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Previous: MERRILL LYNCH SPECIAL VALUE FUND INC, NSAR-B, 1997-05-28 |
Next: MUNICIPAL BOND TRUST SERIES 46, 485B24E, 1997-05-28 |
<PAGE>
TO OUR SHAREHOLDERS APRIL 30, 1997
We are pleased to present MassMutual Corporate Investors' report for the first
three months of 1997.
The Trust got off to a good start this year with net assets per share increasing
to $42.06 from $40.47 per share on December 31, 1996. Based on the change in net
assets and reinvestment of dividends, the Trust's performance for the quarter
was 3.9%, which beat both the stock and bond markets as measured by the S&P 500
Composite Index and the Lehman Brothers Government/Corporate Bond Index which
were up 2.7% and down .9% respectively. The broad based stock market index
initially realized considerable gains until late March when the Federal Reserve
Board raised interest rates and most of the earlier gains were erased. The
Federal Reserve action was also felt throughout most of the domestic bond market
sectors which realized negative total returns.
We are also pleased to report that the regular quarterly dividend declared on
the day of the annual shareholders' meeting on April 24, 1997 was increased to
$.71 per share. Our regular quarterly dividend had been $.70 per share since
December 1989. As many of you who have been investors with us through the years
may remember, we had been warning shareholders that the earnings of the Trust
were insufficient to maintain the level of the dividend, and that we were
augmenting the regular quarterly dividend with short-term gains which could not
be guaranteed in the future. The net earnings of the Trust for the quarter ended
March 31, 1997 were $3,057,559 or 71.8 cents per share as compared with
$2,731,679 or 64.2 cents per share a quarter ago. What we are seeing is one of
the unique features of Corporate Investors which is the growth of the assets of
the Trust through the retention of long-term capital gains. Over time this
growth in assets will help us increase the earnings of the Trust and,
ultimately, your dividends.
New private placement investments made during the quarter included Associated
Vintage Group, Inc., a Sonoma County, California provider of custom wine
production services which is one of the largest in the country; Swing N'Slide
Corporation, a manufacturer and distributor of home playground equipment which
refinanced its existing bank facility while making an acquisition; and Trend
Plastics, Inc., a manufacturer and assembler of plastic injection molded parts
which was acquired by a buyout sponsor with whom we have worked in the past. All
of these investments allow us to participate in the long-term growth of the
companies via their equity features while providing a weighted average coupon of
over 11.6%. The closing of these new investments brings our holdings in private
placement issuers, the primary investment category of Corporate Investors, to
over 75% of the portfolio.
The Trust realized over $5.3 million (or $1.26 per share) in net capital gains
during the quarter, roughly half of which came from partial or complete sales of
investments from our private placement portfolio. Of the $1.26 per share, $.43
per share represents net short-term gains which, if not offset by year end, will
be distributed to shareholders. The majority of the quarter's gains were
realized early in the quarter while the markets were still strong.
At the twenty-seventh Annual Meeting of Shareholders held on April 24, 1997,
Gary E. Wendlandt, Milton Cooper, and Martin T. Hart were re-elected as Trustees
for three-year terms; Coopers & Lybrand L.L.P. was re-elected as auditor of the
Trust, and the Investment Services Contract between the Trust and Massachusetts
Mutual Life Insurance Company was approved.
The Trustees and management appreciate the continued interest and support of the
shareholders of Corporate Investors.
Sincerely,
/s/ Stuart H. Reese
Stuart H. Reese
President
1
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES MASSMUTUAL CORPORATE INVESTORS
March 31, 1997 and 1996
(Unaudited)
1997 1996
------------- ------------
<S> <C> <C>
Assets:
Investments (Notes 2A, 2B and 5)
(See Schedule of Investments)
Corporate restricted securities at fair value
(Cost 1997 - $139,538,082; 1996 - $107,759,337) $147,308,753 $116,164,428
Corporate public securities at market value
(Cost 1997 - $43,002,450; 1996 - $62,184,976) 45,550,692 66,484,551
Short-term securities at cost plus earned discount which
approximates market value 2,500,000 5,093,732
------------- ------------
195,359,445 187,742,711
Cash 72,905 1,707,214
Interest and dividends receivable, net 3,183,470 3,504,346
Receivable for investments sold 1,675,213 1,129,051
Other assets 12,128 12,128
------------- ------------
Total assets $200,303,161 $194,095,450
============= ============
Liabilities:
Payable for investments purchased $ 354,200 $ 2,649,900
Management fee payable (Note 3) 671,369 639,591
Note payable (Note 4) 20,000,000 20,000,000
Interest payable (Note 4) 136,211 136,211
Accrued expenses 109,710 112,047
------------- ------------
Total liabilities 21,271,490 23,537,749
============= ============
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 57,447,542 45,926,213
Undistributed net investment income (Note 2D) 3,075,349 2,981,702
Undistributed net realized gain on investments 5,342,426 6,097,679
Net unrealized appreciation of investments (Notes 2A, 2B and 5) 10,318,913 12,704,666
------------- ------------
Total net assets 179,031,671 170,557,701
------------- ------------
Total liabilities and net assets $200,303,161 $194,095,450
============= ============
Common shares issued and outstanding 4,256,724 4,256,724
============= ============
Net asset value per share $ 42.06 $ 40.07
============= ============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2
<PAGE>
STATEMENT OF OPERATIONS MASSMUTUAL CORPORATE INVESTORS
For the three months ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Investment Income (Note 2B):
Interest $ 3,905,383 $ 3,636,515
Dividends 155,441 102,730
------------ ------------
Total income 4,060,824 3,739,245
------------ ------------
Expenses:
Management fee (Note 3) 671,369 639,591
Trustees' fees and expenses 24,848 18,959
Transfer Agent/Registrar's expenses 12,706 25,678
Interest (Note 4) 266,500 266,500
Reports to shareholders 8,520 8,520
Audit and legal 14,733 13,333
Other 4,589 8,515
------------ ------------
Total expenses 1,003,265 981,096
------------ ------------
Net investment income 3,057,559 2,758,149
------------ ------------
Net realized and unrealized gain (loss) on investments (Notes 2A and 2B):
Net realized gain on investments 5,342,426 6,097,679
Net change in unrealized appreciation/depreciation of investments (1,637,527) (6,861,171)
------------ ------------
Net gain (loss) on investments 3,704,899 (763,492)
------------ ------------
Net increase in net assets resulting from operations $ 6,762,458 $ 1,994,657
============ ============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
3
<PAGE>
STATEMENT OF CASH FLOWS MASSMUTUAL CORPORATE INVESTORS
For the three months ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Net increase (decrease) in cash:
Cash flows from operating activities:
Interest and dividends received $ 3,775,696 $ 3,802,899
