<PAGE>
1998 ANNUAL
[LOGO APPEARS HERE]
REPORT
MASSMUTUAL
CORPORATE
INVESTORS
------------------
PHOTO:
IMAGE OF PEOPLE ON
THE NEW YORK STOCK
FLOOR
------------------
1998
HIGHLIGHTS
PORTFOLIO
REVIEW
PERFORMANCE
EXPANSION
IN THE U.S.
ANALYST
REVIEW
TAX
INFORMATION
<PAGE>
INVESTMENT
....OBJECTIVE AND
POLICY
BACKGROUND
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" or "MassMuInv" under the New York Stock
Exchange listings. The trading symbol is "MCI".
INVESTMENT OBJECTIVE
The Trust's investment objective is to maintain a portfolio of securities
providing a fixed yield 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.
DIVIDEND POLICY
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.
ANNUAL MEETING
MassMutual Corporate Investors' Annual Meeting of Shareholders is scheduled
to be held on April 23, 1999 at 2:00 p.m. in Springfield, Massachusetts.
We cordially invite all shareholders to attend.
................................
MASSMUTUAL CORPORATE INVESTORS
1295 State Street
Springfield, Massachusetts 01111-0001
(413) 744-8480
www.massmutual.com/mci
ADVISER
Massachusetts Mutual Life Insurance
Company
AUDITOR
PricewaterhouseCoopers LLP
Springfield, Massachusetts 01101
CUSTODIAN
The Chase Manhattan Bank, N.A.
TRANSFER AGENT & REGISTRAR
Shareholder Financial Services, Inc.
P.O. Box 173673
Denver, Colorado 80217-3673
1-800-647-7374
................................
[LOGO OF MCI NYSE APPEARS HERE]
TABLE OF CONTENTS
To Our Shareholders....................................................Intro
Tax Information........................................................Intro
Statement of Assets and Liabilities........................................1
Statement of Operations....................................................2
Statement of Cash Flows....................................................3
Statement of Changes in Net Assets.........................................4
Selected Per Share Data....................................................5
Schedule of Investments.................................................6-21
Notes to Financial Statements..........................................22-24
Report of Independent Accountants.........................................25
<PAGE>
TO OUR
SHAREHOLDERS
It is a pleasure to present the 1998 Annual Report for MassMutual Corporate
Investors, rated the number one performing closed-end bond fund for the second
year in a row, as reported by Lipper Analytic Services, Inc.
[PHOTO OF GARY WENDLANDT AND STUART REESE AT A TABLE READING NEWSPAPER APPEARS
HERE]
(L to R) Gary E. Wendlandt, Chief Investment Officer of Massachusetts Mutual
Life Insurance Company and Stuart H. Reese, President of the Trust
MASSMUTUAL CORPORATE INVESTORS
Summary Financial Information
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Year Ended Per Year Ended Per
December 31,1998 Share December 31,1997 Share
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total net assets $205,019,403 $ 23.87 $192,858,418 $ 22.65
Net investment income $ 13,846,000 1.62 $ 12,659,328 1.49
Realized gain (net of tax) $ 13,725,696 1.60 $ 20,531,522 2.41
Change in unrealized appreciation $ (841,905) (0.10) $ 3,957,012 0.46
Shares outstanding 8,587,495 8,513,448
Key Ratios:
Ratio of total expenses
to average net assets 2.14% 2.25%
Ratio of operating expenses
to average net assets 1.62% 1.69%
Portfolio turnover 60% 66%
.................................................................................................
</TABLE>
PORTFOLIO REVIEW
As of December 31, 1998, the Trust had approximately 75% of its portfolio in
private placement securities. In 1998, the Trust closed a total of 16 new or
add-on private placements for a total of $39.8 million. In the fourth quarter,
the Trust closed 3 private placement securities totalling $11.4 million. The
private placements that were added in the fourth quarter are ATI Acquisition
Corporation, America's Body Co., and Lund International Holdings, Inc. (A brief
description of each of these investments is provided in the Schedule of
Investments.) The fixed income components of these investments have a weighted
average coupon of 11.64% per anum.
Private placement investments are the core of Corporate Investors' portfolio.
These investments must have a fixed income component with an equity feature
(mezzanine investments). Generally, private placement investments are made by
institutions. By investing alongside MassMutual, Corporate Investors is able to
offer individual shareholders access to an otherwise unavailable asset class.
This is where we believe we add the most value.
Net investment income for the three months ended December 31, 1998 rose to
$4,007,273 or $.47 per share, from $3,142,399 or $.37 per share for the prior
quarter. The primary reason for the increase is that the third quarter's numbers
reflected certain one-time charges, and the fourth quarter's numbers reflect
some one-time fees received and a lower management fee.
<PAGE>
MASSMUTUAL CORPORATE INVESTORS
.........................................
Issuer Gains ($000S)
.........................................
Sequentia,Inc. 3,725
Unipac Corporation 2,378
Mercury Computer Systems,Inc. 2,056
Hein-Werner Corp. 1,659
TACC International Corp. 1,453
Rent-Way,Inc. 1,276
Although we were the number one performing closed-end bond fund for the year
according to Lipper, our management fee decreased for the quarter. This is
because the performance component of our management fee calculation is partly
compared to the S&P Industrial Stock Index, which has had spectacular returns
over the past few years.
The table on the right shows some of the highlights of the gains realized from
the portfolio during the year. It should be noted that the gains shown for
Mercury Computer Systems relate only to partial sales of our original holdings.
During the month of January 1999, we realized nearly $1 million in additional
gains from sales of this security and we continue to hold over 280,000 shares
valued at over $6 million. Our original investment in Mercury was $1.5 million.
Another advantageous event that happened in January 1999 was the sale of Lloyd's
Barbecue Company. A little more than a year ago, we made an investment of
approximately $3.5 million in Lloyd's. In January, the company was sold and we
received a gain on our investment of $4.3 million.
These gains as well as others helped push our net asset value per share to
$23.87 at year-end from $22.65 last year.
An issue that has received a lot of attention this past year is "Year 2000" or
"Y2K". Y2K is one of MassMutual's highest priorities. As of December 31, 1998,
MassMutual's critical computer technology hardware and software, including
applications supporting the Trust, was substantially "Year 2000 Compliant"
according to MassMutual Y2K certification standards. To address the issue of
interdependency between the company and external entities, MassMutual is seeking
assurances from vendors, customers, service providers, governments and others,
to determine their Year 2000 readiness. MassMutual will consider the responses
to these inquiries in the development of any contingency plans needed for Year
2000.
ANOTHER YEAR OF EXPANSION IN THE U.S.
1998 marked the eighth consecutive year of economic expansion in the United
States, once again confounding those who were looking for the economy to falter.
While economic growth continued, inflation remained virtually dormant. Producer
prices, which often lead changes in consumer prices, actually declined in 1998.
Interest rates fell for most of the year, ending December at near-record low
levels. Contributing to the easing of interest rates was the fact that the U.S.
government had a $70 billion surplus in fiscal year 1998 after several decades
of deficits. Another surplus is forecast for the current fiscal year.
OVERSEAS: SOME PROGRESS, SOME NEW CHALLENGES
In Asia, where severe financial problems first came to a head in 1997, there was
some progress. The stock markets of Thailand and South Korea rebounded
noticeably in 1998, indicating that investors are beginning to overcome their
generalized fear of Southeast Asian markets and instead are making investment
decisions on a nation-specific basis. This is a key prerequisite for meaningful
recovery in the region.
One key concern continues to be the extent to which the problems in Asia will
spread to other emerging markets, and eventually to the U.S. This concern gained
renewed force in August, when Russia announced a substantial devaluation of its
currency, the ruble, and defaulted on much of its foreign debt.
EQUITIES AND BONDS RIDE THE ROLLER COASTER
U.S. equities were uniformly strong during the first three months of the
year, as concerns about Asia receded into the background and
investors focused on strong economic growth. In April, a two-tiered
market emerged, with large-capitalization technology and other growth
[PHOTO OF STEPHEN KUHN, MARK ACKERMAN, ROBERT JOYAL, CHARLES MCCOBB, CLIFFORD
NOREEN APPEARS HERE]
(L to R) Stephen L. Kuhn, Vice President and Secretary, Mark B. Ackerman,
Treasurer, Robert E. Joyal, Senior Vice President, Charles C. McCobb, Jr., Vice
President and Chief Financial Officer, and Clifford M. Noreen, Vice President
<PAGE>
TOTAL ANNUAL
.......RETURN
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
MassMutual Corporate Investors S&P Industrial Stock Index Lehman Brothers Government/
(Based on earnings and change Corporate Bond Index
in net asset value)
<S> <C> <C> <C>
1 Year 17.12 33.77 9.46
3 Year 19.78 29.20 7.32
5 Year 18.66 24.70 7.30
10 Year 15.99 19.29 9.33
15 Year 16.01 17.95 10.27
20 Year 16.24 17.78 10.17
</TABLE>
issues leading the S&P 500 Index and the Dow Jones Industrial Average higher
through mid-July. The Russell 2000 Index, however, trended lower throughout the
second quarter, indicating that many small-capitalization stocks were not
participating in the rally. Indeed, even the S&P 500's gains are largely due to
its twenty largest components. The rally, therefore, was quite narrow.
Bonds were by no means immune to the third quarter's volatility. Up to that
point, interest rates, which began the year at low levels, had trended
irregularly lower, as the yield curve gradually flattened.
As happened with equities, the credit markets regained some confidence when the
Federal Reserve Board lowered interest rates. Spreads narrowed considerably by
year-end, although not nearly to their levels before the crisis.
LOOKING AHEAD TO 1999
The central economic event of 1999 is likely to be a mild slowdown in the U.S.
economy. Softness in corporate earnings, a symptom of reduced consumer spending,
may be evident. Federal Reserve Board policy, which was extremely accommodating
in response to the 1998 crisis in the financial markets, has returned to a
neutral stance and will likely remain so until circumstances clearly mandate a
change. Inflation may rise a little but should remain unthreatening. In this
environment, we should continue to serve shareholders well with our focus on
thorough research and identifying value in the financial markets.
Sincerely,
/s/ Stuart H. Reese
Stuart H. Reese
President
BOND FUND
........RANKING
CLOSED-END BOND FUND RANKING*
Based on earnings and change in net asset value For the years ending 12/31/97 --
12/31/98
- --------------------------------------------------------------------------------
1 year 2 year** 5 year** 10 year**
- --------------------------------------------------------------------------------
1998 1/340 1 1 1
1997 1/344 14 3 1
.................................................................................
*Source: Lipper Analytical Services, Inc.
**Number of Funds decrease. Not all Funds exist in period.
- --------------------------------------------------------------------------------
LETTER FROM TRUSTEES
The Trustees of MassMutual Corporate
Investors wish to congratulate the
management of the Trust, MassMutual, on
its outstanding performance achievement.
The Trust has not only led in the Lipper
rankings over the past two years, but has
also performed admirably over an
extended period of time.
The Trustees of MassMutual
Corporate Investors
- --------------------------------------------------------------------------------
<PAGE>
ANALYST
.......REVIEW
[PHOTO OF MICHAEL KLOFAS AND MICHAEL HERMSEN APPEARS HERE]
(L to R) Michael L. Klofas, Vice President and Michael P. Hermsen, Vice
President
Michael P. Hermsen and Michael L. Klofas are officers of the Trust responsible
for the origination, analysis and execution of new investments made by
MassMutual Corporate Investors and the ongoing monitoring of existing portfolio
companies.
