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    Barings

    Participation Investors


    Report for the   

    Nine Months Ended September 30, 2021   
















       



           

     

     


     

     
     

    Adviser

    Barings LLC

    300 S Tryon St., Suite 2500

    Charlotte, NC 28202

    Independent Registered Public Accounting Firm

    KPMG LLP

    Boston, Massachusetts 02110

    Counsel to the Trust

    Ropes & Gray LLP

    Boston, Massachusetts 02111

    Custodian

    State Street Bank and Trust Company

    Boston, Massachusetts 02110

     

    Transfer Agent & Registrar

    DST Systems, Inc.

    P.O. Box 219086

    Kansas City, Missouri 64121-9086

    1-800-647-7374

    Internet Website

    www.barings.com/mpv

      

    Barings Participation Investors

    c/o Barings LLC

    300 S Tryon St., Suite 2500

    Charlotte, NC 28202

    1-866-399-1516

     



     

     

     

     

     

     

     

    Investment Objective and Policy

    Barings Participation Investors (the “Trust”) is a closed-end management investment company, first offered to the public in 1988, whose shares are traded on the New York Stock Exchange under the trading symbol “MPV”. The Trust’s share price can be found in the financial section of most newspapers 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 current yield and, when available, an opportunity for capital gains. The Trust’s principal investments are privately placed, below investment grade, long-term debt obligations including bank loans and mezzanine debt instruments. Such private placement securities may, in some cases, be accompanied by equity features such as common stock, preferred stock, warrants, conversion rights, or other equity features. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers in private placement transactions. These investments are typically made to small or middle market companies. In addition, the Trust may invest, subject to certain limitations, in marketable debt securities (including high yield and/or investment grade securities) and marketable common stock. 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.

    The Trust distributes substantially all of its net income to shareholders each year. Accordingly, the Trust pays dividends to shareholders in January, May, August, and November. All registered shareholders are automatically enrolled in the Dividend Reinvestment and Cash Purchase Plan unless cash distributions are requested.

    Form N-PORT

    The Trust files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on part F of Form N-PORT. This information is available (i) on the SEC’s website at http://www.sec.gov; and (ii) at the SEC’s Public Reference Room in Washington, DC (which information on their operation may be obtained by calling 1-800-SEC-0330). A complete schedule of portfolio holdings as of each quarter-end is available upon request by calling, toll-free, 866-399-1516.

     

     

     

    Proxy Voting Policies & Procedures; Proxy Voting Record

    The Trustees of the Trust have delegated proxy voting responsibilities relating to the voting of securities held by the Trust to Barings LLC (“Barings”). A description of Barings’ proxy voting policies and procedures is available (1) without charge, upon request, by calling, toll-free 866-399-1516; (2) on the Trust’s website at www.barings.com/mpv; and (3) on the SEC’s website at http://www.sec.gov. Information regarding how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (1) on the Trust’s website at www.barings.com/mpv; and (2) on the SEC’s website at http://www.sec.gov.

    Legal Matters

    The Trust has entered into contractual arrangements with an investment adviser, transfer agent and custodian (collectively “service providers”) who each provide services to the Trust. Shareholders are not parties to, or intended beneficiaries of, these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the Trust.

    Under the Trust’s Bylaws, any claims asserted against or on behalf of the Trust, including claims against Trustees and officers must be brought in courts located within the Commonwealth of Massachusetts.

    The Trust’s registration statement and this shareholder report are not contracts between the Trust and its shareholders and do not give rise to any contractual rights or obligations or any shareholder rights other than any rights conferred explicitly by federal or state securities laws that may not be waived.

     

     

     

     


     

     

     

     
     

     

    Barings Participation Investors

     

    TO OUR SHAREHOLDERS

    October 31, 2021

     

    We are pleased to present the September 30, 2021 Quarterly Report of Barings Participation Investors (the “Trust”).

    PORTFOLIO PERFORMANCE

    The Board of Trustees declared a quarterly dividend of $0.20 per share, payable on November 19, 2021 to shareholders of record on November 8, 2021. The Trust paid a $0.20 per share dividend for the preceding quarter. The Trust earned $0.20 per share of net investment income for the third quarter of 2021, compared to $0.20 per share in the previous quarter.

    During the third quarter, the net assets of the Trust increased to $162,398,423 or $15.32 per share compared to $154,442,288 or $14.57 per share on June 30, 2021. This translates to a 6.6% total return for the quarter, based on the change in the Trust’s net assets assuming the reinvestment of all dividends. Longer term, the Trust returned 21.5%, 10.7%, 10.0%, 10.6% and 12.0% for the 1, 3, 5, 10, and 25-year periods, respectively, based on the change in the Trust’s net assets assuming the reinvestment of all dividends.

    The Trust’s market price increased 0.6% during the quarter, from $13.72 per share as of June 30, 2021 to $13.80 per share as of September 30, 2021. The Trust’s market price of $13.80 per share equates to a 9.9% discount to the September 30, 2021 net asset value per share of $15.32. The Trust’s average quarter-end premium for the 3, 5 and 10-year periods was 1.5%, 2.7% and 4.8%, respectively. U.S. fixed income markets, as approximated by the Bloomberg Barclays U.S. Corporate High Yield Index and the Credit Suisse Leverage Loan Index, increased 0.9% and 1.1% for the quarter, respectively.

    PORTFOLIO ACTIVITY

    The Trust closed seven new private placement investments and nine add-on investments to existing portfolio companies during the second quarter. The total amount invested by the Trust in these transactions was $11,621,834. Of note, the new platform investments were floating rate term loans, three of which included equity co-investments, and the add-on investments included eight floating rate term loans and one equity co-investment.

    The robust growth in investment activity over the last 12 months continued in the third quarter of 2021 with the Trust enjoying a strong quarter in terms of deployment. As the investment landscape has improved, some key trends have continued. First, investment activity is now back to (and even beyond) pre-pandemic levels. Secondly, in the current market, financial sponsors and other ownership groups are motivated to divest portfolio companies due to the high valuations for strong businesses. With the significant dry powder they have available, financial sponsors are also motivated to acquire high-quality businesses which have outperformed through both good times and the more recent uncertainty. Lastly, private equity clients continue to work with a smaller group of trusted lenders with whom they have long-standing relationships and who can offer certainty of execution and creative solutions.

    With demand for products and services continuing to increase, one key question is whether supply chains can keep up with the renewed demand and whether we will see material increases in prices as a result of supply-chain bottlenecks, rising raw material and energy costs and labor shortages. Across the world, and particularly in regions with large manufacturing sectors which depend on international trade, these risks may be key. However, it is important to note that such issues do not affect every geography and sector the same. When constructing portfolios, we focus on investing in high-quality businesses which are leaders in their space and offer defensive characteristics which will allow them to perform through the cycle. Therefore, while segments of the broader economy may be affected by potential supply chain issues, increasing raw material and energy costs and labor shortages, we remain confident in the current diverse portfolio to perform through the potential cycle.

    We continue to be selective in our investment choices and maintain our underwriting discipline throughout multiple cycles. First, the Trust continues to invest in first lien senior secured loans in high-quality companies in defensive sectors and remains well diversified by industry. This was a strategy put in place more than four years ago and has provided strong risk adjusted returns for the Trust given their senior position in the capital stack. As of September 30, 2021, 59.0% of the Trust’s investment portfolio is in first lien senior secured loans compared to 2.7% as of December 31, 2017. These investments have proven resilient to date and their management teams now have the benefit of having a wealth of knowledge to draw upon from working in such unique and challenging circumstances. Second, we hold meaningful

     

    (Continued) 

    1 
     

     

     

    investment liquidity based on the Trust’s combined available cash balance and short-term investments of $17,594,742 or 9.8% of total assets, and low leverage profile at 0.09x as of September 30, 2021. We have strengthened our liquidity position by entering into a $15.0 million committed revolving credit facility with MassMutual (See Note 4). This facility coupled with the current cash balance provides ample liquidity to support our current portfolio companies to the extent the duration of COVID-19 related stress extends as well as invest in new portfolio companies. Third, we continue to be selective in pruning our equity investments and reinvesting the proceeds into first lien senior secured investments further driving investment income. As always, the Trust continues to benefit from strong relationships with our financial sponsor partners which provides clear benefits including potential access to additional capital if needed, strategic thinking alongside their management teams and high-quality and timely information which is only available in a private market setting. This allows us to work constructively together and maximize the portfolio companies’ long-term health and value.

    In closing, we believe it is always appropriate to provide views on the Trust’s long-term dividend policy which is to say, ‘we believe that long-term dividends should be a reflection of long-term core earnings power, even when core earnings power is lower as a result of a higher quality asset mix’. The Trust’s recently announced dividend of $0.20 per share is in line with our most recently reported net investment income of $0.20 per share. That said, as we continue to both (1) deploy the Trust’s excess liquidity and (2) seek opportunities to shift the Trust’s non-yielding equity investments to senior secured loans, we expect long-term earnings power to meet the dividend distribution.

    Thank you for your continued interest in and support of Barings Participation Investors.

    Sincerely,

     

    Christina Emery

    President

    Portfolio Composition as of 09/30/21*

     

    * Based on market value of total investments (including cash)

    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 on 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.

     

     

     

     

    2 
     

     

     

    Barings Participation Investors

    CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

    September 30, 2021

    (Unaudited)

     

     

         
    Assets:    
    Investments
    (See Consolidated Schedule of Investments)
         
    Corporate restricted securities - private placement investments at fair value
    (Cost - $139,783,087)
      $144,146,843 
    Corporate restricted securities - rule 144A securities at fair value
    (Cost - $8,986,848)
       9,724,248 
    Corporate public securities at fair value
    (Cost - $5,066,828)
       5,384,108 
    Short-term securities at fair value
    (Cost - $5,999,789)
       5,999,789 
          
    Total investments (Cost - $159,836,552)   165,254,988 
          
    Cash   11,592,784 
    Foreign currencies (Cost - $2,165)   2,169 
    Dividend and interest receivable   1,119,492 
    Receivable for investments sold   85,641 
    Deferred financing fees   52,162 
    Other assets   752,878 
          
          
    Total assets   178,860,114 
          
          
    Liabilities:     
    Note payable   15,000,000 
    Payable for investments purchased   904,817 
    Investment advisory fee payable   365,396 
    Interest payable   27,267 
    Accrued expenses   164,211 
          
          
    Total liabilities   16,461,691 
          
          
    Commitments and Contingencies (See Note 7)     
    Total net assets  $162,398,423 
          
          
    Net Assets:     
    Common shares, par value $.01 per share  $106,017 
    Additional paid-in capital   142,111,125 
    Total distributable earnings   20,181,281 
          
          
    Total net assets  $162,398,423 
          
          
    Common shares issued and outstanding (14,787,750 authorized)   10,601,700 
          
          
    Net asset value per share  $15.32 
          

     

     

     

     

     

     

    See Notes to Consolidated Financial Statements

    3 
     

    CONSOLIDATED STATEMENT OF OPERATIONS

    For the nine months ended September 30, 2021

    (Unaudited)

     

     

         
    Investment Income:     
    Interest  $8,019,643 
    Dividends   166,498 
    Other   154,232 
          
          
    Total investment income   8,340,373 
          
          
    Expenses:     
    Investment advisory fees   1,051,201 
    Interest and other financing fees   469,630 
    Professional fees   220,694 
    Trustees’ fees and expenses   207,000 
    Reports to shareholders   67,500 
    Custodian fees   18,000 
    Other   58,744 
          
          
    Total expenses   2,092,769 
          
          
    Investment income - net   6,247,604 
          
          
    Net realized and unrealized gain on investments and foreign currency:     
    Net realized gain on investments before taxes   6,497,711 
    Net realized loss on foreign currency transactions before taxes   (102)
    Income tax expense   (47,658)
          
          
    Net realized gain on investments and foreign currency transactions after taxes   6,449,951 
          
          
    Net increase/(decrease) in unrealized appreciation/(depreciation) of investments before taxes   9,764,165 
    Net increase/(decrease) in unrealized appreciation/(depreciation) of foreign currency translation before taxes   4 
          
          
    Net increase/(decrease) in unrealized appreciation/(depreciation) of investments and foreign currency translation after taxes   9,764,169 
          
          
    Net gain on investments and foreign currency   16,214,120 
          
          
    Net increase in net assets resulting from operations  $22,461,724 
          

     

     

     

     

     

     

    See Notes to Consolidated Financial Statements

    4 
     

    Barings Participation Investors

    CONSOLIDATED STATEMENT OF CASH FLOWS

    For the nine months ended September 30, 2021

    (Unaudited)

     

     

