<PAGE>
SCHEDULE 14A
Information Required in Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
--
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MassMutual Participation Investors
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------
MassMutual Participation Investors
Springfield, Massachusetts 01111
[LOGO OF MASSMUTUAL PARTICIPATION INVESTORS APPEARS HERE]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
TIME
Thursday, April 24, 1997
at 1:00 p.m.
PLACE
Oak Room
Massachusetts Mutual
Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
- ---------------------------------------------------------------------------
Please date, fill in and sign the enclosed form of proxy and mail it in the
enclosed return envelope which requires no postage if mailed in the United
States.
- ---------------------------------------------------------------------------
<PAGE>
MassMutual Participation Investors
Springfield, Massachusetts
Dear Shareholder:
The 1997 Annual Meeting of Shareholders will be held in the Oak Room of
Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111, at 1:00 p.m., Springfield time, on Thursday, April 24,
1997. A Notice and a Proxy Statement regarding the meeting, a proxy card for
your vote at the meeting and a postage prepaid envelope in which to return your
proxy card are enclosed.
By promptly returning the enclosed proxy card, you as a shareholder can
help management avoid the necessity and expense of sending follow-up letters to
obtain the attendance of a majority of the outstanding shares. You are earnestly
requested to sign and return the proxy card in order that the necessary quorum
may be represented at the meeting. If you find you can be present in person, you
may, if you wish, revoke your proxy then and vote your shares in person.
At the meeting, shareholders will elect three Trustees of the Trust,
approve or disapprove the selection of Coopers & Lybrand L.L.P. as auditors, and
approve or disapprove the continuance of the current Investment Advisory and
Administrative Services Contract between the Trust and its investment adviser,
Massachusetts Mutual Life Insurance Company. In order to provide management with
greater flexibility in managing the Trust's portfolio, shareholders will also be
asked to approve changes in the Trust's investment policies to permit not more
than 75% of its total assets to be invested in non-investment grade securities.
The Trustees of the Trust have recommended that the shareholders vote for
election of the nominated Trustees, ratify the selection of Coopers & Lybrand
L.L.P., approve the continuance of the Investment Advisory and Administrative
Services Contract, and approve the proposed changes in investment policies.
I look forward to your attendance at this meeting because it will
provide us with an opportunity to hold an informal discussion with you
concerning the progress of MassMutual Participation Investors.
Sincerely,
/s/ Gary E. Wendlandt
Gary E. Wendlandt
Chairman
-1-
<PAGE>
MassMutual Participation Investors
Notice of Annual Meeting of Shareholders
To the Shareholders of
MassMutual Participation Investors:
Please take notice that the Annual Meeting of Shareholders of MASSMUTUAL
PARTICIPATION INVESTORS (the "Trust") has been called to be held in the Oak
Room of Massachusetts Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111, on Thursday, April 24, 1997, at 1:00 p.m.,
Springfield time, for the following purposes:
(1) To re-elect Gary E. Wendlandt, Milton Cooper and Martin T. Hart as Trustees
for three-year terms and until their successors are duly elected and qualified;
(2) To consider and ratify or reject the action taken by the Board of Trustees
in selecting Coopers & Lybrand L.L.P. as auditors for the fiscal year ending
December 31, 1997;
(3) To consider and approve or disapprove continuance of the Trust's current
Investment Advisory and Administrative Services Contract dated October 7, 1988;
(4) To consider and approve or disapprove an amendment to the Trust's
investment policies to permit not more than 75% of its total assets to be
invested in non-investment grade securities; and
(5) To transact such other business as may properly come before the meeting or
any adjournment or adjournments thereof. Holders of record of the shares of
beneficial interest of the Trust at the close of business on February 24, 1997,
are entitled to vote at the meeting or any adjournment thereof.
By order of the
Board of Trustees,
/s/ Stephen L. Kuhn
Stephen L. Kuhn
Vice President and Secretary
Springfield, Massachusetts
March 4, 1997
-2-
<PAGE>
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of MASSMUTUAL PARTICIPATION INVESTORS (the
"Trust") for use at the Annual Meeting of its Shareholders, to be held in the
Oak Room of Massachusetts Mutual Life Insurance Company (the "Insurance
Company"), 1295 State Street, Springfield, Massachusetts 01111, on Thursday,
April 24, 1997, at 1:00 p.m., Springfield time.
Any person giving a proxy has power to revoke it by mail or in person at
any time prior to its exercise by executing a superseding proxy or by submitting
a notice of revocation to the Trust. All properly executed and unrevoked proxies
received in time for the meeting will be voted in accordance with the
instructions contained therein.
Holders of the shares of beneficial interest of the Trust ("shares"),
of record at the close of business on February 24, 1997, will be entitled to one
vote per share on all business of the meeting and any adjournments. There were
9,216,665 shares outstanding on the record date.
The mailing address of the principal executive offices of the Trust is
1295 State Street, Springfield, Massachusetts 01111. This Proxy Statement and
the accompanying letter to shareholders from the Chairman of the Board of
Trustees, Notice of Annual Meeting of Shareholders and proxy card are being
mailed on or about March 4, 1997 to shareholders of record on the record date.
Pursuant to the Trust's By-Laws, the presence at the Annual Meeting, in
person or by proxy, of Shareholders entitled to cast a majority of the votes
shall be a quorum for the transaction of business. A plurality of the votes cast
is required to elect Trustees. Thus, the three nominees for re-election as
Trustees at the
-3-
<PAGE>
Annual Meeting who receive the greatest number of votes properly cast
for the election of trustees shall be elected Trustees. Under the Trust's
Declaration of Trust a majority of the shares voted is required to ratify the
selection of independent accountants.
An affirmative "majority vote" of the Trust's shares is required to
approve the continuance of the Trust's Investment Advisory and Administrative
Services Contract and to approve changes in the Trust's investment policies to
permit not more than 75% of its total assets to be invested in non-investment
grade securities. A "majority vote" means either (1) the holders of at least 67%
of the Trust's shares present in person or by proxy, if more than 50% of the
Trust's outstanding shares are present or represented by proxy, or (2) a
majority of the outstanding shares of the Trust, whichever is less.
Votes cast by proxy or in person at the Annual Meeting will be counted
by persons appointed by the Trust to act as election inspectors for the meeting.
