<PAGE>
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1997 Annual Report
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[LOGO OF MASSMUTUAL CORPORATE INVESTORS APPEARS HERE]
MassMutual
Corporate Investors
[PICTURE APPEARS HERE]
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www.massmutual.com/mci
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MassMutual Corporate Investors
1295 State Street
Springfield, Massachusetts 01111
(413) 744-8480
Adviser
Massachusetts Mutual
Life insurance Company
Auditor
Coopers & Lybrand L.L.P.
Springfield, Massachusetts 01101
Custodian
The Chase Manhattan Bank, NA
Transfer Agent & Registrar
Shareholder Financial Services, Inc.
P.O. Box 173673
Denver, Colorado 80217-3673
1-800-647-7374
MCI
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Listed
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NYSE
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Investment Objective and Policy
MassMutual Corporate Investors, a closed-end investment company, was offered to
the public in September 1971 and its shares are listed on the New York Stock
Exchange. The share price of Corporate Investors can be found in the financial
section of most newspapers as "MasCp" under the New York Stock Exchange
listings. The trading symbol is "MCI".
The Trust's investment objective is to maintain a portfolio of securities
providing a fixed yield and at the same time offering an opportunity for capital
gains. The principal investments are long-term corporate debt obligations and
occasionally preferred stocks purchased directly from issuers. These provide a
fixed yield and potential capital gains through warrants, conversion rights, or
other equity features which are a prerequisite to every private placement
purchased.
Corporate Investors' current portfolio is characterized by broad industrial
diversification. The entire portfolio is shown in the Schedule of Investments in
the Financial Section of this Annual Report.
The Trust holds investments in a number of companies that are not publicly
traded at this time. Capital gains may be realized on holdings of private
companies through various methods, including directly negotiated sales, put
options and initial public offerings of stock.
The Trust pays quarterly dividends and intends to distribute substantially all
of its net income to shareholders each year. All distributions are paid in cash
unless the shareholder elects to participate in the Dividend Reinvestment and
Share Purchase Plan.
Dividends are distributed in January, May, August, and November.
MassMutual Corporate Investors' Annual Meeting of Shareholders is scheduled to
be held on April 24, 1998 at 2:00 p.m. in Springfield, Massachusetts. We
cordially invite all shareholders to attend.
[LOGO OF MASSMUTUAL APPEARS HERE]
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TO OUR SHAREHOLDERS JANUARY 30, 1998
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We welcome this opportunity to provide you MassMutual Corporate investors' 1997
Annual Report.
1997 Highlights
We are pleased to report that Corporate Investors was the number one performing
closed-end bond fund for the year 1997 as reported by Lipper Analytical
Services. The Trust raised its quarterly dividend three times over the course of
the year, declared a year-end extra dividend, declared a two-for-one stock
split, closed seventeen new or add-on private placements, reported record-high
net asset values, enjoyed a record-high stock market price, and established our
website on the Internet.
[PHOTOGRAPH APPEARS HERE]
(left to right) Stuart H. Reese, President and Gary E. Wendlandt, Chairman
Shareholders of record on December 31, 1997 participated in a two-for-one stock
split of the Trust's shares bringing the stock market price near its original
offering price of $25 in 1971. in fact, our split-adjusted market price at
year-end was $25.75 per share -- an all-time high. The net asset value per share
of the Trust increased throughout the year ending at $22.65 compared to $20.23
per share at the end of 1996. Due to the stock split, all share and per share
information in this annual report has been restated to reflect the split.
We were able to increase our quarterly dividend three times throughout the year.
In May, the Trustees increased the quarterly dividend to 35.5 cents per share
from the previous distribution level of 35 cents per share. Then in July the
quarterly dividend was raised to 36.5 cents per share, and in October it was
raised again to the 37.5 cent-per-share level. In addition to the 37.5 cents per
share declared in December, a 47.5 cent-per-share extra dividend was declared
This all adds up to $1.94 1/2 per share distributed for 1997.
Portfolio Review
In keeping with our investment objective, we invest in a portfolio of securities
providing a fixed yield, while at the same time, providing an opportunity for
capital profits. Private placement investments, which are purchased directly
from an issuer, are our primary investments. In that regard, private placement
activity in the Trust remained strong. In total, the Trust closed seventeen new
or add-on private placement investments during the year. This brought our
private placement holdings to 76% of the portfolio, up from 72% at the end of
1996. During the fourth quarter, we invested in six private placements totaling
approximately $10.2 million. The new investments are as follows: Adventure
Entertainment Corporation, Beta Brands, Inc., Capitol Vial, Inc., Vitex
Packaging. Inc., and two add-on investments in Trend Plastics, Inc. (A brief
description of these companies is provided in the Schedule of Investments.) The
fixed income components of these investments have a weighted average coupon of
14.9% and offer the potential of capital gains via their equity features.
The Trust participated heavily in the 144A market. For the year, the Trust
purchased ninety-six issues for a total investment of $44.6 million. Many of the
issues purchased throughout the year were either sold at a gain or converted
into public securities. (Our current holdings are shown at the end of our
Corporate Restricted Securities section of the Schedule of Investments.)
Even though interest rates declined during the year, we were able to increase
the net earnings of the Trust and raise our quarterly dividend. Our net earnings
went from $11,275,280, or $1.32 per share in 1996, to $12,659,328, or $1.49 per
share in 1997. This was done without any compromise of our ability to generate
capital gains. In fact, Corporate Investors had a record year for realized
capital gains.
Despite the number of private placement investments that were purchased during
the year, a number of names disappeared. However, we are very pleased that many
of these investments left us significant capital gains, For the year, the Trust
realized $18.4 million in capital gains from our traditional private placement
investments. Some of the highlights are listed below.
Issuer Gains ($000s)
------ -------------
Classic Sports, Inc. 1,862
Compucom Systems 2,245
Exide Electronics Group, Inc. 2,875
PanEnergy Corp. 3,172
Schwitzer, Inc. 1,666
Telex Communications, Inc. 5,900
1
<PAGE>
In the public portfolio, which is where the Trust invests while looking for
appropriate private placement investments, Corporate Investors was also very
successful in generating capital gains in addition to providing investment
income. For the year, the public portfolio realized $10.8 million in capital
gains. In total, the Trust realized capital gains of over $29 million, $3.3
million of which were realized in the fourth quarter.
Performance
As mentioned previously, the Trust was ranked by Lipper Analytical Services as
the number one performing closed-end bond fund, of 344 funds, for 1997. This
performance is based on a 27.1% gain for the year as measured by the change in
net assets, with dividends reinvested. The Trust also placed first in the
ten-year, fifteen-year, twenty-year, and twenty-five-year time intervals. When
measured against Lipper's General Bond Fund category, Corporate Investors ranked
number one for the one-, two-, five-, ten-, twelve-, fifteen-, twenty-, and
twenty-five-year time periods. Our one-year performance compares favorably to
the S&P Industrial Stock Index, which was up 31.0% and the Lehman Government/
Corporate Index, which was up 9.8%. In terms of shareholders' realization, the
one-year total return based on the change in the stock market price, assuming
reinvestment of dividends, was 52.4%. All in all, a top notch year for investors
in Corporate Investors no matter how you view it.
Accumulated Value of $100 Invested in
MassMutual Corporate Investors vs. the Average of Stocks and Bonds
(Based on earnings and changes in net assets value with
reinvestment of dividends)
[LINE GRAPH APPEARS HERE]
Lehman Brothers
Government/Corporate S&P Industrial MassMutual
Year Bond Index Stock Index Corporate Investors
1/77 100 100 100
1977 102.99 91.77 115.65
1978 104.21 98.87 123.51
1979 106.6 117.56 139.9
1980 109.86 157.58 152.92
1981 117.84 146.78 176.72
1982 154.49 178.14 212.41
1983 166.83 219.3 254.93
1984 191.89 228.69 290.64
1985 232.76 298.83 369.61
1986 269.12 354.71 493.84
1987 275.28 385.78 515.77
1988 296.15 447.51 568.37
1989 338.29 579.34 619.13
1990 366.3 574.19 621.73
1991 425.39 751.09 735.32
1992 457.63 793.98 862.97
1993 508.11 865.84 1064.99
1994 490.27 899 1090.13
1995 584.6 1210.41 1458.15
1996 601.56 1489.17 1683
1997 660.21 1951.41 2139.77
More Positive News From The U.S.
As we begin 1998, the U.S. economy appears to be embarking on its eighth
consecutive year of expansion. By almost any measure, 1997 was a solidly good
year. Consumption was up, consumer confidence reached a 28-year high,
unemployment hit a 24-year low, gains were made in personal income and corporate
profits, housing starts and new and existing housing sales were up, and the
Federal budget deficit was tightened to a point where 1998 may even see a small
surplus.
All of this happened against a backdrop of declining price pressures. Without
inflationary pressures, the Federal Reserve, which had raised interest rates by
25 basis points in March, did not take action again for the remainder of the
year, and interest rates consequently declined.
Against Uncertainty From Overseas
Working counter to the forces supporting the domestic economy over the past year
was the financial breakdown in the Pacific Rim. After years of over-investment,
weak infrastructure and poor economic policy, high-flying markets including
South Korea, Thailand and Indonesia suffered tremendous losses during the second
half of 1997.
The problems these economies face are deep and far-reaching, and recognition of
this fact has caused turmoil in markets throughout the world. The U.S. has seen
effects of the Asian crisis on a number of levels. The uncertainty it has
created added volatility to an already nervous stock market, precipitating a one
day drop of over 500 points in late October. A flight to quality in the currency
markets bolstered the U.S. dollar, making American exports expensive in overseas
markets. Domestic firms that rely on sales to Asian markets may see profits come
under pressure as orders decline, and competitive price pressures from Asian
exporters may impact the ability of companies to raise prices on a global basis.
Strength Overcame Volatility in Stocks and Turned a Profitable Year for Bonds
Even though the U.S. stock market increased in volatility, it turned in
impressive results for the third consecutive year. American corporations have
invested in both the technology and the human resources they need to remain
competitive and profitable in the global market. During 1997, gains in the
market were driven both by corporate earnings and net flows of cash into equity
mutual funds.
