-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SIIeWe9EVXw8Km/nU/sTlxevVusC9SCBnxfQtkaNkx5EE+mcZ1dWsIr8uCJHtABQ G8+W/eDWK4cya2rPinE5Kw== 0001072613-07-000621.txt : 20070306 0001072613-07-000621.hdr.sgml : 20070306 20070306164435 ACCESSION NUMBER: 0001072613-07-000621 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070306 DATE AS OF CHANGE: 20070306 EFFECTIVENESS DATE: 20070306 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASSMUTUAL CORPORATE INVESTORS CENTRAL INDEX KEY: 0000275694 IRS NUMBER: 042483041 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02183 FILM NUMBER: 07675328 BUSINESS ADDRESS: STREET 1: 1500 MAIN STREET STREET 2: SUITE 600 CITY: SPRINGFIELD STATE: MA ZIP: 01115 BUSINESS PHONE: 4132261000 MAIL ADDRESS: STREET 1: 1500 MAIN STREET STREET 2: SUITE 600 CITY: SPRINGFIELD STATE: MA ZIP: 01115 N-CSR 1 formn-csr_14940.txt MASSMUTUAL CORPORATE INVESTORS FORM N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-2183 --------------------------------------------- MassMutual Corporate Investors - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1500 Main Street, Suite 600, P.O. Box 15189, Springfield, MA 01115-5189 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Rodney J. Dillman, Vice President and Secretary 1500 Main Street, Suite 2800, P.O. Box 15189, Springfield, MA 01115-5189 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 413-226-1000 ---------------------------- Date of fiscal year end: 12/31 ------------------ Date of reporting period: 12/31/06 ------------------ Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORT TO STOCKHOLDERS. Attached hereto is the annual shareholder report transmitted to shareholders pursuant to Rule 30e-1 of the Investment Company Act of 1940, as amended. [PHOTO] [LOGO] MASSMUTUAL CORPORATE INVESTORS 2006 ANNUAL REPORT MassMutual Corporate Investors MASSMUTUAL CORPORATE INVESTORS c/o Babson Capital Management LLC 1500 Main Street, Suite 600 Springfield, Massachusetts 01115 (413) 226-1516 http://www.babsoncapital.com/mci ADVISER Babson Capital Management LLC 1500 Main Street Springfield, Massachusetts 01115 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP Boston, Massachusetts 02110 COUNSEL TO THE TRUST Ropes & Gray LLP Boston, Massachusetts 02110 CUSTODIAN Citibank, N.A. New York, New York 10043 TRANSFER AGENT & REGISTRAR Shareholder Financial Services, Inc. P.O. Box 173673 Denver, Colorado 80217-3673 1-800-647-7374 MCI LISTED NYSE [BACKGROUND PHOTO] MassMutual Corporate Investors MassMutual Corporate Investors is a closed-end investment company, first offered to the public over 35 years ago, whose shares are traded on the New York Stock Exchange. PROXY VOTING POLICIES & PROCEDURES; PROXY VOTING RECORD The Trustees of MassMutual Corporate Investors have delegated proxy voting responsibilities relating to the voting of securities held by the Trust to Babson Capital Management LLC. A description of Babson Capital's proxy voting policies and procedures is available (1) without charge, upon request, by calling, toll-free 866-399-1516; (2) on MassMutual Corporate Investors' website: http://www. babsoncapital.com/mci; and (3) on the U.S. Securities and Exchange Commission ("SEC") website at http://www.sec.gov. Information regarding how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (1) on MassMutual Corporate Investors' website: http://www.babsoncapital.com/mci; and (2) on the SEC's website at http://www.sec.gov. FORM N-Q MassMutual Corporate Investors files its complete schedule of portfolio holdings with the 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 upon request by calling, toll-free, 866-399-1516. Or visiting http://www.babsoncapital.com/mci. MassMutual Corporate Investors [BACKGROUND PHOTO] INVESTMENT OBJECTIVE & POLICY MassMutual Corporate Investors (the "Trust") is a closed-end investment company, first offered to the public in 1971, whose shares are traded on the New York Stock Exchange under the trading symbol "MCI". The Trust's share price can be found in the financial section of most newspapers as "MassCp" or "MassMuInv" under either the New York Stock Exchange listings or Closed-End Fund Listings. The Trust's investment objective is to maintain a portfolio of securities providing a fixed yield and at the same time offering an opportunity for capital gains. The Trust's principal investments are privately placed, below-investment grade, long-term corporate debt obligations with equity features such as warrants, conversion rights, or other equity features and, occasionally, preferred stocks. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers, which tend to be smaller companies. In addition, the Trust may temporarily invest, subject to certain limitations, in marketable investment grade debt securities, other marketable debt securities (including high yield securities) and marketable common stocks. Babson Capital Management LLC ("Babson Capital") manages the Trust on a total return basis. The Trust distributes substantially all of its net income to shareholders each year. Accordingly, the Trust pays dividends to shareholders quarterly in January, May, August, and November. The Trust pays dividends to its shareholders in cash, unless the shareholder elects to participate in the Dividend Reinvestment and Share Purchase Plan. In this report you will find a complete listing of the Trust's holdings. We encourage you to read this section carefully for a better understanding of the Trust. We cordially invite all shareholders to attend the Trust's Annual Meeting of Shareholders, which will be held on April 27, 2007 at 2:00 P.M. in Springfield, Massachusetts. PORTFOLIO COMPOSITION AS OF 12/31/06* [PIE CHART APPEARS HERE] Public Equity 1.4% Private High Yield Debt 45.7% Private Investment Grade Debt 5.4% Private/Restricted Equity 15.3% Cash & Short Term Investments 4.4% Public High Yield Debt 27.8% *BASED ON VALUE OF TOTAL INVESTMENTS (INCLUDING CASH) 1 MassMutual Corporate Investors [BACKGROUND PHOTO] TO OUR SHAREHOLDERS I am pleased to share with you the Trust's Annual Report for the year ended December 31, 2006. THE TRUST'S 2006 PORTFOLIO PERFORMANCE The Trust's net total portfolio rate of return for 2006 was 18.09%, as measured by the change in net asset value, assuming the reinvestment of all dividends and distributions. The Trust's total net assets were $251,689,646, or $27.51 per share, as of December 31, 2006 compared to $236,275,418, or $26.06 per share, as of December 31, 2005. The Trust paid a quarterly dividend of 48 cents per share for the first quarter of 2006 and then 50 cents per share for the next three quarters, with the fourth quarter dividend paid in January 2007. In addition, the Trust declared a special year-end dividend of 50 cents per share, paid in January 2007 to shareholders of record on December 29, 2006, bringing total dividends for the year to $2.48. All in all, we are very pleased with the Trust's 2006 portfolio performance. [PHOTO OF OFFICERS] LEFT TO RIGHT: Clifford M. Noreen PRESIDENT Roger W. Crandall CHAIRMAN 2 MassMutual Corporate Investors TOTAL ANNUAL PORTFOLIO RETURN (AS OF 12/31 EACH YEAR)* [BAR CHART APPEARS HERE]
27.14 17.12 7.53 7.28 5.91 4.80 22.61 22.76 20.04 18.09 MASSMUTUAL CORPORATE INVESTORS (BASED ON CHANGE IN THE NET ASSET VALUE WITH REINVESTED DIVIDENDS) 31.04 33.77 25.89 -16.26 -11.67 -23.51 28.34 10.20 3.98 14.79 STANDARD & POOR'S INDUSTRIALS COMPOSITE (FORMERLY CALLED THE STANDARD & POOR'S INDUSTRIAL PRICE INDEX) 8.36 8.29 0.16 9.46 9.77 10.14 6.91 4.08 1.42 4.49 LEHMAN BROTHERS INTERMEDIATE U.S. CREDIT INDEX (FORMERLY CALLED THE LEHMAN BROTHERS INTERMEDIATE CORPORATE BOND INDEX) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
*DATA FOR MASSMUTUAL CORPORATE INVESTORS (THE "TRUST") REPRESENTS PORTFOLIO RETURNS BASED ON CHANGE IN THE TRUST'S NET ASSET VALUE ASSUMING THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS WHICH DIFFERS FROM THE TOTAL INVESTMENT RETURN BASED ON MARKET VALUE DUE TO THE DIFFERENCE BETWEEN THE TRUST'S NET ASSET VALUE AND THE MARKET VALUE OF ITS SHARES OUTSTANDING (SEE PAGE 12 FOR TOTAL INVESTMENT RETURN BASED ON MARKET VALUE); PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. [PHOTO OF OFFICERS] LEFT TO RIGHT: James M. Roy VICE PRESIDENT & CHIEF FINANCIAL OFFICER Rodney J. Dillman VICE PRESIDENT, SECRETARY & CHIEF LEGAL OFFICER 3 MassMutual Corporate Investors The table shown below lists the average annual returns of the Trust's portfolio, based on the change in net assets, assuming the reinvestment of all dividends and distributions, compared to the average annual returns of selected equity and fixed income market indices for the 1, 3, 5 and 10 years ended December 31, 2006. The U.S. economy and investment markets started the year slowly amid lukewarm expectations due to concerns over inflation and the housing market, yet 2006 concluded with some very strong performance, especially in the equity markets. A key date was June 29th, when the Federal Reserve Board completed its fourth and final quarter-point interest rate increase for the year (and 17th since mid-2004).
LEHMAN LEHMAN STANDARD BROTHERS BROTHERS & POOR'S THE U.S. CORPORATE INTERMEDIATE INDUSTRIALS RUSSELL TRUST HIGH YIELD INDEX U.S. CREDIT INDEX* COMPOSITE** 2000 INDEX 1 Year 18.09% 11.85% 4.49% 14.79% 18.37% 3 Year 20.28% 8.49% 3.32% 9.57% 13.56% 5 Year 17.46% 10.18% 5.37% 5.25% 11.39% 10 Year 15.06% 6.59% 6.25% 7.72% 9.44%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. *FORMERLY CALLED THE LEHMAN BROTHERS INTERMEDIATE CORPORATE BOND INDEX. ****FORMERLY CALLED THE STANDARD & POOR'S INDUSTRIAL PRICE INDEX. LEFT TO RIGHT: Jill A. Fields VICE PRESIDENT Michael P. Hermsen VICE PRESIDENT Michael L. Klofas VICE PRESIDENT Richard E. Spencer, II VICE PRESIDENT [PHOTO OF OFFICERS] 4 MassMutual Corporate Investors Eventually, commodity prices tumbled, relieving some inflation fears, and economic growth was sustained even as the housing market declined. The market focused on continued solid earnings growth, reasonable inflation and stable interest rates. Overall, the US economy remains in good shape, but not without question marks. The unemployment rate in 2006 dropped to 4.5 percent from 5 percent the previous year, according to the US Department of Labor. However, core inflation was up to 2.6 percent from 2.2 percent in both 2005 and 2004, and the value of the dollar versus several other currencies dropped in 2006 and is expected to continue to drop in 2007. Investors continued to witness an ever stronger corporate-credit market in 2006. Corporate credit defaults around the globe continued their downward trend for the fifth consecutive year, as reported by Moody's Investors Service. Moody's global issuer-weighted speculative-grade default rate finished the year at 1.7 percent, down from 1.9 percent in 2005 and its lowest level since 1996. Moody's expects the default rate to climb in 2007 but remain well below its historical average of 5 percent. [BACKGROUND PHOTO] Overall, the Trust closed 24 new private placement transactions during 2006 - a record number - and added to eight existing private placement investments. Total direct placement volume of $56,483,647 is also a record for the Trust. New private placement transactions invested in during the year were: Momentum Holding Co.; NABCO, Inc.; Duncan Systems, Inc.; Flutes Inc.; OakRiver Technology, Inc.; Overton's Holding Company; Magnatech International Inc.; Wellborn Forest Holding Co.; Bravo Sports Holding Corporation; Davis- Standard LLC; F H S Holdings LLC; Fowler Holding, Inc.; Fuel Systems Holding Corporation; H M Holding Company; K N B Holdings Corporation; Monessen Holding Corporation; Morton Industrial Group, Inc.; Ontario Drive & Gear Ltd.; PA S Holdco LLC; P I I Holding Corporation; Postle Aluminum Company LLC; R AJ Manufacturing Holdings LLC; Radiac Abrasives, Inc.; and Stanton Carpet Holding Co. In addition, the Trust added to existing private placement investments in Augusta Sportswear Holding Co.; A T I Acquisition Company; American Hospice Management Holding LLC; River Ranch Fresh Foods LLC; Consolidated Foundries Holdings; Eagle Pack Pet Foods, Inc.; Micro-Group, Inc.; and Terra Renewal Services, Inc. 5 MassMutual Corporate Investors THE OUTLOOK FOR 2007 Optimism abounds at the beginning of 2007 based on events in the fourth quarter of 2006, but history reminds us that there are no assurances a year will finish as it starts. Consumer confidence remains strong, and there are indications that the housing market may be through the worst of the downturn that started in 2006. Oil prices fell precipitously at the end of 2006 after significant increases in 2004 and 2005. The Fed indicates that it is on hold with interest rates for the time being, and the corporate debt market appears in good shape. However, Treasury bond activity is sending mixed signals, the dollar continues to drop, and instability and conflict in the Middle East could create new problems at any time. As always, no one can predict the future with any degree of certainty. Regarding mergers and acquisitions (M&A), there are strong indications that the record M&Aactivity of 2006 around the globe could continue into 2007. Last year was the world's most active M&A environment ever, with $3.79 trillion in announced deals worldwide, up 38 percent from 2005, according to Thomson Financial. Private equity firms had a larger than ever role last year, taking part in 20 percent of these deals, and it is estimated that these firms still have some $750 billion in capital ready to go to work. Buyout firms also appear more willing than most corporations to use debt financing, and the current good health of credit markets may allow buyout firms to push the M&A boom further. Regardless of the economic environment, however, the Trust continues to repeatedly 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, combined with Babson Capital's seasoned investment-management team and the Trust's financial position, contribute to the Trust being well positioned for future investment opportunities that meet its investment objectives and policies. As always, I would like to thank you for your continued interest in and support of MassMutual Corporate Investors. Sincerely, /S/ Clifford M. Noreen, - -------------------------- Clifford M. Noreen, PRESIDENT CAUTIONARY NOTICE: CERTAIN STATEMENTS CONTAINED IN THIS REPORT TO SHAREHOLDERS MAY BE "FORWARD LOOKING" STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION ACT OF 1995. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE FORECASTED. - -------------------------------------------------------------------------------- 2006 Record Net Investment Short-Term Tax Long-Term Dividends Date Income Gains Effect Gains - -------------------------------------------------------------------------------- Regular 05/02/06 $0.4800 -- $0.0000 07/28/06 0.5000 -- -- 10/30/06 0.5000 -- -- 12/29/06 0.5000 -- -- Special 12/29/06 0.4860 $0.0140 -- ---------------------------------------------- $2.4660 $0.0140 $2.4800 $0.0000 ---------------------------------------------- The following table summarizes the tax effects of the retention of capital gains for 2006: Amount Per Share Form 2439 - -------------------------------------------------------------------------------- 2006 Gains Retained 1.9399 Line 1a Long-Term Gains Retained 1.9399 Taxes Paid 0.6790 Line 2* Basis Adjustment 1.2609 ** - -------------------------------------------------------------------------------- *IF YOU ARE NOT SUBJECT TO FEDERAL CAPITAL GAINS TAX (E.G., CHARITABLE ORGANIZATIONS, IRAS AND KEOGH PLANS), YOU MAY BE ABLE TO CLAIM A REFUND BY FILING FORM 990-T. **FOR FEDERAL INCOME TAX PURPOSES, YOU MAY INCREASE THE ADJUSTED COST BASIS OF YOUR SHARES BY THIS AMOUNT (THE EXCESS OF LINE 1A OVER LINE 2).