The election inspectors will count the total number of votes cast "for"
approval of the proposals for purposes of determining whether sufficient
affirmative votes have been cast. The election inspectors will count shares
represented by proxies that withhold authority to vote for a nominee for
election as a Trustee or that reflect abstentions or "broker non-votes" (i.e.,
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or the persons entitled to vote, and (ii)
the broker or nominee does not have the discretionary voting power on a
particular matter) as shares that are present and entitled to vote on the matter
for purposes of determining the presence of a quorum. As to the continuance of
the Investment Advisory and Administrative Services Contract and the approval of
the proposed change to the Trust's investment policies, abstentions or broker
non-votes have the effect of a negative vote. With respect to the election of
Trustees and the ratification of the selection of an independent accountants,
abstentions and broker non-votes have no effect on the outcome of the proposal.
-4-
<PAGE>
(1) ELECTION OF TRUSTEES
The Board of Trustees is currently comprised of nine Trustees with terms
expiring in 1997, 1998, and 1999. The terms of Messrs. Wendlandt, Cooper and
Hart expire this year and the Board has nominated them for three-year terms.
Thus, following the Annual Meeting of Shareholders, the Board will be comprised
of nine Trustees, having various terms expiring in 1998, 1999 and 2000. All
nominees, if elected, are to serve their respective terms, and until each of
their successors is duly elected and qualified.
Information Concerning Nominees
Set forth below as to each nominee for Trustee, and for each Trustee
whose term will continue after this meeting, is his present office with the
Trust, his age, his principal occupation or employment during the past five
years, the organization by which he is employed and its principal business, and
certain other directorships held by him.
GARY E. WENDLANDT*
(Term expires 1997)
Nominee for election. Trustee since 1988, Chairman (since 1995) and
President (1988-1995) of the Trust. Chief Investment Officer (since 1993),
Executive Vice President (since 1992), Senior Vice President (1983-1992) of the
Insurance Company; Director (since 1991), Merrill Lynch Derivative Products,
Inc. (swap dealer); Director, Oppenheimer Acquisition Corporation (holding
company for investment advisers); Supervisory Director (since 1991),
MassMutual/Carlson CBO N.V. (collateralized bond fund); Chairman and Director
(since 1996), Antares Leveraged Capital Corp.; Director and President (since
1995), DLB Acquisition Corporation (holding company for investment advisers);
President and Chief Executive Officer
- ---------
* Mr. Wendlandt is an "interested person" of the Trust (as defined in the
Investment Company Act of 1940, as amended) because of his position as an
officer of the Trust and of the Insurance Company.
-5-
<PAGE>
(1994-1996), Director (1992-1996), Concert Capital Management, Inc. (indirect
investment advisory subsidiary of the Insurance Company); Director (since 1994),
MassMutual Corporate Value Partners Limited (investor in debt and equity
securities advised by the Insurance Company) and MassMutual Corporate Value
Limited (parent of MassMutual Corporate Value Partners Limited); Chairman and
Chief Executive Officer (since 1994), MassMutual Institutional Funds (open-end
investment company advised by the Insurance Company); Chairman (since 1995),
Trustee (since 1993), Vice Chairman (1993-1995) and President (1988-1993), MML
Series Investment Fund (open-end investment company advised by the Insurance
Company); Chairman (since 1995), Trustee (since 1986) and President (1983-1995),
MassMutual Corporate Investors (closed-end investment company advised by the
Insurance Company); Director of various subsidiaries of the Insurance Company.
Age: 46.
DONALD E. BENSON
(Term expires 1998)
Trustee since 1986. Executive Vice President and Director (since 1992),
Marquette Bancshares (bank holding company); Executive Vice President and
Director (1968-1992), Bank Shares Inc. (bank holding company); President and
Director (1986-1994), MEI Diversified Inc. (medical product manufacturer);
Partner (since 1996), Benson Family Limited Partnership No. 1 and Benson Family
Limited Partnership No. 2 (investment partnerships); Partner, Benson, Pinckney,
Oates Partnership (building partnership); Director, Mesaba Holdings, Inc.
(commuter airline); Delta Beverage Group Inc. (soft drink bottler and
distributor); Director (1988-1994), IJ Holding Corporation; Director (1984-
1993), Athens Bancorp, Inc.; Trustee (since 1986), MassMutual Corporate
Investors (closed-end investment company advised by the Insurance Company).
Age: 66.
-6-
<PAGE>
MARSHALL D. BUTLER
(Term expires 1999)
Trustee since 1990. Chairman (since 1994), Nitzanm Venture Capital;
Director (since 1993), Chairman and Chief Executive Officer (1973-1993), AVX
Corporation (manufacturer of electronic components); Director, Kyocera Corp.;
Director (since 1993), Synercom Technology, Incorporated (computer software);
Trustee (since 1990), MassMutual Corporate Investors (closed-end investment
company advised by the Insurance Company). Age: 70.
MILTON COOPER
(Term expires 1997)
Nominee for election. Trustee since 1990. Chairman (since 1992),
President (1971-1992), Kimco Realty Corp. (shopping center ownership and
management); Vice President (1971-1992) and Director, Getty Petroleum Corp.
(petroleum marketing); Director, Blue Ridge Real Estate; Trustee (since 1990),
MassMutual Corporate Investors (closed-end investment company advised by the
Insurance Company). Age: 67.
RICHARD G. DOOLEY*
(Term expires 1998)
Trustee since 1988, Vice Chairman (since 1995) and Chairman (1988-1995)
of the Trust. Consultant (since 1993), Executive Vice President and Chief
Investment Officer (1978-1993) of the Insurance Company; Director (since 1996),
Investment Technology Group, Inc.; Director, The Advest Group, Inc. (financial
services holding company), Hartford Steam Boiler Inspection and Insurance Co.,
New England Education Loan Marketing Corporation; Director (1993-1995), Luxonen
S.A. (Swedish investment fund); Director and Vice President, Oppenheimer
Acquisition Corporation
- ---------
* Mr. Dooley is an "interested person" of the Trust (as defined in the
Investment Company Act of 1940, as amended) because of his position as an
officer of the Trust.
-7-
<PAGE>
(holding company for investment advisers); Supervisory Director, (1991-1995),
MassMutual/Carlson CBO N.V. (collateralized bond fund); Director (1992-1995),
Concert Capital Management, Inc. (indirect investment advisory subsidiary of the
Insurance Company); Trustee (since 1992), Kimco Realty Corp. (shopping center
ownership and management); Director (since 1993), Jefferies Group, Inc.
