MassMutual
CORPORATE
INVESTORS
REPORT for the NINE
MONTHS ENDED 9/30/04
ADVISER
Babson Capital Management LLC
1500 Main Street
MASSMUTUAL CORPORATE INVESTORS Springfield, Massachusetts 01115
c/o Babson Capital Management LLC
1500 Main Street, Suite 600 AUDITOR
Springfield, Massachusetts 01115 KPMG LLP
(413) 226-1516 Boston, Massachusetts 02110
COUNSEL TO THE TRUST
Ropes & Gray LLP
Boston, Massachusetts 02110
[LOGO]
CUSTODIAN
MCI Citibank, N.A.
LISTD New York, New York 10043
NYSE
TRANSFER AGENT & REGISTRAR
Shareholder Financial Services, Inc.
P.O. Box 173673
Denver, Colorado 80217-3673
1-800-647-7374
Internet website: www.babsoncapital.com/mci
INVESTMENT OBJECTIVE AND POLICY
MassMutual Corporate Investors (the "Trust") is a closed-end investment company,
first offered to the public in 1971, whose shares are traded on the New York
Stock Exchange under the trading symbol "MCI". The Trust's share price can be
found in the financial section of most newspapers as "MassCp" or "MassMuInv"
under the New York Stock Exchange listings.
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.
Babson Capital Management LLC 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.
PROXY VOTING POLICIES & PROCEDURES; PROXY VOTING RECORD
The Trustees of MassMutual Corporate Investors have
delegated proxy voting responsibilities relating to the
voting of securities held by the Trust to Babson Capital
Management LLC. A description of Babson Capital's proxy
voting policies and procedures is available (1) without
charge, upon request, by calling, tollfree 866-399-1516; (2)
on MassMutual Corporate Investors' website:
http://www.babsoncapital.com/mci; and (3) on the U.S.
Securities and Exchange Commission ("SEC") website at
http://www.sec.gov. Information regarding how the Trust
voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 is available (1)
on MassMutual Corporate Investors' website:
http://www.babsoncapital.com/mci; and (2) on the SEC's
website at http://www.sec.gov.
TO OUR SHAREHOLDERS
October 29, 2004
We are pleased to present the September 30, 2004 Quarterly Report of MassMutual
Corporate Investors (the "Trust"). The Trust's Board of Trustees declared an
increase in the quarterly dividend to 46 cents per share, payable on November
15, 2004 to shareholders of record on November 1, 2004. A dividend of 45 cents
per share was paid in the previous quarter.
U.S. equity markets, as measured by several broad market indices, declined.
During the quarter ended September 30, 2004, large stocks, as approximated by
the Dow Jones Industrial Average, decreased 2.9%. Smaller stocks, as
approximated by the Russell 2000 Index, decreased 2.86%. Alternatively, U.S.
fixed income markets, as measured by select indices, increased during the
quarter. The Lehman Brothers Government/Credit Index and the Lehman Brothers
U.S. Corporate High Yield Index increased 3.56% and 4.85%, respectively, for the
quarter.
For the quarter ended September 30, 2004, the Trust earned 54 cents per share,
of which 5 cents represents income due to a nonrecurring item. The Trust earned
59 cents per share in the previous quarter, of which 15 cents represented income
due to a separate nonrecurring item. The Trust's net assets as of September 30,
2004 totaled $213,481,986 or $23.83 per share compared to $208,743,330 or $23.37
per share on June 30, 2004. This translated into a portfolio return of 4.36% for
the quarter based on the change in the Trust's net assets assuming the
reinvestment of all dividends. Long term, the Trust's portfolio had average
annualized returns of 18.21%, 11.56%, 15.13%, and 14.88% for the 1-, 5-, 10- and
25-year periods ended September 30, 2004, respectively, based on change in net
assets with the reinvestment of all dividends.
During the quarter, the Trust made private placement investments in ten new
issuers totaling approximately $18.8 million. The ten issuers added to the
portfolio were Eagle Pack Pet Foods, Inc., Maverick Acquisition Company, Maxon
Corporation, Qualserv Corporation, River Ranch Fresh Foods LLC, Savage Sports
Holdings, Inc., Sport Court International, Inc., Vitality Foodservice, Inc.,
Vitex Packaging Group, Inc. and Walls Industries, Inc. The weighted average
coupon of these investments was 11.79%. (A brief description of these
investments can be found in the Schedule of Investments.)
Thank you for your continued interest in and support of MassMutual Corporate
Investors.
Sincerely,
/s/ Roger W. Crandall
-------------------------
Roger W. Crandall
President
--------------------------------------------------------------------------------
1
CONSOLIDATED STATEMENT OF MASSMUTUAL CORPORATE INVESTORS
ASSETS AND LIABILITIES
September 30, 2004
(Unaudited)
ASSETS:
Investments
(See Consolidated Schedule of Investments)
Corporate restricted securities at fair value
(Cost - $192,545,061) $ 176,924,437
Corporate public securities at market value
(Cost - $49,683,143) 49,423,172
Short-term securities at cost plus earned discount
which approximates market value 4,793,966
-------------
231,141,575
Cash 1,919,913
Interest and dividends receivable 5,146,530
Receivable for investments sold 4,288,745
Other assets 6,285
-------------
TOTAL ASSETS $ 242,503,048
=============
LIABILITIES:
Payable for investments purchased $ 2,000,000
Management fee payable 724,908
Note payable 20,000,000
Revolving Credit Agreement 6,000,000
Interest payable 202,768
Accrued expenses 93,386
-------------
TOTAL LIABILITIES 29,021,062
-------------
NET ASSETS:
Common shares, par value $1.00 per share;
an unlimited number authorized 8,957,487
Additional paid-in capital 103,623,051
Retained net realized gain on investments, prior years 100,547,585
Undistributed net investment income 6,672,250
Undistributed net realized gain on investments 9,562,208
Net unrealized depreciation of investments (15,880,595)
-------------
TOTAL NET ASSETS 213,481,986
-------------
TOTAL LIABILITIES AND NET ASSETS $ 242,503,048
=============
COMMON SHARES IS
SUED AND OUTSTANDING 8,957,487
=============
NET ASSET VALUE PER SHARE $ 23.83
=============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
2
CONSOLIDATED STATEMENT OF OPERATIONS MASSMUTUAL CORPORATE INVESTORS
For the nine months ended September 30, 2004
(Unaudited)
INVESTMENT INCOME:
Interest $ 15,976,284
Dividends 1,784,422
------------
TOTAL INVESTMENT INCOME 17,760,706
------------
EXPENSES:
Management fees (net of fee waiver of $15,565) See Footnote 7 2,273,321
Trustees' fees and expenses 115,000
Transfer agent/registrar's expenses 16,000
Interest 1,176,673
Reports to shareholders 50,000
Audit and legal 234,800
Other 30,066
------------
TOTAL EXPENSES 3,895,860
------------
NET INVESTMENT INCOME ($1.55 PER SHARE) 13,864,846
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on investments before taxes 10,706,311
Income taxes paid (478,945)
------------
Net realized gain on investments 10,227,366
Net change in unrealized depreciation of investments 2,253,662
------------
NET GAIN ON INVESTMENTS 12,481,028
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 26,345,874
============
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
3
CONSOLIDATED STATEMENT OF CASH FLOWS MASSMUTUAL CORPORATE INVESTORS
For the nine months ended September 30, 2004
(Unaudited)
NET DECREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received $ 14,545,763
Interest expense paid (1,161,616)
Operating expenses paid (2,512,487)
Income taxes paid (2,256,414)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,615,246
-------------
Cash flows from investing activities:
Purchases/Proceeds/Maturities from short-term portfolio
securities, net 1,556,919
Purchase of portfolio securities (103,119,586)
Proceeds from disposition of portfolio securities 93,211,218
-------------
NET CASH USED FOR INVESTING ACTIVITIES (8,351,449)
-------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES 263,797
-------------
Cash flows from financing activities:
Proceeds from borrowings on Revolving Credit Agreement 6,000,000
Cash dividends paid from net investment income (13,393,325)
-------------
NET CASH USED FOR FINANCING ACTIVITIES (7,393,325)
-------------
NET DECREASE IN CASH (7,129,528)
Cash - beginning of year 9,049,441
-------------
CASH - END OF PERIOD $ 1,919,913
=============
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES:
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 26,345,874
-------------
Increase in investments (23,858,052)
Increase in interest and dividends receivable (1,870,363)
Increase in receivable for investments sold (484,649)
Increase in other assets (6,285)
Increase in payable for investments purchased 2,000,000
Decrease in management fee payable (4,525)
Increase in interest payable 15,057
Decrease in accrued expenses (95,791)
Decrease in accrued taxes payable (1,777,469)
-------------
TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS (26,082,077)
-------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES $ 263,797
=============
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
4
CONSOLIDATED STATEMENTS OF MASSMUTUAL CORPORATE INVESTORS
CHANGES IN NET ASSETS
For the nine months ended September 30, 2004 and the year ended December 31,
2003
For the nine
months ended For the
09/30/2004 year ended
(Unaudited) 12/31/2003
------------- -------------
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 13,864,846 $ 12,804,578
Net realized gain on investments 10,227,366 4,989,717
Net change in unrealized depreciation of investments 2,253,662 20,089,74
------------- -------------
Net increase in net assets resulting from operations 26,345,874 37,884,036
Net increase in shares of beneficial interest transactions 1,915,287 1,167,125
Dividends to shareholders from:
Net investment income (2004 - $.96 per share; 2003 - $1.84 per share) (8,565,289) (16,293,478)
------------- -------------
TOTAL INCREASE IN NET ASSETS 19,620,505 22,757,683
NET ASSETS, BEGINNING OF YEAR 193,786,114 171,028,431
------------- -------------
NET ASSETS, END OF PERIOD/YEAR (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME IN 2004 - $6,672,250; 2003 - $1,372,693) $ 213,481,986 $ 193,786,114
============= =============
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
5
CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS MASSMUTUAL CORPORATE INVESTORS
Selected data for each common share outstanding:
For the
nine months
ended For the years ended December 31,
09/30/2004 -----------------------------------------------------------------------
(Unaudited) 2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ----------
Net asset value:
Beginning of year $ 21.84 $ 19.40 $ 20.07 $ 20.74 $ 22.00 $ 23.87
Net investment income 1.55 1.44 1.53 1.70 1.96 1.80
Net realized and unrealized
gain (loss) on investments 1.40 2.83 (0.59) (0.53) (0.46) (0.94)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 2.95 4.27 0.94 1.17 1.50 0.86
---------- ---------- ---------- ---------- ---------- ----------
Dividends from net investment
income to common shareholders (0.96) (1.84) (1.44) (1.79) (1.96) (1.73)
Distributions from net realized
gain on investments to common
shareholders 0.00 0.00 (0.18) (0.09) (0.80) (1.00)
Change from issuance of shares 0.00 0.01 0.01 0.04 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.96) (1.83) (1.61) (1.84) (2.76) (2.73)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value:
End of period/year $ 23.83 $ 21.84 $ 19.40 $ 20.07 $ 20.74 $ 22.00
---------- ---------- ---------- ---------- ---------- ----------
Per share market value:
End of period/year $ 24.15 $ 22.90 $ 19.49 $ 20.70 $ 22.00 $ 21.38
========== ========== ========== ========== ========== ==========
Total investment return
Market value 19.06%* 27.53% 1.35% 1.88% 17.55% 7.35%
Net asset value** 13.73%* 22.61% 4.80% 5.91% 7.28% 7.53%
Net assets (in millions):
End of period/year $ 213.48 $ 193.79 $ 171.03 $ 175.11 $ 178.13 $ 188.96
Ratio of operating expenses to average
net assets 1.33%* 2.04% 1.82% 1.72% 1.47% 1.30%
Ratio of interest expense to average
net assets 0.58%* 0.82% 0.86% 0.84% 0.58% 0.52%
Ratio of total expenses to average
net assets 1.91%* 2.86% 2.68% 2.56% 2.05% 1.82%
Ratio of net investment income
to average net assets 6.81%* 6.95% 7.65% 8.20% 8.56% 7.63%
Portfolio turnover 44.41%* 56.10% 34.02% 24.48% 59.75% 68.04%
*Percentages represent results for the period and are not annualized.
