<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.
<PAGE>
MassMutual Participation Investors
Springfield, Massachusetts 01111
[LOGO OF MASSMUTUAL PARTICIPATION INVESTORS]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
TIME
Friday, April 23, 1999
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 1999 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 Friday, April 23, 1999.
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 the Trust 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, approve or
disapprove the selection of PricewaterhouseCoopers LLP 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. The Trustees recommend that the
shareholders elect the nominated Trustees, ratify the selection of
PricewaterhouseCoopers LLP and approve the continuance of the Investment
Advisory and Administrative Services Contract.
I look forward to your attendance at this meeting because it will provide
us with an opportunity to inform you about the progress of MassMutual
Participation Investors.
Sincerely,
Richard G. Dooley
Chairman
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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 Friday, April 23, 1999, at 1:00 p.m., Springfield time,
for the following purposes:
(1) To re-elect Marshall D. Butler as a Trustee for a one-year term and to
re-elect Jack A. Laughery and Corine T. Norgaard as Trustees for three-year
terms and until their successors are duly elected and qualified;
(2) To ratify or reject the action taken by the Board of Trustees in
selecting PricewaterhouseCoopers LLP as auditors for the fiscal year ending
December 31, 1999;
(3) To approve or disapprove continuance of the Trustees current Investment
Advisory and Administrative Services Contract dated October 7, 1988; and
(4) 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 23, 1999, are entitled to vote at the meeting or
any adjournment thereof.
By order of the
Board of Trustees,
Stephen L. Kuhn
Vice President and Secretary
Springfield, Massachusetts
March 3, 1999
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<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 Friday, April
23, 1999, 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 23, 1999 will be entitled to one
vote per share on all business of the meeting and any adjournments. There were
9,316,591 shares outstanding on the record date. To the best knowledge of the
Trust, the only beneficial owner of more than 5% of the outstanding shares of
the Trust is the Insurance Company. The Insurance Company may be deemed a
beneficial owner of more than 5% of the outstanding shares of the Trust by
reason of its owning a $12,000,000 Senior Fixed Rate Convertible Note due July
15, 2002 (the "Note") issued by the Trust. The Insurance Company, at its option,
can convert the principal amount of the Note into shares. The dollar amount of
principal would be converted into an equivalent dollar amount of shares based
upon the average price of the shares for ten business days prior to the notice
of conversion.
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 3, 1999 to shareholders of record on the record date.
3
<PAGE>
Pursuant to the Trustees 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 election as Trustees
at the Annual Meeting who receive the greatest number of votes properly cast for
the election of trustees shall be elected Trustees. Under the Trustees
Declaration of Trust a majority of the shares voted is required to ratify the
selection of independent accountants.
An affirmative "majority vote" of the Trustees shares is required to
approve the continuance of the Trustees Investment Advisory and Administrative
Services Contract. A "majority vote" means either (1) the holders of at least
67% of the Trustees 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 exercise 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, 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 accountant, abstentions and
broker non-votes have no effect on the outcome of the proposal so long as a
quorum is present.
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<PAGE>
(1) ELECTION OF TRUSTEES
The Board of Trustees is currently comprised of eight Trustees with terms
expiring in 1999, 2000, and 2001. The terms of Marshall D. Butler, Jack A.
Laughery and Corine T. Norgaard expire this year and the Board has nominated
them for re-election. Mr. Laughery and Ms. Norgaard have been nominated for
three-year terms and Mr. Butler has been nominated for a one-year term.
Following the Annual Meeting of Shareholders, the Board will be comprised of
eight Trustees, having various terms expiring in 2000, 2001 and 2002. 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 or her present office with the
Trust, age, principal occupation or employment during the past five years, the
organization by which he or she is employed and its principal business, and
certain other directorships held by them.
RICHARD G. DOOLEY*
(Term expires 2001)
Trustee and Chairman of the Trust (since 1988). Consultant (since 1993) and
former Chief Investment Officer of the Insurance Company. Director (since 1996),
Investment Technology Group, Inc.; Director, The Advest Group, Inc. (financial
services holding company), HSB Group, Inc. (formerly known as Hartford Steam
Boiler Inspection and Insurance Co.), Nellie Mae; Trustee, Kimco Realty Corp.
(shopping center ownership and management); Director, Jefferies Group, Inc.