2
<PAGE>
The bond market also advanced during 1997. After the Federal Reserve's March
tightening, interest rates began to decline, and bonds rallied as a result.
During the second half of the year, investors moved into bonds as a safe haven
from the stock market volatility.
We expect the positive economic factors that determined 1997's market to
outweigh Asian concerns as 1998 continues. We also expect another year of
economic growth, but at less vigorous levels than what we've seen recently. In
any event, recent volatility reminds us of the need to be paid for taking risk.
All told, we should be well positioned to act on the opportunities the coming
year presents.
Sincerely,
/s/ Stuart H. Reese
Stuart H. Reese
President
[PHOTOGRAPH APPEARS HERE]
(left to right) Robert E. Joyal, Senior Vice President, Stephen L. Kuhn, Vice
President and Secretary, Clifford M. Noreen, Vice President, Hamline C. Wilson,
Vice President and Chief Financial Officer, and Charles C. McCobb, Jr, Vice
President
Tax Information
The following table summarizes, for income tax purposes, the cash distributions
paid by MassMutual Corporate Investors for the calendar year 1997. (Note: All
figures reflect the effect of a 2-for-1 stock split on January 20th 1998.)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
1997 Dividend Payments Net Investment Income Short-term gains Tax Effect
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1.945 $1.4202 $0.5248 $1.945 represents income for
tax purposes
- ------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes the tax effects of the retention of long-term
capital gains for 1997. (Note: All figures reflect the effect of a 2-for-1 stock
split on January 20th 1998.)
<TABLE>
<CAPTION>
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Amount Per Share Form 2439 Schedule D (individual)
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<S> <C> <C> <C>
1997 Gains Retained $2.89960 Line la Line 11, column (f)
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Mid-term Gains Retained (28%) $0.19135 Line lb Line 11, column (g)
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Long-term Gains Retained (200%) $2.70825
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Taxes Paid $1.01485 Line 2 Tax credit*
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Basis Adjustment $1.88475 **
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</TABLE>
* If you are not subject to federal tax (e.g., a charitable organization, IRA,
or Keogh Plan), you may be able to claim a refund by filing From 990-T.
**For federal tax purposes, you may increase the adjusted basis of your shares
by this amount (the excess of Line la over Line 2).
<TABLE>
<CAPTION>
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Qualified for Dividend Interest Earned On
Annual Dividend Received Deduction U.S. Government Obligations
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Amount Per Share Percent Amount Per Share Percent Amount Per Share
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1.945 3.8920% $0.0757 0.0000% $0.0000
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</TABLE>
3
<PAGE>
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STATEMENT OF ASSETS AND LIABILITIES MASSMUTUAL CORPORATE INVESTORS
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December 31, 1997 and 1996
1997 1996
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Assets:
Investments (Notes 2A, 2B and 5)
(See Schedule of Investments)
Corporate restricted securities at fair value
(Cost 1997 -- $158,654,961; 1996 -- $136,885,662) $170,405,030 $144,807,102
Corporate public securities at market value
(Cost 1997 -- $48,736,671; 1996 -- $52,767,684) 52,900,054 56,802,684
Short-term securities at cost plus earned
discount which approximates market value 2,781,452 819,835
------------ ------------
226,086,536 202,429,621
Cash 80,311 83,336
Interest and dividends receivable, net 3,570,389 3,016,401
Receivable for investments sold 159,712 682,534
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Total assets $229,896,948 $206,211,892
============ ============
Liabilities:
Dividends payable $ 7,236,431 $ 6,470,220
Payable for investments purchased 150,000 348,125
Management fee payable (Note 3) 723,219 646,010
Note payable (Note 4) 20,000,000 20,000,000
Interest payable (Note 4) 136,211 136,211
Accrued expenses 152,767 131,171
Accrued taxes (Note 2D) 8,639,902 6,210,942
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Total liabilities 37,038,530 33,942,679
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Net Assets:
Common shares, par value $1.00 per share;
an unlimited number authorized (Note 7) 8,513,448 8,513,448
Additional paid-in capital 94,333,993 94,333,993
Retained net realized gain on investments,
prior years 57,447,543 45,912,935
Undistributed net investment income (Note 2D) 586,318 17,789
Undistributed net realized gain on investments 16,063,664 11,534,608
Net unrealized appreciation of investments
(Notes 2A, 2B and 5) 15,913,452 11,956,440
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Total net assets 192,858,418 172,269,213
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Total liabilities and net assets $229,896,948 $206,211,892
============ ============
Common shares issued and outstanding (Note 7) 8,513,448 8,513,448
============ ============
Net asset value per share $ 22.65 $ 20.23
============ ============
See Notes to Financial Statements.
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4
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STATEMENT OF OPERATIONS MASSMUTUAL CORPORATE INVESTORS
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For the years ended December 31, 1997 and 1996
1997 1996
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Investment Income (Note 2B):
Interest $16,289,353 $14,987,055
Dividends 644,690 323,800
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Total income 16,934,043 15,310,855
----------- -----------
Expenses:
Management fee (Note 3) 2,904,066 2,643,359
Trustees' fees and expenses 113,199 103,647
Transfer Agent/Registrar's expenses 79,706 101,901
Interest (Note 4) 1,066,000 1,066,000
Reports to shareholders 26,520 34,080
Audit and legal 58,551 57,291
Other 26,673 29,297
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Total expenses 4,274,715 4,035,575
----------- -----------
Net investment income (1997 -- $1.49 per share;
1996-- $1.32 per share) 12,659,328 11,275,280
----------- -----------
Net realized and unrealized gain (loss)
on investments (Notes 2A and 2B):
Realized gain on investments 29,171,424 21,660,569
Provision for federal income tax (Note 2D) (8,639,902) (6,210,942)
------------ ------------
Net realized gain on investments 20,531,522 15,449,627
Net change in unrealized appreciation/depreciation
of investments 3,957,012 (7,609,397)
------------ ------------
Net gain on investments 24,488,534 7,840,230
------------ ------------
Net increase in net assets resulting
from operations $ 37,147,862 $ 19,115,510
------------ ------------
See Notes to Financial Statements
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5
<PAGE>
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STATEMENT OF CASH FLOWS MASSMUTUAL CORPORATE INVESTORS
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For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Net increase (decrease) in cash:
Cash flows from operating activities:
Interest and dividends received $ 15,836,608 $ 15,242,192
Interest expense paid (1,066,000) (1,066,000)
Operating expenses paid (3,109,910) (2,961,268)
Federal income tax paid (6,210,942) (1,984,882)
------------- -------------
Net cash provided by operating activities 5,449,756 9,230,042
------------- -------------
Cash flows from investing activities:
Change in short-term portfolio securities, net (1,823,335) 2,539,948
Purchase of portfolio securities (138,042,427) (128,592,743)
Proceeds from disposition of portfolio securities 150,205,427 130,215,803
------------- -------------
Net cash provided by investing activities 10,339,665 4,163,008
------------- -------------
Net cash provided by operating and investing activities 15,789,421 13,393,050
------------- -------------
Cash flows from financing activities:
Cash dividends paid from net investment income (11,877,427) (11,691,554)
Cash dividends paid from net realized gain on investments (3,915,019) (4,143,459)
------------- -------------
Net cash used for financing activities (15,792,446) (15,835,013)
------------- -------------
Net decrease in cash (3,025) (2,441,963)
Cash -- beginning of year 83,336 2,525,299
------------- -------------
Cash -- end of year $ 80,311 $ 83,336
============= =============
Reconciliation of net increase (decrease) in net assets to net cash from
operating and investing activities:
Net increase in net assets resulting from operations $ 37,147,862 $ 19,115,510
------------- -------------
Increase in investments (23,656,915) (7,243,564)
(Increase) decrease in interest and dividends receivable, net (553,988) 746,166
Decrease in receivable for investments sold 522,822 507,952
Decrease in payable for investments purchased (198,125) (3,967,380)
Increase in management fee payable 77,209 13,899
Increase (decrease) in accrued expenses 21,596 (5,593)
Increase in accrued taxes 2,428,960 4,226,060
------------- -------------
Total adjustments to net assets from operations (21,358,441) (5,722,460)
------------- -------------
Net cash provided by operating and investing activities $ 15,789,421 $ 13,393,050
============= =============
</TABLE>
See Notes to Financial Statements.
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6
<PAGE>
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STATEMENT OF CHANGES IN NET ASSETS MASSMUTUAL CORPORATE INVESTORS
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For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 12,659,328 $ 11,275,280
Net realized gain on investments 20,531,522 15,449,627
Net change in unrealized appreciation/depreciation of investments 3,957,012 (7,609,397)
------------- -------------
Net increase in net assets resulting from operations 37,147,862 19,115,510
Dividends to shareholders from:
Net investment income (1997 -- $1.42 per share; 1996 -- $1.35 per share) (12,090,799) (11,481,044)
Net realized gain on investments (1997 -- $.52 per share; 1996 -- $.46 per share) (4,467,858) (3,928,297)
------------- -------------
Total increase 20,589,205 3,706,169
Net Assets, beginning of year 172,269,213 168,563,044
------------- -------------
Net Assets, end of year (including undistributed net investment income
in 1997 -- $586,318; 1996 -- $17,789) $ 192,858,418 $ 172,269,213
============= =============
</TABLE>
See Notes to Financial Statements.