Interest expense paid (266,500) (266,500)
Operating expenses paid (732,867) (731,832)
Federal income tax paid (6,210,942) (1,984,882)
------------ ------------
Net cash (used for) provided by operating activities (3,434,613) 819,685
------------ ------------
Cash flows from investing activities:
Change in short-term portfolio securities, net (1,657,790) (1,877,888)
Purchase of portfolio securities (23,540,403) (22,423,845)
Proceeds from disposition of portfolio securities 35,092,595 29,559,856
------------ ------------
Net cash provided by investing activities 9,894,402 5,258,123
------------ ------------
Net cash provided by operating and investing activities 6,459,789 6,077,808
------------ ------------
Cash flows from financing activities:
Cash dividends paid from net investment income (2,555,201) (2,752,434)
Cash dividends paid from net realized gain on investments (3,915,019) (4,143,459)
------------ ------------
Net cash used for financing activities (6,470,220) (6,895,893)
------------ ------------
Net decrease in cash (10,431) (818,085)
Cash - beginning of year 83,336 2,525,299
------------ ------------
Cash - end of period $ 72,905 $ 1,707,214
============ ============
Reconciliation of net increase (decrease) in net assets to net cash from
operating and investing activities:
Net increase in net assets resulting from operations $ 6,762,458 $ 1,994,657
------------ ------------
Decrease in investments 7,070,176 7,443,346
(Increase) decrease in interest and dividends receivable, net (167,069) 258,221
(Increase) decrease in receivable for investments sold (992,679) 61,435
Increase in other assets (12,128) (12,128)
Increase (decrease) in payable for investments purchased 6,075 (1,665,605)
Increase in management fee payable 25,359 7,480
Decrease in accrued expenses (21,461) (24,716)
Decrease in accrued taxes (6,210,942) (1,984,882)
------------ ------------
Total adjustments to net assets from operations (302,669) 4,083,151
------------ ------------
Net cash provided by operating and investing activities $ 6,459,789 $ 6,077,808
============ ============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
4
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS MASSMUTUAL CORPORATE INVESTORS
For the three months ended March 31, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 3,057,559 $ 2,758,149
Net realized gain on investments 5,342,426 6,097,679
Net change in unrealized appreciation/depreciation of investments (1,637,527) (6,861,171)
------------ ------------
Net increase in net assets resulting from operations 6,762,458 1,994,657
Net Assets, beginning of year 172,269,213 168,563,044
------------ ------------
Net Assets, end of period (including undistributed net investment income
in 1997 - $3,075,349; 1996 - $2,981,702) $179,031,671 $170,557,701
============ ============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
5
<PAGE>
<TABLE>
<CAPTION>
SELECTED PER SHARE DATA MASSMUTUAL CORPORATE INVESTORS
Selected data for each common share outstanding for the periods ended:
For the
three months For the
ended 3/31/97 year ended
(Unaudited) 12/31/96
------------- ------------
<S> <C> <C>
Net asset value:
Beginning of year $ 40.47 $ 39.60
------------ ------------
Net investment income .72 2.65
Net realized and unrealized gain on investments .87 1.84
------------ ------------
Total from investment operations 1.59 4.49
------------ ------------
Dividends from net investment income to common shareholders -- (2.70)
Distributions from net realized gain on investments to common shareholders -- (.92)
------------ ------------
Total distributions -- (3.62)
------------ ------------
Net asset value:
End of period $ 42.06 $ 40.47
============ ============
Per share market value:
End of period $ 38.25 $ 38.50
============ ============
Total investment return:
Market value (.65)%* 22.44%
Net asset value 3.93%* 15.42%
Net assets (in millions):
End of period $ 179.03 $ 172.27
Ratio of operating expenses to average net assets .42%* 1.70%
Ratio of interest expenses to average net assets .15%* .61%
Ratio of total expenses to average net assets .57%* 2.31%
Ratio of net investment income to average net assets 1.74%* 6.44%
Portfolio turnover 12.10%* 64.89%
</TABLE>
*Percentages represent results for the period and are not annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6
<PAGE>
SCHEDULE OF INVESTMENTS MASSMUTUAL CORPORATE INVESTORS
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities - 75.97%: (A) Amount Date Date (Note 2B) (Note 2A)
------------- ------------ -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
AccTech, LLC
A designer and marketer of specialized cleaning
products.
Senior Floating Rate Revolving Credit Note
due 2002 $ 548,760 10/31/96 $ 548,760 $ 548,760 $ 538,004
Senior Secured Series A Floating Rate Note
due 2002 $ 776,833 10/31/96 765,181 776,832 766,191
10.1% Senior Secured Series A Note
due 2002 $ 1,165,250 10/31/96 1,135,420 1,165,250 1,134,720
12% Senior Secured Series B Note
due 2004 $1,098,000 10/31/96 1,155,206 991,936 1,148,179
Membership Interest 5 int. 10/31/96 264,080 332,000 264,080
Warrant, exercisable until 2004, to purchase 2
Membership Interests at $.01 per interest (B) 2 int. 10/31/96 -- 109,800 --
-------------- ----------- ------------
3,868,647 3,924,578 3,851,174
-------------- ----------- ------------
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 2004 $ 3,000,000 12/27/91 2,964,60 2,961,288 2,880,900
Warrant, exercisable until 2004, to purchase
103,342 shares of common stock at $15.53
per share (B) 103,342 shs. 12/27/91 49,714 38,712 103,342
-------------- ----------- ------------
3,014,314 3,000,000 2,984,242
-------------- ----------- ------------
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 $ 1,166,667 11/23/93 1,142,867 1,166,667 1,242,617
-------------- ----------- ------------
Associated Vintage Group, Inc.
A provider of custom wine production services
in the United States
11% Senior Subordinated Note due 2005 $ 3,335,000 3/19/97 3,274,637 3,162,080 3,262,631
Common Stock (B) 31,350 shs. 3/19/97 123,750 165,000 123,750
Warrant, exercisable until 2005, to purchase
94,107 shares of common stock at $.01 per
share (B) 94,107 shs. 3/19/97 94,107 173,346 94,107
-------------- ----------- ------------
3,492,494 3,500,426 3,480,488
-------------- ----------- ------------
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. 2/28/89 654,500 401,170 422,153
-------------- ----------- ------------
C&K Manufacturing and Sales Company
A manufacturer and distributor of branded packaging
and supply products.
Senior Secured Floating Rate Revolving
Credit Facility due 2002 $ 319,200 8/29/96 319,200 319,200 316,263
Senior Secured Series A Floating Rate
Term Note due 2002 $ 2,423,117 8/29/96 2,397,188 2,423,117 2,399,612
12% Series B Term Note due 2004 $ 533,000 8/29/96 524,739 507,500 526,391
Membership Interest 266 int. 8/29/96 212,800 262,840 212,800
Warrant, exercisable until 2004, to purchase 73
Membership Interests at $.01 per interest (B) 73 int. 8/29/96 1 26,650 1
-------------- ----------- ------------
3,453,928 3,539,307 3,455,067
-------------- ----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Cains Foods, L.P.
A producer of mayonnaise, sauce and pickle
products for both the retail and food
service markets.
