<PAGE>
TO OUR SHAREHOLDERS:
We are pleased to present MassMutual Corporate Investors' report for the first
nine months of 1995.
The September 30th net asset value per share of Corporate Investors reached
another record high at $39.68 primarily reflecting continued strength in our
equity related investments and stronger Trust earnings. Net investment income
for the nine months increased to $8.4 million or $1.98 per share from $7.3
million or $1.73 per share for the comparable period in 1994. Net investment
income for the quarter increased to $.69 per share compared with $.64 per share
in the prior quarter. This increase in earnings is partly attributable to our
strong private placement activity with three new financings completed during the
quarter. However, based on the terms of our note agreements, two private
placement issuers, CompuCom Systems, Inc. and Exide Electronics Group, Inc.,
will force conversion of our notes into stock, thereby preserving our capital
gains potential but decreasing current net investment income.
The three new investments purchased during the quarter are Cains Foods, L.P.,
Intermetrics, Inc., and Jackson Products, Inc. and total about $7.6 million.
Together these investments provide a weighted average coupon of about 11.3% in
addition to their capital gains potential via their equity features. A brief
description of these companies is provided in the Schedule of Investments.
The Trust's total return performance based on earnings and change in net asset
value was 24.9% for the twelve months ended September 30, 1995. In comparison,
the Lehman Brothers Government/Corporate Bond Index was up 14.3% and the
Standard & Poor's Industrial Index Stock was up 28.1% for the same period.
The Trust realized capital gains of $2.6 million or $.62 per share during the
third quarter, bringing our year-to-date gains to $11.3 million or $2.66 per
share. Of this amount, $1.00 represents short-term gains and $1.66 represents
long-term gains. From our restricted portfolio, we partially or completely
disposed of nine companies at a net gain of over $1 million for the quarter. On
the public side, we continued to be very successful in generating profits and
realized $1.6 million of net gains during the quarter.
At September 30, 1995 the Trust was 97.2% invested long-term, having 2.8% of the
portfolio in cash and short-term issues. The Trust had 61.7% of the portfolio
invested in seventy private placement and Rule 144A issues. Of this amount,
28.6% have equity features. Counting our publicly traded equity related issues,
the portfolio had a 41.2% equity orientation. In addition to the gains realized
during the year, as of mid-October, 1995, there were twelve private placement
companies in the portfolio in which the combined public stock market value
exceeded the Trust's cost or exercise price by nearly $18 million.
At the October Board meeting, the Trustees declared a dividend of 70 cents per
share payable on November 9, 1995 to shareholders of record on October 31, 1995.
A dividend of 70 cents per share was paid in the preceding quarter. We thank you
for your continued support and interest in Corporate Investors.
Sincerely,
/s/ Stuart H. Reese
--------------------
Stuart H. Reese
President
October 31, 1995
1
<PAGE>
MassMutual Corporate Investors
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Assets:
Investments (Notes 2A, 2B and 5)
(See Schedule of Investments)
Corporate restricted securities at fair value
(Cost 1995 - $109,550,905;
1994 - $92,364,572)............................... $ 116,973,617 $ 92,852,403
Corporate public securities at market value
(Cost 1995 - $64,751,604;
1994 - $73,819,266)............................... 67,182,612 71,781,999
Short-term securities at cost plus earned
discount which approximates market value.......... 2,814,059 760,000
------------- -------------
186,970,288 165,394,402
Cash............................................... 2,500,448 25,327
Interest and dividends receivable, net............. 3,258,045 3,043,958
Receivable for investments sold.................... 957,530 128,357
Receivable for principal payments.................. 33,911 15,000
Other assets....................................... 4,043 5,672
------------- -------------
Total assets..................................... $ 193,724,265 $ 168,612,716
============= =============
Liabilities:
Payable for investments purchased................. $ 3,879,193 $ 1,308,000
Management fee payable (Note 3)................... 633,469 549,355
Note payable (Note 4)............................. 20,000,000 20,000,000
Interest payable (Note 4)......................... 136,211 136,211
Accrued expenses.................................. 150,396 124,455
------------- -------------
Total liabilities............................... 24,799,269 22,118,021
------------- -------------
Net Assets:
Common shares, par value $1.00 per share;
an unlimited number authorized.................... 4,256,724 4,256,724
Additional paid-in capital......................... 98,590,717 98,590,717
Retained net realized gain on investments,
prior years....................................... 42,226,726 42,226,726
Undistributed net investment income (Note 2C)...... 2,664,534 2,628,054
Undistributed net realized gain
on investments.................................... 11,332,575 341,910
Net unrealized appreciation (depreciation)
of investments (Notes 2A and 5)................... 9,853,720 (1,549,436)
------------- -------------
Total net assets................................. 168,924,996 146,494,695
------------- -------------
Total liabilities and net assets................. $ 193,724,265 $ 168,612,716
============= =============
Common shares issued and
outstanding....................................... 4,256,724 4,256,724
============= =============
Net asset value per share......................... $ 39.68 $ 34.41
============= =============
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
STATEMENT OF OPERATIONS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -------------
<S> <C> <C>
Investment Income (Note 2B):
Interest........................................... $10,729,780 $ 9,792,116
Dividends.......................................... 549,525 311,095
----------- -----------
Total income..................................... 11,279,305 10,103,211
----------- -----------
Expenses:
Management fee (Note 3)............................ 1,802,469 1,663,941
Trustees' fees and expenses........................ 71,421 71,060
Transfer Agent/Registrar's expenses................ 90,305 77,661
Custodian's fees................................... 19,764 26,103
Interest (Note 4).................................. 799,500 799,500
Reports to shareholders............................ 25,560 34,170
Audit and legal.................................... 32,667 44,996
Other.............................................. 19,068 41,468
----------- -----------
Total expenses................................... 2,860,754 2,758,899
----------- -----------
Net investment income.............................. 8,418,551 7,344,312
----------- -----------
Net realized and unrealized gain (loss)
on investments (Notes 2A and 2B):
Net realized gain on investments................... 11,311,322 1,448,437
Net change in unrealized appreciation/depreciation
of investments.................................... 14,921,384 (5,043,799)
----------- -----------
Net gain (loss) on investments................... 26,232,706 (3,595,362)
----------- -----------
Net increase in net assets
resulting from operations......................... $34,651,257 $ 3,748,950
=========== ===========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -------------
<S> <C> <C>
Net increase (decrease) in cash:
Cash flows from operating activities:
Interest and dividends received................... $ 10,434,572 $ 8,882,916
Interest expense paid............................. (799,500) (826,150)
Operating expenses paid........................... (1,922,984) (1,926,734)
------------ ------------
Net cash provided by operating activities........ 7,712,088 6,130,032
------------ ------------
Cash flows from investing activities:
Change in short-term portfolio securities, net.... 2,133,136 4,111,897
Purchase of portfolio securities.................. (76,085,621) (59,851,028)
Proceeds from disposition of portfolio securities. 77,667,625 58,557,390
------------ ------------
Net cash provided by investing activities........ 3,715,140 2,818,259
------------ ------------
Net cash provided by operating and
investing activities............................. 11,427,228 8,948,291
------------ ------------
Cash flows from financing activities:
Cash dividends paid from net investment
income........................................... (7,985,606) (7,155,040)
Cash dividends paid from net realized gain
on investments................................... (953,515) (1,784,081)
------------ ------------
Net cash used for financing activities........... (8,939,121) (8,939,121)
------------ ------------
Net increase in cash............................... 2,488,107 9,170
Cash - beginning of year........................... 12,341 16,157
------------ ------------
Cash - end of period............................... $ 2,500,448 $ 25,327
============ ============
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
STATEMENT OF CASH FLOWS (Continued)
