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
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MassMutual Corporate Investors
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(Exact name of registrant as specified in charter)
1500 Main Street, P.O. Box 15189, Springfield, MA 01115-5189
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(Address of principal executive offices) (Zip code)
Christopher A. DeFrancis, Vice President and Secretary
1500 Main Street, Suite 2800, P.O. Box 15189, Springfield, MA 01115-5189
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(Name and address of agent for service)
Registrant's telephone number, including area code: 413-226-1000
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Date of fiscal year end: 12/31
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Date of reporting period: 12/31/10
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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, 100 F Street NE,
Washington, DC 20549. 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.
[LOGO] MASSMUTUAL CORPORATE INVESTORS
2010 ANNUAL REPORT
MASSMUTUAL CORPORATE INVESTORS
c/o Babson Capital Management LLC
1500 Main Street
P.O. Box 15189
Springfield, Massachusetts 01115-5189
(413) 226-1516
http://www.BabsonCapital.com/mci
ADVISER
Babson Capital Management LLC
1500 Main Street, P.O. Box 15189
Springfield, Massachusetts 01115-5189
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 (the "Trust") have delegated
proxy voting responsibilities relating to the voting of securities held by the
Trust to Babson Capital Management LLC ("Babson Capital"). A description of
Babson Capital's proxy voting policies and procedures is available (1) without
charge, upon request, by calling, toll-free 1-866-399-1516; (2) on the Trust's
website at http://www.BabsonCapital.com/mci; and (3) on the U.S. Securities and
Exchange Commission's ("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, 2010 is available (1) on the
Trust's web-site at http://www.BabsonCapital.com/mci; and (2) on the SEC's
website at http://www.sec.gov.
FORM N-Q
The Trust files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. This information is
available (i) on the SEC's website at http://www.sec.gov; and (ii) at the SEC'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 on the Trust's website at http://
www.BabsonCapital.com/mci or upon request by calling, toll-free, 1-866-399-1516.
OFFICERS OF THE TRUST
Clifford M. Noreen
Chairman
Michael L. Klofas
President
Michael P. Hermsen
Vice President
Richard E. Spencer, II
Vice President
Jill A. Fields
Vice President
James M. Roy
Vice President
& Chief Financial
Officer
Christopher A. DeFrancis
Vice President &
Secretary
MASSMUTUAL CORPORATE INVESTORS
MASSMUTUAL CORPORATE INVESTORS IS A CLOSED-END INVESTMENT COMPANY, FIRST OFFERED
TO THE PUBLIC IN 1971, WHOSE SHARES ARE TRADED ON THE NEW YORK STOCK EXCHANGE.
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 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 in private placement transactions. These
investments are typically mezzanine debt instruments with accompanying private
equity securities made to small or middle market 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. Below-investment grade or
high yield securities have predominantly speculative characteristics with
respect to the capacity of the issuer to pay interest and repay principal.
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 shareholders to attend the Trust's Annual Meeting
of Shareholders, which will be held on April 15, 2011 at 1:30 P.M. in
Springfield, Massachusetts.
(Continued)
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MassMutual Corporate Investors 2010 ANNUAL REPORT 1
PORTFOLIO COMPOSITION AS OF 12/31/10*
[PIE CHART APPEARS HERE]
Private / 144A Public High
High Yield Debt Yield Debt
72.0% 5.1%
Private / Restricted Public Equity
Equity 0.2%
12.1%
Cash & Short Term
Investments
10.6%
* Based on value of total investments (including cash)
TOTAL ANNUAL PORTFOLIO RETURN (AS OF 12/31 EACH YEAR)*
[BAR CHART APPEARS HERE]
7.28 5.91 4.80 22.61 22.76 20.04 18.06 8.72 -10.34 12.64 19.81 MassMutual Corporate Investors
(Based on change in the net asset
value with reinvested dividends)
-3.03 2.49 -20.48 47.25 18.33 4.55 18.37 -1.57 -33.79 27.17 26.86 Russell 2000 Index
-5.86 5.28 -1.41 28.97 11.13 2.74 11.85 1.87 -26.16 58.21 15.13 Barclays Capital U.S.
Corporate High Yield Index
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
* 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. These returns differ from the total
investment return based on market value of the Trust's shares 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.
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2 MassMutual Corporate Investors 2010 ANNUAL REPORT
TO OUR SHAREHOLDERS
I am pleased to share with you the Trust's Annual Report for the year ended
December 31, 2010.
PORTFOLIO PERFORMANCE
The Trust's net total portfolio rate of return for 2010 was 19.81%, as measured
by the change in net asset value and assuming the reinvestment of all dividends
and distributions. The Trust's total net assets were $237,584,875, or $25.12 per
share, as of December 31, 2010. This compares to $214,436,954, or $22.89 per
share, as of December 31, 2009. The Trust paid a quarterly dividend of 54 cents
per share for each of the four quarters of 2010. Including the fourth quarter
dividend paid in January 2011, total dividends for the year were $2.16 per
share, which was unchanged from the prior year. Net investment income for the
year was $2.27 per share, including $0.09 per share of non-recurring income,
which was up 10% from $2.05 per share in 2009. After weathering the difficult
markets of 2008 and early 2009, we are pleased to report that the net investment
income generated by the Trust's portfolio is once again exceeding the dividend
level. Investors took note of the strong performance in 2010 as the Trust's
stock price increased 21.8% during the year, from $25.10 as of December 31, 2009
to $30.56 as of December 31, 2010.
At the January 21, 2011 Board of Trustees' meeting, the Trustees declared a
two-for-one stock split payable in the form of a stock dividend. As a result of
the stock split, on February 18, 2011, the Trust distributed one additional
share of its common stock to all shareholders of record at the close of business
on February 4, 2011 for each share of Trust's common stock held on that date.
The table below lists the average annual net returns of the Trust's portfolio,
based on the change in net assets and assuming the reinvestment of all dividends
and distributions. Average annual returns of the Barclays Capital U.S. Corporate
High Yield Index and the Russell 2000 Index for the 1, 3, 5 and 10 years ended
December 31, 2010 are provided for comparison purposes only.
BARCLAYS CAPITAL
U.S. CORPORATE HIGH RUSSELL
THE TRUST YIELD INDEX 2000 INDEX
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1 Year 19.81% 15.13% 26.86%
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3 Years 6.56% 10.38% 2.22%
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5 Years 9.20% 8.91% 4.47%
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10 Years 12.03% 8.88% 6.33%
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Past performance is no guarantee of future results.
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MassMutual Corporate Investors 2010 ANNUAL REPORT 3
MARKET CONDITIONS
The year 2010 opened with nervous investors unable to shake their fears of a
double-dip recession even though the global economy entered its second year of
recovery. Despite these worries, investors stayed the course and markets
continued to improve until mid-spring, when financial troubles facing several
European nations raised concerns around the globe. As markets stalled,
governments and central banks once again stepped to the fore to help restore
investor confidence. The U.S. economy was further bolstered at year-end by
extensions of investor friendly tax policies, helping to close the year on a
strong note. The Dow Jones Industrial Average gained 11% for the year to 11,577,
a level not seen since September 2008. The market's strong performance occurred
in the latter part of the year, as the Dow rose 18.5% in the final six months,
and 7.3% in the fourth quarter.
Despite the strong finish, concerns remain for the U.S. economy. The
unemployment rate, according to the U.S. Department of Labor, ended 2010 at
9.8%, down slightly from 10% in 2009, but still stubbornly high. Inflation was
just under 1.5%, down significantly from 2.7% in 2009, but history has shown
that significant fiscal stimulus often leads to inflation. The current fiscal
policy and the growing national debt also worry investors and companies alike
about potential tax hikes, which might be required at some point to pay
principal and interest on the debt. The value of the dollar improved overall
versus the currencies of the main U.S. trading partners in 2010, although much
of that was due to the negative impact on the euro given financial troubles for
several European countries; the dollar's performance against other currencies
was mixed. One welcome sign was corporate credit defaults, which plummeted in
2010. Moody's Investors Service global issuer-weighted speculative-grade default
rate was 3.1% in 2010, down dramatically from 12.5% in 2009. The current rate is
more in line with its historical average of 5%, and Moody's predicts defaults
will fall even lower - to below 2% - in 2011.
PORTFOLIO ACTIVITY
New investment activity for the Trust was very sporadic during 2010. In the
first three quarters of the year, the Trust completed eight new private
placement investments. In the fourth quarter, the Trust completed 11 new
investments, including seven in the month of December alone. This high level of
transaction volume in the fourth quarter was driven mostly by concerns about
potential tax law changes, although pent-up demand from private equity and
corporate buyers also contributed. For the full year 2010, the Trust closed 19
new private placement investments and eight add-on investments in existing
portfolio companies. Total private placement investment purchases in 2010 were
$56,077,054, which is among the highest level of annual investment volume in the
Trust's history. In 2009, the Trust closed ten new private placement
transactions and seven add-on investments aggregating $25,976,473.
We are certainly pleased with the high level of investment activity in 2010 as
this should have a positive impact on net investment income in the years ahead.
We are also very pleased to report that leverage multiples, though they
increased as the year progressed, remained reasonable despite the increased
level of market activity. Pricing and return expectations on our new investments
were stable throughout the year. All in all, market conditions in 2010 were
favorable for new investment activity.
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4 MassMutual Corporate Investors 2010 ANNUAL REPORT
New private placement investments completed during 2010 were: Associated
Diversified Services; Barcodes Group, Inc.; Eatem Holding Company; F F C Holding
Corporation; F G I Equity LLC; F H Equity LLC; G C Holdings; J A C Holding
Enterprises, Inc.; K P H I Holdings, Inc.; Manhattan Beachwear Holding Company;
MBWS Ultimate Holdco, Inc.; Motion Controls Holding; Nicoat Acquisitions LLC; O
E C Holding Corporation; P P T Holdings LLC; Snacks Parent Corporation; Sunrise
Windows Holding Co.; Wheaton Holding Corporation; and Whitcraft Holdings, Inc.
In addition, the Trust added to existing private placement investments in A S C
Group, Inc.; F C X Holdings Corporation; Manhattan Beachwear Holding Company;
Northwest Mailing Services, Inc.; P K C Holding Corporation; Pacific
Consolidated Holdings LLC; Postle Aluminum Company LLC; and Savage Sports
Holding, Inc. A brief description of these investments can be found in the
Consolidated Schedule of Investments.
The condition of the Trust's existing portfolio of investments improved
significantly during 2010. Sales and earnings for most of the Trust's portfolio
companies increased in 2010, after showing a deteriorating trend for all of
2009. We also had a number of portfolio companies resume paying cash interest on
their debt obligations due to their improved operating performance and liquidity
position. Patience, sometimes coupled with additional equity infusions from the
sponsor groups and/or the deferral of interest on debt obligations, has proven
to be the right approach to helping many of these companies rebound.
We also had 12 companies exit from the Trust's portfolio during 2010. In nine of
these exits, the Trust realized a significant positive return on its investment.
These investments were: Dwyer Group, Inc.; ITC^Deltacom, Inc.; K-Tek Holding
Corporation; Maverick Acquisition Company; PAS Holdco LLC; Tangent Rail
Corporation; Transtar Holding Company; Waggin' Train Holdings LLC; and Walls
Industries, Inc. We also realized on our investments in Diversco, Inc., FHS
Holdings LLC, and Olympic Sales, Inc. Realization activity for the Trust's
portfolio in 2010 was at its highest level since 2007.
OUTLOOK FOR 2011
The year 2011 opened with cautious optimism, as recovery continues in both the
U.S. and emerging markets. Europe, however, is again focusing on those nations
with troubled finances and may need to take stronger action with the debts of
some. On the home front, public sector employment may take a hit as states,
cities and towns deal with their budget woes. And housing remains the albatross
around the neck of the U.S. economy. Home sales remain at depressed levels while
the inventory of new and existing homes continues to be well above average,
although down from peak levels. Delays in the foreclosure process have only
exacerbated the problem.
On the positive side, U.S. companies are reporting strong profits, banks are
making more loans, and consumer spending is on the upswing, although not yet
enough to make a major dent in unemployment levels. The economy is expected to
continue to improve, although regions vary in their respective speed of
recovery. The Federal Reserve has been priming the pump along the way and
government policies have been supportive of growth and job generation.
Although the buyout market is taking a breather after the hectic pace of deal
activity at the end of 2010, we have begun 2011 with a reasonable backlog of new
investment opportunities and an expectation that leverage and pricing conditions
will continue to be favorable for the Trust. We also have a number of portfolio
companies that are in various stages of a sale process. We expect that
realization activity, which started to rebound in the fourth quarter of 2009 and
accelerated through 2010, will continue to be strong in 2011.
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MassMutual Corporate Investors 2010 ANNUAL REPORT 5
The Trust weathered the difficult markets of 2008 and early 2009 well, and was
able to maintain its dividend level. With market conditions continuing to
improve, the Trust generated strong results in 2010, and we are optimistic
heading into 2011. Regardless of the market environment, however, the Trust will
continue to employ the investment philosophy that has served it well since its
inception: investing in companies which we believe have a strong business
proposition, solid cash flow and experienced, ethical management. This
philosophy, along with Babson Capital's seasoned investment-management team,
positions the Trust well to 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. I look forward to seeing you at the Trust's
annual shareholder meeting in Springfield on April 15, 2011.
Sincerely,
Michael L. Klofas
President
Cautionary Notice: Certain statements contained in this report may be "forward
looking" statements. Investors are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date in which they are
made and which reflect management's current estimates, projections, expectations
or beliefs, and which are subject to risks and uncertainties that may cause
actual results to differ materially. These statements are subject to change at
any time based upon economic, market or other conditions and may not be relied
upon as investment advice or an indication of the Trust's trading intent.
References to specific securities are not recommendations of such securities,
and may not be representative of the Trust's current or future investments. We
undertake no obligation to publicly update forward looking statements, whether
as a result of new information, future events, or otherwise.
