================================================================================
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 ss.240.14a-11(c) or ss.240.14a-12
MassMutual Corporate 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.
================================================================================
--------------------------------------------------------------------------------
MASSMUTUAL CORPORATE INVESTORS
Springfield, Massachusetts 01115
[LOGO]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
TIME
FRIDAY, APRIL 11, 2003
AT 2:00 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.
--------------------------------------------------------------------------------
MASSMUTUAL CORPORATE INVESTORS
Springfield, Massachusetts
Dear Shareholder:
The 2003 Annual Meeting of Shareholders will be held in the Oak Room of
Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111, at 2:00 p.m., Eastern Time, on Friday, April 11, 2003. 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 CAN HELP THE TRUST AVOID
THE 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 be asked to elect one Trustee and to
re-elect two Trustees, ratify the selection of Deloitte & Touche LLP as
auditors, and approve the existing Investment Services Contract dated July 1,
1988, with David L. Babson & Company Inc.
The Trustees recommend that shareholders elect the nominated Trustees,
ratify the selection of Deloitte & Touche LLP, and approve the continuance of
the contract with David L. Babson & Company Inc.
I look forward to your attendance at this meeting because it will provide
us with an opportunity to inform you about the progress of the Trust.
Sincerely,
/s/ Stuart H. Reese
Stuart H. Reese
CHAIRMAN
1
MASSMUTUAL CORPORATE INVESTORS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF
MASSMUTUAL CORPORATE INVESTORS:
The Annual Meeting of Shareholders of MASSMUTUAL CORPORATE INVESTORS (the
"Trust") will be held in the Oak Room of Massachusetts Mutual Life Insurance
Company, 1295 State Street, Springfield, Massachusetts 01111, on Friday, April
11, 2003, at 2:00 p.m., Eastern Time, for the following purposes:
(1) To elect Robert E. Joyal for a one-year term as Trustee, and to
re-elect Stuart H. Reese and Martin T. Hart as Trustees for three-year terms,
and until their successors are duly elected and qualified;
(2) To ratify the selection of Deloitte & Touche LLP as auditors of the
Trust for the fiscal year ending December 31, 2003;
(3) To approve the Trust's existing Investment Services Contract with David
L. Babson & Company Inc. dated July 1, 1988 and last submitted to a vote of the
Trust's shareholders on April 19, 2002 for ratification; 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 the Trust at the close of business on
February 11, 2003, 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
February 28, 2003
2
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of MASSMUTUAL CORPORATE 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 11, 2003, at
2:00 p.m., Eastern 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 common shares of the Trust ("shares") of record at the close of
business on February 11, 2003 will be entitled to one vote per share on all
business of the meeting and any adjournments. There were 8,836,464 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
$20,000,000 Senior Fixed Rate Convertible Note due November 15, 2007 (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.
This Proxy Statement and the accompanying letter to shareholders from the
Chairman of the Trust, Notice of Annual Meeting of Shareholders and proxy card
are being mailed on or about February 28, 2003, to shareholders of record on
February 11, 2003, the record date. The Trust's principal business office is
3
1500 Main Street, Suite 1100, Springfield, Massachusetts 01115.
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 votes cast is
required to elect Trustees. Thus, the three nominees for 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 Trust's Declaration of Trust a
majority of the shares voted is required to ratify the selection of independent
accountants.
To the extent that a vote is legally required, an affirmative "majority
vote" of the Trust's shares is required to approve the Trust's existing
Investment Services Contract dated July 1, 1988 (the "Contract") with David L.
Babson & Company Inc. ("Babson"). An affirmative "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 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 Contract,
abstentions or broker non-votes have the effect of a negative vote. With respect
to the election of
4
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.
(1) ELECTION OF TRUSTEES
The Board of Trustees is currently comprised of eight Trustees with terms
expiring in 2003, 2004 and 2005. The terms of Stuart H. Reese, Richard G. Dooley
and Martin T. Hart expire this year. Mr. Dooley, who is 73, will be retiring
from the Board. Mr. Reese and Mr. Hart have been nominated for re-election for
three-year terms. Mr. Robert E. Joyal has been nominated for a one-year term.
All nominees, if elected, are to serve their respective terms, and until each of
their successors is duly elected and qualified.
INFORMATION CONCERNING TRUSTEES AND NOMINEES FOR TRUSTEE AND OFFICERS OF THE
TRUST
Set forth below after the name of 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, year of election as trustee, year that his or her
term ends, principal occupation during the past five years, certain other
directorships held by them, and certain other information required to be
disclosed in this proxy statement. Also, set forth below after the name of each
Officer is his or her position with the Trust, principal occupation or
employment for the past five years and date upon which his or her position
began.
[PLEASE REFER TO THE TABLE ON THE NEXT PAGE]
SHARE OWNERSHIP OF TRUSTEES, NOMINEES AND EXECUTIVE OFFICERS
The tables on page 18 display information concerning beneficial ownership,
as of December 31, 2002, of the Trust's shares by each Trustee and nominee for
Trustee, and by the Trust's Trustees, nominees for Trustee and executive
officers as a group.
5
INTERESTED TRUSTEES
NAME (AGE) PRINCIPAL OCCUPATION NUMBER OF
ADDRESS DURING THE PAST FIVE YEARS/ SERVICE BEGAN/ PORTFOLIOS
POSITION WITH THE FUND OTHER DIRECTORSHIPS HELD TERM ENDS OVERSEEN
------------------------ --------------------------------------------------------------------------- -------------- ----------
STUART H. REESE** (47) Executive Vice President and Chief Investment Officer (since 1999) of the 1999/2003*** 41
Insurance Company; Director and CEO (since 2000) and President (2000-2001)
MassMutual Life Ins. Co. of Babson; Chief Executive Director (1997-1999), Senior Vice President
1295 State Street (1993-1997) of the Insurance Company; President (1993-1999), Chairman and
Springfield, MA 01111 Trustee (1999), MML Series Investment Fund; Director (since 1995),
MassMutual Corporate Value Partners Limited (investment company); President
TRUSTEE (1994-1999), Chairman and Trustee (1999), MassMutual Institutional Funds;
CHAIRMAN (since 1999) Director (since 1993), MML Baystate Life Insurance Company; Advisory Board ***NOMINEE FOR
PRESIDENT (1993-1999) Member (since 1995), Kirtland Capital Partners (investment partnership); A THREE-YEAR
Advisory Board Member (since 1996), MassMutual High Yield Partners II LLC TERM.