         
    Net decrease in cash:     
    Cash flows from operating activities:     
    Purchases/Proceeds/Maturities from short-term portfolio securities, net  $(996,786)
    Purchases of portfolio securities   (43,745,323)
    Proceeds from disposition of portfolio securities   43,943,058 
    Interest, dividends and other income received   8,228,939 
    Interest and other financing expenses paid   (469,630)
    Operating expenses paid   (1,426,801)
    Income taxes paid   (165,803)
          
          
    Net cash provided by operating activities   5,367,654 
          
          
    Cash flows from financing activities:     
    Cash dividends paid from net investment income   (6,361,020)
    Financing fees paid   (52,162)
          
    Net cash used for financing activities   (6,413,182)
          
          
    Net decrease in cash   (1,045,528)
    Cash - beginning of period   12,640,481 
          
          
    Cash - end of period  $11,594,953 
          
          
          
    Reconciliation of net increase in net assets to
    net cash used in operating activities:
         
          
          
    Net increase in net assets resulting from operations  $22,461,724 
          
          
    Increase in investments   (16,777,641)
    Increase in interest receivable   (16,843)
    Increase in receivable for investments sold   (68,161)
    Decrease in other assets   215,635 
    Decrease in payable for investments purchased   (525,253)
    Increase in investment advisory fee payable   41,447 
    Decrease in tax payable   (118,145)
    Increase in accrued expenses   154,891 
          
          
    Total adjustments to net assets from operations   17,094,070 
          
          
    Net cash provided by operating activities  $5,367,654 
          

     

     

     

    See Notes to Consolidated Financial Statements

    5 
     

    CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

    For the nine months ended September 30, 2021

     

     

             
        

    For the nine
    months ended
    9/30/2021
    (Unaudited)

        

    For the
    year ended
    12/31/2020

     
    Increase in net assets:          
               
    Operations:          
    Investment income - net  $6,247,604   $10,630,477 
    Net realized gain on investments and foreign currency after taxes   6,449,951    240,048 
    Net change in unrealized appreciation (depreciation) of investments and foreign currency after taxes   9,764,169    (4,521,459)
               
               
    Net increase in net assets resulting from operations   22,461,724    6,349,066 
               
               
    Increase from common shares issued on reinvestment of dividends          
               
    Common shares issued (2021 - nil; 2020 - 14,472)       227,533 
               
               
    Dividends to shareholders from:          
    Distributable earnings to Common Stock Shareholders (2021 - $0.40 per share;
    2020 - $0.80 per share)
       (4,240,680)   (8,481,360)
               
               
    Total increase / (decrease) in net assets   18,221,044    (1,904,761)
               
    Net assets, beginning of period/year   144,177,379    146,082,140 
               
               
               
    Net assets, end of period/year  $162,398,423   $144,177,379 
               

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    See Notes to Consolidated Financial Statements

    6 
     

    Barings Participation Investors

    CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS

    Selected data for each share of beneficial interest outstanding:

     

     

       For the nine
    months ended
    9/30/2021
       For the years ended December 31, 
       (Unaudited)   2020   2019   2018   2017 
    Net asset value:                         
    Beginning of period / year  $13.60   $13.80   $13.18   $13.91   $13.15 
                              
                              
    Net investment income (a)   0.59    1.00    1.00    1.03    1.09 
    Net realized and unrealized gain (loss) on investments   1.53    (0.40)    0.69    (0.68)    0.75 
                              
                              
    Total from investment operations   2.12    0.60    1.69    0.35    1.84 
                              
                              
    Dividends from net investment income to common shareholders   (0.40)    (0.80)    (1.08)    (1.08)    (1.08) 
    Increase / (Decrease) from dividends reinvested   0.00    0.00 (b)    0.01 (b)    (0.00) (b)    (0.00) (b) 
                              
                              
    Total dividends   (0.40)    (0.80)    (1.07)    (1.08)    (1.08) 
                              
                              
    Net asset value: End of period / year  $15.32   $13.60   $13.80   $13.18   $13.91 
                              
                              
    Per share market value:                         
    End of period / year  $13.80   $11.88   $16.13   $15.05   $14.10 
                              
                              
    Total investment return                         
    Net asset value (c)   15.83%    4.66%    13.21%    2.53%    14.29% 
                              
    Market value (c)   19.71%    (21.11%)    14.72%    15.02%    7.21% 
                              
    Net assets (in millions):                         
    End of period / year  $162.40   $144.18   $146.08   $138.75   $145.48 
    Ratio of total expenses to average net assets (d)   1.90% (e)    1.47%    2.26%    2.76%    3.23% 
    Ratio of operating expenses to average net assets   1.44% (e)    1.38%    1.45%    1.56%    1.49% 
    Ratio of interest expense to average net assets   0.42% (e)    0.43%    0.42%    0.42%    0.43% 
    Ratio of income tax expense/(benefit) to average net assets   0.04% (e)    (0.34%)    0.39%    0.78%    1.31% 
    Ratio of net investment income to average net assets   5.54% (e)    7.52%    7.30%    7.47%    7.92% 
    Portfolio turnover   29%    34%    22%    48%    24% 
    (a)Calculated using average shares.
    (b)Rounds to less than $0.01 per share.
    (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)Total expenses include income tax expense.
    (e)Annualized

     

    Senior borrowings:                         
    Total principal amount (in millions)  $15   $15   $15   $15   $15 
    Asset coverage per $1,000 of indebtedness  $11,827   $10,612   $10,739   $10,250   $10,699 

     

     

     

     

     

     

    See Notes to Consolidated Financial Statements

    7 
     

    CONSOLIDATED SCHEDULE OF INVESTMENTS

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities - 94.75%: (A) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    Private Placement Investments - 88.76%: (C)               
     
    1A Smart Start, Inc.
    A designer, distributor and lessor of ignition interlock devices (“IIDs”).
    9.50% Second Lien Term Loan due 06/02/2028
    (LIBOR + 8.500%)
      $1,725,000   06/02/21   $1,700,349   $1,701,954 
                       
    1WorldSync, Inc.                  
    A product information sharing platform that connects manufacturers/suppliers and key retailers via the Global Data Synchronization Network.
    7.25% Term Loan due 06/24/2025 (LIBOR + 6.250%)  $2,440,215   *    2,406,652    2,440,215 
    * 07/01/19 and 12/09/20.                  
                       
    Accelerate Learning                  
    A provider of standards-based, digital science education content of K-12 schools.
    5.75% Term Loan due 12/31/2024 (LIBOR + 4.750%)  $974,753   12/19/18    964,294    955,258 
    5.75% Term Loan due 12/20/2024 (LIBOR + 4.750%)  $750,247   09/30/21    735,242    735,242 
                1,699,536    1,690,500 
    Advanced Manufacturing Enterprises LLC                  
    A designer and manufacturer of large, custom gearing products for a number of critical customer applications.
    Limited Liability Company Unit (B)    1,945 uts.    *    207,911     
    * 12/07/12, 07/11/13 and 06/30/15.                  
                       
    Advantage Software                  
    A provider of enterprise resource planning (ERP) software built for advertising and marketing agencies.
    7.50% Term Loan due 01/15/2027 (LIBOR + 6.500%)  $1,373,387   01/15/21    1,343,111    1,370,640 
    7.50% Term Loan due 01/15/2027 (LIBOR + 6.500%)  $214,175   05/12/21    209,187    213,746 
    Limited Liability Company Unit A (F)    613 uts.    01/15/21    61,346    63,383 
    Limited Liability Company Unit B (F)    304 uts.    01/15/21    1,970    111,248 
                1,615,614    1,759,017 
    Aftermath, Inc.                  
    A provider of crime scene cleanup and biohazard remediation services.
    6.00% Term Loan due 04/10/2025 (LIBOR + 5.000%)  $963,473   04/09/19    950,745    948,569 
    6.00% Term Loan due 04/10/2025 (LIBOR + 5.000%)  $761,527   04/23/21    749,259    749,747 
                1,700,004    1,698,316 
    AIT Worldwide Logistics, Inc.                  
    A provider of domestic and international third-party logistics services.
    8.50% Second Lien Term Loan due 03/31/2029  $1,669,355   04/06/21    1,634,087    1,662,677 
    Limited Liability Company Unit (B)    56 uts.    04/06/21    55,645    81,313 
                1,689,732    1,743,990 

     

     

     

     

    8 
     

     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    AMS Holding LLC               
    A leading multi-channel direct marketer of high-value collectible coins and proprietary-branded jewelry and watches.
    Limited Liability Company Unit Class A Preferred (B)(F)    114 uts.    10/04/12   $113,636   $444,118 
                       
    ASC Holdings, Inc.                  
    A manufacturer of capital equipment used by corrugated box manufacturers.
    13% (1% PIK) Senior Subordinated Note
    due 11/19/2021
      $752,294   11/19/15    752,289    752,294 
    Limited Liability Company Unit (B)    111,100 uts.    11/18/15    111,100    32,219 
                863,389    784,513 
    ASPEQ Holdings                  
    A manufacturer of highly-engineered electric heating parts and equipment for a range of industrial, commercial, transportation and marine applications.
    6.25% Term Loan due 10/31/2025 (LIBOR + 5.250%)  $1,157,395   11/08/19    1,145,523    1,157,395 
                       
    Audio Precision                  
    A provider of high-end audio test and measurement sensing instrumentation software and accessories.
    7.00% Term Loan due 07/27/2024 (LIBOR + 6.000%)  $1,755,000   10/30/18    1,736,970    1,755,000 
                       
    Aurora Parts & Accessories LLC                  
    A distributor of aftermarket over-the-road semi-trailer parts and accessories sold to customers across North America.
    Preferred Stock (B)    210 shs.    08/17/15    209,390    209,390 
    Common Stock (B)    210 shs.    08/17/15    210    149,036 
                209,600    358,426 
    BDP International, Inc.                  
    A provider of transportation and related services to the chemical and life sciences industries.
    6.25% Term Loan due 12/14/2024 (LIBOR + 5.250%)  $2,397,213   12/18/18    2,371,563    2,397,213 
    6.25% Incremental Term Loan due 12/19/2024
    (LIBOR + 5.250%)
      $42,922   12/07/20    42,237    42,922 
    6.25% Incremental Term Loan due 12/21/2024
    (LIBOR + 5.250%)
      $40,957   03/30/21    40,248    40,957 
                2,454,048    2,481,092 
    Beacon Pointe Advisors, LLC                  
    An integrated wealth management platform with comprehensive financial planning capabilities for high net worth clients with complex financial needs.
    5.50% Term Loan due 03/31/2026 (LIBOR + 4.500%)  $989,250   03/31/20    972,569    968,846 
                       
                       

     

     

     

    9 
     

     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    Blue Wave Products, Inc.                  
    A distributor of pool supplies.
    Common Stock (B)    51,064 shs.    10/12/12   $51,064   $177,811 
    Warrant, exercisable until 2022, to purchase common
    stock at $.01 per share (B)
        20,216 shs.    10/12/12    20,216    70,395 
                71,280    248,206 
    Brown Machine LLC                  
    A designer and manufacturer of thermoforming equipment used in the production of plastic packaging containers within the food and beverage industry.
    6.25% Term Loan due 10/04/2024 (LIBOR + 5.250%)  $854,448   10/03/18    848,327    854,448 
                       
    Cadence, Inc.                  
    A full-service contract manufacturer (“CMO”) and supplier of advanced products, technologies, and services to medical device, life science, and industrial companies.
    6.00% First Lien Term Loan due 04/30/2025
    (LIBOR + 5.000%)
      $881,698   05/14/18    872,504    851,720 
                       
    Cadent, LLC                  
    A provider of advertising solutions driven by data and technology.
    6.00% Term Loan due 09/07/2023 (LIBOR + 5.000%)  $890,428   09/04/18    886,954    890,428 
                       
    Claritas Holdings, Inc.                  
    A market research company that provides market segmentation insights to customers engaged in direct-to-consumer and business-to-business marketing activities.
    6.75% Term Loan due 12/31/2023 (LIBOR + 5.750%)  $1,543,682   12/20/18    1,526,542    1,543,682 
                       
    CloudWave                  
    A provider of managed cloud hosting and IT services for hospitals.
    7.00% Term Loan due 01/04/2027 (LIBOR + 6.000%)  $1,662,399   01/29/21    1,629,226    1,662,399 
    Limited Liability Company Unit (B)(F)    55,645 uts.    01/29/21    55,645    49,246 
                1,684,871    1,711,645 
    Clubessential LLC                  
    A leading SaaS platform for private clubs and resorts.
    7.25% Term Loan due 11/30/2023 (LIBOR + 6.250%)  $1,703,438   01/09/20    1,687,559    1,703,438 
                       
