TO OUR SHAREHOLDERS
October 31, 2003
We are pleased to present the September 30, 2003 Quarterly Report of MassMutual
Corporate Investors (the "Trust"). The Trust's Board of Trustees declared a
quarterly dividend of 36 cents per share, payable on November 14, 2003 to
shareholders of record on October 31, 2003. The Trust paid its shareholders a
dividend of 36 cents per share in the previous quarter.
U.S. equity markets, as measured by several broad market indices, continued to
post positive returns. During the quarter ended September 30, 2003, the Dow
Jones Industrial Average and the Russell 2000 Index increased 3.77% and 9.08%,
respectively. In contrast to U.S. equity markets, U.S. fixed income markets, as
measured by selected indices, posted mixed returns for the quarter. The Lehman
Brothers Government/Credit Index decreased 0.50%, while the Lehman Brothers U.S.
Corporate High Yield Index increased 2.77% for the quarter.
For the quarter ended September 30, 2003, the Trust earned 35 cents per share
compared to 31 cents per share in the previous quarter. The Trust's net assets
as of September 30th totaled $195,578,028 or $22.09 per share compared to
$185,398,157 or $20.98 per share on June 30, 2003. This translated into
portfolio returns of 7.13% for the quarter and 20.41% for the 1- year period
ending September 30, 2003, based on change in net assets, assuming the
reinvestment of dividends and distributions. Long term, the Trust's portfolio
had average annualized returns of 10.04%, 14.31%, and 14.60% for the 5-, 10- and
25- year time periods ended September 30, 2003, respectively, again, based on
change in net assets, assuming the reinvestment of all dividends and
distributions.
The Trust closed three new private placement transactions during the third
quarter of 2003, totaling approximately $6.4 million. The Trust purchased
securities of Euro-Pro Corporation, Synventive Equity LLC and U S M Holdings
Corp. The weighted average coupon of these investments was 12.59%. (A brief
description of these investments can be found in the Schedule of Investments.)
Thank you for your continued interest in and support of MassMutual Corporate
Investors.
Sincerely,
/s/ Roger W. Crandall
--------------------------
Roger W. Crandall
President
--------------------------------------------------------------------------------
1
CONSOLIDATED STATEMENT OF MASSMUTUAL CORPORATE INVESTORS
ASSETS AND LIABILITIES
September 30, 2003
(Unaudited)
ASSETS:
Investments
(See Consolidated Schedule of Investments)
Corporate restricted securities at fair value
(Cost 2003 - $196,184,128) $ 179,005,589
Corporate public securities at market value
(Cost 2003 - $24,727,630) 23,102,204
Short-term securities at cost plus earned discount which
approximates market value 17,457,421
-------------
219,565,214
Cash 337,962
Interest and dividends receivable 4,185,473
Receivable for investments sold 2,179,160
Other assets 6,346
-------------
TOTAL ASSETS $ 226,274,155
=============
LIABILITIES:
Payable for investments purchased $ 7,776,989
Management fee payable 736,178
Note payable 20,000,000
Interest payable 187,711
Accrued expenses 172,656
Accrued taxes payable 1,822,593
-------------
TOTAL LIABILITIES 30,696,127
=============
NET ASSETS:
Common shares, par value $1.00 per share;
an unlimited number authorized 8,855,280
Additional paid-in capital 101,457,746
Retained net realized gain on investments, prior years 100,547,585
Undistributed net investment income 4,331,586
Undistributed net realized loss on investments (810,204)
Net unrealized depreciation of investments (18,803,965)
-------------
TOTAL NET ASSETS 195,578,028
-------------
TOTAL LIABILITIES AND NET ASSETS $ 226,274,155
=============
COMMON SHARES ISSUED AND OUTSTANDING 8,855,280
=============
NET ASSET VALUE PER SHARE $ 22.09
=============
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
2
CONSOLIDATED STATEMENT OF OPERATIONS MASSMUTUAL CORPORATE INVESTORS
For the nine months ended September 30, 2003
(Unaudited)
INVESTMENT INCOME:
Interest $ 12,542,528
Dividends 239,575
-------------
TOTAL INVESTMENT INCOME 12,782,103
-------------
EXPENSES:
Management fees 2,112,325
Trustees' fees and expenses 83,099
Transfer agent/registrar's expenses 36,000
Interest 1,136,548
Reports to shareholders 101,800
Audit and legal 157,900
Other 286,146
-------------
TOTAL EXPENSES 3,913,818
-------------
NET INVESTMENT INCOME ($1.00 per share) 8,868,285
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 3,667,264
Net change in unrealized depreciation of investments 19,420,033
Provision for federal income taxes (1,822,593)
-------------
NET GAIN ON INVESTMENTS 21,264,704
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 30,132,989
=============
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
3
CONSOLIDATED STATEMENT OF CASH FLOWS MASSMUTUAL CORPORATE INVESTORS
For the nine months ended September 30, 2003
(Unaudited)
NET DECREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received $ 10,899,444
Interest expense paid (1,136,548)
Operating expenses paid (2,614,106)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,148,790
Cash flows from investing activities:
Purchases/Proceeds/Maturities from short-term
portfolio securities, net (6,528,674)
Purchase of portfolio securities (65,322,065)
Proceeds from disposition of portfolio securities 72,745,816
-------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 895,077
-------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES 8,043,867
-------------
Cash flows from financing activities:
Increase in receipts for shares issued on
reinvestment of dividends 778,862
Cash dividends paid from net investment income (9,536,145)
-------------
NET CASH USED FOR FINANCING ACTIVITIES (8,757,283)
-------------
NET DECREASE IN CASH (713,416)
Cash - beginning of year 1,051,378
-------------
CASH - END OF PERIOD $ 337,962
=============
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET
CASH FROM OPERATING AND INVESTING ACTIVITIES:
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 30,132,989
-------------
Increase in investments (30,053,460)
Increase in interest and dividends receivable, net (867,090)
Increase in receivable for investments sold (923,591)
Increase in other assets (6,346)
Increase in payable for investments purchased 7,776,989
Increase in management fee payable 92,407
Increase in accrued expenses 69,376
Increase in accrued taxes payable 1,822,593
-------------
TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS (22,089,122)
-------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES $ 8,043,867
=============
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
4
CONSOLIDATED STATEMENTS OF MASSMUTUAL CORPORATE INVESTORS
CHANGES IN NET ASSETS
For the nine months ended September 30, 2003 and
the year ended December 31, 2002
For the nine
months ended For the
09/30/2003 year ended
(Unaudited) 12/31/2002
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 8,868,285 $ 13,504,732
Net realized gain (loss) on investments 3,667,264 (2,296,178)
Net change in unrealized depreciation of investments 19,420,033 (2,951,901)
Provision for federal income taxes (1,822,593) --
------------- -------------
Net increase in net assets resulting from operations 30,132,989 8,256,653
Net increase in shares of beneficial interest transactions 778,862 1,885,841
Dividends to shareholders from:
Net investment income (2003 - $.72 per share; 2002 -
$1.44 per share) (6,362,254) (12,611,444)
Net realized gains on investments (2002 - $.18 per share) -- (1,615,166)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 24,549,597 (4,084,116)
NET ASSETS, BEGINNING OF YEAR 171,028,431 175,112,547
------------- -------------
NET ASSETS, END OF PERIOD/YEAR (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME IN 2003 - $4,331,586; 2002 - $1,825,555) $ 195,578,028 $ 171,028,431
============= =============
See Notes to Financial Statements.
--------------------------------------------------------------------------------
5
CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS MASSMUTUAL CORPORATE INVESTORS
Selected data for each common share outstanding:
For the
nine months
ended For the years ended December 31,
09/30/2003 ----------------------------------------------------
(Unaudited) 2002 2001 2000 1999 1998
--------- -------- -------- -------- -------- --------
Net asset value:
Beginning of year $ 19.40 $ 20.07 $ 20.74 $ 22.00 $ 23.87 $ 22.65
-------- -------- -------- -------- -------- --------
Net investment income 1.00 1.53 1.70 1.96 1.80 1.62
Net realized and unrealized
gain (loss) on investments 2.40 (0.59) (0.53) (0.46) (0.94) 1.51
-------- -------- -------- -------- -------- --------
Total from investment operations 3.40 0.94 1.17 1.50 0.86 3.13
-------- -------- -------- -------- -------- --------
Dividends from net investment
income to common shareholders (0.72) (1.44) (1.79) (1.96) (1.73) (1.60)
Distributions from net realized
gain on investments to common
shareholders 0.00 (0.18) (0.09) (0.80) (1.00) (0.31)
Change from issuance of shares 0.01 0.01 0.04 0.00 0.00 0.00
-------- -------- -------- -------- -------- --------
Total distributions (0.71) (1.61) (1.84) (2.76) (2.73) (1.91)
-------- -------- -------- -------- -------- --------
Net asset value:
End of period/year $ 22.09 $ 19.40 $ 20.07 $ 20.74 $ 22.00 $ 23.87
-------- -------- -------- -------- -------- --------
Per share market value:
End of period/year $ 22.10 $ 19.49 $ 20.70 $ 22.00 $ 21.38 $ 23.31
======== ======== ======== ======== ======== ========
Total investment return
Market value 17.42%* 1.35% 1.88% 17.55% 7.35% 0.77%
Net asset value 17.91%* 4.80% 5.91% 7.28% 7.53% 17.12%
Net assets (in millions):
End of period/year $ 195.58 $ 171.03 $ 175.11 $ 178.13 $ 188.96 $ 205.02
Ratio of operating expenses to
average net assets 1.53%* 1.82% 1.72% 1.47% 1.30% 1.62%
Ratio of interest expense to
average net assets 0.63%* 0.86% 0.84% 0.58% 0.52% 0.52%
Ratio of total expenses to
average net assets 2.16%* 2.68% 2.56% 2.05% 1.82% 2.14%
Ratio of net investment income
to average net assets 4.90%* 7.65% 8.20% 8.56% 7.63% 6.76%
Portfolio turnover 38.21%* 34.02% 24.48% 59.75% 68.04% 60.14%
*Percentages represent results for the period and are not annualized.
All per share amounts have been restated after giving effect to the two-for-one
split on the Trust's common shares authorized on December 19, 1997 effective
January 20, 1998.