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7
<PAGE>
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SELECTED PER SHARE DATA MASSMUTUAL CORPORATE INVESTORS
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Selected data for each common share outstanding for the years ended:
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year $ 20.23 $ 19.80 $ 16.47 $ 17.47 $ 15.38 $ 14.37 $ 13.37 $ 14.74 $ 15.15 $ 15.58
---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- --------
Net investment income 1.49 1.32 1.32 1.16 1.08 1.11 1.40 1.35 1.39 1.55
Net realized and
unrealized gain (loss)
on investments 2.87 .92 3.88 (.76) 2.41 1.30 1.00 (1.32) (.14) (.07)
---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- --------
Total from investment
operations 4.36 2.24 5.20 .40 3.49 2.41 2.40 .03 1.25 1.48
---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- --------
Dividends from net
investment income to
common shareholders (1.42) (1.35) (1.32) (1.16) (1.08) (1.12) (1.40) (1.32) (1.39) (1.56)
Distributions from net
realized gain on investments
to common shareholders (.52) (.46) (.55) (.24) (.32) (.28) -- (.08) (.27) (.35)
---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- --------
Total distributions (1.94) (1.81) (1.87) (1.40) (1.40) (1.40) (1.40) (1.40) (1.66) (1.91)
---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- --------
Net asset value:
End of year $ 22.65 $ 20.23 $ 19.80 $ 16.47 $ 17.47 $ 15.38 $ 14.37 $ 13.37 $ 14.74 $ 15.15
---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- --------
Per share market value:
End of year $ 25.75 $ 19.25 $ 17.88 $ 15.57 $ 14.88 $ 13.07 $ 14.00 $ 10.63 $ 12.57 $ 16.50
========== ========== ========== ========== ========== ========== ======== ======== ======== ========
Total investment return:
Market value 52.43% 22.44% 29.19% 14.03% 24.84% 3.18% 45.83% (4.15) (14.54) (2.92)%
Net asset value 27.14% 15.42% 33.76% 2.36% 23.41% 17.36% 18.27% .42% 8.93% 10.20%
Net assets (in millions):
End of year $ 192.86 $ 172.27 $ 168.56 $ 140.20 $ 148.70 $ 131.00 $ 122.30 $ 113.80 $ 125.40 $ 127.80
Ratio of operating
expenses to average
net assets 1.69% 1.70% 1.78% 1.76% 1.63% 1.27% 1.44% 1.51% 1.33% 1.31%
Ratio of interest expense
to average net assets .56% .61% .67% .72% 1.30% 1.42% 1.33% 1.39% 1.37% 1.12%
Ratio of total expenses
to average net assets 2.25% 2.31% 2.45% 2.48% 2.93% 2.69% 2.77% 2.90% 2.70% 2.43%
Ratio of net investment
income to average net assets 6.66% 6.44% 7.09% 6.75% 6.61% 7.44% 9.70% 9.33% 8.90% 9.87%
Portfolio turnover 66.23% 64.89% 66.90% 46.88% 76.01% 60.59% 45.96% 23.74% 20.00% 28.18%
</TABLE>
All per share amounts have been restated after giving effect to the two-for-one
split of the Trust's common shares authorized on December 19, 1997 effective
January 20, 1998.
See Notes to Financial Statements.
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8
<PAGE>
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SCHEDULE OF INVESTMENTS MASSMUTUAL CORPORATE INVESTORS
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities-- 75.75%: (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 $ 505,080 10/31/96 $ 505,080 $ 505,080 $ 464,875
due 2002
Senior Secured Series A Floating Rate Note $ 737,333 10/31/96 726,281 737,333 697,812
due 2002
10.1% Senior Secured Series A Note due 2002 $ 1,106,000 10/31/96 1,077,686 1,106,000 1,061,208
12% Senior Secured Series B Note due 2004 $ 1,098,000 10/31/96 1,155,206 999,622 1,108,650
Membership Interests (B) 5 int. 10/31/96 264,080 228,524 247,575
Warrant, exercisable until 2004, to purchase 3 int. 10/31/96 -- 109,800 --
Membership Interests at $.01 per interest (B)
---------- ---------- ----------
3,728,333 3,686,359 3,580,120
---------- ---------- ----------
Adventure Entertainment Corporation
An owner and operator of themed family
entertainment centers.
7% Redeemable Series B Preferred Stock 1,667 shs. 10/31/97 1,600,288 1,641,995 1,619,335
Warrant, exercisable until 2005, to purchase 6,447 shs. 10/31/97 64 25,005 64
Class A Common Stock at $.01 per share (B)
---------- ---------- ----------
1,600,352 1,667,000 1,619,399
---------- ---------- ----------
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 $ 583,334 11/23/93 571,434 583,334 617,400
---------- ---------- ----------
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 3,274,636 3,174,650 3,412,372
Common Stock (B) 31,350 shs. 3/19/97 123,750 165,000 123,738
Warrant, exercisable until 2005, to purchase 94,107 shs. 3/19/97 94,107 173,346 94,107
common stock at $.01 per share (B)
---------- ---------- ----------
3,492,493 3,512,996 3,630,217
---------- ---------- ----------
Beta Brands, Inc.
A manufacturer of hard candy and chocolate-coated
products sold primarily to the Canadian market.
Senior Secured Floating Rate Tranche A Note
due 2004 $ 2,294,000 12/23/97 2,273,813 2,294,000 2,273,813
14.75% Senior Secured Tranche B Note due 2005 $ 660,000 12/23/97 686,400 660,000 686,400
Limited Partnership Interests of CM Equity 8.112 int. 12/22/97 648,934 811,168 648,934
Partners (B)
Warrant, exercisable until 2005, to purchase 214,419 shs. 12/23/97 2,144 -- 2,144
Limited Partnership Interests at $.81 per
interest (B) ---------- ---------- ----------
3,611,291 3,765,168 3,611,291
---------- ---------- ----------
BP Prudhoe Bay Royalty Trust -- N.Y.S.E.
A trust which shares in the production of petroleum
from the Alaskan North Slope.
Beneficial Interests 26.180 uts. 2/28/89 654,500 387,529 420,529
---------- ---------- ----------
Budget Group. The -- 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 $ 2,000,000 12/18/96 1,798,440 2,000,000 3,420,800
2003, convertible into common stock at ---------- ---------- ----------
$20.16 per share
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- -------- -----------
<S> <C> <C> <C> <C> <C>
C&K Manufacturing and Sales Company
A manufacturer and distributor of branded packaging
and supply products
Senior Secured floating Rate Revolving $ 651,700 8/29/96 $ 651,700 $ 651,700 $ 325,850
Credit Facility due 2002
Senior Secured Series A floating Rate Term $ 2,343,234 8/29/96 2,318,161 2,343,234 1,171,616
Note due 2002
12% Series B Term Note due 2004 $ 533,000 8/29/96 524,738 509,138 266,500
Membership Interests (B) 266 int. 8/29/96 212,800 196,601 26,600
Warrant, exercisable until 2004, to purchase 73 16 int. 8/29/96 1 26,650 1
Membership Interests at $.01 per interest (B)
---------- ---------- ---------
3,707,400 3,727,323 1,790,567
---------- ---------- ---------
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 $ 432,432 9/29/95 432,432 432,432 429,881
Credit Note due 2000
10% Senior Secured Term Note due 2004 $ 1,513,512 9/29/95 1,513,512 1,513,512 1,520,928
11.5% Senior Subordinated Note due 2004 $ 945,945 9/29/95 895,706 905,431 958,621
8% Junior Subordinated Convertible Note $ 108,108 9/29/95 108,108 108,108 194,908
due 2004, convertible into partnership points
at $1,388.89 per point
Warrant, exercisable until 2006, to purchase 39 pts. 9/29/95 50,261 50,261 91,364
partnership points at $.01 per point (B) ---------- ---------- ---------
3,000,019 3,009,744 3,195,702
---------- ---------- ---------
Capitol Vial, Inc.
A producer of plastic vial containers
19% Senior Subordinated Notes due 2004 $ 3,500,000 1 2/30/97 3,426,500 3,500,000 3,426,500
Common Stock (B) 66 shs. 1 2/30/97 263 328 263
---------- ---------- ---------
3,426,763 3,500,328 3,426,763
---------- ---------- ---------
Catalina Lighting, Inc. -- N.Y.S.E
A designer, importer and distributor of residential
and office lighting fixtures
8% Convertible Subordinated Note due 2002, $ 1,500,000 3/31/94 1,420,050 1,500,000 1,402,500
convertible into common stock at $7.31 per share --------- --------- ---------
Chaparral Resources, Inc. -- O.T.C
An international oil and gas exploration and
production company 9,838 shs. 12/3/97 6,395 6,395 22,136
Common Stock (B) --------- --------- --------
Coast Distribution System, The -- A.S.E
A wholesale distributor of recreational vehicle
and marine parts and accessories
11.2% Senior Subordinated Secured Note $ 233,400 6/26/89 240,845 233,400 196,850
due 1999
Common Stock (B) 77,779 shs. 6/27/85 401,340 413,766 230,927
---------- ---------- ---------
642,185 647,166 427,777
---------- ---------- ---------
Consumer Product Enterprises, Inc.
A manufacturer of colored acrylic felt for
consumer use
Senior Secured floating Rate Revolving $ 153,800 12/8/95 153,800 153,800 152,862
Credit Notes due 2000
10.75% Senior Secured Term Note due 2003 $ 1,214,205 12/8/95 1,226,772 1,214,205 1,217,969
12% Senior Subordinated Note due 2005 $ 800,575 12/8/95 803,858 761,616 797,533
Common Stock (B) 184,560 shs. 12/8/95 138,420 184,560 138,420
Warrant, exercisable until 2005, to purchase 138,420 shs. 12/8/95 1,384 50,853 1,384
common stock at $.01 per share (B) ---------- ----------- ---------
2,324,234 2,365,034 2,308,168
---------- ---------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Control Devices, Inc. -- O.T.C.
A producer of high quality electromechanical circuit
protector devices and photo-optic sensors
Common Stock (B) 232,266 shs. * $ 34,989 $ 26,242 $ 3,530,448
-------------- ----------- ------------
D&K Healthcare Resources, Inc. -- O.T.C.
A wholesale pharmaceutical distribution company
Common Stock (B) 265,489 shs. 12/29/87 875,000 875,000 2,112,300
-------------- ----------- ------------
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 Floating Rate Term Note due 2002 $ 425,859 10/24/96 423,262 425,859 423,900
10.16% Senior Term Note due 2002 $ 1,277,578 10/24/96 1,279,110 1,277,578 1,306,196
12% Senior Subordinated Note due 2003 $ 1,249,000 10/24/96 1,277,852 1,119,238 1,326,563
Membership Interests (B) 2,992 int. 10/24/96 224,393 299,190 224,392
Warrant, exercisable to 2003, to purchase 1,791 int. 10/24/96 18 147,609 18
Membership Interests at $.0l per interest (B) -------------- ----------- ------------
3,204,635 3,269,474 3,281,069
-------------- ----------- ------------
Eagle Pacific Industries, Inc. -- O.T.C.
