MassMutual
PARTICIPATION
INVESTORS
[PARTICIPATION INVESTORS LOGO]
REPORT for the THREE
MONTHS ENDED 3/31/95
<PAGE>
[PARTICIPATION INVESTORS LOGO]
INVESTMENT OBJECTIVE AND POLICY
MassMutual Participation Investors is a closed-end diversified investment
company and its shares are listed on the New York Stock Exchange. The share
price of Participation Investors can be found in the financial sections of most
newspapers as "MasPrt" under the New York Stock Exchange listings. The ticker
symbol is "MPV".
The investment objective of the Trust is to maximize total return by providing
a high level of current income, the potential for growth of income, and
capital appreciation, by investing primarily in a portfolio of privately
placed fixed-income securities, normally half of which will include equity
features. The Trust will also invest in publicly-traded securities, again
with emphasis on convertible issues. Equity related issues provide the
opportunity to realize capital gains which, if realized, will be reinvested in
income-producing securities, permitting the Trust to increase its dividend
payments in the future.
The Trust pays quarterly dividends from investment income and intends to
distribute substantially all of its net income to shareholders each year. All
registered shareholders are automatically enrolled in the Dividend Reinvestment
and Cash Purchase Plan unless cash distributions are requested.
Dividends are distributed in May, August, November and January.
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| FOR SHAREHOLDER SERVICE CONTACT: |
| |
| SHAREHOLDER FINANCIAL SERVICES, INC. |
| PO BOX 173673 |
| DENVER CO 80217-3673 |
| |
| 1-800-647-7374 |
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TO OUR SHAREHOLDERS:
We are pleased to present MassMutual Participation Investors' report for the
first quarter of 1995.
The Trust increased the quarterly dividend to 18 cents per share from the 16
cent per share level paid during the last three quarters. The dividend was
declared payable on May 11, 1995 to shareholders of record on May 1, 1995. The
dividend increase reflects the improving Trust net investment income, which was
$1,703,989 or $.18 per share, compared to $1,510,119 or $.16 per share for the
comparable period in 1994. Additionally, the Trust's net asset value increased
to $9.23 per share from $8.84 per share at the end of the prior quarter,
reflecting the increased Trust earnings, improving bond prices, and a stock
market in record territory.
Portfolio sales activity has been very favorable during the period. In March,
RailTex, Inc. completed a secondary offering and we converted our note into
common equity. We have since sold a modest portion of our equity holdings at a
gain of over $205,000. On the public equity side, complete or partial sales of
Chesapeake Energy Corporation, Super Rite Corporation, and Officemax Inc.
provided gains of more than $357,000. In total, gains for the quarter were
$566,515 or $.06 per share. Of this amount, net short-term gains, which are
required to be distributed to shareholders each year if not offset by losses,
were $281,439 or $.03 per share. Participation Investors currently has a
capital loss carry-forward of $.24 per share which can be used to offset current
and future capital gains for tax purposes. Potential gains still exist in six
private placement portfolio securities in which the public stock market value on
March 31st exceeded the Trust's cost by $2.2 million.
Investment activity continued to be strong this year with two new private
placements closed during the quarter. We purchased a ten-year guaranteed senior
note with warrants from Hardy Oil & Gas USA, Inc., and a senior secured term-
note and convertible preferred stock from Latin Communications Group. Together
these investments provide an approximate yield of 9.3% with an opportunity for
gains via their equity features. A brief description of these companies is
provided in the Schedule of Investments. At the present time, four new private
placement investments have been approved for future investment with a total
value of over $4.8 million. Together, the fixed income component of these new
investments should contribute an average coupon of 11.2% to the portfolio in
addition to their capital gains potential.
On April 21, 1995, the Trust held its seventh Annual Meeting of Shareholders.
Richard G. Dooley, Donald E. Benson, and Donald Glickman were re-elected as
Trustees, Coopers & Lybrand L.L.P. was selected as auditors, and the
continuation of the Investment Advisory and Administrative Services Contract was
approved. We thank you for your continued support and interest in Participation
Investors.
Sincerely,
Stuart H. Reese
President
April 28, 1995
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<CAPTION>
MASSMUTUAL PARTICIPATION INVESTORS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 and 1994
(Unaudited)
1995 1994
---------------- ----------------
Assets:
- -------
<S> <C> <C>
Investments (Notes 2A, 2B and 5)
(See Schedule of Investments)
Corporate restricted securities at fair value
(Cost 1995 - $57,736,881 ; 1994 - $57,355,093) $57,905,132 $58,314,739
Corporate public securities at market value
(Cost 1995 - $22,144,778 ; 1994 - $23,242,196) 21,748,594 22,836,986
Short-term securities at cost plus earned
discount which approximates market value 4,287,419 2,024,667
---------------- ----------------
83,941,145 83,176,392
Cash 99,896 4,121
Interest and dividends receivable, net 1,643,535 1,490,395
Receivable for investments sold 92,777 456,139
Receivable for principal payments 299,474 568,695
Other assets 12,128 12,128
---------------- ----------------
Total assets $86,088,955 $85,707,870
================ ================
Liabilities:
- ------------
Payable for investments purchased $658,691 ---
Management fee payable (Note 4) 191,500 192,264
Accrued expenses 127,606 64,717
---------------- ----------------
Total liabilities 977,797 256,981
---------------- ----------------
Net Assets:
- -----------
Shares of beneficial interest, par value $.01 per share;
an unlimited number authorized 92,167 92,167
Additional paid-in capital 84,895,820 84,895,820
Retained net realized gain on investments, prior years 204,495 204,495
Undistributed net investment income (Note 2C) 1,825,216 1,507,166
Accumulated net realized loss on investments (Note 3) (1,678,607) (1,803,195)
Net Unrealized appreciation (depreciation)
of investments (Notes 2A and 5) (227,933) 554,436
---------------- ----------------
Total net assets 85,111,158 85,450,889
---------------- ----------------
Total liabilities and net assets $86,088,955 $85,707,870
================ ================
Shares of beneficial interest issued and outstanding 9,216,665 9,216,665
================ ================
Net asset value per share $9.23 $9.27
================ ================
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
---------------- ----------------
<S> <C> <C>
Investment Income (Note 2B):
- ------------------
Interest $1,915,668 $1,749,508
Dividends 45,795 16,530
---------------- ----------------
Total income 1,961,463 1,766,038
---------------- ----------------
Expenses:
- ---------
Management fee (Note 4) 191,500 192,264
Trustees' fees and expenses 11,719 12,724