    Command Alkon                  
    A vertical-market software and technology provider to the heavy building materials industry delivering purpose-built, mission critical products that serve as the core operating & production systems for ready-mix concrete producers, asphalt producers, and aggregate suppliers.
    9.25% Term Loan due 04/17/2027 (LIBOR + 8.250%)  $2,063,987   *    2,014,040    2,029,555 
    Limited Liability Company Unit (B) (F)    18 uts.    04/23/20    18,006    20,113 
    Limited Liability Company Unit Class B    6,629 uts.    04/23/20        1,643 
    * 04/23/20, 10/30/20 and 11/18/20.           2,032,046    2,051,311 

     

     

     

    10 
     

     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    Concept Machine Tool Sales, LLC               
    A full-service distributor of high-end machine tools and metrology equipment, exclusively representing a variety of global manufacturers in the Upper Midwest.
    6.00% Term Loan due 01/31/2025 (LIBOR + 5.000%)  $584,016   01/30/20   $576,229   $570,000 
    Limited Liability Company Unit (F)    1,237 shs.    *    49,559    38,941 
    * 01/30/20 and 03/05/21           625,788    608,941 
                       
    CTS Engines                  
    A provider of maintenance, repair and overhaul services within the aerospace & defense market.
    6.25% Term Loan due 12/22/2026 (LIBOR + 5.250%)  $1,392,375   12/22/20    1,368,114    1,350,604 
                       
    Dart Buyer, Inc.                  
    A manufacturer of helicopter aftermarket equipment and OEM Replacement parts for rotorcraft operators, providers and OEMs.
    6.00% Term Loan due 04/01/2025
    (LIBOR + 5.000%) (H)
      $1,694,506   04/01/19    1,393,573    1,389,609 
                       
    Del Real LLC                  
    A manufacturer and distributor of fully-prepared fresh refrigerated Hispanic entrees as well as side dishes that are typically sold on a heat-and-serve basis at retail grocers.
    11% Senior Subordinated Note due 04/06/2023 (D)  $1,420,588   10/07/16    1,403,758    1,349,559 
    Limited Liability Company Unit (B)(F)    368,799 uts.    *    368,928    159,779 
    * 10/07/16, 07/25/18, 03/13/19 and 06/17/19.           1,772,686    1,509,338 
                       
    Dunn Paper                  
    A provider of specialty paper for niche product applications.
    9.33% Second Lien Term Loan due 08/31/2023
    (LIBOR + 9.250%)
      $1,725,000   09/28/16    1,714,183    1,597,350 
                       
    Dwyer Instruments, Inc.                  
    A designer and manufacturer of precision measurement and control products for use with solids, liquids and gases.
    6.25% Term Loan due 07/01/2027 (LIBOR + 5.500%) (H)  $1,000,000   07/20/21    849,078    848,421 
                       
    Electric Power Systems International, Inc.                  
    A provider of electrical testing services for apparatus equipment and protection & controls infrastructure.
    6.75% Term Loan due 04/19/2028 (LIBOR + 5.750%) (H)  $1,253,130   04/19/21    1,115,764    1,117,882 
                       
    Elite Sportswear Holding, LLC                  
    A designer and manufacturer of gymnastics, competitive cheerleading and swimwear apparel in the U.S. and internationally.
    11.5% (1% PIK) Senior Subordinated Note
    due 09/20/2022 (D)
      $1,588,640   10/14/16    1,568,694     
    Limited Liability Company Unit (B)(F)    101 uts.    10/14/16    159,722     
                1,728,416     
                       

     

     

     

    11 
     

     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    Ellkay               
    A provider of data interoperability solutions for labs, hospitals and healthcare providers.        
    6.75% Term Loan due 09/14/2027 (LIBOR + 5.750%)  $707,437   09/23/21   $693,340   $693,288 
                       
    English Color & Supply LLC                  
    A distributor of aftermarket automotive paint and related products to collision repair shops, auto dealerships and fleet customers through a network of stores in the Southern U.S.
    11.5% (0.5% PIK) Senior Subordinated Note
    due 12/31/2023
      $1,355,794   06/30/17    1,345,252    1,349,969 
    Limited Liability Company Unit (B)(F)    397,695 uts.    06/30/17    397,695    819,505 
                1,742,947    2,169,474 
    ENTACT Environmental Services, Inc.                  
    A provider of environmental remediation and geotechnical services for blue-chip companies with regulatory-driven liability enforcement needs.
    6.75% Term Loan due 12/15/2025 (LIBOR + 4.750%)  $1,017,787   02/09/21    1,008,954    1,010,662 
                       
    E.S.P. Associates, P.A.                  
    A professional services firm providing engineering, surveying and planning services to infrastructure projects.
    Limited Liability Company Unit (B)    273 uts.    *    295,518    252,534 
    * 06/29/18 and 12/29/20.                  
                       
    F G I Equity LLC                  
    A manufacturer of a broad range of filters and related products that are used in commercial, light industrial, healthcare, gas turbine, nuclear, laboratory, clean room, hotel, educational system, and food processing settings.
    Limited Liability Company Unit Class B-1 (B)    49,342 uts.    12/15/10    42,343    662,166 
                       
    Follett School Solutions                  
    A provider of software for K-12 school libraries.
    5.87% First Lien Term Loan due 07/09/2028
    (LIBOR + 5.750%)
      $1,714,192   08/31/21    1,680,324    1,679,908 
    LP Units (B)(F)    881 uts.    08/30/21    8,805    8,805 
    LP Interest (B)(F)    200 shs.    08/30/21    2,003    2,003 
                1,691,132    1,690,716 
    Foundation Risk Partners, Corp.                  
    A retail insurance brokerage firm focused on providing commercial P&C and employee benefits solution to small and medium-sized clients.
    5.75% First Lien Term Loan due 08/31/2026
    (LIBOR + 4.750%)
      $661,664   09/30/20    651,573    661,664 
    9.50% Second Lien Term Loan due 11/10/2024
    (LIBOR + 8.500%) (H)
      $333,333   09/30/20    104,178    111,111 
                755,751    772,775 
                       

     

     

     

     

    12 
     

     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    FragilePAK               
    A provider of third-party logistics services focused on the full delivery life-cycle for big and bulky products.
    6.75% Term Loan due 05/24/2027
    (LIBOR + 5.750%) (H)
      $1,614,492   05/21/21   $1,033,589   $1,036,045 
    Limited Liability Company Unit (B)(F)    108 shs.    05/21/21    107,813    106,475 
                1,141,402    1,142,520 
    GD Dental Services LLC                  
    A provider of convenient “onestop” general, specialty, and cosmetic dental services with 21 offices located throughout South and Central Florida.
    Limited Liability Company Unit Preferred (B)    76 uts.    10/05/12    75,920    12,927 
    Limited Liability Company Unit Common (B)    767 uts.    10/05/12    767     
                76,687    12,927 
    gloProfessional Holdings, Inc.                  
    A marketer and distributor of premium mineral-based cosmetics, cosmeceuticals and professional hair care products to the professional spa and physician’s office channels.
    14% (2% PIK) Senior Subordinated Note
    due 11/30/2021 (D)
      $1,380,135   03/27/13    989,505    1,311,129 
    Preferred Stock (B)    295 shs.    03/29/19    295,276    396,826 
    Common Stock (B)    1,181 shs.    03/27/13    118,110    37,629 
                1,402,891    1,745,584 
    GraphPad Software, Inc.                  
    A provider of data analysis, statistics and graphing software solution for scientific research applications, with a focus on the life sciences and academic end-markets.
    7.00% Term Loan due 12/15/2023 (LIBOR + 6.000%)  $2,403,093   *    2,385,310    2,403,093 
    6.50% Term Loan due 04/27/2027 (PRIME + 5.500%)  $84,525   04/27/21    82,956    84,525 
    Preferred Stock (B)(F)    3,737 shs.    04/27/21    103,147    109,052 
    * 12/19/17 and 04/16/19.           2,571,413    2,596,670 
                       
    Halo Technology Bidco Limited                  
    A global supplier, tester and coder of compatible optical transceivers.
    6.50% Term Loan due 06/30/2027 (LIBOR + 5.750%)  $1,720,688   06/30/21    1,695,973    1,697,027 
                       
    Handi Quilter Holding Company (Premier Needle Arts)                  
    A designer and manufacturer of long-arm quilting machines and related components for the consumer quilting market.
    Limited Liability Company Unit Preferred (B)    372 uts.    *    371,644    598,147 
    Limited Liability Company Unit Common Class A (B)    3,594 uts.    12/19/14        13,548 
    *12/19/14 and 04/29/16.           371,644    611,695 

     

     

     

     

     

    13 
     

     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    HHI Group, LLC               
    A developer, marketer, and distributor of hobby-grade radio control products.
    Limited Liability Company Unit (B)(F)    102 uts.    01/17/14   $101,563   $554,024 
                       
    Holley Performance Products                  
    A provider of automotive aftermarket performance products.
    5.13% Term Loan due 10/17/2024
    (LIBOR + 5.000%)
      $2,397,213   10/24/18    2,376,237    2,397,213 
                       
    Home Care Assistance, LLC                  
    A provider of private pay non-medical home care assistance services.
    6.00% Term Loan due 03/30/2027
    (LIBOR + 5.000%) (H)
      $853,078   03/26/21    798,777    800,179 
                       
    HOP Entertainment LLC                  
    A provider of post production equipment and services to producers of television shows and motion pictures.
    Limited Liability Company Unit Class F (B)(F)    47 uts.    10/14/11         
    Limited Liability Company Unit Class G (B)(F)    114 uts.    10/14/11         
    Limited Liability Company Unit Class H (B)(F)    47 uts.    10/14/11         
    Limited Liability Company Unit Class I (B)(F)    47 uts.    10/14/11         
                     
    IGL Holdings III Corp.                  
    A specialty label and flexible packaging converter.
    6.75% Term Loan due 10/23/2026
    (LIBOR + 5.750%) (H)
      $1,715,900   11/02/20    1,175,169    1,169,929 
                       
    IM Analytics Holdings, LLC                  
    A provider of test and measurement equipment used for vibration, noise, and shock testing.
    8.00% Term Loan due 11/22/2023 (LIBOR + 7.000%)  $1,049,893   11/21/19    1,044,252    806,318 
    Warrant, exercisable until 2026, to purchase
    common stock at $.01 per share (B)
        8,885 shs.    11/25/19         
                1,044,252    806,318 
    Industrial Service Solutions                  
    A provider of maintenance, repair and overhaul services for process equipment within the industrial, energy and power end-markets.
    6.50% Term Loan due 01/31/2026 (LIBOR + 5.500%)  $888,050   02/05/20    875,183    836,543 

     

     

     

    14 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

     

     

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    International Marine and Industrial Applicators               
    A provider of maintenance, repair and overhaul and new construction services for shipyards.
    6.75% Term Loan due 03/31/2027 (LIBOR + 5.750%)  $1,716,375   04/09/21   $1,684,801   $1,706,077 
                       
    JF Petroleum Group                  
    A provider of repair, maintenance, installation and projection management services to the US fueling infrastructure industry.
    6.50% Term Loan due 04/20/2026 (LIBOR + 5.500%)  $684,852   05/04/21    665,994    673,007 
                       
    Kano Laboratories LLC                  
    A producer of industrial strength penetrating oils and lubricants.
    6.00% Term Loan due 09/30/2026
    (LIBOR + 5.000%) (H)
      $1,247,255   11/18/20    830,852    852,117 
    Limited Liability Company Unit    20 uts.    11/19/20    19,757    22,396 
                850,609    874,513 
    LYNX Franchising                  
    A global franchisor of B2B services including commercial janitorial services, shared office space solutions, and textile and electronics restoration services.
    7.25% Term Loan due 12/18/2026 (LIBOR + 6.250%)  $2,495,688   *    2,450,369    2,445,774 
    * 12/22/20 and 09/09/21                  
                       
    Manhattan Beachwear Holding Company                  
    A designer and distributor of women’s swimwear.
    12.5% Senior Subordinated Note due 05/30/2022 (D)  $419,971   01/15/10    404,121     
    15% (2.5% PIK) Senior Subordinated Note
    due 05/30/2022 (D)
      $115,253   10/05/10    114,604     
    Common Stock (B)    35 shs.    10/05/10    35,400     
    Common Stock Class B (B)    118 shs.    01/15/10    117,647     
    Warrant, exercisable until 2023, to purchase
    common stock at $.01 per share (B)
        104 shs.    10/05/10    94,579     
                766,351     
    Master Cutlery LLC                  
    A designer and marketer of a wide assortment of knives and swords.
    13% Senior Subordinated Note due 07/20/2022 (D)  $868,102   04/17/15    867,529    86,810 
    Limited Liability Company Unit    5 uts.    04/17/15    678,329     
                1,545,858    86,810 
    Media Recovery, Inc.                  
    A global manufacturer and developer of shock, temperature, vibration and other condition indicators and monitors for in-transit and storage applications.
    7.00% First Out Term Loan due 11/22/2025
    (LIBOR + 6.000%)
      $491,055   11/25/19    484,148    491,055 

