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 [ ]
Filed by a Party other than the Registrant [X]
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 Corporate Investors
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(Name of Registrant as Specified In Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MassMutual Corporate Investors
Springfield, Massachusetts 01111
[LOGO]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
TIME
Friday, April 28, 2000
at 2:00 p.m.
PLACE
Oak Room
Massachusetts Mutual
Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
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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.
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MassMutual Corporate Investors
Springfield, Massachusetts
Dear Shareholder:
The 2000 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 28, 2000. 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 re-elect three Trustees,
ratify the selection of Deloitte & Touche LLP as auditors, and approve the
existing Investment Services Contract dated July 1, 1988. As part of a corporate
reorganization, Massachusetts Mutual Life Insurance Company (the "Insurance
Company"), the Trust's investment adviser, merged its investment management
division into and transferred its investment management business to David L.
Babson and Company, Incorporated ("Babson"), an investment advisory subsidiary
of the Insurance Company, effective January 1, 2000 (the "Reorganization"). As a
result of the Reorganization, the Insurance Company assigned its duties under
the Investment Services Contract to Babson.
The Trustees recommend that shareholders elect the nominated Trustees,
ratify the selection of Deloitte & Touche LLP, and approve the existing
Investment Services Contract.
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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
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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
28, 2000, at 2:00 p.m., Eastern time, for the following purposes:
(1) To re-elect Stuart H. Reese and Martin T. Hart as Trustees for
three-year terms, and to re-elect Milton Cooper as a Trustee for a two-year
term, 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, 2000;
(3) To approve the Trust's existing Investment Services Contract with David
L. Babson and Company Incorporated dated July 1, 1988;
(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 29, 2000, are entitled to vote at the meeting or any adjournment
thereof.
By order of the
Board of Trustees,
/s/ Stephen L. Kuhn
Stephen L. Kuhn
Vice President and Secretary
Springfield, Massachusetts
March 7, 2000
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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 28, 2000, 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 29, 2000 will be entitled to one vote per share on all
business of the meeting and any adjournments. There were 8,587,495 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, 2000 (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 Trust, Notice of
Annual Meeting of Shareholders and proxy card are being mailed on or
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about March 7, 2000, to shareholders of record on the record date.
Pursuant to the Trust's By-Laws, the presence at the Annual Meeting, in
person or by proxy, of shareholders entitled to cast a majority of the votes
shall be a quorum for the transaction of business. A plurality of votes cast is
required to elect Trustees. Thus, the three nominees for re-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 Trust's
Declaration of Trust a majority of the shares voted is required to ratify the
selection of independent accountants.
An affirmative "majority vote" of the Trust's shares is required to approve
the Trust's existing Investment Services Contract dated July 1, 1988 (the
"Contract"), which has been assigned to Babson as of January 1, 2000. 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 Trustees and the ratification of the selection of an
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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 nine Trustees with terms
expiring in 2000, 2001, and 2002. The terms of Stuart H. Reese, Marshall D.
Butler, Milton Cooper, and Martin T. Hart expire this year. Following the Annual
Meeting of Shareholders, Marshall D. Butler will be retiring and the Board will
be comprised of eight Trustees. The Trustees voted to reduce the Board to eight
Trustees at their January 21, 2000 meeting. 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.
STUART H. REESE /1/
(Term expires 2000)
Nominee for re-election. Trustee, Chairman (since 1999), and President
(1993-1999), of the Trust; Executive Vice President and Chief Investment Officer
(since 1999), of the Insurance Company; Director, President and CEO (since
2000), of Babson; Chief Executive Director (1997-1999), Senior Vice President
(1993-1997), of the Insurance Company; President (1993-1999), MML Series
Investment Fund; Director (since 1995), MassMutual Corporate Value Partners;
President (1994-1999), MassMutual Institutional Funds; Trustee, Chairman (since
1999), and President (1993-1999), MassMutual Participation Investors; Director
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/1/ Mr. Reese is an "interested person" of Trust (as defined in the Investment
Company Act of 1940, amended) because of his position as an Officer of the Trust
and a Director, President and CEO of Babson.