2010 RECORD NET INVESTMENT SHORT-TERM TAX LONG-TERM
DIVIDENDS DATE INCOME GAINS EFFECT GAINS
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Regular 4/26/2010 0.5400 - -
8/2/2010 0.5400 - -
11/1/2010 0.5400 - -
12/31/2010 0.5400 - -
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$ 2.1600 $ - $ 2.1600 0.0000
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THE FOLLOWING TABLE SUMMARIZES THE TAX EFFECTS OF THE RELATION OF CAPITAL GAINS FOR 2010:
AMOUNT PER SHARE FORM 2439
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2010 Gains Retained 0.0183 Line 1a
Long-Term Gains Retained 0.0183
Taxes Paid 0.0064 Line 2 *
Basis Adjustment 0.0119 **
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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 AMOUNT AMOUNT AMOUNT
PER SHARE PERCENT PER SHARE PERCENT PER SHARE PERCENT PER SHARE
-------------------------------------------------------------------------------------------------
$2.16 2.6956% 0.0580 2.6959% 0.0580 0% 0.0000
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*** Not available to individual shareholders
**** Qualified dividends are reported in Box 1b on IRS Form 1099-Div for 2010
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6 MassMutual Corporate Investors 2010 ANNUAL REPORT
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 FINANCIAL HIGHLIGHTS 12
CONSOLIDATED SCHEDULE OF INVESTMENTS 13-41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 42-46
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 47
INTERESTED TRUSTEES 48
INDEPENDENT TRUSTEES 49-51
OFFICERS OF THE TRUST 52
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CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2010
ASSETS:
Investments
(See Consolidated Schedule of Investments)
Corporate restricted securities at fair value
(Cost - $243,192,736) $ 223,583,112
Corporate restricted securities at market value
(Cost - $4,928,622) 5,165,080
Corporate public securities at market value
(Cost - $15,098,645) 14,555,450
Short-term securities at amortized cost 24,033,751
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Total investments (Cost - $287,253,754) 267,337,393
Cash 4,777,787
Interest receivable 2,660,092
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TOTAL ASSETS 274,775,272
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LIABILITIES:
Dividend payable 5,106,585
Investment advisory fee payable 741,760
Note payable 30,000,000
Interest payable 202,105
Accrued expenses 165,195
Accrued taxes payable 430,641
Deferred tax liability 469,919
Other payables 74,192
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TOTAL LIABILITIES 37,190,397
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TOTAL NET ASSETS $ 237,584,875
=============
NET ASSETS:
Common shares, par value $1.00 per share $ 9,456,638
Additional paid-in capital 115,967,663
Retained net realized gain on investments, prior years 127,688,004
Undistributed net investment income 3,451,526
Accumulated net realized gain on investments 1,407,324
Net unrealized depreciation of investments (20,386,280)
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TOTAL NET ASSETS $ 237,584,875
=============
COMMON SHARES ISSUED AND OUTSTANDING (14,027,391 AUTHORIZED) 9,456,638
=============
NET ASSET VALUE PER SHARE $ 25.12
=============
See Notes to Consolidated Financial Statements
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8 MassMutual Corporate Investors 2010 ANNUAL REPORT
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010
INVESTMENT INCOME:
Interest $ 25,979,092
Dividends 548,764
Other 71,563
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TOTAL INVESTMENT INCOME 26,599,419
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EXPENSES:
Investment advisory fees 2,881,215
Interest 1,584,000
Trustees' fees and expenses 300,700
Professional fees 154,200
Reports to shareholders 100,000
Transfer agent/registrar's expenses 27,000
Custodian fees 26,500
Other 124,877
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TOTAL EXPENSES 5,198,492
-------------
INVESTMENT INCOME - NET 21,400,927
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments before taxes 2,893,037
Income tax expense (616,188)
-------------
Net realized gain on investments after taxes 2,276,849
-------------
Net change in unrealized depreciation of investments
before taxes 17,836,360
Net change in deferred income tax expense (304,629)
-------------
Net change in unrealized depreciation of investments
after taxes 17,531,731
-------------
NET GAIN ON INVESTMENTS 19,808,580
=============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 41,209,507
=============
See Notes to Consolidated Financial Statements
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MassMutual Corporate Investors 2010 ANNUAL REPORT 9
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2010
NET DECREASE IN CASH:
Cash flows from operating activities:
Purchases/Proceeds/Maturities from short-term portfolio
securities, net $ (24,013,407)
Purchases of portfolio securities (95,839,484)
Proceeds from disposition of portfolio securities 105,992,040
Interest, dividends and other income received 24,729,328
Interest expense paid (1,584,000)
Operating expenses paid (3,468,408)
Income taxes paid (241,547)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,574,522
-------------
Cash flows from financing activities:
Cash dividends paid from net investment income (20,309,888)
Receipts for shares issued on reinvestment of dividends 2,296,374
-------------
NET CASH USED FOR FINANCING ACTIVITIES (18,013,514)
-------------
NET DECREASE IN CASH (12,438,992)
Cash - beginning of year 17,216,779
-------------
CASH - END OF YEAR $ 4,777,787
=============
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 41,209,507
-------------
Increase in investments (36,777,745)
Decrease in interest receivable 495,976
Decrease in receivable for investments sold 47,302
Increase in investment advisory fee payable 71,645
Increase in accrued expenses 248
Increase in accrued taxes payable 679,270
Decrease in other payables (151,681)
-------------
TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS (35,634,985)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 5,574,522
=============
See Notes to Consolidated Financial Statements
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10 MassMutual Corporate Investors 2010 ANNUAL REPORT
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
2010 2009
------------- -------------
INCREASE IN NET ASSETS:
Operations:
Investment income - net $ 21,400,927 $ 19,170,412
Net realized gain on investments after taxes 2,276,849 868,412
Net change in unrealized depreciation of investments
after taxes 17,531,731 5,285,777
------------- -------------
Net increase in net assets resulting from operations 41,209,507 25,324,601
Increase from common shares issued on reinvestment of dividends
Common shares issued (2010 - 89,022; 2009 - 48,107) 2,296,374 1,137,714
Dividends to shareholders from:
Net investment income (2010 - $2.16 per share;
2009 - $2.16 per share) (20,357,960) (20,168,880)
------------- -------------
TOTAL INCREASE IN NET ASSETS 23,147,921 6,293,435
NET ASSETS, BEGINNING OF YEAR 214,436,954 208,143,519
------------- -------------
NET ASSETS, END OF YEAR (including undistributed net investment
income of $3,451,526 and $2,305,051 respectively) $ 237,584,875 $ 214,436,954
============= =============
See Notes to Consolidated Financial Statements
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MassMutual Corporate Investors 2010 ANNUAL REPORT 11
CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF BENEFICIAL INTEREST OUTSTANDING:
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------
2010 2009 2008 2007 2006
--------------------------------------------------------
Net asset value:
Beginning of year $ 22.89 $ 22.33 $ 27.19 $ 27.51 $ 26.06
-------- -------- -------- -------- --------
Net investment income (a) 2.27 2.05 2.31 2.56 2.27
Net realized and unrealized
gain (loss) on investments 2.11 0.66 (5.02) (0.35) 1.62
-------- -------- -------- -------- --------
Total from investment operations 4.38 2.71 (2.71) 2.21 3.89
-------- -------- -------- -------- --------
Dividends from net investment
income to common shareholders (2.16) (2.16) (2.16) (2.57) (2.47)
Dividends from net realized gain
on investments to common shareholders - - - - (0.01)
Increase from dividends reinvested 0.01 0.01 0.01 0.04 0.04
-------- -------- -------- -------- --------
Total dividends (2.15) (2.15) (2.15) (2.53) (2.44)
-------- -------- -------- -------- --------
Net asset value: End of year $ 25.12 $ 22.89 $ 22.33 $ 27.19 $ 27.51
-------- -------- -------- -------- --------
Per share market value:
End of year $ 30.56 $ 25.10 $ 19.25 $ 30.20 $ 34.89
======== ======== ======== ======== ========
Total investment return
Net asset value (b) 19.81% 12.64% (10.34%) 8.72% 18.06%
Market value (b) 31.73% 39.89% (30.44%) (8.78%) 29.04%
Net assets (in millions):
End of year $ 237.58 $ 214.44 $ 208.14 $ 251.16 $ 251.69
Ratio of operating expenses
to average net assets 1.60% 1.58% 1.49% 1.55% 1.43%
Ratio of interest expense
to average net assets 0.70% 0.75% 0.67% 0.59% 0.60%
Ratio of income tax expense
to average net assets (c) 0.27% 0.00% 0.00% 0.35% 2.46%
Ratio of total expenses before custodian fee
reduction to average net assets (c) 2.57% 2.33% 2.16% 2.49% 4.53%
Ratio of net expenses after custodian fee
reduction to average net assets (c) 2.57% 2.33% 2.16% 2.49% 4.49%
Ratio of net investment income
to average net assets 9.46% 9.06% 9.01% 9.17% 8.19%
Portfolio turnover 39% 23% 32% 44% 35%
(a) Calculated using average shares.
(b) 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.
(c) As additional information, this ratio is included to reflect the taxes paid on retained long-term gains. These taxes paid are
netted against realized capital gains in the Statement of Operations. The taxes paid are treated as deemed distributions and a
credit for the taxes paid are passed on to the shareholders.
Senior borrowings:
Total principal amount (in millions) $ 30 $ 30 $ 30 $ 30 $ 20
Asset coverage per $1,000
of indebtedness $ 8,919 $ 8,148 $ 7,938 $ 9,372 $ 13,584
See Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
12 MassMutual Corporate Investors 2010 ANNUAL REPORT
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES - 96.28%:(A) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
PRIVATE PLACEMENT INVESTMENTS - 94.10%
A E Company, Inc.
A designer and manufacturer of machined parts and assembly structures for the commercial and military aerospace industries.
11% Senior Secured Note due 2015 $ 1,413,462 * $ 1,385,193 $ 1,439,808
13% Senior Subordinated Note due 2016 $ 1,413,461 11/10/09 1,281,271 1,448,723
Common Stock (B) 323,077 shs. 11/10/09 323,077 231,646
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B) 161,538 shs. 11/10/09 119,991 115,823
------------- -------------
* 11/10/09 and 11/18/09. 3,109,532 3,236,000
------------- -------------
A H C Holding Company, Inc.
A designer and manufacturer of boilers and water heaters for the commercial sector.
15% Senior Subordinated Note due 2015 $ 2,555,182 11/21/07 2,516,012 2,555,182
Limited Partnership Interest (B) 23.16% int. 11/21/07 224,795 392,781
------------- -------------
2,740,807 2,947,963
------------- -------------
A S A P Industries LLC
A designer and manufacturer of components used on oil and natural gas wells.
12.5% Senior Subordinated Note due 2015 $ 850,946 12/31/08 760,035 859,455
Limited Liability Company Unit Class A-2 (B) 1,276 uts. 12/31/08 140,406 342,070
Limited Liability Company Unit Class A-3 (B) 1,149 uts. 12/31/08 126,365 307,863
------------- -------------
1,026,806 1,509,388
------------- -------------
A S C Group, Inc.
A designer and manufacturer of high reliability encryption equipment, communications products, computing systems and electronic
components primarily for the military and aerospace sectors.
12.75% Senior Subordinated Note due 2016 $ 2,318,182 10/09/09 2,021,303 2,364,546
Limited Liability Company Unit Class A (B) 4,128 uts. * 405,691 246,257
Limited Liability Company Unit Class B (B) 2,782 uts. 10/09/09 273,352 165,961
------------- -------------
* 10/09/09 and 10/27/10. 2,700,346 2,776,764
------------- -------------
A W X Holdings Corporation
A provider of aerial equipment rental, sales and repair services to non-residential construction and maintenance contractors
operating in the State of Indiana.
10.5% Senior Secured Term Note due 2014 (D) $ 735,000 05/15/08 720,300 551,250
13% Senior Subordinated Note due 2015 (D) $ 735,000 05/15/08 657,905 --
Common Stock (B) 105,000 shs. 05/15/08 105,000 --
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B) 36,923 shs. 05/15/08 62,395 --
------------- -------------
1,545,600 551,250
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 13
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Advanced Technologies Holdings
A provider of factory maintenance services to industrial companies.
15% Senior Subordinated Note due 2013 $ 2,232,104 12/27/07 $ 2,205,951 $ 2,232,104
Preferred Stock (B) 1,031 shs. 12/27/07 510,000 615,193
------------- -------------
2,715,951 2,847,297
------------- -------------
Aero Holdings, Inc.
A provider of geospatial services to corporate and government clients.
10.5% Senior Secured Term Note due 2014 $ 1,417,500 03/09/07 1,396,238 1,421,370
14% Senior Subordinated Note due 2015 $ 1,260,000 03/09/07 1,172,953 1,260,000
Common Stock (B) 262,500 shs. 03/09/07 262,500 260,781
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B) 66,116 shs. 03/09/07 111,527 65,683
------------- -------------
2,943,218 3,007,834
------------- -------------
All Current Holding Company
A specialty re-seller of essential electrical parts and components primarily serving wholesale distributors.
12% Senior Subordinated Note due 2015 $ 1,140,317 09/26/08 1,055,745 1,151,720
Common Stock (B) 1,347 shs. 09/26/08 134,683 113,579
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 958 shs. 09/26/08 87,993 80,779
------------- -------------
1,278,421 1,346,078
------------- -------------
American Hospice Management Holding LLC
A for-profit hospice care provider in the United States.
12% Senior Subordinated Note due 2013 $ 3,187,495 * 3,089,167 3,187,495
Preferred Class A Unit (B) 3,223 uts. ** 322,300 551,683
Preferred Class B Unit (B) 1,526 uts. 06/09/08 152,626 227,947
Common Class B Unit (B) 30,420 uts. 01/22/04 1 145,744
Common Class D Unit (B) 6,980 uts. 09/12/06 1 33,442
------------- -------------
* 01/22/04 and 06/09/08. ** 01/22/04 and 09/12/06. 3,564,095 4,146,311
------------- -------------
Apex Analytix Holding Corporation
A provider of audit recovery and fraud detection services and software to commercial and retail businesses in the U.S. and
Europe.
12.5% Senior Subordinated Note due 2014 $ 1,912,500 04/28/09 1,647,879 1,950,750
Preferred Stock Series B (B) 3,065 shs. 04/28/09 306,507 456,158
Common Stock (B) 1,366 shs. 04/28/09 1,366 203,305
------------- -------------
1,955,752 2,610,213
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
14 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
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 $ 1,859,060 05/18/05 $ 1,719,936 $ 1,487,248
Preferred Stock (B) 63 shs. 10/16/09 62,756 --
Common Stock (B) 497 shs. 05/18/05 497,340 --
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 130 shs. 05/18/05 112,128 --
------------- -------------
2,392,160 1,487,248
------------- -------------
Associated Diversified Services
A provider of routine maintenance and repair services primarily to electric utility companies predominantly on electric power
distribution lines.
10% Senior Secured Term Note due 2016 (C) $ 853,714 09/30/10 832,371 842,899
13% Senior Subordinated Note due 2017 $ 853,714 09/30/10 762,041 832,999
Limited Liability Company Unit Class B (B) 92,571 uts. 09/30/10 92,571 87,942
Limited Liability Company Unit Class B OID (B) 70,765 uts. 09/30/10 70,765 708
------------- -------------
1,757,748 1,764,548
------------- -------------
Barcodes Group, Inc.
A distributor and reseller of automatic identification and data capture equipment, including mobile computers, scanners,
point-of-sale systems, labels, and accessories.
13.5% Senior Subordinated Note due 2016 $ 1,920,849 07/27/10 1,826,759 1,941,605
Preferred Stock (B) 39 shs. 07/27/10 394,487 374,775
Common Stock Class A (B) 131 shs. 07/27/10 1,310 1,245
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B) 23 shs. 07/27/10 227 --
------------- -------------
2,222,783 2,317,625
------------- -------------
Bravo Sports Holding Corporation
A designer and marketer of niche branded consumer products including canopies, trampolines, in-line skates, skateboards, and
urethane wheels.
12.5% Senior Subordinated Note due 2014 $ 2,281,593 06/30/06 2,203,127 2,281,593
Preferred Stock Class A (B) 879 shs. 06/30/06 268,121 188,971
Common Stock (B) 1 sh. 06/30/06 286 --
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 309 shs. 06/30/06 92,102 66,413
------------- -------------
2,563,636 2,536,977
------------- -------------
C D N T, Inc.
A value-added converter and distributor of specialty pressure sensitive adhesives, foams, films, and foils.
10.5% Senior Secured Term Note due 2014 $ 657,013 08/07/08 649,289 644,518
12.5% Senior Subordinated Note due 2015 $ 750,872 08/07/08 694,469 721,827
Common Stock (B) 73,256 shs. 08/07/08 73,256 54,261
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 57,600 shs. 08/07/08 57,689 42,665
------------- -------------
1,474,703 1,463,271
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 15
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Capital Specialty Plastics, Inc.
A producer of desiccant strips used for packaging pharmaceutical products.
Common Stock (B) 109 shs. * $ 503 $ 1,157,108
* 12/30/97 and 05/29/99. ------------- -------------
Clough, Harbour and Associates
An engineering service firm that is located in Albany, NY.
12.25% Senior Subordinated Note due 2015 2,400,000 12/02/08 2,261,012 2,424,000
Preferred Stock (B) 277 shs. 12/02/08 276,900 261,064
------------- -------------
2,537,912 2,685,064
------------- -------------
Coeur, Inc.
A producer of proprietary, disposable power injection syringes.
12% Senior Subordinated Note due 2016 $ 1,214,286 10/10/08 1,119,274 1,226,429
Common Stock (B) 607 shs. 10/10/08 60,714 38,794
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 934 shs. 10/10/08 91,071 59,684
------------- -------------
1,271,059 1,324,907
------------- -------------
Connecticut Electric, Inc.
A supplier and distributor of electrical products sold into the retail and wholesale markets.
10% Senior Subordinated Note due 2014 (D) $ 1,456,429 01/12/07 1,358,631 728,215
Limited Liability Company Unit Class A (B) 156,046 uts. 01/12/07 156,046 --
Limited Liability Company Unit Class C (B) 112,873 uts. 01/12/07 112,873 --
Limited Liability Company Unit Class D (B) 1,268,437 uts. 05/03/10 -- --
Limited Liability Company Unit Class E (B) 2,081 uts. 05/03/10 -- --
------------- -------------
1,627,550 728,215
------------- -------------
Connor Sport Court International, Inc.
A designer and manufacturer of outdoor and indoor synthetic sports flooring and other temporary flooring products.
Preferred Stock Series B-2 (B) 17,152 shs. 07/05/07 700,392 1,715,247
Preferred Stock Series C (B) 8,986 shs. 07/05/07 300,168 898,560
Common Stock (B) 718 shs. 07/05/07 7 839
Limited Partnership Interest (B) 12.64% int. * 189,586 --
------------- -------------
*08/12/04 and 01/14/05. 1,190,153 2,614,646
------------- -------------
CorePharma LLC
A manufacturer of oral dose generic pharmaceuticals targeted at niche applications.
14.5% Senior Subordinated Note due 2016 $ 2,550,000 08/04/05 2,550,000 2,550,000
Warrant, exercisable until 2013, to purchase
common stock at $.001 per share (B) 20 shs. 08/04/05 137,166 255,756
------------- -------------
2,687,166 2,805,756
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
16 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Crane Rental Corporation
A crane rental company.
13% Senior Subordinated Note due 2015 $ 2,295,000 08/21/08 $ 2,116,190 $ 2,249,663
Common Stock (B) 255,000 shs. 08/21/08 255,000 --
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 136,070 shs. 08/21/08 194,826 --
------------- -------------
2,566,016 2,249,663
------------- -------------
Custom Engineered Wheels, Inc.
A manufacturer of custom engineered, non-pneumatic plastic wheels and plastic tread cap tires used primarily for lawn and garden
products and wheelchairs.
12.5% Senior Subordinated Note due 2016 $ 2,182,212 10/27/09 1,921,882 2,232,477
Preferred Stock PIK (B) 296 shs. 10/27/09 295,550 298,434
Preferred Stock Series A (B) 216 shs. 10/27/09 197,152 218,047
Common Stock (B) 72 shs. 10/27/09 72,238 32,182
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 53 shs. 10/27/09 48,608 23,512
------------- -------------
2,535,430 2,804,652
------------- -------------
Davis-Standard LLC
A manufacturer, assembler, and installer of a broad range of capital equipment that is used in the extrusion, conversion, and
processing of plastic materials.
12% Senior Subordinated Note due 2014 $ 1,847,826 10/30/06 1,774,363 1,847,271
Limited Partnership Interest (B) 1.82% int. 10/30/06 702,174 511,254
Warrant, exercisable until 2014, to purchase
preferred stock at $.01 per share (B) 50 shs. 10/30/06 49,830 64,230
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 34 shs. 10/30/06 34,000 --
------------- -------------
2,560,367 2,422,755
------------- -------------
Duncan Systems, Inc.
A distributor of windshields and side glass for the recreational vehicle market.
10% Senior Secured Term Note due 2013 $ 405,000 11/01/06 398,925 413,543
13% Senior Subordinated Note due 2014 $ 855,000 11/01/06 791,836 855,000
Common Stock (B) 180,000 shs. 11/01/06 180,000 143,822
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 56,514 shs. 11/01/06 78,160 45,155
------------- -------------
1,448,921 1,457,520
------------- -------------
E S P Holdco, Inc.
A manufacturer of power protection technology for commercial office equipment, primarily supplying the office equipment dealer
network.
14% Senior Subordinated Note due 2015 $ 2,356,154 01/08/08 2,311,767 2,306,384
Common Stock (B) 660 shs. 01/08/08 329,990 100,473
------------- -------------
2,641,757 2,406,857
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 17
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
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 $ 78,143
------------- -------------
Eatem Holding Company
A developer and manufacturer of savory flavor systems for soups, sauces, gravies, and other products produced by food
manufacturers for retail and foodservice end products.
12.5% Senior Subordinated Note due 2018 $ 2,850,000 02/01/10 2,496,081 2,816,116
Common Stock (B) 150 shs. 02/01/10 150,000 142,500
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 358 shs. 02/01/10 321,300 4
------------- -------------
2,967,381 2,958,620
------------- -------------
F C X Holdings Corporation
A distributor of specialty/technical valves, actuators, accessories, and process instrumentation supplying a number of
industrial, high purity, and energy end markets in North America.