Transfer Agent/Registrar's expenses 20,300 18,349
Custodian's fees 6,216 5,984
Reports to shareholders 10,167 8,420
Audit and legal 12,226 12,611
Other 5,346 5,567
---------------- ----------------
Total expenses 257,474 255,919
---------------- ----------------
Net investment income 1,703,989 1,510,119
---------------- ----------------
Net realized and unrealized gain (loss)
on investments (Note 2A and 2B):
Net realized gain on investments (Note 3) 566,515 236,846
Net change in unrealized appreciation/depreciation
of investments 1,410,068 (405,092)
---------------- ----------------
Net gain (loss) on investments 1,976,583 (168,246)
---------------- ----------------
Net increase in net assets resulting
from operations $3,680,572 $1,341,873
================ ================
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
---------------- ----------------
<S> <C> <C>
Net increase (decrease) in cash:
- --------------------------------
Cash flows from operating activities:
Interest and dividends received $1,848,067 $1,309,416
Operating expenses paid (219,642) (242,878)
---------------- ----------------
Net cash provided by operating activities 1,628,425 1,066,538
---------------- ----------------
Cash flows from investing activities:
Change in short-term portfolio securities, net (3,666,430) 5,137,617
Purchase of portfolio securities (8,191,661) (20,369,331)
Proceeds from disposition of portfolio securities 11,791,587 15,727,969
---------------- ----------------
Net cash (used for) provided by investing activities (66,504) 496,255
---------------- ----------------
Net cash provided by operating and investing activities 1,561,921 1,562,793
---------------- ----------------
Cash flows from financing activities:
Cash dividends paid from net investment income (1,474,666) (1,494,049)
Cash dividends paid from return of capital 0.00 (72,784)
---------------- ----------------
Net cash used for financing activities (1,474,666) (1,566,833)
---------------- ----------------
Net increase (decrease) in cash 87,255 (4,040)
Cash - beginning of period 12,641 8,161
---------------- ----------------
Cash - end of period $99,896 $4,121
================ ================
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS (Continued)
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
---------------- ----------------
<S> <C> <C>
Reconciliation of net increase (decrease) in net assets to net
cash from operating and investing activities:
Net increase in net assets resulting from operations $3,680,572 $1,341,873
---------------- ----------------
(Increase) decrease in investments (2,451,033) 1,495,123
(Increase) decrease in interest and dividends receivable, net (39,591) (343,994)
(Increase) in receivable for investments sold (84,378) (456,139)
(Increase) in receivable for principal payments (228,045) (474,983)
(Increase) in other assets (12,128) (12,128)
Increase in payable for investments purchased 658,691 ----
Increase in management fee payable 8,281 3,019
Increase in accrued expenses 29,552 10,022
---------------- ----------------
Total adjustments to net assets from operations (2,118,651) 220,920
---------------- ----------------
Net cash provided by operating and investing activities $1,561,921 $1,562,793
================ ================
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the three months ended March 31, 1995 and 1994
(Unaudited)
Increase (decrease) in net assets: 1995 1994
- ---------------------------------- ---------------- ----------------
<S> <C> <C>
Operations:
Net investment income $1,703,989 $1,510,119
Net realized gain on investments 566,515 236,846
Net change in unrealized appreciation/depreciation
of investments 1,410,068 (405,092)
---------------- ----------------
Net increase in net assets resulting
from operations 3,680,572 1,341,873
Net Assets, beginning of period 81,430,586 84,109,016
---------------- ----------------
Net Assets, end of period (including undistributed net
investment income in 1995 - $1,825,216; 1994 - $1,507,166) $85,111,158 $85,450,889
================ ================
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
SELECTED PER SHARE DATA
Selected data for each share of beneficial interest outstanding for the periods ended:
For the
Period ended For the
3/31/95 year ended
(Unaudited) 12/31/94
------------ ------------
<S> <C> <C>
Net asset value:
Beginning of period $8.84 $9.13
------ ------
Net investment income 0.18 0.66
Net realized and unrealized
gain (loss) on investments 0.21 (0.30)
------ ------
Total from investment operations 0.39 0.36
------ ------
Dividends from net investment
income to common shareholders -- 0.65
------ ------
Total distributions -- 0.65
------ ------
Net asset value:
End of period $9.23 $8.84
====== ======
Per share market value:
End of period $7.63 $7.38
====== ======
Total investment return:
Market value 3.39 %* 0.35 %
Net asset value 4.41 %* 4.03 %
Net assets (in thousands):
End of period $85,111 $81,431
Ratio of expenses to average
net assets 0.30 %* 1.25 %
Ratio of net investment income
to average net assets 2.06 %* 7.30 %
Portfolio turnover 10.10 %* 51.42 %
* Percentages represent results for the period and are not annualized.
See Notes To Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
March 31, 1995
(Unaudited)
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES - 68.03% : (A) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Allen's Creek Enterprises, Inc.
A fully integrated industrial biotechnology
company.
9.99% Senior Note due 2000 $750,000 3/23/90 $736,800 $750,000 $775,950
------------ ------------- -------------
Alliant Techsystems, Inc. - N.Y.S.E.
A producer of military tactical equipment and a
provider of information security services.
11.75% Senior Subordinated Note due 2003 $150,000 3/7/95 150,000 150,000 153,188
------------ ------------- -------------
American Exploration Company - A.S.E.
An independent oil and gas company engaged principally
in the acquisition, development and management of oil
and gas properties.
11% Senior Subordinated Note due 2001 $1,500,000 12/27/91 1,482,300 1,480,644 1,363,350
Warrant, exercisable until 2001, to purchase
405,132 shares of common stock at $2.26 per
share (B) 405,132 shs 12/27/91 24,857 19,356 40,513
------------ ------------- -------------
1,507,157 1,500,000 1,403,863
------------ ------------- -------------
Ammirati & Puris, Inc.
An advertising agency that specializes in representing a
limited number of large and high quality clients.
14% Senior Secured Note due 1998 $250,000 11/23/93 244,900 250,000 284,250
------------ ------------- -------------
Associated Natural Gas Corporation - N.Y.S.E.
A natural gas marketing company which purchases and
resells natural gas to utilities and industrial users.
9% Convertible Subordinated Note due 2004,
convertible into 67,781 shares of Panhandle Eastern
common stock at $22.13 per share $1,500,000 12/30/92 1,467,000 1,500,000 1,513,103
------------ ------------- -------------
Atlantic Aviation Corporation
An operator and provider of business aircraft
services and fueling services to commercial airlines.
9.85% Senior Note due 1999 $844,625 1/31/90 830,069 844,625 795,806
------------ ------------- -------------
J. Baker, Inc. - O.T.C.
A wholesaler and retailer of shoes.