Qualified for Dividend Interest Earned on Annual Dividend Received Deduction*** Qualified Dividends**** U.S. Gov't. Obligations Amount Per Share Percent Amount Per Share Percent Amount Per Share Percent Amount Per Share - --------------------------------------------------------------------------------------------------------- $2.48 14.9716% 0.3713 14.9703% 0.3713 0.0000% 0.0000 - ---------------------------------------------------------------------------------------------------------
***NOT AVAILABLE TO INDIVIDUAL SHAREHOLDERS ****QUALIFIED DIVIDENDS ARE REPORTED IN BOX 1B ON IRS FORM 1099-DIV FOR 2006 6 MassMutual Corporate Investors - -------------------------------------------------------------------------------- Consolidated Statement of Assets and Liabilities . . . . . . . . . . . . . 8 Consolidated Statement of Operations . . . . . . . . . . . . . . . . . . . 9 Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . 10 Consolidated Statements of Changes in Net Assets . . . . . . . . . . . . . 11 Consolidated Selected Financial Highlights . . . . . . . . . . . . . . . . 12 Consolidated Schedule of Investments . . . . . . . . . . . . . . . . . . . 13-33 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 34-37 Report of Independent Registered Public Accounting Firm. . . . . . . . . . 38 Interested Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39-40 Independent Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-43 Officers of the Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 44 MassMutual Corporate Investors - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2006 ASSETS: Investments (See Consolidated Schedule of Investments) Corporate restricted securities at fair value (Cost - $184,641,225) $ 187,640,308 Corporate public securities at market value (Cost - $ 79,333,836) 82,519,303 Short-term securities at amortized cost 7,188,341 ------------- 277,347,952 ------------- Cash 5,184,468 Interest and dividends receivable 6,134,665 Receivable for investments sold 500,863 ------------- TOTAL ASSETS $ 289,167,948 ------------- LIABILITIES: Dividend payable $ 9,149,919 Investment advisory fee payable 786,530 Note payable 20,000,000 Interest payable 188,856 Accrued expenses 165,977 Accrued taxes payable 7,187,020 ------------- TOTAL LIABILITIES 37,478,302 ------------- TOTAL NET ASSETS 251,689,646 ============= NET ASSETS: Common shares, par value $1.00 per share; an unlimited number authorized 9,149,919 Additional paid-in capital 108,209,270 Retained net realized gain on investments, prior years 115,317,244 Undistributed net investment income 1,798,902 Accumulated net realized gain on investments 11,680,778 Net unrealized appreciation of investments 5,533,533 ------------- TOTAL NET ASSETS 251,689,646 ------------- COMMON SHARES ISSUED AND OUTSTANDING 9,149,919 ------------- NET ASSET VALUE PER SHARE $ 27.51 ============= SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 8 MassMutual Corporate Investors - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006 INVESTMENT INCOME: Interest $ 23,856,919 Dividends 1,589,829 Other 366,518 ------------- TOTAL INVESTMENT INCOME 25,813,266 ------------- EXPENSES: Investment advisory fees 3,192,645 Interest 1,516,645 Professional fees 120,500 Trustees' fees and expenses 160,500 Reports to shareholders 111,000 Custodian fees 34,000 Transfer agent/registrar's expenses 32,000 Other 67,288 ------------- TOTAL EXPENSES 5,234,578 ------------- Fees paid indirectly (see Footnote 2.F) (102,455) ------------- NET EXPENSES 5,132,123 ------------- INVESTMENT INCOME - NET 20,681,143 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments before taxes 18,942,246 Income tax expense (6,640,555) ------------- Net realized gain on investments 12,301,691 ------------- Net change in unrealized appreciation of investments 2,831,497 Net change in deferred income tax expense (375,445) ------------- Net change in unrealized appreciation of investments 2,456,052 ------------- NET GAIN ON INVESTMENTS 14,757,743 ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 35,438,886 ============= SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 9 MassMutual Corporate Investors - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2006 NET DECREASE IN CASH: Cash flows from operating activities: Interest, dividends, and other received $ 23,341,010 Interest expense paid (1,515,500) Operating expenses paid (3,526,384) Income taxes paid (7,401,446) ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 10,897,680 ------------- Cash flows from investing activities: Purchases/Proceeds/Maturities from short-term portfolio securities, net 17,471,640 Purchases of portfolio securities (98,552,036) Proceeds from disposition of portfolio securities 89,029,580 ------------- NET CASH PROVIDED BY INVESTING ACTIVITIES 7,949,184 ------------- NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES 18,846,864 ============= Cash flows from financing activities: Cash dividends paid from net investment income (20,296,206) Cash dividends paid from net realized gain on investments (1,446,640) Receipts for shares issued on reinvestment of dividends 2,619,000 ------------- NET CASH USED FOR FINANCING ACTIVITIES (19,123,846) ------------- NET DECREASE IN CASH (276,982) Cash - beginning of year 5,461,450 ------------- CASH - END OF YEAR $ 5,184,468 ============= RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES: NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 35,438,886 ------------- Increase in investments (15,601,109) Increase in interest and dividends receivable (1,111,949) Decrease in receivable for investments sold 416,242 Decrease in other assets 49,175 Increase in investment advisory fee payable 48,169 Increase in interest payable 1,145 Decrease in accrued expenses (8,249) Decrease in accrued taxes payable (385,446) ------------- TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS (16,592,022) ------------- NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES $ 18,846,864 ============= SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 10 MassMutual Corporate Investors - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 2006 2005 - ------------------------------------------------------------------------------- INCREASE IN NET ASSETS: Operations: Investment income - net $ 20,681,143 $ 18,371,097 Net realized gain on investments 12,301,691 15,531,627 Net change in unrealized appreciation of investments 2,456,052 2,199,515 ------------ ------------ Net increase in net assets resulting from operations 35,438,886 36,102,239 ------------ ------------ Increase from common shares issued on reinvestment of dividends Common shares issued (2006 - 84,966; 2005 - 86,526) 2,619,000 2,375,977 Dividends to shareholders from: Net investment income (2006 - $2.47 per share; 2005 - $2.11 per share) (22,518,167) (19,033,162) Net realized gains on investments (2006 - $0.01; 2005 - $0.18 per share) (125,491) (1,674,784) ------------ ------------ TOTAL INCREASE IN NET ASSETS 15,414,228 17,770,270 ------------ ------------ NET ASSETS, BEGINNING OF YEAR 236,275,418 218,505,148 ------------ ------------ NET ASSETS, END OF YEAR (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $1,798,902 AND $1,848,444, RESPECTIVELY) $251,689,646 $236,275,418 ============ ============ SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 11 MassMutual Corporate Investors - -------------------------------------------------------------------------------- CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding: For the years ended December 31, 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------- NET ASSET VALUE: BEGINNING OF YEAR $ 26.06 $ 24.34 $ 21.84 $ 19.40 $ 20.07 ---------- ---------- ---------- ---------- ---------- Net investment income(a) 2.27 2.03 2.00 1.44 1.53 Net realized and unrealized gain (loss) on investments 1.62 1.96(b) 2.64 2.83 (0.59) Total from investment operations 3.89 3.99 4.64 4.27 0.94 ---------- ---------- ---------- ---------- ---------- Dividends from net investment income to common shareholders (2.47) (2.11) (2.16) (1.84) (1.44) Dividends from net realized gain on investments to common shareholders (0.01) (0.18) -- -- (0.18) Increase from dividends reinvested 0.04 0.02 0.02 0.01 0.01 Total dividends (2.44) (2.27) (2.14) (1.83) (1.61) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE: END OF YEAR $ 27.51 $ 26.06 $ 24.34 $ 21.84 $ 19.40 ---------- ---------- ---------- ---------- ---------- PER SHARE MARKET VALUE: END OF YEAR $ 34.89 $ 30.05 $ 28.50 $ 22.90 $ 19.49 ========== ========== ========== ========== ========== Total investment return Market value 29.04% 16.95% 36.10% 27.53% 1.35% Net asset value(c) 18.09% 20.04% 22.76% 22.61% 4.80% Net assets (in millions): End of year $ 251.69 $ 236.28 $ 218.51 $ 193.79 $ 171.03 Ratio of operating expenses to average net assets 1.43% 1.78% 1.93% 2.04% 1.82% Ratio of interest expense to average net assets 0.60% 0.73% 0.77% 0.82% 0.86% Ratio of total expenses before custodian reduction to average net assets 2.07% 2.52% 2.70% 2.86% 2.68% Ratio of net expenses after custodian reduction to average net assets 2.03% 2.51% 2.70% 2.86% 2.68% Ratio of net investment income to average net assets 8.19% 7.98% 8.68% 6.95% 7.65% Portfolio turnover 34.70% 35.22% 53.45% 56.10% 34.02% (a) CALCULATED USING AVERAGE SHARES. (b) AMOUNT INCLUDES $0.19 PER SHARE IN LITIGATION PROCEEDS. (c) 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. Senior securities: Total principal amount (in millions) $ 20 $ 20 $ 29 $ 20 $ 20 Asset coverage per $1,000 of indebtedness $ 13,584 $ 12,814 $ 8,535 $ 10,689 $ 9,551
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 12 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities - 74.55%:(A) Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- Private Placement Investments - 69.30% A T I ACQUISITION COMPANY A for-profit post-secondary school serving students in Texas, Florida and Arizona. 12% Senior Subordinated Note due 2012 $ 2,125,000 04/08/04 $ 2,125,000 $ 2,000,160 Warrant, exercisable until 2012, to purchase common stock at $.02 per share (B) 2,323 shs. 04/08/04 -- 23 Warrant, exercisable until 2012, to purchase preferred stock at $.01 per share (B) 63,287 shs. 03/23/06 63,958 633 ------------- ------------- 2,188,958 2,000,816 ------------- ------------- ADORN, INC. A manufacturer of wall panels, cabinets, moldings and countertops for houses and recreational vehicles. 12.5% Subordinated Note due 2012 $ 1,465,517 02/29/00 1,386,570 1,465,517 Warrant, exercisable until 2012, to purchase common stock at $.02 per share 364 shs. 02/29/00 307,759 613,305 ------------- ------------- 1,694,329 2,078,822 ------------- ------------- AMERCABLE, INC. A manufacturer of electric power, instrumentation and control cables, primarily for the mining and oil and gas industries. 12% Senior Subordinated Note due 2013 $ 1,101,852 04/08/05 1,044,896 1,123,889 Limited Partnership Interest (B) 0.36% int. 04/07/05 78,704 165,270 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 125 shs. 04/08/05 122,463 262,206 ------------- ------------- 1,246,063 1,551,365 ------------- ------------- AMERICAN HOSPICE MANAGEMENT HOLDING LLC A for-profit hospice care provider in the United States. 12% Senior Subordinated Note due 2010 $ 2,125,000 01/22/04 1,944,555 2,163,099 Preferred Class AUnit (B) 3,223 uts. * 322,300 322,300 Common Class B Unit 30,420 uts. 01/22/04 1 34,606 Common Class D Unit (B) 6,980 uts. 09/12/06 1 7,940 ------------- ------------- *01/22/04 AND 09/12/06. 2,266,857 2,527,945 ------------- ------------- ARROW TRU-LINE HOLDINGS, INC. A manufacturer of hardware for residential and commercial overhead garage doors in North America. 12% Senior Subordinated Note due 2012 $ 1,627,660 05/18/05 1,532,974 1,648,065 Common Stock (B) 497 shs. 05/18/05 497,340 507,003 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 130 shs. 05/18/05 112,128 132,913 ------------- ------------- 2,142,442 2,287,981 ------------- ------------- AUGUSTA SPORTSWEAR HOLDING CO. A manufacturer and distributor of athletic apparel, activewear and team uniforms. 12% Senior Subordinated Note due 2012 $ 1,686,800 12/31/04 1,586,441 1,742,912 Common Stock (B) 520 shs. ** 519,622 934,866 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 137 shs. 12/31/04 119,482 247,358 ------------- ------------- **12/31/04, 03/31/05 AND 05/02/06. 2,225,545 2,925,136 ------------- ------------- BETA BRANDS LTD. A manufacturer of hard candy and chocolate-coated products sold primarily to the Canadian market. 5% Promissory Note due 2009 (B) $ 195,498 03/31/04 195,498 -- Warrant, exercisable until 2009, to purchase common stock at $.01 per share (B) 4,895 shs. 03/31/04 1 -- ------------- ------------- 195,499 -- ------------- ------------- 13
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- 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 $ 2,147,176 $ 2,222,666 Preferred Stock Class A(B) 879 shs. 06/30/06 268,121 254,713 Common Stock (B) 1 shs. 06/30/06 286 272 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 309 shs. 06/30/06 92,102 3 ------------- ------------- 2,507,685 2,477,654 ------------- ------------- CAINS FOODS, L.P. A producer of mayonnaise and sauce products for both the retail and food service markets. Limited Partnership Interest 3.69% int. 09/29/95 45,046 127,333 ------------- ------------- CAPESUCCESS LLC A provider of diversified staffing services. Preferred Membership Interests (B) 1,882 uts. 04/29/00 8,396 420 Common Membership Interests (B) 24,318 uts. 04/29/00 108,983 5,442 ------------- ------------- 117,379 5,862 ------------- ------------- CAPITAL SPECIALTY PLASTICS, INC. A producer of desiccant strips used for packaging pharmaceutical products. Common Stock (B) 109 shs. * 503 55,408 ------------- ------------- *12/30/97 AND 05/29/99 COEUR, INC. A producer of proprietary, disposable power injection syringes. 8.75% Senior Secured Term Note due 2010 $ 462,862 04/30/03 462,862 470,645 11.5% Senior Subordinated Note due 2011 $ 424,819 04/30/03 397,498 428,961 Common Stock (B) 126,812 shs. 04/30/03 126,812 249,946 Warrant, exercisable until 2010, to purchase common stock at $.01 per share (B) 87,672 shs. 04/30/03 40,804 172,802 ------------- ------------- 1,027,976 1,322,354 ------------- ------------- COINING CORPORATION OF AMERICA LLC A manufacturer of close tolerance parts and metal stampings. 10.62% Senior Secured Revolving Credit Facility due 2007 (C) $ 43,210 01/07/02 43,210 43,037 10.62% Senior Secured Tranche ANote due 2007 (C) $ 708,875 06/26/01 705,875 700,749 13% Senior Secured Tranche B Note due 2008 $ 648,148 06/26/01 648,148 653,605 Limited Partnership Interest (B) 6.38% int. 06/26/01 324,074 1,647,916 Warrant, exercisable until 2008, to purchase common stock at $.01 per share (B) 107,036 shs. 06/26/01 79,398 544,277 ------------- ------------- 1,800,705 3,589,584 ------------- ------------- CONNOR SPORT COURT INTERNATIONAL, INC. A designer and manufacturer of outdoor and indoor synthetic sports flooring and other temporary flooring products. 12% Senior Subordinated Note due 2012 (D) $ 2,001,121 ** 1,840,888 1,801,009 Limited Partnership Interest (B) 7.74% int. *** 189,586 1,896 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 174 shs. ** 160,233 2 ------------- ------------- **08/12/04 AND 01/18/05. ***08/12/04 AND 01/14/05. 2,190,707 1,802,907 ------------- ------------- 14
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED FOUNDRIES HOLDINGS A manufacturer of engineered cast metal components for the global aerospace and defense industries. 12% Senior Subordinated Note due 2013 $ 2,185,714 06/15/05 $ 2,097,458 $ 2,204,129 Common Stock (B) 509 shs. * 526,096 457,839 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 103 shs. 06/15/05 100,668 1 ------------- ------------- *06/15/05 AND 05/22/06. 2,724,222 2,661,969 ------------- ------------- COREPHARMA LLC A manufacturer of oral dose generic pharmaceuticals targeted at niche applications. 12% Senior Subordinated Note due 2013 $ 2,550,000 08/04/05 2,426,483 2,575,500 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 20 shs. 08/04/05 137,166 67,691 ------------- ------------- 2,563,649 2,643,191 ------------- ------------- 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 1,727,952 1,819,535 Limited Partnership Interest (B) 702,174 uts. 10/30/06 702,174 667,065 Warrant, exercisable until 2014, to purchase preferred stock at $.01 per share (B) 50 shs. 10/30/06 49,830 1 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 34 shs. 10/30/06 34,000 -- ------------- ------------- 2,513,956 2,486,601 ------------- ------------- DEXTER MAGNETICS TECHNOLOGIES, INC. A designer, fabricator, assembler and distributor of industrial magnets and subassemblies in North America and Europe. Common Stock 585 shs. 07/19/01 351,088 805,529 Warrant, exercisable until 2007, to purchase common stock at $.01 per share 297 shs. 07/19/01 131,981 408,278 ------------- ------------- 483,069 1,213,807 ------------- ------------- DIRECTED ELECTRONICS, INC. A designer and distributor of brand name automotive security systems, audio products and installation accessories. Common Stock (B) 368,560 shs. ** 1,856,534 3,945,729 Limited Partnership Interest (B) 8.70% int. *** -- 355,422 ------------- ------------- **12/19/05 AND 06/14/06. ***12/22/99 AND 09/14/05. 1,856,534 4,301,151 ------------- ------------- DIVERSCO, INC./DHI HOLDINGS, INC. Acontract 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 1,392,069 Warrants, exercisable until 2011, to purchase common stock of DHI Holdings, Inc. at $.01 per share (B) 13,352 shs. **** 403,427 -- ------------- ------------- ****10/24/96 AND 8/28/98. 3,921,650 1,392,069 ------------- ------------- 15
