UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-2183
---------------------------------------------
MassMutual Corporate Investors
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(Exact name of registrant as specified in charter)
1500 Main Street, Suite 600, Springfield, MA 01115
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(Address of principal executive offices) (Zip code)
Stephen L. Kuhn, Vice President and Secretary
1500 Main Street, Suite 2800, Springfield, MA 01115
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(Name and address of agent for service)
Registrant's telephone number, including area code: 413-226-1000
----------------------------
Date of fiscal year end: 12/31
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Date of reporting period: 12/31/05
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORT TO STOCKHOLDERS.
Attached hereto is the annual shareholder report transmitted to
shareholders pursuant to Rule 30e-1 of the Investment Company Act of
1940, as amended.
================================================================================
2005 Annual Report
[LOGO]
MassMutual Corporate Investors
================================================================================
MassMutual Corporate Investors
MASSMUTUAL
CORPORATE INVESTORS
c/o Babson Capital Management LLC
1500 Main Street, Suite 600
Springfield, Massachusetts 01115
(413) 226-1516
http://www.babsoncapital.com/mci
ADVISER
Babson Capital Management LLC
1500 Main Street
Springfield, Massachusetts 01115
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
KPMG LLP
Boston, Massachusetts 02110
COUNSEL TO THE TRUST
Ropes & Gray LLP
Boston, Massachusetts 02110
CUSTODIAN
Citibank, N.A.
New York, New York 10043
TRANSFER AGENT & REGISTRAR
Shareholder Financial Services, Inc.
P.O. Box 173673
Denver, Colorado 80217-3673
1-800-647-7374
------
MCI
Listed
NYSE
------
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, toll-free 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.
FORM N-Q
MassMutual Corporate Investors files its complete schedule of portfolio holdings
with the U.S. Securities and Exchange Commission for the first and third
quarters of each fiscal year on Form N-Q. This information is available (i) on
the U.S. Securities and Exchange Commission's website at http://www.sec.gov; and
(ii) at the U.S. Securities and Exchange Commission's Public Reference Room in
Washington, DC (which information on their operation may be obtained by calling
1-800-SEC-0330). A complete schedule of portfolio holdings as of each
quarter-end is available upon request by calling, toll-free, 866-399-1516.
MASSMUTUAL CORPORATE INVESTORS
MassMutual Corporate Investors is a closed-end investment company, first offered
to the public over 30 years ago, whose shares are traded on the New York Stock
Exchange.
MassMutual Corporate Investors
INVESTMENT OBJECTIVE & 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 either the New York Stock Exchange listings or Closed-End Fund 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 ("Babson Capital") manages the Trust on a total
return basis. The Trust distributes substantially all of its net income to
shareholders each year. Accordingly, the Trust pays dividends to shareholders
quarterly in January, May, August, and November. The Trust pays dividends to its
shareholders in cash, unless the shareholder elects to participate in the
Dividend Reinvestment and Share Purchase Plan.
In this report you will find a complete listing of the Trust's holdings. We
encourage you to read this section carefully for a better understanding of the
Trust. We cordially invite all share-holders to attend the Trust's Annual
Meeting of Shareholders, which will be held on April 21, 2006 at 2:00 P.M. in
Springfield, Massachusetts.
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Portfolio Composition as of 12/31/05*
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[PIE CHART APPEARS HERE]
Public High
Yield Debt 33%
Public Equity 4%
Private High
Yield Debt 38%
Cash & Short Term
Investments 11%
Private/Restricted
Equity 13%
Private Investment
Grade Debt 1%
*BASED ON VALUE OF TOTAL INVESTMENTS
1
MassMutual Corporate Investors
To Our Shareholders
As the Trust announced in July, Stuart H. Reese stepped down as a Trustee and
Chairman of the Board of Trustees as a result of his new position as President
and CEO of Massachusetts Mutual Life Insurance Company ("MassMutual"). Roger W.
Crandall, the Trust's former President, was appointed as a Trustee and elected
to replace Mr. Reese as Chairman of the Board of Trustees. Additionally, I was
elected to succeed Mr. Crandall as President of the Trust.
I am pleased to share with you the Trust's Annual Report for the year ended
December 31, 2005.
We cordially invite all shareholders to attend the MassMutual Corporate
Investors Annual Meeting of Shareholders, which will be held on April 21, 2006
at 2:00 P.M. in Springfield, Massachusetts.
[PHOTO OF PRESIDENT AND CHAIRMAN APPEARS HERE]
LEFT TO RIGHT:
Clifford M. Noreen
PRESIDENT
Roger W. Crandall
CHAIRMAN
2
MassMutual Corporate Investors
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Total Annual Portfolio Return (as of 12/31 each year)*
--------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
Lehman Brothers
Intermediate
MassMutual Corporate Standard & Poor's U.S. Credit Index
Investors (Based on Industrials Composite (Formerly called the
change in the net (Formerly called the Lehman Brothers
asset value with Standard & Poor's Intermediate
reinvested dividends) Industrial Price Index) Corporate Bond Index)
2005 20.04% 2005 3.98% 2005 1.42%
2004 22.76% 2004 10.20% 2004 4.08%
2003 22.61% 2003 28.34% 2003 6.91%
2002 4.80% 2002 -23.51% 2002 10.14%
2001 5.91% 2001 -11.67% 2001 9.77%
2000 7.28% 2000 -16.26% 2000 9.46%
1999 7.53% 1999 25.89% 1999 0.16%
1998 17.12% 1998 33.77% 1998 8.29%
1997 27.14% 1997 31.04% 1997 8.36%
1996 15.42% 1996 23.03% 1996 3.97%
*DATA FOR MASSMUTUAL CORPORATE INVESTORS (THE "TRUST") REPRESENTS PORTFOLIO
RETURNS BASED ON CHANGE IN THE TRUST'S 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 TRUST'S NET ASSET
VALUE AND THE MARKET VALUE OF ITS SHARES OUTSTANDING (SEE PAGE 12 FOR TOTAL
INVESTMENT RETURN BASED ON MARKET VALUE); PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS.
[PHOTO OF OFFICERS APPEARS HERE]
LEFT TO RIGHT:
James M. Roy
VICE PRESIDENT &
CHIEF FINANCIAL
OFFICER
Stephen L. Kuhn
VICE PRESIDENT,
SECRETARY &
CHIEF LEGAL OFFICER
3
MassMutual Corporate Investors
[PHOTO APPEARS HERE]
THE TRUST'S 2005 PORTFOLIO PERFORMANCE
The Trust's total portfolio rate of return for 2005 was 20.04%, as measured by
the change in net asset value, assuming the reinvestment of all dividends and
distributions. The Trust's total net assets were $236,275,418, or $26.06 per
share, as of December 31, 2005, compared to $218,505,148, or $24.34 per share,
as of December 31, 2004. The Trust paid a quarterly dividend of 46 cents per
share each quarter in 2005, with the fourth quarter dividend paid in January
2006. In addition, the Trust declared a special year-end dividend of 45 cents
per share paid in January 2006 to shareholders of record on December 30, 2005,
bringing total dividends for the year to $2.29. All in all, we are very pleased
with the Trust's 2005 portfolio performance.
The table shown below lists the average annual net returns of the Trust's
portfolio, based on the change in net assets, assuming the reinvestment of all
dividends and distributions, compared to the average annual returns of selected
equity and fixed income market indices for the 1, 3, 5, and 10 years ended
December 31, 2005.
The U.S. economy and investment markets weathered the storms - both literally
and figuratively - of 2005, as the economy remained healthy despite dramatic
events. The most devastating hurricane in U.S. history - Katrina - caused oil
prices to spike to over $70 a barrel in August before settling back to $60 by
December; natural gas prices are also up. Short-term interest rates were raised
eight times during the year by the Federal Reserve Board (the "Fed") for a total
increase of 2 percent.
Lehman Lehman Standard
Brothers Brothers & Poor's
The U.S. Corporate Intermediate Industrials Russell
Trust High Yield Index U.S. Credit Index* Composite** 2000 Index
--------------------------------------------------------------------------------
1 Year 20.04% 2.74% 1.42% 3.98% 4.55%
3 Year 21.80% 13.77% 4.11% 13.72% 22.13%
5 Year 14.93% 8.85% 6.41% -0.14% 8.22%
10 Year 14.80% 6.54% 6.20% 8.47% 9.26%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
* FORMERLY CALLED THE LEHMAN BROTHERS INTERMEDIATE CORPORATE BOND INDEX.
** FORMERLY CALLED THE STANDARD & POOR'S INDUSTRIAL PRICE INDEX.
4
MassMutual Corporate Investors
While historically events such as these have had a negative economic impact,
indications are that the U.S. economy remains strong and is improving. The
unemployment rate in 2005 dropped to 5 percent from 5.4 percent the previous
year. Core inflation is about 2 percent and the value of the dollar versus
several other currencies improved after three years of decline. U.S. Gross
Domestic Product has grown at an annualized rate of more than 4 percent during
the past two years.
Investors continue to witness a strong corporate-credit market in 2005.
Corporate credit defaults around the globe continued their downward trend for
the fourth consecutive year, as reported by Moody's Investors Service. Moody's
global issuer-weighted speculative-grade default rate finished the year at 1.9
percent, down from 2.3 percent in 2004 and its lowest level since 1997. Moody's
expects the default rate to climb this year, but still stay below the rate's
historical annual average of 4.9 percent.
Overall, the Trust closed 13 new private placement transactions during 2005 and
invested additional capital in three existing private placement investments,
fewer than in 2004 but consistent with activity of prior years.
New private placement transactions during the year were: AmerCable, Inc.; Arrow
Tru-Line Holdings, Inc.; C & J Spec-Rent GRAPHIC OMITTED] Services, Inc.; Connor
Sport Court International, Inc.; Consolidated Foundries Holdings; CorePharma
LLC; ITC^DeltaCom, Inc.; MicroGroup, Inc.; O R S Nasco Holding, Inc.; Tangent
Rail Corporation; Terra Renewal Services, Inc.; Transtar Holding Company; and
Truck Bodies & Equipment International.
In addition, the Trust added to existing private placement investments in
Augusta Sportswear Holding Co.; Directed Electronics, Inc.; and Moss, Inc.
The Trust also had realizations in over 16 private placement investments.
[PHOTO APPEARS HERE]
5
MassMutual Corporate Investors
The Outlook for 2006
There are no clear signals that identify prospects for 2006. There is room for
optimism in that the Fed presently indicates it does not expect to continue to
raise interest rates, which are still low by historical standards. The economy
continues to chug along at better-than-expected growth rates, but a return to
more normal growth seems likely if inflation is to remain muted. Consumer
confidence remains strong, but higher energy prices and cooling of the housing
market may slow consumer spending. The rising global demand for energy continues
to push prices up. Geopolitical risk worldwide and instability and conflict in
the Middle East could create new problems at any time. As always, no one can
predict the future with any degree of certainty.
Indications are that merger and acquisition activity could be high in 2006. Last
year was the world's most active merger and acquisition environment since 2000,
with some $1.3 trillion in announced deals in the U.S. alone, according to
Thomson Financial. Private equity firms raised a record $86.2 billion in 2005,
and are expected to put that to work in 2006. Many corporations also have strong
cash positions as well. The market for deals in the coming year will be very
competitive, requiring investors to fully scrutinize each opportunity.
Regardless of the economic environment, however, the Trust continues to
repeatedly employ the investment philosophy and process that has served it well
since its inception: investing in companies which we believe have a strong
business model, solid cash flow, reasonable financial leverage, and experienced,
ethical management. This philosophy, combined with Babson Capital's seasoned
investment-management team and the Trust's financial position, contribute to the
Trust being well positioned for future investment opportunities that meet its
investment objectives and policies. As always, I would like to thank you for
your continued interest in and support of MassMutual Corporate Investors.
Sincerely, CAUTIONARY NOTICE: CERTAIN
STATEMENTS CONTAINED IN THIS REPORT
/s/ Clifford M. Noreen TO SHAREHOLDERS MAY BE "FORWARD
LOOKING" STATEMENTS WITHIN THE
Clifford M. Noreen, MEANING OF THE PRIVATE SECURITIES
PRESIDENT LITIGATION ACT OF 1995. THESE
STATEMENTS ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM
THOSE FORECASTED.
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2005 Record Net Investment Short-Term Ordinary Long-Term
Dividends Date Income Gains Income Gains
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Regular 05/02/05 $0.4370 -- $0.0230
07/29/05 0.4600 -- --
10/31/05 0.4600 -- --
12/30/05 0.4600 -- --
Special 12/30/05 0.2880 $0.1620 --
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$2.1050 $0.1620 $2.2670 $0.0230
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The following table summarizes the tax effects of the retention of capital gains
for 2005:
Amount Per Share Form 2439
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2005 Gains Retained 2.0578 Line 1a
Long-Term Gains Retained 2.0578
Taxes Paid 0.7202 Line 2*
Basis Adjustment 1.3376 **
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* IF YOU ARE NOT SUBJECT TO FEDERAL CAPITAL GAINS TAX (E.G., CHARITABLE
ORGANIZATIONS, IRAS AND KEOGH PLANS), YOU MAY BE ABLE TO CLAIM A REFUND BY
FILING FORM 990-T.
** FOR FEDERAL INCOME TAX PURPOSES, YOU MAY INCREASE THE ADJUSTED COST BASIS
OF YOUR SHARES BY THIS AMOUNT (THE EXCESS OF LINE 1A OVER LINE 2).
Qualified for Dividend Interest Earned on
Annual Dividend Received Deduction*** Qualified Dividends**** U.S. Gov't. Obligations
Amount Per Share Percent Amount Per Share Percent Amount Per Share Percent Amount Per Share
-------------------------------------------------------------------------------------------------------------------
$2.29 10.6603% 0.2245 10.6603% 0.2245 0.0000% 0.0000
*** NOT AVAILABLE TO INDIVIDUAL SHAREHOLDERS
**** QUALIFIED DIVIDENDS ARE REPORTED IN BOX 1B ON IRS FORM 1099-DIV FOR 2005
6
Financial Report
Consolidated Statement of Assets and Liabilities ........................ 8
Consolidated Statement of Operations .................................... 9
Consolidated Statement of Cash Flows .................................... 10
Consolidated Statements of Changes in Net Assets ........................ 11
Consolidated Selected Financial Highlights .............................. 12
Consolidated Schedule of Investments .................................... 13-34
Notes to Consolidated Financial Statements .............................. 35-39
Report of Independent Registered Public Accounting Firm ................. 40
Interested Trustees ..................................................... 41-42
Independent Trustees .................................................... 43-45
Officers of the Trust ................................................... 46
MassMutual Corporate Investors
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
ASSETS:
Investments
(See Consolidated Schedule of Investments)
Corporate restricted securities at fair value
(Cost - $158,552,125) $156,952,826
Corporate public securities at market value
(Cost - $75,726,792) 80,679,144
Short-term securities at amortized cost 24,114,873
------------
261,746,843
------------
Cash 5,461,450
Interest and dividends receivable 5,022,716
Receivable for investments sold 917,105
Other assets 49,175
------------
TOTAL ASSETS 273,197,289
------------
LIABILITIES:
Dividend payable 8,249,107
Investment advisory fee payable 738,361
Note payable 20,000,000
Interest payable 187,711
Accrued expenses 174,226
Accrued taxes payable 7,572,466
------------
TOTAL LIABILITIES 36,921,871
------------
TOTAL NET ASSETS $236,275,418
============
NET ASSETS:
Common shares, par value $1.00 per share; an unlimited number authorized $ 9,064,953
Additional paid-in capital 105,714,236
Retained net realized gain on investments, prior years 103,192,438
Undistributed net investment income 1,848,444
Accumulated net realized gain on investments 13,377,866
Net unrealized appreciation of investments 3,077,481
------------
TOTAL NET ASSETS $236,275,418
------------
COMMON SHARES ISSUED AND OUTSTANDING 9,064,953
------------
NET ASSET VALUE PER SHARE $ 26.06
============
See Notes to Consolidated Financial Statements.
8
MassMutual Corporate Investors
CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2005
INVESTMENT INCOME:
Interest $ 22,396,630
Dividends 1,743,827
------------
TOTAL INVESTMENT INCOME 24,140,457
------------
EXPENSES:
Investment advisory fees (net of fee waiver of $59,757) (See footnote 3) 3,197,680
Interest 1,686,617
Trustees' fees and expenses 180,000
Transfer agent/registrar's expenses 48,000
Reports to shareholders 120,000
Legal fees 300,000
Audit fees 127,600
Other 30,513
------------
TOTAL EXPENSES 5,690,410
------------
Investment income before income tax expense 18,450,047
------------
Income tax expense (78,950)
------------
INVESTMENT INCOME - NET 18,371,097
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments before taxes 22,753,735
Income tax expense (7,222,108)
------------
Net realized gain on investments 15,531,627
------------
Net change in unrealized appreciation of investments before taxes 2,475,087
Deferred income tax expense (275,572)
------------
Net change in unrealized appreciation of investments 2,199,515
------------
NET GAIN ON INVESTMENTS 17,731,142
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 36,102,239
============
See Notes to Consolidated Financial Statements.
