, to purchase
common stock at $1 per share (B) 338,280 shs. * 48,447 --
---------------------------------------------------------------------------------------------------------------------------------
*1/25/99 and 7/16/99. 3,746,371 380,271
---------------------------------------------------------------------------------------------------------------------------------
-18-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
HIGHGATE CAPITAL LLC
An acquirer of controlling or substantial interests in manufacturing and marketing entities.
Series A Preferred Units (B) 1.22% int. 7/21/94 $ 399,981 $ 150,000
---------------------------------------------------------------------------------------------------------------------------------
HUSSEY SEATING COMPANY
A manufacturer of spectator seating products
Senior Secured Floating Rate Revolving Note due 2006 $ 726,106 6/12/96 726,106 671,527
Senior Secured Floating Rate Note due 2006 $ 933,750 * 933,750 863,563
Preferred Stock 13,500 shs. 8/3/01 1,223,211 917,406
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 4,771 shs. ** 225,000 48
---------------------------------------------------------------------------------------------------------------------------------
*6/12/96 and 8/3/01. 3,108,067 2,452,544
**6/12/96 and 1/19/00.
---------------------------------------------------------------------------------------------------------------------------------
IBEAM BROADCASTING CORPORATION
A provider of an Internet broadcast network that delivers streaming media with viewing and listening quality.
Common Stock (B) 46 shs. 4/20/01 2,360 --
---------------------------------------------------------------------------------------------------------------------------------
INTEGRATION TECHNOLOGY SYSTEMS, INC.
A manufacturer of steel protective computer and network systems for the industrial and office environments.
11% Senior Secured Note due 2007 $ 1,661,661 6/1/00 1,661,661 1,603,028
Common Stock (B) 228 shs. 6/1/00 262,200 196,650
---------------------------------------------------------------------------------------------------------------------------------
1,923,861 1,799,678
---------------------------------------------------------------------------------------------------------------------------------
JACKSON PRODUCTS, INC.
A manufacturer and distributor of a variety of industrial and highway safety products.
Common Stock (B) 226 shs. 8/16/95 22,634 54,887
Warrant, exercisable until 2005, to purchase
common stock at $.01 per share (B) 1,042 shs. 8/16/95 95,627 252,395
---------------------------------------------------------------------------------------------------------------------------------
118,261 307,282
---------------------------------------------------------------------------------------------------------------------------------
JASON, INC.
A diversified manufacturing company serving various industrial markets.
13% Senior Subordinated Note due 2008 $ 963,687 8/4/00 868,586 937,670
14% Cumulative Redeemable Preferred Stock Series A (B) 289 shs. 8/4/00 289,224 278,055
Limited Partnership Interest of Saw Mill Capital Fund II L.P. (B) 2.52% int. 8/3/00 886,506 664,880
Warrants, exercisable until 2008 and 2009, to purchase
common stock at $.01 per share (B) 50,870 shs. 8/4/00 115,412 509
---------------------------------------------------------------------------------------------------------------------------------
2,159,728 1,881,114
---------------------------------------------------------------------------------------------------------------------------------
-19-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
KEEPSAKE QUILTING, INC.
A seller of quilting fabrics, books, patterns, kits and notions to consumers.
Senior Secured Floating Rate Revolving Note due 2005 $ 91,732 6/16/00 $ 91,732 $ 91,213
Senior Secured Floating Rate Tranche A Note due 2007 $ 1,073,264 6/16/00 1,073,264 1,057,790
12% Senior Secured Tranche B Note due 2008 $ 550,392 6/16/00 514,260 563,841
Limited Partnership Interest of
Riverside XVI Holding Company L.P. (B) 5.29% int. 6/12/00 333,459 297,425
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 1,108 shs. 6/12/00 45,866 11
---------------------------------------------------------------------------------------------------------------------------------
2,058,581 2,010,280
---------------------------------------------------------------------------------------------------------------------------------
KENAN-ADVANTAGE TRANSPORT COMPANY
A transporter of light petroleum, petrochemicals, lubricants, and residual fuels.
12.5% Senior Subordinated Note due 2009 $ 1,817,435 4/30/01 1,817,435 1,863,002
Preferred Stock (B) 307 shs. 4/30/01 307,000 276,300
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 269 shs. 4/30/01 14 3
---------------------------------------------------------------------------------------------------------------------------------
2,124,449 2,139,305
---------------------------------------------------------------------------------------------------------------------------------
LANCASTER LABORATORIES, INC.
One of the largest laboratory testing operations in the United States.
12% Senior Subordinated Note due 2007 $ 1,669,643 9/25/00 1,393,207 1,675,044
Common Stock (B) 455,357 shs. 9/25/00 455,357 409,821
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 405,485 shs. 9/25/00 348,348 4,055
---------------------------------------------------------------------------------------------------------------------------------
2,196,912 2,088,920
---------------------------------------------------------------------------------------------------------------------------------
LIH INVESTORS, L.P.
A manufacturer and marketer of a broad line of external accessories for new and used sport utility vehicles, trucks and vans.
12.5% Senior Subordinated Note due 2006 $ 3,845,000 * 3,422,363 3,833,020
Common Stock (B) 58,001 shs. * 406,003 51,041
Warrant, exercisable until 2006, to purchase
common stock at $.11 per share (B) 108,404 shs. * 602,127 85,856
---------------------------------------------------------------------------------------------------------------------------------
*12/23/98 and 1/28/99. 4,430,493 3,969,917
---------------------------------------------------------------------------------------------------------------------------------
MOSS, INC.
A manufacturer and distributor of large display and exhibit structures.
Senior Secured Floating Rate Revolving Note due 2005 $ 184,910 9/21/00 184,910 129,436
Senior Secured Floating Rate Tranche A Note due 2007 $ 1,344,800 9/21/00 1,344,800 941,360
12% Senior Secured Tranche B Note due 2008 $ 420,250 9/21/00 387,288 294,175
Limited Partnership Interest of
Riverside Capital Appreciation Fund I L.P. (B) 6.23% int. * 311,466 77,867
Warrant, exercisable until 2008, to purchase
common stock at $100 per share (B) 463 shs. 9/21/00 40,344 5
---------------------------------------------------------------------------------------------------------------------------------
*9/20/00 and 5/23/02. 2,268,808 1,442,843
---------------------------------------------------------------------------------------------------------------------------------
-20-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
MUSTANG VENTURES COMPANY
A natural gas gathering and processing operation located in Oklahoma and Texas.
11.5% Subordinated Note due 2011 $ 566,667 12/11/02 $ 463,718 $ 571,509
8.5% Redeemable Preferred Stock (B) 155,833 shs. 12/11/02 1,108,087 1,068,532
Warrant, exercisable until 2012, to purchase
common stock at $0.01 per share (B) 18,425 shs. 12/11/02 553,539 184
---------------------------------------------------------------------------------------------------------------------------------
2,125,344 1,640,225
---------------------------------------------------------------------------------------------------------------------------------
NPC, INC.
A manufacturer of flexible connectors and equipment used in the installation of sewers and storm drain pipelines.
Senior Secured Floating Rate Revolving Note due 2006 $ 328,568 6/25/99 328,568 316,393
Senior Secured Floating Rate Note due 2006 $ 2,455,932 6/25/99 2,455,858 2,361,168
12% Senior Secured Tranche B Note due 2007 $ 978,814 6/25/99 879,106 955,232
Limited Partnership Interest of Riverside XIII
Holding Company L.P. (B) 3.49% int. 6/11/99 296,876 221,438
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 201 shs. 6/25/99 142,373 2
---------------------------------------------------------------------------------------------------------------------------------
4,102,781 3,854,233
---------------------------------------------------------------------------------------------------------------------------------
NYLONCRAFT, INC.
A supplier of engineered plastic components for the automotive industry.
9% Senior Secured Note due 2009 $ 812,500 1/28/02 812,500 823,230
11.5% Senior Subordinated Note due 2012 $ 1,500,000 1/28/02 1,346,211 1,506,456
Common Stock (B) 312,500 shs. 1/28/02 312,500 281,250
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 243,223 shs. 1/28/02 162,045 2,432
---------------------------------------------------------------------------------------------------------------------------------
2,633,256 2,613,368
---------------------------------------------------------------------------------------------------------------------------------
OLYMPIC SALES, INC.
An operator of boat dealerships in Washington state, Wisconsin, Minnesota, and British Columbia.
12% Senior Subordinated Note due 2006 $ 2,774,000 8/7/98 2,581,280 2,219,200
12% Senior Subordinated Note due 2008 $ 307,071 2/9/00 278,424 245,657
Limited Partnership Interest of Riverside VIII and VIII-A
Holding Company L.P. (B) 13.14% int. * 1,393,647 694,926
Warrants, exercisable until 2007and 2008, to purchase
common stock at $.01 per share (B) 25,793 shs. ** 389,188 287
---------------------------------------------------------------------------------------------------------------------------------
*8/7/98, 2/23/99 and 12/22/99. 4,642,539 3,160,070
---------------------------------------------------------------------------------------------------------------------------------
**8/7/98 and 2/9/00.
---------------------------------------------------------------------------------------------------------------------------------
PARADIGM PACKAGING, INC.
A manufacturer of plastic bottles and closures for the nutritional, pharmaceutical, personal care and food packaging markets.