See Notes to Financial Statements
--------------------------------------------------------------------------------
6
CONSOLIDATED SCHEDULE OF INVESTMENTS MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES - 91.53%:(A) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
PRIVATE PLACEMENT INVESTMENTS - 83.38%
ADORN, INC.
A manufacturer of wall panels, cabinets, moldings and
countertops for houses and recreational vehicles.
12.5% Subordinated Note due 2010 $ 2,125,000 02/29/00 $ 1,894,112 $ 2,165,523
Warrant, exercisable until 2010, to purchase
common stock at $.02 per share (B) 364 shs. 02/29/00 307,759 192,198
------------ ------------
2,201,871 2,357,721
------------ ------------
AMERICA'S BODY COMPANY, INC.
A designer and manufacturer of commercial work vehicles.
12% Senior Subordinated Note due 2007 (B) $ 3,500,000 11/02/98 3,181,210 1,400,000
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 58 shs. 11/02/98 513,333 1
------------ ------------
3,694,543 1,400,001
------------ ------------
AMES TRUE TEMPER GROUP
A manufacturer and distributor of non-powered lawn and
garden tools and accessories in North America.
13% Senior Subordinated Note due 2010 $ 1,888,889 01/14/02 1,883,871 1,992,778
10% Preferred Stock 161 shs. * 161,093 174,057
Class A Common Stock (B) 2,105 shs. 02/28/02 2,105 1,894
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 5,018 shs. 01/14/02 5,018 50
------------ ------------
2,052,087 2,168,779
------------ ------------
BEACON MEDICAL PRODUCTS, INC.
A designer, manufacturer and marketer of medical air and
gas distribution systems.
Senior Secured Floating Rate Revolving Credit
Facility due 2007 $ 62,847 04/09/02 62,847 62,371
Senior Secured Tranche A Floating Rate Note due 2008 $ 1,017,051 04/09/02 1,017,051 1,011,792
12% Senior Secured Note due 2010 $ 721,196 04/09/02 607,020 747,224
Limited Partnership Interest of Riverside Capital
Appreciation Fund IV, L.P. (B) 2.29% int. 04/09/02 152,329 137,096
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 1,390 shs. 04/09/02 127,497 14
------------ ------------
1,966,744 1,958,497
------------ ------------
BETA BRANDS LTD
A manufacturer of hard candy and chocolate-coated
products sold primarily to the Canadian market.
Secured Floating Rate Note due 2010 (B) $ 3,505,090 05/02/03 525,764 525,764
Limited Partnership Interest of
CM Equity Partners (B) 6.27 % int. 12/22/97 833,182 --
Common Stock (B) 930,000 shs. 05/02/03 930 --
------------ ------------
1,359,876 525,764
------------ ------------
*02/28/02 and 11/15/02.
--------------------------------------------------------------------------------
7
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
BETTER MINERALS & AGGREGATES
A producer of high grade industrial and specialty silica
sands.
14% Redeemable Preferred Stock (B) 997 shs. 09/30/99 $ 545,858 $ 108,991
Convertible Preferred Stock Series A and B, convertible
into common stock at $9.26 per share (B) 126,003 shs. 12/19/96 1,166,700 --
Common Stock (B) 20,027 shs. 09/30/99 799,068 --
Warrants, exercisable until 2005 and 2010, to
purchase common stock at $.01 per share (B) 11,399 shs. * 128,502 --
------------ ------------
2,640,128 108,991
------------ ------------
C & M CONVEYOR, INC.
A manufacturer and supplier of material handling systems
to the corrugated sheet and container industry.
9.5% Senior Secured Term Note due 2007 $ 1,233,434 09/13/02 1,233,434 1,239,301
11% Senior Subordinated Note due 2010 $ 838,102 09/13/02 785,488 846,366
Common Stock (B) 316,265 shs. 09/13/02 316,265 253,012
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 137,175 shs. 09/13/02 60,250 1,372
------------ ------------
2,395,437 2,340,051
------------ ------------
CAINS FOODS, L.P.
A producer of mayonnaise and sauce products for both the
retail and food service markets.
8% Junior Subordinated Convertible
Note due 2004, convertible into partnership
points at $1,388.89 per point $ 108,108 09/29/95 108,108 113,362
Warrant, exercisable until 2006, to purchase
partnership points at $.01 per point (B) 39 pts. 09/29/95 50,261 --
------------ ------------
158,369 113,362
------------ ------------
CAPESUCCESS LLC
A provider of diversified staffing services.
Preferred Membership Interests (B) 1,882 uts. 04/29/00 8,396 420
Common Membership Interests (B) 24,318 uts. 04/29/00 108,983 5,442
------------ ------------
117,379 5,862
------------ ------------
CAPITOL SPECIALTY PLASTICS, INC.
A producer of desiccant strips used for packaging
pharmaceuticals products.
Common Stock (B) 109 shs. ** 503 403
------------ ------------
COEUR, INC.
A producer of proprietary, disposable power injection
syringes.
8.75% Senior Secured Term Note due 2010 $ 570,652 04/30/03 570,652 576,711
11.5% Senior Subordinated Note due 2011 $ 424,819 04/30/03 385,260 431,265
Common Stock (B) 126,812 shs. 04/30/03 126,812 114,131
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 87,672 shs. 04/30/03 40,804 877
------------ ------------
1,123,528 1,122,984
------------ ------------
*12/19/96 and 09/30/99.
**12/30/97 and 05/29/99.
--------------------------------------------------------------------------------
8
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
COINING CORPORATION OF AMERICA LLC
A manufacturer of close tolerance parts and metal
stampings.
Senior Secured Floating Rate Revolving Credit
Facility due 2006 $ 97,222 01/07/02 $ 97,222 $ 94,261
Senior Secured Floating Rate Tranche A Note due 2007 $ 1,155,864 06/26/01 1,155,864 1,109,246
12% Senior Secured Tranche B Note due 2008 $ 648,148 06/26/01 586,217 659,432
Limited Partnership Interest (B) 6.38% int. 06/26/01 324,074 259,259
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 107,036 shs. 06/26/01 79,398 1,070
------------ ------------
2,242,775 2,123,268
------------ ------------
COLIBRI HOLDINGS CORPORATION
A manufacturer and distributor of wild bird feeders and
accessories.
12.5% Senior Subordinated Note due 2008 $ 1,593,750 09/22/00 1,391,938 1,579,179
28% Preferred Stock 71 shs. 11/02/01 70,833 70,802
Common Stock (B) 1,429 shs. 09/22/00 531,250 269,251
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 843 shs. 09/22/00 265,625 158,868
------------ ------------
2,259,646 2,078,100
------------ ------------
CONSUMER PRODUCT ENTERPRISES, INC.
A manufacturer of colored acrylic felt for consumer use.
Senior Secured Floating Rate Revolving Credit
Note due 2003 (B) $ 412,941 12/08/95 412,941 206,470
10.75% Senior Secured Term Note due 2003 (B) $ 613,774 12/08/95 613,774 306,887
Senior Secured Floating Rate Term Note due 2003 (B) $ 311,445 12/08/95 311,445 155,722
12% Senior Subordinated Note due 2005 (B) $ 800,575 12/08/95 756,458 --
Common Stock (B) 184,560 shs. 12/08/95 184,560 --
Warrant, exercisable until 2005, to purchase
common stock at $.01 per share (B) 138,420 shs. 12/08/95 50,853 --
------------ ------------
2,330,031 669,079
------------ ------------
CORVEST GROUP, INC.
A manufacturer and distributor of promotional products.
12% Senior Subordinated Note due 2007 $ 3,863,636 * 3,695,854 3,562,338
Common Stock (B) 56 shs. * 96,591 48,291
Limited Partnership Interest (B) 19.32% int. * 285,769 143,384
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 183 shs. * 297,203 157,789
------------ ------------
4,375,417 3,911,802
------------ ------------
DELSTAR HOLDING CORPORATION
A manufacturer of plastic netting for a wide variety of
industries.
Convertible Preferred Stock, convertible into common
stock at $12.16 per share (B) 3,514 shs. 10/05/01 427,153 384,393
------------ ------------
*03/05/99 and 03/24/99.
--------------------------------------------------------------------------------
9
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
DEXTER MAGNETICS TECHNOLOGIES, INC.
A designer, fabricator, assembler, and distributor of
industrial magnets and subassemblies in North America
and Europe.
12% Senior Subordinated Note due 2006 $ 1,231,884 07/19/01 $ 1,092,541 $ 1,180,156
Common Stock (B) 585 shs. 07/19/01 585,145 409,605
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 297 shs. 07/19/01 250,611 3
------------ ------------
1,928,297 1,589,764
------------ ------------
DHD HEALTHCARE, INC.
A designer, manufacturer and distributor of plastic, noninvasive
medical devices used for respiratory care.
Senior Secured Floating Rate Revolving Credit
Note due 2007 $ 82,031 08/26/03 82,031 82,031
Senior Secured Floating Rate Tranche A Note due 2008 $ 1,033,592 02/08/01 1,033,592 1,016,799
12% Senior Secured Tranche B Note due 2009 $ 451,173 02/08/01 386,721 439,404
Limited Partnership Interest of Riverside
Capital Appreciation Fund III, L.P. (B) 2.81% int. 02/08/01 163,896 236,010
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 927 shs. 02/08/01 82,030 155,783
------------ ------------
1,748,270 1,930,027
------------ ------------
DIRECTED ELECTRONICS, INC.
A designer and distributor of brand name automotive
security systems, audio products and installation
accessories.
12% Senior Subordinated Note due 2007 $ 3,355,267 12/22/99 3,081,019 3,422,373
8% Convertible Class B Subordinated
Promissory Note due 2008 $ 96,598 12/22/99 96,518 99,776
Class B Common Stock (B) 26,097 shs. 12/22/99 260,965 234,869
Limited Partnership Interest 8.70% int. 12/22/99 548,920 485,342
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 45,255 shs. 12/22/99 413,816 453
------------ ------------
4,401,238 4,242,813
------------ ------------
DIVERSCO, INC./DHI HOLDINGS, INC.
A contract provider of janitorial and equipment
maintenance services and temporary production labor to
industrial customers.
Membership Interests of MM/Lincap
Diversco Investments Ltd. LLC (B) 27.19% int. 08/27/98 734,090 --
Preferred Stock (B) 3,278 shs. 12/14/01 2,784,133 1,113,655
Warrants, exercisable until 2011, to purchase common
stock of DHI Holdings, Inc. at $.01 per share (B) 13,352 shs. * 403,427 --
------------ ------------
3,921,650 1,113,655
------------ ------------
DT INDUSTRIES, INC.