(financial services holding company); Chairman (1988-1995), Vice Chairman (since
1995) and Trustee, MML Series Investment Fund (open-end investment company
advised by the Insurance Company); Vice Chairman (since 1995), Chairman (1982-
1995) and Trustee (since 1974), MassMutual Corporate Investors (closed-end
investment company advised by the Insurance Company). Age: 67.
SUMNER L. FELDBERG
(Term expires 1998)
Trustee since 1977. Chairman of the Board (1989-1996), Waban, Inc.
(wholesale clubs and home improvement warehouses); Chairman of the Board (1989-
1995), The TJX Companies, Inc. (off-price apparel specialty stores); Trustee
(since 1977),MassMutual Corporate Investors (closed-end investment company
advised by the Insurance Company). Age: 72.
DONALD GLICKMAN
(Term Expires 1998)
Trustee since 1992. Chairman (since 1992), Donald Glickman and Company,
Inc. (investment banking); Partner (1989-1992), Peter J. Solomon Investment Co.;
Chairman and Director, CalTex Industries, Inc. (manufacturer of windows);
Director, Monro Muffler Brake, Inc.; Director (1993-1996), Steerage Corp. Inc.
(navigation equipment manufacturer); Director (1991-1994), Food Barn Stores,
Inc.; Director (1992-1993), Astra Holdings, Inc. (ordnance materials
manufacturer); Trustee (since 1992), MassMutual Corporate Investors (closed-end
investment company advised by the Insurance Company). Age: 63.
-8-
<PAGE>
MARTIN T. HART
(Term expires 1997)
Nominee for election. Trustee since 1991. President and Director, H
Corporation; Co-Manager (1983-1996), Lake Catamount Joint Venture (ski resort);
Partner, Consolidated Nursery Properties (wholesale nursery and garden center);
Director, Optical Security Group Inc. (product security), Schuler Homes, Inc.
(housing), and PNB Financial Group (bank holding company); Director (since
1996), PJ America (pizza restaurant); Director (since 1994), Unidata, Inc.
(computers), Houston Pizza Venture (pizza restaurant); Director (1994-1996), The
Bagel Group (bagel restaurant); Director (1992-1996), PJVA, Inc. and PJV, Inc.
(pizza restaurants); Director (since 1993), PJNC, Inc. (pizza restaurant);
Director (1993-1995), Inco Homes (housing); Director (1992-1994), Morris Air
Corp. (airline); Director (1991-1994), Capital Bancorp; Director (1991-1992),
American Banco Corporation (collections); Director (1982-1992), First National
Bank of Leadville; Director (1979-1993), Valley State Bank; Director (1980-
1993), Little Valley Nurseries, Inc. (wholesale nursery); Trustee (since 1991),
MassMutual Corporate Investors (closed-end investment company advised by the
Insurance Company). Age: 61.
JACK A. LAUGHERY
(Term expires 1999)
Trustee since 1996. Chairman (since 1994), The Bagel Group (bagel
restaurant); Consultant (since 1994), Heartland Foods (food service); Director
(since 1993), Corral America and Papa John's International (food service
companies); Consultant (since 1996), Papa John's Iowa (food service); Director,
Sprint Mid-Atlantic (telecommunications) and First Union National Bank; Partner
(since 1992), Papa John's V and Papa John's VA (food service); Partner (since
1994), Houston Pizza Venture (pizza restaurant); Partner, Atlantic Beach
Sheraton and Coastal Lodging (hotels); Consultant (1989-1994), Hardee's Food
Systems, Inc.
-9-
<PAGE>
(fast food restaurants); Director (1981-1995), Imasco Ltd. (food service,
banking, tobacco and drug stores); Trustee (since 1996), MassMutual Corporate
Investors (closed-end investment company advised by the Insurance Company).
Age: 62.
Share Ownership of Trustees, Nominees
and Officers
The following table sets forth information concerning beneficial
ownership, as of February 7, 1997, of the Trust's shares by each Trustee, and by
the Trust's nominees for Trustee and officers as a group.
<TABLE>
<CAPTION>
Name Shares Percentage of
Individual Beneficially Outstanding
or Group Owned* Shares Owned
- --------------------------------------- ------------ --------------
<S> <C> <C>
Gary E. Wendlandt 5,701 **
Donald E. Benson 5,318 **
Marshall D. Butler 5,621 **
Milton Cooper 1,506 **
Richard G. Dooley 2,019 **
Sumner L. Feldberg 507 **
Donald Glickman 1,550 **
Martin T. Hart 12,438 0.13%
Jack A. Laughery 500 **
All Trustees, Nominees
and Officers as a Group 40,945 0.44%
</TABLE>
Information Concerning Committees and
Meetings of the Board of Trustees
The Board of Trustees of the Trust has an Audit Committee, whose present
members are Messrs. Benson and Hart, neither of whom is an "interested person"
of the Trust. The Audit Committee makes recommen-
- ---------
* This information, not being within the knowledge of the Trust, has been
furnished by each nominee, Trustee and officer. Beneficial ownership is as
defined under Section 13(d) of the Securities Exchange Act of 1934, as amended.
Fractional shares are not reported.
** Less than one-tenth of one percent is not listed.
-10-
<PAGE>
dations to the Board of Trustees as to the engagement or discharge of the
Trust's independent accountants, supervises investigations into matters relating
to audit functions, reviews with the Trust's independent accountants the results
of the audit engagement and considers the audit fees.
During the past fiscal year, the Board of Trustees held six regular
meetings (one of which was a telephone conference call meeting), and the Audit
Committee met once. The Trust does not have a standing nominating or
compensation committee.
Transactions with and Remuneration of
Officers and Trustees
Pursuant to the Investment Advisory and Administrative Services Contract
with the Trust, the Insurance Company pays the salaries and fees of all officers
of the Trust and of all Trustees of the Trust who are "interested persons" of
the Trust or of the Insurance Company. Thus, during the fiscal year ended
December 31, 1996, the Trust did not pay any compensation to any of its officers
or to any of its Trustees who were "interested persons" of the Trust or of the
Insurance Company.
Trustees who are not "interested persons" of the Trust or of the
Insurance Company receive fees of $600 for each Trustees' meeting which they
attend (other than the organizational meeting of the Board following the Annual
Meeting of Shareholders for which no fees are paid) and annual Trustees' fees of
$5,000. No meeting fees are paid for meetings conducted by telephone conference
call or by unanimous written consent. Members of the Audit Committee receive an
additional annual fee of $600. Pursuant to a deferred compensation plan,
Trustees may defer receipt of their fees until their retirement from the Board
or some other time at their election. The aggregate direct remuneration of these
Trustees and reimbursement of their travel expenses paid by the Trust during the
fiscal year ended December 31, 1996 was approximately $55,690.