11.21% Senior Subordinated Note due 1999 $1,500,000 6/21/89 1,496,100 1,474,527 1,558,350
Warrant, exercisable until 1999, to purchase
25,714 shares of common stock at $20 per
share (B) 25,714 shs 6/21/89 2,571 73,285 2,571
------------ ------------- -------------
1,498,671 1,547,812 1,560,921
------------ ------------- -------------
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Berkshire Medical Center, Inc.
A non-profit, regional acute care hospital.
10.5% Senior Note due 1999 $935,455 5/15/89 $935,455 $935,455 $965,577
------------ ------------- -------------
Boyle Leasing Technologies, Inc.
A leasing company specializing in the leasing and
rental of microticket business equipment.
12% Senior Subordinated Note due 2001 $1,000,000 8/16/94 899,723 908,716 933,400
------------ ------------- -------------
BP Prudhoe Bay Royalty Trust - N.Y.S.E.
A trust which shares in the production of
petroleum from the Alaskan North Slope.
13,190 Units of Beneficial Interest 13,190 uts 2/28/89 329,750 211,283 224,230
------------ ------------- -------------
C & S Wholesale Grocers, Inc.
A food wholesaler in New England and New York.
10.47% Senior Note due 2001 $350,000 7/3/91 355,100 350,000 368,235
------------ ------------- -------------
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 63,506 shares of
common stock at $11.81 per share $750,000 3/31/94 710,025 750,000 752,400
------------ ------------- -------------
The Chronicle Publishing Company
A media company including newspaper publishing,
television broadcasting and cable operations.
9.5% Senior Note due 1997 $333,333 2/21/91 320,933 331,853 338,366
------------ ------------- -------------
The Coast Distribution System - A.S.E.
A wholesale distributor of recreational vehicle
and marine parts and accessories.
11.2% Senior Subordinated Secured Note
due 1999 $1,166,700 6/26/89 1,203,918 1,166,700 1,178,250
10% Senior Subordinated Convertible Secured
Note due 1995, convertible into 12,500 shares
of common stock at $8 per share $100,000 6/26/89 102,410 100,000 99,890
------------ ------------- -------------
1,306,328 1,266,700 1,278,140
------------ ------------- -------------
Columbia Sportswear Company
A manufacturer and marketer of outerwear
and sportswear.
10.75% Senior Note due 1996 $562,500 6/20/89 572,625 562,500 572,906
------------ ------------- -------------
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
CompuCom Systems, Inc. - O.T.C.
A personal computer dealer specializing in serving
corporate accounts.
9% Convertible Subordinated Note due 2002,
convertible into 681,818 shares of
common stock at $2.20 per share $1,500,000 9/24/92 $1,482,900 $1,500,000 $1,811,079
------------ ------------- -------------
Contico International, Inc.
A developer, manufacturer and marketer of consumer,
commercial and industrial plastic products.
12% Senior Subordinated Note due 2003 $500,000 3/23/93 522,800 500,000 524,200
------------ ------------- -------------
Continental Ozark Corporation
An independent petroleum products marketing company.
12.75% Senior Subordinated Debenture due 2000 $1,200,000 3/28/91 1,274,280 1,170,085 1,238,160
7.15% Cumulative Convertible Preferred Stock,
convertible into 54,954 shares of common stock
at $6.10 per share 54,954 shs * 276,941 384,728 255,729
Warrant, exercisable until 2001, to purchase
74,606 shares of common stock at $6.10 per
share (B) 74,606 shs 3/28/91 7,461 42,000 7,461
------------ ------------- -------------
1,558,682 1,596,813 1,501,350
Control Devices, Inc. ------------ ------------- -------------
A producer of high quality electromechanical circuit
protector devices and photo-optic sensors.
10% Senior Secured Note due 2004 $609,000 7/29/94 610,827 609,000 625,078
11% Senior Subordinated Note due 2004 $261,000 7/29/94 257,059 261,000 262,644
11% Commulitve Preferred Stock 34 shs 7/29/94 29,734 33,640 30,623
Common Stock (B) 25,282 shs 7/29/94 8,410 8,410 34,700
Warrant, exercisable until 2004, to purchase 32,718
shares of common stock at $.01 per share (B) 32,718 shs 7/29/94 327 -- 44,660
------------ ------------- -------------
906,357 912,050 997,705
------------ ------------- -------------
Corrections Corporation of America - O.T.C.
An operator of private prisons and correctional
facilities for federal, state and local governments.
11.08% Senior Secured Note due 2000 $381,606 12/11/90 381,386 381,129 402,823
Warrant, exercisable until 2000, to purchase
3,750 shares of common stock at $7.14 per share (B) 3,750 shs 12/11/90 375 375 84,430
------------ ------------- -------------
381,761 381,504 487,253
* 3/28/91, 12/18/91, 9/30/92, 9/30/93 and 9/30/94. ------------ ------------- -------------
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
CP Clare Corporation
A designer and manufacturer of materials
used in the telecommunications industries.
14% Subordinated Debenture due 1999 $1,500,000 1/26/89 $1,470,300 $1,466,674 $600,000
Warrant, exercisable until 1999, to purchase
916,426 shares of common stock at $.16
per share (B) 916,426 shs 1/26/89 19,610 72,750 916
------------ ------------- -------------
1,489,910 1,539,424 600,916
------------ ------------- -------------
Discount Auto Parts
A retailer of auto parts.
9.8% Senior Secured Note due 2003 $1,350,000 11/2/89 1,304,235 1,350,000 1,392,525
------------ ------------- -------------
Duty Free International, Inc.
A retailer of duty free merchandise.
10.42% Senior Note due 1996 $300,000 3/23/89 290,460 300,000 302,250
------------ ------------- -------------
Elgin National Industries, Inc.
An operator in the specialty fastener, mineral
processing equipment, engineering, construction
and electrical distribution industries.
13% Senior Subordinated Note due 2001 $1,333,333 9/24/93 1,330,578 1,322,145 1,343,733
10% Preferred Stock 1,559 shs 9/24/93 117,976 155,950 118,600
Common Stock (B) 107 shs 9/24/93 10,717 10,717 20,118
Warrant, exercisable from 1998 until 2001, to
purchase 112 shares of common stock
at $.01 per share (B) 112 shs 9/24/93 11 11,188 11
------------ ------------- -------------
1,459,282 1,500,000 1,482,462
Exide Electronics Group, Inc. - O.T.C. ------------ ------------- -------------
A manufacturer and servicer of uninterruptible
power systems.
8.375% Convertible Subordinated Note due
2000, convertible into 114,679 shares
of common stock at $13.08 per share $1,500,000 9/2/92 1,486,200 1,500,000 1,625,574
------------ ------------- -------------
Fay's, Inc. - N.Y.S.E.
