-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N5a3fW76GdkxtVg6npHdotUtGpgqejll0c169PuaMhqvWOK9zgFYVM5gpn5Q7WlY x17o+fOJu45oLJBeYUG51w== 0001072613-10-000346.txt : 20100308 0001072613-10-000346.hdr.sgml : 20100308 20100308154225 ACCESSION NUMBER: 0001072613-10-000346 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100308 DATE AS OF CHANGE: 20100308 EFFECTIVENESS DATE: 20100308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASSMUTUAL CORPORATE INVESTORS CENTRAL INDEX KEY: 0000275694 IRS NUMBER: 042483041 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02183 FILM NUMBER: 10663704 BUSINESS ADDRESS: STREET 1: 1500 MAIN STREET STREET 2: SUITE 600 CITY: SPRINGFIELD STATE: MA ZIP: 01115 BUSINESS PHONE: 4132261000 MAIL ADDRESS: STREET 1: 1500 MAIN STREET STREET 2: SUITE 600 CITY: SPRINGFIELD STATE: MA ZIP: 01115 N-CSR 1 form-ncsr_16739.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: 12/31/09 ------------------ 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 2009 ANNUAL REPORT MASSMUTUAL CORPORATE INVESTORS c/o Babson Capital Management LLC 1500 Main Street P.O. Box 15189 Springfield, Massachusetts 01115-5189 (413) 226-1516 http://www.BabsonCapital.com/mci ADVISER Babson Capital Management LLC 1500 Main Street, P.O. Box 15189 Springfield, Massachusetts 01115-5189 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP Boston, Massachusetts 02110 COUNSEL TO THE TRUST Ropes & Gray LLP Boston, Massachusetts 02110 CUSTODIAN Citibank, N.A. New York, New York 10043 TRANSFER AGENT & REGISTRAR Shareholder Financial Services, Inc. P.O. Box 173673 Denver, Colorado 80217-3673 1-800-647-7374 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, 2009 is available (1) on the Trust's web-site at http://www.BabsonCapital.com/mci; and (2) on the SEC's website at http://www.sec.gov. FORM N-Q The Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This information is available (i) on the SEC's website at http://www.sec.gov; and (ii) at the SEC's Public Reference Room in Washington, DC (which information on their operation may be obtained by calling 1-800-SEC-0330). A complete schedule of portfolio holdings as of each quarter-end is available on the Trust's website at http:// www.BabsonCapital.com/mci or upon request by calling, toll-free, 1-866-399-1516. OFFICERS OF THE TRUST - --------------------- Clifford M. Noreen Chairman Michael L. Klofas President Michael P. Hermsen Vice President Richard E. Spencer, II Vice President Jill A. Fields Vice President James M. Roy Vice President & Chief Financial Officer Patricia J. Walsh Vice President, Secretary & Chief Legal Officer 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 16, 2010 at 1:30 P.M. in Springfield, Massachusetts. 1 PORTFOLIO COMPOSITION AS OF 12/31/09* [PIE CHART APPEARS HERE] Private / 144A Private / Restricted High Yield Debt Equity 11.3% 66.2% Public High Cash Yield Debt 6.9% 14.7% Public Equity 0.9% *Based on value of total investments (including cash) TOTAL ANNUAL PORTFOLIO RETURN (AS OF 12/31 EACH YEAR)* [BAR CHART APPEARS HERE]
MASSMUTUAL CORPORATE 7.28 5.91 4.80 22.61 22.76 20.04 18.06 8.72 -10.34 12.64 INVESTORS (BASED ON CHANGE IN THE NET ASSET VALUE WITH REINVESTED DIVIDENDS) RUSSELL 2000 INDEX -3.03 2.49 -20.48 47.25 18.33 4.55 18.37 -1.57 -33.79 27.17 BARCLAYS CAPITAL U.S. -5.86 5.28 -1.41 28.97 11.13 2.74 11.85 1.87 -26.16 58.21 CORPORATE HIGH YIELD INDEX 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
* 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. 2 TO OUR SHAREHOLDERS As the Trust announced in January of 2009, 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 Executive Officer of Massachusetts Mutual Life Insurance Company. Clifford M. Noreen, the Trust's former President, was appointed as a Trustee and elected to replace Mr. Crandall as Chairman of the Board of Trustees. Additionally, I was elected to succeed Mr. Noreen as President of the Trust. I am pleased to share with you the Trust's Annual Report for the year ended December 31, 2009. THE TRUST'S 2009 PORTFOLIO PERFORMANCE The Trust's net total portfolio rate of return for 2009 was 12.64%, 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 $214,436,954, or $22.89 per share, as of December 31, 2009. This compares to $208,143,519, or $22.33 per share, as of December 31, 2008. The Trust paid a quarterly dividend of 54 cents per share for each of the four quarters of 2009. Including the fourth quarter dividend paid in January 2010, total dividends for the year were $2.16 per share, which was unchanged from the prior year. We are pleased to be able to maintain the Trust's dividend despite the extremely challenging economic environment during 2009. The table below lists the average annual net returns of the Trust's portfolio, based on the change in net assets and assuming the reinvestment of all dividends and distributions. Average annual returns of the Barclays Capital U.S. Corporate High Yield Index and the Russell 2000 Index for the 1, 3, 5 and 10 years ended December 31, 2009 are provided for comparison purposes only. Barclays Capital U.S. Russell The Trust Corporate High Yield Index 2000 Index - -------------------------------------------------------------------------------- 1 Year 12.64% 58.21% 27.17% - -------------------------------------------------------------------------------- 3 Year 3.17% 5.97% -6.07% - -------------------------------------------------------------------------------- 5 Year 9.25% 6.46% 0.51% - -------------------------------------------------------------------------------- 10 Year 10.80% 6.71% 3.51% - -------------------------------------------------------------------------------- Past performance is no guarantee of future results. 3 MARKET CONDITIONS The year 2009 opened with the entire global economy mired in a deep recession rooted in the mortgage and credit crisis that unfolded in mid-2007. This grim environment continued into March. With unprecedented stimulus from governments around the world, however, the financial markets began a rally that lifted both equity and bond markets through the end of the year. The Dow Jones Industrial Average gained 18.8% for the year, but was up nearly 60% from its March 2009 low. Asset classes that were among the poorest performers in 2008 had some of the largest advances in 2009. These asset classes included high yield bonds and loans, which both reported gains of more than 50%, according to Barclays Capital. After the celebrated rally, however, questions remain about what is next for the U.S. economy. The unemployment rate, according to the U.S. Department of Labor, ended 2009 at 10%, up from 7.1% at year-end 2008, with expectations that it will remain high throughout 2010. Inflation was 2.7% in 2009, compared to just 0.1% in 2008. The value of the dollar varied widely versus the currencies of the main U.S. trading partners in 2009, and the 2010 outlook remains unclear. The massive U.S. stimulus spending also raises concerns about potential tax increases to finance the national debt, which creates uncertainty for investors and companies alike. It is possible that corporate credit defaults have peaked: after rising for 23 straight months since January 2008, the Moody's Investors Service global issuer-weighted speculative-grade default rate declined in December 2009, though it still finished the year at 12.5%, well above its historical average of 5%. Moody's predicts defaults will fall dramatically in 2010. PORTFOLIO ACTIVITY Similar to 2008, the Trust's investment activity was very sporadic during 2009. During the first and second quarters of the year, middle market buyout activity was quite low due to a shortage of available credit. Senior lending capacity, one of the key drivers of buyout activity, was limited as these capital providers refrained from taking risk. As a result, the Trust was able to complete only three new private placement transactions during the first half of 2009. Beginning in the third quarter of 2009, banks and other senior debt providers slowly began to make more capital available to finance middle market transactions and the Trust's investment activity increased correspondingly. During the second half of 2009, the Trust completed seven new private placement transactions. For the full year 2009, the Trust closed ten new private placement transactions and made add-on investments in seven existing portfolio companies. Total private placement investments in 2009 were $25,976,473. In 2008, the Trust closed 23 new private placement transactions and nine add-on investments aggregating $52,612,864. While the Trust invested fewer dollars in 2009, we are nonetheless pleased with the Trust's level of investment activity given the significant decline in middle market buyout transactions that occurred during the year and reports of other middle 4 market mezzanine investors struggling to close any deals. We are also pleased to report that the trend towards lower leverage and more conservative capital structures which began in early 2008 continued throughout 2009. In addition, return expectations for the Trust's new investments continued to be more favorable than they have been for several years. New private placement investments completed during 2009 were: A E Company, Inc.; A S C Group, Inc.; Apex Analytix Holding Corporation; Custom Engineered Wheels, Inc.; International Offshore Services LLC; Northwest Mailing Services, Inc.; Precision Wire Holding Company; Sencore Holding Company; Spartan Foods Holding Company; and Telecorps Holdings, Inc. In addition, the Trust added to existing private placement investments in Arrow Tru-Line Holdings, Inc.; K P I Holdings, Inc.; NetShape Technologies, Inc.; Postle Aluminum Company LLC; Telecorps Holdings, Inc.; Visioneering, Inc.; and Vitex Packaging Group, Inc. As 2009 drew to a close, we had some very positive news from the portfolio. A T I Acquisition Company and Vitality Foodservice, Inc. were both sold in late December and the Trust realized significant gains on its investments in these companies. These transactions represented the first meaningful realization activity for the Trust's portfolio since the early part of 2008. In contrast to the positive developments around realization activity, however, is the fact that the weak economy that existed during most of 2009 negatively impacted the financial performance of many of the Trust's portfolio companies. Many of these companies had to amend their debt covenants, raise additional capital, or request relief from their debt service requirements. We spent considerable time working closely with the transaction sponsors and the management teams of these portfolio companies to remedy these situations during 2009. 2009 Record Ordinary Tax Long-Term Dividends Date Income Effect Gains - -------------------------------------------------------------------------------- Regular 5/4/2009 0.5400 -- 8/3/2009 0.5400 -- 10/26/2009 0.5400 -- 12/31/2009 0.5400 -- - -------------------------------------------------------------------------------- $ 2.1600 $ 2.1600 $ -- ================================================================================ The Trust did not have distributable net long-term capital gains in 2009.
Annual Qualified for Dividend Interest Earned on Dividend Received Deduction* Qualified Dividends** U .S. Gov't. Obligations Amount Amount Amount Amount Per Share Percent Per Share Percent Per Share Percent Per Share - ------------------------------------------------------------------------------------ $2.16 0.0000% 0.0000 0.0000% 0.00000 0.0000% 0.0000 ====================================================================================
* Not available to individual shareholders ** Qualified dividends are reported in Box 1b on IRS Form 1099-Div for 2009 5 OUTLOOK FOR 2010 The year 2010 opened with many breathing a sigh of relief, looking back on how difficult the previous 18 months had been and how the worst now seems to be behind us. The housing market, where much of the trouble started, seems to have bottomed out. Companies have begun to report improved profits, primarily due to cost-cutting rather than sales growth. The Federal Reserve has held fast on a policy of near zero interest rates, providing needed liquidity to the market. But companies still need to grow revenues to create more jobs, and financial institutions need to lend money to fund expansion and capital investments. Government stimulus cannot continue forever and the Federal Reserve will eventually have to move away from its easy money policy. It is uncertain how the economy will react in 2010 to these and other developments. We have begun 2010 with a reasonable backlog of new investment opportunities and an expectation that leverage and pricing conditions will also continue to be favorable for the Trust. We are hopeful that realization activity will increase in 2010 due to the pent-up demand for such transactions. However, we still expect 2010 to be another challenging year as the Trust's portfolio companies rebound from the affects of the economic recession. Regardless of the economic environment, the Trust continues to employ the investment philosophy that has served it well since its inception: investing in companies which we believe have a strong business proposition, solid cash flow and experienced, ethical management. This philosophy, along with Babson Capital's seasoned investment-management team, positions the Trust well to meet its investment objectives and policies. As always, I would like to thank you for your continued interest in and support of MassMutual Corporate Investors. Sincerely, /s/ Michael L. Klofas Michael L. Klofas President Cautionary Notice: Certain statements contained in this report may be "forward looking" statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date in which they are made and which reflect management's current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. These statements are subject to change at any time based upon economic, market or other conditions and may not be relied upon as investment advice or an indication of the Trust's trading intent. References to specific securities are not recommendations of such securities, and may not be representative of the Trust's current or future investments. We undertake no obligation to publicly update forward looking statements, whether as a result of new information, future events, or otherwise. 