A designer and manufacturer of automated production
systems used to assemble, test or package industrial and
consumer products.
7.16% Convertible Preferred Stock, convertible into
common stock at $14 per share (B) 20,000 shs. 06/12/97 1,000,000 200,000
------------ ------------
*10/24/96 and 08/28/98.
--------------------------------------------------------------------------------
10
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
EAGLE WINDOW & DOOR HOLDING CO.
A manufacturer of wood and aluminum-clad wood
windows and doors.
12% Senior Subordinated Note due 2010 $ 1,900,000 05/06/02 $ 1,643,531 $ 1,976,000
Common Stock (B) 225 shs. 05/06/02 225,000 202,500
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 441 shs. 05/06/02 285,000 4
------------ ------------
2,153,531 2,178,504
------------ ------------
EAST RIVER VENTURES I, L.P.
An acquirer of controlling or substantial interests in other
entities.
Limited Partnership Interest (B) 0.16% int. 01/01/01 29,976 27,148
------------ ------------
ENZYMATIC THERAPY, INC.
A manufacturer and distributor of branded natural
medicines and nutritional supplements.
13% Senior Subordinated Note due 2004 (B) $ 1,593,750 09/17/02 1,349,781 1,115,625
Limited Partnership Interest (B) 1.32% int. 03/30/00 531,250 5,312
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 478 shs. 03/30/00 255,000 5
------------ ------------
2,136,031 1,120,942
------------ ------------
EURO-PRO CORPORATION
A designer, marketer and distributor of floor care, steam
cleaning and small kitchen products and appliances.
13.25% Senior Subordinated Note due 2011 $ 2,125,000 09/09/03 2,089,560 2,075,392
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 43,878 shs. 09/09/03 35,641 439
------------ ------------
2,125,201 2,075,831
------------ ------------
EVANS CONSOLES, INC.
A designer and manufacturer of consoles and control
center systems.
Senior Secured Tranche A Floating Rate Note
due 2004 $ 242,000 01/21/03 242,000 242,000
Senior Secured Tranche A Floating Rate Note
due 2006 $ 1,003,261 03/02/98 993,124 501,630
8.85% Senior Secured Tranche A Note due 2006 $ 1,017,892 03/02/98 1,002,635 508,946
11.75% Senior Secured Tranche B Note due 2006 (B) $ 762,601 03/02/98 695,260 381,301
Senior Secured Floating Rate Revolving Credit
Facility due 2006 $ 984,242 03/02/98 984,242 492,121
Convertible Preferred Stock, convertible on a one share
for one share basis into non voting common stock (B) 293,071 shs. 01/21/03 1 3
Common Stock (B) 26,906 shs. 02/11/98 94,880 --
Limited Partnership Interest of CM
Equity Partners (B) 126,445 uts. 02/11/98 126,648 --
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 34,783 shs. 03/02/98 112,000 --
------------ ------------
4,250,790 2,126,001
------------ ------------
--------------------------------------------------------------------------------
11
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
EXAMINATION MANAGEMENT SERVICES, INC.
A national full-service evidence provider to the insurance
industry and a provider of occupational health testing.
12% Senior Subordinated Note due 2007 $ 2,109,637 03/16/99 $ 2,009,811 $ 1,698,700
Limited Partnership Interest (B) 5.27% int. 03/02/99 2,140,363 1,284,218
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 77,233 shs. 03/16/99 175,803 772
------------ ------------
4,325,977 2,983,690
------------ ------------
FASTENERS FOR RETAIL, INC.
A designer and marketer of low-cost fasteners for point of
purchase displays and signage in retail environments.
12.5% Senior Subordinated Note due 2007 $ 3,650,000 12/22/99 3,340,488 3,650,000
Class B Common Stock (B) 600 shs. 12/22/99 600,000 1,611,846
Warrant, exercisable until 2007, to purchase
common stock at $.02 per share (B) 589 shs. 12/22/99 462,927 1,581,559
------------ ------------
4,403,415 6,843,405
------------ ------------
G C-SUN HOLDINGS, L.P.
A value-added national distributor of maintenance, repair
and operating supplies such as fasteners, electrical
components and tools.
12% Senior Subordinated Note due 2008 (B) $ 1,725,000 03/02/00 1,451,784 1,293,750
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 880 shs. 03/02/00 347,288 9
------------ ------------
1,799,072 1,293,759
------------ ------------
HAMILTON FUNERAL SERVICES CENTERS, INC.
The privately held owner and operator of funeral homes in
the United States.
16.5% Senior Subordinated Note due 2007 (B) $ 3,802,712 * 3,697,924 380,271
Warrant, exercisable until 2007, to purchase
common stock at $1 per share (B) 338,280 shs. * 48,447 --
------------ ------------
3,746,371 380,271
------------ ------------
HIGHGATE CAPITAL LLC
An acquirer of controlling or substantial interests in
manufacturing and marketing entities.
Series A Preferred Units (B) 1.19% int. 07/21/94 398,280 19,008
------------ ------------
HUSSEY SEATING CORPORATION
A manufacturer of spectator seating products.
Senior Secured Floating Rate Revolving
Note due 2006 $ 1,128,839 06/12/96 1,128,838 1,144,418
Senior Secured Floating Rate Note due 2006 $ 722,812 ** 722,812 722,812
12% Senior Subordinated Note due 2006 $ 1,350,000 03/31/03 1,350,000 1,351,408
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 4,771 shs. *** 225,000 700,722
------------ ------------
3,426,650 3,919,360
------------ ------------
*01/25/99 and 07/16/99.
**06/12/96 and 08/03/01.
***06/12/96 and 01/19/00.
--------------------------------------------------------------------------------
12
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
INTEGRATION TECHNOLOGY SYSTEMS, INC.
A manufacturer of steel protective computer and network
systems for the industrial and office environments.
11% Senior Secured Note due 2007 $ 1,435,071 06/01/00 $ 1,435,071 $ 1,327,074
13% Senior Secured Note due 2007 $ 196,378 02/28/03 196,378 182,024
Common Stock (B) 228 shs. 06/01/00 262,200 131,100
------------ ------------
1,893,649 1,640,198
------------ ------------
JACKSON PRODUCTS, INC.
A manufacturer and distributor of a variety of industrial
and highway safety products.
Common Stock (B) 226 shs. 08/16/95 22,634 --
Warrant, exercisable until 2005, to purchase
common stock at $.01 per share (B) 1,042 shs. 08/16/95 95,627 --
------------ ------------
118,261 --
------------ ------------
JASON, INC.
A diversified manufacturing company serving various
industrial markets.
13% Senior Subordinated Note due 2008 $ 963,687 08/04/00 876,607 930,403
14% Cumulative Redeemable Preferred Stock Series A (B) 289 shs. 08/04/00 289,224 275,865
Limited Partnership Interests of
Saw Mill Capital Fund II, L.P. (B) 2.52% int. 08/03/00 886,451 443,253
Warrants, exercisable until 2008 and 2009, to purchase
common stock at $.01 per share (B) 50,870 shs. 08/04/00 115,412 509
------------ ------------
2,167,694 1,650,030
------------ ------------
KEEPSAKE QUILTING, INC.
A seller of quilting fabrics, books, patterns, kits and
notions to consumers.
Senior Secured Floating Rate Revolving Note Due 2005 $ 91,732 06/16/00 91,732 91,367
Senior Secured Floating Rate Tranche A Note due 2007 $ 940,252 06/16/00 940,252 928,729
12% Senior Secured Tranche B Note due 2008 $ 550,392 06/16/00 517,819 572,408
Limited Partnership Interest of
Riverside XVI Holding Company, L.P. (B) 5.29% int. 06/12/00 333,490 300,132
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 1,108 shs. 06/12/00 45,866 11
------------ ------------
1,929,159 1,892,647
------------ ------------
KENAN-ADVANTAGE TRANSPORT COMPANY
A transporter of light petroleum, petrochemicals, lubricants
and residual fuels.
12.5% Senior Subordinated Note due 2009 $ 1,817,435 04/30/01 1,817,435 1,817,435
Preferred Stock (B) 307 shs. 04/30/01 307,000 614,000
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 269 shs. 04/30/01 14 3
------------ ------------
2,124,449 2,431,438
------------ ------------
LANCASTER LABORATORIES, INC.
A laboratory testing operation in the United States.
12% Senior Subordinated Note due 2007 $ 1,669,643 09/25/00 1,423,526 1,699,462
Common Stock (B) 455,357 shs. 09/25/00 455,357 409,821
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 405,485 shs. 09/25/00 348,348 4,055
------------ ------------
2,227,231 2,113,338
------------ ------------
--------------------------------------------------------------------------------
13
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
LIH INVESTORS, L.P.
A manufacturer and marketer of a broad line of external
accessories for new and used sport utility vehicles, trucks
and vans.
12.5% Senior Subordinated Note due 2006 $ 3,845,000 * $ 3,410,428 $ 3,921,900
Common Stock (B) 5,800 shs. * 406,003 203,000
Warrant, exercisable until 2006, to purchase
common stock at $.11 per share (B) 15,572 shs. * 602,127 545,020
------------ ------------
4,418,558 4,669,920
------------ ------------
MEDASSIST, INC.
A provider of patient eligibility and accounts receivable
management services to hospitals and physician practices.
12% Senior Subordinated Note due 2011 $ 2,125,000 05/01/03 2,085,576 2,137,769
Warrant, exercisable until 2013, to purchase
common stock at $.01 per share (B) 83,214 shs. 05/01/03 40,675 832
------------ ------------
2,126,251 2,138,601
------------ ------------
MOSS, INC.
A manufacturer and distributor of large display and exhibit
structures.
Senior Secured Floating Rate Revolving Note due 2005 $ 42,025 09/21/00 42,025 33,620
Senior Secured Floating Rate Tranche A Note due 2007 $ 1,294,370 09/21/00 1,294,370 1,035,496
12% Senior Secured Tranche B Note due 2008 $ 420,250 09/21/00 390,261 336,200
Limited Partnership Interest of
Riverside Capital Appreciation Fund I, L.P. (B) 6.23% int. ** 311,472 155,733
Warrant, exercisable until 2008, to purchase
common stock at $100 per share (B) 463 shs. 09/21/00 40,344 5
------------ ------------
2,078,472 1,561,054
------------ ------------
MUSTANG VENTURES COMPANY
A natural gas gathering and processing operation located in
Oklahoma and Texas.