-11-
<PAGE>
The following table discloses the compensation paid to the Trust's non-
interested Trustees for the fiscal year ended December 31, 1996. All of the non-
interested Trustees also serve as Trustees of one other investment company
managed by the Insurance Company.
<TABLE>
<CAPTION>
Total
Aggregate Compensation
Name of Compensation from Fund
Trustee from Trust Complex
- -------------------- -------------- -------------
<S> <C> <C>
Donald E. Benson $8,000 $23,400
Sumner L. Feldberg 6,800 20,400
Marshall D. Butler 6,800 20,400
Milton Cooper 6,800 20,400
Martin T. Hart 7,400 21,600
Donald Glickman 7,400 22,200
Jack A. Laughery 4,300 12,900
</TABLE>
(2) RATIFICATION OR REJECTION OF
APPROVAL OF AUDITORS
The Board of Trustees of the Trust, including all of the Trustees who
are not "interested persons" of the Trust, have selected Coopers & Lybrand
L.L.P. to act as auditors for the Trust for the fiscal year ending December 31,
1997. Coopers & Lybrand L.L.P. are independent public accountants and have no
direct or material indirect interest in the Trust. The selection is subject to
the approval of the shareholders of the Trust at the forthcoming Annual Meeting.
The enclosed proxy card provides space for instructions directing the proxies
named therein to vote for or against ratification of that selection.
A representative of Coopers & Lybrand L.L.P. is expected to be present
at the forthcoming Annual Meeting. He shall have the opportunity to make a
statement if he desires to do so, and it is expected that he will be available
to respond to appropriate questions which may be posed by shareholders.
-12-
<PAGE>
(3) APPROVAL OR DISAPPROVAL OF
CONTINUANCE OF
INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES CONTRACT
The Trust has an Investment Advisory and Administrative Services
Contract, dated October 7, 1988 (the "Contract") with the Insurance Company
which entitles the Trust to certain investment advisory and administrative
services from the Insurance Company. Under the Contract, the aggregate fee
payable to the Insurance Company for the fiscal year ended December 31, 1996 was
$885,454. No changes are being made in the Contract, which was last approved by
shareholders at the Trust's 1996 Annual Meeting of Shareholders held on April
19, 1996.
At its meeting on January 13, 1997, the Board of Trustees approved, and
voted to recommend that the shareholders approve, the continuance of the
Contract. Among other things, the Board considered the nature of the services
provided to the Trust by the Insurance Company including the nature of the
private placement market compared to public markets. The Insurance Company is
required to provide the Trust with a continuing investment program consistent
with its objectives which include investments in private placement debt
securities without equity features, private placement debt securities and
preferred stock with equity features attached, publicly-traded investment-grade
and non-investment grade debt securities and certain temporary investments. The
Trustees concluded that the Insurance Company has developed a sizeable,
experienced and competent staff of investment professionals (including analysts,
traders, accountants, auditors and computer personnel) to support investment
activities for a wide variety of investments. The Trustees also considered the
expenses of the Trust assumed by the Insurance Company under the Contract; the
actual fees paid to the Insurance Company by the Trust for the services provided
and expenses assumed; a comparison of the Trust's fee schedule to fees charged
by other investment advisers whose investment activities include private
placement
-13-
<PAGE>
securities (including possible economy of scale and incentive fee features); and
possible benefits to the Insurance Company as a result of the Contract
(including intangibles such as increased visibility in the financial community).
In connection with the investment and administrative services provided to the
Trust by the Insurance Company, the Trustees concluded that the administration
of private placement securities is more extensive, costs more and requires
greater time and expertise than a portfolio of only public securities. Valuation
of private placement securities, for example, is more time consuming and
requires significantly more expertise than valuation of publicly-traded
securities. In making comparisons with other funds, therefore, the Trustees
considered the percentage of the Trust's portfolio comprised of private
placement securities. The Trustees also considered the Trust's investment
performance over various periods of time; comparisons of the Trust's investment
performance to other funds investing in restricted securities and equities and
to stock and bond indices; the quality of service provided by the Insurance
Company (including the size, experience and professionalism of the Insurance
Company's investment, accounting and compliance staffs); the profitability of
the Contract to the Insurance Company; the Trust's expenses and its expense
ratio compared to other similar funds; the Insurance Company's soft dollar
practices; and possible alternatives to the engagement of the Insurance Company.
The Trustees concluded, among other things, that the investment performance of
the Trust's portfolio for the twelve-month and twenty four-month periods ended
September 30, 1996 were satisfactory and that its expense ratio (excluding
interest expenses) of 1.11% was competitive. Based on their consideration of
these and other factors, the Trustees approved, and recommended that
shareholders approve, the continuation of the Contract as now in effect.
Prior to the Annual Meeting of Shareholders on April 24, 1997, the
Trustees (including a majority of the Trustees who are not "interested persons"
of the Trust or of the Insurance Company) will meet again to review their
approval and recommendation. Subject
-14-
<PAGE>
to such further review by the Board of Trustees, the Contract will be submitted
to the Trust's shareholders for their approval or disapproval at the forthcoming
Annual Meeting.
Summary of the Contract
Under the Contract, the Insurance Company has agreed to use its best
efforts to present to the Trust a continuing and suitable investment program
consistent with the investment objectives, policies and restrictions of the
Trust. The Insurance Company has further agreed that it will request each issuer
of securities which the Insurance Company is prepared to purchase at direct
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 issuer accedes to such request.
The Insurance Company, at its expense, investigates and conducts relations
with the issuers of securities purchased or to be purchased directly by the
Trust and represents the Trust in any negotiations with issuers, investment
banking firms, securities brokers or dealers and other institutions or investors
relating to the Trust's investments. The Insurance Company provides
administration of the day-to-day investment operations of the Trust and provides
the Trust with all necessary office facilities and personnel for servicing the
Trust's investments, and will pay the salaries an fees of all officers of the
Trust, of all Trustees who are "interested persons" of the Trust or of the
Insurance Company, and of all personnel of the Trust or of the Insurance Company
performing services relating to research, statistical and investment activities.
In addition, the Insurance Company, subject to the supervision of the
Trustees of the Trust, will, at its expense, furnish (or make provision for) the
management and administrative services necessary for the operation of the Trust.