9
MassMutual Corporate Investors
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended December 31, 2005
NET INCREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received $ 21,772,099
Interest expense paid (1,709,218)
Operating expenses paid (3,931,912)
Income taxes paid (2,215,814)
------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 13,915,155
------------
Cash flows from investing activities:
Purchases/Proceeds/Maturities from short-term portfolio securities, net (21,532,330)
Purchase of portfolio securities (84,722,348)
Proceeds from disposition of portfolio securities 118,940,754
------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 12,686,076
------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES 26,601,231
============
Cash flows from financing activities:
Repayment of borrowings on Revolving Credit Agreement (See footnote 4) (9,000,000)
Cash dividends paid from net investment income (19,102,875)
Receipts for shares issued on reinvestment of dividends 2,375,977
------------
NET CASH USED FOR FINANCING ACTIVITIES (25,726,898)
------------
NET INCREASE IN CASH 874,333
Cash - beginning of year 4,587,117
------------
CASH - END OF YEAR $ 5,461,450
============
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES:
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 36,102,239
------------
Increase in investments (14,520,605)
Increase in interest and dividends receivable (1,309,855)
Decrease in receivable for investments sold 1,078,530
Increase in other assets (49,175)
Decrease in payable for investments purchased (110,000)
Increase in investment advisory fee payable 112,286
Decrease in interest payable (22,601)
Decrease in accrued expenses (40,404)
Increase in accrued taxes payable 5,360,816
------------
TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS (9,501,008)
------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES $ 26,601,231
============
See Notes to Consolidated Financial Statements.
10
MassMutual Corporate Investors
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2005 and 2004
2005 2004
-------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS:
Operations:
Investment income - net $ 18,371,097 $ 17,949,347
Net realized gain on investments 15,531,627 4,654,719
Net change in unrealized appreciation of investments 2,199,515 19,012,223
-------------- --------------
Net increase in net assets resulting from operations 36,102,239 41,616,289
-------------- --------------
Increase from common shares issued on reinvestment of dividends
Common shares issued (2005 - 86,526; 2004 - 105,634) 2,375,977 2,432,514
Dividends to shareholders from:
Net investment income (2005 - $2.11 per share; 2004 - $2.16 per share) (19,033,162) (19,329,769)
Net realized gains on investments (2005 - $.18 per share) (1,674,784) --
-------------- --------------
TOTAL INCREASE IN NET ASSETS 17,770,270 24,719,034
-------------- --------------
NET ASSETS, BEGINNING OF YEAR 218,505,148 193,786,114
-------------- --------------
NET ASSETS, END OF YEAR $ 236,275,418 $ 218,505,148
============== ==============
See Notes to Consolidated Financial Statements.
11
MassMutual Corporate Investors
CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding:
For the years ended December 31, 2005 2004 2003 2002 2001
-------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: BEGINNING OF YEAR $ 24.34 $ 21.84 $ 19.40 $ 20.07 $ 20.74
-------- -------- -------- -------- --------
Net investment income+ 2.03 2.00 1.44 1.53 1.70
Net realized and unrealized
gain (loss) on investments 1.96** 2.64 2.83 (0.59) (0.53)
Total from investment operations 3.99 4.64 4.27 0.94 1.17
-------- -------- -------- -------- --------
Dividends from net investment
income to common shareholders (2.11) (2.16) (1.84) (1.44) (1.79)
Distributions from net realized gain
on investments to common shareholders (0.18) 0.00 0.00 (0.18) (0.09)
Change from issuance of shares 0.02 0.02 0.01 0.01 0.04
Total distributions (2.27) (2.14) (1.83) (1.61) (1.84)
-------- -------- -------- -------- --------
NET ASSET VALUE: END OF YEAR $ 26.06 $ 24.34 $ 21.84 $ 19.40 $ 20.07
-------- -------- -------- -------- --------
PER SHARE MARKET VALUE: END OF YEAR $ 30.05 $ 28.50 $ 22.90 $ 19.49 $ 20.70
======== ======== ======== ======== ========
Total investment return
Market value 16.95% 36.10% 27.53% 1.35% 1.88%
Net asset value* 20.04% 22.76% 22.61% 4.80% 5.91%
Net assets (in millions): End of year $ 236.28 $ 218.51 $ 193.79 $ 171.03 $ 175.11
Ratio of operating expenses to average net assets 1.78% 1.93% 2.04% 1.82% 1.72%
Ratio of interest expense to average net assets 0.73% 0.77% 0.82% 0.86% 0.84%
Ratio of total expenses to average net assets 2.51% 2.70% 2.86% 2.68% 2.56%
Ratio of net investment income to average net assets 7.98% 8.68% 6.95% 7.65% 8.20%
Portfolio turnover 35.22% 53.45% 56.10% 34.02% 24.48%
+ Calculated using average shares.
* Net asset value return represents portfolio returns based on change in the
Trust's net asset value assuming the reinvestment of all dividends and
distributions which differs from the total investment return based on the
Trust's market value due to the difference between the Trust's net asset
value and the market value of its shares outstanding; past performance is no
guarantee of future results.
** Amount includes $0.19 per share in litigation proceeds (See Footnote 8).
See Notes to Consolidated Financial Statements.
12
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities - 66.43%:(A) Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
Private Placement Investments - 59.10%
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 $ 1,995,698
Warrant, exercisable until 2012, to purchase
common stock at $.02 per share (B) 2,323 shs. 04/08/04 -- 23
------------- -------------
2,125,000 1,995,721
------------- -------------
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 1,938,786 2,162,757
Limited Partnership Interest of AW C Investments LLC (B) 1.40% int. 05/18/04 212,500 579,780
------------- -------------
2,151,286 2,742,537
------------- -------------
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 1,967,588 2,125,000
Warrant, exercisable until 2010, to purchase
common stock at $.02 per share (B) 364 shs. 02/29/00 307,759 523,541
------------- -------------
2,275,347 2,648,541
------------- -------------
AMERCABLE, INC.
A manufacturer of electric power, instrumentation and control cables, primarily for the mining and oil and gas industries.
12% Senior Subordinated Note due 2013 $ 1,101,852 04/08/05 1,039,443 1,110,293
Limited Partnership Interest (B) 0.36% int. 04/07/05 78,704 70,830
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 125 shs. 04/08/05 122,463 1
------------- -------------
1,240,610 1,181,124
------------- -------------
AMERICAN HOSPICE MANAGEMENT HOLDING LLC
A for-profit hospice care provider in the United States.
12% Senior Subordinated Note due 2010 $ 2,125,000 01/22/04 1,916,881 2,160,598
Preferred Class A Unit (B) 2,525 uts. 01/22/04 252,500 227,250
Common Class B Unit 3,042 uts. 01/22/04 -- 291,648
------------- -------------
2,169,381 2,679,496
------------- -------------
ARROW TRU-LINE HOLDINGS, INC.
A manufacturer of hardware for residential and commercial overhead garage doors in North America.
12% Senior Subordinated Note due 2012 $ 1,627,660 05/18/05 1,521,732 1,624,105
Common Stock (B) 497 shs. 05/18/05 497,340 447,606
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 130 shs. 05/18/05 112,128 1
------------- -------------
2,131,200 2,071,712
------------- -------------
13
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
AUGUSTA SPORTSWEAR HOLDING CO.
A manufacturer and distributor of athletic apparel, activewear and team uniforms.
12% Senior Subordinated Note due 2012 $ 1,686,800 12/31/04 $ 1,576,271 $ 1,719,049
Common Stock (B) 493 shs. * 492,975 443,682
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 137 shs. 12/31/04 119,482 1
------------- -------------
* 12/31/04 and 03/31/05 2,188,728 2,162,732
------------- -------------
BEACON MEDICAL PRODUCTS, INC.
A designer, manufacturer and marketer of medical air and gas distribution systems.
8.08% Senior Secured Revolving Credit
Facility due 2007 (C) $ 230,636 04/09/02 230,636 231,084
8.08% Senior Secured Tranche A Note due 2008 (C) $ 644,961 04/09/02 644,961 644,961
12% Senior Secured Note due 2010 $ 721,196 04/09/02 634,278 750,044
Limited Partnership Interest of Riverside Capital
Appreciation Fund IV, L.P. (B) 8.91% int. 04/09/02 152,329 245,298
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 1,390 shs. 04/09/02 127,497 223,777
------------- -------------
1,789,701 2,095,164
------------- -------------
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) 24,945 shs. 09/30/99 927,440 --
Warrants, exercisable until 2010 to
purchase common stock at $.01 per share (B) 6,481 shs. * 130 --
------------- -------------
*12/19/96 and 09/30/99. 2,640,128 108,991
------------- -------------
C & J SPEC-RENT SERVICES, INC.
A provider of coiled tubing and pressure pumping services to the oil and gas industry in Texas and Louisiana.
10% Senior Secured Term Note due 2012 $ 1,551,492 08/12/05 1,551,492 1,560,815
14% Senior Subordinated Note due 2013 $ 1,128,358 08/12/05 1,024,878 1,122,366
Common Stock (B) 470,150 shs. 08/12/05 470,150 423,135
Warrants, exercisable until 2013, to purchase
common stock at $.01 per share (B) 86,716 shs. 08/12/05 106,592 867
------------- -------------
3,153,112 3,107,183
------------- -------------
14
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
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 $ 759,036 09/13/02 $ 759,036 $ 761,233
11% Senior Subordinated Note due 2010 $ 838,102 09/13/02 805,548 844,160
Common Stock (B) 316,265 shs. 09/13/02 316,265 474,398
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 137,175 shs. 09/13/02 60,250 205,763
------------- -------------
1,941,099 2,285,554
------------- -------------
CAINS FOODS, L.P.
A producer of mayonnaise and sauce products for both the retail and food service markets.
Limited Partnership Interest 12.97% int. 09/29/95 158,369 1,000,912
------------- -------------
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 pharmaceutical products.
Common Stock (B) 109 shs. * 503 2,156
------------- -------------
*12/30/97 and 05/29/99.
COEUR, INC.
A producer of proprietary, disposable power injection syringes.
8.75% Senior Secured Term Note due 2010 $ 570,652 04/30/03 570,652 574,740
11.5% Senior Subordinated Note due 2011 $ 424,819 04/30/03 393,154 430,680
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
------------- -------------
1,131,422 1,120,428
------------- -------------
COINING CORPORATION OF AMERICA LLC
A manufacturer of close tolerance parts and metal stampings.
9.25% Senior Secured Revolving Credit
Facility due 2006 (C) $ 162,037 01/07/02 162,037 159,963
9.25% Senior Secured Tranche A Note due 2007 (C) $ 846,307 06/26/01 846,307 812,902
13% Senior Secured Tranche B Note due 2006 $ 648,148 06/26/01 648,148 631,709
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
------------- -------------
2,059,964 1,864,903
------------- -------------
15
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
CONNOR SPORT COURT INTERNATIONAL, INC.
A designer and manufacturer of outdoor and indoor synthetic sports flooring and other temporary flooring products.
12% Senior Subordinated Note due 2012 $ 2,001,121 * $ 1,852,219 $ 1,801,009
Limited Partnership Interest (B) 7.74% int. ** 189,586 151,668
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 174 shs. * 160,233 2
------------- -------------
*08/12/04 and 01/18/05. **08/12/04 and 01/14/05. 2,202,038 1,952,679
------------- -------------
CONSOLIDATED FOUNDRIES HOLDINGS
A manufacturer of engineered cast metal components for the global aerospace and defense industries.
12% Senior Subordinated Note due 2013 $ 2,185,714 06/15/05 2,089,288 2,193,137
Common Stock (B) 364 shs. 06/15/05 364,286 327,861
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 103 shs. 06/15/05 100,668 1
------------- -------------
2,554,242 2,520,999
------------- -------------
COREPHARMA LLC
A manufacturer of oral dose generic pharmaceuticals targeted at niche applications.
12% Senior Subordinated Note due 2013 $ 2,550,000 08/04/05 2,416,555 2,519,891
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 20 shs. 08/04/05 137,166 --
------------- -------------
2,553,721 2,519,891
------------- -------------
CORVEST GROUP, INC.
A manufacturer and distributor of promotional products.
12% Senior Subordinated Note due 2007 $ 3,863,636 *** 3,725,752 1,931,818
Common Stock (B) 56 shs. *** 96,591 9,658
Limited Partnership Interest (B) 19.32% int. *** 284,052 28,677
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 324 shs. *** 297,203 55,700
------------- -------------
***03/05/99 and 03/24/99. 4,403,598 2,025,853
------------- -------------
DEXTER MAGNETICS TECHNOLOGIES, INC.
A designer, fabricator, assembler and distributor of industrial magnets and subassemblies in North America and Europe.
Common Stock (B) 585 shs. 07/19/01 585,145 694,854
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 297 shs. 07/19/01 250,611 352,183
------------- -------------
835,756 1,047,037
------------- -------------
DIRECTED ELECTRONICS, INC.
A designer and distributor of brand name automotive security systems, audio products and installation accessories.
Common Stock (B) 239,547 shs. 12/19/05 76,530 3,018,290
Limited Partnership Interest (B) 8.70% int. **** 11,903 374,643
------------- -------------
****12/22/99 and 09/05/05. 88,433 3,392,933
------------- -------------
16
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
DIVERSCO, INC./DHI HOLDINGS, INC.
A contract provider of janitorial and equipment maintenance services and temporary production labor to industrial customers.
Membership Interests of MM/Lincap
Diversco Investments Ltd. LLC (B) 27.19% int. 08/27/98 $ 734,090 $ --
Preferred Stock (B) 3,278 shs. 12/14/01 2,784,133 2,505,724
Warrants, exercisable until 2011, to purchase common
stock of DHI Holdings, Inc. at $.01 per share (B) 13,352 shs. * 403,427 --
------------- -------------
*10/24/96 and 08/28/98. 3,921,650 2,505,724
------------- -------------
DWYER GROUP, INC.
A franchiser of a variety of home repair services.
14% Senior Subordinated Note due 2011 $ 1,859,375 10/30/03 1,702,512 1,896,563
Common Stock (B) 6,906 shs. ** 690,600 593,384
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 2,034 shs. 10/30/03 186,469 174,732
------------- -------------
**10/30/03 and 01/02/04. 2,579,581 2,664,679
------------- -------------
E X C ACQUISITION CORPORATION
A manufacturer of pre-filled syringes and pump systems used for intravenous drug delivery.
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 22 shs. 06/28/04 77,208 112,746
------------- -------------
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 1,027,520 1,083,750
Warrant, exercisable until 2011, to purchase
common stock at $.02 per share (B) 4,085 shs. 09/24/04 39,464 71,896
------------- -------------
1,066,984 1,155,646
------------- -------------
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 26,855 21,706
------------- -------------
ENZYMATIC THERAPY, INC.
A manufacturer and distributor of branded natural medicines and nutritional supplements.
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) 29,117 shs. 03/30/00 255,000 291
------------- -------------
786,250 5,604
------------- -------------
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 2,089,359 1,912,500
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 43,878 shs. 09/09/03 35,641 439
------------- -------------
2,125,000 1,912,939
------------- -------------
17
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
EVANS CONSOLES, INC.
A designer and manufacturer of consoles and control center systems.
Limited Partnership Interest of CM Equity Partners (B) 2.24% int. 02/11/98 $ 128,464 $ --
Common Stock (B) 90,000 shs. 05/06/04 6 --
------------- -------------
128,470 --
------------- -------------
HIGHGATE CAPITAL LLC
An acquirer of controlling or substantial interests in manufacturing and marketing entities.
Series A Preferred Units (B) 1.22% int. 7/21/94 367,440 2,947
------------- -------------
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 * 1,861,980 2,082,091
Common Stock (B) 63 shs. * 62,742 71,994
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 200 shs. * 199,501 228,926
------------- -------------
* 06/30/04 and 08/19/04. 2,124,223 2,383,011
------------- -------------
INTEGRATION TECHNOLOGY SYSTEMS, INC.
A manufacturer of steel protective computer and network systems for the industrial and office environments.