6 FINANCIAL REPORT Consolidated Statement of Assets and Liabilities 8 Consolidated Statement of Operations 9 Consolidated Statement of Cash Flows 10 Consolidated Statements of Changes in Net Assets 11 Consolidated 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 7 MASSMUTUAL CORPORATE INVESTORS CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES December 31, 2009 ASSETS: Investments (See Consolidated Schedule of Investments) Corporate restricted securities at fair value (Cost - $213,701,071) $ 180,783,191 Corporate restricted securities at market value (Cost - $11,909,685) 11,449,792 Corporate public securities at market value (Cost - $42,701,613) 38,326,665 - -------------------------------------------------------------------------------- 230,559,648 - -------------------------------------------------------------------------------- Cash 17,216,779 Interest and dividends receivable 3,156,068 Receivable for investments sold 47,302 - -------------------------------------------------------------------------------- TOTAL ASSETS 250,979,797 - -------------------------------------------------------------------------------- Liabilities: Dividend payable 5,058,513 Investment advisory fee payable 670,115 Note payable 30,000,000 Interest payable 202,105 Accrued taxes payable 221,290 Accrued expenses 164,947 Other payables 225,873 - -------------------------------------------------------------------------------- TOTAL LIABILITIES 36,542,843 - -------------------------------------------------------------------------------- TOTAL NET ASSETS $ 214,436,954 - -------------------------------------------------------------------------------- Net Assets: Common shares, par value $1.00 per share; an unlimited number authorized $ 9,367,616 Additional paid-in capital 113,863,819 Retained net realized gain on investments, prior years 127,688,004 Undistributed net investment income 2,305,051 Accumulated net realized loss on investments (869,525) Net unrealized depreciation of investments (37,918,011) - -------------------------------------------------------------------------------- TOTAL NET ASSETS $ 214,436,954 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- COMMON SHARES ISSUED AND OUTSTANDING 9,367,616 - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE $ 22.89 - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements 8 MASSMUTUAL CORPORATE INVESTORS CONSOLIDATED STATEMENT OF OPERATIONS For the year ended December 31, 2009 INVESTMENT INCOME: Interest $ 24,031,881 Dividends 27,518 Other 31,827 - -------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 24,091,226 - -------------------------------------------------------------------------------- EXPENSES: Investment advisory fees 2,642,607 Interest 1,584,000 Trustees' fees and expenses 218,400 Professional fees 154,750 Reports to shareholders 120,000 Custodian fees 25,000 Transfer agent/registrar's expenses 23,000 Other 153,057 - -------------------------------------------------------------------------------- TOTAL EXPENSES 4,920,814 - -------------------------------------------------------------------------------- INVESTMENT INCOME - NET 19,170,412 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments before taxes 910,579 Income tax expense (42,167) - -------------------------------------------------------------------------------- NET REALIZED GAIN ON INVESTMENTS AFTER TAXES 868,412 - -------------------------------------------------------------------------------- Net change in unrealized depreciation of investments before taxes 5,451,067 Net change in deferred income tax expense (165,290) - -------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED DEPRECIATION OF INVESTMENTS AFTER TAXES 5,285,777 - -------------------------------------------------------------------------------- NET GAIN ON INVESTMENTS 6,154,189 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 25,324,601 - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements 9 MASSMUTUAL CORPORATE INVESTORS CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended December 31, 2009 NET INCREASE IN CASH: Cash flows from operating activities: Purchases/Proceeds/Maturities from short-term portfolio securities, net $ 6,251,321 Purchases of portfolio securities (53,362,568) Proceeds from disposition of portfolio securities 62,049,113 Interest, dividends and other income received 23,083,181 Interest expense paid (1,584,000) Operating expenses paid (3,099,425) Income tax refund, net 247,833 - -------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 33,585,455 - -------------------------------------------------------------------------------- Cash flows from financing activities: Cash dividends paid from net investment income (20,142,902) Receipts for shares issued on reinvestment of dividends 1,137,714 - -------------------------------------------------------------------------------- NET CASH USED FOR FINANCING ACTIVITIES (19,005,188) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET INCREASE IN CASH 14,580,267 - -------------------------------------------------------------------------------- Cash - beginning of year 2,636,512 - -------------------------------------------------------------------------------- CASH - END OF YEAR $ 17,216,779 - -------------------------------------------------------------------------------- RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 25,324,601 - -------------------------------------------------------------------------------- Decrease in investments 7,231,565 Decrease in interest and dividends receivable 291,425 Decrease in receivable for investments sold 138,115 Decrease in payable for investments purchased (3,578) Increase in investment advisory fee payable 19,667 Decrease in accrued expenses (8,149) Increase in accrued taxes payable 455,290 Increase in other payables 136,519 - -------------------------------------------------------------------------------- TOTAL ADJUSTMENTS TO NET ASSETS FROM OPERATIONS 8,260,854 - -------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 33,585,455 - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements 10 MASSMUTUAL CORPORATE INVESTORS CONSOLIDATED STATEMENTS OF CHANGES IN NET ASETS For the years ended December 31, 2009 and 2008 2009 2008 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Investment income - net $ 19,170,412 $ 21,472,294 Net realized gain (loss) on investments 868,412 (2,459,420) Net change in unrealized depreciation of investments 5,285,777 (44,140,369) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 25,324,601 (25,127,495) - -------------------------------------------------------------------------------- Increase from common shares issued on reinvestment of dividends Common shares issued (2009 - 48,107; 2008 - 81,890) 1,137,714 2,186,860 Dividends to shareholders from: Net investment income (2009 - $2.16 per share; 2008 - $2.16 per share) (20,168,880) (20,078,868) - -------------------------------------------------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 6,293,435 (43,019,503) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSETS, BEGINNING OF YEAR 208,143,519 251,163,022 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSETS, END OF YEAR (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $2,305,051 AND $3,174,832, RESPECTIVELY) $214,436,954 $208,143,519 - -------------------------------------------------------------------------------- See Notes to Consolidated Financial 11 MassMutual Corporate Investors CONSOLIDATED FINANCIAL HIGHLIGHTS Selected data for each share of beneficial interest outstanding:
FOR THE YEARS ENDED DECEMBER 31, 2009 2008 2007 2006 2005 - ------------------------------------------------------------------------------------------------------ NET ASSET VALUE: BEGINNING OF YEAR $ 22.33 $ 27.19 $ 27.51 $ 26.06 $ 24.34 - ------------------------------------------------------------------------------------------------------ Net investment income (a) 2.05 2.31 2.56 2.27 2.03 Net realized and unrealized gain (loss) on investments 0.66 (5.02) (0.35) 1.62 1.96(b) - ------------------------------------------------------------------------------------------------------ TOTAL FROM INVESTMENT OPERATIONS 2.71 (2.71) 2.21 3.89 3.99 - ------------------------------------------------------------------------------------------------------ Dividends from net investment income to common shareholders (2.16) (2.16) (2.57) (2.47) (2.11) Dividends from net realized gain on investments to common shareholders -- -- -- (0.01) (0.18) Increase from dividends reinvested 0.01 0.01 0.04 0.04 0.02 - ------------------------------------------------------------------------------------------------------ TOTAL DIVIDENDS (2.15) (2.15) (2.53) (2.44) (2.27) - ------------------------------------------------------------------------------------------------------ NET ASSET VALUE: END OF YEAR $ 22.89 $ 22.33 $ 27.19 $ 27.51 $ 26.06 - ------------------------------------------------------------------------------------------------------ PER SHARE MARKET VALUE: END OF YEAR $ 25.10 $ 19.25 $ 30.20 $ 34.89 $ 30.05 - ------------------------------------------------------------------------------------------------------ Total investment return Net asset value(c) 12.64% (10.34%) 8.72% 18.06% 20.04% Market value 39.89% (30.44%) (8.78%) 29.04% 16.95% Net assets (in millions): End of year $ 214.44 $ 208.14 $ 251.16 $ 251.69 $ 236.28 Ratio of operating expenses to average net assets 1.58% 1.49% 1.55% 1.43% 1.78% Ratio of interest expense to average net assets 0.75% 0.67% 0.59% 0.60% 0.73% Ratio of income tax expense to average net assets (d) 0.00% 0.00% 0.35% 2.46% 2.84% Ratio of total expenses before custodian reduction to average net assets (d) 2.33% 2.16% 2.49% 4.53% 5.36% Ratio of net expenses after custodian reduction to average net assets (d) 2.33% 2.16% 2.49% 4.49% 5.35% Ratio of net investment income to average net assets 9.06% 9.01% 9.17% 8.19% 7.98% Portfolio turnover 23% 32% 44% 35% 35% (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 $ 30 $ 20 $ 20 Asset coverage per $1,000 of indebtedness $ 8,148 $ 7,938 $ 9,372 $ 13,584 $ 12,814
See Notes to Consolidated Financial Statements 12 MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES - 89.65%:(A) PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- PRIVATE PLACEMENT INVESTMENTS - 83.87% A E COMPANY, INC. A designer and manufacturer of machined parts and assembly structures for the commercial and military aerospace industries. 11% Senior Secured Note due 2015 $ 1,413,462 * $ 1,385,193 $ 1,411,013 13% Senior Subordinated Note due 2016 $ 1,413,461 11/10/09 1,265,201 1,410,469 Common Stock (B) 323,077 shs. 11/10/09 323,077 306,923 Warrant, exercisable until 2019, to purchase common stock at $.01 per share (B) 161,538 shs. 11/10/09 119,991 1,615 ------------- ------------- * 11/10/09 and 11/18/09. 3,093,462 3,130,020 ------------- ------------- 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 $ 2,478,917 11/21/07 2,427,269 2,503,706 Limited Partnership Interest (B) 23.16% int. 11/21/07 224,795 277,539 ------------- ------------- 2,652,064 2,781,245 ------------- ------------- 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 1,157,411 Limited Liability Company Unit Class A-2 (B) 1,276 uts. 12/31/08 140,406 216,224 Limited Liability Company Unit Class A-3 (B) 1,149 uts. 12/31/08 126,365 194,602 ------------- ------------- 1,252,308 1,568,237 ------------- ------------- A S C GROUP, INC. A designer and manufacturer of high reliability encryption equipment, communications products, computing systems and electronic components primarily for the military and aerospace sectors. 12.75% Senior Subordinated Note due 2016 $ 2,318,182 10/09/09 1,986,875 2,334,756 Limited Liability Company Unit Class A (B) 2,359 uts. 10/09/09 231,818 220,215 Limited Liability Company Unit Class B (B) 2,782 uts. 10/09/09 273,352 28 ------------- ------------- 2,492,045 2,554,999 ------------- ------------- A W X HOLDINGS CORPORATION A provider of aerial equipment rental, sales and repair services to non-residential construction and maintenance contractors operating in the State of Indiana. 10.5% Senior Secured Term Note due 2014 $ 735,000 05/15/08 720,300 685,815 13% Senior Subordinated Note due 2015 $ 735,000 05/15/08 667,812 663,849 Common Stock (B) 105,000 shs. 05/15/08 105,000 -- Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 36,923 shs. 05/15/08 62,395 -- ------------- ------------- 1,555,507 1,349,664 ------------- ------------- ADVANCED TECHNOLOGIES HOLDINGS A provider of factory maintenance services to industrial companies. 15% Senior Subordinated Note due 2013 $ 2,166,378 12/27/07 2,123,785 2,180,395 Preferred Stock (B) 1,031 shs. 12/27/07 510,000 422,136 ------------- ------------- 2,633,785 2,602,531 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 13
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- 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 $ 1,649,330 14% Senior Subordinated Note due 2015 $ 1,260,000 03/09/07 1,151,553 1,272,600 Common Stock (B) 262,500 shs. 03/09/07 262,500 59,408 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 66,116 shs. 03/09/07 111,528 14,963 ------------- ------------- 3,128,669 2,996,301 ------------- ------------- 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 1,045,791 1,132,474 Common Stock (B) 1,347 shs. 09/26/08 134,683 99,555 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 958 shs. 09/26/08 87,993 70,805 ------------- ------------- 1,268,467 1,302,834 ------------- ------------- 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 3,187,495 Preferred Class A Unit (B) 3,223 uts. ** 322,300 509,115 Preferred Class B Unit (B) 1,526 uts. 06/09/08 152,626 191,618 Common Class B Unit (B) 30,420 uts. 01/22/04 1 37,448 Common Class D Unit (B) 6,980 uts. 09/12/06 1 8,593 ------------- ------------- * 01/22/04 and 06/09/08. ** 01/22/04 and 09/12/06. 3,508,593 3,934,269 ------------- ------------- APEX ANALYTIX HOLDING CORPORATION A provider of audit recovery and fraud detection services and software to commercial and retail businesses in the U.S. and Europe. 12.5% Senior Subordinated Note due 2016 $ 1,912,500 04/28/09 1,585,159 1,969,875 Preferred Stock Series B (B) 3,065 shs. 04/28/09 306,507 31 Common Stock (B) 1,366 shs. 04/28/09 1,366 14 ------------- ------------- 1,893,032 1,969,920 ------------- ------------- ARROW TRU-LINE HOLDINGS, INC. A manufacturer of hardware for residential and commercial overhead garage doors in North America. 14% Senior Subordinated Note due 2012 $ 1,796,193 05/18/05 1,617,055 1,436,954 Preferred Stock (B) 63 shs. 10/16/09 62,756 31,380 Common Stock (B) 497 shs. 05/18/05 497,340 -- Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 130 shs. 05/18/05 112,128 -- ------------- ------------- 2,289,279 1,468,334 ------------- ------------- 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 2,172,588 2,205,719 Preferred Stock Class A (B) 879 shs. 06/30/06 268,121 80,539 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 28,305 ------------- ------------- 2,533,097 2,314,563 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 14
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- 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 $ 698,301 12.5% Senior Subordinated Note due 2015 $ 750,872 08/07/08 686,843 668,097 Common Stock (B) 73,256 shs. 08/07/08 73,256 -- Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 57,600 shs. 08/07/08 57,689 -- ------------- ------------- 1,553,643 1,366,398 ------------- ------------- CAPITAL SPECIALTY PLASTICS, INC. A producer of desiccant strips used for packaging pharmaceutical products. Common Stock (B) 109 shs. * 503 795,663 ------------- ------------- * 12/30/97 and 05/29/99. CLOUGH, HARBOUR AND ASSOCIATES An engineering service firm that is located in Albany, NY. 12.25% Senior Subordinated Note due 2015 $ 2,400,000 12/02/08 2,225,100 2,448,000 Preferred Stock (B) 277 shs. 12/02/08 276,900 263,148 ------------- ------------- 2,502,000 2,711,148 ------------- ------------- 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 1,238,572 Common Stock (B) 607 shs. 10/10/08 60,714 50,645 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 934 shs. 10/10/08 91,071 77,916 ------------- ------------- 1,250,714 1,367,133 ------------- ------------- 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 1,196,977 Limited Liability Company Unit Class A (B) 156,046 uts. 01/12/07 156,046 -- Limited Liability Company Unit Class C (B) 112,873 uts. 01/12/07 112,873 -- ------------- ------------- 2,502,121 1,196,977 ------------- ------------- CONNOR SPORT COURT INTERNATIONAL, INC. A designer and manufacturer of outdoor and indoor synthetic sports flooring and other temporary flooring products. Preferred Stock Series B-2 (B) 17,152 shs. 07/05/07 700,392 1,715,247 Preferred Stock Series C (B) 8,986 shs. 07/05/07 300,168 898,560 Common Stock (B) 718 shs. 07/05/07 7 56 Limited Partnership Interest (B) 12.64% int. * 189,586 -- ------------- ------------- * 08/12/04 and 01/14/05. 1,190,153 2,613,863 ------------- ------------- COREPHARMA LLC A manufacturer of oral dose generic pharmaceuticals targeted at niche applications. 12% Senior Subordinated Note due 2013 $ 2,550,000 08/04/05 2,465,391 2,550,000 Warrant, exercisable until 2013, to purchase common stock at $.001 per share (B) 20 shs. 08/04/05 137,166 215,048 ------------- ------------- 2,602,557 2,765,048 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 15