NOMINEE FOR RE-ELECTION (investment partnership); Director (since 1996), CM Assurance Company;
Director (since 1996), CM Benefit
------------------------------------------------------------------------------------------------------------------------------------
6
------------------------ --------------------------------------------------------------------------- -------------- ----------
Insurance Company; Director (since 1996), CM Life Insurance Company;
Director (since 1996), CM International, Inc; Chairman (since 1999) and
Director (since 1996), Antares Capital Corporation (high yield bank loans);
Director (since 1996), Charter Oak Capital Management, Inc.; Director
(since 1996), State House I Corporation; President (since 1998),
MassMutual/Darby CBO LLC (investment company); Director (since 1999), MLDP
Holdings; Chairman (since 2000), Cornerstone Real Estate Advisers Inc.;
Trustee, Chairman (since 1999), and President (1993-1999), MassMutual
Participation Investors (closed-end investment company advised by Babson).
------------------------------------------------------------------------------------------------------------------------------------
** Mr. Reese is an "interested person" of the Trust (as defined in the
Investment Company Act of 1940, amended) because of his position as an Officer
of the Trust, an executive officer of the Insurance Company and a Director and
CEO of Babson.
7
NAME (AGE) PRINCIPAL OCCUPATION NUMBER OF
ADDRESS DURING THE PAST FIVE YEARS/ SERVICE BEGAN/ PORTFOLIOS
POSITION WITH THE FUND OTHER DIRECTORSHIPS HELD TERM ENDS OVERSEEN
------------------------ --------------------------------------------------------------------------- -------------- ----------
ROBERT E. JOYAL** (58) President (since 2001) and Managing Director (2000-2001) of Babson; 2003-2004*** 2
Executive Director (1997-1999), Vice President and Managing Director
MassMutual Corporate (1987-1997) of the Insurance Company; Director (since 1996), Antares
Investors Capital Corporation (high yield bank loans); Director (since 1999), ***NOMINEE FOR
1500 Main Street MassMutual Corporate Value Partners Limited (investment company); Advisory ONE-YEAR TERM.
Suite 1100 Board Member (since 1996), MassMutual High Yield Partners II LLC
Springfield, MA 01115 (investment company); President (since 1999) MassMutual Corporate Investors
(closed-end investment company advised by Babson); President (since 1999),
MassMutual Participation Investors (closed-end investment company advised
NOMINEE FOR TRUSTEE by Babson).
------------------------------------------------------------------------------------------------------------------------------------
**Mr. Joyal is an "interested person" of the Trust (as defined in the Investment
Company Act of 1940, amended) because of his position as President of the Trust
and President of Babson.
8
INDEPENDENT TRUSTEES
NAME (AGE) PRINCIPAL OCCUPATION NUMBER OF
ADDRESS DURING THE PAST FIVE YEARS/ SERVICE BEGAN/ PORTFOLIOS
POSITION WITH THE FUND OTHER DIRECTORSHIPS HELD TERM ENDS OVERSEEN
------------------------ --------------------------------------------------------------------------- -------------- ----------
DONALD E. BENSON (72) Executive Vice President and Director (since 1992), Marquette Financial 1986/2004 2
Companies (financial services); Partner (since 1996), Benson Family Limited
MassMutual Corporate Partnership No. 1 and Benson Family Limited Partnership No. 2 (investment
Investors partnerships); Partner (since 1987), Benson, Pinckney, Oates Partnership
1500 Main Street (building partnership); Director (since 1997), National Mercantile Bancorp
Suite 1100 (bank holding company) and Mercantile National Bank; Director, Mesaba
Springfield, MA 01115 Holdings, Inc. (commuter airline); Trustee (since 1988), MassMutual
Participation Investors (closed-end investment company advised by Babson.)
TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
9
NAME (AGE) PRINCIPAL OCCUPATION NUMBER OF
ADDRESS DURING THE PAST FIVE YEARS/ SERVICE BEGAN/ PORTFOLIOS
POSITION WITH THE FUND OTHER DIRECTORSHIPS HELD TERM ENDS OVERSEEN
------------------------ --------------------------------------------------------------------------- -------------- ----------
DONALD GLICKMAN (69) Chairman (since 1992), Donald Glickman and Company, Inc. (investment 1992/2004 2
banking); Director (1988-2000), CalTex Industries, Inc. (manufacturer of
MassMutual Corporate windows); Director (since 1984), Monro Muffler Brake, Inc. (automobile
Investors repair service); Director (since 1998), MSC Software, Inc.; Chairman (since
1500 Main Street 1998), Elgar Electronics (manufacturer of electronic power supplies);
Suite 1100 Director (since 2002), Racal Instrument Group (manufacturer of electronic
Springfield, MA 01115 test equipment); Director (since 2002), OAOT, Inc. (ITC Services); Director
(since 1999) SDI, Inc. (manufacturer of airbag initiations); Partner (since
TRUSTEE 1992), J.F. Lehman & Co. (private investments); Trustee (since 1992),
MassMutual Participation Investors (closed-end investment company advised
by Babson).
------------------------------------------------------------------------------------------------------------------------------------
10
NAME (AGE) PRINCIPAL OCCUPATION NUMBER OF
ADDRESS DURING THE PAST FIVE YEARS/ SERVICE BEGAN/ PORTFOLIOS
POSITION WITH THE FUND OTHER DIRECTORSHIPS HELD TERM ENDS OVERSEEN
------------------------ --------------------------------------------------------------------------- -------------- ----------
MARTIN T. HART (67) Private Investor; President and Director (1983-2000), H Corporation; 1991/2003*** 2
Partner (1986-2000), Consolidated Nursery Properties (wholesale nursery and
MassMutual Corporate garden center); Director (since 1997), T Netiks (communications company); ***NOMINEE FOR
Investors Director (since 1999), ValueClick Inc. (internet advertising company); RE-ELECTION FOR
1500 Main Street Director (since 2002), Spectranetics (medical device company); Trustee A THREE-YEAR
Suite 1100 (since 1991), MassMutual Participation Investors. (closed-end investment
Springfield, MA company advised by Babson).