12% Senior Subordinated Note due 2008 $ 2,125,000 12/19/00 1,901,919 2,152,194
Membership Interests of MM/Lincap
PPI Investments, Inc., LLC (B) 2.42% int. 12/21/00 265,625 212,500
---------------------------------------------------------------------------------------------------------------------------------
2,167,544 2,364,694
---------------------------------------------------------------------------------------------------------------------------------
-21-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
PGT INDUSTRIES, INC.
A manufacturer of residential windows and patio doors and a provider of custom patio rooms and porch enclosures.
12% Senior Subordinated Notes due 2009 $ 1,965,000 1/29/01 $ 1,739,411 $ 2,043,600
Common Stock (B) 115 shs. 1/29/01 115,000 170,477
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 325 shs. 1/29/01 264,519 481,750
---------------------------------------------------------------------------------------------------------------------------------
2,118,930 2,695,827
---------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICAL BUYERS, INC.
A group purchasing organization which specializes in arranging and negotiating contracts for the purchase of pharmaceutical
goods and medical equipment
10.5% Senior Secured Note due 2005 $ 172,768 11/30/95 172,768 176,254
10.5% Senior Secured Convertible Note due 2005,
convertible into common stock at $50,000 per share $ 195,000 11/30/95 195,000 280,254
Common Stock 6 shs. 11/30/95 337,500 440,948
---------------------------------------------------------------------------------------------------------------------------------
705,268 897,456
---------------------------------------------------------------------------------------------------------------------------------
P H I HOLDING COMPANY
A retailer of mid-priced gift items, home and garden decor, accessories and other similar consumer products.
12.5% Senior Subordinated Note due 2010 $ 2,125,000 10/25/02 1,914,772 2,083,867
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 351 shs. 10/25/02 212,500 4
---------------------------------------------------------------------------------------------------------------------------------
2,127,272 2,083,871
---------------------------------------------------------------------------------------------------------------------------------
PLASSEIN PACKAGING CORPORATION
A manufacturer of flexible packaging products
13% Senior Subordinated Note due 2007 (B) $ 763,608 8/15/00 664,988 610,887
15% Junior Subordinated Note due 2008 (B) $ 73,494 11/14/01 71,969 7,349
12% Junior Subordinated Note due 2008 (B) $ 658,905 8/15/00 459,101 65,891
Convertible Preferred Stock, convertible into
common stock at $1 per share (B) 288,256 shs. 8/15/00 288,256 28,826
Common Stock (B) 446,960 shs. 8/15/00 289,552 28,956
Warrants, exercisable until 2007 and 2008, to purchase
common stock at $.01 per share (B) 482,594 shs. * 95,840 --
---------------------------------------------------------------------------------------------------------------------------------
*8/15/00 and 11/14/01. 1,869,706 741,909
---------------------------------------------------------------------------------------------------------------------------------
POLYMER TECHNOLOGIES, INC./POLI-TWINE WESTERN, INC.
A leading manufacturer of polypropylene twine for the hay bailing marketplace.
8% Senior Subordinated Note due 2010 $ 743,750 9/27/02 743,722 669,375
Preferred Series A Stock (B) 1,062 shs. 9/27/02 958,922 239,730
Preferred Series B Stock (B) 239 shs. 9/27/02 232,880 58,220
Common Stock (B) 159,375 shs. 3/1/00 79,688 --
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 7,375,899 shs. * 109,789 --
---------------------------------------------------------------------------------------------------------------------------------
*3/1/00 and 9/27/02. 2,125,001 967,325
---------------------------------------------------------------------------------------------------------------------------------
-22-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
PRECISION DYNAMICS, INC.
A manufacturer of custom-designed solenoid valves and controls.
Senior Secured Floating Rate Revolving Credit Facility due 2003 $ 896,500 7/22/96 $ 896,500 $ 762,025
Senior Secured Floating Rate Term Note due 2003 $ 1,532,200 7/22/96 1,532,200 1,302,370
12% Senior Secured Term Note due 2004 $ 489,000 7/22/96 464,491 415,650
8% Preferred Stock 374 shs. 7/22/96 231,964 --
Common Stock (B) 599 shs. 7/22/96 28,978 --
Warrant, exercisable until 2004, to purchase
common stock at $.01 per share (B) 322 shs. 7/22/96 97,800 --
---------------------------------------------------------------------------------------------------------------------------------
3,251,933 2,480,045
---------------------------------------------------------------------------------------------------------------------------------
PREMIUM FOODS GROUP, INC.
A manufacturer and distributor of branded meat products
12% Senior Subordinated Note due 2008 $ 1,821,000 8/29/00 1,535,275 1,875,630
Limited Partnership Interest of MHD Holdings LLC (B) 1.29% int. 8/29/00 804,000 723,600
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 7,052 shs. 8/29/00 327,072 71
---------------------------------------------------------------------------------------------------------------------------------
2,666,347 2,599,301
---------------------------------------------------------------------------------------------------------------------------------
PROCESS CHEMICALS LLC
A specialty chemical company that manufactures processed chemicals for the fertilizer, asphalt and concrete industries.
6% Redeemable Preferred Membership Interests 2,525 int. * 2,780,992 2,717,026
Common Membership Interests 9,863 int. * 13,049 38,802
---------------------------------------------------------------------------------------------------------------------------------
*7/31/97 and 1/4/99. 2,794,041 2,755,828
---------------------------------------------------------------------------------------------------------------------------------
PROGRESSIVE SOFTWARE HOLDINGS, INC.
A designer and manufacturer of point-of-sale monitors and keyboards used by retailers and restaurants.
Common Stock (B) 729,946 shs. 7/9/02 3,500,003 13,139
---------------------------------------------------------------------------------------------------------------------------------
PROTEIN GENETICS, INC.
A producer of bovine artificial insemination products, related breeding and healthcare products and specialty genetics
sold to the dairy and beef industries
9.8% Redeemable Exchangeable Preferred Stock (B) 1,004 shs. 8/12/94 100,350 50,175
Common Stock (B) 2,600 shs. * 126,866 --
---------------------------------------------------------------------------------------------------------------------------------
*11/14/01 and 8/12/94. 227,216 50,175
---------------------------------------------------------------------------------------------------------------------------------
PW EAGLE, INC. - O.T.C.
An extruder of small and medium diameter plastic pipe and tubing in the United States.
14% Senior Subordinated Note due 2007 $ 3,521,053 9/16/99 3,516,651 3,490,201
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 197,040 shs. 9/16/99 1 796,239
---------------------------------------------------------------------------------------------------------------------------------
3,516,652 4,286,440
---------------------------------------------------------------------------------------------------------------------------------
-23-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
RK POLYMERS LLC
A producer of styrenic block copolymers and highly engineered synthetic elastomers.
13% Senior Subordinated Note due 2011 $ 2,125,000 2/28/01 $ 1,919,531 $ 2,162,422
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 212 shs. 2/28/01 205,469 2
---------------------------------------------------------------------------------------------------------------------------------
2,125,000 2,162,424
---------------------------------------------------------------------------------------------------------------------------------
SABEX 2002, INC.
A Canadian specialty pharmaceutical company which manufactures and distributes generic injectable drugs and eye products.
12% Senior Subordinated Note due 2009 $ 2,125,000 4/19/02 1,995,769 2,169,445
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 51,088 shs. 4/19/02 138,052 511
---------------------------------------------------------------------------------------------------------------------------------
2,133,821 2,169,956
---------------------------------------------------------------------------------------------------------------------------------
SAFETY SPEED CUT MANUFACTURING COMPANY, INC.
A manufacturer of vertical panel saws and routers for the wood working industry.
Senior Secured Floating Rate Tranche A Note due 2007 $ 2,214,194 6/2/99 2,214,194 2,214,194
12% Senior Secured Tranche B Note due 2007 $ 1,130,652 6/2/99 1,130,652 1,141,959
Class B Common Stock (B) 1,480 shs. 6/2/99 256,212 156,762
---------------------------------------------------------------------------------------------------------------------------------
3,601,058 3,512,915
---------------------------------------------------------------------------------------------------------------------------------
SELIG ACQUISITION CORPORATION
A manufacturer of container sealing materials for bottles used in consumer products.
12% Senior Subordinated Note due 2009 $ 2,125,000 6/13/02 1,952,415 2,139,418
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 2,011 shs. 6/13/02 182,023 20
---------------------------------------------------------------------------------------------------------------------------------
2,134,438 2,139,438
---------------------------------------------------------------------------------------------------------------------------------
SHELTER ACQUISITION, INC.
A distributor of roofing supplies and products throughout the Midwest.
12.5% Senior Subordinated Note due 2008 $ 1,517,857 8/1/02 1,310,693 1,517,857
Common Stock (B) 607,143 shs. 8/1/02 607,143 546,429
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 263,444 shs. 8/1/02 216,446 2,634
---------------------------------------------------------------------------------------------------------------------------------
2,134,282 2,066,920
---------------------------------------------------------------------------------------------------------------------------------
SNYDER INDUSTRIES, INC.
A manufacturer of proprietary rotationally molded polyethylene containers.