** Net asset value return represents portfolio returns based on change in the net asset value assuming the reinvestment of all
dividends and distributions which differs from the total investment return based on market value due to the difference between
the net asset value and the market value of the shares outstanding; past performance is no guarantee of future results.
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
6
CONSOLIDATED SCHEDULE OF INVESTMENTS MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES - 82.87%: (A) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
PRIVATE PLACEMENT INVESTMENTS - 72.85%
A T I ACQUISITION COMPANY
A for-profit post-secondary school serving students in
Texas, Florida and Arizona.
12% Senior Subordinated Note due 2012 $ 2,125,000 04/08/04 $ 2,125,000 $ 2,115,366
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 2,323 shs. 04/08/04 -- 23
------------ ------------
2,125,000 2,115,389
------------ ------------
A W C HOLDING COMPANY
A manufacturer and distributor of aluminum and
vinyl windows and doors in the Southwest and
Southeast regions of the U.S.
12% Senior Subordinated Note due 2012 $ 2,125,000 05/18/04 1,917,731 1,918,647
Limited Partnership Interest (B) 250 uts. 05/18/04 212,500 191,251
------------ ------------
2,130,231 2,109,898
------------ ------------
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 02/29/00 1,924,254 2,095,924
Warrant, exercisable until 2010, to purchase
common stock at $.02 per share (B) 364 shs. 02/29/00 307,759 137,429
------------ ------------
2,232,013 2,233,353
------------ ------------
AMERICA'S BODY COMPANY, INC./LCP HOLDING CO.
A designer and manufacturer of commercial work vehicles.
12% Preferred Stock Series C (B) $ 395 shs. 12/16/03 1,750,000 2,625,001
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 58 shs. * 513,334 1
------------ ------------
2,263,334 2,625,002
------------ ------------
AMERICAN HOSPICE MANAGEMENT
A for-profit hospice care provider in the U.S.
12% Senior Subordinated Note due 2010 $ 2,125,000 01/22/04 1,899,110 2,210,000
Preferred Class A Unit (B) 2,525 uts. 01/22/04 240,789 216,710
Common Class B Unit (B) 3,042 uts. 01/22/04 -- 30
------------ ------------
2,139,899 2,426,740
------------ ------------
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 $ 115,318 04/09/02 115,318 114,686
Senior Secured Tranche A Floating Rate Note due 2008 $ 899,928 04/09/02 899,928 890,777
12% Senior Secured Note due 2010 $ 721,196 04/09/02 617,976 754,707
Limited Partnership Interest of Riverside Capital
Appreciation Fund IV, L.P. (B) 1.12% int. 04/09/02 152,329 137,096
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 1,390 shs. 04/09/02 127,497 78,180
------------ ------------
1,913,048 1,975,446
------------ ------------
*11/02/98 and 12/16/03.
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7
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
BETA BRANDS LTD
A manufacturer of hard candy and chocolate-coated
products sold primarily to the Canadian market.
5% Promissory Note due 2009 (B) $ 195,498 03/31/04 $ 195,498 $ --
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 4,895 shs. 03/31/04 1 --
------------ ------------
195,499 --
------------ ------------
BETTER MINERALS & AGGREGATES
A producer of high grade industrial and specialty silica sands.
14% Redeemable Preferred Stock (B) 997 shs. 09/30/99 545,858 108,991
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. 09/30/99 799,068 --
Warrants, exercisable until 2005 and 2010, to
purchase common stock at $.01 per share (B) 11,399 shs. * 128,502 --
------------ ------------
2,640,128 108,991
------------ ------------
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 $ 996,235 09/13/02 996,235 1,005,263
11% Senior Subordinated Note due 2010 $ 838,102 09/13/02 793,859 854,189
Common Stock (B) 316,265 shs. 09/13/02 316,265 253,012
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 137,175 shs. 09/13/02 60,250 1,372
------------ ------------
2,166,609 2,113,836
------------ ------------
CAINS FOODS, L.P.
A producer of mayonnaise and sauce products for both
the retail and food service markets.
Limited Partnership Interest (B) 117 uts. 09/29/95 158,369 194,418
------------ ------------
CAPESUCCESS LLC
A provider of diversified staffing services.
Preferred Membership Interests (B) 1,882 uts. 04/29/00 8,396 420
Common Membership Interests (B) 24,318 uts. 04/29/00 108,983 5,442
------------ ------------
117,379 5,862
------------ ------------
CAPITAL SPECIALTY PLASTICS, INC.
A producer of desiccant strips used for packaging
pharmaceuticals products.
Common Stock (B) 109 shs. ** 503 503
------------ ------------
CHEMED CORPORATION
An operator in the residential and commercial repairand-
maintenance service industry through two wholly
owned subsidiaries, Roto-Rooter and Service America.
Common Stock (B) 20,000 shs. 02/24/04 1,000,000 1,114,802
------------ ------------
**12/19/96 and 09/30/99.
**12/30/97 and 05/29/99.
--------------------------------------------------------------------------------
8
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
COEUR, INC.
A producer of proprietary, disposable power injection syringes.
8.75% Senior Secured Term Note due 2010 $ 570,652 04/30/03 $ 570,652 $ 584,384
11.5% Senior Subordinated Note due 2011 $ 424,819 04/30/03 388,513 435,478
Common Stock (B) 126,812 shs. 04/30/03 126,812 114,131
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 87,672 shs. 04/30/03 40,804 877
------------ ------------
1,126,781 1,134,870
------------ ------------
COINING CORPORATION OF AMERICA LLC
A manufacturer of close tolerance parts and metal stampings.
Senior Secured Floating Rate Revolving Credit
Facility due 2006 $ 108,025 01/07/02 108,025 103,498
Senior Secured Floating Rate Tranche A Note due 2007 $ 1,020,834 06/26/01 1,020,834 935,614
13% Senior Secured Tranche B Note due 2006 $ 648,148 06/26/01 648,148 638,361
Limited Partnership Interest (B) 6.38% int. 06/26/01 324,074 259,259
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 107,036 shs. 06/26/01 79,398 1,070
------------ ------------
2,180,479 1,937,802
------------ ------------
COLIBRI HOLDINGS CORPORATION
A manufacturer and distributor of wild bird feeders
and accessories.
12.5% Senior Subordinated Note due 2008 $ 1,593,750 09/22/00 1,420,761 1,512,042
28% Preferred Stock 71 shs. 11/02/01 70,833 70,294
20% Preferred Stock 66 shs. 03/09/04 66,406 64,076
Common Stock (B) 1,429 shs. 09/22/00 531,250 265,624
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 843 shs. 09/22/00 265,625 8
------------ ------------
2,354,875 1,912,044
------------ ------------
CORVEST GROUP, INC.
A manufacturer and distributor of promotional products.
12% Senior Subordinated Note due 2007 $ 3,863,636 * 3,739,063 3,477,272
Common Stock (B) 56 shs. * 96,591 24,145
Limited Partnership Interest (B) 19.32% int. * 284,869 71,692
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 324 shs. * 297,203 139,251
------------ ------------
4,417,726 3,712,360
------------ ------------
DELSTAR HOLDING CORPORATION
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. 10/05/01 427,153 395,243
Preferred Stock (B) 412 shs. 09/16/04 48,793 46,353
------------ ------------
475,946 441,596
------------ ------------
*03/05/99 and 03/24/99.
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9
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
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 $ 461,956 07/19/01 $ 423,210 $ 462,571
Common Stock (B) 585 shs. 07/19/01 585,074 526,635
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 297 shs. 07/19/01 250,611 3
------------ ------------
1,258,895 989,209
------------ ------------
DIRECTED ELECTRONICS, INC.
A designer and distributor of brand name automotive
security systems, audio products and installation accessories.
Class B Common Stock (B) 36,633 shs. 12/22/99 -- 560,480
Limited Partnership Interest (B) 8.70% int. 12/22/99 1 839,837
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 48,569 shs. 12/22/99 -- 743,106
------------ ------------
1 2,143,423
------------ ------------
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 1,392,069
Warrants, exercisable until 2011, to purchase common
stock of DHI Holdings, Inc. at $.01 per share (B) 13,352 shs. * 403,427 --
------------ ------------
3,921,650 1,392,069
------------ ------------
DWYER GROUP, INC.
A franchiser of a variety of home repair services.
14% Senior Subordinated Note due 2011 $ 1,859,375 10/30/03 1,684,239 1,818,733
Common Stock (B) 6,906 shs. ** 690,600 621,540
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 2,034 shs. 10/30/03 186,469 20
------------ ------------
2,561,308 2,440,293
------------ ------------
E X C ACQUISITION CORPORATION
A manufacturer of pre-filled syringes and pump systems
used for intravenous drug delivery.