For the nine months ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -------------
<S> <C> <C>
Reconciliation of net increase (decrease) in
net assets to net cash from operating and
investing activities:
Net increase in net assets
resulting from operations......................... $ 34,651,257 $ 3,748,950
------------ ------------
(Increase) decrease in investments................. (28,100,189) 2,431,767
Increase in interest and dividends
receivable, net................................... (266,466) (676,301)
Decrease in receivable for
investments sold.................................. 1,163,116 2,611,794
Increase in receivable for principal
payments.......................................... (33,911) (15,000)
(Increase) decrease in other assets................ (4,043) 16,828
Increase in payable for investments
purchased......................................... 3,879,193 841,066
Increase (decrease) in management fee
payable........................................... 107,595 (8,289)
Decrease in interest payable....................... -- (26,650)
Increase in accrued expenses....................... 30,676 24,126
------------ -----------
Total adjustments to net assets from
operations..................................... (23,224,029) 5,199,341
------------ -----------
Net cash provided by operating and
investing activities........................... $ 11,427,228 $ 8,948,291
============ ============
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income............................. $ 8,418,551 $ 7,344,312
Net realized gain on investments.................. 11,311,322 1,448,437
Net change in unrealized
appreciation/depreciation of investments......... 14,921,384 (5,043,799)
------------ -----------
Net increase in net assets resulting
from operations................................... 34,651,257 3,748,950
Dividends to shareholders from:
Net investment income (1995 - $1.28 per share;
1994 - $1.14 per share).......................... (5,448,607) (4,852,665)
Net realized gains on investments
(1995 - $.12 per share;
1994 - $.26 per share)........................... (510,807) (1,106,748)
------------ -----------
Total increase (decrease)....................... 28,691,843 (2,210,463)
Net assets, beginning of year...................... 140,233,153 148,705,158
------------ ------------
Net assets, end of period (including
undistributed net investment income in
1995 - $2,664,534; 1994 - $2,628,054)............. $168,924,996 $146,494,695
============ ============
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
SELECTED PER SHARE DATA
Selected data for each common share outstanding for the periods ended:
<TABLE>
<CAPTION>
For the
period ended For the
9/30/95 year ended
(Unaudited) 12/31/94
------------ ----------
<S> <C> <C>
Net asset value:
Beginning of year.......................... $ 32.94 $ 34.93
--------- ----------
Net investment income....................... 1.98 2.33
Net realized and unrealized gain
(loss) on investments...................... 6.16 (1.52)
--------- ----------
Total from investment operations............ 8.14 .81
--------- ----------
Dividends from net investment income to
common shareholders........................ (1.28) (2.32)
Distributions from net realized gain on
investments to common shareholders......... (.12) (.48)
--------- ----------
Total distributions......................... (1.40) (2.80)
--------- ----------
Net asset value:
End of period.............................. $ 39.68 $ 32.94
========= ==========
Per Share Market Value:
End of period.............................. $ 33.88 $ 31.13
========= ==========
Total Investment Return:
Market Value............................... 13.59%* 14.03%
Net Asset Value............................ 24.85%* 2.36%
Net assets (in millions):
End of period.............................. $ 168.9 $ 140.2
Ratio of expenses to average net assets..... 1.86%* 2.48%
Ratio of net investment income to average
net assets................................. 5.46%* 6.75%
Portfolio turnover.......................... 45.43%* 46.68%
</TABLE>
*Percentages represent results for the period and are not annualized.
See Notes to Financial Statements.
7
<PAGE>
SCHEDULE OF INVESTMENTS
September 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities - 69.25%: (A)
American Exploration Company - A.S.E.
An independent oil and gas company engaged principally
in the acquisition,
development and management of oil and gas properties.
11% Senior Subordinated Note due 2001 $ 3,000,000 12/27/91 $ 2,964,600 $ 2,961,288 $ 2,848,800
Warrant, exercisable until 2001, to purchase 81,026
shares of common stock at
$22.37 per share (B) 81,026 shs. 12/27/91 49,714 38,712 81,026
------------ ------------ -----------
3,014,314 3,000,000 2,929,826
------------ ------------ -----------
Ammirati & Puris, Inc.
An advertising agency that specializes in representing
a limited number of large
and high quality clients.
14% Senior Secured Note due 1998 $ 1,750,000 11/23/93 1,714,300 1,750,000 1,976,450
------------ ------------ -----------
Aritech Corp. - O.T.C.
A worldwide manufacturer and distributor of security
and fire control systems.
10% Convertible Subordinated Note due 2000, convertible
into 41,996 shares of
common stock at $6.50 per share (B) $ 272,972 8/9/88 272,972 272,972 270,000
------------ ------------ -----------
Associated Natural Gas Corporation N.Y.S.E.
A natural gas marketing company which purchases and
resells natural gas to
utilities and industrial users.
9% Convertible Subordinated Note due 2004, convertible
into 135,563 shares of
Panhandle Eastern common stock at $22.13 per share $ 3,000,000 12/30/92 2,934,000 3,000,000 3,250,791
------------ ------------ -----------
BP Prudhoe Bay Royalty Trust - N.Y.S.E.
A trust which shares in the production of petroleum
from the Alaskan North
Slope.
26,180 Units of Beneficial Interest 26,180 uts. 2/28/89 654,500 437,830 409,063
------------ ------------ -----------
Cabot Safety Acquisition Corporation
A manufacturer of industrial and consumer personal
protection equipment.
12.5% Senior Subordinated Note due 2005 $ 1,000,000 6/29/95 1,000,000 1,000,000 1,050,000
------------ ------------ -----------
Cains Foods, L.P.
A producer of mayonnaise, sauce and pickle products
for both the retail and food
service markets.
10% Senior Secured Term Note due 2004 $ 1,513,512 9/29/95 1,513,512 1,513,512 1,501,555
11% Senior Subordinated Note due 2004 $ 945,945 9/29/95 895,706 895,706 942,823
8% Junior Subordinated Convertible Note due 2004,
convertible into 78
partnership units at $1,388.88 per unit $ 108,108 9/29/95 108,108 108,108 83,205
Warrant, exercisable until 2006, to purchase 40
partnership units at $.01 per
unit (B) 40 uts. 9/29/95 50,261 50,261 39
------------ ------------ -----------
2,567,587 2,567,587 2,527,622
------------ ------------ -----------
</TABLE>
8
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
CalTex Industries, Inc.
A manufacturer of aluminum windows, doors and extrusions.
13% Senior Subordinated Note due 1996 (B) $ 1,150,000 8/18/88 $ 1,155,750 $ 1,150,000 $ 11,500
10% Junior Subordinated Note due 1995 (B) $ 262,500 2/19/92 182,831 262,498 2,625
Common Stock (B) 100,000 shs. 8/18/88 97,000 100,000 1,000
Warrant, exercisable until 1997, to purchase 779,779
shares of common stock at $.10 per share (B) 779,779 shs. 2/19/92 1,000 2 7,798
------------ ------------ -----------
1,436,581 1,512,500 22,923
------------ ------------ -----------
Catalina Lighting, Inc. - N.Y.S.E.
A designer, importer and distributor of residential and
office lighting fixtures.
8% Convertible Subordinated Note due 2002, convertible
into 254,022 shares of
common stock at $11.81 per share $ 3,000,000 3/31/94 2,840,100 3,000,000 2,850,750
------------ ------------ -----------
Classic Sports Partners, L.P.
A cable sports television network.
600,000 Units of Limited Partnership Interests (B) 600,000 uts. 4/18/95 540,000 600,000 540,000
------------ ------------ -----------
The Coast Distribution System - A.S.E.
A wholesale distributor of recreational vehicles and
marine parts and accessories.
11.2% Senior Subordinated Secured Note due 1999 $ 466,700 6/26/89 481,588 466,700 483,035
Common Stock (B) 130,753 shs. 6/27/85 674,685 689,468 853,974
------------ ------------ -----------
1,156,273 1,156,168 1,337,009
------------ ------------ -----------
CompuCom Systems, Inc. - O.T.C.
A personal computer dealer specializing in serving
corporate accounts.
9% Convertible Subordinated Note due 2002, convertible
into 1,363,636 shares of
common stock at $2.20 per share $ 3,000,000 9/24/92 2,965,800 3,000,000 7,534,089
------------ ------------ -----------
Control Devices, Inc.
A producer of high quality electromechanical circuit
protector devices and
photo-optic sensors.
10% Senior Secured Note due 2004 $ 1,829,100 7/29/94 1,834,587 1,829,100 1,943,602
11% Senior Subordinated Note due 2004 $ 783,900 7/29/94 772,063 783,900 843,398
11% Cumulative Preferred Stock 101 shs. 7/29/94 89,306 101,036 105,128
Common Stock (B) 75,933 shs. 7/29/94 25,259 25,259 104,218
Warrant, exercisable until 2004, to purchase 98,267
shares of common stock at $.01 per share (B) 98,267 shs. 7/29/94 983 -- 134,134
------------ ------------ -----------
2,722,198 2,739,295 3,130,480
------------ ------------ -----------
</TABLE>
9
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
Corrections Corporation of America - O.T.C.