12.25% Senior Subordinated Note due 2007 $ 3,125,000 12/6/99 2,807,186 3,160,701
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 513 shs. 12/6/99 426,136 5
---------------------------------------------------------------------------------------------------------------------------------
3,233,322 3,160,706
---------------------------------------------------------------------------------------------------------------------------------
-24-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
SPECTAGUARD ACQUISITION LLC
The tenth largest provider of security officers in the United States.
14% Senior Subordinated Note due 2008 $ 2,073,901 3/1/00 $ 2,038,418 $ 2,151,764
Preferred LLC Interests (B) 109 int. 3/1/00 108,854 102,682
Common LLC Interests (B) 100,179 int. 3/1/00 14,844 13,359
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 257,000 shs. 3/1/00 35,980 2,570
---------------------------------------------------------------------------------------------------------------------------------
2,198,096 2,270,375
---------------------------------------------------------------------------------------------------------------------------------
STAR INTERNATIONAL, INC.
A manufacturer of commercial cooking appliances
11% Senior Secured Note due 2004 $ 2,282,975 1/25/00 2,226,480 2,277,006
9.65% Senior Secured Note due 2004 $ 469,254 5/27/94 469,252 463,816
10.5% Subordinated Note due 2004 $ 716,418 5/27/94 716,418 700,787
Common Stock (B) 4,310 shs. 5/27/94 259,735 354,716
Warrant, exercisable until 2004, to purchase
common stock at $.01 per share (B) 4,621 shs. * 171,830 380,248
---------------------------------------------------------------------------------------------------------------------------------
*5/27/94 and 1/25/00. 3,843,715 4,176,573
---------------------------------------------------------------------------------------------------------------------------------
STRATEGIC EQUIPMENT & SUPPLY CORP., INC.
A provider of kitchen and restaurant design, equipment fabrication and installation services.
12% Senior Subordinated Note due 2008 $ 3,875,000 1/14/00 3,373,324 3,619,083
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 106,539 shs. 1/14/00 658,751 1,065
---------------------------------------------------------------------------------------------------------------------------------
4,032,075 3,620,148
---------------------------------------------------------------------------------------------------------------------------------
THE TRANZONIC COMPANIES
A producer of commercial and industrial supplies, such as safety products, janitorial supplies, work apparel, washroom and restroom
supplies and sanitary care products
12.5% Senior Subordinated Note due 2007 $2,712,000 2/5/98 2,481,543 2,739,120
Common Stock (B) 630 shs. 2/4/98 630,000 567,000
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 444 shs. 2/5/98 368,832 4
---------------------------------------------------------------------------------------------------------------------------------
3,480,375 3,306,124
---------------------------------------------------------------------------------------------------------------------------------
THERMA-TRU CORPORATION
A manufacturer of residential exterior entry door systems
12.25% Senior Subordinated Note due 2009 $ 1,236,000 5/9/00 999,234 1,273,080
Limited Partnership Interest of KT Holding Company L.P. (B) 0.52% int. 5/5/00 773,200 695,882
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 739 shs. 5/9/00 287,370 73,071
---------------------------------------------------------------------------------------------------------------------------------
2,059,804 2,042,033
---------------------------------------------------------------------------------------------------------------------------------
-25-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
TIDEWATER HOLDINGS, INC.
An operator of a barge transportation line on the Columbia/Snake River system.
17% Preferred Stock (B) 560 shs. 12/23/02 $ 560,000 $ 532,000
Convertible Preferred Stock, convertible into
common stock at $1,000 per share (B) 1,120 shs. 7/25/96 1,120,000 896,000
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 474 shs. 7/25/96 48,216 379,008
---------------------------------------------------------------------------------------------------------------------------------
1,728,216 1,807,008
---------------------------------------------------------------------------------------------------------------------------------
TINNERMAN-PALNUT ENGINEERED COMPONENTS
A manufacturer of precision engineered metal and plastic fasteners and assembly components.
12.75% Senior Subordinated Note due 2008 $ 1,875,000 12/6/01 1,875,000 1,887,375
Membership Interests 250,000 int. 12/6/01 250,000 225,000
---------------------------------------------------------------------------------------------------------------------------------
2,125,000 2,112,375
---------------------------------------------------------------------------------------------------------------------------------
TRONAIR, INC.
A designer, engineer and manufacturer of ground support equipment for the business, commuter and commercial aviation markets.
10.5% Senior Secured Term Note due 2008 $ 2,368,750 1/20/00 2,368,750 2,285,349
12% Senior Subordinated Note due 2010 $ 1,326,500 1/20/00 1,246,758 1,226,982
Common Stock (B) 227,400 shs. 1/20/00 227,400 181,920
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 260,563 shs. 1/20/00 98,540 2,606
---------------------------------------------------------------------------------------------------------------------------------
3,941,448 3,696,857
---------------------------------------------------------------------------------------------------------------------------------
TRUSEAL TECHNOLOGIES, INC.
A manufacturer of sealant systems for the North American window and door market.
12.25% Senior Subordinated Note due 2006 $ 2,675,000 6/23/97 2,498,275 2,675,000
Limited Partnership Interest (B) 10.04% int. 6/17/97 824,600 742,140
Warrant, exercisable until 2006, to purchase
limited partnership interests at $.01 per unit (B) 1,258 uts. 6/23/97 376,932 52,636
---------------------------------------------------------------------------------------------------------------------------------
3,699,807 3,469,776
---------------------------------------------------------------------------------------------------------------------------------
TVI, INC.
A retailer of used clothing in the United States, Canada and Australia.
15.971% Subordinated Note due 2008 $ 2,020,972 5/2/00 1,949,370 1,995,727
Common Stock (B) 354,167 shs. 5/2/00 354,167 247,917
---------------------------------------------------------------------------------------------------------------------------------
2,303,537 2,243,644
---------------------------------------------------------------------------------------------------------------------------------
-26-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Shares, Units
Warrants, Ownership Acquisition
CORPORATE RESTRICTED SECURITIES:(A) continued or Principal Amount Date Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
USFLOW CORPORATION
A distributor of industrial pipes, valves and fittings
12.5% Senior Subordinated Note due 2007 (B) $ 3,463,000 12/14/99 $ 3,092,256 $ 1,385,200
Class B Common Stock (B) 664 shs. 12/14/99 664,200 --
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 565 shs. 12/14/99 461,733 --
---------------------------------------------------------------------------------------------------------------------------------
4,218,189 1,385,200
---------------------------------------------------------------------------------------------------------------------------------
VICTORY VENTURES LLC
An acquirer of controlling or substantial interests in other entities.
Series A Preferred Units (B) 0.15% int. 12/2/96 1 2
---------------------------------------------------------------------------------------------------------------------------------
VITEX PACKAGING, INC.
A manufacturer of specialty packaging, primarily envelopes and tags used on tea bags.
12% Senior Subordinated Note due 2008 $ 2,045,265 12/18/00 1,904,981 2,152,632
Limited Partnership Interest of Riverside VI
Holding Company L.P. (B) 4.80% int. * 351,320 281,054
Limited Partnership Interest of Riverside
Capital Appreciation Fund II L.P. (B) 0.75% int. 12/18/00 79,735 63,788
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 308 shs. ** 227,729 3
---------------------------------------------------------------------------------------------------------------------------------
*12/30/97 and 9/9/99. 2,563,765 2,497,477
---------------------------------------------------------------------------------------------------------------------------------
**1/2/98 and 12/18/00.
---------------------------------------------------------------------------------------------------------------------------------
WASHINGTON INVENTORY SERVICES, INC
A provider of physical inventory taking and other related services to retailers.
12.5% Senior Subordinated Note due 2008 $ 1,646,881 11/3/00 1,605,810 1,633,597
Senior Preferred Stock (B) 4,692 shs. 11/1/00 469,160 429,692
Class B Common Stock (B) 8,959 shs. 11/1/00 8,959 8,063
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 3,979 shs. 11/3/00 49,804 40
---------------------------------------------------------------------------------------------------------------------------------
2,133,733 2,071,392
---------------------------------------------------------------------------------------------------------------------------------
WICOR AMERICAS, INC
A manufacturer of cellulose based insulation products, systems and services for electrical transformer equipment manufacturers.
