N-CSR 1 form-ncsr_16319.txt MASSMUTUAL CORPORATE INVESTORS 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, P.O. Box 15189, Springfield, MA 01115-5189 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Patricia J. Walsh, Vice President, Secretary and Chief Legal Officer 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: 12/31/08 ------------------ Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORT TO STOCKHOLDERS. Attached hereto is the annual shareholder report transmitted to shareholders pursuant to Rule 30e-1 of the Investment Company Act of 1940, as amended. [LOGO] MASSMUTUAL CORPORATE INVESTORS 2008 ANNUAL REPORT MASSMUTUAL CORPORATE INVESTORS c/o Babson Capital Management LLC 1500 Main Street Suite 600, P.O. Box 15189 Springfield, Massachusetts 01115-5189 (413) 226-1516 http://www.BabsonCapital.com/mci ADVISER Babson Capital Management LLC 1500 Main Street, P.O. Box 15189 Springfield, Massachusetts 01115-5189 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: KPMG LLP Boston, Massachusetts 02110 COUNSEL TO THE TRUST Ropes & Gray LLP Boston, Massachusetts 02110 CUSTODIAN Citibank, N.A. New York, New York 10043 TRANSFER AGENT & REGISTRAR Shareholder Financial Services, Inc. P.O. Box 173673 Denver, Colorado 80217-3673 1-800-647-7374 MCI Listed NYSE PROXY VOTING POLICIES & PROCEDURES; PROXY VOTING RECORD The Trustees of MassMutual Corporate Investors (the "Trust") have delegated proxy voting responsibilities relating to the voting of securities held by the Trust to Babson Capital Management LLC ("Babson Capital"). A description of Babson Capital's proxy voting policies and procedures is available (1) without charge, upon request, by calling, toll-free 1-866-399-1516; (2) on the Trust's website at http://www.BabsonCapital.com/mci; and (3) on the U.S. Securities and Exchange Commission's ("SEC") website at http:// www.sec.gov. Information regarding how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2008 is available (1) on the Trust's web-site at http://www.BabsonCapital.com/mci; and (2) on the SEC's website at http://www.sec.gov. FORM N-Q The Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This information is available (i) on the SEC's website at http://www. sec.gov; and (ii) at the SEC's Public Reference Room in Washington, DC (which information on their operation may be obtained by calling 1-800-SEC-0330). A complete schedule of portfolio holdings as of each quarter-end is available on the Trust's website at http:// www.BabsonCapital.com/mci or upon request by calling, toll-free, 1-866-399-1516. -------------------------------------------------------------------------------- MassMutual Corporate Investors MASSMUTUAL CORPORATE INVESTORS -------------------------------------------------------------------------------- MassMutual Corporation 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. INVESTMENT OBJECTIVE & POLICY -------------------------------------------------------------------------------- MassMutual Corporate Investors (the "Trust") is a closed-end investment company, first offered to the public in 1971, whose shares are traded on the New York Stock Exchange under the trading symbol "MCI". The Trust's share price can be found in the financial section of most newspapers as "MassCp" or "MassMuInv" under either the New York Stock Exchange listings or Closed-End Fund Listings. The Trust's investment objective is to maintain a portfolio of securities providing a fixed yield and at the same time offering an opportunity for capital gains. The Trust's principal investments are privately placed, below-investment grade, long-term debt obligations with equity features such as warrants, conversion rights, or other equity features and, occasionally, preferred stocks. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers in private placement transactions. These investments are typically mezzanine debt instruments with accompanying private equity securities made to small or middle market companies. In addition, the Trust may temporarily invest, subject to certain limitations, in marketable investment grade debt securities, other marketable debt securities (including high yield securities) and marketable common stocks. Below-investment grade or high yield securities have predominantly speculative characteristics with respect to the capacity of the issuer to pay interest and repay principal. Babson Capital Management LLC ("Babson Capital") manages the Trust on a total return basis. The Trust distributes substantially all of its net income to shareholders each year. Accordingly, the Trust pays dividends to shareholders quarterly in January, May, August, and November. The Trust pays dividends to its shareholders in cash, unless the shareholder elects to participate in the Dividend Reinvestment and Share Purchase Plan. In this report you will find a complete listing of the Trust's holdings. We encourage you to read this section carefully for a better understanding of the Trust. We cordially invite all shareholders to attend the Trust's Annual Meeting of Shareholders, which will be held on April 24, 2009 at 1:30 P.M. in Springfield, Massachusetts. -------------------------------------------------------------------------------- MassMutual Corporate Investors 1 TOTAL ANNUAL PORTFOLIO RETURN (AS OF 12/31 EACH YEAR)* [BAR CHART APPEARS HERE]
MASSMUTUAL CORPORATE 7.53 7.28 5.91 4.80 22.61 22.76 20.04 18.06 8.72 -10.34 INVESTORS (BASED ON CHANGE IN THE NET ASSET VALUE WITH REINVESTED DIVIDENDS) RUSSELL 2000 INDEX 21.26 -3.03 2.49 -20.48 47.25 18.33 4.55 18.37 -1.57 -33.79 BARCLAYS CAPITAL U.S. 2.39 -5.86 5.28 -1.41 28.97 11.13 2.74 11.85 1.87 -26.16 CORPORATE HIGH YIELD INDEX 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
* Data for MassMutual Corporate Investors (the "Trust") represents portfolio returns based on change in the Trust's net asset value assuming the reinvestment of all dividends and distributions. These returns differ from the total investment return based on market value of the Trust's shares due to the difference between the Trust's net asset value and the market value of its shares outstanding (see page 12 for total investment return based on market value). Past performance is no guarantee of future results. PORTFOLIO COMPOSITION AS OF 12/31/08* [PIE CHART APPEARS HERE] Private / 144A Public High High Yield Debt Yield Debt 64.6% 15.7% Private / Restricted Public Equity Equity 1.1% 14.9% Cash & Short Term Investments 3.7% *Based on value of total investments (including cash) -------------------------------------------------------------------------------- 2 MassMutual Corporate Investors TO OUR SHAREHOLDERS -------------------------------------------------------------------------------- I am pleased to share with you the Trust's Annual Report for the year ended December 31, 2008. THE TRUST'S 2008 PORTFOLIO PERFORMANCE The Trust's net total portfolio rate of return for 2008 was negative 10.34%, as measured by the change in net asset value and assuming the reinvestment of all dividends and distributions. The Trust's total net assets were $208,143,519, or $22.33 per share, as of December 31, 2008. This compares to $251,163,022, or $27.19 per share, as of December 31, 2007. The Trust paid a quarterly dividend of 54 cents per share for each of the four quarters of 2008. Including the fourth quarter dividend paid in January 2009, total dividends for the year were $2.16 per share. The table below lists the average annual net returns of the Trust's portfolio, based on the change in net assets and assuming the reinvestment of all dividends and distributions. Average annual returns of the Barclays Capital U.S. Corporate High Yield Index and the Russell 2000 Small Cap Equity Index for the 1, 3, 5 and 10 years ended December 31, 2008 are provided for comparison. Barclays Capital U.S. Russell The Trust Corporate High Yield Index 2000 Index -------------------------------------------------------------------------------- 1 Year -10.34% -26.16% -33.79% -------------------------------------------------------------------------------- 3 Year 4.79% -5.59% -8.29% -------------------------------------------------------------------------------- 5 Year 11.14% -0.80% -0.93% -------------------------------------------------------------------------------- 10 Year 10.29% 2.17% 3.02% -------------------------------------------------------------------------------- Past performance is no guarantee of future results. The year 2008 was a challenging one at all levels. The U.S. economy declined into a recession and most asset classes performed below expectations. The mortgage and credit market crisis that began in mid-2007 expanded into a widespread economic recession that reached beyond the U.S. into every corner of the world. As credit markets weakened, businesses that relied on borrowing, including a number of well known financial firms, could not get the funds they needed and either closed or were acquired by others. Governments around the globe pumped capital into various institutions to try to improve the situation, but this had limited success. A crisis in investor confidence led to a flight to quality. This resulted in U.S. Treasury bills and bonds at record low yields. As 2008 came to an end, significant concerns existed about the U.S. economy. How far will the downturn extend? When will the downturn end? What events will lead to a recovery? The unemployment rate was 7.2 percent in December and is expected to rise in 2009, according to the U.S. Department of Labor. Inflation spiked to 5.4 percent in August, but then plummeted to just 0.1 percent by year-end. The value of the dollar versus several other currencies rebounded in 2008 after dropping precipitously in 2007. Corporate credit defaults around the globe rose after five straight years of decline, according to Moody's Investors Service. Moody's global issuer-weighted speculative-grade default rate finished the year at 4 percent, up from 0.9 percent in 2007. Moody's expects the default rate to jump in 2009 to more than 15 percent in the U.S., well beyond its historical average of 5 percent. PORTFOLIO ACTIVITY The Trust's investment activity during 2008 was very lumpy. During the first quarter of the year, the mezzanine and private equity markets in which the Trust participates continued to be affected by the credit dislocation that began in 2007. Less credit was available to fund transactions than had previously been available, so new investment activity was very slow. Credit became more readily available during the second and third quarters of 2008. As a result, new investment activity and -------------------------------------------------------------------------------- MassMutual Corporate Investors 3 portfolio company sale activity increased during both quarters. Equally as important, the trend towards more conservative capital structures that began toward the end of 2007 continued into 2008. New investments were structured with lower leverage than had generally been the case during the last several years. At the same time, pricing on these investments was also more favorable than it has been for several years. As the third quarter ended, however, the turmoil in the financial markets once again impacted middle market leveraged buyout activity. Senior debt financing became increasingly scarce and significantly more expensive as a number of senior debt providers withdrew from the market. Investment activity in the fourth quarter slowed dramatically as a result, and the slowdown has continued into 2009. Overall, the Trust closed 23 new private placement transactions during 2008 and added to nine existing private placement investments. Total private placement purchases in 2008 were $52,612,864. Left to right: Clifford M. Noreen PRESIDENT Roger W. Crandall CHAIRMAN [PHOTO OF PRESIDENT AND CHAIRMAN] -------------------------------------------------------------------------------- 4 MassMutual Corporate Investors New private placement investments completed during 2008 were: ASAP Industries LLC; AWX Holdings Corporation; All Current Holding Company; CDNT, Inc.; Clough, Harbour and Associates; Coeur, Inc.; Crane Rental Corporation; ESP Holdco, Inc.; FCX Holdings Corporation; GQ Holdings LLC; Hospitality Mints Holding Company; KPI Holdings, Inc.; MVI Holding, Inc.; MedSystems Holdings LLC; MEGTEC Holdings, Inc.; Milwaukee Gear Company; Power Services Holding Company; REI Delaware Holding, Inc.; Specialty Commodities, Inc.; Synteract Holdings Corporation; THI Acquisition, Inc.; UMA Enterprises, Inc.; and Xaloy Superior Holdings, Inc. In addition, the Trust added to existing private placement investments in American Hospice Management Holding LLC; Fuel Systems Holding Corporation; Morton Industrial Group, Inc.; Navis Global; NetShape Technologies, Inc.; Power Services Holding Company; Smart Source Holdings LLC; Tangent Rail Corporation and Truck Bodies & Equipment International. Left to right: Richard E. Spencer, II Vice President Michael P. Hermsen Vice President Jill A. Fields Vice President Patricia J. Walsh Vice President, Secretary & Chief Legal Officer Michael L. Klofas [PHOTO OF OFFICERS] Vice President James M. Roy Vice President & Chief Financial Officer -------------------------------------------------------------------------------- MassMutual Corporate Investors 5 OUTLOOK FOR 2009 -------------------------------------------------------------------------------- The year 2009 opened with a new U.S. President and with the worldwide economy and financial markets still in a state of uncertainty. The recession has businesses and consumers in a self-perpetuating negative cycle. Nervous consumers and companies cut back spending, which puts pressure on company earnings, often necessitating businesses to lay off staff, further fanning fear. Governments continue to look at capital injections to help start a recovery, but banks are hesitant to lend, despite the fact that they are able to borrow from the Federal Reserve at interest rates near zero. How long will it take before the world's economies return to a healthier state? As always, no one can predict the future with any degree of certainty. The current recessionary economic conditions have adversely affected the financial performance of many of the Trust's portfolio companies. In addition, middle market leveraged buyout activity, which drives new investment and portfolio company sale activity for the Trust, remains very slow. This will continue until senior debt financing becomes more widely available. As a result, we expect 2009 to be another challenging year, and one during which we will spend significant efforts on managing the Trust's existing portfolio of companies. Regardless of the economic environment 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, contributes to the Trust's being well positioned to meet its investment objectives and policies. As always, I would like to thank you for your continued interest in and support of MassMutual Corporate Investors. Sincerely, /s/ Clifford M. Noreen Clifford M. Noreen, President Cautionary Notice: Certain statements contained in this report may be "forward looking" statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date in which they are made and which reflect management's current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. These statements are subject to change at any time based upon economic, market or other conditions and may not be relied upon as investment advice or an indication of the Trust's trading intent. References to specific securities are not recommendations of such securities, and may not be representative of the Trust's current or future investments. We undertake no obligation to publicly update forward looking statements, whether as a result of new information, future events, or otherwise. -------------------------------------------------------------------------------- 2008 Record Net Investment Short-Term Tax Long-Term Dividends Date Income Gains Effect Gains -------------------------------------------------------------------------------- Regular 5/5/2008 0.5400 -- -- 8/1/2008 0.5400 -- -- 10/31/2008 0.5400 -- -- 12/31/2008 0.5400 -- -- -------------------------------------------------------------------------------- $2.1600 $ -- $2.1600 $ -- ================================================================================ The Trust did not have distributable net long-term capital gains in 2008.