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- CRANE RENTAL CORPORATION A crane rental company. 13% Senior Subordinated Note due 2015 $ 2,295,000 08/21/08 $ 2,079,900 $ 2,340,900 Common Stock (B) 255,000 shs. 08/21/08 255,000 161,164 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 136,070 shs. 08/21/08 194,826 85,998 ------------- ------------- 2,529,726 2,588,062 ------------- ------------- CUSTOM ENGINEERED WHEELS, INC. A manufacturer of custom engineered, non-pneumatic plastic wheels and plastic tread cap tires used primarily for lawn and garden products and wheelchairs. 12.5% Senior Subordinated Note due 2016 $ 2,182,212 10/27/09 1,892,808 2,193,057 Preferred Stock PIK 296 shs. 10/27/09 295,550 280,773 Preferred Stock Series A 216 shs. 10/27/09 197,152 2 Common Stock (B) 72 shs. 10/27/09 72,238 68,628 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 53 shs. 10/27/09 48,608 1 ------------- ------------- 2,506,356 2,542,461 ------------- ------------- 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 1,752,855 1,833,967 Limited Partnership Interest (B) 1.82% int. 10/30/06 702,174 748,507 Warrant, exercisable until 2014, to purchase preferred stock at $.01 per share (B) 50 shs. 10/30/06 49,830 66,784 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 34 shs. 10/30/06 34,000 27,733 ------------- ------------- 2,538,859 2,676,991 ------------- ------------- 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) 2,586 shs. 12/14/01 2,186,976 1,643,701 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. 3,324,493 1,643,701 ------------- ------------- DUNCAN SYSTEMS, INC. A distributor of windshields and side glass for the recreational vehicle market. 10% Senior Secured Term Note due 2013 $ 405,000 11/01/06 398,925 411,836 13% Senior Subordinated Note due 2014 $ 855,000 11/01/06 782,125 855,000 Common Stock (B) 180,000 shs. 11/01/06 180,000 167,655 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 56,514 shs. 11/01/06 78,160 52,638 ------------- ------------- 1,439,210 1,487,129 ------------- ------------- DWYER GROUP, INC. A franchiser of a variety of home repair services. Common Stock (B) 6,906 shs. * 690,600 1,163,888 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 2,034 shs. 10/30/03 186,469 342,727 ------------- ------------- * 10/30/03 and 01/02/04. 877,069 1,506,615 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 16
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- 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 $ 2,309,614 01/08/08 $ 2,267,124 $ 2,151,316 Common Stock (B) 660 shs. 01/08/08 329,990 71,162 ------------- ------------- 2,597,114 2,222,478 ------------- ------------- 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 77,208 225,244 ------------- ------------- 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 $ 2,192,379 10/06/08 2,148,358 2,204,830 Preferred Stock (B) 4,341 shs. 10/06/08 434,074 207,706 Common Stock (B) 3,069 shs. 10/06/08 3,069 -- ------------- ------------- 2,585,501 2,412,536 ------------- ------------- F H S HOLDINGS LLC A national provider of customized disease management services to large self-insured employers. 12% Senior Subordinated Note due 2014 (D) $ 2,390,625 06/01/06 2,220,452 1,195,313 Limited Liability Company Units of Linden/ FHS Holdings LLC (B) 159 uts. 06/01/06 159,362 -- Common Unit Class B (B) 1,386 uts. 06/01/06 122,361 -- ------------- ------------- 2,502,175 1,195,313 ------------- ------------- FLUTES, INC. An independent manufacturer of micro fluted corrugated sheet material for the food and consumer products packaging industries. 10% Senior Secured Term Note due 2013 (D) $ 918,385 04/13/06 904,609 229,596 14% Senior Subordinated Note due 2014 (D) $ 555,059 04/13/06 495,635 -- ------------- ------------- 1,400,244 229,596 ------------- ------------- GOLDEN COUNTY FOODS HOLDING, INC. A manufacturer of frozen appetizers and snacks. 16% Senior Subordinated Note due 2015 $ 1,912,500 11/01/07 1,727,592 1,530,000 16% PIK Note due 2015 $ 367,165 12/31/08 300,426 293,732 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 -- ------------- ------------- 2,174,676 1,823,732 ------------- ------------- H M HOLDING COMPANY A designer, manufacturer, and importer of promotional and wood furniture. 7.5% Senior Subordinated Note due 2013 (D) $ 685,100 10/15/09 512,231 -- Preferred Stock (B) 40 shs. * 40,476 -- Preferred Stock Series B (B) 2,055 shs. 10/15/09 1,536,694 Common Stock (B) 340 shs. 02/10/06 340,000 -- Common Stock Class C (B) 560 shs. 10/15/09 -- -- Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 126 shs. 02/10/06 116,875 -- ------------- ------------- * 09/18/07 and 06/27/08. 2,546,276 -- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 17
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- HIGHGATE CAPITAL LLC An acquirer of controlling or substantial interests in manufacturing and marketing entities. Series A Preferred Units (B) 1.19% int. 07/21/94 $ 367,440 $ -- ------------- ------------- HOME DeCOR HOLDING COMPANY A designer, manufacturer and marketer of framed art and wall decor products. 12.5% Senior Subordinated Note due 2012 $ 2,043,269 * 1,937,059 2,043,269 Common Stock (B) 63 shs. * 62,742 62,272 Warrant, exercisable until 2012, to purchase common stock at $.02 per share (B) 200 shs. * 199,501 198,013 ------------- ------------- * 06/30/04 and 08/19/04. 2,199,302 2,303,554 ------------- ------------- 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 1,971,802 Common Stock (B) 474 shs. 08/19/08 474,419 103,677 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 123 shs. 08/19/08 113,773 26,797 ------------- ------------- 2,508,489 2,102,276 ------------- ------------- 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 2,077 154,381 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 20 shs. 02/27/07 612 45,469 ------------- ------------- 2,689 199,850 ------------- ------------- INTERNATIONAL OFFSHORE SERVICES LLC A leading provider of marine transportation services, platform decommissioning, and salvage services to oil and gas producers, in the shallow waters of the Gulf of Mexico. 14.25% Senior Subordinated Secured Note due 2017 $ 2,550,000 07/07/09 2,299,566 2,626,500 Limited Liability Company Unit (B) 3,112 uts. 07/07/09 186,684 31 ------------- ------------- 2,486,250 2,626,531 ------------- ------------- JASON, INC. A diversified manufacturing company serving various industrial markets. 13% Senior Subordinated Note due 2010 $ 963,687 08/04/00 848,275 240,922 Limited Partnership Interest of Saw Mill Capital Fund II, L.P. (B) 2.50% int. 08/03/00 886,470 -- Warrant, exercisable until 2010, to purchase common stock at $.01 per share (B) 50,870 shs. 08/04/00 115,412 -- ------------- ------------- 1,850,157 240,922 ------------- ------------- JUSTRITE MANUFACTURING ACQUISITION CO. A manufacturer of safety products such as storage cabinets and containers. 12% Senior Subordinated Note due 2011 $ 1,593,750 12/15/04 1,551,608 1,593,750 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 1,121 shs. 12/15/04 101,109 192,235 1,652,717 1,785,985 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 $ 2,434,382 10/15/07 2,386,137 2,452,083 Common Stock (B) 220,673 shs. 10/15/07 220,673 168,410 ------------- ------------- 2,606,810 2,620,493 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 18
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- 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 $ 2,390,795 $ 1,255,844 Common Stock (B) 134,210 shs. 05/25/06 134,210 -- Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 82,357 shs. 05/25/06 71,534 -- ------------- ------------- 2,596,539 1,255,844 ------------- ------------- 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 1,579,892 Convertible Preferred Stock Series C (B) 55 shs. 06/30/09 55,435 -- Convertible Preferred Stock Series D (B) 24 shs. 09/17/09 24,476 -- Common Stock (B) 443 shs. 07/15/08 443,478 -- Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 734 shs. * 96,024 -- ------------- ------------- * 07/16/08 and 09/17/09. 2,587,781 1,579,892 ------------- ------------- 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 $ 2,690,787 03/14/07 2,456,785 2,152,630 Common Stock (B) 232 shs. 03/13/07 232,000 -- Warrant, exercisable until 2019, to purchase preferred stock at $.01 per share (B) 134 shs. 07/07/09 -- -- Warrant, exercisable until 2017, to purchase common stock at $.01 per share (B) 167 shs. 03/14/07 162,260 -- ------------- ------------- 2,851,045 2,152,630 ------------- ------------- 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 $ 2,276,071 12/20/07 2,234,623 2,298,832 Preferred Stock (B) 363,260 shs. 12/20/07 363,260 418,280 Common Stock (B) 102,616 shs. 12/20/07 1,026 39,572 ------------- ------------- 2,598,909 2,756,684 ------------- ------------- L H D EUROPE HOLDING, INC. A non-carbonated beverage dispensing company focused on the food service industry. Common Stock (B) 85 shs. 12/28/09 7,916 24,225 ------------- ------------- 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 $ 1,230,154 09/12/08 1,139,999 1,211,999 Common Stock (B) 61 shs. 09/12/08 60,714 10,098 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 66 shs. 09/12/08 65,571 10,906 ------------- ------------- 1,266,284 1,233,003 ------------- ------------- 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 05/04/07 912,469 975,000 Limited Liability Company Unit (B) 24,109 uts. * 314,464 331,330 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 3,375 shs. 05/04/07 43,031 46,383 ------------- ------------- * 05/04/07 and 01/02/08. 1,269,964 1,352,713 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 19
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- MAVERICK ACQUISITION COMPANY A manufacturer of capsules that cover the cork and neck of wine bottles. 7.1% Senior Secured Tranche A Note due 2010 (C) $ 275,429 09/03/04 $ 275,429 $ 273,814 12.5% Senior Secured Tranche B Note due 2011 $ 313,433 09/03/04 299,580 302,618 7.72% Senior Secured Revolver due 2011 (C) $ 50,933 09/03/04 50,932 50,015 Limited Partnership Interest (B) 7.84% int. 09/03/04 58,769 11,933 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 425 shs. 09/03/04 39,473 8,622 ------------- ------------- 724,183 647,002 ------------- ------------- 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 $ 1,163,639 08/29/08 1,034,349 1,186,912 Preferred Unit (B) 126 uts. 08/29/08 125,519 136,820 Common Unit Class A (B) 1,268 uts. 08/29/08 1,268 54,910 Common Unit Class B (B) 472 uts. 08/29/08 120,064 20,431 ------------- ------------- 1,281,200 1,399,073 ------------- ------------- 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 2,070,591 Preferred Stock (B) 107 shs. 09/24/08 103,255 82,048 Limited Partnership Interest (B) 1.40% int. 09/16/08 388,983 -- Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 35 shs. 09/24/08 33,268 -- ------------- ------------- 2,506,780 2,152,639 ------------- ------------- 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 * 2,578,171 2,626,489 Common Stock (B) 450 shs. * 450,000 492,561 Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 164 shs. * 162,974 179,489 ------------- ------------- * 08/12/05 and 09/11/06. 3,191,145 3,298,539 ------------- ------------- 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 2,226,834 2,118,461 Preferred Stock (B) 263 shs. 07/21/08 261,830 52,489 Common Stock (B) 18 shs. 07/21/08 20,000 -- Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 10 shs. 07/21/08 11,285 -- ------------- ------------- 2,519,949 2,170,950 ------------- ------------- 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. 08/04/06 106,153 239,757 Warrant, exercisable until 2014, to purchase common stock at $.02 per share (B) 1,107 shs. 08/04/06 107,109 249,919 ------------- ------------- 213,262 489,676 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 20
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- 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 $ 2,550,000 07/25/08 $ 2,404,930 $ 1,275,000 14% PIK Note due 2014 $ 792,791 07/25/08 646,821 396,395 Warrant, exercisable until 2014, to purchase common stock at $.02 per share (B) 152 shs. 03/31/06 138,125 -- ------------- ------------- 3,189,876 1,671,395 ------------- ------------- NABCO, INC. A producer of explosive containment vessels in the United States. 14% Senior Subordinated Note due 2014 $ 625,000 02/24/06 588,676 468,750 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. 1,451,274 468,750 ------------- ------------- 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 2010 $ 73,736 11/14/08 73,736 73,736 14% Senior Subordinated Note due 2014 (D) $ 1,338,613 05/28/04 1,155,793 -- 10.75% Senior Secured Note due 2011 (D) $ 609,206 05/28/04 607,397 152,302 ------------- ------------- 1,836,926 226,038 ------------- ------------- 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 2,146,250 Common Stock (B) 425,000 shs. 08/02/07 425,000 564,213 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 119,360 shs. 08/02/07 194,257 158,458 ------------- ------------- 2,507,500 2,868,921 ------------- ------------- 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 1,114,584 Limited Partnership Interest of Saw Mill PCG Partners LLC (B) 2.61% int. 02/01/07 1,019,958 -- Limited Liability Company Unit Class D of Saw Mill PCG Partners LLC (B) 15 uts. * 15,389 7,695 Limited Liability Company Unit Class D-1 of Saw Mill PCG Partners LLC (B) 55 uts. 09/30/09 54,518 27,262 Preferred Stock Class A (B) 1 sh. 12/18/08 1,370 686 Preferred Stock Class A-1 (B) 5 shs. 09/30/09 4,730 2,365 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 91 shs. 02/02/07 90,830 -- ------------- ------------- * 12/18/08 and 09/30/09. 2,595,365 1,152,592 ------------- ------------- NORTHWEST MAILING SERVICES, INC. A producer of promotional materials for companies that use direct mail as part of their customer retention and loyalty programs. 12% Senior Subordinated Note due 2016 $ 2,281,579 07/09/09 1,899,712 2,371,717 Limited Partnership Interest (B) 2,684 uts. 07/09/09 268,421 255,000 Warrant, exercisable until 2019, to purchase common stock at $.01 per share (B) 3,498 shs. 07/09/09 349,753 35 ------------- ------------- 2,517,886 2,626,752 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 21
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- NYLONCRAFT, INC. A supplier of engineered plastic components for the automotive industry. 9% Senior Secured Note due 2012 $ 812,500 01/28/02 $ 812,500 $ 609,375 15% Senior Subordinated Note due 2012 (D) $ 500,000 01/28/02 473,642 -- Convertable Preferred Stock A (B) 1,000 shs. 01/28/02 961,637 -- 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 -- ------------- ------------- 2,722,324 609,375 ------------- ------------- 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 $ 141,907 01/03/06 140,993 144,668 13% Senior Subordinated Note due 2013 $ 687,241 01/03/06 635,084 687,241 Common Stock (B) 322,307 shs. 01/03/06 322,307 256,948 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 75,378 shs. 01/03/06 62,824 60,092 ------------- ------------- 1,161,208 1,148,949 ------------- ------------- OLYMPIC SALES, INC. A boat retailer in Washington state, Oregon, California and British Columbia. 12% Senior Subordinated Note due 2010 (D) $ 1,022,000 08/07/98 1,022,000 153,300 12% Senior Subordinated Note due 2010 (D) $ 307,071 02/09/00 268,283 46,061 ------------- ------------- 1,290,283 199,361 ------------- ------------- 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. 01/17/06 572,115 357,487 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 619 shs. 01/17/06 170,801 60,356 ------------- ------------- 742,916 417,843 ------------- ------------- 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 $ 2,324,243 07/03/06 2,230,549 2,347,485 Preferred Unit (B) 382 uts. 07/03/06 382,150 547,893 Preferred Unit (B) 69 uts. 07/03/06 68,790 98,625 Common Unit Class I (B) 148 uts. 07/03/06 -- 528,513 Common Unit Class L (B) 31 uts. 07/03/06 -- 111,689 ------------- ------------- 2,681,489 3,634,205 ------------- ------------- 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 2,186,643 2,295,000 Preferred Stock (B) 36 shs. 03/31/06 329,596 444,161 Common Stock (B) 23 shs. 03/31/06 25,500 159,127 Warrant, exercisable until 2013, to purchase common stock at $.01 per share (B) 13 shs. 03/31/06 11,122 92,564 ------------- ------------- 2,552,861 2,990,852 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 22