20% Senior Subordinated Secured Note due 2009 $ 2,272,932 11/9/01 2,271,878 2,222,799
---------------------------------------------------------------------------------------------------------------------------------
Total Private Placement Investments 189,943,812 157,270,981
=================================================================================================================================
-27-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Interest Due Shares or
CORPORATE RESTRICTED SECURITIES:(A) continued Rate Date Principal Amount Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
RULE 144A SECURITIES - 2.91%: (A)
BONDS - 0.99%
The Brickman Group, Ltd. 11.750% 12/15/09 $ 475,000 $ 475,000 $ 496,375
Cuddy International Corp. (B) 10.750 12/01/07 229,062 225,640 22,906
Del Monte Corp. 8.625 12/15/12 225,000 225,000 229,500
Dex Media East LLC 9.875 11/15/09 475,000 475,000 510,625
Grant Prideco, Inc. 9.000 12/15/09 100,000 100,000 104,000
JohnsonDiversey, Inc. 9.625 05/15/12 210,000 210,000 220,500
RH Donnelley Fin Corp. I 8.875 12/15/10 110,000 110,000 117,700
------------ ------------ ------------
TOTAL BONDS $ 1,824,062 1,820,640 1,701,606
============ ------------ ------------
CONVERTIBLE BONDS - 1.91%
Advanced Micro Devices, Inc. 4.750% 02/01/22 $ 500,000 $ 397,449 $ 311,250
Computer Associates Intl, Inc. 1.625 12/15/09 150,000 150,000 147,626
Cymer, Inc. 3.500 02/15/09 850,000 850,000 833,000
Echostar Communications, Inc. 4.875 01/01/07 400,000 400,000 354,000
F E I Company 5.500 08/15/08 375,000 375,000 304,687
General Semiconductor, Inc. 5.750 12/15/06 65,000 58,663 60,531
Hyperion Solutions Corp. 4.500 03/15/05 200,000 200,000 195,500
Invitrogen Corp. 2.250 12/15/06 425,000 425,000 358,594
Sanmina-SCI Corp. (B) 0.000 09/12/20 1,090,000 453,712 444,175
Triquint Semiconductor, Inc. 4.000 03/01/07 225,000 168,442 174,094
Viropharma, Inc. 6.000 03/01/07 215,000 147,282 88,956
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 4,495,000 3,625,548 3,272,413
============ ------------ ------------
COMMON STOCK - 0.00%
Jordan Telecom Products (B) 70 $ 14,000 --
------------ ------------
TOTAL COMMON STOCK 14,000 --
------------ ------------
WARRANTS - 0.01%
Winsloew Escrow Corp. (B) 900 $ 9 $ 9,000
------------ ------------
TOTAL WARRANTS 9 9,000
------------ ------------
TOTAL RULE 144A SECURITIES 5,460,197 4,983,019
------------ ------------
TOTAL CORPORATE RESTRICTED SECURITIES $195,404,009 $162,254,000
============ ============
-28-
MASSMUTUAL CORPORATE INVESTORS
-
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Interest Due Shares or
CORPORATE PUBLIC SECURITIES - 9.61%:(A) Rate Date Principal Amount Cost Market Value
---------------------------------------------------------------------------------------------------------------------------------
BONDS - 2.58%
G F S I, Inc. 9.625% 03/01/07 $ 145,000 $ 122,814 $ 116,000
Isle of Capri Casinos, Inc. 9.000 03/15/12 450,000 450,000 466,875
Neff Corp. 10.250 06/01/08 230,000 227,688 60,950
Numatics, Inc. 9.625 04/01/08 550,000 540,813 258,500
Remington Products Co. 11.000 05/15/06 600,000 595,506 492,750
S P X Corporation 7.500 01/01/13 500,000 500,000 506,250
Sports Club Co. 11.375 03/15/06 600,000 582,000 540,000
Telex Communications, Inc. (B) 0.000 11/15/06 373,182 206,820 205,250
United Refining Co. 10.750 06/15/07 1,365,000 1,365,000 1,037,400
Winsloew Escrow Corp. 12.750 08/15/07 900,000 879,472 729,000
------------ ------------ ------------
TOTAL BONDS $ 5,713,182 5,470,113 4,412,975
============ ------------ ------------
COMMON STOCK - 3.39%
Computer Horizons Corp. (B) 32,068 $ 301,942 $ 104,862
DT Industries, Inc. (B) 178,876 1,168,093 466,866
EOS International, Inc. (B) 100,000 300,000 42,000
Florist Transworld Delivery, Inc. (B) 29,374 41,258 467,928
H C I Direct, Inc. (B) 1,000 -- 10
PepsiAmericas, Inc. 92,145 2,006,365 1,237,507
Proton Energy Systems, Inc. (B) 26,000 328,859 78,000
Rent-Way, Inc. (B) 92,866 916,263 325,031
Supreme Industries, Inc. (B) 105,202 267,325 452,369
Surebeam Corp. (B) 40,555 17,507 163,843
T G C Industries (B) 6,361 9,497 397
Titan Corp. (B) 58,052 155,714 603,741
Transmontaigne, Inc. (B) 333,326 1,109,177 1,546,633
Vina Technologies, Inc. (B) 572 1,687 114
W E C Company, Inc. (B) 5,938 800,000 159,990
Wellchoice, Inc. (B) 6,200 155,000 148,490
------------ ------------
TOTAL COMMON STOCK 7,578,687 5,797,781
------------ ------------
CONVERTIBLE BONDS - 3.11%
B E A Systems, Inc. 4.000% 12/15/06 $ 525,000 $ 382,594 $ 475,125
Charter Communications, Inc. 4.750 06/01/06 660,000 660,000 117,975
Commscope, Inc. 4.000 12/15/06 185,000 179,550 148,196
Corning Inc. (B) 0.000 11/08/15 795,000 589,829 445,200
Cypress Semiconductor Corp. 4.000 02/01/05 210,000 210,000 175,088
Echostar Communications, Inc. 4.875 01/01/07 1,000,000 805,000 885,000
F E I Company 5.500 08/15/08 1,160,000 1,080,300 942,500
Hyperion Solutions Corp. 4.500 03/15/05 50,000 35,500 48,875
Mediacom Communications Corp. 5.250 07/01/06 1,045,000 1,045,000 869,962
Nextel Communications 4.750 07/01/07 200,000 122,000 166,750
S C I Systems, Inc. 3.000 03/15/07 800,000 727,038 567,000
Sanmina-SCI Corp. (B) 0.000 09/12/20 1,190,000 425,373 484,925
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 7,820,000 6,262,184 5,326,596
============ ------------ ------------
-29-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
CORPORATE PUBLIC SECURITIES:(A)continued Shares Cost Market Value
---------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK - 0.52%
Lucent Technologies Capital Trust I 2,200 $ 2,200,000 $ 881,936
------------ ------------
TOTAL CONVERTIBLE PREFERRED STOCK 2,200,000 881,936
------------ ------------
PREFERRED STOCK - 0.01%
Telex Communications, Inc. 17,708 $ 1 $ 17,708
------------ ------------
TOTAL PREFERRED STOCK 1 17,708
------------ ------------
WARRANTS - 0.00%
Telex Communications, Inc. 698 $ 7 $ 7
------------ ------------
TOTAL WARRANTS 7 7
------------ ------------
TOTAL CORPORATE PUBLIC SECURITIES $ 21,510,992 $ 16,437,003
============ ============
Interest Due Principal
SHORT-TERM SECURITIES: Rate/Yield Date Amount Cost Market Value
---------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER - 6.33%
Caterpillar Financial Services Corp. 1.200% 01/03/03 $ 3,200,000 $ 3,199,786 $ 3,199,786
Conagra Foods, Inc. 1.450 01/02/03 1,865,000 1,864,925 1,864,925
DaimlerChrysler NA Holding Corp. 1.900 01/23/03 2,825,000 2,821,720 2,821,720
General Electric Capital Corp. 1.280 01/13/03 610,000 609,740 609,740
PACCAR Financial Corp. 1.300 01/06/03 2,325,000 2,324,580 2,324,580
------------ ------------ ------------
TOTAL SHORT-TERM SECURITIES $ 10,825,000 $ 10,820,751 $ 10,820,751
============ ------------ ------------
TOTAL INVESTMENTS 110.81% $227,735,752 $189,511,754
============ ------------
Other Assets 3.29 5,625,330
Liabilities (14.10) (24,108,653)
------ ------------
TOTAL NET ASSETS 100.00% $171,028,431
====== ============
(A) In each of the convertible note, warrant, convertible preferred and common
stock investments, the issuer has agreed to provide certain registration
rights.
(B) Non-income producing security.
See Notes to Consolidated Financial Statements.