15% Senior Subordinated Note due 2012 $ 2,125,000 06/28/04 2,049,078 2,151,457
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 22 shs. 06/28/04 77,208 --
------------ ------------
2,126,286 2,151,457
------------ ------------
EAGLE PACK PET FOODS, INC.
A manufacturer of premium pet food sold through
independent pet stores.
14% Senior Subordinated Note due 2011 $ 1,062,500 09/24/04 1,023,045 1,059,255
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 4,085 shs. 09/24/04 39,464 41
------------ ------------
1,062,509 1,059,296
------------ ------------
*10/24/96 and 08/28/98.
**10/30/03 and 01/02/04.
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10
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
EAGLE WINDOW & DOOR HOLDING CO.
A manufacturer of wood and aluminum-clad
wood windows and doors.
12% Senior Subordinated Note due 2010 $ 1,900,000 05/06/02 $ 1,668,936 $ 1,957,000
Common Stock (B) 225 shs. 05/06/02 225,000 400,928
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 441 shs. 05/06/02 285,000 785,244
------------ ------------
2,178,936 3,143,172
------------ ------------
EAST RIVER VENTURES I, L.P.
An acquirer of controlling or substantial interests
in other entities.
Limited Partnership Interest (B) 0.14% int. 01/01/01 28,971 27,300
------------ ------------
ENZYMATIC THERAPY, INC.
A manufacturer and distributor of branded natural
medicines and nutritional supplements.
13% Senior Subordinated Note due 2005 (B) $ 1,593,750 09/17/02 1,349,781 956,250
Limited Partnership Interest (B) 1.32% int. 03/30/00 531,250 5,313
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 478 shs. 03/30/00 255,000 5
------------ ------------
2,136,031 961,568
------------ ------------
EURO-PRO CORPORATION
A designer, marketer and distributor of floor care, steam
cleaning and small kitchen products and appliances.
13.25% Senior Subordinated Note due 2011 $ 2,125,000 09/09/03 2,092,083 2,144,679
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 43,878 shs. 09/09/03 35,641 439
------------ ------------
2,127,724 2,145,118
------------ ------------
EVANS CONSOLES, INC.
A designer and manufacturer of consoles
and control center systems.
10% Senior Secured Note due 2006 $ 602,000 05/06/04 602,000 602,000
Limited Partnership Interest of CM
Equity Partners (B) 2.24% int. 02/11/98 126,648 --
Common Stock (B) 90,000 shs. 05/06/04 6 --
------------ ------------
728,654 602,000
------------ ------------
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 03/16/99 2,021,398 --
Limited Partnership Interest (B) 13.14% int. 03/02/99 2,140,363 --
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 77,233 shs. 03/16/99 175,803 --
------------ ------------
4,337,564 --
------------ ------------
--------------------------------------------------------------------------------
11
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
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 03/02/00 $ 1,451,784 $ 1,293,750
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 880 shs. 03/02/00 347,288 --
------------ ------------
1,799,072 1,293,750
------------ ------------
HAMILTON FUNERAL SERVICES CENTERS, INC.
A 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 --
------------ ------------
3,746,371 380,271
------------ ------------
HIGHGATE CAPITAL LLC
An acquirer of controlling or substantial interests in
manufacturing and marketing entities.
Series A Preferred Units (B) 1.19% int. 07/21/94 385,258 2,723
------------ ------------
HOME DeCOR HOLDING COMPANY
A designer, manufacturer and marketer of framed art
and wall decor products.
12.5% Senior Subordinated Note due 2012 $ 2,043,269 ** 1,845,775 2,074,470
Common Stock (B) 63 shs. ** 62,742 56,466
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 200 shs. ** 199,501 2
------------ ------------
2,108,018 2,130,938
------------ ------------
HUSSEY SEATING CORPORATION
A manufacturer of spectator seating products.
Senior Secured Floating Rate Revolving Note due 2006 $ 1,343,106 06/12/96 1,343,106 1,343,106
Senior Secured Floating Rate Note due 2006 $ 433,125 *** 433,125 433,125
12% Senior Subordinated Note due 2006 $ 1,350,000 03/31/03 1,350,000 1,345,078
Common Stock (B) 4,771 shs. 03/12/04 225,000 211,007
------------ ------------
3,351,231 3,332,316
------------ ------------
INTEGRATION TECHNOLOGY SYSTEMS, INC.
A manufacturer of steel protective computer and network
systems for the industrial and office environments.
16.5% Senior Secured Note due 2006 $ 1,603,175 03/01/04 1,601,792 1,535,374
Common Stock (B) 228 shs. 06/01/00 262,200 131,100
------------ ------------
1,863,992 1,666,474
------------ ------------
*01/25/99 and 07/16/99.
**06/30/04 and 08/19/04.
***06/12/96 and 08/03/01.
--------------------------------------------------------------------------------
12
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
JASON, INC.
A diversified manufacturing company serving various
industrial markets.
13% Senior Subordinated Note due 2008 $ 963,687 08/04/00 $ 888,840 $ 864,167
14% Cumulative Redeemable Preferred Stock Series A (B) 289 shs. 08/04/00 289,224 265,364
Limited Partnership Interest of
Saw Mill Capital Fund II, L.P. (B) 2.50% int. 08/03/00 886,409 443,253
Warrants, exercisable until 2008 and 2009, to purchase
common stock at $.01 per share (B) 50,870 shs. 08/04/00 115,412 509
------------ ------------
2,179,885 1,573,293
------------ ------------
KEEPSAKE QUILTING, INC.
A seller of quilting fabrics, books, patterns,
kits and notions to consumers.
Senior Secured Floating Rate Revolving Note Due 2005 $ 128,425 06/16/00 128,425 128,217
Senior Secured Floating Rate Tranche A Note due 2007 $ 729,269 06/16/00 729,265 722,701
12% Senior Secured Tranche B Note due 2008 $ 550,392 06/16/00 523,187 566,904
Limited Partnership Interest of
Riverside XVI Holding Company, L.P. (B) 5.29% int. 06/12/00 333,490 300,132
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 1,108 shs. 06/12/00 45,866 31,815
------------ ------------
1,760,233 1,749,769
------------ ------------
KELE AND ASSOCIATES, INC.
A distributor of building automation control products.
12% Senior Subordinated Note due 2012 $ 1,831,548 02/27/04 1,662,446 1,826,007
Preferred Stock Class A (B) 23 shs. 02/27/04 449,164 483,545
Common Stock (B) 12 shs. 02/27/04 12,871 11,581
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 11 shs. 02/27/04 7,793 --
------------ ------------
2,132,274 2,321,133
------------ ------------
KENAN-ADVANTAGE TRANSPORT COMPANY
A transporter of light petroleum, petrochemicals,
lubricants and residual fuels.
12.5% Senior Subordinated Note due 2009 $ 1,817,435 04/30/01 1,817,435 1,853,784
Preferred Stock (B) 307 shs. 04/30/01 307,000 614,000
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 269 shs. 04/30/01 14 3
------------ ------------
2,124,449 2,467,787
------------ ------------
LANCASTER LABORATORIES, INC.
A laboratory testing operation in the United States.
Common Stock (B) 455,739 shs. 09/25/00 589,813 821,243
------------ ------------
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 * 3,462,973 3,868,697
Common Stock (B) 5,800 shs. * 406,003 345,100
Warrant, exercisable until 2006, to purchase
common stock at $.11 per share (B) 15,572 shs. * 602,127 926,534
------------ ------------
4,471,103 5,140,331
------------ ------------
*12/23/98 and 1/28/99.
--------------------------------------------------------------------------------
13
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
MAVERICK ACQUISITION COMPANY
A manufacturer of capsules that cover the cork and neck
of wine bottles.
Senior Secured Floating Rate Revolving Note due 2009 $ 13,496 09/03/04 $ 13,496 $ 13,360
Senior Secured Floating Rate Tranche A Note due 2010 $ 783,582 09/03/04 783,582 774,431
12% Senior Secured Tranche B Note due 2011 $ 313,433 09/03/04 274,173 319,482
Limited Partnership Interest (B) 58,769 uts. 09/03/04 58,769 52,892
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 425 shs. 09/03/04 39,473 4
------------ ------------
1,169,493 1,160,169
------------ ------------
MAXON CORPORATION
A manufacturer of industrial combustion equipment
and related shut-off valves and control valves.
12% Senior Subordinated Note due 2012 $ 962,215 09/30/04 871,318 951,150
8.75% Senior Subordinated Note due 2012 $ 1,281,112 09/30/04 1,281,112 1,279,703
Common Stock (B) 381,672 shs. 09/30/04 381,672 343,505
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 153,572 shs. 09/30/04 90,897 1,536
------------ ------------
2,624,999 2,575,894
------------ ------------
MEDASSIST, INC.
A provider of patient eligibility and accounts receivable
management services to hospitals and physician practices.
12% Senior Subordinated Note due 2011 $ 2,125,000 05/01/03 2,089,077 2,188,750
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 83,214 shs. 05/01/03 40,675 53,174
------------ ------------
2,129,752 2,241,924
------------ ------------
MOSS, INC.
A manufacturer and distributor of large display
and exhibit structures.
Senior Secured Floating Rate Tranche A Note due 2007 $ 951,601 09/21/00 951,601 951,601
12% Senior Secured Tranche B Note due 2008 $ 336,200 09/21/00 315,787 336,200
Limited Partnership Interest of
Riverside Capital Appreciation Fund I, L.P. (B) 7.47% int. * 311,481 233,600
Warrant, exercisable until 2008, to purchase
common stock at $100 per share (B) 463 shs. 09/21/00 40,344 5
------------ ------------
1,619,213 1,521,406
------------ ------------
MUSTANG VENTURES COMPANY
A natural gas gathering and processing
operation located in Oklahoma and Texas.
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 16,535 shs. 12/11/02 493,501 938,300
------------ ------------
NEFF MOTIVATION, INC.
A manufacturer and distributor of customized
awards and sportswear to schools.
12.5% Senior Subordinated Note due 2011 $ 1,062,500 01/31/03 902,141 1,098,682
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 212 shs. 01/31/03 180,625 86,937
------------ ------------
1,082,766 1,185,619
------------ ------------
* 09/20/00 and 05/23/02.