Senior Secured Floating Rate Revolving
Credit Note due 2000 $ 432,432 9/30/96 $ 432,432 $ 432,432 $ 432,432
10% Senior Secured Term Note due 2004 $ 1,513,512 9/29/95 1,513,512 1,513,512 1,482,182
11.5% Senior Subordinated Note due 2004 $ 945,945 9/29/95 895,706 901,919 923,715
8% Junior Subordinated Convertible Note
due 2004, convertible into 78 partnership
points at $1,388.89 per point $ 108,108 9/29/95 108,108 108,108 208,606
Warrant, exercisable until 2006, to purchase
39 partnership points at $.01 per point (B) 39 pts. 9/29/95 50,261 50,261 82,218
------------- ------------ -------------
3,000,019 3,006,232 3,129,153
------------- ------------ -------------
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 200,000 shares of common
stock at $7.31 per share $ 1,500,000 3/31/94 1,420,050 1,500,000 1,393,050
------------- ------------ -------------
Classic Sports, Inc.
A cable sports television network.
Convertible Preferred Stock, convertible
into 644 shares of common stock at $1,000
per share 644 shs. * 544,444 304,121 773,333
------------- ------------ -------------
The Coast Distribution System - A.S.E.
A wholesale distributor of recreational vehicle
and marine parts and accessories.
11.2% Senior Subordinated Secured Note
due 1999 $ 350,050 6/26/89 361,217 350,050 351,590
Common Stock (B) 108,646 shs. 6/27/85 560,613 568,101 387,045
------------- ------------ -------------
921,830 918,151 738,635
------------- ------------ -------------
CompuCom Systems, Inc. - O.T.C.
A personal computer dealer specializing in
serving corporate accounts.
Common Stock (B) 367,220 shs. 9/24/92 799,805 807,884 2,093,154
------------- ------------ -------------
Consumer Product Enterprises, Inc.
A manufacturer of colored acrylic felt for
consumer use.
10.75% Senior Secured Term Note due 2003 $ 1,214,205 12/8/95 1,226,772 1,214,205 1,191,014
12% Senior Subordinated Note due 2005 $ 800,575 12/8/95 803,858 759,565 762,548
Common Stock (B) 184,560 shs. 12/8/95 138,420 184,560 138,420
Warrant, exercisable until 2005, to purchase
138,420 shares of common stock at $.01
per share (B) 138,420 shs. 12/8/95 1,384 50,853 1,384
------------- ------------ -------------
2,170,434 2,209,183 2,093,366
------------- ------------ -------------
Control Devices, Inc. - O.T.C.
A producer of high quality electromechanical
circuit protector devices and photo-optic sensors.
Common Stock (B) 174,200 shs. ** 26,242 26,242 1,959,754
------------- ------------ -------------
</TABLE>
*4/18/95 and 6/3/96.
**7/29/94 and 10/8/96.
- -------------------------------------------------------------------------------
8
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------- ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
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 $ 383,495 12/11/90 $ 388,271 $ 383,016 $ 398,950
-------------- ----------- -----------
D&K Wholesale Drug, Inc. - O.T.C
A wholesale pharmaceutical distribution company
11% Subordinated Note due 1997 $ 541,667 12/29/87 495,842 541,667 541,234
11% Convertible Subordinated Note due 1997,
convertible into 265,490 shares of common
stock at $3.30 per share $ 875,000 12/29/87 956,113 875,000 987,263
-------------- ----------- -----------
1,451,955 1,416,667 1,528,497
-------------- ----------- -----------
Delta Beverage Group, Inc.
A Pepsi soft drink bottler
Common Stock (B) 966 shs. 3/8/88 181,486 2,006,380 181,486
-------------- ----------- -----------
Diversco, Inc.
A contract provider of janitorial and equipment
maintenance services and temporary production
labor to industrial customers
Senior Secured Floating Rate Revolving Credit
Facility due 2002 $ 454,000 10/24/96 451,479 454,000 450,459
Senior Floating Rate Term Note due 2002 $ 447,152 10/24/96 443,197 447,152 444,692
10.16% Senior Term Note due 2002 $ 1,341,457 10/24/96 1,343,066 1,341,457 1,339,579
12% Senior Subordinated Note due 2003 $ 1,249,000 10/24/96 1,277,852 1,107,776 1,270,982
Membership Interest 2,992 int. 10/24/96 224,393 305,190 224,393
Warrant, exercisable until 2003, to purchase
1,791 Membership Interest at $.01 per
interest (B) 1,791 int. 10/24/96 18 147,609 18
-------------- ----------- -----------
3,740,005 3,803,184 3,730,123
-------------- ----------- -----------
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 2,033,000
10% Preferred Stock 2,339 shs. 9/24/93 176,964 233,925 193,924
Common Stock (B) 161 shs. 9/24/93 16,075 16,075 92,117
Warrant, exercisable from 1998 until 2001,
to purchase 168 shares of common stock at
$.01 per share (B) 168 shs. 9/24/93 17 16,782 96,271
-------------- ----------- -----------
2,136,272 2,249,998 2,415,312
-------------- ----------- -----------
Exide Electronics Group, Inc. - O.T.C
A manufacturer and servicer of uninterruptible
power systems
Common Stock (B) 229,358 shs. 9/2/92 2,972,400 3,000,000 2,369,553
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 $ 2,771,114 * 2,738,692 2,630,666 2,781,922
Common Stock (B) 545 shs. 4/28/95 141,111 272,500 20,552
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 8,684
Incentive Warrant, exercisable from 1998
until 2000, to purchase 19 shares of common
stock at $.01 per share (B) 19 shs. 4/28/95 3,308 2,273 439
-------------- ----------- -----------
2,981,346 3,075,894 2,811,597
-------------- ----------- -----------
</TABLE>
*4/28/95, 5/1/96 and 2/1/97
- --------------------------------------------------------------------------------
9
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
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 $ 2,980,500
Warrant, exercisable until 2005, to purchase
272,934 shares of common stock at (pounds)1.53
per share (B) 272,934 shs. 1/11/95 27,000 -- 366,999
-------------- ------------ ------------
2,931,300 3,000,000 3,347,499
-------------- ------------ ------------
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 179,140 shares of common
stock at $6.28 per share $ 1,125,000 9/29/89 1,094,738 1,125,000 1,128,713
Warrant, exercisable until 1999, to purchase
59,713 shares of common stock at $6.28
per share (B) 59,713 shs. 9/3/96 -- -- 4,538
-------------- ------------ ------------
1,094,738 1,125,000 1,133,251
-------------- ------------ ------------
Highland Homes Holdings, Inc.
A single family homebuilder operating in the
Dallas-Fort Worth and Atlanta areas.
12.75% Senior Note due 1999 $ 2,250,000 11/18/93 2,227,725 2,219,324 2,323,350
Warrant, exercisable until 2001, to purchase
10 shares of common stock at $17,897.31
per share (B) 10 shs. 11/18/93 1 20,451 104
-------------- ------------ ------------
2,227,726 2,239,775 2,323,454
-------------- ------------ ------------
Hudson River Capital
Acquires controlling or substantial interests
in manufacturing and marketing entities.
3% Convertible Preferred Stock, convertible
into 100,000 shares of common stock at $10
per share (B) 100,000 shs. 7/21/94 950,000 1,000,000 950,000
-------------- ------------ ------------
Hussey Seating Company
A manufacturer of spectator seating products.