15% Senior Subordinated Note due 2015 $ 2,258,895 10/06/08 2,224,679 2,304,072
Preferred Stock Series B (B) 4,341 shs. 10/06/08 434,074 236,978
Preferred Stock Series A (B) 231 shs. 12/30/10 23,100 21,945
Common Stock (B) 3,069 shs. 10/06/08 3,069 --
------------- -------------
2,684,922 2,562,995
------------- -------------
F F C Holding Corporation
A leading U.S. manufacturer of private label frozen novelty and ice cream products.
16% Senior Subordinated Note due 2017 $ 2,510,541 09/27/10 2,460,458 2,474,434
Limited Liability Company Units Preferred (B) 512 uts. 09/27/10 460,976 437,931
Limited Liability Company Units (B) 512 uts. 09/27/10 51,220 48,659
------------- -------------
2,972,654 2,961,024
------------- -------------
F G I Equity LLC
A manufacturer of a broad range of filters and related products that are used in commercial, light industrial, healthcare, gas
turbine, nuclear, laboratory, clean room, hotel, educational system, and food processing settings.
14.25% Senior Subordinated Note due 2016 $ 2,605,263 12/15/10 2,529,739 2,611,440
Limited Liability Company Unit Class B-1 (B) 394,737 uts. 12/15/10 394,737 375,000
Limited Liability Company Unit Class B-2 (B) 49,488 uts. 12/15/10 49,488 495
------------- -------------
2,973,964 2,986,935
------------- -------------
F H Equity LLC
A designer and manufacturer of a full line of automatic transmission filters and filtration systems for passenger vehicles.
14% Senior Subordinated Note due 2017 $ 3,000,000 12/20/10 2,873,969 3,007,885
Limited Liability Company Unit Class C (B) 9,449 uts. 12/20/10 96,056 94
------------- -------------
2,970,025 3,007,979
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
18 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Flutes, Inc.
An independent manufacturer of micro fluted corrugated sheet material for the food and consumer products packaging industries.
10% Senior Secured Term Note due 2013 (D) $ 918,385 04/13/06 $ 904,609 $ 688,789
14% Senior Subordinated Note due 2014 (D) $ 555,059 04/13/06 495,635 --
------------- -------------
1,400,244 688,789
------------- -------------
G C Holdings
A leading manufacturer of gaming tickets, industrial recording charts, security-enabled point-of sale receipts, and medical
charts and supplies.
12.5% Senior Subordinated Note due 2017 $ 3,000,000 10/19/10 2,800,815 2,955,952
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 594 shs. 10/19/10 140,875 6
------------- -------------
2,941,690 2,955,958
------------- -------------
Golden County Foods Holding, Inc.
A manufacturer of frozen appetizers and snacks.
16% Senior Subordinated Note due 2015 $ 1,912,500 11/01/07 1,777,671 765,000
16% PIK Note due 2015 $ 510,745 12/31/08 414,218 204,298
8% Series A Convertible Preferred Stock, convertible into
fully dilluted common shares (B) 146,658 shs. 11/01/07 146,658 --
------------- -------------
2,338,547 969,298
------------- -------------
H M Holding Company
A designer, manufacturer, and importer of promotional and wood furniture.
7.5% Senior Subordinated Note due 2013 (D) $ 685,100 10/15/09 512,231 513,825
Preferred Stock (B) 40 shs. * 40,476 --
Preferred Stock Series B (B) 2,055 shs. 10/15/09 1,536,694
Common Stock (B) 340 shs. 02/10/06 340,000 --
Common Stock Class C (B) 560 shs. 10/15/09 -- --
Warrant, exercisable until 2013, to purchase
common stock at $.02 per share (B) 126 shs. 02/10/06 116,875 --
------------- -------------
* 09/18/07 and 06/27/08. 2,546,276 513,825
------------- -------------
Highgate Capital LLC
An acquirer of controlling or substantial interests in manufacturing and marketing entities.
Series A Preferred Units (B) 1.19% int. 07/21/94 367,440 --
------------- -------------
Home Decor Holding Company
A designer, manufacturer and marketer of framed art and wall decor products.
12.5% Senior Subordinated Note due 2013 $ 2,043,269 * 1,931,948 2,043,269
Common Stock (B) 63 shs. * 62,742 94,013
Warrant, exercisable until 2012, to purchase
common stock at $.02 per share (B) 200 shs. * 199,501 298,943
------------- -------------
* 06/30/04 and 08/19/04. 2,194,191 2,436,225
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 19
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Hospitality Mints Holding Company
A manufacturer of individually-wrapped imprinted promotional mints.
12% Senior Subordinated Note due 2016 $ 2,472,050 08/19/08 $ 2,331,405 $ 2,416,342
Common Stock (B) 474 shs. 08/19/08 474,419 120,490
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 123 shs. 08/19/08 113,773 31,142
------------- -------------
2,919,597 2,567,974
------------- -------------
Insurance Claims Management, Inc.
A third party administrator providing auto and property claim administration services for insurance companies.
Common Stock (B) 69 shs. 02/27/07 2,077 299,325
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 20 shs. 02/27/07 612 88,159
------------- -------------
2,689 387,484
------------- -------------
International Offshore Services LLC
A leading provider of marine transportation services, platform decomissioning, and salvage services to oil and gas producers in
the shallow waters of the Gulf of Mexico.
14.25% Senior Subordinated Secured Note due 2017 $ 2,550,000 07/07/09 2,325,466 2,535,218
Limited Liability Company Unit (B) 3,112 uts. 07/07/09 186,684 40,930
------------- -------------
2,512,150 2,576,148
------------- -------------
J A C Holding Enterprises, Inc.
A supplier of luggage racks and accessories to the original equipment manufacturers.
12.5% Senior Subordinated Note due 2017 $ 2,500,000 12/20/10 2,133,147 2,489,757
Preferred Stock A (B) 495 shs. 12/20/10 495,000 470,250
Preferred Stock B (B) 0.17 sh. 12/20/10 -- --
Common Stock (B) 100 shs. 12/20/10 5,000 4,750
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B) 36 shs. 12/20/10 316,931 --
------------- -------------
2,950,078 2,964,757
------------- -------------
Jason Partners Holdings LLC
A diversified manufacturing company serving various industrial markets.
Limited Liability Company Unit (B) 90 uts. 09/21/10 848,275 48,185
------------- -------------
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 1,568,749 1,593,750
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 1,121 shs. 12/15/04 101,109 215,570
------------- -------------
1,669,858 1,809,320
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
20 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
K H O F Holdings, Inc.
A manufacturer of premium disposable tableware products serving both the foodservice and consumer channels.
Common Stock (B) 220,673 shs. 10/15/07 $ 135,084 $ 219,747
------------- -------------
K N B Holdings Corporation
A designer, manufacturer and marketer of products for the custom framing market.
15.5% Senior Subordinated Note due 2013 (D) $ 3,012,887 05/25/06 2,641,395 2,970,555
Common Stock (B) 134,210 shs. 05/25/06 134,210 --
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 82,357 shs. 05/25/06 71,534 --
------------- -------------
2,847,139 2,970,555
------------- -------------
K P H I Holdings, Inc.
A manufactuer of highly engineered plastic and metal components for a diverse range of end-markets, including medical, consumer
and industrial, automotive and defense.
15% Senior Subordinated Note due 2017 $ 2,608,696 12/10/10 2,556,522 2,565,137
Common Stock (B) 391,304 shs. 12/10/10 391,304 371,739
------------- -------------
2,947,826 2,936,876
------------- -------------
K P I Holdings, Inc.
The largest player in the U.S. non-automotive, non-ferrous die casting segment.
18% Senior Subordinated Note due 2014 (D) $ 2,256,692 07/16/08 2,089,319 2,230,843
Convertible Preferred Stock Series C (B) 55 shs. 06/30/09 55,435 52,250
Convertible Preferred Stock Series D (B) 24 shs. 09/17/09 24,476 23,247
Common Stock (B) 443 shs. 07/15/08 443,478 62
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 734 shs. * 96,024 102
------------- -------------
* 07/16/08 and 09/17/09. 2,708,732 2,306,504
------------- -------------
K W P I Holdings Corporation
A manufacturer and distributor of vinyl windows and patio doors throughout the northwestern United States.
18% Senior Subordinated Note due 2014 (D) $ 2,938,407 03/14/07 2,681,605 2,350,726
Common Stock (B) 232 shs. 03/13/07 232,000 --
Warrant, exercisable until 2019, to purchase
preferred stock at $.01 per share (B) 134 shs. 07/07/09 -- --
Warrant, exercisable until 2017, to purchase
common stock at $.01 per share (B) 167 shs. 03/14/07 162,260 --
------------- -------------
3,075,865 2,350,726
------------- -------------
L H D Europe Holding, Inc.
A non-carbonated beverage dispensing company focused on the foodservice industry.
Common Stock (B) 85 shs. 12/28/09 7,916 24,225
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 21
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
M V I Holding, Inc.
A manufacturer of large precision machined metal components used in equipment which services a variety of industries, including
the oil and gas, mining, and defense markets.
13% Senior Subordinated Note due 2016 $ 1,242,502 09/12/08 $ 1,168,219 $ 1,143,315
Common Stock (B) 61 shs. 09/12/08 60,714 --
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 66 shs. 09/12/08 65,571 --
------------- -------------
1,294,504 1,143,315
------------- -------------
Mail Communications Group, Inc.
A provider of mail processing and handling services, lettershop services, and commercial printing services.
12.5% Senior Subordinated Note due 2014 $ 975,000 05/04/07 937,675 975,000
Limited Liability Company Unit (B) 24,109 uts. * 303,179 343,069
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 3,375 shs. 05/04/07 43,031 48,026
------------- -------------
* 05/04/07 and 01/02/08. 1,283,885 1,366,095
------------- -------------
Manhattan Beachwear Holding Company
A designer and distributor of women's swimwear.
15% Senior Subordinated Note due 2018 $ 643,800 10/05/10 630,924 648,485
12.5% Senior Subordinated Note due 2018 $ 2,647,059 01/15/10 2,330,872 2,700,000
Common Stock (B) 106 shs. 10/05/10 106,200 100,890
Common Stock Class B (B) 353 shs. 01/15/10 352,941 335,293
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B) 312 shs. 01/15/10 283,738 3
------------- -------------
3,704,675 3,784,671
------------- -------------
MBWS Ultimate Holdco, Inc.
A provider of services throughout North Dakota that address the fluid management and related transportation needs of an oil well.
12% Senior Subordinated Note due 2016 $ 2,651,163 09/07/10 2,378,452 2,659,745
Preferred Stock Series A (B) 4,164 shs. 09/07/10 416,392 395,580
Common Stock (B) 458 shs. 09/07/10 45,845 43,510
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 1,158 shs. 09/07/10 115,870 12
------------- -------------
2,956,559 3,098,847
------------- -------------
MedSystems Holdings LLC
A manufacturer of enteral feeding products, such as feeding tubes and other products related to assisted feeding.
13% Senior Subordinated Note due 2015 $ 1,175,319 08/29/08 1,030,897 1,187,072
Preferred Unit (B) 126 uts. 08/29/08 125,519 135,742
Common Unit Class A (B) 1,268 uts. 08/29/08 1,268 --
Common Unit Class B (B) 472 uts. 08/29/08 120,064 --
------------- -------------
1,277,748 1,322,814
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
22 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
MEGTEC Holdings, Inc.
A supplier of industrial and environmental products and services to a broad array of industries.
12% Senior Subordinated Note due 2016 $ 2,161,017 09/24/08 $ 2,014,112 $ 2,150,519
Preferred Stock (B) 107 shs. 09/24/08 103,255 25,964
Limited Partnership Interest (B) 1.40% int. 09/16/08 388,983 --
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 35 shs. 09/24/08 33,268 --
------------- -------------
2,539,618 2,176,483
------------- -------------
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 (D) $ 2,685,614 * 2,600,362 2,282,772
Common Stock (B) 450 shs. * 450,000 --
Warrant, exercisable until 2013, to purchase
common stock at $.02 per share (B) 164 shs. * 162,974 --
------------- -------------
* 08/12/05 and 09/11/06. 3,213,336 2,282,772
------------- -------------
Milwaukee Gear Company
A manufacturer of high-precision custom gears and gear drives used by original equipment manufacturers operating in a number of
industries.
13% Senior Subordinated Note due 2014 $ 2,353,846 07/21/08 2,254,858 2,236,154
Preferred Stock (B) 263 shs. 07/21/08 261,830 54,529
Common Stock (B) 18 shs. 07/21/08 20,000 --
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 10 shs. 07/21/08 11,285 --
------------- -------------
2,547,973 2,290,683
------------- -------------
Momentum Holding Co.
A designer and supplier of upholstery fabric to commercial furniture manufacturers and architectural and design firms.
Limited Partnership Interest (B) 21.23% int. 08/04/06 106,153 301,766
Warrant, exercisable until 2014, to purchase
common stock at $.02 per share (B) 1,107 shs. 08/04/06 107,109 314,556
------------- -------------
213,262 616,322
------------- -------------
Monessen Holding Corporation
A designer and manufacturer of a broad line of gas, wood, and electric hearth products and accessories.
14% Senior Subordinated Note due 2014 (D) $ 2,550,000 07/25/08 2,420,704 1,275,000
14% PIK Note due 2014 (D) $ 792,791 07/25/08 646,821 396,395
Warrant, exercisable until 2014, to purchase
common stock at $.02 per share (B) 152 shs. 03/31/06 138,125 --
------------- -------------
3,205,650 1,671,395
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 23
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Motion Controls Holding
A manufacturer of high performance mechanical motion control and linkage products.
14.25% Senior Subordinated Note due 2017 $ 2,730,909 11/30/10 $ 2,678,118 $ 2,708,516
Limited Liability Company Unit Class B-1 (B) 281,250 uts. 11/30/10 281,250 267,188
Limited Liability Company Unit Class B-2 (B) 25,504 uts. 11/30/10 25,504 255
------------- -------------
2,984,872 2,975,959
------------- -------------
NABCO, Inc.
A producer of explosive containment vessels in the United States.
14% Senior Subordinated Note due 2014 (D) $ 625,000 02/24/06 575,313 --
Limited Liability Company Unit (B) 825 uts. * 825,410 --
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 129 shs. 02/24/06 37,188 --
------------- -------------
* 02/24/06 and 06/22/07. 1,437,911 --
------------- -------------
Navis Global
A designer, manufacturer, seller and servicer of finishing machinery for the knit and woven segments of the global textile industry.
10.75% Senior Secured Note due 2011 (D) $ 695,588 05/28/04 689,460 692,524
14% Senior Subordinated Note due 2014 (D) $ 1,338,613 05/28/04 1,155,793 133,861
------------- -------------
1,845,253 826,385
------------- -------------
Nesco Holdings Corporation
A sales and leasing company that provides equipment to the electric utility, telecommunications, and various other industries.
12% Senior Secured Subordinated Note due 2015 $ 2,125,000 08/02/07 1,958,337 2,125,000
Common Stock (B) 425,000 shs. 08/02/07 425,000 837,923
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B) 119,360 shs. 08/02/07 194,257 235,329
------------- -------------
2,577,594 3,198,252
------------- -------------
NetShape Technologies, Inc.
A manufacturer of powder metal and metal injection molded precision components used in industrial, consumer, and other applications.
12% Senior Subordinated Note due 2014 $ 1,638,974 02/02/07 1,473,767 819,487
Limited Partnership Interest of
Saw Mill PCG Partners LLC (B) 2.73% int. 02/01/07 1,019,980 --
Limited Liability Company Unit Class D of
Saw Mill PCG Partners LLC (B) 15 uts. * 15,389 --
Limited Liability Company Unit Class D-1 of
Saw Mill PCG Partners LLC (B) 211 uts. 09/30/09 210,585 --
Preferred Stock Class A (B) 1 sh. 12/18/08 1,370 --
Preferred Stock Class A-1 (B) 18 shs. 09/30/09 18,272 --
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 91 shs. 02/02/07 90,830 --
------------- -------------
* 12/18/08 and 09/30/09. 2,830,193 819,487
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
24 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Newark Group, Inc.
A major producer of paper products from recycled materials.
Common Stock (B) 134,520 shs. 09/02/10 $ 796,863 $ 571,627
------------- -------------
Nicoat Acquisitions LLC
A manufacturer of water-based and ultraviolet coatings for high-performance graphic arts, packaging and other specialty coating
applications.
12.5% Senior Subordinated Note due 2016 $ 1,448,276 11/05/10 1,308,733 1,430,727
Limited Liability Company Unit Series B (B) 51,724 uts. 11/05/10 51,724 49,138
Limited Liability Company Unit Series B - OID (B) 104,792 uts. 11/05/10 104,792 1,048
Limited Liability Company Unit Series F (B) 156,516 uts. 11/05/10 -- 1,565
------------- -------------
1,465,249 1,482,478
------------- -------------
Northwest Mailing Services, Inc.
A producer of promotional materials for companies that use direct mail as part of their customer retention and loyalty programs.
12% Senior Subordinated Note due 2016 $ 2,818,421 * 2,326,772 2,830,681
Limited Partnership Interest (B) 3,287 uts. * 328,679 182,022
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B) 4,920 shs. * 492,016 272,478
------------- -------------
* 07/09/09 and 08/09/10. 3,147,467 3,285,181
------------- -------------
Nyloncraft, Inc.
A supplier of engineered plastic components for the automotive industry.
10% Senior Secured Note due 2012 $ 812,500 01/28/02 812,500 803,622
15% Senior Subordinated Note due 2012 (D) $ 500,000 01/28/02 473,642 498,327
Convertible Preferred Stock A (B) 1,000 shs. 01/28/02 961,637 1,160,979
Common Stock (B) 312,500 shs. 01/28/02 312,500 220,553
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 243,223 shs. 01/28/02 162,045 171,660
------------- -------------
2,722,324 2,855,141
------------- -------------
O E C Holding Corporation
A provider of elevator maintenance, repair and modernization services.