11.5% Subordinated Note due 2011 $ 566,667 12/11/02 469,184 587,292
8.5% Redeemable Preferred Stock 155,833 shs. 12/11/02 1,108,087 1,120,700
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 18,425 shs. 12/11/02 553,539 414,562
------------ ------------
2,130,810 2,122,554
------------ ------------
NEFF MOTIVATION, INC.
A manufacturer and distributor of customized awards and
sportswear to schools.
12.5% Senior Subordinated Note due 2011 $ 1,062,500 01/31/03 889,015 1,061,989
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 212 shs. 01/31/03 180,625 2
------------ ------------
1,069,640 1,061,991
------------ ------------
*12/23/98 and 01/28/99.
**09/20/00 and 05/23/02.
--------------------------------------------------------------------------------
14
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
NPC, INC.
A manufacturer of flexible connectors and equipment used
in the installation of sewers and storm drain pipelines.
Senior Secured Floating Rate Revolving Note
due 2006 $ 377,375 06/25/99 $ 377,375 $ 366,122
Senior Secured Floating Rate Note due 2006 $ 2,282,415 06/25/99 2,282,356 2,211,527
12% Senior Secured Tranche B Note due 2007 $ 978,814 06/25/99 891,461 979,107
Limited Partnership Interest of Riverside XIII
Holding Company L.P. (B) 3.38% int. 06/11/99 296,883 221,438
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 201 shs. 06/25/99 142,373 2
------------ ------------
3,990,448 3,778,196
------------ ------------
NYLONCRAFT, INC.
A supplier of engineered plastic components for the
automotive industry.
9% Senior Secured Note due 2009 $ 812,500 01/28/02 812,500 845,685
11.5% Senior Subordinated Note due 2012 $ 1,500,000 01/28/02 1,353,857 1,562,566
Common Stock (B) 312,500 shs. 01/28/02 312,500 326,250
Warrant, exercisable until 2012, to purchase
common stock at $.01 per share (B) 243,223 shs. 01/28/02 162,045 251,736
------------ ------------
2,640,902 2,986,237
------------ ------------
OLYMPIC SALES, INC.
An operator of boat dealerships in Washington state,
Wisconsin, Minnesota and British Columbia.
12% Senior Subordinated Note due 2006 $ 2,774,000 08/07/98 2,618,535 2,279,951
12% Senior Subordinated Note due 2008 $ 307,071 02/09/00 281,867 252,382
Limited Partnership Interest of Riverside VIII,
VIII-A and VIII-B Holding Company, L.P. (B) 1,531,250 shs. * 1,555,729 798,930
Warrants, exercisable until 2007and 2008, to purchase
common stock at $.01 per share (B) 28,648 shs. ** 389,188 287
------------ ------------
4,845,319 3,331,550
------------ ------------
PARADIGM PACKAGING, INC.
A manufacturer of plastic bottles and closures for the
nutritional, pharmaceutical, personal care and food
packaging markets.
12% Senior Subordinated Note due 2008 $ 2,125,000 12/19/00 1,920,705 2,188,750
Membership Interests of MM/Lincap
PPI Investments, Inc., LLC (B) 1.77% int. 12/21/00 265,625 265,625
------------ ------------
2,186,330 2,454,375
------------ ------------
PGT INDUSTRIES, INC.
A manufacturer of residential windows and patio doors and
a provider of custom patio rooms and porch enclosures.
12% Senior Subordinated Notes due 2009 $ 1,965,000 01/29/01 1,757,829 1,965,000
Common Stock (B) 115 shs. 01/29/01 115,000 322,000
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 325 shs. 01/29/01 264,519 909,944
------------ ------------
2,137,348 3,196,944
------------ ------------
*08/07/98, 02/23/99, 12/22/99 and 02/25/03.
**08/07/98 and 02/09/00.
--------------------------------------------------------------------------------
15
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
PHARMACEUTICAL BUYERS, INC.
A group purchasing organization which specializes in
arranging and negotiating contracts for the purchase of
pharmaceutical goods and medical equipment.
10.5% Senior Secured Note due 2005 $ 172,768 11/30/95 $ 172,768 $ 174,267
10.5% Senior Secured Convertible Note
due 2005, convertible into common stock
at $50,000 per share $ 195,000 11/30/95 195,000 303,868
Common Stock 6 shs. 11/30/95 337,500 478,101
------------ ------------
705,268 956,236
------------ ------------
P H I HOLDING COMPANY
A retailer of mid-priced gift items, home and garden decor,
accessories and other similar consumer products.
12.5% Senior Subordinated Note due 2010 $ 2,125,000 10/25/02 1,841,580 2,231,250
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 351 shs. 10/25/02 296,747 4
------------ ------------
2,138,327 2,231,254
------------ ------------
POLYMER TECHNOLOGIES, INC./POLI-TWINE WESTERN, INC.
A manufacturer of polypropylene twine for the hay bailing
marketplace.
8% Senior Subordinated Note due 2010 (B) $ 743,750 09/27/02 743,722 371,875
Preferred Series A Stock (B) 1,062 shs. 09/27/02 958,922 --
Preferred Series B Stock (B) 239 shs. 09/27/02 232,880 --
Common Stock (B) 159,375 shs. 03/01/00 79,688 --
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 7,375,899 shs. * 109,789 --
------------ ------------
2,125,001 371,875
------------ ------------
PRECISION DYNAMICS, INC.
A manufacturer of custom-designed solenoid valves and
controls.
Senior Secured Floating Rate Revolving Credit
Facility due 2003 $ 896,500 07/22/96 896,500 896,500
Senior Secured Floating Rate Term Note
due 2003 $ 1,238,800 07/22/96 1,238,800 1,238,800
12% Senior Secured Term Note due 2004 $ 489,000 07/22/96 479,175 489,000
8% Preferred Stock (B) 374 shs. 07/22/96 231,964 --
Common Stock (B) 599 shs. 07/22/96 28,978 --
Warrant, exercisable until 2004, to purchase
common stock at $.01 per share (B) 322 shs. 07/22/96 97,800 --
------------ ------------
2,973,217 2,624,300
------------ ------------
PREMIUM FOODS GROUP, INC.
A manufacturer and distributor of branded meat products.
Limited Partnership Interest of MHD
Holdings LLC (B) 1.43% int. 08/29/00 525,155 1,190,367
------------ ------------
*03/01/00 and 09/27/02.
--------------------------------------------------------------------------------
16
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
PROCESS CHEMICALS LLC
A specialty chemical company that manufactures
processed chemicals for the fertilizer, asphalt and concrete
industries.
6% Redeemable Preferred Membership Interests 2,525 uts. * $ 2,780,992 $ 3,044,014
Common Membership Interests 9,863 uts. * 13,049 4,987,500
------------ ------------
2,794,041 8,031,514
------------ ------------
PROGRESSIVE SOFTWARE HOLDING, INC.
A designer and manufacturer of point-of-sale monitors and
keyboards used by retailers and restaurants.
Common Stock (B) 729,946 shs. 07/09/02 3,500,003 13,139
------------ ------------
PROTEIN GENETICS, INC.
A producer of bovine artificial insemination products,
related breeding and healthcare products and specialty
genetics sold to the dairy and beef industries.
9.8% Redeemable Exchangeable Preferred Stock (B) 1,004 shs. 08/12/94 100,350 25,088
Common Stock (B) 2,600 shs. ** 126,866 --
------------ ------------
227,216 25,088
------------ ------------
PW EAGLE, INC. - O.T.C.
An extruder of small and medium diameter plastic pipe
and tubing in the United States.
14% Senior Subordinated Note due 2007 $ 3,556,351 09/16/99 3,552,186 3,548,733
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 197,040 shs. 09/16/99 1 714,664
------------ ------------
3,552,187 4,263,397
------------ ------------
RK POLYMERS LLC
A producer of styrenic block copolymers and highly
engineered synthetic elastomers.
13% Senior Subordinated Notes due 2011 $ 2,125,000 02/28/01 1,919,531 2,235,669
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 212 shs. 02/28/01 205,469 2
------------ ------------
2,125,000 2,235,671
------------ ------------
SABEX 2002, INC.
A Canadian specialty pharmaceutical company which
manufactures and distributes generic injectable drugs and
eye products.
12% Senior Subordinated Note due 2009 $ 2,125,000 04/19/02 2,006,025 2,210,000
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 51,088 shs. 04/19/02 138,052 246,449
------------ ------------
2,144,077 2,456,449
------------ ------------
*07/31/97 and 01/04/99.
**11/14/01 and 08/12/94.
--------------------------------------------------------------------------------
17
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
SAFETY SPEED CUT MANUFACTURING COMPANY, INC.
A manufacturer of vertical panel saws and routers for the
wood working industry.
Senior Secured Floating Rate Revolving Note due 2006 $ 94,221 05/01/03 $ 94,221 $ 96,767
Senior Secured Floating Rate Tranche A
Note due 2007 $ 1,860,865 06/02/99 1,860,865 1,860,865
12% Senior Secured Tranche B Note Due 2007 $ 1,130,652 06/02/99 1,130,652 1,130,652
Class B Common Stock (B) 1,480 shs. 06/02/99 256,212 495,007
------------ ------------
3,341,950 3,583,291
------------ ------------
SELIG ACQUISITION CORPORATION
A manufacturer of container sealing materials for bottles
used in consumer products.
12% Senior Subordinated Note due 2009 $ 2,125,000 06/13/02 1,965,191 2,184,500
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 2,011 shs. 06/13/02 182,023 52,642
------------ ------------
2,147,214 2,237,142
------------ ------------
SHELTER ACQUISITION, INC.
A distributor of roofing supplies and products throughout
the Midwest.
12.5% Senior Subordinated Note due 2008 $ 1,517,857 08/01/02 1,329,242 1,543,781
Common Stock (B) 758,929 shs. * 758,929 683,036
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 263,444 shs. 08/01/02 216,446 2,634
------------ ------------
2,304,617 2,229,451
------------ ------------
SNYDER INDUSTRIES, INC.