Senior Secured Floating Rate Revolving Note
due 2003 $ 495,000 6/12/96 490,149 495,000 490,644
Senior Secured Floating Rate Note due 2003 $ 900,000 6/12/96 891,090 900,000 892,710
10% Senior Secured Note due 2003 $ 900,000 6/12/96 876,240 900,000 884,250
12% Subordinated Secured Note due 2006 $ 1,350,000 6/12/96 1,327,320 1,135,934 1,342,575
Warrant, exercisable until 2006, to purchase
3,553 shares of common stock at $.01 per
share (B) 3,553 shs. 6/12/96 36 225,000 36
-------------- ------------ ------------
3,584,835 3,655,934 3,610,215
-------------- ------------ ------------
Intermetrics, Inc.
A provider of software systems, services and
products to a variety of information
technology users.
Senior Floating Rate Revolving Term Note
due 2002 $ 1,332,143 8/31/95 1,320,881 1,332,143 1,300,172
13% Senior Subordinated Note due 2002 $ 799,318 8/31/95 813,520 710,007 787,248
Common Stock (B) 11,075 shs. 8/31/95 51,961 69,221 51,914
Warrant, exercisable until 2007, to purchase
21,176 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 2,215,371 2,141,452
-------------- ------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
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 $ 1,949,516
13.25% Cumulative Exchangeable Preferred
Stock 99 shs. 8/16/95 985,500 823,332 814,028
Common Stock (B) 434 shs. 8/16/95 43,426 43,426 39,083
Warrant, exercisable until 2005, to purchase
1,999 shares of common stock at $.01
per share (B) 1,999 shs. 8/16/95 199,735 199,735 1,999
-------------- ------------ ------------
3,199,661 2,999,926 2,804,626
-------------- ------------ ------------
Kappler Safety Group, Inc.
A manufacturer of protective apparel for the
industrial/safety, cleanroom and healthcare
markets.
13% Senior Subordinated Note due 2004 $ 3,333,000 12/2/96 3,383,995 3,012,276 3,303,003
Warrant, exercisable until 2004, to purchase
57,418 shares of common stock at $.01
per share (B) 57,418 shs. 12/2/96 57,418 333,300 72,576
-------------- ------------ ------------
3,441,413 3,345,576 3,375,579
-------------- ------------ ------------
Kuhlman Corporation - N.Y.S.E.
A manufacturer of non-automotive engine components.
Warrant, exercisable until 2002, to purchase
96,150 shares of common stock at $8.32
per share (B) 96,150 shs. 4/30/92 106,000 162,000 1,160,473
-------------- ------------ ------------
Latin Communications Group
An operator of Spanish-language media in
North America.
Common Stock (B) 88,438 shs. * 628,945 812,504 884,380
-------------- ------------ ------------
Maloney Industries, Inc.
Engineers and manufactures process systems
for the oil and gas industry.
13% Subordinated Note due 2004 $ 2,025,000 10/26/95 2,378,250 2,025,000 2,193,480
Limited Partnership Interest 568 uts. 10/20/95 506,250 733,259 506,250
Warrant, exercisable until 2004, to purchase
297 units of Limited Partnership Interest at
$.01 per unit (B) 297 uts. 10/26/95 297 -- 297
-------------- ------------ ------------
2,884,797 2,758,259 2,700,027
-------------- ------------ ------------
Maxtec International Corp.
A manufacturer and distributor of precision
test and measurement equipment and overhead
crane control systems.
Senior Floating Rate Revolving Credit
Facility due 2001 $ 659,341 6/28/95 659,341 659,341 653,538
Senior Secured Floating Rate Note due 2001 $ 95,472 6/28/95 94,517 95,472 95,386
12.5% Subordinated Secured Note due 2003 $ 102,331 6/28/95 104,470 79,525 102,259
Common Stock (B) 76,923 shs. 6/28/95 192,115 230,769 173,077
Warrant, exercisable from 1998 until 2005,
to purchase 39,563 shares of common stock
at $.01 per share (B) 39,563 shs. 6/28/95 98,581 171,429 39,563
-------------- ------------ ------------
1,149,024 1,236,536 1,063,823
-------------- ------------ ------------
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 1,512,000
-------------- ------------ ------------
</TABLE>
*7/13/95 and 12/1/95.
- --------------------------------------------------------------------------------
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Monro Muffler Brake, Inc. - O.T.C.
An operator of retail muffler and brake shops.
Common Stock 2,056 shs. 4/19/85 $ 3,272 $ 2,672 $ 32,849
-------------- ------------ ------------
NM Holdings LLC
A company created to acquire motion picture film
rights from Twentieth Century Fox.
10% Senior Note due 2001 $ 1,000,000 6/28/96 980,600 1,000,000 979,200
12% Subordinated Note due 2001 $ 980,000 6/28/96 982,156 980,000 977,947
Membership Interest 20,000 int. 6/28/96 15,000 19,876 15,000
-------------- ------------ ------------
1,977,756 1,999,876 1,972,147
-------------- ------------ ------------
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 156,867 shares of
common stock at $9 per share $ 1,411,800 8/31/94 1,425,918 1,411,800 1,468,554
-------------- ------------ ------------
PanEnergy Corporation - N.Y.S.E.
An owner and operator of natural gas gathering,
transmission and processing facilities.
9% Convertible Subordinated Note due 2004,
convertible into 135,563 shares of common
stock at $22.13 per share $ 3,000,000 12/30/92 2,934,000 3,000,000 5,261,400
-------------- ------------ ------------
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 2/5/93 832,000 833,333 850,750
8% Convertible Preferred Stock due 2001,
convertible into 83,333 shares of common
stock at $2 per share 83,333 shs. 2/5/93 166,667 166,667 151,783
Common Stock (B) 133,333 shs. 2/5/93 333,333 333,333 160,000
-------------- ------------ ------------
1,332,000 1,333,333 1,162,533
-------------- ------------ ------------
Pharmaceutical Buyers, Inc.
A group purchasing organization which specializes
in arranging and negotiating contracts for the
purchase of pharmaceutical goods and medical
equipment.
10.5% Senior Secured Note due 2005 $ 817,500 11/30/95 851,917 817,500 818,808
10.5% Senior Secured Convertible Note
due 2005, convertible into 4 shares of
common stock at $50,000 per share $ 195,000 11/30/95 205,355 195,000 205,218
Common Stock (B) 7 shs. 11/30/95 253,125 337,500 253,125
-------------- ------------ ------------
1,310,397 1,350,000 1,277,151
-------------- ------------ ------------
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 2,784,040
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 66,973
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 -- 89,344
-------------- ------------ ------------
3,024,270 2,999,993 3,222,296
-------------- ------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Plastipak Packaging, Inc.
A manufacturer of plastic containers.
10.64% Senior Subordinated Note due 2006 $ 3,500,000 10/25/96 $ 3,403,750 $ 3,410,148 $ 3,392,550
Warrant, exercisable until 2006, to purchase
97 shares of common stock at $.01 per
share (B) 97 shs. 10/25/96 55,593 93,625 62,201
------------- ----------- -----------
3,459,343 3,503,773 3,454,751
------------- ----------- -----------
Precision Dynamics, Inc.
A manufacturer of custom-designed solenoid
valves and controls.