Prior to every investment we make, we perform an extensive analysis and
evaluation of the underlying company. The companies in which we invest are
usually leaders in their industries and provide products or services which are
highly valued by their customers. Companies that become part of the MassMutual
Corporate Investors' portfolio also have demonstrated stable historical cash
flows, with future cash flows being reasonably predictable. Perhaps most
importantly, companies in which we invest have strong management teams and are
usually owned by experienced investor groups, also known as sponsor groups.
A critical factor in the success of the Trust's investment activities is our
development of strong relationships with our portfolio companies and the sponsor
groups which own them. Each year, a significant number of new investment
opportunities are brought to us by sponsor groups with whom we have previously
done business, or from other sponsor groups which have been referred to us.
These groups recognize the value of relationship investing and appreciate our
responsiveness, long-term investment perspective and ability to provide
additional capital to portfolio companies if needed.
Despite the difficulties experienced by many financial markets during 1998,
investment opportunities in the private placement mezzanine market remained
plentiful. Additionally, favorable market conditions enabled us to liquidate a
number of holdings and realize significant gains upon their disposition.
TAX
.......INFORMATION
The following table summarizes, for income tax purposes, the cash distributions
paid by MassMutual Corporate Investors for the calendar year 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1998 DIVIDEND PAYMENTS RECORD DATE NET INVESTMENT INCOME SHORT-TERM GAINS TAX EFFECT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Regular 05/6/98 0.3979 0.0021
07/31/98 0.4000 --
10/30/98 0.4000 --
12/31/98 0.4000 --
Extra 12/31/98 -- 0.3100
..........................................................................................................
Total Dividends 1.5979 0.3121 1.91 represents
income for tax
purposes
</TABLE>
The following table summarizes the tax effects of the the retention of long-term
capital gains for 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
AMOUNT PER SHARE FROM 2439
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
1998 Gains Retained $1.9367 Line 1a
Long-term Gains Retained (20%) 1.9367
Taxes Paid 0.6778 Line 2*
Basis Adjustment 1.2589 **
..........................................................................................................
</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 Form 990-T.
** For federal tax purposes, you may increase the adjusted basis of your shares
by this amount (the excess of Line 1a over Line 2).
<TABLE>
<CAPTION>
ANNUAL DIVIDEND QUALIFIED FOR DIVIDEND INTEREST EARNED ON
RECEIVED DEDUCTION U.S. GOVERNMENT OBLIGATIONS
- ---------------------------------------------------------------------------------------------------------
AMOUNT PER SHARE PERCENT AMOUNT PER SHARE PERCENT AMOUNT PER SHARE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1.91 4.62013% $0.088088 0.0000% $0.0000
..........................................................................................................
</TABLE>
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
STATEMENT OF ..................................................................
ASSETS AND December 31, 1998 and 1997
LIABILITIES
<TABLE>
<CAPTION>
1998 1997
============================================================================================================
<S> <C> <C>
ASSETS:
Investments (Notes 2A, 2B and 5)
(See Schedule of Investments)
Corporate restricted securities at fair value
(Cost 1998 -- $150,144,259; 1997 -- $158,654,961) $166,668,053 $170,405,030
Corporate public securities at market value
(Cost 1998 -- $54,981,122; 1997 -- $48,736,671) 53,528,875 52,900,054
Short-term securities at cost plus earned discount
which approximates market value 8,305,621 2,781,452
- ------------------------------------------------------------------------------------------------------------
228,502,549 226,086,536
Cash 4,056,616 80,311
Interest and dividends receivable, net 3,957,449 3,570,389
Receivable for investments sold 1,201,590 159,712
- ------------------------------------------------------------------------------------------------------------
Total assets $237,718,204 $229,896,948
============================================================================================================
LIABILITIES:
Dividend payable $ 6,097,121 $ 7,236,431
Payable for investments purchased -- 150,000
Management fee payable (Note 3) 511,849 723,219
Note payable (Note 4) 20,000,000 20,000,000
Interest payable (Note 4) 136,211 136,211
Accrued expenses 132,720 152,767
Accrued taxes (Note 2D) 5,820,900 8,639,902
- ------------------------------------------------------------------------------------------------------------
Total liabilities 32,698,801 37,038,530
- ------------------------------------------------------------------------------------------------------------
NET ASSETS:
Common shares, par value $1.00 per share; an unlimited
number authorized 8,587,495 8,513,448
Additional paid-in capital 96,064,219 94,333,993
Retained net realized gain on investments, prior years 73,493,074 57,447,543
Undistributed net investment income (Note 2D) 770,118 586,318
Undistributed net realized gain on investments (Note 2D) 11,032,950 16,063,664
Net unrealized appreciation of investments (Note 2A, 2B and 5) 15,071,547 15,913,452
- ------------------------------------------------------------------------------------------------------------
Total net assets 205,019,403 192,858,418
- ------------------------------------------------------------------------------------------------------------
Total liabilities and net assets $237,718,204 $229,896,948
============================================================================================================
Common shares issued and outstanding 8,587,495 8,513,448
============================================================================================================
Net asset value per share $ 23.87 $ 22.65
============================================================================================================
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
STATEMENT OF ...................................................................
OPERATIONS For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
=====================================================================================================================
<S> <C> <C>
INVESTMENT INCOME (NOTE 2B):
Interest $17,469,339 $16,289,353
Dividends 756,457 644,690
- ---------------------------------------------------------------------------------------------------------------------
Total income 18,225,796 16,934,043
- ---------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fee (Note 3) 2,883,052 2,904,066
Trustees' fees and expenses 125,493 113,199
Transfer Agent/Registrar's expenses 60,000 79,706
Interest (Note 4) 1,066,000 1,066,000
Reports to shareholders 24,000 26,520
Audit and legal 55,018 58,551
Other 166,233 26,673
- ---------------------------------------------------------------------------------------------------------------------
Total expenses 4,379,796 4,274,715
- ---------------------------------------------------------------------------------------------------------------------
Net investment income (1998 - $1.62 per share; 1997 - $1.49 per share) 13,846,000 12,659,328
- ---------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 2A AND 2B):
Realized gain on investments 19,546,596 29,171,424
Provision for federal income taxes (Note 2D) (5,820,900) (8,639,902)
- ---------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 13,725,696 20,531,522
Net change in unrealized appreciation/depreciation of investments (841,905) 3,957,012
- ---------------------------------------------------------------------------------------------------------------------
Net gain on investments 12,883,791 24,488,534
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $26,729,791 $37,147,862
=====================================================================================================================
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
STATEMENT OF ...................................................................
CASH FLOWS For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH:
Cash flows from operating activities:
Interest and dividends received $ 17,130,326 $ 15,836,608
Interest expense paid (1,066,000) (1,066,000)
Operating expenses paid (3,545,212) (3,109,910)
Federal income tax paid (8,639,902) (6,210,942)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,879,212 5,449,756
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Change in short-term portfolio securities, net (5,253,065) (1,823,335)
Purchase of portfolio securities (132,271,918) (138,042,427)
Proceeds from disposition of portfolio securities 153,330,192 150,205,427
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 15,805,209 10,339,665
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating and investing activities 19,684,421 15,789,421
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Cash dividends paid from net investment income (11,795,057) (11,877,427)
Cash dividends paid from net realized gain on investments (3,913,059) (3,915,019)
- -------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (15,708,116) (15,792,446)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 3,976,305 (3,025)
Cash -- beginning of year 80,311 83,336
- -------------------------------------------------------------------------------------------------------------------
Cash -- end of year $ 4,056,616 $ 80,311
===================================================================================================================
RECONCILIATION OF NET INCREASE (DECREASE) IN NET ASSETS
TO NET CASH FROM OPERATING AND INVESTING ACTIVITIES:
Net increase in net assets resulting from operations $ 26,729,791 $ 37,147,862
- -------------------------------------------------------------------------------------------------------------------
Increase in investments (2,416,013) (23,656,915)
Increase in interest and dividends receivable, net (387,060) (553,988)
(Increase) decrease in receivable for investments sold (1,041,878) 522,822
Decrease in payable for investments purchased (150,000) (198,125)
Increase (decrease) in management fee payable (211,370) 77,209
Increase (decrease) in accrued expenses (20,047) 21,596
Increase (decrease) in accrued taxes (2,819,002) 2,428,960
- -------------------------------------------------------------------------------------------------------------------
Total adjustments to net assets from operations (7,045,370) (21,358,441)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating and investing activities $ 19,684,421 $ 15,789,421
===================================================================================================================
</TABLE>
Supplemental disclosure of non-cash financing activities:
In 1998, the Trust issued 74,047 common shares as reinvestment of dividends
paid from net investment income in the amount of $1,786,140 and from net
realized gains in the amount of $18,133.
See Notes to Financial Statements.
3
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
STATEMENT OF .................................................................
CHANGES IN NET For the years ended December 31, 1998 and 1997
ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS: 1998 1997
====================================================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 13,846,000 $ 12,659,328
Net realized gain on investments 13,725,696 20,531,522
Net change in unrealized appreciation/depreciation of investments (841,905) 3,957,012
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 26,729,791 37,147,862
Net increase in common share transactions 1,804,273 --
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (1998 - $1.60 per share; 1997 - $1.42 per share) (13,662,200) (12,090,799)
Net realized gain on investments (1998 - $0.31 per share; 1997 - $0.52 per share) (2,710,879) (4,467,858)
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase 12,160,985 20,589,205
Net Assets, beginning of year 192,858,418 172,269,213
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of year (including undistributed net investment
income in 1998 -- $770,118; 1997 -- $586,318) $ 205,019,403 $ 192,858,418
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SELECTED PER ...................................................................
SHARE DATA Selected data for each common share outstanding for the years
ended:
<TABLE>
<CAPTION>
For the years ended December 31,
==========================================================================================================================
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year $ 22.65 $ 20.23 $ 19.80 $ 16.47 $ 17.47 $ 15.38 $ 14.37 $ 13.37 $ 14.74 $ 15.15
- --------------------------------------------------------------------------------------------------------------------------
Net investment income 1.62 1.49 1.32 1.32 1.16 1.08 1.11 1.40 1.35 1.39
Net realized and unrealized
gain (loss) on investments 1.51 2.87 0.92 3.88 (0.76) 2.41 1.30 1.00 (1.32) (0.14)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 3.13 4.36 2.24 5.20 0.40 3.49 2.41 2.40 0.03 1.25
- --------------------------------------------------------------------------------------------------------------------------
Dividends from net
investment income to
common shareholders (1.60) (1.42) (1.35) (1.32) (1.16) (1.08) (1.12) (1.40) (1.32) (1.39)
Distributions from net realized
gains on investments to
common shareholders (0.31) (0.52) (0.46) (0.55) (0.24) (0.32) (0.28) -- (0.08) (0.27)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (1.91) (1.94) (1.81) (1.87) (1.40) (1.40) (1.40) (1.40) (1.40) (1.66)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value:
End of year $ 23.87 $ 22.65 $ 20.23 $ 19.80 $ 16.47 $ 17.47 $ 15.38 $ 14.37 $ 13.37 $ 14.74
- --------------------------------------------------------------------------------------------------------------------------
Per share market value:
End of year $ 23.31 $ 25.75 $ 19.25 $ 17.88 $ 15.57 $ 14.88 $ 13.07 $ 14.00 $ 10.63 $ 12.57
==========================================================================================================================
Total investment return:
Market value 0.77% 52.43% 22.44% 29.19% 14.03% 24.84% 3.18% 45.83% (4.15)% (14.54)%
Net asset value 17.12% 27.14% 15.42% 33.76% 2.36% 23.41% 17.36% 18.27% 0.42% 8.93%
Net assets (in millions):
End of year $205.02 $192.86 $172.27 $168.56 $140.20 $148.70 $131.00 $122.30 $113.80 $125.40
Ratio of operating expenses
to average net assets 1.62% 1.69% 1.70% 1.78% 1.76% 1.63% 1.27% 1.44% 1.51% 1.33%
Ratio of interest expense
to average net assets 0.52% 0.56% 0.61% 0.67% 0.72% 1.30% 1.42% 1.33% 1.39% 1.37%
Ratio of total expenses
to average net assets 2.14% 2.25% 2.31% 2.45% 2.48% 2.93% 2.69% 2.77% 2.90% 2.70%
Ratio of net investment
income to average
net assets 6.76% 6.66% 6.44% 7.09% 6.75% 6.61% 7.44% 9.70% 9.33% 8.90%
Portfolio turnover 60.14% 66.23% 64.89% 66.90% 46.88% 76.01% 60.59% 45.96% 23.74% 20.00%
==========================================================================================================================
</TABLE>
All per share amounts have been restated after giving effect to the
two-for-one split on the Trust's common shares authorized on December 19, 1997
effective January 20, 1998.