An operator of private prisons and correctional facilities
for federal, state and local governments.
11.08% Senior Secured Note due 2000 $ 492,946 12/11/90 $ 499,085 $ 492,330 $ 529,128
------------ ------------ -----------
Decorative Home Accents, Inc.
A designer, manufacturer and marketer of an extensive
line of decorative home accessories.
13% Senior Note due 2002 $ 1,000,000 6/30/95 1,000,000 1,000,000 1,000,000
------------ ------------ -----------
D&K Wholesale Drug, Inc. - O.T.C.
A wholesale pharmaceutical distribution company.
11% Subordinated Note due 1997 $ 1,625,000 12/29/87 1,487,525 1,625,000 1,635,075
11% Convertible Subordinated Note due 1997, convertible
into 265,490 shares of common stock at $3.30 per share $ 875,000 12/29/87 956,113 875,000 1,551,454
------------ ------------ -----------
2,443,638 2,500,000 3,186,529
------------ ------------ -----------
Delta Beverage Group, Inc.
A Pepsi soft drink bottler.
Common Stock (B) 966 shs. 3/8/88 181,486 2,006,380 181,486
------------ ------------ -----------
Edmund Publications Corporation
A publisher of paperback books.
12.5% Senior Note due 1995 (B) $ 1,937,500 9/9/88 1,912,700 1,937,500 193,750
12.5% Convertible Senior Note due 1995, convertible into
50 shares of common stock at $1,250 per share (B) $ 62,500 9/9/88 67,594 62,500 6,250
------------ ------------ -----------
1,980,294 2,000,000 200,000
------------ ------------ -----------
Elgin National Industries, Inc.
An operator in the specialty fastener, mineral processing
equipment,engineering, construction and electrical
distribution industries.
13% Senior Subordinated Note due 2001 $ 2,000,000 9/24/93 1,943,216 1,983,216 2,074,200
10% Preferred Stock 2,339 shs. 9/24/93 176,964 233,925 186,555
Common Stock (B) 161 shs. 9/24/93 16,075 16,075 30,176
Warrants, exercisable from 1998 to 2001, to purchase
168 shares of common stock at $.01 per share (B) 168 shs. 9/24/93 17 16,782 17
------------ ------------ -----------
2,136,272 2,249,998 2,290,948
------------ ------------ -----------
</TABLE>
10
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
Engel Industries, Inc.
A manufacturer of specialized metal fabricating equipment.
10% Senior Secured Note due 1995 $ 175,000 11/5/86 $ 152,040 $ 175,000 $ 175,000
13% Senior Note due 1995 (B) $ 585,000 8/30/85 592,254 585,000 234,000
14% Subordinated Note due 1995 (B) $ 227,500 8/30/85 232,050 227,500 34,125
14% Convertible Subordinated Note due 1995, convertible
into 350 shares of common stock at $500 per share (B) $ 175,000 8/30/85 179,620 175,000 26,250
------------ ------------ -----------
1,155,964 1,162,500 469,375
------------ ------------ -----------
Ermanco Inc.
A manufacturer of a complete line of conveyors.
11.18% Senior Note due 1997 $ 200,000 3/23/89 194,000 200,000 204,120
------------ ------------ -----------
Exide Electronics Group, Inc. - O.T.C.
A manufacturer and servicer of uninterruptible power
systems.
8.375% Convertible Subordinated Note due 2000, convertible
into 229,358 shares of common stock at $13.08 per share $ 3,000,000 9/2/92 2,972,400 3,000,000 3,870,414
------------ ------------ -----------
Fay's, Inc. - N.Y.S.E.
An operator of a discount drug store chain.
10% Convertible Senior Note due 1998, convertible into
143,331 shares of common stock at $5.23 per share $ 750,000 1/31/83 728,700 750,000 1,064,363
------------ ------------ -----------
Fleming Acquisition Corporation
A supplier of high-quality, premium printed labels for
distilled spirits, wine, food and household products.
15% Senior Subordinated Note due 2005 $ 2,746,591 4/28/95 2,734,046 2,581,931 2,854,420
Common Stock (B) 545 shs. 4/28/95 141,111 272,500 97,330
Warrant, exercisable until 2005, to purchase 380 shares of
common stock at $.01 per share (B) 380 shs. 4/28/95 98,235 170,455 67,757
Incentive Warrant, exercisable from 1998 to 2000, to
purchase 19 shares of common stock at $.01 per share (B) 19 shs. 4/28/95 3,308 2,273 3,422
------------ ------------ -----------
2,976,700 3,027,159 3,022,929
------------ ------------ -----------
Forschner Enterprises, Inc.
Acquires controlling or substantial interests in
manufacturing and marketing entities.
3% Convertible Preferred Stock, convertible into 1.95%
of the Company 100,000 shs. 7/21/94 950,000 1,000,000 950,000
------------ ------------ -----------
</TABLE>
11
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
Garnet Resources Corporation - O.T.C.
Explores and develops oil and gas properties outside the
United States.
9.5% Convertible Subordinated Debenture due 1998,
convertible into 90,910 shares of common stock at
$5.50 per share $ 500,000 12/14/93 $ 500,000 $ 500,000 $ 450,000
------------ ------------ -----------
Grand Metropolitan Public Limited Company - London Stock
Exchange
A leading international branded consumer products group.
6.5% Convertible Senior Debenture due 2000, convertible
into 87,420 shares of common stock at $6.86 per share $ 600,000 1/16/95 600,000 600,000 681,000
------------ ------------ -----------
HMH Properties, Inc.
Owns full-service, moderate price and extended stay
lodging properties.
9.5% Senior Note due 2005 $ 1,000,000 7/7/95 1,000,000 987,500 977,500
------------ ------------ -----------
Hardy Oil & Gas USA, Inc.
Engages in the exploration and development of oil and
gas reserves.
8.46% Guaranteed Senior Note, due 2004 $ 3,000,000 1/11/95 2,904,300 3,000,000 2,847,300
Warrants, exercisable until 2005, to purchase 270,000
shares of common stock at (pounds)1.86 per share (B) 270,000 shs. 1/11/95 27,000 -- 27,000
------------ ------------ -----------
2,931,300 3,000,000 2,874,300
------------ ------------ -----------
Harvard Industries, Inc.
Designs, engineers and manufactures accessories, parts
and components for the automobile industry.
11.13% Senior Note due 2005 $ 250,000 7/25/95 250,000 250,000 252,500
------------ ------------ -----------
Hein-Werner Corp. - A.S.E.
A manufacturer of automotive service and collision repair
equipment and hydraulic cylinders.
8% Convertible Subordinated Note due 1999, convertible
into 227,617 shares of common stock at $6.59 per share $ 1,500,000 9/29/89 1,459,650 1,500,000 1,466,798
------------ ------------ -----------
Herff Jones, Inc.
A leading manufacturer of recognition awards, educational
products and graduation related products for the
scholastic market in the United States.
11% Senior Subordinated Note due 2005 $ 150,000 8/14/95 150,000 150,000 154,875
------------ ------------ -----------
</TABLE>
12
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
Highland Homes Holdings, Inc.
A single family homebuilder operating in the Dallas-Fort
Worth and Atlanta areas.
9.75% Senior Note due 2001 $ 3,000,000 11/18/93 $ 2,970,300 $ 2,959,098 $ 3,015,600
Warrants, excercisable until 2001, to purchase 21 shares
of common stock at $17,897.31 per share (B) 21 shs. 11/18/93 2 40,902 209
------------ ------------ -----------
2,970,302 3,000,000 3,015,809
------------ ------------ -----------
Industrial General Corporation
A diversified manufacturing company primarily servicing the
machinery, equipment and capital goods sectors.
8% Convertible Subordinated Note due 2002, convertible
into 120,000 shares of common stock at $.90
per share (B) $ 108,000 8/30/85 120,377 106,800 1,080
Warrants, exercisable until 2002, to purchase 120,000
shares of common stock at $1 per share (B) 120,000 shs. 12/30/92 1,200 1,200 1,200
------------ ------------ -----------
121,577 108,000 2,280
------------ ------------ -----------
Intermetrics, Inc.
A provider of software systems, services and products to
a variety of technology users.