12% Senior Secured Note due 2006 $ 1,664,444 03/01/04 1,646,101 1,248,333
Common Stock (B) 228 shs. 06/01/00 262,200 --
------------- -------------
1,908,301 1,248,333
------------- -------------
ITC^DELTACOM, INC.
A provider of integrated communications services in the southeastern United States.
12.81% Senior Secured Note due 2009 (C) $ 2,207,053 07/26/05 2,207,053 2,206,391
16.31% Senior Secured Note due 2009 (C) $ 342,947 07/26/05 342,947 343,942
Warrant, exercisable until 2009, to purchase
convertible preferred stock at $.01 per share (B) 102,884 shs. 07/26/05 -- 128,605
------------- -------------
2,550,000 2,678,938
------------- -------------
JASON, INC.
A diversified manufacturing company serving various industrial markets.
13% Senior Subordinated Note due 2008 $ 963,687 08/04/00 906,973 954,606
14% Cumulative Redeemable Preferred Stock Series A (B) 289 shs. 08/04/00 289,224 283,950
Limited Partnership Interests of
Saw Mill Capital Fund II, L.P. (B) 2.50% int. 08/03/00 886,361 709,205
Warrants, exercisable until 2008 and 2009, to purchase
common stock at $.01 per share (B) 50,870 shs. 08/04/00 115,412 46,927
------------- -------------
2,197,970 1,994,688
------------- -------------
18
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
JUSTRITE MANUFACTURING ACQUISITION CO.
A manufacturer of safety products such as storage cabinets and containers.
12% Senior Subordinated Note due 2011 $ 1,593,750 12/15/04 $ 1,501,814 $ 1,573,201
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 1,121 shs. 12/15/04 101,109 11
------------- -------------
1,602,923 1,573,212
------------- -------------
KEEPSAKE QUILTING, INC.
A seller of quilting fabrics, books, patterns, kits and notions to consumers.
7.35% Senior Secured Revolving Note due 2006 (C) $ 36,693 06/16/00 36,693 36,642
7.94% Senior Secured Tranche A Note due 2007 (C) $ 412,794 06/16/00 412,794 410,797
12% Senior Secured Tranche B Note due 2008 $ 550,392 06/16/00 531,008 561,400
Limited Partnership Interest of
Riverside XVI Holding Company, L.P. (B) 5.29% int. 6/12/00 333,490 314,456
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 1,108 shs. 6/12/00 45,866 104,459
------------- -------------
1,359,851 1,427,754
------------- -------------
KELE AND ASSOCIATES, INC.
A distributor of building automation control products.
12% Senior Subordinated Note due 2012 $ 1,831,548 02/27/04 1,679,825 1,836,296
Preferred Stock (B) 23 shs. 11/24/04 449,164 456,950
Common Stock (B) 12 shs. 02/27/04 12,871 105,184
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 11 shs. 02/27/04 7,793 96,274
------------- -------------
2,149,653 2,494,704
------------- -------------
KEYSTONE NORTH AMERICA, INC.
An operator of funeral homes in North America.
Common Stock 49,216 shs. 02/08/05 236,709 295,296
------------- -------------
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 2008 $ 3,845,000 * 3,540,546 3,842,586
Common Stock (B) 5,800 shs. * 406,003 223,300
Warrant, exercisable until 2006, to purchase
common stock at $.11 per share (B) 15,572 shs. * 602,127 599,522
------------- -------------
*12/23/98 and 01/28/99. 4,548,676 4,665,408
------------- -------------
MAVERICK ACQUISITION COMPANY
A manufacturer of capsules that cover the cork and neck of wine bottles.
8.57% Senior Secured Tranche A Note due 2010 (C) $ 763,992 09/03/04 763,992 764,176
12% Senior Secured Tranche B Note due 2011 $ 313,433 09/03/04 278,563 317,032
Limited Partnership Interest (B) 7.84% int. 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
------------- -------------
1,140,797 1,134,104
------------- -------------
19
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
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 $ 880,361 $ 968,047
8.75% Senior Subordinated Note due 2012 $ 1,281,112 09/30/04 1,281,112 1,298,390
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
------------- -------------
2,634,042 2,611,478
------------- -------------
MEDASSIST, INC.
A provider of patient eligibility and accounts receivable management services to hospitals and physician practices.
8% Preferred Stock 84 shs. 10/28/04 83,658 85,084
Common Stock 26,185 shs. 10/02/04 35,088 40,534
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share 88,948 shs. 05/01/03 40,675 136,891
------------- -------------
159,421 262,509
------------- -------------
MICROGROUP, INC.
A manufacturer of precision parts and assemblies, and a value-added supplier of metal tubing and bars.
12% Senior Subordinated Note due 2013 $ 2,142,000 08/12/05 2,008,335 2,094,852
Common Stock (B) 408 shs. 08/12/05 408,000 367,200
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 137 shs. 08/12/05 137,088 1
------------- -------------
2,553,423 2,462,053
------------- -------------
MOSS, INC.
A manufacturer and distributor of large display and exhibit structures.
8.51% Senior Secured Revolving Note due 2010 (C) $ 41,176 12/21/05 39,118 40,783
8.51% Senior Secured Tranche A Note due 2010 (C) $ 350,000 12/21/05 309,853 350,516
12% Senior Secured Tranche B Note due 2010 $ 1,019,118 12/21/05 1,008,927 1,009,379
Limited Partnership Interest of
Riverside Capital Appreciation Fund I, L.P. (B) 33.59% int. * 311,481 389,333
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 214 shs. 12/21/05 36,647 2
------------- -------------
*09/20/00 and 05/23/02. 1,706,026 1,790,013
------------- -------------
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 2,240,544
------------- -------------
NEFF MOTIVATION, INC.
A manufacturer and distributor of customized awards and sportswear to schools.
12.5% Senior Subordinated Note due 2011 $ 1,062,500 01/31/03 921,841 1,094,375
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 212 shs. 01/31/03 180,625 87,555
------------- -------------
1,102,466 1,181,930
------------- -------------
20
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
NONNI'S FOOD COMPANY
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 $ 1,887,839
10% Preferred Stock (B) 255 shs. 03/29/04 255,083 258,012
Common Stock (B) 6,455 shs. 03/29/04 6,455 48,025
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 8,622 shs. 03/29/04 7,323 64,080
------------- -------------
2,125,000 2,257,956
------------- -------------
NYLONCRAFT, INC.
A supplier of engineered plastic components for the automotive industry.
9% Senior Secured Note due 2009 $ 812,500 01/28/02 812,500 809,203
11.5% Senior Subordinated Note due 2012 $ 1,500,000 01/28/02 1,381,438 1,476,142
Common Stock (B) 312,500 shs. 01/28/02 312,500 213,750
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 243,223 shs. 01/28/02 162,045 164,176
------------- -------------
2,668,483 2,663,271
------------- -------------
O R S NASCO HOLDING, INC.
Awholesale distributor of industrial supplies in North America.
13% Senior Subordinated Note due 2013 $ 2,372,732 12/20/05 2,226,504 2,346,438
Common Stock (B) 177,268 shs. 12/20/05 177,268 159,541
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B) 99,771 shs. 12/20/05 98,773 998
------------- -------------
2,502,545 2,506,977
------------- -------------
OLYMPIC SALES, INC.
A boat retailer in Washington state, Oregon, California and British Columbia.
14% Senior Subordinated Note due 2006 $ 2,482,000 08/07/98 2,482,000 2,443,470
12% Senior Subordinated Note due 2008 $ 307,071 02/09/00 294,605 295,942
Limited Partnership Interest of Riverside VIII,
VIII-A and VIII-B Holding Company, L.P. 20.57% int. * 1,555,820 1,337,139
Warrants, exercisable until 2007 and 2008, to purchase
common stock at $.01 per share (B) 28,648 shs. ** 389,188 88,695
------------- -------------
*08/07/98, 02/23/99, 12/22/99 and 02/25/03. **08/07/98 and 02/09/00. 4,721,613 4,165,246
------------- -------------
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 1,989,655 2,133,920
Membership Interests of MM/Lincap
PPI Investments, Inc., LLC (B) 2.42% int. 12/21/00 265,625 150,741
------------- -------------
2,255,280 2,284,661
------------- -------------
21
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
PRECISION DYNAMICS, INC.
A manufacturer of custom-designed solenoid valves and controls.
8% Senior Secured Revolving Credit
Facility due 2006 (C) $ 415,650 07/22/96 $ 415,650 $ 415,650
12% Senior Secured Term Note due 2006 $ 326,000 07/22/96 323,883 326,000
8% Preferred Stock 456 shs. 07/22/96 232,046 464,092
Common Stock (B) 599 shs. 07/22/96 28,978 86,934
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 322 shs. 07/22/96 97,800 3
------------- -------------
1,098,357 1,292,679
------------- -------------
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 --
------------- -------------
*11/14/01 and 08/12/94. 227,216 --
------------- -------------
QUALIS AUTOMOTIVE LLC
A distributor of aftermarket automotive brake and chassis products.
12% Senior Subordinated Note due 2012 $ 1,770,834 05/28/04 1,444,031 1,802,635
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
------------- -------------
2,175,916 2,125,161
------------- -------------
QUALSERV CORPORATION
A provider of foodservice equipment and supplies to major restaurant chains and their franchisees.
14% Senior Subordinated Note due 2012 $ 1,893,563 07/09/04 1,844,035 1,136,138
Limited Partnership Interest (B) 9.26% int. 07/09/04 259,146 --
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 528 shs. 07/09/04 49,061 --
------------- -------------
2,152,242 1,136,138
------------- -------------
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 1,701,484 1,712,750
Limited Partnership Interest (B) 40,610 uts. 09/29/04 283,333 232,333
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 23,575 shs. 09/29/04 157,903 236
------------- -------------
2,142,720 1,945,319
------------- -------------
22
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
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 $ 960,053 $ 1,068,068
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 140 shs. 11/14/03 122,946 71,317
------------- -------------
1,082,999 1,139,385
------------- -------------
SAFETY SPEED CUT MANUFACTURING COMPANY, INC.
A manufacturer of vertical panel saws and routers for the wood working industry.
7.36% Senior Secured Tranche A Note due 2007 (C) $ 800,879 06/02/99 800,879 800,879
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. 06/02/99 256,212 508,125
------------- -------------
2,187,743 2,439,656
------------- -------------
SAVAGE SPORTS HOLDING, INC.
A manufacturer of sporting firearms.
12% Senior Subordinated Note due 2012 $ 1,538,793 09/10/04 1,435,628 1,544,365
Common Stock (B) 586 shs. 09/10/04 586,207 478,207
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 134 shs. 09/10/04 113,578 109,001
------------- -------------
2,135,413 2,131,573
------------- -------------
SPECIALTY FOODS GROUP, INC.
A manufacturer and distributor of branded meat products.
Limited Partnership Interest of MHD Holdings LLC 1.43% int. 08/29/00 579,736 --
------------- -------------
STRATEGIC EQUIPMENT & SUPPLY CORPORATION, INC.
A provider of kitchen and restaurant design, equipment fabrication and installation services.
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 106,539 shs. 01/14/00 658,751 --
------------- -------------
SYNVENTIVE EQUITY LLC
A manufacturer of hot runner systems used in the plastic injection molding process.
Limited Partnership Interest (B) 1.99% int. 08/20/03 63,207 11,280
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 86,780 shs. 08/21/03 19,359 15,487
------------- -------------
82,566 26,767
------------- -------------
TANGENT RAIL CORPORATION
A manufacturer of rail ties and provides specialty services to the North American railroad industry.
13% Senior Subordinated Note due 2013 $ 2,217,385 10/14/05 1,882,033 2,174,036
Preferred Stock (B) 3,304 shs. 10/14/05 330,412 320,591
Common Stock (B) 2,203 shs. 10/14/05 2,203 1,983
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 1,167 shs. 10/14/05 294,403 12
------------- -------------
2,509,051 2,496,622
------------- -------------
23
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
TERRA RENEWAL SERVICES, INC.
A provider of wastewater residual management and required environmental reporting, permitting,
nutrient management planning and record keeping to companies involved in poultry and food processing.
7.78% Senior Secured Term A Note due 2010 (C) $ 204,394 03/01/05 $ 204,394 $ 204,394
7.78% Senior Secured Term B Note due 2012 (C) $ 362,989 03/01/05 362,989 362,276
12% Senior Subordinated Note due 2013 $ 1,025,391 03/01/05 972,733 1,004,856
Limited Partnership Interest of
Saw Mill Capital Fund V, L.P. (B) 4.00% int. 03/01/05 412,207 370,989
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B) 65 shs. 03/01/05 56,171 1
------------- -------------
2,008,494 1,942,516
------------- -------------
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 2,528,512 2,712,000
Common Stock (B) 630 shs. 02/04/98 630,000 636,741
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 444 shs. 02/05/98 368,832 448,751
------------- -------------
3,527,344 3,797,492
------------- -------------
TOMAH HOLDINGS, INC.
A manufacturer of specialty chemicals.
16% Senior Subordinated Note due 2011 $ 1,505,617 * 1,460,966 1,505,617
16% Preferred Stock Series A (B) 37 shs. 12/08/03 631,630 916,393
Common Stock (B) 21,240 shs. ** 209,770 367,348
------------- -------------
*12/08/03 and 12/30/05. **12/08/03 and 07/01/05. 2,302,366 2,789,358
------------- -------------
TRANSTAR HOLDING COMPANY
A distributor of aftermarket automotive transmission parts.
12% Senior Subordinated Note due 2013 $ 1,734,000 08/31/05 1,657,621 1,714,773
Common Stock (B) 816 shs. 08/31/05 816,000 734,400
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 86 shs. 08/31/05 77,485 1
------------- -------------
2,551,106 2,449,174
------------- -------------
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 $ 1,184,565 01/20/00 1,184,565 1,186,188
12% Senior Subordinated Note due 2010 $ 1,326,500 01/20/00 1,274,771 1,334,410
Common Stock (B) 227,400 shs. 01/20/00 227,400 204,660
Warrant, exercisable until 2010, to purchase
common stock at $1 per share (B) 260,563 shs. 01/20/00 98,540 2,606
------------- -------------
2,785,276 2,727,864
------------- -------------
24
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
TRUCK BODIES & EQUIPMENT INTERNATIONAL
A designer and manufacturer of accessories for heavy and medium duty trucks, primarily
dump bodies, hoists, various forms of flat-bed bodies, landscape bodies and other accessories.
12% Senior Subordinated Note due 2013 $ 2,309,541 * $ 2,145,659 $ 2,328,718
Common Stock (B) 742 shs. * 800,860 1,004,517
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 153 shs. * 159,894 207,469
------------- -------------
*07/19/05 and 12/22/05. 3,106,413 3,540,704
------------- -------------
TRUSTILE DOORS, INC.
A manufacturer and distributor of interior doors.
12.5% Senior Subordinated Note due 2010 $ 1,062,500 04/11/03 993,411 1,058,399
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 5,781 shs. 04/11/03 95,625 33,038
------------- -------------
1,089,036 1,091,437
------------- -------------
TUBULAR TEXTILE MACHINERY
A designer, manufacturer, seller 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 1,116,986 1,202,155
8.75% Senior Secured Note due 2011 $ 716,292 05/28/04 716,292 707,659
Common Stock (B) 674,157 shs. 05/28/04 674,157 573,033
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 203,912 shs. 05/28/04 130,789 2,039
------------- -------------
2,638,224 2,484,886
------------- -------------
TVI, INC.
A retailer of used clothing in the United States, Canada and Australia.
Common Stock (B) 354,167 shs. 05/02/00 354,167 382,500
------------- -------------
U S M HOLDINGS CORPORATION
A provider of facility maintenance services to retail and corporate clients with multiple locations.
12% Senior Subordinated Note due 2011 $ 894,737 08/06/03 773,300 921,579
Preferred Stock 2,571 shs. 08/06/03 257,095 257,096
Common Stock (B) 1,032 shs. 08/06/03 1,032 1,032
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share 949 shs. 08/06/03 298,198 949
------------- -------------
1,329,625 1,180,656
------------- -------------
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 1,695,644 1,935,204
Common Stock (B) 182 shs. 04/30/04 182,200 180,378
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 230 shs. 04/30/04 211,736 228,116
------------- -------------
2,089,580 2,343,698
------------- -------------
25
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares, Units,
Warrants,
Ownership
or Principal Acquisition Fair
Corporate Restricted Securities:(A) continued Amount Date Cost Value
---------------------------------------------------------------------------------------------------------------------------------
VICTORY VENTURES LLC
An acquirer of controlling or substantial interests in other entities.