A manufacturer of proprietary rotationally molded
polyethylene containers.
12.25% Senior Subordinated Note due 2007 $ 3,125,000 12/06/99 2,842,164 3,187,500
Warrant, exercisable until 2007, to purchase
common stock at $.01 per share (B) 513 shs. 12/06/99 426,136 64,624
------------ ------------
3,268,300 3,252,124
------------ ------------
STRATEGIC EQUIPMENT & SUPPLY CORP., INC.
A provider of kitchen and restaurant design, equipment
fabrication and installation services.
12% Senior Subordinated Note due 2008 $ 3,875,000 01/14/00 3,425,814 3,860,734
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 106,539 shs. 01/14/00 658,751 1,065
------------ ------------
4,084,565 3,861,799
------------ ------------
SYNVENTIVE EQUITY LLC
A manufacturer of hot runner systems used in the plastic
injection molding process.
12% Senior Subordinated Note due 2007 $ 1,841,667 08/21/03 1,758,301 1,860,027
Limited Partnership Interest (B) 183,333 uts. 08/20/03 283,333 255,000
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 86,780 shs. 08/21/03 85,000 868
------------ ------------
2,126,634 2,115,895
------------ ------------
*08/01/03 and 01/17/03.
--------------------------------------------------------------------------------
18
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
THE TRANZONIC COMPANIES
A producer of commercial and industrial supplies, such as
safety products, janitorial supplies, work apparel,
washroom and restroom supplies and sanitary care
products.
13% Senior Subordinated Note due 2007 $ 2,712,000 02/05/98 $ 2,452,858 $ 2,712,000
Common Stock (B) 630 shs. 02/04/98 630,000 570,856
Warrant, exercisable until 2006, to purchase
common stock at $.01 per share (B) 444 shs. 02/05/98 368,832 402,313
------------ ------------
3,451,690 3,685,169
------------ ------------
THERMA-TRU CORPORATION
A manufacturer of residential exterior entry door systems.
Limited Partnership Interest of KT
Holding Company, L.P. (B) 0.52% int. 05/05/00 773,200 773,202
Warrant, exercisable until 2009, to purchase
common stock at $.01 per share (B) 739 shs. 05/09/00 287,370 296,756
------------ ------------
1,060,570 1,069,958
------------ ------------
TIDEWATER HOLDINGS, INC.
An operator of a barge transportation line on the
Columbia/Snake River system.
17% Preferred Stock (B) 560 shs. 12/23/02 560,000 532,000
Convertible Preferred Stock, convertible into 1,120 shs. 07/25/96 1,120,000 896,000
common stock at $1,000 per share (B)
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 474 shs. 07/25/96 48,216 379,008
------------ ------------
1,728,216 1,807,008
------------ ------------
TINNERMAN-PALNUT ENGINEERED COMPONENTS
A manufacturer of precision engineered metal and plastic
fasteners and assembly components.
12.75% Senior Subordinated Note due 2008 $ 1,875,000 12/06/01 1,875,000 1,912,500
Membership Interests (B) 1.34% int. 12/06/01 250,000 225,000
------------ ------------
2,125,000 2,137,500
------------ ------------
TRONAIR, INC.
A designer, engineer and manufacturer of ground support
equipment for the business, commuter and commercial
aviation markets.
10.5% Senior Secured Term Note due 2008 $ 1,974,022 01/20/00 1,974,022 1,938,153
12% Senior Subordinated Note due 2010 $ 1,326,500 01/20/00 1,252,233 1,271,876
Common Stock (B) 227,400 shs. 01/20/00 227,400 181,920
Warrant, exercisable until 2010, to purchase
common stock at $ 1 per share (B) 260,563 shs. 01/20/00 98,540 2,606
------------ ------------
3,552,195 3,394,555
------------ ------------
TRUSEAL TECHNOLOGIES, INC.
A manufacturer of sealant systems for the North American
window and door market.
12.25% Senior Subordinated Note due 2006 $ 2,675,000 06/23/97 2,539,129 2,675,000
Limited Partnership Interest (B) 10.04% int. 06/17/97 824,600 1,106,828
Warrant, exercisable until 2006, to purchase
limited partnership interests at $.01 per unit (B) 1,258 uts. 06/23/97 376,932 572,390
------------ ------------
3,740,661 4,354,218
------------ ------------
--------------------------------------------------------------------------------
19
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
TRUSTILE DOORS, INC.
A manufacturer and distributor of interior doors.
12.5% Senior Subordinated Note due 2010 $ 1,062,500 04/11/03 $ 971,091 $ 1,054,596
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 5,781 shs. 04/11/03 95,625 58
------------ ------------
1,066,716 1,054,654
------------ ------------
TVI, INC.
A retailer of used clothing in the United States, Canada
and Australia.
15.971% Senior Subordinated Note due 2008 $ 2,074,041 05/02/00 2,009,197 2,114,796
Common Stock (B) 354,167 shs. 05/02/00 354,167 247,917
------------ ------------
2,363,364 2,362,713
------------ ------------
U S M HOLDINGS CORP.
A provider of facility maintenance services to retail and
corporate clients with multiple locations.
12% Senior Subordinated Note due 2011 $ 789,474 08/06/03 1,494,405 1,787,678
Preferred Stock (B) 3,345 shs. 08/06/03 334,494 301,045
Common Stock (B) 1,032 shs. 08/06/03 1,032 929
Warrant, exercisable until 2011, to purchase
common stock at $.01 per share (B) 949 shs. 08/06/03 298,198 9
------------ ------------
2,128,129 2,089,661
------------ ------------
VICTORY VENTURES LLC
An acquirer of controlling or substantial interests in other
entities.
Series A Preferred Units (B) 0.13% int. 12/02/96 1 2
------------ ------------
VITEX PACKAGING, INC.
A manufacturer of specialty packaging, primarily
envelopes and tags used on tea bags.
12% Senior Subordinated Note due 2008 $ 2,045,265 12/18/00 1,917,053 2,082,080
Limited Partnership Interest of Riverside VI
Holding Company, L.P. (B) 4.80% int. * 351,323 281,054
Limited Partnership Interest of Riverside
Capital Appreciation Fund II L.P. (B) 0.75% int. 12/18/00 79,735 63,788
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 308 shs. ** 227,729 3
------------ ------------
2,575,840 2,426,925
------------ ------------
WASHINGTON INVENTORY SERVICES, INC.
A provider of physical inventory taking and other related
services to retailers.
12.5% Senior Subordinated Note due 2008 $ 1,646,881 11/03/00 1,609,594 1,648,093
Senior Preferred Stock (B) 4,692 shs. 11/01/00 469,160 444,570
Class B Common Stock (B) 8,959 shs. 11/01/00 8,959 8,063
Warrant, exercisable until 2008, to purchase
common stock at $.01 per share (B) 3,979 shs. 11/03/00 49,804 40
------------ ------------
2,137,517 2,100,766
------------ ------------
*12/30/97 and 09/09/99.
**01/02/98 and 12/18/00.
--------------------------------------------------------------------------------
20
CONSOLIDATED SCHEDULE OF INVESTMENTS(Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Shares, Units
Warrants,
Ownership or Acquisition
CORPORATE RESTRICTED SECURITIES (A)(Continued) Principal Amount Date Cost Fair Value
---------------- ----------- ------------ ------------
WEASLER HOLDINGS LLC
A manufacturer of mechanical power transmission
components for the agricultural, lawn and turf industries.
13.25% Senior Subordinated Note due 2010 $ 2,023,810 02/04/03 $ 1,823,211 $ 2,081,706
Limited Partnership Interest (B) 101,190 uts. 02/03/03 101,190 81
Warrant, exercisable until 2010, to purchase
common stock at $.01 per share (B) 256 shs. 02/04/03 209,829 3
------------ ------------
2,134,230 2,081,790
------------ ------------
W E C COMPANY, INC.
A maker of attachments for prime moving equipment.
Common Stock (B) 5,938 shs. 12/31/01 800,000 159,990
------------ ------------
WICOR AMERICAS, INC.
A manufacturer of cellulose based insulation products,
systems and services for electrical transformer equipment
manufacturers.