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(since 1993), MML Baystate Life Insurance Company; Advisory Board Member (since
1995), Kirtland Capital Partners; Director (since 1996), MassMutual High Yield
Partners II; Director (since 1996), CM Assurance Company; Director (since 1996),
CM Benefit Insurance Company; Director (since 1996), CM Life Insurance Company;
Director (since 1996), CM International, Inc; Director (since 1996), Antares
Capital Corporation; Director (since 1996), Charter Oak Capital Management,
Inc.; Director (since 1996), State House I Corporation; President (since 1998),
MassMutual/Darby CBO LLC; Director (since 1999), MLDP Holdings. (Mr. Reese was
elected to the Board by the Trustees at a meeting held on July 16, 1999). Age:
44.
DONALD E. BENSON
(Term expires 2001)
Trustee (since 1986) of the Trust; Executive Vice President and Director
(since 1992), Marquette Bancshares (bank holding company); 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), 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 1988), MassMutual Participation Investors
(closed-end investment company advised by Babson). Age: 69.
RICHARD G. DOOLEY /2/
(Term expires 2001)
Trustee (since 1988), Vice Chairman (since 1995) and Chairman (1999) of the
Trust; Consultant (since 1993), and former Chief Investment Officer of the
Insurance Company; Director, The Advest Group, Inc. (financial services holding
company); Director, HSB Group, Inc. (formerly known as Hartford Steam Boiler
Inspection and Insurance Co.); Trustee (since 1992), Kimco Realty Corp.
(shopping center ownership and management); Director, Jefferies Group, Inc.
(financial
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/2/ Mr. Dooley is an "interested person" of the Trust (as defined in the
Investment Act of 1940, amended) because of his position as an Officer of the
Trust and consultant to the Insurance Company.
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services holding company); Chairman (1999 and 1988-1995), Vice Chairman
(1995-1999) and Trustee, MML Series Investment Fund (open-end investment company
advised by the Insurance Company); Chairman (1999, and 1988-1995), Vice Chairman
(since 1995) and Trustee (since 1988), MassMutual Participation Investors
(closed-end investment company advised by Babson). Age: 70.
MILTON COOPER
(Term expires 2000)
Nominee for Re-election. Trustee (since 1990) of the Trust; Chairman (since
1992), Kimco Realty Corp. (shopping center ownership and management); Director,
Getty Petroleum Corp. (petroleum marketing); Director, Blue Ridge Real Estate;
Trustee (since 1990), MassMutual Participation Investors (closed-end investment
company advised by Babson). Age: 71.
DONALD GLICKMAN
(Term Expires 2001)
Trustee (since 1992) of the Trust; 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); Trustee (since 1992),
MassMutual Participation Investors (closed-end investment company advised by
Babson). Age: 66.
MARTIN T. HART
(Term expires 2000)
Nominee for Re-election. Trustee (since 1991) of the Trust; President and
Director, H Corporation (since 1983); Co-Manager (1983-1996), Lake Catamount
Joint Venture (ski resort); Partner (since 1986), Consolidated Nursery
Properties (wholesale nursery and garden center); Director (1993-2000), Optical
Security Group, Inc. (product security); Director (since 1992), Schuler Homes,
Inc. (housing); Director (1990-1998), PNB Financial Group (bank holding
company); Director (since 1997), T Netiks (communications); Director (since
1996), PJ America (pizza restaurant); Director (1993-1998), PJNC, Inc. (pizza
restaurant); Director (since 1994), Ardent Software, Inc. (computers); Director
(since 1994), Houston Pizza Venture (pizza restaurant); Director (1994-1996),
The Bagel Group (bagel restaurant); Director (1992-1996), PJVA, Inc. and PJV,
Inc. (pizza
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restaurants); Director (since 1998), Vail Banks; Trustee (since 1991),
MassMutual Participation Investors (closed-end investment company advised by
Babson). Age: 64.