--------------------------------------------------------------------------------
14
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
NONNI'S FOOD COMPANY, INC.
A producer and distributor of premium biscotti and
bagel chips in North America.
12.25% Senior Subordinated Note due 2012 $ 1,863,462 03/29/04 $ 1,856,139 $ 1,924,540
10% Preferred Stock 255 shs. 03/29/04 255,083 260,180
Common Stock (B) 6,455 shs. 03/29/04 6,455 5,810
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 8,622 shs. 03/29/04 7,323 86
------------ ------------
2,125,000 2,190,616
------------ ------------
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 $ 414,182 06/25/99 414,182 406,202
Senior Secured Floating Rate Note due 2006 $ 2,024,364 06/25/99 2,024,330 1,983,732
12% Senior Secured Tranche B Note due 2007 $ 978,814 06/25/99 910,239 978,808
Limited Partnership Interest of Riverside XIII
Holding Company L.P. (B) 3.38% int. 06/11/99 296,883 221,438
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 201 shs. 06/25/99 142,373 2
------------ ------------
3,788,007 3,590,182
------------ ------------
NYLONCRAFT, INC.
A supplier of engineered plastic components
for the automotive industry.
9% Senior Secured Note due 2009 $ 812,500 01/28/02 812,500 883,326
11.5% Senior Subordinated Note due 2012 $ 1,500,000 01/28/02 1,365,316 1,634,038
Common Stock (B) 312,500 shs. 01/28/02 312,500 326,250
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 243,223 shs. 01/28/02 162,045 251,736
------------ ------------
2,652,361 3,095,350
------------ ------------
OLYMPIC SALES, INC.
A boat retailer in Washington state, Oregon, California
and British Columbia.
12% Senior Subordinated Note due 2006 $ 2,774,000 08/07/98 2,676,397 2,497,563
12% Senior Subordinated Note due 2008 $ 307,071 02/09/00 287,071 258,829
Limited Partnership Interest of Riverside VIII,
VIII-A and VIII-B Holding Company, L.P. (B) 1,531,250 shs. * 1,555,768 798,930
Warrants, exercisable until 2007and 2008, to purchase
common stock at $.01 per share (B) 28,648 shs. ** 389,188 287
------------ ------------
4,908,424 3,555,609
------------ ------------
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 1,948,414 2,167,500
Membership Interests of MM/Lincap
PPI Investments, Inc., LLC (B) 2.42% int. 12/21/00 265,625 265,625
------------ ------------
2,214,039 2,433,125
------------ ------------
*08/07/98, 02/23/99, 12/22/99 and 02/25/03.
**08/07/98 and 02/09/00.
--------------------------------------------------------------------------------
15
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
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 $ 1,860,111 $ 2,210,000
Warrant, exercisable until 2010, to purchase
common stock at $.02 per share (B) 351 shs. 10/25/02 296,747 320,449
------------ ------------
2,156,858 2,530,449
------------ ------------
POLYMER TECHNOLOGIES, INC./POLI-TWINE WESTERN, INC.
A manufacturer of polypropylene twine for the hay
bailing marketplace.
8% Senior Subordinated Note due 2010 (B) $ 499,977 09/27/02 499,948 --
------------ ------------
PRECISION DYNAMICS, INC.
A manufacturer of custom-designed solenoid
valves and controls.
Senior Secured Floating Rate Revolving Credit
Facility due 2004 $ 733,500 07/22/96 733,500 733,500
Senior Secured Floating Rate Term Note
due 2004 $ 700,900 07/22/96 700,900 700,900
12% Senior Secured Term Note due 2004 $ 326,000 07/22/96 322,585 326,000
8% Preferred Stock (B) 374 shs. 07/22/96 231,964 231,964
Common Stock (B) 599 shs. 07/22/96 28,978 28,978
Warrant, exercisable until 2004, to purchase
common stock at $.01 per share (B) 322 shs. 07/22/96 97,800 3
------------ ------------
2,115,727 2,021,345
------------ ------------
PROCESS CHEMICALS LLC
A specialty chemical company that manufactures
processed chemicals for the fertilizer, asphalt and
concrete industries.
Common Membership Interests 9,863 uts. * 4 --
------------ ------------
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. 08/12/94 100,350 --
Common Stock (B) 2,600 shs. ** 126,866 --
------------ ------------
227,216 --
------------ ------------
PW EAGLE, INC. - O.T.C.
An extruder of small and medium diameter plastic pipe
and tubing in the United States.
18% Senior Subordinated Note due 2007 $ 3,639,961 09/16/99 3,616,448 1,273,986
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 197,040 shs. 09/16/99 1 179,750
------------ ------------
3,616,449 1,453,736
------------ ------------
*07/31/97 and 01/04/99.
**11/14/01 and 08/12/94.
--------------------------------------------------------------------------------
16
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
QUALIS AUTOMOTIVE LLC
A distributor of aftermarket automotive brake
and chassis products.
12% Senior Subordinated Note due 2012 $ 1,770,834 05/28/04 $ 1,403,299 $ 1,800,700
Common Stock (B) 354,166 shs. 05/28/04 354,166 318,749
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 377,719 shs. 05/28/04 377,719 3,777
------------ ------------
2,135,184 2,123,226
------------ ------------
QUALSERV CORPORATION
A provider of foodservice equipment and supplies,
to major restaurant chains and their franchisees.
14% Senior Subordinated Note due 2012 $ 1,865,854 07/09/04 1,817,555 1,904,296
Limited Partnership Interest (B) 259,146 uts. 07/09/04 259,146 233,231
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 528 shs. 07/09/04 49,061 5
------------ ------------
2,125,462 2,137,532
------------ ------------
RIVER RANCH FRESH FOODS LLC
A supplier of fresh produce to the retail and
foodservice channels.
13% Senior Subordinated Note due 2011 $ 1,841,667 09/29/04 1,683,824 1,858,867
Limited Partnership Interest (B) 283,333 uts. 09/29/04 283,333 255,000
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 23,715 shs. 09/29/04 157,903 236
------------ ------------
2,125,060 2,114,103
------------ ------------
ROYAL BATHS MANUFACTURING COMPANY
A manufacturer and distributor of acrylic and cultured
marble bathroom products.
12.5% Senior Subordinated Notes due 2011 $ 1,062,500 11/14/03 947,003 1,063,028
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 140 shs. 11/14/03 122,946 1
------------ ------------
1,069,949 1,063,029
------------ ------------
SAFETY SPEED CUT MANUFACTURING COMPANY, INC.
A manufacturer of vertical panel saws and routers
for the wood working industry.
Senior Secured Floating Rate Revolving Note due 2006 $ 282,663 05/01/03 282,663 287,475
Senior Secured Floating Rate Tranche A Note due 2007 $ 1,389,760 06/02/99 1,389,760 1,389,760
12% Senior Secured Tranche B Note Due 2007 $ 1,130,652 06/02/99 1,130,652 1,130,652
Class B Common Stock (B) 1,480 shs. 06/02/99 256,212 463,418
------------ ------------
3,059,287 3,271,305
------------ ------------
SAVAGE SPORTS HOLDINGS, INC.
A manufacturer of sporting firearms.
12% Senior Subordinated Note due 2012 $ 1,583,793 09/10/04 1,425,556 1,555,240
Common Stock (B) 586 shs. 09/10/04 586,207 527,589
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 134 shs. 09/10/04 113,578 1
------------ ------------
2,125,341 2,082,830
------------ ------------
--------------------------------------------------------------------------------
17
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
SELIG ACQUISITION CORPORATION
A manufacturer of container sealing materials
for bottles used in consumer products.
12% Senior Subordinated Note due 2009 $ 2,125,000 06/13/02 $ 1,984,397 $ 2,163,250
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 2,011 shs. 06/13/02 182,023 422,247
------------ ------------
2,166,420 2,585,497
------------ ------------
SHELTER ACQUISITION, INC.
A distributor of roofing supplies and products
throughout the Midwest.
12.5% Senior Subordinated Note due 2008 $ 1,517,857 08/01/02 1,357,694 1,548,214
Common Stock (B) 758,929 shs. * 758,929 683,036
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 263,444 shs. 08/01/02 216,446 2,634
------------ ------------
2,333,069 2,233,884
------------ ------------
SNYDER INDUSTRIES, INC.
A manufacturer of proprietary rotationally molded
polyethylene containers.
12.25% Senior Subordinated Note due 2007 $ 3,125,000 12/06/99 2,895,267 3,156,250
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 513 shs. 12/06/99 426,136 77,187
------------ ------------
3,321,403 3,233,437
------------ ------------
SPECIALTY FOODS GROUP, INC.
A manufacturer and distributor of branded meat products.
Limited Partnership Interest of MHD Holdings LLC (B) 1.43% int. 08/29/00 525,155 93,180
------------ ------------
SPORT COURT INTERNATIONAL, INC.
A designer and manufacturer of synthetic indoor and outdoor
sports flooring and other temporary flooring products.
Senior Secured Floating Rate Revolving Note due 2009 $ 185,750 08/12/04 185,750 183,959
Senior Secured Floating Rate Note due 2009 $ 527,171 08/12/04 527,171 521,944
12% Senior Secured Note due 2012 $ 254,282 08/12/04 236,88 256,479
Limited Partnership Interest (B) 65,830 uts. 08/12/04 65,830 59,247
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 33 shs. 08/12/04 17,598 --
------------ ------------
1,033,233 1,021,629
------------ ------------
STRATEGIC EQUIPMENT & SUPPLY CORPORATION, INC.
A provider of kitchen and restaurant design, equipment
fabrication and installation services.
12% Senior Subordinated Note due 2008 $ 3,875,000 01/14/00 3,506,418 3,913,750
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 106,539 shs. 01/14/00 658,751 --
------------ ------------
4,165,169 3,913,750
------------ ------------
* 08/01/02 and 01/17/03
--------------------------------------------------------------------------------
18
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
SYNVENTIVE EQUITY LLC
A manufacturer of hot runner systems used in
the plastic injection molding process.
12% Senior Subordinated Note due 2007 $ 1,841,667 08/21/03 $ 1,773,893 $ 1,878,500
Limited Partnership Interest (B) 0.61% int. 08/20/03 283,333 283,333
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 86,780 shs. 08/21/03 85,000 868
------------ ------------
2,142,226 2,162,701
------------ ------------
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.