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- 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 $ 1,331,354 04/27/07 $ 1,252,064 $ 1,140,696 Limited Liability Company Unit (B) 1,754,707 uts. 04/27/07 63,233 -- ------------- ------------- 1,315,297 1,140,696 ------------- ------------- 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 2,052,254 2,111,319 Membership Interests of MM/Lincap PPI Investments, Inc., LLC (B) 2.42% int. 12/21/00 265,625 241,304 ------------- ------------- 2,317,879 2,352,623 ------------- ------------- PEARLMAN ENTERPRISES, INC. A developer and distributor of tools, equipment, and supplies to the natural and engineered stone industry. Preferred Stock Series A (B) 2,334 shs. 05/22/09 111,508 -- Preferred Stock Series B (B) 13,334 shs. 05/22/09 547,872 -- Common Stock (B) 40,540 shs. 05/22/09 1,877,208 -- ------------- ------------- 2,536,588 -- ------------- ------------- POSTLE ALUMINUM COMPANY LLC A manufacturer and distributor of aluminum extruded products. 3% Senior Subordinated PIK Note due 2014 (D) $ 2,198,100 10/02/06 2,014,226 -- Limited Liability Company Unit Class A 1,384 uts. 10/02/06 510,000 -- Limited Liability Company Unit 143 uts. 05/22/09 72,042 67,828 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 8,595 shs. 10/02/06 124,644 -- ------------- ------------- 2,720,912 67,828 ------------- ------------- 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 2,181,466 2,329,310 Limited Partnership Interest (B) 23.70% int. 02/11/08 177,729 64,710 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 1,322 shs. 02/11/08 167,588 127,531 ------------- ------------- 2,526,783 2,521,551 ------------- ------------- PRECISION WIRE HOLDING COMPANY A manufacturer of specialty medical wires that are used in non-elective minimally invasive surgical procedures. 14.25% Senior Subordinated Note due 2016 $ 2,550,000 11/12/09 2,288,681 2,540,179 Warrant, exercisable until 2019, to purchase common stock at $.01 per share (B) 206 shs. 11/12/09 203,944 2 ------------- ------------- 2,492,625 2,540,181 ------------- ------------- QUALIS AUTOMOTIVE LLC A distributor of aftermarket automotive brake and chassis products. 12% Senior Subordinated Note due 2012 $ 1,742,711 05/28/04 1,598,853 1,838,380 Common Stock (B) 354,167 shs. 05/28/04 354,166 196,499 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 377,719 shs. 05/28/04 377,719 209,566 ------------- ------------- 2,330,738 2,244,445 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 23
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- R A J MANUFACTURING HOLDINGS LLC A designer and manufacturer of women's swimwear sold under a variety of licensed brand names. 12.5% Senior Subordinated Note due 2014 $ 2,267,190 12/15/06 $ 2,090,363 $ 2,153,831 Limited Liability Company Unit (B) 2,828 uts. 12/15/06 282,810 133,714 Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 3 shs. 12/15/06 131,483 63,057 ------------- ------------- 2,504,656 2,350,602 ------------- ------------- 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 2,565,167 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 6 shs. 01/18/08 31,089 78,729 ------------- ------------- 2,499,000 2,643,896 ------------- ------------- 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 1,021,996 1,035,195 Warrant, exercisable until 2011, to purchase common stock at $.01 per share (B) 140 shs. 11/14/03 122,946 41,760 ------------- ------------- 1,144,942 1,076,955 ------------- ------------- 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. 06/02/99 256,212 197,881 ------------- ------------- SAVAGE SPORTS HOLDING, INC. A manufacturer of sporting firearms. 12% Senior Subordinated Note due 2012 $ 1,538,793 09/10/04 1,483,409 1,538,447 Common Stock (B) 612 shs. * 642,937 980,094 Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 134 shs. 09/10/04 113,578 213,987 ------------- ------------- * 09/10/04 and 10/05/07. 2,239,924 2,732,528 ------------- ------------- SENCORE HOLDING COMPANY A designer, manufacturer, and marketer of decoders, receivers and modulators sold to broadcasters, satellite, cable and telecom operators for encoding/decoding analog and digital transmission video signals. 12.5% Senior Subordinated Note due 2014 $ 1,765,385 01/15/09 1,549,386 1,610,351 Common Stock (B) 131 shs. 01/15/09 130,769 32,693 Warrant, exercisable until 2019, to purchase common stock at $.01 per share (B) 282 shs. 01/15/09 281,604 3 ------------- ------------- 1,961,759 1,643,047 ------------- ------------- SMART SOURCE HOLDINGS LLC A short-term computer rental company. 12% Senior Subordinated Note due 2015 $ 2,223,076 * 2,043,496 2,167,583 Limited Liability Company Unit (B) 619 uts. * 631,592 275,415 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 157 shs. * 164,769 69,772 ------------- ------------- * 08/31/07 and 03/06/08. 2,839,857 2,512,770 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 24
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- SPARTAN FOODS HOLDING COMPANY A manufacturer of branded pizza crusts and pancakes. 12.5% Senior Subordinated Note due 2017 $ 1,912,500 12/15/09 $ 1,647,241 $ 1,905,830 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 257 shs. 12/15/09 227,109 3 ------------- ------------- 1,874,350 1,905,833 ------------- ------------- SPECIALTY COMMODITIES, INC. A distributor of specialty food ingredients. 13.25% Senior Subordinated Note due 2016 $ 2,283,557 10/23/08 2,145,453 2,329,228 Common Stock (B) 30,000 shs. 10/23/08 300,000 126,807 Warrant, excercisable until 2018, to purchase common stock at $.01 per share (B) 11,054 shs. 10/23/08 100,650 46,724 ------------- ------------- 2,546,103 2,502,759 ------------- ------------- 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 2,128,786 2,084,157 Common Stock (B) 311 shs. 08/01/06 310,976 35,595 Warrant, exercisable until 2014, to purchase common stock at $.02 per share (B) 104 shs. 08/01/06 93,293 11,855 ------------- ------------- 2,533,055 2,131,607 ------------- ------------- SYNTERACT HOLDINGS CORPORATION A provider of outsourced clinical trial management services to pharmaceutical and biotechnology companies. 14% Senior Subordinated Note due 2016 $ 2,584,544 09/02/08 2,419,755 2,635,716 Redeemable Preferred Stock Series A (B) 1,280 shs. 09/02/08 12,523 37,361 Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B) 12,803 shs. 09/02/08 112,693 -- ------------- ------------- 2,544,971 2,673,077 ------------- ------------- 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 2,422,500 Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 9 shs. 01/14/08 88,054 31,380 ------------- ------------- 2,499,000 2,453,880 ------------- ------------- 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 2,217,385 Common Stock (B) 2,203 shs. 10/14/05 2,203 1,072,983 Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 1,192 shs. 09/30/08 568,009 580,570 ------------- ------------- 2,522,328 3,870,938 ------------- ------------- TELECORPS HOLDINGS, INC. A provider of equipment and services to producers of television shows and motion pictures. 12.75% Senior Subordinated Note due 2016 $ 3,176,506 * 2,785,539 3,114,737 Common Stock (B) 270 shs. 09/02/09 10,994 9,895 Warrant, exercisable until 2019, to purchase common stock at $.01 per share (B) 7,906 shs. * 327,437 79 ------------- ------------- * 05/20/09 and 09/02/09. 3,123,970 3,124,711 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 25
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
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. 12% Senior Subordinated Note due 2014 $ 1,162,110 * $ 1,116,616 $ 934,837 8.79% Term Note due 2012 (C) $ 1,369,040 * 1,364,590 1,252,291 7.75% Term Note due 2012 (C) $ 1,143 * 1,435 1,320 Limited Partnership Interest of Saw Mill Capital Fund V, LLC (B) 3.97% int. ** 149,176 -- Warrant, exercisable until 2016, to purchase common stock at $.01 per share (B) 72 shs. 04/28/06 59,041 -- ------------- ------------- * 04/28/06 and 09/13/06. ** 03/01/05 and 10/10/08. 2,690,858 2,188,448 ------------- ------------- 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 2,102,363 559,756 Series A Preferred Stock (B) 414 shs. 10/26/07 414,051 -- ------------- ------------- 2,516,414 559,756 ------------- ------------- 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 03/02/07 838,581 808,783 13% Senior Subordinated Note due 2014 $ 598,450 03/02/07 490,608 299,225 ------------- ------------- 1,329,189 1,108,008 ------------- ------------- TRANSPAC HOLDING COMPANY A designer, importer and wholesaler of home decor and seasonal gift products. 12% Senior Subordinated Note due 2015 (D) $ 1,733,006 10/31/07 1,649,939 1,507,055 Common Stock (B) 209 shs. 10/31/07 208,589 -- Warrant, exercisable until 2015, to purchase common stock at $.01 per share (B) 94 shs. 10/31/07 87,607 -- ------------- ------------- 1,946,135 1,507,055 ------------- ------------- TRANSTAR HOLDING COMPANY A distributor of aftermarket automotive transmission parts. 12% Senior Subordinated Note due 2014 $ 1,734,000 08/31/05 1,682,395 1,751,340 Common Stock (B) 1,078 shs. * 1,078,450 1,337,937 Warrant, exercisable until 2013, to purchase common stock at $.02 per share (B) 86 shs. 08/31/05 77,485 106,618 ------------- ------------- * 08/31/05 and 04/30/07. 2,838,330 3,195,895 ------------- ------------- 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 2,668,276 2,712,000 Common Stock (B) 630 shs. 02/04/98 630,000 709,405 Warrant, exercisable until 2010, to purchase common stock at $.01 per share (B) 444 shs. 02/05/98 368,832 499,962 ------------- ------------- 3,667,108 3,921,367 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 26
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
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 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. 3,343,875 577,385 ------------- ------------- 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 68,059 151,268 ------------- ------------- U M A ENTERPRISES, INC. An importer and wholesaler of home decor products. 15% Senior Subordinated Note due 2015 $ 1,760,083 02/08/08 1,721,755 1,712,555 Convertible Preferred Stock (B) 887 shs. 02/08/08 886,956 -- ------------- ------------- 2,608,711 1,712,555 ------------- ------------- 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 1,789,594 1,599,785 14.5% PIK Note due 2012 $ 117,631 10/06/09 99,987 99,987 Common Stock (B) 182 shs. 04/30/04 182,200 -- Warrant, exercisable until 2012, to purchase common stock at $.01 per share (B) 230 shs. 04/30/04 211,736 -- ------------- ------------- 2,283,517 1,699,772 ------------- ------------- VISIONEERING, INC. A designer and manufacturer of tooling and fixtures for the aerospace industry. 10.5% Senior Secured Term Loan due 2013 $ 802,941 05/17/07 790,897 790,119 13% Senior Subordinated Note due 2014 $ 648,530 05/17/07 594,083 628,086 18% PIK Convertible Preferred Stock (B) 37,381 shs. 03/13/09 72,519 58,015 Common Stock (B) 123,529 shs. 05/17/07 123,529 -- Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 35,006 shs. 05/17/07 55,055 -- ------------- ------------- 1,636,083 1,476,220 ------------- ------------- VITEX PACKAGING GROUP, INC. A manufacturer of specialty packaging, primarily envelopes and tags used on tea bags. 10% Senior Subordinated PIK Note due 2011 (D) $ 154,545 07/19/04 136,956 146,809 5% Senior Subordinated PIK Note due 2011 (D) $ 850,000 06/30/07 741,532 212,500 Class B Unit (B) 767,881 uts. 10/29/09 348,058 -- Class C Unit (B) 850,000 uts. 10/29/09 780,572 -- Limited Liability Company Unit Class A (B) 723,465 uts. * 433,222 -- Limited Liability Company Unit Class B (B) 182,935 uts. 07/19/04 182,935 -- ------------- ------------- * 07/19/04 and 10/29/09. 2,623,275 359,309 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 27
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
PRINCIPAL AMOUNT, SHARES, UNITS, OR OWNERSHIP ACQUISITION CORPORATE RESTRICTED SECURITIES:(A) CONTINUED PERCENTAGE DATE COST FAIR VALUE ------------- -------- ------------- ------------- WAGGIN' TRAIN HOLDINGS LLC A producer of premium quality meat dog treats. 14% Senior Subordinated Note due 2014 $ 2,219,604 11/15/07 $ 2,173,990 $ 2,241,800 Limited Liability Company Unit Class B (B) 423 uts. 11/15/07 422,652 490,413 Limited Liability Company Unit Class C (B) 423 uts. 11/15/07 -- 513,152 ------------- ------------- 2,596,642 3,245,365 ------------- ------------- 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. 14.13% Senior Subordinated Note due 2014 $ 1,721,250 11/30/06 1,621,114 1,463,063 Common Stock (B) 191 shs. 11/30/06 191,250 -- Warrant, exercisable until 2014, to purchase common stock at $.01 per share (B) 95 shs. 11/30/06 86,493 -- ------------- ------------- 1,898,857 1,463,063 ------------- ------------- 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 1,069,760 1,068,576 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 -- ------------- ------------- 1,269,026 1,068,576 ------------- ------------- 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 (D) $ 2,322,844 09/08/08 2,272,887 1,161,422 Common Stock (B) 283 shs. 09/08/08 283,333 -- ------------- ------------- 2,556,220 1,161,422 ------------- ------------- TOTAL PRIVATE PLACEMENT INVESTMENTS (E) (F) 212,746,601 179,833,791 ------------- ------------- - --------------------------------------------------------------------------------------------------------------------------------- 28
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
SHARES OR INTEREST DUE PRINCIPAL MARKET CORPORATE RESTRICTED SECURITIES:(A) (Continued) RATE DATE AMOUNT COST VALUE ------ -------- ------------ ------------ ------------ RULE 144A SECURITIES - 5.78%:(A) BONDS -- 5.74% ACCO Brands Corporation 10.625% 03/15/15 $ 100,000 $ 98,550 $ 109,750 Advanced Micro Devices, Inc. 8.125 12/15/17 750,000 714,024 746,250 American Tire Distributor (C) 6.540 04/01/12 1,000,000 950,000 830,000 Appleton Papers, Inc. 11.250 12/15/15 303,000 300,000 256,414 Cemex Finance LLC 9.500 12/14/16 375,000 393,239 386,588 Cenveo Corporation 10.500 08/15/16 100,000 100,000 102,500 Clear Channel Worldwide Holdings, Inc. 9.250 12/15/17 750,000 750,000 772,500 Compucom Systems, Inc. 12.500 10/01/15 1,330,000 1,292,771 1,353,275 Cricket Communications, Inc. 9.375 11/01/14 750,000 754,998 753,750 Douglas Dynamics LLC (F) 7.750 01/15/12 1,010,000 954,470 949,400 Easton-Bell Sports, Inc. 9.750 12/01/16 320,000 328,438 331,600 G F S I, Inc. (C) 10.500 06/01/11 715,000 685,658 530,888 Gannett Company, Inc. 9.375 11/15/17 125,000 123,228 129,063 Great Atlantic & Pacific Tea Co. 11.375 08/01/15 75,000 73,132 78,938 H C A, Inc. 9.875 02/15/17 35,000 33,920 38,588 Harrah's Operating Escrow LLC 11.250 06/01/17 325,000 313,250 343,688 Headwaters, Inc. 11.375 11/01/14 500,000 520,033 522,500 J D A Software Group, Inc. 8.000 12/15/14 75,000 74,241 77,063 JohnsonDiversey, Inc. 8.250 11/15/19 100,000 99,170 100,875 MGM Mirage, Inc. 10.375 05/15/14 45,000 43,855 48,825 MGM Mirage, Inc. 11.125 11/15/17 75,000 73,096 83,063 Packaging Dynamics Corporation of America 10.000 05/01/16 1,200,000 1,194,891 901,500 Pinnacle Foods Finance LLC 9.250 04/01/15 75,000 75,000 76,125 SandRidge Energy, Inc. 8.000 06/01/18 360,000 364,056 353,700 SandRidge Energy, Inc. 8.750 01/15/20 750,000 744,973 750,000 Sinclair Television Group, Inc. 9.250 11/01/17 425,000 413,543 442,000 Trimas Corporation 9.750 12/15/17 75,000 73,495 73,875 Tunica-Biloxi Gaming Authority 9.000 11/15/15 1,075,000 1,099,500 968,844 Viasystems, Inc. 12.000 01/15/15 175,000 168,513 187,250 ------------ ------------ TOTAL BONDS 12,810,044 12,298,812 ------------ ------------ CONVERTIBLE PREFERRED STOCK -- 0.00% ETEX Corporation (B) 777 716 -- ------------ ------------ TOTAL CONVERTIBLE PREFERRED STOCK 716 -- ------------ ------------ PREFERRED STOCK -- 0.04% General Motors Acceptance Corporation, Inc. 143 45,009 94,255 TherOX, Inc. (B) 103 4,131 -- ------------ ------------ TOTAL PREFERRED STOCK 49,140 94,255 ------------ ------------ COMMON STOCK -- 0.00% Nortek, Inc. 175 1 6,125 Touchstone Health Partnership (B) 1,168 4,254 -- ------------ ------------ TOTAL COMMON STOCK 4,255 6,125 ------------ ------------ TOTAL RULE 144A SECURITIES 12,864,155 12,399,192 ------------ ------------ TOTAL CORPORATE RESTRICTED SECURITIES $225,610,756 $192,232,983 ------------ ------------ - --------------------------------------------------------------------------------------------------------------------------------- 29