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- DUNCAN SYSTEMS, INC. A distributor of windshields and side glass for the recreational vehicle market. 10% Senior Secured Term Note due 2013 $ 540,000 11/01/06 $ 531,900 $ 529,813 13% Senior Subordinated Note due 2014 $ 855,000 11/01/06 760,793 836,624 Common Stock (B) 180,000 shs. 11/01/06 180,000 171,000 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 56,514 shs. 11/01/06 78,160 565 ------------- ------------- 1,550,853 1,538,002 ------------- ------------- DWYER GROUP, INC. A franchiser of a variety of home repair services. Common Stock (B) 6,906 shs. * 690,600 718,224 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 2,034 shs. 10/30/03 186,469 211,493 ------------- ------------- *10/30/03 AND 01/02/04. 877,069 929,717 ------------- ------------- 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 77,208 137,269 ------------- ------------- EAGLE PACK PET FOODS, INC. A manufacturer of premium pet food sold through independent pet stores 12% Senior Subordinated Note due 2011 $ 1,517,857 ** 1,479,282 1,533,036 Warrant, exercisable until 2011, to purchase common stock at $.02 per share (B) 4,085 shs. 09/24/04 39,464 85,501 ------------- ------------- **09/24/04 AND 04/20/06. 1,518,746 1,618,537 ------------- ------------- ENZYMATIC THERAPY, INC. A manufacturer and distributor of branded natural medicines and nutritional supplements. Limited Partnership Interest (B) 1.32% int. 03/30/00 531,250 63,750 Warrant, exercisable until 2009, to purchase common stock at $.01 per share (B) 29,117 shs. 03/30/00 255,000 42,500 ------------- ------------- 786,250 106,250 ------------- ------------- EVANS CONSOLES, INC Adesigner and manufacturer of consoles and control center systems Common Stock (B) 90,000 shs. 05/06/04 6 -- ------------- ------------- F H S HOLDINGS LLC Anational provider of customized disease management services to large self-insured employers. 12% Senior Subordinated Note due 2014 $ 2,390,625 06/01/06 2,225,916 2,427,406 Preferred Unit (B) 158 uts. 06/01/06 157,780 142,002 Common Unit (B) 1,594 uts. 06/01/06 1,594 1,434 Common Unit Class B (B) 1,386 uts. 06/01/06 122,361 110,125 ------------- ------------- 2,507,651 2,680,967 ------------- ------------- 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 $ 918,385 04/13/06 904,609 924,733 14% Senior Subordinated Note due 2014 $ 552,298 04/13/06 495,198 556,776 Common Stock (B) 109,436 shs. 04/13/06 109,436 98,492 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 30,940 shs. 04/13/06 48,433 309 ------------- ------------- 1,557,676 1,580,310 ------------- ------------- 16
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- FOWLER HOLDING, INC. A provider of site development services to residential homebuilders and developers in the Raleigh/Durham region of North Carolina. 12% Senior Subordinated Note due 2013 $ 2,365,217 02/03/06 $ 2,137,986 $ 2,334,405 Common Stock (B) 185 shs. 02/03/06 184,783 166,302 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 254 shs. 02/03/06 208,435 3 ------------- ------------- 2,531,204 2,500,710 ------------- ------------- FUEL SYSTEMS HOLDING CORPORATION An independent North American supplier of fuel tanks for a wide variety of commercial vehicles. 12% Senior Subordinated Note due 2014 $ 2,337,500 01/31/06 2,179,453 2,376,266 Common Stock (B) 212,500 shs. 01/31/06 212,500 191,250 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 138,408 shs. 01/31/06 119,213 1,384 ------------- ------------- 2,511,166 2,568,900 ------------- ------------- H M HOLDING COMPANY A designer, manufacturer, and importer of promotional and wood furniture. 12% Senior Subordinated Note due 2013 $ 2,210,000 02/10/06 2,055,940 2,141,553 Common Stock (B) 340 shs. 02/10/06 340,000 272,000 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 126 shs. 02/10/06 116,875 1 ------------- ------------- 2,512,815 2,413,554 ------------- ------------- HIGHGATE CAPITAL LLC An acquirer of controlling or substantial interests in manufacturing and marketing entities. Series APreferred 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 2012 $ 2,043,269 * 1,877,016 2,087,674 Common Stock (B) 63 shs. * 62,742 83,796 Warrant, exercisable until 2012, to purchase common stock at $.02 per share (B) 200 shs. * 199,501 266,452 ------------- ------------- *06/30/04 AND 08/19/04. 2,139,259 2,437,922 ------------- ------------- INTEGRATION TECHNOLOGY SYSTEMS, INC. A manufacturer of steel protective computer and network systems for the industrial and office environments. 12% Senior Secured Note due 2007 $ 1,644,444 03/01/04 1,646,101 1,248,333 Common Stock (B) 228 shs. 06/01/00 262,200 -- ------------- ------------- 1,908,301 1,248,333 ------------- ------------- ITC^DELTACOM, INC A provider of integrated communications services in the southeastern United States. 13.88% Senior Secured Note due 2009 (C) $ 2,237,971 07/26/05 2,193,583 2,243,315 17.38% Senior Secured Note due 2009 (C) $ 363,203 07/26/05 320,146 363,045 Warrant, exercisable until 2009, to purchase convertible preferred stock at $.01 per share (B) 102,884 shs. 07/26/05 34,295 261,325 ------------- ------------- 2,548,024 2,867,685 ------------- ------------- 17
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- JASON, INC. A diversified manufacturing company serving various industrial markets. 13% Senior Subordinated Note due 2008 $ 963,687 08/04/00 $ 924,180 $ 954,050 14% Cumulative Redeemable Preferred Stock Series A(B) 289 shs. 08/04/00 289,224 280,542 Limited Partnership Interest of Saw Mill Capital Fund II, L.P. (B) 2.50% int. 08/03/00 886,352 709,205 Warrants, exercisable until 2008 and 2009, to purchase common stock at $.01 per share (B) 50,870 shs. 08/04/00 115,412 40,694 ------------- ------------- 2,215,168 1,984,491 ------------- ------------- JUSTRITE MANUFACTURING AQUISITION CO. A manufacturer of safety products such as storage cabinets and containers. 12% Senior Subordinated Note due 2011 $ 1,593,750 12/15/04 1,511,856 1,609,688 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 1,121 shs. 12/15/04 101,109 78,644 ------------- ------------- 1,612,965 1,688,332 ------------- ------------- K N B HOLDINGS CORPORATION A designer, manufacturer and marketer of products for the custom framing market. 13.5% Senior Subordinated Note due 2013 $ 2,428,486 05/25/06 2,312,312 2,422,376 Common Stock (B) 134,210 shs. 05/25/06 134,210 120,789 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 82,357 shs. 05/25/06 71,534 824 ------------- ------------- 2,518,056 2,543,989 ------------- ------------- KEEPSAKE QUILTING, INC. A seller of quilting fabrics, books, patterns, kits and notions to consumers. 8.87% Senior Secured Revolving Note due 2007 (C) $ 110,078 06/16/00 110,078 110,538 8.87% Senior Secured Tranche ANote due 2007 (C) $ 137,598 07/19/00 137,598 136,988 12% Senior Secured Tranche B Note due 2008 $ 550,392 06/16/00 538,262 553,917 Limited Partnership Interest of Riverside XVI Holding Company, L.P. (B) 5.29% int. 06/12/00 333,490 323,193 Warrant, exercisable until 2008, to purchase common stock at $.01 per share (B) 1,108 shs. 06/12/00 45,866 108,344 ------------- ------------- 1,165,294 1,232,980 ------------- ------------- KELE AND ASSOCIATES, INC. A distributor of building automation control products. 12% Senior Subordinated Note due 2012 $ 1,831,548 02/27/04 1,696,059 1,886,494 Preferred Stock (B) 23 shs. 11/24/04 449,164 456,950 Common Stock (B) 12 shs. 02/27/04 12,871 236,719 Warrant, exercisable until 2012, to purchase common stock at $.02 per share (B) 11 shs. 02/27/04 7,793 216,668 ------------- ------------- 2,165,887 2,796,831 ------------- ------------- KEYSTONE NORTH AMERICA, INC. An operator of funeral homes in North America. Common Stock 49,216 shs. 02/08/05 236,709 251,592 ------------- ------------- 18
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
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 2008 $ 3,845,000 * $ 3,613,269 $ 3,268,250 Common Stock (B) 5,800 shs. * 406,003 6,380 Warrant, exercisable until 2008, to purchase common stock at $.11 per share (B) 15,572 shs. * 602,127 -- ------------- ------------- *12/23/98 AND 01/28/99. 4,621,399 3,274,630 ------------- ------------- MAGNATECH INTERNATIONAL, INC. A supplier of process equipment and related parts used in the manufacturing of medium and high-pressure reinforced hoses. 12% Senior Subordinated Note due 2014 $ 1,275,000 04/05/06 1,187,208 1,286,593 13% Preferred Stock (B) 565 shs. 04/05/06 565,335 537,064 Common Stock (B) 125 shs. 04/05/06 125,048 118,798 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 13 shs. 04/05/06 12,905 -- ------------- ------------- 1,890,496 1,942,455 ------------- ------------- MAVERICK ACQUISITION COMPANY A manufacturer of capsules that cover the cork and neck of wine bottles. 9.87% Senior Secured Tranche ANote due 2010 (C) $ 667,169 09/03/04 667,169 670,380 12% Senior Secured Tranche B Note due 2011 $ 313,433 09/03/04 282,702 315,106 Limited Partnership Interest (B) 7.84% int. 09/03/04 58,769 53,764 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 425 shs. 09/03/04 39,473 38,846 ------------- ------------- 1,048,113 1,078,096 ------------- ------------- MAXON CORPORATION A manufacturer of industrial combustion equipment and related shut-off valves and control valves. 12% Senior Subordinated Note due 2012 $ 962,215 09/30/04 888,798 990,656 8.75% Senior Subordinated Note due 2012 $ 1,155,562 09/30/04 1,155,562 1,191,468 Common Stock (B) 381,672 shs. 09/30/04 381,672 841,587 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 153,572 shs. 09/30/04 90,897 338,625 ------------- ------------- 2,516,929 3,362,336 ------------- ------------- MEDASSIST, INC. A provider of patient eligibility and accounts receivable management services to hospitals and physician practices. 8% Preferred Stock (B) 84 shs. 10/28/04 83,658 84,333 Common Stock (B) 26,185 shs. 10/28/04 35,088 82,039 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 88,948 shs. 05/01/03 40,675 278,681 ------------- ------------- 159,421 445,053 ------------- ------------- MICROGROUP, INC. A manufacturer of precision parts and assemblies, and a value-added supplier of metal tubing and bars. 12% Senior Subordinated Note due 2013 $ 2,685,614 ** 2,526,500 2,734,970 Common Stock (B) 450 shs. ** 450,000 823,752 Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 164 shs. ** 162,974 300,175 ------------- ------------- **08/12/05 AND 09/11/06. 3,139,474 3,858,897 ------------- ------------- 19
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- MOMENTUM HOLDING CO. A designer and supplier of upholstery fabric to commercial furniture manufacturers and architectural and design firms. 12% Senior Subordinated Note due 2014 $ 1,168,847 08/04/06 $ 1,041,236 $ 1,183,845 Limited Partnership Interest (B) 106,153 uts. 08/04/06 106,153 95,538 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 1,107 shs. 08/04/06 107,109 11 ------------- ------------- 1,254,498 1,279,394 ------------- ------------- MONESSEN HOLDING CORPORATION A designer and manufacturer of a broad line of gas, wood, and electric hearth products and accessories. 12% Senior Subordinated Note due 2014 $ 2,550,000 03/31/06 2,368,020 2,425,560 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 152 shs. 03/31/06 138,125 2 ------------- ------------- 2,506,145 2,425,562 ------------- ------------- MORTON INDUSTRIAL GROUP, INC. A manufacturer of highly engineered metal fabricated components 12% Senior Subordinated Note due 2014 $ 2,440,909 08/25/06 2,245,474 2,481,293 Common Stock (B) 109,091 shs. 08/25/06 109,091 98,182 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 173,633 shs. 08/25/06 149,940 1,736 ------------- ------------- 2,504,505 2,581,211 ------------- ------------- MOSS, INC. A manufacturer and distributor of large display and exhibit structures. 9.37% Senior Secured Revolving Note due 2010 (C) $ 926,471 07/03/06 917,206 931,379 9.37% Senior Secured Tranche ANote due 2010 (C) $ 164,706 12/21/05 164,706 166,116 12% Senior Secured Tranche B Note due 2010 $ 350,000 12/21/05 309,853 354,499 Limited Partnership Interest of Riverside Capital Appreciation Fund I, L.P. (B) 33.59% int. * 49 120,296 Warrant, exercisable until 2010, to purchase common stock at $.01 per share (B) 214 shs. 12/21/05 36,647 20,918 ------------- ------------- *09/20/00 AND 05/23/02. 1,428,461 1,593,208 ------------- ------------- NABCO, INC. A producer of explosive containment vessels in the United States. 12% Senior Subordinated Note due 2014 $ 625,000 02/24/06 577,566 611,356 Limited Partnership Interest (B) 650 uts. 02/24/06 650,000 617,500 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 48 shs. 02/24/06 37,188 -- ------------- ------------- 1,264,754 1,228,856 ------------- ------------- NEFF MOTIVATION, INC A manufacturer and distributor of customized awards and sportswear to schools. 12.5% Senior Subordinated Note due 2011 $ 1,062,500 01/31/03 940,500 1,083,750 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 212 shs. 01/31/03 180,625 301,952 ------------- ------------- 1,121,125 1,385,702 ------------- ------------- 20
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- NONNI'S FOOD COMPANY A producer and distributor of premium biscotti and bagel chips in North America. 12.25% Senior Subordinated Note due 2012 $ 1,863,462 03/29/04 $ 1,856,139 $ 1,875,738 10% Preferred Stock (B) 255 shs. 03/29/04 255,083 256,310 Common Stock (B) 6,455 shs. 03/29/04 6,455 71,864 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 8,622 shs. 03/29/04 7,323 95,990 ------------- ------------- 2,125,000 2,299,902 ------------- ------------- NYLONCRAFT, INC. A supplier of engineered plastic components for the automotive industry. 9% Senior Secured Note due 2009 $ 812,500 01/28/02 812,500 771,875 11.5% Senior Subordinated Note due 2012 $ 1,500,000 01/28/02 1,397,375 750,000 Common Stock (B) 312,500 shs. 01/28/02 312,500 -- Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 243,223 shs. 01/28/02 162,045 -- 2,684,420 1,521,875 O R S NASCO HOLDING, INC. A wholesale distributor of industrial supplies in North America. 13% Senior Subordinated Note due 2013 $ 2,372,732 12/20/05 2,233,455 2,420,187 Common Stock (B) 177,268 shs. 12/20/05 177,268 159,541 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 99,771 shs. 12/20/05 98,773 998 ------------- ------------- 2,509,496 2,580,726 ------------- ------------- OAKRIVER TECHNOLOGY, INC. Designs, engineers and assembles high precision automated process equipment for the medical device industry, with a focus on defibrillators and stents. 10% Senior Secured Note due 2012 $ 565,452 01/03/06 556,970 562,843 13% Senior Subordinated Note due 2013 $ 687,241 01/03/06 615,444 684,292 Common Stock (B) 322,307 shs. 01/03/06 322,307 290,076 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 72,185 shs. 01/03/06 62,824 754 ------------- ------------- 1,557,545 1,537,965 ------------- ------------- OLYMPIC SALES, INC. A boat retailer in Washington state, Oregon, California and British Columbia. 12% Senior Subordinated Note due 2008 $ 1,606,000 08/07/98 1,606,000 1,553,112 12% Senior Subordinated Note due 2008 $ 307,071 02/09/00 301,800 302,988 Limited Partnership Interest of Riverside VIII, VIII-A and VIII-B Holding Company, L.P. 20.57% int. * 1,555,992 1,555,626 Warrants, exercisable until 2007 and 2008, to purchase common stock at $.01 per share (B) 28,648 shs. ** 389,188 385,720 ------------- ------------- *08/07/98, 02/23/99, 12/22/99 AND 02/25/03. **08/07/98 AND 02/09/00. 3,852,980 3,797,446 ------------- ------------- ONTARIO DRIVE & GEAR LTD. Amanufacturer of all-wheel drive, off-road amphibious vehicles and related accessories. 13% Senior Subordinated Note due 2013 $ 1,977,885 01/17/06 1,783,889 1,987,098 Limited Partnership Interest (B) 3,667 uts. 01/17/06 572,115 514,903 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 619 shs. 01/17/06 170,801 6 ------------- ------------- 2,526,805 2,502,007 ------------- ------------- 21
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- OVERTON'S HOLDING COMPANY A marketer of marine and water sports accessories in the United States. 12% Senior Subordinated Note due 2014 $ 1,817,308 04/28/06 $ 1,701,543 $ 1,823,373 Common Stock (B) 95 shs. 04/28/06 95,000 85,500 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 94 shs. 04/28/06 83,720 1 ------------- ------------- 1,880,263 1,908,874 ------------- ------------- P A S HOLDCO LLC An independent provider of maintenance, repair and overhaul services to the aerospace gas turbine engine and airframe markets. 14% Senior Subordinated Note due 2014 $ 2,178,325 07/03/06 2,068,313 2,176,341 Preferred Unit (B) 382 uts. 07/03/06 382,150 363,043 Preferred Unit (B) 69 uts. 07/03/06 68,790 65,351 Common Unit Class I (B) 148 uts. 07/03/06 -- 1 Common Unit Class L (B) 31 uts. 07/03/06 -- -- ------------- ------------- 2,519,253 2,604,736 ------------- ------------- P I I HOLDING CORPORATION A manufacturer of plastic film and bags for the general industrial, medical, and food industries. 12% Senior Subordinated Note due 2013 $ 2,295,000 03/31/06 2,145,829 2,296,982 Preferred Stock (B) 36 shs. 03/31/06 329,596 313,116 Common Stock (B) 23 shs. 03/31/06 25,500 22,950 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 13 shs. 03/31/06 11,122 -- ------------- ------------- 2,512,047 2,633,048 ------------- ------------- 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 2,028,432 2,108,091 Membership Interests of MM/Lincap PPI Investments, Inc., LLC (B) 2.42% int. 12/21/00 265,625 280,043 ------------- ------------- 2,294,057 2,388,134 ------------- ------------- POSTLE ALUMINUM COMPANY LLC A manufacturer and distributor of aluminum extruded products. 12% Senior Subordinated Note due 2014 $ 2,040,000 10/02/06 1,886,907 2,029,919 Limited Partnership Interest (B) 1384 uts. 10/02/06 510,000 484,501 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 344 shs. 10/02/06 124,644 3 ------------- ------------- 2,521,551 2,514,423 ------------- ------------- PROTEIN GENETICS, INC. A producer of bovine artificial insemination products, related breeding and healthcare products and specialty genetics sold to the dairy and beef industries. 9.8% Redeemable Exchangeable Preferred Stock (B) 1,004 shs. 08/12/94 100,350 -- Common Stock (B) 2,600 shs. * 126,866 -- ------------- ------------- *11/14/01 AND 08/12/94 227,216 -- ------------- ------------- QUALIS AUTOMOTIVE LLC A distributor of aftermarket automotive brake and chassis products. 12% Senior Subordinated Note due 2012 $ 1,770,833 05/28/04 1,483,249 1,790,258 Common Stock 354,167 shs. 05/28/04 354,166 408,000 Warrant, exercisable until 2012, to purchase common stock at $.01 per share 377,719 shs. 05/28/04 377,719 435,132 ------------- ------------- 2,215,134 2,633,390 ------------- ------------- 22