Senior Secured Floating Rate Revolving
Credit Facility due 2003 $ 391,200 7/22/96 387,327 391,200 387,601
Senior Secured Floating Rate Term Note
due 2003 $ 2,935,000 7/22/96 2,906,237 2,935,000 2,910,053
12% Senior Secured Term Note due 2004 $ 489,000 7/22/96 482,545 395,895 483,817
8% Preferred Stock 232 shs. 7/22/96 220,231 231,822 220,231
Common Stock (B) 599 shs. 7/22/96 21,699 28,978 21,699
Warrant, exercisable until 2004 to purchase 322
shares of common stock at $.01 per share (B) 322 shs. 7/22/96 3 97,800 3
------------- ----------- -----------
4,018,042 4,080,695 4,023,404
------------- ----------- -----------
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 1,200,000 979,680
11.51% Junior Secured Note due 1999 $ 800,000 8/12/94 783,040 800,000 627,120
9.8% Redeemable Exchangeable
Preferred Stock 10,000 shs. 8/12/94 847,900 1,000,000 384,000
Common Stock (B) 1,492 shs. 8/12/94 15 -- 11
------------- ----------- -----------
2,815,115 3,000,000 1,990,811
------------- ----------- -----------
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 1,673,700
Common Stock (B) $ 35,500 shs. 2/16/93 340,800 340,800 560,678
------------- ----------- -----------
1,939,950 1,840,800 2,234,378
------------- ----------- -----------
Rent-Way, Inc. - O.T.C.
Operates rent-to-own stores in Ohio,
Pennsylvania and New York.
10% Convertible Subordinated Note due 2002,
convertible into 201,207 shares of common
stock at $9.94 per share $ 2,000,000 7/18/95 1,991,220 2,000,000 2,119,800
Warrant, exercisable until 2002, to purchase
20,000 shares of common stock at $9.94
per share (B) 20,000 shs. 7/18/95 200 -- 11,060
------------- ----------- -----------
1,991,420 2,000,000 2,130,860
------------- ----------- -----------
Sequentia, Inc.
A manufacturer and distributor of fiberglass
reinforced panels used in commercial, industrial
and residential applications.
12% Subordinated Note due 2004 $ 2,281,400 12/14/95 2,418,284 1,845,613 1,711,050
Limited Partnership Interest of KS Holdings, L.P. 7,186 uts. 12/14/95 538,950 678,741 71,860
Warrant, exercisable until 2004, to purchase
5,449 units of Limited Partnership Interest of
KS Holdings, L.P. at $.01 per unit (B) 5,449 uts. 12/14/95 5,449 479,094 2,725
------------- ----------- -----------
2,962,683 3,003,448 1,785,635
------------- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
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 $ 1,655,672 5/27/94 $1,675,010 $1,665,672 $1,635,023
10.5% Subordinated Note due 2004 $ 716,418 5/27/94 716,418 716,418 678,663
Common Stock (B) 4,310 shs. 5/27/94 259,735 259,735 45,096
Warrant, exercisable until 2004, to purchase
3,224 shares of common stock at $.01
per share (B) 3,224 shs. 5/27/94 32 -- 33,707
------------- ----------- -----------
2,651,195 2,641,825 2,392,489
------------- ----------- -----------
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 (B) $ 937,500 12/13/83 886,500 937,500 234,375
10.25% Senior Note due 1999 (B) $ 743,750 9/30/87 669,003 743,750 185,938
10.25% Convertible Senior Note due 1999,
convertible into 4% of the Company (B) $ 50,000 9/30/87 48,795 50,000 12,500
------------- ----------- -----------
1,604,298 1,731,250 432,813
------------- ----------- -----------
Supreme Industries, Inc. - A.S.E
A manufacturer of modular homes and truck bodies
Common Stock (B) 536,049 shs. * 1,226,108 1,279,976 3,588,178
Common Stock of Contempri Homes, Inc. (B) 256,516 shs. 12/31/92 7,040 4,952 19,239
Common Stock of TGC Industries, Inc. (B) 19,082 shs. 9/30/86 9,497 9,497 23,255
------------- ----------- -----------
1,242,645 1,294,425 3,630,672
------------- ----------- -----------
Swing N'Slide Corporation - A.S.E.
A manufacturer and distributor of home playground
equipment and accessories
12% Subordinated Note due 2005 $ 3,125,000 3/13/97 2,585,000 2,446,572 2,575,000
Limited Partnership Interest of Green Grass
Capital II, LLC 81,548 uts. 3/13/97 293,573 447,500 281,341
Warrant, exercisable until 2005, to purchase
148,044 units of Limited Partnership Interest
of Green Grass Capital II, LLC at $.01 per
unit (B) 148,044 uts. 3/13/97 531,774 680,722 509,567
------------- ----------- -----------
3,410,347 3,574,794 3,365,908
------------- ----------- -----------
Team Rental Group, Inc. - O.T.C
An operator of Budget Rent-A-Car franchises,
retail used car sales facilities, and van pool
territories
7% Convertible Subordinated Note due 2003,
convertible into 99,226 shares of common stock
at $20.16 per share $ 2,000,000 12/18/96 1,798,440 2,000,000 1,868,800
------------- ----------- -----------
Telex Communications, Inc.
A producer of electronic and communications
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 4,157,550
------------- ----------- -----------
Tidewater Holdings, Inc.
An operator of a barge transportation line on the
Columbia/Snake River system
12.5% Senior Subordinated Note due 2006 $ 2,380,000 7/25/96 2,388,092 2,334,464 2,395,708
Convertible Preferred Stock, convertible into
1,120 shares of common stock at $1,000 per
share (B) 1,120 shs. 7/25/96 1,008,000 1,120,000 1,008,000
Warrant, exercisable until 2008, to purchase
474 shares of common stock at $.01 per
share (B) 474 shs. 7/25/96 43 48,216 43
------------- ----------- -----------
3,396,135 3,502,680 3,403,751
------------- ----------- -----------
</TABLE>
*5/23/79, 12/15/95 and 6/9/96.
- --------------------------------------------------------------------------------
14
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
TransMontaigne Oil Company - A.S.E.
An independent petroleum products marketing
company
12.75% Senior Subordinated Debenture
due 2000 $ 1,200,000 3/28/91 $ 1,274,280 $ 1,179,333 $ 1,246,920
Common Stock (B) 258,720 shs. * 400,000 798,595 2,425,500
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 42,000 538,282
------------- ------------ ------------
1,681,741 2,019,928 4,210,702
------------- ------------ ------------
Trend Plastics, Inc.
A manufacturer and assembler of plastic injection
molded parts
12% Subordinated Note due 2005 $ 2,513,500 3/21/97 2,592,675 2,510,371 2,581,867
Limited Partnership Interest of Riverside V
Holding Company L.P. 2,183 uts. 3/21/97 267,065 295,664 267,065
Limited Partnership Interest of Riverside V-A
Holding Company L.P. 4,670 uts. 3/21/97 605,024 632,619 605,024
Warrant, exercisable until 2005, to purchase
3,129 units of Limited Partnership Interest at
$.01 per unit (B) 3,129 uts. 3/21/97 3,129 3,129 3,129
------------- ------------ ------------
3,467,893 3,441,783 3,457,085
------------- ------------ ------------
Unidata, Inc.