13% Senior Subordinated Note due 2009 $ 2,712,000 02/05/98 2,483,428 2,712,000
Common Stock (B) 630 shs. 02/04/98 630,000 534,477
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 444 shs. 02/05/98 368,832 376,675
------------ ------------
3,482,260 3,623,152
------------ ------------
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. 07/25/96 1,120,000 1,008,000
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 474 shs. 07/25/96 48,216 426,384
------------ ------------
1,728,216 1,966,384
------------ ------------
TINNERMAN-PALNUT ENGINEERED COMPONENTS
A manufacturer of precision engineered metal
and plastic fasteners and assembly components.
12.75% Senior Subordinated Note due 2008 $ 1,125,000 12/06/01 863,812 1,136,250
Class B Unit (B) 100,000 uts. 12/06/01 73,529 66,177
Class C Unit (B) 174,125 uts. 12/06/01 128,033 115,231
------------ ------------
1,065,374 1,317,658
------------ ------------
TOMAH HOLDINGS, INC.
A manufacturer of specialty chemicals.
16% Senior Subordinated Note due 2011 $ 1,416,667 12/08/03 1,365,371 1,448,523
16% Preferred Stock Series A (B) 37 shs. 12/08/03 631,630 644,355
Common Stock (B) 5,269 shs. 12/08/03 131,471 118,323
------------ ------------
2,128,472 2,211,201
------------ ------------
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 $ 1,579,293 01/20/00 1,579,293 1,564,492
12% Senior Subordinated Note due 2010 $ 1,326,500 01/20/00 1,261,379 1,311,814
Common Stock (B) 227,400 shs. 01/20/00 227,400 181,920
Warrant, exercisable until 2010, to purchase
common stock at $1 per share (B) 260,563 shs. 01/20/00 98,540 2,606
------------ ------------
3,166,612 3,060,832
------------ ------------
--------------------------------------------------------------------------------
19
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
TRUSTILE DOORS, INC.
A manufacturer and distributor of interior doors.
12.5% Senior Subordinated Note due 2010 $ 1,062,500 04/11/03 $ 979,923 $ 1,075,244
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 5,781 shs. 04/11/03 95,625 58
------------ ------------
1,075,548 1,075,302
------------ ------------
TUBULAR TEXTILE MACHINERY
A designer, manufacturer, sale and servicer of finishing
machinery for the knit and woven segments of the
global textile industry.
12% Senior Subordinated Note due 2014 $ 1,234,551 05/28/04 1,106,556 1,258,232
8.75% Senior Secured Note due 2011 $ 716,292 05/28/04 716,292 733,910
Common Stock (B) 674,157 shs. 05/28/04 674,157 606,741
Warrant, exercisable until 2012, to purchase
common stock at $1 per share (B) 203,912 shs. 05/28/04 130,788 2,039
------------ ------------
2,627,793 2,600,922
------------ ------------
TVI, INC.
A retailer of used clothing in the United States,
Canada and Australia.
Common Stock (B) 354,167 shs. 05/02/00 267,786 414,375
------------ ------------
U S M HOLDINGS CORP.
A provider of facility maintenance services to retail and
corporate clients with multiple locations.
12% Senior Subordinated Note due 2011 $ 1,789,474 08/06/03 1,515,421 1,827,074
Preferred Stock (B) 3,345 shs. 08/06/03 334,494 301,045
Common Stock (B) 1,032 shs. 08/06/03 1,032 929
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 949 shs. 08/06/03 298,198 9
------------ ------------
2,149,145 2,129,057
------------ ------------
U-LINE CORPORATION
A manufacturer of high-end, built-in, undercounter
icemaking, wine storage and refrigeration appliances.
12.5% Senior Subordinated Note due 2012 $ 1,882,100 04/30/04 1,675,711 1,907,576
10% Jr Subordinated Note due 2012 $ 60,700 04/30/04 60,700 60,734
Common Stock (B) 182 shs. 04/30/04 182,200 163,980
Warrant, exercisable until 2012, to purchase
common stock at $1 per share (B) 230 shs. 04/30/04 211,736 2
------------ ------------
2,130,347 2,132,292
------------ ------------
VICTORY VENTURES LLC
An acquirer of controlling or substantial interests
in other entities.
Series A Preferred Units (B) 0.13% int. 12/02/96 1 2
------------ ------------
--------------------------------------------------------------------------------
20
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares, Units,
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Principal Amount Date Cost Fair Value
------------ ------------ ------------ ------------
VITALITY FOODSERVICE, INC.
A non-carbonated beverage dispensing company
focused on the foodservice industry.
13% Senior Subordinated Note due 2011 $ 1,887,288 09/24/04 $ 1,700,628 $ 1,903,980
Common Stock (B) 23,771 shs. 09/24/04 237,710 213,939
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 23,787 shs. 09/24/04 186,883 238
------------ ------------
2,125,221 2,118,157
------------ ------------
VITEX PACKAGING GROUP, INC.
A manufacturer of specialty packaging, primarily envelopes
and tags used on tea bags and medical and food products.
12.5% Senior Subordinated Note due 2012 $ 1,700,000 07/19/04 1,483,065 1,701,690
Limited Partnership Interest Class A (B) 414,375 uts. 07/19/04 414,375 372,938
Limited Partnership Interest Class B (B) 182,935 uts. 07/19/04 182,935 164,642
------------ ------------
2,080,375 2,239,270
------------ ------------
WALLS INDUSTRIES, INC.
A provider of branded workwear and sporting goods apparel.
10% Senior Subordinated Lien Note due 2009 $ 1,043,860 07/12/04 1,043,860 1,028,686
14% Senior Subordinated Note due 2012 $ 1,043,859 07/12/04 1,041,026 1,027,765
Limited Partnership Interest (B) 37,281 uts. 07/12/04 37,281 33,553
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 4,029 shs. 07/12/04 2,833 40
------------ ------------
2,125,000 2,090,044
------------ ------------
WASHINGTON INVENTORY SERVICES, INC.
A provider of physical inventory taking and other
related services to retailers.
12.5% Senior Subordinated Note due 2011 $ 1,075,768 11/03/00 1,055,128 1,097,283
Senior Preferred Stock (B) 4,692 shs. 11/01/00 224,031 218,567
Class B Common Stock (B) 8,959 shs. 11/01/00 8,959 82,486
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 3,979 shs. 11/03/00 -- 36,599
------------ ------------
1,288,118 1,434,935
------------ ------------
WEASLER HOLDINGS LLC
A manufacturer of mechanical power transmission
components for the agricultural, lawn and turf industries.
Limited Partnership Interest (B) 1.55% int. 02/03/03 101,190 97,142
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 256 shs. 02/04/03 209,829 3
------------ ------------
311,019 97,145
------------ ------------
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 $ 2,520,040 11/09/01 2,510,467 2,385,303
------------ ------------
TOTAL PRIVATE PLACEMENT INVESTMENTS $170,630,816 $155,523,703
------------ ------------
--------------------------------------------------------------------------------
21
CONSOLIDATED SCHEDULE OF INVESTMENTS(CONT) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares or
Interest Due Principal
CORPORATE RESTRICTED SECURITIES (A) (CONTINUED) Rate Date Amount Cost Fair Value
---- ---- ------ ---- ----------
RULE 144A SECURITIES - 10.02%: (A)
BONDS - 9.63%
A E S Corporation 8.750% 05/15/13 $ 1,025,000 $ 1,131,599 $ 1,155,687
A E S Corporation 9.000 05/15/15 200,000 200,000 225,500
Appleton Papers Inc. 8.125 06/15/11 300,000 300,000 309,000
Argo Tech Corporation 9.250 06/01/11 850,000 850,000 911,625
BCP Caylux Holding Lux SCA 9.625 06/15/14 750,000 752,455 810,000
Blockbuster, Inc. 9.000 09/01/12 350,000 350,000 363,125
Bombardier Capital, Inc. 6.300 05/01/14 1,000,000 890,000 863,638
Cablevision Systems Corporation 5.670 04/01/09 1,000,000 1,000,000 1,040,000
Cadmus Communications Corporation 8.375 06/15/14 750,000 750,000 808,125
Calpine Corporation 8.750 07/15/13 500,000 465,000 377,500
Charter Communications Op LLC 8.000 04/30/12 250,000 249,375 249,375
Chesapeake Energy Corporation 7.000 08/15/14 325,000 325,000 343,688
Collins & Aikman Products Co. 12.875 08/24/12 300,000 289,323 276,750
Dana Credit Corporation 8.375 08/15/07 500,000 500,000 551,250
GulfMark Offshore, Inc. 7.750 07/15/14 565,000 562,599 572,063
Imax Corporation 9.625 12/01/10 500,000 500,000 498,750
Interactive Health LLC 7.250 04/01/11 900,000 732,628 774,000
Jostens I H Corporation 7.625 10/01/12 1,250,000 1,250,000 1,256,250
K 2, Inc. 7.375 07/01/14 325,000 325,000 344,500
Land O'Lakes, Inc. 9.000 12/15/10 750,000 750,000 780,937
M G M Mirage, Inc. 6.000 10/01/09 375,000 380,593 380,156
Metaldyne Corporation 10.000 11/01/13 510,000 514,063 474,300
N R G Energy, Inc. 8.000 12/15/13 700,000 700,000 749,875
North American Energy Partners 8.750 12/01/11 400,000 400,000 390,000
O E D Corp/Diamond Jo Company Guarantee 8.750 04/15/12 1,000,000 985,960 925,000