An operator of a discount drug store chain.
9.95% Mortgage Note due 2004 $1,363,750 12/14/89 1,326,520 1,363,750 1,393,753
------------ ------------- -------------
Firth Rixson, Inc.
A U.S. subsidiary of Johnson & Firth Brown; a producer
of specialty metal components, steel and iron castings,
and specialty engineering.
9.82% Senior Guaranteed Note due 2001 $357,026 4/5/91 356,966 357,026 342,138
------------ ------------- -------------
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Forschner Enterprises, Inc.
Aquires controlling or substantial interests in
manufacturing and marketing entities.
3% Convertible Preferred Stock, convertible into
1.95% of the Company 25,000 shs 7/21/94 $250,000 $250,000 $237,500
------------ ------------- -------------
FTD Acquisition Corporation
A floral services organization which is the largest
in the world.
14% Senior Subordinated Note due 2001 $275,000 2/21/95 259,290 259,290 261,938
Warrant, excercisable until 2001, to purchase
225 shares of common stock at $.01 per share (B) 275 shs 2/21/95 13,750 13,750 13,750
------------ ------------- -------------
273,040 273,040 275,688
------------ ------------- -------------
Golden State Vintners
An owner and operator of vineyards and grape processing
facilities.
Tranche B Variable Rate Note due 2000 $428,571 6/1/93 422,185 428,571 425,057
Warrant, exercisable until 2003, to acquire 1,936,530
shares of Series C Convertible Preferred Stock (B) 1,936,530 shs 6/1/93 19,365 -- 87,917
------------ ------------- -------------
441,550 428,571 512,974
------------ ------------- -------------
Grand Metropolitan Public Limited Company - London Stock Exchange
A leading international branded consumer products group.
6.5% Convertible Senior Debenture due 2000,
convertible into 72,850 share of common stock at
$6.86 per share $500,000 1/17/95 500,000 500,000 522,500
------------ ------------- -------------
Hardy Oil & Gas USA, Inc.
Engages in exploration and developement of oil
and gas reserves.
8.46% Guaranted Senior Note due 2004 $1,500,000 1/11/95 1,452,600 1,500,000 1,486,650
Warrant, exercisable until 2004, to purchase 135,000
shares of common stock at 1.86 pounds per share (B) 135,000 shs 1/11/95 13,500 -- 13,500
------------ ------------- -------------
1,466,100 1,500,000 1,500,150
Hein-Werner Corp. - A.S.E. ------------ ------------- -------------
A manufacturer of automotive service and
collision repair equipment and hydraulic cylinders.
8% Convertible Subordinated Note due 1999,
convertible into 216,763 shares of common
stock at $6.92 per share $1,500,000 9/29/89 1,459,650 1,500,000 1,419,075
------------ ------------- -------------
Highland Homes Holdings, Inc.
A single family homebuilder operating in the
Dallas-Fort Worth and Atlanta areas.
9.75% Senior Note due 2001 $750,000 11/18/93 742,575 739,765 730,650
Warrant, exercisable until 2001, to purchase
5 shares of common stock at $17,897.31 per
share (B) 5 shs 11/18/93 1 10,235 20,018
------------ ------------- -------------
742,576 750,000 750,668
------------ ------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Hosiery Corporation of America, Inc.
A manufacturer and distributor of women's
hosiery products.
13.75% Senior Subordinated Note due 2002 $500,000 10/12/94 $493,900 $493,900 $472,500
------------ ------------- -------------
Hunton & Williams
A major law firm in Richmond, Virginia.
10.06% Senior Secured Note due 2000 $262,375 12/21/90 254,294 262,375 268,173
------------ ------------- -------------
Latin Communications Group
An advertising agency that specializes in
Spanish-language advertising to the New York
City metropolitan market.
10.4% Senior Secured Note due 2001 $875,000 2/14/95 876,138 875,000 876,138
7% Convertible Preferred Series A Stock,
covertible into 10,648 shares of common stock
at $10 per share 9,000 shs 2/14/95 80,275 90,000 81,072
Convertible Preferred Series B Stock,
convertible into 16,000 shares of common stock
at $10 per share 16,000 shs 2/14/95 120,000 160,000 120,000
------------ ------------- -------------
1,076,413 1,125,000 1,077,210
------------ ------------- -------------
National R.V., Inc. - O.T.C.
A manufacturer and distributor of recreational
vehicles nationwide.
Common Stock (B) 24,672 shs 10/29/91 18,670 40,560 181,655
------------ ------------- -------------
Nu Horizon Electronics Corp. - O.T.C.
A distributor of high technology active and passive
electronics devices.
8.25% Convertible Subordinated Note due 2002,
convertible into 1.78% of the Company $1,500,000 8/31/94 1,517,550 1,500,000 1,533,510
------------ ------------- -------------
PAR Acquisition Corp.
A manufacturer of fuel handling systems for
nuclear power plants and hazardous waste.
14.5% Senior Subordinated Note due 2000 $833,333 2/5/93 832,000 833,333 855,083
8% Convertible Preferred Stock due 2001,
convertible into 6.67% of the Company 83,333 shs 2/5/93 166,667 166,667 138,893
Common Stock (B) 133,333 shs 2/5/93 333,333 333,333 64,000
------------ ------------- -------------
1,332,000 1,333,333 1,057,976
------------ ------------- -------------
Penske Truck Leasing, L.P.
A full service maintenance truck leasing company.
9.73% Senior Secured Note due 1996 $1,125,000 11/15/89 1,099,125 1,125,000 1,141,200
------------ ------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Piedmont Holding, Inc.
A general aviation fixed based operator with
repair, maintenance and overhaul certification.
12% Senior Subordinated Note due 2001 $1,357,151 7/15/92 $1,368,280 $1,357,151 $1,425,416
Senior Redeemable Cumulative Preferred Stock 140,983 shs 7/15/92 140,983 140,983 140,983
Common Stock (B) 1,887 shs 7/15/92 1,283 1,887 40,804
Warrant, exercisable until 2001, to purchase
2,521 shares of common stock at $.05 per share (B) 2,521 shs 7/15/92 1,613 -- 54,413
------------ ------------- -------------
1,512,159 1,500,021 1,661,616
PRN Holdings, Inc. ------------ ------------- -------------
Rents critical care equipment to hospitals and
other healthcare providers.