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 --------------------------------------------------------------------------------------------------------- $2.16 6.4459% 0.1389 6.6790% 0.1439 0% 0.0000 =========================================================================================================
* Not available to individual shareholders ** Qualified dividends are reported in Box 1b on IRS Form 1099-Div for 2008 -------------------------------------------------------------------------------- 6 MassMutual Corporate Investors FINANCIAL REPORT Consolidated Statement of Assets and Liabilities 8 Consolidated Statement of Operations 9 Consolidated Statement of Cash Flows 10 Consolidated Statements of Changes in Net Assets 11 Consolidated Financial Highlights 12 Consolidated Schedule of Investments 13-35 Notes to Consolidated Financial Statements 36-41 Report of Independent Registered Public Accounting Firm 42 Interested Trustees 43-44 Independent Trustees 45-47 Officers of the Trust 48 -------------------------------------------------------------------------------- MassMutual Corporate Investors 7 CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS: Investments (See Consolidated Schedule of Investments) Corporate restricted securities at fair value (Cost - $213,841,105) $ 191,135,415 Corporate public securities at market value (Cost - $60,920,630) 40,422,532 Short-term securities at amortized cost 6,233,266 -------------- 237,791,213 -------------- Cash 2,636,512 Interest and dividends receivable 3,447,493 Receivable for investments sold 185,417 Prepaid taxes 250,000 -------------- TOTAL ASSETS 244,310,635 -------------- LIABILITIES: Dividend payable 5,032,535 Payable for investments purchased 3,578 Investment advisory fee payable 650,448 Note payable 30,000,000 Interest payable 202,105 Accrued expenses 173,096 Accrued taxes payable 16,000 Other payables 89,354 -------------- TOTAL LIABILITIES 36,167,116 -------------- TOTAL NET ASSETS $ 208,143,519 ============== NET ASSETS: Common shares, par value $1.00 per share; an unlimited number authorized $ 9,319,509 Additional paid-in capital 112,902,899 Retained net realized gain on investments, prior years 127,688,004 Undistributed net investment income 3,174,832 Accumulated net realized loss on investments (1,737,937) Net unrealized depreciation of investments (43,203,788) -------------- TOTAL NET ASSETS $ 208,143,519 ============== COMMON SHARES ISSUED AND OUTSTANDING 9,319,509 -------------- NET ASSET VALUE PER SHARE $ 22.33 ============== See Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- 8 MassMutual Corporate Investors CONSOLIDATED STATEMENT OF OPERATIONS For the year ended December 31, 2008 INVESTMENT INCOME: Interest $ 25,240,896 Dividends 1,294,265 Other 88,292 -------------- TOTAL INVESTMENT INCOME 26,623,453 -------------- EXPENSES: Investment advisory fees 2,943,631 Interest 1,599,574 Trustees' fees and expenses 213,400 Professional fees 166,900 Reports to shareholders 132,500 Custodian fees 30,000 Transfer agent/registrar's expenses 26,000 Other 39,154 -------------- TOTAL EXPENSES 5,151,159 -------------- INVESTMENT INCOME - NET 21,472,294 -------------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss on investments before taxes (2,584,195) Income tax benefit 124,775 -------------- NET REALIZED LOSS ON INVESTMENTS AFTER TAXES (2,459,420) -------------- NET CHANGE IN UNREALIZED DEPRECIATION OF INVESTMENTS (44,140,369) -------------- NET LOSS ON INVESTMENTS (46,599,789) -------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (25,127,495) ============== See Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- MassMutual Corporate Investors 9 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended December 31, 2008 NET INCREASE IN CASH: Cash flows from operating activities: Purchases/Proceeds/Maturities from short-term portfolio securities, net $ 13,836,396 Purchases of portfolio securities (93,704,805) Proceeds from disposition of portfolio securities 81,680,294 Interest, dividends and other received 28,408,656 Interest expense paid (1,609,026) Operating expenses paid (3,581,173) Income taxes paid (1,242,326) -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 23,788,016 -------------- Cash flows from financing activities: Cash dividends paid from net investment income (24,006,823) Receipts for shares issued on reinvestment of dividends 2,186,860 -------------- NET CASH USED FOR FINANCING ACTIVITIES (21,819,963) -------------- NET INCREASE IN CASH 1,968,053 Cash - beginning of year 668,459 -------------- CASH - END OF YEAR $ 2,636,512 -------------- RECONCILIATION OF NET DECREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (25,127,495) -------------- Decrease in investments 46,360,020 Decrease in interest and dividends receivable 2,607,682 Decrease in receivable for investments sold 1,350,368 Increase in prepaid taxes (250,000) Increase in payable for investments purchased 3,578 Decrease in investment advisory fee payable (134,436) Decrease in interest payable (9,452) Increase in accrued expenses 17,228 Decrease in accrued taxes payable (1,117,101) Increase in other payables 87,624 -------------- TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS 48,915,511 -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 23,788,016 ============== See Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- 10 MassMutual Corporate Investors CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
2008 2007 -------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Investment income - net $ 21,472,294 $ 23,586,915 Net realized (loss) gain on investments (2,459,420) 1,411,465 Net change in unrealized depreciation of investments (44,140,369) (4,596,952) -------------- -------------- NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS (25,127,495) 20,401,428 -------------- -------------- Increase from common shares issued on reinvestment of dividends Common shares issued (2008 - 81,890; 2007 - 87,700) 2,186,860 2,751,359 Dividends to shareholders from: Net investment income (2008 - $2.16 per share; 2007 - $2.57 per share) (20,078,868) (23,679,411) -------------- -------------- TOTAL DECREASE IN NET ASSETS (43,019,503) (526,624) -------------- -------------- NET ASSETS, BEGINNING OF YEAR 251,163,022 251,689,646 -------------- -------------- NET ASSETS, END OF YEAR (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $3,174,832 AND $1,765,219 RESPECTIVELY) $ 208,143,519 $ 251,163,022 ============== ==============
See Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- MassMutual Corporate Investors 11 CONSOLIDATED FINANCIAL HIGHLIGHTS Selected data for each share of beneficial interest outstanding:
For the years ended December 31, 2008 2007 2006 2005 2004 ----------------------------------------------------------------------------------------------------- NET ASSET VALUE: BEGINNING OF YEAR $ 27.19 $ 27.51 $ 26.06 $ 24.34 $ 21.84 ---------- ---------- ---------- ---------- ---------- Net investment income (a) 2.31 2.56 2.27 2.03 2.00 Net realized and unrealized gain (loss) on investments (5.02) (0.35) 1.62 1.96(b) 2.64 ---------- ---------- ---------- ---------- ---------- TOTAL FROM INVESTMENT OPERATIONS (2.71) 2.21 3.89 3.99 4.64 ---------- ---------- ---------- ---------- ---------- Dividends from net investment income to common shareholders (2.16) (2.57) (2.47) (2.11) (2.16) Dividends from net realized gain on investments to common shareholders -- -- (0.01) (0.18) -- Increase from dividends reinvested 0.01 0.04 0.04 0.02 0.02 ---------- ---------- ---------- ---------- ---------- TOTAL DIVIDENDS (2.15) (2.53) (2.44) (2.27) (2.14) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE: END OF YEAR $ 22.33 $ 27.19 $ 27.51 $ 26.06 $ 24.34 ---------- ---------- ---------- ---------- ---------- PER SHARE MARKET VALUE: END OF YEAR $ 19.25 $ 30.20 $ 34.89 $ 30.05 $ 28.50 ========== ========== ========== ========== ========== Total investment return Net asset value (c) (10.34%) 8.72% 18.06% 20.04% 22.76% Market value (30.44%) (8.78%) 29.04% 16.95% 36.10% Net assets (in millions): End of year $ 208.14 $ 251.16 $ 251.69 $ 236.28 $ 218.51 Ratio of operating expenses to average net assets 1.49% 1.55% 1.43% 1.78% 1.93% Ratio of interest expense to average net assets 0.67% 0.59% 0.60% 0.73% 0.77% Ratio of income tax expense to average net assets (d) 0.00% 0.35% 2.46% 2.84% 0.69% Ratio of total expenses before custodian reduction to average net assets (d) 2.16% 2.49% 4.53% 5.36% 3.39% Ratio of net expenses after custodian reduction to average net assets (d) 2.16% 2.49% 4.49% 5.35% 3.39% Ratio of net investment income to average net assets 9.01% 9.17% 8.19% 7.98% 8.68% Portfolio turnover 32% 44% 35% 35% 53% (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. (d) As additional information, this ratio is included to reflect the taxes paid on retained long-term gains. These taxes paid are netted against realized capital gains in the Statement of Operations. The taxes paid are treated as deemed distributions and a credit for the taxes paid are passed on to the shareholders. Senior borrowings: Total principal amount (in millions) $ 30 $ 30 $ 20 $ 20 $ 29 Asset coverage per $1,000 of indebtedness $ 7,938 $ 9,372 $ 13,584 $ 12,814 $ 8,535
See Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- 12 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES - 91.83%:(A) PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- PRIVATE PLACEMENT INVESTMENTS - 87.82% A H C HOLDING COMPANY, INC. A designer and manufacturer of boilers and water heaters for the commercial sector. 15% Senior Subordinated Note due 2015 $ 2,404,929 11/21/07 $ 2,354,304 $ 2,274,518 Limited Partnership Interest (B) 23.16% int. 11/21/07 224,795 217,161 ------------- ------------- 2,579,099 2,491,679 ------------- ------------- A S A P INDUSTRIES LLC A designer and manufacturer of components used on oil and natural gas wells. 12.5% Senior Subordinated Note due 2015 $ 1,134,594 12/31/08 985,537 1,173,363 Limited Liability Company Unit Class A-2 (B) 1,276 uts. 12/31/08 140,406 133,386 Limited Liability Company Unit Class A-3 (B) 1,149 uts. 12/31/08 126,365 11 ------------- ------------- 1,252,308 1,306,760 ------------- ------------- 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 2,125,000 Warrant, exercisable until 2012, to purchase preferred stock at $.01 per share (B) 13 shs. 11/16/07 -- 20,271 Warrant, exercisable until 2012, to purchase common stock at $.02 per share (B) 2,323 shs. 04/08/04 -- 1,035,536 ------------- ------------- 2,125,000 3,180,807 ------------- ------------- A W X HOLDINGS CORPORATION A provider of aerial equipment rental, sales and repair services to non-residential construction and maintenance contractors operating in Indiana. 10.5% Senior Secured Term Note due 2014 $ 735,000 05/15/08 720,300 706,172 13% Senior Subordinated Note due 2015 $ 735,000 05/15/08 661,374 696,761 Common Stock (B) 105,000 shs. 05/15/08 105,000 99,750 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 36,923 shs. 05/15/08 62,395 369 ------------- ------------- 1,549,069 1,503,052 ------------- ------------- ADVANCED TECHNOLOGIES HOLDINGS A provider of factory maintenance services to industrial companies. 15% Senior Subordinated Note due 2013 $ 2,102,587 12/27/07 2,059,849 2,053,571 Preferred Stock (B) 1,031 shs. 12/27/07 510,000 517,501 ------------- ------------- 2,569,849 2,571,072 ------------- ------------- AERO HOLDINGS, INC. A provider of geospatial services to corporate and government clients. 10.5% Senior Secured Term Note due 2014 $ 1,627,500 03/09/07 1,603,088 1,587,648 14% Senior Subordinated Note due 2015 $ 1,260,000 03/09/07 1,140,120 1,221,182 Common Stock (B) 262,500 shs. 03/09/07 262,500 435,822 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 66,116 shs. 03/09/07 111,527 109,771 ------------- ------------- 3,117,235 3,354,423 ------------- -------------
MassMutual Corporate Investors 13 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- ALL CURRENT HOLDING COMPANY A specialty re-seller of essential electrical parts and components primarily serving wholesale distributors. 12% Senior Subordinated Note due 2015 $ 1,140,317 09/26/08 $ 1,037,101 $ 1,086,252 Common Stock (B) 1,347 shs. 09/26/08 134,683 127,965 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 958 shs. 09/26/08 87,993 10 ------------- ------------- 1,259,777 1,214,227 ------------- ------------- AMERICAN HOSPICE MANAGEMENT HOLDING LLC A for-profit hospice care provider in the United States. 12% Senior Subordinated Note due 2013 $ 3,187,495 * 3,033,665 3,211,067 Preferred Class A Unit (B) 3,223 uts. ** 322,300 257,840 Preferred Class B Unit (B) 1,526 uts. 06/09/08 152,626 152,626 Common Class B Unit (B) 30,420 uts. 01/22/04 1 -- Common Class D Unit (B) 6,980 uts. 09/12/06 1 -- ------------- ------------- * 01/22/04 and 06/09/08. ** 01/22/04 and 09/12/06. 3,508,593 3,621,533 ------------- ------------- 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 1,560,657 1,499,691 Common Stock (B) 497 shs. 05/18/05 497,340 35,980 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 130 shs. 05/18/05 112,128 9,432 ------------- ------------- 2,170,125 1,545,103 ------------- ------------- 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 2,163,017 2,119,052 Preferred Stock Class A (B) 879 shs. 06/30/06 268,121 139,554 Common Stock (B) 1 sh. 06/30/06 286 -- Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 309 shs. 06/30/06 92,102 49,046 ------------- ------------- 2,523,526 2,307,652 ------------- ------------- C D N T, INC. A value-added converter and distributor of specialty pressure sensitive adhesives, foams, films, and foils. 10.5% Senior Secured Term Note due 2014 $ 750,872 08/07/08 735,855 726,756 12.5% Senior Subordinated Note due 2015 $ 750,872 08/07/08 680,397 716,238 Common Stock (B) 73,256 shs. 08/07/08 73,256 69,593 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 57,600 shs. 08/07/08 57,689 576 ------------- ------------- 1,547,197 1,513,163 ------------- ------------- CAPESUCCESS LLC A provider of diversified staffing services. Preferred Membership Interests (B) 1,881 uts. 04/29/00 8,395 -- Common Membership Interests (B) 24,318 uts. 04/29/00 108,983 -- ------------- ------------- 117,378 -- ------------- ------------- CAPITAL SPECIALTY PLASTICS, INC. A producer of desiccant strips used for packaging pharmaceutical products. Common Stock (B) 109 shs. * 503 279,466 ------------- ------------- *12/30/97 and 05/29/99.