These services include providing facilities for maintaining the Trust's
organization (e.g., conducting Board, Committee and Shareholder meetings),
supervising relations with the Trust's cus-
-15-
<PAGE>
todian, transfer agent, accountants and other persons dealing with the Trust,
providing for pricing of the Trust's portfolio securities, coordinating the
preparation of shareholder communications and conducting shareholder relations,
maintaining the Trust's records, developing management services for the Trust
and furnishing reports, evaluations and analyses on a variety of subjects for
the Trustees of the Trust.
The Trust pays the fees and expenses of Trustees who are not "interested
persons" of the Trust or of the Insurance Company. The Trust also pays the fees
and expenses of independent advisers, independent contractors, consultants,
managers and other agents which it employs other than through the Insurance
Company. In addition, the Trust is responsible for the payment of legal fees and
expenses; the fees and disbursements of transfer agents, dividend disbursing
agents, registrars, independent accountants, and custodians and depositories of
its assets; out-of-pocket business travel expenses incurred by Trustees,
officers or employees of the Trust; taxes and governmental fees; the cost of
preparing and mailing share certificates, dividends, reports, notices and proxy
materials to shareholders; brokers' commissions or underwriting fees; and
insurance as may be required by its Board of Trustees.
Expenses incurred jointly by the Trust, the Insurance Company, MassMutual
Corporate Investors (another closed-end investment company advised by the
Insurance Company), MassMutual Corporate Value Partners Limited (an unregistered
investment fund) or any of them which are directly associated with the joint
purchase or sale of securities by any such parties are shared by such parties in
proportion to the relative amounts of such securities each is purchasing or
selling.
For its services under the Contract, the Insurance Company is paid a
quarterly fee equal to 0.225% of the value of the net assets of the Trust as of
the last business day of each fiscal quarter, an amount approximately equivalent
to 0.90% on an annual basis. A majority of the Trustees of the Trust, including
a majority of Trustees of the Trust who are not "interested persons" of the
-16-
<PAGE>
Trust or of the Insurance Company, must approve each valuation of the Trust's
net assets used to calculate the Insurance Company's fee.
At a meeting on January 13, 1997, the Board of Trustees of the Trust
approved the valuations being made as of the close of business on December 31,
1996, and arrived at a value for the net assets of the Trust at that date of
$97,153,859.
The Contract provides that the Insurance Company will reimburse the Trust
for any amount, not exceeding the Insurance Company's entire fee for any year,
by which the aggregate annual expenses (including the management fee, but
excluding interest, taxes, brokerage expenses and extraordinary expenses)
incurred by the Trust in such year exceed any expense limitation imposed by any
state securities law or regulations thereunder applicable to the Trust. This
requirement for reimbursement of expenses may be amended or rescinded with the
approval of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of the Insurance Company in response to changes in the
requirements of state law, provided that no amendment or rescission shall be
given retroactive effect unless required by the change in state law.
Under the Contract, the Trust may use the name "MassMutual" or any name
derived from or similar to the name "Massachusetts Mutual" or "Massachusetts
Mutual Life Insurance Company" only for so long as the Contract or any
extension, renewal or amendment thereof remains in effect. When it is no longer
in effect, the Trust will (to the extent that it lawfully can) cease to use such
a name or any other name indicating that it is advised by or otherwise connected
with the Insurance Company.
The Contract also provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations thereunder, the
Insurance Company is not liable to the Trust or any of its shareholders for any
act or omission or for any loss suffered by the Trust or its shareholders.
-17-
<PAGE>
The Contract is terminable on 60 days' written notice by the Trust's Board
of Trustees, by vote of the majority of the Trust's outstanding voting
securities or by the Insurance Company. It will terminate automatically in the
event of its assignment. Until terminated, the Contract will remain in force
from year to year to the extent approved at least annually (a) by vote of a
majority of Trustees of the Trust who are not "interested persons" of the Trust
or of the Insurance Company, cast in person at a meeting called for the purpose
of voting on such approval, and (b) specifically either by the Trust's Board of
Trustees or by vote of a majority of the Trust's outstanding voting securities.
Shareholder approval of the continuance of the Contract is not a
requirement of law. The Board of Trustees, however, believes it is desirable for
the Trust's shareholders to have an opportunity to give or withhold such
approval. If such approval is withheld the Contract will not automatically
terminate but the Trustees will determine what action to take in the best
interests of shareholders of the Trust. Approval of continuance of the Contract
will require the affirmative "majority vote" of the shareholders.
Sub-Administrative Contract
The Insurance Company has entered into a sub-administrative contract with
Dean Witter Reynolds, Inc. ("DWR"), through DWR's Intercapital Division
("Intercapital") under which Intercapital will perform, subject to the Insurance
Company's supervision, certain administrative services for the Trust. These
services include coordinating the printing and distribution of reports to
shareholders of the Trust; arranging for the distribution of proxy materials to
shareholders of the Trust, and overseeing the tabulation of proxies by the
Trust's transfer agent; evaluating the terms under which custodian, transfer
agency, dividend disbursing and registrar services will be provided to the
Trust; assisting and consulting with the Insurance Company with respect to the
payment of dividends and distributions by the Trust; making economic and market
research prepared by DWR available to
-18-
<PAGE>
the Trust and the Insurance Company; and making reports to the Board of Trustees
of the Trust. The Insurance Company, however, remains legally obligated to
provide such services to the Trust. Pursuant to the sub-administrative contract,
the Insurance Company pays Intercapital a quarterly fee equal to 0.0375% of the
value of the net assets of the Trust as of the last business day of each fiscal
quarter, an amount approximately equal to 0.15% on an annual basis.
Allocation of Portfolio Brokerage
Transactions in direct placement securities are on a negotiated basis.
Brokers and dealers who execute any portfolio transaction for the Trust will be
selected primarily on the basis of obtaining the best price and execution of
each transaction. In seeking the best price and execution for securities traded
only in the over-the-counter market, the Trust will normally deal directly with
the principal market-makers unless a more favorable price may be obtained
through other brokers or dealers.
When it can be done consistent with the policy of obtaining best price and
execution, it is the Insurance Company's practice to place orders with brokers
and dealers who supply market quotations to the Trust or its agents for
portfolio evaluation purposes, or who supply research, market and statistical
information to the Trust or the Insurance Company. Except for implementing the
policy stated above, there is no intention to place portfolio transactions with
particular brokers or dealers or groups thereof. Although certain research,
market and statistical information from brokers and dealers can be useful to the
Trust and the Insurance Company, it is the opinion of the Insurance Company that
such information is only supplementary to the Insurance Company's own research
effort since the information must still be analyzed, weighed and reviewed by the
Insurance Company's staff. Such information may be useful to the Insurance
Company in providing services to clients other than the Trust, and not all such
information will be used by the Insurance Company in connection with the Trust.