10.25% Senior Subordinated Note due 2004 $1,500,000 9/30/94 1,471,875 1,471,875 1,491,750
Warrant, exercisable from 1997 until 2004, to
purchase 1.5% of the Company (B) 17 shs 9/30/94 1,000 28,125 33,751
------------ ------------- -------------
1,472,875 1,500,000 1,525,501
------------ ------------- -------------
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 $400,000 8/12/94 394,720 400,000 400,960
11.51% Junior Secured Note due 1999 $266,667 8/12/94 261,014 266,667 263,974
9.8% Redeemable Exchangeable Preferred Stock 3,333 shs 8/12/94 282,634 333,333 289,433
Common Stock (B) 497 shs 8/12/94 5 -- 5
------------ ------------- -------------
938,373 1,000,000 954,372
------------ ------------- -------------
Quad-Graphics Inc.
A commercial printing company.
10.48% Secured Note due 2000 $1,038,426 * 1,022,850 1,038,426 1,086,609
------------ ------------- -------------
Quanex Corporation
A manufacturer of specialty metals.
10.77% Senior Note due 2000 $500,000 8/23/90 486,450 500,000 527,650
------------ ------------- -------------
RailTex, Inc. - O.T.C.
An operator of short-line railroads in the
Midwest, West and Canada.
12% Senior Subordinated Note due 2002 $750,000 2/16/93 799,575 750,000 852,000
Common Stock 62,500 shs 2/16/93 600,075 600,000 1,543,750
------------ ------------- -------------
1,399,650 1,350,000 2,395,750
------------ ------------- -------------
Rogers Cablesystems Limited
A provider of cable television service in Canada.
11.09% Senior Subordinated Note due 2000 $500,000 6/20/90 493,450 500,000 518,000
------------ ------------- -------------
*6/7/89, 8/3/89 and 9/28/89.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
RXI Holdings, Inc.
A manufacturer and distributor of plastic containers
for the food, household chemical, agricultural and
personal care markets.
14% Senior Note due 2002 $1,400,000 2/3/95 $1,374,730 $1,374,884 $1,400,000
10% Series B Preferred Stock, with warrants 93,333 shs 2/3/95 93,333 93,333 93,333
Warrants, exercisable until 2002, to purchase
1,400 shares of common stock at $15.64 per share (B) 1,400 shs 2/3/95 25,270 25,270 25,270
------------ ------------- -------------
1,493,333 1,493,487 1,518,603
------------ ------------- -------------
A.T.-Sentinel, Inc.
A leveraged lease transaction guaranteed by
E.I. Dupont, the chemical company.
9.52% First Preferred Ship Mortgage
Note due 1998 $1,500,416 8/22/89 1,484,212 1,522,922 1,520,071
------------ ------------- -------------
Schwitzer U.S., Inc. - N.Y.S.E.
A manufacturer of non-automotive engine components.
10.21% Senior Note due 2002 $1,500,000 4/30/92 1,488,900 1,441,298 1,563,750
Warrant, exercisable until 2002, to purchase
50,000 shares of common stock at $8 per
share (B) 50,000 shs 4/30/92 53,000 81,000 103,595
------------ ------------- -------------
1,541,900 1,522,298 1,667,345
------------ ------------- -------------
Southern Credit Corporation
A diversified secured lending and leasing company.
10.58% Senior Note due 1996 $585,000 4/13/89 570,141 585,000 590,558
------------ ------------- -------------
Star International Holdings, Inc.
A manufacturer of commercial cooking appliances.
9.65% Senior Secured Note due 2004 $438,805 5/29/94 418,752 438,805 420,990
10.5% Subordinated Note due 2004 $179,104 5/29/94 162,913 179,104 163,880
Common Stock (B) 1,077 shs 5/29/94 58,414 64,904 58,414
Warrant, exercisable until 2004, to purchase
806 shares of common stock at $.01 per share (B) 806 shs 5/29/94 8 -- 8
------------ ------------- -------------
640,087 682,813 643,292
------------ ------------- -------------
Steerage Corporation
A manufacturer and designer of marine electronic devices
including navigation and control systems, sensors, radar
and communication systems.
10% Subordinated Note due 2003 $617,647 11/12/93 614,065 617,647 598,006
Class A Common Stock (B) 17,647 shs 11/12/93 136,059 132,353 165,574
------------ ------------- -------------
750,124 750,000 763,580
------------ ------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Stonehurst I LLC
A wholly owed subsidiary of Tenneco, Inc., whose
businesses include natural gas, auto parts and
packaging.
Floating Rate Subordinated Note due 2004 $1,444,500 12/29/94 $1,444,500 $1,444,500 $1,439,155
Common Stock (B) 5,050 shs 12/29/94 55,000 55,500 55,000
------------ ------------- -------------
1,499,500 1,500,000 1,494,155
------------ ------------- -------------
Tele-Communications, Inc.
An owner and operator of cable television systems.
9.68% Senior Note due 1999 $1,000,000 12/21/89 983,400 1,000,000 1,025,200
------------ ------------- -------------
Telex Communications, Inc.
A producer of electronic and communications products.
Warrant, exercisable until 2004, to purchase
5,544 shares of common stock at $.01
per share (B) 5,544 shs 5/30/89 55 6 4,172
------------ ------------- -------------
Terminal 91 Realty, L.P.
A subsidiary of Arctic Alaska Fisheries Corporation,
which operates a cold storage facility. Arctic
Alaska Fisheries is the Guarantor of the loan.
9.75% Guaranteed Mortgage Note due 1996 $453,800 3/28/91 444,318 453,800 457,793
------------ ------------- -------------
Turner Broadcasting Systems, Inc. - A.S.E.
Engages in cable TV broadcasting.
Zero Coupon Convertible Subordinated Note due
2007, convertible into 19,175 shares of common
stock at $26.88 per share $1,500,000 6/23/94 586,875 621,591 620,700
------------ ------------- -------------
Unocal Corporation - N.Y.S.E.
An integrated crude oil and natural gas company with
interest in chemical geothermal energy and metals.
$3.50 Convertible Preferred Stock,
convertible into 8,130 shares of common stock
at $30.75 per share 5,000 shs 7/21/92 250,000 250,000 260,625
------------ ------------- -------------
Uno-Ven Company
A partnership in an oil refinery and related
midwestern marketing operations.
10.1% Senior Secured Note due 2003 $885,714 12/1/89 863,750 885,714 907,680
------------ ------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Shares, Units,
Warrants or Fair Value Fair Value
Principal Acquisition at Acquisition Cost at 3/31/95
CORPORATE RESTRICTED SECURITIES: (A) (Continued) Amount Date Date (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
USAir, Inc.
A domestic and international airline.
10.8% Series A Secured Loan Certificates due 2003 $572,835 6/29/94 $486,910 $494,034 $497,736
------------ ------------- -------------
Valero Energy Corporation
An owner and operator of a specialized petroleum
refinery engaging in petroleum product
marketing operations.