An extruder of small and medium diameter plastic
pipe and tubing in the United States.
8% Redeemable Convertible Preferred Stock, 3,300 shs. 5/9/97 3,286,140 3,300,000 3,454,440
convertible into common stock at $4.26 per share -------------- ----------- ------------
Fleming Acquisition Corporation
A supplier of high-quality, premium printed labels for
distilled spirits, wine, food and household products.
Common Stock (B) 545 shs. 4/28/95 1,231,111 272,500 20,511
Warrant, exercisable until 2005, to purchase 380 shs. 4/28/95 98,235 170,455 14,289
common stock at $.01 per share (B)
Incentive Warrant, exercisable from 1998 19 shs. 4/28/95 3,339 2,273 722
until 2000, to purchase common stock at $.01 -------------- ----------- ------------
per share (B) 1,332,685 445,228 35,522
-------------- ----------- ------------
Golden Bear Acquisition Corporation
A manufacturer of asphalt and specialty lubricating
and processing oils.
17% Senior Subordinated Note due 2005 $ 3,111,000 7/18/97 3,140,866 3,043,306 3,191,264
12% Preferred Stock 311 shs. 7/18/97 314,907 311,111 321,999
Common Stock (B) 14,000 shs. 7/18/97 58,380 77,840 58,380
Warrant, exercisable until 2005, to purchase 23,333 shs. 7/18/97 233 69,999 233
common stock at $.00l per share (B)
Warrant, exercisable until 2010, to purchase 17,111 shs. 7/18/97 171 -- 171
common stock at $.001 per share (B) -------------- ----------- ------------
3,514,557 3,502,256 3,572,047
-------------- ----------- ------------
Hardy Oil & Gas PLC - L.S.E
Engages in 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 3,120,900
Warrant, exercisable until 2005, to purchase 273,083 shs. 1/11/95 27,015 -- 344,085
common stock at(pound)1.84 per share (B) -------------- ----------- ------------
2,931,315 3,000,000 3,464,985
-------------- ----------- ------------
*7/29/94 and 10/8/96.
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Hartzell Manufacturing, Inc.
A provider of contract engineering, manufacturing,
and assembly services for a variety of industrial
manufacturing companies.
12.5% Senior Subordinated note due 2005 $ 2,626,300 4/18/97 $ 2,659,129 $ 2,328,421 $ 2,749,736
Common Stock (B) 70,968 shs. 4/18/97 601,074 801,438 601,096
Warrant, exercisable until 2005, to purchase 33,379 shs. 4/18/97 3,338 315,156 3,338
common stock at $.0l per share (B) -------------- ----------- ------------
3,263,541 3,445,015 3,354,170
-------------- ----------- ------------
Hein-Werner Corp. -- A.S.E.
A manufacturer of automotive service and collision
repair equipment and hydraulic cylinders.
Warrant, exercisable until 1999, to purchase 59,713 shs. 9/3/96 -- -- 49,323
common stock at $6.28 per share (B) -------------- ----------- ------------
Highland Homes Holdings, Inc.
A single family home builder operating in the
Dallas-Fort Worth and Atlanta areas.
12.75% Senior Note due 1999 $ 1,500,000 11/18/93 1,485,150 1,479,549 1,570,800
Warrant, exercisable until 2001, to purchase 10 shs. 11/18/93 1 20,451 36,193
common stock at $17,897.31 per share (B) -------------- ----------- ------------
1,485,151 1,500,000 1,606,993
-------------- ----------- ------------
Hudson River Capital LLC
Acquires controlling or substantial interests in
manufacturing and marketing entities.
Series A Preferred Units (B) 88,730 uts. 7/21/94 787,305 887,304 842,935
-------------- ----------- ------------
Hussey Seating Company
A manufacturer of spectator seating products.
Senior Secured Floating Rate Revolving $ 405,000 6/12/96 401,031 405,000 405,000
Note due 2003
Senior Secured Floating Rate Note due 2003 $ 787,500 6/12/96 779,704 787,500 787,500
10% Senior Secured Note due 2003 $ 787,500 6/12/96 766,710 787,500 786,319
12% Subordinated Secured Note due 2006 $ 1,350,000 6/12/96 1,327,320 1,147,247 1,437,210
Warrant, exercisable until 2006, to purchase 3,553 shs. 6/12/96 36 225,000 36
common stock at $.0l per share (B) -------------- ----------- ------------
3,274,801 3,352,247 3,416,065
-------------- ----------- ------------
Intermetrics, Inc.
A provider of software systems, services and
products to a variety of information technology
users.
Senior Floating Rate Revolving Credit Note $ 384,000 5/30/97 384,000 384,000 384,000
due 2001
Senior Floating Rate Revolving Term Note $ 1,332,143 8/31/95 1,320,881 1,332,143 1,332,143
due 2002
13% Senior Subordinated Note due 2002 $ 799,318 8/31/95 813,520 718,341 844,639
Class A Common Stock (B) 2,941 shs. 8/31/95 13,789 18,384 365
Class B Common Stock (B) 8,134 shs. 8/31/95 38,173 50,837 1,009
Warrant, exercisable until 2007 to purchase 21,176 shs. 8/31/95 2,118 104,000 2,456
Class D common stock at $.0l per share (B) -------------- ----------- ------------
2,572,481 2,607,705 2,564,612
-------------- ----------- ------------
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 2,063,243
13.25% Cumulative Exchangeable Preferred Stock 99 shs. 8/16/95 985,500 823,332 864,252
Common Stock (B) 434 shs. 8/16/95 43,426 43,426 39,083
Warrant, exercisable until 2005, to purchase 1,999 shs. 8/16/95 199,735 199,735 1,999
common stock at $.0l per share (B) -------------- ----------- ------------
3,199,661 2,999,926 2,968,577
-------------- ----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Kappler Safety Group, Inc.
A manufacturer of protective apparel for the
industrial/safety, clean room and healthcare markets.
13% Senior Subordinated Note due 2004 $ 3,333,000 12/2/96 $3,383,995 $3,041,337 $3,425,991
Warrant, exercisable until 2004, to purchase 57,418 shs. 12/2/96 57,418 333,300 72,576
common stock at $.0l per share (B) ---------- ---------- ----------
3,441,413 3,374,637 3,498,567
---------- ---------- ----------
Latin Communications Group
An operator of Spanish-language media in North
America.
Common Stock (B) 88,438 shs. * 628,945 812,504 884,380
---------- ---------- ----------
Lloyd's Barbecue Company
A manufacturer and marketer of packaged barbecue
meats and related products.
18% Senior Subordinated Note due 2006 $ 1,627,500 9/30/97 1,627,500 1,627,500 1,725,150
Membership Interests of LFPI Mainstreet (B) 18,725 uts. 9/30/97 1,870,300 1,872,742 1,685,250
----------- ---------- ----------
3,497,800 3,500,242 3,410,400
----------- ---------- ----------
Louis Dreyfus Natural Gas Corporation -- A.S.E
An independent oil and gas company engaged
principally in the acquisition, development and
management of oil and gas properties.
Warrant, exercisable until 2004, to purchase 103,342 shs. 12/27/91 49,714 38,712 255,255
---------- ---------- ----------
common stock at $187.81 per share (B)
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 2,212,110
Limited Partnership Interests (B) 568 uts. 10/20/95 506,250 677,832 296,777
Warrant, exercisable until 2004, to purchase 297 uts. 10/26/95 297 -- 155,022
---------- ---------- ----------
Limited Partnership Interests at $.0l per unit (B) 2,884,797 2,702,832 2,663,909
---------- ---------- ----------
Maxtec International Corp.
A manufacturer and distributor of precision test and
measurement equipment and overhead crane control
systems.
Senior Floating Rate Revolving Credit $ 461,538 6/28/95 461,538 461,538 461,538
Facility due 2001
Common Stock (B) 76,923 shs. 6/28/95 192,115 230,769 207,692
Warrant, exercisable from 1998 until 2005, to 39,563 shs. 6/28/95 98,581 171,429 39,563
purchase common stock at $.0l per share (B) ---------- ---------- ----------
752,234 863,736 708,793
---------- ---------- ----------
Mercury Computer Systems. Inc.
A designer, manufacturer and marketer of computer
systems.
Common Stock (B) 500,000 shs. 12/21/87 1,487,870 1,500,000 1,624,500
---------- ---------- ----------
N2K, Inc. -- O.T.C
A music entertainment company which uses the
internet as a global platform for the promoting and
merchandising of music and related merchandise.
Warrant, exercisable until 2004, to purchase 27,777 shs. 8/6/97 278 -- 65,637
common stock at $12 per share (B) ---------- ----------- ----------
</TABLE>
*2/14/95, 12/1/95 and 2/27/96.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF IN VESTMENTS (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
-------------- ----------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Nu Horizons Electronics Corp. -- O.T.C.
A distributor of high technology active and passive
electronic devices.
8.25% Convertible Subordinated Note due $ 1,411,800 8/31/94 $1,425,918 $1,411,800 $1,516,414
2002, convertible into common stock at $9 ---------- ---------- ----------
per share
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 2/5/93 832,000 833,333 855,500
8% Convertible Preferred Stock due 2001, 83,333 shs. 2/5/93 166,667 166,667 161,917
convertible into common stock at $2 per share
Common Stock (B) 133,333 shs. 2/5/93 333,333 333,333 213,333
---------- ---------- ----------
1,332,000 1,333,333 1,230,750
---------- ---------- ----------
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 11/30/95 851,917 817,500 862,299
10.5% Senior Secured Convertible Note due $ 195,000 11/30/95 205,335 195,000 222,359
2005, convertible into common stock at
$50,000 per share
Common Stock 7 shs. 11/30/95 253,125 337,500 210,209
---------- ---------- ----------
1,310,377 1,350,000 1,294,867
---------- ---------- ----------
Piedmont Holding, Inc.
A general aviation fixed based operator with
repair, maintenance and overhaul certification.