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- QUALSERV CORPORATION A provider of foodservice equipment and supplies to major restaurant chains and their franchisees. 14% Senior Subordinated Note due 2012 (D) $ 1,893,563 07/09/04 $ 1,844,035 $ -- Limited Partnership Interest (B) 9.26% int. 07/09/04 259,146 -- Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 528 shs. 07/09/04 49,061 -- ------------- ------------- 2,152,242 -- ------------- ------------- R A J MANUFACTURING HOLDINGS LLC A designer and manufacturer of women's swimwear sold under a variety of licensed brand names. 12.5% Senior Subordinated Note due 2014 $ 2,267,190 12/15/06 2,090,363 2,220,661 Limited Partnership Interest (B) 2,828 uts. 12/15/06 282,810 268,670 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 3 shs. 12/15/06 131,483 -- ------------- ------------- 2,504,656 2,489,331 ------------- ------------- RADIAC ABRASIVES, INC. A manufacturer of bonded abrasive and super abrasive grinding wheels in the United States. 12% Senior Subordinated Note due 2014 $ 2,260,638 02/10/06 2,104,998 2,302,552 Common Stock (B) 289,362 shs 02/10/06 289,362 260,426 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 131,555 shs. 02/10/06 119,796 1,316 ------------- ------------- 2,514,156 2,564,294 ------------- ------------- RIVER RANCH FRESH FOODS LLC A supplier of fresh produce to the retail and foodservice channels. 13% Senior Subordinated Note due 2011 (D) $ 1,841,667 09/29/04 1,683,764 1,473,334 Limited Partnership Interest (B) 40,610 uts. 09/29/04 283,333 -- 18% Prefered Stock (B) 141,667 shs. 11/16/06 141,667 141,667 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 23,575 shs. 09/29/04 157,903 -- ------------- ------------- 2,266,667 1,615,001 ------------- ------------- ROYAL BATHS MANUFACTURING COMPANY A manufacturer and distributor of acrylic and cultured marble bathroom products. 12.5% Senior Subordinated Notes due 2011 $ 1,062,500 11/14/03 972,277 1,083,750 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 140 shs. 11/14/03 122,946 175,389 ------------- ------------- 1,095,223 1,259,139 ------------- ------------- SAFETY SPEED CUT MANUFACTURING COMPANY, INC A manufacturer of vertical panel saws and routers for the wood working industry. 8.87% Senior Secured Tranche ANote due 2007 (C) $ 282,663 06/02/99 282,663 282,663 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 1,054,544 ------------- ------------- 1,669,527 2,467,859 ------------- ------------- SAVAGE SPORTS HOLDING, INC. A manufacturer of sporting firearms 12% Senior Subordinated Note due 2012 $ 1,538,793 09/10/04 1,445,281 1,551,306 Common Stock (B) 586 shs. 09/10/04 586,207 469,094 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 134 shs. 09/10/04 113,578 106,925 ------------- ------------- 2,145,066 2,127,325 ------------- ------------- 23
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- SPECIALTY FOODS GROUP, INC. A manufacturer and distributor of branded meat products. Limited Partnership Interest of MHD Holdings LLC 1.43% int. 08/29/00 $ 684,724 $ -- ------------- ------------- 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 2,103,216 2,247,169 Common Stock (B) 311 shs. 08/01/06 310,976 279,882 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 104 shs. 08/01/06 93,293 1 ------------- ------------- 2,507,485 2,527,052 ------------- ------------- STRATEGIC EQUIPMENT & SUPPLY CORPORATION, INC. A provider of kitchen and restaurant design, equipment fabrication and installation services. Warrant, exercisable until 2008, to purchase common stock at $.01 per share (B) 106,539 shs. 01/14/00 658,751 -- ------------- ------------- SYNVENTIVE EQUITY LLC A manufacturer of hot runner systems used in the plastic injection molding process. Limited Partnership Interest (B) 1.99% int. 08/20/03 63,206 14,100 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 86,780 shs. 08/21/03 19,359 19,359 ------------- ------------- 82,565 33,459 ------------- ------------- TANGENT RAIL CORPORATION A manufacturer of rail ties and provides specialty services to the North American railroad industry. 13% Senior Subordinated Note due 2013 $ 2,217,385 10/14/05 1,905,672 2,261,733 Preferred Stock 1,324 shs. 10/14/05 132,370 136,480 Common Stock (B) 2,203 shs. 10/14/05 2,203 1,983 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 1,167 shs. 10/14/05 294,403 12 ------------- ------------- 2,334,648 2,400,208 ------------- ------------- TERRA RENEWAL SERVICES, INC. A provider of wastewater residual management and required environmental reporting, permitting, nutrient management planning and record keeping to companies involved in poultry and food processing. 8.64% Senior Secured Tranche B Note due 2012 (C) $ 1,597,149 04/28/06 1,592,000 1,580,858 12% Senior Subordinated Note due 2014 $ 1,162,110 * 1,106,179 1,166,511 Limited Partnership Interest of Saw Mill Capital Fund V, L.P. 2.30% int. 03/01/05 215,742 194,173 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 72 shs. 04/28/06 60,597 1 ------------- ------------- *04/28/06 AND 09/13/06. 2,974,518 2,941,543 ------------- ------------- THE TRANZONIC COMPANIES Aproducer of commercial and industrial supplies, such as safety products, janitorial supplies, work apparel, washroom and restroom supplies and sanitary care products. 13% Senior Subordinated Note due 2009 $ 2,712,000 02/05/98 2,570,733 2,712,000 Common Stock (B) 630 shs. 02/04/98 630,000 442,260 Warrant, exercisable until 2009, to purchase common stock at $.01 per share (B) 444 shs. 02/05/98 368,832 311,688 ------------- ------------- 3,569,565 3,465,948 ------------- ------------- 24
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- TRANSTAR HOLDING COMPANY A distributor of aftermarket automotive transmission parts. 12% Senior Subordinated Note due 2013 $ 1,734,000 08/31/05 $ 1,663,468 $ 1,784,082 Common Stock (B) 816 shs. 08/31/05 816,000 775,200 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 86 shs. 08/31/05 77,485 1 ------------- ------------- 2,556,953 2,559,283 ------------- ------------- 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 $ 789,836 01/20/00 789,836 793,040 12% Senior Subordinated Note due 2010 $ 1,326,500 01/20/00 1,287,457 1,352,788 Common Stock (B) 227,400 shs. 01/20/00 227,400 577,141 Warrant, exercisable until 2010, to purchase common stock at $1 per share (B) 260,563 shs. 01/20/00 98,540 661,309 ------------- ------------- 2,403,233 3,384,278 ------------- ------------- TRUCK BODIES & EQUIPMENT INTERNATIONAL A designer and manufacturer of accessories for heavy and medium duty trucks, primarily dump bodies, hoists, various forms of flat-bed bodies, landscape bodies and other accessories. 12% Senior Subordinated Note due 2013 $ 2,309,541 * 2,156,900 2,392,246 Common Stock (B) 742 shs. * 800,860 1,825,935 Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 153 shs. * 159,894 377,121 ------------- ------------- *07/19/05 AND 12/22/05. 3,117,654 4,595,302 ------------- ------------- TRUSTILE DOORS, INC. A manufacturer and distributor of interior doors. 12.5% Senior Subordinated Note due 2010 $ 1,062,500 04/11/03 1,006,070 1,083,569 Warrant, exercisable until 2010, to purchase common stock at $.01 per share (B) 5,781 shs. 04/11/03 95,625 197,707 ------------- ------------- 1,101,695 1,281,276 ------------- ------------- TUBULAR TEXTILE MACHINERY A designer, manufacturer, seller and servicer of finishing machinery for the knit and woven segments of the global textile industry. 12% Senior Subordinated Note due 2014 $ 1,234,551 05/28/04 1,126,620 1,224,761 8.75% Senior Secured Note due 2011 $ 716,292 05/28/04 716,292 715,660 Common Stock (B) 674,157 shs. 05/28/04 674,157 573,033 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 203,912 shs. 05/28/04 130,789 2,039 ------------- ------------- 2,647,858 2,515,493 ------------- ------------- U S S HOLDINGS, INC. A producer of high grade industrial and specialty silica sands. 14% Redeemable Preferred Stock (B) 997 shs. 09/30/99 545,858 933,236 Convertible Preferred Stock Series Aand B, convertible into common stock at $8.02 per share (B) 145,446 shs. 12/19/96 1,166,829 -- Common Stock (B) 20,027 shs. 09/30/99 799,068 -- Warrants, exercisable until 2010 to purchase common stock at $.01 per share (B) 4,918 shs. ** 128,372 -- ------------- ------------- **12/19/96 AND 9/30/99. 2,640,127 933,236 ------------- ------------- 25
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares, Units, Warrants, Ownership or Acquisition Corporate Restricted Securities:(A) continued Principal Amount Date Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- 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 $ 1,882,100 04/30/04 $ 1,714,264 $ 1,882,100 Common Stock (B) 182 shs. 04/30/04 182,200 273,847 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 230 shs. 04/30/04 211,736 346,321 ------------- ------------- 2,108,200 2,502,268 ------------- ------------- VICTORY VENTURES LLC An acquirer of controlling or substantial interests in other entities Series APreferred Units (B) 0.15% int. 12/02/96 1 -- VITALITY FOODSERVICE, INC. A non-carbonated beverage dispensing company focused on the foodservice industry. 13% Senior Subordinated Note due 2011 $ 1,887,288 09/24/04 1,740,960 1,698,559 Common Stock (B) 26,456 shs. * 264,558 211,648 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 23,787 shs. 09/24/04 186,883 190,296 ------------- ------------- *09/24/04 AND 12/22/06. 2,192,401 2,100,503 ------------- ------------- VITEX PACKAGING GROUP, INC A manufacturer of specialty packaging, primarily envelopes and tags used on tea bags. 12.5% Senior Subordinated Note due 2012 $ 1,700,000 07/19/04 1,483,065 1,559,750 Limited Partnership Interest Class A(B) 1.75% int. 07/19/04 414,375 352,219 Limited Partnership Interest Class B (B) 0.77% int. 07/19/04 182,935 155,495 ------------- ------------- 2,080,375 2,067,464 ------------- ------------- WALLS INDUSTRIES, INC. A provider of branded workwear and sporting goods apparel. 12.36% Senior Subordinated Lien Note due 2009 (C) $ 838,816 07/12/04 838,815 839,990 14% Senior Subordinated Note due 2012 $ 1,085,380 07/12/04 1,082,866 1,107,088 Limited Partnership Interest (B) 0.40% int. 07/12/04 37,281 737,469 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 4,029 shs. 07/12/04 2,833 79,696 ------------- ------------- 1,961,795 2,764,243 ------------- ------------- 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 1,600,400 1,684,415 Common Stock (B) 191 shs. 11/30/06 191,250 181,688 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 95 shs. 11/30/06 86,493 1 ------------- ------------- 1,878,143 1,866,104 ------------- ------------- TOTAL PRIVATE PLACEMENT INVESTMENTS $ 171,749,836 $ 174,416,861 ------------- ------------- 26
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares or Interest Due Principal Corporate Restricted Securities:(A) (Continued) Rate Date Amount Cost Fair Value - --------------------------------------------------------------------------------------------------------------------------------- Rule 144A Securities - 5.25%: (A) BONDS - 5.25% A E S Corporation 9.000% 05/15/15 $ 200,000 $ 200,000 $ 215,000 Activant Solutions, Inc. (C) 9.500 05/01/16 150,000 150,000 139,500 American Tire Distributor (C) 11.622 04/01/12 1,000,000 950,000 955,000 Bombardier, Inc. 6.300 05/01/14 1,000,000 890,000 940,000 Calpine Corporation 8.750 07/15/13 500,000 465,000 536,250 Charter Communications Op LLC 8.000 04/30/12 250,000 249,375 259,688 Douglas Dynamics LLC 7.750 01/15/12 630,000 633,274 592,200 G F S I, Inc. (C) 11.500 06/01/11 750,000 682,541 735,000 H C A, Inc. 9.250 11/15/16 975,000 992,364 1,044,469 Idearc, Inc. 8.000 11/15/16 600,000 600,000 609,000 Opti Canada, Inc. 8.250 12/15/14 400,000 400,000 411,000 Packaging Dynamics Corporation of America 10.000 05/01/16 1,250,000 1,256,813 1,250,000 Pregis Corporation 12.375 10/15/13 1,000,000 981,490 1,082,500 Rental Service Corporation 9.500 12/01/14 1,000,000 1,014,374 1,032,500 Stewart & Stevenson LLC 10.000 07/15/14 1,200,000 1,225,170 1,260,000 Tekni-Plex, Inc. (C) 9.750 11/15/13 650,000 655,756 628,875 Tenaska Alabama Partners LP 7.000 06/30/21 348,916 348,916 346,527 Titan International, Inc. 8.000 01/15/12 150,000 150,000 150,938 Tunica-Biloxi Gaming Authority 9.000 11/15/15 1,000,000 1,032,307 1,035,000 ------------ ------------ TOTAL BONDS 12,877,380 13,223,447 ------------ ------------ COMMON STOCK - 0.00% Jordan Telecom Products (B) 70 $ 14,000 $ -- ------------ ------------ TOTAL COMMON STOCK 14,000 -- ------------ ------------ WARRANTS - 0.00% Winsloew Furniture, Inc. (B) 900 $ 9 $ -- ------------ ------------ TOTAL WARRANTS 9 -- ------------ ------------ TOTAL RULE 144A SECURITIES 12,891,389 13,223,447 ------------ ------------ TOTAL CORPORATE RESTRICTED SECURITIES $184,641,225 $187,640,308 ------------ ------------ 27
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Interest Due Principal Corporate Public Securities -- 32.78%:(A) Rate Date Amount Cost Market Value - --------------------------------------------------------------------------------------------------------------------------------- BONDS - 30.00% A M C Entertainment, Inc. 11.000% 02/01/16 $ 815,000 $ 817,373 $ 914,838 Affinia Group, Inc. 9.000 11/30/14 910,000 834,625 891,800 Alamosa Delaware, Inc. 11.000 07/31/10 325,000 328,748 351,190 Alamosa Delaware, Inc. 8.500 01/31/12 400,000 400,000 423,940 ALH Fin LLC/ALH Fin Corporation 8.500 01/15/13 950,000 918,812 933,375 Allied Waste NA 7.875 04/15/13 1,000,000 1,022,155 1,031,250 Appleton Papers, Inc. 8.125 06/15/11 300,000 300,000 306,000 Argo Tech Corporation 9.250 06/01/11 850,000 850,000 918,000 Atlas Pipeline Partners 8.125 12/15/15 200,000 200,000 205,500 Bally Total Fitness Holdings Corporation 9.875 10/15/07 135,000 128,925 125,550 Basic Energy Services 7.125 04/15/16 225,000 225,000 221,625 BCP Crystal US Holdings Corporation 9.625 06/15/14 485,000 485,000 535,925 Blockbuster, Inc. (C) 9.000 09/01/12 475,000 475,955 459,563 Brigham Exploration Co. 9.625 05/01/14 700,000 690,403 701,750 CCH I Holdings LLC 11.000 10/01/15 1,000,000 890,000 1,026,250 CCH I Holdings LLC 11.125 01/15/14 1,000,000 640,438 880,000 Cablevision Systems Corporation 8.000 04/15/12 1,000,000 1,013,604 982,500 Cadmus Communications Corporation 8.375 06/15/14 1,000,000 995,625 995,000 Cenveo Corporation 7.875 12/01/13 1,100,000 1,100,000 1,056,000 Chemed Corporation 8.750 02/24/11 1,125,000 1,125,000 1,164,375 Chesapeake Energy Corporation 7.000 08/15/14 1,075,000 1,110,957 1,092,469 Cincinnati Bell, Inc. 8.375 01/15/14 1,100,000 1,007,500 1,130,250 Clayton Williams Energy, Inc. 7.750 08/01/13 800,000 800,000 738,000 Consolidated Container Corporation (E) 0.000 06/15/09 750,000 729,949 759,375 Dave and Buster's, Inc. 11.250 03/15/14 600,000 607,500 609,000 Del Monte Corporation 8.625 12/15/12 225,000 225,000 237,375 Dominos Pizza, Inc. 8.250 07/01/11 292,000 289,892 302,585 Dynegy Holdings, Inc. 6.875 04/01/11 500,000 422,500 500,000 Dynegy Holdings, Inc. 8.375 05/01/16 330,000 330,000 346,500 Edison Mission Energy 7.750 06/15/16 500,000 500,000 530,000 El Paso Corporation 7.875 06/15/12 1,050,000 1,061,420 1,126,125 Esterline Technologies 7.750 06/15/13 200,000 200,000 204,000 Flextronics International Ltd. 6.500 05/15/13 400,000 400,000 395,000 Ford Motor Credit Co. 7.375 10/28/09 1,250,000 1,246,875 1,252,663 Ford Motor Credit Co. 8.000 12/15/16 300,000 294,965 297,555 Gencorp, Inc. 9.500 08/15/13 259,000 259,000 274,540 General Mortors Acceptance Corporation 7.750 01/19/10 1,250,000 1,293,309 1,308,330 General Motors Corporation 8.250 07/15/23 1,000,000 920,000 930,000 Geo Sub Corporation 11.000 05/15/12 1,000,000 1,008,194 965,000 Goodyear Tire & Rubber Co. 7.857 08/15/11 1,400,000 1,342,750 1,407,000 Great Lakes Dredge & Dock Corporation 7.750 12/15/13 1,015,000 926,319 989,625 GulfMark Offshore, Inc. 7.750 07/15/14 565,000 562,599 576,300 Harrah's Operating Co. 6.500 06/01/16 950,000 842,338 850,583 Hawaiian Telecom Communications 12.500 05/01/15 700,000 764,659 733,250 Inergy LP 8.250 03/01/16 150,000 150,000 157,500 Insurance Auto Auctions, Inc. 11.000 04/01/13 1,000,000 1,009,019 1,130,000 Intelsat Subsidiary Holding Company Ltd. (C) 10.484 01/15/12 1,000,000 1,009,570 1,008,750 Interline Brands, Inc. 8.125 06/15/14 325,000 322,670 333,938 Iron Mountain, Inc. 8.750 07/15/18 1,065,000 1,100,011 1,128,900 Koppers, Inc. 9.875 10/15/13 477,000 477,000 518,738 Land O'Lakes, Inc. 9.000 12/15/10 750,000 750,000 795,938 Lazard LLC 7.125 05/15/15 750,000 749,408 776,863 Leucadia National Corporation 7.000 08/15/13 650,000 661,029 659,750 Liberty Media Corporation 5.700 05/15/13 1,000,000 951,610 942,137 Lodgenet Entertainment Corporation 9.500 06/15/13 425,000 425,000 457,938 M G M Mirage, Inc. 6.000 10/01/09 375,000 378,290 374,062 28
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Interest Due Principal Corporate Public Securities: (A) continued Rate Date Amount Cost Market Value - --------------------------------------------------------------------------------------------------------------------------------- BONDS, CONTINUED Mac-Gray Corporation 7.625% 08/15/15 $ 600,000 $ 600,000 $ 609,000 Majestic Star Casino LLC 9.500 10/15/10 500,000 500,000 525,000 Manitowoc Company, Inc. 7.125 11/01/13 200,000 200,000 202,000 Markwest Energy Operating Co. 6.875 11/01/14 775,000 763,000 747,875 Mediacom LLC 9.500 01/15/13 1,000,000 1,001,843 1,030,000 Metaldyne Corporation 11.000 06/15/12 750,000 601,250 768,750 Metaldyne Corporation (C) 10.000 11/01/13 510,000 513,495 545,700 N R G Energy, Inc. 7.375 02/01/16 175,000 175,000 175,875 Nalco Co. 7.750 11/15/11 500,000 500,000 511,250 National Wine & Spirits, Inc. 10.125 01/15/09 1,260,000 1,251,730 1,260,000 Neiman Marcus Group, Inc. 10.375 10/15/15 1,250,000 1,250,000 1,390,625 Newark Group, Inc. 9.750 03/15/14 850,000 796,863 852,125 North American Energy Partners 8.750 12/01/11 400,000 400,000 402,000 Nova Chemicals Corporation (C) 8.502 11/15/13 475,000 475,000 475,000 NTL Cable PLC 9.125 08/15/16 980,000 1,002,996 1,035,125 O E D Corp/Diamond Jo Company Guarantee 8.750 04/15/12 1,000,000 985,960 990,000 Offshore Logistics, Inc. 6.125 06/15/13 450,000 450,000 425,250 P Q Corporation 7.500 02/15/13 1,100,000 1,088,750 1,083,500 Pacific Energy Partners 7.125 06/15/14 500,000 503,720 513,105 Pacific Energy Partners 6.250 09/15/15 150,000 149,316 146,645 Petrohawk Energy Corporation 9.125 07/15/13 1,000,000 997,984 1,050,000 Pinnacle Foods Group 8.250 12/01/13 450,000 450,000 460,688 Pliant Corporation (C) 11.850 06/15/09 882,912 888,897 963,476 Primedia, Inc. 8.000 05/15/13 1,000,000 1,022,668 967,500 Quality Distribution LLC 9.000 11/15/10 300,000 288,000 292,500 Quality Distribution LLC (C) 9.874 01/15/12 325,000 323,375 329,875 Quicksilver Resources, Inc 7.125 04/01/16 500,000 500,000 488,750 Rent-A-Center, Inc. 7.500 05/01/10 400,000 400,000 401,000 Rock-Tenn Co. 8.200 08/15/11 1,000,000 1,006,509 1,055,000 Rogers Wireless, Inc. 7.500 03/15/15 870,000 927,832 943,950 Sbarro, Inc. 11.000 09/15/09 1,000,000 1,012,179 1,015,000 Service Corporation International (C) 7.000 06/15/17 1,000,000 990,030 1,012,500 Sheridan Acquisition Corporation 10.250 08/15/11 375,000 370,001 390,000 Sierra Pacific Resources 6.750 08/15/17 635,000 638,154 622,814 Stanadyne Corporation 10.000 08/15/14 1,500,000 1,500,000 1,541,250 Tekni-Plex, Inc. 12.750 06/15/10 1,000,000 960,125 912,500 Tenet Healthcare Corporation 9.875 07/01/14 500,000 488,370 508,750 Tenneco, Inc. 8.625 11/15/14 1,000,000 1,002,500 1,020,000 Tennessee Gas Pipeline Co. 7.000 03/15/27 500,000 523,738 526,957 Texas Industries, Inc. 7.250 07/15/13 70,000 70,000 71,050 Trimas Corporation 9.875 06/15/12 625,000 566,250 604,688 Triton PCS, Inc. 8.500 06/01/13 550,000 550,000 526,625 Unisys Corporation 8.000 10/15/12 190,000 190,000 187,863 United Components, Inc. 9.375 06/15/13 1,080,000 1,081,608 1,117,800 United Rentals, Inc. 7.750 11/15/13 625,000 625,000 627,344 United Rentals, Inc. 7.000 02/15/14 500,000 500,000 490,625 Universal City Florida (C) 8.375 05/01/10 200,000 200,000 205,000 Universal City Florida (C) 10.121 05/01/10 200,000 200,000 206,500 Vertis, Inc. 10.875 06/15/09 280,000 275,400 281,400 Vought Aircraft Industries 8.000 07/15/11 1,000,000 999,727 962,500 Warner Music Group 7.375 04/15/14 275,000 275,000 272,250 Waste Services, Inc. 9.500 04/15/14 1,100,000 1,124,230 1,146,750 Wornick Co. 10.875 07/15/11 750,000 750,000 671,250 ------------ ------------ TOTAL BONDS $ 73,477,496 75,527,450 ------------ ------------ 29