See Notes To Financial Statements.
5
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
CORPORATE RESTRICTED SECURITIES--81.29%: (A) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
====================================================================================================================
<S> <C> <C> <C> <C> <C>
Private Placement Investments -- 75.30%
ATI ACQUISITION CORPORATION
A manufacturer of disposable nonwoven protection products.
Senior Floating Rate Revolving Credit
Note due 2006 $ 477,273 12/16/98 $ 477,273 $ 477,273 $ 477,273
10% Senior Secured Note due 2006 $2,068,183 12/16/98 2,068,183 2,068,183 2,053,706
12% Subordinated Note due 2008 $1,590,910 12/16/98 1,595,365 1,495,456 1,590,909
Common Stock (B) 318,182 shs. 12/16/98 318,182 318,182 254,546
Warrant, exercisable until 2008, to
purchase common stock at $1 per share (B) 227,273 shs. 12/16/98 95,452 95,455 2,273
- --------------------------------------------------------------------------------------------------------------------
4,554,455 4,454,549 4,378,707
-------------------------------------
ACCTECH, LLC
A designer and marketer of specialized
cleaning products.
Senior Floating Rate Revolving Credit
Note due 2002 (B) $ 812,520 10/31/96 812,520 812,520 203,130
Senior Secured Series A Floating Rate
Note due 2002 (B) $ 693,444 10/31/96 683,050 693,444 173,361
10.1% Senior Secured Series A Note due
2002 (B) $1,040,167 10/31/96 1,013,538 1,040,167 260,042
12% Senior Secured Series B Note due
2004 (B) $1,098,000 10/31/96 1,155,206 988,200 274,500
Membership Interests (B) 5 int. 10/31/96 264,080 146,736 467
Warrant, exercisable until 2004, to
purchase membership interests at
$.0l per interest (B) 3 int. 10/31/96 -- 109,800 --
- --------------------------------------------------------------------------------------------------------------------
3,928,394 3,790,867 911,500
-------------------------------------
ADVENTURE ENTERTAINMENT CORPORATION
An owner and operator of themed family
entertainment centers.
7% Redeemable Series B Preferred Stock 1,808 shs. 10/31/97 176,215 1,783,076 1,719,418
Warrant, exercisable until 2005, to purchase
Class A common stock at $.01 per share (B) 6,447 shs. 10/31/97 64 25,005 64
- --------------------------------------------------------------------------------------------------------------------
176,279 1,808,081 1,719,482
-------------------------------------
AMERICA'S BODY CO./LCP HOLDING CO.
A designer and manufacturer of commercial
work vehicles.
12% Senior Subordinated Note Due 2007 $3,500,000 11/2/98 2,986,665 2,990,066 3,347,050
Warrant, exercisable until 2007, to
purchase common stock at $.01 per
share (B) 58 shs. 11/2/98 1 513,333 1
- --------------------------------------------------------------------------------------------------------------------
2,986,666 3,503,399 3,347,051
-------------------------------------
APPLIED PROCESS SOLUTIONS, INC.
An engineer and manufacturer of process
systems for the oil and gas industry.
Limited Partnership Interests of Maloney
Industries, Inc. (B) 568 uts. 10/20/95 506,250 665,856 546,316
Limited Partnership Interests of APS
Growth LLC (B) 800,000 uts. 9/28/98 682,583 800,000 656,378
Warrant, exercisable until 2004, to
purchase limited partnership
interests at $.01 per unit (B) 297 uts. 10/26/95 297 -- 316,118
- --------------------------------------------------------------------------------------------------------------------
1,189,130 1,465,856 1,518,812
-------------------------------------
ARDENT SOFTWARE, INC. -- O.T.C.
A manufacturer and distributor of
database management software.
Common Stock (B) 83,770 shs. 12/14/95 251,310 686,750 1,541,368
- --------------------------------------------------------------------------------------------------------------------
251,310 686,750 1,541,368
-------------------------------------
</TABLE>
6
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ----------------------------------------------------------------
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
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 $3,194,243 $2,001,001
Common Stock (B) 31,350 shs. 3/19/97 123,750 165,000 82,501
Warrant, exercisable until 2005, to
purchase common stock at $.01
per share (B) 94,107 shs. 3/19/97 94,107 173,346 941
- -------------------------------------------------------------------------------------------------------------------------------
3,492,493 3,532,589 2,084,443
--------------------------------------------
AVERSTAR, INC.
A provider of software systems, services and products to a variety of information technology users.
Senior Floating Rate Revolving Credit
Note due 2001 $ 399,659 5/30/97 399,659 399,659 399,659
Senior Floating Rate Revolving
Term Note due 2002 $ 1,252,211 8/31/95 1,252,211 1,252,211 1,252,211
13% Senior Subordinated Note due 2002 $ 799,318 8/31/95 8,135 724,680 836,805
Class A Common Stock (B) 13,453 shs. 8/31/95 15,799 18,384 33,901
Class B Common Stock (B) 37,200 shs. 8/31/95 43,689 50,837 93,744
Class G Common Stock (B) 96,846 shs. 8/31/95 113,733 104,000 244,051
Class A Common Stock of I E S Holdings (B) 2,941 shs. 2/27/98 -- -- --
Class B Common Stock of I E S Holdings (B) 8,134 shs. 2/27/98 -- -- --
Warrants of I E S Holdings (B) 21,176 shs. 2/27/98 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
1,833,226 2,549,771 2,860,371
--------------------------------------------
BETA BRANDS, INC. -- T.S.E.
A manufacturer of hard candy and chocolate-coated products sold primarily to the Canadian market.
Senior Secured Tranche A Floating
Rate Note due 2004 $ 2,294,000 12/23/97 2,273,813 2,294,000 2,276,566
14.75% Senior Secured Tranche B Note
due 2005 $ 664,510 12/23/97 691,090 664,510 691,090
Limited Partnership Interests of CM
Equity Partners (B) 811,168 int. 12/22/97 648,934 796,649 730,051
Warrant, exercisable until 2005, to
purchase common stock at $.81 per
share (B) 214,419 shs. 12/23/97 2,144 -- 2,144
- -------------------------------------------------------------------------------------------------------------------------------
3,615,981 3,755,159 3,699,851
--------------------------------------------
C&K MANUFACTURING AND SALES COMPANY
A manufacturer and distributor of branded
packaging and supply products.
Senior Secured Floating Rate
Revolving Credit Facility due 2002 $ 651,700 8/29/96 651,700 651,700 325,850
Senior Secured Series A Floating Rate
Term Note due 2002 $ 2,343,234 8/29/96 2,318,161 2,343,234 1,171,617
12% Series B Term Note due 2004 $ 533,000 8/29/96 524,738 511,578 266,500
Membership Interests (B) 266 int. 8/29/96 212,800 134,716 12,868
Warrant, exercisable until 2004, to
purchase membership interests at
$.0l per interest (B) 16 int. 8/29/96 1 26,650 --
- -------------------------------------------------------------------------------------------------------------------------------
3,707,400 3,667,878 1,776,835
--------------------------------------------
CAINS FOODS, L.P.
A producer of mayonnaise, sauce and pickle products for both the retail and food service markets.
Senior Secured Floating Rate
Revolving Credit Note due 2000 $ 843,242 9/29/95 843,242 843,242 836,647
10% Senior Secured Term Note due 2004 $ 1,297,296 9/29/95 1,297,296 1,297,296 1,303,004
11.5% Senior Subordinated Note due 2004 $ 945,945 9/29/95 895,706 910,193 956,918
8% Junior Subordinated Convertible Note
due 2004, convertible into partnership
points at $1,388.89 per point $ 108,108 9/29/95 108,108 108,108 134,086
Warrant, exercisable until 2006, to purchase
partnership points at $.01 per point (B) 39 pts. 9/29/95 50,261 50,261 62,856
- -------------------------------------------------------------------------------------------------------------------------------
3,194,613 3,209,100 3,293,511
--------------------------------------------
</TABLE>
7
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF -----------------------------------------------------------------
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
CAPITOL VIAL, INC.
A producer of plastic vial containers.
Common Stock (B) 66 shs. 12/30/97 $ 263 $ 328 $ 263
- ---------------------------------------------------------------------------------------------------------------------------------
263 328 263
------------------------------------------------
CATALINA LIGHTING, INC. -- N.Y.S.E.
A designer, importer and distributor of residential and office lighting fixtures.
8% Convertible Subordinated Note due 2002,
convertible into common stock at
$7.31 per share $ 1,500,000 3/31/94 1,420,050 1,500,000 1,368,150
- ---------------------------------------------------------------------------------------------------------------------------------
1,420,050 1,500,000 1,368,150
------------------------------------------------
CHAPARRAL RESOURCES, INC. -- O.T.C.
An international oil and gas exploration and production company.
Common Stock (B) 9,838 shs. 12/3/97 6,395 6,395 3,044
- ---------------------------------------------------------------------------------------------------------------------------------
6,395 6,395 3,044
------------------------------------------------
COAST DISTRIBUTION SYSTEM, THE -- A.S.E.
A wholesale distributor of recreational vehicle and marine parts and accessories.
11.2% Senior Subordinated Secured Note
due 1999 $ 116,750 6/26/89 120,474 116,750 112,827
- ---------------------------------------------------------------------------------------------------------------------------------
120,474 116,750 112,827
------------------------------------------------
CONSUMER PRODUCT ENTERPRISES, INC.
A manufacturer of colored acrylic felt for consumer use.
Senior Secured Floating Rate
Revolving Credit Notes due 2000 $ 338,360 12/8/95 338,360 338,360 337,118
10.75% Senior Secured Term Note due 2003 $ 1,014,061 12/8/95 1,024,557 1,014,061 1,011,121
12% Senior Subordinated Note due 2005 $ 800,575 12/8/95 803,858 764,480 787,444
Common Stock (B) 184,560 shs. 12/8/95 138,420 184,560 138,420
Warrant, exercisable until 2005, to
purchase common stock at $.01 per
share (B) 138,420 shs. 12/8/95 1,384 50,853 1,384
- ---------------------------------------------------------------------------------------------------------------------------------
2,306,579 2,352,314 2,275,487
------------------------------------------------
CONTROL DEVICES, INC. -- O.T.C.
A producer of high quality electro-mechanical circuit protector devices and photo-optic sensors.
Common Stock (B) 290,332 shs. * 43,737 26,242 4,413,051
- ---------------------------------------------------------------------------------------------------------------------------------
* 7/29/94 and 10/8/96 43,737 26,242 4,413,051
------------------------------------------------
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 6,872,857
- ---------------------------------------------------------------------------------------------------------------------------------
875,000 875,000 6,872,857
------------------------------------------------
DEALER SOLUTIONS HOLDINGS, INC.