-30-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
CORPORATE RESTRICTED SECURITIES: Fair Value
-----------------------------------------------------------------------------------------------
AUTOMOBILE - 5.69%
America's Body Co., Inc./LCP Holding Co. $ 3,150,001
LIH Investors, L.P. 3,969,917
Nyloncraft, Inc. 2,613,368
-----------------------------------------------------------------------------------------------
9,733,286
-----------------------------------------------------------------------------------------------
BEVERAGE, FOOD & TOBACCO - 2.15%
Beta Brands, Inc. 732,559
Cains Foods, L.P. 112,854
Del Monte Corp. 229,500
Premium Foods Group, Inc. 2,599,301
-----------------------------------------------------------------------------------------------
3,674,214
-----------------------------------------------------------------------------------------------
BROADCASTING & ENTERTAINMENT - 0.21%
Echostar Communications, Inc. 354,000
-----------------------------------------------------------------------------------------------
BUILDINGS & REAL ESTATE - 10.68%
Adorn, Inc. 2,220,025
Eagle Window & Door Holdings Co. 2,151,922
PGT Industries, Inc. 2,695,827
Shelter Acquisition, Inc. 2,066,920
Strategic Equipment & Supply Corp., Inc. 3,620,148
Therma-Tru Corporation 2,042,033
Truseal Technologies, Inc. 3,469,776
-----------------------------------------------------------------------------------------------
18,266,651
-----------------------------------------------------------------------------------------------
CARGO TRANSPORT - 2.31%
Kenan-Advantage Transport Company 2,139,305
Tidewater Holdings, Inc. 1,807,008
-----------------------------------------------------------------------------------------------
3,946,313
-----------------------------------------------------------------------------------------------
CHEMICAL, PLASTICS & RUBBER - 2.88%
Delstar Holdings Corp. 342
Process Chemicals LLC 2,755,828
RK Polymers LLC 2,162,424
-----------------------------------------------------------------------------------------------
4,918,594
-----------------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 12.72%
Alpha Shirt Company 6,473,296
The Brickman Group, Ltd. 496,375
Colibri Holdings Corporation 2,096,280
Consumer Product Enterprises, Inc. 550,115
Corvest Group, Inc. 3,933,355
Dexter Magnetic Technologies, Inc. 1,591,180
G C-Sun Holdings, L.P. 1,293,759
Keepsake Quilting, Inc. 2,010,280
The Tranzonic Companies 3,306,124
-----------------------------------------------------------------------------------------------
21,750,764
-----------------------------------------------------------------------------------------------
CORPORATE RESTRICTED SECURITIES: Fair Value
-----------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING & GLASS - 6.39%
C & K Financing Company LLC $ 33,818
Capitol Specialty Plastics, Inc. 403
Paradigm Packaging, Inc. 2,364,694
Plassein Packaging Corporation 741,909
Selig Acquisition Corporation 2,139,438
Snyder Industries, Inc. 3,160,706
Vitex Packaging, Inc. 2,497,477
-----------------------------------------------------------------------------------------------
10,938,445
-----------------------------------------------------------------------------------------------
DIVERSIFIED/CONGLOMERATE, MANUFACTURING - 13.78%
DT Industries, Inc. 400,000
Evans Consoles, Inc. 2,383,849
Highgate Capital LLC 150,000
Hussey Seating Company 2,452,544
Jackson Products, Inc. 307,282
Jason, Inc. 1,881,114
NPC, Inc. 3,854,233
PW Eagle, Inc. 4,286,440
Safety Speed Cut Manufacturing Company, Inc. 3,512,915
Tinnerman-Palnut Engineered Components 2,112,375
Wicor Americas, Inc. 2,222,799
-----------------------------------------------------------------------------------------------
23,563,551
-----------------------------------------------------------------------------------------------
DIVERSIFIED /CONGLOMERATE, SERVICE - 7.82%
Diversco, Inc./DHI Holdings, Inc. 1,113,655
Examination Management Services, Inc. 2,389,624
Hamilton Funeral Services Centers, Inc. 380,271
Lancaster Laboratories, Inc. 2,088,920
Pharmaceutical Buyers, Inc. 897,456
Sabex 2002, Inc. 2,169,956
SpectaGuard Acquisition LLC 2,270,375
Washington Inventory Services, Inc. 2,071,392
-----------------------------------------------------------------------------------------------
13,381,649
-----------------------------------------------------------------------------------------------
ELECTRONICS - 7.02%
Advanced Micro Devices, Inc. 311,250
Computer Associates Int'l, Inc. 147,626
Coining Corporation of America 2,217,318
Directed Electronics, Inc 4,234,921
Evolve Software, Inc 16
Fairmarket, Inc 314
Hyperion Solutions Corp. 195,500
IBEAM Broadcasting Corporation --
Integration Technology Systems, Inc. 1,799,678
Precision Dynamics, Inc. 2,480,045
Progressive Software Holdings, Inc. 13,139
Sanmina-SCI Corp. 444,175
Triquint Semiconductor, Inc. 174,094
-----------------------------------------------------------------------------------------------
12,018,076
-----------------------------------------------------------------------------------------------
-31-
MASSMUTUAL CORPORATE INVESTORS
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
CORPORATE RESTRICTED SECURITIES: Fair Value
-----------------------------------------------------------------------------------------------
FARMING & AGRICULTURE - 0.61%
Cuddy International Corp. $ 22,906
Polymer Technologies, Inc./Poli-Twine Western, Inc. 967,325
Protein Genetics, Inc. 50,175
-----------------------------------------------------------------------------------------------
1,040,406
-----------------------------------------------------------------------------------------------
HEALTHCARE, EDUCATION & CHILDCARE - 2.96%
Beacon Medical Products, Inc. 2,041,086
DHD Healthcare, Inc. 1,759,566
Enzymatic Therapy, Inc. 1,168,755
Viropharma, Inc. 88,956
-----------------------------------------------------------------------------------------------
5,058,363
-----------------------------------------------------------------------------------------------
HOME & OFFICE FURNISHINGS, HOUSEWARES,
AND DURABLE CONSUMER PRODUCTS - 6.81%
Fasteners for Retail, Inc. 5,818,625
JohnsonDiversey, Inc. 220,500
Moss, Inc. 1,442,843
Star International, Inc. 4,176,573
-----------------------------------------------------------------------------------------------
11,658,541
-----------------------------------------------------------------------------------------------
LEISURE, AMUSEMENT, ENTERTAINMENT - 2.36%
Adventure Entertainment Corporation 20,705
Grand Expeditions, Inc 852,824
Olympic Sales, Inc. 3,160,070
-----------------------------------------------------------------------------------------------
4,033,599
-----------------------------------------------------------------------------------------------
MACHINERY - 3.04%
Ames True Temper Group 2,082,827
C & M Conveyor, Inc. 2,291,454
Cymer, Inc. 833,000
-----------------------------------------------------------------------------------------------
5,207,281
-----------------------------------------------------------------------------------------------
MINING, STEEL, IRON & NON PRECIOUS METALS - 0.09%
Better Minerals & Aggregates 147,622
-----------------------------------------------------------------------------------------------
MISCELLANEOUS - 1.45%
CapeSuccess LLC 7,747
Dex Media East LLC 510,625
East River Ventures I, L.P. 39,814
General Semiconductor, Inc. 60,531
Invitrogen Corp. 358,594
RH Donnelley Fin Corp I 117,700
USFlow Corporation 1,385,200
Victory Ventures LLC 2
Winsloew Escrow Corp. 9,000
-----------------------------------------------------------------------------------------------
2,489,213
-----------------------------------------------------------------------------------------------
CORPORATE RESTRICTED SECURITIES: Fair Value
-----------------------------------------------------------------------------------------------
OIL AND GAS - 1.02%
Chaparral Resources, Inc. $ 148
Grant Prideco, Inc. 104,000
Mustang Ventures Company 1,640,225
-----------------------------------------------------------------------------------------------
1,744,373
-----------------------------------------------------------------------------------------------
PERSONAL TRANSPORTATION - 2.16%
Tronair, Inc. 3,696,857
-----------------------------------------------------------------------------------------------
RETAIL STORES - 2.53%
P H I Holdings Company 2,083,871
TVI, Inc. 2,243,644
-----------------------------------------------------------------------------------------------
4,327,515
-----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.01%
Jordan Telecom Products --
-----------------------------------------------------------------------------------------------
TECHNOLOGY - 0.18%
F E I Company 304,687
-----------------------------------------------------------------------------------------------
Total Corporate Restricted Securities - 94.87% $162,254,000
===============================================================================================
-32-
MASSMUTUAL CORPORATE INVESTORS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
1. HISTORY
MassMutual Corporate Investors (the "Trust") is a closed-end,
non-diversified investment company. David L. Babson & Company
Inc. ("Babson"), a majority owned subsidiary of Massachusetts
Mutual Life Insurance Company, ("MassMutual"), acts as its
investment adviser.
The Trust commenced operations in 1971 as a Delaware
corporation. Pursuant to an Agreement and Plan of Reorganization
dated November 14, 1985, approved by shareholders, the Trust was
organized as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts, effective November 28, 1985.
On January 27, 1998, the Board of Trustees authorized the
formation of a wholly-owned subsidiary ("MMCI Subsidiary
Trust") for the purpose of holding certain investments.
The results of MMCI Subsidiary Trust have been included
in the accompanying consolidated financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
followed consistently by the Trust in the preparation of the
consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America.
A. VALUATION OF INVESTMENTS:
Valuation of a security in the Trust's portfolio is made on the basis of
market price whenever market quotations are readily available and all
securities of the same class held by the Trust can be readily sold in such
market. Nearly all securities which are acquired by the Trust directly from
the issuers and shares into which such securities may be converted or which
may be purchased on the exercise of warrants attached to such securities
will be subject to legal or contractual delays in or restrictions on resale
and will therefore be "restricted securities". Generally speaking, as
contrasted with open-market sales of unrestricted securities which may be
effected immediately if the market is adequate, restricted securities can
be sold only in a directly negotiated transaction to a limited number of
purchasers or in a public offering for which a registration statement is in
effect under the Securities Act of 1933.
The value of restricted securities, and of any other assets for which there
are no reliable market quotations, is the fair value as determined in good
faith by the Board of Trustees of the Trust (the "Trustees"). Each
restricted security is valued by the Trustees at the time of the
acquisition thereof and at least quarterly thereafter. The Trustees have
established guidelines to aid in the valuation of each security. Generally,
restricted securities are initially valued at cost or less at the time of
acquisition by the Trust. Values greater or less than cost are used
thereafter for restricted securities in appropriate circumstances. Among
the factors ordinarily considered are the existence of restrictions upon
the sale of the security by the Trust; an estimate of the existence and
extent of a market for the security; the extent of any discount at which
the security was acquired; the estimated period of time during which the
security will not be freely marketable; the estimated expenses of
registering or otherwise qualifying the security for public sale; estimated
underwriting commissions if underwriting would be required to effect a
sale; in the case of a convertible security, whether or not it would trade
on the basis of its stock equivalent; in the case of a debt obligation
which would trade independently of any equity equivalent, the current
yields on comparable securities; the estimated amount of the floating
supply of such securities available; the proportion of the issue held by
the Trust; changes in the financial condition and prospects of the issuer;
the existence of merger proposals or tender offers affecting the issuer;
and any other factors affecting fair value, all in accordance with the
Investment Company Act of 1940. In making valuations, opinions of counsel
may be relied upon as to whether or not securities are restricted
securities and as to the legal requirements for public sale.