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Shares or Interest Due Principal Corporate Public Securities: (A) continued Rate Date Amount Cost Market Value - --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCK - 1.57% Allegiant Travel Co. (B) 13,900 $250,200 $ 390,034 Bally Total Fitness Holdings Corporation (B) 600 5,520 1,470 Heelys, Inc. (B) 9,900 207,900 317,889 Isilon Systems, Inc. (B) 1,000 13,000 27,600 Melco PBL Entertainment (B) 8,000 152,000 170,080 Nymex Holdings, Inc. (B) 3,000 177,000 372,030 PepsiAmericas, Inc. 92,145 2,006,365 1,933,202 Supreme Industries, Inc. 115,721 267,323 738,300 Triana Solar, Ltd. (B) 400 7,400 7,560 ------------ ------------ TOTAL COMMON STOCK 3,086,708 3,958,165 ------------ ------------ CONVERTIBLE BONDS - 1.21% Citadel Broadcasting Corporation 1.875% 02/15/11 $ 700,000 $ 543,375 $ 567,875 Graftech International 1.625 01/15/24 1,500,000 1,083,750 1,168,125 ICOS Corporation 2.000 07/01/23 750,000 596,250 735,938 Q L T, INC 3.000 09/15/23 600,000 546,257 561,750 TOTAL CONVERTIBLE BONDS 2,769,632 3,033,688 ------------ ------------ TOTAL CORPORATE PUBLIC SECURITIES $ 79,333,836 $ 82,519,303 ------------ ------------ Interest Due Principal Short-Term Securities: Rate/Yield Date Amount Cost Market Value COMMERCIAL PAPER - 2.86% Caterpillar Financial Services Corporation 5.233% 01/02/07 $ 2,936,000 $ 2,933,867 $ 2,933,867 Detroit Edison Co. 5.405 01/03/07 1,129,000 1,128,323 1,128,323 Kraft Foods, Inc. 5.323 01/03/07 3,128,000 3,126,151 3,126,151 TOTAL SHORT-TERM SECURITIES $ 7,188,341 $ 7,188,341 ------------ ------------ TOTAL INVESTMENTS 110.19% $271,163,402 $277,347,952 ------ ============ ------------ Other Assets 4.70 11,819,996 Liabilities (14.89) (37,478,302) ------ ------------ TOTAL NET ASSETS 100.00% $251,689,646 ====== ============ (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 12/31/06. (D)DEFAULTED SECURITY; INTEREST NOT ACCRUED. (E) STEP BOND: COUPON RATE IS ZERO OR BELOW MARKET FOR AN INITIAL PERIOD AND THEN INCREASES TO A HIGHER COUPON RATE AT A SPECIFIED DATE. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 30
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Fair Value/ Fair Value/ Industry Classification: Market Value Industry Classification: continued Market Value - ------------------------------------------------------------ ------------------------------------------------------------ AEROSPACE - 3.03% BUILDINGS & REAL ESTATE - 1.36% Argo Tech Corporation $ 918,000 Adorn, Inc. $ 2,078,822 Consolidated Foundries Holdings 2,661,969 Texas Industries, Inc. 71,050 Esterline Technologies 204,000 TruStile Doors, Inc. 1,281,276 Gencorp, Inc. 274,540 ------------ PAS Holdco LLC 2,604,736 3,431,148 Vought Aircraft Industries 962,500 ------------ ------------ CHEMICAL, PLASTICS & RUBBER - 1.26% 7,625,745 BCP Crystal US Holdings Corporation 535,925 ------------ Capital Specialty Plastics, Inc. 55,408 AUTOMOBILE - 10.65% Koppers, Inc. 518,738 American Tire Distributor 955,000 Nalco Co. 511,250 Ford Motor Credit Co. 1,550,218 Nova Chemicals Corporation 475,000 Fuel Systems Holding Corporation 2,568,900 P Q Corporation 1,083,500 General Motors Acceptance Corporation 1,308,330 ------------ General Motors Corporation 930,000 3,179,821 Goodyear Tire & Rubber Co. 1,407,000 ------------ Jason, Inc. 1,984,491 CONSUMER PRODUCTS - 8.84% LIH Investors, L.P. 3,274,630 ALH Fin LLC/ALH Fin Corporation 933,375 Metaldyne Corporation 1,314,450 Augusta Sportswear Holding Co. 2,925,136 Nyloncraft, Inc. 1,521,875 Bravo Sports Holding Corporation 2,477,654 Ontario Drive & Gear Ltd. 2,502,007 G F S I, Inc. 735,000 Qualis Automotive LLC 2,633,390 K N B Holdings Corporation 2,543,989 Tenneco, Inc. 1,020,000 Momentum Holding Co. 1,279,394 Titan International, Inc. 150,938 Neff Motivation, Inc. 1,385,702 Transtar Holding Company 2,559,283 R AJ Manufacturing Holdings LLC 2,489,331 United Components, Inc. 1,117,800 Royal Baths Manufacturing Company 1,259,139 ------------ The Tranzonic Companies 3,465,948 26,798,312 Walls Industries, Inc. 2,764,243 ------------ Winsloew Furniture, Inc. -- BEVERAGE, DRUG & FOOD - 5.98% ------------ Beta Brands Ltd. -- 22,258,911 Cains Foods, L.P. 127,333 ------------ Dave and Buster's, Inc. 609,000 CONTAINERS, PACKAGING & GLASS - 6.10% Del Monte Corporation 237,375 Consolidated Container Corporation 759,375 Dominos Pizza, Inc. 302,585 Flutes, Inc. 1,580,310 Eagle Pack Pet Foods, Inc. 1,618,537 Maverick Acquisition Company 1,078,096 Land O'Lakes, Inc. 795,938 P I I Holding Corporation 2,633,048 National Wine & Spirits, Inc. 1,260,000 Packaging Dynamics Corporation of America 1,250,000 Nonni's Food Company 2,299,902 Paradigm Packaging, Inc. 2,388,134 PepsiAmericas, Inc. 1,933,202 Pliant Corporation 963,476 Pinnacle Foods Group 460,688 Pregis Corporation 1,082,500 River Ranch Fresh Foods LLC 1,615,001 Tekni-Plex, Inc. 1,541,375 Sbarro, Inc. 1,015,000 Vitex Packaging, Inc. 2,067,464 Specialty Foods Group, Inc. -- ------------ Vitality Foodservice, Inc. 2,100,503 15,343,778 Wornick Co. 671,250 ------------ ------------ DISTRIBUTION - 3.87% 15,046,314 Affina Group, Inc. 891,800 ------------ Duncan Systems, Inc. 1,538,002 BROADCASTING & ENTERTAINMENT - 2.86% Kele and Associates, Inc. 2,796,831 CCH I Holdings LLC 1,906,250 Magnatech International, Inc. 1,942,455 Cablevision Systems Corporation 982,500 O R S Nasco Holding, Inc. 2,580,726 Cenveo Corporation 1,056,000 QualServ Corporation -- Citadel Broadcasting Corporation 567,875 Strategic Equipment & Supply Corporation, Inc. -- Charter Communications Op LLC 259,688 ------------ Liberty Media Corporation 942,137 9,749,814 Lodgenet Entertainment Corporation 457,938 ------------ Mediacom LLC 1,030,000 ------------ 7,202,388 ------------ 31
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Fair Value/ Fair Value/ Industry Classification: continued Market Value Industry Classification: continued Market Value - ------------------------------------------------------------ ------------------------------------------------------------ DIVERSIFIED/CONGLOMERATE, HEALTHCARE, EDUCATION & CHILDCARE - 4.17% MANUFACTURING - 9.42% AT I Acquisition Company $ 2,000,816 Activant Solutions, Inc. $ 139,500 American Hospice Management Holding LLC 2,527,945 AmerCable, Inc. 1,551,365 F H S Holding LLC 2,680,967 Arrow Tru-Line Holdings, Inc. 2,287,981 H C A, Inc. 1,044,469 Bombardier, Inc. 940,000 ICOS Corporation 735,938 Coining Corporation of America LLC 3,589,584 MedAssist, Inc. 445,053 Dexter Magnetics Technologies, Inc. 1,213,807 Q L T, Inc. 561,750 Douglas Dynamics LLC 592,200 Tenet Healthcare Corporation 508,750 Evans Consoles, Inc. -- ------------ Geo Sub Corporation 965,000 10,505,688 Graftech International 1,168,125 ------------ Great Lakes Dredge & Dock Corporation 989,625 HOME & OFFICE FURNISHINGS, HOUSEWARES, Postle Aluminum Company LLC 2,514,423 AND DURABLE CONSUMER PRODUCTS - 7.02% Radiac Abrasives, Inc. 2,564,294 Connor Sport Court International, Inc. 1,802,907 Trimas Corporation 604,688 H M Holding Company 2,413,554 Truck Bodies & Equipment International 4,595,302 Home Decor Holding Company 2,437,922 ------------ Justrite Manufacturing Acquisition Co. 1,688,332 23,715,894 Monessen Holding Corporation 2,425,562 ------------ Stanton Carpet Holding Co. 2,527,052 DIVERSIFIED/CONGLOMERATE, SERVICE - 4.75% U-Line Corporation 2,502,268 Allied Waste NA 1,031,250 Wellborn Foprest Holding Co. 1,866,104 CapeSuccess LLC 5,862 ------------ Chemed Corporation 1,164,375 17,663,701 Diversco, Inc./DHI Holdings, Inc. 1,392,069 ------------ Dwyer Group, Inc. 929,717 LEISURE, AMUSEMENT, ENTERTAINMENT - 4.35% Fowler Holding, Inc. 2,500,710 AM C Entertainment, Inc. 914,838 Interline Brands, Inc. 333,938 Bally Total Fitness Holding Corporation 127,020 Iron Mountain, Inc. 1,128,900 Harrah's Operating Company 850,583 Keystone North America, Inc. 251,592 Keepsake Quilting, Inc. 1,232,980 Mac-Gray Corporation 609,000 M G M Mirage, Inc. 374,062 Moss, Inc. 1,593,208 Majestic Star Casino LLC 525,000 Service Corporation International 1,012,500 Melco PBL Entertainment 170,080 ------------ O E D Corp/Diamond Jo Company Guarantee 990,000 11,953,121 Overton's Holding Company 1,908,874 ------------ Savage Sports Holding, Inc. 2,127,325 ELECTRONICS - 2.17% Tunica-Biloxi Gaming Authority 1,035,000 AE S Corporation 215,000 Universal City Florida 411,500 Calpine Corporation 536,250 Warner Music Group 272,250 Directed Electronics, Inc. 4,301,151 ------------ Flextronics International Ltd. 395,000 10,939,512 ------------ ------------ 5,447,401 MACHINERY - 8.67% ------------ Davis-Standard LLC 2,486,601 FARMING & AGRICULTURE - 0.00% Integration Technology Systems, Inc. 1,248,333 Protein Genetics, Inc. -- Manitowoc Company, Inc. 202,000 ------------ Maxon Corporation 3,362,336 FINANCIAL SERVICES - 0.72% Morton Industrial Group, Inc. 2,581,211 Highgate Capital LLC -- Safety Speed Cut Manufacturing Company, Inc. 2,467,859 Lazard LLC 776,863 Stanadyne Corporation 1,541,250 Leucadia National Corporation 659,750 Stewart & Stevenson LLC 1,260,000 Nymex Holdings, Inc. 372,030 Supreme Industries, Inc. 738,300 Victory Ventures LLC -- Synventive Equity LLC 33,459 ------------ Tronair, Inc. 3,384,278 1,808,643 Tubular Textile Machinery 2,515,493 ------------ ------------ 21,821,120 32
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2006
Fair Value/ Fair Value/ Industry Classification: continued Market Value Industry Classification: continued Market Value - ------------------------------------------------------------ ------------------------------------------------------------ MEDICAL DEVICES/BIOTECH - 2.72% TECHNOLOGY - 0.08% Coeur, Inc. $ 1,322,354 Triana Solar, Ltd. $ 7,560 E X C Acquisition Corporation 137,269 Unisys Corporation 187,863 MicroGroup, Inc. 3,858,897 ------------ OakRiver Technology, Inc. 1,537,965 195,423 ------------ ------------ 6,856,485 TELECOMMUNICATIONS - 3.60% ------------ Alamosa Deleware, Inc. 775,130 MINING, STEEL, IRON & Cincinnati Bell, Inc. 1,130,250 NON PRECIOUS METALS - 0.37% Hawaiian Telecom Communications 733,250 U S S Holdings, Inc. 933,236 Insilion Systems, Inc. 27,600 NATURAL RESOURCES - 0.54% Intelsat Subsidiary Holding Company Ltd. 1,008,750 Appleton Papers, Inc. 306,000 ITC^DeltaCom, Inc. 2,867,685 Rock-Tenn Co. 1,055,000 Jordan Telecom Products -- ------------ NTL Cable PLC 1,035,125 1,361,000 Rogers Wireless, Inc. 943,950 ------------ Triton P C S, Inc. 526,625 OIL AND GAS - 2.75% ------------ Atlas Pipeline Partners 205,500 9,048,365 Basic Energy Services 221,625 ------------ Brigham Exploration Co. 701,750 TRANSPORTATION - 1.85% Chesapeake Energy Corporation 1,092,469 Allegiant Travel Co. 390,034 Clayton Williams Energy, Inc. 738,000 NABCO, Inc. 1,228,856 El Paso Corporation 1,126,125 Quality Distribution LLC 622,375 GulfMark Offshore, Inc. 576,300 Tangent Rail Corporation 2,400,208 North American Energy Partners 402,000 ------------ Offshore Logistics, Inc. 425,250 4,641,473 Opti Canada, Inc. 411,000 ------------ Quicksilver Resources, Inc. 488,750 UTILITIES - 2.04% Tennessee Gas Pipeline Co. 526,957 Dynegy Holdings, Inc. 846,500 ------------ Edison Mission Energy 530,000 6,915,726 Inergy LP 157,500 ------------ Markwest Energy Operating Co. 747,875 PHARMACEUTICALS - 1.09% N R G Energy, Inc. 175,875 CorePharma LLC 2,643,191 Pacific Energy Partners 659,750 Enzymatic Therapy, Inc. 106,250 Petrohawk Energy Corporation 1,050,000 ------------ Sierra Pacific Resources 622,814 2,749,441 Tenaska Alabama Partners LP 346,527 ------------ ------------ PUBLISHING/PRINTING - 1.63% 5,136,841 Cadmus Communications Corporation 995,000 ------------ Idearc, Inc. 609,000 WASTE MANAGEMENT/POLLUTION - 1.62% Newark Group, Inc. 852,125 Terra Renewal Services, Inc. 2,941,543 Primedia, Inc. 967,500 Waste Services, Inc. 1,146,750 Sheridan Acquisition Corporation 390,000 ------------ Vertis, Inc. 281,400 4,088,293 ------------ ------------ 4,095,025 TOTAL CORPORATE RESTRICTED ------------ AND PUBLIC SECURITIES - 107.34% $270,159,611 RETAIL STORES - 3.83% ============ Blockbuster, Inc. 459,563 Heelys, Inc. 317,889 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Insurance Auto Auctions, Inc. 1,130,000 Neiman Marcus Group, Inc. 1,390,625 Olympic Sales, Inc. 3,797,446 Rent-A-Center, Inc. 401,000 Rental Service Corporation 1,032,500 United Rentals, Inc. 1,117,969 ------------ 9,646,992 ------------ 33
MassMutual Corporate Investors NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2006 1. HISTORY MassMutual Corporate Investors (the "Trust") commenced operations in 1971 as a Delaware corporation. Pursuant to an Agreement and Plan of Reorganization dated November 14, 1985, approved by shareholders, the Trust was reorganized as a Massachusetts business trust under the laws of the Commonwealth of Massachusetts, effective November 28, 1985. The Trust is a diversified closed-end management investment company. Babson Capital Management LLC ("Babson Capital"), a wholly-owned indirect subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual"), acts as its investment adviser. The Trust's investment objective is to maintain a portfolio of securities providing a fixed yield while providing an opportunity for capital gains by investing primarily in a portfolio of privately placed, below investment grade, long term corporate debt obligations with equity features, such as warrants, conversions rights, or other equity features and, occasionally, preferred stocks, purchased directly from their issuers. On January 27,1998, the Board of Trustees authorized the formation of a wholly-owned subsidiary ("MMCI Subsidiary Trust") for the purpose of holding certain investments. The results of MMCI Subsidiary Trust have been included in the accompanying consolidated financial statements. Footnote 2.D below discusses the Federal tax consequences of the MMCI Subsidiary Trust. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed consistently by the Trust in the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. A. VALUATION OF INVESTMENTS: Valuation of a security in the Trust's portfolio is made on the basis of market price whenever market quotations are readily available and all securities of the same class held by the Trust can be readily sold in such market. Nearly all securities which are acquired by the Trust directly from the issuers and shares into which such securities may be converted or which may be purchased on the exercise of warrants attached to such securities will be subject to legal or contractual delays in, or restrictions on, resale and will therefore be "restricted securities." Generally speaking, as contrasted with open-market sales of unrestricted securities which may be effected immediately if the market is adequate, absent an exemption from registration, restricted securities can be sold only in a public offering for which a registration statement is in effect under the Securities Act of 1933, as amended (the "1933 Act"). The value of restricted securities, including warrants, and of any other assets for which there are no reliable market quotations, is the fair value as determined in good faith by the Trust's Board of Trustees (the "Trustees"). Each restricted security is valued by the Trustees at the time of the acquisition thereof and at least quarterly thereafter. The Trustees have established guidelines to aid in the valuation of each security. Generally, restricted securities are initially valued at cost or less at the time of acquisition by the Trust. Values greater or less than cost are used thereafter for restricted securities in appropriate circumstances. Among the factors ordinarily considered are the existence of restrictions upon the sale of the security by the Trust; an estimate of the existence and extent of a market for the security; the extent of any discount at which the security was acquired; the estimated period of time during which the security will not be freely marketable; the estimated expenses of registering or otherwise qualifying the security for public sale; estimated underwriting commissions if underwriting would be required to effect a sale; in the case of a convertible security, whether or not it would trade on the basis of its stock equivalent; in the case of a debt obligation which would trade independently of any equity equivalent, the current yields on comparable securities; the estimated amount of the floating supply of such securities available for purchase; the proportion of the issue held by the Trust; changes in the financial condition and prospects of the issuer; the existence of merger proposals or tender offers affecting the issuer; and any other factors affecting fair value, all in accordance with the Investment Company Act of 1940, as amended (the "1940 Act"). In making valuations, opinions of counsel may be relied upon as to whether or not securities are restricted securities and as to the legal requirements for public sale. When market quotations are readily available for unrestricted securities of an issuer, restricted securities of the same class are generally valued at a discount from the market price of such unrestricted securities. The Trustees, however, consider all factors in fixing any discount, including the filing of a registration statement for such securities under the 1933 Act and any other developments which are likely to increase the probability that the securities may be publicly sold by the Trust without restriction. The Trustees meet at least once 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 $174,416,861 (69.30% of net assets) as of December 31, 2006 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, 2006, 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. 