13% Senior Subordinated Note due 2017 $ 1,333,333 06/04/10 1,218,352 1,342,547
Preferred Stock Series A (B) 1,661 shs. 06/04/10 166,062 157,759
Preferred Stock Series B (B) 934 shs. 06/04/10 93,376 9
Common Stock (B) 1,032 shs. 06/04/10 1,032 981
------------- -------------
1,478,822 1,501,296
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 25
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
OakRiver Technology, Inc.
Designs, engineers and assembles high precision automated process equipment for the medical device industry with a focus on
defibrillators and stents.
Common Stock (B) 322,307 shs. 01/03/06 $ 322,307 $ 493,315
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 75,378 shs. 01/03/06 62,824 115,372
------------- -------------
385,131 608,687
------------- -------------
Ontario Drive & Gear Ltd.
A manufacturer of all-wheel drive, off-road amphibious vehicles and related accessories.
Limited Liability Company Unit (B) 3,667 uts. 01/17/06 572,115 1,077,005
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 619 shs. 01/17/06 170,801 181,837
------------- -------------
742,916 1,258,842
------------- -------------
P K C Holding Corporation
A manufactuer of plastic film and badges for the general industrial, medical, and food industries.
14% Senior Subordinated Note due 2016 $ 2,932,500 12/21/10 2,852,102 2,923,222
Preferred Stock Class A (B) 54 shs. 12/21/10 340,718 538,600
Common Stock (B) 54 shs. 12/21/10 25,500 --
------------- -------------
3,218,320 3,461,822
------------- -------------
P P T Holdings LLC
A high-end packaging solutions provider that targets customers who have multiple packaging needs, require a high number of low
volume SKUs, short lead times, technical expertise, and overall supply chain management.
15% Senior Subordinated Note due 2017 $ 2,678,571 12/20/10 2,625,000 2,675,163
Limited Liability Company Unit Class A (B) 99 uts. 12/20/10 318,215 302,299
Limited Liability Company Unit Class B (B) 99 uts. 12/20/10 3,214 3,054
------------- -------------
2,946,429 2,980,516
------------- -------------
Pacific Consolidated Holdings LLC
A manufacturer of rugged, mobile liquid and gaseous oxygen and nitrogen generating systems used in the global defense, oil and
gas, and medical sectors.
14% Senior Subordinated Note due 2012 $ 1,353,001 04/27/07 1,309,274 1,093,140
5% Senior Subordinated Note due 2012 $ 79,688 07/21/10 79,688 79,627
Preferred Shares Series E (B) 79,688 shs. 07/21/10 -- --
Limited Liability Company Unit (B) 1,754,707 uts. 04/27/07 63,233 --
------------- -------------
1,452,195 1,172,767
------------- -------------
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 2011 $ 2,125,000 12/19/00 2,092,258 2,125,000
Warrant, excercisable until 2011, to purchase
common stock at $.02 per share (B) 372 shs. 12/21/00 265,625 236,614
------------- -------------
2,357,883 2,361,614
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
26 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Pearlman Enterprises, Inc.
A developer and distributor of tools, equipment, and supplies to the natural and engineered stone industry.
Preferred Stock Series A (B) 2,334 shs. 05/22/09 $ 111,508 $ --
Preferred Stock Series B (B) 13,334 shs. 05/22/09 547,872 --
Common Stock (B) 40,540 shs. 05/22/09 1,877,208 --
------------- -------------
2,536,588 --
------------- -------------
Postle Aluminum Company LLC
A manufacturer and distributor of aluminum extruded products.
15% Senior Subordinated Note due 2013 $ 1,556,660 06/03/10 1,526,250 1,577,976
3% Senior Subordinated PIK Note due 2014 (D) $ 2,283,699 10/02/06 2,014,226 2,238,380
Limited Liability Company Unit Class A (B) 1,384 uts. 10/02/06 510,000 125,188
Limited Liability Company Unit (B) 143 uts. 05/22/09 642 12,934
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 8,595 shs. 10/02/06 124,644 777,424
------------- -------------
4,175,762 4,731,902
------------- -------------
Power Services Holding Company
A provider of industrial motor repair services, predictive and preventative maintenance, and performance improvement consulting
serving the petrochemical, mining, power generation, metals, and paper industries.
12% Senior Subordinated Note due 2016 $ 2,372,093 02/11/08 2,208,978 2,329,982
Limited Partnership Interest (B) 23.70% int. 02/11/08 177,729 21,980
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 1,322 shs. 02/11/08 167,588 43,319
------------- -------------
2,554,295 2,395,281
------------- -------------
Precision Wire Holding Company
A manufacturer of specialty medical wires that are used in non-elective minimally invasive surgical procedures.
14.25% Senior Subordinated Note due 2016 $ 2,593,858 11/12/09 2,356,799 2,630,509
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B) 206 shs. 11/12/09 203,944 191,919
------------- -------------
2,560,743 2,822,428
------------- -------------
Qualis Automotive LLC
A distributor of aftermarket automotive brake and chassis products.
13% Senior Subordinated Note due 2013 $ 850,000 05/28/04 801,175 850,000
Common Stock (B) 354,167 shs. 05/28/04 354,166 297,033
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 377,719 shs. 05/28/04 377,719 316,786
------------- -------------
1,533,060 1,463,819
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 27
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
R A J Manufacturing Holdings LLC
A designer and manufacturer of women's swimwear sold under a variety of licensed brand names.
14.5% Senior Subordinated Note due 2014 $ 2,709,789 12/15/06 $ 2,574,043 $ 2,574,299
Limited Liability Company Unit (B) 2,828 uts. 12/15/06 282,810 76,906
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 3 shs. 12/15/06 131,483 36,268
------------- -------------
2,988,336 2,687,473
------------- -------------
R E I Delaware Holding, Inc.
An engineer and manufacturer of highly complex, close tolerance components, assemblies, tooling and custom automation equipment
primarily for aerospace, medical and defense/radar markets.
12% Senior Subordinated Note due 2016 $ 2,550,000 01/18/08 2,488,882 2,534,860
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 6 shs. 01/18/08 31,089 25,037
------------- -------------
2,519,971 2,559,897
------------- -------------
Royal Baths Manufacturing Company
A manufacturer and distributor of acrylic and cultured marble bathroom products.
12.5% Senior Subordinated Note due 2011 $ 531,250 11/14/03 520,667 533,890
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 140 shs. 11/14/03 122,946 123,183
------------- -------------
643,613 657,073
------------- -------------
Safety Speed Cut Manufacturing Company, Inc.
A manufacturer of vertical panel saws and routers for the woodworking industry.
Class B Common Stock (B) 1,480 shs. 06/02/99 256,212 289,865
------------- -------------
Savage Sports Holding, Inc.
A manufacturer of sporting firearms.
12% Senior Subordinated Note due 2012 $ 1,538,793 09/10/04 1,495,404 1,538,793
Preferred Stock Series A (B) 66 shs. 05/28/10 66,185 62,871
Common Stock (B) 612 shs. * 642,937 1,073,584
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 134 shs. 09/10/04 113,578 234,399
------------- -------------
* 09/10/04 and 10/05/07. 2,318,104 2,909,647
------------- -------------
Sencore Holding Company
A designer, manufacturer, and marketer of decoders, receivers and modulators sold to broadcasters, satellite, cable and telecom
operators for encoding/decoding analog and digital transmission video signals.
12.5% Senior Subordinated Note due 2014 $ 1,765,385 01/15/09 1,587,126 1,500,577
Common Stock (B) 131 shs. 01/15/09 130,769 --
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B) 282 shs. 01/15/09 281,604 --
------------- -------------
1,999,499 1,500,577
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
28 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Smart Source Holdings LLC
A short-term computer rental company.
12% Senior Subordinated Note due 2015 $ 2,223,076 * $ 2,059,410 $ 2,171,027
Limited Liability Company Unit (B) 619 uts. * 631,592 446,204
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B) 157 shs. * 164,769 113,038
------------- -------------
* 08/31/07 and 03/06/08. 2,855,771 2,730,269
------------- -------------
Snacks Parent Corporation
The worlds largest provider of trail mixes and a leading provider of snack nuts, dried fruits, and other healthy snack products.
13% Senior Subordinated Note due 2017 $ 2,608,809 11/12/10 2,454,978 2,589,161
Preferred Stock A (B) 3,395 shs. 11/12/10 322,495 306,370
Preferred Stock B (B) 1,575 shs. 11/12/10 149,650 142,167
Common Stock (B) 19,737 shs. 11/12/10 19,737 18,750
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B) 5,418 shs. 11/12/10 5,418 54
------------- -------------
2,952,278 3,056,502
------------- -------------
Spartan Foods Holding Company
A manufacturer of branded pizza crusts and pancakes.
12.25% Senior Subordinated Note due 2017 $ 1,912,500 12/15/09 1,664,044 1,817,391
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 257 shs. 12/15/09 227,109 93,224
------------- -------------
1,891,153 1,910,615
------------- -------------
Specialty Commodities, Inc.
A distributor of specialty food ingredients.
13.25% Senior Subordinated Note due 2016 $ 2,312,236 10/23/08 2,191,675 2,335,358
Common Stock (B) 30,000 shs. 10/23/08 300,000 170,495
Warrant, excercisable until 2018, to purchase
common stock at $.01 per share (B) 11,054 shs. 10/23/08 100,650 62,822
------------- -------------
2,592,325 2,568,675
------------- -------------
Stanton Carpet Holding Co.
A designer and marketer of high and mid-priced decorative carpets and rugs.
12.13% Senior Subordinated Note due 2014 $ 2,239,024 08/01/06 2,160,143 2,196,824
Common Stock (B) 311 shs. 08/01/06 310,976 189,184
Warrant, exercisable until 2014, to purchase
common stock at $.02 per share (B) 104 shs. 08/01/06 93,293 63,006
------------- -------------
2,564,412 2,449,014
------------- -------------
Sundance Investco LLC
A provider of post-production services to producers of movies and television shows.
Limited Liability Company Unit Class A (B) 6,429 uts. 03/31/10 -- --
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 29
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Sunrise Windows Holding Co.
A manufacturer and marketer of premium vinyl windows exclusively selling to the residential remodeling and replacement market.
14% Senior Subordinated Note due 2017 $ 2,885,496 12/14/10 $ 2,716,207 $ 2,884,239
Common Stock (B) 115 shs. 12/14/10 114,504 108,775
Warrant, exercisable until 2020, to purchase
common stock at $.01 per share (B) 112 shs. 12/14/10 111,747 1
------------- -------------
2,942,458 2,993,015
------------- -------------
Synteract Holdings Corporation
A provider of outsourced clinical trial management services to pharmaceutical and biotechnology companies.
14.5% Senior Subordinated Note due 2016 $ 2,619,067 09/02/08 2,473,393 2,645,258
Redeemable Preferred Stock Series A (B) 1,280 shs. 09/02/08 12,523 6,210
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 12,803 shs. 09/02/08 112,693 --
------------- -------------
2,598,609 2,651,468
------------- -------------
T H I Acquisition, Inc.
A machine servicing company providing value-added steel services to long steel products.
12% Senior Subordinated Note due 2016 $ 2,550,000 01/14/08 2,446,538 2,295,000
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 9 shs. 01/14/08 88,054 --
------------- -------------
2,534,592 2,295,000
------------- -------------
Telecorps Holdings, Inc.
A provider of equipment and services to producers of television shows and motion pictures.
12.75% Senior Subordinated Note due 2016 $ 3,176,506 * 2,785,539 2,700,030
Common Stock (B) 270 shs. 09/02/09 10,994 --
Warrant, exercisable until 2019, to purchase
common stock at $.01 per share (B) 7,906 shs. * 327,437 --
------------- -------------
* 05/20/09 and 09/02/09. 3,123,970 2,700,030
------------- -------------
Terra Renewal LLC
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.
12% Senior Subordinated Note due 2014 $ 1,162,110 * 1,121,046 581,055
6.79% Term Note due 2012 (C) $ 1,363,270 * 1,358,819 1,226,943
8.75% Term Note due 2012 (C) $ 1,456 * 1,456 1,311
Limited Partnership Interest of
Saw Mill Capital Fund V, LLC (B) 3.97% int. ** 149,176 --
Warrant, exercisable until 2016, to purchase
common stock at $.01 per share (B) 72 shs. 04/28/06 59,041 --
------------- -------------
* 04/28/06 and 09/13/06. ** 03/01/05 and 10/10/08. 2,689,538 1,809,309
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
30 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Torrent Group Holdings, Inc.
A contractor specializing in the sales and installation of engineered drywells for the retention and filtration of stormwater and
nuisance water flow.
14.5% Senior Subordinated Note due 2013 (D) $ 2,455,561 10/26/07 $ 2,102,363 $ --
Series B Preferred Stock (B) 182 shs. 03/31/10 -- --
Common Stock (B) 515 shs. 03/31/10 414,051 --
------------- -------------
2,516,414 --
------------- -------------
Total E & S, Inc.
A manufacturer of a wide variety of equipment used in the oil and gas industry.
10.5% Senior Secured Term Note due 2013 $ 851,351 03/02/07 847,321 842,953
13% Senior Subordinated Note due 2014 $ 598,450 03/02/07 490,608 568,528
------------- -------------
1,337,929 1,411,481
------------- -------------
Transpac Holding Company
A designer, importer and wholesaler of home decor and seasonal gift products.
14% Senior Subordinated Note due 2015 (D) $ 1,773,006 10/31/07 1,649,939 1,684,356
Common Stock (B) 209 shs. 10/31/07 208,589 --
Warrant, exercisable until 2015, to purchase
common stock at $.01 per share (B) 94 shs. 10/31/07 87,607 --
------------- -------------
1,946,135 1,684,356
------------- -------------
Tranzonic Companies (The)
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 2013 $ 2,712,000 02/05/98 2,681,582 2,712,000
Common Stock (B) 630 shs. 02/04/98 630,000 672,199
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 444 shs. 02/05/98 368,832 473,740
------------- -------------
3,680,414 3,857,939
------------- -------------
Truck Bodies & Equipment International
A designer and manufacturer of accessories for heavy and medium duty trucks, primarily dump bodies, hoists, various forms of flatbed
bodies, landscape bodies and other accessories.
12% Senior Subordinated Note due 2014 (D) $ 2,309,541 * 2,082,309 2,078,587
Preferred Stock Series B (B) 241 shs. 10/20/08 241,172 --
Common Stock (B) 742 shs. * 800,860 --
Warrant, exercisable until 2013, to purchase
common stock at $.02 per share (B) 153 shs. * 159,894 --
Warrant, exercisable until 2018, to purchase
common stock at $.01 per share (B) 1,054 shs. 10/20/08 -- --
------------- -------------
* 07/19/05 and 12/22/05. 3,284,235 2,078,587
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 31
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
TruStile Doors, Inc.
A manufacturer and distributor of interior doors.
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 5,781 shs. 04/11/03 $ 68,059 $ 940
------------- -------------
U M A Enterprises, Inc.
An importer and wholesaler of home decor products.
15% Senior Subordinated Note due 2015 $ 1,813,482 02/08/08 1,784,271 1,822,171
Convertible Preferred Stock (B) 887 shs. 02/08/08 886,956 629,803
------------- -------------
2,671,227 2,451,974
------------- -------------
U-Line Corporation
A manufacturer of high-end, built-in, undercounter ice making, wine storage and refrigeration appliances.
12.5% Senior Subordinated Note due 2012 $ 1,787,995 04/30/04 1,731,645 1,702,482
Common Stock (B) 182 shs. 04/30/04 182,200 65,078
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 230 shs. 04/30/04 211,736 82,301
------------- -------------
2,125,581 1,849,861
------------- -------------
Visioneering, Inc.
A designer and manufacturer of tooling and fixtures for the aerospace industry.
10.5% Senior Secured Term Loan due 2013 $ 802,941 05/17/07 792,271 781,394
13% Senior Subordinated Note due 2014 $ 648,530 05/17/07 598,941 620,745
18% PIK Convertible Preferred Stock (B) 37,381 shs. 03/13/09 72,519 --
Common Stock (B) 123,529 shs. 05/17/07 123,529 --
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 35,006 shs. 05/17/07 55,055 --
------------- -------------
1,642,315 1,402,139
------------- -------------
Vitex Packaging Group, Inc.
A manufacturer of specialty packaging, primarily envelopes and tags used on tea bags.
10% Senior Subordinated PIK Note due 2011 $ 173,527 10/29/09 163,174 164,850
5% Senior Subordinated PIK Note due 2011 (D) $ 850,000 06/30/07 741,532 807,500
Class B Unit (B) 767,881 uts. 10/29/09 348,058 --
Class C Unit (B) 850,000 uts. 10/29/09 780,572 465,536
Limited Liability Company Unit Class A (B) 723,465 uts. * 433,222 --
Limited Liability Company Unit Class B (B) 182,935 uts. 07/19/04 182,935 --
------------- -------------
* 07/19/04 and 10/29/09. 2,649,493 1,437,886
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
32 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
PRINCIPAL AMOUNT,
SHARES, UNITS,
OR OWNERSHIP ACQUISITION
CORPORATE RESTRICTED SECURITIES:(A)(Continued) PERCENTAGE DATE COST FAIR VALUE
------------- -------- ------------- -------------
Wellborn Forest Holding Co.
A manufacturer of semi-custom kitchen and bath cabinetry.
12.13% Senior Subordinated Note due 2014 $ 1,721,250 11/30/06 $ 1,625,184 $ 1,635,188
Common Stock (B) 191 shs. 11/30/06 191,250 67,619
Warrant, exercisable until 2014, to purchase
common stock at $.01 per share (B) 95 shs. 11/30/06 86,493 33,758
------------- -------------
1,902,927 1,736,565
------------- -------------
Wheaton Holding Corporation
A distributor and manufacturer of laboratory supply products and packaging.
13% Senior Subordinated Note due 2017 $ 3,000,000 06/08/10 2,740,001 3,009,744
Preferred Stock Series B (B) 2,109 shs. 06/08/10 210,924 21
Common Stock (B) 1,058 shs. 06/08/10 1,058 11
------------- -------------
2,951,983 3,009,776
------------- -------------
Whitcraft Holdings, Inc.