10.58% Senior Note due 2000 $428,571 12/20/90 435,717 428,571 426,942
------------ ------------- -------------
Wakebourne PLC - London Stock Exchange
A U.K. public company engaged in the computer services
and networking systems business.
Common Stock (B) 170,898 shs 3/10/92 881,836 1,070,508 130,737
------------ ------------- -------------
Wirekraft Industries, Inc.
A supplier of electrical wire harnesses
for major appliances.
12% Senior Subordinated Note due 2003 $1,320,000 11/9/94 1,253,208 1,254,000 1,283,964
Warrants, exercisable until 2003, to purchase
108,108 shares of common stock at $.01 per share (B) 108,108 shs 11/9/94 63,405 92,400 90,162
------------ ------------- -------------
1,316,613 1,346,400 1,374,126
------------ ------------- -------------
Total Corporate Restricted Securities $56,910,055 57,736,881 57,905,132
============ ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
Market Value
Interest Due Principal Cost at 3/31/95
CORPORATE PUBLIC SECURITIES: Rate Date Amount (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Convertible Bonds - 4.63%
Agnico-Eagle Mines Limited 3.500% 1/27/04 $200,000 129,542 161,000
Graphic Industries, Inc. 7.000 5/15/06 400,000 388,000 328,000
Hospitality Franchise Systems, Inc. 4.500 10/1/99 500,000 500,000 530,000
IMC Global, Inc. 6.250 12/1/01 110,000 116,325 105,050
Leucadia National Corporation 5.250 2/1/03 1,000,000 1,000,000 965,000
Ogden Corp. 5.750 10/20/02 490,000 443,350 411,600
Savoy Pictures Entertainment, Inc. 7.000 7/1/03 650,000 505,375 500,500
Time Warner, Inc. 0.000 12/17/12 1,333,000 424,129 429,893
Time Warner, Inc. 0.000 6/12/13 1,333,000 491,229 509,873
------------ ------------- -------------
Total Convertible Bonds $6,016,000 3,997,950 3,940,916
============ ------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Market Value
Interest Due Principal Cost at 3/31/95
CORPORATE PUBLIC SECURITIES: (Continued) Rate Date Amount (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Bonds - 16.58%
American Airlines 9.780 % 11/26/11 $1,000,000 $1,000,000 $1,028,800
Bally's Grand, Inc. 10.375 12/15/03 500,000 470,625 468,750
Central Rents, Inc. 12.875 12/15/03 730,000 667,288 664,300
Chesapeake Energy Corporation 12.000 3/1/01 450,000 427,550 468,000
Comdisco Inc. 7.750 9/1/99 1,500,000 1,598,265 1,491,945
Continental Cablevision, Inc. 8.875 9/15/05 500,000 454,375 475,000
Data Documents, Inc. 13.500 7/15/02 1,400,000 1,400,750 1,400,000
El Paso Funding Corporation (B) 9.375 10/1/96 200,000 174,526 122,000
GMAC 1992-E Grantor Trust 4.750 8/15/97 381,838 384,403 375,751
Honda Auto Receivables 1992-A Grantor Trust 4.900 6/15/98 211,607 211,243 209,226
Imax Gloabal, Inc. 7.000 3/1/01 300,000 252,750 261,000
Jordan Industries, Inc. 10.375 8/1/03 500,000 490,625 461,250
Orchard Supply Hardware Corporation 9.375 2/15/02 500,000 447,250 392,500
Red Roof Inns, Inc. 9.625 12/15/03 500,000 466,250 480,000
Repap Wisconsin, Inc. 9.250 2/1/02 500,000 463,750 468,750
Rowan Companies, Inc. 11.875 12/1/01 500,000 537,500 522,500
Sealy Corporation 9.500 5/1/03 500,000 482,250 502,500
Select Auto Receivables Trust 1991-2 7.650 7/15/96 145,472 145,358 145,517
Telex Communications, Inc. 12.000 7/15/04 750,000 750,000 736,875
Trism, Inc. 10.750 12/15/00 500,000 501,875 490,000
USG Corporation 9.250 9/15/01 500,000 475,625 495,000
United States Treasury 5.000 1/31/99 2,000,000 1,990,156 1,866,240
Venture Holdings Trust 9.750 4/1/04 500,000 463,750 433,750
Videotron Ltee 10.625 2/15/05 150,000 149,062 152,250
------------ ------------- -------------
Total Bonds $14,718,917 14,405,226 14,111,904
============ ------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Market Value
Warrants or Cost at 3/31/95
CORPORATE PUBLIC SECURITIES: (Continued) Shares (Note 2B) (Note 2A)
------------ ------------- -------------
<S> <C> <C> <C>
Warrants - .04%
Central Rents, Inc. (B) 730 shs $21,712 $21,900
Payless Cashways, Inc. (B) 500 shs 2,688 12,500
------------- -------------
Total Warrants 24,400 34,400
------------- -------------
Common Stock - 2.81%
Abex, Inc. 22,500 shs 173,820 177,188
Amerisource Health Corporation (B) 3,214 shs 3,216 144,630
Doskocil Company 22,500 shs 177,188 171,563
Excalibur Technologies Corporation 15,000 shs 89,250 138,750
First Industrial Realty Trust, Inc. 3,600 shs 84,600 68,400
First USA, Inc. 7,500 shs 313,125 315,000
Lincoln Snacks Company 4,500 shs 8,438 10,688
Marker International, Inc. 7,500 shs 53,437 54,375
Southwest Airlines 35,715 shs 500,000 638,406
Staffing Resources, Inc. 45,000 shs 247,500 326,250
Tele-Communications, Inc. 7,500 shs 157,500 157,500
Western Transmedia Co, Inc. 40,000 shs 140,925 155,000
Zale Corporation (B) 2,569 shs 393,203 30,186
------------- -------------
Total Common Stock 2,342,202 2,387,936
------------- -------------
Convertible Preferred Stock - 1.50%
Arkansas Best Corp. 7,500 shs 375,000 289,688
Integon Corp. 10,000 shs 500,000 458,750
Occidental Petroleum Corporation 10,000 shs 500,000 525,000
------------- -------------
Total Convertible Preferred Stock 1,375,000 1,273,438
------------- -------------
Total Corporate Public Securities 22,144,778 21,748,594
------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
Market Value
Interest/ Due Principal Cost at 3/31/95
SHORT-TERM SECURITIES: Yield Date Amount (Note 2B) (Note 2A)
------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Commercial Paper - 5.04%
Countrywide Funding Corporation 6.118% 4/5/95 $1,500,000 $1,498,982 $1,498,982