     

     

     

     

    15 
     

     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

      

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    MES Partners, Inc.               
    An industrial service business offering an array of cleaning and environmental services to the Gulf Coast region of the U.S.
    Preferred Stock Series A (B)    30,926 shs.    07/25/19   $12,412   $ 
    Preferred Stock Series C (B)    1,275 shs.    09/22/20    457,365    49,307 
    Common Stock Class B (B)    259,252 shs.    *    244,163     
    Warrant, exercisable until 2021, to purchase
    common stock at $.01 per share (B)
        351,890 shs.    09/22/20         
    * 09/30/14 and 02/28/18.           713,940    49,307 
                       
    MeTEOR Education LLC                  
    A leading provider of classroom and common area design services, furnishings, equipment and instructional support to K-12 schools.
    12% Senior Subordinated Note due 06/20/2023  $915,819   03/09/18    909,451    915,819 
    Limited Liability Company Unit (B)(F)    182 uts.    03/09/18    183,164    249,006 
                1,092,615    1,164,825 
    MNS Engineers, Inc.                  
    A consulting firm that provides civil engineering, construction management and land surveying services.
    6.50% Term Loan due 07/30/2027 (LIBOR + 5.500%)  $1,200,000   08/09/21    1,176,540    1,176,000 
    Limited Liability Company Unit (B)    100 uts.    08/09/21    100,000    100,000 
                1,276,540    1,276,000 
    Motion Controls Holdings                  
    A manufacturer of high performance mechanical motion control and linkage products.
    Limited Liability Company Unit Class B-1 (B)(F)    75,000 uts.    11/30/10        13,500 
    Limited Liability Company Unit Class B-2 (B)(F)    6,801 uts.    11/30/10        1,224 
                    14,724 
    Music Reports, Inc.                  
    An administrator of comprehensive offering of rights and royalties solutions for music and cue sheet copyrights to music and entertainment customers.
    6.75% Term Loan due 08/21/2026 (LIBOR + 5.750%)  $599,118   08/25/20    586,883    599,118 
                       
    Navia Benefit Solutions, Inc.                  
    A third-party administrator of employee-directed healthcare benefits.
    6.25% Term Loan due 02/01/2026
    (LIBOR + 5.250%) (H)
      $1,719,825   02/10/21    1,002,915    1,006,111 
                       
    Omni Logistics, LLC                  
    A specialty freight forwarding business specifically targeting the semiconductor, media, technology and healthcare end markets.
    6.00% Term Loan due 12/30/2026 (LIBOR + 5.000%)  $1,741,250   12/30/20    1,695,569    1,741,250 
                       
                       

     

     

     

     

    16 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

     

     

     

     

     

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    Options Technology Ltd               
    A provider of vertically focused financial technology managed services and IT infrastructure products for the financial services industry.
    5.50% Term Loan due 12/18/2025
    (LIBOR + 4.500%)
      $1,587,825   12/23/19   $1,565,403   $1,587,825 
                       
    PANOS Brands LLC                  
    A marketer and distributor of branded consumer foods in the specialty, natural, better-for-you,“free from” healthy and gluten-free categories.
    12% (1% PIK) Senior Subordinated Note
    due 08/17/2022
      $1,775,705   02/17/17    1,769,188    1,775,705 
    Common Stock Class B (B)    380,545 shs.    *    380,545    526,928 
    * 01/29/16 and 02/17/17.           2,149,733    2,302,633 
                       
    PB Holdings LLC                  
    A designer, manufacturer and installer of maintenance and repair parts and equipment for industrial customers.
    6.25% Term Loan due 02/28/2024 (LIBOR + 5.250%)  $783,253   03/06/19    774,306    715,893 
                       
    Pegasus Transtech Corporation                  
    A provider of end-to-end document, driver and logistics management solutions, which enable its customers (carriers, brokers, and drivers) to operate more efficiently, reduce manual overhead, enhance compliance, and shorten cash conversion cycles.
    7.75% Term Loan due 08/31/2026 (LIBOR + 6.500%)  $383,766   09/29/20    372,604    383,765 
    6.88% Term Loan due 11/17/2024 (LIBOR + 6.750%)  $1,894,364   11/14/17    1,873,184    1,894,364 
                2,245,788    2,278,129 
    Petroplex Inv Holdings LLC                  
    A leading provider of acidizing services to E&P customers in the Permian Basin.
    Limited Liability Company Unit    0.40% int.    *    174,669    6,787 
    * 11/29/12 and 12/20/16.                  
                       
    Polytex Holdings LLC                  
    A manufacturer of water based inks and related products serving primarily the wall covering market.
    13.9% (7.9% PIK) Senior Subordinated Note
    due 12/31/2021 (D)
      $1,069,985   07/31/14    1,064,183    1,016,486 
    Limited Liability Company Unit    148,096 uts.    07/31/14    148,096    33,988 
    Limited Liability Company Unit Class F    36,976 uts.    *    24,802    32,439 
    * 09/28/17 and 02/15/18.           1,237,081    1,082,913 
                       

     

     

     

     

    17 
     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    PPC Event Services               
    A special event equipment rental business.
    Preferred Stock Series P-1 (B)    71 shs.    07/21/20   $71,018   $ 
    Common Stock (B)    170,927 shs.    07/21/20         
    16.00% Term Loan due 05/28/2023 (D)  $1,015,367   07/21/20    846,461     
    8.00% Term Loan due 05/28/2023 (D)  $750,912   07/21/20    616,911     
    Limited Liability Company Unit (B)    3,450 uts.    11/20/14    172,500     
    Limited Liability Company Unit Series A-1 (B)    339 uts.    03/16/16    42,419     
                1,749,309     
    Recovery Point Systems, Inc.                  
    A provider of IT infrastructure, colocation and cloud based resiliency services.
    7.50% Term Loan due 07/31/2026 (LIBOR + 6.500%)  $1,342,949   08/12/20    1,321,177    1,342,949 
    Limited Liability Company Unit (B)(F)    21,532 uts.    03/05/21    21,532    18,410 
                1,342,709    1,361,359 
    RedSail Technologies                  
    A provider of pharmacy management software solutions for independent pharmacies and long-term care facilities.
    6.25% Term Loan due 10/27/2026 (LIBOR + 5.500%)  $1,672,858   12/09/20    1,636,766    1,672,858 
                       
    ReelCraft Industries, Inc.                  
    A designer and manufacturer of heavy-duty reels for diversified industrial, mobile equipment OEM, auto aftermarket, government/military and other end markets.
    Limited Liability Company Unit Class B    293,617 uts.    11/13/17    184,689    926,689 
                       
    Resonetics, LLC                  
    A provider of laser micro-machining manufacturing services for medical device and diagnostic companies.
    7.75% Second Lien Term Loan due 04/28/2029
    (LIBOR + 7.000%)
      $1,725,000   04/28/21    1,692,342    1,695,356 
                       
    REVSpring, Inc.                  
    A provider of accounts receivable management and revenue cycle management services to customers in the healthcare, financial and utility industries.
    9.25% Second Lien Term Loan due 10/11/2026
    (LIBOR + 8.250%)
      $1,725,000   10/11/18    1,692,483    1,725,000 
                       
    Rock-it Cargo                  
    A provider of specialized international logistics solutions to the music touring, performing arts, live events, fine art and specialty industries.
    6.00% Term Loan due 06/22/2024
    (LIBOR + 5.000% Cash & 2.750% PIK) (G)
      $2,454,594   *    2,426,244    1,921,947 
    * 07/30/18 and 09/30/20.                  

     

     

     

     

    18 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)  

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    ROI Solutions               
    Call center outsourcing and end user engagement services provider.
    6.00% Term Loan due 07/31/2024
    (LIBOR + 5.000%) (H)
      $1,592,918   07/31/18   $616,315   $631,357 
                       
    RPX Corp                  
    A provider of subscription services that help member companies mitigate the risk of patent disputes and reduce the cost of patent litigation.
    7.00% Term Loan due 10/23/2025 (LIBOR + 6.000%)  $2,500,000   *    2,450,517    2,443,750 
    * 10/22/20 and 09/28/21.                  
                       
    Ruffalo Noel Levitz                  
    A provider of enrollment management, student retention and career services, and fundraising management for colleges and universities.
    7.00% Term Loan due 05/29/2022 (LIBOR + 5.500%)  $1,229,180   01/08/19    1,225,603    1,229,180 
                       
    Safety Products Holdings, Inc.                  
    A manufacturer of highly engineered safety cutting tools.
    7.00% Term Loan due 12/15/2026
    (LIBOR + 6.000%)
      $1,673,426   12/15/20    1,640,742    1,635,774 
    Common Stock    29 shs.    12/16/20    29,262    37,868 
                1,670,004    1,673,642 
    Sandvine Corporation                  
    A provider of active network intelligence solutions.
    8.08% Second Lien Term Loan due 11/02/2026
    (LIBOR + 8.000%)
      $1,725,000   11/01/18    1,697,578    1,725,000 
                       
    Sara Lee Frozen Foods                  
    A provider of frozen bakery products, desserts and sweet baked goods.
    5.50% Lien Term Loan due 07/30/2025
    (LIBOR + 4.500%)
      $1,491,123   07/27/18    1,472,779    1,404,637 
                       
    Scaled Agile, Inc.                  
    A provider of training and certifications for IT professionals focused on software development.
    4.58% Term Loan due 06/28/2025 (LIBOR + 4.500%)  $531,087   06/27/19    528,178    531,087 
                       
    SEKO Worldwide, LLC                  
    A third-party logistics provider of ground, ocean, air and home delivery forwarding services.
    6.00% Term Loan due 12/30/2026
    (LIBOR + 5.000%) (H)
      $1,713,944   12/30/20    1,424,787    1,445,896 

     

     

     

     

    19 
     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    Smart Bear               
    A provider of web-based tools for software development, testing and monitoring.
    8.00% Second Lien Term Loan due 11/10/2028
    (LIBOR + 7.500%)
      $1,725,000   03/20/21   $1,680,560   $1,687,305 
                       
    Specified Air Solutions                  
    A manufacturer and distributor of heating, dehumidification and other air quality solutions.
    Limited Liability Company Unit (B)    726,845 uts.    02/20/19    2,298,574    11,600,451 
                       
    Springbrook Software                  
    A provider of vertical-market enterprise resource planning software and payments platforms focused on the local government end-market.
    6.75% Term Loan due 12/20/2026
    (LIBOR + 5.750%) (H)
      $1,636,857   12/23/19    1,310,752    1,332,137 
                       
    Stackline                  
    An e-commerce data company that tracks products sold through online retailers.
    8.75% Term Loan due 07/30/2028 (LIBOR + 7.750%)  $1,682,927   07/29/21    1,650,097    1,649,268 
    Common Stock (B)    1,036 shs.    07/30/21    42,078    42,078 
                1,692,175    1,691,346 
    Strahman Holdings Inc.                  
    A manufacturer of industrial valves and wash down equipment for a variety of industries, including chemical, petrochemical, polymer, pharmaceutical, food processing, beverage and mining.
    Preferred Stock Series A (B)    158,967 shs.    12/13/13    158,967    280,640 
    Preferred Stock Series A-2 (B)    26,543 shs.    09/10/15    29,994    46,859 
                188,961    327,499 
    Stratus Unlimited                  
    A nationwide provide of brand implementation services, including exterior and interior signage, refresh and remodel, and facility maintenance and repair.
    6.50% Term Loan due 06/08/2027
    (LIBOR + 6.000%) (H)
      $585,893   07/02/21    760,565    760,928 
    Limited Liability Company Unit (B)    75 uts.    06/30/21    74,666    74,670 
                835,231    835,598 
    Sunvair Aerospace Group Inc.                  
    An aerospace maintenance, repair, and overhaul provider servicing landing gears on narrow body aircraft.
    12% (1% PIK) Senior Subordinated Note
    due 08/01/2024
      $2,000,650   *    1,978,556    1,994,340 
    Preferred Stock Series A    28 shs.    12/21/20    71,176    88,640 
    Common Stock (B)    68 shs.    **    104,986    213,660 
    * 07/31/15 and 12/21/20.           2,154,718    2,296,640 
    ** 07/31/15 and 11/08/17.                  

     

     

     

    20 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    The Hilb Group, LLC               
    An insurance brokerage platform that offers insurance and benefits programs to middle-market companies throughout the Eastern seaboard.
    6.75% Term Loan due 09/30/2026
    (LIBOR + 5.750%) (H)
      $1,709,692   *   $1,584,406   $1,583,399 
    * 12/02/19 and 12/15/20.                  
                       
    Therma-Stor Holdings LLC                  
    A designer and manufacturer of dehumidifiers and water damage restoration equipment for residential and commercial applications.
    Limited Liability Company Unit (B)    19,696 uts.    11/30/17        10,698 
                       
    Transit Technologies LLC                  
    A software platform for the transportation market that offers end-to-end software solutions focused on operations, fleet management and telematics services.
    4.87% Term Loan due 02/10/2025
    (LIBOR + 4.750%) (H)
      $1,020,405   02/13/20    768,288    753,780 
                       
    Trident Maritime Systems                  
    A leading provider of turnkey marine vessel systems and solutions for government and commercial new ship construction as well as repair, refurbishment, and retrofit markets worldwide.
    6.50% Term Loan due 02/19/2026 (LIBOR + 5.500%)  $1,716,375   02/25/21    1,689,922    1,692,291 
                       
    Tristar Global Energy Solutions, Inc.                  
    A hydrocarbon and decontamination services provider serving refineries worldwide.
    12.5% (1.5% PIK) Senior Subordinated Note
    due 03/31/2022 (D)
      $1,204,904   01/23/15    1,203,934    301,226 
                       
    Truck-Lite                  
    A leading provider of harsh environment LED safety lighting, electronics, filtration systems, and telematics for a wide range of commercial vehicles, specialty vehicles, final mile delivery vehicles, off-road/off-highway, marine, and other adjacent harsh environment markets.
    7.25% Term Loan due 12/02/2026 (LIBOR + 6.250%)  $1,696,471   12/13/19    1,671,269    1,696,471 
                       
    Trystar, Inc.                  
    A niche manufacturer of temporary power distribution products for the power rental, industrial, commercial utility and back-up emergency markets.
    6.00% Term Loan due 10/01/2023 (LIBOR + 5.000%)  $2,279,962   09/28/18    2,261,917    2,266,281 
    Limited Liability Company Unit (B)(F)    49 uts.    09/28/18    49,676    43,164 
                2,311,593    2,309,445 
                       

     

     

     

     

    21 
     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

                    
    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

       

    Cost

        

    Fair Value

     
                       
    Turnberry Solutions, Inc.                  
    A provider of technology consulting services.
    7.00% Term Loan due 07/30/2026 (LIBOR + 6.000%)  $1,628,981   07/29/21   $1,597,525   $1,596,401 
                       
    U.S. Legal Support, Inc.                  
    A provider of court reporting, record retrieval and other legal supplemental services.
    6.75% Term Loan due 11/12/2024 (LIBOR + 5.750%)  $2,089,362   *    2,067,306    2,087,041 
    * 11/29/18 and 03/25/19.                  
                       
    U.S. Oral Surgery Management                  
    An operator of oral surgery practices providing medically necessary treatments.
    6.75% Term Loan due 12/31/2023
    (LIBOR + 5.750%) (H)
      $2,491,087   *    2,445,216    2,430,750 
    * 01/04/19, 10/01/19 and 07/02/21.                  
                       
    UBEO, LLC                  
    A dealer and servicer of printers and copiers to medium sized businesses.
    11.00% Term Loan due 10/03/2024  $1,558,661   11/05/18    1,542,792    1,558,661 
                       
    UroGPO, LLC                  
    A group purchasing organization that connects pharmaceutical companies with urology practices to facilitate the purchase of pharmaceutical drugs for discounted prices.
    6.75% Term Loan due 12/15/2026 (LIBOR + 5.750%)  $2,366,667   12/14/20    2,325,598    2,366,667 
                       
    VitalSource                  
    A provider of digital fulfillment software for the higher education sector.
    6.75% Term Loan due 06/01/2028 (LIBOR + 6.000%)  $1,702,753   06/01/21    1,670,323    1,672,451 
    Limited Liability Company Unit (B)(F)    1,891 uts.    06/01/21    18,909    20,488 
                1,689,232    1,692,939 
    VP Holding Company                  
    A provider of school transportation services for special-needs and homeless children in Massachusetts and Connecticut.
    5.63% Term Loan due 05/22/2024 (LIBOR + 5.500%)  $2,402,339   05/17/18    2,381,214    2,384,321 
                       
    Westminster Acquisition LLC                  
    A manufacturer of premium, all-natural oyster cracker products sold under the Westminster and Olde Cape Cod brands.
    12% (1% PIK) Senior Subordinated Note
    due 04/30/2022 (D)
      $383,062   08/03/15    382,227     
    Limited Liability Company Unit (B)(F)    370,241 uts.    08/03/15    370,241     
                752,468     
                       

     

     

     

     

    22 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)  

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Principal Amount,
    Shares, Units or
    Ownership Percentage

      

    Acquisition
    Date

     

    Cost

      

    Fair Value

     
                    
    Wolf-Gordon, Inc.               
    A designer and specialty distributor of wallcoverings and related building products, including textiles, paint, and writeable surfaces.
    Common Stock (B)    157 shs.    01/22/16   $62,177   $149,167 
                       
    World 50, Inc.                  
    A provider of exclusive peer-to-peer networks for C-suite executives at leading corporations.
    6.25% Term Loan due 01/10/2026 (LIBOR + 5.250%)  $378,152   09/21/20    368,999    378,152 
    5.50% Term Loan due 12/31/2025 (LIBOR + 4.500%)  $1,209,427   01/09/20    1,187,874    1,185,238 
                1,556,873    1,563,390 
    WP Supply Holding Corporation                  
    A distributor of fresh fruits and vegetables to grocery wholesalers and food service distributors in the upper Midwest.
    Common Stock (B)    1,500 shs.    11/03/11    150,000    211,119 
                       
    York Wall Holding Company                  
    A designer, manufacturer and marketer of wall covering products for both residential and commercial wall coverings.
    Preferred Stock Series A (B)    2,936 shs.    02/05/19    293,616    293,600 
    Common Stock (B)    2,046 shs.    *    200,418    321,343 
    * 03/04/15 and 02/07/18.           494,034    614,943 
                       
                       
    Total Private Placement Investments (E)          $139,783,087   $144,146,843 
                      

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    23 
     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)

     

     

     

    Corporate Restricted Securities: (A) (Continued) 

    Interest
    Rate

      

    Maturity
    Date

     

    Shares or
    Principal
    Amount

      

    Cost

      

    Market
    Value

     
                            
    Rule 144A Securities - 5.99%:                       
                            
    Bonds - 5.99%                       
    American Airlines Inc   11.750%  07/15/25  $500,000   $496,010   $618,750 
    BWAY Holding Company   7.250   04/15/25   750,000    705,474    745,428 
    Cleveland-Cliffs Inc.   9.875   10/17/25   331,000    356,647    379,823 
    CommScope Finance LLC   8.250   03/01/27   500,000    479,550    523,363 
    Coronado Finance Pty Ltd.   10.750   05/15/26   274,000    269,161    298,660 
    CVR Energy Inc.   5.750   02/15/28   500,000    458,540    495,430 
    Diebold Nixdorf   9.375   07/15/25   350,000    368,943    383,033 
    First Quantum Minerals Ltd.   7.500   04/01/25   500,000    477,462    512,915 
    First Quantum Minerals Ltd.   7.250   04/01/23   385,000    383,356    391,738 
    Houghton Mifflin Harcourt   9.000   02/15/25   500,000    493,075    531,775 
    LBC Tank Terminals Holding Netherlands B.V.   6.875   05/15/23   511,000    514,131    510,290 
    Neptune Energy Bondco PLC   6.625   05/15/25   500,000    494,601    514,375 
    Panther BF Aggregator 2 LP   8.500   05/15/27   100,000    93,599    106,375 
    Picou Holdings LLC   10.000   12/31/24   500,000    452,487    504,700 
    Prime Security Services, LLC   6.250   01/15/28   885,000    785,845    914,894 
    Terrier Media Buyer, Inc.   8.875   12/15/27   530,000    510,171    560,411 
    The Manitowoc Company, Inc.   9.000   04/01/26   500,000    489,527    535,535 
    Trident TPI Holdings Inc.   9.250   08/01/24   500,000    490,187    525,430 
    Verscend Holding Corp   9.750   08/15/26   482,000    507,082    507,908 
    Warrior Met Coal, Inc.   8.000   11/01/24   161,000    161,000    163,415 
                           
    Total Bonds                8,986,848    9,724,248 
                           
    Common Stock - 0.00%                      
    TherOX, Inc. (B)           2         
    Touchstone Health Partnership (B)          292         
                           
    Total Common Stock                     
                           
    Total Rule 144A Securities               $8,986,848   $9,724,248 
                           
    Total Corporate Restricted Securities               $148,769,935   $153,871,091 
                           

     

     

     

     

     

     

    24 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)  

     

     

     

    Corporate Public Securities - 3.32%: (A) 

    LIBOR
    Spread

      

    Interest
    Rate

      

    Maturity
    Date

     

    Shares or
    Principal
    Amount

      

    Cost

      

    Market
    Value

     
                            
    Bank Loans - 1.94%                            
    Almonde, Inc.   7.250%   8.250%  06/13/25   $500,000   $505,000   $502,330 
    Alpine US Bidco LLC   9.000    9.750   04/28/29    628,215    610,258    631,356 
    Edelman Financial Services   6.750    6.834   06/08/26    128,178    127,792    129,019 
    Kenan Advantage Group Inc.   7.250    8.000   08/17/27    264,317    259,082    261,674 
    Magenta Buyer LLC   8.250    9.000   05/03/29    503,333    498,011    502,704 
    PS Logistics LLC   4.500    5.500   03/01/25    407,063    409,096    406,216 
    STS Operating, Inc.   8.000    9.000   04/25/26    500,000    505,000    488,335 
    Syncsort Incorporated   7.250    8.000   04/23/29    222,222    220,590    222,129 
                                 
    Total Bank Loans                     3,134,829    3,143,763 
                                 
                                 
    Bonds - 0.84%                            
    Genesis Energy LP        6.500   10/01/25    337,000    323,020    335,315 
    Hecla Mining Company        7.250   02/15/28    500,000    474,599    538,580 
    Triumph Group, Inc.        7.750   08/15/25    500,000    502,637    494,613 
                                 
    Total Bonds                     1,300,256    1,368,508 
                                 
                                 
    Common Stock - 0.22%                            
    Tourmaline Oil Corp                51,632    131,743    356,037 
                                 
    Total Common Stock                     131,743    356,037 
                                 
                                 
    Preferred Stock - 0.32%                            
    B. Riley Financial Inc.                20,000    500,000    515,800 
                                 
    Total Preferred Stock                     500,000    515,800 
                                 
                                 
    Total Corporate Public Securities                    $5,066,828   $5,384,108 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    25 
     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)  

     

     

     

                        
    Short-Term Security:   

    Interest
    Rate/Yield^

      

    Maturity
    Date

       

    Principal
    Amount

        

    Cost

        

    Market Value

     
                            
    Commercial Paper - 3.69%                       
    American Honda Finance Corp.       0.160   10/12/21  $1,000,000   $999,951   $999,951 
    Aon plc   0.110   10/07/21   1,000,000    999,982    999,982 
    BASF Aktiengesellschaft   0.100   10/04/21   1,000,000    999,992    999,992 
    Duke Energy Corporation   0.120   10/18/21   1,000,000    999,943    999,943 
    Tampa Electric   0.170   10/07/21   1,000,000    999,972    999,972 
    VW Credit Inc.   0.150   10/14/21   1,000,000    999,949    999,949 
                            
    Total Short-Term Securities               $5,999,789   $5,999,789 
                            
                            
                            
    Total Investments   101.76%          $159,836,552   $165,254,988 
                            
    Other Assets   8.38                 13,605,126 
    Liabilities   (10.14)                (16,461,691)
                            
    Total Net Assets   100.00%               $162,398,423 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    (A)In each of the convertible note, warrant, and common stock investments, the issuer has agreed to provide certain registration rights.
    (B)Non-income producing security.
    (C)Security valued at fair value using methods determined in good faith by or under the direction of the Board of Trustees.
    (D)Defaulted security; interest not accrued.
    (E)Illiquid security. As of September 30, 2021 the values of these securities amounted to $144,146,843 or 88.76% of net assets.
    (F)Held in PI Subsidiary Trust
    (H)A portion of these securities contain unfunded commitments. As of September 30, 2021, total unfunded commitments amounted to $4,968,849 and had unrealized depreciation of $29,985 or 0.02% of net assets. See Note 7.
    ^Effective yield at purchase
    PIK- Payment-in-kind

     

     

    26 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)  

     

     

     

     

    Industry Classification: 

    Fair Value/
    Market Value

     
          
    AEROSPACE & DEFENSE - 5.82%     
    CTS Engines  $1,350,604 
    Dart Buyer, Inc.   1,389,609 
    International Marine and Industrial Applicators   1,706,077 
    Sunvair Aerospace Group Inc.   2,296,640 
    Trident Maritime Systems   1,692,291 
    Trident TPI Holdings Inc.   525,430 
    Triumph Group, Inc.   494,613 
        9,455,264 
          
    AIRLINES - 0.38%     
    American Airlines Inc   618,750 
          
          
    AUTOMOTIVE - 5.17%     
    American Honda Finance Corp.   999,951 
    Aurora Parts & Accessories LLC   358,426 
    English Color & Supply LLC   2,169,474 
    Holley Performance Products   2,397,213 
    JF Petroleum Group   673,007 
    Panther BF Aggregator 2 LP   106,375 
    Truck-Lite   1,696,471 
        8,400,917 
     
    BROKERAGE, ASSET MANAGERS & EXCHANGES - 0.98%
    The Hilb Group, LLC   1,583,399 
          
          
    BUILDING MATERIALS - 0.09%     
    Wolf-Gordon, Inc.   149,167 
          
          
    CHEMICALS - 2.14%     
    BASF Aktiengesellschaft   999,992 
    Kano Laboratories LLC   874,513 
    LBC Tank Terminals Holding
    Netherlands B.V.
       510,290 
    Polytex Holdings LLC   1,082,913 
        3,467,708 
          
    CONSUMER CYCLICAL SERVICES - 5.44%     
    Accelerate Learning   1,690,500 
    LYNX Franchising   2,445,774 
    MeTEOR Education LLC   1,164,825 
    PPC Event Services    
    Prime Security Services, LLC   914,894 
    PS Logistics LLC   406,216 

     

     

     

    Fair Value/
    Market Value

     
          
    ROI Solutions  $631,357 
    Turnberry Solutions, Inc.   1,596,401 
        8,849,967 
          
    CONSUMER PRODUCTS - 3.70%     
    1A Smart Start, Inc.   1,701,954 
    AMS Holding LLC   444,118 
    Blue Wave Products, Inc.   248,206 
    Elite Sportswear Holding, LLC    
    gloProfessional Holdings, Inc.   1,745,584 
    Handi Quilter Holding Company   611,695 
    HHI Group, LLC   554,024 
    Manhattan Beachwear Holding Company    
    Master Cutlery LLC   86,810 
    York Wall Holding Company   614,943 
        6,007,334 
          
    DIVERSIFIED MANUFACTURING - 5.81%     
    Advanced Manufacturing Enterprises LLC    
    F G I Equity LLC   662,166 
    MNS Engineers, Inc.   1,276,000 
    Motion Controls Holdings   14,724 
    Reelcraft Industries, Inc.   926,689 
    Resonetics, LLC   1,695,356 
    Safety Products Holdings, Inc.   1,673,642 
    Strahman Holdings Inc.   327,499 
    The Manitowoc Company, Inc.   535,535 
    Therma-Stor Holdings LLC   10,698 
    Trystar, Inc.   2,309,445 
        9,431,754 
          
    ELECTRIC - 2.44%     
    Duke Energy Corporation   999,943 
    Dwyer Instruments, Inc.   848,421 
    Electric Power Systems International, Inc.   1,117,882 
    Tampa Electric   999,972 
        3,966,218 
          
    ENVIRONMENTAL - 0.62%     
    ENTACT Environmental Services, Inc.   1,010,662 
          
          
    FINANCIAL OTHER - 2.09%     
    Beacon Pointe Advisors, LLC   968,846 
    B. Riley Financial Inc.   515,800 

     

     

     

     

     

    See Notes to Consolidated Financial Statements

    27 
     

     

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)  

     

     

     

     

    Industry Classification: (Continued) 

    Fair Value/
    Market Value

     
          
    Edelman Financial Services  $129,019 
    Foundation Risk Partners, Corp.   772,775 
    VW Credit Inc.   999,949 
        3,386,389 
          
    FOOD & BEVERAGE - 3.73%     
    Alpine US Bidco LLC   631,356 
    Del Real LLC   1,509,338 
    PANOS Brands LLC   2,302,633 
    Sara Lee Frozen Foods   1,404,637 
    Westminster Acquisition LLC    
    WP Supply Holding Corporation   211,119 
        6,059,083 
          
    HEALTHCARE - 6.37%     
    Cadence, Inc.   851,720 
    Ellkay   693,288 
    GD Dental Services LLC   12,927 
    Home Care Assistance, LLC   800,179 
    Navia Benefit Solutions, Inc.   1,006,111 
    RedSail Technologies   1,672,858 
    TherOX, Inc.    
    Touchstone Health Partnership    
    U.S. Oral Surgery Management   2,430,750 
    UroGPO, LLC   2,366,667 
    Verscend Holding Corp   507,908 
        10,342,408 
          
    INDUSTRIAL OTHER - 14.65%     
    Aftermath, Inc.   1,698,316 
    ASPEQ Holdings   1,157,395 
    Concept Machine Tool Sales, LLC   608,941 
    E.S.P. Associates, P.A.   252,534 
    IGL Holdings III Corp.   1,169,929 
    IM Analytics Holdings, LLC   806,318 
    Industrial Service Solutions   836,543 
    Media Recovery, Inc.   491,055 
    PB Holdings LLC   715,893 
    Specified Air Solutions   11,600,451 
    Stratus Unlimited   835,598 
    STS Operating, Inc.   488,335 
    UBEO, LLC   1,558,661 
    World 50, Inc.   1,563,390 
        23,783,359 

     

     

     

    Fair Value/
    Market Value

     
    MEDIA & ENTERTAINMENT - 2.67%     
    Advantage Software  $1,759,017 
    Cadent, LLC   890,428 
    HOP Entertainment LLC    
    Houghton Mifflin Harcourt   531,775 
    Music Reports, Inc.   599,118 
    Terrier Media Buyer, Inc.   560,411 
        4,340,749 
          
    METALS & MINING - 1.72%     
    Cleveland-Cliffs Inc.   379,823 
    Coronado Finance Pty Ltd.   298,660 
    First Quantum Minerals Ltd.   904,653 
    Hecla Mining Company   538,580 
    Picou Holdings LLC   504,700 
    Warrior Met Coal, Inc.   163,415 
        2,789,831 
          
    MIDSTREAM - 0.21%     
    Genesis Energy LP   335,315 
          
          
    OIL FIELD SERVICES - 0.54%     
    Neptune Energy Bondco PLC   514,375 
    Petroplex Inv Holdings LLC   6,787 
    Tourmaline Oil Corp   356,037 
        877,199 
          
    PACKAGING - 1.47%     
    ASC Holdings, Inc.   784,513 
    Brown Machine LLC   854,448 
    BWAY Holding Company   745,428 
        2,384,389 
          
    PAPER - 0.98%     
    Dunn Paper   1,597,350 
          
          
    PROPERTY & CASUALTY - 0.62%     
    Aon plc   999,982 
          
          
    REFINING - 0.52%     
    CVR Energy Inc.   495,430 
    MES Partners, Inc.   49,307 
    Tristar Global Energy Solutions, Inc.   301,226 
        845,963 

     

     

     

     

    See Notes to Consolidated Financial Statements

    28 
     

    Barings Participation Investors

    CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

    September 30, 2021

    (Unaudited)  

     

     

     

     

     

    Industry Classification: (Continued) 

    Fair Value/
    Market Value

     
          
    TECHNOLOGY - 24.12%     
    1WorldSync, Inc.  $2,440,215 
    Almonde, Inc.   502,330 
    Audio Precision   1,755,000 
    Claritas Holdings, Inc.   1,543,682 
    CloudWave   1,711,645 
    Clubessential LLC   1,703,438 
    Command Alkon   2,051,311 
    CommScope Finance LLC   523,363 
    Diebold Nixdorf   383,033 
    Follett School Solutions   1,690,716 
    GraphPad Software, Inc.   2,596,670 
    Halo Technology Bidco Limited   1,697,027 
    Magenta Buyer LLC   502,704 
    Options Technology Ltd   1,587,825 
    Recovery Point Systems, Inc.   1,361,359 
    REVSpring, Inc.   1,725,000 
    RPX Corp   2,443,750 
    Ruffalo Noel Levitz   1,229,180 
    Sandvine Corporation   1,725,000 
    Scaled Agile, Inc.   531,087 
    Smart Bear   1,687,305 
    Stackline   1,691,346 
    Springbrook Software   1,332,137 
    Syncsort Incorporated   222,129 
    Transit Technologies LLC   753,780 
    U.S. Legal Support, Inc.   2,087,041 
    VitalSource   1,692,939 
        39,171,012 
          

     

     

     

     

    Fair Value/
    Market Value

     
    TRANSPORTATION SERVICES - 9.48%     
    AIT Worldwide Logistics, Inc.  $1,743,990 
    BDP International, Inc.   2,481,092 
    FragilePAK   1,142,520 
    Omni Logistics, LLC   1,741,250 
    Pegasus Transtech Corporation   2,278,129 
    Rock-it Cargo   1,921,947 
    SEKO Worldwide, LLC   1,445,896 
    VP Holding Company   2,384,321 
    Kenan Advantage Group Inc.   261,674 
        15,400,819 
          
    Total Investments - 101.76%
    (Cost - $159,836,552)
      $165,254,988 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    See Notes to Consolidated Financial Statements

    29 
     

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    (Unaudited)

     

     

     

     

    1.History

    Barings Participation Investors (the “Trust”) was organized as a Massachusetts business trust under the laws of the Commonwealth of Massachusetts pursuant to a Declaration of Trust dated April 7, 1988.

    The Trust is a diversified closed-end management investment company. Barings LLC (“Barings”), 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 current yield and, when available, an opportunity for capital gains. The Trust’s principal investments are privately placed, below investment grade, long-term debt obligations including bank loans and mezzanine debt instruments. Such direct placement securities may, in some cases, be accompanied by equity features such as common stock, preferred stock, warrants, conversion rights, or other equity features. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers in private placement transactions. These investments are typically made to small or middle market companies. In addition, the Trust may invest, subject to certain limitations, in marketable debt securities (including high yield and/or investment grade securities) and marketable common stock. 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 (“PI Subsidiary Trust”) for the purpose of holding certain investments. The results of the PI Subsidiary Trust are consolidated in the accompanying financial statements. Footnote 2.D below discusses the Federal tax consequences of the PI 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 (“U.S. GAAP”).

    The Trustees have determined that the Trust is an investment company in accordance with Accounting Standards Codification (“ASC”) 946, Financial Services – Investment Companies, for the purpose of financial reporting.

    A. Fair Value Measurements:

    Under U.S. GAAP, fair value represents the price that should be received to sell an asset (exit price) in an orderly transaction between willing market participants at the measurement date.

    Determination of Fair Value

    The determination of the fair value of the Trust’s investments is the responsibility of the Trust’s Board of Trustees (the

     

     

     

    “Trustees”). The Trustees have adopted procedures for the valuation of the Trust’s securities and have delegated responsibility for applying those procedures to Barings. Barings has established a Pricing Committee which is responsible for setting the guidelines used in following the procedures adopted by the Trustees ensuring that those guidelines are being followed. Barings considers all relevant factors that are reasonably available, through either public information or information available to Barings, when determining the fair value of a security. 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 Barings. In approving valuations, the Trustees will consider reports by Barings analyzing each portfolio security in accordance with the procedures and guidelines referred to above, which include the relevant factors referred to below. Barings has agreed to provide such reports to the Trust at least quarterly. The consolidated financial statements include private placement restricted securities valued at $144,146,843 (88.76% of net assets) as of September 30, 2021 the values of which have been estimated by the Trustees based on the process described above 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.

    Independent Valuation Process

    The fair value of bank loans and equity investments that are unsyndicated or for which market quotations are not readily available, including middle-market bank loans, will be submitted to an independent provider to perform an independent valuation on those bank loans and equity investments as of the end of each quarter. Such bank loans and equity investments will be held at cost until such time as they are sent to the valuation provider for an initial valuation subject to override by the Adviser should it determine that there have been material changes in interest rates and/or the credit quality of the issuer. The independent valuation provider applies various methods (synthetic rating analysis, discounting cash flows, and re-underwriting analysis) to establish the rate of return a market participant would require (the “discount rate”) as of the valuation date, given market conditions, prevailing lending standards and the perceived credit quality of the issuer. Future expected cash flows for each investment are discounted back to present value using these discount rates in the discounted cash flow analysis. A range of value will be provided by the valuation provider and the Adviser will determine the point within that range that it will use in making valuation recommendations to the Trustees, and will report to the Trustees on its rationale for each such determination. The Adviser will continue to use its internal valuation model as a comparison point to validate

     

     


     

     

     

    30 
     

    Barings Participation Investors

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    (Unaudited)

     

     

     

    the price range provided by the valuation provider and, where applicable, in determining the point within that range that it will use in making valuation recommendations to the Trustees. If the Advisers’ Pricing Committee disagrees with the price range provided, it may make a fair value recommendation to the Trustees that is outside of the range provided by the independent valuation provider, and will notify the Trustees of any such override and the reasons therefore. In certain instances, the Trust may determine that it is not cost-effective, and as a result is not in the shareholders’ best interests, to request the independent valuation firm to perform the Procedures on certain investments. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio. Finally, the Trustees determined in good faith that the Trust’s investments were valued at fair value in accordance with the Trust’s valuation policies and procedures and the 1940 Act based on, among other things, the input of Barings, the Trust’s Audit Committee and the independent valuation firm.

    Following is a description of valuation methodologies used for assets recorded at fair value.

    Corporate Public Securities at Fair Value – Bank Loans, Corporate Bonds, Preferred Stocks and Common Stocks

    The Trust uses external independent third-party pricing services to determine the fair values of its Corporate Public Securities. At September 30, 2021, 100% of the carrying value of these investments was from external pricing services. In the event that the primary pricing service does not provide a price, the Trust utilizes the pricing provided by a secondary pricing service.

    Public debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Trust’s pricing services use multiple valuation techniques to determine fair value. In instances where significant market activity exists, the pricing services may utilize a market based approach through which quotes from market makers are used to determine fair value. In instances where significant market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, option adjusted spreads, credit spreads, estimated default rates, coupon rates, anticipated timing of principal underlying prepayments, collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

    The Trust’s investments in bank loans are normally valued at the bid quotation obtained from dealers in loans by an independent pricing service in accordance with the Trust’s valuation policies and procedures approved by the Trustees.

    Public equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sales price of that day.

     

     

     

    At least annually, Barings conducts reviews of the primary pricing vendors to validate that the inputs used in that vendors’ pricing process are deemed to be market observable as defined in the standard. While Barings is not provided access to proprietary models of the vendors, the reviews have included on-site walk-throughs of the pricing process, methodologies and control procedures for each asset class and level for which prices are provided. The reviews also include an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations. In addition, the pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of prices that fall outside expected ranges. Barings believes that the prices received from the pricing vendors are representative of prices that would be received to sell the assets at the measurement date (exit prices) and are classified appropriately in the hierarchy.

    Corporate Restricted Securities at Fair Value – Bank Loans, Corporate Bonds

    The fair value of certain notes is determined using an internal model that discounts the anticipated cash flows of those notes using a specific discount rate. Changes to that discount rate are driven by changes in general interest rates, probabilities of default and credit adjustments. The discount rate used within the models to discount the future anticipated cash flows is considered a significant unobservable input. Increases/(decreases) in the discount rate would result in a (decrease)/increase to the notes’ fair value.

    The fair value of certain distressed notes is based on an enterprise waterfall methodology which is discussed in the equity security valuation section below.

    Corporate Restricted Securities at Fair Value – Common Stock, Preferred Stock and Partnerships & LLC’s

    The fair value of equity securities is determined using an enterprise waterfall methodology. Under this methodology, the enterprise value of the company is first estimated and that value is then allocated to the company’s outstanding debt and equity securities based on the documented priority of each class of securities in the capital structure. Generally, the waterfall proceeds from senior debt, to senior and junior subordinated debt, to preferred stock, then finally common stock.

    To estimate a company’s enterprise value, the company’s trailing twelve months earnings before interest, taxes, depreciation and amortization (“EBITDA”) is multiplied by a valuation multiple.

    Both the company’s EBITDA and valuation multiple are considered significant unobservable inputs. Increases/(decreases) to the company’s EBITDA and/or valuation multiple would result in increases/(decreases) to the equity value.

     

     


     

     

     

     

    31 
     

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    (Unaudited)

     

     

     

    Short-Term Securities

    Short-term securities with more than sixty days to maturity are valued at fair value, using external independent third-party services. Short-term securities, of sufficient credit quality, having a maturity of sixty days or less are valued at amortized cost, which approximates fair value.

    New Accounting Pronouncement

    In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update 2020-04 (“ASU 2020-04”) “Reference Rate Reform (Topic 848): Facilitation of the

     

     

     

    Effects of Reference Rate Reform on Financial Reporting.” This guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Trust expects that the adoption of this guidance will not have a material impact on the Trust’s financial position, result of operations or cash flows.

     

     


    Fair Value Hierarchy

    The Trust categorizes its investments measured at fair value in three levels, based on the inputs and assumptions used to determine fair value. These levels are as follows:

    Level 1 – quoted prices in active markets for identical securities

    Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

    Level 3 – significant unobservable inputs (including the Trust’s own assumptions in determining the fair value of investments)

    The following table summarizes the levels in the fair value hierarchy into which the Trust’s financial instruments are categorized as of September 30, 2021.

    The fair values of the Trust’s investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of September 30, 2021 are as follows:

     

                     
    Assets:  Total   Level 1   Level 2   Level 3 
    Restricted Securities                    
    Corporate Bonds  $20,577,584   $   $9,724,248   $10,853,336 
    Bank Loans   112,696,112            112,696,112 
    Common Stock - U.S.   1,937,035            1,937,035 
    Preferred Stock   1,365,262            1,365,262 
    Partnerships and LLCs   17,295,098            17,295,098 
    Public Securities                    
    Bank Loans   3,143,763        1,748,029    1,395,734 
    Corporate Bonds   1,368,508        1,368,508     
    Common Stock - U.S.   356,037    322,571        33,466 
    Preferred Stock   515,800        515,800     
    Short-term Securities   5,999,789    5,999,789         
    Total  $165,254,988   $6,322,360   $13,356,585   $145,576,043 

     

    See information disaggregated by security type and industry classification in the Consolidated Schedule of Investments.

     

     

     

     

     

    32 
     

    Barings Participation Investors

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    (Unaudited)

     

     

     

    Quantitative Information about Level 3 Fair Value Measurements

    The following table represents quantitative information about Level 3 fair value measurements as of September 30, 2021.

     

               
      Fair Value Valuation
    Technique
    Unobservable
    Inputs
    Range Weighted*
               
    Bank Loans $  90,605,215 Market Yield Yield Analysis 5.6% - 29.6% 8.0%
               
    Corporate Bonds $  10,853,336 Income Approach Implied Spread 10.6% - 21.5% 14.6%
               
    Equity Securities** $  20,369,838 Enterprise Value Waterfall Approach Valuation Multiple 5.0x to 25.3x 13.4x

      

    Certain of the Trust’s Level 3 equity securities investments may be valued using unadjusted inputs that have not been internally developed by the Trust, including recently purchased securities held at cost. As a result, fair value of assets of $23,747,654 have been excluded from the preceding table.

     

    *The weighted averages disclosed in the table above were weighted by relative fair value
    **Including partnerships and LLC’s

     

    Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

     

    Assets:  Beginning
    balance at
    12/31/2020
       Included in
    earnings
       Purchases   Sales   Prepayments   Transfers
    into
    Level 3
       Transfers
    out of
    Level 3
       Ending
    balance at
    9/30/2021
     
    Restricted Securities                                        
    Corporate Bonds  $18,359,723   $606,140   $39,506   $(4,104,643)  $(4,047,390)  $   $   $10,853,336 
    Bank Loans   88,124,979    1,008,218    36,113,739        (15,687,915)   3,137,091        112,696,112 
    Common Stock - U.S.   2,767,599    1,308,038    42,078    (2,209,940)       29,260        1,937,035 
    Preferred Stock   2,252,826    (122,265)       (765,299)               1,365,262 
    Partnerships and LLCs   8,261,019    13,131,001    2,372,908    (6,469,830)               17,295,098 
    Public Securities                                        
    Bank Loans   1,137,471    112,145    1,366,308        (1,618,781)   398,591        1,395,734 
    Common Stock - U.S.       33,466                        33,466 
    Corporate Bonds                                
       $120,903,617   $16,076,743   $39,934,539   $(13,549,712)  $(21,354,086)  $3,564,942   $   $145,576,043 
    *For the six months ended September 30, 2021, transfers into and out of Level 3 were the result of changes in the observability of significant inputs for certain portfolio companies.

     

     

     

     

     

     

     

     

     

    33 
     

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    (Unaudited)

     

     

     

    Income, Gains and Losses on Level 3 assets included in Net Increase in Net Assets resulting from Operations for the year are presented in the following accounts on the Statement of Operations:

     

       Net Increase in
    Net Assets
    Resulting from
    Operations
       Change in
    Unrealized
    Gains &
    (Losses) in
    Net Assets
    from assets
    still held
     
             
    Interest (Amortization)  $303,742   $ 
               
    Net realized gain on investments before taxes   6,036,495     
               
    Net change in unrealized appreciation of investments before taxes   9,736,506    10,892,213 

     

    B. Accounting for Investments:

    Investment Income

    Investment transactions are accounted for on the trade date. Interest income, including the amortization of premiums and accretion of discounts on bonds held using the yield-to-maturity method, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if the Trust otherwise does not expect the borrower to be able to service its debt and other obligations, the Trust will place the investment on non-accrual status and will cease recognizing interest income on that investment for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Trust writes off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. As of September 30, 2021, the fair value of the Trust’s non-accrual assets was $4,065,210, or 2.5% of the total fair value of the Trust’s portfolio, and the cost of the Trust’s non-accrual assets was $9,461,929, or 5.9% of the total cost of the Trust’s portfolio.

    Payment-in-Kind Interest

    The Trust currently holds, and expects to hold in the future, some investments in its portfolio that contain Payment-in-Kind (“PIK”) interest provisions. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the investment, rather than being paid to the Trust in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment. PIK interest, which is a non-cash source of income at the time of recognition, is included in the Trust’s taxable income and therefore affects the amount the Trust is required to distribute

     

     

    to its stockholders to maintain its qualification as a “regulated investment company” for federal income tax purposes, even though the Trust has not yet collected the cash.

    Generally, when current cash interest and/or principal payments on an investment become past due, or if the Trust otherwise does not expect the borrower to be able to service its debt and other obligations, the Trust will place the investment on PIK non-accrual status and will cease recognizing PIK interest income on that investment for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Trust writes off any accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible. As of September 30, 2021, the Trust held no PIK non-accrual assets.

    Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments

    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 U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.

    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 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.

    The Trust is taxed as a regulated investment company and is therefore limited as to the amount of non-qualified income that it may receive as the result of operating a trade or business, e.g. the Trust’s pro rata share of income allocable to the Trust by a partnership operating company. The Trust’s violation of this limitation could result in the loss of its status as a regulated investment company, thereby subjecting all of its net income and capital gains to corporate taxes prior to distribution to its shareholders. The Trust, from time-to-time, identifies investment opportunities in the securities of entities that could cause such trade or business income to be allocable to the Trust. The PI Subsidiary Trust (described in

     

     


     

     

     

     

     

    34 
     

    Barings Participation Investors

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    (Unaudited)

     

     

    Footnote 1, above) was formed in order to allow investment in such securities without adversely affecting the Trust’s status as a regulated investment company.

    The PI Subsidiary Trust is not taxed as a regulated investment company. Accordingly, prior to the Trust receiving any distributions from the PI Subsidiary Trust, all of the PI Subsidiary Trust’s taxable income and realized gains, including non-qualified income and realized gains, is subject to taxation at prevailing corporate tax rates. As of September 30, 2021, the PI Subsidiary Trust has incurred income tax expense of $47,658.

    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 September 30, 2021, the PI Subsidiary Trust has no deferred tax liability.

    E. Distributions to Shareholders:

    The Trust records distributions to shareholders from distributable earnings and net realized gains, if any, on the ex-dividend date. The Trust’s 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.

    3.Investment Advisory and Administrative Services Contract

    A. Services:

    Under an Investment Advisory and Administrative Services Contract (the “Contract”) with the Trust, Barings has agreed to use its best efforts to present to the Trust a continuing and suitable investment program consistent with the investment objectives and policies of the Trust. Barings 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, Barings also provides administration of the day-to-day operations of the Trust and provides the Trust with office space and office equipment, accounting and bookkeeping services, and necessary executive, clerical and secretarial personnel for the performance of the foregoing services.

    B. Fee:

    For its services under the Contract, Barings is paid a quarterly investment advisory fee equal to 0.225% of the value of the Trust’s net assets as of the last business day of each fiscal quarter, an amount approximately equivalent to 0.90% on an annual basis. A majority of the Trustees, including a majority of the Trustees who are not interested persons of the Trust or of Barings, approve the valuation of the Trust’s net assets as of such day.

     

     

     

    4.Borrowings

    Senior Secured Indebtedness

    MassMutual holds the Trust’s $15,000,000 Senior Fixed Rate Convertible Note (the “Note”) issued by the Trust on December 13, 2011. The Note is due December 13, 2023 and accrues interest at 4.09% per annum. MassMutual, at its option, can convert the principal amount of the Note into common shares. The dollar amount of principal would be converted into an equivalent dollar amount of common shares based upon the average price of the common shares for ten business days prior to the notice of conversion. For the nine months ended September 30, 2021, the Trust incurred total interest expense on the Note of $460,125.

    The Trust may redeem the Note, in whole or in part, at the principal amount proposed to be redeemed together with the accrued and unpaid interest thereon through the redemption date plus the Make Whole Premium. The Make Whole Premium equals the excess of (i) the present value of the scheduled payments of principal and interest which the Trust would have paid but for the proposed redemption, discounted at the rate of interest of U.S. Treasury obligations whose maturity approximates that of the Note plus 0.50% over (ii) the principal of the Note proposed to be redeemed.

    Credit Facility

    On July 22, 2021 (the “Effective Date”), MassMutual provided to the Trust, a five-year $15,000,000 committed revolving credit facility. Interest charged is at the rate of LIBOR (London Interbank Offered Rate) plus 2.25% on the outstanding borrowings. The Trust will also be responsible for paying a commitment fee of 0.50% on the unused amount. For purposes of calculating the commitment fee for the period from the Effective Date to the earlier to occur of (x) the date that is 270 days after the Effective Date and (y) the first date on which the aggregate outstanding borrowings is greater than $7,500,000, the unused amount shall be deemed to be in an amount equal to $7,500,000. As of September 30, 2021, the Trust had no outstanding borrowings on the revolving credit facility.

    5.Purchases and Sales of Investments
      

    For the nine
    months ended
    9/30/2021

     
      

    Cost of
    Investments
    Acquired

      

    Proceeds
    from
    Sales or
    Maturities

     
               
    Corporate restricted securities  $40,172,088   $43,992,116 
    Corporate public securities   3,047,986    19,103 
    6.Investment Risks

    In the normal course of its business, the Trust trades various financial instruments and enters into certain investment activities with investment risks. These risks include: (i) market risk, (ii) volatility risk and (iii) credit, counterparty and liquidity

     

     

     

     

     

     

     

    35 
     

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    (Unaudited)

     

     

     

    risk. It is the Trust’s policy to identify, measure and monitor risk through various mechanisms including risk management strategies and credit policies. These include monitoring risk guidelines and diversifying exposures across a variety of instruments, markets and counterparties. There can be no assurance that the Trust will be able to implement its credit guidelines or that its risk monitoring strategies will be successful.

    Impacts of COVID-19

    The pandemic related to the global spread of novel coronavirus disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual companies and sectors, and the securities and commodities markets in general. This pandemic, the full effects of which are still unknown, has resulted in substantial market volatility and may continue to adversely impact the prices and liquidity of the Trust’s investments and the Trust’s performance.

    LIBOR

    The United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced a desire to phase out the use of LIBOR by the end of 2021. LIBOR has historically been a common benchmark interest rate index used to make adjustments to variable-rate loans. It is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments and borrowing arrangements. The transition process might lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. It could also lead to a reduction in the value of some LIBOR-based investments held by a fund and reduce the effectiveness of new hedges placed against existing LIBOR-based investments. While some LIBOR-based instruments contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, not all have such provisions and there may be significant uncertainty regarding the effectiveness of any such alternative methodologies. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur prior to the end of 2021.

    7.Commitments and Contingencies

    During the normal course of business, the Trust may enter into contracts and agreements that contain a variety of representations and warranties. The exposure, if any, to the Trust under these arrangements is unknown as this would involve future claims that may or may not be made against the Trust and which have not yet occurred. The Trust has no history of prior claims related to such contracts and agreements.

     

     

     

    At September 30, 2021 the Trust had the following unfunded commitments:

           

    Investment

    Unfunded Amount

     

    Fair Value

     
    Dart Buyer, Inc $281,175  $279,183 
    Dwyer Instruments, Inc.  131,579   131,492 
    Electric Power Systems International Inc  113,921   114,113 
    Foundation Risk Partners, Corp.  222,222   228,577 
    FragilePAK  539,063   539,883 
    Home Care Assistance, LLC  38,680   38,871 
    IGL Holdings III Corp. (fka Inovar Packaging Group)  511,653   510,091 
    Kano Laboratories LLC  395,138   401,875 
    Navia Benefit Solutions Inc  690,000   691,282 
    ROI Solutions, LLC  961,561   970,641 
    SEKO Worldwide, LLC  250,909   253,999 
    Springbrook Software (SBRK Intermediate, Inc.)  304,719   311,264 
    Stratus Unlimited (V-Sky Co-Invest Aggregator LP)  172,106   172,247 
    The Hilb Group, LLC  93,056   95,749 
    Transit Technologies LLC  240,095   236,682 
    US Oral Surgery Management (USOSM)  22,971   22,884 
       4,968,849  $4,998,834 

     

    As of September 30, 2021 unfunded commitments had unrealized appreciation of $29,985 or 0.02% of net assets.

    8.Quarterly Results of Investment Operations (unaudited)

     

       March 31, 2021 
      

    Amount

      

    Per Share

     
               
    Investment income  $2,742,160      
    Net investment income   2,059,266   $0.19 
    Net realized and unrealized gain on investments (net of taxes)   4,123,347    0.39 
               
       June 30, 2021 
      

    Amount

      

    Per Share

     
               
    Investment income  $2,799,993      
    Net investment income   2,108,892   $0.20 
    Net realized and unrealized loss on investments (net of taxes)   4,093,744    0.39 
               
       September 30, 2021 
      

    Amount

      

    Per Share

     
               
    Investment income  $2,798,220      
    Net investment income   2,079,446   $0.20 
    Net realized and unrealized loss on investments (net of taxes)   7,997,029    0.75 

     

     


     

     

     

    36 
     

    Barings Participation Investors

     

     

     

    This privacy notice is being provided on behalf of Barings LLC and its affiliates: Barings Securities LLC; Barings Australia Pty Ltd; Barings Japan Limited; Barings Investment Advisers (Hong Kong) Limited; Barings Funds Trust; Barings Global Short Duration High Yield Fund; Barings BDC, Inc.; Barings Corporate Investors and Barings Participation Investors (together, for purposes of this privacy notice, “Barings”).

    When you use Barings you entrust us not only with your hard-earned assets but also with your personal and financial data. We consider your data to be private and confidential, and protecting its confidentiality is important to us. Our policies and procedures regarding your personal information are summarized below.

    We may collect non-public personal information about you from:

    Applications or other forms, interviews, or by other means;
    Consumer or other reporting agencies, government agencies, employers or others;
    Your transactions with us, our affiliates, or others; and
    Our Internet website.

    We may share the financial information we collect with our financial service affiliates, such as insurance companies, investment companies and securities broker-dealers. Additionally, so that we may continue to offer you products and services that best meet your investment needs and to effect transactions that you request or authorize, we may disclose the information we collect, as described above, to companies that perform administrative or marketing services on our behalf, such as transfer agents, custodian banks, service providers or printers and mailers that assist us in the distribution of investor materials or that provide operational support to Barings. These companies are required to protect this information and will use this information only for the services for which we hire them, and are not permitted to use or share this information for any other purpose. Some of these companies may perform such services in jurisdictions other than the United States. We may share some or all of the information we collect with other financial institutions with whom we jointly market products. This may be done only if it is permitted by the state in which you live. Some disclosures may be limited to your name, contact and transaction information with us or our affiliates.

    Any disclosures will be only to the extent permitted by federal and state law. Certain disclosures may require us to get an “opt-in” or “opt-out” from you. If this is required, we will do so before information is shared. Otherwise, we do not share any personal information about our customers or former customers unless authorized by the customer or as permitted by law.

    We restrict access to personal information about you to those employees who need to know that information to provide products and services to you. We maintain physical, electronic and procedural safeguards that comply with legal standards to guard your personal information. As an added measure, we do not include personal or account information in non-secure e-mails that we send you via the Internet without your prior consent. We advise you not to send such information to us in non-secure e-mails.

    This joint notice describes the privacy policies of Barings, the Funds and Barings Securities LLC. It applies to all Barings and the Funds accounts you presently have, or may open in the future, using your social security number or federal taxpayer identification number - whether or not you remain a shareholder of our Funds or as an advisory client of Barings. As mandated by rules issued by the Securities and Exchange Commission, we will be sending you this notice annually, as long as you own shares in the Funds or have an account with Barings.

    Barings Securities LLC is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). Investors may obtain information about SIPC including the SIPC brochure by contacting SIPC online at www.sipc.org or calling (202)-371-8300. Investors may obtain information about FINRA including the FINRA Investor Brochure by contacting FINRA online at www.finra.org or by calling (800) 289-9999.

    April 2019

     

     

     

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    Members of the Board of
    Trustees

    Clifford M. Noreen

    Chairman

    Michael H. Brown*

    Barbara M. Ginader*

    Edward P. Grace III*

    Eric J. Lloyd

    Susan B. Sweeney*

    Maleyne M. Syracuse*

    *Member of the Audit Committee

    Officers

     

    Christina Emery

    President

    Jonathan Bock

    Chief Financial Officer

    Jill Dinerman

    Chief Legal Officer

    Michael Cowart

    Chief Compliance Officer

    Elizabeth Murray

    Principal Accounting Officer

    Christopher D. Hanscom

    Treasurer

    Ashlee Steinnerd

    Secretary

    Alexandra Pacini

    Assistant Secretary

    Sean Feeley

    Vice President

    Jonathan Landsberg

    Vice President

     

     

    DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

     

    Barings Participation Investors (the “Trust”) offers a Dividend Reinvestment and Cash Purchase Plan (the “Plan”). The Plan provides a simple and automatic way for shareholders to add to their holdings in the Trust through the receipt of dividend shares issued by the Trust or through the reinvestment of cash dividends in Trust shares purchased in the open market. The dividends of each shareholder will be automatically reinvested in the Trust by DST Systems, Inc., the Transfer Agent, in accordance with the Plan, unless such shareholder elects not to participate by providing written notice to the Transfer Agent. A shareholder may terminate his or her participation by notifying the Transfer Agent in writing.

    Participating shareholders may also make additional contributions to the Plan from their own funds. Such contributions may be made by personal check or other means in an amount not less than $100 nor more than $5,000 per quarter. Cash contributions must be received by the Transfer Agent at least five days (but no more then 30 days) before the payment date of a dividend or distribution.

    Whenever the Trust declares a dividend payable in cash or shares, the Transfer Agent, acting on behalf of each participating shareholder, will take the dividend in shares only if the net asset value is lower than the market price plus an estimated brokerage commission as of the close of business on the valuation day. The valuation day is the last day preceding the day of dividend payment.

    When the dividend is to be taken in shares, the number of shares to be received is determined by dividing the cash dividend by the net asset value as of the close of business on the valuation date or, if greater than net asset value, 95% of the closing share price. If the net asset value of the shares is higher than the market value plus an estimated commission, the Transfer Agent, consistent with obtaining the best price and execution, will buy shares on the open market at current prices promptly after the dividend payment date.

    The reinvestment of dividends does not, in any way, relieve participating shareholders of any federal, state or local tax. For federal income tax purposes, the amount reportable in respect of a dividend received in newly-issued shares of the Trust will be the fair market value of the shares received, which will be reportable as ordinary income and/or capital gains.

    As compensation for its services, the Transfer Agent receives a fee of 5% of any dividend and cash contribution (in no event in excess of $2.50 per distribution per shareholder.)

    Any questions regarding the Plan should be addressed to DST Systems, Inc., Transfer Agent for Barings Participation Investors’ Dividend Reinvestment and Cash Purchase Plan, P.O. Box 219086, Kansas City, MO 64121-9086.

     

     

     

     

     

         
         

     

     

     

    Barings

    Participation Investors

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

            PI6217

     

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