JACK A. LAUGHERY
(Term expires 2002)
Trustee (since 1996) of the Trust; Chairman (1997-1998), and Partner (since
1996), Papa John's New England (food service); President (since 1996), Laughery
Investments; 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 (1997-1998), Maynard Capital Partners
(investments); Director (since 1993), Papa John's International (food service
companies); Houston Pizza Venture LLC (pizza restaurant); Partner (1988-1998),
Atlantic Beach Sheraton; Partner (since 1987), 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); Director (1990-1997),
Sprint Mid-Atlantic (telecommunications); Director (1993-1996), Corral America
(food service); Trustee (since 1996), MassMutual Participation Investors
(closed-end investment company advised by Babson). Age: 65.
CORINE T. NORGAARD
(Term Expires 2002)
Trustee (since 1997) of the Trust; 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 (since 1997), The Advest Bank; Trustee (since
1993), Aetna Series Fund (investment company); Director (1988-1996), The Advest
Group; Trustee (since 1997), MassMutual Participation (a closed-end investment
company advised by Babson). Age: 62.
Share Ownership of Trustees, Nominees and Executive Officers
The following table sets forth information concerning beneficial ownership,
as of February 1, 2000, of the Trust's shares by each Trustee and nominee for
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Trustee, and by the Trust's Trustees, nominees for Trustee and executive
officers as a group.
Name Shares Percentage of
Individual Beneficially Outstanding
or Group Owned* Shares Owned
-------- ----- ------------
Donald E. Benson 7,750** ***
Marshall D. Butler 1,000 ***
Milton Cooper 1,000 ***
Richard G. Dooley 8,400 ***
Donald Glickman 2,800 ***
Martin T. Hart 9,600 0.11%
Jack A. Laughery 1,000 ***
Corine T. Norgaard 400 ***
Stuart H. Reese 13,654 0.16%
All Trustees, Nominees
and Executive Officers
as a Group 48,185 0.56%
Information Concerning Committees and Meetings of the Board of Trustees
The Board 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 Trust's independent auditors,
supervises investigations into matters relating to audit functions, reviews with
the Trust's independent auditors the results of the audit engagement, and
considers the audit fees. The Trust also has a Joint Transactions Committee,
made up of the independent Trustees, that reviews certain investment
transactions. 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
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*Each nominee, Trustee and officer has furnished this information, not being
within the knowledge of the Trust. Beneficial ownership is as defined under
Section 13(d) of the Securities Exchange Act of 1934, as amended. Fractional
shares are not reported.
**6,500 shares held in trust, 50% ownership by Mr. Benson.
***Less than one-tenth of one percent not listed.
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Nominating Committee may consider nominations submitted by the Trust's
shareholders at its discretion.
During the past fiscal year, the Board of Trustees held five regular
meetings (one of which was held by telephone conference), and the Audit
Committee met once. The Joint Transactions Committee met four times in person
and conducted one telephone conference meeting. All Trustees attended at least
80% of the aggregate number of meetings of the Board of Trustees and Committees
of the Board on which they serve.
Transactions with and Remuneration of Officers and Trustees
Pursuant to the Contract (prior to its assignment to Babson effective
January 1, 2000), the Insurance Company 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 the Insurance Company. Thus, during its fiscal year
ended December 31, 1999, 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 the Insurance Company. Babson or 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 Babson or the Insurance
Company.
Trustees who are not officers or employees of the Insurance Company (and,
as of January 1, 2000, Babson) receive fees of $1,500 for each Trustees' meeting
which they attend and annual Trustees' fees of $12,000. No meeting fees are paid
for meetings conducted by telephone conference call or by written consent.
Members of the Audit Committee and Nominating Committee receive an additional
fee of $600 per meeting. 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, 1999 was approximately $136,706.
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The following table discloses the compensation paid to the Trust's
independent Trustees for the fiscal year ended December 31, 1999. Each of the
independent Trustees also serves as a Trustee of one other closed-end investment
company managed by Babson.
Total
Aggregate Compensation
Name of Compensation from Fund
Trustee from the Trust Complex
------- -------------- -------
Donald E. Benson $18,600 $31,200
Marshall D. Butler 18,000 30,000
Milton Cooper 18,000 30,000
Donald Glickman 18,000 30,000
Martin T. Hart 18,600 31,200
Jack A. Laughery 18,000 30,000
Corine T. Norgaard 18,000 30,000
(2) RATIFICATION OF
APPROVAL OF AUDITORS
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, 2000. Deloitte & Touche
LLP has assured the Trust that they are independent public accountants and have
no direct or material indirect interest in the Trust. 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 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.
(3) APPROVAL OF THE EXISTING
INVESTMENT SERVICES CONTRACT
The Trust has an Investment Services Contract, dated July 1, 1988 (the
"Contract") that entitles the Trust to certain investment services. Under the
Contract, the Trust paid an advisory fee of $2,013,708 to
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the Insurance Company for the fiscal year ended December 31, 1999.
On January 1, 2000, the Insurance Company consolidated its investment
management organization into Babson, an indirect subsidiary that is a federally
registered investment adviser (the "Reorganization). The employees of the
Insurance Company's investment management division and its investment management
business were transferred to Babson. The Insurance Company owns and controls
approximately 98% of the voting stock of Babson through various subsidiaries. As
a result of the Reorganization, the Insurance Company assigned its investment
advisory contract with the Trust to Babson. The Trustees of the Trust, including
a majority of the Trustees who are independent, approved the assignment. No
increase in fees or change in portfolio management personnel for the Trust
occurred as a result of the Reorganization or the assignment of the Contract to
Babson.
At a meeting of the Board of Trustees of the Trust held on January 21,
2000, the Board of Trustees approved (including a majority of the independent
Trustees), and voted to recommend that shareholders approve, 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, that
includes investments in a wide variety of private placement securities with
equity features attached, 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 Trust's fee schedule to fees
charged by other investment advisers whose investment activities include private
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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.
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, 1999 was satisfactory and that its expense ratio (excluding
interest expenses) for the fiscal year ended December 31, 1999 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 with Babson as now in effect. Prior to the Annual Meeting of
Shareholders on April 28, 2000, the Trustees will meet again to review their
approval and
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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 offer such
securities also 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 pay 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 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
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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, the Insurance Company, MassMutual
Participation Investors (another closed-end investment company advised by
Babson), 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.
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 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 the Trust's
actual rate of return over the Measurement Period and the Target Rate. If the
Trust's actual rate of return exceeds the Target Rate, the Base Fee Rate is
increased by an amount equal to the Performance Adjustment; if the Trust's
actual rate of return is less than the Target Rate, the Base Fee Rate is reduced
by
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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 21, 2000, the Board of Trustees of the Trust valued
the Trust's portfolio securities as of the close of business on December 31,
1999, and arrived at a net asset value of $188,960,760.
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 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
17
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. As previously stated, the assignment of the Contract to
Babson is not considered an assignment pursuant to Rule 2a-6 of the Investment
Company Act of 1940, since there has been no change in actual control or
management of the adviser to the Trust.
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
18
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, 1999, the Trust paid an aggregate
sum of $33,514 in brokerage commissions. Portfolio turnover for the fiscal year
ended December 31, 1999 was 68.04%.
INVESTMENT ADVISER
The names and addresses of the principal executive officer and each
director of Babson and his or her principal occupations are given below:
STUART H. REESE
1295 State Street
Springfield, Massachusetts 01111
Director, President and CEO of David L. Babson and
Company Incorporated
Executive Vice President and Chief Investment Officer
of Massachusetts Mutual Life Insurance Company
19
ROBERT E. JOYAL
1295 State Street
Springfield, Massaachusetts 01111
Director and Executive Director of David L. Babson and
Company Incorporated
KEVIN M. McCLINTOCK
One Memorial Drive
Cambridge, Massachusetts 02142
Director and Executive Vice President of David L.
Babson and Company Incorporated
FRANK L. TARANTINO
One Memorial Drive
Cambridge, Massachusetts 02142
Chief Financial Officer, Executive Vice President and
Director, and Chief Compliance Officer of David L.