When market quotations are readily available for unrestricted securities of
an issuer, restricted securities of the same class are generally valued at
a discount from the market price of such unrestricted securities. The
Trustees, however, consider all factors in fixing any discount, including
the filing of a registration statement for such securities under the
Securities Act of 1933 and any other developments which are likely to
increase the probability that the securities may be publicly sold by the
Trust without restriction.
The Board of Trustees of the Trust meets at least once in each quarter to
value the Trust's portfolio securities as of the close of business on the
last business day of the preceding quarter. This valuation requires the
approval of a majority of the Trustees of the Trust, including a majority
of the Trustees who are not interested persons of the Trust (otherwise than
as Trustees) or of Babson. In making valuations, the Trustees will consider
reports by Babson analyzing each portfolio security in accordance with the
relevant factors referred to above. Babson has agreed to provide such
reports to the Trust at least quarterly.
The financial statements include restricted securities valued at
$162,254,000 (94.87% of net assets) as of December 31, 2002 ($165,049,591
at December 31, 2001) whose values have been estimated by the Board of
Trustees in the absence of readily ascertainable market values. Due to the
inherent uncertainty of valuation, those estimated values may differ
significantly from the values that would have been used had a ready market
for the securities existed, and the differences could be material.
The values for corporate public securities are stated at the last reported
sales price or at prices based upon quotations obtained from brokers and
dealers as of December 31, 2002, subject to discount where appropriate, and
are approved by the Trustees.
Short-term securities with more than sixty days to maturity are valued at
fair value and short-term securities having a maturity of sixty days or
less are valued at amortized cost which approximates market value.
B. ACCOUNTING FOR INVESTMENTS:
Investment transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
The Trust has elected to accrue, for financial reporting purposes, certain
premiums and discounts which are required to be accrued for federal income
tax purposes.
-33-
MASSMUTUAL CORPORATE INVESTORS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
Realized gains and losses on investment transactions and unrealized
appreciation and depreciation of investments are reported for financial
statement and federal income tax purposes on the identified cost method.
The Trust does not accrue income when payment is delinquent and when
management believes payment is questionable.
C. USE OF ESTIMATES:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
D. FEDERAL INCOME TAXES:
No provision for federal taxes on net investment income and short-term
capital gains is considered necessary because the Trust has elected to be
taxed as a "regulated investment company" under the Internal Revenue Code,
and intends to maintain this qualification and to distribute substantially
all of its net taxable income to its shareholders. In any year when net
longterm capital gains are realized by the Trust, management, after
evaluating the prevailing economic conditions, will recommend to the
Trustees either to designate the net realized long-term gains as
undistributed and to pay the federal capital gains taxes thereon or to
distribute all or a portion of such net gains.
In 2002, the Trust reclassed ($68,784) from undistributed net investment
income to additional paid-in-capital to more accurately portray the Trust's
financial position. This reclass has no impact on the Trust's net asset
value per share.
E. RECLASSIFICATIONS
Certain amounts from prior years' financial statements have been reclassed
to conform with current year presentation.
3. INVESTMENT ADVISORY FEE
Under an investment services contract, Babson has agreed to invest for
MassMutual general account concurrently with the Trust in each restricted
security purchased by the Trust. Babson, in addition to originating and sharing
in the purchase of such securities, represents the Trust in any negotiations
with issuers, investment banking firms, securities brokers or dealers and other
institutions or investors relating to the Trust's investments. Babson provides a
continuing review of the investment operations of the Trust. Babson also
provides the Trust with office space and office equipment, accounting and
bookkeeping services, and necessary executive, clerical and secretarial
personnel for the performance of the foregoing services.
Under the investment services contract, as amended July 1, 1988, the Trust pays
Babson a quarterly base rate (the "Base Fee Rate") of 5/16 of 1% of the value of
the Trust's net assets as of the end of each fiscal quarter, approximately
equivalent to 1.25% of the net asset value of the Trust on an annual basis, plus
or minus a quarterly performance adjustment (the "Performance Adjustment") of up
to 1/16 of 1% approximately equivalent to .25% on an annual basis.
The Performance Adjustment is based on the Trust's performance as compared to a
benchmark rate of return (the "Target Rate") equal to 5.0 percentage points plus
an unweighted, arithmetic average of the rates of return on the Standard &
Poor's Industrial Stock Price Index and the Lehman Brothers Intermediate Credit
Bond Index (formerly called the Lehman Brothers Intermediate Corporate Bond
Index) over a rolling three-year period (the "Measurement Period") comprising
the twelve quarters ending on the last day of each quarter (the "Valuation
Date"). The Performance Adjustment is equal to 5% of the difference between the
Trust's actual rate of return over the Measurement Period and the Target Rate.
If the Trust's actual rate of return exceeds the Target Rate, the Base Fee Rate
is increased by an amount equal to the Performance Adjustment; if the Trust's
actual rate of return is less than the Target Rate, the Base Fee Rate is reduced
by the Performance Adjustment. The advisory fee payable by the Trust is equal to
the Base Fee Rate (as adjusted by the Performance Adjustment) times the net
asset value of the Trust as of the Valuation Date. The Performance Adjustment
for the quarters ended March 31, June 30, September 30 and December 31, 2002
was:
Performance
Adjustment Amount
---------- ------
March 31, 2002 0.0625% $114,090
June 30, 2002 0.0625% $112,914
September 30, 2002 0.0625% $108,793
December 31, 2002 0.0625% $107,295
4. SENIOR SECURED INDEBTEDNESS
A. NOTE PAYABLE
MassMutual holds the Trust's $20,000,000 Senior Fixed Rate Convertible Note
(the "Note") issued by the Trust in 1995. The Note, as amended, is due
November 15, 2007 and accrues at 7.39% per annum. MassMutual, at its
option, can convert the principal amount of the Note into common shares.
The dollar amount of principal would be converted into an equivalent dollar
amount of common shares based upon the average price of the common shares
for ten business days prior to the notice of conversion. For each of the
years ended December 31, 2002 and 2001, the Trust incurred total interest
expense on the Note of $1,478,000.
B. REVOLVING CREDIT AGREEMENT
The Trust entered into a Revolving Credit Agreement (the "Revolver") with
Fleet National Bank as of June 29, 2000, in the principal amount of
$25,000,000, maturing on May 31, 2005. The interest rate on the outstanding
revolving loan is determined for periods of one, three or six months (as
selected by the Trust) and is set at an annual rate equal to LIBOR (London
Interbank Offered Rate) plus 0.37%. The Trust also agreed to pay an
up-front fee equal to 0.10% on the total commitment. The facility fee is
0.15% per annum of the total commitment.
As of December 31, 2002 and 2001, there were no outstanding loans drawn
against the Revolver. For each of the years ended December 31, 2002 and
2001, the Trust incurred $37,500 and $37,397, respectively, in expense
related to the undrawn portion.
-34-
MASSMUTUAL CORPORATE INVESTORS
DECEMBER 31, 2002 AND 2001
Notes to Consolidated Financial Statements
5. PURCHASES AND SALES OF INVESTMENTS
For the Year For the Year
Ended 12/31/2002 Ended 12/31/2001
--------------------------------------------------------------------------------
Cost of Investments Acquired
--------------------------------------------------------------------------------
Corporate restricted securities $ 50,028,750 $ 29,582,911
Corporate public securities 12,960,717 16,987,578
Short-term securities 504,894,722 579,764,573
--------------------------------------------------------------------------------
Proceeds from Sales or Maturities
--------------------------------------------------------------------------------
Corporate restricted securities $ 49,886,380 $ 40,001,873
Corporate public securities 13,171,712 19,329,657
Short-term securities 504,775,518 576,507,503
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of December 31, 2002. The net unrealized
depreciation of investments for financial reporting and federal tax purposes as
of December 31, 2002 is $38,223,998 and consists of $14,308,440 appreciation and
$52,532,438 depreciation.
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of December 31, 2001. The net unrealized
depreciation of investments for financial reporting and federal tax purposes as
of December 31, 2001 is $35,272,097 and consists of $13,236,957 appreciation and
$48,509,054 depreciation.