A manufacturer and distributor of database
management software
11.5% Senior Subordinated Note due 2003 $ 2,500,000 12/14/95 2,538,500 2,397,865 2,299,000
Common Stock (B) 125,000 shs. 12/14/95 375,000 500,000 375,000
Warrant, exercisable until 2003, to purchase
62,500 shares of common stock at $1 per
share (B) 62,500 shs. 12/14/95 625 124,250 625
------------- ------------ ------------
2,914,125 3,022,115 2,674,625
------------- ------------ ------------
Unipac Corporation
A manufacturer of laminated materials which are
used to seal a variety of packaging containers
Senior Secured Floating Rate Note due 2002 $ 850,313 2/9/96 850,313 850,313 850,313
12% Senior Secured Note due 2004 $ 243,750 2/9/96 246,870 220,201 250,209
Acquisition Line of Credit due 2002 $ 750,000 9/30/96 750,000 750,000 750,000
Limited Partnership Interest of Riverside II
Holding Company L.P. 123 uts. ** 112,737 217,232 325,237
Warrant, exercisable from 2000 until 2004, to
purchase 41 units of Limited Partnership Interest
of Riverside II Holding Company L.P. at $.01
per unit (B) 41 uts. 2/9/96 4 40,313 109,395
------------- ------------ ------------
1,959,924 2,078,059 2,285,154
------------- ------------ ------------
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 1,773,781
12% Subordinated Note due 2005 $ 652,050 5/3/95 733,622 619,995 698,215
Common Stock (B) 4,911 shs. 5/3/95 162,652 391,230 36,332
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 20,652
------------- ------------ ------------
2,842,918 2,723,848 2,528,980
------------- ------------ ------------
</TABLE>
*3/28/91, 12/18/91, 9/30/92, 9/30/93, 9/30/94, 3/31/95 and 5/9/95.
**2/9/96 and 9/25/96
- --------------------------------------------------------------------------------
15
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
U.S. Silica Company
A producer of high grade industrial and specialty
ground silica sands in North America
15% Senior Subordinated Note due 2005 $ 2,344,967 * $ 2,490,098 $ 2,344,837 $ 2,457,056
Redeemable Preferred Stock Series A (B) 42,001 shs. 12/19/96 291,673 388,898 291,677
Convertible Preferred Stock Series B,
convertible into 84,002 shares of Series B
common stock at $9.26 per share (B) 84,002 shs. 12/19/96 583,352 777,802 583,347
Warrant, exercisable until 2005, to purchase
6,481 units of Series A Preferred Stock and
12,964 units of Series B Preferred Stock at $.01
per unit (B) 6,481 uts. 12/19/96 12,963 129 6,482
------------ ------------ ------------
3,378,086 3,511,666 3,338,562
------------ ------------ ------------
Wright & Lato, Inc.
A manufacturer of gold wedding bands and rings
16% Subordinated Note due 1997 $ 123,250 12/6/83 109,420 123,250 122,474
14% Convertible Subordinated Note due
1997, convertible into 15,000 shares of
common stock at $4.28 per share $ 64,250 12/6/83 63,363 64,250 63,646
------------ ------------ ------------
172,783 187,500 186,120
------------ ------------ ------------
Sub-Total Corporate Restricted Securities $123,950,716 127,546,253 136,008,463
============ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Market Value
Interest Due Principal Cost at 3/31/97
Rule 144A Securities: (A) Rate Date Amount (Note 2B) (Note 2A)
--------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Convertible Bonds - 4.52%
Continental Airlines, Inc. 6.750% 4/15/06 $ 600,000 557,250 732,000
Corporate Express, Inc. 4.500 7/1/00 570,000 526,350 483,075
CUC International, Inc. 3.000 2/15/02 1,200,000 1,200,000 1,176,000
Garnet Resources Corporation 9.500 12/21/98 500,000 500,000 200,000
Grand Metropolitan PLC 6.500 1/31/00 600,000 600,000 699,000
Home Shopping Network 5.880 3/1/06 1,000,000 1,000,000 1,115,000
Imax Corporation 5.750 4/1/03 1,050,000 1,006,500 1,029,000
Marriott International, Inc. 0.000 3/25/11 1,000,000 555,398 545,000
Molton Metal Technology 5.500 5/1/06 1,150,000 1,079,063 667,000
Renal Treatment Centers, Inc. 5.625 7/15/06 475,000 475,000 432,250
The Sports Authority, Inc. 5.250 9/15/01 140,000 140,000 126,700
Sunglass Hut International, Inc. 5.250 6/15/03 725,000 673,231 543,750
Thermo Electron Corporation 4.250 1/1/03 250,000 250,000 259,375
Thermo Terratech, Inc. 4.625 5/1/03 90,000 90,000 83,475
------------ --------- ---------
Sub-Total Rule 144A Convertible Bonds $ 9,350,000 8,652,792 8,091,625
============ --------- ---------
Bonds - 1.06%
Anchor Advanced Products 11.750 4/1/04 $ 350,000 350,000 352,625
Atlantic Express 10.750 2/1/04 550,000 550,000 554,125
CFP Holdings, Inc. 11.625 1/15/04 200,000 200,000 203,500
Sun Media Corporation 9.500 2/15/07 825,000 836,187 792,000
------------ --------- ---------
Sub-Total Rule 144A Bonds $ 1,925,000 1,936,187 1,902,250
============ --------- ---------
</TABLE>
*12/19/96 and 2/15/97.