Pacific Energy Partners 7.125 06/15/14 500,000 491,270 541,250
Pinnacle Foods Holding 8.250 12/01/13 450,000 450,000 424,125
Sheridan Acquisition Corporation 10.250 08/15/11 375,000 370,001 405,938
Siebe PLC 6.500 01/15/10 650,000 572,000 588,250
Stanadyne Corporation 10.000 08/15/14 1,500,000 1,500,000 1,560,000
Tenet Healthcare Corporation 9.875 07/01/14 500,000 488,370 522,500
Warner Music Group 7.375 04/15/14 275,000 275,000 284,625
Wornick Co. 10.875 07/15/11 750,000 750,000 802,500
------------ ------------ ------------
TOTAL BONDS $ 20,375,000 20,050,236 20,560,282
============ ------------ ------------
COMMON STOCK - 0.00%
Jordan Telecom Products (B) 70 $ 14,000 --
------------ ------------
TOTAL COMMON STOCK 14,000 --
------------ ------------
CONVERTIBLE BONDS - 0.39%
Cymer, Inc. 3.500% 02/15/09 $ 850,000 $ 850,000 $ 840,438
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 850,000 850,000 840,438
============ ------------ ------------
CONVERTIBLE PREFERRED STOCK - 0.00%
D T Industries, Inc. (B) 20,000 $ 1,000,000 --
------------ ------------
TOTAL CONVERTIBLE PREFERRED 1,000,000 --
------------ ------------
WARRANTS - 0.00%
Winsloew Furniture, Inc. (B) 900 $ 9 $ 14
------------ ------------
TOTAL WARRANTS 9 14
------------ ------------
TOTAL RULE 144A SECURITIES 21,914,245 21,400,734
------------ ------------
TOTAL CORPORATE RESTRICTED SECURITIES $192,545,061 $176,924,437
------------ ------------
--------------------------------------------------------------------------------
22
CONSOLIDATED SCHEDULE OF INVESTMENTS(CONT) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Interest Due Principal
CORPORATE PUBLIC SECURITIES - 23.15%: (A) Rate Date Amount Cost Market Value
---- ---- ------ ---- ------------
BONDS - 20.28%
A E P Industries, Inc. 9.875% 11/15/07 $ 350,000 $ 333,375 $ 356,563
Activant Solutions Inc 10.500 06/15/11 700,000 703,738 721,000
Aearo Co. 8.250 04/15/12 450,000 450,000 459,000
Alamosa Delaware, Inc. 11.000 07/31/10 325,000 330,477 368,062
Alamosa Delaware, Inc. 8.500 01/31/12 400,000 400,000 405,000
Allied Waste NA 7.375 04/15/14 1,000,000 975,000 962,500
American Media Operation, Inc. 8.875 01/15/11 900,000 901,718 933,750
Bally Total Fitness Holding Corporation 9.875 10/15/07 135,000 128,925 109,350
C S C Holdings, Inc. 7.625 04/01/11 500,000 502,244 526,875
Cenveo Corporation 7.875 12/01/13 1,100,000 1,100,000 1,072,500
Charter Comm Holdings LLC 10.000 04/01/09 1,000,000 815,000 810,000
Chemed Corporation 8.750 02/24/11 1,125,000 1,125,000 1,158,750
Cincinnati Bell, Inc. 8.375 01/15/14 1,100,000 1,007,500 1,003,750
Collins & Aikman Products Co. 10.750 12/31/11 700,000 722,077 700,000
Dana Corporation 9.000 08/15/11 500,000 526,977 603,750
Del Monte Corporation 8.625 12/15/12 225,000 225,000 250,312
Dollar Financial Group 9.750 11/15/11 600,000 600,000 636,000
Dominos, Inc. 8.250 07/01/11 292,000 289,892 316,090
Dynegy Holdings, Inc. 6.875 04/01/11 500,000 422,500 476,250
Esterline Technologies 7.750 06/15/13 200,000 200,000 214,000
Flextronics Intl Ltd 6.500 05/15/13 400,000 400,000 409,000
G F S I, Inc. 9.625 03/01/07 750,000 673,418 725,625
Gencorp, Inc. 9.500 08/15/13 400,000 400,000 428,000
General Nutrition Center 8.500 12/01/10 800,000 820,534 818,000
Goodyear Tire & Rubber Co. 7.857 08/15/11 650,000 607,750 612,625
Great Lakes Dredge & Dock Corporation 7.750 12/15/13 750,000 679,250 648,750
Houghton Mifflin Co. 9.875 02/01/13 1,000,000 1,056,671 1,050,000
Huntsman LLC 11.625 10/15/10 500,000 494,075 578,750
Intrawest Corporation 7.500 10/15/13 500,000 500,000 518,125
Koppers Inc. 9.875 10/15/13 700,000 700,000 773,500
Leucadia National Corporation 7.000 08/15/13 650,000 663,801 646,750
Lodgenet Entertainment Corp. 9.500 06/15/13 425,000 425,000 463,250
Lyondell Chemical Co. 9.500 12/15/08 900,000 923,539 982,125
M C I, Inc. 7.735 05/01/14 1,000,000 905,000 947,500
M S X International, Inc. 11.000 10/15/07 350,000 347,004 346,500
Majestic Star Casino LLC 9.500 10/15/10 500,000 500,000 510,000
Manitowoc Company, Inc. 7.125 11/01/13 200,000 200,000 211,500
Mediacom LLC/Mediacom Capital 9.500 01/15/13 1,150,000 1,136,000 1,106,875
Metaldyne Corporation 11.000 06/15/12 750,000 601,250 596,250
Mrs Fields Brands/Finance 11.500 03/15/11 750,000 713,710 731,250
Nalco Company 7.750 11/15/11 500,000 500,000 530,000
National Wine & Spirits, Inc. 10.125 01/15/09 500,000 485,250 480,000
Neff Corporation 10.250 06/01/08 170,000 168,062 144,500
Nextel Communications Corporation 7.375 08/01/15 700,000 714,238 752,500
Numatics, Inc. 9.625 04/01/08 550,000 539,705 495,000
O M Group, Inc. 9.250 12/15/11 750,000 777,882 781,875
Offshore Logistics, Inc. 6.125 06/15/13 450,000 450,000 456,750
Pliant Corporation 0.000 06/15/09 875,000 743,979 748,125
Pliant Corporation 13.000 06/01/10 1,000,000 936,875 860,000
Quintiles Transnational Corporation 10.000 10/01/13 500,000 500,000 530,000
Rayovac Corporation 8.500 10/01/13 200,000 200,000 217,000
Rent-A-Center, Inc. 7.500 05/01/10 400,000 400,000 414,000
Rent-Way, Inc. 11.875 06/15/10 800,000 848,346 872,000
Rhodia SA 10.250 06/01/10 800,000 830,161 828,000
Rhodia SA 8.875 06/01/11 500,000 499,668 435,000
S P X Corporation 6.250 06/15/11 400,000 400,000 390,000
Sea Containers Ltd. 10.500 05/15/12 785,000 765,065 801,681
Service Corp International 6.000 12/15/05 41,000 41,232 42,128
--------------------------------------------------------------------------------
23
CONSOLIDATED SCHEDULE OF INVESTMENTS(CONT) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Shares or
Interest Due Principal
CORPORATE PUBLIC SECURITIES: (A)(CONTINUED) Rate Date Amount Cost Market Value
---- ---- ------ ---- ------------
Ship Finance Intl Ltd 8.500% 12/15/13 $ 750,000 $ 750,000 $ 746,250
Sports Club Co. 11.375 03/15/06 150,000 145,500 142,500
Tekni-Plex, Inc. 12.750 06/15/10 1,000,000 960,125 835,000
Telex Communications, Inc. 11.500 10/15/08 500,000 500,000 540,000
Telex Communications, Inc. 0.000 01/15/09 471,915 206,820 259,553
Tenet Healthcare Corporation 6.375 12/01/11 500,000 482,500 448,750
Tenneco Automotive, Inc. 10.250 07/15/13 400,000 400,000 456,000
Thermadyne LLC 9.250 02/01/14 750,000 738,750 729,375
Triton P C S, Inc. 8.500 06/01/13 550,000 550,000 499,125
United Rentals, Inc. 7.750 11/15/13 625,000 625,000 585,938
United Rentals, Inc. 7.000 02/15/14 500,000 500,000 443,750
Vicorp Restaurants Inc 10.500 04/15/11 600,000 592,746 597,000
Von Hoffman Press, Inc. 10.250 03/15/09 200,000 209,797 222,000
Vought Aircraft Industries 8.000 07/15/11 1,000,000 1,001,168 960,000
Williams Scotsman, Inc. 9.875 06/01/07 500,000 492,500 478,750
Winsloew Furniture, Inc. 12.750 08/15/07 455,000 444,622 375,375
------------ ------------ ------------
TOTAL BONDS $ 44,099,915 42,906,416 43,285,802
============ ------------ ------------
COMMON STOCK - 2.37%
D T Industries, Inc. (B) 178,876 $ 1,168,093 $ 537
E O S International, Inc. (B) 100,000 300,000 12,000
H C I Direct, Inc. (B) 1,000 -- --
PepsiAmericas, Inc. 92,145 2,006,365 1,759,969
Rent-Way, Inc. (B) 92,866 916,263 636,132
Supreme Industries, Inc. 115,722 267,325 698,961
T G C Industries, Inc. (B) 6,361 9,496 14,630
Transmontaigne, Inc. (B) 333,326 1,109,177 1,939,957
------------ ------------
TOTAL COMMON STOCK 5,776,719 5,062,186
------------ ------------
CONVERTIBLE BONDS - 0.50%
Leucadia National Corporation 3.750% 04/15/14 $ 1,000,000 $ 1,000,000 $ 1,075,000
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 1,000,000 1,000,000 1,075,000
============ ------------ ------------
PREFERRED STOCK - 0.00%
Telex Communications, Inc. 17,707 $ 1 $ 177
------------ ------------
TOTAL PREFERRED STOCK 1 177
------------ ------------
WARRANTS - 0.00%
Telex Communications, Inc. 698 $ 7 $ 7
------------ ------------
TOTAL WARRANTS 7 7
------------ ------------
TOTAL CORPORATE PUBLIC SECURITIES $ 49,683,143 $ 49,423,172
------------ ------------
Interest Due Principal
SHORT-TERM SECURITIES: Rate/Yield Date Amount Cost Market Value
---------- ---- ------ ---- ------------
COMMERCIAL PAPER - 2.25%
Textron Financial Corporation 1.800% 10/06/04 $ 3,205,000 $ 3,204,199 $ 3,204,199
Wisconsin Electric Power Co. 1.760 10/04/04 1,590,000 1,589,767 1,589,767
------------ ------------ ------------
TOTAL SHORT-TERM SECURITIES $ 4,795,000 $ 4,793,966 $ 4,793,966
============ ------------ ------------
TOTAL INVESTMENTS 108.27% $247,022,170 $231,141,575
============ ------------
Other Assets 5.32 11,361,470
Liabilities (13.59) (29,021,062)
-------- ------------
TOTAL NET ASSETS 100.00% $213,481,986
======== ============
(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.