20% Senior Subordinated Secured Note due 2009 $ 2,352,484 11/09/01 2,350,839 2,318,540
------------ ------------
TOTAL PRIVATE PLACEMENT INVESTMENTS 180,522,497 163,064,749
------------ ------------
--------------------------------------------------------------------------------
21
CONSOLIDATED SCHEDULE OF INVESTMENTS (Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Interest Due Shares or
CORPORATE RESTRICTED SECURITIES:(A)(Continued) Rate Date Principal Amount Cost Fair Value
-------- -------- ------------ ------------ ------------
RULE 144A SECURITIES - 8.15%: (A)
BONDS - 6.51%
A E S Corporation 9.000% 05/15/15 $ 200,000 $ 200,000 $ 211,500
A E S Corporation 8.750 05/15/13 200,000 200,000 210,000
Calpine Corporation 8.750 07/15/13 500,000 465,000 457,500
Cooperative Computing, Inc. 10.500 06/15/11 400,000 394,768 432,000
Cuddy International Corporation (B) 10.750 12/01/07 202,748 199,326 20,275
Dana Credit Corporation 8.375 08/15/07 500,000 500,000 517,500
Del Monte Corporation 8.625 12/15/12 225,000 225,000 245,812
Dex Media West 9.875 08/15/13 500,000 500,000 565,000
Dominos, Inc. 8.250 07/01/11 400,000 397,112 422,500
Esterline Technologies 7.750 06/15/13 200,000 200,000 212,000
Flextronics International Ltd. 6.500 05/15/13 400,000 400,000 397,000
Gencorp, Inc. 9.500 08/15/13 400,000 400,000 410,000
Huntsman LLC 11.625 10/15/10 500,000 494,075 487,500
Koppers, Inc. 9.875 10/15/13 1,200,000 1,200,000 1,200,000
M S X International, Inc. 11.000 10/15/07 350,000 347,004 350,875
Majestic Star Casino LLC 9.500 10/15/10 1,850,000 1,850,000 1,900,875
Mortons Restaurant Group 7.500 07/01/10 450,000 384,073 409,500
Nextel Partners, Inc. 8.125 07/01/11 1,000,000 1,000,000 975,000
P G & E Corporation 6.875 07/15/08 400,000 400,000 420,000
Quintiles Transnational Corporation 10.000 10/01/13 500,000 500,000 516,250
Rayovac Corporation 8.500 10/01/13 200,000 200,000 206,000
Rent-Way, Inc. 11.875 06/15/10 300,000 294,756 312,750
Rhodia SA 8.875 06/01/11 500,000 490,000 491,250
Sheridan Acquisition Corporation 10.250 08/15/11 500,000 493,335 520,625
Tenneco Automotive, Inc. 10.250 07/15/13 400,000 400,000 434,000
Vought Aircraft Industries 8.000 07/15/11 400,000 400,000 408,000
------------ ------------ ------------
TOTAL BONDS $ 12,677,748 12,534,449 12,733,712
============ ------------ ------------
COMMON STOCK - 0.00%
Jordan Telecom Products 70 $ 14,000 --
------------ ------------
TOTAL COMMON STOCK 14,000 --
------------ ------------
CONVERTIBLE BONDS - 1.64%
Advanced Micro Devices, Inc. 4.750% 02/01/22 $ 500,000 $ 397,449 $ 444,375
Centerpoint Energy, Inc. 3.750 05/15/23 350,000 350,000 357,438
Cymer, Inc. 3.500 02/15/09 850,000 850,000 902,063
Echostar Communications, Inc. 4.875 01/01/07 400,000 400,000 407,500
F E I Company 5.500 08/15/08 175,000 175,000 171,500
Hyperion Solutions Corporation 4.500 03/15/05 200,000 200,000 199,750
Invitrogen Corporation 2.250 12/15/06 425,000 425,000 417,031
Triquint Semiconductor, Inc. 4.000 03/01/07 225,000 168,442 193,781
Viropharma, Inc. 6.000 03/01/07 215,000 147,282 113,681
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 3,340,000 3,113,173 3,207,119
============ ------------ ------------
Warrants - 0.00%
Winsloew Escrow Corporation (B) 900 $ 9 $ 9
------------ ------------
Total Warrants 9 9
------------ ------------
Total Rule 144A Securities 15,661,631 15,940,840
------------ ------------
Total Corporate Restricted Securities $196,184,128 $179,005,589
------------ ------------
--------------------------------------------------------------------------------
22
CONSOLIDATED SCHEDULE OF INVESTMENTS (Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Interest Due Shares or
CORPORATE PUBLIC SECURITIES - 11.81%:(A) Rate Date Principal Amount Cost Market Value
-------- -------- ------------ ------------ ------------
BONDS - 8.08%
A E P Industries, Inc. 9.875% 11/15/07 $ 350,000 $ 333,375 $ 343,000
Alamosa Delaware, Inc 13.625 05/15/11 500,000 490,000 490,000
American Media Operation, Inc. 8.875 01/15/11 200,000 200,000 214,250
Bally Total Fitness Holding Corporation 9.875 10/15/07 200,000 191,000 192,000
Bausch & Lomb, Inc. 6.950 11/15/07 500,000 524,442 535,000
C S C Holdings, Inc. 7.625 04/01/11 500,000 502,500 498,750
Canwest Media, Inc. 7.625 04/15/13 200,000 200,000 214,000
Dana Corporation 9.000 08/15/11 500,000 529,802 547,500
Dynegy Holding, Inc. 6.875 04/01/11 500,000 422,500 418,750
G F S I, Inc. 9.625 03/01/07 500,000 432,627 430,000
Host Marriott L.P. 8.375 02/15/06 500,000 524,375 523,125
IMAX Corporation 7.875 12/01/05 500,000 493,750 496,250
Lodgenet Entertainment Co. 9.500 06/15/13 425,000 425,000 450,500
Lyondell Chemical Co. 9.500 12/15/08 400,000 380,000 370,000
M G M Mirage, Inc. 6.000 10/01/09 500,000 502,500 502,500
Neff Corporation 10.250 06/01/08 170,000 168,063 93,500
Nextel Communications Corporation 7.375 08/01/15 400,000 392,000 404,000
Numatics, Inc. 9.625 04/01/08 550,000 540,361 407,000
Offshore Logistics, Inc. 6.125 06/15/13 450,000 450,000 429,750
Remington Products Co. 11.000 05/15/06 600,000 595,506 610,500
Rent-A-Center, Inc. 7.500 05/01/10 400,000 400,000 420,500
S P X Corporation 6.250 06/15/11 400,000 400,000 397,000
Service Corp International 6.000 12/15/05 500,000 505,000 505,000
Sports Club Co. 11.375 03/15/06 600,000 582,000 546,000
Steelcase, Inc. 6.375 11/15/06 500,000 514,872 516,548
Tekni-Plex, Inc. 12.750 06/15/10 550,000 533,000 539,000
Telex Communications, Inc. (B) 0.000 11/15/06 373,182 206,820 205,250
Tenet Healthcare Corporation 6.375 12/01/11 500,000 482,500 478,750
Triton P C S, Inc. 8.500 06/01/13 550,000 561,929 589,875
Tyco International Group SA 6.375 10/15/11 350,000 346,500 360,938
United Refining Co. 10.750 06/15/07 1,265,000 1,265,000 1,024,650
United Rentals, Inc. 9.000 04/01/09 350,000 343,000 362,250
Williams Companies, Inc. 8.625 06/01/10 500,000 500,000 531,250
Williams Scotsman, Inc. 9.875 06/01/07 500,000 492,500 492,500
Winsloew Furniture, Inc. 12.750 08/15/07 900,000 879,472 675,000
------------ ------------ ------------
TOTAL BONDS $ 16,683,182 16,310,394 15,814,886
============ ------------ ------------
COMMON STOCK - 2.84%
Computer Horizons Corporation (B) 32,068 $ 301,942 $ 118,652
D T Industries, Inc. (B) 178,876 1,168,093 313,033
EOS International, Inc. (B) 100,000 300,000 170,000
H C I Direct, Inc. (B) 1,000 -- --
PepsiAmericas, Inc. (B) 92,145 2,006,365 1,335,181
Proton Energy Systems, Inc. 26,000 328,859 67,600
Rent-Way, Inc. (B) 92,866 916,263 498,690
Sigmatel, Inc. 19,600 294,000 403,956
Supreme Industries, Inc. (B) 105,202 267,325 599,651
Surebeam Corporation (B) 40,555 17,507 57,994
T G C Industries (B) 6,361 9,497 2,417
Transmontaigne, Inc. (B) 333,326 1,109,177 1,986,623
------------ ------------
TOTAL COMMON STOCK 6,719,028 5,553,797
------------ ------------
--------------------------------------------------------------------------------
23
CONSOLIDATED SCHEDULE OF INVESTMENTS (Cont.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
Interest Due Shares or
CORPORATE PUBLIC SECURITIES:(A)(CONTINUED) Rate Date Principal Amount Cost Market Value
-------- -------- ------------ ------------ ------------
CONVERTIBLE BONDS - 0.88%
Commscope, Inc. 4.000% 12/15/06 $ 185,000 $ 179,550 $ 171,356
Duke Energy Corporation 1.750 05/15/23 400,000 400,000 396,500
F E I Company 5.500 08/15/08 340,000 305,150 333,200
Hyperion Solutions Corporation 4.500 03/15/05 50,000 35,500 49,938
Mediacom Communications Corporation 5.250 07/01/06 400,000 400,000 357,000
S C I Systems, Inc. 3.000 03/15/07 450,000 378,000 407,812
------------ ------------ ------------
TOTAL CONVERTIBLE BONDS $ 1,825,000 1,698,200 1,715,806
============ ------------ ------------
PREFERRED STOCK - 0.01%
Telex Communications, Inc. 17,707 $ 1 $ 17,708
------------ ------------
TOTAL PREFERRED STOCK 1 17,708
------------ ------------
WARRANTS - 0.00%
Telex Communications, Inc. 698 $ 7 $ 7
------------ ------------
TOTAL WARRANTS 7 7
------------ ------------
TOTAL CORPORATE PUBLIC SECURITIES $ 24,727,630 $ 23,102,204
------------ ------------
Interest Due Principal
SHORT-TERM SECURITIES: Rate/Yield Date Amount Cost Market Value
-------- -------- ------------ ------------ ------------
COMMERCIAL PAPER - 8.93%
DaimlerChrysler NA Holdings Corp. 1.210% 10/17/03 $ 1,780,000 $ 1,779,043 $ 1,779,043
National Fuel Gas Company 1.150 10/03/03 1,335,000 1,334,915 1,334,915
Pearson Holdings, Inc. 1.120 10/08/03 2,315,000 2,314,496 2,314,496
Public Service Electric & Gas 1.140 10/24/03 3,565,000 3,562,403 3,562,403
Sears Robeuck Acceptance 1.150 10/06/03 1,340,000 1,339,786 1,339,786
Textron Financial Corporation 1.130 10/22/03 3,565,000 3,562,650 3,562,650
Wisconsin Electric Power Co. 1.100 10/09/03 3,565,000 3,564,128 3,564,128
------------ ------------ ------------
TOTAL SHORT-TERM SECURITIES $ 17,465,000 $ 17,457,421 $ 17,457,421
============ ------------ ------------
TOTAL INVESTMENTS 112.27% $246,080,006 219,565,214
============ ------------
Other Assets 3.43 6,708,941
Liabilities (15.70) (30,696,127)
------ ------------
TOTAL NET ASSETS 100.00% $195,578,028
====== ============
(A) In each of the convertible note, warrant, convertible preferred and common
stock investments, the issuer has agreed to provide certain registration
rights.
(B) Non-income producing security.
See Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------
24
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
INDUSTRY CLASSIFICATION
CORPORATE RESTRICTED SECURITIES: Fair Value
------------
AEROSPACE - 0.21%
Vought Aircraft Industries $ 408,000
------------
AUTOMOBILE - 4.85%
America's Body Company, Inc 1,400,001
LIH Investors, L.P. 4,669,920
Nyloncraft, Inc. 2,986,237
Tenneco Automotive, Inc. 434,000
------------
9,490,158
------------
BEVERAGE, FOOD & TOBACCO - 1.49%
Beta Brands Ltd 525,764
Cains Foods, L.P. 113,362
Del Monte Corporation 245,812
Dominos, Inc. 422,500
Mortons Restaurant Group 409,500
Premium Foods Group, Inc. 1,190,367
------------
2,907,305
------------
BROADCASTING &
ENTERTAINMENT - 0.21%
Echostar Communications, Inc. 407,500
------------
BUILDINGS & REAL ESTATE - 10.38%
Adorn, Inc. 2,357,721
Eagle Window & Door Holding Co. 2,178,504
PGT Industries, Inc. 3,196,944
Shelter Acquisition, Inc. 2,229,451
Strategic Equipment & Supply Corp., Inc. 3,861,799
Therma-Tru Corporation 1,069,958
Truseal Technologies, Inc. 4,354,218
TruStile Doors, Inc. 1,054,654
------------
20,303,249
------------
CARGO TRANSPORT - 2.17%
Kenan-Advantage Transport Company 2,431,438
Tidewater Holdings, Inc. 1,807,008
------------
4,238,446
------------
CHEMICAL, PLASTICS & RUBBER - 6.31%
Delstar Holding Corporation 384,393
Huntsman LLC 487,500
Koppers, Inc. 1,200,000
Process Chemicals LLC 8,031,514
RK Polymers LLC 2,235,671
------------
12,339,078
------------
CONSUMER PRODUCTS - 9.34%
Colibri Holdings Corporation $ 2,078,100
Consumer Product Enterprises, Inc. 669,079
Corvest Group, Inc. 3,911,802
Dexter Magnetic Technologies, Inc. 1,589,764
Euro-Pro Corporation 2,075,831
G C-Sun Holdings, L.P. 1,293,759
Keepsake Quilting, Inc. 1,892,647
Neff Motivation, Inc. 1,061,991
The Tranzonic Companies 3,685,169
------------
18,258,142
------------
CONTAINERS, PACKAGING & GLASS - 5.30%
Capitol Specialty Plastics, Inc. 403
Paradigm Packaging, Inc. 2,454,375
Selig Acquisition Corporation 2,237,142
Snyder Industries, Inc. 3,252,124
Vitex Packaging, Inc. 2,426,925
------------
10,370,969
------------
DIVERSIFIED/CONGLOMERATE,
MANUFACTURING - 12.35%
D T Industries, Inc. 200,000
Evans Consoles, Inc. 2,126,001
Highgate Capital LLC 19,008
Hussey Seating Corporation 3,919,360
Jackson Products, Inc. --
Jason, Inc. 1,650,030
NPC, Inc. 3,778,196
PW Eagle, Inc. 4,263,397
Safety Speed Cut Manufacturing Company, Inc. 3,583,291
Tinnerman-Palnut Engineered Components 2,137,500
W E C Company, Inc. 159,990
Wicor Americas, Inc. 2,318,540
------------
24,155,313
------------
DIVERSIFIED/CONGLOMERATE,
SERVICE - 7.26%
Diversco, Inc./DHI Holdings, Inc. 1,113,655
Examination Management Services, Inc. 2,983,690
Hamilton Funeral Services Centers, Inc. 380,271
Lancaster Laboratories, Inc. 2,113,338
Pharmaceutical Buyers, Inc. 956,236
Sabex 2002, Inc. 2,456,449
U S M Holdings Corp. 2,089,661
Washington Inventory Services, Inc. 2,100,766
------------
14,194,066
------------
--------------------------------------------------------------------------------
25
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONT.) MASSMUTUAL CORPORATE INVESTORS
SEPTEMBER 30, 2003
(Unaudited)
INDUSTRY CLASSIFICATION
CORPORATE RESTRICTED SECURITIES:(CONT.) Fair Value
------------
ELECTRONICS - 7.07%
Advanced Micro Devices, Inc. 444,375
A E S Corporation 211,500
A E S Corporation 210,000
Calpine Corporation 457,500
Coining Corporation of America LLC 2,123,268
Cooperative Computing, Inc. 432,000
Directed Electronics, Inc 4,242,813
Esterline Technologies 212,000
Flextronics International Ltd. 397,000
Hyperion Solutions Corporation 199,750
Integration Technology Systems, Inc. 1,640,198
P G & E Corporation 420,000
Precision Dynamics, Inc. 2,624,300
Progressive Software Holding, Inc. 13,139
Triquint Semiconductor, Inc. 193,781
------------
13,821,624
------------
FARMING & AGRICULTURE - 0.21%
Cuddy International Corporation 20,275
Polymer Technologies, Inc./Poli-Twine Western, Inc. 371,875
Protein Genetics, Inc. 25,088
------------
417,238
------------
FINANCE - 0.26%
Dana Credit Corporation 517,500
------------
HEALTHCARE, EDUCATION
& CHILDCARE - 3.71%
Beacon Medical Products, Inc. 1,958,497
DHD Healthcare, Inc. 1,930,027
Enzymatic Therapy, Inc. 1,120,942
MedAssist, Inc. 2,138,601
Viropharma, Inc. 113,681
------------
7,261,748
------------
HOME & OFFICE FURNISHINGS,
HOUSEWARES, AND DURABLE
CONSUMER PRODUCTS - 4.30%
Fasteners for Retail, Inc. 6,843,405
Moss, Inc. 1,561,054
------------
8,404,459
------------
LEISURE, AMUSEMENT,
ENTERTAINMENT - 2.67%
Majestic Star Casino LLC 1,900,875
Olympic Sales, Inc. 3,331,550
------------
5,232,425
------------
MACHINERY - 5.12%
Ames True Temper Group 2,168,779
C & M Conveyor, Inc. 2,340,051
Cymer, Inc. 902,063
Gencorp Inc. 410,000
Synventive Equity LLC 2,115,895
Weasler Holdings LLC 2,081,790
------------
10,018,578
------------
MEDICAL DEVICES/BIOTECH - 0.84%
Coeur, Inc. 1,122,984
Quintiles Transnational Corporation 516,250
------------
1,639,234
------------
MINING, STEEL, IRON & NON
PRECIOUS METALS - 0.06%
Better Minerals & Aggregates 108,991
------------
MISCELLANEOUS - 1.21%
CapeSuccess LLC 5,862
Centerpoint Energy, Inc. 357,438
East River Ventures I, L.P. 27,148
Invitrogen Corporation 417,031
M S X International, Inc. 350,875
Rayovac Corporation 206,000
Rhodia SA 491,250
Sheridan Acquisition Corporation 520,625
Victory Ventures LLC 2
Winsloew Escrow Corporation 9
------------
2,376,240
------------
OIL AND GAS - 1.09%
Mustang Ventures Company 2,122,555
------------
PERSONAL TRANSPORTATION - 1.73%
Tronair, Inc. 3,394,554
------------
PUBLISHING/PRINTING - 0.29%
Dex Media West 565,000
------------
RETAIL STORES - 2.51%
P H I Holding Company 2,231,254
Rent-Way, Inc. 312,750
TVI, Inc. 2,362,713
------------
4,906,717
------------
TECHNOLOGY - 0.09%
F E I Company 171,500
------------
TELECOMMUNICATIONS - 0.50%
Jordan Telecom Products --
Nextel Partners, Inc. 975,000
------------
975,000
------------
TOTAL CORPORATE RESTRICTED
SECURITIES - 91.53% $179,005,589
============
--------------------------------------------------------------------------------
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(Unaudited)
1. HISTORY
MassMutual Corporate Investors (the "Trust") commenced operations in 1971 as
a Delaware corporation. Pursuant to an Agreement and Plan of Reorganization
dated November 14, 1985, approved by shareholders, the Trust was reorganized
as a Massachusetts business trust under the laws of the Commonwealth of
Massachusetts, effective November 28, 1985.
The Trust is a closed-end management investment company. David L. Babson &
Company Inc. ("Babson"), a majority owned 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.
On January 27,1998, the Board of Trustees authorized the formation of a
wholly-owned subsidiary ("MMCI Subsidiary Trust") for the purpose of holding
certain investments. The results of MMCI Subsidiary Trust have been included
in the accompanying consolidated financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Trust in the preparation of the consolidated financial
statements in conformity with accounting principles generally accepted in the
United States of America.
A. VALUATION OF INVESTMENTS:
Valuation of a security in the Trust's portfolio is made on the basis of
market price whenever market quotations are readily available and all
securities of the same class held by the Trust can be readily sold in such
market.
Nearly all securities which are acquired by the Trust directly from the
issuers and shares into which such securities may be converted or which may
be purchased on the exercise of warrants attached to such securities will be
subject to legal or contractual delays in, or restrictions on, resale and
will therefore be "restricted securities". Generally speaking, as contrasted
with open-market sales of unrestricted securities which may be effected
immediately if the market is adequate, absent an exemption from registration,
restricted securities can be sold only in a public offering for which a
registration statement is in effect under the Securities Act of 1933.
The value of restricted securities, and of any other assets for which there
are no reliable market quotations, is the fair value as determined in good
faith by the Trust's Board of Trustees (the "Trustees"). Each restricted
security is valued by the Trustees at the time of the acquisition thereof and
at least quarterly thereafter. The Trustees have established guidelines to
aid in the valuation of each security. Generally, restricted securities are
initially valued at cost or less at the time of acquisition by the Trust.
Values greater or less than cost are used thereafter for restricted
securities in appropriate circumstances. Among the factors ordinarily
considered are the existence of restrictions upon the sale of a security held
by the Trust; an estimate of the existence and extent of a market for the
security; the extent of any discount at which the security was acquired; the
estimated period of time during which the security will not be freely
marketable; the estimated expenses of registering or otherwise qualifying the
security for public sale; estimated underwriting commissions if underwriting
would be required to effect a sale; in the case of a convertible security,
whether or not it would trade on the basis of its stock equivalent; in the
case of a debt obligation which would trade independently of any equity
equivalent, the current yields on comparable securities; the estimated amount
of the floating supply of such securities available for purchase; the
proportion of the issue held by the Trust; changes in the financial condition
and prospects of the issuer; the existence of merger proposals or tender
offers affecting the issuer; and any other factors affecting fair value, all
in accordance with the Investment Company Act of 1940, as amended. 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.
--------------------------------------------------------------------------------
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
When market quotations are readily available for unrestricted securities of
an issuer, restricted securities of the same class are generally valued at a
discount from the market price of such unrestricted securities. The Trustees,
however, consider all factors in fixing any discount, including the filing of
a registration statement for such securities under the Securities Act of 1933
and any other developments which are likely to increase the probability that
the securities may be publicly sold by the Trust without restriction.