12% Senior Subordinated Note due 2001 $ 2,171,426 7/15/92 2,189,232 2,171,426 2,252,855
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 shs. 7/15/92 3,227 -- 89,344
common stock at $.05 per share (B) ---------- ---------- ----------
2,476,962 2,457,136 2,691,111
---------- ---------- ----------
Plastipak Packaging, Inc.
A manufacturer of plastic containers.
10.64% Senior Subordinated Note due 2006 $ 3,500,000 10/25/96 3,403,750 3,416,957 3,557,750
Warrant, exercisable until 2006, to purchase 97 shs. 10/25/96 55,593 93,625 62,195
common stock at $.0l per share (B) ---------- ---------- ----------
3,459,343 3,510,582 3,619,945
---------- ---------- ----------
Precision Dynamics, Inc.
A manufacturer of custom-designed solenoid valves
and controls.
Senior Secured floating Rate Revolving $ 619,400 7/22/96 613,268 619,400 614,197
Credit Facility due 2003
Senior Secured floating Rate Term Note $ 2,804,566 7/22/96 2,777,082 2,804,566 2,783,532
due 2003
12% Senior Secured Term Note due 2004 $ 489,000 7/22/96 482,545 401,684 505,528
8% Preferred Stock 232 shs. 7/22/96 220,231 231,822 189,136
Common Stock (B) 599 shs. 7/22/96 21,699 28,978 19,907
Warrant, exercisable until 2004, to purchase 322 shs. 7/22/96 3 97,800 10,715
common stock at $.0l per share (B) ---------- ---------- ----------
4,114,828 4,184,250 4,123,015
---------- ---------- ----------
Process Chemicals, LLC
A platform company used by C3 Chemical Ventures
to acquire specialty chemical and mineral companies.
6% Redeemable Preferred Membership Interests 20,000 int. 7/31/97 1,967,600 1,990,215 1,991,600
Common Membership Interests 9 int. 7/31/97 23 25 23
---------- ---------- ----------
1,967,623 1,990,240 1,991,623
---------- ---------- ----------
</TABLE>
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF IN VESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
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 $1,035,840
11.51% Junior Secured Note due 1999 $ 600,000 8/12/94 587,280 600,000 511,200
9.8% Redeemable Exchangeable Preferred Stock 10,000 shs. 8/12/94 847,900 1,000,000 432,500
Common Stock (B) 1,492 shs. 8/12/94 15 -- 12
---------- ---------- ----------
2,619,355 2,800,000 1,979,552
---------- ---------- ----------
RailTex, Inc. -- O.T.C
An operator of short-line railroads in the Midwest,
West and Canada
12% Subordinated Note due 2002 $1,500,000 2/16/93 1,599,150 1,500,000 1,660,050
Common Stock (B) 35,500 shs. 2/16/93 340,800 340,800 482,694
---------- ---------- ----------
1,939,950 1,840,800 2,142,744
---------- ---------- ----------
Rent-Way, Inc. -- O.T.C
Operates rent-to-own stores in Ohio, Pennsylvania
and New York
Common Stock(B) 201,207 shs. 7/18/95 1,991,220 2,000,000 3,536,213
Warrant, exercisable until 2002, to purchase 20,000 shs. 7/18/95 200 -- 170,740
common stock at $9.94 per share (B)
---------- ---------- ----------
1,991,420 2,000,000 3,706,953
---------- ---------- ----------
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 1,874,210 2,356,230
Limited Partnership Interests of KS 7,186 uts. 12/14/95 538,950 718,741 646,740
Holdings, L.P. (B)
Warrant, exercisable until 2004, to purchase 5,449 uts. 12/14/95 5,449 479,094 2,724
Limited Partnership Interests of KS Holdings, L.P.
at $.0l per unit (B)
---------- ---------- ----------
2,962,683 3,072,045 3,005,694
---------- ---------- ----------
Star International, Inc.
A manufacturer of commercial cooking appliances
9.65% Senior Secured Note due 2004 $1,531,343 5/27/94 1,531,343 1,531,343 1,550,332
10.5% Subordinated Note due 2004 $ 716,418 5/27/94 716,418 716,418 717,206
Common Stock (B) 4,310 shs. 5/27/94 259,735 259,735 80,981
Warrant, exercisable until 2004, to purchase 3,224 shs. 5/27/94 32 -- 60,547
common stock at $.0l per share (B)
---------- ---------- ----------
2,507,528 2,507,496 2,409,066
---------- ---------- ----------
Supreme industries. Inc. -- A.S.E
A manufacturer of modular homes and truck bodies
Common Stock (B) 556,317 shs. * 1,272,467 1,248,341 4,506,168
Common Stock of TGC Industries, Inc. (B) 19,082 shs. 9/30/86 9,497 9,497 15,208
---------- ---------- ----------
1,281,964 1,257,838 4,521,376
---------- ---------- ----------
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 2,482,175 2,781,562
Limited Partnership Interests of Green Grass 81,548 uts. 3/13/97 293,573 447,561 260,954
Capital II, LLC (B)
Warrant, exercisable until 2005, to purchase 148,044 uts. 3/13/97 531,774 680,722 472,556
Limited Partnership Interests of Green Grass
Capital II, LLC at $.0l per unit (B)
---------- ---------- ----------
3,410,347 3,610,458 3,515,072
---------- ---------- ----------
</TABLE>
*5/23/79, 12/15/95 and 6/9/96.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
Corporate Restricted Securities: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
TACC International Corporation
A leading domestic manufacturer of adhesives and
sealants in the building and construction industries
12.5% Subordinated Note due 2005 $ 1,750,000 8/8/97 $1,699,075 $1,707,676 $1,739,150
8% Convertible Redeemable Preferred Stock 8,244 shs. 8/8/97 1,695,225 1,750,000 1,750,000
Warrant, exercisable until 2005, to purchase 1,560 shs. 8/8/97 16 43,898 16
common stock at $.0l per share (B)
---------- ---------- ----------
3,394,316 3,501,574 3,489,166
---------- ---------- ----------
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 2,523,990
Convertible Preferred Stock, convertible into 1,120 shs. 7/25/96 1,008,000 1,120,000 1,008,000
common stock at $1,000 per share (B)
Warrant, exercisable until 2008, to purchase 474 shs. 7/25/96 43 48,216 43
common stock at $.0l per share (B)
---------- ---------- ----------
3,396,135 3,502,680 3,532,033
---------- ---------- ----------
TransMontaigne Oil Company -- A.S.E
An independent petroleum products marketing
company
12.75% Senior Subordinated Debenture due $ 1,200,000 3/28/91 1,274,280 1,183,408 1,291,080
2000
Common Stock (B) $ 258,720 shs. * 400,000 798,595 3,298,680
Warrant, exercisable until 2001, to purchase 74,606 shs. 3/28/91 7,461 42,000 680,407
common stock at $3.60 per share (B)
---------- ---------- ----------
1,681,741 2,024,003 5,270,167
---------- ---------- ----------
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 2,672,605
Limited Partnership Interests of Riverside V 5,359 uts. ** 655,759 591,555 655,760
Holding Company L.P.
Limited Partnership Interests of Riverside V-A 11,467 uts. ** 1,485,581 1,265,169 1,485,578
Holding Company L.P.
Warrant, exercisable until 2005, to purchase 3,129 uts. 3/21/97 3,129 3,129 3,129
Limited Partnership Interests at $.0l per unit (B)
---------- ---------- ----------
4,737,144 4,370,224 4,817,072
---------- ---------- ----------
Truseal Technologies, Inc.
A manufacturer of sealant systems for the North
American window and door market
12.25% Senior Subordinated Note due 2006 $ 2,675,000 6/23/97 2,733,315 2,309,045 2,808,750
Limited Partnership Interests (B) 8,246 uts. 6/17/97 742,140 824,661 742,140
Warrant, exercisable until 2006, to purchase 1,258 uts. 6/23/97 13 376,932 13
Limited Partnership Interests at $.0l per unit (B)
---------- ---------- ----------
3,475,468 3,510,638 3,550,903
---------- ---------- ----------
U.S. Netting, inc
A manufacturer of plastic netting for a wide
variety of industries
11% Senior Secured Note due 2005 $ 1,583,548 5/3/95 1,751,087 1,583,548 1,722,425
12% Subordinated Note due 2005 $ 652,050 5/3/95 733,622 621,793 749,466
Common Stock (B) 4,911 shs. 5/3/95 162,652 391,230 32,295
Warrant, exercisable until 2005, to purchase 2,795 shs. 5/3/95 92,549 35,923 18,358
common stock at $.0l per share (B)
---------- ---------- ----------
2,739,910 2,632,494 2,522,544
---------- ---------- ----------
</TABLE>
* 3/28/91, 12/18/91, 9/30/92, 9/30/93, 9/30/94, 3/31/95 and 5/9/95.
**3/21/97, 10/16/97 and 11/19/97.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 12/31/97
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 Notes due 2005 $ 2,380,317 * $ 2,527,635 $ 2,380,188 $ 2,570,742
Redeemable Preferred Stock Series A (B) 42,001 shs. 12/19/96 291,673 388,898 291,655
Convertible Preferred Stock Series B, 84,002 shs. 12/19/96 583,352 777,802 583,310
convertible into Series B common stock at
$9.26 per share (B)
Warrant, exercisable until 2005, to purchase 6,481 uts. 12/19/96 12,963 130 6,481
Series A Preferred Stock and Series B
Preferred Stock at $.0l per unit (B)
------------ ------------ ------------
3,415,623 3,547,018 3,452,188
------------ ------------ ------------
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 2,412,228 2,393,250
Common Stock (B) 125,000 shs. 12/14/95 375,000 500,000 375,000
Warrant, exercisable until 2003, to purchase 62,500 shs. 12/14/95 625 124,250 625
common stock at $1 per share (B)
------------ ------------ ------------
2,914,125 3,036,478 2,768,875
------------ ------------ ------------
Unipac Corporation
A manufacturer of laminated materials which are
used to seal a variety of packaging containers
Senior Secured Floating Rate Note due 2002 $ 138,047 2/9/96 136,584 138,047 138,047
12% Senior Secured Note due 2004 $ 243,750 2/9/96 246,870 222,182 264,542
Acquisition Line of Credit due 2002 $ 712,500 9/30/96 712,500 712,500 712,500
Limited Partnership Interests of Riverside II 123 uts. ** 112,407 133,232 325,241
Holding Company L.P. (B)
Warrant, exercisable from 2000 until 2004, to 41 uts. 2/9/96 4 40,312 109,395
purchase Limited Partnership Interests of
Riverside II Holding Company L.P. at $.0l
per unit (B)
------------ ------------ ------------
1,208,365 1,246,273 1,549,725
------------ ------------ ------------
Victory Ventures LLC
Acquires controlling or substantial interests in
other entities
Series A Preferred Units (B) 11,270 uts. 12/2/96 6,306 57,101 107,065
------------ ------------ ------------
Vitex Packaging, Inc.