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
INTEREST DUE PRINCIPAL MARKET CORPORATE PUBLIC SECURITIES -- 17.87%: (A) RATE DATE AMOUNT COST VALUE ------ -------- ------------ ------------ ------------ BONDS -- 16.95% A M C Entertainment, Inc. 11.000% 02/01/16 $ 1,315,000 $ 1,321,271 $ 1,374,175 Activant Solutions, Inc. 9.500 05/01/16 150,000 150,000 141,563 Affinia Group, Inc. 9.000 11/30/14 50,000 48,500 48,500 American Axle & Manufacturing Holding, Inc. 7.875 03/01/17 750,000 598,125 633,750 Aramark Corporation (C) 3.781 02/01/15 200,000 200,000 183,000 Atlas Pipeline Partners 8.125 12/15/15 250,000 206,875 221,250 Bally Total Fitness Holdings Corporation (F) 14.000 10/01/13 104,062 74,053 10 Basic Energy Services 7.125 04/15/16 225,000 225,000 187,313 Berry Plastics Corporation 8.875 09/15/14 500,000 460,000 486,250 Berry Plastics Corporation (C) 5.034 02/15/15 500,000 476,908 456,875 Boyd Gaming Corporation 6.750 04/15/14 150,000 137,250 135,188 Boyd Gaming Corporation 7.125 02/01/16 200,000 173,000 174,000 Brigham Exploration Co. 9.625 05/01/14 1,200,000 1,167,903 1,197,000 Cenveo Corporation 7.875 12/01/13 1,300,000 1,192,500 1,202,500 Chaparral Energy, Inc. 8.875 02/01/17 1,500,000 1,491,780 1,323,750 Denbury Resources, Inc. 9.750 03/01/16 50,000 46,730 53,375 Dynegy Holdings, Inc. 7.750 06/01/19 830,000 564,400 720,025 Ford Motor Credit Co. 7.500 08/01/12 100,000 92,575 100,846 Ford Motor Credit Co. 8.000 06/01/14 275,000 229,904 283,938 Gencorp, Inc. 9.500 08/15/13 259,000 259,000 259,648 Goodyear Tire & Rubber Co. 10.500 05/15/16 100,000 96,111 110,500 Great Lakes Dredge & Dock Corporation 7.750 12/15/13 1,000,000 948,750 995,000 Hawker Beechcraft Acquisition Co. 9.750 04/01/17 1,000,000 1,007,745 620,000 Inergy LP 8.250 03/01/16 470,000 479,988 477,050 Intelsat Bermuda Ltd. 9.250 06/15/16 1,365,000 1,407,945 1,344,525 Interline Brands, Inc. 8.125 06/15/14 1,300,000 1,291,107 1,306,500 Interpublic Group of Companies 10.000 07/15/17 75,000 73,552 83,250 Kar Holdings, Inc. 8.750 05/01/14 50,000 50,000 51,563 Liberty Media Corporation 5.700 05/15/13 1,000,000 951,610 952,500 Manitowoc Company, Inc. 7.125 11/01/13 200,000 200,000 188,000 Mariner Energy, Inc. 11.750 06/30/16 160,000 155,623 178,400 Markwest Energy Operating Co. 6.875 11/01/14 950,000 930,563 907,250 - --------------------------------------------------------------------------------------------------------------------------------- 30
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
INTEREST DUE PRINCIPAL MARKET CORPORATE PUBLIC SECURITIES:(A) (Continued) RATE DATE AMOUNT COST VALUE ------ -------- ------------ ------------ ------------ BONDS, CONTINUED Markwest Energy Operating Co. 6.875% 11/01/14 $ 70,000 $ 55,578 $ 66,150 Markwest Energy Operating Co. 8.750 04/15/18 125,000 123,979 128,750 Michaels Stores, Inc. 11.375 11/01/16 750,000 776,719 789,375 Navistar International Corporation 8.250 11/01/21 625,000 618,590 639,844 Newark Group, Inc. 9.750 03/15/14 850,000 796,863 415,438 Nortek, Inc. 11.000 12/01/13 175,000 174,924 182,875 North American Energy Partners 8.750 12/01/11 1,165,000 1,170,800 1,165,000 Owens Corning, Inc. 9.000 06/15/19 55,000 54,112 61,600 Polypore, Inc. 8.750 05/15/12 1,460,000 1,410,050 1,452,700 Pregis Corporation 12.375 10/15/13 1,000,000 981,490 968,750 Quebecor Media, Inc. 7.750 03/15/16 1,050,000 978,235 1,047,375 RailAmerica, Inc. 9.250 07/01/17 270,000 259,412 287,213 Rental Service Corporation 9.500 12/01/14 500,000 484,112 500,625 Sabre Holdings Corporation 8.350 03/15/16 500,000 455,000 455,625 Seneca Gaming Corporation 7.250 05/01/12 500,000 477,500 487,500 Sheridan Acquisition Corporation 10.250 08/15/11 375,000 370,001 350,156 Speedway Motorsports, Inc. 8.750 06/01/16 70,000 67,898 73,850 Stanadyne Corporation 10.000 08/15/14 1,500,000 1,500,000 1,365,000 Stewart & Stevenson LLC 10.000 07/15/14 1,465,000 1,492,731 1,362,450 T X U Energy Company LLC 10.250 11/01/15 1,250,000 1,260,666 1,012,500 Teck Resources Ltd. 10.750 05/15/19 65,000 61,829 77,675 Tekni-Plex, Inc. 8.750 11/15/13 650,000 653,780 478,563 Tenneco, Inc. 8.125 11/15/15 1,100,000 540,000 1,112,375 Texas Industries, Inc. 7.250 07/15/13 70,000 70,000 68,775 Ticketmaster Entertainment, Inc. 10.750 07/28/16 500,000 500,000 538,750 Titan International, Inc. 8.000 01/15/12 1,070,000 1,062,100 1,048,600 Tube City IMS Corporation 9.750 02/01/15 1,500,000 1,482,506 1,449,375 United Components, Inc. 9.375 06/15/13 1,080,000 1,080,031 1,042,200 United Rentals, Inc. 10.875 06/15/16 125,000 121,479 135,933 Videotron, Ltd. 9.125 04/15/18 40,000 39,373 44,000 Waste Services, Inc. 9.500 04/15/14 1,100,000 1,116,085 1,149,500 ------------ ------------ TOTAL BONDS 36,944,611 36,356,016 ------------ ------------ - --------------------------------------------------------------------------------------------------------------------------------- 31
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
SHARES OR INTEREST DUE PRINCIPAL MARKET CORPORATE PUBLIC SECURITIES:(A) (Continued) RATE DATE AMOUNT COST VALUE ------ -------- ------------ ------------ ------------ COMMON STOCK -- 0.90% Chase Packaging Corporation (B) 9,541 $ -- $ 1,431 CKX, Inc. (B) 97,500 784,875 513,825 Directed Electronics, Inc. (B) 368,560 1,856,534 171,380 El Paso Corporation (B) 65,000 808,362 638,950 ITC^DeltaCom, Inc. (B) 178,666 1,563,328 330,532 Intrepid Potash, Inc. (B) 365 11,680 10,647 Rue21, Inc. (B) 650 12,350 18,259 Supreme Industries, Inc. 125,116 267,319 247,730 ------------ ------------ TOTAL COMMON STOCK 5,304,448 1,932,754 ------------ ------------ Convertible Bonds - 0.02% Citadel Broadcasting Corporation 4.000% 02/15/11 $ 583,000 452,554 37,895 ------------ ------------ TOTAL CONVERTIBLE BONDS 452,554 37,895 ------------ ------------ TOTAL CORPORATE PUBLIC SECURITIES $ 42,701,613 $ 38,326,665 ------------ ------------ TOTAL INVESTMENTS 107.52% $268,312,369 $230,559,648 ------ ------------ ------------ Other Assets 9.52 20,420,149 Liabilities (17.04) (36,542,843) ------ ------------ TOTAL NET ASSETS 100.00% $214,436,954 ====== ============ (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 12/31/09. (D) Defaulted security; interest not accrued. (E) Illiquid securities. At December 31, 2009, the value of these securities amounted to $179,833,791 or 83.87% 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. PIK - Payment-in-kind - --------------------------------------------------------------------------------------------------------------------------------- 32
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
Fair Value/ Fair Value/ Industry Classification Market Value Market Value ------------ ------------ AEROSPACE - 3.96% CONSUMER PRODUCTS - 8.38% A E Company, Inc. $ 3,130,020 Aero Holdings, Inc. $ 2,996,301 Gencorp, Inc. 259,648 Bravo Sports Holding Corporation 2,314,563 P A S Holdco LLC 3,634,205 Custom Engineered Wheels, Inc. 2,542,461 Visioneering, Inc. 1,476,220 Easton-Bell Sports, Inc. 331,600 ------------ G F S I, Inc. 530,888 8,500,093 JohnsonDiversey, Inc. 100,875 ------------ K N B Holdings Corporation 1,255,844 AUTOMOBILE - 5.36% Kar Holdings, Inc. 51,563 American Tire Distributor 830,000 Momentum Holding Co. 489,676 American Axle & Manufacturing Holding, Inc. 633,750 R A J Manufacturing Holdings LLC 2,350,602 Goodyear Tire & Rubber Co. 110,500 Royal Baths Manufacturing Company 1,076,955 Jason, Inc. 240,922 The Tranzonic Companies 3,921,367 Nyloncraft, Inc. 609,375 Walls Industries, Inc. -- Ontario Drive & Gear Ltd. 417,843 ------------ Qualis Automotive LLC 2,244,445 17,962,695 Tenneco, Inc. 1,112,375 ------------ Titan International, Inc. 1,048,600 CONTAINERS, PACKAGING & GLASS - 4.60% Transtar Holding Company 3,195,895 Berry Plastics Corporation 943,125 United Components, Inc. 1,042,200 Chase Packaging Corporation 1,431 ------------ Flutes, Inc. 229,596 11,485,905 Maverick Acquisition Company 647,002 ------------ P I I Holding Corporation 2,990,852 BEVERAGE, DRUG & FOOD - 3.98% Packaging Dynamics Corporation of America 901,500 Aramark Corporation 183,000 Paradigm Packaging, Inc. 2,352,623 Golden County Foods Holding, Inc. 1,823,732 Pregis Corporation 968,750 Hospitality Mints Holding Company 2,102,276 Tekni-Plex, Inc. 478,563 L H D Europe Holding, Inc 24,225 Vitex Packaging Group, Inc. 359,309 Spartan Foods Holding Company 1,905,833 ------------ Specialty Commodities, Inc. 2,502,759 9,872,751 ------------ ------------ 8,541,825 DISTRIBUTION - 1.82% ------------ Duncan Systems, Inc. 1,487,129 BROADCASTING & ENTERTAINMENT - 1.84% F C X Holdings Corporation 2,412,536 Citadel Broadcasting Corporation 37,895 ------------ Clear Channel Worldwide Holdings, Inc. 772,500 3,899,665 CKX, Inc. 513,825 ------------ Interpublic Group of Companies 83,250 DIVERSIFIED/CONGLOMERATE, MANUFACTURING - 8.23% Liberty Media Corporation 952,500 A H C Holding Company, Inc. 2,781,245 Sinclair Television Group, Inc. 442,000 Activant Solutions, Inc. 141,563 Speedway Motorsports, Inc. 73,850 Arrow Tru-Line Holdings, Inc. 1,468,334 Workplace Media Holding Co. 1,068,576 C D N T, Inc. 1,366,398 ------------ Douglas Dynamics LLC 949,400 3,944,396 Great Lakes Dredge & Dock Corporation 995,000 ------------ Headwaters, Inc. 522,500 BUILDINGS & REAL ESTATE - 1.13% K P I Holdings, Inc. 1,579,892 K W P I Holdings Corporation 2,152,630 MEGTEC Holdings, Inc. 2,152,639 Owens Corning, Inc. 61,600 Milwaukee Gear Company 2,170,950 Texas Industries, Inc. 68,775 Nortek, Inc. 189,000 TruStile Doors, Inc. 151,268 Polypore, Inc. 1,452,700 ------------ Postle Aluminum Company LLC 67,828 2,434,273 Trimas Corporation 73,875 ------------ Truck Bodies & Equipment International 577,385 CHEMICAL, PLASTICS & RUBBER - 0.37% Xaloy Superior Holdings, Inc. 1,161,422 Capital Specialty Plastics, Inc. 795,663 ------------ ------------ 17,650,131 795,663 ------------ ------------ - ---------------------------------------------------------------------------------------------------------------------------------- 33
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
Fair Value/ Fair Value/ Industry Classification Market Value Market Value ------------ ------------ DIVERSIFIED/CONGLOMERATE, SERVICE - 12.10% K H O F Holdings, Inc. $ 2,620,493 ACCO Brands Corporation $ 109,750 Monessen Holding Corporation 1,671,395 A W X Holdings Corporation 1,349,664 Stanton Carpet Holding Co. 2,131,607 Advanced Technologies Holdings 2,602,531 Transpac Holdings Company 1,507,055 Affinia Group, Inc. 48,500 U M A Enterprises, Inc. 1,712,555 Apex Analytix Holding Corporation 1,969,920 U-Line Corporation 1,699,772 A S C Group, Inc. 2,554,999 Wellborn Forest Holding Co. 1,463,063 Clough, Harbour, and Associates 2,711,148 ------------ Crane Rental Corporation 2,588,062 19,509,342 Diversco, Inc./DHI Holdings, Inc. 1,643,701 ------------ Dwyer Group, Inc. 1,506,615 LEISURE, AMUSEMENT, ENTERTAINMENT - 3.21% Insurance Claims Management, Inc. 199,850 A M C Entertainment, Inc. 1,374,175 Interline Brands, Inc. 1,306,500 Bally Total Fitness Holding Corporation 10 Mail Communications Group, Inc. 1,352,713 Boyd Gaming Corporation 309,188 Nesco Holdings Corporation 2,868,921 Harrah's Operating Escrow LLC 343,688 Northwest Mailing Services, Inc. 2,626,752 MGM Mirage, Inc. 131,888 Pearlman Enterprises, Inc. -- Savage Sports Holding, Inc. 2,732,528 Sabre Holdings Corporation 455,625 Seneca Gaming Corporation 487,500 Videotron, Ltd. 44,000 Ticketmaster Entertainment, Inc. 538,750 ------------ Tunica-Biloxi Gaming Authority 968,844 25,939,251 ------------ ------------ 6,886,571 ELECTRONICS - 0.64% ------------ Connecticut Electric, Inc. 1,196,977 MACHINERY - 10.03% Directed Electronics, Inc. 171,380 A S A P Industries LLC 1,568,237 ------------ Davis-Standard LLC 2,676,991 1,368,357 E S P Holdco, Inc. 2,222,478 ------------ K-Tek Holdings Corporation 2,756,684 FARMING & AGRICULTURE - 1.51% M V I Holding, Inc. 1,233,003 Waggin' Train Holdings LLC 3,245,365 Manitowoc Company, Inc. 188,000 ------------ Navis Global 226,038 3,245,365 NetShape Technologies, Inc. 1,152,592 ------------ Pacific Consolidated Holdings LLC 1,140,696 FINANCIAL SERVICES - 0.69% Power Services Holding Company 2,521,551 Cemex Finance LLC 386,588 R E I Delaware Holding, Inc. 2,643,896 Ford Motor Credit Co. 384,784 Safety Speed Cut Manufacturing Company, Inc. 197,881 General Motors Acceptance Corporation, Inc. 94,255 Stanadyne Corporation 1,365,000 Hawker Beechcraft Acquisition Co. 620,000 Stewart & Stevenson LLC 1,362,450 Highgate Capital LLC -- Supreme Industries, Inc. 247,730 ------------ ------------ 1,485,627 21,503,227 ------------ ------------ HEALTHCARE, EDUCATION & CHILDCARE - 3.66% MEDICAL DEVICES/BIOTECH - 4.65% American Hospice Management Holding LLC 3,934,269 Coeur, Inc. 1,367,133 F H S Holdings LLC 1,195,313 E X C Acquisition Corporation 225,244 H C A, Inc. 38,588 ETEX Corporation -- Synteract Holdings Corporation 2,673,077 MedSystems Holdings LLC 1,399,073 Touchstone Health Partnership -- MicroGroup, Inc. 3,298,539 ------------ OakRiver Technology, Inc. 1,148,949 7,841,247 Precision Wire Holding Company 2,540,181 ------------ TherOX, Inc. -- HOME & OFFICE FURNISHINGS, HOUSEWARES, ------------ AND DURABLE CONSUMER PRODUCTS - 9.10% 9,979,119 Connor Sport Court International, Inc. 2,613,863 ------------ H M Holding Company -- Home Decor Holding Company 2,303,554 Justrite Manufacturing Acquisition Co. 1,785,985 - ---------------------------------------------------------------------------------------------------------------------------------- 34
MassMutual Corporate Investors CONSOLIDATED SCHEDULE OF INVESTMENTS December 31, 2009
Fair Value/ Fair Value/ Industry Classification Market Value Market Value ------------ ------------ MINING, STEEL, IRON & NON PRECIOUS METALS - 1.86% TELECOMMUNICATIONS - 3.20% T H I Acquisition, Inc. $ 2,453,880 All Current Holding Company $ 1,302,834 Teck Resources Ltd. 77,675 Cricket Communications, Inc. 753,750 Tube City IMS Corporation 1,449,375 Intelsat Bermuda Ltd. 1,344,525 ------------ ITC^DeltaCom, Inc. 330,532 3,980,930 Telecorps Holdings, Inc. 3,124,711 ------------ ------------ NATURAL RESOURCES - 1.25% 6,856,352 Appleton Papers, Inc. 256,414 ------------ Cenveo Corporation 1,305,000 TRANSPORTATION - 2.46% Intrepid Potash, Inc. 10,647 NABCO, Inc. 468,750 SandRidge Energy, Inc. 1,103,700 Navistar International Corporation 639,844 ------------ RailAmerica, Inc. 287,213 2,675,761 Tangent Rail Corporation 3,870,938 ------------ ------------ OIL & GAS - 3.76% 5,266,745 Atlas Pipeline Partners 221,250 ------------ Basic Energy Services 187,313 UTILITIES - 1.84% Brigham Exploration Co. 1,197,000 Dynegy Holdings, Inc. 720,025 Chaparral Energy, Inc. 1,323,750 El Paso Corporation 638,950 Denbury Resources, Inc. 53,375 Inergy LP 477,050 International Offshore Services LLC 2,626,531 Markwest Energy Operating Co. 1,102,150 Mariner Energy, Inc. 178,400 T X U Energy Company LLC 1,012,500 North American Energy Partners 1,165,000 ------------ Total E & S, Inc. 1,108,008 3,950,675 ------------ ------------ 8,060,627 WASTE MANAGEMENT / POLLUTION - 1.82% ------------ Terra Renewal LLC 2,188,448 PHARMACEUTICALS - 1.29% Torrent Group Holdings, Inc. 559,756 CorePharma LLC 2,765,048 Waste Services, Inc. 1,149,500 ------------ ------------ 2,765,048 3,897,704 ------------ ------------ PUBLISHING/PRINTING - 0.90% TOTAL INVESTMENTS - 107.52% $230,559,648 Gannett Company, Inc. 129,063 ============ Newark Group, Inc. 415,438 Quebecor Media, Inc. 1,047,375 Sheridan Acquisition Corporation 350,156 ------------ 1,942,032 ------------ RETAIL STORES - 0.84% Great Atlantic & Pacific Tea Co. 78,938 Michaels Stores, Inc. 789,375 Olympic Sales, Inc. 199,361 Pinnacle Foods Finance LLC 76,125 Rental Service Corporation 500,625 Rue21, Inc. 18,259 United Rentals, Inc. 135,933 ------------ 1,798,616 ------------ TECHNOLOGY - 3.04% Advanced Micro Devices, Inc. 746,250 Compucom Systems, Inc. 1,353,275 J D A Software Group, Inc. 77,063 Sencore Holding Company 1,643,047 Smart Source Holdings LLC 2,512,770 Viasystems, Inc. 187,250 ------------ 6,519,655 ------------ - ---------------------------------------------------------------------------------------------------------------------------------- 35