The Board of Trustees of the Trust meets at least once in each quarter to
value the Trust's portfolio securities as of the close of business on the
last business day of the preceding quarter. This valuation requires the
approval of a majority of the Trustees of the Trust, including a majority of
the Trustees who are not interested persons of the Trust or of Babson, the
Trust's investment adviser. In making valuations, the Trustees will consider
reports by Babson analyzing each portfolio security in accordance with the
relevant factors referred to above. Babson has agreed to provide such reports
to the Trust at least quarterly.
The financial statements include restricted securities valued at $179,005,589
(91.53% of net assets) as of September 30, 2003 whose values have been
estimated by the Board of Trustees in the absence of readily ascertainable
market values. Due to the inherent uncertainty of valuation, those estimated
values may differ significantly from the values that would have been used had
a ready market for the securities existed, and the differences could be
material.
The values for corporate public securities are stated at the last reported
sales price or at prices based upon quotations obtained from brokers and
dealers as of September 30, 2003, subject to discount where appropriate, and
are approved by the Trustees.
Short-term securities with more than sixty days to maturity are valued at
fair value and short-term securities having a maturity of sixty days or less
are valued at amortized cost which approximates market value.
B. ACCOUNTING FOR INVESTMENTS:
Investment transactions are accounted for on the trade date. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis. The Trust does not accrue income when payment is delinquent
and when management believes payment is questionable.
The Trust has elected to accrue, for financial reporting purposes, certain
premiums and discounts which are required to be accrued for federal income
tax purposes.
Realized gains and losses on investment transactions and unrealized
appreciation and depreciation of investments are reported for financial
statement and federal income tax purposes on the identified cost method.
C. USE OF ESTIMATES:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
D. FEDERAL INCOME TAXES:
No provision for federal taxes on net investment income and short-term
capital gains is considered necessary because the Trust has elected to be
taxed as a "regulated investment company" under the Internal Revenue Code,
and intends to maintain this qualification by, among other things,
distributing substantially all of its net taxable income to its shareholders.
In any year when net long-term capital gains are realized by the Trust,
management, after evaluating the prevailing economic conditions, will
recommend to the Trustees either to designate the net realized long-term
gains as undistributed and to pay the federal capital gains taxes thereon or
to distribute all or a portion of such net gains.
The Trust is taxed as a regulated investment company and is therefore limited
as to the amount of non-qualified income that it may receive as the result of
operating a trade or business, e.g. the Trust's pro rata share of income
allocable to the Trust by a partnership operating company. The Trust's
violation of this limitation could result in the loss of its status as a
regulated investment company, thereby subjecting all of its net income and
capital gains to corporate taxes prior to distribution to its shareholders.
The Trust, from time-to-time, identifies investment opportunities in the
securities of entities that could cause such trade or business income to be
allocable to the Trust. The MMCI Subsidiary Trust (described in Footnote 1,
above) was formed in order to allow investment in such securities without
adversely affecting the Trust's status as a regulated investment company. The
MMCI Subsidiary Trust is not taxed as a regulated investment company.
Accordingly, prior to the Trust receiving any distributions from the MMCI
Subsidiary Trust, all of the MMCI Subsidiary Trust's taxable income and
realized gains, including non-qualified income and realized gains, is subject
to taxation at prevailing corporate tax rates.
For the period ended September 30, 2003, the MMCI Subsidiary Trust accrued
federal income tax of $1,822,593 for future liabilities on unrealized gains
on investments held in the MMCI Subsidiary Trust.
3. INVESTMENT SERVICES FEE
Under an Investment Services Contract with the Trust dated July 1, 1988,
Babson has agreed to use its best efforts to present to the Trust a
continuing and suitable investment program consistent with the investment
objectives and policies of the Trust. Babson has further agreed that it will
request each issuer of securities which MassMutual is prepared to purchase in
a private placement, and which would be consistent with the investment
objectives and policies of the Trust, to also offer such securities to the
Trust. Babson will use its best efforts to insure that issuers accede to such
requests. MassMutual has agreed that, subject to such orders of the
Securities and Exchange Commission as may apply, it will invest concurrently
with the Trust in any such investment. Babson will also represent the Trust
in any negotiations with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors relating to the
Trust's investments. Under the contract, Babson provides administration of
the day-to-day operations of the Trust and provides the Trust with office
space and office equipment, accounting and bookkeeping services, and
necessary executive, clerical and secretarial personnel for the performance
of the foregoing services.
Under the Investment Services Contract, the Trust pays Babson a quarterly
base rate (the "Base Fee Rate") of 5/16 of 1% of the value of the Trust's net
assets as of the end of each fiscal quarter, approximately equivalent to
1.25% of the net asset value of the Trust on an annual basis, plus or minus a
quarterly performance adjustment (the "Performance Adjustment") of up to 1/16
of 1% approximately equivalent to .25% on an annual basis.
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29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
The Performance Adjustment is based on the Trust's performance as compared to
a benchmark rate of return (the "Target Rate") equal to 5.0 percentage points
plus an unweighted, arithmetic average of the rates of return on the Standard
& Poor's Industrials Composite (formerly called the Standard & Poor's
Industrial Index) and the Lehman Brothers Intermediate U.S. Credit Index
(formerly called the Lehman Brothers Intermediate Corporate Bond Index) over
a rolling three-year period (the "Measurement Period") comprising the twelve
quarters ending on the last day of each quarter (the "Valuation Date"). The
Standard & Poor's Industrials Composite is not available to the general
public. Standard & Poor's provides Babson with the information for this
index. The 3-year annualized return for the Standard & Poor's Industrial
Composite for the period ending September 30, 2003 was (11.62%). The
Performance Adjustment is equal to 5% of the difference between the Trust's
actual rate of return over the Measurement Period and the Target Rate. If the
Trust's actual rate of return exceeds the Target Rate, the Base Fee Rate is
increased by an amount equal to the Performance Adjustment; if the Trust's
actual rate of return is less than the Target Rate, the Base Fee Rate is
reduced by the Performance Adjustment. The advisory fee payable by the Trust
is equal to the Base Fee Rate (as adjusted by the Performance Adjustment)
times the net asset value of the Trust as of the Valuation Date. The
Performance Adjustment for the quarters ended March 31, June 30, and
September 30, 2003 was:
PERFORMANCE
ADJUSTMENT AMOUNT
---------- --------
March 31, 2003 0.0625% $113,048
June 30, 2003 0.0625% $116,310
September 30, 2003 0.0625% $122,721
4. SENIOR SECURED INDEBTEDNESS
A. NOTE PAYABLE
MassMutual holds the Trust's $20,000,000 Senior Fixed Rate Convertible Note
(the "Note") issued by the Trust in 1995. The Note, as amended, is due
November 15, 2007 and accrues at 7.39% per annum. MassMutual, at its option,
can convert the principal amount of the Note into common shares. The dollar
amount of principal would be converted into an equivalent dollar amount of
common shares based upon the average price of the common shares for ten
business days prior to the notice of conversion. For the nine months ended
September 30, 2003, the Trust incurred total interest expense on the Note of
$1,108,500.
The Trust may redeem the Note, in whole or in part, at the principal amount
proposed to be redeemed together with the accrued and unpaid interest thereon
through the redemption date plus the Make Whole Premium. The Make Whole
Premium equals the excess of (i) the present value of the scheduled payments
of principal and interest which the Trust would have paid but for the
proposed redemption, discounted at the rate of interest of U.S. Treasury
obligations whose maturity approximates that of the Note plus 0.50% over (ii)
the principal of the Notes proposed to be redeemed.
B. REVOLVING CREDIT AGREEMENT
The Trust entered into a Revolving Credit Agreement with Fleet National Bank
as of June 29, 2000, in the principal amount of $25,000,000, maturing on May
31, 2005. The interest rate on the outstanding revolving loan is determined
for periods of one, three or six months (as selected by the Trust) and is set
at an annual rate equal to LIBOR (London Interbank Offered Rate) plus 0.37%.
The Trust also agreed to pay an up-front fee equal to 0.10% on the total
commitment. The facility fee is 0.15% per annum of the total commitment.
As of September 30, 2003, there were no outstanding loans drawn against the
revolving credit facility. For the nine months ended September 30, 2003, the
Trust incurred $28,048 in expense related to the undrawn portion.
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30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(CONTINUED)
5. PURCHASES AND SALES OF INVESTMENTS
FOR THE NINE MONTHS ENDED 9/30/2003
-----------------------------------
COST OF PROCEEDS FROM
INVESTMENTS SALES OR
ACQUIRED MATURITIES
------------ ------------
Corporate restricted securities $ 57,676,253 $ 59,185,597
Corporate public securities 15,410,855 14,483,811
Short-term securities 396,368,633 389,839,959
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of September 30, 2003. The net unrealized
depreciation of investments for financial reporting and federal tax purposes
as of September 30, 2003 is $18,803,965 and consists of $22,087,711
appreciation and $40,891,676 depreciation.
6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS
AMOUNT PER SHARE
------------ ------------
MARCH 31, 2003
-----------------------------------
Investment income $ 4,242,541
Net investment income 2,995,578 $ 0.34
Net realized and unrealized
gain on investments 5,781,368 0.66
AMOUNT PER SHARE
------------ ------------
JUNE 30, 2003
-----------------------------------
Investment income 4,011,172
Net investment income 2,789,107 0.31
Net realized and unrealized
gain on investments 5,592,226 0.63
AMOUNT PER SHARE
------------ ------------
SEPTEMBER 30, 2003
-----------------------------------
Investment income 4,528,390
Net investment income 3,083,600 0.35
Net realized and unrealized
gain on investments (net of taxes) 9,891,110 1.11
7. CONTINGENCIES
The Trust, together with other investors including MassMutual, is a plaintiff
in two lawsuits in connection with private placement investments made by the
Trust in Sharp International Corporation ("Sharp"). Three managing
shareholders of Sharp, which is currently being liquidated in Chapter 7
liquidation proceedings, have pleaded guilty to criminal fraud charges. Two
separate civil lawsuits have been brought in New York state court in an
attempt to recover damages for lost investment funds from Sharp's working
capital lender and auditors. The lawsuit involving Sharp's working capital
lender has been dismissed prior to trial. An appeal of this dismissal is
pending. The lawsuit against Sharp's auditors is in its preliminary stages.
The Trust is unable to estimate any potential recovery from these lawsuits as
of September 30, 2003.
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