14 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- CLOUGH, HARBOUR AND ASSOCIATES An engineering service firm that is located in Albany, NY. 12.25% Senior Subordinated Note due 2015 $ 2,400,000 12/02/08 $ 2,225,100 $ 2,401,099 Preferred Stock (B) 277 shs. 12/02/08 276,900 263,055 ------------- ------------- 2,502,000 2,664,154 ------------- ------------- COEUR, INC. A producer of proprietary, disposable power injection syringes. 12% Senior Subordinated Note due 2016 $ 1,214,286 10/10/08 1,098,929 1,172,468 Common Stock (B) 607 shs. 10/10/08 60,714 57,678 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 934 shs. 10/10/08 91,071 9 ------------- ------------- 1,250,714 1,230,155 ------------- ------------- CONNECTICUT ELECTRIC, INC. A supplier and distributor of electrical products sold into the retail and wholesale markets. 12% Senior Subordinated Note due 2014 $ 2,393,954 01/12/07 2,233,202 1,984,601 Limited Liability Company Unit Class A (B) 156,046 uts. 01/12/07 156,046 44,718 Limited Liability Company Unit Class C (B) 112,873 uts. 01/12/07 112,873 32,346 ------------- ------------- 2,502,121 2,061,665 ------------- ------------- CONNOR SPORT COURT INTERNATIONAL, INC. A designer and manufacturer of outdoor and indoor synthetic sports flooring and other temporary flooring products. Preferred Stock Series B-2 (B) 17,152 shs. 07/05/07 700,392 1,715,247 Preferred Stock Series C (B) 8,986 shs. 07/05/07 300,168 808,704 Common Stock (B) 718 shs. 07/05/07 7 7 Limited Partnership Interest (B) 12.64% int. * 189,586 -- ------------- ------------- *08/12/04 and 01/14/05. 1,190,153 2,523,958 ------------- ------------- COREPHARMA LL A manufacturer of oral dose generic pharmaceuticals targeted at niche applications. 12% Senior Subordinated Note due 2013 $ 2,550,000 08/04/05 2,450,764 2,419,833 Warrant, exercisable until 2013, to purchase common stock at $.001 per share (B) 20 shs. 08/04/05 137,166 89,997 ------------- ------------- 2,587,930 2,509,830 ------------- ------------- CRANE RENTAL CORPORATION A crane rental company. 13% Senior Subordinated Note due 2015 $ 2,295,000 08/21/08 2,060,608 2,198,879 Common Stock (B) 255,000 shs. 08/21/08 255,000 242,250 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 136,070 shs. 08/21/08 194,826 1,361 ------------- ------------- 2,510,434 2,442,490 ------------- ------------- 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 1,743,484 1,819,998 Limited Partnership Interest (B) 1.82% int. 10/30/06 702,174 1,558,017 Warrant, exercisable until 2014, to purchase preferred stock at $.01 per share (B) 50 shs. 10/30/06 49,830 60,503 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 34 shs. 10/30/06 34,000 166,231 ------------- ------------- 2,529,488 3,604,749 ------------- -------------
MassMutual Corporate Investors 15 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- DIVERSCO, INC./ DHI HOLDINGS, INC. A contract provider of janitorial and equipment maintenance services and temporary production labor to industrial customers. Membership Interests of MM/Lincap Diversco Investments Ltd. LLC (B) 27.20% int. 08/27/98 $ 734,090 $ -- Preferred Stock (B) 3,278 shs. 12/14/01 2,784,133 1,319,430 Warrants, exercisable until 2011, to purchase common stock of DHI Holdings, Inc. at $.01 per share (B) 13,352 shs. * 403,427 -- ------------- ------------- *10/24/96 and 08/28/98. 3,921,650 1,319,430 ------------- ------------- DUNCAN SYSTEMS, INC. A distributor of windshields and side glass for the recreational vehicle market. 10% Senior Secured Term Note due 2013 $ 540,000 11/01/06 531,900 502,858 13% Senior Subordinated Note due 2014 $ 855,000 11/01/06 773,745 776,739 Common Stock (B) 180,000 shs. 11/01/06 180,000 138,244 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 56,514 shs. 11/01/06 78,160 43,404 ------------- ------------- 1,563,805 1,461,245 ------------- ------------- DWYER GROUP, INC. A franchiser of a variety of home repair services. Common Stock (B) 6,906 shs. * 690,600 1,152,242 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 2,034 shs. 10/30/03 186,469 339,297 ------------- ------------- *10/30/03 and 01/02/04. 877,069 1,491,539 ------------- ------------- E S P HOLDCO, INC. A manufacturer of power protection technology for commercial office equipment, primarily supplying the office equipment dealer network. 14% Senior Subordinated Note due 2015 $ 2,263,993 01/08/08 2,223,390 2,102,162 Common Stock (B) 660 shs. 01/08/08 329,990 313,500 ------------- ------------- 2,553,380 2,415,662 ------------- ------------- 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 77,208 210,822 ------------- ------------- ELECTRA BICYCLE COMPANY LLC A designer and marketer of branded leisure bicycles. Limited Liability Company Unit Series F 64,597 uts. 04/12/07 64,597 185,598 Limited Liability Company Unit Series G 4,990 uts. 04/12/07 4,990 14,337 ------------- ------------- 69,587 199,935 ------------- ------------- EVANS CONSOLES, INC. A designer and manufacturer of consoles and control center systems. Common Stock (B) 90,000 shs. 05/06/04 6 1,684,302 ------------- ------------- F C X HOLDINGS CORPORATION A distributor of specialty/technical valves, actuators, accessories, and process instrumentation supplying a number of industrial, high purity, and energy end markets in North America. 15% Senior Subordinated Note due 2015 $ 2,112,857 10/06/08 2,070,600 2,005,978 Preferred Stock (B) 4,341 shs. 10/06/08 434,074 412,395 Common Stock (B) 3,069 shs. 10/06/08 3,069 2,916 ------------- ------------- 2,507,743 2,421,289 ------------- -------------
16 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- F H S HOLDINGS LLC A national provider of customized disease management services to large self-insured employers. 12% Senior Subordinated Note due 2014 $ 2,390,625 06/01/06 $ 2,249,367 $ 2,151,563 Limited Liability Company Units of Linden/FHS Holdings LLC (B) 159 uts. 06/01/06 159,362 80,250 Common Unit Class B (B) 1,386 uts. 06/01/06 122,361 -- ------------- ------------- 2,531,090 2,231,813 ------------- ------------- 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 04/13/06 904,609 810,372 14% Senior Subordinated Note due 2014 $ 555,059 04/13/06 506,106 486,538 Common Stock (B) 109,436 shs. 04/13/06 109,436 -- Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 30,940 shs. 04/13/06 48,433 -- ------------- ------------- 1,568,584 1,296,910 ------------- ------------- 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 2,121,304 -- Common Stock (B) 185 shs. 02/03/06 184,783 -- Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 254 shs. 02/03/06 208,435 -- ------------- ------------- 2,514,522 -- ------------- ------------- 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 (D) $ 2,337,500 01/31/06 2,171,538 584,375 Preferred Stock (B) 31,718 shs. 06/12/08 31,718 -- Common Stock (B) 212,500 shs. 01/31/06 212,500 -- Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 138,408 shs. 01/31/06 119,213 -- ------------- ------------- 2,534,969 584,375 ------------- ------------- GOLDEN COUNTRY FOODS HOLDING, INC. A manufacturer of frozen appetizers and snacks. 12% Senior Subordinated Note due 2015 $ 1,912,500 11/01/07 1,727,592 1,530,000 8% Series A Convertible Preferred Stock, convertible into 4.25% of the fully dilluted common shares (B) 146,658 shs. 11/01/07 146,658 -- ------------- ------------- 1,874,250 1,530,000 ------------- ------------- GQ HOLDINGS LLC A developer and distributor of tools, equipment, and supplies to the natural and engineered stone industry. 15% Senior Subordinated Note due 2015 $ 2,316,895 06/27/08 2,270,014 2,086,715 Common Stock (B) 7,304 shs. 06/27/08 250,923 200,739 ------------- ------------- 2,520,937 2,287,454 ------------- -------------
MassMutual Corporate Investors 17 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- H M HOLDING COMPANY A designer, manufacturer, and importer of promotional and wood furniture. 12% Senior Subordinated Note due 2013 (D) $ 2,210,000 02/10/06 $ 2,048,925 $ -- Preferred Stock (B) 40 shs. * 40,476 -- Common Stock (B) 340 shs. 02/10/06 340,000 -- Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 126 shs. 02/10/06 116,875 -- ------------- ------------- * 09/18/07 and 06/27/08 2,546,276 -- ------------- ------------- HIGHGATE CAPITAL LLC An acquirer of controlling or substantial interests in manufacturing and marketing entities. Series A Preferred Units (B) 1.19% int. 7/21/94 367,440 -- ------------- ------------- 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 * 1,914,272 1,943,618 Common Stock (B) 63 shs. * 62,742 51,123 Warrant, exercisable until 2012, to purchase common stock at $.02 per share (B) 200 shs. * 199,501 162,562 ------------- ------------- *06/30/04 and 08/19/04. 2,176,515 2,157,303 ------------- ------------- HOSPITALITY MINTS HOLDING COMPANY A manufacturer of individually-wrapped imprinted promotional mints. 12% Senior Subordinated Note due 2016 $ 2,075,581 08/19/08 1,920,297 1,969,332 Common Stock (B) 474 shs. 08/19/08 474,419 450,699 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 123 shs. 08/19/08 113,773 1 ------------- ------------- 2,508,489 2,420,032 ------------- ------------- INSURANCE CLAIMS MANAGEMENT, INC. A third party administrator providing auto and property claim administration services for insurance companies. Common Stock (B) 69 shs. 02/27/07 2,077 100,939 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 20 shs. 02/27/07 612 29,729 ------------- ------------- 2,689 130,668 ------------- ------------- INTEGRATION TECHNOLOGY SYSTEMS, INC. A manufacturer of steel protective computer and network systems for the industrial and office environments. 12% Senior Subordinated Note due on demand $ 43,943 03/01/04 1 -- Common Stock (B) 228 shs. 06/01/00 262,200 -- ------------- ------------- 262,201 -- ------------- ------------- JASON, INC. A diversified manufacturing company serving various industrial markets. 13% Senior Subordinated Note due 2010 $ 963,687 08/04/00 928,273 927,293 Limited Partnership Interest of Saw Mill Capital Fund II, L.P. (B) 2.50% int. 08/03/00 886,302 97,294 Warrant, exercisable until 2010, to purchase common stock at $.01 per share (B) 50,870 shs. 08/04/00 115,412 19,539 ------------- ------------- 1,929,987 1,044,126 ------------- -------------
18 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- 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 $ 1,536,598 $ 1,562,410 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 1,121 shs. 12/15/04 101,109 258,503 ------------- ------------- 1,637,707 1,820,913 ------------- ------------- K H O F HOLDINGS, INC. A manufacturer of premium disposable tableware products serving both the foodservice and consumer channels. 14% Senior Subordinated Note due 2014 $ 2,386,297 10/15/07 2,338,611 2,286,324 Common Stock (B) 220,673 shs. 10/15/07 220,673 228,058 ------------- ------------- 2,559,284 2,514,382 ------------- ------------- K N B HOLDINGS CORPORATION A designer, manufacturer and marketer of products for the custom framing market. 13.5% Senior Subordinated Note due 2013 $ 2,511,688 05/25/06 2,410,052 2,398,738 Common Stock (B) 134,210 shs. 05/25/06 134,210 112,876 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 82,357 shs. 05/25/06 71,534 69,266 ------------- ------------- 2,615,796 2,580,880 ------------- ------------- K P I HOLDINGS, INC. Pace Industries is the largest player in the U.S. non-automotive, non-ferrous die casting segment. 13% Senior Subordinated Note due 2014 $ 2,106,522 07/16/08 1,968,368 2,004,269 Common Stock (B) 443 shs. 07/15/08 443,478 421,306 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 96 shs. 07/16/08 96,024 1 ------------- ------------- 2,507,870 2,425,576 ------------- ------------- K W P I HOLDINGS CORPORATION A manufacturer and distributor of vinyl windows and patio doors throughout the northwestern United States. 12.75% Senior Subordinated Note due 2014 $ 2,322,346 03/14/07 2,141,830 1,992,000 Common Stock (B) 232 shs. 03/13/07 232,000 90,009 Warrant, exercisable until 2017, to purchase common stock at $.01 per share (B) 167 shs. 03/14/07 162,260 64,791 ------------- ------------- 2,536,090 2,146,800 ------------- ------------- K-TEK HOLDING CORPORATION A manufacturer of instrumentation for liquid and bulk solids level detection for process and storage tanks. 14% Senior Subordinated Note due 2015 $ 2,231,113 12/20/07 2,189,914 2,127,248 Preferred Stock (B) 363,260 shs. 12/20/07 363,260 386,427 Common Stock (B) 102,616 shs. 12/20/07 1,026 149,535 ------------- ------------- 2,554,200 2,663,210 ------------- ------------- M V I HOLDING, INC. A manufacturer of large precision machined metal components used in equipment which services a variety of industries, including the oil & gas, mining, and defense markets. 13% Senior Subordinated Note due 2016 $ 1,217,929 09/12/08 1,127,857 1,148,110 Common Stock (B) 61 shs. 09/12/08 60,714 57,675 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 66 shs. 09/12/08 65,571 1 ------------- ------------- 1,254,142 1,205,786 ------------- -------------
MassMutual Corporate Investors 19 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- MAIL COMMUNICATIONS GROUP, INC. A provider of mail processing and handling services, lettershop services, and commercial printing services. 12.5% Senior Subordinated Note due 2014 $ 975,000 05/04/07 $ 912,469 $ 936,586 Limited Liability Company Unit (B) 24,109 uts. * 314,464 419,617 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 3,375 shs. 05/04/07 43,031 58,742 ------------- ------------- * 05/04/07 and 01/02/08. 1,269,964 1,414,945 ------------- ------------- MAVERICK ACQUISITION COMPANY A manufacturer of capsules that cover the cork and neck of wine bottles. 8.26% Senior Secured Tranche A Note due 2010 (C) $ 364,721 09/03/04 364,721 360,567 12% Senior Secured Tranche B Note due 2011 $ 313,433 09/03/04 293,117 291,421 Limited Partnership Interest (B) 7.84% int. 09/03/04 58,769 18,229 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 425 shs. 09/03/04 39,473 13,171 ------------- ------------- 756,080 683,388 ------------- ------------- MEDSYSTEMS HOLDINGS LLC A manufacturer of enteral feeding products,such as feeding tubes and other products related to assisted feeding. 13% Senior Subordinated Note due 2015 $ 1,149,202 08/29/08 1,009,344 1,098,539 Preferred Unit (B) 126 uts. 08/29/08 125,519 119,244 Common Unit Class A (B) 1,268 uts. 08/29/08 1,268 1,205 Common Unit Class B (B) 472 uts. 08/29/08 120,064 5 ------------- ------------- 1,256,195 1,218,993 ------------- ------------- MEGTEC HOLDINGS, INC. A supplier of industrial and environmental products and services to a broad array of industries. 12% Senior Subordinated Note due 2016 $ 2,161,017 09/24/08 1,981,274 2,046,581 Preferred Stock (B) 107 shs. 09/24/08 103,255 1 Limited Partnership Interest (B) 388,983 int. 09/16/08 388,983 369,534 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 35 shs. 09/24/08 33,268 -- ------------- ------------- 2,506,780 2,416,116 ------------- ------------- 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 * 2,558,691 2,599,737 Common Stock (B) 450 shs. * 450,000 805,943 Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 164 shs. * 162,974 293,686 ------------- ------------- * 08/12/05 and 09/11/06. 3,171,665 3,699,366 ------------- ------------- MILWAUKEE GEAR COMPANY A manufacturer of high-precision custom gears and gear drives used by original equipment manufacturers operating in a number of industries. 13% Senior Subordinated Note due 2014 $ 2,353,846 07/21/08 2,215,299 2,272,781 Preferred Stock (B) 263 shs. 07/21/08 261,830 248,732 Common Stock (B) 18 shs. 07/21/08 20,000 19,000 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 10 shs. 07/21/08 11,285 -- ------------- ------------- 2,508,414 2,540,513 ------------- -------------