Series A Preferred Units (B) 0.15% int. 12/02/96 $ 1 $ 2
------------- -------------
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 1,721,448 1,891,035
Common Stock (B) 23,771 shs. 09/24/04 237,710 326,328
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 23,787 shs. 09/24/04 186,883 326,548
------------- -------------
2,146,041 2,543,911
------------- -------------
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 1,637,765
Limited Partnership Interest Class A (B) 1.75% int. 07/19/04 414,375 372,938
Limited Partnership Interest Class B (B) 0.77% int. 07/19/04 182,935 164,642
------------- -------------
2,080,375 2,175,345
------------- -------------
WALLS INDUSTRIES, INC.
A provider of branded workwear and sporting goods apparel.
10% Senior Subordinated Lien Note due 2009 $ 1,006,579 07/12/04 1,006,579 1,015,774
14% Senior Subordinated Note due 2012 $ 1,069,419 07/12/04 1,066,722 1,094,126
Limited Partnership Interest (B) 0.40% int. 07/12/04 37,281 100,659
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 4,029 shs. 07/12/04 2,833 10,842
------------- -------------
2,113,415 2,221,401
------------- -------------
Total Private Placement Investments $ 141,081,030 $ 139,640,729
------------- -------------
26
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares or
Interest Due Principal
Corporate Restricted Securities:(A) (Continued) Rate Date Amount Cost Fair Value
---------------------------------------------------------------------------------------------------------------------------------
Rule 144A Securities - 7.33%: (A)
BONDS - 6.31%
A E S Corporation 9.000% 05/15/15 $ 200,000 $ 200,000 $ 219,000
Activant Solutions, Inc. (C) 10.054 04/01/10 825,000 825,000 850,781
Atlas Pipeline Partners 8.125 12/15/15 200,000 200,000 201,750
Blockbuster, Inc. 9.000 09/01/12 475,000 476,986 418,000
Bombardier, Inc. 6.300 05/01/14 1,000,000 890,000 875,000
Calpine Corporation 8.750 07/15/13 500,000 465,000 410,000
Charter Communications Op LLC 8.000 04/30/12 250,000 249,375 248,750
Douglas Dynamics LLC 7.750 01/15/12 630,000 633,790 607,950
Hertz Corporation 10.500 01/01/16 50,000 50,000 51,500
Intelsat Bermuda, Ltd. 8.695 01/15/12 450,000 450,000 457,313
Intelsat Bermuda, Ltd. 8.250 01/15/13 500,000 500,000 505,000
Interactive Health LLC 7.250 04/01/11 900,000 756,280 729,000
Markwest Energy 6.875 11/01/14 475,000 475,000 437,000
Neiman Marcus Group, Inc. 10.375 10/15/15 1,250,000 1,250,000 1,270,313
NOVA Chemicals Corporation 7.561 11/15/13 550,000 550,000 561,688
P Q Corporation 7.500 02/15/13 1,100,000 1,088,750 1,023,000
Pacific Energy Partners 6.250 09/15/15 150,000 149,316 147,750
Pogo Producing Co. 6.875 10/01/17 500,000 500,000 487,500
Pregis Corporation 12.375 10/15/13 1,000,000 981,490 985,000
Service Corporation International 7.500 06/15/17 1,000,000 990,030 992,500
Siebe PLC 6.500 01/15/10 650,000 572,000 578,500
Sierra Pacific Resources 6.750 08/15/17 635,000 638,304 631,825
Sungard Data Systems 9.125 08/15/13 175,000 175,000 181,125
Tekni-Plex, Inc. 10.875 08/15/12 250,000 250,000 272,500
Tekni-Plex, Inc. 8.750 11/15/13 650,000 656,103 572,000
Tenaska Alabama Partners LP 7.000 06/30/21 342,155 342,155 344,220
Texas Genco LLC 6.875 12/15/14 705,000 705,000 763,163
Texas Industries, Inc. 7.250 07/15/13 70,000 70,000 72,625
------------ ------------ ------------
TOTAL BONDS $ 15,482,155 15,089,579 14,894,753
------------ ------------ ------------
COMMON STOCk - 0.00%
Jordan Telecom Products (B) 70 $ 14,000 --
------------ ------------ ------------
Total Common Stock 14,000 --
------------ ------------
CONVERTIBLE BONDS - 1.02%
Cymer, Inc. 3.500% 02/15/09 $ 850,000 $ 850,000 $ 831,938
ICOS Corporation 2.000 07/01/23 750,000 596,250 603,750
Q L T, Inc. 3.000 09/15/23 600,000 546,257 530,250
Wesco International, Inc. 2.625 10/15/25 375,000 375,000 451,406
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 2,575,000 2,367,507 2,417,344
------------ ------------ ------------
WARRANTS - 0.00%
Winsloew Furniture, Inc. (B) 900 $ 9 $ --
------------ ------------ ------------
TOTAL WARRANTS 9 --
------------ ------------
TOTAL RULE 144A SECURITIES 17,471,095 17,312,097
------------ ------------
TOTAL CORPORATE RESTRICTED SECURITIES $158,552,125 $156,952,826
------------ ------------
27
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Interest Due Principal Market
Corporate Public Securities - 34.15%:(A) Rate Date Amount Cost Value
---------------------------------------------------------------------------------------------------------------------------------
BONDS - 28.86%
Abitibi-Consolidated, Inc. 7.750% 06/15/11 $ 1,000,000 $ 1,032,013 $ 952,500
Activant Solutions, Inc. 10.500 06/15/11 585,000 584,560 640,575
Aearo Co. 8.250 04/15/12 450,000 450,000 456,750
Affinia Group, Inc. 9.000 11/30/14 460,000 460,000 363,400
Alamosa Delaware, Inc. 11.000 07/31/10 325,000 329,566 366,437
Alamosa Delaware, Inc. 8.500 01/31/12 400,000 400,000 432,500
ALH Fin LLC/ALH Fin Corporation 8.500 01/15/13 725,000 704,500 683,312
Allied Waste NA 7.875 04/15/13 1,000,000 1,024,826 1,032,500
American Media Operation, Inc. 8.875 01/15/11 900,000 901,458 765,000
Appleton Papers, Inc. 8.125 06/15/11 300,000 300,000 291,750
Argo Tech Corporation 9.250 06/01/11 850,000 850,000 871,250
Bally Total Fitness Holding Corporation 9.875 10/15/07 135,000 128,925 131,625
BCP Crystal US Holdings Corporation 9.625 06/15/14 485,000 485,000 539,562
C C O Holdings LLC/Cap Corporation 8.616 12/15/10 500,000 499,617 488,750
C S C Holdings, Inc. 7.625 04/01/11 500,000 501,891 497,500
Cablevision Systems Corporation (C) 8.716 04/01/09 1,000,000 1,000,000 1,010,000
Cadmus Communications Corporation 8.375 06/15/14 750,000 750,000 770,625
Cenveo Corporation 7.875 12/01/13 1,100,000 1,100,000 1,061,500
Charter Communication Holdings LLC 10.000 04/01/09 1,000,000 815,000 745,000
Chemed Corporation 8.750 02/24/11 1,125,000 1,125,000 1,206,562
Chesapeake Energy Corporation 7.000 08/15/14 1,075,000 1,114,536 1,112,625
Cincinnati Bell, Inc. 8.375 01/15/14 1,100,000 1,007,500 1,082,125
Clayton Williams Energy, Inc. 7.750 08/01/13 800,000 800,000 768,000
Del Monte Corporation 8.625 12/15/12 225,000 225,000 239,062
Dollar Financial Group 9.750 11/15/11 600,000 600,000 618,000
Dominos, Inc. 8.250 07/01/11 292,000 289,892 305,140
Dynegy Holdings, Inc. 6.875 04/01/11 500,000 422,500 492,500
El Paso Corporation 7.875 06/15/12 1,050,000 1,063,048 1,081,500
Esterline Technologies 7.750 06/15/13 200,000 200,000 209,000
Flextronics International Ltd. 6.500 05/15/13 400,000 400,000 406,500
Ford Motor Credit Co. 7.375 10/28/09 1,250,000 1,246,875 1,108,607
G F S I, Inc. 9.625 03/01/07 750,000 682,541 675,000
Gencorp, Inc. 9.500 08/15/13 259,000 259,000 278,425
General Motors Acceptance Corporation 7.750 01/19/10 1,250,000 1,305,781 1,167,359
Goodyear Tire & Rubber Co. 7.857 08/15/11 1,400,000 1,342,750 1,365,000
Great Lakes Dredge & Dock Corporation 7.750 12/15/13 750,000 679,250 675,938
GulfMark Offshore, Inc. 7.750 07/15/14 565,000 562,599 587,600
Houghton Mifflin Co. 9.875 02/01/13 1,000,000 1,050,575 1,068,750
Huntsman LLC 11.625 10/15/10 324,000 320,161 368,955
Insurance Auto Auctions, Inc. 11.000 04/01/13 800,000 799,438 840,718
Interpool, Inc. 7.350 08/01/07 750,000 760,228 763,125
Iron Mountain, Inc. 6.625 01/01/16 1,000,000 951,250 930,000
Koppers, Inc. 9.875 10/15/13 700,000 700,000 759,500
Land O'Lakes, Inc. 9.000 12/15/10 750,000 750,000 813,750
Lazard LLC 7.125 05/15/15 750,000 749,408 787,568
Leucadia National Corporation 7.000 08/15/13 650,000 662,312 646,750
Liberty Media Corporation 5.700 05/15/13 1,000,000 951,610 931,761
Lodgenet Entertainment Corporation 9.500 06/15/13 425,000 425,000 462,188
Lyondell Chemical Co. 9.500 12/15/08 530,000 518,310 555,175
M C I, Inc. 8.735 05/01/14 500,000 452,500 553,125
M G M Mirage, Inc. 6.000 10/01/09 375,000 379,363 372,656
M S X International, Inc. 11.000 10/15/07 350,000 347,004 348,250
Mac-Gray Corporation 7.625 08/15/15 600,000 600,000 604,500
Magnachip Semiconductor 8.000 12/15/14 100,000 100,000 95,500
28
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Interest Due Principal Market
Corporate Public Securities:(A)continued Rate Date Amount Cost Value
---------------------------------------------------------------------------------------------------------------------------------
BONDS, CONTINUED
Majestic Star Casino LLC 9.500% 10/15/10 $ 500,000 $ 500,000 $ 526,250
Manitowoc Company, Inc. 7.125 11/01/13 200,000 200,000 205,500
Mediacom LLC 9.500 01/15/13 1,000,000 1,002,958 976,250
Metaldyne Corporation 11.000 06/15/12 750,000 601,250 578,438
Metaldyne Corporation 10.000 11/01/13 510,000 513,766 461,550
Moog, Inc. 6.250 01/15/15 120,000 120,000 118,200
Mrs. Fields Brands 11.500 03/15/11 750,000 713,710 600,000
N R G Energy, Inc. 8.000 12/15/13 453,000 453,000 505,095
Nalco Co. 7.750 11/15/11 500,000 500,000 513,750
National Wine & Spirits, Inc. 10.125 01/15/09 1,135,000 1,128,364 1,146,350
North American Energy Partners 8.750 12/01/11 400,000 400,000 377,000
O E D Corp/Diamond Jo Company Guarantee 8.750 04/15/12 1,000,000 985,960 975,000
O M Group, Inc. 9.250 12/15/11 750,000 774,174 733,125
Offshore Logistics, Inc. 6.125 06/15/13 450,000 450,000 420,750
Pacific Energy Partners 7.125 06/15/14 500,000 504,088 515,000
Pinnacle Foods Group 8.250 12/01/13 450,000 450,000 428,625
Pliant Corporation 11.625 06/15/09 787,891 805,448 835,165
Primedia, Inc. 8.000 05/15/13 1,000,000 1,025,342 846,250
Quintiles Transnational Corporation 10.000 10/01/13 500,000 500,000 557,500
Rayovac Corporation 8.500 10/01/13 200,000 200,000 174,500
Rent-A-Center, Inc. 7.500 05/01/10 400,000 400,000 382,000
Rent-Way, Inc. 11.875 06/15/10 800,000 839,001 851,000
Rhodia SA 10.250 06/01/10 800,000 824,926 876,000
Rhodia SA 8.875 06/01/11 500,000 499,668 512,500
Rock-Tenn Co. 8.200 08/15/11 1,000,000 1,007,498 1,015,000
Rogers Wireless, Inc. 7.250 12/15/12 165,000 165,000 173,456
Rogers Wireless, Inc. 7.500 03/15/15 870,000 933,064 939,600
Rogers Wireless, Inc. 8.000 12/15/12 165,000 165,000 174,694
Samsonite Corporation 8.875 06/01/11 1,000,000 1,043,294 1,035,000
Sbarro, Inc. 11.000 09/15/09 750,000 762,304 746,250
Sea Containers Ltd. 10.500 05/15/12 460,000 449,659 453,100
Sheridan Acquisition Corporation 10.250 08/15/11 375,000 370,001 385,781
Ship Finance Intl Ltd. 8.500 12/15/13 750,000 750,000 701,250
Sports Club Co. 11.375 03/15/06 150,000 145,500 148,688
Stanadyne Corporation 10.000 08/15/14 1,500,000 1,500,000 1,440,000
Tekni-Plex, Inc. 12.750 06/15/10 1,000,000 960,125 545,000
Telex Communications, Inc. 11.500 10/15/08 500,000 500,000 532,500
Telex Communications, Inc. 0.000 01/15/09 471,915 206,820 292,587
Tenet Healthcare Corporation 6.375 12/01/11 500,000 482,500 456,250
Tenet Healthcare Corporation 9.875 07/01/14 500,000 488,370 506,250
Thermadyne Holdings Corporation 9.250 02/01/14 1,000,000 986,250 875,000
Transmontaigne, Inc. 9.125 06/01/10 485,000 476,513 476,513
Triton P C S, Inc. 8.500 06/01/13 550,000 550,000 511,500
Unisys Corporation 8.000 10/15/12 190,000 190,000 175,750
United Components, Inc. 9.375 06/15/13 1,000,000 1,004,364 995,000
United Rentals, Inc. 7.750 11/15/13 625,000 625,000 609,375
United Rentals, Inc. 7.000 02/15/14 500,000 500,000 467,500
Universal City Florida (C) 9.000 05/01/10 200,000 200,000 201,000
Universal City Florida 8.375 05/01/10 200,000 200,000 195,500
Utilicorp United, Inc. 9.950 02/01/11 1,000,000 1,092,854 1,102,500
Vicorp Restaurants, Inc. 10.500 04/15/11 600,000 592,746 556,500
Vought Aircraft Industries 8.000 07/15/11 1,000,000 1,000,406 935,000
Warner Music Group 7.375 04/15/14 275,000 275,000 272,938
Wornick Co. 10.875 07/15/11 750,000 750,000 768,750
------------ ------------ ------------
Total Bonds $ 69,647,806 68,924,710 68,185,780
------------ ------------ ------------
29
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Shares or
Interest Due Principal Market
Corporate Public Securities:(A)continued Rate Date Amount Cost Value
---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK - 4.11%
Copa Holdings SA (B) 6,600 $ 132,000 $ 180,180
DealerTrack Holdings, Inc. (B) 3,200 54,400 67,136
H C I Direct, Inc. (B) 1,000 -- --
PW Eagle, Inc. (B) 196,518 1 4,028,619
PepsiAmericas, Inc. 92,145 2,006,365 2,143,293
Rent-Way, Inc. (B) 92,866 916,263 593,414
Supreme Industries, Inc. 115,722 267,325 895,688
Telex Communications, Inc. (B) 489 7 2,445
Telex Communications, Inc. (B) 17,707 1 88,537
Transmontaigne, Inc. (B) 258,720 798,595 1,707,552
------------ ------------
TOTAL COMMON STOCK 4,174,957 9,706,864
------------ ------------
CONVERTIBLE BONDS - 1.18%
Citadel Broadcasting Corporation 1.875% 02/15/11 $ 700,000 $ 543,375 $ 543,375
Graftech International 1.625 01/15/24 1,500,000 1,083,750 1,089,375
Leucadia National Corporation 3.750 04/15/14 1,000,000 1,000,000 1,153,750
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 3,200,000 2,627,125 2,786,500
============ ------------ ------------
TOTAL CORPORATE PUBLIC SECURITIES 75,726,792 80,679,144
------------ ------------
Interest Due Principal Market
Short-Term Securities: Rate/Yield Date Amount Cost Value
---------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER - 10.20%
Centex Corporation 4.408% 01/13/06 $ 4,900,000 $ 4,892,213 $ 4,892,213
Consolidated Natural Gas Co. 4.484 01/04/06 1,810,000 1,809,099 1,809,099
DaimlerChrysler NA Holding Corporation 4.487 01/10/06 1,132,000 1,130,594 1,130,594
DaimlerChrysler NA Holding Corporation 4.481 01/11/06 653,000 652,108 652,108
DaimlerChrysler NA Holding Corporation 4.443 01/13/06 1,925,000 1,921,921 1,921,921
Detroit Edison Co. 4.404 01/03/06 2,805,000 2,803,972 2,803,972
Florida Power & Light Co. 4.378 01/13/06 4,955,000 4,947,181 4,947,181
Ryder System, Inc. 4.409 01/09/06 1,152,000 1,150,733 1,150,733
Wisconsin Gas Co. 4.337 01/12/06 4,814,000 4,807,052 4,807,052
------------ ------------ ------------
TOTAL SHORT-TERM SECURITIES $ 24,146,000 $ 24,114,873 $ 24,114,873
============ ------------ ------------
TOTAL INVESTMENTS 110.78% $258,393,790 $261,746,843
============ ------------
Other Assets 4.85 11,450,446
Liabilities (15.63) (36,921,871)
------ ------------
TOTAL NET ASSETS 100.00% $236,275,418
====== ============
(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.