A vertical application software company.
Convertible Preferred Stock (B) 222,222 shs. 5/12/98 500,000 500,000 400,000
Warrant to purchase common stock
at $.01 per share (B) 43,111 shs. 5/12/98 -- -- 431
- ---------------------------------------------------------------------------------------------------------------------------------
500,000 500,000 400,431
------------------------------------------------
DELTA BEVERAGE GROUP, INC.
A Pepsi soft drink bottler.
Common Stock (B) 966 shs. 3/8/88 181,486 2,006,380 198,118
- ---------------------------------------------------------------------------------------------------------------------------------
181,486 2,006,380 198,118
------------------------------------------------
</TABLE>
8
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF -----------------------------------------------------------------
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
DIVERSCO, INC./DHI HOLDINGS, INC.
A contract provider of janitorial and equipment maintenance services and temporary production labor to industrial customers.
12% Senior Subordinated Note due 2006 $ 2,814,000 8/28/98 $2,799,086 $2,558,182 $2,782,484
Membership Interests of MM/Lincap Diversco
Investments Ltd., LLC (B) 7,341 int. * 587,272 734,090 587,272
Warrant, exercisable until 2003 & 2006,
to purchase common stock of DHI
Holdings, Inc. at $.01 per share (B) 3,627 shs. * 36 403,427 36
- -----------------------------------------------------------------------------------------------------------------------------------
* 10/24/96 and 8/28/98 3,386,394 3,695,699 3,369,792
----------------------------------------------
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,
convertible into common stock at $4.26
per share 3,300 shs. 5/9/97 3,286,140 3,300,000 3,361,380
- -----------------------------------------------------------------------------------------------------------------------------------
3,286,140 3,300,000 3,361,380
----------------------------------------------
EVANS CONSOLES, INC.
A designer and manufacturer of consoles and control center systems.
Senior Secured Tranche A Floating $ 1,280,000 3/2/98 1,270,272 1,280,000 1,271,296
Rate Note due 2005
8.85% Senior Secured Tranche A Note
due 2005 $ 1,280,000 3/2/98 1,192,192 1,280,000 1,206,272
11.75% Senior Secured Tranche B Note
due 2006 $ 700,000 3/2/98 743,750 594,660 743,330
Common Stock (B) 26,906 shs. 2/11/98 75,600 94,880 75,601
Limited Partnership Interests of CM
Equity Partners (B) 1,264 int. 2/11/98 101,156 126,445 101,156
Warrant, exercisable until 2006, to
purchase common stock at $.01 per
share (B) 34,783 shs. 3/2/98 348 112,000 348
- -----------------------------------------------------------------------------------------------------------------------------------
3,383,318 3,487,985 3,398,003
----------------------------------------------
FAXSAV INCORPORATED -- O.T.C.
An Internet communications company.
Common Stock (B) 469 shs. 11/9/98 1,524 1,524 1,451
- -----------------------------------------------------------------------------------------------------------------------------------
1,524 1,524 1,451
----------------------------------------------
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 24,525
Warrant, exercisable until 2005, to
purchase common stock at $.01 per
share (B) 380 shs. 4/28/95 98,235 170,455 17,086
Incentive Warrant, exercisable from
1998 until 2000, to purchase common
stock at $.0l per share (B) 19 shs. 4/28/95 3,339 2,273 863
- -----------------------------------------------------------------------------------------------------------------------------------
1,332,685 445,228 42,474
----------------------------------------------
GOLDEN BEAR OIL SPECIALTIES
A manufacturer of asphalt and specialty lubricating and processing oils.
17% Senior Subordinated Note due 2005 $ 3,236,684 7/18/97 3,267,757 3,173,418 3,313,071
12% Series A Convertible Preferred Stock 252 shs. 6/19/98 251,770 251,768 253,558
12% Preferred Stock 311 shs. 7/18/97 31,491 311,111 198,550
Common Stock (B) 20,800 shs. 7/18/97 86,738 77,840 208
Warrant, exercisable until 2005, to
purchase common stock at $.001 per
share (B) 23,333 shs. 7/18/97 233 69,999 233
Warrant, exercisable until 2010, to
purchase common stock at $.001 per
share (B) 17,111 shs. 7/18/97 171 -- 171
- -----------------------------------------------------------------------------------------------------------------------------------
3,638,160 3,884,136 3,765,791
----------------------------------------------
</TABLE>
9
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ----------------------------------------------------------------
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GRAND LYON ENTERPRISES LLC
A manufacturer and marketer of Grand Lyon Bordeaux Ketchup.
Limited Liability Company Interests (B) 2,203 int. 5/15/98 $ 220,347 $ 220,347 $ 198,312
- ---------------------------------------------------------------------------------------------------------------------------------
220,347 220,347 198,312
----------------------------------------------
HARTZELL MANUFACTURING, INC./CMS HOLDING COMPANY
A provider of contract engineering, manufacturing, and assembly services for a variety of industrial manufacturing companies.
12.5% Senior Subordinated note due 2007 $ 2,626,300 * 2,659,129 2,351,840 2,661,230
Common Stock (B) 70,968 shs. * 601,074 801,438 601,079
Warrant, exercisable until 2007, to
purchase common stock at $.01 per
share (B) 33,379 shs. * 3,338 315,156 3,002
- ---------------------------------------------------------------------------------------------------------------------------------
*4/18/97 and 10/8/98 3,263,541 3,468,434 3,265,311
----------------------------------------------
HIGHLAND HOMES HOLDINGS, INC.
A single family home builder operating in the Dallas-Fort Worth and Atlanta areas.
12.75% Senior Note due 1999 $ 750,000 11/18/93 742,575 739,775 774,600
- ---------------------------------------------------------------------------------------------------------------------------------
742,575 739,775 774,600
----------------------------------------------
HUDSON RIVER CAPITAL, LLC
An acquirer of controlling or substantial interests in manufacturing and marketing entities.
Series A Preferred Units (B) 88,730 uts. 7/21/94 787,305 572,461 842,935
- ---------------------------------------------------------------------------------------------------------------------------------
787,305 572,461 842,935
----------------------------------------------
HUSSEY SEATING COMPANY
A manufacturer of spectator seating products.
Senior Secured Floating Rate
Revolving Note due 2003 $ 450,000 6/12/96 445,960 450,000 450,000
Senior Secured Floating Rate Note
due 2003 $ 637,500 6/12/96 631,189 637,500 637,500
10% Senior Secured Note due 2003 $ 637,500 6/12/96 620,670 637,500 637,500
12% Subordinated Secured Note due 2006 $ 1,350,000 6/12/96 1,327,320 1,164,442 1,464,075
Warrant, exercisable until 2006, to
purchase common stock at $.01 per
share (B) 3,553 shs. 6/12/96 36 225,000 342,058
- ---------------------------------------------------------------------------------------------------------------------------------
3,025,175 3,114,442 3,531,133
----------------------------------------------
IRON MOUNTAIN INC. -- O.T.C.
A records management company.
Common Stock (B) 7,075 shs. 6/26/98 135,245 135,236 229,628
- ---------------------------------------------------------------------------------------------------------------------------------
135,245 135,236 229,628
----------------------------------------------
JACKSON PRODUCTS, INC.
A manufacturer and distributor of a variety of industrial and highway safety products.
Common Stock (B) 434 shs. 8/16/95 43,426 43,426 178,220
Warrant, exercisable until 2005, to
purchase common stock at $.01 per
share (B) 1,999 shs. 8/16/95 199,735 199,735 820,365
- ---------------------------------------------------------------------------------------------------------------------------------
243,161 243,161 998,585
----------------------------------------------
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 3,085,532 3,261,008
Warrant, exercisable until 2004, to
purchase common stock at $.01 per
share (B) 57,418 shs. 12/2/96 57,418 333,300 574
- ---------------------------------------------------------------------------------------------------------------------------------
3,441,413 3,418,832 3,261,582
----------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
==================================================================================================================
<S> <C> <C> <C> <C> <C>
LATIN COMMUNICATIONS GROUP
An operator of Spanish-language media in North America.
5% Subordinated Note due 2005 (B) $ 6,594 2/4/98 $ 32,616 $ 33,875 $ 33,473
Common Stock (B) 98,586 shs. * 638,887 826,484 924,245
- ------------------------------------------------------------------------------------------------------------------
* 2/14/95, 12/1/95, 2/27/96 and 2/4/98 671,503 860,359 957,718
-------------------------------------
LIH INVESTORS, L.P.
A manufacturer and marketer of a broad line of external accessories for new and used sport utility vehicles,
trucks and vans.
12.5% Senior Subordinated Note due 2006 $ 3,076,000 12/23/98 2,997,870 2,676,478 3,011,096
Common Stock (B) 48,334 shs. 12/23/98 338,338 338,334 270,670
Warrant, exercisable until 2006, to
purchase common stock at .11 per
share (B) 80,091 shs. 12/23/98 801 399,880 801
- ------------------------------------------------------------------------------------------------------------------
3,337,009 3,414,692 3,282,567
-------------------------------------
LLOYD'S BARBECUE COMPANY
A manufacturer and marketer of packaged barbecue meats and related products.
18% Senior Subordinated Note due 2006 $ 1,726,615 9/30/97 1,726,615 1,726,615 1,726,615
Membership Interests of LFPI
Mainstreet (B) 18,725 uts. 9/30/97 1,873,000 1,872,400 4,868,500
- ------------------------------------------------------------------------------------------------------------------
3,599,615 3,599,015 6,595,115
-------------------------------------
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 common stock at $17.81 per
share (B) 103,342 shs. 12/27/91 49,714 38,712 10,334
- ------------------------------------------------------------------------------------------------------------------
49,714 38,712 10,334
-------------------------------------
MAXTEC INTERNATIONAL CORP.
A manufacturer and distributor of remote control operating systems for overhead cranes.
Senior Floating Rate Revolving Credit
Facility due 2001 $ 329,668 6/28/95 329,668 329,668 329,668
Common Stock (B) 76,923 shs. 6/28/95 192,115 230,769 221,538
Warrant, exercisable from 1998 until
2005, to purchase common stock at
$.01 per share (B) 39,563 shs. 6/28/95 98,581 171,429 113,585
- ------------------------------------------------------------------------------------------------------------------
620,364 731,866 664,791
-------------------------------------
MERCURY COMPUTER SYSTEMS
A designer, manufacturer and marketer of high performance computer systems for computationally intense scientific
and engineering applications.
Common Stock (B) 323,750 shs. 12/31/87 1,171,564 971,250 8,650,212
- ------------------------------------------------------------------------------------------------------------------
1,171,564 971,250 8,650,212
-------------------------------------
MERIT INDUSTRIES, INC.
A designer and manufacturer of coin-operated video and dart games.
12% Senior Subordinated Note due 2006 $ 2,516,293 8/19/98 2,469,238 2,335,396 2,455,902
Limited Partnership Interests (B) 987,241 int. 8/12/98 888,516 948,110 853,272
Warrants, exercisable until 2006, to
purchase limited partnership
interests at $.01 per share (B) 1,855 int. 8/19/98 19 185,411 19
- ------------------------------------------------------------------------------------------------------------------
3,357,773 3,468,917 3,309,193
-------------------------------------
</TABLE>
11
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
==================================================================================================================
<S> <C> <C> <C> <C> <C>
MICROMUSE, INC. -- O.T.C.
A provider of service-level management software.
Common Stock (B) 343 shs. 11/10/98 $ 6,517 $ 6,517 $ 6,020
- ------------------------------------------------------------------------------------------------------------------
6,517 6,517 6,020
----------------------------------------
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 common stock at $12 per
share (B) 27,777 shs. 8/6/97 278 -- 26,560
- ------------------------------------------------------------------------------------------------------------------
278 -- 26,560
----------------------------------------
NU HORIZONS ELECTRONICS CORP. -- O.T.C.