20 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- MOMENTUM HOLDING CO. A designer and supplier of upholstery fabric to commercial furniture manufacturers and architectural and design firms. Limited Partnership Interest (B) 21.23% int. 08/04/06 $ 106,153 $ 252,813 Warrant, exercisable until 2014, to purchase common stock at $.02 per share (B) 1,107 shs. 08/04/06 107,109 263,528 ------------- ------------- 213,262 516,341 ------------- ------------- MONESSEN HOLDING CORPORATION A designer and manufacturer of a broad line of gas, wood, and electric hearth products and accessories. 14% Senior Subordinated Note due 2014 $ 2,814,540 07/25/08 2,629,138 2,533,086 Warrant, exercisable until 2014, to purchase common stock at $.02 per share (B) 152 shs. 03/31/06 138,125 -- ------------- ------------- 2,767,263 2,533,086 ------------- ------------- MORTON INDUSTRIAL GROUP, INC. A manufacturer of highly engineered metal fabricated components. 12% Senior Subordinated Note due 2014 (D) $ 2,440,909 08/25/06 2,242,151 2,196,818 30% Convertible Preferred Stock (B) 77,993 shs. 07/28/08 37,227 70,194 Common Stock (B) 1 sh. 08/25/06 1 -- ------------- ------------- 2,279,379 2,267,012 ------------- ------------- NABCO, INC. A producer of explosive containment vessels in the United States. 14% Senior Subordinated Note due 2014 $ 815,419 02/24/06 695,769 407,710 Limited Liability Company Unit (B) 825 uts. * 825,410 -- Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 129 shs. 02/24/06 37,188 -- ------------- ------------- * 02/24/06 and 06/22/07. 1,558,367 407,710 ------------- ------------- NAVIS GLOBAL A designer, manufacturer, seller and servicer of finishing machinery for the knit and woven segments of the global textile industry. 12% Senior Secured Term Note Series A due 2009 $ 252,809 11/14/08 252,809 251,390 14% Senior Subordinated Note due 2014 (D) $ 1,338,613 05/28/04 1,103,764 -- 10.75% Senior Secured Note due 2011 (D) $ 609,200 05/28/04 573,029 152,300 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 203,912 shs. 05/28/04 130,789 -- ------------- ------------- 2,060,391 403,690 ------------- ------------- NESCO HOLDINGS CORPORATION A sales and leasing company that provides equipment to the electric utility, telecommunications, and various other industries. 12% Senior Secured Subordinated Note due 2015 $ 2,125,000 08/02/07 1,888,243 2,069,963 Common Stock (B) 425,000 shs. 08/02/07 425,000 540,874 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 119,360 shs. 08/02/07 194,257 151,903 ------------- ------------- 2,507,500 2,762,740 ------------- -------------
MassMutual Corporate Investors 21 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- NETSHAPE TECHNOLOGIES, INC. A manufacturer of powder metal and metal injection molded precision components used in industrial, consumer, and other applications. 12% Senior Subordinated Note due 2014 $ 1,530,000 02/02/07 $ 1,408,570 $ 1,339,367 Limited Partnership Interest of Saw Mill PCG Partners LLC (B) 2.61% int. 02/01/07 1,019,958 214,228 Limited Liability Company Unit Class D of Saw Mill PCG Partners LLC (B) 15 uts. 12/18/08 15,389 15,390 Preferred Stock Class A (B) 1 sh. 12/18/08 1,370 1,371 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 91 shs. 02/02/07 90,830 19,077 ------------- ------------- 2,536,117 1,589,433 ------------- ------------- NYLONCRAFT, INC. A supplier of engineered plastic components for the automotive industry. 9% Senior Secured Note due 2009 $ 812,500 01/28/02 812,500 609,375 11.5% Senior Subordinated Note due 2012 $ 1,500,000 01/28/02 1,435,279 750,000 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 -- ------------- ------------- 2,722,324 1,359,375 ------------- ------------- 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 $ 478,459 01/03/06 471,282 451,027 13% Senior Subordinated Note due 2013 $ 687,241 01/03/06 627,485 628,513 Common Stock (B) 322,307 shs. 01/03/06 322,307 -- Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 75,378 shs. 01/03/06 62,824 -- ------------- ------------- 1,483,898 1,079,540 ------------- ------------- OLYMPIC SALES, INC. A boat retailer in Washington state, Oregon, California and British Columbia. 12% Senior Subordinated Note due 2009 (D) $ 1,022,000 08/07/98 1,022,000 204,400 12% Senior Subordinated Note due 2009 (D) $ 307,071 02/09/00 268,283 61,414 Warrants, exercisable until 2009, to purchase common stock at $.01 per share (B) 2,855 shs. * 38,788 -- ------------- ------------- *08/07/98 and 02/09/00. 1,329,071 265,814 ------------- ------------- ONTARIO DRIVE & GEAR LTD. A manufacturer of all-wheel drive, off-road amphibious vehicles and related accessories. Limited Liability Company Unit (B) 3,667 uts. 01/17/06 572,115 1,125,650 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 619 shs. 01/17/06 170,801 190,049 ------------- ------------- 742,916 1,315,699 ------------- -------------
22 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- 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 $ 2,278,333 07/03/06 $ 2,178,270 $ 2,183,657 Preferred Unit (B) 382 uts. 07/03/06 382,150 486,796 Preferred Unit (B) 69 uts. 07/03/06 68,790 87,627 Common Unit Class I (B) 148 uts. 07/03/06 -- 7,633 Common Unit Class L (B) 31 uts. 07/03/06 -- 1,613 ------------- ------------- 2,629,210 2,767,326 ------------- ------------- 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 2,171,286 2,254,384 Preferred Stock (B) 36 shs. 03/31/06 329,596 397,558 Common Stock (B) 23 shs. 03/31/06 25,500 71,659 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 13 shs. 03/31/06 11,122 41,684 ------------- ------------- 2,537,504 2,765,285 ------------- ------------- PACIFIC CONSOLIDATED HOLDINGS LLC A manufacturer of rugged, mobile liquid and gaseous oxygen and nitrogen generating systems used in the global defense, oil & gas, and medical sectors. 14% Senior Subordinated Note due 2012 $ 1,324,584 04/27/07 1,228,824 1,223,441 Limited Liability Company Unit (B) 1,754,707 uts. 04/27/07 63,233 -- ------------- ------------- 1,292,057 1,223,441 ------------- ------------- PARADIGM PACKAGING, INC. A manufacturer of plastic bottles and closures for the nutritional, pharmaceutical, personal care and food packaging markets. 12% Senior Subordinated Note due 2011 $ 2,125,000 12/19/00 2,017,414 2,015,537 Membership Interests of MM/Lincap PPI Investments, Inc., LLC (B) 2.42% int. 12/21/00 265,625 -- 2,283,039 2,015,537 POSTLE ALUMINUM COMPANY LLC A manufacturer and distributor of aluminum extruded products. 12% Senior Subordinated Note due 2014 $ 2,040,000 10/02/06 1,907,486 1,020,000 Limited Liability Company Unit 1,384 uts. 10/02/06 510,000 -- Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 344 shs. 10/02/06 124,644 -- ------------- ------------- 2,542,130 1,020,000 ------------- ------------- POWER SERVICES HOLDING COMPANY A provider of industrial motor repair services, predictive and preventative maintenance, and performance improvement consulting, serving the petrochemical, mining, power generation, metals, and paper industries. 12% Senior Subordinated Note due 2016 $ 2,372,093 02/11/08 2,167,765 2,280,937 Limited Partnership Interest (B) 23.70% int. 02/11/08 177,729 168,843 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 1,322 shs. 02/11/08 167,588 13 ------------- ------------- 2,513,082 2,449,793 ------------- -------------
MassMutual Corporate Investors 23 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- 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 -- ------------- ------------- *08/12/94 and 11/14/01. 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 1,584,633 1,705,311 Common Stock 354,167 shs. 05/28/04 354,166 -- Warrant, exercisable until 2012, to purchase common stock at $.01 per share 377,719 shs. 05/28/04 377,719 -- ------------- ------------- 2,316,518 1,705,311 ------------- ------------- 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 2,150,912 Limited Liability Company Unit (B) 2,828 uts. 12/15/06 282,810 201,086 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 3 shs. 12/15/06 131,483 94,829 ------------- ------------- 2,504,656 2,446,827 ------------- ------------- R E I DELAWARE HOLDING, INC. An engineer and manufacturer of highly complex, close tolerance components, assemblies, tooling and custom automation equipment primarily for aerospace, medical and defense/radar markets. 12% Senior Subordinated Note due 2016 $ 2,550,000 01/18/08 2,467,911 2,376,802 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 6 shs. 01/18/08 31,089 -- ------------- ------------- 2,499,000 2,376,802 ------------- ------------- 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 2,124,912 2,262,330 Common Stock (B) 289,362 shs. 02/10/06 289,362 457,523 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 131,555 shs. 02/10/06 119,796 208,008 ------------- ------------- 2,534,070 2,927,861 ------------- ------------- ROYAL BATHS MANUFACTURING COMPANY A manufacturer and distributor of acrylic and cultured marble bathroom products. 12.5% Senior Subordinated Note due 2011 $ 1,062,500 11/14/03 1,002,977 990,611 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 140 shs. 11/14/03 122,946 25,172 ------------- ------------- 1,125,923 1,015,783 ------------- ------------- SAFETY SPEED CUT MANUFACTURING COMPANY, INC. A manufacturer of vertical panel saws and routers for the wood working industry. Class B Common Stock (B) 1,480 shs. 06/02/99 256,212 1,020,728 ------------- -------------
24 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- SAVAGE SPORTS HOLDING, INC. A manufacturer of sporting firearms. 12% Senior Subordinated Note due 2012 $ 1,538,793 09/10/04 $ 1,469,008 $ 1,434,941 Common Stock (B) 612 shs. * 642,937 634,633 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 134 shs. 09/10/04 113,578 138,561 ------------- ------------- *09/10/04 and 10/05/07. 2,225,523 2,208,135 ------------- ------------- SMART SOURCE HOLDINGS LLC A short-term computer rental company. 12% Senior Subordinated Note due 2015 $ 2,223,076 * 2,029,552 2,145,848 Limited Liability Company Unit (B) 619 uts. * 637,996 761,140 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 157 shs. * 164,769 192,822 ------------- ------------- * 08/31/07 and 03/06/08. 2,832,317 3,099,810 ------------- ------------- SPECIALTY COMMODITIES, INC. A distributor of specialty food ingredients. 13.25% Senior Subordinated Note due 2016 $ 2,250,000 10/23/08 2,104,770 2,317,500 Common Stock (B) 30,000 shs. 10/23/08 300,000 285,000 Warrant, excercisable until 2018, to purchase common stock at $.01 per share (B) 11,054 shs. 10/23/08 100,650 111 ------------- ------------- 2,505,420 2,602,611 ------------- ------------- 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 2,119,186 2,068,074 Common Stock (B) 311 shs. 08/01/06 310,976 327,810 Warrant, exercisable until 2014, to purchase common stock at $.02 per share (B) 104 shs. 08/01/06 93,293 109,175 ------------- ------------- 2,523,455 2,505,059 ------------- ------------- SYNTERACT HOLDINGS CORPORATION A provider of outsourced clinical trial management services to pharmaceutical and biotechnology companies. 14% Senior Subordinated Note due 2016 $ 2,558,505 09/02/08 2,384,428 2,449,711 Redeemable Preferred Stock Series A (B) 1,280 shs. 09/02/08 12,523 13 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 12,803 shs. 09/02/08 112,693 128 ------------- ------------- 2,509,644 2,449,852 ------------- ------------- T H I ACQUISITION, INC. A machine servicing company providing value-added steel services to long steel products. 12% Senior Subordinated Note due 2016 $ 2,550,000 01/14/08 2,410,946 2,375,300 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 9 shs. 01/14/08 88,054 -- ------------- ------------- 2,499,000 2,375,300 ------------- ------------- TANGENT RAIL CORPORATION A manufacturer of rail ties and provider of specialty services to the North American railroad industry. 13% Senior Subordinated Note due 2015 $ 2,217,385 10/14/05 1,952,116 2,156,264 Common Stock 2,203 shs. 10/14/05 2,203 633,181 Warrant, exercisable until 2015, to purchase common stock at $.01 per share 1,192 shs. 09/30/08 568,009 342,602 ------------- ------------- 2,522,328 3,132,047 ------------- -------------
MassMutual Corporate Investors 25 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- TERRA RENEWAL LLC A provider of wastewater residual management and required environmental reporting, permitting, nutrient management planning and record keeping to companies involved in poultry and food processing. 6.46% Senior Secured Tranche B Note due 2012 (C) $ 1,514,744 * $ 1,509,610 $ 1,475,058 6.50% Senior Secured Tranche B Note due 2012 (C) $ 1,443 09/30/08 1,443 1,435 12% Senior Subordinated Note due 2014 $ 1,162,110 ** 1,112,703 1,117,665 Limited Partnership Interest of Saw Mill Capital Fund V, LLC (B) 3.97% int. *** 149,259 542,885 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 72 shs. 04/28/06 59,041 87,721 ------------- ------------- * 04/28/06 and 12/21/06. ** 04/28/06 and 09/13/06. *** 03/01/05 and 10/10/08. 2,832,056 3,224,764 ------------- ------------- TORRENT GROUP HOLDINGS, INC. A contractor specializing in the sales and installation of engineered drywells for the retention and filtration of stormwater and nuisance water flow. 12.5% Senior Subordinated Note due 2013 $ 2,239,024 10/26/07 2,102,363 2,112,976 Series A Preferred Stock (B) 414 shs. 10/26/07 414,051 190,554 ------------- ------------- 2,516,414 2,303,530 ------------- ------------- TOTAL E & S, INC. A manufacturer of a wide variety of equipment used in the oil and gas industry. 10.5% Senior Secured Term Note due 2013 $ 851,351 03/02/07 838,581 827,348 13% Senior Subordinated Note due 2014 $ 598,450 03/02/07 490,608 573,161 Common Stock (B) 125,199 shs. 03/02/07 125,199 115,439 Warrant, exercisable until 2014 to purchase common stock at $.01 per share (B) 34,533 shs. 03/02/07 95,873 31,841 ------------- ------------- 1,550,261 1,547,789 ------------- ------------- TRANSPAC HOLDING COMPANY A designer, importer, and wholesaler of home decor and seasonal gift products. 12% Senior Subordinated Note due 2015 $ 1,773,006 10/31/07 1,657,424 1,551,799 Common Stock (B) 209 shs. 10/31/07 208,589 187,731 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 94 shs. 10/31/07 87,607 1 ------------- ------------- 1,953,620 1,739,531 ------------- ------------- TRANSTAR HOLDING COMPANY A distributor of aftermarket automotive transmission parts. 12% Senior Subordinated Note due 2014 $ 1,734,000 08/31/05 1,674,945 1,639,601 Common Stock (B) 1,078 shs. * 1,078,450 991,539 Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 86 shs. 08/31/05 77,485 79,014 ------------- ------------- *08/31/05 and 04/30/07. 2,830,880 2,710,154 ------------- ------------- TRANZONIC COMPANIES (THE) A producer of commercial and industrial supplies, such as safety products, janitorial supplies, work apparel, washroom and restroom supplies and sanitary care products. 13% Senior Subordinated Note due 2010 $ 2,712,000 02/05/98 2,615,097 2,709,940 Common Stock (B) 630 shs. 02/04/98 630,000 707,010 Warrant, exercisable until 2009, to purchase common stock at $.01 per share (B) 444 shs. 02/05/98 368,832 498,274 ------------- ------------- 3,613,929 3,915,224 ------------- -------------
26 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- TRUCK BODIES & EQUIPMENT INTERNATIONAL A designer and manufacturer of accessories for heavy and medium duty trucks, primarily dump bodies, hoists, various forms of flat-bed bodies, landscape bodies and other accessories. 16% Senior Subordinated Note due 2010 (D) $ 2,309,541 * $ 2,141,949 $ 577,385 16% PIK Note due 2010 $ 215,219 12/30/08 -- 53,805 Preferred Stock Series B (B) 241 shs. 10/20/08 241,172 Common Stock (B) 742 shs. * 800,860 -- Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 153 shs. * 159,894 -- Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 1,054 shs. 10/20/08 -- -- ------------- ------------- * 07/19/05 and 12/22/05. 3,343,875 631,190 ------------- ------------- TRUSTILE DOORS, INC. A manufacturer and distributor of interior doors. Warrant, exercisable until 2010, to purchase common stock at $.01 per share (B) 5,781 shs. 04/11/03 71,438 252,803 ------------- ------------- U M A ENTERPRISES, INC. An importer and wholesaler of home decor products. 15% Senior Subordinated Note due 2015 $ 1,708,255 02/08/08 1,672,705 1,554,708 Convertible Preferred Stock (B) 887 shs. 02/08/08 886,956 798,264 ------------- ------------- 2,559,661 2,352,972 ------------- ------------- 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 1,760,845 1,790,581 Common Stock (B) 182 shs. 04/30/04 182,200 126,037 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 230 shs. 04/30/04 211,736 159,393 ------------- ------------- 2,154,781 2,076,011 ------------- ------------- VISIONEERING, INC. A designer and manufacturer of tooling and fixtures for the aerospace industry. 10.5% Senior Secured Term Loan due 2013 $ 802,941 05/17/07 790,897 786,195 13% Senior Subordinated Note due 2014 $ 648,530 05/17/07 588,317 627,053 Common Stock (B) 123,529 shs. 05/17/07 123,529 157,490 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 35,006 shs. 05/17/07 55,055 44,630 ------------- ------------- 1,557,798 1,615,368 ------------- ------------- 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 1,790,297 1,753,909 Common Stock (B) 26,456 shs. * 264,558 276,317 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 23,787 shs. 09/24/04 186,883 248,441 ------------- ------------- * 09/24/04 and 12/22/06. 2,241,738 2,278,667 ------------- -------------