(financial services holding company); Chairman (since 1999 and 1982-1995), Vice
Chairman (1995-1999) and Trustee, MML Series Investment Fund (open-end
investment company advised by the Insurance Company); Chairman (since 1999),
Vice Chairman (1995-1999), Chairman (1982-1995) and Trustee (since 1974),
MassMutual Corporate Investors (closed-end investment company advised by the
Insurance Company). Age: 69.
- -------------------
* 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 and a consultant of the Insurance Company.
5
<PAGE>
DONALD E. BENSON
(Term expires 2001)
Trustee since 1988. Executive Vice President and Director (since 1992),
Marquette Bancshares (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 (since 1997), National Mercantile Bancorp (bank
holding company) and Mercantile National Bank; Director, Mesaba Holdings, Inc.
(commuter airline); Director, Delta Beverage Group, Inc. (soft drink bottler and
distributor); Trustee (since 1986), MassMutual Corporate Investors (closed-end
investment company advised by the Insurance Company). Age: 68.
MARSHALL D. BUTLER
(Term expires 1999)
Nominee for re-election. Trustee since 1990. Chairman (since 1994),
Nitzanim (electronic components); Director, Chairman and Chief Executive Officer
(1973-1993), AVX Corporation (manufacturer of electronic components); Director,
Kyocera Corp. and ESC Medical; Director (since 1993), Synercom Technology,
Incorporated (computer software); Chairman (since 1994), Alpha Technologies
Group, Inc. (electronic components); Partner (since 1995), First Israel
Mezzanine Investors Ltd. (mezzanine financing); Trustee (since 1990), MassMutual
Corporate Investors (closed-end investment company advised by the Insurance
Company). Age: 72.
MILTON COOPER
(Term expires 2000)
Trustee since 1990. Chairman (since 1992), Kimco Realty Corp. (shopping
center ownership and management); Director (since 1971), 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: 69.
6
<PAGE>
DONALD GLICKMAN
(Term Expires 2001)
Trustee since 1992. Chairman (since 1992), Donald Glickman and Company,
Inc. (investment banking); Director, CalTex Industries, Inc. (manufacturer of
windows) and Monro Muffler Brake, Inc.; Director (1993-1996), Steerage Corp.
Inc. (navigation equipment manufacturer); Director (1991-1994), Food Barn
Stores, Inc.; Trustee (since 1992), MassMutual Corporate Investors (closed-end
investment company advised by the Insurance Company). Age: 65.
MARTIN T. HART
(Term expires 2000)
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 1997), T Netiks
(communications); Director (since 1996), PJ America (pizza restaurant);
Director (since 1994), Ardent Software, Inc. (computers); Manager (since 1994),
Houston Pizza Venture (pizza restaurant); Director (1994-1996), The Bagel Group
(bagel restaurant); Director (1992-1996), PJVA, Inc. and PJV, Inc. (pizza
restaurants); Director, PJNC, Inc. (pizza restaurant); Director (1993-1995),
Inco Homes (housing); Trustee (since 1991), Morris Air Corporation (airline),
Capital Bancorp, MassMutual Corporate Investors (closed-end investment company
advised by the Insurance Company). Age: 63.
JACK A. LAUGHERY
(Term expires 1999)
Nominee for re-election. Trustee since 1996. Chairman (since 1997),
President (since 1996) Laughery Investments; Partner (since 1996), Papa John's
New England (food service); Consultant (since 1996), Papa John's Iowa (food
service); Chairman (1994-1996), The Bagel Group (bagel restaurant); Consultant
(1994-1996), Heartland Foods (food service); Director (since 1997), Maynard
Capital
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Partners (investments); Director, Papa John's International (food service
companies); Director, First Union National Bank; Manager (since 1994), Houston
Pizza Venture LLC (pizza restaurant); Partner, Atlantic Beach Sheraton and
Coastal Lodging (hotels); Partner (1992-1996), Papa John's V and Papa John's VA
(food service); Partner (1993-1996), Papa John's North Carolina (food service);
Consultant (1989-1994), Hardee's Food Systems, Inc. (fast food restaurants);
Director (1990-1997), Sprint Mid-Atlantic (telecommunications); Director (1993-
1996), Corral America (food service); 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: 64.
CORINE T. NORGAARD
(Term Expires 1999)
Nominee for re-election. Trustee since 1997. Dean (since 1996), Barney
School of Business and Public Administration, University of Hartford; Professor
of Accounting and Dean (1993-1996), School of Management, State University of
New York at Binghamton; Director, The Advest Group, Inc. (financial services
holding company); Trustee, Aetna Series Fund (investment company) and MassMutual
Corporate Investors. Age 61.