(C) Variable rate securities; rate indicated is as of 12/31/05.
See Notes to Consolidated Financial Statements.
30
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Fair Value/ Fair Value/
Industry Classification: Market Value Industry Classification: Market Value
------------------------------------------------------------ ------------------------------------------------------------
AEROSPACE - 2.29% BROADCASTING & ENTERTAINMENT - 2.95%
Argo Tech Corporation $ 871,250 C C O Holdings LLC $ 488,750
Bombardier, Inc. 875,000 C S C Holdings, Inc. 497,500
Consolidated Foundries Holdings 2,520,999 Cablevision Systems Corporation 1,010,000
Esterline Technologies 209,000 Cenveo Corporation 1,061,500
Vought Aircraft Industries 935,000 Charter Communications Holdings LLC 745,000
------------ Charter Communications Op LLC 248,750
5,411,249 Citadel Broadcasting Corporation 543,375
------------ Liberty Media Corporation 931,761
AUTOMOBILE - 7.44% Lodgenet Entertainment Corporation 462,188
Gencorp, Inc. 278,425 Mediacom LLC 976,250
Goodyear Tire & Rubber Co. 1,365,000 ------------
Jason, Inc. 1,994,688 6,965,074
LIH Investors, L.P. 4,665,408 ------------
Metaldyne Corporation 1,039,988 BUILDINGS & REAL ESTATE - 2.77%
Nyloncraft, Inc. 2,663,271 A W C Holding Company 2,742,537
Qualis Automotive LLC 2,125,161 Adorn, Inc. 2,648,541
Transtar Holding Company 2,449,174 Texas Industries, Inc. 72,625
United Components, Inc. 995,000 TruStile Doors, Inc. 1,091,437
------------ ------------
17,576,115 6,555,140
------------ ------------
BEVERAGE, DRUG & FOOD - 7.05% CARGO TRANSPORT - 0.30%
Beta Brands Ltd. -- Ship Finance International Ltd. 701,250
Cains Foods, L.P. 1,000,912 ------------
Del Monte Corporation 239,062 CHEMICAL, PLASTICS & RUBBER - 3.46%
Dominos, Inc. 305,140 Capital Specialty Plastics, Inc. 2,156
Eagle Pack Pet Foods, Inc. 1,155,646 Huntsman LLC 368,955
Land O' Lakes, Inc. 813,750 Koppers, Inc. 759,500
Mrs. Fields Brands 600,000 Lyondell Chemical Co. 555,175
National Wine & Spirits, Inc. 1,146,350 NOVA Chemicals Corporation 561,688
Nonni's Food Company, Inc. 2,257,956 O M Group, Inc. 733,125
PepsiAmericas, Inc. 2,143,293 P Q Corporation 1,023,000
Pinnacle Foods Group 428,625 Rhodia SA 1,388,500
River Ranch Fresh Foods LLC 1,945,319 Tomah Holdings, Inc. 2,789,358
Sbarro, Inc. 746,250 ------------
Specialty Foods Group, Inc. -- 8,181,457
Vicorp Restaurants, Inc. 556,500 ------------
Vitality Foodservice, Inc. 2,543,911
Wornick Co. 768,750
------------
16,651,464
------------
31
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Fair Value/ Fair Value/
Industry Classification: continued Market Value Industry Classification: continued Market Value
------------------------------------------------------------ ------------------------------------------------------------
CONSUMER PRODUCTS - 6.91% DIVERSIFIED/CONGLOMERATE, MANUFACTURING - 6.38%
Alh Fin LLC/ALH Fin Corporation $ 683,312 Activant Solutions, Inc. $ 1,491,356
Appleton Papers, Inc. 291,750 AmerCable, Inc. 1,181,124
Augusta Sportswear Holding Co. 2,162,732 Arrow Tru-Line Holdings, Inc. 2,071,712
Euro-Pro Corporation 1,912,939 Coining Corporation of America LLC 1,864,903
G F S I, Inc. 675,000 Dexter Magnetics Technologies, Inc. 1,047,037
H C I Direct, Inc. -- Douglas Dynamics, LLC 607,950
Maverick Acquisition Company 1,134,104 Evans Consoles, Inc. --
Rayovac Corporation 174,500 Great Lakes Dredge & Dock Corporation 675,938
Royal Baths Manufacturing Company 1,139,385 Justrite Manufacturing Acquisition Co. 1,573,212
Savage Sports Holding, Inc. 2,131,573 Rock-Tenn Co. 1,015,000
The Tranzonic Companies 3,797,492 Truck Bodies & Equipment International 3,540,704
Walls Industries, Inc. 2,221,401 ------------
Winsloew Furniture, Inc. -- 15,068,936
------------ ------------
16,324,188 DIVERSIFIED/CONGLOMERATE, SERVICE - 6.50%
------------ Abitibi-Consolidated, Inc. 952,500
CONTAINERS, PACKAGING & GLASS - 3.44% Allied Waste NA 1,032,500
A E P Industries, Inc. CapeSuccess LLC 5,862
Paradigm Packaging, Inc. 2,284,661 Chemed Corporation 1,206,562
Pliant Corporation 835,165 Diversco, Inc./DHI Holdings, Inc. 2,505,724
Pregis Corporation 985,000 Dwyer Group, Inc. 2,664,679
Sea Containers Ltd. 453,100 Iron Mountain, Inc. 930,000
Tekni-Plex, Inc. 1,389,500 Keystone North America, Inc. 295,296
Vitex Packaging, Inc. 2,175,345 Mac-Gray Corporation 604,500
------------ Moss, Inc. 1,790,013
8,122,771 M S X International, Inc. 348,250
------------ Service Corporation International 992,500
DISTRIBUTION - 3.61% U S M Holdings Corporation 1,180,656
Affinia Group, Inc. 363,400 Universal City Florida 396,500
Corvest Group, Inc. 2,025,853 Wesco International, Inc. 451,406
Kele and Associates, Inc. 2,494,704 ------------
O R S Nasco Holding, Inc. 2,506,977 15,356,948
QualServ Corporation 1,136,138 ------------
Strategic Equipment & Supply Corporation, Inc. -- ELECTRONICS - 3.20%
------------ A E S Corporation 219,000
8,527,072 Calpine Corporation 410,000
------------ Directed Electronics, Inc. 3,392,933
Flextronics International Ltd. 406,500
N R G Energy, Inc. 505,095
Precision Dynamics, Inc. 1,292,679
Siebe PLC 578,500
Texas Genco LLC 763,163
------------
7,567,870
------------
32
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Fair Value/ Fair Value/
Industry Classification: continued Market Value Industry Classification: continued Market Value
------------------------------------------------------------ ------------------------------------------------------------
FARMING & Agriculture - 0.00% MACHINERY - 8.82%
Protein Genetics, Inc. $ -- Aearo Co. $ 456,750
------------ C & M Conveyor, Inc. 2,285,554
FINANCIAL SERVICES - 2.88% Integration Technology Systems, Inc. 1,248,333
BCP Crystal US Holding Corporation 539,562 Manitowoc Company, Inc. 205,500
Dollar Financial Group 618,000 Maxon Corporation 2,611,478
East River Ventures I, L.P. 21,706 PW Eagle, Inc. 4,028,619
Ford Motor Credit Co. 1,108,607 Safety Speed Cut Manufacturing Company, Inc. 2,439,656
General Motors Acceptance Corporation 1,167,359 Stanadyne Corporation 1,440,000
Highgate Capital LLC 2,947 Synventive Equity LLC 26,767
Interpool, Inc. 763,125 Thermadyne Holdings Corporation 875,000
Lazard LLC 787,568 Tronair, Inc. 2,727,864
Leucadia National Corporation 1,800,500 Tubular Textile Machinery 2,484,886
Victory Ventures LLC 2 ------------
------------ 20,830,407
6,809,376 ------------
------------ MEDICAL DEVICES/BIOTECH - 2.45%
HEALTHCARE, EDUCATION & CHILDCARE - 3.52% Beacon Medical Products, Inc. 2,095,164
A T I Acquisition Company 1,995,721 Coeur, Inc. 1,120,428
American Hospice Management Holding LLC 2,679,496 E X C Acquisition Corporation 112,746
ICOS Corporation 603,750 MicroGroup, Inc. 2,462,053
Interactive Health LLC 729,000 ------------
MedAssist, Inc. 262,509 5,790,391
Q L T, Inc. 530,250 ------------
Quintiles Transnational Corporation 557,500 MINING, STEEL, IRON & NON PRECIOUS METALS - 0.05
Tenet Healthcare Corporation 962,500 Better Minerals & Aggregates 108,991
------------ ------------
8,320,726 OIL AND GAS - 5.64%
------------ C & J Spec-Rent Services, Inc. 3,107,183
HOME & OFFICE FURNISHINGS, HOUSEWARES, Chesapeake Energy Corporation 1,112,625
AND DURABLE CONSUMER PRODUCTS - 3.26% Clayton Williams Energy, Inc. 768,000
Connor Sport Court International, Inc. 1,952,679 Dynegy Holdings, Inc. 492,500
Home Decor Holding Company 2,383,011 GulfMark Offshore, Inc. 587,600
Samsonite Corporation 1,035,000 Mustang Ventures Company 2,240,544
U-Line Corporation 2,343,698 North American Energy Partners 377,000
------------ Offshore Logistics, Inc. 420,750
7,714,388 Pacific Energy Partners 662,750
------------ Pogo Producing Co. 487,500
LEISURE, AMUSEMENT, ENTERTAINMENT - 1.57% Supreme Industries, Inc. 895,688
Bally Total Fitness Holding Corporation 131,625 Transmontaigne, Inc. 2,184,065
Keepsake Quilting, Inc. 1,427,754 ------------
M G M Mirage, Inc. 372,656 13,336,205
Majestic Star Casino LLC 526,250 ------------
O E D Corp/Diamond Jo Company Guarantee 975,000 PHARMACEUTICALS - 1.07%
Warner Music Group 272,938 CorePharma LLC 2,519,891
------------ Enzymatic Therapy, Inc. 5,604
3,706,223 ------------
------------ 2,525,495
------------
33
MassMutual Corporate Investors
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2005
Fair Value/ Fair Value/
Industry Classification: continued Market Value Industry Classification: continued Market Value
------------------------------------------------------------ ------------------------------------------------------------
PUBLISHING/PRINTING - 1.62% TRANSPORTATION - 1.15%
American Media Operation, Inc. $ 765,000 Copa Holdings SA $ 180,180
Cadmus Communications Corporation 770,625 Hertz Corporation 51,500
Houghton Mifflin Co. 1,068,750 Tangent Rail Corporation 2,496,622
Primedia, Inc. 846,250 ------------
Sheridan Acquisition Corporation 385,781 2,728,302
------------ ------------
3,836,406 UTILITIES - 1.88%
------------ Atlas Pipeline Partners 201,750
RETAIL STORES - 4.79% El Paso Corporation 1,081,500
Blockbuster, Inc. 418,000 Markwest Energy 437,000
Insurance Auto Auctions, Inc. 840,718 Moog, Inc. 118,200
Neff Corporation 1,181,930 Nalco Co. 513,750
Neiman Marcus Group, Inc. 1,270,313 Sierra Pacific Resources 631,825
Olympic Sales, Inc. 4,165,246 Tenaska Alabama Partners LP 344,220
Rent-A-Center, Inc. 382,000 Utilicorp United, Inc. 1,102,500
Rent-Way, Inc. 1,444,414 ------------
Sports Club Co. 148,688 4,430,745
TVI, Inc. 382,500 ------------
United Rentals, Inc. 1,076,875 WASTE MANAGEMENT/POLLUTION - 0.82%
------------ Terra Renewal Services, Inc. 1,942,516
11,310,684 ------------
------------ Total Corporate Restricted
TECHNOLOGY - 1.03% and Public Securities - 100.57% $237,631,970
Cymer, Inc. 831,938 ============
DealerTrack Holdings, Inc. 67,136
Graftech International 1,089,375 See Notes to Consolidated Financial Statements.
Magnachip Semiconductor 95,500
Sungard Data Systems 181,125
Unisys Corporation 175,750
------------
2,440,824
------------
TELECOMMUNICATIONS - 3.72%
Alamosa Delaware, Inc. 798,937
Cincinnati Bell, Inc. 1,082,125
Intelsat Bermuda, Ltd. 962,313
ITC^DeltaCom, Inc. 2,678,938
Jordan Telecom Products --
M C I, Inc. 553,125
Rogers Wireless, Inc. 1,287,750
Telex Communications, Inc. 916,069
Triton P C S, Inc. 511,500
------------
8,790,757
------------
34
MassMutual Corporate Investors
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
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 diversified closed-end management investment company. Babson
Capital Management LLC ("Babson Capital"), 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, conversion 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, as
amended (the "1933 Act").
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, as amended (the "1940
Act"). In making valuations, opinions of counsel may be relied upon as to
whether or not securities are restricted securities and as to the legal
requirements for public sale.
When market quotations are readily available for unrestricted securities of
an issuer, restricted securities of the same class are generally valued at a
discount from the market price of such unrestricted securities. The Trustees,
however, consider all factors in fixing any discount, including the filing of
a registration statement for such securities under the 1933 Act and any other
developments which are likely to increase the probability that the securities
may be publicly sold by the Trust without restriction.
The Trustees meet 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 Capital, the Trust's investment
adviser. In making valuations, the Trustees will consider reports by Babson
Capital analyzing each portfolio security in accordance with the relevant
factors referred to above. Babson Capital has agreed to provide such reports
to the Trust at least quarterly.
The consolidated financial statements include private placement restricted
securities valued at $139,640,729 (59.10% of net assets) as of December 31,
2005 whose values have been estimated by the Trustees in the absence of
readily ascertainable market values. Due to the inherent uncertainty of
valua-
35
MassMutual Corporate Investors
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
tion, those estimated values may differ significantly from the values that
would have been used had a ready market for the securities existed, and the
differences could be material.
The values for corporate public securities are stated at the last reported
sales price or at prices based upon quotations obtained from brokers and
dealers as of December 31, 2005, 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, including the amortization of premiums and accretion of
discounts on bonds held. The Trust does not accrue income when payment is
delinquent and when management believes payment is questionable.
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:
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 pay the federal capital gains taxes thereon or to
distribute all or a portion of such net gains. For the year ended December
31, 2005, the Trust had a net realized long-term taxable capital gain balance
of $18,653,548, which the Trustees voted to retain and pay the federal
capital gain tax thereon. The Trust has accrued a provision for federal taxes
of $6,528,742 on the Statement of Operations related to the retained realized
capital gains.
In 2005, the Trust re-classified a total of $1,239,812 to undistributed net
investment income. $417,309 was re-classified from accumulated net realized
gain on investments and $822,503 was re-classified from additional paid in
capital to more accurately display the Trust's capital financial position on
a tax-basis in accordance with accounting principles generally accepted in
the United States of America. These re-classifications had no impact on net
asset value.
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. For the year ended December
31, 2005, the MMCI Subsidiary Trust had accrued tax expense on net investment
income of $78,950, on net realized gains of $693,366 and deferred tax expense
on net unrealized gains of $275,572.
E. DISTRIBUTIONS TO SHAREHOLDERS:
The Trust's records distributions to shareholders from net investment income
and net realized gains, if any, on the ex-dividend date. The Trust's net
investment income dividend is declared four times per year, in April, July,
October, and December. The Trusts net realized capital gain distribution, if
any, is declared in December.