MassMutual Corporate Investors 27 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) Continued PERCENTAGE DATE COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- 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 $ -- 14.5% PIK Note due 2010 $ 407,956 06/30/07 340,945 -- Limited Liability Company Unit Class A (B) 414,375 uts. 07/19/04 414,375 -- Limited Liability Company Unit Class B (B) 182,935 uts. 07/19/04 182,935 -- ------------- ------------- 2,421,320 -- ------------- ------------- WAGGIN' TRAIN HOLDINGS LLC A producer of premium quality meat dog treats. 14% Senior Subordinated Note due 2014 $ 2,175,761 11/15/07 2,130,736 1,985,743 Limited Liability Company Unit Class B (B) 423 uts. 11/15/07 422,652 182,948 Limited Liability Company Unit Class C (B) 423 uts. 11/15/07 -- 182,948 ------------- ------------- 2,553,388 2,351,639 ------------- ------------- WALLS INDUSTRIES, INC. A provider of branded workwear and sporting goods apparel. Limited Partnership Interest (B) 0.40% int. 07/12/04 3,728 -- Common Stock (B) 4,028 shs. 12/21/07 -- -- ------------- ------------- 3,728 -- ------------- ------------- 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 1,614,828 1,520,527 Common Stock (B) 191 shs. 11/30/06 191,250 82,806 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 95 shs. 11/30/06 86,493 41,340 ------------- ------------- 1,892,571 1,644,673 ------------- ------------- WORKPLACE MEDIA HOLDING CO. A direct marketer specializing in providing advertisers with access to consumers in the workplace. 13% Senior Subordinated Note due 2015 $ 1,159,196 05/14/07 1,062,393 1,030,065 Limited Partnership Interest (B) 23.16% int. 05/14/07 115,804 -- Warrant, exercisable until 2015, to purchase common stock at $.02 per share (B) 88 shs. 05/14/07 83,462 -- ------------- ------------- 1,261,659 1,030,065 ------------- ------------- XALOY SUPERIOR HOLDINGS, INC. A provider of melt processing components and ancillary equipment for both plastic injection molding and extrusion applications. 15% Senior Subordinated Note due 2015 $ 2,266,667 09/08/08 2,221,334 2,118,256 Common Stock (B) 283 shs. 09/08/08 283,329 254,995 2,504,663 2,373,251 ------------- ------------- TOTAL PRIVATE PLACEMENT INVESTMENTS (E) 202,377,655 182,799,290 ------------- -------------
28 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
SHARES OR INTEREST DUE PRINCIPAL CORPORATE RESTRICTED SECURITIES:(A) (CONTINUED) RATE DATE AMOUNT COST FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- RULE 144A SECURITIES - 4.01%: (A) BONDS - 4.01% American Tire Distributor (C) 10.133% 04/01/12 $ 1,000,000 $ 950,000 $ 740,000 Cenveo Corporation 10.500 08/15/16 100,000 100,000 58,000 Charter Communications Op LLC 8.000 04/30/12 1,350,000 1,152,250 1,107,000 Compucom Systems, Inc. 12.500 10/01/15 1,330,000 1,288,710 904,400 Douglas Dynamics LLC 7.750 01/15/12 1,010,000 955,115 525,200 G F S I, Inc. (C) 10.500 06/01/11 715,000 685,658 597,025 Intergen NV 9.000 06/30/17 750,000 743,918 615,000 Packaging Dynamics Corporation of America 10.000 05/01/16 1,200,000 1,195,153 546,000 Rock-Tenn Co. 9.250 03/15/16 1,075,000 1,115,554 999,750 SandRidge Energy, Inc. 8.000 06/01/18 360,000 364,387 199,800 Ticketmaster Entertainment, Inc. 10.750 08/01/16 500,000 500,000 270,000 Tunica-Biloxi Gaming Authority 9.000 11/15/15 1,075,000 1,102,608 849,250 TXU Energy Company LLC 10.250 11/01/15 1,250,000 1,261,623 887,500 Videotron, Ltd. 9.125 04/15/18 40,000 39,373 37,200 ------------ ------------ TOTAL BONDS 11,454,349 8,336,125 ------------ ------------ CONVERTIBLE PREFERRED STOCK - 0.00% ETEX Corporation (B) 777 716 -- ------------ ------------ TOTAL CONVERTIBLE PREFERRED STOCK 716 -- ------------ ------------ PREFERRED STOCK - 0.00% TherOX, Inc. (B) 103 4,131 -- ------------ ------------ TOTAL PREFERRED STOCK 4,131 -- ------------ ------------ COMMON STOCK - 0.00% Touchstone Health Partnership (B) 1,168 4,254 -- ------------ ------------ TOTAL COMMON STOCK 4,254 -- ------------ ------------ TOTAL RULE 144A SECURITIES 11,463,450 8,336,125 ------------ ------------ TOTAL CORPORATE RESTRICTED SECURITIES $213,841,105 $191,135,415 ------------ ------------
MassMutual Corporate Investors 29 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
INTEREST DUE PRINCIPAL CORPORATE PUBLIC SECURITIES - 19.42%:(A) RATE DATE AMOUNT COST MARKET VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS - 18.00% A M C Entertainment, Inc. 11.000% 02/01/16 $ 1,315,000 $ 1,321,956 $ 918,856 Activant Solutions, Inc. 9.500 05/01/16 150,000 150,000 69,750 Appleton Papers, Inc. 8.125 06/15/11 300,000 300,000 207,000 Aramark Corporation (C) 6.693 02/01/15 200,000 200,000 151,000 Aramark Corporation 8.500 02/01/15 500,000 502,379 452,500 Bally Total Fitness Holdings Corporation (F) 14.000 10/01/13 104,062 74,053 260 Basic Energy Services 7.125 04/15/16 225,000 225,000 128,250 Berry Plastics Corporation (C) 7.463 02/15/15 500,000 473,489 345,000 Brigham Exploration Co. 9.625 05/01/14 1,200,000 1,167,903 684,000 Cablevision Systems Corporation 8.000 04/15/12 1,000,000 1,009,071 890,000 Cablevision Systems Corporation (C) 8.334 04/01/09 300,000 300,000 299,250 Cenveo Corporation 7.875 12/01/13 1,300,000 1,192,500 679,250 Chaparral Energy, Inc. 8.875 02/01/17 1,500,000 1,491,780 300,000 Cincinnati Bell, Inc. 7.000 02/15/15 1,100,000 789,250 841,500 Community Health Systems, Inc. (C) 8.875 07/15/15 1,200,000 1,169,415 1,104,000 Dynegy Holdings, Inc. 7.750 06/01/19 830,000 564,400 572,700 El Paso Corporation 12.000 12/12/13 55,000 48,947 54,588 Enterprise Products Operating Co. 9.750 01/31/14 750,000 750,000 763,716 Ford Motor Credit Co. 7.375 10/28/09 500,000 498,750 439,111 General Motors Acceptance Corporation 7.750 01/19/10 815,000 733,174 733,182 Gencorp, Inc. 9.500 08/15/13 259,000 259,000 207,200 Goodyear Tire & Rubber Co. 7.857 08/15/11 1,150,000 1,097,750 954,500 Graham Packaging Corporation 8.500 10/15/12 280,000 268,800 199,500 Great Lakes Dredge & Dock Corporation 7.750 12/15/13 1,000,000 948,750 771,250 H C A, Inc. 9.125 11/15/14 1,125,000 919,688 1,043,438 Hawker Beechcraft Acquisition Co. 9.750 04/01/17 1,000,000 1,008,488 270,000 Hughes Network Systems 9.500 04/15/14 1,325,000 1,346,781 1,076,563 Inergy LP 8.250 03/01/16 470,000 481,218 366,600 Intelsat Bermuda Ltd. 9.250 06/15/16 1,365,000 1,412,750 1,064,700 Interline Brands, Inc. 8.125 06/15/14 1,300,000 1,291,107 1,027,000 Kar Holdings, Inc. 8.750 05/01/14 50,000 50,000 22,000 L-3 Communications Holdings, Inc. 6.125 07/15/13 1,000,000 995,000 920,000 Leucadia National Corporation 7.000 08/15/13 450,000 450,821 357,750 Liberty Media Corporation 5.700 05/15/13 1,000,000 951,610 655,577 Manitowoc Company, Inc. 7.125 11/01/13 200,000 200,000 152,000
30 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
INTEREST DUE PRINCIPAL CORPORATE PUBLIC SECURITIES:(A) Continued RATE DATE AMOUNT COST MARKET VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS, CONTINUED Markwest Energy Operating Co. 6.875% 11/01/14 $ 950,000 $ 930,563 $ 598,500 Markwest Energy Operating Co. 8.750 04/15/18 125,000 123,979 77,500 Mediacom Broadband LLC 8.500 10/15/15 1,250,000 975,000 943,750 N R G Energy, Inc. 7.375 02/01/16 175,000 175,000 162,750 Newark Group, Inc. 9.750 03/15/14 850,000 796,863 80,750 Nortek, Inc. 10.000 12/01/13 175,000 173,175 119,000 North American Energy Partners 8.750 12/01/11 1,165,000 1,173,490 885,400 O E D Corp./Diamond Jo Company Guarantee 8.750 04/15/12 1,000,000 985,960 685,000 Pliant Corporation 11.125 09/01/09 550,000 539,000 27,500 Pliant Corporation (C) 11.850 06/15/09 1,111,500 1,085,040 594,654 Polypore, Inc. 8.750 05/15/12 1,460,000 1,410,050 1,051,200 Pregis Corporation 12.375 10/15/13 1,000,000 981,490 450,000 Quebecor Media, Inc. 7.750 03/15/16 1,050,000 978,235 708,750 Rental Service Corporation 9.500 12/01/14 500,000 484,385 275,000 Scholastic Corporation 5.000 04/15/13 1,500,000 1,278,750 1,170,000 Seneca Gaming Corporation 7.250 05/01/12 500,000 477,500 402,500 Shaw Communications, Inc. 7.250 04/06/11 400,000 411,641 378,000 Sheridan Acquisition Corporation 10.250 08/15/11 375,000 370,001 262,969 Stanadyne Corporation 10.000 08/15/14 1,500,000 1,500,000 1,020,000 Stewart & Stevenson LLC 10.000 07/15/14 1,465,000 1,497,451 908,300 Tekni-Plex, Inc. 8.750 11/15/13 650,000 654,573 377,000 Tenneco, Inc. 8.125 11/15/15 1,100,000 540,000 506,000 Texas Industries, Inc. 7.250 07/15/13 70,000 70,000 54,075 Time Warner Telecom Holdings 9.250 02/15/14 1,000,000 1,008,981 820,000 Titan International, Inc. 8.000 01/15/12 1,070,000 1,062,100 791,800 Transdigm, Inc. 7.750 07/15/14 500,000 503,488 410,000 Trimas Corporation 9.875 06/15/12 1,073,000 982,375 536,500 Tube City IMS Corporation 9.750 02/01/15 1,500,000 1,485,219 525,000 United Components, Inc. 9.375 06/15/13 1,080,000 1,080,604 453,600 United Rentals, Inc. 6.500 02/15/12 1,125,000 815,625 888,750 Virgin Media Finance PLC 9.125 08/15/16 1,380,000 1,414,129 1,021,200 Vought Aircraft Industries 8.000 07/15/11 1,150,000 1,115,399 776,250 Waste Services, Inc. 9.500 04/15/14 1,100,000 1,119,041 781,000 ------------ ------------ TOTAL BONDS 52,842,937 37,464,689 ------------ ------------
MassMutual Corporate Investors 31 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
SHARES OR INTEREST DUE PRINCIPAL CORPORATE PUBLIC SECURITIES:(A) (CONTINUED) RATE DATE AMOUNT COST MARKET VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCK - 1.22% Chase Packaging Corporation (B) 9,541 $ -- $ 477 CKX, Inc. (B) 97,500 784,875 357,825 Directed Electronics, Inc. (B) 368,560 1,856,534 147,424 El Paso Corporation (B) 65,000 808,362 508,950 EnerNOC, Inc. (B) 46,500 1,283,262 345,960 ITC^DeltaCom, Inc. (B) 178,666 1,563,328 89,333 Intrepid Potash, Inc. (B) 365 11,680 7,581 PepsiAmericas, Inc. 48,206 1,049,637 981,474 Supreme Industries, Inc. 125,116 267,315 106,346 ------------ ------------ TOTAL COMMON STOCK 7,624,993 2,545,370 ------------ ------------ CONVERTIBLE BONDS - 0.20% Citadel Broadcasting Corporation 4.000% 02/15/11 $ 583,000 452,556 412,473 ------------ ------------ TOTAL CONVERTIBLE BONDS 452,556 412,473 ------------ ------------ PREFERRED STOCK - 0.00% Preferred Blocker, Inc. 144 144 -- TOTAL PREFERRED STOCK 144 -- ------------ ------------ TOTAL CORPORATE PUBLIC SECURITIES $ 60,920,630 $ 40,422,532 ------------ ------------ INTEREST DUE PRINCIPAL SHORT-TERM SECURITIES: RATE/YIELD DATE AMOUNT COST MARKET VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMERCIAL PAPER - 2.99% Dow Chemical Co. 5.154% 01/05/09 $ 1,070,000 $ 1,069,388 $ 1,069,388 Dow Chemical Co. 5.155 01/06/09 1,287,000 1,286,079 1,286,079 Dow Chemical Co. 5.164 01/12/09 711,000 709,886 709,886 Wisconsin Gas Co. 0.250 01/05/09 3,168,000 3,167,913 3,167,913 TOTAL SHORT-TERM SECURITIES $ 6,233,266 $ 6,233,266 ------------ ------------ TOTAL INVESTMENTS 114.24% $280,995,001 $237,791,213 ------ ------------ ------------ Other Assets 3.13 6,519,422 Liabilities (17.37) (36,167,116) ------ ------------ TOTAL NET ASSETS 100.00% $208,143,519 ====== ============ (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 12/31/08. (D) Defaulted security; interest not accrued. (E) Illiquid securities. At December 31, 2008, the value of these securities amounted to $182,799,290 or 87.82% of net assets. (F) Security valued at fair value using methods determined in good faith by or under the direction of the Board of Trustees. ^ Effective yield at purchase PIK - Payment-in-kind
32 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
Fair Value/ Fair Value/ Industry Classification Market Value Industry Classification Market Value ------------------------------------------------------------ ------------------------------------------------------------ AEROSPACE - 3.73% CHEMICAL, PLASTICS & RUBBER - 0.13% Gencorp, Inc. $ 207,200 Capital Specialty Plastics, Inc. $ 279,466 Hughes Network Systems 1,076,563 ------------ L-3 Communications Holdings, Inc. 920,000 279,466 P A S Holdco LLC 2,767,326 ------------ Transdigm, Inc. 410,000 CONSUMER PRODUCTS - 8.05% Visioneering, Inc. 1,615,368 Aero Holdings, Inc. 3,354,423 Vought Aircraft Industries 776,250 Bravo Sports Holding Corporation 2,307,652 ------------ G F S I, Inc. 597,025 7,772,707 K N B Holdings Corporation 2,580,880 ------------ Kar Holdings, Inc. 22,000 AUTOMOBILE - 5.84% Momentum Holding Co. 516,341 American Tire Distributor 740,000 R A J Manufacturing Holdings LLC 2,446,827 Fuel Systems Holding Corporation 584,375 Royal Baths Manufacturing Company 1,015,783 Goodyear Tire & Rubber Co. 954,500 The Tranzonic Companies 3,915,224 Jason, Inc. 1,044,126 Walls Industries, Inc. -- Nyloncraft, Inc. 1,359,375 ------------ Ontario Drive & Gear Ltd. 1,315,699 16,756,155 Qualis Automotive LLC 1,705,311 ------------ Tenneco, Inc. 506,000 CONTAINERS, PACKAGING & GLASS - 4.47% Titan International, Inc. 791,800 Berry Plastics Corporation 345,000 Transtar Holding Company 2,710,154 Chase Packaging Corporation 477 United Components, Inc. 453,600 Flutes, Inc. 1,296,910 ------------ Graham Packaging Corporation 199,500 12,164,940 Maverick Acquisition Company 683,388 ------------ P I I Holding Corporation 2,765,285 BEVERAGE, DRUG & FOOD - 5.00% Packaging Dynamics Corporation of America 546,000 Aramark Corporation 603,500 Paradigm Packaging, Inc. 2,015,537 Golden County Foods Holding, Inc. 1,530,000 Pliant Corporation 622,154 Hospitality Mints Holding Company 2,420,032 Pregis Corporation 450,000 PepsiAmericas, Inc. 981,474 Tekni-Plex, Inc. 377,000 Specialty Commodities, Inc. 2,602,611 Vitex Packaging Group, Inc. -- Vitality Foodservice, Inc. 2,278,667 ------------ ------------ 9,301,251 10,416,284 ------------ ------------ DISTRIBUTION - 1.87% BROADCASTING & ENTERTAINMENT - 3.41% Duncan Systems, Inc. 1,461,245 Cablevision Systems Corporation 1,189,250 F C X Holdings Corporation 2,421,289 Charter Communications Op LLC 1,107,000 ------------ Citadel Broadcasting Corporation 412,473 3,882,534 CKX, Inc. 357,825 ------------ Liberty Media Corporation 655,577 DIVERSIFIED/CONGLOMERATE, MANUFACTURING - 11.84% Mediacom Broadband LLC 943,750 A H C Holding Company, Inc. 2,491,679 Shaw Communications, Inc. 378,000 Activant Solutions, Inc. 69,750 Virgin Media Finance PLC 1,021,200 Arrow Tru-Line Holdings, Inc. 1,545,103 Workplace Media Holding Co. 1,030,065 C D N T, Inc. 1,513,163 ------------ Douglas Dynamics LLC 525,200 7,095,140 Evans Consoles, Inc. 1,684,302 ------------ Great Lakes Dredge & Dock Corporation 771,250 BUILDINGS & REAL ESTATE - 1.18% K P I Holdings, Inc. 2,425,576 K W P I Holdings Corporation 2,146,800 MEGTEC Holdings, Inc. 2,416,116 Texas Industries, Inc. 54,075 Milwaukee Gear Company 2,540,513 TruStile Doors, Inc. 252,803 Nortek, Inc. 119,000 ------------ Polypore, Inc. 1,051,200 2,453,678 Postle Aluminum Company LLC 1,020,000 ------------
MassMutual Corporate Investors 33 CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