6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED)
Amount Per Share Amount Per Share
--------------------------------------------------------------------------------
March 31, 2002 March 31, 2001
--------------------------------------------------------------------------------
Investment income $ 4,810,387 $ 4,901,147
Net investment income 3,587,006 $ 0.41 3,729,498 $ 0.43
Net realized and unrealized
gain (loss) on investments 2,640,053 0.30 (1,686,474) (0.19)
--------------------------------------------------------------------------------
June 30, 2002 June 30, 2001
--------------------------------------------------------------------------------
Investment income 4,866,101 5,051,877
Net investment income 3,767,012 0.43 3,844,565 0.44
Net realized and unrealized
(loss) gain on investments (2,039,467) (0.23) 2,449,657 0.28
--------------------------------------------------------------------------------
September 30, 2002 September 30, 2001
--------------------------------------------------------------------------------
Investment income 4,537,861 4,875,161
Net investment income 3,338,262 0.38 3,737,511 0.43
Net realized and unrealized
loss on investments (6,640,118) (0.75) (7,180,355) (0.83)
--------------------------------------------------------------------------------
December 31, 2002 December 31, 2001
--------------------------------------------------------------------------------
Investment income 4,023,523 4,661,551
Net investment income 2,812,452 0.31 3,545,560 0.40
Net realized and unrealized
gain on investments 791,453 0.09 1,785,165 0.21
7. CONTINGENCIES
The Trust, together with other investors including MassMutual, is a plaintiff in
two lawsuits in connection with private placement investments made by the Trust
in Sharp International Corporation ("Sharp"). Three managing shareholders of
Sharp, which is currently being liquidated in Chapter 7 liquidation proceedings,
have pleaded guilty to criminal fraud charges. Two separate civil lawsuits have
been brought in New York state court in an attempt to recover damages for lost
investment funds from Sharp's working capital lender and auditors. The Trust is
unable to estimate any potential recovery from these lawsuits as of February 7,
2003.
-35-
MASSMUTUAL PARTICIPATION INVESTORS
INTERESTED TRUSTEES
NAME (AGE), ADDRESS, PRINCIPAL OCCUPATION SERVICE BEGAN/
POSITION WITH THE TRUST DURING THE PAST FIVE YEARS/OTHER DIRECTORSHIPS HELD TERM ENDS
--------------------------------------------------------------------------------------------------
STUART H. REESE* (47) Executive Vice President and Chief Investment 1999/2003
MassMutual Life Ins. Co. Officer (since 1999) of MassMutual Director and
1295 State Street CEO (since 2000) and President (2000-2001) of
Springfield, MA 01111 Babson Chief Executive Director (1997-1999) Senior
Trustee Vice President (1993-1997), of MassMutual
Chairman (since 1999) President (1993-1999), Chairman and Trustee
President (1993-1999) (1999), MML Series Investment Fund Director (since
1995), MassMutual Corporate Value Partners
President (1994-1999), Chairman and Trustee
(1999), MassMutual Institutional Funds Director
(since 1993), MML Baystate Life Insurance Company
Advisory Board Member (since 1995), Kirtland
Capital Partners Advisory Board Member (since
1996), MassMutual High Yield Partners II Director
(since 1996), CM Assurance Company Director (since
1996), CM Benefit Insurance Company Director
(since 1996), CM Life Insurance Company Director
(since 1996), CM International, Inc Chairman
(since 1999) and Director (since 1996), Antares
Capital Corporation Director (since 1996), Charter
Oak Capital Management, Inc. Director (since
1996), State House I Corporation President (since
1998), MassMutual/Darby CBO LLC Director (since
1999), MLDP Holdings Chairman (since 2000),
Cornerstone Real Estate Advisers Inc. Trustee,
Chairman (since 1999), and President (1993-1999),
MassMutual Participation Investors (closed-end
investment company advised by Babson).
Number of portfolios in Fund Complex overseen: 41
--------------------------------------------------------------------------------------------------
RICHARD G. DOOLEY** (73) Consultant (since 1993) and former Executive Vice 1974/2003
MassMutual Life Ins. Co. President and Chief Investment Officer of
1295 State Street MassMutual Director (since 1992), Kimco Realty
Springfield, MA 01111 Corp. (shopping center ownership and management)
Trustee Director (since 1993), Jeffries Group, Inc.
Vice-Chairman (since 1995) (financial services holding company) Chairman
Chairman (1982-1995, 1999) (1988-1995, 1999), Vice Chairman (1995-1999) and
Trustee, MML Series Investment Fund (open-end
investment company advised by the Insurance
Company) Chairman (1988-1995, 1999), Vice Chairman
(since 1995) and Trustee (since 1988), MassMutual
Participation Investors (closed-end investment
company advised by Babson).
Number of portfolios in Fund Complex overseen: 41
* Mr. Reese is an "interested person" of the Trust (as defined in the Investment
Company Act of 1940, amended) because of his position as an Officer of the Trust
and a Director and CEO of Babson.
** Mr. Dooley is an "interested person" of the Trust (as defined in the
Investment Company Act of 1940, amended) because of his position as an Officer
of the Trust and as a consultant to MassMutual.
-36-
MASSMUTUAL PARTICIPATION INVESTORS
INDEPENDENT TRUSTEES
NAME (AGE), ADDRESS, PRINCIPAL OCCUPATION SERVICE BEGAN/
POSITION WITH THE TRUST DURING THE PAST FIVE YEARS/OTHER DIRECTORSHIPS HELD TERM ENDS
--------------------------------------------------------------------------------------------------
DONALD E. BENSON (72) Executive Vice President and Director (since 1986/2004
MassMutual Corporate 1992), Marquette Financial Companies (financial
Investors services) Partner (since 1996), Benson Family
1500 Main Street, Suite 1100 Limited Partnership No. 1 and Benson Family
Springfield, MA 01115 Limited Partnership No. 2 (investment
Trustee partnerships) Partner (since 1987), Benson,
Pinckney, Oates Partnership (building partnership)
Director (since 1997), National Mercantile Bancorp
(bank holding company) and Mercantile National
Bank Director, Mesaba Holdings, Inc. (commuter
airline) Trustee (since 1988), MassMutual
Participation Investors (closed-end investment
company advised by Babson).
Number of portfolios in Fund Complex overseen: 2
--------------------------------------------------------------------------------------------------
DONALD GLICKMAN (69) Chairman (since 1992), Donald Glickman and 1992/2004
MassMutual Corporate Company, Inc. (investment banking) Director
Investors (1988-2000), CalTex Industries, Inc. (manufacturer
1500 Main Street, Suite 1100 of windows) Director (since 1984), Monro Muffler
Springfield, MA 01115 Brake, Inc. (automobile repair service) Director
Trustee (since 1998), MSC Software, Inc. Chairman (since
1998), Elgar Electronics (manufacturer of
electronic power supplies) Director (since 2002),
Racal Instrument Group (manufacturer of electronic
test equipment) Director (since 2002), OAOT, Inc.
(ITC services) Director (since 1999), SDI, Inc.
(manufacturer of airbag initiations) Partner
(since 1992), J.F. Lehman & Co. (private
investments) Trustee (since 1992), MassMutual
Participation Investors (closed-end investment
company advised by Babson).
Number of portfolios in Fund Complex overseen: 2
--------------------------------------------------------------------------------------------------
MARTIN T. HART (67) Private investor President and Director 1991/2003
MassMutual Corporate (1983-2000), H Corporation Partner (1986-2000),
Investors Consolidated Nursery Properties (wholesale nursery
1500 Main Street, Suite 1100 and garden center) Director (since 1997), T-Netix
Springfield, MA 01115 Inc. (communications company) Director (since
Trustee 1999), ValueClick Inc. (internet advertising
company) Director (since 2002), Spectranetics
Corporation (medical device company) Trustee
(since 1991), MassMutual Participation Investors
(closed-end investment company advised by Babson).
Number of portfolios in Fund Complex overseen: 2
--------------------------------------------------------------------------------------------------
STEVEN A. KANDARIAN (50) Executive Director (since 2001), Pension Benefit 2002/2005
MassMutual Corporate Guaranty Corp., (a federal pension agency)
Investors Managing Director (1993-2001), Orion Partners,
1500 Main Street, Suite 1100 L.P. (a private equity fund) Trustee (since 2002),
Springfield, MA 01115 The DLB Fund Group (open-end investment company
Trustee advised by Babson) Trustee (since 2002),
MassMutual Participation Investors (a closed-end
investment company advised by Babson).
Number of portfolios in Fund Complex overseen: 13
--------------------------------------------------------------------------------------------------
JACK A. LAUGHERY (68) Chairman (1997-1998), President and Partner (since 1996/2005
MassMutual Corporate 1996), Laughery Investments Chairman (1997-1998),
Investors Papa John's New England (food service) Director
1500 Main Street, Suite 1100 (since 1993), Papa John's International (food
Springfield, MA 01115 service companies) Director (since 1994), Houston
Trustee Pizza Venture LLC (pizza restaurant) Partner
(since 1987), Coastal Lodging (hotels) Part Owner
(since 1998), Rocky Mount Harley Davidson Partner
(since 1996), Papa John's Iowa Director (since
2001), Papa John's United (food service) Trustee
(since 1996), MassMutual Participation Investors
(closed-end investment company advised by Babson).
Number of portfolios in Fund Complex overseen: 2
--------------------------------------------------------------------------------------------------
CORINE T. NORGAARD (65) Dean (since 1996), Barney School of Business and 1998/2005
MassMutual Corporate Public Administration, University of Hartford
Investors Director (since 1997), The Advest Bank Trustee
1500 Main Street, Suite 1100 (since 1993), Aetna Series Fund (investment
Springfield, MA 01115 company) Director (since 1992), Aetna Variable
Trustee Series Fund Trustee (since 1998), MassMutual
Participation Investors (a closed-end investment
company advised by Babson).