13% Senior Subordinated Note due 2002 $ 800,000 8/31/95 813,520 696,703 818,560
Floating Rate Senior Term Note due 2002 $ 1,333,280 8/31/95 1,320,881 1,333,280 1,321,014
Common Stock (B) 11,085 shs. 8/31/95 51,961 69,281 51,961
Warrants, exercisable until 2005, to purchase 132,347
shares of Class D common stock at $.01 per share (B) 21,176 shs. 8/31/95 2,118 104,000 2,118
------------ ------------ -----------
2,188,480 2,203,264 2,193,653
------------ ------------ -----------
International Wire Group, Inc.
A leader in the design, manufacture and market of
non-insulated, tin plated copper wire, insulated copper
wire and wire harnesses.
11.75% Subordinated Note due 2005 $ 750,000 6/7/95 750,000 750,000 765,000
------------ ------------ -----------
Jackson Products, Inc.
Manufactures and distributes a variety of industrial and
highway safety products.
12.25% Senior Subordinated Note due 2004 $ 1,971,000 8/16/95 1,971,000 1,933,433 1,990,119
13.25% Cumulative Preferred Stock 985 shs. 8/16/95 985,500 823,332 831,401
Common Stock (B) 43,426 shs. 8/16/95 43,426 43,426 43,426
Warrant, exercisable until 2005, to purchase 199,735
shares of common stock at $.01 per share (B) 199,735 shs. 8/16/95 199,735 199,735 1,999
------------ ------------ -----------
3,199,661 2,999,926 2,866,945
------------ ------------ -----------
Kuhlman Corporation (formerly Schwitzer U.S., Inc.)
- N.Y.S.E.
A manufacturer of non-automotive engine components.
Warrant, exercisable until 2002, to purchase 100,000
shares of common stock at $8.32 per share (B) 100,000 shs. 4/30/92 106,000 162,000 330,850
------------ ------------ -----------
</TABLE>
13
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
Latin Communications Group
An advertising agency that specializes in
Spanish-language advertising to the
New York City metropolitan market.
10.4% Senior Secured Note due 2001 $ 1,750,000 2/14/95 $ 1,752,275 $ 1,750,000 $ 1,808,975
Senior Secured Floating Rate Revolving Credit Facility
Note due 2001 $ 325,000 7/13/95 325,000 325,000 322,823
7% Convertible Preferred Stock, convertible into 18,000
shares of common stock at $10 per share 18,000 shs. 2/14/95 160,549 180,000 172,017
Convertible Preferred Stock, convertible into 32,000
shares of common stock at $10 per share 32,000 shs. 2/14/95 240,000 320,000 240,000
------------ ------------ -----------
2,477,824 2,575,000 2,543,815
------------ ------------ -----------
Liberty Business Forms, Inc.
A manufacturer of business forms and tags for the dry
cleaning industry.
13% Senior Subordinated Note due 1996 $ 1,738,500 10/1/86 1,728,417 1,738,500 1,290,141
13% Convertible Senior Subordinated Note due 1996,
convertible into 350 shares of common stock at $832.86
per share $ 291,500 10/1/86 318,376 291,500 216,322
------------ ------------ -----------
2,046,793 2,030,000 1,506,463
------------ ------------ -----------
Maxtec International Corp.
A manufacturer and distributor of precision test and
measurement equipment for overhead cranes.
12.5% Subordinated Secured Note due 2003 $ 659,340 6/28/95 673,120 490,599 671,010
Senior Secured Floating Rate Revolving Credit Facility
Note due 2001 $ 659,341 6/28/95 659,341 659,341 651,362
Senior Secured Floating Rate Note due 2001 $ 1,021,978 6/28/95 1,011,758 1,021,978 1,013,599
Common Stock (B) 76,923 shs. 6/28/95 192,115 230,769 173,077
Warrants, exercisable from 1998 to 2005, to purchase
39,591 shares of common stock at $.01 per share (B) 39,591 shs. 6/28/95 98,581 171,429 39,591
------------ ------------ -----------
2,634,915 2,574,116 2,548,639
------------ ------------ -----------
Mercury Computer Systems, Inc.
A designer, manufacturer and marketer of computer systems.
Common Stock (B) 500,000 shs. 12/21/87 1,487,700 1,500,000 2,295,000
------------ ------------ -----------
Monro Muffler Brake, Inc. - O.T.C.
An operator of retail muffler and brake shops.
Common Stock 107,505 shs. 4/19/85 173,198 217,564 1,427,129
------------ ------------ -----------
Nu Horizons Electronics Corp. - O.T.C.
A distributor of high technology active and passive
electronic devices.
8.25% Convertible Subordinated Note due 2002, convertible
into 3.56% of the Company $ 3,000,000 8/31/94 3,035,100 3,000,000 3,960,000
------------ ------------ -----------
</TABLE>
14
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
PAR Acquisition Corp.
A manufacturer of fuel handling systems for nuclear
power plants and hazardous waste.
14.5% Senior Subordinated Note due 2000 $ 833,333 2/5/93 $ 832,000 $ 833,333 $ 871,166
8% Convertible Preferred Stock due 2001, convertible
into 6.67% of the Company 83,333 shs. 2/5/93 166,667 166,667 146,117
Common Stock (B) 133,333 shs. 2/5/93 333,333 333,333 44,800
------------ ------------ -----------
1,332,000 1,333,333 1,062,083
------------ ------------ -----------
Piedmont Holding, Inc.
A general aviation fixed based operator with repair,
maintenance and overhaul certification.
12% Senior Subordinated Note due 2001 $ 2,714,283 7/15/92 2,736,540 2,714,283 2,901,840
Senior Redeemable Cumulative Preferred Stock 281,939 shs. 7/15/92 281,939 281,939 281,939
Common Stock (B) 3,771 shs. 7/15/92 2,564 3,771 81,544
Warrant, exercisable until 2001, to purchase 5,042
shares of common stock at $.05 per share (B) 5,042 shs. 7/15/92 3,227 -- 108,827
------------ ------------ -----------
3,024,270 2,999,993 3,374,150
------------ ------------ -----------
Premier Parks, Inc.
A leading theme park operator.
12% Senior Note due 2003 $ 500,000 8/15/95 500,000 500,000 505,000
------------ ------------ -----------
PRN Holdings, Inc.
Rents critical care equipment to hospitals and other
healthcare providers.
10.25% Senior Subordinated Note due 2004 $ 3,000,000 9/30/94 2,876,100 2,943,750 3,101,400
Warrant, exercisable from 1997 to 2004, to purchase 3%
of the Company (B) 33 shs. 9/30/94 2,000 56,250 279,148
------------ ------------ -----------
2,878,100 3,000,000 3,380,548
------------ ------------ -----------
Protein Genetics, Inc.
A producer of bovine artificial insemination products,
related breeding and healthcare products and specialty
genetics sold to the dairy and beef industries.
11.67% Senior Secured Note due 2004 $ 1,200,000 8/12/94 1,184,160 1,200,000 1,248,600
11.51% Junior Secured Note due 1999 $ 800,000 8/12/94 783,040 800,000 808,800
9.8% Redeemable Exchangeable Preferred Stock 10,000 shs. 8/12/94 847,900 1,000,000 910,100
Common Stock (B) 1,492 shs. 8/12/94 15 -- 15
------------ ------------ -----------
2,815,115 3,000,000 2,967,515
------------ ------------ -----------
RailTex, Inc. - O.T.C.
An operator of short-line railroads in the Midwest,
West and Canada.
12% Senior Subordinated Note due 2002 $ 1,500,000 2/16/93 1,599,150 1,500,000 1,750,800
Common Stock (B) 125,000 shs. 2/16/93 1,200,000 1,200,000 2,375,000
------------ ------------ -----------
2,799,150 2,700,000 4,125,800
------------ ------------ -----------
</TABLE>
15
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
------------ ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
Rent-Way, Inc.
Operates rent-to-own stores in Ohio, Pennsylvania and
Florida.
10% Convertible Subordinated Note due 2002, convertible
into 189,753 shares of common stock at $10.54 per share $ 2,000,000 7/18/95 $ 1,991,220 $ 2,000,000 $ 2,034,060
Warrant, exercisable until 2002, to purchase 20,000 shares
of common stock at $.01 per share (B) 20,000 shs. 7/18/95 200 -- 200
------------ ------------ -----------
1,991,420 2,000,000 2,034,260
------------ ------------ -----------
RXI Holdings, Inc.
A manufacturer and distributor of plastic containers for
the food, household chemical, agricultural and personal
care markets.