Fair Value/ Fair Value/ Industry Classification Market Value Industry Classification Market Value ------------------------------------------------------------ ------------------------------------------------------------ Radiac Abrasives, Inc. $ 2,927,861 HOME & OFFICE FURNISHINGS, HOUSEWARES, AND Trimas Corporation 536,500 DURABLE CONSUMER PRODUCTS - 10.51% Truck Bodies & Equipment International 631,190 Connor Sport Court International, Inc. $ 2,523,958 Xaloy Superior Holdings, Inc. 2,373,250 H M Holding Company -- ------------ Home Decor Holding Company 2,157,303 24,641,653 Justrite Manufacturing Acquisition Co. 1,820,913 ------------ K H O F Holdings, Inc. 2,514,382 DIVERSIFIED/CONGLOMERATE, SERVICE - 9.44% Monessen Holding Corporation 2,533,086 A W X Holdings Corporation 1,503,052 Stanton Carpet Holding Co. 2,505,059 Advanced Technologies Holdings 2,571,072 Transpac Holdings Company 1,739,531 CapeSuccess LLC -- U M A Enterprises, Inc. 2,352,972 Clough, Harbour and Associates 2,664,154 U-Line Corporation 2,076,011 Crane Rental Corporation 2,442,490 Wellborn Forest Holding Co. 1,644,673 Diversco, Inc./DHI Holdings, Inc. 1,319,430 ------------ Dwyer Group, Inc. 1,491,539 21,867,888 Fowler Holding, Inc. -- ------------ GQ Holdings LLC 2,287,454 LEISURE, AMUSEMENT, ENTERTAINMENT - 2.66% Insurance Claims Management, Inc. 130,668 A M C Entertainment, Inc. 918,856 Interline Brands, Inc. 1,027,000 Bally Total Fitness Holding Corporation 260 Mail Communications Group, Inc. 1,414,945 Electra Bicycle Company LLC 199,935 Nesco Holdings Corporation 2,762,740 O E D Corp/Diamond Jo Company Guarantee 685,000 Videotron, Ltd. 37,200 Savage Sports Holding, Inc. 2,208,135 ------------ Seneca Gaming Corporation 402,500 19,651,744 Ticketmaster Entertainment, Inc. 270,000 ------------ Tunica-Biloxi Gaming Authority 849,250 ELECTRONICS - 1.06% ------------ Connecticut Electric, Inc. 2,061,665 5,533,936 Directed Electronics, Inc. 147,424 ------------ ------------ MACHINERY - 11.87% 2,209,089 A S A P Industries LLC 1,306,760 ------------ Davis-Standard LLC 3,604,749 FARMING & AGRICULTURE - 1.13% E S P Holdco, Inc. 2,415,662 Protein Genetics, Inc. -- Integration Technology Systems, Inc. -- Waggin' Train Holdings LLC 2,351,639 K-Tek Holdings Corporation 2,663,210 ------------ M V I Holding, Inc. 1,205,786 2,351,639 Manitowoc Company, Inc. 152,000 ------------ Morton Industrial Group, Inc. 2,267,012 FINANCIAL SERVICES - 0.87% Navis Global 403,690 Ford Motor Credit Co. 439,111 NetShape Technologies, Inc. 1,589,433 General Motors Acceptance Corporation 733,182 Pacific Consolidated Holdings LLC 1,223,441 Hawker Beechcraft Acquisition Co. 270,000 Power Services Holding Company 2,449,793 Highgate Capital LLC -- R E I Delaware Holding, Inc. 2,376,802 Leucadia National Corporation 357,750 Safety Speed Cut Manufacturing Company, Inc. 1,020,728 ------------ Stanadyne Corporation 1,020,000 1,800,043 Stewart & Stevenson LLC 908,300 ------------ Supreme Industries, Inc. 106,347 HEALTHCARE, EDUCATION & CHILDCARE - 6.55% ------------ A T I Acquisition Company 3,180,807 24,713,713 American Hospice Management Holding LLC 3,621,533 ------------ Community Health Systems, Inc. 1,104,000 F H S Holdings LLC 2,231,813 H C A, Inc. 1,043,438 Synteract Holdings Corporation 2,449,852 Touchstone Health Partnership -- ------------ 13,631,443 ------------
34 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2008
Fair Value/ Fair Value/ Industry Classification Market Value Industry Classification Market Value ------------------------------------------------------------ ------------------------------------------------------------ MEDICAL DEVICES/BIOTECH - 3.57% TECHNOLOGY - 2.09% Coeur, Inc. $ 1,230,155 Compucom Systems, Inc. $ 904,400 E X C Acquisition Corporation 210,822 EnerNOC, Inc. 345,960 ETEX Corporation -- Smart Source Holdings LLC 3,099,810 MedSystems Holdings LLC 1,218,993 ------------ MicroGroup, Inc. 3,699,366 4,350,170 OakRiver Technology, Inc. 1,079,540 ------------ TherOX, Inc. -- TELECOMMUNICATIONS - 1.94% ------------ All Current Holding Company 1,214,227 7,438,876 Cincinnati Bell, Inc. 841,500 ------------ Intelsat Bermuda Ltd. 1,064,700 MINING, STEEL, IRON & NON PRECIOUS ITC^DeltaCom, Inc. 89,333 METALS - 1.39% Time Warner Telecom Holdings 820,000 T H I Acquisition, Inc. 2,375,300 ------------ Tube City IMS Corporation 525,000 4,029,760 ------------ ------------ 2,900,300 TRANSPORTATION - 1.70% ------------ NABCO, Inc. 407,710 NATURAL RESOURCES - 1.03% Tangent Rail Corporation 3,132,047 Appleton Papers, Inc. 207,000 ------------ Cenveo Corporation 737,250 3,539,757 Intrepid Potash, Inc. 7,581 ------------ Rock-Tenn Co. 999,750 UTILITIES - 1.85% SandRidge Energy, Inc. 199,800 Dynegy Holdings, Inc. 572,700 ------------ El Paso Corporation 563,538 2,151,381 Inergy LP 366,600 ------------ Intergen NV 615,000 OIL & GAS - 2.07% Markwest Energy Operating Co. 676,000 Basic Energy Services 128,250 N R G Energy, Inc. 162,750 Brigham Exploration Co. 684,000 TXU Energy Company LLC 887,500 Chaparral Energy, Inc. 300,000 ------------ Enterprise Products Operating Co. 763,716 3,844,088 North American Energy Partners 885,400 ------------ Total E & S, Inc. 1,547,789 WASTE MANAGEMENT / POLLUTION - 3.03% ------------ Terra Renewal LLC 3,224,764 4,309,155 Torrent Group Holdings, Inc. 2,303,530 ------------ Waste Services, Inc. 781,000 PHARMACEUTICALS - 1.21% ------------ CorePharma LLC 2,509,830 6,309,294 ------------ ------------ 2,509,830 TOTAL CORPORATE RESTRICTED AND PUBLIC ------------ SECURITIES - 111.25% $231,557,947 PUBLISHING/PRINTING - 1.07% ============ Newark Group, Inc. 80,750 Quebecor Media, Inc. 708,750 Scholastic Corporation 1,170,000 Sheridan Acquisition Corporation 262,969 ------------ 2,222,469 ------------ RETAIL STORES - 0.69% Olympic Sales, Inc. 265,814 Rental Service Corporation 275,000 United Rentals, Inc. 888,750 ------------ 1,429,564 ------------
MassMutual Corporate Investors 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2008 1. HISTORY MassMutual Corporate Investors (the "Trust") commenced operations in 1971 as a Delaware corporation. Pursuant to an Agreement and Plan of Reorganization dated November 14, 1985, approved by shareholders, the Trust was reorganized as a Massachusetts business trust under the laws of the Commonwealth of Massachusetts, effective November 28, 1985. The Trust is a diversified closed-end management investment company. Babson Capital Management LLC ("Babson Capital"), a wholly-owned indirect subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual"), acts as its investment adviser. The Trust's investment objective is to maintain a portfolio of securities providing a fixed yield and at the same time offering an opportunity for capital gains. The Trust's principal investments are privately placed, below-investment grade, long-term debt obligations with equity features such as common stock, warrants, conversion rights, or other equity features and, occasionally, preferred stocks. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers in private placement transactions. These investments are typically mezzanine debt instruments with accompanying private equity securities made to small or middle market companies. In addition, the Trust may temporarily invest, subject to certain limitations, in marketable investment grade debt securities, other marketable debt securities (including high yield securities) and marketable common stocks. Below-investment grade or high yield securities have predominantly speculative characteristics with respect to the capacity of the issuer to pay interest and repay capital. On January 27,1998, the Board of Trustees authorized the formation of a wholly-owned subsidiary of the Trust ("MMCI Subsidiary Trust") for the purpose of holding certain investments. The results of MMCI Subsidiary Trust are consolidated in the accompanying financial statements. Footnote 2.D below discusses the federal tax consequences of the MMCI Subsidiary Trust. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed consistently by the Trust in the preparation of its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. A. VALUATION OF INVESTMENTS: 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, restricted securities can be sold only in a public offering for which a registration statement is in effect under the Securities Act of 1933, as amended (the "1933 Act"), or pursuant to a transaction that is exempt from registration under the 1933 Act. The value of restricted securities, and of any other assets for which there are no reliable market quotations, is the fair value as determined in good faith by the Trust's Board of Trustees (the "Trustees"). Each restricted security is valued by the Trustees at the time of its acquisition and at least quarterly thereafter. The Trustees have established guidelines to aid in the valuation of each security. Generally, restricted securities are initially valued at cost or less at the time of acquisition by the Trust. Values greater or less than cost are used thereafter for restricted securities in appropriate circumstances. Among the factors ordinarily considered are the existence of restrictions upon the sale of a security held by the Trust; an estimate of the existence and the 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 -------------------------------------------------------------------------------- 36 MassMutual Corporate Investors NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2008 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 $182,799,290 (87.82% of net assets) as of December 31, 2008 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, 2008, 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. Effective January 1, 2008, the Trust adopted FASB Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 clarifies the definition of fair value, establishes a framework for measuring fair values, and requires additional disclosures about the use of fair value measurements. FAS 157 requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity's financial performance. Various inputs are used in determining the value of the Trust's investments. Using the hierarchy established under FAS 157, these inputs are summarized in the three broad levels listed below: Level 1: quoted prices in active markets for identical securities Level 2: other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Level 3: significant unobservable inputs (including the Trust's own assumptions in determining the fair value of investments) The inputs and methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the Trust's net assets as of December 31, 2008: Assets: Total Level 1 Level 2 Level 3 ----------------------------------------------------------------------------- Restricted Securities $191,135,415 $ -- $ 8,336,125 $182,799,290 Public Securities 40,422,532 2,545,370 37,876,902 260 Short-term Securities 6,233,266 -- 6,233,266 -- ----------------------------------------------------------------------------- Total $237,791,213 $ 2,545,370 $52,446,293 $182,799,550 ----------------------------------------------------------------------------- -------------------------------------------------------------------------------- MassMutual Corporate Investors 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2008 Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value: Restricted Public Short-term Assets Securities Securities Securities Total ----------------------------------------------------------------------------- Beginning Balance at 12/31/2007 $175,656,605 $ 74,700 $ -- $175,731,305 Total gains or losses (realized/ unrealized) included in earnings * (16,135,320) (75,143) -- (16,210,463) Purchases, sales, issuances & Settlements(net) 23,278,005 703 -- 23,278,708 ----------------------------------------------------------------------------- Ending balance at 12/31/08 $182,799,290 $ 260 $ -- $182,799,550 ----------------------------------------------------------------------------- * The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to Level 3 assets still held at 12/31/08 is ($20,269,679). B. ACCOUNTING FOR INVESTMENTS: Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis, including the amortization of premiums and accretion of discounts on bonds held using the yield-to-maturity method. The Trust does not accrue income when payment is delinquent and when management believes payment is questionable. Realized gains and losses on investment transactions and unrealized appreciation and depreciation of investments are reported for financial statement and federal income tax purposes on the identified cost method. C. USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. D. FEDERAL INCOME TAXES: The Trust has elected to be taxed as a "regulated investment company" under the Internal Revenue Code, and intends to maintain this qualification and to distribute substantially all of its net taxable income to its shareholders. In any year when net long-term capital gains are realized by the Trust, management, after evaluating the prevailing economic conditions, will recommend that the Trustees either designate the net realized long-term gains as undistributed and pay the federal capital gains taxes thereon or distribute all or a portion of such net gains. For the year ended December 31, 2008, the Trust did not have any realized taxable long-term capital gain. The Trust is taxed as a regulated investment company and is therefore limited as to the amount of non-qualified income that it may receive as the result of operating a trade or business, e.g. the Trust's pro rata share of income allocable to the Trust by a partnership operating company. The Trust's violation of this limitation could result in the loss of its status as a regulated investment company, thereby subjecting all of its net income and capital gains to corporate taxes prior to distribution to its shareholders. The Trust, from time-to-time, identifies investment opportunities in the securities of entities that could cause such trade or business income to be allocable to the Trust. The MMCI Subsidiary Trust (described in Footnote 1, above) was formed in order to allow investment in such securities without adversely affecting the Trust's status as a regulated investment company. Net investment income and net realized gains or losses of the Trust as presented under accounting principles generally accepted in the United States of America may differ from distributable taxable earnings due to earnings from the MMCI Subsidiary Trust as well as certain permanent and temporary differences in the recognition of income and realized gains or losses on certain investments. Permanent differences will result in re-classifications to the capital accounts. In 2008, the Trust increased undistributed net investment income and decreased additional paid in capital by a total of $16,187 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. -------------------------------------------------------------------------------- 38 MassMutual Corporate Investors NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2008 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, 2008, the MMCI Subsidiary Trust has accrued income tax expense of $25,780. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities and their respective tax basis. As of December 31, 2008, the MMCI Subsidiary Trust has a deferred tax asset of $77,177 for which a full valuation reserve has been recorded. No future tax benefit is expected to be realized from this asset as of December 31, 2008. 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 No. 109 ("FIN 48"). Management has analyzed the Trust's tax positions taken on federal income tax returns for all open tax years and has concluded that as of December 31, 2008, no provision for income tax would be required in the Trust's financial statements. The Trust's federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue. 