01115
TRUSTEE
NOMINEE FOR
RE-ELCTION
------------------------------------------------------------------------------------------------------------------------------------
11
NAME (AGE) PRINCIPAL OCCUPATION NUMBER OF
ADDRESS DURING THE PAST FIVE YEARS/ SERVICE BEGAN/ PORTFOLIOS
POSITION WITH THE FUND OTHER DIRECTORSHIPS HELD TERM ENDS OVERSEEN
------------------------ --------------------------------------------------------------------------- -------------- ----------
STEVEN A. KANDARIAN (50) Executive Director (since 2001), Pension Benefit Guaranty Corp., (a Federal 2002/2005 13
pension agency); Managing Director (1993-2001), Orion Partners, L.P. (a
1500 Main Street private equity fund); Trustee (since 2002), The DLB Fund Group (open-end
Suite 1100 investment company advised by Babson); Trustee (since 2002), MassMutual
Springfield, MA Participation Investors (a closed-end investment company advised by
01115 Babson).
TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
JACK A. LAUGHERY (68) Chairman (1997-1998), President and Partner (since 1996), Laughery 1996/2005 2
Investments; Chairman (1997-1998), Papa John's New England (food service);
MassMutual Corporate Director (since 1993), Papa John's International (food service companies);
Investors Director (since 1994), Houston Pizza Venture LLC (pizza restaurant);
1500 Main Street Partner (since 1987), Coastal Lodging (hotels); Part Owner (since 1998),
Suite 1100 Rocky Mount Harley Davidson; Partner (since 1996), Papa John's Iowa;
Springfield, MA Director (since 2001), Papa John's United (food service); Trustee (since
01115 1996), MassMutual Participation Investors (closed-end investment company
advised by Babson).
TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
12
NAME (AGE) PRINCIPAL OCCUPATION NUMBER OF
ADDRESS DURING THE PAST FIVE YEARS/ SERVICE BEGAN/ PORTFOLIOS
POSITION WITH THE FUND OTHER DIRECTORSHIPS HELD TERM ENDS OVERSEEN
------------------------ --------------------------------------------------------------------------- -------------- ----------
CORINE T. NORGAARD (65) Dean (since 1996), Barney School of Business and Public Administration, 1998/2005 2
University of Hartford; Director (since 1997), The Advest Bank; Trustee
MassMutual Corporate (since 1993), Aetna Series Fund (investment company); Director (since
Investors 1992), Aetna Variable Series Fund; Trustee (since 1998), MassMutual
1500 Main Street Participation Investors (a closed-end investment company advised by
Suite 1100 Babson).
Springfield, MA 01115
TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
13
OFFICERS OF THE TRUST
NAME (AGE)
ADDRESS PRINCIPAL OCCUPATION(S) POSITION HELD
POSITION WITH THE FUND DURING THE PAST FIVE YEARS SINCE THIS DATE
------------------------ --------------------------------------------------------------------------- -----------------
ROBERT E. JOYAL (58) President (since 2001) and Managing Director (2000-2001) of Babson.; 1999
Executive Director (1997-1999), Vice President and Managing Director
MassMutual Corporate (1987-1997) of the Insurance Company; Director (since 1996), Antares
Investors Leverage Capital Corp.; Director (since 1999), MassMutual Corporate Value
1500 Main Street Partners Limited ; Advisory Board Member (since 1996), MassMutual High
Suite 1100 Yield Partners II LLC; President (since 1999), MassMutual Corporate
Springfield, MA 01115 Investors; President (since 1999), MassMutual Participation Investors.
PRESIDENT
--------------------------------------------------------------------------------------------------------------------------
14
NAME (AGE)
ADDRESS PRINCIPAL OCCUPATION(S) POSITION HELD
POSITION WITH THE FUND DURING THE PAST FIVE YEARS SINCE THIS DATE
------------------------ --------------------------------------------------------------------------- -----------------
CLIFFORD M. NOREEN (45) Vice President (since 1993) of the Trust; Managing Director (since 2000) of 1993
Babson; Managing Director (1996-1999); Vice President (1995-1996) of the
MassMutual Corporate Insurance Company; Vice President (since 1993), MassMutual Participation
Investors Investors.
1500 Main Street
Suite 1100
Springfield, MA 01115
VICE PRESIDENT
--------------------------------------------------------------------------------------------------------------------------
ROGER W. CRANDALL (38) Vice President (since 2002) of the Trust; Managing Director (since 2000) of 2002
Babson; Managing Director (1993-2000) of the Insurance Company; Vice
MassMutual Corporate President (since 2002), MassMutual Participation Investors.
Investors
1500 Main Street
Suite 1100
Springfield, MA 01115
VICE PRESIDENT
--------------------------------------------------------------------------------------------------------------------------
15
NAME (AGE)
ADDRESS PRINCIPAL OCCUPATION(S) POSITION HELD
POSITION WITH THE FUND DURING THE PAST FIVE YEARS SINCE THIS DATE
------------------------ --------------------------------------------------------------------------- -----------------
STEPHEN L. KUHN (56) Vice President (since 1989) and Secretary (since 1980) of the Trust; Vice President
General Counsel and Clerk (since 2000) of Babson; Senior Vice President (since 1989)
MassMutual Corporate and Deputy General Counsel (since 1999), Vice President and Deputy
Investors General Counsel (1998-1999), Vice President and Associate General Counsel Secretary
1500 Main Street (1992-1998) of the Insurance Company; Vice President and Secretary (since (since 1980)
Suite 1100 1988) of MassMutual Participation Investors.