14% Senior Note due 2002 $ 2,800,000 2/3/95 2,749,592 2,751,348 2,828,000
10% Series B Preferred Stock
Warrants, exercisable until 2002, to purchase 2,800 shares 187,667 shs. 2/3/95 186,667 186,667 186,667
of common stock at $15.64 per share (B) 2,800 shs. 2/3/95 50,540 50,540 50,540
------------ ------------ -----------
2,986,799 2,988,555 3,065,207
------------ ------------ -----------
Sandoz Capital BVI Ltd.
A manufacturer of chemicals and pharmaceuticals.
2% Convertible Note due 2002, convertible into 1,328
shares of common stock at $91.72 per share $ 150,000 9/28/95 121,755 121,755 127,125
------------ ------------ -----------
Sanitary Dash Manufacturing Co., Inc.
A manufacturer of tubular plumbing products and
accessories.
15% Convertible Subordinated Note due 1996, convertible
into 29 shares of common stock at $1,388.89 per share $ 40,742 1/20/84 41,643 40,742 177,852
Common Stock (B) 59 shs. 1/20/84 43,192 81,481 357,723
------------ ------------ -----------
84,835 122,223 535,575
------------ ------------ -----------
Shelter Components Corporation - A.S.E.
A distributor of tools and supplies to the mobile home
industry.
Common Stock 52,686 shs. 11/5/81 15,987 17,983 719,491
------------ ------------ -----------
Staples, Inc.
An owner and operator of high-volume office superstores.
4.5% Convertible Note due 2000, convertible into 35,606
shares of common stock at $33 per share $ 1,175,000 9/12/95 1,175,000 1,175,000 1,239,625
------------ ------------ -----------
</TABLE>
16
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units, Fair Value
Warrants or at Fair Value
Principal Acquisition Acquisition Cost at 9/30/95
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Star International Holdings, Inc.
A manufacturer of commercial cooking appliances.
9.65% Senior Secured Note due 2004 $ 1,755,224 5/27/94 $ 1,675,010 $ 1,755,224 $ 1,743,289
10.5% Subordinated Note due 2004 $ 716,418 5/27/94 716,418 716,418 691,630
Common Stock (B) 4,310 shs. 5/27/94 259,735 259,735 233,762
Warrant, exercisable until 2004, to purchase
3,224 shares of common stock at $.01 per share (B) 3,224 shs. 5/27/94 32 -- 32
----------- ----------- -----------
2,651,195 2,731,377 2,668,713
----------- ----------- -----------
Steerage Corporation
A manufacturer and designer of marine electronic
devices including navigation and control systems,
sensors, radar and communication systems.
10% Subordinated Note due 2003 $ 2,470,588 11/12/93 2,456,260 2,470,588 2,556,565
Class A Common Stock (B) 70,588 shs. 11/12/93 544,235 529,412 662,294
----------- ----------- -----------
3,000,495 3,000,000 3,218,859
----------- ----------- -----------
Summey Outdoor Advertising, Inc.
An operator of an outdoor advertising business in
North Carolina and South Carolina.
12% Senior Note (with contingent interest) due 1995 $ 937,500 12/13/83 886,500 937,500 644,156
10.25% Senior Note due 1999 $ 743,750 9/30/87 669,003 743,750 460,084
10.25% Convertible Senior Note due 1999, convertible
into 4% of the Company $ 50,000 9/30/87 48,795 50,000 30,930
----------- ----------- -----------
1,604,298 1,731,250 1,135,170
----------- ----------- -----------
Supreme Industries, Inc. - A.S.E.
A manufacturer of modular homes and truck bodies.
8.6% Convertible Subordinated Note due 1996,
convertible into 185,262 shares of
common stock at $4.74 per share $878,144 12/30/86 806,049 878,144 1,521,464
Common Stock (B) 284,980 shs. 5/23/79 316,328 315,733 2,340,390
Common Stock of Contempri Homes, Inc. (B) 194,763 shs. 12/31/92 123,801 123,801 176,261
Common Stock of TGC Industries, Inc. (B) 19,082 shs. 9/30/86 9,497 9,497 17,889
----------- ----------- -----------
1,255,675 1,327,175 4,056,004
----------- ----------- -----------
Talley Machinery Corporation
A rebuilder and marketer of industrial and commercial
laundry and dry cleaning equipment.
14% Senior Note due 1992 (B) $74,994 12/30/82 74,994 74,994 750
15% Junior Convertible Subordinated Note due 1992,
convertible into 35,000 shares of common stock at
$4 per share (B) $140,000 12/30/82 142,856 140,000 1,400
----------- ----------- -----------
217,850 214,994 2,150
----------- ----------- -----------
Telex Communications, Inc.
A producer of electronic and communication products.
Warrant, exercisable until 2004, to purchase 9,239
shares of common stock at $.01 per share (B) 9,239 shs. 5/30/89 92 9 2,446
----------- ----------- -----------
</TABLE>
17
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units, Fair Value
Warrants or at Fair Value
Principal Acquisition Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
TransMontaigne Oil Company
An independent petroleum products marketing company.
12.75% Senior Subordinated Debenture due 2000 $ 1,200,000 3/28/91 $ 1,274,280 $ 1,172,162 $ 1,270,800
Common Stock (B) 258,720 shs. * 400,000 798,595 598,911
Warrant, exercisable until 2001, to purchase 74,606
shares of common stock at $3.60 per share (B) 74,606 shs. 3/28/91 7,461 42,000 7,461
----------- ----------- -----------
1,681,741 2,012,757 1,877,172
----------- ----------- -----------
Turner Broadcasting System, Inc. - A.S.E.
Engages in cable TV broadcasting.
Zero Coupon Convertible Subordinated Note due 2007,
convertible into 39,500 shares of common stock at
$26.88 per share $ 3,090,000 ** 1,220,703 1,338,419 1,375,050
----------- ----------- -----------
United States Filter Corporation
A designer and manufacturer of systems and equipment
for the water and waste water treatment industry.
6% Convertible Note due 2005, convertible into
18,182 shares of common stock at $27.50 per share $ 500,000 9/13/95 500,000 500,000 535,000
----------- ----------- -----------
Unocal Corporation - N.Y.S.E.
An integrated crude oil and natural gas company with
interests in chemical geothermal energy and metals.
$3.50 Convertible Preferred Stock, convertible into
8,130 shares of common stock at $30.75 per share 5,000 shs. 7/21/92 250,000 250,000 267,500
----------- ----------- -----------
U.S. Netting, Inc.
A manufacturer of plastic netting for a wide variety
of industries.
11% Senior Secured Note due 2005 $ 1,676,700 5/3/95 1,854,095 1,676,700 1,872,036
12% Subordinated Note due 2005 $ 652,050 5/3/95 733,622 616,877 747,380
Common Stock (B) 4,911 shs. 5/3/95 162,652 391,230 162,652
Warrant, exercisable until 2005, to purchase 2,795
shares of common stock at $.01 per share (B) 2,795 shs. 5/3/95 92,549 35,923 92,549
----------- ----------- -----------
2,842,918 2,720,730 2,874,617
----------- ----------- -----------
Van De Kamps, Inc.
A producer and marketer of a retail brand of frozen
seafood
12% Senior Subordinated Note due 2005 $ 350,000 9/14/95 350,000 350,000 353,500
----------- ----------- -----------
</TABLE>
*3/28/91, 12/18/91, 9/30/92, 9/30/93, 9/30/94, 3/31/95 and 5/9/95.
*2/06/92, 4/21/94 and 6/16/94.
18
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Shares, Units, Fair Value
Warrants or at Fair Value
Principal Acquisition Acquisition Cost at 9/30/95
Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Corporate Restricted Securities: (A) (Continued)
Wakebourne PLC - London Stock Exchange
A U.K. public company engaged in the computer
services and networking systems business.
Common Stock (B) 256,347 shs. 3/10/92 $ 1,322,754 $ 1,605,763 $ 84,595
------------ ----------- -----------
Wright & Lato, Inc.
A manufacturer of gold wedding bands and rings.