A leading independent manufacturer of precision formed, machined, and fabricated flight-critical aerospace components.
12% Senior Subordinated Note due 2018 $ 2,383,562 12/16/10 2,187,919 2,370,402
Common Stock (B) 616 shs. 12/16/10 616,438 585,618
Warrant, exercisable until 2015, to purchase
common stock at $.02 per share (B) 166 shs. 12/16/10 148,003 2
------------- -------------
2,952,360 2,956,022
------------- -------------
Workplace Media Holding Co.
A direct marketer specializing in providing advertisers with access to consumers in the workplace.
13% Senior Subordinated Note due 2015 $ 1,235,800 05/14/07 1,132,117 617,900
Limited Partnership Interest (B) 23.16% int. 05/14/07 115,804 --
Warrant, exercisable until 2015, to purchase
common stock at $.02 per share (B) 88 shs. 05/14/07 83,462 --
------------- -------------
1,331,383 617,900
------------- -------------
Xaloy Superior Holdings, Inc.
A provider of melt processing components and ancillary equipment for both plastic injection molding and extrusion applications.
15.5% Senior Subordinated Note due 2015 (D) $ 2,322,844 09/08/08 2,272,887 2,206,702
Common Stock (B) 283 shs. 09/08/08 283,330 97,472
------------- -------------
2,556,217 2,304,174
------------- -------------
Total Private Placement Investments (E) 243,192,736 223,583,112
------------- -------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 33
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
SHARES OR
INTEREST DUE PRINCIPAL MARKET
CORPORATE RESTRICTED SECURITIES:(A) (Continued) RATE DATE AMOUNT COST VALUE
------ -------- ------------ ------------ ------------
RULE 144A SECURITIES - 2.18%:(A)
Bonds - 2.12%
Cemex Finance LLC 9.500% 12/14/16 $ 375,000 $ 391,237 $ 386,719
Cenveo Corporation 10.500 08/15/16 100,000 100,000 98,250
Coffeyville Resources LLC 9.000 04/01/15 126,000 125,384 134,820
Dae Aviation Holdings, Inc. 11.250 08/01/15 200,000 195,255 207,000
Energy Future Holdings 10.000 01/15/20 400,000 402,913 411,509
Evertec, Inc. 11.000 10/01/18 375,000 375,000 377,813
Fidelity National Information 7.625 07/15/17 100,000 100,000 105,250
Fidelity National Information 7.875 07/15/20 125,000 125,000 132,188
Georgia Gulf Corporation 9.000 01/15/17 190,000 194,817 206,150
Hertz Corporation 7.500 10/15/18 75,000 75,000 77,813
Inergy, L.P. 7.000 10/01/18 200,000 200,000 201,500
Libbey Glass, Inc. 10.000 02/15/15 125,000 130,588 134,375
Michael Foods, Inc. 9.750 07/15/18 75,000 75,000 81,938
Nexstar Broadcasting Group, Inc. 8.875 04/15/17 175,000 173,887 185,938
Packaging Dynamics Corporation of America 10.000 05/01/16 1,200,000 1,194,602 1,231,500
Pinafore LLC 9.000 10/01/18 330,000 330,000 356,400
SandRidge Energy, Inc. 8.000 06/01/18 360,000 363,698 365,400
Spectrum Brands, Inc. 9.500 06/15/18 125,000 123,293 137,344
Valeant Pharmaceuticals International 6.750 10/01/17 70,000 69,650 69,650
Valeant Pharmaceuticals International 7.000 10/01/20 130,000 129,188 128,375
------------ ------------
Total Bonds 4,874,512 5,029,932
------------ ------------
Convertible Preferred Stock - 0.00%
ETEX Corporation (B) 777 716 --
------------ ------------
Total Convertible Preferred Stock 716 --
------------ ------------
Preferred Stock - 0.06%
General Motors Acceptance Corporation, Inc. 143 45,009 135,148
TherOX, Inc. (B) 103 4,131 --
------------ ------------
Total Preferred Stock 49,140 135,148
------------ ------------
---------------------------------------------------------------------------------------------------------------------------------
34 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
MARKET
CORPORATE RESTRICTED SECURITIES:(A)(Continued) SHARES COST VALUE
------------ ------------ ------------
RULE 144A SECURITIES - 2.18%:(A)
Common Stock - 0.00%
Touchstone Health Partnership (B) 1,168 $ 4,254 $ --
------------ ------------
Total Common Stock 4,254 --
------------ ------------
Total Rule 144A Securities 4,928,622 5,165,080
------------ ------------
Total Corporate Restricted Securities $248,121,358 $228,748,192
------------ ------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 35
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
INTEREST DUE PRINCIPAL MARKET
CORPORATE PUBLIC SECURITIES - 6.12%: (A) RATE DATE AMOUNT COST VALUE
------ -------- ------------ ------------ ------------
Bonds - 5.82%
ACCO Brands Corporation 10.625% 03/15/15 $ 100,000 $ 98,791 $ 112,500
Affinia Group, Inc. 9.000 11/30/14 50,000 48,500 51,375
American Axle & Manufacturing Holding, Inc. 7.875 03/01/17 750,000 608,625 767,813
Atlas Pipeline Partners 8.125 12/15/15 750,000 663,750 772,500
B E Aerospace, Inc. 6.875 10/01/20 100,000 99,104 103,250
Berry Plastics Corporation (C) 5.039 02/15/15 500,000 480,601 482,500
Chaparral Energy, Inc. 8.875 02/01/17 1,000,000 991,780 1,015,000
Crosstex Energy L.P. 8.875 02/15/18 225,000 220,445 241,031
Easton-Bell Sports, Inc. 9.750 12/01/16 320,000 327,597 351,200
Energy Transfer Equity LP 7.500 10/15/20 100,000 100,000 103,000
Gannett Company, Inc. 9.375 06/01/14 125,000 123,228 139,375
Geoeye, Inc. 9.625 10/01/15 750,000 774,837 847,500
Great Lakes Dredge & Dock Corporation 7.750 12/15/13 1,000,000 948,750 1,008,750
Harrah's Operating Co. 11.250 06/01/17 325,000 314,308 365,625
Intelsat Bermuda Ltd. 9.250 06/15/16 1,365,000 1,402,718 1,474,200
International Coal Group, Inc. 9.125 04/01/18 625,000 626,607 675,000
Kar Holdings, Inc. 8.750 05/01/14 50,000 50,000 52,000
Landry's Restaurants, Inc. 11.625 12/01/15 165,000 176,143 176,138
LIN Television Corporation 8.375 05/15/13 190,000 192,454 201,400
Markwest Energy Operating Co. 8.750 04/15/18 125,000 123,979 135,313
McClatchy Co. 11.500 02/15/17 275,000 271,766 309,031
Nortek, Inc. 11.000 12/01/13 175,778 173,174 187,204
Omnicare, Inc. 7.750 06/01/20 75,000 75,000 77,250
Owens Corning, Inc. 9.000 06/15/19 55,000 54,112 64,526
Pinnacle Foods Finance LLC 9.250 04/01/15 300,000 307,625 312,375
Pregis Corporation 12.375 10/15/13 1,000,000 981,490 980,000
Quebecor Media, Inc. 7.750 03/15/16 1,050,000 978,235 1,084,125
Quiksilver, Inc. 6.875 04/15/15 315,000 290,463 307,913
RailAmerica, Inc. 9.250 07/01/17 240,000 230,589 263,700
Reddy Ice Corporation 13.250 11/01/15 150,000 153,815 128,250
Tekni-Plex, Inc. 8.750 11/15/13 579,000 581,598 532,680
Thermadyne Holdings Corporation 10.000 02/01/14 115,000 115,333 117,300
Trimas Corporation 9.750 02/01/15 75,000 73,614 82,125
United Rentals, Inc. 10.875 06/15/16 125,000 121,478 142,813
Verso Paper Holdings LLC 11.375 08/01/16 175,000 170,250 175,434
------------ ------------
Total Bonds 12,950,759 13,840,196
------------ ------------
---------------------------------------------------------------------------------------------------------------------------------
36 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (C0NTINUED)
December 31, 2010
MARKET
CORPORATE PUBLIC SECURITIES: (A)(Continued) SHARES COST VALUE
------------ ------------ ------------
Common Stock - 0.30%
Bally Total Fitness Holding Corporation (B) 29 $ 2 $ --
Chase Packaging Corporation (B) 9,541 -- 954
Directed Electronics, Inc. (B) 368,560 1,856,534 287,477
Intrepid Potash, Inc. (B) 365 11,680 13,611
Nortek, Inc. (B) 175 1 6,300
Rue21, Inc. (B) 650 12,350 19,052
Supreme Industries, Inc. (B) 125,116 267,319 387,860
------------ ------------
Total Common Stock 2,147,886 715,254
------------ ------------
Total Corporate Public Securities $ 15,098,645 $ 14,555,450
------------ ------------
INTEREST
RATE/ DUE PRINCIPAL MARKET
SHORT TERM SECURITIES: YIELD^ DATE AMOUNT COST VALUE
------ -------- ------------ ------------ ------------
Commercial Paper - 10.12%
Citigroup Funding, Inc. 0.250% 01/07/11 $ 3,000,000 $ 2,999,875 $ 2,999,875
Deutsche Bank Financial LLC 0.230 01/14/11 4,500,000 4,499,626 4,499,626
National Rural Utilities CFC 0.220 01/04/11 1,335,000 1,334,976 1,334,976
Natixis US Finance Company 0.260 01/07/11 4,000,000 3,999,827 3,999,827
Ryder System, Inc. 0.310 01/10/11 2,500,000 2,499,794 2,499,794
Ryder System, Inc. 0.350 01/12/11 2,000,000 1,999,786 1,999,786
Societe Generale NA 0.250 01/03/11 4,500,000 4,499,937 4,499,937
Wisconsin Gas Company 0.190 01/07/11 2,200,000 2,199,930 2,199,930
------------ ------------
Total Short-Term Securities $ 24,033,751 $ 24,033,751
------------ ------------
Total Investments 112.52% $287,253,754 $267,337,393
============ ------------
Other Assets 3.13 7,437,879
Liabilities (15.65) (37,190,397)
------ ------------
Total Net Assets 100.00% $237,584,875
====== ============
(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 security; rate indicated is as of December 31, 2010.
(D) Defaulted security; interest not accrued.
(E) Illiquid securities. As of December 31, 2010, the value of these securities amounted to $223,583,112 or 94.11% of net assets.
^ Effective yield at purchase
PIK - Payment-in-kind
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 37
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 2010
Fair Value/ Fair Value/
Industry Classification Market Value Market Value
------------ ------------
AEROSPACE - 3.68% BUILDINGS & REAL ESTATE - 2.28%
A E Company, Inc. $ 3,236,000 K W P I Holdings Corporation $ 2,350,726
B E Aerospace, Inc. 103,250 Owens Corning, Inc. 64,526
Dae Aviation Holdings, Inc. 207,000 Sunrise Windows Holding Co. 2,993,015
Geoeye, Inc. 847,500 TruStile Doors, Inc. 940
Visioneering, Inc. 1,402,139 ------------
Whitcraft Holdings, Inc. 2,956,022 5,409,207
------------ ------------
8,751,911 CHEMICAL, PLASTICS & RUBBER - 1.11%
------------ Capital Specialty Plastics, Inc. 1,157,108
AUTOMOBILE - 5.21% Nicoat Acquisitions LLC 1,482,478
American Axle & Manufacturing Holding, Inc. 767,813 ------------
F H Equity LLC 3,007,979 2,639,586
J A C Holding Enterprises, Inc. 2,964,757 ------------
Jason Partners Holdings LLC 48,185 CONSUMER PRODUCTS - 9.60%
Nyloncraft, Inc. 2,855,141 Aero Holdings, Inc. 3,007,834
Ontario Drive & Gear Ltd. 1,258,842 Bravo Sports Holding Corporation 2,536,977
Qualis Automotive LLC 1,463,819 Custom Engineered Wheels, Inc. 2,804,652
------------ Easton-Bell Sports, Inc. 351,200
12,366,536 K N B Holdings Corporation 2,970,555
------------ Kar Holdings, Inc. 52,000
BEVERAGE, DRUG & FOOD - 7.27% Manhattan Beachwear Holding Company 3,784,671
Eatem Holding Company 2,958,620 Momentum Holding Co. 616,322
F F C Holding Corporation 2,961,024 R A J Manufacturing Holdings LLC 2,687,473
Golden County Foods Holding, Inc. 969,298 Reddy Ice Corporation 128,250
Hospitality Mints Holding Company 2,567,974 The Tranzonic Companies 3,857,939
Landry's Restaurants, Inc. 176,138 ------------
L H D Europe Holding, Inc. 24,225 22,797,873
Michael Foods, Inc. 81,938 ------------
Snacks Parent Corporation 3,056,502 CONTAINERS, PACKAGING & GLASS - 5.96%
Spartan Foods Holding Company 1,910,615 Berry Plastics Corporation 482,500
Specialty Commodities, Inc. 2,568,675 Chase Packaging Corporation 954
------------ Flutes, Inc. 688,789
17,275,009 P K C Holding Corporation 3,461,822
------------ P P T Holdings LLC 2,980,516
BROADCASTING & ENTERTAINMENT - 0.42% Packaging Dynamics Corporation of America 1,231,500
LIN Television Corporation 201,400 Paradigm Packaging, Inc. 2,361,614
Nexstar Broadcasting Group, Inc. 185,938 Pregis Corporation 980,000
Workplace Media Holding Co. 617,900 Tekni-Plex, Inc. 532,680
------------ Vitex Packaging Group, Inc. 1,437,886
1,005,238 ------------
------------ 14,158,261
------------
---------------------------------------------------------------------------------------------------------------------------------
38 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 2010
Fair Value/ Fair Value/
Industry Classification Market Value Market Value
------------ ------------
DISTRIBUTION - 1.69% ELECTRONICS - 1.40%
Duncan Systems, Inc. $ 1,457,520 Barcodes Group, Inc. $ 2,317,625
F C X Holdings Corporation 2,562,995 Connecticut Electric, Inc. 728,215
------------ Directed Electronics, Inc. 287,477
4,020,515 ------------
------------ 3,333,317
DIVERSIFIED/CONGLOMERATE, ------------
MANUFACTURING - 14.13% FINANCIAL SERVICES - 9.16%
A H C Holding Company, Inc. 2,947,963 Cemex Finance LLC 386,719
Arrow Tru-Line Holdings, Inc. 1,487,248 Citigroup Funding, Inc. 2,999,875
C D N T, Inc. 1,463,271 Deutsche Bank Financial LLC 4,499,626
F G I Equity LLC 2,986,935 Evertec, Inc. 377,813
G C Holdings 2,955,958 General Motors Acceptance Corporation, Inc. 135,148
Great Lakes Dredge & Dock Corporation 1,008,750 Highgate Capital LLC --
K P H I Holdings, Inc. 2,936,876 Natixis US Finance Company 3,999,827
K P I Holdings, Inc. 2,306,504 Pinafore LLC 356,400
MEGTEC Holdings, Inc. 2,176,483 Ryder System, Inc. 4,499,580
Milwaukee Gear Company 2,290,683 Societe Generale NA 4,499,937
Nortek, Inc. 193,504 ------------
O E C Holding Corporation 1,501,296 21,754,925
Postle Aluminum Company LLC 4,731,902 ------------
Thermadyne Holdings Corporation 117,300 HEALTHCARE, EDUCATION & CHILDCARE - 4.13%
Trimas Corporation 82,125 American Hospice Management Holding LLC 4,146,311
Truck Bodies & Equipment International 2,078,587 Synteract Holdings Corporation 2,651,468
Xaloy Superior Holdings, Inc. 2,304,174 Touchstone Health Partnership --
------------ Wheaton Holding Corporation 3,009,776
33,569,559 ------------
------------ 9,807,555
DIVERSIFIED/CONGLOMERATE, SERVICE - 10.05% ------------
A S C Group, Inc. 2,776,764 HOME & OFFICE FURNISHINGS, HOUSEWARES &
A W X Holdings Corporation 551,250 DURABLE CONSUMER PRODUCTS - 8.70%
ACCO Brands Corporation 112,500 Connor Sport Court International, Inc. 2,614,646
Advanced Technologies Holdings 2,847,297 H M Holding Company 513,825
Affinia Group, Inc. 51,375 Home Decor Holding Company 2,436,225
Apex Analytix Holding Corporation 2,610,213 Justrite Manufacturing Acquisition Co. 1,809,320
Associated Diversified Services 1,764,548 K H O F Holdings, Inc. 219,747
Clough, Harbour, and Associates 2,685,064 Libbey Glass, Inc. 134,375
Crane Rental Corporation 2,249,663 Monessen Holding Corporation 1,671,395
Insurance Claims Management, Inc. 387,484 Quiksilver, Inc. 307,913
Mail Communications Group, Inc. 1,366,095 Royal Baths Manufacturing Company 657,073
Nesco Holdings Corporation 3,198,252 Spectrum Brands, Inc. 137,344
Northwest Mailing Services, Inc. 3,285,181 Stanton Carpet Holding Co. 2,449,014
Pearlman Enterprises, Inc. -- Transpac Holding Company 1,684,356
------------ U M A Enterprises, Inc. 2,451,974
23,885,686 U-Line Corporation 1,849,861
------------ Wellborn Forest Holding Co. 1,736,565
------------
20,673,633
------------
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 39
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 2010
Fair Value/ Fair Value/
Industry Classification Market Value Market Value
------------ ------------
LEISURE, AMUSEMENT & ENTERTAINMENT - 1.38% NATURAL RESOURCES - 0.65%
Bally Total Fitness Holding Corporation $ -- Cenveo Corporation $ 98,250
Harrah's Operating Co. 365,625 Georgia Culf Corporation 206,150
Savage Sports Holding, Inc. 2,909,647 International Coal Group, Inc. 675,000
------------ Intrepid Potash, Inc. 13,611
3,275,272 SandRidge Energy, Inc. 365,400
------------ Verso Paper Holdings LLC 175,434
MACHINERY - 7.96% ------------
A S A P Industries LLC 1,509,388 1,533,845
Davis-Standard LLC 2,422,755 ------------
E S P Holdco, Inc. 2,406,857 OIL & GAS - 3.84%
M V I Holding, Inc. 1,143,315 Atlas Pipeline Partners 772,500
Motion Controls Holdings 2,975,959 Coffeyville Resources LLC 134,820
Navis Global 826,385 Chaparral Energy, Inc. 1,015,000
NetShape Technologies, Inc. 819,487 Energy Transfer Equity LP 103,000
Pacific Consolidated Holdings LLC 1,172,767 International Offshore Services LLC 2,576,148
Power Services Holding Company 2,395,281 MBWS Ultimate Holdco, Inc. 3,098,847
R E I Delaware Holding, Inc. 2,559,897 Total E & S, Inc. 1,411,481
Safety Speed Cut Manufacturing ------------
Company, Inc. 289,865 9,111,796
Supreme Industries, Inc. 387,860 ------------
------------ PHARMACEUTICALS - 1.26%
18,909,816 CorePharma LLC 2,805,756
------------ Valeant Pharmaceuticals International 198,025
MEDICAL DEVICES/BIOTECH - 3.58% ------------
Coeur, Inc. 1,324,907 3,003,781
E X C Acquisition Corporation 78,143 ------------
ETEX Corporation -- PUBLISHING/PRINTING - 0.89%
MedSystems Holdings LLC 1,322,814 Gannett Company, Inc. 139,375
MicroGroup, Inc. 2,282,772 McClatchy Co. 309,031
OakRiver Technology, Inc. 608,687 Newark Group, Inc. 571,627
Omnicare, Inc. 77,250 Quebecor Media, Inc. 1,084,125
Precision Wire Holding Company 2,822,428 ------------
TherOX, Inc. -- 2,104,158
------------ ------------
8,517,001 RETAIL STORES - 0.20%
------------ Pinnacle Foods Finance LLC 312,375
MINING, STEEL, IRON & NON-PRECIOUS Rue21, Inc. 19,052
METALS - 0.97% United Rentals, Inc. 142,813
T H I Acquisition, Inc. 2,295,000 ------------
------------ 474,240
------------
---------------------------------------------------------------------------------------------------------------------------------
40 MassMutual Corporate Investors 2010 Annual Report
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 2010
Fair Value/ Fair Value/
Industry Classification Market Value Market Value
------------ ------------
TECHNOLOGY - 1.88% WASTE MANAGEMENT/POLLUTION - 0.76%
Fidelity National Information $ 237,438 Terra Renewal LLC $ 1,809,309
Sencore Holding Company 1,500,577 Torrent Group Holdings, Inc. --
Smart Source Holdings LLC 2,730,269 ------------
------------ 1,809,309
4,468,284 ------------
------------ Total Investments - 112.52% $267,337,393
TELECOMMUNICATIONS - 2.32% ============
All Current Holding Company 1,346,078
Intelsat Bermuda Ltd. 1,474,200
Sundance Investco LLC --
Telecorps Holdings, Inc. 2,700,030
------------
5,520,308
------------
TRANSPORTATION - 0.14%
Hertz Corporation 77,813
NABCO, Inc. --
RailAmerica, Inc. 263,700
------------
341,513
------------
UTILITIES - 1.90%
Crosstex Energy, L.P. 241,031
Energy Future Holdings 411,509
Inergy, L.P. 201,500
Markwest Energy Operating Co. 135,313
National Rural Utilities 1,334,976
Wisconsin Gas Company 2,199,930
------------
4,524,259
------------
See Notes to Consolidated Financial Statements
---------------------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 Annual Report 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 and at the same
time offering an opportunity for capital gains. The Trust's principal
investments are privately placed, below-investment grade, long-term debt
obligations with equity features such as common stock, 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 in private placement
transactions. These investments are typically mezzanine debt instruments
with accompanying private equity securities made to small or middle market
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. Below-investment grade or high yield securities
have predominantly speculative characteristics with respect to the
capacity of the issuer to pay interest and repay capital.