Springfield, MA 01115
VICE PRESIDENT AND SECRETARY
--------------------------------------------------------------------------------------------------------------------------
CHARLES C. MCCOBB, JR.(59) Chief Financial Officer (since 1998) and Vice President (since 1997) of Vice-President
the Trust; Managing Director (since 2000) of Babson; Managing Director (since 1997)
MassMutual Corporate (1997-1999) of the Insurance Company; Managing Director and Vice President
Investors (1994-1997) Citicorp, Inc. (banking); Chief Financial Officer (since 1998), Chief Financial
1500 Main Street and Vice-President (since 1997), MassMutual Participation Investors. Officer
Suite 1100 (since 1998)
Springfield, MA 01115
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
--------------------------------------------------------------------------------------------------------------------------
16
NAME (AGE)
ADDRESS PRINCIPAL OCCUPATION(S) POSITION HELD
POSITION WITH THE FUND DURING THE PAST FIVE YEARS SINCE THIS DATE
------------------------ --------------------------------------------------------------------------- -----------------
MARK B. ACKERMAN (37) Treasurer (since 1998), Comptroller (1997-1998) and Associate Treasurer 1998
(1995-1998) of the Trust; Managing Director (since 2000) of Babson;
MassMutual Corporate Investment Director (1994-1999) of the Insurance Company; Treasurer (since
Investors 1998), Comptroller (1997-1998), and Associate Treasurer (1995-1998),
1500 Main Street MassMutual Participation Investors.
Suite 1100
Springfield, MA 01115
TREASURER
--------------------------------------------------------------------------------------------------------------------------
JOHN T. DAVITT, JR. (35) Comptroller (since 2001) of the Trust; Director (since 2000) of Babson; 2001
Associate Director (since 1997) of MassMutual; Comptroller (since 2001),
MassMutual Corporate MassMutual Participation Investors.
Investors
1500 Main Street
Suite 1100
Springfield, MA 01115
COMPTROLLER
--------------------------------------------------------------------------------------------------------------------------
17
BENEFICIAL OWNERSHIP OF TRUST SHARES
DECEMBER 31, 2002*
NAME OF SHARES PERCENTAGE OF
INDIVIDUAL BENEFICIALLY OUTSTANDING
OR GROUP OWNED* SHARES OWNED
-------- ------ ------------
D. Benson 2,500 **
R. Dooley 8,400 **
D. Glickman 9,600 **
M. Hart 17,800 0.20%
R. Joyal 3,093 **
S. Kandarian None **
J. Laughery 4,834 **
C. Norgaard 492 **
S. Reese 16,543 0.19%
All Trustees, Nominees
and Executive Officers
as a Group 70,894 0.80%
DOLLAR RANGES OF SHARES OWNED BY TRUSTEES AND
NOMINEES FOR TRUSTEE*
NAME OF DOLLAR RANGE AGGREGATE DOLLAR RANGE
NOMINEE/ OF SHARES OF SHARES IN THE FAMILY
TRUSTEE IN THE FUND*** INVESTMENT COMPANIES
------- -------------- --------------------
D. Benson $50,001-$100,000 Over $100,000
R. Dooley Over $100,000 Over $100,000
D. Glickman Over $100,000 Over $100,000
M. Hart Over $100,000 Over $100,000
R. Joyal $50,001-$100,000 Over $100,000
S. Kandarian $0 $0
J. Laughery $50,001-$100,000 Over $100,000
C. Norgaard $10,001-$50,000 $10,001-$50,000
S. Reese Over $100,000 Over $100,000
------------
*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 not listed.
***Market Value as of January 23, 2003.
18
INFORMATION CONCERNING COMMITTEES AND MEETINGS OF THE BOARD OF TRUSTEES
The Board of Trustees has an Audit Committee composed exclusively of
Trustees who are not "interested persons" of the Trust, which operates pursuant
to a written Charter appearing on page 38 of this proxy as Appendix A. Its
present members are Messrs. Benson and Hart, and Ms. Norgaard. Each member of
the Audit Committee qualifies as an "independent" Trustee under the current
listing standards of the New York Stock Exchange and the rules of U.S.
Securities and Exchange Commission. The Audit Committee reviews the independence
of the Trust's independent accountants and the Trust's financial statements and
operation. The Committee also recommends to the Board of Trustees the engagement
of the Trust's independent auditors, and reviews with the auditors the plan and
scope of their audit for each year, the results of the audit when completed and
their fees for services performed. The Audit Committee also supervises
investigations into matters relating to audit function. During the twelve months
ended December 31, 2002, the Audit Committee held three meetings, one of which
was by telephone.
The Trust also has a Joint Transactions Committee, made up of the
independent Trustees, that reviews certain investment transactions. This
Committee acts primarily by written consent, and 15 consents were executed by
Committee members, approving 15 investments during the past fiscal year. The
Committee met informally four times during the year in conjunction with the
quarterly meetings of the full Board.
In addition, the Trust has a Nominating Committee whose members are also
the independent Trustees. The Nominating Committee is responsible for nominating
independent Trustees. The Nominating Committee may consider nominations
submitted by the Trust's shareholders at its discretion. This Committee met once
during fiscal year 2002.
During the past fiscal year, the Board of Trustees held five regular
meetings (one of which was held by means of a telephone conference). All
Trustees attended
19
at least 80% of all of the meetings of the Board of Trustees.
TRANSACTIONS WITH AND REMUNERATION OF OFFICERS AND TRUSTEES
Pursuant to the Contract, Babson paid the compensation and expenses of the
Trust's officers and employees and of all Trustees of the Trust who were
officers or employees of Babson, with the exception of Mr. Reese and Mr. Dooley,
whose compensation and expenses were paid by the Insurance Company. Thus, during
its fiscal year ended December 31, 2002, the Trust did not pay any compensation
to any of its officers or employees or to any of its Trustees who also were
officers or employees of Babson or the Insurance Company. Mr. Kandarian, who is
the executive director of a U.S. Government agency, does not receive any
compensation for his services as a Trustee other than out-of-pocket expenses
incurred to attend meetings. Babson will pay the compensation of and expenses of
the Trust's officers and employees and all Trustees of the Trust who are
officers or employees of Babson. The Insurance Company will pay the compensation
of and expenses of the Trust's officers and employees and all Trustees of the
Trust who are officers or employees of the Insurance Company.
Trustees who are not officers or employees of the Insurance Company or
Babson receive fees of $2,000 for each Trustees' meeting which they attend and
annual Trustees' fees of $12,000. No fees are paid for Trustees' meetings
conducted by telephone conference call or by written consent. Members of the
Audit Committee and Nominating Committee receive an additional fee of $1,000 per
meeting attended, including meetings conducted by telephone. The fees were
increased by the Board of Trustees on October 19, 2001, effective as of January
1, 2002. 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, 2002 was approximately $111,704.