Number of portfolios in Fund Complex overseen: 2
-37-
MASSMUTUAL PARTICIPATION INVESTORS
OFFICERS OF THE TRUST
NAME (AGE), ADDRESS, PRINCIPAL OCCUPATION POSITION HELD
POSITION WITH THE TRUST DURING THE PAST FIVE YEARS SINCE THIS DATE
--------------------------------------------------------------------------------------------------
ROBERT E. JOYAL (58) President (since 2001) and Managing Director 1999
MassMutual (2000-2001) of Babson Executive Director
Corporate Investors (1997-1999), Vice President and Managing Director
1500 Main Street, Suite 1100 (1987-1997) of MassMutual Director (since 1996),
Springfield, MA 01115 Antares Leverage Capital Corp. Director (since
President 1999), MassMutual Corporate Value Partners Limited
Advisory Board Member (since 1996), MassMutual
High Yield Partners II, LLC President (since
1999), MassMutual Corporate Investors President
(since 1999), MassMutual Participation Investors.
--------------------------------------------------------------------------------------------------
CLIFFORD M. NOREEN (45) Vice President (since 1993) of the Trust Managing 1993
MassMutual Director (since 2000) of Babson Managing Director
Corporate Investors (1996-1999), Vice President (1995-1996) of
1500 Main Street, Suite 1100 MassMutual Vice President (since 1993), MassMutual
Springfield, MA 01115 Participation Investors.
Vice President
--------------------------------------------------------------------------------------------------
ROGER W. CRANDALL (38) Vice President (since 2002) of the Trust Managing 2002
MassMutual Director (since 2000) of Babson Managing Director
Corporate Investors (1993-2000) of MassMutual Vice President (since
1500 Main Street, Suite 1100 2002), MassMutual Participation Investors.
Springfield, MA 01115
Vice President
--------------------------------------------------------------------------------------------------
STEPHEN L. KUHN (56) Vice President (since 1989) and Secretary (since Secretary
MassMutual 1980) of the Trust General Counsel and Clerk (since 1980)
Corporate Investors (since 2000) of Babson Senior Vice President and
1500 Main Street, Suite 1100 Deputy General Counsel (since 1999), Vice Vice President
Springfield, MA 01115 President and Deputy General Counsel (1998-1999), (since 1989)
Vice President & Secretary Vice President and Associate General Counsel
(1992-1998) of MassMutual Vice President and
Secretary (since 1988), MassMutual Participation
Investors.
-38-
MASSMUTUAL PARTICIPATION INVESTORS
OFFICERS OF THE TRUST
NAME (AGE), ADDRESS, PRINCIPAL OCCUPATION POSITION HELD
POSITION WITH THE TRUST DURING THE PAST FIVE YEARS SINCE THIS DATE
--------------------------------------------------------------------------------------------------
CHARLES C. MCCOBB, JR. (59) Chief Financial Officer (since 1998) and Vice Vice President
MassMutual President (since 1997) of the Trust Managing (since 1997)
Corporate Investors Director (since 2000) of Babson Managing Director
1500 Main Street, Suite 1100 (1997-1999) of MassMutual Managing Director and CFO
Springfield, MA 01115 Vice President (1994-1997), Citicorp, Inc. (since 1998)
Vice President & (banking) Chief Financial Officer (since 1998) and
Chief Financial Officer Vice-President (since 1997), MassMutual
Participation Investors.
--------------------------------------------------------------------------------------------------
MARK B. ACKERMAN (37) Treasurer (since 1998), Comptroller (1997-1998) 1998
MassMutual and Associate Treasurer (1995-1998) of the Trust
Corporate Investors Managing Director (since 2000) of Babson
1500 Main Street, Suite 1100 Investment Director (1994-1999) of MassMutual
Springfield, MA 01115 Treasurer (since 1998), Comptroller (1997-1998),
Treasurer and Associate Treasurer (1995-1998), MassMutual
Participation Investors.
--------------------------------------------------------------------------------------------------
JOHN T. DAVITT, JR. (35) Comptroller (since 2001) of the Trust Director 2001
MassMutual (since 2000) of Babson Associate Director
Corporate Investors (1997-1999) of MassMutual Comptroller (since
1500 Main Street, Suite 1100 2001), MassMutual Participation Investors.
Springfield, MA 01115
Comptroller
-39-
INDEPENDENT AUDITORS' REPORT
------------------------------------------
To the Shareholders and the Board of Trustees of MassMutual
Corporate Investors
We have audited the accompanying consolidated statements of
assets and liabilities of MassMutual Corporate Investors (the
"Trust") as of December 31, 2002 and 2001 (including the
consolidated schedule of investments as of December 31, 2002),
and the related consolidated statements of operations, cash
flows, changes in net assets for the two years then ended and the
consolidated selected financial highlights for the four-year
period ended December 31, 2002. These consolidated financial
statements and consolidated selected financial highlights are the
responsibility of the Trust's management. Our responsibility is
to express an opinion on these consolidated financial statements
and consolidated selected financial highlights based on our
audits. The consolidated selected financial highlights for the
year ended December 31, 1998 and for each of the years in the
six-year period then ended were audited by other auditors, whose
report, dated February 25, 1999 expressed an unqualified opinion
on those consolidated selected financial highlights.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial
statements and consolidated selected financial highlights are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. Our procedures included
verification of securities owned as of December 31, 2002, by
counting of securities at the custodian and confirmation of
securities owned as of December 31, 2002 by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements and
consolidated selected financial highlights referred to above
present fairly, in all material respects, the financial position
of the Trust as of December 31, 2002 and 2001, and the results of
its operations, its cash flows, changes in net assets for the two
years then ended, and consolidated selected financial highlights
for the four-year period ended December 31, 2002, in conformity
with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
New York, New York
February 7, 2003
-40-
MASSMUTUAL PARTICIPATION INVESTORS
Members of the Board of Trustees (LEFT TO RIGHT):
Donald Glickman, Chairman, Donald Glickman &
Company, Inc., Steven A. Kandarian, Executive
[PHOTO] Director, Pension Benefit Guaranty Corp., Jack A.
Laughery, President and Partner, Laughery
Investments, Richard G. Dooley, Retired Executive
Vice President and Chief Investment Officer,
Massachusetts Mutual Life Insurance Company
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
MassMutual Corporate Investors offers a Dividend Reinvestment and Share Purchase
Plan. The Plan provides a simple way for shareholders to add to their holdings
in the Trust through the receipt of dividend shares issued by the Trust or
through the reinvestment of cash dividends in Trust shares purchased in the open
market. A shareholder may join the Plan by filling out and mailing an
authorization card to Shareholder Financial Services, Inc., the Transfer Agent.
Participating shareholders will continue to participate until they notify the
Transfer Agent, in writing, of their desire to terminate participation. Unless a
shareholder elects to participate in the Plan, he or she will, in effect, have
elected to receive dividends and distributions in cash.
Participating shareholders may also make additional contributions to the Plan
from their own funds. Such contributions may be made by personal check or other
means in an amount not less than $10 nor more than $5,000 per quarter.
Whenever the Trust declares a dividend payable in cash or shares, the Transfer
Agent, acting on behalf of each participating shareholder, will take the
dividend in shares only if the net asset value is lower than the market price
plus an estimated brokerage commission as of the close of business on the
valuation day. The valuation day is the last day preceding the day of dividend
payment. When the dividend is to be taken in shares, the number of shares to be
received is determined by dividing the cash dividend by the net asset value as
of the close of business on the valuation date or, if greater than net asset
value, 95% of the closing share price. If the net asset value of the shares is
higher than the market value plus an estimated commission, the Transfer Agent,
consistent with obtaining the best price and execution, will buy shares on the
open market at current prices promptly after the dividend payment date.
The reinvestment of dividends does not, in any way, relieve participating
shareholders of any federal, state or local tax. For federal income tax
purposes, the amount reportable in respect of a dividend received in
newly-issued shares of the Trust will be the fair market value of the shares
received, which will be reportable as ordinary income and/or capital gains.
As compensation for its services, the Transfer Agent receives a fee of 5% of any
dividend and cash contribution (in no event in excess of $2.50 per distribution
per shareholder.)
Any questions regarding the Plan should be addressed to Shareholder Financial
Services, Inc., Agent for MassMutual Corporate Investors' Dividend Reinvestment
and Share Purchase Plan, P.O. Box 173673, Denver, CO 80217-3673.
Members of the Board of Trustees (LEFT TO RIGHT):
Stuart H. Reese, Executive Vice President and
Chief Investment Officer, Massachusetts Mutual
Life Insurance Company Corine T. Norgaard,* Dean,
Barney School of Business and Public [PHOTO]
Administration, University of Hartford, Martin T.
Hart,* Private Investor Donald E. Benson,*
Executive Vice President and Director, Marquette
Financial Companies, *Member of Audit Committee
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OFFICERS Robert E. Joyal Roger W. Crandall Michael L. Klofas Richard E. Spencer, II
Stuart H. Reese President Vice President Vice President Vice President
Chairman
Charles C. McCobb, Jr. Michael P. Hermsen Richard C. Morrison Mark B. Ackerman
Richard G. Dooley Vice President and Vice President Vice President Treasurer
Vice Chairman Chief Financial Officer
Mary Wilson Kibbe Clifford M. Noreen John T. Davitt, Jr.
Stephen L. Kuhn Vice President Vice President Comptroller
Vice President and
Secretary
MASSMUTUAL PARTICIPATION INVESTORS L4287A