A distributor of high technology active and passive electronic devices.
8.25% Convertible Subordinated Note due
2002, convertible into common stock at
$9 per share $ 1,411,800 8/31/94 1,425,918 1,411,800 1,435,942
- ------------------------------------------------------------------------------------------------------------------
1,425,918 1,411,800 1,435,942
----------------------------------------
OLYMPIC BOAT CENTERS, INC.
An operator of boat dealerships in Washington state and British Columbia.
12% Senior Subordinated Note due 2006 $ 2,774,000 8/7/98 2,764,568 2,431,367 2,742,932
Limited Partnership Interests (B) 828,341 int. 8/7/98 745,507 747,369 672,613
Warrant, exercisable until 2007, to
purchase limited partnership
interests at $.01 per interest (B) 25,793 int. 8/7/98 258 350,400 258
- ------------------------------------------------------------------------------------------------------------------
3,510,333 3,529,136 3,415,803
----------------------------------------
PAR ACQUISITION CORP.
A manufacturer of fuel handling systems for nuclear power plants and hazardous waste.
14.5% Senior Subordinated Note due 2000 $ 420,833 2/5/93 420,160 420,833 420,833
8% Convertible Preferred Stock due 2001,
convertible into common stock at
$2 per share 83,333 shs. 2/5/93 166,667 166,667 293,333
Common Stock (B) 133,333 shs. 2/5/93 333,333 333,333 469,333
- ------------------------------------------------------------------------------------------------------------------
920,160 920,833 1,183,499
----------------------------------------
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 $ 725,625 11/30/95 756,174 725,625 754,940
10.5% Senior Secured Convertible Note
due 2005, convertible into common
stock at $50,000 per share $ 195,000 11/30/95 205,335 195,000 220,759
Common Stock 7 shs. 11/30/95 227,812 337,500 200,506
- ------------------------------------------------------------------------------------------------------------------
1,189,321 1,258,125 1,176,205
----------------------------------------
PLASTIPAK PACKAGING, INC.
A manufacturer of plastic containers.
10.64% Senior Subordinated Note due 2006 $ 3,500,000 10/25/96 3,403,750 3,425,514 3,550,750
Warrant, exercisable until 2006, to
purchase common stock at $.01 per
share (B) 97 shs. 10/25/96 55,599 93,625 40,937
- ------------------------------------------------------------------------------------------------------------------
3,459,349 3,519,139 3,591,687
----------------------------------------
</TABLE>
12
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
======================================================================================================================
<S> <C> <C> <C> <C> <C>
PLAYCORE, INC - 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 $2,534,694 $2,870,312
Limited Partnership Interests of Green
Grass Capital II, LLC (B) 81,548 uts. 3/13/97 293,573 433,909 297,650
Warrant, exercisable until 2005, to
purchase limited partnership interests
of Green Grass Capital II, LLC at $.01
per unit (B) 148,044 uts. 3/13/97 531,774 680,722 539,176
- ----------------------------------------------------------------------------------------------------------------------
3,410,347 3,649,325 3,707,138
-----------------------------------------
PRECISION DYNAMICS, INC.
A manufacturer of custom-designed solenoid valves and controls.
Senior Secured Floating Rate
Revolving Credit Facility due 2003 $ 863,900 7/22/96 856,799 863,900 826,925
Senior Secured Floating Rate Term Note
due 2003 $ 2,608,000 7/22/96 2,582,442 2,608,000 2,531,064
12% Senior Secured Term Note due 2004 $ 489,000 7/22/96 482,545 410,449 484,746
8% Preferred Stock 232 shs. 7/22/96 220,231 231,822 183,911
Common Stock (B) 599 shs. 7/22/96 21,699 28,978 19,907
Warrant, exercisable until 2004, to
purchase common stock at $.01 per
share (B) 322 shs. 7/22/96 3 97,800 10,714
- ----------------------------------------------------------------------------------------------------------------------
4,163,719 4,240,949 4,057,267
-----------------------------------------
PROCESS CHEMICALS, LLC
A specialty chemical company that manufactures process chemicals for the fertilizer, asphalt and concrete industries.
6% Redeemable Preferred Membership
Interests 2,000 int. 7/31/97 196,760 2,058,318 2,120,346
Common Membership Interests 8,930 int. 7/31/97 22,504 130,025 22,504
- ----------------------------------------------------------------------------------------------------------------------
219,264 2,188,343 2,142,850
-----------------------------------------
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 1,200,000 840,000
11.51% Junior Secured Note due 1999 $ 600,000 8/12/94 587,280 600,000 360,000
9.8% Redeemable Exchangeable
Preferred Stock 10,000 shs. 8/12/94 847,900 1,000,000 250,000
Common Stock (B) 1,492 shs. 8/12/94 15 -- 112
- ----------------------------------------------------------------------------------------------------------------------
2,619,355 2,800,000 1,450,112
-----------------------------------------
RAILTEX, INC. -- O.T.C.
An operator of short-line railroads in the Midwest, West and Canada.
12% Senior Subordinated Note due 2002 $ 1,500,000 2/16/93 1,599,150 1,500,000 1,611,150
Common Stock (B) 35,500 shs. 2/16/93 340,800 340,800 381,515
- ----------------------------------------------------------------------------------------------------------------------
1,939,950 1,840,800 1,992,665
-----------------------------------------
RENT-WAY, INC. -- O.T.C.
An operator of rent-to-own stores across the United States.
Warrant, exercisable until 2002, to purchase
common stock at $9.94 per share (B) 20,000 shs. 7/18/95 200 -- 280,586
- ----------------------------------------------------------------------------------------------------------------------
200 -- 280,586
-----------------------------------------
SHARP INTERNATIONAL CORP.
A designer and distributor of wrist watches, clocks, pens and mechanical pencils.
11% Subordinated Debenture due 2006 $ 2,200,000 7/10/98 2,108,260 2,169,829 2,115,740
Warrants, exercisable until 2006, to
purchase common stock at $.01 per
share (B) 35,528 shs. 7/10/98 355 30,171 355
- ----------------------------------------------------------------------------------------------------------------------
2,108,615 2,200,000 2,116,095
-----------------------------------------
</TABLE>
13
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
STAR INTERNATIONAL HOLDINGS, INC.
A manufacturer of commercial cooking appliances.
9.65% Senior Secured Note due 2004 $ 1,352,239 5/27/94 $1,352,239 $1,352,239 $1,366,573
10.5% Subordinated Note due 2004 $ 716,418 5/27/94 716,418 716,418 717,636
Common Stock (B) 4,310 shs. 5/27/94 259,735 259,735 149,188
Warrant, exercisable until 2004, to
purchase common stock at $.01 per
share (B) 3,224 shs. 5/27/94 32 -- 111,567
- ---------------------------------------------------------------------------------------------------------------------
2,328,424 2,328,392 2,344,964
-----------------------------------------
SUPREME INDUSTRIES, INC. -- A.S.E.
A manufacturer of modular homes and truck bodies.
Common Stock (B) 607,460 shs. * 1,389,446 1,243,471 5,262,119
Common Stock of TGC Industries, Inc. (B) 6,361 shs. 9/30/86 3,166 9,497 4,771
- ---------------------------------------------------------------------------------------------------------------------
*5/23/79, 12/15/95 and 6/9/96 1,392,612 1,252,968 5,266,890
-----------------------------------------
THE TRANZONIC COMPANIES
A producer of commercial and industrial supplies, such as safety products, janitorial supplies, work apparel, washroom
and restroom supplies and sanitary care products.
12.5% Senior Subordinated Note due 2006 $ 2,712,000 2/4/98 2,762,172 2,367,558 2,754,578
Common Stock (B) 630 shs. 2/4/98 567,000 630,000 567,000
Warrants to purchase shares of Class B
common stock at .01 per share (B) 444 shs. 2/4/98 4 368,832 4
- ---------------------------------------------------------------------------------------------------------------------
3,329,176 3,366,390 3,321,582
-----------------------------------------
TIDEWATER HOLDINGS, INC.
An operator of a barge transportation line on the Columbia/Snake River system.
Convertible Preferred Stock, convertible
into common stock at $1,000 per share (B) 1,120 shs. 7/25/96 1,008,000 1,120,000 749,408
Warrant, exercisable until 2008, to
purchase common stock at $.01 per
share (B) 474 shs. 7/25/96 43 48,216 316,995
- ---------------------------------------------------------------------------------------------------------------------
1,008,043 1,168,216 1,066,403
-----------------------------------------
TRANSMONTAIGNE OIL COMPANY - A.S.E.
An independent petroleum products marketing company.
12.75% Senior Subordinated
Debenture due 2000 $ 1,200,000 3/28/91 1,274,280 1,181,264 1,252,920
Common Stock (B) 258,720 shs. * 400,000 798,595 3,326,156
Warrant, exercisable until 2001, to
purchase common stock at $3.60 per
share (B) 74,606 shs. 3/28/91 7,461 42,000 730,855
- ---------------------------------------------------------------------------------------------------------------------
*3/28/91, 12/18/91, 9/30/92, 9/30/93, 1,681,741 2,021,859 5,309,931
9/30/94, 3/31/95 and 5/9/95 -----------------------------------------
TREND TECHNOLOGIES, 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 2,437,342
Limited Partnership Interests of
Riverside V Holding Company L.P. 5,359 uts. * 655,759 591,079 443,310
Limited Partnership Interests of
Riverside V-A Holding Company L.P. 11,467 uts. * 1,485,581 1,264,688 1,011,751
Warrant, exercisable until 2005, to
purchase common stock at $.01
per share (B) 3,131 uts. 3/21/97 3,131 3,131 313
- ---------------------------------------------------------------------------------------------------------------------
*3/21/97, 10/16/97 and 11/19/97 4,737,146 4,369,269 3,892,716
-----------------------------------------
</TABLE>
14
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES, UNITS,
WARRANTS OR FAIR VALUE AT FAIR VALUE
CORPORATE RESTRICTED SECURITIES: (A) PRINCIPAL ACQUISITION ACQUISITION COST AT 12/31/98
(CONTINUED) AMOUNT DATE DATE (NOTE 2B) (NOTE 2A)
====================================================================================================================
<S> <C> <C> <C> <C> <C>
TRIDEX CORP. -- O.T.C.
A designer and manufacturer of point-of
-sale monitors and keyboards used by
retailers and restaurants.
12% Senior Subordinated Note due 2005 $ 3,000,000 4/17/98 $ 2,957,700 $ 3,000,000 $ 2,804,700
Common Stock (B) 71,429 shs. 4/17/98 500,003 500,003 184,823
Warrant, exercisable until 2005, to
purchase common stock at $7 per
share (B) 95,709 shs. 4/17/98 -- -- 9,571
- --------------------------------------------------------------------------------------------------------------------
3,457,703 3,500,003 2,999,094
---------------------------------------
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 2,337,913 2,767,288
Limited Partnership Interests (B) 8,246 uts. 6/17/97 742,140 824,600 742,140
Warrant, exercisable until 2006, to
purchase limited partnership
interests at $.01 per unit (B) 1,258 uts. 6/23/97 13 376,932 13
- --------------------------------------------------------------------------------------------------------------------
3,475,468 3,539,445 3,509,441
---------------------------------------
U.S. NETTING, INC.
A manufacturer of plastic netting for
a wide variety of industries.