- --------------------------------------------------------------------------------
16
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares, Warrants Market Value
Interest Due or Principal Cost at 3/31/97
Rule 144A Securities: (A) (Continued) Rate Date Amount (Note 2B) (Note 2A)
-------- -------- ---------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Convertible Preferred Stock - .73%
Greenfield Capital Trust, Inc. 14,300 $ 697,850 $ 593,450
Loral Space and Communications LTD 1,800 90,000 87,300
McKesson Corporation 4,580 229,000 241,595
Qualcomm Financial Trust 7,720 386,000 384,070
------------ ------------
Sub-Total Rule 144A Convertible
Preferred Stock 1,402,850 1,306,415
------------ ------------
Total Rule 144A Securities 11,991,829 11,300,290
------------ ------------
Total Corporate Restricted Securities 139,538,082 147,308,753
------------ ------------
Corporate Public Securities:
Convertible Bonds - 3.74%
Continental Airlines, Inc. 6.750% 4/15/06 $ 400,000 371,000 488,000
Diamond Offshore Drilling 3.750 2/15/07 250,000 250,000 266,875
Hilton Hotels, Inc. 5.000 5/15/06 1,385,000 1,385,000 1,385,000
Home Depot, Inc. 3.250 10/1/01 900,000 887,000 900,000
Magna International, Inc. 5.000 10/15/02 600,000 613,125 646,500
Savoy Pictures Entertainment, Inc. 7.000 7/1/03 1,250,000 1,287,500 1,012,500
US Filter Corporation 4.500 12/15/01 1,000,000 1,000,000 1,010,000
USA Waste Services, Inc. 4.000 2/1/02 950,000 950,000 983,250
------------ ----------- ------------
Total Convertible Bonds $ 6,735,000 6,743,625 6,692,125
============ ----------- ------------
Bonds - 13.44%
Aearo Company 12.500 7/15/05 $ 1,000,000 1,000,000 1,080,000
Atlas Air, Inc. 12.250 12/1/02 1,500,000 1,500,000 1,620,000
Central Rents, Inc. 12.875 12/15/03 1,630,000 1,530,600 1,646,300
Consolidated Cigar Corporation 10.500 3/1/03 500,000 500,000 515,000
Continental Airlines, Inc. 9.500 12/15/01 750,000 750,000 766,410
Crown Packaging Ltd. 10.750 11/1/00 750,000 750,000 682,500
Data Documents, Inc. 13.500 7/15/02 3,028,000 3,033,290 3,361,080
Dawson Production Services, Inc. 9.375 2/1/07 850,000 867,938 824,500
Decorative Homes Accents, Inc. 13.000 6/30/02 700,000 700,000 350,000
Florist Transworld Delivery, Inc. 14.000 12/15/01 1,175,000 1,142,916 1,186,750
Great American Cookie Company 10.875 10/1/06 650,000 627,250 624,000
Harman International Industries Incorporated 12.000 8/1/02 1,000,000 992,770 1,070,000
Hosiery Corporation of America 13.750 8/1/02 1,000,000 987,800 1,100,000
Indah Kiah International Corporation 11.875 6/15/02 1,000,000 1,000,000 1,085,000
International Wire Group, Inc. 11.750 6/1/05 750,000 750,000 787,500
Ivex Packaging Corporation 12.500 12/15/02 250,000 266,562 270,000
Key Plastics, Inc. 14.000 11/15/99 750,000 760,462 828,750
Northwest Airlines Corp. 12.091 12/31/00 787,076 816,591 824,462
Northwest Airlines Corp. 10.150 1/2/05 609,693 609,694 640,178
Parker Drilling Corporation 9.750 11/15/06 1,500,000 1,488,225 1,545,000
Remington Products Company 11.000 6/15/06 600,000 595,506 486,000
Telex Communications, Inc. 12.000 7/15/04 1,500,000 1,500,000 1,680,000
Trans-Resources, Inc. 11.875 7/1/02 1,000,000 1,032,500 975,000
Vintage Petroleum, Inc. 8.625 2/1/09 125,000 123,948 117,813
------------ ----------- ------------
Total Bonds $ 23,404,769 23,326,052 24,066,243
============ ----------- ------------
Warrants - .03%
Barringer Technologies, Inc. (B) 13,930 696 13,930
Western Systems Corporation (B) 183,117 45,780 45,779
----------- ------------
Total Warrants 46,476 59,709
----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
17
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Market Value
Cost at 3/31/97
Corporate Public Securities: (Continued) Shares (Note 2B) (Note 2A)
----------- ------------ ------------
<S> <C> <C> <C>
Common Stock - 6.67%
America West Airlines, Inc. (B) 4,900 $ 98,294 $ 76,563
Atlas Air, Inc. (B) 5,800 117,450 152,250
Barringer Technologies, Inc. (B) 10,504 89,946 97,162
Benson Petroleum, Ltd. (B) 200,000 154,408 151,600
Central Rents, Inc. (B) 1,880 67,856 94,000
Chesapeake Energy Corporation (B) 35,000 1,176,875 730,625
Collins & Aikman Corporation (B) 40,200 240,834 346,725
Computer Horizons Corporation 38,850 342,825 1,204,350
Correctional Services, Inc. (B) 9,553 53,206 95,530
Data Documents, Inc. (B) 21,994 33 228,188
Dawson Production Services, Inc. (B) 32,400 405,000 396,900
Florist Transworld Delivery, Inc. (B) 14,686 41,258 73,430
4Health, Inc. (B) 27,000 151,000 150,201
GTech Holdings Corporation (B) 24,500 704,375 738,063
Gulf Canada Resources, Ltd. (B) 58,350 459,506 430,331
Health and Retirement Property Trust 11,600 218,950 208,800
Hosiery Corporation of America 1,000 -- 70,000
Hvide Marine, Inc. (B) 12,600 313,425 286,650
Integrated Living Communities, Inc. (B) 59,500 476,000 357,000
LCS Industries, Inc. 35,000 546,831 498,750
Marker International (B) 70,000 437,500 315,000
MEDIQ Incorporated (B) 150,000 574,147 1,218,750
Public Storage, Inc. 23,400 663,975 678,600
Red Roof Inns, Inc. (B) 45,200 640,993 711,900
Staffing Resources, Inc. 105,000 577,500 1,522,500
Sweetwater, Inc. (B) 26,000 182,000 39,000
US Rentals, Inc. (B) 21,000 420,000 380,625
Western Systems Corporation (B) 405,590 760,889 684,636
------------ ------------
Total Common Stock 9,915,076 11,938,129
------------ ------------
Convertible Preferred Stock - 1.56%
Merrill Lynch & Co. 26,500 606,187 543,250
Occidental Petroleum Corporation 13,740 687,000 913,710
RXI Holdings, Inc. 225,559 225,559 226
SFX Broadcasting, Inc. 31,100 1,452,475 1,337,300
------------ ------------
Total Convertible Preferred Stock 2,971,221 2,794,486
------------ ------------
Total Corporate Public Securities 43,002,450 45,550,692
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Market Value
Due Principal Cost at 3/31/97
Short-Term Securities: Yield Date Amount (Note 2B) (Note 2A)
---------- ------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Commercial Paper - .47%
Aristar, Inc. 6.501% 4/1/97 $ 2,500,000 $ 2,500,000 $ 2,500,000
------------ ------------ ------------
Total Short-Term Securities $ 2,500,000 2,500,000 2,500,000
============ ------------ ------------
Total Investments - 117.50% $185,040,532 195,359,445
============ ------------
Other Assets - 2.20 4,943,716
Liabilities - (19.70) (21,271,490)
------- ------------
Total Net Assets - 100.00% $179,031,671
====== ============
</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.