Babson and Company Incorporated
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 2000 Annual Meeting of Shareholders and until his successor shall have been
chosen and qualified.
ROBERT E. JOYAL
President (since 1999), Senior Vice President (1989-1999) of the Trust;
Director and Executive Director of Babson (since 2000); Executive Director
(1997-1999), Vice President and Managing Director (1987-1996) of the Insurance
Company; Director (since 1996) of MassMutual High Yield Partners; Director
(1995-1999) of Tenneco International; Director (since 1996) of Antares Capital
Corporation. Age: 55.
20
CLIFFORD M. NOREEN
Vice President (since 1993) of the Trust; Senior Managing Director (since
2000) of Babson; Senior Managing Director (1996-1999), Managing Director,
(1996), Vice President (1995-1996) of the Insurance Company. Age: 42.
STEPHEN L. KUHN
Vice President and Secretary (since 1988) 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.
Age: 53.
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). Age: 56
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. Age: 34.
Other officers of the Trust who are officers or employees of Babson are:
Mark A. Ahmed, Maura Ann Batchelor, James T. Birchall, Roger W. Crandall, John
Cunningham, Andrew C. Dickey, Walter T. Dwyer, Jill A. Fields, Victoria Fortier,
Michael P. Hermsen, William N. Holm, Patrick J. Joyce, Mary Wilson Kibbe,
Michael L. Klofas, Kathleen L. Kraez, Lisa M. Kusek, Mary S. Law, Thomas S. Li,
Kathleen Lynch, Mary Ann Z. McCarthy, Richard C. Morrison, Emeka Onukwugha,
James M. Roy, Jeffrey Sadjak, Richard E. Spencer II, John B. Wheeler, Lisa J.
Yoerg, and Edward Youmell.
21
DLB Acquisition Corporation is the direct owner of 100% of the voting
shares of Babson. MassMutual Holding Trust I owns approximately 98% of the
voting shares of DLB Acquisition Corporation. MassMutual Holding Company owns
all of the voting shares of MassMutual Holding Trust I. 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 that location, 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 net
assets of $97,014,656 as of December 31, 1999. 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 12/31/99 annual basis)
- ------------ -------- ------------
MassMutual
Participation $97.0 .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 to the DLB Fund Group,
another 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.
22
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, four employees of the Insurance Company (now
employees of Babson), who had reporting responsibilities with respect to
transactions in securities of the Trust failed to timely file SEC Form 4 in
connection with certain deferrals and transfers to a "shadow account" under
employee benefit plans of the Insurance Company. Mark B. Ackerman failed to
timely file one form with respect to two transactions; Charles C. McCobb failed
to timely file one form with respect to one transaction; Clifford M. Noreen
failed to timely file one form with respect to two transactions; and Jeanne M.
Stamant failed to timely file one form with respect to three transactions.
Stuart H. Reese inadvertently failed to file a SEC Form 4 with respect to two
transactions that took place in 1998.
PROPOSALS BY SHAREHOLDERS
Any shareholder intending to present a proposal at the Annual Meeting to be
held in 2001 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, 2000,
to be considered for inclusion in the Trust's proxy material for its 2001 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 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
23
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.
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, 1999,
including financial statements, a schedule of the Trust's investments as of such
date and other data, was mailed, on or about February 25, 2000, 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
1295 State Street
Springfield, Massachusetts 01111
March 7, 2000
24
APPENDIX
FORM OF PROXY
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
28, 2000, 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).
PLEASE SIGN ON REVERSE SIDE
SEE REVERSE
SIDE
Please mark votes as in this example.
1. Election of Trustees
Nominees: Stuart H. Reese, Martin T. Hart, and Milton Cooper for the terms set
forth in the proxy statement.
FOR WITHHELD
- --------------------------------------
For all nominees except as noted above
2. Ratification of the selection of Deloitte & Touche L.L.P. as auditors for the
fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
3. Approval of continuance of the Trust's Investment Services Contract with
David L. Babson and Company, Incorporated, dated July 1, 1988.
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.
1
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