20
The following table discloses the compensation paid to the Trust's
independent Trustees for the fiscal year ended December 31, 2002. Each of the
independent Trustees also serves as a Trustee of one other closed-end investment
company managed by Babson. (Both funds collectively referred to as the "Fund
Family").
TOTAL
AGGREGATE COMPENSATION
NAME OF COMPENSATION FROM FUND
TRUSTEE FROM THE TRUST FAMILY
------- -------------- ------
Donald E. Benson $24,000 $41,000
Milton Cooper 8,000 13,500
Donald Glickman 21,000 35,000
Martin T. Hart 22,000 37,750
Jack A. Laughery 21,000 35,000
Corine T. Norgaard 24,000 41,000
(2) RATIFICATION OR REJECTION OF APPROVAL OF AUDITORS
Upon the recommendation of the Audit Committee, the Trust's Board of
Trustees, including a majority of the independent Trustees, approved the
appointment of Deloitte & Touche LLP to act as auditors for the Trust for the
fiscal year ending December 31, 2003. Deloitte & Touche LLP has assured the
Trust that they are independent public accountants and have no direct or
material indirect interest in the Trust.
Shareholder approval of the Trust's auditors 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 Trustees will determine what action to take in the best
interests of shareholders of the Trust. Approval of the auditors will require
the affirmative "majority vote" of the shareholders.
A representative of Deloitte & Touche 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 from
shareholders.
21
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Trust's financial
reporting process on behalf of the Board of Trustees and operates under a
written Charter adopted by the Board of Trustees. The Audit Committee meets with
the Trust's management ("Management") and independent public accountants and
reports the results of its activities to the Board of Trustees. Management has
the primary responsibility for the financial statements and the reporting
process including the system of internal controls. In connection with the
Committee's and independent accountant's responsibilities, Management advised
that the Trust's financial statements were prepared in conformity with generally
accepted accounting principles.
Accordingly, the Audit Committee has:
o Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2002 with Management and Deloitte & Touche LLP, the
Trust's independent public accountants;
o Discussed with Deloitte & Touche LLP those matters required to be
discussed by SAS 61 (Codification of Statements on Auditing Standards); and
o Received the written disclosure and the letter from Deloitte & Touche LLP
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with Deloitte & Touche
LLP its independence.
The Audit Committee has also reviewed the aggregate fees billed for
professional services rendered by Deloitte & Touche LLP for the Trust and for
the non-audit services provided to Babson, and Babson's parent, the Insurance
Company. As part of this review, the Audit Committee considered whether the
provision of such non-audit services were compatible with maintaining the
principal accountant's independence.
22
In reliance on the reviews and discussions referred to above, the Audit
Committee presents this Report to the Trust's Board of Trustees and recommends
that the Board of Trustees (1) include the December 31, 2002 audited financial
statements in the Annual Report to shareholders for the fiscal year ended
December 31, 2002, and (2) file such Annual Report with the Securities and
Exchange Commission and the New York Stock Exchange. The Audit Committee and the
Board have also recommended reappointment of Deloitte & Touche LLP as the
Trust's independent auditors.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF TRUSTEES
Donald E. Benson, Audit Committee Chair
Martin T. Hart, Audit Committee Member
Corine T. Norgaard, Audit Committee Member
The Board of Trustees reviewed this Report and approved the audited financial
statements for publication in the Trust's Annual Report.
AUDIT COMMITTEE MEMBERS
The Audit Committee is comprised of Donald E. Benson, Martin T. Hart and
Corine T. Norgaard.
FEES PAID TO INDEPENDENT AUDITORS
FEES BILLED TO THE TRUST
DECEMBER 31, 2002 DECEMBER 31, 2001
Audit Fees $36,000 $26,500
Audit-Related Fees 0 0
Tax Fees 7,400 7,400
All Other Fees 0 0
------- -------
Total Fees $43,400 $33,900
======= =======
23
NON-AUDIT FEES BILLED TO BABSON AND THE INSURANCE COMPANY
DECEMBER 31, 2002 DECEMBER 31, 2001
Audit-Related Fees $380,850 $258,420
Tax Fees 18,350 2,000
All Other Fees 22,104 43,400
-------- --------
Total Fees $421,304 $303,820
======== ========
The enclosed proxy card provides space for instructions directing the
proxies named therein to vote for or against ratification of the selection of
Deloitte & Touche LLP.
(3) APPROVAL OF THE EXISTING INVESTMENT SERVICES CONTRACT
The Contract entitles the Trust to certain investment services. Under the
Contract, the Trust paid an advisory fee of $2,658,551 to Babson for the fiscal
year ended December 31, 2002.
At a meeting of the Board of Trustees of the Trust held on January 17,
2003, the Board of Trustees (including a majority of the independent Trustees),
approved, and voted to recommend that the shareholders approve the continuance
of the existing Contract with Babson. Among other things, the Board considered
the nature of the services provided to the Trust by Babson, including the nature
of the private placement market compared to public markets. Babson is required
to provide the Trust with a continuing investment program consistent with its
objectives, which includes investments in a wide variety of private placement
securities with equity features, short-term investments and publicly-traded
securities. The Trustees concluded that Babson has 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 Babson
under the Contract; the actual fees paid to Babson by the Trust for the services
provided and expenses assumed; a comparison of the
24
Trust's 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 Babson 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 Babson, the Trustees concluded that the administration of private
placement securities (and particularly private mezzanine securities) is more
extensive, expensive, 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 Babson's abilities to find and negotiate
private placement securities having equity features; 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 Babson (including
the size, experience and professionalism of Babson's investment, compliance and
accounting staffs); the profitability of the Contract to Babson; the Trust's
expenses and its expense ratio compared to other similar funds; and Babson's
soft dollar practices, and possible alternatives to the engagement of Babson.
The Trustees concluded, among other things, that the investment
performance of the Trust's portfolio for the one and three year periods ended
September 30, 2002 was satisfactory and that its expense ratio (excluding
interest expenses) for the fiscal year ended December 31, 2002 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 Babson, approved, and
recommended that shareholders approve, the continuation of the Contract
25
with Babson as now in effect. Prior to the Annual Meeting of Shareholders on
April 11, 2003, 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.