The tax character of distributions paid during the years ended December 31,
2005 and 2004 were as follows:
DISTRIBUTIONS PAID FROM: 2005 2004
-----------------------------
Ordinary Income $ 20,499,802 $ 19,329,769
Long-term Capital Gains $ 208,144 --
As of December 31, 2005, the components of distributable earnings on a tax
basis included $1,888,309 of undistributed ordinary income. Such
distributions and distributable earnings on a tax basis are determined in
conformity with income
36
MassMutual Corporate Investors
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
tax regulations, which may differ from accounting principles generally
accepted in the United States.
Net investment income of the Trust as presented under accounting principles
generally accepted in the United States differs from distributable earnings
due to earnings from the MMCI Subsidiary Trust as well as timing differences
in the recognition of income on certain investments.
3. INVESTMENT SERVICES CONTRACT
A. NEW INVESTMENT SERVICES CONTRACT:
An Investment Services Contract between the Trust and Babson Capital,
effective October 1, 2005 (the "New Contract"), provides for a quarterly
investment advisory fee of 0.3125% of the net asset value of the Trust each
quarter, which is approximately equal to 1.25% annually, with no performance
adjustment. The New Contract provides that for its first eighteen months, the
investment advisory fee cannot exceed the amount that Babson Capital would
have been paid under the prior Investment Services Contract with the Trust
dated July 1, 1988 (the "Prior Contract").
B. SERVICES:
Under both the New and Prior Contracts with the Trust, Babson Capital 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 Capital 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 both the
New and Prior Contracts, Babson Capital 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.
C. PRIOR INVESTMENT SERVICES CONTRACT:
Under the Prior Contract, the Trust paid Babson Capital 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% of
net asset value, approximately equivalent to plus or minus 0.25% 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 of the Standard
& Poor's Industrials Composite (formerly called the Standard & Poor's
Industrial Price Index) and the Lehman Brothers Intermediate U.S. Credit
Index (formerly called the Lehman Brothers Corporate Bond Index) over a
rolling three-year period (the "Measurement Period") comprising the twelve
quarters ending on the last day of each quarter (the "Valuation Date"). The
Standard & Poor's Industrials Composite is not readily available to the
general public. Babson Capital obtains the information for this index from
Factset Research Systems. The three-year annualized return for the Standard &
Poor's Industrials Composite for the period ended December 31, 2005 was
13.72%. 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. Under the Prior Contract, the
investment advisory fee payable by the Trust is equal to the Base Fee Rate
(as adjusted by the Performance Adjustment) times the net asset value of the
Trust as of the Valuation Date.
In connection with a nationwide sweep examination of investment companies
having performance fees conducted by the staff of the Fort Worth, Texas
regional office of the Securities and Exchange Commission ("SEC"), the Trust
received a letter stating that the SEC staff interprets Section 205 of the
Investment Advisers Act of 1940 (the "Advisers Act") and the rules
promulgated thereunder in a way that is inconsistent with the methodology for
calculating the Performance Adjustment set forth in the Prior Contract.
Retroactive adjustment to the calculation methodology for the period since
July 1, 1988 (the period during which the Performance Adjustment has been in
effect) using the staff's methodology would result in a reduction in
aggregate investment advisory fees for that period. As a result, Babson
Capital reduced its investment advisory fee for the quarters ended December
31, 2004 and March 31, 2005 by an aggregate amount of $269,788 ($176,223 for
the quarter ended December 31, 2004 and $93,565 for the quarter ended March
31, 2005), which represented the excess of the aggregate investment advisory
fee calculated total under the Prior Contract for the period from July 1,
1988 through June 30, 2004, over the fee calculated using the methodology
identified by the SEC staff, together with interest. Babson Capital has also
agreed to waive, for each quarter beginning July 1, 2004, the amount, if any,
by which the investment advisory fee calculated in the manner described in
the Prior Contract exceeds 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, which is consistent with the
methodology identified by the SEC staff. The
37
MassMutual Corporate Investors
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
Performance Adjustments for the periods ended March 31, June 30, and
September 30, 2005 were:
Performance
Adjustment Amount
--------------------------------------------------------------------------
March 31, 2005 0.0625% $ 122,255*
--------------------------------------------------------------------------
June 30, 2005 0.0625% $ 125,025**
--------------------------------------------------------------------------
September 30, 2005 0.0625% $ 128,469***
--------------------------------------------------------------------------
* Net of waiver of $18,048.
** Net of waiver of $20,570.
*** Net of waiver of $21,139.
Total $ 59,757
--------------------------------------------------------------------------
In addition, during the year ended December 31, 2005, the Trust was
reimbursed $41,456 by an affiliate of Babson Capital due to a trading error.
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 year ended December
31, 2005, the Trust incurred total interest expense on the Note of
$1,478,000.
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 Revolving Credit Agreement with Bank of America (formerly, Fleet National
Bank), dated June 29, 2000, matured on May 31, 2005. Effective May 31, 2005,
the Trust entered into a Revolving Credit Agreement (the "New Revolver";
collectively, the "Revolvers") with The Royal Bank of Scotland PLC (the
"Agent Bank"), in the principal amount of $25,000,000, maturing May 31, 2008.
The New Revolver bears interest payable in arrears at a per annum rate that
varies depending upon whether the Trust requests a Base Rate Loan or LIBOR
Rate Loan. Interest on Base Rate Loans equals the higher of: (i) the annual
"Base Rate" as set periodically by the Agent Bank and (ii) the most recent
Federal Funds Effective Rate plus .50% per annum. Per annum interest on LIBOR
Rate Loans equals .37% plus the London Inter Bank Offered Rate ("LIBOR")
rate, divided by 1 minus LIBOR Reserve Rate. The Trust also incurs expense on
the undrawn portion of the total New Revolver at a rate of .15% per annum.
The Trust incurred closing costs on the New Revolver of $25,000.
As of December 31, 2005, there was no outstanding amount against the New
Revolver. The average daily outstanding balance was $7,761,905 and the
average rate of interest attributable to the New Revolver was 3.15%. For the
year ended December 31, 2005, the Trust incurred total interest expense on
the Revolvers of $173,400 plus $35,217 related to the undrawn portion.
5. PURCHASES AND SALES OF INVESTMENTS
FOR THE YEAR COST OF INVESTMENTS
ENDED 12/31/2005 ACQUIRED
--------------------------------------------------------------------------
Corporate restricted securities $ 64,305,280
Corporate public securities 20,307,068
PROCEEDS FROM
SALES OR MATURITIES
--------------------------------------------------------------------------
Corporate restricted securities $ 99,941,457
Corporate public securities 17,920,767
--------------------------------------------------------------------------
The aggregate cost of investments is substantially the same for financial
reporting and federal income tax purposes as of December 31, 2005. The net
unrealized appreciation of investments for financial reporting and federal tax
purposes as of December 31, 2005 is $3,353,053 and consists of $23,558,458
appreciation and $20,205,405 depreciation.
Net unrealized appreciation of investments on the Statement of Assets and
Liabilities reflects the balance net of a deferred tax accrual of $275,572 on
net unrealized gains in the MMCI Subsidiary Trust.
6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS
(unaudited)
Amount Per Share
-----------------------------------------------------------------------------
March 31, 2005
-----------------------------------------------------------------------------
Investment income $ 5,534,814
Net investment income 4,176,321 $ 0.46
Net realized and unrealized
gain on investments (net of taxes) 1,164,599 0.13
38
MassMutual Corporate Investors
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
Amount Per Share
-----------------------------------------------------------------------------
June 30, 2005
-----------------------------------------------------------------------------
Investment income $ 5,790,885
Net investment income 4,257,224 $ 0.47
Net realized and unrealized
gain on investments (net of taxes) 7,765,845 0.86
-----------------------------------------------------------------------------
September 30, 2005
-----------------------------------------------------------------------------
Investment income 5,997,408
Net investment income 4,513,620 0.50
Net realized and unrealized
gain on investments (net of taxes) 5,546,690 0.61
-----------------------------------------------------------------------------
December 31, 2005
-----------------------------------------------------------------------------
Investment income 6,817,350
Net investment income (net of taxes) 5,423,932 0.60
Net realized and unrealized
gain on investments (net of taxes) 3,254,008 0.36
7. AGGREGATE REMUNERATION PAID TO OFFICERS, TRUSTEES AND THEIR AFFILIATED
PERSONS
During 2005, the Trust paid its Trustees aggregate remuneration of $153,000. The
Trust did not pay any compensation to any of its Trustees who are "interested
persons" (as defined by the 1940 Act) of the Trust during this period. The Trust
classifies Messers. Crandall and Joyal and former Trustee Stuart H. Reese as
"interested persons" of the Trust.
All of the Trust's officers are employees of Babson Capital or MassMutual.
Pursuant to the Investment Services Contracts, the Trust does not compensate its
officers who are employees of Babson Capital or MassMutual.
Mr. Crandall, one of the Trust's Trustees, is an "affiliated person" (as defined
by the 1940 Act) of MassMutual and Babson Capital. The Trust did not make any
payments to Babson Capital during 2005, other than amounts payable to Babson
Capital pursuant to the Investment Services Contracts. During 2005, the Trust
paid the following amounts to MassMutual, exclusive of interest expense on the
Note explained in Footnote 4.A:
Preparation of the Trust's Quarterly
and Annual Reports to Shareholders $ 15,439
Preparation of Certain of the
Trust's Shareholder communications 1,264
Preparation of the Trust's
Annual Proxy Statements 1,084
-----------------------------------------------------------------------------
$ 17,787
-----------------------------------------------------------------------------
8. CONTINGENCIES
The Trust, together with other investors including MassMutual, was a plaintiff
in litigation 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
second lawsuit against Sharp's auditors was settled in the Spring of 2005. Under
the terms of the settlement agreement, the Trust would recover all legal fees it
incurred to prosecute the lawsuit, as well as additional amounts. A related
lawsuit brought by the Trustee of the Sharp bankruptcy estate against Sharp's
auditors on behalf of unsecured creditors, including the Trust, was also settled
at the same time. Total net proceeds to be distributed to the Trust as a result
of the settlement of these two lawsuits against Sharp's auditors are expected to
be approximately $1,800,000. To date, $1,764,529 has been received by the Trust.
9. CERTIFICATIONS (UNAUDITED)
As required under New York Stock Exchange ("NYSE") Corporate Governance Rules,
the Trust's principal executive officer has certified to the NYSE that he was
not aware, as of the certification date, of any violation by the Trust of the
NYSE's Corporate Governance listing standards. In addition, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Trust's
principal executive and principal financial officers have made quarterly
certifications, included in filings with the SEC on Forms N-CSR and N-Q,
relating to, among other things, the Trust's disclosure controls and procedures
and internal control over financial reporting, as applicable.
10. SPECIAL MEETING OF SHAREHOLDERS: (UNAUDITED)
At a Special Meeting of Shareholders held on August 8, 2005, shareholders of
record of the Trust at the close of business on June 10, 2005 voted to approve
the New Contract which was approved and recommended by the Trustees on April 22,
2005. 5,034,650 shares were voted in favor of the New Contract, 141,712 shares
were voted against, and 92,840 shares abstained (out of a total of 9,028,531
outstanding eligible shares). A total of 58.36% of the Trust's outstanding
shares were present in person or by proxy at the Special Meeting and 95.55% of
the 5,269,202 outstanding shares present voted in favor of the New Contract.
39
MassMutual Corporate Investors
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Trustees of MassMutual Corporate Investors
We have audited the accompanying statement of assets and liabilities of
MassMutual Corporate Investors (the "Trust"), including the schedule of
investments, as of December 31, 2005, and the related statements of operations
and cash flows for the year then ended and the statements of changes in net
assets and financial highlights for each of the years in the two-year period
then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the years in the three-year period
ended December 31, 2003 were audited by other independent registered public
accountants whose report, dated February 6, 2004, expressed an unqualified
opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2005, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
MassMutual Corporate Investors as of December 31, 2005, and the results of its
operations, its cash flows, the changes in its net assets, and the financial
highlights for each of the years described above in conformity with accounting
principles generally accepted in the United States of America.
/s/ KPMG LLP
Boston, Massachusetts
February 6, 2006
40
MassMutual Corporate Investors
INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATION(S) OVERSEEN OTHER
NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS
ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
ROGER W. CRANDALL* (41) Trustee 3 years/ Executive Vice President 2 Trustee, Chairman (since
Massachusetts Mutual (since 2005) 7 months** and Chief Investment 2005), President
Life Insurance Company Officer (since 2005) of (2003-2005) and Vice
1295 State Street Chairman 1 year/ MassMutual; and Chairman President (2002-2003) of
Springfield, MA 01111 (since 2005) 7 months*** (since 2005), Vice the Trust; Director (since
Chairman (2005), Member 2004), Babson Capital
of the Board of Managers Europe Limited (an
NOMINEE FOR TRUSTEE (since 2004), Director institutional debt-fund
(2003-2004), and Managing manager); Director (since
Director of Babson 2005), Babson Capital
Capital (2000-2005). Japan KK (a Japanese
registered investment
adviser); Non- Executive
Director (since 2005),
Baring Asset Management
Limited (an investment
manager/adviser); Chairman
(since 2005), Cornerstone
Real Estate Advisers LLC
(an investment adviser);
Director (since 1996), HYP
Management LLC (LLC
manager); Director (since
2003), MassMutual
Corporate Value Partners
Limited (investment
company); Director (since
2003), MassMutual
Corporate Value Limited
(investment company);
Director (since 2005),
MassMutual Holdings
(Bermuda) Ltd. (holding
company); Director (since
2005), MassMutual Holding
MSC, Inc. (holding
company); Director (since
1996), MMHC Investment LLC
(investment company);
Director (since 2004), MML
Assurance, Inc. (a New
York Insurance Company);
Director (since 2005),
Oppenheimer Acquisition
Corp. (holding company);
Director (since 2004),
Jefferies Babson Finance
LLC (a joint venture
between Jefferies Group
Inc. and Babson Capital);
Director (since 2004),
Great Lakes LLC
(investment company);
Director (since 1999),
SAAR Holdings CDO Ltd.
(investment company);
Trustee (since 2003),
President (2003-2005), and
Chairman (since 2005) MMCI
Subsidiary Trust and MMPI
Subsidiary Trust; and
Trustee (since 2005),
Chairman (since 2005),
President (2003-2005), and
Vice President (2002-2003)
of MassMutual
Participation Investors
(closed-end investment
advised by Babson
Capital).
* MR. CRANDALL IS AN "INTERESTED PERSON" OF THE TRUST AND BABSON CAPITAL (AS
DEFINED BY THE 1940 ACT) BECAUSE OF HIS POSITION AS AN OFFICER OF THE
TRUST; AN EXECUTIVE OFFICER OF MASSMUTUAL; AND CHAIRMAN AND MEMBER OF THE
BOARD OF MANAGERS OF BABSON CAPITAL.
** MR. CRANDALL WAS APPOINTED TO THE BOARD OF TRUSTEES ON JULY 15, 2005 TO
FILL THE VACANT SEAT CREATED BY THE RESIGNATION OF STUART H. REESE, THE
TERM OF WHICH EXPIRES IN 2006.
*** MR. CRANDALL WAS ELECTED CHAIRMAN OF THE BOARD OF TRUSTEES ON JULY 15,
2005.
41
MassMutual Corporate Investors
INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATION(S) OVERSEEN OTHER
NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS
ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
ROBERT E. JOYAL* (61) Trustee 3 years/ President (2001-2003), 33 President (1999-2003) and
MassMutual (since 2003) 1 year, Managing Director Trustee (since 2003) of
Corporate Investors 10 months (2000-2001), and Executive the Trust; Director (since
1500 Main Street Director (1999-2000) of 2006), Jefferies Group
Suite 600 Babson Capital; and Inc. (global investment
Springfield, MA 01115 Executive Director bank and institutional
(1997-1999) of MassMutual. securities firm); Director
(since 2005), York
Enhanced Strategies Fund
(a closed-end investment
company); Director (since
2003), Pemco Aviation
Group, Inc. (aircraft
maintenance and overhaul);
Trustee (since 2003),
MassMutual Select Funds,
formerly MassMutual
Institutional Funds, (an
openend investment company
advised by MassMutual);
Trustee (since 2003), MML
Series Investment Fund (an
open-end investment
company advised by
MassMutual); Trustee
(1998-2003), Senior Vice
President (1998-2001) and
President (2001-2003),
MMCI Subsidiary Trust and
MMPI Subsidiary Trust; and
President (1999-2003),
Trustee (since 2003),
MassMutual Participation
Investors (closed-end
investment company advised
by Babson Capital).