Conversely,
-19-
<PAGE>
such information provided to the Insurance Company by brokers and dealers
through whom other clients of the Insurance Company effect securities
transactions may be useful to the Insurance Company in providing services to the
Trust.
The Trust paid $25,489 in brokerage commissions for the fiscal year ended
December 31, 1996. Portfolio turnover for the fiscal year was 68.48%.
Investment Adviser
The names and addresses of each director of the Insurance Company and his
or her principal occupations are set forth below.
THOMAS B. WHEELER
1295 State Street
Springfield, Massachusetts 01111
Chairman of Board of Directors and Chief Executive Officer of the Insurance
Company.
ROGER G. ACKERMAN
One Riverfront Plaza
Corning, New York 14831
Chairman and Chief Executive Officer, Corning Incorporated (manufacturer of
speciality materials, communications equipment, and consumer products).
JAMES R. BIRLE
2 Greenwich Plaza
Suite 100
Greenwich, Connecticut 06830
President, Resolute Partners, LLC.
FRANK C. CARLUCCI III
1001 Pennsylvania Avenue N.W.
Suite 220S
Washington, D.C. 20004
Chairman, The Carlyle Group, Inc.
-20-
<PAGE>
GENE CHAO
733 S.W. Vista Avenue
Portland, Oregon 97205-1203
Chairman and Chief Executive Officer, Computer Projections, Inc.
PATRICIA DIAZ DENNIS
175 East Houston
San Antonio, Texas 78205
Senior Vice President and Assistant General Counsel, SBC Communications,
Inc.
ANTHONY DOWNS
1775 Massachusetts Avenue N.W.
Washington, DC 20036-2188
Senior Fellow, The Brookings Institution (non-profit research center).
JAMES L. DUNLAP
1201 Louisiana, Suite 1400
Houston, Texas 77002-5603
President and Chief Operating Officer, United Meridian Corporation (oil
exploration).
WILLIAM B. ELLIS
31 Pound Foolish Lane
Glastonbury, Connecticut 06033
Retired; former Chairman, Northeast Utilities (electric utility).
ROBERT M. FUREK
100 Pearl Street
Hartford, Connecticut 06103-4506
Retired; former President and Chief Executive Officer, Heublein, Inc.
(beverage distributor).
-21-
<PAGE>
CHARLES K. GIFFORD
100 Federal Street
Boston, Massachusetts 02110
Chief Executive Officer, The First National Bank of Boston and Bank of
Boston Corporation.
WILLIAM N. GRIGGS
75 Wall Street, 20th Floor
New York, New York 10005
Managing Director, Griggs & Santow, Inc. (business consultant).
GEORGE B. HARVEY
663 Ponus Ridge
New Canaan, Connecticut 06840
Retired; former Chairman, President and Chief Executive Officer, Pitney
Bowes, Inc. (office machines manufacturer).
BARBARA BARNES HAUPTFUHRER
1700 Old Welsh Road
Huntingdon Valley, Pennsylvania 19006
Director: The Vanguard Group of Investment Companies, The Great Atlantic
and Pacific Tea Company, Inc. (operator of retail food stores), Knight-Ridder
Inc. (publisher of daily newspapers and operator of cable television and
business information systems), Raytheon Company (electronics), Alco Standard
Corporation (diversified manufacturer and distributor).
SHELDON B. LUBAR
777 East Wisconsin Avenue, Suite 3380
Milwaukee, Wisconsin 53202
Chairman, Lubar & Co. Incorporated (investment management and advisory
company).
-22-
<PAGE>
WILLIAM B. MARX, JR.
600 Mountain Avenue
Room 6A-502
Murray Hill, New Jersey 07974
Consultant, Lucent Technologies Inc. (public telecommunications systems and
software).
JOHN F. MAYPOLE
P.O. Box 1223
Toccoa, Georgia 30577
Managing Partner, Peach State Real Estate Holding Company (real estate).
DONALD F. McCULLOUGH
210 Madison Avenue
New York, New York 10016
Retired; former Chairman, Chief Executive Officer and President, Collins &
Aikman Corp. (manufacturer of textile products).
JOHN J. PAJAK
1295 State Street
Springfield, Massachusetts 01111
President, Director and Chief Operating Officer of the Insurance Company.
BARBARA SCOTT PREISKEL
60 East 42nd Street, Suite 3125
New York, New York 10165
Attorney-at-law.
ALFRED M. ZEIEN
Prudential Tower
Boston, Massachusetts 02199
Chairman and Chief Executive Officer, The Gillette Company (manufacturer of
personal care products).
Executive Officers of the Trust (other than Trustees) who are officers of
the Insurance Company are listed below with their current titles.
-23-
<PAGE>
STUART H. REESE
President (since 1995), Executive Vice President (1993-1995) of the Trust.
Executive Director (since 1997), Senior Vice President (1993-1997) of the
Insurance Company. Age: 41.
ROBERT E. JOYAL
Senior Vice President (since 1989) of the Trust. Senior Managing Director
(since 1996), Vice President and Managing Director (1989-1996) of the Insurance
Company. Age: 52.
HAMLINE C. WILSON
Vice President and Chief Financial Officer (since 1988) of the Trust.
Senior Managing Director (since 1996), Vice President and Managing Director
(1989-1996) of the Insurance Company. Age: 59.
CLIFFORD M. NOREEN
Vice President (since 1993) of the Trust. Managing Director (since 1996),
Vice President (1995-1996), Second Vice President (1992-1994),
Director/Investments (1989-1992) of the Insurance Company. Age: 39.
STEPHEN L. KUHN
Vice President and Secretary (since 1988) of the Trust. Vice President and
Associate General Counsel (since 1992), Second Vice President and Associate
General Counsel (1988-1992) of the Insurance Company. Age: 50.
RAYMOND B. WOOLSON
Treasurer (since 1992) of the Trust. Senior Managing Director (since 1996),
Second Vice President (1992-1996), Director/Fund Account Administration (1989-
1992) of the Insurance Company. Age: 38.