A manufacturer of specialty packaging, primarily
envelopes and tags used on tea bags
Limited Partnership Interests of Riverside VI 1,222 int. 12/30/97 97,745 122,182 97,746
Holding Company L.P.
Limited Partnership Interests of Riverside VI-A 2,016 int. 12/30/97 161,280 201,600 161,280
------------ ------------ ------------
Holding Company L.P. 259,025 323,782 259,026
------------ ------------ ------------
Sub-Total Corporate Restricted Securities $132,695,243 135,446,059 146,086,728
============ ============ ============
</TABLE>
* 12/19/96 and 2/15/97.
**2/9/96 and 9/25/96.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MASSMUTUAL CORPORATE INVESTORS
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares or Market Value
Interest Due Principal Cost at 12/31/97
Rule 144A Securities: (A) Rate Date Amount (Note 2B) (Note 2A)
-------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Bonds -- 5.08%
American Lawyer Media 9.750% 12/15/07 $ 350,000 $ 350,000 $ 355,250
Amtran, Inc. 10.500 08/01/04 600,000 600,000 627,048
Atlantic Coast Airlines Inc. 8.750 01/01/07 600,000 600,000 600,000
Atlantic Express 10.750 02/01/04 950,000 964,000 1,009,375
Climachem, Inc. 10.750 12/01/07 300,000 300,000 309,000
Cuddy International Corp. 10.750 12/01/07 800,000 788,048 806,000
Doskocil Manufacturing Co., Inc. 10.125 09/15/07 250,000 254,688 261,250
McLeodUSA Incorporated 9.250 07/15/07 350,000 350,000 364,875
Scovill Fastener, Inc. 11.250 11/30/07 500,000 500,000 510,000
Sovereign Speciality Chemicals 9.500 08/01/07 200,000 200,000 205,500
Tjiwi Kima Fin Mauritius LTD 10.000 08/01/04 500,000 497,275 415,000
Trans World Airlines 11.500 12/15/04 500,000 494,110 502,500
Unicco Service Co. 9.875 10/15/07 325,000 323,472 325,000
United Refining Company 10.750 06/15/07 1,750,000 1,750,000 1,841,875
Von Hoffman Press, Inc. 10.375 05/15/07 380,000 382,362 406,600
W R Carpenter North America 10.625 06/15/07 625,000 631,917 646,875
Worldtex, Inc. 9.625 12/15/07 600,000 600,000 615,000
------------ ------------ ------------
Sub-Total Rule 144A Bonds $ 9,580,000 $ 9,585,872 $ 9,801,148
============ ============ ============
Convertible Bonds -- 5.75%
Atria Communities, Inc. 5.000 10/15/02 $ 500,000 500,000 511,875
Continental Airlines, Inc. 6.750 04/15/06 600,000 557,250 1,015,764
Costco Companies, Inc. 0.000 08/19/17 600,000 303,606 351,528
CUC International, Inc. 3.000 02/15/02 1,200,000 1,200,000 1,501,128
Cymer Inc. 3.500 08/06/04 375,000 377,500 281,726
Family Golf Centers, Inc. 5.750 10/15/04 300,000 300,000 318,960
Garnet Resources Corporation 9.500 12/21/98 500,000 500,000 50,000
Grand Metropolitan PLC 6.500 01/31/00 400,000 400,000 555,888
Halter Marine 4.500 09/15/04 150,000 150,000 165,162
Kellstorm Industries, Inc. 5.750 10/15/02 350,000 350,000 383,124
Key Energy Group 5.000 09/15/04 1,000,000 1,000,000 857,500
Mark IV Industries 4.750 11/01/04 750,000 711,875 697,500
Omnicom, Inc. 2.250 01/06/13 150,000 150,000 158,062
Roche Holdings, Inc. 0.000 05/06/12 2,850,000 1,158,424 1,314,562
Scholastic Corp. 5.000 08/15/05 650,000 528,125 576,062
Smartalk Teleservices 5.750 09/15/04 600,000 600,000 640,194
Tel-Save 4.500 09/15/02 1,300,000 1,288,750 1,258,595
Thermo Electron Corporation 4.250 01/01/03 250,000 250,000 311,250
Tower Automotive, Inc. 5.000 08/01/04 140,000 140,000 145,349
------------ ------------ ------------
Sub-Total Rule 144A Convertible Bonds $ 12,665,000 $ 10,465,530 $ 11,094,229
============ ============ ============
Convertible Preferred Stock -- 1.74%
D T Industries 40,000 2,000,000 2,190,000
Newell Financial Trust 20,250 1,012,500 1,063,125
Trans World Airlines 1,500 75,000 100,500
------------ ------------
Sub-Total Rule 144A Convertible Preferred Stock 3,087,500 3,353,625
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MASSMUTUAL CORPORATE INVESTORS
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares or Market Value
Interest Due Principal Cost at 12/31/97
Rule 144A Securities: (A) (Continued) Rate Date Amount (Note 2B) (Note 2A)
------------ --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Preferred Stock -- .04%
Jordan Telecom Products 700 $ 70,000 $ 69,300
----------- -----------
Sub-Total Rule 144A Preferred Stock 70,000 69,300
----------- -----------
Total Rule 144A Securities 23,208,902 24,318,302
----------- -----------
Total Corporate Restricted Securities 158,654,961 170,405,030
----------- -----------
Corporate Public Securities:
Bonds -- 13.04%
Advanced Micro Devices 11.000% 08/01/03 $ 400,000 424,000 428,000
Aearo Company 12.500 07/15/05 1,000,000 1,000,000 1,120,000
Amphenol Corporation 9.875 05/15/07 400,000 400,000 424,000
Anchor Advanced Products 11.750 04/01/04 410,000 413,000 430,500
Aurora Foods, Inc. 9.875 02/15/07 900,000 922,500 945,000
Callon Petroleum Company 10.125 09/15/02 500,000 497,120 500,000
Central Rents, Inc. 12.875 12/15/03 1,255,000 1,187,475 1,273,825
Chesapeake Energy Corporation 8.500 03/15/12 500,000 459,812 497,500
Continental Airlines, Inc. 9.500 12/15/01 750,000 750,000 787,500
Dawson Production Services 9.375 02/01/07 850,000 867,938 895,688
DecisionOne Corporation 9.750 08/01/07 175,000 175,000 180,250
Decorative Home Accents, Inc. 13.000 06/30/02 700,000 700,000 175,000
Florist Transworld Delivery, Inc. 14.000 12/15/01 1,475,000 1,457,376 1,640,938
Great American Cookie Co. 10.875 01/15/01 1,385,000 1,367,500 1,416,162
Hosiery Corporation of America 13.750 08/01/02 1,000,000 987,800 1,080,000
I C N Pharmaceuticals, Inc. 9.250 08/15/05 400,000 400,000 422,000
Indah Kiat International Corporation 11.875 06/15/02 1,000,000 1,000,000 955,000
International Wire Group, Inc. 11.750 06/01/05 550,000 598,125 602,250
International Wire Group, Inc. 11.750 06/01/05 750,000 750,000 821,250
Jordan Industries, Inc. 10.375 08/01/07 500,000 500,000 506,250
Jordan Telecom Products 9.875 08/01/07 1,150,000 1,139,907 1,184,500
Key Plastics, Inc. 14.000 11/15/99 750,000 760,462 817,500
L-3 Corporation 10.375 05/01/07 450,000 450,000 487,125
Neenah Corporation 11.125 05/01/07 300,000 300,000 328,500
Northwest Airlines Corp. 10.150 01/02/05 609,694 609,694 661,188
Northwest Airlines Corp. 12.092 12/31/00 331,554 343,987 339,842
Parker Drilling Corporation 9.750 11/15/06 750,000 744,112 804,375
Pierce Leahy Corp. 9.125 07/15/07 175,000 175,000 181,125
Remington Products Company 11.000 05/15/06 600,000 595,506 516,000
Scotsman Group, Inc. 8.625 12/15/07 150,000 149,598 150,562
Speedway Motorsports, Inc. 8.500 08/15/07 275,000 274,252 280,500
Spinnaker Industries 10.750 10/15/06 250,000 252,812 255,000
Sun Media Corporation 9.500 05/15/07 100,000 99,206 107,000
Sun Media Corporation 9.500 02/15/07 575,000 586,188 615,250
Telex Communications, Inc. 10.500 05/01/07 1,150,000 1,162,938 1,132,750
Therma-Wave, Inc. 10.625 05/15/04 450,000 457,500 477,000
Trans-Resources, Inc. 11.875 07/01/02 1,000,000 1,032,500 1,067,500
Wavetek Corporation 10.125 06/15/07 130,000 130,000 134,550
Williams Scotsman, Inc. 9.875 06/01/07 500,000 500,000 515,000
----------- ----------- -----------
Total Bonds $24,596,248 24,621,308 25,156,380
=========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares or Market Value
Interest Due Principal Cost at 12/31/97
Corporate Public Securities: (Continued) Rate Date Amount (Note 2B) (Note 2A)
------------ -------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Common Stock -- 9.88%
4Health Inc. (B) 27,000 $ 151,000 $ 138,375
American Country Holdings, Inc. (B) 405,590 760,889 734,930
American Skiing Corp. (B) 35,000 630,000 520,625
AMF Bowling, Inc. (B) 33,600 655,200 840,000
Atlas Air, Inc. (B) 5,800 117,450 139,200
Avis Rent A Car, Inc. (B) 3,850 65,450 122,957
Benson Petroleum, LTD. (B) 200,000 154,408 209,800
Central Rents, Inc. 1,880 67,856 94,000
Collins & Aikman Corporation (B) 40,200 240,834 346,725
Computer Horizons Corporation (B) 2,900 77,374 131,950
Conning Corporation (B) 28,000 378,000 469,000
Corporate Express 24,193 34 311,490
Correctional Services, Inc. (B) 9,553 53,206 99,705
Dawson Production Services (B) 45,242 570,064 786,080
Dril-Quip, Inc. (B) 1,750 42,000 61,469
Echostar Communications (B) 11,670 227,565 195,472
Edutrek International (B) 1,750 24,500 45,500
ESG RE Limited (B) 53,200 1,064,000 1,250,200
Excalibur Technologies Corp. (B) 23,334 230,210 199,786
Florida Panthers Holdings, Inc. (B) 45,502 870,380 784,910
Florist Transworld Delivery, Inc. (B) 14,686 41,258 146,860
Friendly Ice Cream Corporation (B) 70,000 1,260,000 813,750