* MR. JOYAL RETIRED AS PRESIDENT OF BABSON CAPITAL IN JUNE 2003. HE CONTINUES
TO SERVE AS A DIRECTOR OR TRUSTEE OF SEVERAL ENTITIES AFFILIATED WITH
MASSMUTUAL, BABSON CAPITAL'S INDIRECT PARENT COMPANY. ACCORDINGLY, THE
TRUST CLASSIFIES MR. JOYAL AS AN "INTERESTED PERSON" OF THE TRUST AND
BABSON CAPITAL (AS DEFINED BY THE 1940 ACT).
42
MassMutual Corporate Investors
INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATION(S) OVERSEEN OTHER
NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS
ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
MICHAEL H. BROWN (49) Trustee 3 years/ Private Investor; 2 Trustee (since 2005),
MassMutual (since 2005) 7 months* and Managing Director MassMutual Participation
Corporate Investors (1994-2005), Investors (a closed-end
1500 Main Street Morgan Stanley. investment company advised
Suite 600 by Babson Capital).
Springfield, MA 01115
------------------------------------------------------------------------------------------------------------------------------------
JACK A. LAUGHERY (71) Trustee 3 years/ President and Partner 2 Director (since 1993),
MassMutual (since 1996) 10 months (since 1996), Laughery Papa John's International
Corporate Investors Investments (private (food service companies);
1500 Main Street investments). and Trustee (since 1996),
Suite 600 MassMutual Participation
Springfield, MA 01115 Investors (closed-end
investment company advised
by Babson Capital).
* MR. BROWN WAS ELECTED BY THE BOARD OF TRUSTEES TO FILL A NEWLY CREATED
BOARD SEAT ON JULY 15, 2005.
43
MassMutual Corporate Investors
INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATION(S) OVERSEEN OTHER
NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS
ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
CORINE T. NORGAARD (68) Trustee 3 years/ President, (2004-2005), 32 Trustee (since 2005), MML
MassMutual (since 1998) 10 months Thompson Enterprises Real Series Investment Fund II
Corporate Investors Estate Investment; and (an open-end investment
1500 Main Street Dean (1996-2004), Barney company advised by
Suite 600 School of Business, MassMutual); Trustee
Springfield, MA 01115 University of Hartford. (since 2004), MassMutual
Premier Funds, formerly
The DLB Fund Group (an
open-end investment
company advised by
MassMutual); Trustee
(since 1993), ING Series
Fund (investment company);
Director (since 1992), ING
Variable Series Fund; and
Trustee (since 1998),
MassMutual Participation
Investors (a closed-end
investment company advised
by Babson Capital).
------------------------------------------------------------------------------------------------------------------------------------
DONALD E. BENSON (75) Trustee 3 years/ Executive Vice President 2 Director (since 1997),
MassMutual (since 1986) 1 year, and Director (since 1992), MAIR Holdings, Inc.
Corporate Investors 10 months Marquette Financial (commuter airline holding
1500 Main Street Companies (financial company); Director (since
Suite 600 services); Partner (since 1997), National Mercantile
Springfield, MA 01115 1996), Benson Family Bancorp (bank holding
Limited Partnership No. 1 company); and Trustee
and Benson Family Limited (since 1988), MassMutual
Partnership No. 2 Participation Investors
(investment partnerships); (closed-end investment
and Partner (1987-2004), company advised by Babson
Benson, Pinckney, Oates Capital).
Partnership (building
partnership).
44
MassMutual Corporate Investors
INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATION(S) OVERSEEN OTHER
NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS
ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
DONALD GLICKMAN (72) Trustee 3 years/ Chairman (since 1992), 2 Director (since 1984),
MassMutual (since 1992) 1 year, Donald Glickman and Monro Muffler Brake, Inc.
Corporate Investors 10 months Company, Inc. (investment (automobile repair
1500 Main Street banking); and Partner service); Director (since
Suite 600 (since 1992), J.F. Lehman 1998), MSC Software Corp.
Springfield, MA 01115 & Co. (private (simulation software);
investments). Director (2002-2006),
OAOT, Inc. (ITC Services);
and Trustee (since 1992),
MassMutual Participation
Investors (closed-end
investment company advised
by Babson Capital).
------------------------------------------------------------------------------------------------------------------------------------
MARTIN T. HART (70) Trustee 3 years/ Private Investor; and 2 Director (since 2004),
MassMutual (since 1991) 2 years, President and Director Texas Roadhouse, Inc.
Corporate Investors 10 months (since 1983), H Investment (operates restaurant
1500 Main Street Company LLC (family chain); Director (since
Suite 600 partnership). 1999), ValueClick Inc.
Springfield, MA 01115 (internet advertising
company); Director (since
2002), Spectranetics Corp.
NOMINEE (medical device company);
FOR TRUSTEE and Trustee (since 1991),
MassMutual Participation
Investors (closed-end
investment company advised
by Babson Capital).
45
MassMutual Corporate Investors
OFFICERS OF THE TRUST
PRINCIPAL
POSITION OCCUPATION(S)
NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST
ADDRESS THE TRUST OF TIME SERVED 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
CLIFFORD M. NOREEN (48) President 1 year/ President (since 2005), Vice President (1993-2005) of the Trust;
MassMutual 7 months Managing Director (since 2000) of Babson Capital; Managing Director
Corporate Investors (1996-1999) of MassMutual; Trustee (since 2005), and President
1500 Main Street (since 2005), MMCI Subsidiary Trust and MMPI Subsidiary Trust; and
Suite 600 President (since 2005), Vice President (1993-2005), MassMutual
Springfield, MA 01115 Participation Investors.
------------------------------------------------------------------------------------------------------------------------------------
STEPHEN L. KUHN (59) Vice 1 year/ Vice President (since 1989) and Secretary (since 1980) of the Trust;
MassMutual President, 7 months Senior Vice President (since 1999), Deputy General Counsel (since
Corporate Investors Secretary, 1998), and Secretary (since 2005) of MassMutual; General Counsel and
1500 Main Street and Chief Secretary (2000-2006) of Babson Capital; Secretary (since 1998),
Suite 600 Legal MMCI Subsidiary Trust and MMPI Subsidiary Trust; and Vice President
Springfield, MA 01115 Officer and Secretary (since 1988), MassMutual Participation Investors.
------------------------------------------------------------------------------------------------------------------------------------
JAMES M. ROY (43) Vice 1 year/ Vice President and Chief Financial Officer (since 2005), Treasurer
MassMutual President 7 months (2003-2005), and Associate Treasurer (1999-2003) of the Trust;
Corporate Investors and Chief Director (since 2000) of Babson Capital; Associate Director
1500 Main Street Financial (1996-1999) of MassMutual; Trustee (since 2005), Treasurer (since
Suite 600 Officer 2005), and Controller (2003-2005), MMCI Subsidiary Trust and MMPI
Springfield, MA 01115 Subsidiary Trust; and Vice President and Chief Financial Officer
(since 2005), Treasurer (2003-2005) and Associate Treasurer
(1999-2003), MassMutual Participation Investors.
------------------------------------------------------------------------------------------------------------------------------------
JOHN T. DAVITT, JR. (38) Comptroller 1 year/ Comptroller (since 2001) of the Trust; Director (since 2000) of
MassMutual 7 months Babson Capital; Associate Director (1997-1999) of MassMutual;
Corporate Investors Controller (since 2005), MMCI Subsidiary Trust and MMPI Subsidiary
1500 Main Street Trust; and Comptroller (since 2001), MassMutual Participation
Suite 600 Investors.
Springfield, MA 01115
------------------------------------------------------------------------------------------------------------------------------------
MELISSA M. LAGRANT (32) Chief 6 months/ Chief Compliance Officer (since 2006) of the Trust; Managing
MassMutual Compliance 1 month* Director (since 2005) of Babson Capital; Vice President and Senior
Corporate Investors Officer Compliance Trading Manager (2003-2005), Loomis, Sayles & Company,
1500 Main Street L.P.; Assistant Vice President-Business Risk Management Group
Suite 600 (2002-2003), and Assistant Vice President-Investment Compliance
Springfield, MA 01115 (2001-2002), Zurich Scudder Investments/Deutsche Asset Management;
and Chief Compliance Officer (since 2006), MassMutual Participation
Investors.
------------------------------------------------------------------------------------------------------------------------------------
LAURA L. GRANT (33) Treasurer 1 year/ Treasurer (since 2005) of the Trust; Associate Director (since 2000)
MassMutual 7 months of Babson Capital; and Treasurer (since 2005), MassMutual
Corporate Investors Participation Investors.
1500 Main Street
Suite 600
Springfield, MA 01115
* MELISSA LAGRANT WAS ELECTED CHIEF COMPLIANCE OFFICER BY THE BOARD ON
JANUARY 20, 2006 TO FILL THE VACANCY CREATED BY MARY ELLEN WESNESKI'S
RESIGNATION AS CHIEF COMPLIANCE OFFICER ON NOVEMBER 18, 2005.
46
MassMutual Corporate Investors
[PHOTO APPEARS HERE]
--------------------------------------------------------------------------------
Members of the Board of Trustees
--------------------------------------------------------------------------------
Donald Glickman
Chairman, Donald Glickman
& Company, Inc.
Robert E. Joyal
Retired President of
Babson Capital Management LLC
Jack A. Laughery
President and Partner,
Laughery Investments
Michael H. Brown
Private Investor
Donald E. Benson*
Executive Vice President
and Director,
Marquette Financial Companies
Corine T. Norgaard*
President, Thompson Enterprises
Real Estate Investment
Roger W. Crandall
Executive Vice President and
Chief Investment Officer,
Massachusetts Mutual
Life Insurance Company
Martin T. Hart*
Private Investor
*Member of the Audit Committee
DIVIDEND REINVESTMENT AND CASH 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 8021 7-3673.
--------------------------------------------------------------------------------
Officers
--------------------------------------------------------------------------------
Roger W. Crandall James M. Roy Michael P. Hermsen Michael L. Klofas Laura L. Grant
CHAIRMAN VICE PRESIDENT & VICE PRESIDENT VICE PRESIDENT TREASURER
CHIEF FINANCIAL OFFICER
Clifford M. Noreen Mary Wilson Kibbe Richard E. Spencer, II John T. Davitt, Jr.
PRESIDENT Stephen L. Kuhn VICE PRESIDENT VICE PRESIDENT COMPTROLLER
VICE PRESIDENT, SECRETARY
& CHIEF LEGAL OFFICER Melissa M. LaGrant
CHIEF COMPLIANCE
OFFICER
[LOGO]
MassMutual Corporate Investors DB1035 206
ITEM 2. CODE OF ETHICS.
The Registrant adopted a Code of Ethics for Senior Financial Officers
(the "Code") on October 17, 2003, which is available on the
Registrant's website at www.babsoncapital.com/mci. During the period
covered by this Form N-CSR, there were no amendments to, or waivers
from, the Code.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant's Board of Trustees has determined that Mr. Donald E.
Benson, a Trustee of the Registrant and a member of its Audit
Committee, is an audit committee financial expert. Mr. Benson is
"independent" for purposes of this Item 3 as required by applicable
regulation.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
FEES BILLED TO THE REGISTRANT
KPMG LLP KPMG LLP
Year Ended Year Ended
December 31, December 31,
2005 2004
---------- ----------
Audit Fees $ 34,000 $ 32,500
Audit-Related Fees 5,200 5,000
Tax Fees 32,900 33,500
All Other Fees 0 0
---------- ----------
Total Fees $ 72,100 $ 71,000
========== ==========
NON-AUDIT FEES BILLED TO BABSON CAPITAL AND MASSMUTUAL
KPMG LLP KPMG LLP
Year Ended Year Ended
December 31, December 31,
2005 2004
---------- ----------
Audit-Related Fees $1,271,816 $ 362,400
Tax Fees 0 0
All Other Fees 0 400,000
---------- ----------
Total Fees $1,271,816 $ 762,400
========== ==========
The category "Audit Related Fees" reflects fees billed by KPMG for
services reasonably related to the audit and the Registrant, Babson
Capital Management LLC ("Babson Capital") and Massachusetts Mutual Life
Insurance Company ("MassMutual"), such as SAS 70 review, a
Sarbanes-Oxley Readiness Assessment and agreed upon procedures reports.
Preparation of Federal, state and local income tax and compliance work
are representative of the fees billed in the "Tax Fees" category. The
category "All Other Fees" represents fees billed by KPMG for tax
consulting rendered to Babson Capital and MassMutual. The
Sarbanes-Oxley Act of 2002 and its implementing regulations allows the
Registrant's Audit Committee to establish a pre-approval policy for
certain services rendered by the Registrant's independent accountants.
During 2005, the Registrant's Audit Committee approved all of the
services rendered to the Registrant by KPMG and did not rely on such a
pre-approval policy for any such services.
The Audit Committee reviewed the aggregate fees billed for professional
services rendered by KPMG for the Registrant and for the non-audit
services provided to Babson Capital, and Babson Capital's parent,
MassMutual. As part of this review, the Audit Committee considered
whether the provision of such non-audit services were compatible with
maintaining the principal accountant's independence.
The 2004 fees billed represent final 2004 amounts, which may differ
from the preliminary figures available as of the filing date of the
Trust's 2005 Annual Form N-CSR and includes, among other things, fees
for services that may not have been billed as of the filing date of the
Trust's 2005 Annual Form N-CSR, but are now properly included in the
2004 fees billed to the Trust, Babson Capital, and MassMutual.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The Registrant maintains an Audit Committee composed exclusively of
Trustees of the Registrant who qualify as "independent" Trustees under
the current listing standards of the New York Stock Exchange and the
rules of U.S. Securities and Exchange Commission. The Committee
operates pursuant to a written Audit Committee Charter, which is
available (1) on the Registrant's website, www.babsoncapital.com/mpv;
and (2) without charge, upon request, by calling, toll-free
866-399-1516. The current members of the Audit Committee are Donald E.
Benson, Martin T. Hart, and Corine T. Norgaard.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable for this filing.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END
MANAGEMENT INVESTMENT COMPANIES.
The Registrant's Board of Trustees has delegated proxy voting
responsibilities relating to voting securities held by the Registrant
to its investment adviser, Babson Capital Management LLC ("Babson
Capital"). A summary of Babson Capital's proxy voting policies and
procedures is set forth below.
Summary of Babson Capital's Proxy Voting Policy
-----------------------------------------------
Babson Capital views the voting of proxies as an integral part of its
investment management responsibility and believes, as a general
principle, that proxies should be voted solely in the best interests of
its clients (i.e. prudently and in a manner believed by Babson Capital
to best protect and enhance an investor's returns). To implement this
general principle, it is Babson Capital's policy to generally vote
proxies in accordance with the recommendations of Institutional
Shareholder Services ("ISS"), a recognized authority on proxy voting
and corporate governance, or, in cases where ISS has not made any
recommendations with respect to a proxy, in accordance with ISS's proxy
voting guidelines.
Babson Capital recognizes, however, that there may be times when Babson
Capital believes that it will be in the best interests of clients
holding the securities to (1) vote against ISS's recommendations or (2)
in cases where ISS has not provided Babson Capital with any
recommendations with respect to a proxy, vote against ISS's proxy
voting guidelines. Babson Capital may vote, in whole or part, against
ISS's recommendations or ISS's proxy voting guidelines, as applicable,
if such vote is authorized by the Policy. The procedures set forth in
the Policy are designed to ensure that votes against ISS's
recommendations or proxy voting guidelines have been made in the best
interests of clients and are not the result of any material conflict of
interest (a "Material Conflict").
Summary of Babson Capital's Proxy Voting Procedures
---------------------------------------------------
Babson Capital has (1) established a Proxy Committee that is
responsible for the implementation and governance of the Policy and (2)
designated Proxy Administrators who will receive and post proxies for
voting with ISS. In accordance with the Policy, Babson Capital will
generally vote all client proxies in accordance with ISS's
recommendation or proxy voting guidelines, unless a person authorized
by the Proxy Committee (each a "Proxy Analyst") determines that it is
in its clients' best interest to vote against ISS's recommendation or
proxy voting guidelines. In these cases, Babson Capital will vote
against ISS's recommendation or proxy voting guidelines, so long as no
other Proxy Analyst reviewing such proxy disagrees with such
recommendation, and no known Material Conflict is identified by the
Proxy Analyst(s) or the Proxy Administrator. Otherwise, the proxy is to
be submitted to a member of the Proxy Committee, who shall determine
how to vote the proxy unless (i) the Proxy Administrator has identified
a Babson Capital Material Conflict or (ii) said Proxy Committee member
has identified a Material Conflict. In such cases, the proxy shall be
submitted to the Proxy Committee, which may authorize a vote against
ISS's recommendation or proxy voting guidelines only if the Proxy
Committee determines that such vote is in the clients' best interests.