11% Senior Secured Note due 2005 $ 1,443,823 5/3/95 1,596,579 1,443,823 1,488,726
12% Subordinated Note due 2005 $ 652,050 5/3/95 733,622 624,474 687,522
Common Stock (B) 4,911 shs. 5/3/95 162,652 391,230 6,247
Warrant, exercisable until 2005, to
purchase common stock at $.01 per
share (B) 2,795 shs. 5/3/95 92,549 35,923 3,533
- --------------------------------------------------------------------------------------------------------------------
2,585,402 2,495,450 2,186,028
---------------------------------------
U.S. SILICA COMPANY
A producer of high grade industrial and
specialty ground silica sands in
North America.
Redeemable Preferred Stock Series A (B) 42,001 shs. 12/19/96 291,673 388,898 291,672
Convertible Preferred Stock Series B,
convertible into Series B common stock
at $9.26 per share (B) 84,002 shs. 12/19/96 583,352 777,802 583,343
Warrant, exercisable until 2005, to
purchase Series A preferred stock
and Series B preferred stock at $.01
per unit (B) 6,481 uts. 12/19/96 12,963 130 4,141
- --------------------------------------------------------------------------------------------------------------------
887,988 1,166,830 879,156
---------------------------------------
VICTORY VENTURES, LLC
An acquirer of controlling or
substantial interests in other
entities.
Series A Preferred Units (B) 11,270 uts. 12/2/96 12,701 26,768 21,413
- --------------------------------------------------------------------------------------------------------------------
12,701 26,768 21,413
---------------------------------------
VITEX PACKAGING, INC.
A manufacturer of specialty packaging,
primarily envelopes and tags used on
tea bags.
Senior Secured Floating Rate
Revolving Credit Facility due 2003 $ 632,476 1/2/98 627,416 632,476 628,175
Senior Secured Floating Rate Term
Note due 2005 $ 2,184,000 1/2/98 2,166,746 2,184,000 2,169,587
12% Senior Secured Tranche B Note
due 2007 $ 672,000 1/2/98 678,787 621,600 674,621
Limited Partnership Interests of
Riverside VI Holding Company L.P. 323,782 int. 12/30/97 2,590 300,443 240,343
Warrant, exercisable until 2007, to
purchase common stock at $.01 per
share (B) 89 shs. 1/2/98 1 50,402 1
- --------------------------------------------------------------------------------------------------------------------
3,475,540 3,788,921 3,712,727
------------------------------------------
Sub-Total Private Placement Investments $127,423,726 136,208,957 154,379,840
============------------------------------
</TABLE>
15
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
CORPORATE RESTRICTED SECURITIES:(A) SHARES OR MARKET VALUE
(CONTINUED) INTEREST DUE PRINCIPAL COST AT 12/31/98
RULE 144 SECURITIES-- 5.99%: (A) RATE DATE AMOUNT (NOTE 2B) (NOTE 2A)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
BONDS -- 3.61%
Atlantic Coast Airlines Inc. 8.750% 01/01/07 $ 554,252 $ 554,252 $ 542,829
Bell Sports, Inc. 11.000 08/15/08 400,000 400,000 404,000
Climachem, Inc. 10.750 12/01/07 175,000 168,000 175,875
Cuddy International Corp. 10.750 12/01/07 525,000 517,156 477,750
DeCrane Aircraft 12.000 09/30/08 700,000 700,000 700,000
Derby Cycle Corp. 10.000 05/15/08 460,000 460,000 395,600
Great Lakes Dredge & Dock Corp. 11.250 08/15/08 450,000 450,000 461,250
McLeodUSA Incorporated 9.500 11/01/05 225,000 225,000 239,625
McLeodUSA Incorporated 8.375 03/15/08 650,000 660,125 653,250
Mrs Fields Original Cookies, Inc. 10.125 12/01/04 800,000 776,008 772,000
Nortek, Inc. 8.875 08/01/08 750,000 736,018 770,625
Oxford Health Plans 11.000 05/15/05 100,000 100,000 96,000
Philipp Brothers Chemicals, Inc. 9.875 06/01/08 385,000 363,756 377,300
Renter's Choice, Inc. 11.000 08/15/08 450,000 450,000 456,750
Von Hoffman Press, Inc. 10.375 05/15/07 850,000 851,112 875,500
- ------------------------------------------------------------------------------------------------------------------------------------
Total Bonds $ 7,474,252 7,411,427 7,398,354
============------------------------------------------------
COMMON STOCK -- 0.01%
Jordan Telecom Products (B) $ 70 14,000 14,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Common Stock $ 70 14,000 14,000
=============-----------------------------------------------
CONVERTIBLE BONDS -- 1.26%
Antec Corp. 4.500 05/15/03 $ 300,000 300,000 302,625
Arbor Software Corporation 4.500 03/15/05 200,000 200,000 144,544
Concentra Managed Care, Inc. 4.500 03/15/03 600,000 600,000 454,878
Equity Corporation International 4.500 12/31/04 400,000 400,000 480,252
Key Energy Group 5.000 09/15/04 1,000,000 1,000,000 441,250
Mark IV Industries 4.750 11/01/04 750,000 711,875 599,295
Oak Industries 4.875 03/01/08 150,000 154,500 155,250
Smartalk Teleservices 5.750 09/15/04 75,000 75,000 21,281
- ------------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds $ 3,475,000 3,441,375 2,599,375
============------------------------------------------------
CONVERTIBLE PREFERRED STOCK -- 1.10%
D T Industries 40,000 2,000,000 1,120,000
Jordan Telecom Products 70 56,000 70,000
Newell Financial Trust 20,250 1,012,500 1,063,125
- ------------------------------------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stock 3,068,500 2,253,125
----------------------------------------
WARRANTS -- 0.01%
Energy Conversion Devices Inc. (B) 32,500 -- 23,359
- ------------------------------------------------------------------------------------------------------------------------------------
Total Warrants -- 23,359
-----------------------------------------
Total Rule 144A Securities 13,935,302 12,288,213
- ------------------------------------------------------------------------------------------------------------------------------------
Total Corporate Restricted Securities 150,144,259 166,668,053
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES OR ARKET VALUE
INTEREST DUE PRINCIPAL COST AT 12/31/98
CORPORATE PUBLIC SECURITIES -- 26.11% RATE DATE AMOUNT (NOTE 2B) (NOTE 2A)
=================================================================================================================
<S> <C> <C> <C> <C> <C>
BONDS -- 16.38%
Advanced Micro Devices 11.000% 08/01/03 $ 105,000 $ 111,300 $ 111,300
Aearo Company 12.500 07/15/05 1,000,000 1,000,000 1,090,000
AMC Entertainment 9.500 03/15/09 140,000 131,775 142,800
Amphenol Corporation 9.875 05/15/07 460,000 459,250 469,200
Amtran, Inc. 10.500 08/01/04 600,000 600,000 621,000
Anchor Advanced Products 11.750 04/01/04 410,000 413,000 444,850
Archibald Candy Corp. 10.250 07/01/04 250,000 252,500 253,750
Atlantic Express 10.750 02/01/04 1,375,000 1,392,719 1,388,750
Brand Scaffold Services 10.250 02/15/08 400,000 382,500 380,000
Building Materials Corp. 7.750 07/15/05 175,000 169,750 172,375
Callon Petroleum Company 10.125 09/15/02 500,000 497,120 487,500
Canadian Airlines Corporation 10.000 05/01/05 455,000 456,000 389,025
Canadian Airlines Corporation 12.250 08/01/06 400,000 370,000 272,000
Central Tractor Farm & Country, Inc. 10.625 04/01/07 600,000 586,500 615,000
Continental Airlines, Inc. 9.500 12/15/01 750,000 750,000 783,750
Continental Airlines, Inc. 11.500 01/02/16 629,905 673,998 733,644
DecisionOne Corporation 9.750 08/01/07 525,000 523,250 241,500
Doe Run Resources Corp. 11.250 03/15/05 300,000 300,000 231,000
Fundy Cable LTD 11.000 11/15/05 740,000 781,125 780,700
Gray Communications System, Inc. 10.625 10/01/06 300,000 316,500 318,000
Grove Worldwide 9.250 05/01/08 335,000 292,325 304,850
H M H Properties, Inc. 7.875 08/01/08 700,000 685,125 679,000
Hollinger International Publishing, Inc. 8.625 03/15/05 100,000 105,250 105,500
Hosiery Corporation of America 13.750 08/01/02 1,000,000 987,800 1,025,000
Impac Group, Inc. 10.125 03/15/08 750,000 750,000 753,750
International Wire Group, Inc. 11.750 06/01/05 750,000 750,000 789,375
International Wire Group, Inc. 11.750 06/01/05 550,000 598,125 578,875
J H Haeffier Company 10.000 05/15/08 125,000 110,938 125,000
Jordan Industries, Inc. 10.375 08/01/07 500,000 500,000 510,000
Jordan Telecom Products 9.875 08/01/07 1,150,000 1,139,907 1,150,000
JTM Industries / ISG Resources, Inc. 10.000 04/15/08 300,000 300,000 297,000
Keystone Consolidated md, Inc. 9.625 08/01/07 100,000 90,500 95,500
Loewen Group Inc. 7.500 04/15/01 450,000 337,500 393,750
Loewen Group Inc. 8.250 04/15/03 250,000 234,375 212,500
Loewen Group Inc. 8.250 10/15/03 125,000 118,750 107,500
M J D Communications Inc. 9.500 05/01/08 100,000 100,000 98,500
M J D Communications Inc. 9.160 05/01/08 250,000 250,000 242,500
MCMS, Inc. 9.750 03/01/08 600,000 600,000 507,000
Mediacom LLC 8.500 04/15/08 450,000 447,750 460,688
Morris Materials Handling 9.500 04/01/08 300,000 300,000 222,000
Mrs Fields Original Cookies, Inc. 10.125 12/01/04 175,000 154,000 168,875
NE Restaurant Company, Inc. 10.750 07/15/08 520,000 516,250 525,200
Neenah Corporation 11.125 05/01/07 575,000 581,875 590,812
Neff Corp. 10.250 06/01/08 230,000 227,688 221,950
Nextel Communications 0.000 02/15/08 575,000 362,312 345,000
Nortek, Inc. 9.125 09/01/07 150,000 145,500 154,500
Northwest Airlines Corp. 10.150 01/02/05 550,413 550,413 608,955
Numatics, Inc. 9.625 04/01/08 820,000 790,175 766,700
Peirce Leahy Corp. 8.125 05/15/08 325,000 308,937 325,000
Pillotex Corporation 10.000 11/15/06 100,000 103,000 107,000
Pillotex Corporation 9.000 12/15/07 545,000 548,944 561,350
</TABLE>
17
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ....................................................................