-24-
<PAGE>
Other officers of the Trust who are officers or employees of the Insurance
Company are: John B. Joyce, Richard C. Morrison, Mary E. Wilson, Thomas J.
Finnegan, Jr., Mark A. Ahmed, Roger W. Crandall, Andrew C. Dickey, Walter T.
Dwyer, Michael L. Hermsen, William H. Jefferis, Michael L. Klofas, Thomas S. Li,
Kathleen Lynch, Mary Ann Z. McCarthy, Richard E. Spencer II, Lawrence D.
Stillman, John B. Wheeler, Lisa J. Yoerg, Mark B. Ackerman, Norman B. Flebotte,
Bruno R. Umbro, Elizabeth Kelliher and Lisa M. Kusek.
The Insurance Company also advises MassMutual Corporate Investors
("Corporate Investors"), a closed-end, non-diversified management investment
company, having net assets of $172.3 million as of December 31, 1996. The
Insurance Company's Investment Services Contract with Corporate Investors
provides that the Insurance Company is to be paid a base rate (the "Base Fee
Rate") of 5/16 of 1% of the net asset value of Corporate Investors
(approximately equivalent to 1.25% on an annual basis), plus or minus a
performance adjustment (the "Performance Adjustment"). The Performance
Adjustment is based on Corporate Investors' 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 Industrials Stock Price Index (the "S&P Industrials") and the Lehman
Brothers Intermediate Corporate Bond Index (the "Intermediate 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 Corporate
Investors' actual rate of return over the Measurement Period and the Target
Rate. If Corporate Investors' actual rate of return exceeds the Target Rate, the
Base Fee Rate is increased by an amount equal to the Performance Adjustment; if
Corporate Investors' actual rate of return is less than the Target Rate, the
Base Fee Rate is reduced by the Performance Adjustment. The Performance
Adjustment is subject to a maximum and minimum range of
-25-
<PAGE>
1/16 of 1% of the net asset value of Corporate Investors (approximately
equivalent to .25% on an annual basis). The advisory fee payable by Corporate
Investors is equal to the Base Fee Rate (as adjusted by the Performance
Adjustment) times the net asset value of Corporate Investors as of the Valuation
Date.
<TABLE>
<CAPTION>
Net Assets Advisory Fee
as of (on an
Name of Fund 12/31/96 annual basis)
- ------------ -------- -------------
<S> <C> <C>
MassMutual 1.25% of net assets PLUS
Corporate $172.3 million Performance Incentive of
Investors +/-.25% (1.0% to 1.25%)
</TABLE>
In addition to acting as investment adviser and administrator to the Trust
and Corporate Investors, the Insurance Company acts as investment adviser to MML
Series Investment Fund and MassMutual Institutional Funds, which are open-end
management investment companies investing in publicly traded securities.
Section 16(a) Beneficial Ownership
Reporting Compliance
During the fiscal year ended December 31, 1996, Clifford M. Noreen and
Raymond B. Woolson inadvertently failed to timely file a Form 3 upon becoming
executive officers of the Trust.
(4) APPROVAL OR DISAPPROVAL OF
CHANGES TO INVESTMENT POLICIES
REGARDING NON-INVESTMENT
GRADE SECURITIES
The Trust has an investment restriction that prevents it from purchasing
any additional non-investment grade securities ("Non-Investment Grade
Securities") if, after giving effect to the purchase of such securities, more
than 662/3% of the Trust's net assets would be invested in Non-Investment Grade
Securities. Non-Investment Grade Securities are debt securities that are rated,
at the time of acquisition, BB or B by Standard & Poor's Rating Group ("S&P") or
Ba or B by Moody's Investors Service Inc. ("Moody's") or, if unrated, are
believed by the Insurance Company to be of a quality
-26-
<PAGE>
equivalent to a rating of BB or B by S&P or Ba or B by Moody's. This investment
restriction is fundamental and may not be changed without an affirmative
"majority vote" of the Trust's shares.
At their meeting on January 13, 1997, the Trustees approved, and voted to
recommend that the shareholders approve, an amendment to the Trust's investment
policies to increase the maximum portion of its assets permitted to be invested
in Non-Investment Grade Securities. Specifically, the current investment
restriction would be amended to prohibit the Trust from purchasing Non-
Investment Grade Securities if, after giving effect to the purchase of such
securities, more than 75% of the Trust's total assets would be invested in Non-
Investment Grade Securities. If this percentage restriction is adhered to at the
time of an investment, subsequent changes in asset values will not constitute a
violation of such restriction.
Approval of the proposed investment restriction would permit the Trust to
significantly increase its investments in Non-Investment Grade Securities. For
example, under the current investment restriction, the Trust was only permitted
to invest up to $64,769,239 in Non-Investment Grade Securities based on the
Trust's net assets of $97,153,859 as of December 31, 1996. Under the proposed
investment restriction, the Trust would have been permitted to invest up to
$87,166,100 in Non-Investment Grade Securities based on the Trust's total assets
of $116,221,466 as of December 31, 1996. Moreover, if the Fund had further
leveraged itself as of December 31, 1996, by borrowing the maximum amount
permitted by law, the Trust would have been permitted to invest $109,298,092 in
Non-Investment Grade Securities under the proposed investment restriction based
on $145,730,789 of total assets.
The Trust recommends approval of the proposed amendment in order to obtain
additional investment flexibility with respect to its portfolio. Increased
exposure to Non-Investment Grade Securities, particularly those with equity
features, would create an opportunity
-27-
<PAGE>
for an enhanced total return but, at the same time, would increase the Trust's
exposure to the risks associated with those types of securities. Non-Investment
Grade Securities involve greater volatility of price and yield, and greater risk
of loss of principal and interest, and generally reflect a greater possibility
of an adverse change in financial condition which could affect the ability of
the issuer to make payments of principal and interest. The market price for Non-
Investment Grade Securities generally responds to short-term corporate and
market developments to a greater extent than higher-rated securities. Because
of the relatively high risks associated with investments in Non-Investment Grade
Securities, including private placement securities, shareholders should
carefully consider the appropriateness of proposal (4) to increase the Trust's
ability to invest in such securities.
The Trust's current investment restriction with respect to Non-Investment
Grade Securities is set forth below.
The Trust will not purchase any additional Non-Investment Grade Securities
if, after giving effect to the purchase of such securities, 66 2/3% or more
of the Trust's net assets would be invested in Non-Investment Grade
Securities. Non-Investment Grade Securities are debt securities that are
rated, at the time of acquisition, BB or B by Standard & Poor's Corporation
("S&P") or Ba or B by Moody's Investors Services Inc. ("Moody's") or, if
unrated, are believed by the Insurance Company to be of a quality
equivalent to a rating of BB or B by S&P or Ba or B by Moody's.