15% Subordinated Note due 1996 $ 213,250 12/6/83 193,949 213,250 212,845
13% Convertible Subordinated Note due 1996,
convertible into 15,000 shares of common stock
at $4.28 per share $ 64,250 12/6/83 63,363 64,250 62,766
------------ ----------- -----------
Total Corporate Restricted Securities................ 257,312 277,500 275,611
------------ ----------- -----------
$105,999,128 109,550,905 116,973,617
============ =========== ===========
</TABLE>
19
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Market
Value at
Interest Due Principal Cost 9/30/95
Rate Date Amount (Note 2B) (Note 2A)
-------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Corporate Public Securities:
Convertible Bonds - 4.81%
AMR Corporation............................ 6.125% 11/1/24 $ 800,000 $ 799,680 $ 819,040
American Travellers Corporation............ 6.500 10/1/05 150,000 150,000 154,875
Comcast Corporation........................ 1.125 4/15/07 750,000 331,313 403,125
Hollinger, Inc. ........................... 0.000 10/15/13 4,000,000 1,255,429 1,245,200
Leucadia National Corporation.............. 5.250 2/1/03 1,000,000 1,000,000 1,110,000
MEDIQ Incorporated......................... 7.500 7/15/03 1,000,000 1,000,000 850,000
Savoy Pictures Entertainment, Inc. ........ 7.000 7/1/03 1,250,000 1,287,500 950,000
Time Warner, Inc. ......................... 0.000 6/22/13 2,000,000 757,493 800,000
United States Cellular Corporation......... 6.089 6/15/15 2,000,000 623,952 705,000
W M S Industries, Incorporated............. 5.750 11/30/02 1,160,000 1,013,800 1,090,400
------------ ------------ ------------
Total Convertible Bonds...................... $ 14,110,000 8,219,167 8,127,640
------------ ------------ ------------
Bonds - 25.85%
AES Corporation............................ 9.750 6/15/99 $ 1,000,000 1,026,250 1,022,500
Affinity Group, Inc. ...................... 11.500 10/15/03 1,000,000 1,010,000 1,005,000
American Restaurant Group, Inc. ........... 12.000 9/15/98 650,000 627,250 474,500
American Rice, Inc. ....................... 13.000 7/31/02 1,250,000 1,175,610 1,175,000
Bally's Grand, Inc. ....................... 10.375 12/15/03 1,000,000 995,000 985,000
Borg-Warner Corporation.................... 8.000 4/1/96 1,000,000 962,500 990,000
CF Cable TV Inc. .......................... 9.125 7/15/07 650,000 650,000 656,500
Central Rents, Inc. ....................... 12.875 12/15/03 1,480,000 1,351,413 1,480,000
Chesapeake Energy Corporation.............. 12.000 3/1/01 1,800,000 1,718,327 1,881,000
Consolidated Cigar Corporation............. 10.500 3/1/03 500,000 500,000 500,000
Container Corporation...................... 9.750 4/1/03 1,000,000 1,000,000 1,005,000
Continental Cablevision, Inc. ............. 10.625 6/15/02 500,000 500,000 527,500
Crown Packaging Ltd. ...................... 10.750 11/1/00 750,000 750,000 716,250
Data Documents, Inc. ...................... 13.500 7/15/02 3,000,000 3,002,000 3,097,500
El Paso Funding Corporation (B)............ 9.375 10/1/96 200,000 174,526 126,000
Empress River Casino....................... 10.750 4/1/02 500,000 483,750 500,000
Florist Transworld Delivery, Inc. ......... 14.000 12/15/01 1,175,000 1,135,574 1,186,750
</TABLE>
20
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Market
Value at
Interest Due Principal Cost 9/30/95
Rate Date Amount (Note 2B) (Note 2A)
-------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Corporate Public Securities: (Continued)
Bonds (Continued)
Foodbrands America Inc. ............................ 9.750% 7/15/00 $ 1,000,000 $ 930,641 $ 982,500
Gulf Canada Resources Ltd. ......................... 9.250 1/15/04 1,100,000 1,056,202 1,089,000
Harman International Industries Incorporated........ 12.000 8/1/02 1,000,000 992,770 1,090,000
Harrah's Operating Company, Inc. ................... 8.750 3/15/00 1,000,000 957,400 1,000,000
Hosiery Corp. of America............................ 13.750 8/1/02 1,000,000 987,800 1,040,000
Imax Corporation.................................... 7.000 3/1/01 1,400,000 1,250,410 1,323,000
Indah Kiah International Corporation................ 11.875 6/15/02 1,000,000 1,000,000 1,030,000
Ivex Packaging Corporation.......................... 12.500 12/15/02 250,000 266,562 271,250
Jones Intercable, Inc. ............................. 9.625 3/15/02 750,000 750,000 780,000
Jordan Industries, Inc. ............................ 10.375 8/1/03 1,000,000 1,000,000 935,000
MEDIQ/PRN Life Support Services, Inc. .............. 11.125 7/1/99 1,000,000 1,000,000 935,000
Northwest Airlines Corp............................. 12.091 12/31/00 1,000,000 1,037,500 1,030,000
Orchard Supply Hardware Corporation................. 9.375 2/15/02 1,325,000 1,260,812 1,225,625
Paracelsus Healthcare Corporation................... 9.875 10/15/03 1,000,000 1,000,000 1,017,500
Peoples Telephone Company Inc. ..................... 12.250 7/15/02 750,000 750,000 765,000
Renco Metals, Inc. ................................. 12.000 7/15/00 1,000,000 1,000,000 1,080,000
SFX Broadcasting, Inc. ............................. 11.375 10/1/00 1,000,000 1,000,000 1,042,500
Sealy Corporation................................... 9.500 5/1/03 1,000,000 1,000,000 990,000
Telex Communications, Inc. ......................... 12.000 7/15/04 1,500,000 1,500,000 1,537,500
Trans-Resources, Inc. .............................. 11.875 7/1/02 1,000,000 1,032,500 950,000
Trism, Inc. ........................................ 10.750 12/15/00 1,000,000 1,003,750 997,500
Tultex Corporation.................................. 10.625 3/15/05 1,000,000 1,000,000 1,045,000
US Air, Inc......................................... 9.625 2/1/01 1,000,000 1,000,000 830,000
Venture Holdings Trust.............................. 9.750 4/1/04 1,300,000 1,300,000 1,105,000
Waban, Inc.......................................... 11.000 5/15/04 1,000,000 1,000,000 1,030,000
Williamhouse-Regency of Delaware, Inc. ............. 11.500 6/15/05 1,000,000 971,250 990,000
Worldcorp, Inc. .................................... 13.875 8/15/97 235,000 244,400 230,300
----------- ---------- ----------
Total Bonds........................................... $44,065,000 43,354,197 43,670,175
=========== ---------- ----------
</TABLE>
21
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Market
Value at
Cost 9/30/95
Shares (Note 2B) (Note 2A)
---------- ----------- -----------
<S> <C> <C> <C>
Corporate Public Securities: (Continued)
Warrants - .10%
Central Rents, Inc. (B)................ 1,480 shs. $ 43,837 $ 37,000
Florist Transworld Delivery (B)........ 1,175 shs. 41,250 58,750
MVR, Inc./Value Support (B)............ 52,000 shs. 2,218 2,401
Western Trans Media Co., Inc. (B)...... 183,117 shs. 45,780 45,779
----------- ------------
Total Warrants........................... 133,085 143,930
----------- ------------
Common Stock - 6.61%
American Standard Companies Inc. ...... 21,000 shs. 633,588 619,500
Amerisource Health Corporation (B)..... 9,483 shs. 3,216 256,041
Bell & Howell Holdings Co. ............ 14,000 shs. 327,775 357,000
Benson Petroleum, Ltd. ................ 200,000 shs. 154,408 216,000
Black Box Corporation.................. 28,875 shs. 483,656 534,188
Computer Horizons Corporation.......... 26,250 shs. 358,750 525,000
Corporate Express, Inc. ............... 35,000 shs. 847,656 853,125
Esmor Correctional Services, Inc. ..... 20,625 shs. 108,814 237,188
Foodbrands America Inc. ............... 52,500 shs. 413,438 754,688
Harvard Industries, Inc. .............. 17,500 shs. 416,500 468,125
Luxonen, S.A. (B)...................... 61,152 shs. 862,312 155,473
MEDIQ Incorporated..................... 200,000 shs. 765,529 1,087,600
Metricom, Inc. ........................ 19,000 shs. 574,750 427,500
Savoy Pictures Entertainment, Inc. .... 11,000 shs. 198,000 72,875
Southwest Airlines..................... 71,429 shs. 1,000,000 1,803,582
Staffing Resources, Inc. .............. 105,000 shs. 577,500 1,260,000
Sweetwater, Inc. ...................... 26,000 shs. 182,000 71,500
Western Transmedia Co., Inc. .......... 405,590 shs. 760,889 912,578
Worldcom Inc. ......................... 17,500 shs. 529,374 562,188
----------- ------------
Total Common Stock....................... 9,198,155 11,174,151
=========== ============
</TABLE>
22
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Market
Value at
Cost 9/30/95
Shares (Note 2B) (Note 2A)
-------- ----------- -----------
<S> <C> <C> <C>
Corporate Public Securities: (Continued)
Convertible Preferred Stock - 2.41%
AMC Entertainment Inc................................... 29,880 shs. $ 747,000 $ 986,040
Arkansas Best Corp...................................... 7,500 shs. 375,000 299,063
Freeport-McMoran Copper & Gold, Inc..................... 7,800 shs. 195,000 214,500
Integon Corp............................................ 19,700 shs. 985,000 1,083,500
Occidental Petroleum Corporation........................ 15,900 shs. 795,000 936,113
Western Gas Resources, Inc.............................. 15,000 shs 750,000 547,500
------------ ------------
Total Convertible Preferred Stock......................... 3,847,000 4,066,716
------------ ------------
Total Corporate Public Securities......................... 64,751,604 67,182,612
------------ ------------
<CAPTION>
Market
Value at
Interest/ Due Principal Cost 9/30/95
Yield Date Amount (Note 2B) (Note 2A)
--------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Short-Term Securities:
Commercial Paper - 1.66%
Orix Credit Alliance.................................... 6.354% 10/3/95 2,500,000 2,499,118 2,499,118
Texas Utilities Electric Company........................ 6.803 10/2/95 315,000 314,941 314,941
----------- ------------ ------------
Total Short-Term Securities............................... $ 2,815,000 2,814,059 2,814,059
=========== ------------ ------------
Total Investments - 110.69%.......................... $177,116,568 186,970,288
============ ------------
Other Assets - 3.99........................... 6,753,977
Liabilities - (14.68).......................... (24,799,269)
------ ------------
Total Net Assets - 100.00%.......................... $168,924,996
====== ============
</TABLE>
(A) In each of the convertible note, warrant, convertible preferred and common
stock investments, the issuer has agreed to provide certain registration
rights.