Share Ownership of Trustees, Nominees and Executive Officers
The following table sets forth information concerning beneficial ownership,
as of February 10, 1999, of the Trustees shares by each Trustee, and by the
Trust's nominees for Trustee and executive officers as a group.
8
<PAGE>
<TABLE>
<CAPTION>
Name Shares Percentage of
Individual Beneficially Outstanding
or Group Owned* Shares Owned
-------- ------ ------------
<S> <C> <C>
Donald E. Benson 5,775 **
Marshall D. Butler 4,683 **
Milton Cooper 1,415 **
Richard G. Dooley 2,019 **
Donald Glickman 1,265 **
Martin T. Hart 12,438 0.13%
Jack A. Laughery 500 **
Corine T. Norgaard 800 **
All Trustees, Nominees
and Executive Officers
as a Group 37,858 0.41%
</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 recommendations to the Board of Trustees
as to the engagement or discharge of the Trustees independent accountants,
supervises investigations into matters relating to audit functions, reviews with
the Trustees independent accountants the results of the audit engagement and
considers the audit fees. The Trust also has a Joint Transactions Committee,
made up of the disinterested Trustees, which reviews certain investment
transactions. The Trust does not have a standing nominating or compensation
committee.
During the past fiscal year, the Board of Trustees held five regular
meetings (one of which was a telephone conference call meeting), and the Audit
Committee met once. The Joint Transactions Committee met once in person and
conducted numerous consent
- ----------------------
* 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 on-tenth of one percent is not listed.
9
<PAGE>
meetings during the year. All Trustees attended at least 80% of the aggregate
number of meetings of the Board of Trustees and Committees of the Board.
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, 1998, 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 $1,000 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 $8,000.
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, 1998 was approximately $86,865.
The following table discloses the compensation paid to the Trustees non-
interested Trustees for the fiscal year ended December 31, 1998. All of the non-
interested Trustees also serve as Trustees of one other closed-end investment
company managed by the Insurance Company.
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<TABLE>
<CAPTION>
Total
Aggregate Compensation
Name of Compensation from Fund
Trustee from Trust Complex
------- ---------- -------
<S> <C> <C>
Donald E. Benson $11,600 $28,700
Marshall D. Butler 11,000 27,500
Milton Cooper 12,000 30,000
Donald Glickman 12,000 30,000
Martin T. Hart 12,600 31,200
Jack A. Laughery 12,000 30,000
Corine T. Norgaard 8,000 20,000
</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 PricewaterhouseCoopers LLP
to act as auditors for the Trust for the fiscal year ending December 31, 1999.
PricewaterhouseCoopers LLP has assured the Trust that they 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 PricewaterhouseCoopers LLP is expected to be present at
the forthcoming Annual Meeting. This representative shall have the opportunity
to make a statement if he or she desires to do so, and it is expected that such
representative will be available to respond to appropriate questions which may
be posed by shareholders.
(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
11
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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, 1998 was $987,685. No
changes are being made in the Contract, which was last approved by shareholders
at the Trustees 1998 Annual Meeting of Shareholders held on April 24, 1998.
At its meeting on January 22, 1999, 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, and other support 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 Trustees fee schedule to fees charged by other
investment advisers whose investment activities include private placement
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
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<PAGE>
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, 1998 was satisfactory and that its expense ratio
(excluding interest expenses) for the fiscal year ended December 31, 1998 was
competitive. Based on their consideration of these and other factors, the
Trustees (including a majority of the Trustees who are not "interested persons"
(as defined by the Investment Company Act of 1940), of the Trust or of the
Insurance Company) approved, and recommended that shareholders approve, the
continuation of the Contract as now in effect.
Prior to the Annual Meeting of Shareholders on April 23, 1999, the Trustees
will meet again to review their approval and recommendation. Subject 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.
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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 custodian, 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.
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<PAGE>
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
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 22, 1999, the Board of Trustees of the Trust
approved the valuations being made as of the close of business on December 31,
1998, and arrived at a value for the net assets of the Trust at that date of
$105,199,998.
15
<PAGE>
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.
The Contract is terminable on 60 days' written notice by the Trust's Board
of Trustees, by a "majority vote" of the Trust's shares or by the Insurance
Company. It will terminate automatically in the event of its assignment within
the meaning of the Investment Company Act. 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
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such approval, and (b) specifically either by the Trust's Board of Trustees or
by a "majority vote" of the Trust's shares.
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.
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
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used by the Insurance Company in connection with the Trust. Conversely, 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 $29,738 in brokerage commissions for the fiscal year ended
December 31, 1998, including approximately $150 paid to Jefferies, Inc.
("Jefferies"). Jefferies is a subsidiary of a company for which one Trustee
serves as Director. Portfolio turnover for the fiscal year ended December 31,
1998 was 54.53%.
Investment Adviser
The names and addresses of the principal executive officer and each director
of the Insurance Company and his or her principal occupations are set forth
below.
ROBERT J. O'CONNELL
1295 State Street
Springfield, Massachusetts 01111
President and Chief Executive Officer of the
Insurance Company.
THOMAS B. WHEELER
1295 State Street
Springfield, Massachusetts 01111
Chairman of the Board of Directors
of the Insurance Company.
ROGER G. ACKERMAN
One Riverfront Plaza
Corning, New York 14831
Chairman and Chief Executive Officer, Corning
Incorporated (manufacturer of specialty materials,
communications equipment, and consumer products).
JAMES R. BIRLE
2 Soundview Drive
Greenwich, Connecticut 06836
Chairman, Resolute Partners, LLC.
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<PAGE>
GENE CHAO
733 S.W. Vista Avenue
Portland, Oregon 97205
Chairman, President 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
Senior Fellow, The Brookings Institution
(non-profit research center).
JAMES L. DUNLAP
1201 Louisiana
Suite 1400
Houston, Texas 77002
Vice Chairman Ocean Energy Corporation.
WILLIAM B. ELLIS
31 Pound Foolish Lane
Glastonbury, Connecticut 06033
Retired; former Chairman, Northeast Utilities
(electric utility); Senior Fellow
Yale University School of Forestry
and Environmental Studies.
ROBERT M. FUREK
1 State Street
Suite 2310
Hartford, Connecticut 06103
Chairman, State Board of Trustees for the Hartford
School System.
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<PAGE>
CHARLES K. GIFFORD
100 Federal Street
Boston, Massachusetts 02110
Chairman and Chief Executive Officer, BankBoston N.A.
and BankBoston 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 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
700 North Water Street
Suite 1200
Milwaukee, Wisconsin 53202
Chairman, Lubar & Co. Incorporated (investment
management and advisory company).
WILLIAM B. MARX, JR.
5 Peacock Lane
Village of Golf, Florida 33436
Retired; former Senior Executive Vice President,
Lucent Technologies Inc.
(public telecommunications systems and software).
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<PAGE>
JOHN F. MAYPOLE
P.O. Box 1223
Toccoa, Georgia 30577
Managing Partner, Peach State Real Estate
Holding Company (real estate).
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 or employees of the Insurance Company,
are listed below with their principal occupation or
employment during the past five years. The term of each
such Executive Officer is until the next meeting of the
Board of Trustees following the 1999 Annual Meeting of
Shareholders and until his successor shall have been
chosen and qualified.
STUART H. REESE
President (since 1995), Executive Vice President
(1993-1995) of the Trust. Chief Executive Director
(since 1997), Senior Vice President (1993-1997) of the
Insurance Company. Age: 43.
ROBERT E. JOYAL
Senior Vice President (since 1989) of the
Trust. Executive Director (since 1997), Senior
Managing Director (1996-1997), Vice President and
Managing Director (1989-1996) of the Insurance
Company. Age: 54.
CLIFFORD M. NOREEN
Vice President (since 1993) of the Trust. Senior
Managing Director (since 1996), Vice President
(1995-1996), Second Vice President (1992-1994),
of the Insurance Company. Age: 41.
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<PAGE>
STEPHEN L. KUHN
Vice President and Secretary (since 1988) of
the Trust. Vice President and Deputy General
Counsel (since 1997), Vice President and Associate
General Counsel (1992-1997) of the Insurance
Company. Age: 52.
CHARLES C. McCOBB, JR.
Chief Financial Officer (since 1998), Vice President
(since 1997) of the Trust. Managing Director
(since 1997), MassMutual; Managing Director
and Vice President (1994-1997), Citicorp, Inc.
(banking); Vice President and Managing Director
(1973-1994), Aetna Life and Casualty
(insurance company). Age: 55
MARK B. ACKERMAN
Treasurer (since 1998), Comptroller (1997-1998),
Associate Treasurer (1995-1998) of the Trust.
Investment Director (since 1996), Associate
Investment Director (1994-1996) of the Insurance
Company. Age:33
Other officers of the Trust who are officers or employees of the Insurance
Company are: Richard C. Morrison, Mary Wilson Kibbe, Mark A. Ahmed, Roger W.
Crandall, Andrew C. Dickey, Walter T. Dwyer, Michael L. Hermsen, Michael L.
Klofas, Thomas S. Li, Kathleen Lynch, Mary Ann Z. McCarthy, Richard E. Spencer
II, John B. Wheeler, Lisa M. Kusek, William N. Holm, John B. Joyce, Victoria
Fortier, Ann F. Lomeli, Kathleen Kraez, Maura Ann Batchelor, John Cunningham,
Edward Youmell, James T. Birchall, Jill A. Fields, Patrick J. Joyce, Robert M.
Shettle, Lisa J. Yoerg and Emeka Onukwugha.
The Insurance Company also advises MassMutual Corporate Investors
("Corporate Investors"), a closed-end, non-diversified management investment
company, having net assets of $205,019,403 million as of December 31, 1998. 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
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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 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>
Net Assets Advisory Fee
as of (on an
Name of Fund 12/31/98 annual basis)
- ------------ -------- ------------
<S> <C> <C>
MassMutual 1.25% of net assets PLUS
Corporate $205.0 million Performance Incentive of
Investors +/- .25% (1.0% to 1.50%)
</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.
Like other businesses and governments around the world, the Trust could be
adversely affected if the computer systems used by the Insurance Company (and
those with which it does business on behalf of the Trust) and the Trust's other
service providers do not properly
23
<PAGE>
recognize the year 2000. This is commonly known as the "Year 2000" issue. In
1996, the Insurance Company began an enterprise-wide process of identifying,
evaluating and implementing changes to computer systems and application software
to address the Year 2000 issue. The Trust has been informed that this is one of
the Insurance Company's highest business operational priorities. The Insurance
Company is also seeking assurances from the Trust's custodian and transfer agent
in order to identify and resolve Year 2000 issues.
(4) OTHER BUSINESS
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.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
During the fiscal year Mark B. Ackerman inadvertently failed to file SEC
Form 3 in a timely manner upon his election as Treasurer and executive officer
of the Trust. In addition, John F. Maypole, a Director of the Insurance Company,
inadvertently failed to timely file one SEC Form 4 with respect to one
transaction during the year.
PROPOSALS BY SHAREHOLDERS
Any shareholder intending to present a proposal at the Annual Meeting to be
held in 2000 who wishes to have such proposal included in the Trust's proxy
material for that meeting should forward the written proposal to the Trust,
Attention: Secretary. Proposals must be received on or before November 1, 1999,
to be considered for inclusion in the Trust's proxy material for its 2000
Annual Meeting. In addition, proxies for that meeting will be voted in the
discretion of management on proposals submitted by January 16, 2000.
ADDITIONAL INFORMATION
Proxies will be solicited by mail and may be solicited in person or by
telephone or facsimile by officers of the Trust. The expenses connected with the
24
<PAGE>
solicitation of these proxies and with any further proxies which may be
solicited by the Trust's officers in person, by telephone or by facsimile 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 would be
approximately $25,000. 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, 1998,
including financial statements, a schedule of the Trust's investments as of such
date and other data, was mailed on or about February 28, 1999 to all
shareholders of record as of the record date. The financial statements included
in such Annual Report are incorporated herein by reference. Any shareholder may
request a copy of the Annual Report and the most recent semi-annual report,
which will be furnished without charge, 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,
Stephen L. Kuhn
Vice President and Secretary
1295 State Street
Springfield, Massachusetts 01111
March 3, 1999
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<PAGE>
L4288P (399)
<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 Charles C. McCobb, Jr.,
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
Friday, April 23, 1999, at 1:00 p.m. Springfield time, and at any adjournments
thereof (the "Annual Meeting").
THIS PROXY WILL BE VOTED ON ITEMS (1), (2) AND (3) 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) AND (3).
PLEASE SIGN ON REVERSE SIDE
SEE REVERSE
SIDE
Please mark votes as in this example.
1. Election of Trustees
Nominees: Marshall D. Butler, Jack A. Laughery and Corine T. Norgaard for the
terms set forth in the proxy statement.
FOR WITHHELD
For all nominees except as noted above
2. Ratification of the selection of PricewaterhouseCoopers LLP as auditors for
the fiscal year ending December 31, 1999.
FOR AGAINST ABSTAIN
3. Approval of continuance of the Trust's Investment Services Contract with
Massachusetts Mutual Life Insurance Company, dated October 7, 1988.
<PAGE>
FOR AGAINST ABSTAIN
4. In their discretion, 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