SUMMARY OF THE CONTRACT
Under the Contract, Babson has agreed to use its best efforts to present to
the Trust a continuing and suitable investment program consistent with the
investment objectives and policies of the Trust. The Insurance Company has
retained its obligation under the Contract to request each issuer of securities
that the Insurance Company is prepared to purchase at direct placement, and that
would be consistent with the investment policies of the Trust, to also offer
such securities to the Trust. The Insurance Company agreed to use its best
efforts to insure that such request is acceded to.
Babson, 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. Babson provides administration of the day-to-day
investment operations of the Trust and provides the Trust with office space and
office equipment, safekeeping facilities, accounting and bookkeeping services,
and necessary executive, clerical and secretarial personnel for the performance
of the foregoing services.
Either Babson or the Insurance Company pays the compensation and expenses
of all officers and executive employees of the Trust, and of all Trustees of the
Trust who are officers or employees of Babson or the Insurance Company, as well
as the expenses of office rent, telephone, utilities, office furniture,
equipment and other office expenses of the Trust.
The Trust pays the fees and expenses of Trustees who are not officers or
employees of Babson or the
26
Insurance Company, and of independent advisers, independent contractors,
consultants, managers and other agents which it employs other than through
Babson. In addition, the Trust is responsible for the payment of legal fees and
expenses; the fees and disbursements of auditors, transfer agents, dividend
disbursing agents, registrars and custodians and depositories of its assets;
taxes or governmental fees; the cost of preparing and mailing dividends,
reports, notices and proxy material to shareholders; brokers' commissions or
underwriting fees; and insurance for its Trustees.
Expenses incurred jointly by the Trust, Babson, the Insurance Company,
MassMutual Participation Investors (another closed-end investment company
advised by Babson), and other investment funds advised by Babson, 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.
Under the Contract, the Trust pays Babson a quarterly base rate (the "Base
Fee Rate") of 5/16 of 1% of the net asset value of the Trust (approximately
equivalent to 1.25% on an annual basis), plus or minus a performance adjustment
(the "Performance Adjustment") of up to 1/16 of 1% of the net asset value of the
Trust (approximately equivalent to .25% on an annual basis).
The Performance Adjustment is based on the Trust's performance as compared
to a benchmark rate of return (the "Target Rate") equal to 5.0 percentage points
plus an unweighted, arithmetic average of the rates of return on the Standard &
Poor's Industrials Stock Price Index (the "S&P Industrials") and the Lehman
Brothers Intermediate Credit Bond Index (the "Intermediate Bond Index," formerly
named "Lehman Brothers Intermediate Corporate Bond Index") over a rolling
three-year period (the "Measurement Period") comprising the twelve quarters
ending on the last day of each quarter (the "Valuation Date"). The Performance
Adjustment is equal to 5% of the difference between the Trust's actual rate of
return
27
over the Measurement Period and the Target Rate. If the Trust's actual rate of
return exceeds the Target Rate, the Base Fee Rate is increased by an amount
equal to the Performance Adjustment; if the Trust's actual rate of return is
less than the Target Rate, the Base Fee Rate is reduced by the Performance
Adjustment. The Performance Adjustment is subject to a maximum and minimum range
of 1/16 of 1% of the net asset value of the Trust (approximately equivalent to
..25% on an annual basis). The advisory fee payable by the Trust is equal to the
Base Fee Rate (as adjusted by the Performance Adjustment) times the net asset
value of the Trust as of the Valuation Date.
At a meeting on January 17, 2003, the Board of Trustees of the Trust valued
the Trust's portfolio securities as of the close of business on December 31,
2002, and arrived at a net asset value of $171,028,431.
The Contract provides that Babson will reimburse the Trust for any amount,
not exceeding the advisory fee payable by the Trust to Babson, 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 Babson 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
28
assignment of the Contract to Babson did not affect the Trust's right to use the
name "MassMutual."
The Contract also provides that Babson shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Babson in the performance of its duties or from reckless disregard by Babson
of its obligations and duties under the Contract.
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 Babson. 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 Babson, 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 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 the 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
29
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, Babson may place orders with brokers and dealers who supply market
quotations to the Trust or its agents for portfolio valuation purposes, or who
supply research, market and statistical information to the Trust or Babson.
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 Babson, it is the opinion of Babson that
such information is only supplementary to Babson's own research effort, since
the information must still be analyzed, weighed and reviewed by Babson's staff.
Such information may be useful to Babson in providing services to clients other
than the Trust, and not all such information is used by Babson in connection
with the Trust. Conversely, such information provided to Babson by brokers and
dealers through whom other clients of Babson effect securities transactions may
be useful to Babson in providing services to the Trust.
During the fiscal year ended December 31, 2002, the Trust paid an aggregate
sum of $13,649 in brokerage commissions. Portfolio turnover for the fiscal year
ended December 31, 2002, was 34.02%.
CERTAIN ADMINISTRATIVE SERVICES
The Insurance Company provides certain administrative services to the Trust
including, but not limited to, meeting facilities, legal and other services
provided to the Trust's Investment Adviser. The Insurance Company's principal
business address is 1295 State Street, Springfield, MA, 01111.
30
INVESTMENT ADVISER
The names and addresses of the principal executive officer and each
director of Babson and his or her principal occupation are set forth below:
STUART H. REESE
1295 STATE STREET
SPRINGFIELD, MASSACHUSETTS 01111
Director, Chairman and CEO of David L. Babson & Company Inc.
Executive Vice President and Chief Investment Officer of
Massachusetts Mutual Life Insurance Company
ROBERT E. JOYAL
1500 MAIN STREET, SUITE 2800
SPRINGFIELD, MASSACHUSETTS 01115
Director, President and Chief Operating Officer of
David L. Babson & Company Inc.
ROBERT LIGUORI
1295 STATE STREET
SPRINGFIELD, MASSACHUSETTS 01111
Director of David L. Babson & Company Inc.
Senior Vice President and Deputy General Counsel of
Massachusetts Mutual Life Insurance Company
KEVIN M. MCCLINTOCK
ONE MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02142
Director and Managing Director of David L. Babson & Company Inc.
31
FRANK L. TARANTINO
ONE MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02142
Director, Chief Financial Officer, Chief Administrative Officer and
Managing Director of David L. Babson & Company Inc.