(B) Non-income producing security.
See Notes to Financial Statements.
23
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
INDUSTRY CLASSIFICATION
<TABLE>
<CAPTION>
Fair Value
at 9/30/95 Percentage
Corporate Restricted Securities: (Note 2A) Net Assets
------------- -----------
<S> <C> <C>
ADVERTISING
Ammirati & Puris, Inc. $ 1,976,450
Latin Communications Group 2,543,815
Summey Outdoor Advertising, Inc. 1,135,170
------------
5,655,435 3.35%
------------
AUTO PARTS
Monro Muffler Brake, Inc. 1,427,129 .84
------------
BEVERAGES
Delta Beverage Group, Inc. 181,486 .11
------------
BUILDING MATERIALS
CalTex Industries, Inc. 22,923
Highland Homes Holdings, Inc. 3,015,809
Shelter Components Corporation 719,491
Supreme Industries, Inc. 4,056,004
------------
7,814,227 4.63
------------
COMMUNICATIONS
Classic Sports Partners, L.P. 540,000
Telex Communications, Inc. 2,446
Turner Broadcasting System, Inc. 1,375,050
------------
1,917,496 1.14
------------
ELECTRICAL EQUIPMENT/ELECTRONICS
Catalina Lighting, Inc. 2,850,750
CompuCom Systems, Inc. 7,534,089
Control Devices, Inc. 3,130,480
Exide Electronics Group, Inc. 3,870,414
Intermetrics, Inc. 2,193,653
Mercury Computer Systems, Inc. 2,295,000
</TABLE>
24
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Fair Value
at 9/30/95 Percentage
Corporate Restricted Securities: (Continued) (Note 2A) Net Assets
------------- -----------
<S> <C> <C>
ELECTRICAL EQUIPMENT/ELECTRONICS (Continued)
Nu Horizons Electronics Corp. $ 3,960,000
Steerage Corporation 3,218,859
Wakebourne PLC 84,595
------------
29,137,840 17.25%
------------
HEALTH CARE
D & K Wholesale Drug, Inc. 3,186,529
PRN Holdings, Inc. 3,380,548
------------
6,567,077 3.89
------------
JEWELRY
Wright & Lato, Inc. 275,611 .16
------------
MACHINERY AND EQUIPMENT
Industrial General Corporation 2,280
Talley Machinery Corporation 2,150
------------
4,430 .00
------------
MANUFACTURING - INDUSTRIAL AND
CONSUMER PRODUCTS
Aritech Corp. 270,000
Cabot Safety Acquisition Corporation 1,050,000
Decorative Home Accents, Inc. 1,000,000
Elgin National Industries, Inc. 2,290,948
Ermanco Inc. 204,120
Fleming Acquisition Corporation 3,022,929
Forschner Enterprises, Inc. 950,000
Harvard Industries, Inc. 252,500
Hein-Werner Corp. 1,466,798
Herff Jones, Inc. 154,875
</TABLE>
25
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Fair Value
at 9/30/95 Percentage
Corporate Restricted Securities: (Continued) (Note 2A) Net Assets
------------- -----------
<S> <C> <C>
MANUFACTURING - INDUSTRIAL AND
CONSUMER PRODUCTS (Continued)
International Wire Group, Inc. $ 765,000
Jackson Products, Inc. 2,866,945
Kuhlman Corporation 330,850
Maxtec International Corp. 2,548,639
PAR Acquisition Corp. 1,062,083
RXI Holdings, Inc. 3,065,207
Sandoz Capital BVI Ltd. 127,125
Sanitary Dash Manufacturing Co., Inc. 535,575
Star International Holdings, Inc. 2,668,713
United States Filter Corporation 535,000
U.S. Netting, Inc. 2,874,617
------------
28,041,924 16.60%
------------
METAL FABRICATING
Engel Industries, Inc. 469,375 .28
------------
MISCELLANEOUS
HMH Properties, Inc. 977,500
Premier Parks, Inc. 505,000
Protein Genetics, Inc. 2,967,515
------------
4,450,015 2.63
------------
OIL AND GAS SERVICE
American Exploration Company 2,929,826
Associated Natural Gas Corporation 3,250,791
BP Prudhoe Bay Royalty Trust 409,063
Garnet Resources Corporation 450,000
Hardy Oil & Gas USA, Inc. 2,874,300
TransMontaigne Oil Company 1,877,172
Unocal Corporation 267,500
------------
12,058,652 7.14
------------
</TABLE>
26
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Fair Value
at 9/30/95 Percentage
Corporate Restricted Securities: (Continued) (Note 2A) Net Assets
------------- -----------
<S> <C> <C>
PAPER
Liberty Business Forms, Inc. $ 1,506,463 .89%
------------
PUBLISHING
Edmund Publications Corporation 200,000 .12
------------
RECREATIONAL SUPPLIES/EQUIPMENT
The Coast Distribution System 1,337,009 .79
------------
RETAILING
Cains Food, L.P. 2,527,622
Fay's, Inc. 1,064,363
Grand Metropolitan Public Limited Company 681,000
Rent-Way, Inc. 2,034,260
Staples, Inc. 1,239,625
Van De Kamps, Inc. 353,500
------------
7,900,370 4.68
------------
SERVICES
Corrections Corporation of America 529,128
Piedmont Holding, Inc. 3,374,150
RailTex, Inc. 4,125,800
------------
8,029,078 4.75
------------ -------
Total Corporate Restricted Securities $116,973,617 69.25%
============ =======
</TABLE>
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. History
MassMutual Corporate Investors (the "Trust") is a closed-end, non-diversified
investment company. Massachusetts Mutual Life Insurance Company (the
"Insurance Company") acts as its investment adviser.
The Trust commenced operations in 1971 as a Delaware corporation. Pursuant to
an Agreement and Plan of Reorganization dated November 14, 1985, approved by
shareholders, the Trust was organized as a Massachusetts business trust
effective November 28, 1985.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed
consistently by the Trust in the preparation of the financial statements in
conformity with generally accepted accounting principles.
A. Valuation of Investments: Nearly all securities which are acquired by
the Trust directly from the issuers and shares into which such
securities may be converted or which may be purchased on the exercise of
warrants attached to such securities will be subject to legal or
contractual delays in or restrictions on resale and will therefore be
"restricted securities". Generally speaking, as contrasted with
open-market sales of unrestricted securities which may be effected
immediately if the market is adequate, restricted securities can be sold
only in a directly negotiated transaction to a limited number of
purchasers or in a public offering for which a registration statement is
in effect under the Securities Act of 1933.
The value of restricted securities, and of any other assets for which
there are no reliable market quotations, is the fair value as determined
in good faith by the Trustees. Each restricted security is valued by the
Trustees as of the time of the acquisition thereof and quarterly
thereafter. The Trustees have established guidelines to aid in the
valuation of each security. Generally, restricted securities are
initially valued at cost or less at the time of acquisition by the
Trust. Values greater or less than cost are used thereafter for
restricted securities in appropriate circumstances.
Among the factors ordinarily considered are the existence of
restrictions upon the sale of the security by the Trust; an estimate of
the existence and extent of a market for the security; the estimated
period of time during which the security will not be freely marketable;
the estimated expenses of registering or otherwise qualifying the
security for public sale; estimated underwriting
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
commissions if underwriting would be required to effect a sale; in the
case of a convertible security, whether or not it would trade on the
basis of its stock equivalent; if it is a debt obligation which would
trade independently of any equity equivalent, the current yields on
comparable securities; the estimated amount of the floating supply of
such securities available; the proportion of the issue held by the
Trust; any changes in the financial condition and prospects of the
issuers; the existence of merger proposals or tender offers affecting
the issuers; and in addition any other factors affecting fair value, all
in accordance with the Investment Company Act of 1940. In making
valuations, opinions of counsel are relied upon as to whether or not
securities are restricted securities and as to the legal requirements
for public sale.
When market quotations are readily available for unrestricted securities
of an issuer, restricted securities of the same class are generally
valued at a discount from the market price of such unrestricted
securities. The Trustees, however, consider all factors in fixing any
discount, including the filing of a registration statement for such
securities under the Securities Act of 1933 and any other developments
which are likely to increase the probability that the securities may be
publicly sold by the Trust without restriction.
It is the intention of the Trustees to meet early in each quarter to
value the Trust's portfolio securities as of the close of business on
the last business day of the preceding quarter. This valuation requires
the approval of a majority of the Trustees, including a majority of the
Trustees who are not interested persons of the Trust (otherwise than as
Trustees) or of the adviser. In making valuations, Trustees consider
reports by the adviser analyzing each portfolio security in accordance
with the relevant factors referred to above. The adviser provides such
reports to the Trust at least quarterly.
The values for corporate public securities are stated at the last
reported sales price or at prices based upon quotations obtained from
brokers and dealers as of September 30, 1995, subject to discount where
appropriate, and are approved by the Trustees.
Short-term securities with more than sixty days to maturity are valued
at market and short-term securities having a maturity of sixty days or
less are valued at amortized cost which approximates market value.
B. Accounting for Investments: Investment transactions are accounted for
on trade date. Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
The cost basis of debt securities is not adjusted for amortization of
premium or accrual of discount since the Trust does not generally intend
to hold such investments until maturity; however, the Trust has elected
to accrue, for financial reporting purposes, certain discounts which are
required to be accrued for federal income tax purposes.
Realized gains and losses on investment transactions and unrealized
appreciation and depreciation of investments are reported for financial
statement and federal income tax purposes on the identified cost method.
The Trust does not accrue income when payment is delinquent or when
management believes payment is questionable.
C. Federal Income Taxes: No provision for federal taxes on net investment
income and short-term capital gains is considered necessary because the
Trust has elected to be taxed as a "regulated investment company" under
the Internal Revenue Code, and intends to maintain this qualification
and to distribute substantially all of its net taxable income to its
shareholders. In any year when net long-term capital gains are realized
by the Trust, management, after evaluating the prevailing economic
conditions, will recommend to the Trustees either to designate the net
realized long-term gains as undistributed and to pay the federal capital
gains taxes thereon or to distribute such net gains.
3. Management Fee
Under an investment services contract, the Insurance Company has agreed to
invest for its general account concurrently with the Trust in each restricted
security purchased by the Trust. The Insurance Company, in addition to
originating and sharing in the purchase of such securities, 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. The Insurance Company provides a continuing review of
the investment operations of the Trust. The Insurance Company also provides
the Trust with office space and office equipment, accounting and bookkeeping
services, and necessary executive, clerical and secretarial personnel for the
performance of the foregoing services.
Under the investment services contract, as amended July 1, 1988, the Trust
pays the Insurance Company a quarterly base rate (the "Base Fee Rate") of
5/16 of 1% of the value of the Trust's net assets as of the end of each
fiscal quarter, approximately equivalent to 1.25% of the net asset value of
the Trust on an annual basis, plus
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
or minus a quarterly performance adjustment (the "Performance Adjustment")
of up to 1/16 of 1% (approximately equivalent to .25% on an annual basis).
The Performance Adjustment is based on the Trust's performance as compared to
a benchmark rate of return (the "Target Rate") equal to 5.0 percentage
points plus an unweighted, arithmetic average of the rates of return on the
Standard & Poor's Industrial Stock Price Index and the Lehman Brothers
Intermediate Corporate Bond Index over a rolling three-year period (the
"Measurement Period") comprising the twelve quarters ending on the last day
of each quarter (the "Valuation Date"). The Performance Adjustment is equal
to 5% of the difference between the Trust's actual rate of return over the
Measurement Period and the Target Rate. If the Trust's actual rate of return
exceeds the Target Rate, the Base Fee Rate is increased by an amount equal to
the Performance Adjustment; if the Trust's actual rate of return is less than
the Target Rate, the Base Fee Rate is reduced by the Performance Adjustment.
The advisory fee payable by the Trust is equal to the Base Fee Rate (as
adjusted by the Performance Adjustment) times the net asset value of the
Trust as of the Valuation Date. The Performance Adjustment for the quarter
ended September 30, 1995 was plus .0625%.
4. Note Payable
On November 5, 1993, the Trust sold to the Insurance Company at par a
$20,000,000 Senior Fixed Rate Convertible Note due November 15, 2000 (the
"Note") which accrues at 5.33% per annum. The Note is convertible into the
Trust's common shares at any time at the stated conversion price per share.
5. Purchases and Sales of Investments
<TABLE>
<CAPTION>
For the nine months ended
9/30/95 9/30/94
------- -------
Cost of Investments Acquired
----------------------------
<S> <C> <C>
Corporate restricted securities....... $ 39,636,367 $ 20,701,012
Corporate public securities........... 40,744,400 40,459,366
Short-term securities................. 228,319,313 217,819,204
<CAPTION>
Proceeds from Sales
or Maturities
----------------------------
<S> <C> <C>
Corporate restricted securities....... $ 23,544,313 $ 29,506,778
Corporate public securities........... 52,886,516 26,456,802
Short-term securities................. 230,452,449 221,931,100
</TABLE>
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
The aggregate cost of investments is the same for financial reporting and
federal income tax purposes as of September 30, 1995. The net unrealized
appreciation of investments for financial reporting and federal tax purposes
as of September 30, 1995 is $9,853,720 and consists of $24,090,966
appreciation and $14,237,246 depreciation.
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of September 30, 1994. The net unrealized
depreciation of investments for financial reporting and federal tax purposes
as of September 30, 1994 was $1,549,436 and consisted of $17,073,559
appreciation and $18,622,995 depreciation.
6. Quarterly Results of Investment Operations
<TABLE>
<CAPTION>
Per Per
Amount Share Amount Share
------ ----- ------ -----
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C> <C> <C>
Investment Income..................... $ 3,623,939 $ 3,370,804
Net investment income................. 2,738,763 $ .64 2,444,990 $ .57
Net realized and unrealized
gain on investments................. 5,667,087 1.33 392,059 .09
<CAPTION>
June 30, 1995 June 30, 1994
------------- -------------
<S> <C> <C> <C> <C>
Investment Income..................... 3,721,895 3,355,273
Net investment income................. 2,729,955 .64 2,427,481 .57
Net realized and unrealized
gain (loss) on investments.......... 14,705,181 3.45 (5,309,224) (1.25)
<CAPTION>
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C> <C> <C>
Investment Income..................... 3,933,471 3,377,134
Net investment income................. 2,949,833 .69 2,471,841 .59
Net realized and unrealized
gain on investments................. 5,860,438 1.38 1,321,803 .31
</TABLE>
32