General Motors Acceptance Corporation 6.008 4/6/95 230,000 230,000 230,000
General Motors Acceptance Corporation 6.007 4/6/95 120,000 120,000 120,000
ITT Financial Corporation 5.957 4/4/95 830,000 830,000 830,000
ITT Financial Corporation 6.007 4/4/95 110,000 110,000 110,000
Tyson Foods Inc. 6.258 4/7/95 1,500,000 1,498,437 1,498,437
------------ ------------- -------------
Total Short-Term Securities $4,290,000 4,287,419 4,287,419
============ ------------- -------------
Total Investments 98.63% $84,169,078 $83,941,145
- ----------------- ============= -------------
Other Assets 2.52 2,147,810
Liabilities (1.15) (977,797)
------------- -------------
Total Net Asset 100.00% $85,111,158
============= =============
(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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
INDUSTRY CLASSIFICATION
Fair Value
at 3/31/95 Percentage
CORPORATE RESTRICTED SECURITIES: (Note 2A) Net Assets
----------- ------------
<S> <C> <C>
ADVERTISING
Ammirati & Puris, Inc. $284,250
Latin Communications Group 1,077,210
-----------
1,361,460 1.60%
APPAREL MANUFACTURING -----------
Columbia Sportswear Company 572,906
Hosiery Corporation of America, Inc. 472,500
-----------
1,045,406 1.23%
-----------
BEVERAGES
Golden State Vintners 512,974 0.60%
-----------
BUILDING MATERIALS
Highland Homes Holdings, Inc. 750,668 0.88%
-----------
CHEMICAL
A.T.-Sentinel, Inc. 1,520,071 1.79%
-----------
COMMUNICATIONS
CP Clare Corporation 600,916
Rogers Cablesystems Limited 518,000
Tele-Communications, Inc. 1,025,200
Telex Communications, Inc. 4,172
Turner Broadcasting Systems, Inc. 620,700
-----------
2,768,988 3.25%
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
INDUSTRY CLASSIFICATION
Fair Value
at 3/31/95 Percentage
CORPORATE RESTRICTED SECURITIES: (Continued) (Note 2A) Net Assets
----------- ------------
<S> <C> <C>
ELECTRICAL EQUIPMENT/ELECTRONICS
Catalina Lighting, Inc. $752,400
CompuCom Systems, Inc. 1,811,079
Control Devices, Inc. 997,705
Exide Electronics Group, Inc. 1,625,574
Nu Horizon Electronics Corp. 1,533,510
Steerage Corporation 763,580
Wakebourne PLC 130,737
Wirekraft Industries, Inc. 1,374,126
-----------
8,988,711 10.56%
-----------
HEALTH CARE
Berkshire Medical Center, Inc. 965,577
PRN Holdings, Inc. 1,525,501
-----------
2,491,078 2.93%
LEASING -----------
Boyle Leasing Technologies 933,400
Penske Truck Leasing, L.P. 1,141,200
Southern Credit Corporation 590,558
-----------
2,665,158 3.13%
-----------
MANUFACTURING -INDUSTRIAL AND
CONSUMER PRODUCTS
Alliant Techsystems, Inc. 153,188
Contico International, Inc. 524,200
Elgin National Industries, Inc. 1,482,462
Firth Rixson, Inc. 342,138
Forschner Enterprises, Inc. 237,500
Hein-Werner Corp. 1,419,075
PAR Acquisition Corp. 1,057,976
Quanex Corporation 527,650
RXI Holdings, Inc. 1,518,603
Schwitzer U.S., Inc. 1,667,345
Star International Holdings, Inc. 643,292
-----------
9,573,429 11.25%
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
INDUSTRY CLASSIFICATION
Fair Value
at 3/31/95 Percentage
CORPORATE RESTRICTED SECURITIES: (Continued) (Note 2A) Net Assets
----------- ------------
<S> <C> <C>
MISCELLANEOUS
Allen's Creek Enterprises, Inc. $775,950
FTD Acquisition Corporation 275,688
Protein Genetics, Inc. 954,372
Terminal 91 Realty, L.P. 457,793
Stonehurst I LLC 1,494,155
-----------
3,957,958 4.65%
-----------
OIL AND GAS SERVICE
American Exploration Company 1,403,863
Associated Natural Gas Corporation 1,513,103
BP Prudhoe Bay Royalty Trust 224,230
Continental Ozark Corporation 1,501,350
Hardy Oil & Gas USA, Inc. 1,500,150
Unocal Corporation 260,625
Uno-Ven Company 907,680
Valero Energy Corporation 426,942
-----------
7,737,943 9.09%
-----------
PUBLISHING
The Chronicle Publishing Company 338,366
Quad-Graphics Inc. 1,086,609
-----------
1,424,975 1.67%
-----------
RECREATIONAL SUPPLIES/EQUIPMENT
The Coast Distribution System 1,278,140
National R.V., Inc. 181,655
-----------
1,459,795 1.72%
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (Continued)
March 31, 1995
INDUSTRY CLASSIFICATION
Fair Value
at 3/31/95 Percentage
CORPORATE RESTRICTED SECURITIES: (Continued) (Note 2A) Net Assets
----------- ------------
<S> <C> <C>
RETAILING
J. Baker, Inc. $1,560,921
C & S Wholesale Grocers, Inc. 368,235
Discount Auto Parts 1,392,525
Duty Free International, Inc. 302,250
Fay's, Inc. 1,393,753
Grand Metropolitan Public Limited Company 522,500
-----------
5,540,184 6.51%
-----------
SERVICES
Atlantic Aviation Corporation 795,806
Corrections Corporation of America 487,253
Hunton & Williams 268,173
Piedmont Holding, Inc. 1,661,616
RailTex, Inc. 2,395,750
USAir, Inc. 497,736
-----------
6,106,334 7.17%
----------- ------
Total Corporate Restricted Securities $57,905,132 68.03%
=========== ======
See Notes To Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. History
MassMutual Participation Investors (the "Trust") was organized as a
Massachusetts business trust under the laws of the Commonwealth of
Massachusetts pursuant to a Declaration of Trust dated April 7, 1988.
The Trust is a closed-end diversified management investment company, whose
investment objective is to maximize total return by providing a high level
of current income, the potential for growth of such income, and capital
appreciation, by investing primarily in a portfolio of privately placed
fixed-income securities, at least half of which normally will include
equity features.
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.