34 MassMutual Corporate Investors NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2006 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 to the Trustees either to designate the net realized long-term gains as undistributed and pay the federal capital gains taxes thereon or to distribute all or a portion of such net gains. For the year ended December 31, 2006, the Trust had a net realized long-term taxable capital gain balance of $17,749,957, which the Trustees voted to retain and pay the federal capital gain tax thereon. The Trust has accrued income tax expense of $6,212,485 on the Statement of Operations related to the retained realized capital gains. In 2006, the Trust re-classified a total of $1,787,482 to undistributed net investment income. $1,748,482 was re-classified from accumulated net realized gain on investments and $39,000 was re-classified from additional paid in capital to more accurately display the Trust's capital financial position on a tax-basis in accordance with accounting principles generally accepted in the United States of America. These re-classifications had no impact on net asset value. The Trust is taxed as a regulated investment company and is therefore limited as to the amount of non-qualified income that it may receive as the result of operating a trade or business, e.g. the Trust's PRO RATA share of income allocable to the Trust by a partnership operating company. The Trust's violation of this limitation could result in the loss of its status as a regulated investment company, thereby subjecting all of its net income and capital gains to corporate taxes prior to distribution to its shareholders. The Trust, from time-to-time, identifies investment opportunities in the securities of entities that could cause such trade or business income to be allocable to the Trust. The MMCI Subsidiary Trust (described in Footnote 1, above) was formed in order to allow investment in such securities without adversely affecting the Trust's status as a regulated investment company. The MMCI Subsidiary Trust is not taxed as a regulated investment company. Accordingly, prior to the Trust receiving any distributions from the MMCI Subsidiary Trust, all of the MMCI Subsidiary Trust's taxable income and realized gains, including non-qualified income and realized gains, is subject to taxation at prevailing corporate tax rates. For the year ended December 31, 2006, the MMCI Subsidiary Trust has accrued income tax expense on net realized gains of $428,070 and increased deferred income tax expense on net unrealized gains by $375,445. E. DISTRIBUTIONS TO SHAREHOLDERS: The Trust records distributions to shareholders from net investment income and net realized gains, if any, on the ex-dividend date. The Trust's net investment income dividend is declared four times per year, in April, July, October, and December. The Trust's net realized capital gain distribution, if any, is declared in December. The tax character of distributions declared during the years ended December 31, 2006 and 2005 was as follows: DISTRIBUTIONS PAID FROM: 2006 2005 ----------------------------- Ordinary Income $ 22,643,658 $ 20,499,802 Long-term Capital Gains $ -- $ 208,144 As of December 31, 2006, the components of distributable earnings on a tax basis included $1,841,989 of undistributed ordinary income. 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. Net investment income of the Trust as presented under accounting principles generally accepted in the United States of America differs from distributable earnings due to earnings from the MMCI Subsidiary Trust as well as timing differences in the recognition of income on certain investments. F. EXPENSE REDUCTION Citibank, N.A. ("Citibank") serves as custodian to the Trust. Pursuant to the custodian agreements, 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. 3. INVESTMENT SERVICES CONTRACT A. NEW INVESTMENT SERVICES CONTRACT: An Investment Services Contract between the Trust and Babson Capital, effective October 1, 2005 (the "New Contract"), provides for a quarterly investment advisory fee of 0.3125% of the net asset value of the Trust each quarter, which is approximately equal to 1.25% annually, with no performance adjustment. The New Contract provides that for its first eighteen months, the investment advisory fee cannot exceed the amount that Babson Capital would have been paid under the prior Investment Services Contract with the Trust dated July 1, 1988 (the "Prior Contract"). 35 MassMutual Corporate Investors NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2006 B. SERVICES: Under the New 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 New 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. C. PRIOR INVESTMENT SERVICES CONTRACT ADVISORY FEE: Under the Prior Contract, the Trust paid Babson Capital a quarterly base rate (the "Base Fee Rate") of 5/16 of 1% of the value of the Trust's net assets as of the end of each fiscal quarter, approximately equivalent to 1.25% of the net asset value of the Trust on an annual basis, plus or minus a quarterly performance adjustment (the "Performance Adjustment") of up to 1/16 of 1% of net asset value, approximately equivalent to plus or minus 0.25% on an annual basis. The Performance Adjustment was based on the Trust's performance as compared to a benchmark rate of return (the "Target Rate") equal to 5.0 percentage points plus an unweighted, arithmetic average of the rates of return of the Standard & Poor's Industrials Composite (formerly called the Standard & Poor's Industrial Price Index) and the Lehman Brothers Intermediate U.S. Credit Index (formerly called the Lehman Brothers Corporate Bond Index) over a rolling threeyear period (the "Measurement Period") comprising the twelve quarters ending on the last day of each quarter (the "Valuation Date"). The Standard & Poor's Industrials Composite is not readily available to the public. Babson Capital obtained the information for this index from Factset Research Systems. The three-year annualized return for the Standard & Poor's Industrials Composite for the period ended December 31, 2006 was 9.57%. Under the prior contract, the Performance Adjustment was 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 exceeded the Target Rate, the Base Fee Rate was increased by an amount equal to the Performance Adjustment; if the Trust's actual rate of return was less than the Target Rate, the Base Fee Rate was reduced by the Performance Adjustment. Under the Prior Contract, the investment advisory fee payable by the Trust was 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. Additionally, Babson Capital agreed to waive, for each quarter beginning July 1, 2004, the amount, if any, by which the investment advisory fee calculated in the manner described in the Prior Contract exceeded the sum of (i) 5/16 of 1% times the ending net asset value for that quarter plus or minus (ii) the Performance Adjustment applied against the average quarter end net assets for the Trust for the twelvequarter period ending on such quarter. 4. SENIOR SECURED INDEBTEDNESS A. NOTE PAYABLE: MassMutual holds the Trust's $20,000,000 Senior Fixed Rate Convertible Note (the "Note") issued by the Trust in 1995. The Note, as amended, is due November 15, 2007 and accrues at 7.39% per annum. MassMutual, at its option, can convert the principal amount of the Note into common shares. The dollar amount of principal would be converted into an equivalent dollar amount of common shares based upon the average price of the common shares for ten business days prior to the notice of conversion. For the year ended December 31, 2006, the Trust incurred total interest expense on the Note of $1,479,145. 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 Note proposed to be redeemed. B. REVOLVING CREDIT AGREEMENT: The Trust entered into a Revolving Credit Agreement (the "Revolver") with The Royal Bank of Scotland PLC as of May 31, 2005 (the "Agent Bank"), in the principal amount of $25,000,000, maturing May 31, 2008. The Revolver bears interest payable in arrears at a per annum rate that varies depending upon whether the Trust requests a Base Rate Loan or LIBOR Rate Loan. Interest on Base Rate Loans equals the higher of: (i) the annual "Base Rate" as set periodically by the Agent Bank and (ii) the most recent Federal Funds Effective Rate plus .50% per annum. Per annum interest on LIBOR Rate Loans equals .37% plus the London Inter Bank Offered Rate ("LIBOR") rate, divided by 1 minus the LIBOR Reserve Rate. The Trust also incurs expense on the undrawn portion of the total Revolver at a rate of .15% per annum. As of December 31, 2006, there was no outstanding amount against the Revolver. For the year ended December 31, 2006, the Trust incurred total expense on the Revolver of $37,500 related to the undrawn portion. 5. PURCHASES AND SALES OF INVESTMENTS FOR THE YEAR COST OF INVESTMENTS ENDED 12/31/2006 ACQUIRED - --------------------------------------------------------------------------- Corporate restricted securities $ 74,805,191 Corporate public securities 23,746,845 PROCEEDS FROM SALES OR MATURITIES - --------------------------------------------------------------------------- Corporate restricted securities $ 49,762,773 Corporate public securities 38,850,564 The aggregate cost of investments is substantially the same for financial reporting and federal income tax purposes as of December 31, 2006. The net unrealized appreciation of investments for financial reporting and federal tax purposes as of 36 MassMutual Corporate Investors NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2006 December 31, 2006 is $6,184,550 and consists of $26,139,808 appreciation and $19,955,258 depreciation. Net unrealized appreciation of investments on the Statement of Assets and Liabilities reflects the balance net of a deferred tax accrual of $651,017 on net unrealized gains in the MMCI Subsidiary Trust. 6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED) AMOUNT PER SHARE - --------------------------------------------------------------------- MARCH 31, 2006 - --------------------------------------------------------------------- Investment income $6,350,324 Net investment income 5,061,431 $ 0.56 Net realized and unrealized gain on investments (net of taxes) 7,598,686 0.84 - --------------------------------------------------------------------- JUNE 30, 2006 - --------------------------------------------------------------------- Investment income 6,202,668 Net investment income 4,891,333 0.53 Net realized and unrealized gain on investments (net of taxes) 6,204,073 0.68 - --------------------------------------------------------------------- SEPTEMBER 30, 2006 - --------------------------------------------------------------------- Investment income 6,242,239 Net investment income 4,942,357 0.55 Net realized and unrealized loss on investments (net of taxes) 4,648,575 0.51 - --------------------------------------------------------------------- DECEMBER 31, 2006 - --------------------------------------------------------------------- Investment income 7,018,035 Net investment income 5,786,022 0.63 Net realized and unrealized loss on investments (net of taxes) (3,693,591) (0.41) 7. AGGREGATE REMUNERATION PAID TO OFFICERS, TRUSTEES AND THEIR AFFILIATED PERSONS For the year ended December 31, 2006, the Trust paid its Trustees aggregate remuneration of $175,875. 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. Crandall and Joyal as "interested persons" of the Trust. All of the Trust's officers are employees of Babson Capital or MassMutual. Pursuant to the New Contract, the Trust does not compensate its officers who are employees of Babson Capital or MassMutual (except for the Chief Compliance Officer of the Trust unless assumed by Babson Capital). For the year ended December 31, 2006 Babson Capital paid the compensation of the Chief Compliance Officer of the Trust. Mr. Crandall, one of the Trust's Trustees, is an "affiliated person" (as defined by the 1940 Act) of MassMutual and Babson Capital. The Trust did not make any payments to Babson Capital during 2006, other than amounts payable to Babson Capital pursuant to the New Contract. During 2006, the Trust paid the following amounts to MassMutual, exclusive of interest expense on the Note explained in Footnote 4.A: Preparation of the Trust's Quarterly and Annual Reports to Shareholders $12,818 Preparation of Certain of the Trust's Shareholder Communications 657 Preparation of the Trust's Annual Proxy Statements 588 ------- $14,063 ======= 8. NEW ACCOUNTING PRONOUNCEMENTS In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES -- AN INTERPRETATION OF FASB STATEMENT 109 ("FIN 48"). FIN 48 supplements FASB 109 by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The adoption of FIN 48 will require financial statements to be adjusted to reflect only those tax positions that are more likely than not to be sustained as of the adoption date. Management of the Trust is currently evaluating the impact that the adoption of FIN 48 will have on the financial statements. FIN 48 will become effective for fiscal years beginning after December 15, 2006. In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, FAIR VALUE MEASUREMENTS ("FAS 157"). FAS 157 establishes a single authoritative definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 applies to fair value measurements already required or permitted by existing standards. The change to current generally accepted accounting principles from the application of FAS 157 relates to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management of the Trust does not believe the adoption of FAS 157 will materially impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. 9. CERTIFICATIONS (UNAUDITED) As required under New York Stock Exchange ("NYSE") Corporate Governance Rules, the Trust's principal executive officer has certified to the NYSE that he was not aware, as of the certification date, of any violation by the Trust of the NYSE's Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Trust's principal executive and principal financial officers have made quarterly certifications, included in filings with the 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. 37 MassMutual Corporate Investors REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Shareholders and Board of Trustees of MassMutual Corporate Investors We have audited the accompanying statement of assets and liabilities of MassMutual Corporate Investors (the Trust), including the schedule of investments, as of December 31, 2006, and the related statements of operations and cash flows for the year then ended and the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the years in the two-year period ended December 31, 2003 were audited by other independent registered public accountants whose report, dated February 6, 2004, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2006 by counting of securities at the custodian and confirmation of securities owned, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of MassMutual Corporate Investors as of December 31, 2006, and the results of its operations, its cash flows, the changes in its net assets, and the financial highlights for the years described above in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP Boston, Massachusetts February 9, 2007 38 MassMutual Corporate Investors INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATION(S) OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ ROGER W. CRANDALL* (42) Trustee 3 years/ Executive Vice President 2 Trustee, Chairman (since 2005), Massachusetts Mutual (since 2005) 1 year, and Chief Investment President (2003-2005), and Vice Life Insurance Company 7 months Officer (since 2005) of President (2002-2003) of the 1295 State Street Chairman MassMutual; and Trust; Director (since 2004), Springfield, MA 01111 (since 2005) 1 year/ Chairman (since 2005), Babson Capital Europe Limited 7 months President and Chief (an institutional debtfund Executive Officer (since manager); Director (since 2006), Vice Chairman 2005), Babson Capital Japan KK (2005), Member of the (a Japanese registered Board of Managers (since investment adviser); 2004), Member of the Non-Executive Director (since Board of Directors (2003- 2005), Baring Asset Management 2004), and Managing Limited (an investment Director of Babson Capital manager/adviser); Chairman (2000-2005). (since 2005), Cornerstone Real Estate Advisers LLC (an investment adviser); Director (since 2003), MassMutual Corporate Value Partners Limited (investment company); Director (since 2003), MassMutual Corporate Value Limited (investment company); Director (since 2005), MassMutual Holdings (Bermuda) Ltd. (holding company); Director (since 2005), MassMutual Holding MSC, Inc. (holding company); Director (since 1996), MMHC Investment LLC (investment company); Director (since 2004), MML Assurance, Inc. (a New York Insurance Company); Director (since 2005), Oppenheimer Acquisition Corp. (holding company); Director (since 2004), Jefferies Finance LLC (a joint venture between Jefferies Group Inc. and Babson Capital); Director (since 2004), Great Lakes LLC (investment company); Director (since 1999), SAAR Holdings CDO Ltd. (investment company); Chairman and Chief Executive Officer (since 2006), MassMutual Capital Partners (investment company); Director (since 2006), Invicta Advisers LLC (derivative trading company); Director (since 2006), Invicta Capital LLC (derivative trading company); Director (since 2006), Invicta Credit LLC (derivative trading company); Director (since 2006), Invicta Holdings LLC (derivative trading company); Trustee (since 2003), President (2003-2005), and Chairman (since 2005), MMCI Subsidiary Trust and MMPI Subsidiary Trust; and Trustee (since 2005), Chairman (since 2005), President (2003-2005), and Vice President (2002-2003) of MassMutual Participation Investors (closed-end investment company advised by Babson Capital).