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. As of December 31, 2008, the components of distributable earnings on a tax basis included $3,247,560 of undistributed ordinary income and ($2,101,113) of a net realized capital loss carryforward. The loss carryforward will expire on December 31, 2016. Such distributions and distributable earnings on a tax basis are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America (GAAP). The difference between net taxable distributable earnings to GAAP earnings is $290,448 which is comprised of various timing differences. The tax character of distributions declared during the years ended December 31, 2008 and 2007 was as follows: DISTRIBUTIONS PAID FROM: 2008 2007 ------------ ------------ Ordinary Income $ 20,078,868 $ 23,679,411 Long-term Capital gains $ -- $ -- F. EXPENSE REDUCTION: Citibank, N.A. ("Citibank") serves as custodian to the Trust. Pursuant to the custodian agreement, Citibank receives a fee reduced by credits on cash balances the Trust maintains with Citibank. All credit balances, if any, used to reduce the Trust's custodian fees are reported as fees paid indirectly on the Statement of Operations. For the year ended December 31, 2008, there were no credit balances used to reduce custodian fees. 3. INVESTMENT SERVICES CONTRACT A. SERVICES: Under an Investment Services Contract (the "Contract") with the Trust, Babson Capital has agreed to use its best efforts to present to the Trust a continuing and suitable investment program consistent with the investment objectives and policies of the Trust. Babson Capital represents the Trust in any negotiations with issuers, investment banking firms, securities brokers or dealers and other institutions or investors relating to the Trust's investments. Under the Contract, Babson Capital also provides administration of the day-to-day operations of the Trust and provides the Trust with office space and office equipment, accounting and bookkeeping services, and necessary executive, clerical and secretarial personnel for the performance of the foregoing services. -------------------------------------------------------------------------------- MassMutual Corporate Investors 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2008 B. FEE: For its services under the Contract, Babson Capital is paid a quarterly investment advisory fee equal to 0.3125% of the value of the Trust's net assets as of the last business day of each fiscal quarter, an amount approximately equivalent to 1.25% annually. A majority of the Trustees, including a majority of the Trustees who are not interested persons of the Trust or of Babson Capital, approve the valuation of the Trust's net assets as of such day. 4. SENIOR SECURED INDEBTEDNESS A. NOTE PAYABLE: MassMutual holds the Trust's $30,000,000 Senior Fixed Rate Convertible Note (the "Note") issued by the Trust on November 15, 2007. The Note, is due November 15, 2017 and accrues interest at 5.28% per annum. MassMutual, at its option, can convert the principal amount of the Note into common shares. The dollar amount of principal would be converted into an equivalent dollar amount of common shares based upon the average price of the common shares for ten business days prior to the notice of conversion. For the year ended December 31, 2008, the Trust incurred total interest expense on the Note of $1,584,000. The Trust may redeem the Note, in whole or in part, at the principal amount proposed to be redeemed together with the accrued and unpaid interest thereon through the redemption date plus a Make Whole Premium. The Make Whole Premium equals the excess of (i) the present value of the scheduled payments of principal and interest which the Trust would have paid but for the proposed redemption, discounted at the rate of interest of U.S. Treasury obligations whose maturity approximates that of the Note plus 0.50% over (ii) the principal of the Note proposed to be redeemed. B. REVOLVING CREDIT AGREEMENT: The Trust's $25,000,000 revolving credit agreement (the "Revolver") with The Royal Bank of Scotland PLC matured on May 31, 2008. For the year ended December 31, 2008, the Trust incurred total expense on the Revolver of $15,574. The expense was incurred on the undrawn portion of the Revolver from January 1, 2008 to the maturity date on May 31, 2008. 5. PURCHASES AND SALES OF INVESTMENTS FOR THE YEAR ENDED COST OF INVESTMENTS 12/31/2008 ACQUIRED ----------------------------------------------------------------------------- Corporate restricted securities $ 60,772,970 Corporate public securities 32,935,413 ----------------------------------------------------------------------------- PROCEEDS FROM SALES OR MATURITIES ----------------------------------------------------------------------------- Corporate restricted securities $ 45,929,176 Corporate public securities 34,400,750 ----------------------------------------------------------------------------- The aggregate cost of investments is substantially the same for financial reporting and federal income tax purposes as of December 31, 2008. The net unrealized depreciation of investments for financial reporting and federal tax purposes as of December 31, 2008 is $43,203,788 and consists of $15,321,967 appreciation and $58,525,755 depreciation. 6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED) AMOUNT PER SHARE ----------------------------------------------------------------------------- MARCH 31, 2008 ----------------------------------------------------------------------------- Investment income $ 6,551,682 Net investment income 5,208,711 $ 0.56 Net realized and unrealized loss on investments (net of taxes) (7,409,784) (0.80) ----------------------------------------------------------------------------- JUNE 30, 2008 ----------------------------------------------------------------------------- Investment income $ 5,878,119 Net investment income 4,557,413 $ 0.49 Net realized and unrealized loss on investments (net of taxes) (3,210,632) (0.35) ----------------------------------------------------------------------------- SEPTEMBER 30, 2008 ----------------------------------------------------------------------------- Investment income $ 7,783,534 Net investment income 6,492,880 $ 0.70 Net realized and unrealized loss on investments (net of taxes) (11,520,796) (1.24) ----------------------------------------------------------------------------- DECEMBER 31, 2008 ----------------------------------------------------------------------------- Investment income $ 6,410,118 Net investment income 5,213,290 $ 0.56 Net realized and unrealized loss on investments (net of taxes) (24,458,577) (2.63) ----------------------------------------------------------------------------- -------------------------------------------------------------------------------- 40 MassMutual Corporate Investors NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2008 7. AGGREGATE REMUNERATION PAID TO OFFICERS, TRUSTEES AND THEIR AFFILIATED PERSONS For the year ended December 31, 2008, the Trust paid its Trustees aggregate remuneration of $200,250. 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 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, 2008, 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 for the year ended December 31, 2008, other than amounts payable to Babson Capital pursuant to the Contract. For the year ended December 31, 2008, the Trust paid the following amounts to MassMutual, exclusive of interest expense on the Note explained in Footnote 4.A: Preparation of Certain of the Trust's Shareholder communications $ 1,376 8. 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. 9. SUBSEQUENT EVENTS On January 23, 2009, the Trust announced that Roger W. Crandall stepped down as a Trustee and Chairman of the Board of Trustees as a result of his new position as President and Chief Operating Officer of MassMutual. Clifford M. Noreen was appointed as a Trustee and elected to succeed Mr. Crandall as Chairman of the Board of Trustees. He previously held the role of President of the Trust. Mr. Noreen is currently the President of Babson Capital. Filling the vacancy left by Mr. Noreen, Michael L. Klofas will become President of the Trust. He was formerly a Vice President of the Trust. Mr. Klofas is currently a Managing Director and co-head of Babson Capital's Mezzanine and Private Equity Group. -------------------------------------------------------------------------------- MassMutual Corporate Investors 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Shareholders and Board of Trustees of MassMutual Corporate Investors We have audited the accompanying consolidated statement of assets and liabilities of MassMutual Corporate Investors (the Trust), including the consolidated schedule of investments, as of December 31, 2008, and the related consolidated statements of operations and cash flows for the year then ended, the consolidated statements of changes in net assets for each of the years in the two-year period then ended and the consolidated financial highlights for each of the years in the five-year period then ended. These consolidated financial statements and consolidated financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these consolidated financial statements and consolidated financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2008 by counting securities at the custodian and by correspondence with the custodian, or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements and consolidated financial highlights referred to above present fairly, in all material respects, the financial position of MassMutual Corporate Investors as of December 31, 2008, and the results of its operations, its cash flows, its changes in net assets, and the financial highlights for the years described above, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP Boston, Massachusetts February 11, 2009 -------------------------------------------------------------------------------- 42 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*(44) Trustee 3 years/ President, Chief Operating 2 Trustee, Chairman (since 2005), Massachusetts Mutual Life (since 2005) 2 years/ Officer and member of Board President (2003- 2005), and Insurance Company 10 months (since November 2008); and Vice President (2002-2003), of 1295 State Street Executive Vice President and the Trust; Director (since Springfield, MA 01111 Chairman 1 year/ Chief Investment Officer 2004), Babson Capital Europe (since 2005) 7 months (since 2005) and Co-Chief Limited (an institutional Operating Officer (since debt-fund manager); Director 2007) of MassMutual; and (since 2004), Babson Capital Chairman (since 2005), Guernsey Limited (an investment President (2006-2007) and management company); Chief Executive Officer Non-Executive Director (since (since 2006), Vice Chairman 2005), Baring Asset Management (2005), Member of the Board Limited (an investment manager/ of Managers (since 2004), adviser); Chairman (since Member of the Board of 2005), Cornerstone Real Estate Directors (2003-2004), and Advisers LLC (an investment Managing Director of Babson adviser); Director (since Capital (2000-2005). 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 2004), MML Assurance, Inc. (a New York insurance company); Director (since 2005), Oppenheimer Acquisition Corp. (holding company); Director (since 2004), Jefferies Finance LLC (a finance company); Director (since 2004), Great Lakes LLC (investment company); Director (since 1999), SAAR Holdings CDO Ltd. (investment company); Chairman, Director, and Chief Executive Officer (since 2006), MassMutual Capital Partners LLC (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); Director (since 2006), MassMutual International LLC (holding 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, Chief Executive Officer, and Member of the Board of Managers of Babson Capital.
-------------------------------------------------------------------------------- MassMutual Corporate Investors 43 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*(64) Trustee 3 years/ President (2001-2003) of 57 President (1999-2003) and (since 2003) 1 year/ Babson Capital. Trustee (since 2003), of the MassMutual 10 months Trust; Director (since 2006), Corporate Investors Jefferies Group, Inc. 1500 Main Street (financial services); Director Suite 600, P.O. Box 15189 (since 2003), Alabama Aircraft Springfield, MA 01115-5189 Industries, Inc. (aircraft maintenance and overhaul); Director (since 2007), Scottish Re Group Ltd. (global life reinsurance specialist); Trustee (since 2003), MassMutual Select Funds, formerly MassMutual Institutional Funds, (an open-end investment company advised by MassMutual); Trustee (since 2003), MML Series Investment Fund (an open-end investment company advised by MassMutual); Trustee (1998-2003), Senior Vice President (1998-2001) and President (2001-2003), MMCI Subsidiary Trust and MMPI Subsidiary Trust; and President (1999-2003), Trustee (since 2003), MassMutual Participation Investors (closed-end investment company advised by Babson Capital). * Mr. Joyal retired as President of Babson Capital in June 2003. In addition and as noted above, Mr. Joyal is a director of Jefferies Group, Inc., which has a wholly owned broker-dealer subsidiary that may execute portfolio transactions and/or engage in principal transactions with the Trust, other investment companies advised by Babson Capital or any other advisory accounts over which Babson Capital has brokerage placement discretion. Accordingly, the Trust has determined to classify Mr. Joyal as an "interested person" of the Trust and Babson Capital (as defined in the Investment Company Act of 1940, as amended).
-------------------------------------------------------------------------------- 44 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 ------------------------------------------------------------------------------------------------------------------------------------ WILLIAM J. BARRETT(69) Trustee 2 years/ President (since 2002), 2 Trustee (since 2006), (since 2006) 1 year/ Barrett-Gardner Associates, MassMutual Participation MassMutual 10 months Inc. (private merchant bank); Investors (a closed-end Corporate Investors and Senior Vice President investment company advised by 1500 Main Street (1976-2002), Janney Montgomery Babson Capital). Suite 600, P.O. Box 15189 Scott LLC (investments). Springfield, MA 01115-5189 DONALD E. BENSON(78) Trustee 3 years/ Executive Vice President 2 Director (1997-2008), MAIR (since 1986) 1 year/ and Director (since 1992), Holdings, Inc. (commuter MassMutual 10 months Marquette Financial airline holding company); Corporate Investors Companies (financial services); Director (since 1997), First 1500 Main Street Partner (since 1996), Benson California Financial Group, Inc. Suite 600, P.O. Box 15189 Family Limited Partnership (bank holding company); and Springfield, MA 01115-5189 No. 1 and Benson Family Trustee (since 1988), MassMutual Limited Partnership No. 2 Participation Investors (investment partnerships); and (closed-end investment company Partner (1987-2004), Benson, advised by Babson Capital). Pinckney, Oates Partnership (building partnership).
-------------------------------------------------------------------------------- MassMutual Corporate Investors 45 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 ------------------------------------------------------------------------------------------------------------------------------------ MICHAEL H. BROWN(52) Trustee 3 years/ Private Investor; and Managing 2 Trustee (since 2005), (since 2005) 10 months Director (1994-2005), Morgan MassMutual Participation MassMutual Stanley. Investors (a closed-end Corporate Investors investment company advised by 1500 Main Street Babson Capital); Independent Suite 600, P.O. Box 15189 Director (since 2006), Invicta Springfield, MA 01115-5189 Holdings LLC and its subsidiaries (a derivative trading company owned indirectly by MassMutual). DONALD GLICKMAN(75) Trustee 3 years/ Chairman (since 1992), Donald 2 Director (since 1984), Monro (since 1992) 1 year/ Glickman and Company, Muffler and Brake, Inc. MassMutual 10 months Inc. (private investments); (automobile repair service); Corporate Investors and Partner (since 1992), Lead Director (since 1998), MSC 1500 Main Street J.F. Lehman & Co. (private Software Corp. (simulation Suite 600, P.O. Box 15189 investments). software); and Trustee (since Springfield, MA 01115-5189 1992), MassMutual Participation Investors (closed-end investment company advised by Babson Capital).