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES OR MARKET VALUE
CORPORATE PUBLIC SECURITIES:(A) INTEREST DUE PRINCIPAL COST AT 12/31/98
(CONTINUED) RATE DATE AMOUNT (NOTE 2B) (NOTE 2A)
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Red Roof Inns, Inc. 9.625% 12/15/03 $ 325,000 $ 325,812 $ 328,250
Regal Cinemas 9.500 06/01/08 525,000 501,375 540,750
Remington Products Company 11.000 05/15/06 600,000 595,506 450,000
Rogers Cantel Inc. 9.375 06/01/08 275,000 279,125 290,125
Scotsman Group, Inc. 8.625 12/15/07 230,000 229,598 225,400
Scovill Fastener, Inc. 11.250 11/30/07 500,000 500,000 430,000
Sovereign Speciality Chemicals 9.500 08/01/07 200,000 200,000 203,000
Speedway Motorsports, Inc. 8.500 08/15/07 275,000 274,252 290,125
Sun Media Corporation 9.500 05/15/07 450,000 469,750 495,000
Sun Media Corporation 9.500 02/15/07 175,000 175,875 194,250
Tekni-Plex Inc. 9.250 03/01/08 650,000 650,000 679,250
Telex Communications, Inc. 10.500 05/01/07 1,150,000 1,162,938 1,012,000
Therma-Wave, Inc. 10.625 05/15/04 710,000 652,500 355,000
Trans World Airlines 11.500 12/15/04 500,000 494,110 435,000
Unicco Service Co. 9.875 10/15/07 325,000 323,472 313,625
United Refining Company 10.750 06/15/07 1,750,000 1,750,000 1,172,500
WR Carpenter North America 10.625 06/15/07 625,000 631,917 632,812
Wavetek Corporation 10.125 06/15/07 130,000 130,000 123,500
Williams Scotsman, Inc. 9.875 06/01/07 1,085,000 1,082,962 1,106,700
Windmere Durable Holdings, Inc. 10.000 07/31/08 360,000 349,425 336,600
Worldtex, Inc. 9.625 12/15/07 600,000 600,000 534,000
Ziff-Davis Inc. 8.500 05/01/08 500,000 498,170 485,000
- -------------------------------------------------------------------------------------------------------------------
Total Bonds $35,505,318 35,031,513 33,592,661
===========----------------------------------
COMMON STOCK -- 4.93%
AMR Corporation (B) 4,900 356,105 290,937
American Country Holdings Inc. (B) 405,590 760,889 659,084
Benson Petroleum, LTD (B) 200,000 154,408 74,780
BP Prudhoe Bay Royalty Trust 26,180 372,266 122,719
Budget Group, The (B) 95,456 1,996,621 1,515,364
Career Blazers, Inc. (B) 105,000 577,500 564,375
Collins & Aikman Corporation (B) 40,200 240,834 206,025
E-Tek Dynamics Inc. (B) 3,250 39,000 86,937
Excalibur Technologies Corp. (B) 23,334 230,209 142,921
Florida Panthers Holdings, Inc. (B) 35,502 681,042 330,612
Florist Transworld Delivery, Inc. (B) 29,372 41,258 146,860
General Chemical Group, Inc. 10,200 261,398 141,525
Hosiery Corporation of America (B) 1,000 -- 40,250
Infinity Broadcasting Corp. (B) 3,088 63,304 84,534
Irwin Naturals (B) 27,000 151,000 128,250
LCS Industries, Inc. 35,000 546,831 601,562
Midway Airlines Corp. (B) 27,088 505,057 325,056
Oxford Health Plans (B) 24,375 459,901 362,578
P.F. Chang's China Bistro Inc. (B) 9,750 117,000 221,813
Pathways Group, Inc. (B) 28,655 640,350 488,926
Princeton Video Image, Inc. (B) 59,500 416,500 178,500
Rent-Way, Inc. (B) 120,725 1,200,008 2,935,127
Swiss Army Brands, Inc. (B) 39,000 393,825 375,375
TSR, Inc. (B) 6,500 42,640 67,438
Xoom.com, Inc. (B) 325 4,550 10,725
- -------------------------------------------------------------------------------------------------------------------
Total Common Stock 10,252,496 10,102,273
---------------------------
</TABLE>
18
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ----------------------------------------------------------------
INVESTMENTS December 31, 1998
<TABLE>
<CAPTION>
SHARES OR MARKET VALUE
CORPORATE PUBLIC SECURITIES: (A) INTEREST DUE PRINCIPAL COST AT 12/31/98
(CONTINUED) RATE/YIELD DATE AMOUNT (NOTE 2B) (NOTE 2A)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BONDS -- 4.76%
Advanced Micro Devices 6.000% 05/15/05 $ 100,000 $ 78,662 $ 102,856
Clear Charmel Communications 2.625 04/01/03 650,000 650,000 698,009
Diamond Offshore Drilling 3.750 02/15/07 900,000 896,906 837,846
Dura Pharmaceuticals 3.500 07/15/02 590,000 597,031 433,650
EMCOR Group, Inc. 5.750 04/01/05 650,000 650,000 552,500
Family Golf Centers, Inc. 5.750 10/15/04 1,905,000 1,660,530 1,893,303
Hilton Hotels 5.000 05/15/06 1,385,000 1,385,000 1,269,006
Kellstorm Industries, Inc. 5.500 06/15/03 975,000 833,150 999,375
Level One Communications 4.000 09/01/04 400,000 371,805 594,408
Magna International, Inc. 4.875 02/15/05 800,000 791,000 819,000
Oak Industries 4.875 03/01/08 225,000 203,000 232,875
Reptron Electronics, Inc. 6.750 08/01/04 200,000 200,000 92,624
Savoy Pictures Entertainment 7.000 07/01/03 1,250,000 1,287,500 1,200,000
Smartalk Teleservices, Inc. 5.750 09/15/04 100,000 46,750 28,375
- ---------------------------------------------------------------------------------------------------------------
Total Convertible Bonds $ 10,130,000 9,651,334 9,753,827
=============------------------------------------
WARRANTS -- 0.04%
American Country Holdings Inc. (B) 183,117 45,779 80,114
- ---------------------------------------------------------------------------------------------------------------
Total Warrants 45,779 80,114
----------------------------
- ---------------------------------------------------------------------------------------------------------------
Total Corporate Public Securities 54,981,122 53,528,875
----------------------------
SHORT-TERM SECURITIES
- ---------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- 4.05%
Indiana Michigan Power 6.156 01/05/99 $ 2,410,000 2,408,353 2,408,353
McKesson Corp. 6.257 01/04/99 1,815,000 1,814,055 1,814,055
Textron, Inc. 5.253 01/04/99 4,085,000 4,083,213 4,083,213
- ---------------------------------------------------------------------------------------------------------------
Total Short-Term Securities $ 8,310,000 8,305,621 8,305,621
=============------------------------------------
Total Investments 111.45% $ 213,431,002 228,502,549
=============------------------
Other Assets 4.50 9,215,655
Liabilities (15.95) (32,698,801)
- ---------------------------------------------------------------------------------------------------------------
Total Net Assets 100.00% $ 205,019,403
===============================================================================================================
</TABLE>
(A) In each of the convertible note, warrant, convertible preferred and
common stock investments, the issuer has agreed to provide certain
registration rights.
(B) Non-income producing security.
See Notes to Financial Statements.
19
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF ----------------------------------------------------------------
INVESTMENTS December 31, 1998
FAIR VALUE
AT 12/31/98
CORPORATE RESTRICTED SECURITIES (NOTE 2A)
- --------------------------------------------------------------------------------
AUTOMOBILE -- 3.58%
America's Body Co./ LCP Holding Co. $ 3,347,051
Coast Distribution System, Inc. 112,827
LIH Investors, L.P. 3,282,567
Mark IV Industries 599,295
- ------------------------------------------------------------------------------
7,341,740
-----------
BEVERAGE, FOOD & TOBACCO -- 8.22%
Associated Vintage Group, Inc. 2,084,443
Beta Brands, Inc. 3,699,851
Cains Foods, L.P. 3,293,511
Delta Beverage Group, Inc. 198,118
Grand Lyon Enterprises LLC 198,312
Lloyd's Barbecue Company 6,595,115
Mrs Fields Original Cookies, Inc. 772,000
- ------------------------------------------------------------------------------
16,841,350
-----------
BROADCASTING & ENTERTAINMENT -- 0.47%
Latin Communications Group 957,718
- ------------------------------------------------------------------------------
957,718
-----------
BUILDINGS & REAL ESTATE -- 5.03%
Highland Homes Holdings, Inc. 774,600
Nortek Inc. 770,625
Supreme Industries, Inc. 5,266,890
Truseal Technologies, Inc. 3,509,441
- ------------------------------------------------------------------------------
10,321,556
-----------
CARGO TRANSPORT -- 1.49%
RailTex, Inc. 1,992,665
Tidewater Holdings, Inc. 1,066,403
- ------------------------------------------------------------------------------
3,059,068
-----------
CHEMICAL, PLASTICS & RUBBER -- 4.64%
AccTech, LLC 911,500
Philipp Brothers Chemicals, Inc. 377,300
Process Chemicals, LLC 2,142,850
Trend Technologies, Inc. 3,892,716
U.S. Netting, Inc. 2,186,028
- ------------------------------------------------------------------------------
9,510,394
-----------
CONSUMER PRODUCTS -- 2.66%
Consumer Product Enterprises, Inc. 2,275,487
Newell Financial Trust 1,063,125
Sharp International Corp. 2,116,095
- ------------------------------------------------------------------------------
5,454,707
-----------
CONTAINERS, PACKAGING & GLASS -- 4.43%
C & K Manufacturing and Sales Company $ 1,776,835
Capitol Vial, Inc. 263
Plastipak Packaging, Inc. 3,591,687
Vitex Packaging, Inc. 3,712,727
- ------------------------------------------------------------------------------
9,081,512
-----------
DIVERSIFIED/CONGLOMERATE --
MANUFACTURING -- 16.94%
ATI Acquisition Corporation 4,378,707
DT Industries 1,120,000
DeCrane Aircraft 700,000
Eagle Pacific Industries, Inc. 3,361,380
Energy Conversion Devices Inc. 23,359
Evans Consoles, Inc. 3,398,003
Fleming Acquisition Corporation 42,474
Golden Bear Oil Specialties 3,765,791
Hartzell Manufacturing, Inc./
CMS Holding Company 3,265,311
Hudson River Capital, LLC 842,935
Hussey Seating Company 3,531,133
Jackson Products, Inc. 998,585
Kappler Safety Group, Inc. 3,261,582
Maxtec International Corp. 664,791
PAR Acquisition Corp. 1,183,499
The Tranzonic Companies 3,321,582
U.S. Silica Company 879,156
- ------------------------------------------------------------------------------
34,738,288
-----------
DIVERSIFIED/CONGLOMERATE --
SERVICE -- 2.55%
Diversco, Inc./DHI Holdings, Inc. 3,369,792
Great Lakes Dredge & Dock Corp. 461,250
Iron Mountain Inc. 229,628
Pharmaceutical Buyers, Inc. 1,176,205
- ------------------------------------------------------------------------------
5,236,875
-----------
ELECTRONICS -- 12.93%
Arbor Software Corporation 144,544
Ardent Software, Inc. 1,541,368
Averstar, Inc. 2,860,371
Control Devices, Inc. 4,413,051
Dealer Solutions Holdings, Inc. 400,431
Mercury Computer Systems 8,650,212
Micromuse, Inc. 6,020
Nu Horizons Electronics Corp. 1,435,942
Precision Dynamics, Inc. 4,057,267
Tridex Corp. 2,999,094
- ------------------------------------------------------------------------------
26,508,300
-----------
20
<PAGE>
CONSOLIDATED MASSMUTUAL CORPORATE INVESTORS
SCHEDULE OF --------------------------------------------------------------
INVESTMENTS December 31, 1998
FAIR VALUE
AT 12/31/98
CORPORATE RESTRICTED SECURITIES (CONTINUED) (NOTE 2A)
==============================================================================
FARMING & AGRICULTURE -- .94%
Cuddy International Corp. $ 477,750
Protein Genetics, Inc. 1,450,112
- ------------------------------------------------------------------------------
1,927,862
------------
HEALTHCARE, EDUCATION & CHILDCARE -- 3.62%
Concentra Managed Care, Inc. 454,878
D & K Healthcare Resources, Inc. 6,872,857
Oxford Health Plans 96,000
- ------------------------------------------------------------------------------
7,423,735
------------
HOME & OFFICE FURNISHINGS, HOUSEWARES,
AND DURABLE CONSUMER PRODUCTS -- 1.81%
Catalina Lighting, Inc. 1,368,150
Star International Holdings, Inc. 2,344,964
- ------------------------------------------------------------------------------
3,713,114
------------
LEISURE, AMUSEMENT, ENTERTAINMENT -- 6.33%
Adventure Entertainment Corporation 1,719,482
Bell Sports, Inc. 404,000
Derby Cycle Corp. 395,600
Merit Industries, Inc. 3,309,193
N2K, Inc. 26,560
Olympic Boat Centers, Inc. 3,415,803
Playcore, Inc. 3,707,138
- ------------------------------------------------------------------------------
12,977,776
------------
MISCELLANEOUS -- 0.33%
Climachem, Inc. 175,875
Equity Corporation International 480,252
Victory Ventures, LLC 21,413
- ------------------------------------------------------------------------------
677,540
------------
OIL & GAS -- 3.55%
Applied Process Solutions, Inc. $ 1,518,812
Chaparral Resources, Inc. 3,044
Key Energy Group 441,250
Louis Dreyfus Natural Gas Corporation 10,334
TransMontaigne Oil Company 5,309,931
- ------------------------------------------------------------------------------
7,283,371
------------
PERSONAL TRANSPORTATION -- 0.27%
Atlantic Coast Airlines Inc. 542,829
- ------------------------------------------------------------------------------
542,829
------------
PRINTING & PUBLISHING -- 0.43%
Von Hoffman Press, Inc. 875,500
- ------------------------------------------------------------------------------
875,500
------------
RETAIL STORES -- 0.36%
Rent-Way, Inc. 280,586
Renter's Choice, Inc. 456,750
- ------------------------------------------------------------------------------
737,336
------------
TELECOMMUNICATIONS -- .71%
Antec Corp. 302,625
FaxSav Inc. 1,451
Jordan Telecom Products 84,000
McLeodUSA Incorporated 892,875
Oak Industries 155,250
Smartalk Teleservices 21,281
- ------------------------------------------------------------------------------
1,457,482
------------
Total Corporate Restricted
Securities -- 81.29% $166,668,053
- ------------------------------------------------------------------============
21
<PAGE>
NOTES TO MASSMUTUAL CORPORATE INVESTORS
FINANCIAL -----------------------------------------------------------------
STATEMENTS December 31, 1998
- --------------------------------------------------------------------------------
1. HISTORY
MassMutual Corporate Investors (the "Trust") is a closed-end, non-diversified
investment company. Massachusetts Mutual Life insurance Company
("MassMutual") acts as its investment adviser.