*MR. CRANDALL IS CLASSIFIED AS AN "INTERESTED PERSON" OF THE TRUST AND BABSON CAPITAL (AS DEFINED IN THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED) BECAUSE OF HIS POSITION AS AN OFFICER OF THE TRUST; AND CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER, AND MEMBER OF THE BOARD OF MANAGERS OF BABSON CAPITAL. 39 MassMutual Corporate Investors INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATION(S) OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ ROBERT E. JOYAL* (62) Trustee 3 years/ President (2001-2003) 51 President (1999-2003) and MassMutual (since 2003) 2 years, of Babson Capital. Trustee (since 2003) of the Corporate Investors 10 months Trust; Director (since 2006), 1500 Main Street Jefferies Group, Inc. Suite 600 (financial services); Director P.O. Box 15189 (since 2003), Pemco Aviation Springfield, MA 01115-5189 Group, Inc. (aircraft maintenance and overhaul); Trustee (since 2003), MassMutual Select Funds, formerly MassMutual Institutional Funds, (an openend investment company advised by MassMutual); Trustee (since 2003), MML Series Investment Fund (an open-end investment company advised by MassMutual); Trustee (1998-2003), Senior Vice President (1998-2001), and President (2001-2003), MMCI Subsidiary Trust and MMPI Subsidiary Trust; and President (1999-2003), Trustee (since 2003), MassMutual Participation Investors (closed-end investment company advised by Babson Capital).
*MR. JOYAL RETIRED AS PRESIDENT OF BABSON CAPITAL IN JUNE 2003. 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). 40 MassMutual Corporate Investors INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATION(S) OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ WILLIAM J. BARRETT (67) Trustee 3 years/ President (since 2002), 2 Trustee (since 2006), MassMutual MassMutual (since 2006) 10 months* Barrett-Gardner Associates, Participation Investors (a Corporate Investors Inc. (investments); and closed-end Investment company 1500 Main Street Senior Vice President advised by Babson Capital). Suite 600 (1976-2002), Janney P.O. Box 15189 Montgomery Scott LLC Springfield, MA 01115-5189 (investments). - ------------------------------------------------------------------------------------------------------------------------------------ DONALD E. BENSON (76) Trustee 3 years/ Executive Vice President 2 Director (since 1997), MAIR MassMutual (since 1986) 2 years, and Director (since 1992), Holdings, Inc. (commuter airline Corporate Investors 10 months Marquette Financial holding company); Director (since 1500 Main Street Companies (financial 1997), National Mercantile Suite 600 services); Partner (since Bancorp (bank holding company); P.O. Box 15189 1996), Benson Family and Trustee (since 1988), Springfield, MA 01115-5189 Limited Partnership No. 1 MassMutual Participation and Benson Family Limited Investors (closed-end investment Partnership No. 2 company advised by Babson (investment partnerships); Capital). and Partner (1987-2004), Benson, Pinckney, Oates Partnership (building partnership).
*MR. BARRETT WAS ELECTED BY THE BOARD OF TRUSTEES TO FILL A NEWLY CREATED BOARD SEAT ON JULY 18, 2006. 41 MassMutual Corporate Investors INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATION(S) OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ MICHAEL H. BROWN (50) Trustee 3 years/ Private Investor; 2 Trustee (since 2005), MassMutual MassMutual (since 2005) 1 year, and Managing Director Participation Investors (a Corporate Investors 7 months (1994-2005), closed-end investment company 1500 Main Street Morgan Stanley. advised by Babson Capital); Suite 600 Independent Director (since P.O. Box 15189 2006), Invicta Holdings LLC Springfield, MA 01115-5189 (derivitive trading company). - ------------------------------------------------------------------------------------------------------------------------------------ DONALD GLICKMAN (73) Trustee 3 years/ Chairman (since 1992), 2 Director (since 1984), Monro MassMutual (since 1992) 2 years, Donald Glickman and Muffler Brake, Inc. (automobile Corporate Investors 10 months Company, Inc. (private repair service); Director (since 1500 Main Street investments); and Partner 1998), MSC Software Corp. Suite 600 (since 1992), J.F. Lehman & (simulation software); and P.O. Box 15189 Co. (private investments). Trustee (since 1992), MassMutual Springfield, MA 01115-5189 Participation Investors (closed-end investment company advised by Babson Capital).
42 MassMutual Corporate Investors INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATION(S) OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ MARTIN T. HART (71) Trustee 3 years/ Private Investor; 2 Director (since 2004), Texas MassMutual (since 1991) 10 months and President and Roadhouse, Inc. (operates Corporate Investors Director (since 1983), restaurant chain); Director 1500 Main Street H Investment Company (since 1999), ValueClick Inc. Suite 600 LLC (family partnership). (internet advertising company); P.O. Box 15189 Director (since 2002), Springfield, MA 01115-5189 Spectranetics Corp. (medical device company); and Trustee (since 1991), MassMutual Participation Investors (closed-end investment company advised by Babson Capital). - ------------------------------------------------------------------------------------------------------------------------------------ CORINNE T. NORGAARD (69) Trustee 3 years/ President, (2004-2005), 33 Trustee (since 2005), MML MassMutual (since 1998) 1 year, Thompson Enterprises Series Investment Fund II (an Corporate Investors 10 months Real Estate Investment; open-end investment company 1500 Main Street and Dean (1996-2004), advised by MassMutual); Trustee Suite 600 Barney School of Business, (since 2004), MassMutual P.O. Box 15189 University of Hartford. Premier Funds, formerly The DLB Springfield, MA 01115-5189 Fund Group (an openend investment company advised by MassMutual); Trustee (since 1993), ING Series Fund (investment company); Director (since 1992), ING Variable Series Fund; and Trustee (since 1998), MassMutual Participation Investors (a closed-end investment company advised by Babson Capital).
43 MassMutual Corporate Investors OFFICERS OF THE TRUST
PRINCIPAL POSITION OCCUPATION(S) NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST ADDRESS THE TRUST OF TIME SERVED 5 YEARS - ------------------------------------------------------------------------------------------------------------------------------------ CLIFFORD M. NOREEN (49) President 1 year/ President (since 2005), Vice President (1993-2005) of the Trust; MassMutual 7 months Member of the Board of Managers (since 2006), and Managing Corporate Investors Director (since 2000) of Babson Capital; Trustee (since 2005), 1500 Main Street o Suite 600 and President (since 2005), MMCI Subsidiary Trust and MMPI P.O. Box 15189 Subsidiary Trust; and President (since 2005), Vice President Springfield, MA 01115-5189 (1993-2005), MassMutual Participation Investors. - ------------------------------------------------------------------------------------------------------------------------------------ RODNEY J. DILLMAN (54) Vice 1 year/ Vice President, Secretary, and Chief Legal Officer (since 2006) MassMutual President, 7 months of the Trust; Vice President and Associate General Counsel (since Corporate Investors Secretary, 2000) of MassMutual; General Counsel and Secretary (since 2006) 1500 Main Street o Suite 600 and Chief of Babson Capital; Vice President and Secretary (since 2006), P.O. Box 15189 Legal MMCI Subsidiary Trust and MMPI Subsidiary Trust; and Vice Springfield, MA 01115-5189 Officer President, Secretary, and Chief Legal Officer (since 2006), MassMutual Participation Investors. - ------------------------------------------------------------------------------------------------------------------------------------ JAMES M. ROY (44) Vice 1 year/ Vice President and Chief Financial Officer (since 2005), MassMutual President 7 months Treasurer (2003-2005), and Associate Treasurer (1999-2003) of the Corporate Investors and Chief Trust; Managing Director (since 2005), and Director (2000-2005) 1500 Main Street o Suite 600 Financial of Babson Capital; Trustee (since 2005), Treasurer (since 2005), P.O. Box 15189 Officer and Controller (2003-2005), MMCI Subsidiary Trust and MMPI Springfield, MA 01115-5189 Subsidiary Trust; and Vice President and Chief Financial Officer (since 2005), Treasurer (2003-2005), and Associate Treasurer (1999-2003), MassMutual Participation Investors. - ------------------------------------------------------------------------------------------------------------------------------------ JOHN T. DAVITT, JR. (39) Comptroller 1 year/ Comptroller (since 2001) of the Trust; Director (since 2000) of MassMutual 7 months Babson Capital; Controller (since 2005), MMCI Subsidiary Trust Corporate Investors and MMPI Subsidiary Trust; and Comptroller (since 2001), 1500 Main Street o Suite 600 MassMutual Participation Investors. P.O. Box 15189 Springfield, MA 01115-5189 - ------------------------------------------------------------------------------------------------------------------------------------ MELISSA M. LAGRANT (33) Chief 1 year/ Chief Compliance Officer (since 2006) of the Trust; Managing MassMutual Compliance 7 months Director (since 2005) of Babson Capital; Vice President and Corporate Investors Officer Senior Compliance Trading Manager (2003-2005), Loomis, Sayles & 1500 Main Street o Suite 600 Company, L.P.; Assistant Vice President-Business Risk Management P.O. Box 15189 Group (2002-2003), and Assistant Vice President-Investment Springfield, MA 01115-5189 Compliance (2001-2002), Zurich Scudder Investments/Deutsche Asset Management; and Chief Compliance Officer (since 2006), MassMutual Participation Investors. - ------------------------------------------------------------------------------------------------------------------------------------ RONALD S. TALAIA (38) Treasurer 1 year/ Treasurer (since 2006) of the Trust; Director (since 2001) of MassMutual 7 months Babson Capital; and Treasurer (since 2006), MassMutual Corporate Investors Participation Investors. 1500 Main Street o Suite 600 P.O. Box 15189 Springfield, MA 01115-5189
44 MassMutual Corporate Investors [PHOTO] Members of the Board of Trustees Left to right: Donald Glickman CHAIRMAN, DONALD GLICKMAN & COMPANY, INC. Robert E. Joyal RETIRED PRESIDENT OF BABSON CAPITAL MANAGEMENT LLC William J. Barrett PRESIDENT, BARRETT-GARDNER ASSOCIATES, INC. Michael H. Brown PRIVATE INVESTOR Donald E. Benson* EXECUTIVE VICE PRESIDENT AND DIRECTOR, MARQUETTE FINANCIAL COMPANIES Corine T. Norgaard* PRESIDENT, THOMPSON ENTERPRISES REAL ESTATE INVESTMENT Roger W. Crandall EXECUTIVE VICE PRESIDENT AND CHIEF INVESTMENT OFFICER, MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY Martin T. Hart* PRIVATE INVESTOR *MEMBER OF THE AUDIT COMMITTEE DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN MEMBERS OF THE BOARD OF TRUSTEES MassMutual Corporate Investors offers a Dividend Reinvestment and Share Purchase Plan. The Plan provides a simple way for shareholders to add to their holdings in the Trust through the receipt of dividend shares issued by the Trust or through the reinvestment of cash dividends in Trust shares purchased in the open market. Ashareholder may join the Plan by filling out and mailing an authorization card to Shareholder Financial Services, Inc., the Transfer Agent. Participating shareholders will continue to participate until they notify the Transfer Agent, in writing, of their desire to terminate participation. Unless a shareholder elects to participate in the Plan, he or she will, in effect, have elected to receive dividends and distributions in cash. Participating shareholders may also make additional contributions to the Plan from their own funds. Such contributions may be made by personal check or other means in an amount not less than $10 nor more than $5,000 per quarter. Whenever the Trust declares a dividend payable in cash or shares, the Transfer Agent, acting on behalf of each participating shareholder, will take the dividend in shares only if the net asset value is lower than the market price plus an estimated brokerage commission as of the close of business on the valuation day. The valuation day is the last day preceding the day of dividend payment. When the dividend is to be taken in shares, the number of shares to be received is determined by dividing the cash dividend by the net asset value as of the close of business on the valuation date or, if greater than net asset value, 95% of the closing share price. If the net asset value of the shares is higher than the market value plus an estimated commission, the Transfer Agent, consistent with obtaining the best price and execution, will buy shares on the open market at current prices promptly after the dividend payment date. The reinvestment of dividends does not, in any way, relieve participating shareholders of any federal, state or local tax. For federal income tax purposes, the amount reportable in respect of a dividend received in newly-issued shares of the Trust will be the fair market value of the shares received, which will be reportable as ordinary income and/or capital gains. As compensation for its services, the Transfer Agent receives a fee of 5% of any dividend and cash contribution (in no event in excess of $2.50 per distribution per shareholder.) Any questions regarding the Plan should be addressed to Shareholder Financial Services, Inc., Agent for MassMutual Corporate Investors' Dividend Reinvestment and Share Purchase Plan, P.O. Box 173673, Denver, CO 80217-3673. OFFICERS Roger W. Crandall CHAIRMAN Clifford M. Noreen PRESIDENT James M. Roy VICE PRESIDENT & CHIEF FINANCIAL OFFICER Rodney J. Dillman VICE PRESIDENT, SECRETARY & CHIEF LEGAL OFFICER Jill A. Fields VICE PRESIDENT Michael P. Hermsen VICE PRESIDENT Mary Wilson Kibbe VICE PRESIDENT Michael L. Klofas VICE PRESIDENT Richard E. Spencer, II VICE PRESIDENT Ronald S. Talaia TREASURER John T. Davitt, Jr. COMPTROLLER Melissa M. LaGrant CHIEF COMPLIANCE OFFICER [LOGO] MassMutual Corporate Investors DB1035 207 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, 2006 2005 ---------- ---------- Audit Fees $ 40,500 $ 34,200 Audit-Related Fees 5,400 5,000 Tax Fees 34,500 25,900 All Other Fees 0 0 ---------- ---------- Total Fees $ 80,400 $ 65,100 ========== ========== NON-AUDIT FEES BILLED TO BABSON CAPITAL AND MASSMUTUAL KPMG LLP KPMG LLP Year Ended Year Ended December 31, December 31, 2006 2005 ---------- ---------- Audit-Related Fees $ 988,727 $1,229,916 Tax Fees 18,000 0 All Other Fees 0 0 ---------- ---------- Total Fees $1,006,727 $1,229,916 ========== ========== 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, agreed upon procedures reports. Preparation of Federal, state and local income tax and compliance work are representative of the fees billed in the "Tax Fees" category. The category "All Other Fees" represents fees billed by KPMG for tax consulting rendered to Babson Capital and MassMutual. The Sarbanes-Oxley Act of 2002 and its implementing regulations allows the Registrant's Audit Committee to establish a pre-approval policy for certain services rendered by the Registrant's independent accountants. During 2006, the Registrant's Audit Committee approved all of the services rendered to the Registrant by KPMG and did not rely on such a pre-approval policy for any such services. The Audit Committee reviewed the aggregate fees billed for professional services rendered by KPMG for the Registrant and for the non-audit services provided to Babson Capital, and Babson Capital's parent, MassMutual. As part of this review, the Audit Committee considered whether the provision of such non-audit services were compatible with maintaining the principal accountant's independence. The 2005 fees billed represent final 2005 amounts, which may differ from the preliminary figures available as of the filing date of the Trust's 2006 Annual Form N-CSR and includes, among other things, fees for services that may not have been billed as of the filing date of the Trust's 2006 Annual Form N-CSR, but are now properly included in the 2005 fees billed to the Trust, Babson Capital, and MassMutual. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The Registrant maintains an Audit Committee composed exclusively of Trustees of the Registrant who qualify as "independent" Trustees under the current listing standards of the New York Stock Exchange and the rules of U.S. Securities and Exchange Commission. The Committee operates pursuant to a written Audit Committee Charter, which is available (1) on the Registrant's website, www.babsoncapital.com/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, Martin T. Hart, and Corine T. Norgaard. ITEM 6. SCHEDULE OF INVESTMENTS Not applicable for this filing. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END MANAGEMENT INVESTMENT COMPANIES. The Registrant's Board of Trustees has delegated proxy voting responsibilities relating to voting securities held by the Registrant to its investment adviser, Babson Capital Management LLC ("Babson Capital"). A summary of Babson Capital's proxy voting policies and procedures is set forth below. Summary of Babson Capital's Proxy Voting Policy ----------------------------------------------- Babson Capital views the voting of proxies as an integral part of its investment management responsibility and believes, as a general principle, that proxies should be voted solely in the best interests of its clients (i.e. prudently and in a manner believed by Babson Capital to best protect and enhance an investor's returns). To implement this general principle, it is Babson Capital's policy to generally vote proxies in accordance with the recommendations of Institutional Shareholder Services ("ISS"), a recognized authority on proxy voting and corporate governance, or, in cases where ISS has not made any recommendations with respect to a proxy, in accordance with ISS's proxy voting guidelines. Babson Capital recognizes, however, that there may be times when Babson Capital believes that it will be in the best interests of clients holding the securities to (1) vote against ISS's recommendations or (2) in cases where ISS has not provided Babson Capital with any recommendations with respect to a proxy, vote against ISS's proxy voting guidelines. Babson Capital may vote, in whole or part, against ISS's recommendations or ISS's proxy voting guidelines, as applicable, if such vote is authorized by the Policy. The procedures set forth in the Policy are designed to ensure that votes against ISS's recommendations or proxy voting guidelines have been made in the best interests of clients and are not the result of any material conflict of interest (a "Material Conflict"). Summary of Babson Capital's Proxy Voting Procedures --------------------------------------------------- Babson Capital has (1) established a Proxy Committee that is responsible for the implementation and governance of the Policy and (2) designated Proxy Administrators who will receive and post proxies for voting with ISS. In accordance with the Policy, Babson Capital will generally vote all client proxies in accordance with ISS's recommendation or proxy voting guidelines, unless a person authorized by the Proxy Committee (each a "Proxy Analyst") determines that it is in its clients' best interest to vote against ISS's recommendation or proxy voting guidelines. In these cases, Babson Capital will vote against ISS's recommendation or proxy voting guidelines, so long as no other Proxy Analyst reviewing such proxy disagrees with such recommendation, and no known Material Conflict is identified by the Proxy Analyst(s) or the Proxy Administrator. Otherwise, the proxy is to be submitted to a member of the Proxy Committee, who shall determine how to vote the proxy unless (i) the Proxy Administrator has identified a Babson Capital Material Conflict or (ii) said Proxy Committee member has identified a Material Conflict. In such cases, the proxy shall be submitted to the Proxy Committee, which may authorize a vote against ISS's recommendation or proxy voting guidelines only if the Proxy Committee determines that such vote is in the clients' best interests. No employee, officer or director of Babson Capital or its affiliates (other than those assigned such responsibilities under the Policy) may influence how Babson Capital votes any proxy, unless such person has been requested to provide such assistance by a Portfolio Manager or Proxy Committee member and has disclosed any known Material Conflict. Any pre-vote communications prohibited by the Policy shall be reported to the Proxy Committee member prior to voting and to Babson Capital's General Counsel. Obtaining a Copy of the Policy ------------------------------ The full text of Babson Capital's Policy is available (1) without charge, upon request, by calling 1-866-399-1516 or (2) on the Registrant's website, www.babsoncapital.com/mci. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The following disclosure item is made as of the date of this Form N-CSR unless otherwise indicated. PORTFOLIO MANAGER. Clifford M. Noreen serves as the President of the Registrant (since 2005) and as its Portfolio Manager. Mr. Noreen began his service to the Registrant in 1993 as a Vice President. With over 25 years of industry experience, Mr. Noreen is a Managing Director and a Member of the Board of Managers of Babson Capital Management LLC ("Babson Capital") and head of Babson Capital's Corporate Securities Group, where he oversees public equities and corporate credit related investments, including public and private bonds, mezzanine, and private equity investments, and structured credit products. Mr. Noreen joined Massachusetts Mutual Life Insurance Company ("MassMutual"), Babson Capital's parent company, in 1985 and began leading its High Yield Team in 1992, where he was responsible for oversight of all public high yield portfolios. In 2004, Mr. Noreen assumed responsibility for Babson Capital's Public Corporate Credit Group, which included the Investment Grade and High Yield Institutional Fixed Income teams. Mr. Noreen also presently serves as President of MassMutual Participation Investors, another closed-end registered investment company advised by Babson Capital. Mr. Noreen holds a B.A. from the University of Massachusetts and an M.B.A from American International College. PORTFOLIO MANAGEMENT TEAM. Mr. Noreen has primary responsibility for overseeing the investment of the Registrant's portfolio, with the day-to-day investment management responsibility of the Registrant's portfolio being shared with the following Babson Capital investment professionals (together with the Portfolio Manager, the "Portfolio Team"). Michael P. Hermsen, Michael L. Klofas, and Richard E. Spencer II are each a Vice President of the Registrant and a Managing Director of Babson Capital. Together they are responsible for managing Babson Capital's Mezzanine Investment and Private Equity Investments Team within the Corporate Securities Group, which is responsible for finding, analyzing, negotiating and servicing mezzanine private placement securities for the Registrant. Mr. Hermsen joined MassMutual in 1990 and has been an officer of the Registrant since 1992. Previously, he worked at Teachers Insurance and Annuity Association where he was a generalist private placement analyst. At MassMutual and then Babson Capital, Mr. Hermsen has analyzed and invested in traditional private placements, high yield public and private bonds, and leveraged bank loans. He has also been responsible for managing a small portfolio of distressed investments. Since 1993, he has focused on originating, analyzing, structuring and documenting mezzanine and private equity investments. He holds a B.A. from Bowdoin College and an M.B.A. from Columbia University. Mr. Klofas joined MassMutual in 1988 and has been an officer of the Registrant since 1989. Prior to joining MassMutual, he spent two years at a small venture capital firm and two years at a national public accounting firm. At MassMutual and then Babson Capital, Mr. Klofas has analyzed and invested in traditional private placements and high yield public bonds. He also spent four years leading Babson Capital's workout and restructuring activities. Since 1993, he has focused on originating, analyzing, structuring and documenting mezzanine and private equity investments. Mr. Klofas holds a B.A. from Brandeis University and an M.B.A. from Babson College as well as a Certified Public Accountant designation. Mr. Spencer joined MassMutual in 1989 after three years as a corporate loan analyst at a major New England bank. He has been an officer of Registrant since 1990. At MassMutual and then Babson Capital, Mr. Spencer has analyzed and invested in traditional private placements, high yield public and private bonds, leveraged bank loans, mezzanine debt and private equity. From 1993 to 1999, he was the lead restructuring professional at Babson Capital. Since 1999, Mr. Spencer has been focused on the origination, analysis, structuring and documentation of mezzanine and private equity investments. He holds a B.A. from Bucknell University and an M.B.A. from the State University of New York at Buffalo. Starting in 2006, Jill A. Fields assumed primary day-to-day responsibility for managing the Registrant's public high yield and investment grade fixed income portfolio. Ms. Fields 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) - ------------ --------------------- -------- ------------ ------------ -------------- Clifford M. Registered Investment Noreen(B) Companies 1 $126.5 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 1 $56.5 million 2 $56.5 million ----------------------------------------------------------------------------------------- Other Accounts 0 N/A 0 N/A ----------------------------------------------------------------------------------------- Jill A. Registered Investment Fields Companies 3 $741.9 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 1 $49.7 million 1 $49.7 million ----------------------------------------------------------------------------------------- Other Accounts 3 $545.6 million 0 N/A ----------------------------------------------------------------------------------------- Michael P. Registered Investment Hermsen Companies 1 $126.5 million N/A N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 5 $577.3 million 5 $577.3 million ----------------------------------------------------------------------------------------- Other Accounts 1C $1.38 billion N/A N/A ----------------------------------------------------------------------------------------- Michael L. Registered Investment Klofas Companies 1 $126.5 million N/A N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 5 $577.3 million 5 $577.3 million ----------------------------------------------------------------------------------------- Other Accounts 1C $1.38 billion N/A N/A ----------------------------------------------------------------------------------------- Richard E. Registered Investment Spencer II Companies 1 $126.5 million N/A N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 5 $577.3 million 5 $577.3 million ----------------------------------------------------------------------------------------- Other Accounts 1C $1.38 billion N/A N/A
(A) Account asset size has been calculated as of December 31, 2006. (B) Mr. Noreen, as the head of Babson Capital's Corporate Securities Group, has overall responsibility for all corporate credit related investments, including public and private bonds, mezzanine, and private equity investments, as well as structured credit products managed by Babson Capital. Except for the accounts noted in the table above, Mr. Noreen is not primarily responsible for the day-to-day management of the other accounts managed by Babson Capital's Corporate Securities Group. (C) The listed account and managed assets represent that portion of the general investment account of Massachusetts Mutual Life Insurance Company and C.M. Life Insurance Company for which an individual Portfolio Team member has primary day-to-day responsibility. As of December 31, 2006, Babson Capital's total general investment account assets under management were $58.5 billion dollars. MATERIAL CONFLICTS OF INTEREST. The potential for material conflicts of interest may exist as the members of the Portfolio Team have responsibilities for the day-to-day management of multiple accounts. These conflicts may be heightened to the extent the individual, Babson Capital and/or an affiliate has an investment in one or much of such accounts or an interest in the performance of such accounts. Babson Capital has identified (and summarized below) areas where material conflicts of interest are most likely to arise, and has adopted policies and procedures that it believes are reasonably designed to address such conflicts. It is possible that an investment opportunity may be suitable for both the Registrant and other accounts managed by a member of the Portfolio Team, but may not be available in sufficient quantities for both the Registrant and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by the Registrant and another account. A conflict may arise where a member of the Portfolio Team may have an incentive to treat an account preferentially as compared to the Registrant because the account pays Babson Capital a performance-based fee or a member of the Portfolio Team, Babson Capital, or an affiliate has an interest in the account. Babson Capital has adopted an investment allocation policy and trade allocation procedures to address allocation of portfolio transactions and investment opportunities across multiple clients. These policies are designed to achieve fair and equitable treatment of all clients over time, and specifically prohibit allocations based on performance of an account, the amount or structure of the management fee, performance fee or profit sharing allocations, participation or investment by an employee, Babson Capital or an affiliate, whether the account is public, private, proprietary or third party. Additionally, the Registrant, MassMutual, Babson Capital, MassMutual Participation Investors, and any private investment company advised or sub-advised by Babson Capital have obtained a blanket order from the Securities and Exchange Commission pursuant to Section 17(d), and Rule 17(d)-1 thereunder, of the Investment Company Act of 1940, as amended, which sets forth the conditions by which the entities can engage in private placement co-investment activities. Potential material conflicts of interest may also arise related to the knowledge and timing of the Registrant's trades, investment opportunities and broker selection. A member of the Portfolio Team will have information about the size, timing and possible market impact of the Registrant's trades. It is theoretically possible that a member of the Portfolio Team could use this information for his or her personal advantage or the advantage of other accounts he manages or the possible detriment of the Registrant. For example, a member of the Portfolio Team could front run a fund's trade or short sell a security for an account immediately prior to the Registrant's sale of that security. To address these conflicts, Babson Capital has adopted policies and procedures governing employees' personal securities transactions, the use of short sales, and trading between the Registrant and other accounts managed by members of the Portfolio Team or accounts owned by Babson Capital or its affiliates. With respect to securities transactions for the Registrant, Babson Capital determines which broker to use to execute each order, consistent with its duty to seek best execution of the transaction. Babson Capital manages certain other accounts, however, where Babson Capital may be limited by the client with respect to the selection of brokers or directed to trade such client's transactions through a particular broker. In these cases, trades for a fund in a particular security may be placed separately from, rather than aggregated with, such other accounts. Placing separate transaction orders for a security may temporarily affect the market price of the security or otherwise affect the execution of the transaction to the possible detriment of a fund or the other account(s) involved. Babson Capital has policies and procedures that address best execution and directed brokerage. Members of the Portfolio Team may also face other potential conflicts of interest in managing the Registrant, and the above is not a complete description of every conflict of interest that could be deemed to exist in managing both the Registrant and the other accounts listed above. COMPENSATION. The current Babson Capital compensation and incentive program for investment professionals is designed to attract, motivate and retain high-performing individuals. To help Babson Capital make informed decisions, the Company participates in annual compensation surveys of investment management firms using McLagan Partners, in addition to other industry specific resources. The firms selected for periodic peer-group comparisons typically have similar asset size or business mix. Annually, a review is conducted of total compensation versus market, to ensure that individual pay is competitive with the defined overall market. The compensation package for the members of the Portfolio Team is comprised of a market-driven base salary, a performance-driven annual bonus, and discretionary long-term incentives. The performance-driven bonus is based on the performance of the accounts managed by the members of the Portfolio Team relative to appropriate benchmarks, including with respect to the Registrant, to the Lehman Brothers Intermediate U.S. Credit and the S & P Industrial Index, in addition to the Russell 2000 Index and Lehman Brothers U.S. Corporate High Yield Index. Performance of the Registrant, like other accounts Portfolio Team members manage, are evaluated on a pre-tax basis, and are reviewed over one and three-year periods, with greater emphasis given to the latter. There are other factors that affect bonus awards to a lesser extent, such as client satisfaction, teamwork, the assets under management, and the overall success of Babson Capital. Such factors are considered as a part of the overall annual bonus evaluation process by the management of Babson Capital. Long-Term incentives are designed to share with participants the longer-term value created in Babson Capital. Long-term incentives may take the form of deferred cash awards (including deferred cash awards that provide a portfolio manager with the economic equivalent of a "shareholder" interest in the firm by linking the value of the award to a formula which ties to the value of the business), and/or, in the case of a portfolio manager who manages a private investment fund with a performance fee, a deferred cash award or a direct profit sharing interest that results in the manager receiving amounts based on the amount of the performance fee paid by such fund. These long-term incentives vest over time and are granted annually, based upon the same criteria used to determine the performance-driven annual bonus detailed above. Because the Portfolio Team members are generally responsible for multiple accounts (including the Registrant), they are compensated on the overall performance of the accounts that they manage, rather than a specific account, except for the portion of compensation relating to any performance fee award. BENEFICIAL OWNERSHIP. As of December 31, 2006, members of the Portfolio Team beneficially owned the following dollar range of equity securities in the Registrant: DOLLAR RANGE OF BENEFICIALLY OWNED* PORTFOLIO TEAM: EQUITY SECURITIES OF THE REGISTRANT --------------- ----------------------------------- Clifford M. Noreen $500,001-$1,000,000 Jill A. Fields $50,001-$100,000 Michael P. Hermsen $100,001-$500,000 Michael L. Klofas $100,001-$500,000 Richard E. Spencer II None * Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended. (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 common shares. However, neither the Plan nor the participant in the Plan has an actual ownership interest in the Registrant's common 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/ Clifford M. Noreen ---------------------------------- Clifford M. Noreen, President ---------------------------------- Date: March 6, 2007 ---------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ Clifford M. Noreen ---------------------------------- Clifford M. Noreen, President ---------------------------------- Date: March 6, 2007 ---------------------------------- By: /s/ James M. Roy ---------------------------------- James M. Roy, Vice President, and Chief Financial Officer ---------------------------------- Date: March 6, 2007 ------------------------------ EX-99.CERT 2 exh99-311_14940.txt CERTIFICATION EXHIBIT-99.31.1 --------------- CERTIFICATION ------------- ITEM 12(a)(2) PRINCIPAL EXECUTIVE OFFICER CERTIFICATION I, Clifford M. Noreen, certify that: 1. I have reviewed this report on Form N-CSR of MassMutual Corporate Investors; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 6, 2007 /s/: Clifford M. Noreen - -------------------------------- Clifford M. Noreen President MassMutual Corporate Investors EXHIBIT-99.31.2 --------------- CERTIFICATION ------------- ITEM 12(a)(2) PRINCIPAL FINANCIAL OFFICER CERTIFICATION I, James M. Roy, certify that: 1. I have reviewed this report on Form N-CSR of MassMutual Corporate Investors; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 6, 2007 /s/: James M. Roy - -------------------------------- James M. Roy Vice President and Chief Financial Officer MassMutual Corporate Investors EX-99.906CERT 3 exh99-32_14940.txt CERTIFICATION EXHIBIT-99.32 ------------- ITEM 12(b) To my knowledge, this periodic report containing the financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer. /s/ Clifford M. Noreen - -------------------------------- Clifford M. Noreen President MassMutual Corporate Investors /s/ James M. Roy - -------------------------------- James M. Roy Vice President and Chief Financial Officer MassMutual Corporate Investors March 6, 2007 -----END PRIVACY-ENHANCED MESSAGE-----