General Chemical Group, Inc. 7,000 180,002 187,250
GTech Holdings Corporation (B) 24,500 704,375 782,456
Herley Industries, Inc. (B) 23,334 280,008 281,455
Hosiery Corporation of America (B) 1,000 -- 70,000
International Home Foods, Inc. (B) 35,000 700,000 980,000
Ivex Packaging Corporation (B) 28,000 448,000 672,000
J. D. Edwards & Company (B) 3,500 80,500 103,250
King World Productions (B) 17,400 848,522 1,004,850
LCS Industries, Inc. 35,000 546,831 507,500
Marker International (B) 70,000 437,500 280,000
Mediq Incorporated (B) 150,000 574,147 1,668,750
N2K, Inc. (B) 42,000 798,000 614,250
NextLink Communications, Inc. (B) 16,100 273,700 343,123
Petersen Companies, Inc. (B) 2,800 49,000 64,400
Princeton Video Image, Inc. (B) 70,000 490,000 656,250
Red Roof Inns, Inc. (B) 45,200 640,992 692,102
Republic Industries, Inc. (B) 35,000 859,688 815,920
Staffing Resources, Inc. (B) 105,000 577,500 840,000
USA Floral Products, Inc. (B) 1,755 22,815 27,641
------------ -----------
Total Common Stock $ 16,193,258 19,033,981
------------ -----------
Convertible Bonds -- 4.28%
Continental Airlines 6.750% 04/15/06 $ 400,000 $ 371,000 677,177
Dura Pharmaceuticals 3.500 07/15/02 590,000 597,031 660,293
Hilton Hotels 5.000 05/15/06 1,385,000 1,385,000 1,540,909
Home Depot, Inc. 3.250 10/01/01 675,000 669,312 886,781
Level One Communications 4.000 09/01/04 280,000 251,650 264,600
Loews Corp. 3.125 09/15/07 1,200,000 1,200,000 1,206,876
Reptron Electronics Inc. 6.750 08/01/04 200,000 200,000 147,750
Savoy Pictures Entertainment 7.000 07/01/03 1,250,000 1,287,500 1,151,562
US Filtor Corporation 4.500 12/15/01 800,000 800,000 812,000
USA Waste Services, Inc. 4.000 02/01/02 475,000 475,000 524,875
World Color Press, Inc. 6.000 10/01/07 400,000 400,000 384,000
---------- ---------- ----------
Total Convertible Bonds $7,655,000 7,636,493 8,256,823
========== ---------- ----------
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Shares,
Yield/ Warrants or Market Value
Interest Due Principal Cost at 12/31/97
Corporate Public Securities: (Continued) Rate Date Amount (Note 2B) (Note 2A)
----------- -------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Convertible Preferred Stock -- 0.14%
Sinclair Broadcasting Group, Inc. (B) 4,750 $ 237,500 $ 271,938
---------- ------------
Total Convertible Preferred Stock 237,500 271,938
---------- ------------
Warrants -- 0.09%
American Country Holdings Inc. (B) 183,117 45,779 143,014
Herley Industries, Inc. (B) 23,334 2,333 37,918
---------- ------------
Total Warrants 48,112 180,932
---------- ------------
Total Corporate Public Securities 48,736,671 52,900,054
---------- ------------
Short-Term Securities:
Commercial Paper -- 1.44%
Maytag Corporation 7.102% 1/2/98 $ 2,500,000 2,499,507 2,499,507
Public Service Company of Colorado 7.052 1/2/98 282,000 281,945 281,945
------------- ----------- -----------
Total Short-Term Securities $ 2,782,000 2,781,452 2,781,452
============= ----------- -----------
Total Investments-- 117.23% 210,173,084 226,086,536
=========== -----------
Other Assets -- 1.98 3,810,412
Liabilities -- (19.21) (37,038,530)
----- -----------
Total Net Assets -- 100.00% $ 192,858,418
====== ==============
</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.
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
INDUSTRY CLASSIFICATION
Fair Value
at 12/31/97
Corporate Restricted Securities: (Note 2A)
-------------
<S> <C>
ADVERTISING - .40%
Ammirati & Puris, Inc. $ 617,400
Omnicom, Inc. 158,062
-----------
775,462
-----------
AUTO PARTS - .07%
Tower Automotive, Inc. 145,349
-----------
BEVERAGES - 1.98%
Associated Vintage Group, Inc. 3,630,217
Delta Beverage Group, Inc. 181,486
-----------
3,811,703
-----------
BUILDING MATERIALS - 3.18%
Highland Homes Holdings, Inc. 1,606,993
Supreme Industries, Inc. 4,521,376
-----------
6,128,369
-----------
CHEMICAL - 3.77%
AccTech, LLC 3,580,120
Sovereign Speciality Chemicals 205,500
TACC International Corporation 3,489,166
-----------
7,274,786
-----------
COMMUNICATIONS - 1.67%
Jordan Telecom Products 69,300
Latin Communications Group 884,380
McLeodUSA Incorporated 364,875
Smartalk Teleservices 640,194
Tel-Save 1,258,595
-----------
3,217,344
-----------
ELECTRICAL EQUIPMENT /
ELECTRONICS - 7.82%
Catalina Lighting, Inc. 1,402,500
Control Devices, Inc. 3,530,448
Intermetrics, Inc. 2,564,612
Mercury Computer Systems, Inc. 1,624,500
Nu Horizons Electronics Corp. 1,516,414
Precision Dynamics, Inc. 4,123,015
Thermo Electron Corporation 311,250
-----------
15,072,739
-----------
ENTERTAINMENT - .84%
Adventure Entertainment Corporation 1,619,399
-----------
HEALTH CARE - 2.04%
Atria Communities, Inc. 511,875
D&K Healthcare Resources, Inc. 2,112,300
Roche Holdings, Inc. 1,314,562
-----------
3,938,737
-----------
MANUFACTURING - INDUSTRIAL AND
CONSUMER PRODUCTS - 34.52%
Beta Brands, Inc. $ 3,611,291
C&K Manufacturing and Sales Company 1,790,567
Capitol Vial, Inc. 3,426,763
Consumer Product Enterprises, Inc. 2,308,168
CUC International, Inc. 1,501,128
Cymer Inc. 281,726
Doskocil Manufacturing Co., Inc. 261,250
Fleming Acquisition Corporation 35,522
Golden Bear Acquisition Corporation 3,572,047
Hartzell Manufacturing, Inc. 3,354,170
Hein-Werner Corp. 49,323
Hudson River Capital LLC 842,935
Hussey Seating Company 3,416,065
Jackson Products, Inc. 2,968,577
Kappler Safety Group, Inc. 3,498,567
Kellstorm Industries, Inc. 383,124
Mark IV Industries 697,500
Maxtec International Corp. 708,793
Newell Financial Trust 1,063,125
PAR Acquisition Corp. 1,230,750
Plastipak Packaging, Inc. 3,619,945
Sequentia, Inc. 3,005,694
Star International, Inc. 2,409,066
Swing N'Slide Corporation 3,515,072
Trend Plastics, Inc. 4,817,072
Truseal Technologies, Inc. 3,550,903
U.S. Netting, Inc. 2,522,544
U.S. Silica Company 3,452,188
Unidata, Inc. 2,768,875
Unipac Corporation 1,549,725
Victory Ventures LLC 107,065
Vitex Packaging, Inc. 259,026
-----------
66,578,566
-----------
MISCELLANEOUS - 10.20%
Climachem, Inc. 309,000
Cuddy International Corp. 806,000
D T Industries 2,190,000
Eagle Pacific Industries, Inc. 3,454,440
Halter Marine 165,162
Key Energy Group 857,500
Lloyd's Barbecue Company 3,410,400
N2K, Inc. 65,637
Process Chemicals, LLC 1,991,623
Protein Genetics, Inc. 1,979,552
Scovill Fastener, Inc. 510,000
Tjiwi Kima Fin Mauritius LTD 415,000
United Refining Company 1,841,875
Von Hoffman Press, Inc. 406,600
W R Carpenter North America 646,875
Worldtex, Inc. 615,000
-----------
19,664,664
-----------
</TABLE>
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
INDUSTRY CLASSIFICATION (Continued)
Fair Value
at 12/31/97
Corporate Restricted Securities: (Continued) (Note 2A)
--------------
<S> <C>
OIL AND GAS SERVICE - 6.30%
BP Prudhoe Bay Royalty Trust $ 420,529
Chaparral Resources, Inc. 22,136
Garnet Resources Corporation 50,000
Hardy Oil & Gas PLC 3,464,985
Louis Dreyfus Natural Gas Corporation 255,255
Maloney Industries, Inc. 2,663,909
TransMontaigne Oil Company 5,270,167
------------
12,146,981
------------
PUBLISHING - .48%
American Lawyer Media 355,250
Scholastic Corp. 576,062
------------
931,312
------------
RECREATIONAL SUPPLIES /
EQUIPMENT - .39%
Coast Distribution System, The 427,777
Family Golf Centers, Inc. 318,960
------------
746,737
------------
RETAILING - 4.72%
Cains Foods, L.P. $ 3,195,702
Costco Companies, Inc. 351,528
Grand Metropolitan PLC 555,888
Pharmaceutical Buyers Inc. 1,294,867
Rent-Way, Inc. 3,706,953
------------
9,104,938
------------
SERVICES - 9.98%
Amtran, Inc. 627,048
Atlantic Coast Airlines Inc. 600,000
Atlantic Express 1,009,375
Budget Group, The 3,420,800
Continental Airlines, Inc. 1,015,764
Diversco, Inc. 3,281,069
Piedmont Holding, Inc. 2,691,111
RailTex, Inc. 2,142,744
Tidewater Holdings, Inc. 3,532,033
Trans World Airlines 603,000
Unicco Service Co. 325,000
------------
19,247,944
------------
Total Corporate Restricted
Securities - 88.36% $170,405,030
============
</TABLE>
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23
<PAGE>
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NOTES TO FINANCIAL STATEMENTS MASSMUTUAL CORPORATE INVESTORS
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I. 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
$170,405,030 (88.36% of net assets) as of December 31, 1997 ($144,807,102 at
December 31, 1996) whose values have been estimated by the Board of Trustees
the absence of readily ascertainable market values. Due to the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the differences could be material.