-------------------------------------------------------------------------------- 46 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 ------------------------------------------------------------------------------------------------------------------------------------ MARTIN T. HART(73) Trustee 3 years/ Private Investor; and 2 Director (since 2004), Texas (since 1991) 2 years/ President and Director Roadhouse, Inc. (operates MassMutual 10 months (since 1983), H Investment restaurant chain); Director Corporate Investors Company LLC(family (since 1999), ValueClick Inc. 1500 Main Street partnership). (internet advertising company); Suite 600, 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). CORINE T. NORGAARD(71) Trustee 3 years/ President, (2004-2005), 34 Trustee (since 2005), MML (since 1998) 10 months Thompson Enterprises Real Series Investment Fund II (an MassMutual Estate Investment; and Dean open-end investment company Corporate Investors (1996-2004), Barney School advised by MassMutual); Trustee 1500 Main Street of Business, University of (since 2004), MassMutual Suite 600, P.O. Box 15189 Hartford. Premier Funds, formerly The DLB Springfield, MA 01115-5189 Fund Group (an open-end investment company advised by MassMutual); Trustee (since 1993), ING Series Fund (investment company); Director (since 1992), ING Variable Series Fund; and Trustee (since 1998), MassMutual Participation Investors (a closed-end investment company advised by Babson Capital). MALEYNE M. SYRACUSE(52) Trustee 3 years/ Managing Director (2000- 2 Trustee (since 2007), (since 2007) 10 months 2007), JP Morgan Securities, MassMutual Participation MassMutual Inc. (investments and Investors (a closed-end Corporate Investors banking). investment company advised by 1500 Main Street Babson Capital). Suite 600, P.O. Box 15189 Springfield, MA 01115-5189
-------------------------------------------------------------------------------- MassMutual Corporate Investors 47 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(51) President 1 year/ President (since 2005), Vice President (1993-2005) of the Trust; 7 months Vice Chairman (since 2007), Member of the Board of Managers (since MassMutual 2006), and Managing Director (since 2000) of Babson Capital; Corporate Investors Trustee (since 2005), and President (since 2005) MMCI Subsidiary 1500 Main Street Trust and MMPI Subsidiary Trust; and President (since 2005), Vice Suite 600, P.O. Box 15189 President (1993-2005), MassMutual Participation Investors. Springfield, MA 01115-5189 PATRICIA J. WALSH+(43) Vice 9 months/ Vice President, Secretary, and Chief Legal Officer (since 2008) of President, 4 months the Trust; Vice President and Associate General Counsel (since MassMutual Secretary, and 2005) of MassMutual; General Counsel and Secretary (since 2008) of Corporate Investors Chief Legal Babson Capital; Secretary (since 2009), MMCI Subsidiary Trust and 1500 Main Street Officer MMPI Subsidiary Trust; and Vice President, Secretary, and Chief Suite 600, P.O. Box 15189 Legal Officer (since 2008), MassMutual Participation Investors. Springfield, MA 01115-5189 JAMES M. ROY(46) Vice 1 year/ Vice President and Chief Financial Officer (since 2005), Treasurer President 7 months (2003-2005), and Associate Treasurer (1999-2003) of the Trust; MassMutual and Chief Managing Director (since 2005), and Director (2000-2005) of Babson Corporate Investors Financial Capital; Trustee (since 2005), Treasurer (since 2005), and 1500 Main Street Officer Controller (2003-2005), MMCI Subsidiary Trust and MMPI Subsidiary Suite 600, P.O. Box 15189 Trust; and Vice President and Chief Financial Officer (since 2005), Springfield, MA 01115-5189 Treasurer (2003-2005) and Associate Treasurer (1999-2003), MassMutual Participation Investors. JOHN T. DAVITT, JR.(41) Comptroller 1 year/ Comptroller (since 2001) of the Trust; Director (since 2000) of 7 months Babson Capital; Controller (since 2005), MMCI Subsidiary Trust and MassMutual MMPI Subsidiary Trust; and Comptroller (since 2001), MassMutual Corporate Investors Participation Investors. 1500 Main Street Suite 600, P.O. Box 15189 Springfield, MA 01115-5189 MELISSA M. LAGRANT(35) Chief 1 year/ Chief Compliance Officer (since 2006) of the Trust; Managing Compliance 7 months Director (since 2005) of Babson Capital; Vice President and Senior MassMutual Officer Compliance Trading Manager (2003-2005), Loomis, Sayles & Company, Corporate Investors L.P.; Assistant Vice President-Business Risk Management Group 1500 Main Street (2002-2003), and Assistant Vice President-Investment Compliance Suite 600, P.O. Box 15189 (2001-2002), Zurich Scudder Investments/Deutsche Asset Management; Springfield, MA 01115-5189 and Chief Compliance Officer (since 2006), MassMutual Participation Investors. DANIEL J. FLORENCE*(36) Treasurer 1 year/ Treasurer (since 2008), Associate Treasurer (2006-2008) of the 7 months Trust; Associate Director (since 2008), Analyst (2000-2008) of MassMutual Babson Capital; and Treasurer (since 2008), Associate Treasurer Corporate Investors (2006-2008), MassMutual Participation Investors. 1500 Main Street Suite 600, P.O. Box 15189 Springfield, MA 01115-5189 + Ms. Walsh was elected as Vice President, Secretary, and Chief Legal Officer of the Trust on October 17, 2008. * Mr. Florence was elected as Treasurer of the Trust on July 22, 2008.
-------------------------------------------------------------------------------- 48 MassMutual Corporate Investors MEMBERS OF THE BOARD OF DIVIDEND REINVESTMENT AND SHARE PURCHASE TRUSTEES PLAN LEFT TO RIGHT: MassMutual Corporate Investors (the Donald Glickman "Trust") offers a Dividend Reinvestment Chairman, and Share Purchase Plan (the "Plan"). Donald Glickman & Company, Inc. The Plan provides a simple way for shareholders to add to their holdings in Robert E. Joyal the Trust through the receipt of Retired President, dividend shares issued by the Trust or Babson Capital Management LLC through the investment of cash dividends in Trust shares purchased in the open William J. Barrett market. A shareholder may join the Plan President, by filling out and mailing an Barrett-Gardner Associates, Inc. authorization card to Shareholder Financial Services, Inc., the Transfer Michael H. Brown* Agent. Private Investor Participating shareholders will continue Donald E. Benson* to participate until they notify the Executive Vice President Transfer Agent, in writing, of their and Director, desire to terminate participation. Marquette Financial Companies Unless a shareholder elects to participate in the Plan, he or she will, Dr. Corine T. Norgaard* in effect, have elected to receive President, dividends and distributions in cash. Thompson Enterprises Participating shareholders may also make Real Estate Investment additional contributions to the Plan from their own funds. Such contributions Roger W. Crandall may be made by personal check or other President and Chief means in an amount not less than $10 nor Operating Officer more than $5,000 per quarter. Cash Massachusetts Mutual Life contributions must be received by the Insurance Company Transfer Agent at least five days (but no more then 30 days) before the payment Martin T. Hart date of a dividend or distributions. Private Investor Whenever the Trust declares a dividend Maleyne M. Syracuse payable in cash or shares, the Transfer Private Investor Agent, acting on behalf of each participating shareholder, will take the *Member of the Audit Committee dividend in shares only if the net asset value is lower than the market price plus an estimated brokerage commission OFFICERS as of the close of business on the valuation day. The valuation day is the Roger W. Crandall last day preceding the day of dividend Chairman payment. Clifford M. Noreen When the dividend is to be taken in President shares, the number of shares to be received is determined by dividing the James M. Roy cash dividend by the net asset value as Vice President & Chief of the close of business on the Financial Officer valuation date or, if greater than net asset value, 95% of the closing share Patricia J. Walsh price. If the net asset value of the Vice President, Secretary shares is higher than the market value & Chief Legal Officer plus an estimated commission, the Transfer Agent, consistent with Jill A. Fields obtaining the best price and execution, Vice President will buy shares on the open market at current prices promptly after the Michael P. Hermsen dividend payment date. Vice President The reinvestment of dividends does not, Mary Wilson Kibbe in anyway, relieve participating Vice President shareholders of any federal, state or local tax. For federal income tax Michael L. Klofas purposes, the amount reportable in Vice President respect of a dividend received in newly-issued shares of the Trust will be Richard E. Spencer, II the fair market value of the shares Vice President received, which will be reportable as ordinary income and/or capital gains. Daniel J. Florence Treasurer As compensation for its services, the Transfer Agent receives a fee of 5% of John T. Davitt, Jr. any dividend and cash contribution (in Comptroller no event in excess of $2.50 per distribution per shareholder.) Melissa M. LaGrant Chief Compliance Officer 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. -------------------------------------------------------------------------------- MassMutual Corporate Investors 49 [LOGO] MassMutual Corporate Investors CI3848 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, 2008 2007 ---------- ---------- Audit Fees $ 51,600 $ 47,500 Audit-Related Fees 6,125 5,700 Tax Fees 39,950 31,000 All Other Fees 0 0 ---------- ---------- Total Fees $ 97,675 $ 84,200 ========== ========== NON-AUDIT FEES BILLED TO BABSON CAPITAL AND MASSMUTUAL KPMG LLP KPMG LLP Year Ended Year Ended December 31, December 31, 2008 2007 ---------- ---------- Audit-Related Fees $ 921,019 $1,102,280 Tax Fees 0 0 All Other Fees 0 75,000 ---------- ---------- Total Fees $ 921,019 $1,177,280 ========== ========== 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 returns 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 2008, 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 2007 fees billed represent final 2007 amounts, which may differ from the preliminary figures available as of the filing date of the Trust's 2008 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 2008 Annual Form N-CSR, but are now properly included in the 2007 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, Michael H. Brown, 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 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. in a manner it believes is most likely to enhance the economic valve of the underlying securities and client accounts). 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. 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 established a Proxy Committee that is responsible for the implementation and governance of the Policy and 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"), the Proxy Committee or a designated member of the Proxy Committee determines that it is in the 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 Analyst or Proxy Administrator has identified a Babson Capital Material Conflict or (ii) said Proxy Committee member has identified a Material Conflict pertinent to him or herself or a Babson 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, director, or a Board of Managers Member of Babson Capital or its affiliates (other than those assigned such responsibilities under the Policy) may influence how Babson Capital votes any client proxy, unless such person has been requested to provide such assistance by a Proxy Analyst 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 Chief Compliance Officer or 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 President, 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. Jill A. Fields is responsible for the day-to-day management of the Registrant's public high yield and investment grade fixed income portfolio. Ms. Fields has been a Vice President of the Registrant since 2006. Ms. Fields is a Managing Director of Babson Capital with over 20 years of industry experience in high yield total return structured credit leveraged loans and private placement investing. Prior to joining Babson Capital in 1997, she was a credit analyst at Shawmut National Bank, and the Director of Corporate Bond Research at Hartford Life Insurance Group. Ms. Fields holds a B.S. from Pennsylvania State University and an M.B.A. from the University of Connecticut. OTHER ACCOUNTS MANAGED BY THE PORTFOLIO TEAM. The members of the Registrant's Portfolio Team also have primary responsibility for the day-to-day management of other Babson Capital advisory accounts, including, among others, closed-end and open-end investment companies, private investment funds, MassMutual-affiliated accounts, as well as separate accounts for institutional clients. These advisory accounts are identified below.
NUMBER OF ACCOUNTS APPROXIMATE TOTAL WITH ASSET SIZE OF NUMBER APPROXIMATE PERFORMANCE- PERFORMANCE- PORTFOLIO ACCOUNT OF TOTAL ASSET BASED BASED ADVISORY TEAM CATEGORY ACCOUNTS SIZE(A) ADVISORY FEE FEE ACCOUNTS(A) ------------ --------------------- -------- ------------ ------------ -------------- Clifford M. Registered Investment Noreen(B) Companies 1 $110.2 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 1 $26.5 million 1 $26.5 million ----------------------------------------------------------------------------------------- Other Accounts 0 N/A 0 N/A ----------------------------------------------------------------------------------------- Jill A. Registered Investment Fields Companies 2 $222.8 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 1 $30.3 million 1 $30.3 million ----------------------------------------------------------------------------------------- Other Accounts 5C $407.2 billion 0 N/A ----------------------------------------------------------------------------------------- Michael P. Registered Investment Hermsen Companies 1 $110.2 million N/A N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 5 $1.0 billion 5 $1.0 billion ----------------------------------------------------------------------------------------- Other Accounts 0 N/A N/A N/A ----------------------------------------------------------------------------------------- Michael L. Registered Investment Klofas Companies 1 $110.2 million N/A N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles(D) 5 $1 billion 5 $1 billion ----------------------------------------------------------------------------------------- Other Accounts 0 N/A N/A N/A ----------------------------------------------------------------------------------------- Richard E. Registered Investment Spencer II Companies 1 $110.2 million N/A N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 5 $1 billion 5 $1 billion ----------------------------------------------------------------------------------------- Other Accounts 0 N/A N/A N/A
(A) Account asset size has been calculated as of December 31, 2008. (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) Ms. Fields manages the high yield sector of the general investment account of Massachusetts Mutual Life Insurance Company; however these assets are not represented in the table above. (D) The listed account and managed assets represent a 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. 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 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, 2008, 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 Over $100,001 Jill A. Fields $50,001-$100,000 Michael P. Hermsen Over $100,001 Michael L. Klofas Over $100,001 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 shares. However, neither the Plan nor the participant in the Plan has an actual ownership interest in the Registrant's shares.) ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not Applicable for this filing. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable for this filing. ITEM 11. CONTROLS AND PROCEDURES. (a) The principal executive officer and principal financial officer of the Registrant evaluated the effectiveness of the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) as of a date within 90 days of the filing date of this report and based on that evaluation have concluded that such disclosure controls and procedures are effective to provide reasonable assurance that material information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) during the Registrant's second fiscal half-year that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) ANY CODE OF ETHICS, OR AMENDMENTS THERETO, THAT IS THE SUBJECT OF DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS TO SATISFY THE ITEM 2 REQUIREMENTS THROUGH THE FILING OF AN EXHIBIT. None. (a)(2) A SEPARATE CERTIFICATION FOR EACH PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER OF THE REGISTRANT AS REQUIRED BY RULE 30a-2 UNDER THE ACT. Attached hereto as EX-99.31.1 Attached hereto as EX-99.31.2 (a)(3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23c-1 UNDER THE ACT (17 CFR 270.23c-1) SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not Applicable for this filing. (b) CERTIFICATIONS PURSUANT TO RULE 30a-2(b) UNDER THE ACT. Attached hereto as EX-99.32 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): MassMutual Corporate Investors ---------------------------------- By: /s/ Clifford M. Noreen ---------------------------------- Clifford M. Noreen, President ---------------------------------- Date: March 6, 2009 ---------------------------------- 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, 2009 ---------------------------------- By: /s/ James M. Roy ---------------------------------- James M. Roy, Vice President, and Chief Financial Officer ---------------------------------- Date: March 6, 2009 ------------------------------