--------------------------------------------------------------------------------
24
CONSOLIDATED SCHEDULE OF INVESTMENTS(CONT) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Fair Value/ Fair Value/
INDUSTRY CLASSIFICATION: Market Value INDUSTRY CLASSIFICATION:(CONT.) Market Value
-------------- --------------
AEROSPACE - 1.97% BUILDINGS & REAL ESTATE - 5.06%
Argo Tech Corporation $ 911,625 A W C Holding Company $ 2,109,898
Esterline Technologies 214,000 Adorn, Inc. 2,233,353
Qualis Automotive LLC 2,123,226 Eagle Window & Door Holding Co. 3,143,172
Vought Aircraft Industries 960,000 Shelter Acquisition, Inc. 2,233,884
-------------- TruStile Doors, Inc. 1,075,302
4,208,851 --------------
-------------- 10,795,609
--------------
AUTOMOBILE - 7.77% CARGO TRANSPORT - 2.43%
America's Body Company, Inc./LCP Kenan-Advantage Transport Company 2,467,787
Holding Co. 2,625,002 Ship Finance International Ltd. 746,250
Collins & Aikman Products Co. 976,750 Tidewater Holdings, Inc. 1,966,384
Dana Corporation 603,750 --------------
Gencorp, Inc. 428,000 5,180,421
Goodyear Tire & Rubber Co. 612,625 --------------
Jason, Inc. 1,573,293 CHEMICAL, PLASTICS & RUBBER - 3.09%
LIH Investors, L.P. 5,140,331 Capital Specialty Plastics, Inc. 503
Metaldyne Corporation 1,070,550 Huntsman LLC 578,750
Nyloncraft, Inc. 3,095,350 Koppers Inc. 773,500
Tenneco Automotive, Inc. 456,000 Lyondell Chemical Co. 982,125
-------------- O M Group, Inc. 781,875
16,581,651 Process Chemicals LLC --
-------------- Rhodia SA 1,263,000
BEVERAGE, DRUG & FOOD - 6.18% Tomah Holdings, Inc. 2,211,201
Beta Brands Ltd -- --------------
Cains Foods, L.P. 194,418 6,590,954
Del Monte Corporation 250,312 --------------
Dominos, Inc. 316,090 CONSUMER PRODUCTS - 8.07%
Eagle Pack Pet Foods, Inc. 1,059,296 Appleton Papers, Inc. 309,000
Land O' Lakes, Inc. 780,937 Colibri Holdings Corporation 1,912,044
National Wine & Spirit Inc. 480,000 Euro-Pro Corporation 2,145,118
Nonni's Food Company, Inc. 2,190,616 G F S I, Inc. 725,625
PepsiAmericas, Inc. 1,759,969 H C I Direct, Inc. --
Pinnacle Foods Holdings 424,125 K 2, Inc. 344,500
River Ranch Fresh Foods LLC 2,114,103 Maverick Acquisition Company 1,160,169
Specialty Foods Group, Inc. 93,180 Neff Motivation, Inc. 1,185,619
Vicorp Restaurants, Inc. 597,000 Rayovac Corporation 217,000
Vitality Foodservice, Inc. 2,118,157 Royal Baths Manufacturing Company 1,063,029
Wornick Co. 802,500 Savage Sports Holdings, Inc. 2,082,830
-------------- The Tranzonic Companies 3,623,152
13,180,703 Walls Industries, Inc. 2,090,044
-------------- Winsloew Furniture, Inc. 375,389
BROADCASTING --------------
& ENTERTAINMENT - 2.47% 17,233,519
C S C Holdings, Inc. 526,875 --------------
Cablevision Systems Corporation 1,040,000 CONTAINERS, PACKAGING & GLASS - 6.60%
Cenveo Corporation 1,072,500 A E P Industries, Inc. 356,563
Charter Communications Holdings LLC 810,000 Paradigm Packaging, Inc. 2,433,125
Charter Communications Op LLC 249,375 Pliant Corporation 1,608,125
Lodgenet Entertainment Corporation 463,250 Sea Containers Ltd. 801,681
Mediacom Communications Corporation 1,106,875 Selig Acquisition Corporation 2,585,497
-------------- Snyder Industries, Inc. 3,233,437
5,268,875 Tekni-Plex, Inc. 835,000
-------------- Vitex Packaging, Inc. 2,239,270
--------------
14,092,698
--------------
--------------------------------------------------------------------------------
25
CONSOLIDATED SCHEDULE OF INVESTMENTS(CONT) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Fair Value/ Fair Value/
INDUSTRY CLASSIFICATION: (CONT.) Market Value INDUSTRY CLASSIFICATION:(CONT.) Market Value
-------------- --------------
DISTRIBUTION - 6.27% FARMING & AGRICULTURE - 0.00%
Corvest Group, Inc. $ 3,712,360 Polymer Technologies, Inc./Poli-Twine
G C-Sun Holdings LP 1,293,750 Western, Inc. --
Kele and Associates, Inc. 2,321,133 Protein Genetics, Inc. --
QualServ Corporation 2,137,532 --------------
Strategic Equip & Supply Corporation, Inc. 3,913,750
-------------- FINANCIAL SERVICES - 2.33%
13,378,525 BCP Caylux Holding Lux SCA $ 810,000
-------------- Dana Credit Corporation 551,250
DIVERSIFIED/CONGLOMERATE, Dollar Financial Group 636,000
MANUFACTURING - 4.21% East River Ventures I, L.P. 27,300
Activant Solutions Inc 721,000 Highgate Capital LLC 2,723
Coining of America LLC 1,937,802 Leucadia National Corporation 1,721,750
Dexter Magnetics Technologies, Inc. 989,209 Mrs. Fields Brands / Finance 731,250
Evans Consoles, Inc. 602,000 Victory Ventures LLC 2
Great Lakes Dredge & Dock Corporation 648,750 Williams Scotsman, Inc. 478,750
S P X Corporation 390,000 --------------
Tinnerman-Palnut Engineered Components 1,317,658
Wicor Americas, Inc. 2,385,303 4,959,025
-------------- --------------
8,991,722
-------------- HEALTHCARE, EDUCATION
DIVERSIFIED/CONGLOMERATE, & CHILDCARE - 4.25%
SERVICE - 6.85% A T I Acquisition Company 2,115,389
Allied Waste NA 962,500 American Hospice Management 2,426,740
Bombardier Capital, Inc. 863,638 Interactive Health LLC 774,000
CapeSuccess LLC 5,862 MedAssist, Inc. 2,241,924
Chemed Corporation 2,273,552 Quintiles Transnational Corporation 530,000
Diversco, Inc./DHI Holdings, Inc. 1,392,069 Tenet Healthcare Corporation 971,250
Dwyer Group, Inc. 2,440,293 --------------
Examination Management Services, Inc. -- 9,059,303
Hamilton Funeral Services Centers, Inc. 380,271 --------------
Lancaster Laboratories, Inc. 821,243
Moss, Inc. 1,521,406 HOME & OFFICE FURNISHINGS,
M S X International, Inc. 346,500 HOUSEWARES, AND DURABLE
Service Corp International 42,128 CONSUMER PRODUCTS - 4.04%
U S M Holdings Corporation 2,129,057 Home Decor Holding Company 2,130,938
Washington Inventory Services, Inc. 1,434,935 Hussey Seating Corporation 3,332,316
-------------- Sport Court Int'l, Inc. 1,021,629
14,613,454 U-Line Corporation 2,132,292
-------------- --------------
ELECTRONICS - 3.59% 8,617,175
A E S Corporation 1,381,187 --------------
Calpine Corporation 377,500
Directed Electronics, Inc. 2,143,423 LEISURE, AMUSEMENT,
Flextronics International Ltd. 409,000 ENTERTAINMENT - 2.33%
N R G Energy, Inc. 749,875 Bally Total Fitness Holding Corporation 109,350
Precision Dynamics, Inc. 2,021,345 IMAX Corporation 498,750
Siebe PLC 588,250 Intrawest Corporation 518,125
-------------- Keepsake Quilting, Inc. 1,749,769
7,670,580 M G M Mirage, Inc. 380,156
-------------- Majestic Star Casino LLC 510,000
O E D Corp/Diamond Jo Company Guarantee 925,000
Warner Music Group 284,625
--------------
4,975,775
--------------
--------------------------------------------------------------------------------
26
CONSOLIDATED SCHEDULE OF INVESTMENTS(CONT) MASSMUTUAL CORPORATE INVESTORS
September 30, 2004
(Unaudited)
Fair Value/ Fair Value/
INDUSTRY CLASSIFICATION: (CONT.) Market Value INDUSTRY CLASSIFICATION:(CONT.) Market Value
-------------- --------------
MACHINERY - 12.20% PUBLISHING/PRINTING - 2.19%
Aearo Co. $ 459,000 American Media Operation, Inc. $ 933,750
C & M Conveyor, Inc. 2,113,836 Cadmus Communications Corporation 808,125
D T Industries, Inc. 537 Houghton Mifflin Co. 1,050,000
Integration Technology Systems, Inc. 1,666,474 Jostens I H Corporation 1,256,250
Manitowoc Company, Inc. 211,500 Sheridan Acquisition Corporation 405,938
Maxon Corporation 2,575,894 Von Hoffman Press, Inc. 222,000
N P C, Inc. 3,590,182 --------------
Numatics, Inc. 495,000 4,676,063
P W Eagle, Inc. 1,453,736 --------------
Safety Speed Cut Manufacturing
Company, Inc. 3,271,305 RETAIL STORES - 5.12%
Stanadyne Corporation 1,560,000 Blockbuster, Inc. 363,125
Synventive Equity LLC 2,162,701 E O S International, Inc. 12,000
Thermadyne LLC 729,375 General Nutrition Center 818,000
Tronair, Inc. 3,060,832 Neff Corporation 144,500
Tubular Textile Machinery 2,600,922 Olympic Sales, Inc. 3,555,609
Weasler Holdings LLC 97,145 P H I Holding Company 2,530,449
-------------- Rent-A-Center, Inc. 414,000
26,048,439 Rent-Way, Inc. 1,508,132
-------------- Sports Club Co. 142,500
TVI, Inc. 414,375
MEDICAL DEVICES/BIOTECH - 2.47% United Rentals, Inc. 1,029,688
Bausch & Lomb, Inc. -- --------------
Beacon Medical Products, Inc. 1,975,446 10,932,378
Coeur, Inc. 1,134,870 --------------
D H D Healthcare, Inc. --
E X C Acquisition Corporation 2,151,457 TECHNOLOGY - 0.60%
Invitrogen Corporation -- Cymer, Inc. 840,438
-------------- Delstar Holding Corporation 441,596
5,261,773 --------------
-------------- 1,282,034
--------------
MINING, STEEL, IRON
& NON PRECIOUS METALS - 0.05% TELECOMMUNICATIONS - 2.24%
Better Minerals & Aggregates 108,991 Alamosa Delaware, Inc. 773,062
-------------- Cincinnati Bell, Inc. 1,003,750
OIL AND GAS - 2.99% Jordan Telecom Products --
Centerpoint Energy, Inc. -- MCI, Inc. 947,500
Chesapeake Energy Corporation 343,688 Nextel Communications Corporation 752,500
Dynegy Holdings, Inc. 476,250 Telex Communications, Inc. 799,737
GulfMark Offshore, Inc. 572,063 Triton P C S, Inc. 499,125
Mustang Ventures Company 938,300 --------------
North American Energy Partners 390,000 4,775,674
Offshore Logistics, Inc. 456,750 --------------
Pacific Energy Partners 541,250 UTILITIES - 0.25%
Supreme Industries, Inc. 698,961 Nalco Co. 530,000
T G C Industries, Inc. 14,630 --------------
Transmontaigne, Inc. 1,939,957
-------------- Total Investments - 106.02% $ 226,347,609
6,371,849 ==============
--------------
PHARMACEUTICALS - 0.45%
Enzymatic Therapy, Inc. 961,568
--------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(UNAUDITED)
1. HISTORY
MassMutual Corporate Investors (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 reorganized as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts, effective November 28, 1985.