The values for corporate public securities are stated at the last reported
sales price or at prices based upon quotations obtained from brokers and
dealers as of December 31, 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.
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24
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 December 31, 1997 was plus .0625%.
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. MassMutual, at its option, can convert the
principal amount of the Note into common shares. The dollar amount of
principal would be converted into an equivalent dollar amount of common
shares based upon the average price of the common shares for ten business
days prior to the notice of conversion.
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25
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. Purchases and Sales of Investments
For the year For the year
ended 12/31/97 ended 12/31/96
-------------- --------------
Cost of Investments Acquired
----------------------------
Corporate restricted securities $ 93,887,203 $ 67,144,607
Corporate public securities 44,354,997 58,132,257
Short-term securities 305,257,587 280,873,961
Proceeds from Sales or Maturities
---------------------------------
Corporate restricted securities $ 80,553,486 $ 51,416,597
Corporate public securities 69,121,852 77,992,854
Short-term securities 303,434,252 283,413,909
The aggregate cost of investments is the same for financial reporting and
federal income tax purposes as of December 31, 1997. The net unrealized
appreciation of investments for financial reporting and federal tax purposes
as of December 31, 1997 is $15,913,452 and consists of $30,537,482
appreciation and $14,624,030 depreciation.
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of December 31, 1996. The net unrealized
appreciation of investments for financial reporting and federal tax purposes
as of December 31, 1996 was $11,956,440 and consisted of $26,300,472
appreciation and $14,344,032 depreciation.
6. Quarterly Results of Investment Operations (Unaudited)
<TABLE>
<CAPTION>
Per Per
Amount Share Amount Share
-------- ------- ------- -------
March 31, 1997 March 31, 1996
----------------------- -----------------------
<S> <C> <C> <C> <C>
Investment income $ 4,060,824 $ 3,739,245
Net investment income 3,057,559 $ .36 2,758,149 $ .32
Net realized and unrealized gain (loss) on investments 3,704,899 .44 (763,492) (.09)
<CAPTION>
June 30, 1997 June 30, 1996
----------------------- -----------------------
<S> <C> <C> <C> <C>
Investment income 4,141,453 3,735,914
Net investment income 3,066,951 .36 2,701,597 .32
Net realized and unrealized gain on investments 14,759,526 1.73 9,604,490 1.13
<CAPTION>
September 30, 1997 September 30, 1996
----------------------- -----------------------
<S> <C> <C> <C> <C>
Investment income 4,509,234 4,098,479
Net investment income 3,378,460 .40 3,083,855 .36
Net realized and unrealized gain on investments 14,584,447 1.71 2,196,599 .25
<CAPTION>
December 31, 1997 December 31, 1996
----------------------- -----------------------
<S> <C> <C> <C> <C>
Investment income 4,222,532 3,737,217
Net investment income 3,156,358 .37 2,731,679 .32
Net realized and unrealized loss on investments (8,560,338) (1.01) (3,197,367) (.37)
</TABLE>
7. Common Shares
On December 19, 1997, the Board of Trustees authorized a two-for-one split
of the Trust's common shares effective January 20, 1998 on shares
outstanding at the close of business on December 31, 1997. The stock split
increased the common shares outstanding to 8,513,448 from 4,256,724. All per
share amounts have been restated after giving effect to the two-for-one
split of the Trust's common shares.
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26
<PAGE>
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REPORT OF INDEPENDENT ACCOUNTANTS
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To the Shareholders and Board of Trustees of MassMutual Corporate Investors
We have audited the accompanying statement of assets and liabilities of
MassMutual Corporate Investors (the "Trust") as of December 31, 1997 and 1996,
including the schedule of investments as of December 31, 1997, and the related
statements of operations, cash flows and changes in net assets for each of the
years then ended, and the selected per-share data and ratios for the ten years
in the period ended December 31, 1997. These financial statements and selected
per-share data and ratios are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
selected per-share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1997, by correspondence with the custodian and brokers,
and were verified by examination. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of MassMutual Corporate Investors as of December 31, 1997 and 1996, the
results of its operations, its cash flows and its changes in its net assets for
the years then ended, and the selected per-share data and ratios for each of the
ten years in the period ended, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Springfield, Massachusetts
January 30, 1998
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27
<PAGE>
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MEMBERS OF THE BOARD OF TRUSTEES JANUARY 30, 1998
- --------------------------------------------------------------------------------
[PHOTO OF GARY E. WENDLANDT [PHOTO OF RICHARD G. DOOLEY
APPEARS HERE] APPEARS HERE]
Gary E. Wendlandt Richard G. Dooley
Executive Vice President Retired Executive Vice President
and Chief Investment Officer, and Chief Investment Officer,
Massachusetts Mutual Massachusetts Mutual
Life Insurance Company Life Insurance Company
[PHOTO OF DONALD E. BENSON [PHOTO OF MARSHALL D. BUTLER [PHOTO OF MILTON
APPEARS HERE] APPEARS HERE] COOPER APPEARS HERE]
Donald E. Benson* Marshall D. Butler Milton Cooper
Executive Vice President Chairman, Chairman,
and Director, Nitzanim AVX Kyocera Kimco Realty Corp.
Marquette Bancshares Inc. Venture Capital Fund
[PHOTO OF SUMNER L. FELDBERG [PHOTO OF DONALD GLICKMAN
APPEARS HERE] APPEARS HERE]
Sumner L. Feldberg Donald Glickman
Retired Chairman of the Board Chairman,
Waban, Inc. Donald Glickman & Company, Inc.
[PHOTO OF MARTIN T. HART [PHOTO OF JACK A. LAUGHERY
APPEARS HERE] APPEARS HERE]
Martin T. Hart* Jack A. Laughery
President and Director, Chairman,
H Corporation Papa John's New England
*Member of the Audit Committee
<PAGE>
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www.massmutual.com/mci
- --------------------------------------------------------------------------------
Officers
Gary E. Wendlandt
Chairman
Richard G. Dooley
Vice Chairman
Stuart H. Reese
President
Robert E. Joyal
Senior Vice President
Hamline C. Wilson
Vice President &
Chief Financial Officer
Stephen L. Kuhn
Vice President &
Secretaty
John B. Joyce
Vice President
Charles C. McCobb, Jr.
Vice President
Richard C. Morrison
Vice President
Clifford M. Noreen
Vice President
Mary E. Wilson
Vice President
Raymond B. Woolson
Treasurer
Mark B. Ackerman
Comptroller
Dividend Reinvestment and
Share Purchase Plan
MassMutual Corporate Investors offers a Dividend Reinvestment and Share Purchase
Plan. The Plan provides a simple way for shareholders to add to their holdings
in the Trust through the receipt of dividend shares issued by the Trust or
through the reinvestment of cash dividends in Trust shares purchased in the open
market. A shareholder may join the Plan by filling out and mailing an
authorization card to Shareholder Financial Services, Inc., the Transfer Agent.
Participating shareholders will continue to participate until they notify the
Transfer Agent, in writing, of their desire to terminate participation. Unless a
shareholder elects to participate in the Plan, he or she will, in effect, have
elected to receive dividends and distributions in cash.
Participating shareholders may also make additional contributions to the Plan
from their own funds. Such contributions may be made by personal check or other
means in an amount not less than $10 nor more than $5,000 per quarter.
Whenever the Trust declares a dividend payable in cash or shares, the Transfer
Agent, acting on behalf of each participating shareholder, will take the
dividend in shares only if the net asset value is lower than the market price
plus an estimated brokerage commission as of the close of business on the
valuation day. The valuation day is the last day preceding the day of dividend
payment. When the dividend is to be taken in shares, the number of shares to be
received is determined by dividing the cash dividend by the net asset value as
of the close of business on the valuation date or, if greater than net asset
value, 95% of the closing share price. If the net asset value of the shares is
higher than the market value plus an estimated commission, the Transfer Agent,
consistent with obtaining the best price and execution, will buy shares on the
open market at current prices promptly after the dividend payment date.
The reinvestment of dividends does not, in any way, relieve participating
shareholders of any federal, state or local tax. For federal income tax
purposes, the amount reportable in respect of a dividend received in
newly-issued shares of the Trust will be the fair market value of the shares
received, which will be reportable as ordinary income and/or capital gains.
As compensation for its services, the Transfer Agent receives a fee of 5% of any
dividend and cash contribution (in no event in excess of $2.50 per distribution
per shareholder.)
Any questions regarding the Plan should be addressed to Shareholder Financial
Services, Inc., Agent for MassMutual Corporate Investors' Dividend Reinvestment
and Share Purchase Plan, P.O. Box 173673, Denver CO 80217-3673.
[LOGO OF MASSMUTUAL CORPORATE INVESTORS APPEARS HERE]
<PAGE>
[LOGO OF MASSMUTUAL CORPORATE INVESTORS APPEARS HERE]
MassMutual Corporate Investors