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. Each
restricted security is valued by the Board at the time of the purchase
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
to the Trust. Values greater or less than cost are thereafter used
for restricted securities in appropriate
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
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 the 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; if it is a debt obligation
which would trade independently of any equity equivalent, the current
yields on comparable securities; the estimated amount of the floating
supply of such securities available; the proportion of the issue held
by the Trust; changes in the financial condition and prospects of the
issuer; the existence of merger proposals or tender offers affecting
the issuer; and in addition any other factors affecting fair value,
all in accordance with the Investment Company Act of 1940. In making
valuations, opinions of counsel are relied upon as to whether or not
securities are restricted securities and as to the legal requirements
for public sale.
When market quotations are readily available for unrestricted
securities of an issuer, restricted securities of the same class are
generally valued at a discount from the market price of such
unrestricted securities. The Board, however, considers 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 Massachusetts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Mutual Life Insurance Company ("MassMutual"), the Trust's investment
adviser and administrator. 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 values for corporate public securities are stated at the last
reported sales price or at prices based upon quotations obtained from
brokers and dealers as of March 31, 1995, subject to discount where
appropriate, and are approved by the Trustees.
Short-term securities with more than sixty days to maturity are valued
at market and short-term securities having a maturity of sixty days
or less are valued at amortized cost, which approximates market value.
B. Accounting for Investments: Investment transactions are accounted for
on trade date. Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis.
The cost basis of debt securities is not adjusted for amortization of
premium or accrual of discount since the Trust does not generally
intend to hold such investments until maturity; however, the Trust has
elected to accrue, for financial reporting purposes, certain discounts
which are required to be accrued for federal income tax purposes.
Realized gains and losses on investment transactions and unrealized
appreciation and depreciation of investments are reported for
financial statements and federal income tax purposes on the identified
cost method.
The Trust does not accrue income when payment is delinquent or when
management believes payment is questionable.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
C. Federal Income taxes: No provision for federal taxes on net
investment income and short-term capital gains is considered necessary
because the Trust has elected to be taxed as a "regulated investment
company" under the Internal Revenue Code, and intends to maintain this
qualification and to distribute substantially all of its net taxable
income to its shareholders. In any year when net long-term capital
gains are realized by the Trust, management, after evaluating the
prevailing economic conditions, will recommend to the Trustees either
to designate the net realized long-term gains as undistributed and to
pay the federal capital gains taxes thereon or to distribute such net
gains.
3. Capital Loss Carryforward
The accumulated net realized loss on investments results in a capital loss
carryforward of $2,245,122 which is available for federal income tax
purposes to offset future capital gains. Of the total carryforward
$2,040,041 expires December 31, 2000 and $205,081 expires
December 31, 2001.
4. Investment Advisory and Administrative Services Fee
Under an investment advisory and administrative services contract with the
Trust, MassMutual has agreed to use its best efforts to present to the
Trust a continuing and suitable investment program consistent with the
investment objective and policies of the Trust. MassMutual has further
agreed that it will request each issuer of securities which MassMutual is
prepared to purchase in a private placement, and which would be consistent
with the investment policies of the Trust, to offer such securities also to
the Trust and that it will use its best efforts to insure that such request
is acceded to. MassMutual has agreed that, subject to such orders of the
Securities and Exchange Commission as may apply, it will invest
concurrently with the Trust in any such invest-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
ment. MassMutual will also represent the Trust in any negotiations with
issuers, investment banking firms, securities brokers or dealers and other
institutions or investors relating to the Trust's investments. Under the
contract, MassMutual is obligated to provide administration of the day-to-
day operations of the Trust and will provide 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.
For its services under the investment advisory and administrative services
contract, MassMutual is paid a quarterly advisory and administrative
services fee equal to .225% of the value of the Trust's net assets as of
the last business day of each fiscal quarter, an amount approximately
equivalent to .90% on an annual basis, provided that a majority of the
Trustees, including a majority of the Trustees who are not interested
persons of the Trust or of MassMutual, approve the valuation of the Trust's
net assets as of such day.
<TABLE>
<CAPTION>
5. Purchases and Sales of Investments
For the three months ended
3/31/95 3/31/94
----------- -----------
Cost of Investments Acquired
------------------------------
<S> <C> <C>
Corporate restricted securities $ 5,324,278 $ 1,013,404
Corporate public securities 2,834,645 19,414,826
Short-term securities 26,702,124 53,588,389
Proceeds from Sales
or Maturities
-----------------------------
Corporate restricted securities $ 4,405,741 $ 2,344,019
Corporate public securities 6,956,158 14,307,759
Short-term securities 23,035,694 58,726,006
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
The aggregate cost of investments is the same for financial reporting and
federal income tax purposes as of March 31, 1995. The net unrealized
depreciation of investments for financial reporting and federal tax
purposes as of March 31, 1995 is $227,933 and consists of $3,830,783
appreciation and $4,058,716 depreciation.
The aggregate cost of investments for financial reporting and federal
income tax purposes as of March 31, 1994 was $82,621,956 and $82,639,753,
respectively. The net unrealized appreciation of investments for
financial reporting purposes as of March 31, 1994 was $554,436 and
consisted of $6,128,886 appreciation and $5,574,450 depreciation. The net
unrealized appreciation of investments for federal income tax purposes as
of March 31, 1994 was $536,639 and consisted of $6,128,886 appreciation
and $5,592,247 depreciation.
<PAGE>
TRUSTEES
DONALD E. BENSON * SUMNER L. FELDBERG
MARSHALL D. BUTLER DONALD GLICKMAN
MILTON COOPER MARTIN T. HART *
RICHARD G. DOOLEY GARY E. WENDLANDT
* Member of the Audit Committee
OFFICERS
GARY E. WENDLANDT, Chairman
RICHARD G. DOOLEY, Vice Chairman
STUART H. REESE, President
ROBERT E. JOYAL, Senior Vice President
BRUCE E. GAUDETTE, Vice President
JOHN B. JOYCE, Vice President
STEPHEN L. KUHN, Vice President & Secretary
RICHARD C. MORRISON, Vice President
CLIFFORD M. NOREEN, Vice President
HAMLINE C. WILSON, Vice President & C.F.O.
MARY E. WILSON, Vice President
JOHN J. McMAHON, Comptroller
RAYMOND B. WOOLSON, Treasurer
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| |
| MASSMUTUAL PARTICIPATION INVESTORS |
| 1295 STATE STREET |
| SPRINGFIELD MA 01111 |
| (413)788-8411 |
| |
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ADVISOR
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
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| |
| TRANSFER AGENT & DIVIDEND DISTRIBUTION AGENT |
| |
| SHAREHOLDER FINANCIAL SERVICES, INC. |
| PO BOX 173673 |
| DENVER CO 80217-3673 |
| |
| 1-800-647-7374 |
| |
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<PAGE>
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SHAREHOLDER FINANCIAL SERVICES, INC. P.O. BOX 173673, DENVER CO 80217-3672