The Trust is a closed-end management investment company. Babson Capital
Management LLC, formerly David L. Babson & Company Inc. ("Babson"), a
wholly-owned indirect subsidiary of Massachusetts Mutual Life Insurance
Company, ("MassMutual"), acts as its investment adviser. The Trust's
investment objective is to maintain a portfolio of securities providing a
fixed yield while providing an opportunity for capital gains, by investing
primarily in a portfolio of privately placed below, investment grade, long
term corporate debt obligations with equity features, such as warrants,
conversions rights or other equity features and, occasionally, preferred
stocks purchased directly from their issuers.
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. Footnote
2-D, below discusses the Federal tax consequences of the MMCI Subsidiary
Trust.
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, absent an exemption from
registration, restricted securities can be sold only 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 Trust's Board of Trustees (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 for purchase; 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.
--------------------------------------------------------------------------------
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
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 Trust's Board of Trustees 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 or of Babson, the
Trust's investment adviser. 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
$155,523,701 (72.85% of net assets) as of September 30, 2004, 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 September 30, 2004, 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 the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on
the accrual basis. The Trust does not accrue income when payment is
delinquent and when management believes payment is questionable.
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.
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.
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
long-term 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.
--------------------------------------------------------------------------------
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
The Trust is taxed as a regulated investment company and is therefore
limited as to the amount of non-qualified income that it may receive as the
result of operating a trade or business, e.g. the Trust's pro rata share of
income allocable to the Trust by a partnership operating company. The
Trust's violation of this limitation could result in the loss of its status
as a regulated investment company, thereby subjecting all of its net income
and capital gains to corporate taxes prior to distribution to its
shareholders. The Trust, from time-to-time, identifies investment
opportunities in the securities of entities that could cause such trade or
business income to be allocable to the Trust. The MMCI Subsidiary Trust
(described in Footnote 1, above) was formed in order to allow investment in
such securities without adversely affecting the Trust's status as a
regulated investment company.
The MMCI Subsidiary Trust is not taxed as a regulated investment company.
Accordingly, prior to the Trust receiving any distributions from the MMCI
Subsidiary Trust, all of the MMCI Subsidiary Trust's taxable income and
realized gains, including non-qualified income and realized gains, is
subject to taxation at prevailing corporate tax rates.
3. INVESTMENT SERVICES FEE
Under an Investment Services Contract with the Trust dated July 1, 1988,
Babson has agreed to use its best efforts to present to the Trust a
continuing and suitable investment program consistent with the investment
objectives and policies of the Trust. Babson has further agreed that it
will request each issuer of securities which MassMutual is prepared to
purchase in a private placement, and which would be consistent with the
investment objectives and policies of the Trust, to also offer such
securities to the Trust. Babson will use its best efforts to insure that
issuers accede to such requests. MassMutual has agreed that, subject to
such orders of the Securities and Exchange Commission as may apply, it will
invest concurrently with the Trust in any such investment. Babson
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. Under the contract, Babson provides
administration of the day-to-day operations of the Trust and 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, 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 Industrials Composite (formerly called the Standard &
Poor's Industrial Price Index) and the Lehman Brothers Intermediate Credit
Bond Index (formerly called the Lehman Brothers Intermediate U.S. Corporate
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 Standard & Poor's Industrials Composite is not
readily available to the general public. FactSet Research Systems provides
Babson Capital with the information for this index. The 3-year annualized
return for the Standard & Poor's Industrials Composite for the period
ending September 30, 2004 was 3.48%. 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 under the
Contract 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,
and September 30, 2004 was:
PERFORMANCE
ADJUSTMENT AMOUNT
---------- ------
March 31, 2004 0.0625% $127,113
June 30, 2004 0.0625% $130,956
September 30, 2004 0.0625% $117,766*
* Net of fee waiver of $15,565. See second paragraph of note 7.
--------------------------------------------------------------------------------
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
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 the nine
months ended September 30, 2004, the Trust incurred total interest expense
on the Note of $1,108,500.
The Trust may redeem the Note, in whole or in part, at the principal amount
proposed to be redeemed together with the accrued and unpaid interest
thereon through the redemption date plus the Make Whole Premium. The Make
Whole Premium equals the excess of (i) the present value of the scheduled
payments of principal and interest which the Trust would have paid but for
the proposed redemption, discounted at the rate of interest of U.S.
Treasury obligations whose maturity approximates that of the Note plus
0.50% over (ii) the principal of the Notes proposed to be redeemed.
B. REVOLVING CREDIT AGREEMENT
The Trust entered into a Revolving Credit Agreement 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 September 30, 2004, there was $6,000,000 in
outstanding loans against the Revolver and the rate of interest
attributable to the Revolver was 2.13%. For the nine months ended September
30, 2004, the Trust incurred total interest expense on the Revolver of
$40,022, plus $28,151 related to the undrawn portion.
5. PURCHASES AND SALES OF INVESTMENTS
FOR THE NINE MONTHS ENDED 9/30/2004
-----------------------------------
COST OF PROCEEDS FROM
INVESTMENTS SALES OR
ACQUIRED MATURITIES
------------- -------------
Corporate restricted securities $ 86,701,289 $ 79,892,797
Corporate public securities 18,418,297 13,803,071
Short-term securities 474,897,190 476,454,110
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of September 30, 2004. The net unrealized
depreciation of investments for financial reporting and federal tax
purposes as of September 30, 2004, is $15,880,595 and consists of
$17,808,429 appreciation and $33,689,024 depreciation.
--------------------------------------------------------------------------------
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS
MARCH 31, 2004
--------------------------------
AMOUNT PER SHARE
------------ ------------
Investment income $ 5,045,227
Net investment income 3,764,100 $ 0.42
Net realized and unrealized
gain on investments 4,232,404 0.48
JUNE 30, 2004
--------------------------------
AMOUNT PER SHARE
------------ ------------
Investment income $ 6,600,662
Net investment income 5,279,982 $ 0.59
Net realized and unrealized
gain on investments (net of taxes) 4,035,224 0.45
SEPTEMBER 30, 2004
--------------------------------
AMOUNT PER SHARE
------------ ------------
Investment income $ 6,114,817
Net investment income 4,820,764 $ 0.54
Net realized and unrealized
gain on investments (net of taxes) 4,213,400 0.47
7. CONTINGENCIES
The Trust, together with other investors, including MassMutual, is a
plaintiff in litigation undertaken 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 11 liquidation proceedings, have pleaded guilty to criminal
fraud charges. Initially, two separate civil lawsuits were 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 first lawsuit
involving Sharp's working capital lender was dismissed prior to trial. An
appeal of this dismissal was unsuccessful. The discovery and deposition
components of the second, related lawsuit against Sharp's auditors, KPMG
LLP, have been completed. The parties to the lawsuit, including the Trust,
agreed to submit the matters which are the subject of the lawsuit to
non-binding mediation proceedings. However, the parties were unable to
resolve these matters through mediation. The trial is scheduled to begin
early in 2005. The Trust is unable to estimate any potential recovery from
this lawsuit as of September 30, 2004.
In connection with a sweep examination of performance fees, the staff of
the Securities and Exchange Commission ("Staff") has questioned whether the
Trust's investment advisory fee fully complies with Section 205 of the
Investment Advisers Act of 1940 and SEC regulations concerning performance
fees. Retroactive adjustment to the calculation methodology for the period
since July 1, 1988 (the period during which the Performance Adjustment has
been in effect) would result in a reduction in aggregate investment
advisory fees for that period. Babson and the Trust are cooperating with
the Staff's review of this matter. Pending resolution of the issue Babson
has voluntarily agreed to waive, for each quarter beginning July 1, 2004,
the amount, if any, by which (A) the investment advisory fee calculated in
the manner described in the Investment Services Contract exceeds (B) the
sum of (i) 5/16 of 1% times the ending net asset value for that quarter
plus or minus (ii) the Performance Adjustment applied against the average
quarter end net assets for the Trust for the twelve-quarter period ending
on such quarter. Babson believes that the likelihood that this matter will
have a material adverse financial impact on the Trust or negatively impact
Babson's ability to provide investment services to the Trust is remote.
--------------------------------------------------------------------------------
32
TRUSTEES OFFICERS
-------- --------
Donald E. Benson* Stuart H. Reese Chairman
Donald Glickman Roger W. Crandall President
Martin T. Hart* Charles C. McCobb, Jr. Vice President &
Robert E. Joyal Chief Financial
Steven A. Kandarian Officer
Jack A. Laughery [LOGO] Stephen L. Kuhn Vice President &
Corine T. Norgaard* Secretary
Stuart H. Reese Michael P. Hermsen Vice President
Mary Wilson Kibbe Vice President
Michael L. Klofas Vice President
Clifford M. Noreen Vice President
Richard E. Spencer, II Vice President
James M. Roy Treasurer
John T. Davitt, Jr. Comptroller
Mary Ellen Wesneski Chief Compliance
Officer
*Member of the Audit Committee
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.