On January 27,1998, the Board of Trustees authorized the formation of a
wholly-owned subsidiary of the Trust ("MMCI Subsidiary Trust") for the
purpose of holding certain investments. The results of MMCI Subsidiary
Trust are consolidated in the accompanying 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 its consolidated financial
statements in conformity with accounting principles generally accepted in
the United States of America.
A. VALUATION OF INVESTMENTS:
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 (public
securities), which may be effected immediately if the market is adequate,
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") or pursuant to a transaction that is exempt from
registration under the 1933 Act. Restricted securities that are valued
using public information, such as observable trades or market quotations,
are reflected as restricted securities at market value. Valuation of
securities in the Trust's portfolio is made on the basis of the market
price whenever market quotations are readily available.
The value of restricted securities at fair value, 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 its acquisition 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 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 in the valuation of debt and equity
securities at fair value are the results of various valuation methods,
which may include comparable company valuation analyses, discounted future
cash flow models and recent private transactions. As part of the valuation
process, we may take into account the following types of factors, if
relevant, in determining the fair value of our investments: the enterprise
value of a portfolio company (an estimate of the total fair value of the
portfolio company's debt and equity), the portfolio company's earnings,
the markets in which the portfolio company does business, a comparison of
the portfolio company's securities to publicly traded securities, changes
in the interest rate environment and the credit markets generally that may
affect the price at which similar investments may be made in the future
and other relevant factors. Consideration is also given to corporate
governance, marketability, company and industry results and outlooks, and
general market conditions. The determination of fair value involves
subjective judgments. As a result, using fair value to price a security
may result in a price materially different from the price used by other
investors or the price that may be realized up on the actual sale of the
security. All of these factors are in accordance with the authoritative
guidance on fair value measurements under accounting principles generally
accepted in the United States of America ("U.S. GAAP"). 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.
--------------------------------------------------------------------------------
42 MassMutual Corporate Investors 2010 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Trustees meet at least once each quarter to approve the value of 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. 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
$223,583,112 (94.10% of net assets) as of December 31, 2010 whose values
have been estimated by the Trustees in the absence of readily
ascertainable market values. Due to the inherent uncertainty of valuation,
those estimated values may differ significantly from the values that would
have been used had a ready market for the securities existed, and the
differences could be material.
The values for Rule 144A restricted securities and 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, 2010,
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.
In accordance with the authoritative guidance on fair value measurements
and disclosures under accounting principles U.S. GAAP, the Trust discloses
the fair value of its investments in a hierarchy that prioritizes the
inputs to valuation techniques used to measure the fair value. The
hierarchy gives the highest priority to valuations based upon unadjusted
quoted prices in active markets for identical assets or liabilities (level
1 measurement) and the lowest priority to valuations based upon
unobservable inputs that are significant to the valuation (level 3
measurements). The guidance establishes three levels of the fair value
hierarchy as follows:
Level 1 - quoted prices in active markets for identical securities
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.)
Level 3 - significant unobservable inputs (including the Trust's own
assumptions in determining the fair value of investments)
The following is a summary of the inputs used to value the Trust's net assets as
of December 31, 2010:
ASSETS: TOTAL LEVEL 1 LEVEL 2 LEVEL 3
--------------------------------------------------------------------------------------
Restricted Securities
Corporate Bonds $ 195,889,677 $ - $ 5,029,932 $ 190,859,745
Common Stock - U.S. 14,856,116 - - 14,856,116
Preferred Stock 9,447,130 - 135,148 9,311,982
Partnerships and LLCs 8,555,269 - - 8,555,269
Public Securities
Corporate Bonds 13,840,196 - 13,840,196 -
Common Stock - U.S. 715,254 715,254 - -
Short-term Securities 24,033,751 - 24,033,751 -
--------------------------------------------------------------------------------------
Total $ 267,337,393 $ 715,254 $ 43,039,027 $ 223,583,112
Following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
UNREALIZED
TOTAL GAINS PURCHASES, GAINS & LOSSES
BEGINNING OR LOSSES SALES, ISSUANCES TRANSFERS IN ENDING IN NET INCOME
BALANCE (REALIZED/ & SETTLEMENTS AND/OR BALANCE AT FROM ASSETS
ASSETS: AT 12/31/2009 UNREALIZED) (NET) OUT OF LEVEL 3 12/31/2010 STILL HELD
----------------------------------------------------------------------------------------------------------------------
Restricted Securities
Corporate Bonds $ 152,772,751 $ 6,163,330 $ 31,923,664 $ - $ 190,859,745 $ 3,240,029
Common Stock - U.S. 14,693,318 3,021,634 (3,430,463) 571,627 14,856,116 524,840
Preferred Stock 6,638,626 3,676,755 (1,003,399) - 9,311,982 2,487,569
Partnerships and LLCs 6,678,496 3,887,034 (2,010,261) - 8,555,269 1,022,692
Public Securities
Corporate Bonds 10 (8) (2) - - -
----------------------------------------------------------------------------------------------------------------------
$ 180,783,201 $ 16,748,745 $ 25,479,539 $ 571,627 $ 223,583,112 $ 7,275,130
----------------------------------------------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 ANNUAL REPORT 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The inputs and methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities.
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 using the yield-to-maturity method. 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 that the Trustees either designate the
net realized long-term gains as undistributed and pay the Federal capital
gains taxes thereon or distribute all or a portion of such net gains. For
the year ended December 31, 2010, the Trust had a net realized taxable
long-term capital gain balance of $173,736 which the Trustees voted to
retain and pay the federal capital gain tax thereon. The Trust has
incurred income tax expense of $60,807 on the Statement of Operations
related to the retained realized capital gains.
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.
Net investment income and net realized gains or losses of the Trust as
presented under accounting principles generally accepted in the United
States of America may differ from distributable taxable earnings due to
earnings from the MMCI Subsidiary Trust as well as certain permanent and
temporary differences in the recognition of income and realized gains or
losses on certain investments. Permanent differences will result in
reclassifications to the capital accounts. In 2010, the Trust increased
undistributed net investment income and decreased additional paid in
capital by a total of $103,508 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 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, 2010, the MMCI Subsidiary Trust has incurred income tax
expense of $555,381.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of the existing assets and liabilities and their
respective tax basis. As of December 31, 2010, the MMCI Subsidiary Trust
has a deferred tax liability of $469,919.
Beginning with the 2009 annual financial statements, the Trust recognizes
a tax benefit from an uncertain position only if it is more likely than
not that the position is sustainable, based solely on its technical merits
and consideration of the relevant taxing authority's widely understood
administrative practices and precedents. If this threshold is met, the
Trust measures the tax benefit as the largest amount of benefit that is
greater than fifty percent likely of being realized upon ultimate
settlement. The Trust has evaluated and determined that the tax positions
did not have a material effect on the Trust's financial position and
results of operations for the year ended December 31, 2010.
--------------------------------------------------------------------------------
44 MassMutual Corporate Investors 2010 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
E. DISTRIBUTIONS TO SHAREHOLDERS:
The Trust records distributions to shareholders from net investment income
and net realized gains, if any, on the exdividend date. The Trust's net
investment income dividend is declared four times per year, in April,
July, October, and December. The Trust's net realized capital gain
distribution, if any, is declared in December.
As of December 31, 2010, the components of distributable earnings on a tax
basis included $3,108,006 of undistributed ordinary income and $112,929 of
undistributed net realized long term capital gains. Such distributions and
distributable earnings on a tax basis are determined in conformity with
income tax regulations, which may differ from accounting principles
generally accepted in the United States of America.
The difference between net taxable undistributed earnings to GAAP is
$303,315 comprised of other timing differences.
The tax character of distributions declared during the years ended
December 31, 2010 and 2009 was as follows:
DISTRIBUTIONS PAID FROM: 2010 2009
------------- -------------
Ordinary Income $ 20,357,960 $ 20,168,880
Long-term Capital Gains $ - $ -
F. EXPENSE REDUCTION:
Citibank, N.A. ("Citibank") serves as custodian to the Trust. Pursuant to
the custodian agreement, Citibank receives a fee reduced by credits on
cash balances the Trust maintains with Citibank. All credit balances, if
any, used to reduce the Trust's custodian fees are reported as fees paid
indirectly on the Statement of Operations. For the year ended December 31,
2010, there were no credit balances used to reduce custodian fees.
3. INVESTMENT SERVICES CONTRACT
A. SERVICES:
Under an Investment Services Contract (the "Contract") with the Trust,
Babson Capital agrees 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 the Contract, Babson Capital also 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.
B. FEE:
For its services under the Contract, Babson Capital is paid a quarterly
investment advisory fee of 0.3125% of the net asset value of the Trust as
of the last business day of each fiscal quarter, which is approximately
equal to 1.25% annually. A majority of the Trustees, including a majority
of the Trustees who are not interested persons of the Trust or of Babson
Capital, approve the valuation of the Trust's net assets as of such day.
4. SENIOR SECURED INDEBTEDNESS
MassMutual holds the Trust's $30,000,000 Senior Fixed Rate Convertible
Note (the "Note") issued by the Trust on November 15, 2007. The Note is
due November 15, 2017 and accrues interest at 5.28% 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, 2010, the Trust incurred total interest
expense on the Note of $1,584,000.
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 a 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 Note proposed to be redeemed.
5. PURCHASES AND SALES OF INVESTMENTS
FOR THE YEAR ENDED
12/31/2010
-----------------------------
PROCEEDS
COST OF FROM
INVESTMENTS SALES OR
ACQUIRED MATURITIES
------------- -------------
Corporate restricted securities $ 75,646,515 $ 59,778,273
Corporate public securities 20,192,969 46,166,464
The aggregate cost of investments is substantially the same for financial
reporting and Federal income tax purposes as of December 31, 2010. The net
unrealized depreciation of investments for financial reporting and Federal
tax purposes as of December 31, 2010 is $19,916,361 and consists of
$19,233,588 appreciation and $39,149,949 depreciation.
--------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 ANNUAL REPORT 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010
5. PURCHASES AND SALES OF INVESTMENTS (CONTINUED)
Net unrealized depreciation of investments on the Statement of Assets and
Liabilities reflects the balance net of a deferred tax accrual of $469,919
on net unrealized gains on the MMCI Subsidiary Trust.
6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED)
MARCH 31, 2010
AMOUNT PER SHARE
------------- -------------
Investment income $ 6,096,825
Net investment income 4,871,657 $ 0.52
Net realized and unrealized
gain on investments (net of taxes) 850,850 0.09
JUNE 30, 2010
AMOUNT PER SHARE
------------- -------------
Investment income $ 6,319,951
Net investment income 5,070,723 $ 0.54
Net realized and unrealized
gain on investments (net of taxes) 4,922,366 0.52
SEPTEMBER 30, 2010
AMOUNT PER SHARE
------------- -------------
Investment income $ 6,543,817
Net investment income 5,245,404 $ 0.56
Net realized and unrealized
gain on investments (net of taxes) 10,695,405 1.14
DECEMBER 31, 2010
AMOUNT PER SHARE
------------- -------------
Investment income $ 7,638,826
Net investment income 6,213,143 $ 0.65
Net realized and unrealized
gain on investments (net of taxes) 3,339,959 0.36
7. AGGREGATE REMUNERATION PAID TO OFFICERS, TRUSTEES AND THEIR AFFILIATED
PERSONS
For the year ended December 31, 2010, the Trust paid its Trustees
aggregate remuneration of $291,325. During the year, 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. The Trust classifies Messrs. Noreen
and Joyal as "interested persons" of the Trust.
All of the Trust's officers are employees of Babson Capital. Pursuant to
the Contract, the Trust does not compensate its officers who are employees
of Babson Capital (except for the Chief Compliance Officer of the Trust
unless assumed by Babson Capital).
For the year ended December 31, 2010, Babson Capital paid the compensation
of the Chief Compliance Officer of the Trust.
Mr. Noreen, 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 for the year ended
December 31, 2010, other than amounts payable to Babson Capital pursuant
to the Contract.
8. CERTIFICATIONS
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
Securities and Exchange Commission 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.
9. SUBSEQUENT EVENTS
On January 21, 2011, the Board of Trustees authorized a two-for-one stock
split of the Trust's common shares payable in the form of a stock
dividend. As a result of the stock split, the Trust distributed one
additional share of its common stock to all shareholders of record at the
close of business on February 4, 2011 for each share of the Trust's common
stock held on that date. The additional shares were distributed on
February 23, 2011. The stock split increased the common shares outstanding
from 9,476,093 to 18,952,186.
The Trust has evaluated the possibility of subsequent events existing in
this report through February 25, 2011. The Trust has determined that there
are no other material events that would require recognition or disclosure
in this report through this date.
--------------------------------------------------------------------------------
46 MassMutual Corporate Investors 2010 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LOGO KPMG LLP Telephone +1 617 988 1000
Two Financial Center Fax +1 617 507 8321
60 South Street Internet www.us.kpmg.com
Boston, MA 02111
The Shareholders and Board of Trustees of MassMutual Corporate Investors
We have audited the accompanying consolidated statement of assets and
liabilities of MassMutual Corporate Investors (the "Trust"), including the
consolidated schedule of investments, as of December 31, 2010, and the related
consolidated statements of operations and cash flows for the year then ended,
the consolidated statements of changes in net assets for each of the years in
the two-year period then ended, and the consolidated financial highlights for
each of the years in the five-year period then ended. These consolidated
financial statements and consolidated financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these consolidated financial statements and consolidated financial
highlights based on our audits.
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, 2010 by correspondence with the custodian or
by other appropriate auditing procedures. 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 consolidated financial statements and consolidated financial
highlights referred to above present fairly, in all material respects, the
financial position of MassMutual Corporate Investors as of December 31, 2010,
the results of its consolidated statements of operations and cash fl ow for the
year then ended, changes in its net assets for each of the years in the two year
period then ended, and the consolidated financial highlights for each of the
years in the five year period then ended, in conformity with U.S. generally
accepted accounting principles.