No employee, officer or director of Babson Capital or its affiliates
(other than those assigned such responsibilities under the Policy) may
influence how Babson Capital votes any proxy, unless such person has
been requested to provide such assistance by a Portfolio Manager or
Proxy Committee member and has disclosed any known Material Conflict.
Any pre-vote communications prohibited by the Policy shall be reported
to the Proxy Committee member prior to voting and to Babson Capital's
General Counsel.
Obtaining a Copy of the Policy
------------------------------
The full text of Babson Capital's Policy is available (1) without
charge, upon request, by calling 1-866-399-1516 or (2) on the
Registrant's website, www.babsoncapital.com/mci.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The following disclosure item is made as of the date of this Form N-CSR
unless otherwise indicated.
PORTFOLIO MANAGER. Clifford M. Noreen serves as the President of the
Registrant (since 2005) and as its Portfolio Manager. Mr. Noreen began
his service to the Registrant in 1993 as a Vice President. With over 24
years of industry experience, Mr. Noreen is a Managing Director of
Babson Capital Management LLC ("Babson Capital") and head of Babson
Capital's Corporate Securities Group, where he oversees all corporate
credit related investments, including public and private bonds,
mezzanine, and private equity investments, as well as structured credit
products. Mr. Noreen joined Massachusetts Mutual Life Insurance Company
("MassMutual"), Babson Capital's parent company, in 1985 and began
leading its High Yield Team in 1992, where he was responsible for
oversight of all public high yield portfolios. In 2004, Mr. Noreen
assumed responsibility for Babson Capital's Public Corporate Credit
Group, which included the Investment Grade and High Yield Institutional
Fixed Income teams. Mr. Noreen also presently serves as President of
MassMutual Participation Investors, another closed-end investment
company advised by Babson Capital. Mr. Noreen holds a B.A. from the
University of Massachusetts and an M.B.A from American International
College.
PORTFOLIO MANAGEMENT TEAM. Mr. Noreen has primary responsibility for
overseeing the investment of the Registrant's portfolio, with the
day-to-day investment management responsibility of the Registrant's
portfolio being shared with the following Babson Capital investment
professionals (together with the Portfolio Manager, the "Portfolio
Team").
Michael P. Hermsen, Michael L. Klofas, and Richard E. Spencer II are
each a Vice President of the Registrant and a managing Director of
Babson Capital. Together they are responsible for managing Babson
Capital's Mezzanine Investment and Private Equity Investments team
within the Corporate Securities Group, which is responsible for
finding, analyzing, negotiating and servicing mezzanine private
placement securities for the Registrant.
Mr. Hermsen joined MassMutual in 1990 and has been an officer of the
Registrant since 1992. Previously, he worked at Teachers Insurance and
Annuity Association where he was a generalist private placement
analyst. At MassMutual and then Babson Capital, Mr. Hermsen has
analyzed and invested in traditional private placements, high yield
public and private bonds, and leveraged bank loans. He has also been
responsible for managing a small portfolio of distressed investments.
Since 1993, he has focused on originating, analyzing, structuring and
documenting mezzanine and private equity investments. He holds a B.A.
from Bowdoin College and an M.B.A. from Columbia University.
Mr. Klofas joined MassMutual in 1988 and has been an officer of the
Registrant since 1989. Prior to joining MassMutual, he spent two years
at a small venture capital firm and two years at a national public
accounting firm. At MassMutual and then Babson Capital, Mr. Klofas has
analyzed and invested in traditional private placements and high yield
public bonds. He also spent four years leading Babson Capital's workout
and restructuring activities. Since 1993, he has focused on
originating, analyzing, structuring and documenting mezzanine and
private equity investments. Mr. Klofas holds a B.A. from Brandeis
University and an M.B.A. from Babson College as well as a Certified
Public Accountant designation.
Mr. Spencer joined MassMutual in 1989 after three years as a corporate
loan analyst at a major New England bank. He has been an officer of
Registrant since 1990. At MassMutual and then Babson Capital, Mr.
Spencer has analyzed and invested in traditional private placements,
high yield public and private bonds, leveraged bank loans, mezzanine
debt and private equity. From 1993 to 1999, he was the lead
restructuring professional at Babson Capital. Since 1999, Mr. Spencer
has been focused on the origination, analysis, structuring and
documentation of mezzanine and private equity investments. He holds a
B.A. from Bucknell University and an M.B.A. from the State University
of New York at Buffalo.
Starting in 2006, Jill A. Fields assumed primary day-to-day
responsibility for managing the Registrant's public high yield and
investment grade fixed income portfolio. Ms. Fields, a Managing
Director of Babson Capital with over 19 years of industry experience,
is responsible for portfolio management of Babson Capital's high yield
total return strategy. Prior to joining Babson Capital in 1997, she was
a credit analyst at Shawmut National Bank, and the Director of
Corporate Bond Research at Hartford Life Insurance Group. Ms. Fields
holds a B.S. from Pennsylvania State University and an M.B.A. from the
University of Connecticut.
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO TEAM. The members of the
Registrant's Portfolio Team also have primary responsibility for the
day-to-day management of other Babson Capital advisory accounts,
including, among others, closed-end and open-end investment companies,
private investment funds, MassMutual-affiliated accounts, as well as
separate accounts for institutional clients. These advisory accounts
are identified below.
NUMBER OF
ACCOUNTS APPROXIMATE
TOTAL WITH ASSET SIZE OF
NUMBER APPROXIMATE PERFORMANCE- PERFORMANCE-
PORTFOLIO ACCOUNT OF TOTAL ASSET BASED BASED ADVISORY
TEAM CATEGORY ACCOUNTS SIZE(A) ADVISORY FEE FEE ACCOUNTS(A)
------------ --------------------- -------- ------------ ------------ --------------
Clifford M. Registered Investment
Noreen(B) Companies 2 $306.4 million 0 N/A
-----------------------------------------------------------------------------------------
Other Pooled Investment
Vehicles 2 $112.6 million 2 $112.6 million
-----------------------------------------------------------------------------------------
Other Accounts 2 $133.7 million 2 $133.7 million
-----------------------------------------------------------------------------------------
Jill A. Registered Investment
Fields Companies 3 $565.2 million 0 N/A
-----------------------------------------------------------------------------------------
Other Pooled Investment
Vehicles 3 $214.3 million 3 $214.3 million
-----------------------------------------------------------------------------------------
Other Accounts 3 $361.2 million 2 $133.9 million
-----------------------------------------------------------------------------------------
Michael P. Registered Investment
Hermsen Companies 1 $131 million N/A N/A
-----------------------------------------------------------------------------------------
Other Pooled Investment
Vehicles 5 $341.2 million 5 $341.2 million
-----------------------------------------------------------------------------------------
Other Accounts 1C $1.1 billion N/A N/A
-----------------------------------------------------------------------------------------
Michael L. Registered Investment
Klofas Companies 1 $131 million N/A N/A
-----------------------------------------------------------------------------------------
Other Pooled Investment
Vehicles 5 $341.2 million 5 $341.2 million
-----------------------------------------------------------------------------------------
Other Accounts 1C $1.1 billion N/A N/A
-----------------------------------------------------------------------------------------
Richard E. Registered Investment
Spencer II Companies 1 $131 million N/A N/A
-----------------------------------------------------------------------------------------
Other Pooled Investment
Vehicles 5 $341.2 million 5 $341.2 million
-----------------------------------------------------------------------------------------
Other Accounts 1C $1.1 billion N/A N/A
(A) Account asset size has been calculated as of December 31, 2005.
(B) Mr. Noreen, as the head of Babson Capital's Corporate Securities
Group, has overall responsibility for all corporate credit related
investments, including public and private bonds, mezzanine, and
private equity investments, as well as structured credit products
managed by Babson Capital. Except for the accounts noted in the table
above, Mr. Noreen is not primarily responsible for the day-to-day
management of the other accounts managed by Babson Capital's Corporate
Securities Group.
(C) The listed account and managed assets represent that portion of the
general investment account of Massachusetts Mutual Life Insurance
Company and C.M. Life Insurance Company for which an individual
Portfolio Team member has primary day-to-day responsibility. As of
December 31, 2005, Babson Capital's total general investment account
assets under management were $56.9 billion dollars.
MATERIAL CONFLICTS OF INTEREST. The potential for material conflicts of
interest may exist as the members of the Portfolio Team have
responsibilities for the day-to-day management of multiple accounts.
These conflicts may be heightened to the extent the individual, Babson
Capital and/or an affiliate has an investment in one or much of such
accounts or an interest in the performance of such accounts. Babson
Capital has identified (and summarized below) areas where material
conflicts of interest are most likely to arise, and has adopted
policies and procedures that it believes are reasonably designed to
address such conflicts.
It is possible that an investment opportunity may be suitable for both
the Registrant and other accounts managed by a member of the Portfolio
Team, but may not be available in sufficient quantities for both the
Registrant and the other accounts to participate fully. Similarly,
there may be limited opportunity to sell an investment held by the
Registrant and another account. A conflict may arise where a member of
the Portfolio Team may have an incentive to treat an account
preferentially as compared to the Registrant because the account pays
Babson Capital a performance-based fee or a member of the Portfolio
Team, Babson Capital, or an affiliate has an interest in the account.
Babson Capital has adopted an investment allocation policy and trade
allocation procedures to address allocation of portfolio transactions
and investment opportunities across multiple clients. These policies
are designed to achieve fair and equitable treatment of all clients
over time, and specifically prohibit allocations based on performance
of an account, the amount or structure of the management fee,
performance fee or profit sharing allocations, participation or
investment by an employee, Babson Capital or an affiliate, whether the
account is public, private, proprietary or third party. Additionally,
the Registrant, MassMutual, Babson Capital, MassMutual Participation
Investors, and any private investment company advised or sub-advised by
Babson Capital have obtained a blanket order from the Securities and
Exchange Commission pursuant to Section 17(d), and Rule 17(d)-1
thereunder, of the Investment Company Act of 1940, as amended, which
sets forth the conditions by which the entities can engage in private
placement co-investment activities.
Potential material conflicts of interest may also arise related to the
knowledge and timing of the Registrant's trades, investment
opportunities and broker selection. A member of the Portfolio Team will
have information about the size, timing and possible market impact of
the Registrant's trades. It is theoretically possible that a member of
the Portfolio Team could use this information for his or her personal
advantage or the advantage of other accounts he manages or the possible
detriment of the Registrant. For example, a member of the Portfolio
Team could front run a fund's trade or short sell a security for an
account immediately prior to the Registrant's sale of that security. To
address these conflicts, Babson Capital has adopted policies and
procedures governing employees' personal securities transactions, the
use of short sales, and trading between the Registrant and other
accounts managed by members of the Portfolio Team or accounts owned by
Babson Capital or its affiliates.
With respect to securities transactions for the Registrant, Babson
Capital determines which broker to use to execute each order,
consistent with its duty to seek best execution of the transaction.
Babson Capital manages certain other accounts, however, where Babson
Capital may be limited by the client with respect to the selection of
brokers or directed to trade such client's transactions through a
particular broker. In these cases, trades for a fund in a particular
security may be placed separately from, rather than aggregated with,
such other accounts. Placing separate transaction orders for a security
may temporarily affect the market price of the security or otherwise
affect the execution of the transaction to the possible detriment of a
fund or the other account(s) involved. Babson Capital has policies and
procedures that address best execution and directed brokerage.
Members of the Portfolio Team may also face other potential conflicts
of interest in managing the Registrant, and the above is not a complete
description of every conflict of interest that could be deemed to exist
in managing both the Registrant and the other accounts listed above.
COMPENSATION. The current Babson Capital compensation and incentive
program for investment professionals is designed to attract, motivate
and retain high-performing individuals.
To help Babson Capital make informed decisions, the Company
participates in annual compensation surveys of investment management
firms using McLagan Partners, in addition to other industry specific
resources. The firms selected for periodic peer-group comparisons
typically have similar asset size or business mix. Annually, a review
is conducted of total compensation versus market, to ensure that
individual pay is competitive with the defined overall market.
The compensation package for the members of the Portfolio Team is
comprised of a market-driven base salary, a performance-driven annual
bonus, and discretionary long-term incentives. The performance-driven
bonus is based on the performance of the accounts managed by the
members of the Portfolio Team relative to appropriate benchmarks,
including with respect to the Registrant, to the Lehman Brothers
Intermediate U.S. Credit and the S & P Industrial Index, in addition to
the Russell 2000 Index and Lehman Brothers U.S. Corporate High Yield
Index. Performance of the Registrant, like other accounts Portfolio
Team members manage, are evaluated on a pre-tax basis, and are reviewed
over one and three-year periods, with greater emphasis given to the
latter. There are other factors that affect bonus awards to a lesser
extent, such as client satisfaction, teamwork, the assets under
management, and the overall success of Babson Capital. Such factors are
considered as a part of the overall annual bonus evaluation process by
the management of Babson Capital.
Long-Term incentives are designed to share with participants the
longer-term value created in Babson Capital. Long-term incentives may
take the form of deferred cash awards (including deferred cash awards
that provide a portfolio manager with the economic equivalent of a
"shareholder" interest in the firm by linking the value of the award to
a formula which ties to the value of the business), and/or, in the case
of a portfolio manager who manages a private investment fund with a
performance fee, a deferred cash award or a direct profit sharing
interest that results in the manager receiving amounts based on the
amount of the performance fee paid by such fund. These long-term
incentives vest over time and are granted annually, based upon the same
criteria used to determine the performance-driven annual bonus detailed
above. Because the Portfolio Team members are generally responsible for
multiple accounts (including the Registrant), they are compensated on
the overall performance of the accounts that they manage, rather than a
specific account, except for the portion of compensation relating to
any performance fee award.
BENEFICIAL OWNERSHIP. As of December 31, 2005, members of the Portfolio
Team beneficially owned the following dollar range of equity securities
in the Registrant:
DOLLAR RANGE OF BENEFICIALLY OWNED*
PORTFOLIO TEAM: EQUITY SECURITIES OF THE REGISTRANT
Clifford M. Noreen $500,001-$1,000,000
Jill A. Fields $50,001-$100,000
Michael P. Hermsen $100,001-$500,000
Michael L. Klofas $100,001-$500,000
Richard E. Spencer II None
* Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2)
under the Securities Exchange Act of 1934, as amended.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable for this filing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable for this filing.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The principal executive officer and principal financial officer
of the Registrant evaluated the effectiveness of the Registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")) as of a
date within 90 days of the filing date of this report and based
on that evaluation have concluded that such disclosure controls
and procedures are effective to provide reasonable assurance that
material information required to be disclosed by the Registrant
on Form N-CSR is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange
Commission's rules and forms.
(b) There were no changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act)
during the Registrant's second fiscal half-year that have
materially affected, or are reasonably likely to materially
affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a)(1) ANY CODE OF ETHICS, OR AMENDMENTS THERETO, THAT IS THE SUBJECT OF
DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT
INTENDS TO SATISFY THE ITEM 2 REQUIREMENTS THROUGH THE FILING OF
AN EXHIBIT.
None.
(a)(2) A SEPARATE CERTIFICATION FOR EACH PRINCIPAL EXECUTIVE OFFICER AND
PRINCIPAL FINANCIAL OFFICER OF THE REGISTRANT AS REQUIRED BY RULE
30a-2 UNDER THE ACT.
Attached hereto as EX-99.31.1
Attached hereto as EX-99.31.2
(a)(3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23c-1
UNDER THE ACT (17 CFR 270.23c-1) SENT OR GIVEN DURING THE PERIOD
COVERED BY THE REPORT BY OR ON BEHALF OF THE REGISTRANT TO 10 OR
MORE PERSONS.
Not Applicable for this filing.
(b) CERTIFICATIONS PURSUANT TO RULE 30a-2(b) UNDER THE ACT.
Attached hereto as EX-99.32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): MassMutual Corporate Investors
----------------------------------
By: /s/ Clifford M. Noreen
----------------------------------
Clifford M. Noreen, President
----------------------------------
Date: March 10, 2006
----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ Clifford M. Noreen
----------------------------------
Clifford M. Noreen, President
----------------------------------
Date: March 10, 2006
----------------------------------
By: /s/ James M. Roy
----------------------------------
James M. Roy, Vice President, and
Chief Financial Officer
----------------------------------
Date: March 10, 2006
------------------------------