Executive Officers of the Trust who are officers or employees of Babson
(other than Trustees of the Trust) 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 2003 Annual Meeting of Shareholders and until his successor shall have been
chosen and qualified.
ROBERT E. JOYAL
President (since 2001), Director and Chief Operating Officer (since 2000)
and Managing Director (2000-2001), Babson, Executive Director (1997-1999) Vice
President and Managing Director (1987-1997) of the Insurance Company; Director
(since 1996), Antares Capital Corporation; Director (since 1999), MassMutual
Corporate Value Partners Limited; Advisory Board Member (since 1996), MassMutual
High Yield Partners II, LLC; President (since 1999) MassMutual Corporate
Investors (closed-end investment company advised by Babson); President (since
1999) MassMutual Participation Investors (closed-end investment company advised
by Babson). Age 58.
CLIFFORD M. NOREEN
Vice President (since 1993) of the Trust; Managing Director (since 2000) of
Babson; Managing Director (1996-1999); Vice President (1995-1996) of the
Insurance Company; Vice President (since 1993), MassMutual Participation
Investors. Age: 45.
ROGER W. CRANDALL
Vice President (since 2002) of the Trust; Managing Director (since 2000) of
Babson; Managing Director (1993-2000) of the Insurance Company; Vice President
(since 2002) of MassMutual Participation Investors. Age: 38
32
STEPHEN L. KUHN
Vice President (since 1989) and Secretary (since 1980) of the Trust;
General Counsel and Clerk (since 2000) of Babson; Senior Vice President and
Deputy General Counsel (since 1999), Vice President and Deputy General Counsel
(1998-1999), Vice President and Associate General Counsel (1992-1998) of the
Insurance Company; Vice President and Secretary (since 1988) of MassMutual
Participation Investors. Age: 56.
CHARLES C. MCCOBB, JR.
Chief Financial Officer (since 1998) and Vice President (since 1997) of the
Trust; Managing Director (since 2000) of Babson; Managing Director (1997-1999)
of the Insurance Company; Managing Director and Vice President (1994-1997) of
Citicorp, Inc. (banking); Chief Financial Officer (since 1998) and
Vice-President (since 1997) of MassMutual Participation Investors. Age: 59.
MARK B. ACKERMAN
Treasurer (since 1998), Comptroller (1997-1998) and Associate Treasurer
(1995-1998) of the Trust; Managing Director (since 2000) of Babson; Investment
Director (1994-1999) of the Insurance Company; Treasurer (since 1998),
Comptroller (1997-1998) and Associate Treasurer (1995-1998), MassMutual
Participation Investors. Age: 37.
Other officers of the Trust who are officers or employees of Babson are:
Mark A. Ahmed, Shaun Corish, John T. Davitt, Jr., Andrew C. Dickey, Christopher
P. Dowd, Walter T. Dwyer, Robert M. Feingold, Jill A. Fields, Laura L. Grant,
Dean R. Graves, Michael P. Hermsen, Patrick J. Joyce, Mary Wilson Kibbe, Michael
L. Klofas, Kathleen L. Kraez, Lisa M. Kusek, Audrey Meyer Lampert, Mary S. Law,
Thomas
33
S. Li, Kathleen Lynch, Mary Ann Z. McCarthy, Richard C. Morrison, Emeka
Onukwugha, Elisabeth A. Perenick, James M. Roy, Thomas Shea, Robert M. Shettle,
Richard E. Spencer II, J. Stevens Staggs, Brian S. Toth and John B. Wheeler.
DLB Acquisition Corporation is the direct owner of 100% of the voting
shares of Babson. MassMutual Holding Company owns approximately 98% of the
voting shares of DLB Acquisition Corporation. The Insurance Company owns all of
the voting shares of MassMutual Holding Company. All of these corporations are
located at 1295 State Street, Springfield, Massachusetts, 01111. Babson also has
an office at 1500 Main Street in Springfield, Massachusetts, 01115, but its
principal office is located at One Memorial Drive, Cambridge, Massachusetts
02142.
Babson also advises MassMutual Participation Investors ("Participation
Investors"), a closed-end, diversified management investment company, having a
similar investment objective as the Trust and having net assets of $83,586,663
as of December 31, 2002. Babson's Investment Advisory and Administrative
Services Contract with Participation Investors provides that Babson is to be
paid a quarterly fee equal to 0.225% of the value of the net assets of
Participation Investors as of the close of business on the last business day of
each fiscal quarter (approximately equivalent to .90% on an annual basis).
NET ASSETS ADVISORY FEE
AS OF (ON AN
NAME OF FUND 12/31/02 ANNUAL BASIS)
------------ -------- -------------
MassMutual
Participation $83.6 .90% of net assets
Investors Million
In addition to acting as investment adviser and administrator to the Trust
and Participation Investors, Babson is investment sub-adviser to certain series
of MML Series Investment Fund and MassMutual Institutional Funds, which are
open-end management investment companies primarily investing in publicly traded
securities. Babson also acts as investment adviser
34
to The DLB Fund Group, another multi-series, open-end management investment
company primarily investing in publicly traded securities.
(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 two Babson employees who had reporting
responsibilities with respect to transactions in securities failed to timely
file a Form 3 and Form 4 respectively. Mr. Davitt inadvertently failed to timely
file a Form 3 upon becoming Comptroller of the Trust. Ms. Fortier inadvertently
failed to timely file a Form 4 upon leaving her position as Comptroller of the
Trust.
PROPOSALS BY SHAREHOLDERS
Any shareholder intending to present a proposal at the Annual Meeting to be
held in 2004 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 3, 2003,
to be considered for inclusion in the Trust's proxy material for its 2004 Annual
Meeting.
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
solicitation of these proxies and with any further proxies which may be
solicited by the Trust's officers
35
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 $18,000. 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, which reimbursement will not be submitted to a vote of
the Trust's shareholders.
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.