- --------------------------------------------------------------------------------
19
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
INDUSTRY CLASSIFICATION
<TABLE>
<CAPTION>
Fair Value
at 3/31/97
Corporate Restricted Securities: (Note 2A)
--------------
<S> <C>
ADVERTISING - .94%
Ammirati & Puris, Inc. $ 1,242,617
Summey Outdoor Advertising, Inc. 432,813
---------------
1,675,430
---------------
AUTO PARTS - .02%
Monro Muffler Brake, Inc. 32,849
---------------
BEVERAGES - 2.05%
Associated Vintage Group, Inc. 3,480,488
Delta Beverage Group, Inc. 181,486
---------------
3,661,974
---------------
BUILDING MATERIALS - 3.33%
Highland Homes Holdings, Inc. 2,323,454
Supreme Industries, Inc. 3,630,672
---------------
5,954,126
---------------
CHEMICAL - 2.15%
AccTech, LLC 3,851,174
---------------
COMMUNICATIONS - 4.31%
Classic Sports, Inc. 773,333
Home Shopping Network 1,115,000
Latin Communications Group 884,380
Sun Media Corporation 792,000
Telex Communications, Inc. 4,157,550
---------------
7,722,263
---------------
ELECTRICAL EQUIPMENT/
ELECTRONICS - 9.62%
Catalina Lighting, Inc. 1,393,050
CompuCom Systems, Inc. 2,093,154
Control Devices, Inc. 1,959,754
Exide Electronics Group, Inc. 2,369,553
Intermetrics, Inc. 2,141,452
Mercury Computer Systems, Inc. 1,512,000
Nu Horizons Electronics Corp. 1,468,554
Precision Dynamics, Inc. 4,023,404
Thermo Electron Corporation 259,375
---------------
17,220,296
---------------
HEALTH CARE - 1.23%
D&K Wholesale Drug, Inc. 1,528,497
McKesson Corporation 241,595
Renal Treatment Centers, Inc. 432,250
---------------
2,202,342
---------------
JEWELRY - .10%
Wright & Lato, Inc. 186,120
---------------
MANUFACTURING-INDUSTRIAL AND
CONSUMER PRODUCTS - 29.90%
C&K Manufacturing and Sales Company 3,455,067
Consumer Product Enterprises, Inc. 2,093,366
CUC International, Inc. 1,176,000
Elgin National Industries, Inc. 2,415,312
Fleming Acquisition Corporation 2,811,597
Hein-Werner Corp. 1,133,251
Hudson River Capital 950,000
Hussey Seating Company 3,610,215
Imax Corporation 1,029,000
Jackson Products, Inc. 2,804,626
Kappler Safety Group, Inc. 3,375,579
Kuhlman Corporation 1,160,473
Maxtec International Corp. 1,063,823
PAR Acquisition Corp. 1,162,533
Plastipak Packaging, Inc. 3,454,751
Sequentia, Inc. 1,785,635
Star International Holdings, Inc. 2,392,489
Swing N'Slide Corporation 3,365,908
Trend Plastics, Inc. 3,457,085
Unidata, Inc. 2,674,625
Unipac Corporation 2,285,154
U.S. Netting, Inc. 2,528,980
U.S. Silica Company 3,338,562
---------------
53,524,031
---------------
METAL FABRICATING - .37%
Molton Metal Technology 667,000
---------------
MISCELLANEOUS - 3.69%
Anchor Advanced Products 352,625
CFP Holdings, Inc. 203,500
Corporate Express, Inc. 483,075
Greenfield Capital Trust, Inc. 593,450
Loral Space and Communications LTD 87,300
Marriott International, Inc. 545,000
NM Holdings LLC 1,972,147
Protein Genetics, Inc. 1,990,811
Qualcomm Financial Trust 384,070
---------------
6,611,978
---------------
OIL AND GAS SERVICE - 10.68%
American Exploration Company 2,984,242
BP Prudhoe Bay Royalty Trust 422,153
Garnet Resources Corporation 200,000
Hardy Oil & Gas USA, Inc. 3,347,499
Maloney Industries, Inc. 2,700,027
PanEnergy Corporation 5,261,400
TransMontaigne Oil Company 4,210,702
---------------
19,126,023
---------------
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 1997
(Unaudited)
INDUSTRY CLASSIFICATION (Continued)
<TABLE>
<CAPTION>
Fair Value
at 3/31/97
Corporate Restricted Securities: (Continued) (Note 2A)
--------------
<S> <C>
RECREATIONAL SUPPLIES/
EQUIPMENT - .41%
The Coast Distribution System $ 738,635
---------------
RETAILING - 4.42%
Cains Foods, L.P. 3,129,153
Grand Metropolitan PLC 699,000
Pharmaceutical Buyers, Inc. 1,277,151
Rent-Way, Inc. 2,130,860
The Sports Authority, Inc. 126,700
Sunglass Hut International, Inc. 543,750
---------------
7,906,614
---------------
SERVICES - 9.06%
Atlantic Express 554,125
Continental Airlines, Inc. 732,000
Corrections Corporation of America 398,950
Diversco, Inc. 3,730,123
Piedmont Holding, Inc. 3,222,296
RailTex, Inc. 2,234,378
Team Rental Group, Inc. 1,868,800
Thermo Terratech, Inc. 83,475
Tidewater Holdings, Inc. 3,403,751
---------------
16,227,898
---------------
Total Corporate Restricted
Securities - 82.28% $ 147,308,753
===============
</TABLE>
- --------------------------------------------------------------------------------
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
(Unaudited)
1. History
MassMutual Corporate Investors (the "Trust") is a closed-end,
non-diversified investment company. Massachusetts Mutual Life Insurance
Company ("MassMutual") 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 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.
The Board of Trustees of the Trust meets at least once 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 of the Trust, including a majority
of Trustees who are not interested persons of the Trust (otherwise than as
Trustees) or of MassMutual. In making valuations, the Trustees will
consider reports by MassMutual analyzing each portfolio security in
accordance with the relevant factors referred to above. MassMutual has
agreed to provide such reports to the Trust at least quarterly.
The financial statements include restricted securities valued at
$147,308,753 (82.28% of net assets) as of March 31, 1997 ($116,164,428 at
March 31, 1996) whose values have been estimated by the Board of Trustees
in the absence of readily ascertainable market values. Due to the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the differences could be material.
- --------------------------------------------------------------------------------
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 March 31, 1997, 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.
The cost basis of debt securities is not adjusted for amortization of
premium 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. Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
D. Federal Income Taxes:
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, MassMutual has agreed to invest for
its general account concurrently with the Trust in each restricted security
purchased by the Trust. MassMutual, 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. MassMutual provides a continuing review of the investment
operations of the Trust. MassMutual 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 MassMutual a quarterly base rate (the "Base Fee Rate") of 5/16 of 1%
of the value of the Trust's net assets as of the end of each fiscal
quarter, approximately equivalent to 1.25% of the net asset value of the
Trust on an annual basis, plus or minus a quarterly performance adjustment
(the "Performance Adjustment") of up to 1/16 of 1%, 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 March 31, 1997 was plus .0625%.
- --------------------------------------------------------------------------------
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. Note Payable
On November 5, 1993, the Trust sold to MassMutual 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 holder, 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.
5. Purchases and Sales of Investments
<TABLE>
<CAPTION>
For the For the
three months three months
ended 3/31/97 ended 3/31/96
------------- -------------
Cost of Investments Acquired
----------------------------
<S> <C> <C>
Corporate restricted securities $ 16,614,086 $ 5,217,976
Corporate public securities 7,019,789 15,687,208
Short-term securities 85,597,678 60,882,489
Proceeds from Sales or Maturities
---------------------------------
Corporate restricted securities $ 13,113,657 $ 8,037,996
Corporate public securities 22,975,458 21,467,368
Short-term securities 83,939,888 59,004,600
</TABLE>
The aggregate cost of investments is the same for financial reporting and
federal income tax purposes as of March 31, 1997. The net unrealized
appreciation of investments for financial reporting and federal tax
purposes as of March 31, 1997 is $10,318,913 and consists of $25,369,653
appreciation and $15,050,740 depreciation.
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of March 31, 1996. The net unrealized
appreciation of investments for financial reporting and federal tax
purposes as of March 31, 1996 was $12,704,666 and consisted of $24,583,316
appreciation and $11,878,650 depreciation.
- --------------------------------------------------------------------------------
24
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