KPMG LLP
Boston, Massachusetts
February 25, 2011
--------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 ANNUAL REPORT 47
INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATIONS 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
------------------------------------------------------------------------------------------------------------------------------------
CLIFFORD M. NOREEN* (53) Trustee Term expires President (since 2008), 2 President (since 2009), Senior
(since 2009) 2012 Vice Chairman (2007-2008), Vice President (1996- 2009),
MassMutual Member of the Board of HYP Management LLC (LLC
Corporate Investors Chairman Managers (since 2006), Manager); Director (since
1500 Main Street (since 2009) Managing Director (since 2005), MassMutual Corporate
P.O. Box 15189 2000), Babson Capital; Value Limited (investment
Springfield, MA 01115-5189 President (2005-2009), Vice company); Director (since
President (1993-2005) of 2005), MassMutual Corporate
the Trust. Value Partners Limited
(investment company); Senior
Vice President (1996-2008),
MMHC Investment LLC (passive
investor); Managing Director
(2006-2009), MassMutual
Capital Partners LLC
(investment company); Director
(since 2008), Jefferies
Finance LLC (a finance
company); Chairman and Chief
Executive Officer (since
2009), Manager (since 2007),
MMC Equipment Finance LLC;
Chairman (since 2009), Trustee
(since 2005); President
(2005-2009), MMCI Subsidiary
Trust and MMPI Subsidiary
Trust; Chairman (since 2009),
Trustee (since 2009),
President (2005-2009), Vice
President (1993-2005),
MassMutual Participation
Investors (closed-end
investment company advised by
Babson Capital); and Member of
Investment Committee (since
1999), Diocese of Springfield.
* Mr. Noreen is classified as an "interested person" of each Trust and Babson
Capital (as defined by the Investment Act of 1940, as amended) because of his
position as an officer of each Trust and President of Babson Capital.
--------------------------------------------------------------------------------
48 MassMutual Corporate Investors 2010 ANNUAL REPORT
INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATIONS 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** (66) Trustee Term expires President (2001-2003) 67 President (1999-2003) and
(since 2003) 2013 of Babson Capital. Trustee (since 2003), of the
MassMutual Trust; Director (since 2006),
Corporate Investors Jefferies Group, Inc.
1500 Main Street (financial services); Director
P.O. Box 15189 (2003- 2010), Alabama Aircraft
Springfield, MA 01115-5189 Industries, Inc. (aircraft
maintenance and overhaul);
Director (since 2007),
Scottish Re Group Ltd. (global
life reinsurance specialist);
Trustee (since 2003),
MassMutual Select Funds, (an
open-end 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. In addition
and as noted above, Mr. Joyal is a director of Jefferies Group, Inc., which
has a wholly owned broker-dealer subsidiary that may execute portfolio
transactions and/or engage in principal transactions with the Trust, other
investment companies advised by Babson Capital or any other advisory accounts
over which Babson Capital has brokerage placement discretion. Accordingly,
the Trust has determined to classify Mr. Joyal as an "interested person" of
the Trust and Babson Capital (as defined in the Investment Company Act of
1940, as amended).
--------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 ANNUAL REPORT 49
INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATIONS 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
------------------------------------------------------------------------------------------------------------------------------------
WILLIAM J. BARRETT (71) Trustee Term expires President (since 2010) WJ 2 Trustee (since 2006),
(since 2006) 2012 Barrett Associates, Inc.; MassMutual Participation
MassMutual President (2002-2010), Investors (a closed-end
Corporate Investors Barrett-Gardner Associates, investment company advised by
1500 Main Street Inc. Babson Capital); Director
P.O. Box 15189 (since 1979), TGC Industries,
Springfield, MA 01115-5189 Inc. (geophysical services);
Director and Secretary (since
2001 and from 1996-1997),
Chase Packaging Corporation
(agricultural services);
Chairman and Director (since
2000), Rumson-Fair Haven Bank
and Trust Company (commercial
bank and trust company); and
Director (since 1983),
Executive Vice President,
Secretary and Assistant
Treasurer (since 2004),
Supreme Industries, Inc.
(specialized truck and body
manufacturer).
DONALD E. BENSON (80) Trustee Term expires Executive Vice President 2 Director (1997-2008), MAIR
(since 1986) 2013 and Director (since 1992), Holdings, Inc. (commuter
MassMutual Marquette Financial airline holding company);
Corporate Investors Companies (financial services); Director (since 1997), First
1500 Main Street Partner (since 1996), Benson California Financial Group,
P.O. Box 15189 Family Limited Partnership Inc. (bank holding company);
Springfield, MA 01115-5189 No. 1 and Benson Family and Trustee (since 1988),
Limited Partnership No. 2 MassMutual Participation
(investment partnerships). Investors (closed-end
investment company advised by
Babson Capital).
--------------------------------------------------------------------------------
50 MassMutual Corporate Investors 2010 ANNUAL REPORT
INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATIONS 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 (54) Trustee Term expires Private Investor; and 2 Trustee (since 2005),
(since 2005) 2011 Managing Director MassMutual Participation
MassMutual (1994-2005), Morgan Investors (a closed-end
Corporate Investors Stanley. investment company advised by
1500 Main Street Babson Capital); Independent
P.O. Box 15189 Director (since 2006), Invicta
Springfield, MA 01115-5189 Holdings LLC and its
subsidiaries (a derivative
trading company).
DONALD GLICKMAN (77) Trustee Term expires Chairman (since 1992), 2 Director (since 1984), Monro
(since 1992) 2013 Donald Glickman and Muffler and Brake, Inc.
MassMutual Company, Inc. (private (automobile repair service);
Corporate Investors investments); and Partner Lead Director (1998 - 2009),
1500 Main Street (since 1992), J.F. Lehman & MSC Software Corp. (simulation
P.O. Box 15189 Co. (private investments). software); and Trustee (since
Springfield, MA 01115-5189 1992), MassMutual Participation
Investors (closed-end investment
company advised by Babson
Capital).
--------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 ANNUAL REPORT 51
INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS
POSITION OCCUPATIONS 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
------------------------------------------------------------------------------------------------------------------------------------
MARTIN T. HART (75) Trustee Term expires Private Investor; and 2 Director (since 2004), Texas
(since 1991) 2012 President and Director Roadhouse, Inc. (operates
MassMutual (since 1983), H Investment restaurant chain); Director
Corporate Investors Company LLC (family (since 1999), ValueClick Inc.
1500 Main Street partnership). (internet advertising
P.O. Box 15189 company); Director (2002 -
Springfield, MA 01115-5189 2009), Spectranetics Corp.
(medical device company); and
Trustee (since 1991),
MassMutual Participation
Investors (closed-end
investment company advised by
Babson Capital).
CORINE T. NORGAARD (73) Trustee Term expires President and Owner (since 34 Trustee (since 2005), MML
(since 1998) 2011 2009), Retirement Options Series Investment Fund II (an
MassMutual (trains and certifies open-end investment company
Corporate Investors retirement coaches); President advised by MassMutual);
1500 Main Street (2004- 2005), Thompson Trustee (since 2004),
P.O. Box 15189 Enterprises Real Estate MassMutual Premier Funds (an
Springfield, MA 01115-5189 Investment. open-end investment company
advised by MassMutual);
Director (since 1991), ING
Series Fund, Inc. (investment
company); Director (since
1991), ING Variable Series
Fund; Director (since 1991),
ING Strategic Allocations
Portfolios, Inc. (investment
company); Director
(1991-2009), ING GET Fund
(investment company); and
Trustee (since 1998),
MassMutual Participation
Investors (a closed-end
investment company advised by
Babson Capital).
MALEYNE M. SYRACUSE (54) Trustee Term expires Private Investor; Managing 2 Trustee (since 2007),
(since 2007) 2011 Director (2000-2007), MassMutual Participation
MassMutual JP Morgan Securities, Inc. Investors (a closed-end
Corporate Investors (investments and banking) investment company advised by
1500 Main Street Babson Capital); Managing
P.O. Box 15189 Director (1984- 2000),
Springfield, MA 01115-5189 Deutsche Bank/Bankers Trust
Company.
--------------------------------------------------------------------------------
52 MassMutual Corporate Investors 2010 ANNUAL REPORT
OFFICERS OF THE TRUST
PRINCIPAL
POSITION OCCUPATIONS
NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST
ADDRESS THE TRUST OF TIME SERVED 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
MICHAEL L. KLOFAS (50) President Since 2009 President (since 2009), Vice President (1998-2009) of the
Trust; Managing Director (since 2000), Babson Capital;
MassMutual President (since 2009), Vice President (2005-2009), MMCI
Corporate Investors Subsidiary Trust and MMPI Subsidiary Trust; President (since
1500 Main Street 2009), Vice President (1998-2009), MassMutual Participation
P.O. Box 15189 Investors.
Springfield, MA 01115-5189
CHRISTOPHER A. DEFRANCIS (44) Vice Since 2010 Vice President and Secretary (since 2010) and Associate
President and Secretary (2008-2010) of the Trust; Co-General Counsel,
MassMutual Secretary Secretary and Managing Director (since 2010), Senior
Corporate Investors Counsel, Assistant Secretary and Managing Director (2010)
1500 Main Street and Assistant Secretary and Counsel (2008-2009), Babson
P.O. Box 15189 Capital; Counsel (2001-2009), Massachusetts Mutual Life
Springfield, MA 01115-5189 Insurance Company; Vice President and Secretary (since 2010)
and Assistant Secretary (2009-2010), MMCI Subsidiary Trust
and MMPI Subsidiary Trust; and Vice President and Secretary
(since 2010) and Associate Secretary (2008-2010), MassMutual
Participation Investors.
JAMES M. ROY (48) Vice Since 2005 Vice President and Chief Financial Officer (since 2005),
President Treasurer (2003-2005), and Associate Treasurer (1999-2003)
MassMutual and Chief of the Trust; Managing Director (since 2005), and Director
Corporate Investors Financial (2000-2005), Babson Capital; Trustee (since 2005), Treasurer
1500 Main Street Officer (since 2005), and Controller (2003-2005), MMCI Subsidiary
P.O. Box 15189 Trust and MMPI Subsidiary Trust; and Vice President and
Springfield, MA 01115-5189 Chief Financial Officer (since 2005), Treasurer (2003-2005)
and Associate Treasurer (1999-2003), MassMutual
Participation Investors.
JOHN T. DAVITT, JR. (43) Comptroller Since 2001 Comptroller (since 2001) of the Trust; Director (since
2000), Babson Capital; Controller (since 2005), MMCI
MassMutual Subsidiary Trust and MMPI Subsidiary Trust; and Comptroller
Corporate Investors (since 2001), MassMutual Participation Investors.
1500 Main Street
P.O. Box 15189
Springfield, MA 01115-5189
MELISSA M. LAGRANT (37) Chief Since 2006 Chief Compliance Officer (since 2006) of the Trust; Managing
Compliance Director (since 2005), Babson Capital; Vice President and
MassMutual Officer Senior Compliance Trading Manager (2003-2005), Loomis,
Corporate Investors Sayles & Company, L.P.; Assistant Vice President-Business
1500 Main Street Risk Management Group (2002-2003), and Assistant Vice
P.O. Box 15189 President-Investment Compliance (2001-2002), Zurich Scudder
Springfield, MA 01115-5189 Investments/Deutsche Asset Management; and Chief Compliance
Officer (since 2006), MassMutual Participation Investors.
DANIEL J. FLORENCE (38) Treasurer Since 2008 Treasurer (since 2008), Associate Treasurer (2006-2008) of
the Trust; Associate Director (since 2008), and Analyst
MassMutual (2000-2008), Babson Capital; and Treasurer (since 2008),
Corporate Investors Associate Treasurer (2006-2008), MassMutual Participation
1500 Main Street Investors.
P.O. Box 15189
Springfield, MA 01115-5189
--------------------------------------------------------------------------------
MassMutual Corporate Investors 2010 ANNUAL REPORT 53
MEMBERS OF THE BOARD OF
TRUSTEES
LEFT TO RIGHT: DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
Donald Glickman MassMutual Corporate Investors offers a Dividend
Chairman, Reinvestment and Share Purchase Plan. The Plan provides a
Donald Glickman & Company, Inc. simple way for shareholders to add to their holdings in the
Trust through the receipt of dividend shares issued by the
Robert E. Joyal Trust or through the investment of cash dividends in Trust
Retired President, shares purchased in the open market. A shareholder may join
Babson Capital Management LLC the Plan by filling out and mailing an authorization card to
Shareholder Financial Services, Inc., the Transfer Agent.
William J. Barrett
President, Participating shareholders will continue to participate
WJ Barrett Associates, Inc. until they notify the Transfer Agent, in writing, of their
desire to terminate participation. Unless a shareholder
Michael H. Brown* elects to participate in the Plan, he or she will, in
Private Investor effect, have elected to receive dividends and distributions
in cash. Participating shareholders may also make additional
Donald E. Benson* contributions to the Plan from their own funds. Such
Executive Vice President contributions may be made by personal check or other means
and Director, in an amount not less than $10 nor more than $5,000 per
Marquette Financial Companies quarter. Cash contributions must be received by the Transfer
Agent at least five days (but no more then 30 days) before
Dr. Corine T. Norgaard* the payment date of a dividend or distribution.
President,
Retirement Options Whenever the Trust declares a dividend payable in cash or
shares, the Transfer Agent, acting on behalf of each
Clifford M. Noreen participating shareholder, will take the dividend in shares
President, only if the net asset value is lower than the market price
Babson Capital Management LLC plus an estimated brokerage commission as of the close of
business on the valuation day. The valuation day is the last
Martin T. Hart day preceding the day of dividend payment.
Private Investor
When the dividend is to be taken in shares, the number of
Maleyne M. Syracuse shares to be received is determined by dividing the cash
Private Investor dividend by the net asset value as of the close of business
on the valuation date or, if greater than net asset value,
*Member of the Audit Committee 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
OFFICERS date.
Clifford M. Noreen The reinvestment of dividends does not, in any way, relieve
Chairman participating shareholders of any federal, state or local
tax. For federal income tax purposes, the amount reportable
Michael L. Klofas in respect of a dividend received in newly-issued shares of
President the Trust will be the fair market value of the shares
received, which will be reportable as ordinary income and/or
James M. Roy capital gains.
Vice President & Chief
Financial Officer As compensation for its services, the Transfer Agent
receives a fee of 5% of any dividend and cash contribution
Christopher A. DeFrancis (in no event in excess of $2.50 per distribution per
Vice President shareholder.)
& Secretary
Any questions regarding the Plan should be addressed to
Jill A. Fields Shareholder Financial Services, Inc., Agent for MassMutual
Vice President Corporate Investors' Dividend Reinvestment and Share
Purchase Plan, P.O. Box 173673, Denver, CO 80217-3673.
Michael P. Hermsen
Vice President
Mary Wilson Kibbe
Vice President
Richard E. Spencer, II
Vice President
Daniel J. Florence
Treasurer
John T. Davitt, Jr.
Comptroller
Melissa M. LaGrant
Chief Compliance Officer
--------------------------------------------------------------------------------
54 MassMutual Corporate Investors 2010 ANNUAL REPORT
[LOGO] MASSMUTUAL CORPORATE INVESTORS
2010 ANNUAL REPORT
CI5501
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,
2010 2009
------------- -------------
Audit Fees $ 52,500 $ 50,000
Audit-Related Fees 0 0
Tax Fees 44,100 42,000
All Other Fees 0 0
------------- -------------
Total Fees $ 96,600 $ 92,000
============= =============
Non-Audit Fees Billed to Babson Capital and MassMutual
KPMG LLP KPMG LLP
Year Ended Year Ended
December 31, December 31,
2010 2009
------------- -------------
Audit-Related Fees $ 937,100 $ 1,108,792
Tax Fees 47,100 25,500
All Other Fees 0 0
------------- -------------
Total Fees $ 984,200 $ 1,134,292
============= =============
The category "Audit-Related Fees" reflects fees billed by KPMG for
various non-audit and non-tax services rendered to the Registrant, Babson
Capital Management LLC ("Babson Capital"), and Massachusetts Mutual Life
Insurance Company ("MassMutual"), such as SAS 70 review, IFRS consulting and
agreed upon procedures reports. Preparation of Federal, state and local income
tax returns and tax compliance work are representative of the fees reported in
the "Tax Fees" category. The category "All Other Fees" represents fees billed by
KPMG for 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 2009, 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 has also reviewed the aggregate fees billed for
professional services rendered by KPMG for 2009 and 2010 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 was compatible with maintaining
the principal accountant's independence.
The 2009 fees billed represent final 2009 amounts, which may differ
from the preliminary figures available as of the filing date of the Registrant's
2010 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 Registrant's 2010 Annual
Form N-CSR, but are now properly included in the 2009 fees billed to the
Registrant, 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 the
U.S. Securities and Exchange Commission. The Audit Committee operates pursuant
to a written Audit Committee Charter, which is available (1) on the Registrant's
website, www.babsoncapital.com/mci; and (2) without charge, upon request, by
calling, toll-free 866-399-1516. The current members of the Audit Committee are
Donald E. Benson, Michael H. Brown and Corine T. Norgaard.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments for the Registrant is included as part of
this report to shareholders under Item 1 of this Form N-CSR.
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 acted upon (voted or abstained) solely in the best interest of
its clients (i.e. in a manner it believes is most likely to enhance the economic
value of the underlying securities held in client accounts). To implement this
general principle, Babson Capital has engaged a proxy service provider (the
"Service Provider"). The Service Provider is responsible for processing and
maintaining records of proxy votes. In addition, the Service Provider has
retained the services of an independent third party research provider (the
"Research Provider") to provide research and recommendations on proxy voting. It
is Babson Capital's Proxy Voting Policy to generally vote proxies in accordance
with the recommendations of the Research Provider, or, in cases where the
Research Provider has not made any recommendations with respect to a proxy, in
accordance with the Research Provider's proxy voting guidelines (the
"Guidelines"). If a proxy involves an issue on which the Research Provider has
not made a recommendation or has not addressed in the Guidelines, it will be
analyzed on a case-by-case basis.
Babson Capital recognizes, however, that there may be times when Babson
Capital determines that it may be in the best interest of clients holding the
securities to (1) vote against the Research Provider's recommendations or (2) in
cases where the Research Provider has not provided Babson Capital with any
recommendations with respect to a proxy, vote against the Research Provider's
Guidelines. Babson Capital may vote, in whole or in part, against the Research
Provider's recommendations or the Research Provider's Guidelines, as applicable.