This investment restriction is fundamental and may not be changed without
an affirmative "majority vote" of the Trust's shares.
If proposal (4) is approved by shareholders at the forthcoming Annual
Meeting, the Trust's investment restriction with respect to Non-Investment Grade
Securities would be amended to read as follows.
-28-
<PAGE>
The Trust will not purchase any additional Non-Investment Grade Securities
if, after giving effect to the purchase of such securities, more than 75%
of the Trust's total assets would be invested in Non-Investment Grade
Securities. Non-Investment Grade Securities are debt securities that are
rated, at the time of acquisition, BB or B by Standard & Poor's Corporation
("S&P") or Ba or B by Moody's Investors Service Inc. ("Moody's") or, if
unrated, are believed by the Insurance Company to be of a quality
equivalent to a rating of BB or B by S&P or Ba or B by Moody's.
If adopted by shareholders, this investment restriction will be fundamental
and may not be changed without an affirmative "majority vote" of the Trust's
shares.
The Trust will increase its exposure to Non-Investment Grade Securities
only when the Insurance Company believes that doing so will benefit the Trust,
taking into account considerations such as general market conditions, the
financial condition of the issuer, and the spread between the rates of return of
investment grade securities and Non-Investment Grade Securities.
There will be no change in the Trust's investment restriction against
investing in any debt security that is rated, at the time of acquisition, below
B by S&P or Moody's or, if unrated, is believed by the Insurance Company to be
of a quality below a B rating. A portfolio security which is downgraded below B
by S&P or Moody's or, if unrated, is believed by the Insurance Company to be of
a quality below a B rating, may be held by the Trust or sold.
PROPOSALS BY SHAREHOLDERS
Any shareholder intending to present a proposal at the Annual Meeting to be
held in 1998 who wishes to have such proposal included in the Trust's proxy
-29-
<PAGE>
material for that meeting should forward the written proposal to the Trust,
Attention: Secretary. Proposals must be received on or before November 4, 1997,
to be considered for inclusion in the Trust's proxy material for its 1998 Annual
Meeting.
OTHER MATTERS
The Board of Trustees knows of no business to be brought before the meeting
other than as set forth above. If, however, any other matters properly come
before the meeting, it is the intention of the persons named in the enclosed
proxy card to vote proxies on such matters in accordance with their best
judgment. Proxies will be solicited by mail and may be solicited in person or
by telephone or telegraph by officers of the Trust. The expenses connected with
the solicitation of these proxies and with any further proxies which may be
solicited by the Trust's officers in person, by telephone or by telegraph will
be borne by the Trust. In addition, the Trust may retain an outside firm to
solicit proxies, which would involve additional expenses, payable by the Trust.
If the Trust does retain such an outside firm, the anticipated cost may be
approximately $15,000. The Trust will reimburse banks, brokers, and other
persons holding the Trust's shares registered in their names or in the names of
their nominees, for their expenses incurred in sending proxy material to and
obtaining proxies from the beneficial owners of such shares.
If any shareholders desire additional information about the matters
proposed for action, the management will be glad to hear from them and to
provide further information.
ANNUAL REPORT
The Annual Report of the Trust for its fiscal year ended December 31, 1996,
including financial statements, a schedule of the Trust's investments as of such
date and other data, was mailed on or about February 28, 1997 to all
shareholders of record as of the record date. The financial statements included
-30-
<PAGE>
in such Annual Report are incorporated herein by reference. Any shareholder may
request a copy of the Annual Report and the most recent quarterly report by
calling (toll-free) the Trust's transfer agent, Shareholder Financial Services,
Inc., at 1-800-647-7374.
By order of the
Board of Trustees,
/s/ Stephen L. Kuhn
Stephen L. Kuhn
Vice President and Secretary
1295 State Street
Springfield, Massachusetts 01111
March 4, 1997
-31-
<PAGE>
APPENDIX
FORM OF PROXY
MASSMUTUAL PARTICIPATION INVESTORS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Stephen L. Kuhn and Hamline C. Wilson, and
each of them, attorneys and proxies of the undersigned, with power of
substitution to vote all shares of MassMutual Participation Investors (the
"Trust") which the undersigned is entitled to vote at the Annual Meeting of
shareholders of the Trust to be held in the Oak Room of Massachusetts Mutual
Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111, on
Thursday, April 24, 1997, at 1:00 p.m. Springfield time, and at any adjournment
thereof (the "Annual Meeting").
THIS PROXY WILL BE VOTED ON ITEMS (1), (2), (3) AND (4) IN ACCORDANCE WITH
THE INSTRUCTIONS GIVEN ON THIS CARD, AND IN THE ABSENCE OF INSTRUCTIONS THE
UNDERSIGNED HEREBY AUTHORIZES THE AFORESAID PROXY OR PROXIES TO VOTE FOR ITEMS
(1), (2), (3) AND (4).
PLEASE SIGN ON REVERSE SIDE
SEE REVERSE
SIDE
Please mark votes as in this example.
1. Election of Trustees
Nominees: Gary E. Wendlandt, Milton Cooper and Martin T. Hart for the terms set
forth in the proxy statement.
FOR WITHHELD
For all nominees except as noted above
2. Ratification of the selection of Coopers & Lybrand L.L.P. as auditors for the
fiscal year ending December 31, 1997.
FOR AGAINST ABSTAIN
3. Approval of continuances of the Trust's Investment Services Contract with
Massachusetts Mutual Life Insurance Company, dated October 7, 1988.
FOR AGAINST ABSTAIN
4. Approval of an amendment to the Trust's investment policies to permit not
more than 75% of its total assets to be invested in non-investment grade
securities.
1
<PAGE>
FOR AGAINST ABSTAIN
5. In their election, the proxies are authorized to vote on any other business
that may properly come before the Annual Meeting.
MARK HERE FOR
ADDRESS CHANGE AND
NOTE AT LEFT.
MARK HERE IF
YOU PLAN TO ATTEND
THE MEETING.
Signature: Date:
Signature: Date:
Please sign exactly as your name or names appear. When signing as joint tenant,
all parties to the joint tenancy should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as
such. Please mail the completed and signed proxy to SFSI, P.O. Box 173673,
Denver, CO 80217-3673.
2