The Trust commenced operations in 1971 as a Delaware corporation. Pursuant to
an Agreement and Plan of Reorganization dated November 14, 1985, approved by
shareholders, the Trust was organized as a Massachusetts business trust under
the laws of the Commonwealth of Massachusetts, effective November 28, 1985.
On January 27, 1998, the Board of Trustees authorized the formation of a
totally held subsidiary ("MMCI Subsidiary Trust") for the purpose of holding
certain investments. The results of MMCI Subsidiary Trust have been
consolidated in the accompanying financial statements.
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:
Valuation of a security in the Trust's portfolio is made on the basis of
market price whenever market quotations are readily available and all
securities of the same class held by the Trust can be readily sold in such
market.
Nearly all securities which are acquired by the Trust directly from the
issuers and shares into which such securities may be converted or which may
be purchased on the exercise of warrants attached to such securities will be
subject to legal or contractual delays in or restrictions on resale and will
therefore be "restricted securities". Generally speaking, as contrasted with
open-market sales of unrestricted securities which may be effected
immediately if the market is adequate, restricted securities can be sold only
in a 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 Board of Trustees of the Trust (the "Trustees"). Each restricted
security is valued by the Trustees as of the time of the acquisition thereof
and at least 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 extent of any discount at which the security was acquired; the
estimated period of time during which the security will not be freely
marketable; the estimated expenses of registering or otherwise qualifying the
security for public sale; estimated underwriting commissions if underwriting
would be required to effect a sale; in the case of a convertible security,
whether or not it would trade on the basis of its stock equivalent; in the
case of a debt obligation which would trade independently of any equity
equivalent, the current yields on comparable securities; the estimated amount
of the floating supply of such securities available; the proportion of the
issue held by the Trust; changes in the financial condition and prospects of
the issuer; the existence of merger proposals or tender offers affecting the
issuer; and any other factors affecting fair value, all in accordance with
the Investment Company Act of 1940. In making valuations, opinions of counsel
may be relied upon as to whether or not securities are restricted securities
and as to the legal requirements for public sale.
When market quotations are readily available for unrestricted securities of
an issuer, restricted securities of the same class are generally valued at a
discount from the market price of such unrestricted securities. The Trustees,
however, consider all factors in 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
the 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 $166,668,053
(81.29% of net assets) as of December 31, 1998 ($170,405,030 at December 31,
1997) whose values have been estimated by the Board of Trustees in the
absence of readily ascertainable market values. Due to the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the differences could be material.
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, 1998, subject to discount where appropriate, and
are approved by the Trustees.
Short-term securities with more than sixty days to maturity are valued at
fair value and short-term securities having a maturity of sixty days or less
are valued at amortized cost which approximates market value.
22
<PAGE>
NOTES TO MASSMUTUAL CORPORATE INVESTORS
FINANCIAL -----------------------------------------------------------------
STATEMENTS December 31, 1998
================================================================================
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 and 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 all or a portion
of 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, safekeeping facilities, 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 year ended December
31, 1998 was:
Performance
Adjustment Amount
-------------------------------------------------------------
March 31, 1998 0.0625% 132,060
June 30, 1998 0.0625% 134,754
September 30, 1998 0.0625% 128,387
December 31, 1998 (0.0625%) (127,963)
-------------------------------------------------------------
Total 0.1250% 267,238
4. NOTE PAYABLE
On November 5, 1993, the Trust sold to MassMutual at par a $20,000,000 Senior
Fixed Rate Convertible Note due November 15, 2000 (the "Note") which accrues
at 5.33% per annum. The Note holder, at its option, can convert the principal
amount of the Note into common shares. The dollar amount of principal would
be converted into an equivalent dollar amount of common shares based upon the
average price of the common shares for ten business days prior to the notice
of conversion.
23
<PAGE>
NOTES TO MASSMUTUAL CORPORATE INVESTORS
FINANCIAL ......................................................................
STATEMENTS
- --------------------------------------------------------------------------------
5. PURCHASES AND SALES OF INVESTMENTS
For the For the
year ended year ended
12/31/98 12/31/97
-----------------------------------------------------------------------------
Cost of Investments Acquired
-----------------------------------------------------------------------------
Corporate restricted securities $ 84,022,395 $ 93,887,203
Corporate public securities 44,579,636 44,354,997
Short-term securities 485,878,059 305,257,587
Proceeds from Sales or Maturities
-----------------------------------------------------------------------------
Corporate restricted securities $ 92,673,578 $ 80,553,486
Corporate public securities 57,741,300 69,121,852
Short-term securities 480,624,992 303,434,252
The aggregate cost of investments was the same for financial reporting and
federal income tax purposes as of December 31, 1998. The net unrealized
appreciation of investments for financial reporting and federal tax purposes
as of December 31, 1998 is $15,071,547 and consists of $40,735,293
appreciation and $25,663,746 depreciation.
The aggregate cost of investments was 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 was $15,913,452 and consisted of $30,537,482
appreciation and $14,624,030 depreciation.
6. QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Per Per
Amount Share Amount Share
- --------------------------------------------------------------------------------------------------------------------
March 31, 1998 March 31, 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income $ 4,573,718 $4,060,824
Net investment income 3,435,337 $ .40 3,057,559 $.36
Net realized and unrealized gain on investments 14,075,440 1.65 3,704,899 .44
June 30, 1998 June 30, 1997
- --------------------------------------------------------------------------------------------------------------------
Investment income 4,410,653 4,141,453
Net investment income 3,260,991 .38 3,066,951 .36
Net realized and unrealized gain on investments 4,030,073 .47 14,759,526 1.73
September 30, 1998 September 30, 1997
- --------------------------------------------------------------------------------------------------------------------
Investment income 4,341,687 4,509,234
Net investment income 3,142,399 .37 3,378,460 .40
Net realized and unrealized gain (loss) on investments (9,389,983) (1.10) 14,584,447 1.71
December 31, 1998 December 31, 1997
- --------------------------------------------------------------------------------------------------------------------
Investment income 4,899,738 4,222,532
Net investment income 4,007,273 0.47 3,156,358 .37
Net realized and unrealized gain (loss) on investments 4,168,261 0.49 (8,560,338) (1.01)
</TABLE>
24
<PAGE>
REPORT OF MASSMUTUAL CORPORATE INVESTORS
INDEPENDENT ....................................................................
ACCOUNTANTS To the Shareholders and the Board of Trustees of MassMutual
Corporate Investors
================================================================================
In our opinion, the accompanying consolidated statement of assets and
liabilities, including the schedule of investments at December 31, 1998, and the
related consolidated statements of operations, cash flows and of changes in net
assets and the selected Per Share Data present fairly, in all material respects,
the financial position of MassMutual Corporate Investors (hereafter referred to
as the "Trust") at December 31, 1998 and 1997, the results of its operations,
its cash flows and the changes in its net assets for the years then ended and
the selected Per Share Data for each of the ten years in the period then ended,
in conformity with generally accepted accounting principles. These financial
statements and selected Per Share Data (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included verification of securities owned at
December 31, 1998 by examination, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers Signature
Springfield, Massachusetts
February 25, 1999
25
<PAGE>
MASS MUTUAL CORPORATE INVESTORS
......................................................................
January 29, 1999
- --------------------------------------------------------------------------------
Photo of:
Milton Cooper, Donald Glickman, Gary Wendlandt,
Corine Norgaard, Martin Hart, Jack Laughery,
Richard Dooley, Donald Benson, Marshall Butler
standing and sitting at conference table
- --------------------------------------------------------------------------------
MILTON COOPER*
Chairman,
Kimco Realty Corp.
DONALD GLICKMAN*
Chairman,
Donald Glickman &
Company, Inc.
GARY E. WENDLANDT
Executive Vice President and
Chief Investment Officer,
Massachusetts Mutual Life
Insurance Company
CORINE T. NORGAARD*
Dean, Barney School
of Business and Public
Administration,
University of Hartford
MARTIN T. HART**
President and Director,
H Corporation
JACK A. LAUGHERY*
Chairman,
Laughery Investments
RICHARD G. DOOLEY*
Retired Executive Vice
President and Chief
Investment Officer,
Massachusetts Mutual Life
Insurance Company
DONALD E. BENSON**
Executive Vice President
and Director,
Marquette Bancshares Inc.
MARSHALL D. BUTLER*
Chairman,
Nitzanim AVX Kyocera
Venture Capital Fund
*Member of the Board of Trustees
**Trustee and Member of Audit Committee
26
<PAGE>
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.
[CI SYMBOL LOGO APPEARS HERE]
OFFICERS
...........................
Richard G. Dooley
Chairman
Stuart H. Reese
President
Robert E. Joyal
Senior Vice President
Charles C. McCobb, Jr.
Vice President and
Chief Financial Officer
Stephen L. Kuhn
Vice President and
Secretary
Michael P. Hermsen
Vice President
William N. Holm
Vice President
Mary Wilson Kibbe
Vice President
Michael L. Klofas
Vice President
John B. Joyce
Vice President
Richard C. Morrison
Vice President
Clifford M. Noreen
Vice President
Mark B. Ackerman
Treasurer
Victoria Fortier
Comptroller
...........................
<PAGE>
[LOGO OF MASSMUTUAL CORPORATE INVESTORS APPEARS HERE]