The procedures set forth in the Proxy Voting Policy are designed to ensure that
votes against the Research Provider's recommendations or Guidelines have been
made in the best interest of clients and are not the result of any material
conflict on interest (a "Material Conflict"). For purposes of the Proxy Voting
Policy, a Material Conflict shall mean any position, relationship or interest,
financial or otherwise, of Babson Capital (or any person authorized under the
Proxy Voting Policy to vote proxies on behalf of Babson Capital) that would or
could reasonably be expected to affect Babson Capital's (or such person's)
independence or judgment concerning how to vote proxies.
Summary of Babson Capital's Proxy Voting Procedures
---------------------------------------------------
Babson Capital will vote all client proxies for which it has proxy
voting discretion in accordance with the Research Provider's recommendations or
Guidelines, unless (i) a person authorized by the Best Execution and Proxy
Committee (each a "Proxy Analyst"), the Best Execution and Proxy Committee or a
designated member of the Best Execution and Proxy Committee, as applicable,
determines that it is in the client's best interest to vote against the Research
Provider's recommendation or Guidelines or (ii) Babson Capital is unable or
determines not to vote a proxy in accordance with the Proxy Voting Policy. In
these cases: if (i) a Proxy Analyst recommends that a proxy should be voted
against the Research Provider's recommendation or Guidelines, (ii) no other
Proxy Analyst reviewing such proxy disagrees with such recommendation, and (iii)
no known Material Conflict is identified by the Proxy Analyst(s) or the Proxy
Administrator, the Proxy Administrator will vote the proxy or post the proxy for
voting in accordance with the Proxy Analyst's recommendation. Otherwise, the
proxy is to be submitted to a member of the Best Execution and Proxy Committee,
who shall determine how to vote the proxy unless (i) the Proxy Analyst or Proxy
Administrator has identified a Babson Capital Material Conflict or (ii) said
Best Execution and Proxy Committee member has identified a Material Conflict
personal to him or herself or a Babson Capital Material Conflict. In such cases,
the proxy shall be submitted to the Bet Execution and Proxy Committee, which may
authorize a vote against the Research Provider's recommendation or Guidelines
only if the Best Execution and Proxy Committee determines that such vote is in
the client's best interests.
Nothing herein shall preclude Babson Capital from splitting a vote
among different advisory clients in those cases where Babson Capital deems it
appropriate.
No associate, officer, director or board of managers member of Babson
Capital or its affiliates (other than those assigned such responsibilities under
the Proxy Voting Policy) may influence how Babson Capital votes client proxies,
unless such person has been requested to provide such assistance by a Proxy
Analyst or Best Execution and Proxy Committee member and has disclosed any know
Material Conflict. Any pre-vote communications prohibited by the Proxy Voting
Policy shall be reported to a Best Execution and Proxy Committee member prior to
voting and to Babson Capital's Chief Compliance Officer or General Counsel.
Obtaining a Copy of the Proxy Voting Policy
-------------------------------------------
Clients may obtain a copy of Babson Capital's Proxy Voting Policy and
information about how Babson Capital voted proxies related to their securities,
free of charge, by contacting the Chief Compliance Officer, Babson Capital
Management LLC, Independence Wharf, 470 Atlantic Avenue, Boston, MA 02210, or
calling toll-free, 1-877-766-0014.
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. Michael L. Klofas serves as the President of the
Registrant (since 2009) and as one of its Portfolio Managers. Mr. Klofas began
his service to the Registrant in 1998 as a Vice President. With over 25 years of
industry experience, Mr. Klofas is a Managing Director of the Mezzanine and
Private Equity Group of Babson Capital Management LLC ("Babson Capital"). Mr.
Klofas joined MassMutual in 1988. 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. Klofas also presently serves as
President of MassMutual Participation Investors, another closed-end management
investment company advised by Babson Capital.
PORTFOLIO MANAGEMENT TEAM. Mr. Klofas 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 is a Vice President of the Registrant and a Managing
Director of Babson Capital who oversees the Private Finance Group and manages
Babson Capital's Mezzanine Investment and Private Equity Investments Team, 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 1998. 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. Spencer is a Vice President of the Registrant and a Managing
Director of Babson Capital who also manages Babson Capital's Mezzanine and
Private Equity Investments Team. 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 the Registrant since 2002. 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.
Jill A. Fields is responsible for the day-to-day management of the
Registrant's public high yield and investment grade fixed income portfolio. Ms.
Fields has been a Vice President of the Registrant since 2006. Ms. Fields is a
Managing Director of Babson Capital with over 20 years of industry experience in
high yield total return structured credit leveraged loans and private placement
investing. 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)
-------------- -------- -------- -------------- ------------ ----------------
Registered
Clifford M. Investment
Noreen (B) Companies 1 $119.5 million 0 N/A
------------------------------------------------------------------------------
Other Pooled
Investment
Vehicles 1 $4.3 million 1 $4.3 million
------------------------------------------------------------------------------
Other
Accounts 0 N/A 0 N/A
------------------------------------------------------------------------------
Registered
Jill A. Investment
Fields Companies 4 $400.4 million 0 N/A
------------------------------------------------------------------------------
Other Pooled
Investment
Vehicles 1 $45 million 1 $45 million
------------------------------------------------------------------------------
Other
Accounts (C) 5 $597.3 million 0 N/A
------------------------------------------------------------------------------
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)
-------------- -------- -------- -------------- ------------ ----------------
Registered
Michael P. Investment
Hermsen Companies 1 $119.5 million 0 N/A
------------------------------------------------------------------------------
Other Pooled
Investment
Vehicles (D) 5 $1 billion 5 $1 billion
------------------------------------------------------------------------------
Other
Accounts 0 N/A 0 N/A
------------------------------------------------------------------------------
Registered
Michael L. Investment
Klofas Companies 1 $119.5 million 0 N/A
------------------------------------------------------------------------------
Other Pooled
Investment
Vehicles (D) 5 $1 billion 5 $1 billion
------------------------------------------------------------------------------
Other
Accounts 0 N/A 0 N/A
------------------------------------------------------------------------------
Registered
Richard E. Investment
Spencer, II Companies 1 $119.5 million 0 N/A
------------------------------------------------------------------------------
Other Pooled
Investment
Vehicles (D) 5 $1 billion 5 $1 billion
------------------------------------------------------------------------------
Other
Accounts 0 N/A 0 N/A
(A) Account asset size has been calculated as of December 31, 2010.
(B) Mr. Noreen, as head of Babson Capital's Fixed Income Group, has overall
responsibility for all corporate credit related investments, including
public and private bonds, 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 Fixed Income Group.
(C) Ms. Fields manages the high yield sector of the general investment
account of Massachusetts Mutual Life Insurance Company and C.M. Life
Insurance Company; however these assets are not represented in the
table above.
(D) Messrs. Hermsen, Klofas and Spencer manage private placement mezzanine
debt securities for the general investment account of Massachusetts
Mutual Life Insurance Company and C.M. Life Insurance Company; however
these assets are not represented in the table above.
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 advisory accounts. These conflicts may
be heightened to the extent the individual, Babson Capital and/or an affiliate
has an investment in one or more of such accounts or an interest in the
performance of one or more of such accounts. Babson Capital has identified (and
summarized below) areas where material conflicts of interest are most likely to
arise, and has adopted polices and procedures that it believes are reasonably
designed to address such conflicts.
Babson Capital or its affiliates, including MassMutual and its
affiliates, may from time to time, acting as principal, buy securities or other
investments for itself from or sell securities or other investments it owns to
its advisory clients. Likewise, Babson Capital may either directly or on behalf
of MassMutual, purchase and/or hold securities or other investments that are
subsequently sold or transferred to advisory clients. Babson Capital has a
conflict of interest in connection with a transaction where it or an affiliate
is acting as principal since it may have an incentive to favor itself or its
affiliates over its advisory clients in connection with the transaction. To
address these conflicts of interest, Babson Capital has adopted certain policies
and procedures, including but not limited to policies and procedures on
transactions with affiliates. Any such transaction will be consistent with
Babson Capital's fiduciary obligation to act in the best interests of its
clients, including its ability to obtain best execution in connection with the
transaction, and will be in compliance with applicable legal and regulatory
requirements.
Babson Capital may effect cross-trades on behalf of its advisory
clients whereby one advisory client buys securities or other investments from or
sells securities or other investments to another advisory client. Babson Capital
may also effect cross-transactions involving advisory accounts or funds in which
it or its affiliates, including MassMutual, and their respective employees, have
an ownership interest or for which Babson Capital is entitled to earn a
performance or incentive fee. As a result, Babson Capital has a conflict of
interest in connection with the cross-transaction since it may have an incentive
to favor the advisory client or fund in which it or its affiliate has an
ownership interest and/or is entitled to a performance or incentive fee. To
address these conflicts of interest, Babson Capital has adopted certain policies
and procedures, including but not limited to policies and procedures on
transactions with affiliates. Any such cross-transaction will be consistent with
Babson Capital's fiduciary obligation to act in the best interests of each of
its advisory clients, including its ability to obtain best execution for each
advisory client in connection with the cross-trade transaction, and will be in
compliance with applicable legal and regulatory requirements. Babson Capital
will not receive a commission or any other remuneration (other than its advisory
fee) for effecting cross-transactions between advisory clients.
Babson Capital may invest client assets in securities or other
investments that are also held by (i) Babson Capital or its affiliates,
including MassMutual, (ii) other Babson Capital advisory accounts, (iii) funds
or accounts in which Babson Capital or its affiliates or their respective
employees have an ownership or economic interest or (iv) employees of Babson
Capital or its affiliates. Babson Capital may also, on behalf of its advisory
clients, invest in the same or different securities or instruments of issuers in
which (i) Babson Capital or its affiliates, including MassMutual, (ii) other
Babson Capital advisory accounts, (iii) funds or accounts in which Babson
Capital, its affiliates, or their respective employees have an ownership or
economic interest or (iv) employees of Babson Capital or its affiliates, have an
ownership interest as a holder of the debt, equity or other instruments of the
issuer. Babson Capital has a conflict of interest in connection with any such
transaction since investments by its advisory clients may directly or indirectly
benefit Babson Capital and/or its affiliates and employees by potentially
increasing the value of the securities or instruments it holds in the issuer.
Any investment by Babson Capital on behalf of its advisory clients will be
consistent with its fiduciary obligations to act in the best interests of its
advisory clients, and otherwise be consistent with such clients' investment
objectives and restrictions.
Babson Capital or its affiliates may also recommend that clients invest
in registered or unregistered investment companies, including private investment
funds such as hedge funds, private equity funds or structured funds, (i) advised
by Babson Capital or an affiliate, (ii) in which Babson Capital, an affiliate or
their respective employees has an ownership or economic interest or (iii) with
respect to which Babson Capital or an affiliate has an interest in the entity
entitled to receive the fees paid by such funds. Babson Capital has a conflict
of interest in connection with any such recommendation since it may have an
incentive to base its recommendation to invest in such investment companies or
private funds on the fees that Babson Capital or its affiliates would earn as a
result of the investment by its advisory clients in the investment companies or
private funds. Any recommendation to invest in a Babson Capital advised fund or
other investment company will be consistent with Babson Capital's fiduciary
obligations to act in the best interests of its advisory clients, consistent
with such clients' investment objectives and restrictions. Babson Capital may,
in certain limited circumstances, offer to clients that invest in private
investment funds that it advises an equity interest in entities that receive
advisory fees and carried profits interest from such funds.
Babson Capital may permit certain of its portfolio managers and other
employees to invest in private investment funds advised by Babson Capital or its
affiliates and/or share in the performance or incentive fees received by Babson
Capital from such funds. If the portfolio manager or other employee was
responsible for both the portfolio management of the private fund and other
Babson Capital advisory accounts, such person would have a conflict of interest
in connection with investment decisions since the person may have an incentive
to direct the best investment ideas, or to allocate trades, in favor of the fund
in which he or she is invested or otherwise entitled to share in the performance
or incentive fees received from such fund. To address these conflicts of
interest, Babson Capital has adopted a policy governing side by side management
of private investment funds and other advisory accounts, which policy requires,
among others things, that Babson Capital treat each of its advisory clients in a
manner consistent with its fiduciary obligations and prohibits Babson Capital
from favoring any particular advisory account as a result of the ownership or
economic interests of Babson Capital, its affiliates or employees, in such
advisory account. Any investment by a Babson Capital employee in one of its
private funds is also governed by Babson Capital's employee co-investment
policy.
As noted above, Babson Capital's portfolio managers are often
responsible for the day-to-day management of multiple accounts, including, among
others, separate accounts for institutional clients, closed-end and open-end
registered investment companies, and/or private investment funds (such as hedge
funds, private equity funds and structured funds), as well as for proprietary
accounts of Babson Capital and its affiliates, including MassMutual and its
affiliates. The potential for material conflicts of interest exist whenever a
portfolio manager has responsibility for the day-to-day management of multiple
advisory accounts. These conflicts may be heightened to the extent a portfolio
manager is responsible for managing a proprietary account for Babson Capital or
its affiliates or where the portfolio manager, Babson Capital and/or an
affiliate has an investment in one or more of such accounts or an interest in
the performance of one or more of such accounts (e.g., through the receipt of a
performance or incentive fee).
Such potential conflicts include those relating to allocation of
investment opportunities. For example, it is possible that an investment
opportunity may be suitable for more than one account managed by Babson Capital,
but may not be available in sufficient quantities for all accounts to
participate fully. Similarly, there may be limited opportunity to sell an
investment held by multiple accounts. A conflict arises where the portfolio
manager has an incentive to treat an account preferentially because the account
pays Babson Capital or its affiliates a performance-based fee or the portfolio
manager, Babson Capital or an affiliate has an ownership or other economic
interest in the account. As noted above, Babson Capital also acts as an
investment manager for certain of its affiliates, including MassMutual. These
affiliate accounts co-invest jointly and concurrently with Babson Capital's
other advisory clients and therefore share in the allocation of such investment
opportunities. To address these conflicts of interest associated with the
allocation of trading and investment opportunities, Babson Capital has adopted
an investment allocation policy and trade allocation procedures that govern the
allocation of portfolio transactions and investment opportunities across
multiple advisory accounts, including affiliated accounts. In addition, as noted
above, to address these conflicts of interest, Babson Capital has adopted a
policy governing side-by-side management of private investment funds and other
advisory accounts, which policy requires, among others things, that Babson
Capital treat each of its advisory clients in a manner consistent with its
fiduciary obligations and prohibits Babson Capital from favoring any particular
advisory account as a result of the ownership or economic interests of Babson
Capital, its affiliates or employees, in such advisory accounts. Any investment
by a Babson Capital employee in one of its private funds is also governed by
Babson Capital's employee co-investment policy.
Potential material conflicts of interest may also arise related to the
knowledge and timing of an account's trades, investment opportunities and broker
selection. Babson Capital and its portfolio managers have information about the
size, timing and possible market impact of the trades of each account they
manage. It is possible that portfolio managers could use this information for
their personal advantage and/or the advantage or disadvantage of various
accounts which they manage. For example, a portfolio manager could, or cause a
favored account to, "front run" an account's trade or sell short a security for
an account immediately prior to another accounts sale of that security. To
address these conflicts, Babson Capital has adopted policies and procedures and
a Code of Ethics governing employees' personal securities transactions, the use
of short sales, and side-by-side management of private investment funds and
other advisory accounts.
Potential material conflicts of interest may also arise if a trade
error occurs in a client account. A trade error is deemed to occur if there is a
deviation by Babson Capital from the applicable standard of care in connection
with the placement, execution or settlement of a trade for an advisory account
that results in (1) Babson Capital purchasing securities not permitted or
authorized by a client's investment advisory agreement or otherwise failing to
follow a client's specific investment directives; (2) Babson Capital purchasing
or selling the wrong security or the wrong amount of securities on behalf of a
client's account; or (3) Babson Capital purchasing or selling securities for, or
allocating securities to, the wrong client account. When correcting these
errors, conflicts of interest between Babson Capital and its advisory accounts
may arise as decisions are made on whether to cancel, reverse or reallocate the
erroneous trades. In order to address these conflicts, Babson Capital has
adopted policies and procedures governing the resolution of trading errors, and
will follow these policies and procedures in order to ensure that trade errors
are handled promptly and appropriately and that no client account is harmed by
an erroneous trade.
With respect to securities transactions for most of the accounts it
manages, Babson Capital determines which broker to use to execute each order,
consistent with its fiduciary duty to seek best execution of the transaction.
Babson Capital manages certain accounts, however, for clients who limit its
discretion with respect to the selection of brokers or direct it to execute such
client's transaction through a particular broker. In these cases, trades for
such an account in a particular security may be placed separately from, rather
than aggregated with, those in the same security for 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 one or more of the other account(s) involved. Babson
Capital has policies and procedures that address best execution and directed
brokerage arrangements.
Babson Capital and its portfolio managers or employees may have other
actual or potential conflicts of interest in managing an advisory account, and
the list above is not a complete description of every conflict of interest that
could be deemed to exist.
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, Babson Capital
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 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
Babson Capital 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 portfolio 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, 2010, members of the Portfolio
Team beneficially owned the following dollar range of equity securities in the
Registrant:
Dollar Range of Beneficially
Portfolio Team: Owned* Equity Securities of the Registrant:
--------------- -------------------------------------------
Clifford M. Noreen Over $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 $10,001-$50,000
* Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2)
under the Securities Exchange Act of 1934, as amended. (Shares "beneficially
owned" include the number of shares of the Registrant represented by the value
of a Registrant-related investment option under Babson Capital's non-qualified
deferred compensation plan for certain officers of Babson Capital (the
"Plan"). The Plan has an investment option that derives its value from the
market value of the Registrant's shares. However, neither the Plan nor the
participation in the Plan has an actual ownership interest in the Registrant's
shares.)
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/ Michael L. Klofas
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Michael L. Klofas, President
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Date: March 7, 2011
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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/ Michael L. Klofas
----------------------------------
Michael L. Klofas, President
----------------------------------
Date: March 7, 2011
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By: /s/ James M. Roy
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James M. Roy, Vice President and
Chief Financial Officer
----------------------------------
Date: March 7, 2011
------------------------------