MASSMUTUAL CORPORATE INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 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. 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 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 36 MASSMUTUAL CORPORATE INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 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 determining 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 $179,833,791 (83.87% of net assets) as of December 31, 2009 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, 2009, subject to discount where appropriate, and are approved by the Trustees. Short-term securities with more than sixty days to maturity are valued at fair value and short-term securities having a maturity of sixty days or less are valued at amortized cost, which approximates market value. In accordance with the authoritative guidance on fair value measurements and disclosures under accounting principles generally accepted in the United States of America ("U.S. GAAP"), the Trust discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1: quoted prices in active markets for identical securities Level 2: other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Level 3: significant unobservable inputs (including the Trust's own assumptions in determining the fair value of investments) The 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, 2009: ASSETS: TOTAL LEVEL 1 LEVEL 2 LEVEL 3 ----------------------------------------------------------------------------- Restricted Securities $192,232,983 $ -- $11,449,792 $180,783,191 Public Securities 38,326,665 1,932,754 36,393,901 10 Short-term Securities -- -- -- -- ----------------------------------------------------------------------------- TOTAL $230,559,648 $1,932,754 $47,843,693 $180,783,201 ----------------------------------------------------------------------------- 37 MASSMUTUAL CORPORATE INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 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 12/31/2008 $182,799,290 $ 260 $ -- $182,799,550 Total gains or losses (realized/ unrealized) included in earnings* (15,529,769) (250) -- (15,530,019) Purchases, sales, issuances & settlements (net) 13,513,670 -- -- 13,513,670 Transfers in and/or out of Level 3 -- -- -- -- ----------------------------------------------------------------------------- ENDING BALANCE AT 12/31/2009 $180,783,191 $ 10 $ -- $180,783,201 ----------------------------------------------------------------------------- *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 12/31/09 is $(21,466,374). 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, 2009, 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 nonqualified income that it may receive as the result of operating a trade or business, e.g. the Trust's pro rata share of income allocable to the Trust by a partnership operating company. The Trust's violation of this limitation could result in the loss of its status as a regulated investment company, thereby subjecting all of its net income and capital gains to corporate taxes prior to distribution to its shareholders. The Trust, from time-to-time, identifies investment opportunities in the securities of entities that could cause such trade or business income to be allocable to the Trust. The MMCI Subsidiary Trust (described in Footnote 1, above) was formed in order to allow investment in such securities without adversely affecting the Trust's status as a regulated investment company. Net investment income and net realized gains or losses of the Trust as presented under accounting principles generally accepted in the United States of America may differ from distributable taxable earnings due to earnings from the MMCI Subsidiary Trust as well as certain permanent and temporary differences in the recognition of income and realized gains or losses on certain investments. Permanent differences will result in reclassifications to the capital accounts. In 2009, the Trust increased undistributed net investment income and decreased additional paid in capital by a total of $128,687 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, 2009 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, 2009, the MMCI Subsidiary Trust has accrued income tax expense of $42,167. 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, 2009, the MMCI Subsidiary Trust has a deferred tax liability of $165,290. Beginning with the 2009 annual financial statements, the Trust recognizes a tax benefit from an uncertain position only if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authority's widely understood administrative practices and precedents. If this threshold is met, the Trust measures the tax benefit as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Trust has evaluated and determined that the tax positions did not have a material effect on the Trust's financial position and results of operations for the year ended December 31, 2009. 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, 2009, the components of distributable earnings on a tax basis included $2,315,840 of undistributed ordinary income and $1,198,988 of a net realized capital loss carry forward. The loss carry forward 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. The difference between net taxable undistributed earnings to GAAP is $318,674 comprised of various timing differences. The tax character of distributions declared during the years ended December 31, 2009 and 2008 was as follows: DISTRIBUTIONS PAID FROM: 2009 2008 --------------------------- Ordinary Income $ 20,168,880 $ 20,078,868 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, 2009, there were no credit balances used to reduce custodian fees. 3. INVESTMENT SERVICES CONTRACT A. SERVICES: Under an Investment Services Contract (the "Contract") with the Trust, Babson Capital agrees to use its best efforts to present to the Trust a continuing and suitable investment program consistent with the investment objectives and policies of the Trust. Babson Capital represents the Trust in any negotiations with issuers, investment banking firms, securities brokers or dealers and other institutions or investors relating to the Trust's investments. Under the Contract, Babson Capital also provides administration of the day-to-day operations of the Trust and provides the Trust with office space and office equipment, accounting and bookkeeping services, and necessary executive, clerical and secretarial personnel for the performance of the foregoing services. 39 MASSMUTUAL CORPORATE INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 B. FEE: For its services under the Contract, Babson Capital is paid a quarterly investment advisory fee of 0.3125% of the net asset value of the Trust as of the last business day of each fiscal quarter, which is approximately equal to 1.25% annually. A majority of the Trustees, including a majority of the Trustees who are not interested persons of the Trust or of Babson Capital, approved 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, 2009, the Trust incurred total interest expense on the Note of $1,584,000. The Trust may redeem the Note, in whole or in part, at the principal amount proposed to be redeemed together with the accrued and unpaid interest thereon through the redemption date plus a Make Whole Premium. The Make Whole Premium equals the excess of (i) the present value of the scheduled payments of principal and interest which the Trust would have paid but for the proposed redemption, discounted at the rate of interest of U.S. Treasury obligations whose maturity approximates that of the Note plus 0.50% over (ii) the principal of the Note proposed to be redeemed. 5. PURCHASES AND SALES OF INVESTMENTS FOR THE YEAR ENDED COST OF INVESTMENTS 12/31/2009 ACQUIRED ----------------------------------------------------------------------------- Corporate restricted securities $46,383,194 Corporate public securities 6,975,796 ----------------------------------------------------------------------------- PROCEEDS FROM SALES OR MATURITIES ----------------------------------------------------------------------------- Corporate restricted securities $33,834,513 Corporate public securities 28,076,484 ----------------------------------------------------------------------------- The aggregate cost of investments is substantially the same for financial reporting and federal income tax purposes as of December 31, 2009. The net unrealized depreciation of investments for financial reporting and federal tax purposes as of December 31, 2009 is $37,752,721 and consists of $18,028,116 appreciation and $55,780,837 depreciation. 6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED) AMOUNT PER SHARE ----------------------------------------------------------------------------- MARCH 31, 2009 ----------------------------------------------------------------------------- Investment income $ 6,499,219 Net investment income 5,338,941 $ 0.57 Net realized and unrealized gain on investments (net of taxes) (13,236,961) (1.42) ----------------------------------------------------------------------------- JUNE 30, 2009 ----------------------------------------------------------------------------- Investment income $ 5,866,032 Net investment income 4,582,972 $ 0.49 Net realized and unrealized gain on investments (net of taxes) 12,423,184 1.33 ----------------------------------------------------------------------------- SEPTEMBER 30, 2009 ----------------------------------------------------------------------------- Investment income $ 6,037,608 Net investment income 4,808,143 $ 0.52 Net realized and unrealized gain on investments (net of taxes) 6,172,267 0.66 ----------------------------------------------------------------------------- DECEMBER 31, 2009 ----------------------------------------------------------------------------- Investment income $ 5,688,367 Net investment income 4,440,356 $ 0.47 Net realized and unrealized gain on investments (net of taxes) 795,699 0.09 ----------------------------------------------------------------------------- 40 MASSMUTUAL CORPORATE INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 7. AGGREGATE REMUNERATION PAID TO OFFICERS, TRUSTEES AND THEIR AFFILIATED PERSONS For the year ended December 31, 2009 the Trust paid its Trustees aggregate remuneration of $210,250. 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. Noreen 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, 2009, Babson Capital paid the compensation of the Chief Compliance Officer of the Trust. Mr. Noreen, one of the Trust's Trustees, is an "affiliated person" (as defined by the 1940 Act) of MassMutual and Babson Capital. The Trust did not make any payments to Babson Capital for the year ended December 31, 2009, other than amounts payable to Babson Capital pursuant to the Contract. 8. SUBSEQUENT EVENTS The Trust has evaluated the possibility of subsequent events existing in this report through February 17, 2010. The Trust has determined that there are no material events that would require recognition or disclosure in this report through this date. 41 MASSMUTUAL CORPORATE INVESTORS REPORT OF INDEPENDENT REGISTERED PUBLIC ACOUNTING 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, 2009, 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, 2009 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, 2009, the results of its operations and cash flows for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP Boston, Massachusetts February 17, 2010 42 MASSMUTUAL CORPORATE INVESTORS INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATIONS OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ CLIFFORD M. NOREEN* (52) Trustee Term expires President (since 2008), Vice 2 President (since 2009), Senior (since 2009) 2012 Chairman (2007-2008), Vice President (1996-2009), MassMutual Member of the Board of HYP Management LLC (LLC Corporate Investors Chairman Managers (since 2006), Manager); Director (since 1500 Main Street (since 2009) Managing Director (since 2005), MassMutual Corporate P.O. Box 15189 2000), Babson Capital; Value Limited (investment Springfield, MA 01115-5189 President (2005-2009), Vice company); Director (since President (1993-2005) of 2005), MassMutual Corporate the Trust. Value Partners Limited (investment company); Senior Vice President (1996-2008), MMHC Investment LLC (passive investor); Managing Director (2006-2009), MassMutual Capital Partners LLC (investment company); Director (since 2008), Jefferies Finance LLC (a finance company); Chairman and Chief Executive Officer (since 2009), Manager (since 2007), MMC Equipment Finance LLC; Chairman (since 2009), Trustee (since 2005); President (2005-2009), MMCI Subsidiary Trust and MMPI Subsidiary Trust; Chairman (since 2009), Trustee (since 2009), President (2005-2009), Vice President (1993-2005), MassMutual Participation Investors (closed-end investment company advised by Babson Capital); and Member of Investment Committee (since 1999), Diocese of Springfield. * Mr. Noreen is classified as an "interested person" of each Trust and Babson Capital (as defined by the Investment Act of 1940, as amended) because of his position as an officer of each Trust and President of Babson Capital.
43 MASSMUTUAL CORPORATE INVESTORS INTERESTED TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATIONS OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ ROBERT E. JOYAL* (65) Trustee Term expires President (2001-2003) of 57 President (1999-2003) and (since 2003) 2010 Babson Capital. Trustee (since 2003), of the MassMutual Trust; Director (since 2006), Corporate Investors Jefferies Group, Inc. 1500 Main Street (financial services); Director P.O. Box 15189 (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, (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 INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATIONS OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ WILLIAM J. BARRETT (70) Trustee Term expires President (since 2002), 2 Trustee (since 2006), (since 2006) 2012 Barrett-Gardner MassMutual Participation MassMutual Associates, Inc. Investors (a closed-end Corporate Investors investment company advised by 1500 Main Street Babson Capital); Director P.O. Box 15189 (since 1979), TGC Industries, Springfield, MA 01115-5189 Inc. (geophysical services); Director and Secretary (since 2001 and from 1996-1997), Chase Packaging Corporation (agricultural services); Chairman and Director (since 2000), Rumson-Fair Haven Bank and Trust Company (commercial bank and trust company); and Director (since 1983), Executive Vice President, Secretary and Assistant Treasurer (since 2004), Supreme Industries, Inc. (specialized truck and body manufacturer). DONALD E. BENSON (79) Trustee Term expires Executive Vice President Director (1997-2008), MAIR (since 1986) 2010 and Director (since 1992), Holdings, Inc. (commuter MassMutual Marquette Financial airline holding company); Corporate Investors Companies (financial services); Director (since 1997), First 1500 Main Street Partner (since 1996), Benson California Financial Group, P.O. Box 15189 Family Limited Partnership Inc. (bank holding company); Springfield, MA 01115-5189 No. 1 and Benson Family and Trustee (since 1988), Limited Partnership No. 2 MassMutual Participation (investment partnerships). Investors (closed-end investment company advised by Babson Capital).
45 MASSMUTUAL CORPORATE INVESTORS INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATIONS OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ MICHAEL H. BROWN (53) Trustee Term expires Private Investor; and 2 Trustee (since 2005), (since 2005) 2011 Managing Director (1994 MassMutual Participation MassMutual -2005), Morgan Stanley. Investors (a closed-end Corporate Investors investment company advised by 1500 Main Street Babson Capital); Independent P.O. Box 15189 Director (since 2006), Invicta Springfield, MA 01115-5189 Holdings LLC and its subsidiaries (a derivative trading company). DONALD GLICKMAN (76) Trustee Term expires Chairman (since 1992), Donald 2 Director (since 1984), Monro (since 1992) 2010 Glickman and Company, Muffler and Brake, Inc. MassMutual Inc. (private investments); (automobile repair service); Corporate Investors and Partner (since 1992), Lead Director (1998-2009), 1500 Main Street J.F. Lehman & Co. (private MSC Software Corp. (simulation 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 INDEPENDENT TRUSTEES
PRINCIPAL PORTFOLIOS POSITION OCCUPATIONS OVERSEEN OTHER NAME (AGE), WITH OFFICE TERM/LENGTH DURING PAST IN FUND DIRECTORSHIPS ADDRESS THE TRUST OF TIME SERVED 5 YEARS COMPLEX HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ MARTIN T. HART (74) Trustee Term expires Private Investor; and 2 Director (since 2004), Texas (since 1991) 2012 President and Director Roadhouse, Inc. (operates MassMutual (since 1983), H Investment restaurant chain); Director Corporate Investors Company LLC (family (since 1999), ValueClick Inc. 1500 Main Street partnership). (internet advertising company); P.O. Box 15189 Director (2002-2009), 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 (72) Trustee Term expires President and Owner (since 34 Trustee (since 2005), MML (since 1998) 2011 2009), Retirement Options Series Investment Fund II (an MassMutual (trains and certifies open-end investment company Corporate Investors retirement coaches); President advised by MassMutual); Trustee 1500 Main Street (2004-2005), Thompson (since 2004), MassMutual P.O. Box 15189 Enterprises Real Estate Premier Funds (an open-end Springfield, MA 01115-5189 Investment. investment company advised by MassMutual); Director (since 1991), ING Series Fund, Inc. (investment company); Director (since 1991), ING Variable Series Fund; Director (since 1991), ING Strategic Allocations Portfolios, Inc. (investment company); Director (1991-2009), ING GET Fund (investment company); and Trustee (since 1998), MassMutual Participation Investors (a closed-end investment company advised by Babson Capital). MALEYNE M. SYRACUSE (53) Trustee Term expires Managing Director (2000- 2 Trustee (since 2007), (since 2007) 2011 2007), JP Morgan Securities, MassMutual Participation MassMutual Inc. (investments and banking). Investors (a closed-end Corporate Investors investment company advised by 1500 Main Street Babson Capital). P.O. Box 15189 Springfield, MA 01115-5189
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 - ------------------------------------------------------------------------------------------------------------------------------------ MICHAEL L. KLOFAS (49) President Since 2009 President (since 2009),Vice President (1998-2009) of the Trust; Managing Director (since 2000), Babson Capital; President (since MassMutual 2009), Vice President (2005-2009), MMCI Subsidiary Trust and MMPI Corporate Investors Subsidiary Trust; President (since 2009), Vice President 1500 Main Street (1998-2009), MassMutual Participation Investors. P.O. Box 15189 Springfield, MA 01115-5189 PATRICIA J. WALSH (44) Vice Since 2008 Vice President, Secretary, and Chief Legal Officer (since 2008) President, of the Trust; Corporate Vice President and Associate General MassMutual Secretary, Counsel (since 2005), MassMutual; General Counsel and Secretary Corporate Investors and Chief (since 2008), Babson Capital; Secretary (since 2008), MMCI 1500 Main Street Legal Officer Subsidiary Trust and MMPI Subsidiary Trust; and Vice President, P.O. Box 15189 Secretary, and Chief Legal Officer (since 2008), MassMutual Springfield, MA 01115-5189 Participation Investors. JAMES M. ROY (47) Vice Since 2005 Vice President and Chief Financial Officer (since 2005), President Treasurer (2003-2005), and Associate Treasurer (1999-2003) of the MassMutual and Chief Trust; Managing Director (since 2005), and Director (2000-2005), Corporate Investors Financial Babson Capital; Trustee (since 2005), Treasurer (since 2005), and 1500 Main Street Officer Controller (2003-2005), MMCI Subsidiary Trust and MMPI Subsidiary P.O. Box 15189 Trust; and Vice President and Chief Financial Officer (since Springfield, MA 01115-5189 2005), Treasurer (2003-2005) and Associate Treasurer (1999-2003), MassMutual Participation Investors. JOHN T. DAVITT, JR. (42) Comptroller Since 2001 Comptroller (since 2001) of the Trust; Director (since 2000), Babson Capital; Controller (since 2005), MMCI Subsidiary Trust MassMutual and MMPI Subsidiary Trust; and Comptroller (since 2001), Corporate Investors MassMutual Participation Investors. 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189 MELISSA M. LAGRANT (36) Chief Since 2006 Chief Compliance Officer (since 2006) of the Trust; Managing Compliance Director (since 2005), 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 P.O. Box 15189 (2001-2002), Zurich Scudder Investments/Deutsche Asset Springfield, MA 01115-5189 Management; and Chief Compliance Officer (since 2006), MassMutual Participation Investors. DANIEL J. FLORENCE (37) Treasurer Since 2008 Treasurer (since 2008), Associate Treasurer (2006-2008) of the Trust; Associate Director (since 2008), and Analyst (2000-2008), MassMutual Babson Capital; and Treasurer (since 2008), Associate Treasurer Corporate Investors (2006-2008), MassMutual Participation Investors. 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189
48 MASSMUTUAL CORPORATE INVESTORS MEMBERS OF THE BOARD OF DIVIDEND REINVESTMENT AND TRUSTEES SHARE PURCHASE PLAN LEFT TO RIGHT: MassMutual Corporate Investors offers a Donald Glickman Dividend Reinvestment and Share Purchase Chairman, Plan. The Plan provides a simple way for Donald Glickman & Company, Inc. shareholders to add to their holdings in the Trust through the receipt of Robert E. Joyal dividend shares issued by the Trust or Retired President, through the investment of cash dividends Babson Capital Management LLC in Trust shares purchased in the open market. A shareholder may join the Plan William J. Barrett by filling out and mailing an President, authorization card to Shareholder Barrett-Gardner Associates, Inc. Financial Services, Inc., the Transfer Agent. Michael H. Brown* Private Investor Participating shareholders will continue to participate until they notify the Donald E. Benson* Transfer Agent, in writing, of their Executive Vice President desire to terminate participation. and Director, Unless a shareholder elects to Marquette Financial Companies participate in the Plan, he or she will, in effect, have elected to receive Dr. Corine T. Norgaard* dividends and distributions in cash. President, Participating shareholders may also make Retirement Options additional contributions to the Plan from their own funds. Such contributions Clifford M. Noreen may be made by personal check or other President, means in an amount not less than $10 nor Babson Capital Management LLC more than $5,000 per quarter. Cash contributions must be received by the Martin T. Hart Transfer Agent at least five days (but Private Investor no more then 30 days) before the payment date of a dividend or distributions. Maleyne M. Syracuse Private Investor Whenever the Trust declares a dividend *Member of the Audit Committee payable in cash or shares, the Transfer Agent, acting on behalf of each OFFICERS participating shareholder, will take the dividend in shares only if the net asset Clifford M. Noreen value is lower than the market price Chairman plus an estimated brokerage commission as of the close of business on the Michael L. Klofas valuation day. The valuation day is the President last day preceding the day of dividend payment. James M. Roy Vice President & Chief When the dividend is to be taken in Financial Officer shares, the number of shares to be received is determined by dividing the Patricia J. Walsh cash dividend by the net asset value as Vice President, Secretary of the close of business on the & Chief Legal Officer valuation date or, if greater than net asset value, 95% of the closing share Jill A. Fields price. If the net asset value of the Vice President shares is higher than the market value plus an estimated commission, the Michael P. Hermsen Transfer Agent, consistent with Vice President obtaining the best price and execution, will buy shares on the open market at Mary Wilson Kibbe current prices promptly after the Vice President dividend payment date. Richard E. Spencer, II The reinvestment of dividends does not, Vice President in anyway, relieve participating shareholders of any federal, state or Daniel J. Florence local tax. For federal income tax Treasurer purposes, the amount reportable in respect of a dividend received in John T. Davitt, Jr. newly-issued shares of the Trust will be Comptroller the fair market value of the shares received, which will be reportable as Melissa M. LaGrant ordinary income and/or capital gains. Chief Compliance Officer As compensation for its services, the Transfer Agent receives a fee of 5% of any dividend and cash contribution (in no event in excess of $2.50 per distribution per shareholder.) Any questions regarding the Plan should be addressed to Shareholder Financial Services, Inc., Agent for MassMutual Corporate Investors' Dividend Reinvestment and Share Purchase Plan, P.O. Box 173673, Denver, CO 80217-3673. 49 [LOGO] MassMutual Corporate Investors 2009 Annual Report 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, 2009 2008 ---------- ---------- Audit Fees $ 50,000 $ 51,600 Audit-Related Fees 0 6,125 Tax Fees 41,950 39,950 All Other Fees 0 0 ---------- ---------- Total Fees $ 91,950 $ 97,675 ========== ========== NON-AUDIT FEES BILLED TO BABSON CAPITAL AND MASSMUTUAL KPMG LLP KPMG LLP Year Ended Year Ended December 31, December 31, 2009 2008 ---------- ---------- Audit-Related Fees $ 874,597 $ 864,409 Tax Fees 0 0 All Other Fees 350,000 0 ---------- ---------- Total Fees $1,224,597 $ 864,409 ========== ========== 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, and agreed upon procedures reports. Preparation of Federal, state and local income tax returns and tax compliance work are representative of the fees reported in the "Tax Fees" category. The category "All Other Fees" represents fees billed by KPMG for consulting rendered to Babson Capital and MassMutual. The Sarbanes-Oxley Act of 2002 and its implementing regulations allows the Registrant's Audit Committee to establish a pre-approval policy for certain services rendered by the Registrant's independent accountants. During 2009, the Registrant's Audit Committee approved all of the services rendered to the Registrant by KPMG and did not rely on such a pre-approval policy for any such services. The Audit Committee reviewed the aggregate fees billed for professional services rendered by KPMG for 2008 and 2009 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 2008 fees billed represent final 2008 amounts, which may differ from the preliminary figures available as of the filing date of the Registrant's 2009 Annual Form N-CSR and includes, among other things, fees for services that may not have been billed as of the filing date of the Registrant's 2009 Annual Form N-CSR, but are now properly included in the 2008 fees billed to the Registrant, Babson Capital, and MassMutual. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The Registrant maintains an Audit Committee composed exclusively of Trustees of the Registrant who qualify as "independent" Trustees under the current listing standards of the New York Stock Exchange and the rules of 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 an integral part of its investment management responsibility and believes, as a general principle, that proxies should be acted upon (voted or abstained) solely in the best interests of its clients (i.e. in a manner it believes is most likely to enhance the economic value of the underlying securities held in client accounts). To implement this general principle, it is Babson Capital's policy to generally vote proxies in accordance with the recommendations of Institutional Shareholder Services ("ISS"), a recognized authority on proxy voting and corporate governance, or, in cases where ISS has not made any recommendations with respect to a proxy, in accordance with ISS's proxy voting guidelines. Babson Capital recognizes, however, that there may be times when Babson Capital believes that it will be in the best interests of clients holding the securities to (1) vote against ISS's recommendations or (2) in cases where ISS has not provided Babson Capital with any recommendations with respect to a proxy, vote against ISS's proxy voting guidelines. Babson Capital may vote, in whole or part, against ISS's recommendations or ISS's proxy voting guidelines, as applicable if such vote is authorized by the Proxy Voting Policy. The procedures set forth in the Proxy Voting 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"). For purposes of the Proxy Voting Policy, a Material Conflict shall means any position, relationship or interest, financial or otherwise, of Babson Capital (or any person authorized under the Proxy Voting Policy to vote proxies on behalf of Babson Capital) that would or could reasonably be expected to affect Babson Capital's or such person's independence or judgment concerning how to vote proxies. Summary of Babson Capital's Proxy Voting Procedures --------------------------------------------------- Babson Capital has (1) established a Best Execution and Proxy Committee that is responsible for the implementation and governance of the Proxy Voting Policy and (2) designated Proxy Administrators who will receive and post proxies for voting with ISS. In accordance with the Proxy Voting Policy, Babson Capital will generally vote all client proxies for which it has proxy voting discretion in accordance with ISS's recommendation or proxy voting guidelines, unless (i) a person authorized by the Best Execution and Proxy Committee (each a "Proxy Analyst") determines that it is in the clients' best interest to vote against ISS's recommendation or proxy voting guidelines or (ii) Babson Capital is unable or determines not to vote a proxy in accordance with the Proxy Voting Policy. In these cases: if (i) a Proxy Analyst recommends that a proxy should be voted against ISS's recommendation or guidelines, (ii) no other Proxy Analyst reviewing such proxy disagrees with such recommendation, and (iii) no known Material Conflict is identified by the Proxy Analyst(s) or the Proxy Administrator, the Proxy Administrator will vote the proxy or post the proxy for voting in accordance with the Proxy Analyst's recommendation. Otherwise, the proxy is to be submitted to a member of the Best Execution and Proxy Committee, who shall determine how to vote the proxy unless (i) the Proxy Analyst or Proxy Administrator has identified a Babson Capital Material Conflict or (ii) said Best Execution and Proxy Committee member has identified a Material Conflict personal to him or herself or a Babson Capital Material Conflict. In such cases, the proxy shall be submitted to the Best Execution and Proxy Committee, which may authorize a vote against ISS's recommendation or proxy voting guidelines only if the Best Execution and Proxy Committee determines that such vote is in the clients' best interests. No associate, officer, director, or a Board of Managers Member of Babson Capital or its affiliates (other than those assigned such responsibilities under the Proxy Voting Policy) may influence how Babson Capital votes client proxies, unless such person has been requested to provide such assistance by a Proxy Analyst or Best Execution and Proxy Committee member and has disclosed any known Material Conflict. Any pre-vote communications prohibited by the Proxy Voting Policy shall be reported to the Best Execution and Proxy Committee member prior to voting and to Babson Capital's Chief Compliance Officer or General Counsel. Obtaining a Copy of the Policy ------------------------------ Clients may obtain a copy of the Proxy Voting Policy and information about how Babson Capital voted proxies related to their securities, free of charge, by contacting the Chief Compliance Officer, Babson Capital Management LLC, Independence Wharf, 470 Atlantic Avenue, Boston, MA 02210, or calling, toll-free, 1-877-766-0014. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The following disclosure item is made as of the date of this Form N-CSR unless otherwise indicated. PORTFOLIO MANAGER. Michael L. Klofas serves as the President of the Registrant (since 2009) and as one of its Portfolio Managers. Mr. Klofas began his service to the Registrant in 1998 as a Vice President. With over 25 years of industry experience, Mr. Klofas is a Managing Director of the Mezzanine and Private Equity Group of Babson Capital Management LLC ("Babson Capital"). Mr. Klofas joined MassMutual in 1988. Prior to joining MassMutual, he spent two years at a small venture capital firm and two years at a national public accounting firm. At MassMutual and then Babson Capital, Mr. Klofas has analyzed and invested in traditional private placements and high yield public and private bonds, and leveraged bank loans. He also spent three years leading Babson Capital's workout and restructuring activities. Since 1992, 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 Chartered Financial Analyst and Certified Public Accountant designations. Mr. Klofas also presently serves as President of MassMutual Participation Investors, another closed-end management investment company advised by Babson Capital. PORTFOLIO MANAGEMENT TEAM. Mr. Klofas has primary responsibility for overseeing the investment of the Registrant's portfolio, with the day-to-day investment management responsibility of the Registrant's portfolio being shared with the following Babson Capital investment professionals (together with the Portfolio Manager, the "Portfolio Team"). Michael P. Hermsen and Richard E. Spencer, II are each a Vice President of the Registrant and a Managing Director of Babson Capital. Together with Mr. Klofas, they are responsible for managing Babson Capital's Mezzanine and Private Equity Group 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 1998. Previously, he worked at Teachers Insurance and Annuity Association where he was a generalist private placement analyst. At MassMutual and then Babson Capital, Mr. Hermsen has analyzed and invested in traditional private placements, high yield public and private bonds, and leveraged bank loans. He has also been responsible for managing a small portfolio of distressed investments. Since 1992, 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, as well as a Chartered Financial Analyst 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 the Registrant since 2002. At MassMutual and then Babson Capital, Mr. Spencer has analyzed and invested in traditional private placements, high yield public and private bonds, leveraged bank loans, mezzanine debt and private equity. From 1993 to 1999, he was the lead restructuring professional at Babson Capital. Since 1999, Mr. Spencer has focused on originating, analyzing, structuring and documenting 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, as well as a Chartered Financial Analyst designation. 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 $108.9 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 1 $16.1 million 1 $16.1 million ----------------------------------------------------------------------------------------- Other Accounts 0 N/A 0 N/A ----------------------------------------------------------------------------------------- Jill A. Registered Investment Fields Companies 3 $569.5 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles 1 $74.7 million 1 $74.7 million ----------------------------------------------------------------------------------------- Other Accounts (C) 5 $534.5 million 0 N/A ----------------------------------------------------------------------------------------- Michael P. Registered Investment Hermsen Companies 1 $108.9 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles (D) 5 $992 million 5 $992 million ----------------------------------------------------------------------------------------- Other Accounts 0 N/A 0 N/A ----------------------------------------------------------------------------------------- Michael L. Registered Investment Klofas Companies 1 $108.9 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles (D) 5 $992 million 5 $992 million ----------------------------------------------------------------------------------------- Other Accounts 0 N/A 0 N/A ----------------------------------------------------------------------------------------- Richard E. Registered Investment Spencer, II Companies 1 $108.9 million 0 N/A ----------------------------------------------------------------------------------------- Other Pooled Investment Vehicles (D) 5 $992 million 5 $992 million ----------------------------------------------------------------------------------------- Other Accounts 0 N/A 0 N/A
(A) Account asset size has been calculated as of December 31, 2009. (B) Mr. Noreen, as 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 and C.M. Life Insurance Company; however these assets are not represented in the table above. (D) Messrs. Hermsen, Klofas and Spencer manage private placement mezzanine debt securities for the general investment account of Massachusetts Mutual Life Insurance Company and C.M. Life Insurance Company; however these assets are not represented in the table above. MATERIAL CONFLICTS OF INTEREST. The potential for material conflicts of interest may exist as the members of the Portfolio Team have responsibilities for the day-to-day management of multiple advisory accounts. These conflicts may be heightened to the extent the individual, Babson Capital and/or an affiliate has an investment in one or more of such accounts or an interest in the performance of one or more of such accounts. Babson Capital has identified (and summarized below) areas where material conflicts of interest are most likely to arise, and has adopted polices and procedures that it believes are reasonably designed to address such conflicts. Babson Capital or its affiliates, including MassMutual and its affiliates, may from time to time, acting as principal, buy securities or other investments for itself from or sell securities or other investments it owns to its advisory clients. Likewise, Babson Capital may either directly or on behalf of MassMutual, purchase and/or hold securities or other investments that are subsequently sold or transferred to advisory clients. Babson Capital has a conflict of interest in connection with a transaction where it or an affiliate is acting as principal since it may have an incentive to favor itself or its affiliates over its advisory clients in connection with the transaction. To address these conflicts of interest, Babson Capital has adopted certain policies and procedures, including but not limited to policies and procedures on transactions with affiliates. Any such transaction will be consistent with Babson Capital's fiduciary obligation to act in the best interests of its clients, including its ability to obtain best execution in connection with the transaction, and will be in compliance with applicable legal and regulatory requirements. Babson Capital may effect cross-trades on behalf of its advisory clients whereby one advisory client buys securities or other investments from or sells securities or other investments to another advisory client. Babson Capital may also effect cross-transactions involving advisory accounts or funds in which it or its affiliates, including MassMutual, and their respective employees, have an ownership interest or for which Babson Capital is entitled to earn a performance or incentive fee. As a result, Babson Capital has a conflict of interest in connection with the cross-transaction since it may have an incentive to favor the advisory client or fund in which it or its affiliate has an ownership interest and/or is entitled to a performance or incentive fee. To address these conflicts of interest, Babson Capital has adopted certain policies and procedures, including but not limited to policies and procedures on transactions with affiliates. Any such cross-transaction will be consistent with Babson Capital's fiduciary obligation to act in the best interests of each of its advisory clients, including its ability to obtain best execution for each advisory client in connection with the cross-trade transaction, and will be in compliance with applicable legal and regulatory requirements. Babson Capital will not receive a commission or any other remuneration (other than its advisory fee) for effecting cross-transactions between advisory clients. Babson Capital may invest client assets in securities or other investments that are also held by (i) Babson Capital or its affiliates, including MassMutual, (ii) other Babson Capital advisory accounts, (iii) funds or accounts in which Babson Capital or its affiliates or their respective employees have an ownership or economic interest or (iv) employees of Babson Capital or its affiliates. Babson Capital may also, on behalf of its advisory clients, invest in the same or different securities or instruments of issuers in which (i) Babson Capital or its affiliates, including MassMutual, (ii) other Babson Capital advisory accounts, (iii) funds or accounts in which Babson Capital, its affiliates, or their respective employees have an ownership or economic interest or (iv) employees of Babson Capital or its affiliates, have an ownership interest as a holder of the debt, equity or other instruments of the issuer. Babson Capital has a conflict of interest in connection with any such transaction since investments by its advisory clients may directly or indirectly benefit Babson Capital and/or its affiliates and employees by potentially increasing the value of the securities or instruments it holds in the issuer. Any investment by Babson Capital on behalf of its advisory clients will be consistent with its fiduciary obligations to act in the best interests of its advisory clients, and otherwise be consistent with such clients' investment objectives and restrictions. Babson Capital or its affiliates may also recommend that clients invest in registered or unregistered investment companies, including private investment funds such as hedge funds, private equity funds or structured funds, (i) advised by Babson Capital or an affiliate, (ii) in which Babson Capital, an affiliate or their respective employees has an ownership or economic interest or (iii) with respect to which Babson Capital or an affiliate has an interest in the entity entitled to receive the fees paid by such funds. Babson Capital has a conflict of interest in connection with any such recommendation since it may have an incentive to base its recommendation to invest in such investment companies or private funds on the fees that Babson Capital or its affiliates would earn as a result of the investment by its advisory clients in the investment companies or private funds. Any recommendation to invest in a Babson Capital advised fund or other investment company will be consistent with Babson Capital's fiduciary obligations to act in the best interests of its advisory clients, consistent with such clients' investment objectives and restrictions. Babson Capital may, in certain limited circumstances, offer to clients that invest in private investment funds that it advises an equity interest in entities that receive advisory fees and carried profits interest from such funds. Babson Capital may permit certain of its portfolio managers and other employees to invest in private investment funds advised by Babson Capital or its affiliates and/or share in the performance or incentive fees received by Babson Capital from such funds. If the portfolio manager or other employee was responsible for both the portfolio management of the private fund and other Babson Capital advisory accounts, such person would have a conflict of interest in connection with investment decisions since the person may have an incentive to direct the best investment ideas, or to allocate trades, in favor of the fund in which he or she is invested or otherwise entitled to share in the performance or incentive fees received from such fund. To address these conflicts of interest, Babson Capital has adopted a policy governing side by side management of private investment funds and other advisory accounts, which policy requires, among others things, that Babson Capital treat each of its advisory clients in a manner consistent with its fiduciary obligations and prohibits Babson Capital from favoring any particular advisory account as a result of the ownership or economic interests of Babson Capital, its affiliates or employees, in such advisory account. Any investment by a Babson Capital employee in one of its private funds is also governed by Babson Capital's employee co-investment policy. As noted above, Babson Capital's portfolio managers are often responsible for the day-to-day management of multiple accounts, including, among others, separate accounts for institutional clients, closed-end and open-end registered investment companies, and/or private investment funds (such as hedge funds, private equity funds, and structured funds), as well as for proprietary accounts of Babson Capital and its affiliates, including MassMutual and its affiliates. The potential for material conflicts of interest exist whenever a portfolio manager has responsibility for the day-to-day management of multiple advisory accounts. These conflicts may be heightened to the extent a portfolio manager is responsible for managing a proprietary account for Babson Capital or its affiliates or where the portfolio manager, Babson Capital and/or an affiliate has an investment in one or more of such accounts or an interest in the performance of one or more of such accounts (e.g., through the receipt of a performance or incentive fee). Such potential conflicts include those relating to allocation of investment opportunities. For example, it is possible that an investment opportunity may be suitable for more than one account managed by Babson Capital, but may not be available in sufficient quantities for all accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by multiple accounts. A conflict arises where the portfolio manager has an incentive to treat an account preferentially because the account pays Babson Capital or its affiliates a performance-based fee or the portfolio manager, Babson Capital or an affiliate has an ownership or other economic interest in the account. As noted above, Babson Capital also acts as an investment manager for certain of its affiliates, including MassMutual. These affiliate accounts co-invest jointly and concurrently with Babson Capital's other advisory clients and therefore share in the allocation of such investment opportunities. To address these conflicts of interest associated with the allocation of trading and investment opportunities, Babson Capital has adopted an investment allocation policy and trade allocation procedures that govern the allocation of portfolio transactions and investment opportunities across multiple advisory accounts, including affiliated accounts. In addition, as noted above, to address these conflicts of interest, Babson Capital has adopted a policy governing side-by-side management of private investment funds and other advisory accounts, which policy requires, among others things, that Babson Capital treat each of its advisory clients in a manner consistent with its fiduciary obligations and prohibits Babson Capital from favoring any particular advisory account as a result of the ownership or economic interests of Babson Capital, its affiliates or employees, in such advisory accounts. Any investment by a Babson Capital employee in one of its private funds is also governed by Babson Capital's employee co-investment policy. Potential material conflicts of interest may also arise related to the knowledge and timing of an account's trades, investment opportunities and broker selection. Babson Capital and its portfolio managers have information about the size, timing and possible market impact of the trades of each account they manage. It is possible that portfolio managers could use this information for their personal advantage and/or the advantage or disadvantage of various accounts which they manage. For example, a portfolio manager could, or cause a favored account to, "front run" an account's trade or sell short a security for an account immediately prior to another accounts sale of that security. To address these conflicts, Babson Capital has adopted policies and procedures and a Code of Ethics governing employees' personal securities transactions, the use of short sales, and side-by-side management of private investment funds and other advisory accounts. Potential material conflicts of interest may also arise if a trade error occurs in a client account. A trade error is deemed to occur if there is a deviation by Babson Capital from the applicable standard of care in connection with the placement, execution or settlement of a trade for an advisory account that results in (1) Babson Capital purchasing securities not permitted or authorized by a client's investment advisory agreement or otherwise failing to follow a client's specific investment directives; (2) Babson Capital purchasing or selling the wrong security or the wrong amount of securities on behalf of a client's account; or (3) Babson Capital purchasing or selling securities for, or allocating securities to, the wrong client account. When correcting these errors, conflicts of interest between Babson Capital and its advisory accounts may arise as decisions are made on whether to cancel, reverse or reallocate the erroneous trades. In order to address these conflicts, Babson Capital has adopted policies and procedures governing the resolution of trading errors, and will follow these policies and procedures in order to ensure that trade errors are handled promptly and appropriately and that no client account is harmed by an erroneous trade. With respect to securities transactions for most of the accounts it manages, Babson Capital determines which broker to use to execute each order, consistent with its fiduciary duty to seek best execution of the transaction. Babson Capital manages certain accounts, however, for clients who limit its discretion with respect to the selection of brokers or direct it to execute such client's transaction through a particular broker. In these cases, trades for such an account in a particular security may be placed separately from, rather than aggregated with, those in the same security for other accounts. Placing separate transaction orders for a security may temporarily affect the market price of the security or otherwise affect the execution of the transaction to the possible detriment of one or more of the other account(s) involved. Babson Capital has policies and procedures that address best execution and directed brokerage arrangements. Babson Capital and its portfolio managers or employees may have other actual or potential conflicts of interest in managing an advisory account, and the list above is not a complete description of every conflict of interest that could be deemed to exist. COMPENSATION. The current Babson Capital compensation and incentive program for investment professionals is designed to attract, motivate and retain high-performing individuals. To help Babson Capital make informed decisions, Babson Capital participates in annual compensation surveys of investment management firms using McLagan Partners, in addition to other industry specific resources. The firms selected for periodic peer-group comparisons typically have similar asset size or business mix. Annually, a review is conducted of total compensation versus market, to ensure that individual pay is competitive with the defined overall market. The compensation package for the members of the Portfolio Team is comprised of a market-driven base salary, a performance-driven annual bonus, and discretionary long-term incentives. The performance-driven bonus is based on the performance of the accounts managed by the members of the Portfolio Team relative to appropriate benchmarks, including with respect to the Registrant, to the Russell 2000 Index and Lehman Brothers U.S. Corporate High Yield Index. Performance of the Registrant, like other accounts Portfolio Team members manage, are evaluated on a pre-tax basis, and are reviewed over one and three-year periods, with greater emphasis given to the latter. There are other factors that affect bonus awards to a lesser extent, such as client satisfaction, teamwork, the assets under management, and the overall success of Babson Capital. Such factors are considered as a part of the overall annual bonus evaluation process by the management of Babson Capital. Long-Term incentives are designed to share with participants the longer-term value created in Babson Capital. Long-term incentives may take the form of deferred cash awards (including deferred cash awards that provide a portfolio manager with the economic equivalent of a "shareholder" interest in Babson Capital by linking the value of the award to a formula which ties to the value of the business), and/or, in the case of a portfolio manager who manages a private investment fund with a performance fee, a deferred cash award or a direct profit sharing interest that results in the portfolio manager receiving amounts based on the amount of the performance fee paid by such fund. These long-term incentives vest over time and are granted annually, based upon the same criteria used to determine the performance-driven annual bonus detailed above. Because the Portfolio Team members are generally responsible for multiple accounts (including the Registrant), they are compensated on the overall performance of the accounts that they manage, rather than a specific account, except for the portion of compensation relating to any performance fee award. BENEFICIAL OWNERSHIP. As of December 31, 2009, 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 $10,001-$50,000 * Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended. (Shares "beneficially owned" include the number of shares of the Registrant represented by the value of a Registrant-related investment option under Babson Capital's non-qualified deferred compensation plan for certain officers of Babson Capital (the "Plan"). The Plan has an investment option that derives its value from the market value of the Registrant's shares. However, neither the Plan nor the 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/ Michael L. Klofas ---------------------------------- Michael L. Klofas, President ---------------------------------- Date: March 8, 2010 ---------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ Michael L. Klofas ---------------------------------- Michael L. Klofas, President ---------------------------------- Date: March 8, 2010 ---------------------------------- By: /s/ James M. Roy ---------------------------------- James M. Roy, Vice President and Chief Financial Officer ---------------------------------- Date: March 8, 2010 ---------------------------------- EX-99.31.1 2 exh99-311_16739.txt EXECUTIVE OFFICER CERTIFICATION EXHIBIT-99.31.1 --------------- CERTIFICATION ------------- ITEM 12(a)(2) PRINCIPAL EXECUTIVE OFFICER CERTIFICATION I, Michael L. Klofas, certify that: 1. I have reviewed this report on Form N-CSR of MassMutual Corporate Investors; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer(s) and I have disclosed to the Registrant's auditors and the Audit Committee of the Registrant's Board of Directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: March 8, 2010 /s/ Michael L. Klofas - -------------------------------- Michael L. Klofas President MassMutual Corporate Investors EXHIBIT-99.31.2 --------------- CERTIFICATION ------------- ITEM 12(a)(2) PRINCIPAL FINANCIAL OFFICER CERTIFICATION I, James M. Roy, certify that: 1. I have reviewed this report on Form N-CSR of MassMutual Corporate Investors; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer(s) and I have disclosed to the Registrant's auditors and the Audit Committee of the Registrant's Board of Directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: March 8, 2010 /s/ James M. Roy - -------------------------------- James M. Roy Vice President and Chief Financial Officer MassMutual Corporate Investors EX-99.31.2 3 exh99-32_16739.txt EXECUTIVE OFFICER CERTIFICATION EXHIBIT-99.32 ------------- ITEM 12(b) To my knowledge, this periodic report containing the financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer. /s/ Michael L. Klofas - -------------------------------- Michael L. Klofas President MassMutual Corporate Investors /s/ James M. Roy - -------------------------------- James M. Roy Vice President and Chief Financial Officer MassMutual Corporate Investors March 8, 2010 -----END PRIVACY-ENHANCED MESSAGE-----