36
ANNUAL REPORT
THE ANNUAL REPORT OF THE TRUST FOR ITS FISCAL YEAR ENDED DECEMBER 31, 2002,
INCLUDING FINANCIAL STATEMENTS, A SCHEDULE OF THE TRUST'S INVESTMENTS AS OF SUCH
DATE AND OTHER DATA, WILL BE MAILED ON OR ABOUT FEBRUARY 28, 2003, TO ALL
SHAREHOLDERS OF RECORD. 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,
/s/ Stephen L. Kuhn
Stephen L. Kuhn
VICE PRESIDENT AND SECRETARY
1500 Main Street, Suite 1100
Springfield, Massachusetts 01115
February 28, 2003
37
APPENDIX A
MASSMUTUAL CORPORATE INVESTORS
AUDIT COMMITTEE CHARTER
ADOPTED APRIL 28, 2000
REVISED JULY 19, 2002
1. The Audit Committee shall be composed entirely of Trustees that are free of
any relationship that would, in the opinion of the Board, interfere with
the exercise of their independent judgment ("independent Trustees"). The
Audit Committee shall be composed of at least three Trustees. Each member
of the Audit Committee:
(a) will be financially literate, as such qualification is interpreted by
the Trust's Board of Trustees, or become financially literate within a
reasonable period of time after his or her appointment to the Audit
Committee; and
(b) at least one member of the Audit Committee must have accounting or
related financial management expertise, as determined by the Board of
Trustees in its business judgment.
2. The purposes of the Audit Committee are:
(a) to oversee the Trust's accounting and financial reporting policies and
practices;
(b) to oversee the quality and objectivity of the Trust's financial
statements and the independent audit thereof;
38
(c) to act as a liaison between the Trust's independent auditors and the
full Board of Trustees, and
(d) to provide immediate access for the independent accountants to report
any special matters they believe should be brought to the attention of
the Board of Trustees.
The function of the Audit Committee is oversight; it is management's
responsibility to maintain appropriate systems for accounting and internal
control, and the independent auditor's responsibility to plan and carry out
a proper audit.
3. To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) to recommend the selection, retention or termination of independent
auditors and, in connection therewith, to evaluate the independence of
the auditors, and to receive the auditors' specific representations as
to their independence;
(b) to meet with the Trust's independent auditors, including private
meetings, as necessary (i) to review the arrangements for the annual
audit and any special audits; (ii) to discuss any matters of concern
brought to their attention relating to the Trust's financial
statements, including any adjustments to such statements recommended
by the independent auditors, or other results of said audit(s); (iii)
to consider the
39
auditors' comments with respect to the Trust's financial policies,
procedures and internal accounting controls and management's responses
thereto; and (iv) to review the form of opinion the auditors propose
to render to the Board and shareholders;
(c) to review reports concerning any changes in accounting principles or
practices proposed by management or the independent auditors;
(d) to receive an update regarding the results, or current status of any
regulatory examinations;
(e) to review the fees charged by the independent auditors for audit and
non-audit services brought to the Committee's attention by management
or the auditors;
(f) to review any unusual or significant commitments or contingent
liabilities that have arisen:
(g) to investigate improprieties or suspected improprieties, if any, in
the Trust's operations; and
(h) to report its activities to the full Board on a regular basis and to
make such recommendations with respect to the above and other matters
as the Committee may deem necessary or appropriate.
4. The Committee shall meet annually and is empowered to hold special meetings
as circumstances require.
40
5. The Committee shall meet annually with the Chief Financial Officer of the
Trust to review any items of concern to the Committee or management
including management's comments on the performance of the independent
auditors.
6. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the Trust.
7. The Committee shall review this charter at least annually and recommend any
changes to the full Board of Trustees.
41
L4287p 203
--------------------------------------------------------------------------------
MASSMUTUAL CORPORATE 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 Corporate 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
11, 2003, at 2:00 p.m. Eastern 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).
THIS PROXY WILL BE VOTED ON ITEM (4) IN THE SOLE AND ABSOLUTE DISCRETION OF
THE PROXY AND IN THE ABSENCE OF INSTRUCTIONS THE UNDERSIGNED HEREBY AUTHORIZES
THE AFOREMENTIONED PROXY OR PROXIES TO VOTE ON ANY MATTER RAISED PURSUANT TO
ITEM (4).
Address Changes: _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(If you noted any address changes/comments above,
please mark corresponding box on other side.)
PLEASE SIGN ON REVERSE SIDE
SEE REVERSE SIDE
--------------------------------------------------------------------------------
MASSMUTUAL CORPORATE INVESTORS MASSMUTUAL CORPORATE INVESTORS
C/O DAVID L. BABSON & COMPANY INC. THIS PROXY IS SOLICITED ON BEHALF
1500 MAIN STREET OF THE BOARD OF TRUSTEES
SPRINGFIELD, MA 01115 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 Corporate 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 11, 2003, at 2:00 p.m.
Eastern 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).
To vote by Mail
THIS PROXY WILL BE VOTED ON ITEM (4)
1) Read the Proxy Statement. IN THE SOLE AND ABSOLUTE DISCRETION
2) Check the appropriate boxes on OF THE PROXY AND IN THE ABSENCE OF
the proxy card below. INSTRUCTIONS THE UNDERSIGNED HEREBY
3) Sign and date the proxy card. AUTHORIZES THE AFOREMENTIONED PROXY
4) Return the proxy card in the OR PROXIES TO VOTE ON ANY MATTER
envelope provided. RAISED PURSUANT TO ITEM (4).
TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
--------------------------------------------------------------------------------
MASSMUTUAL CORPORATE INVESTORS
1. Election of Trustees FOR WITHHELD FOR ALL
ALL ALL EXCEPT
Nominee: Robert E. Joyal for the term set [_] [_] [_]
forth in the proxy statement.
To withhold authority to vote, mark
Nominees for re-election: Stuart H. Reese "For All Except" and write the
and Martin T. Hart for the terms set forth nominee's number on the line below.
in the proxy statement. ___________________________________
FOR AGAINST ABSTAIN
2. Ratification of the selection of [_] [_] [_]
Deloitte & Touche L.L.P. as auditors
for the fiscal year ending December
31, 2003.
3. Approval of continuance of the Trust's [_] [_] [_]
Investment Services Services Contract
with David L. Babson & Company Inc.
dated July 1, 1988.
4. In their discretion, the proxies are
authorized to vote on any other business
that may properly come before the Annual
Meeting. The proxies are hereby authorized
to vote on any other business in their sole
and absolute discretion.
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 80217-36
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT. [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING. [ ]
Signature: Date:
Signature:(Joint Owner) Date: