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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 Participation Investors
----------------------------------
(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.
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MASSMUTUAL PARTICIPATION INVESTORS
SPRINGFIELD, MASSACHUSETTS 01115
[LOGO]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
TIME
FRIDAY, APRIL 22, 2005
AT 1:00 P.M.
PLACE
OAK ROOM
MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY
1295 STATE STREET
SPRINGFIELD, MASSACHUSETTS 01111
--------------------------------------------------------------------------------
Please date, fill in and sign the enclosed proxy card and mail it in
the enclosed return envelope which requires no postage if mailed in
the United States.
--------------------------------------------------------------------------------
MASSMUTUAL PARTICIPATION INVESTORS
Springfield, Massachusetts
Dear Shareholder:
The 2005 Annual Meeting of Shareholders of MassMutual Participation
Investors (the "Trust") will be held in the Oak Room of Massachusetts Mutual
Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111, at
1:00 p.m., Eastern Time, on Friday, April 22, 2005. 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 later find that 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. The
Board of Trustees and the Nominating Committee of the Board of Trustees
recommend that shareholders elect the nominated Trustees.
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 PARTICIPATION INVESTORS
Notice of Annual Meeting of Shareholders
TO THE SHAREHOLDERS OF
MASSMUTUAL PARTICIPATION INVESTORS:
The Annual Meeting of Shareholders of MassMutual Participation 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 22, 2005, at 1:00 p.m., Eastern Time, for the following purposes:
(1) to re-elect Steven A. Kandarian, Jack A. Laughery and Corine T.
Norgaard as Trustees for three-year terms, and until their respective successors
are duly elected and qualified; and
(2) to transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Holders of record of the shares of beneficial interest of the Trust at the
close of business on February 22, 2005, 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 1, 2005
2
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of MassMutual Participation Investors (the
"Trust") for use at the Annual Meeting of its Shareholders, to be held in the
Oak Room of Massachusetts Mutual Life Insurance Company ("MassMutual"), 1295
State Street, Springfield, Massachusetts 01111, on Friday, April 22, 2005, at
1:00 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 the shares of beneficial interest of the Trust ("shares") of
record at the close of business on February 22, 2005 will be entitled to one
vote per share on all business of the meeting and any adjournments. There were
9,696,389 shares outstanding on the record date. To the best knowledge of the
Trust, MassMutual is the only beneficial owner of more than 5% of the
outstanding shares of the Trust. MassMutual may be deemed a beneficial owner of
more than 5% of the outstanding shares of the Trust by reason of its owning a
$12,000,000 Senior Fixed Rate Convertible Note due December 13, 2011 (the
"Note") issued by the Trust. MassMutual, 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 Board of Trustees, Notice of Annual Meeting of Shareholders and
proxy card are being mailed on or about March 1, 2005, to shareholders of record
on February 22, 2005, the record date. The Trust's principal business office is
MassMutual Participation Investors, c/o Babson Capital Management LLC
("Babson"), 1500 Main Street, Suite 600, 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.
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
3
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. With
respect to the election of Trustees, 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 2005, 2006 and 2007. The terms of Steven A. Kandarian, Jack A.
Laughery and Corine T. Norgaard expire this year. The Trust's Nominating
Committee nominated Mr. Kandarian, Mr. Laughery and Ms. Norgaard (who are
independent Trustees) for re-election to the Board of Trustees, each for a
three-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, 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; term of office and length of such term served;
principal occupation during the past five years; certain other of the Trustees'
directorships; and certain other information required to be disclosed in this
Proxy Statement. Also, set forth below is a list of the Trust's Executive
Officers, with his or her position with the Trust, principal occupation or
employment for the past five years and term of office and length of such term
served.
4
INTERESTED TRUSTEES
Portfolios
Position Office Term/ Principal Overseen In
Name (Age) with the Length of Occupation(s) During Fund Other Directorships
Address Fund Time Served Past 5 Years Complex Held by Director
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Stuart H. Reese* (49) Trustee 3 years/1 year, Executive Vice President 41 Trustee, Chairman (since 1999)
10 months and Chief Investment and President (1993-1999) of
MassMutual Life Ins. Co. Chairman Officer (since 1999) of the Trust; Director (since
1295 State Street (since 1999) 1 year/7 months MassMutual; Chairman 1995), MassMutual Corporate
Springfield, MA 01111 and Chief Executive Value Partners Limited
Officer (since 2000), (investment company); President
Director (2000-2004), (1994-1999), Chairman and
Member of the Board of Trustee (since 1999),
Managers (since 2004), MassMutual Select Funds,
and President (2000- formerly MassMutual
2001 and 2003-2005) of Institutional Funds (an
Babson; Chief Executive open-end investment company
Director (1997-1999), advised by MassMutual);
Senior Vice President President (1993-1999), Chairman
(1993-1997) of MassMutual. and Trustee (since 1999), MML
Series Investment Fund (an
open-end investment company
advised by MassMutual);
Advisory Board Member (since
1995), Kirtland Capital
Partners (investment
partnership); Advisory Board
Member (since 1996), MassMutual
High Yield Partners II LLC
(investment company); Chairman
(since 1999) and Director
(since 1996), Antares Capital
Corporation (bank loan
syndication); Director (since
1996), Charter Oak Capital
Management, Inc.; President
(since 1998), MassMutual/Darby
CBO LLC (investment company);
Director (since 1999), MLDP
Holdings; Chairman (since
2000), Cornerstone Real Estate
Advisers Inc.; Trustee (since
1998), President (1998-2001)
and Chairman (since 2001), MMCI
Subsidiary Trust and MMPI
Subsidiary Trust; Trustee,
Chairman (since 1999), and
President (1993-1999),
MassMutual Corporate
Investors (closed-end
investment company advised by
Babson).
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*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 MassMutual and Chairman, Member of the Board of Managers, and Chief
Executive Officer of Babson.
5
INTERESTED TRUSTEES
Portfolios
Position Office Term/ Principal Overseen In
Name (Age) with the Length of Occupation(s) During Fund Other Directorships
Address Fund Time Served Past 5 Years Complex Held by Director
------------------------------------------------------------------------------------------------------------------------------------
Robert E. Joyal** (60) Trustee 3 years/10 months President (2001-2003), 41 President (1999-2003) and
(since 2003) Managing Director Trustee (since 2003) of the
MassMutual (2000-2001) and Trust; Director (since 1996),
Participation Investors Executive Director Antares Capital Corporation
1500 Main Street (1999-2000) of Babson; (bank loan syndication);
Suite 600 Executive Director Director (since 2003), Pemco
Springfield, MA 01115 (1997-1999) of Aviation Group, Inc.; Trustee
MassMutual. (since 2003), MassMutual Select
Funds, formerly MassMutual
Institutional Funds, (an
open-end investment company
advised by MassMutual); Trustee
(since 2003) MML Series
Investment Fund (an open-end
investment company advised by
MassMutual); Trustee
(1998-2003), Senior Vice
President (1998-2001) and
President (2001-2003), MMCI
Subsidiary Trust and MMPI
Subsidiary Trust; President
(1999-2003), Trustee (since
2003), MassMutual Corporate
Investors (closed-end
investment company advised by
Babson).
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**Mr. Joyal retired as President of Babson in June 2003. He continues to serve as a director or trustee of several entities
affiliated with MassMutual, Babson's indirect parent company. Accordingly, the Trust classifies Mr. Joyal as an "interested person"
of the Trust and Babson (as defined in the Investment Company Act of 1940, amended).
6
INDEPENDENT TRUSTEES
Portfolios
Position Office Term/ Principal Overseen In
Name (Age) with the Length of Occupation(s) During Fund Other Directorships
Address Fund Time Served Past 5 Years Complex Held by Director
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Steven A. Kandarian (52) Trustee 3 years/2 years, Consultant, financial 22 Trustee (since 2002),
(since 2002) 10 months services (since 2004); MassMutual Premier Funds,
MassMutual Former Executive formerly The DLB Fund Group,
Participation Investors Director (2001-2004), (an open-end investment company
1500 Main Street Pension Benefit advised by MassMutual); Trustee
Suite 600 Guaranty Corp., (a (since 2002), MassMutual
Springfield, MA 01115 Federal pension agency); Corporate Investors (a
Managing Director closed-end investment company
NOMINEE FOR TRUSTEE (1993-2001), Orion advised by Babson).
Partners, L.P. (a private
equity fund).
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7
INDEPENDENT TRUSTEES
Portfolios
Position Office Term/ Principal Overseen In
Name (Age) with the Length of Occupation(s) During Fund Other Directorships
Address Fund Time Served Past 5 Years Complex Held by Director
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Jack A. Laughery (70) Trustee 3 years/2 years, President and Partner 2 Director (since 1993), Papa
(since 1996) 10 months (since 1996), Laughery John's International (food
MassMutual Investments. service companies); Director
Participation Investors (since 1994), Houston Pizza
1500 Main Street Venture LLC (pizza restaurant);
Suite 600 Part Owner (1998-2004), Rocky
Springfield, MA 01115 Mount Harley Davidson; Partner
(since 1996), Papa John's Iowa;
NOMINEE FOR TRUSTEE Director (since 2001), Papa
John's United (food service);
Director (1997-1998), PJ New
England; Trustee (since 1996),
MassMutual Corporate Investors
(closed-end investment company
advised by Babson).
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Corine T. Norgaard (67) Trustee 3 years/2 years, President, (since 2004), 22 Trustee (since 2004),
(since 1998) 10 months Thompson Enterprises MassMutual Premier Funds,
MassMutual Real Estate Investment; formerly The DLB Fund Group (an
Participation Investors Dean (1996-2004), open-end investment company
1500 Main Street Barney School of advised by MassMutual);
Suite 600 Business, University of Director (1997-2004), The
Springfield, MA 01115 Hartford. Advest Bank; Director (since
2004), Frontier Trust Company,
NOMINEE FOR TRUSTEE FSB (Federal Savings Bank);
Trustee (since 1993), ING
Series Fund (investment
company); Director (since
1992), ING Variable Series
Fund; Trustee (since 1998),
MassMutual Corporate Investors
(a closed end investment
company advised by Babson).
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8
INDEPENDENT TRUSTEES
Portfolios
Position Office Term/ Principal Overseen In
Name (Age) with the Length of Occupation(s) During Fund Other Directorships
Address Fund Time Served Past 5 Years Complex Held by Director
------------------------------------------------------------------------------------------------------------------------------------
Donald E. Benson* (74) Trustee 3 years/10 months Executive Vice President 2 Director (since 1997), MAIR
(since 1988) and Director (since Holdings, Inc. (commuter
MassMutual 1992), Marquette airline holding company);
Participation Investors Financial Companies Director (since 1997), National
1500 Main Street (financial services); Mercantile Bancorp (bank
Suite 600 Partner (since 1996), holding company) and Mercantile
Springfield, MA 01115 Benson Family Limited National Bank; Trustee (since
Partnership No. 1 and 1986), MassMutual Corporate
Benson Family Limited Investors (closed-end
Partnership No. 2 investment company advised by
(investment partnerships); Babson).
Partner (1987-2004),
Benson, Pinckney, Oates
Partnership (building
partnership).
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Donald Glickman (71) Trustee 3 years/10 months Chairman (since 1992), 2 Director (1988-2000), CalTex
(since 1992) Donald Glickman and Industries, Inc. (manufacturer
MassMutual Company, Inc. of windows); Director (since
Participation Investors (investment banking); 1984), Monro Muffler Brake,
1500 Main Street Partner (since 1992), J.F. Inc. (automobile repair
Suite 600 Lehman & Co. (private service); Director (since
Springfield, MA 01115 investments). 1998), MSC Software, Inc.;
Chairman (1998-2003), Elgar
Electronics (manufacturer of
electronic power supplies);
Director (since 2002), Racal
Instrument Group (manufacturer
of electronic test equipment);
Director (2002-2004), OAOT,
Inc. (ITC Services); Director
(since 1999) SDI, Inc.
(manufacturer of airbag
initiations); Trustee (since
1992), MassMutual Corporate
Investors (closed-end
investment company advised by
Babson).
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*Mr. Benson has a beneficial ownership interest in the Benson Family Limited Partnership No. 2, which owns 0.863% ($985,512 in
value) of MassMutual High Yield Partners II LLC and 1.80% ($1,056,608 in value) of Corporate Value Partners Limited, each an
investment fund that may be deemed to be controlled by MassMutual.
9
INDEPENDENT TRUSTEES
Portfolios
Position Office Term/ Principal Overseen In
Name (Age) with the Length of Occupation(s) During Fund Other Directorships
Address Fund Time Served Past 5 Years Complex Held by Director
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Martin T. Hart*(69) Trustee 3 years/1 year, Private Investor; 2 Director (since 2004), Texas
(since 1991) 10 months President and Director Roadhouse, Inc. (operates
MassMutual (since 1983), H restaurant chain); Director
Participation Investors Corporation. (since 1999), ValueClick Inc.
1500 Main Street (internet advertising company);
Suite 600 Director (since 2002),
Springfield, MA 01115 Spectranetics Corp. (medical
device company); Trustee (since
1991), MassMutual Corporate
Investors (closed-end
investment company advised by
Babson).
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*Mr. Hart owns 0.878% ($1,002,560 in value) of MassMutual High Yield Partners II LLC and 0.90% ($528,304 in value) of MassMutual
Corporate Value Partners Limited, each an investment fund that may be deemed to be controlled by MassMutual.
10
OFFICERS OF THE TRUST
Position Office Term/ Principal
Name (Age) with the Length of Occupation(s) During
Address Fund Time Served Past 5 Years
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Roger W. Crandall (40) President 1 year/7 months President (since 2003) and Vice President (2002-2003) of the Trust;
Vice Chairman (since 2005), Director (2003-2004), Member of the
MassMutual Board of Managers (since 2004), and Managing Director (since 2000)
Participation Investors of Babson; Managing Director (1993-2000) of MassMutual; Trustee and
1500 Main Street President (since 2003), MMCI Subsidiary Trust and MMPI Subsidiary
Suite 600 Trust; President (since 2003), Vice President (2002-2003),
Springfield, MA 01115 MassMutual Corporate Investors.
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Clifford M. Noreen (47) Vice President 1 year/7 months Vice President (since 1993) of the Trust; Managing Director (since
2000) of Babson; Managing Director (1996-1999) of MassMutual; Vice
MassMutual President (since 1993), MassMutual Corporate Investors.
Participation Investors
1500 Main Street
Suite 600
Springfield, MA 01115
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Stephen L. Kuhn (58) Vice President 1 year/7 months Vice President and Secretary (since 1988) of the Trust; General
and Secretary Counsel and Clerk (since 2000) of Babson; Senior Vice President
MassMutual (since 1999), Deputy General Counsel (since 1998), and Assistant
Participation Investors Secretary (since 1996) of MassMutual; Secretary (since 1998), MMCI
1500 Main Street Subsidiary Trust and MMPI Subsidiary Trust; Vice President (since
Suite 600 1989) and Secretary (since 1980) of MassMutual Corporate Investors.
Springfield, MA 01115
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11
OFFICERS OF THE TRUST
Position Office Term/ Principal
Name (Age) with the Length of Occupation(s) During
Address Fund Time Served Past 5 Years
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Charles C. McCobb, Jr. (61) Vice President 1 year/7 months Chief Financial Officer (since 1998) and Vice President (since 1997)
and Chief of the Trust; Managing Director (since 2000) of Babson; Managing
MassMutual Financial Officer Director (1997-1999) of MassMutual; Trustee, Vice President,
Participation Investors Treasurer and Chief Financial Officer (since 1998), MMCI Subsidiary
1500 Main Street Trust and MMPI Subsidiary Trust; Chief Financial Officer (since
Suite 600 1998) and Vice-President (since 1997), MassMutual Corporate
Springfield, MA 01115 Investors.
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John T. Davitt, Jr. (37) Comptroller 1 year/7 months Comptroller (since 2001) of the Trust; Director (since 2000) of
Babson; Associate Director (1997-1999) of MassMutual; Comptroller
MassMutual (since 2001), MassMutual Corporate Investors.
Participation Investors
1500 Main Street
Suite 600
Springfield, MA 01115
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James M. Roy (42) Treasurer 1 year/7 months Treasurer (since 2003) and Associate Treasurer (1999-2003) of the
Trust; Director (since 2000) of Babson; Associate Director
MassMutual (1996-1999) of MassMutual; Controller (since 2003), MMCI Subsidiary
Participation Investors Trust and MMPI Subsidiary Trust; Treasurer (since 2003) and
1500 Main Street Associate Treasurer (1999-2003), MassMutual Corporate Investors.
Suite 600
Springfield, MA 01115
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Mary Ellen Wesneski (54) Chief 1 year/7 months Chief Compliance Officer (since 2004) of the Trust; Managing
Compliance Director and Compliance Director (since 1999) of Babson; Chief
MassMutual Officer Compliance Officer (since 2004) of MassMutual Corporate Investors.
Participation Investors
1500 Main Street
Suite 600
Springfield, MA 01115
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12
SHARE OWNERSHIP OF TRUSTEES, NOMINEES AND EXECUTIVE OFFICERS
Set forth below is information concerning beneficial ownership, as of
December 31, 2004, of the Trust's shares by each Trustee, nominee for Trustee,
by the President and by the Trust's Trustees, nominees for Trustee and Executive
Officers as a group.
BENEFICIAL OWNERSHIP OF TRUST SHARES
DECEMBER 31, 2004*
--------------------------------------------------------------------------------
NAME OF SHARES PERCENTAGE OF
INDIVIDUAL BENEFICIALLY OUTSTANDING
OR GROUP OWNED* SHARES OWNED
-------- ------ ------------
D. Benson 8,974 **
D. Glickman 2,540 **
M. Hart 44,438 0.46%
R. Joyal 17,256 0.18%
S. Kandarian 5,102 **
J. Laughery 6,333+ **
C. Norgaard 1,011++ **
S. Reese 11,827 0.12%
R. Crandall 800+++ **
All Trustees, Nominees
and Executive Officers
as a Group
98,891 1.02%
---------------------------------------
*This information, not being within the knowledge of the Trust, has been
furnished by each nominee, Trustee and executive officer as of December 31,
2004. Beneficial ownership is as defined under Section 13(d) of the Securities
Exchange Act of 1934, as amended. Except as otherwise indicated by footnote, the
persons named in the table have sole voting and investment power with respect to
all of the shares beneficially owned by them. Fractional shares not reported.
**Less than one-tenth of one percent not listed
+Includes 3333 shares owned by Mr. Laughery's wife with respect to which he
disclaims beneficial ownership.
++Ms. Norgaard has shared voting and investment power with respect to the shares
listed in the table above.
+++Mr. Crandall has shared voting and investment power with respect to the
shares listed in the table above.
The table below sets forth information regarding the beneficial ownership
of the Trust's shares by each Trustee and Nominee based on the market value of
such shares as of December 31, 2004.
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 TRUST INVESTMENT COMPANIES
------- ------------ --------------------
D. Benson Over $100,000 Over $100,000
D. Glickman $10,001-$50,000 Over $100,000
M. Hart Over $100,000 Over $100,000
R. Joyal Over $100,000 Over $100,000
S. Kandarian $50,001-$100,000 Over $100,000
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
13
INFORMATION CONCERNING COMMITTEES AND MEETINGS OF THE BOARD OF TRUSTEES
The Board of Trustees has an Audit Committee, a Joint Transactions
Committee and a Nominating Committee.
The Audit Committee is comprised exclusively of Trustees who are not
"interested persons" of the Trust and operates pursuant to a written Audit
Committee Charter, which is available on the Trust's website,
www.babsoncapital.com/mpv. The present members of the Audit Committee are Donald
E. Benson (Chairman), Martin T. Hart and Corine T. Norgaard. Each member of the
Audit Committee qualifies as an "independent" Trustee under the current listing
standards of the New York Stock Exchange (the "Listing Standards") and the rules
of the U.S. Securities and Exchange Commission ("SEC"). In accordance with the
SEC's rules implementing Section 407 of the Sarbanes-Oxley Act of 2002, and upon
due consideration of the qualifications of each member of the Trust's Audit
Committee at the July 18, 2003 meeting of the Trust's Board of Trustees, the
Board designated Mr. Benson as the Trust's Audit Committee Financial Expert.
In accordance with the standards set forth in the Audit Committee Charter,
the Audit Committee is responsible for: financial statement and disclosure
oversight matters; matters related to the hiring, retention and oversight of the
Trust's independent accountants; certain legal and compliance oversight matters;
and certain other matters as set forth in the Charter. The Audit Committee also
supervises investigations into matters relating to audit function and performs
other duties as required by applicable law or regulation. During the twelve
months ended December 31, 2004, the Audit Committee held six meetings.
The Joint Transactions Committee is comprised of all of the Trust's
Trustees who are not "interested persons" of the Trust. This Committee reviews
certain joint investment transactions between the Trust and MassMutual. This
Committee acts primarily by written consent (eighteen consents were executed by
Committee members, approving twenty-nine investments during the past fiscal
year). The Committee also met informally four times during the year in
conjunction with the quarterly meetings of the Trust's Board of Trustees.
The Trust's Nominating Committee currently is comprised of the following
Trustees: Donald E. Benson, Donald Glickman, Martin T. Hart, Jack A. Laughery
(Chairman), Steven A. Kandarian, and Corine T. Norgaard, none of whom is an
"interested person" of the Trust, as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act"). A current copy of
the Nominating Committee's Charter can be found on the Trust's website,
www.babsoncapital.com/mpv. This Committee did not meet during fiscal year 2004.
The Nominating Committee is responsible for identifying and nominating
individuals to serve as Trustees who are not "interested persons" of the Trust
("independent Trustees"). The Nominating Committee Charter contemplates that all
nominees for independent Trustees have a college degree or, in the judgment of
the
14
Committee, equivalent business experience. In addition, the Committee may take
into account a wide variety of factors in considering Trustee candidates, giving
such weight to any individual factor(s) as it deems appropriate, including but
not limited to: availability and commitment of a candidate to attend meetings
and perform his or her responsibilities on the Board; relevant industry and
related experience; educational background; depth and breadth of financial
expertise; an assessment of the candidate's ability, judgment, expertise,
reputation and integrity. In the case of a shareholder recommended candidate,
the Committee may also consider any other facts and circumstances attendant to
such shareholder submission as may be deemed appropriate by the Committee.
Different factors may assume greater or lesser significance at particular times,
in light of the Board's present composition and the Committee's (or the Board's)
perceptions about future issues and needs.
When the Board has or expects to have a vacancy for an independent Trustee,
the Nominating Committee will consider candidates recommended by the Trust's
current Trustees; the Trust's officers; the Trust's investment adviser; the
Trust's shareholders; and any other source the Committee deems to be
appropriate. Shareholders' recommendations to fill vacancies on the Board for
independent Trustees must be submitted in accordance with the provisions of the
Nominating Committee Charter, which requires that shareholder recommendations be
timely received, and contain biographical and other necessary information
regarding the candidate that would be required for the Trust to meet its
disclosure obligations under the proxy rules. The Nominating Committee will
evaluate nominee candidates properly submitted by shareholders in the same
manner as it evaluates candidates recommended by other sources.
During the past fiscal year, the Board of Trustees held six regular
meetings (two of which were held by means of a telephone conference call).
TRANSACTIONS WITH AND REMUNERATION OF OFFICERS AND TRUSTEES
Pursuant to the Investment Advisory and Administrative Services Contract
between the Trust and Babson (the "Contract"), Babson paid (and will continue to
pay) the compensation and expenses of the Trust's officers and of all Trustees
of the Trust who were officers or employees of Babson, with the exception of
Messrs. Reese, Kuhn and Deitelbaum, whose compensation and expenses were paid
(and will continue to be paid) by MassMutual.
Trustees who are not officers or employees of MassMutual or Babson receive
fees of $1,250 for each Trustees' meeting ($625 for each meeting conducted by
telephone conference call) which they attend and annual Trustees' fees of
$8,000. Members of the Audit Committee and Nominating Committee receive an
additional fee of $1,000 per meeting attended, including meetings conducted by
telephone. 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 out-of-pocket expenses paid by the Trust during the fiscal year ended
December 31, 2004 was $109,984.
15
The following table discloses the compensation paid to the Trust's
independent Trustees (not including reimbursement for out-of-pocket expenses)
for the fiscal year ended December 31, 2004. Each of the independent Trustees
also serves as a Trustee of one other closed-end investment company, MassMutual
Corporate Investors, managed by Babson. Mr. Kandarian and Ms. Norgaard also
serve as a Trustee of an open-end investment company, MassMutual Premier Funds,
managed by MassMutual, the ultimate parent of Babson. (The Trust, MassMutual
Corporate Investors and MassMutual Premier Funds, are collectively referred to
in the table below as the "Fund Complex"). The Trustees do not receive pension
or retirement benefits.
TOTAL
AGGREGATE COMPENSATION
NAME OF COMPENSATION FROM FUND
TRUSTEE FROM THE TRUST COMPLEX
------- -------------- -------
Donald E. Benson $ 20,250 $ 48,250
Donald Glickman 14,250 36,250
Martin T. Hart 20,250 48,250
Jack A. Laughery 14,250 36,250
Corine T. Norgaard 20,250 57,583
Steven A. Kandarian 11,857 54,643
-------- --------
Total $101,107 $281,226
======== ========
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, 2004 with Management and KPMG LLP, the Trust's
independent public accountant;
o Discussed with KPMG LLP those matters required to be discussed by SAS
61 (Codification of Statements on Auditing Standards); and
16
o Received the written disclosure and the letter from KPMG LLP required
by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with KPMG LLP its
independence.
The Audit Committee has also reviewed the aggregate fees billed for
professional services rendered by KPMG LLP for 2004 and by Deloitte & Touche LLP
for 2003 for the Trust and for the non-audit services provided to Babson, and
Babson's parent, MassMutual. 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.
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, 2004 audited financial
statements in the Annual Report to shareholders for the fiscal year ended
December 31, 2004, and (2) file such Annual Report with the Securities and
Exchange Commission and the New York Stock Exchange.
The Audit Committee appointed the firm of KPMG LLP as the Trust's auditors
of the Trust for the fiscal year ending December 31, 2005, and, in connection
therewith, KPMG LLP will prepare all of the Trust's tax returns for the fiscal
year ending December 31, 2005.
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
February 7, 2005
The Board of Trustees reviewed this Report and approved the audited
financial statements for publication in the Trust's Annual Report.
THE TRUST'S INDEPENDENT AUDITORS
KPMG LLP ("KPMG") audited the financial statements of the Trust, Babson and
MassMutual for the fiscal year ended December 31, 2004. KPMG's audit report for
the Trust contained no qualifications or modifications. A KPMG representative 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. As noted above, KPMG will audit the
Trust's 2005 financial statements and prepare the Trust's 2005 tax return.
17
FEES PAID TO INDEPENDENT AUDITORS
(1) Fees Billed to the Trust
--------------------------------------------------------------------------------
KPMG LLP Deloitte & Touche LLP*
Year Ended Year Ended
December 31, 2004 December 31, 2003
----------------- -----------------
Audit Fees $32,500 $49,500
Audit-Related Fees 5,000 5,500
Tax Fees 8,500 7,400
All Other Fees 0 0
------- -------
Total Fees $46,000 $62,400
======= =======
(2) Non-Audit Fees Billed to Babson and MassMutual
--------------------------------------------------------------------------------
KPMG LLP Deloitte & Touche LLP*
Year Ended Year Ended
December 31, 2004 December 31, 2003
----------------- -----------------
Audit-Related Fees $406,900 $340,000
Tax Fees 35,138 35,100
All Other Fees 400,000 5,000
-------- --------
Total Fees $842,038 $380,100
======== ========
*Deloitte & Touche LLP ("D&T") was the Trust's independent auditors for the 2003
fiscal year audit.
The category "Audit Related Fees" reflects fees billed by KPMG or D&T for
services related to the audit and other assurance services performed in
connection with the audit engagements of the Trust, Babson and MassMutual.
Preparation of Federal, state and local income tax and compliance work are
representative of the fees billed in the "Tax Fees" category. The category "All
Other Fees" represents fees billed by KPMG or D&T for various non-audit and
non-tax services rendered to Babson and MassMutual, such as SAS 70 review,
agreed upon procedures reports, and tax consulting. The Sarbanes-Oxley Act of
2002 and its implementing regulations allows the Trust's Audit Committee to
establish a pre-approval policy for certain services rendered by the Trust's
independent accountants. During 2004, the Trust's Audit Committee approved all
of the services rendered to the Trust by KPMG and did not rely on such a
pre-approval policy for any such services.
The 2003 fees billed represent final 2003 amounts, which may differ from
the preliminary figures available as of the publication date of the Trust's 2004
Proxy Statement and includes, among other things, fees for services that may not
have been billed as of the publication date of the Trust's 2004 Proxy Statement,
but are now properly included in the 2003 fees billed to the Trust, Babson and
MassMutual.
18
During 2003, the Trust, Babson and MassMutual solicited proposals for their
independent audit and tax engagements from the four nationally recognized public
accounting firms (including D&T and KPMG). The Trust's Audit Committee and its
Board of Trustees determined that, based on KPMG's more favorable fee structure,
engaging KPMG was in the best interests of the Trust. Effective January 1, 2004,
and for the fiscal year ended December 31, 2004, the Trust's Audit Committee and
Board of Trustees appointed KPMG as the Trust's independent auditors replacing
D&T. Babson and MassMutual also engaged KPMG to perform certain audit, tax and
other services for them.
During 2002 and 2003, the Trust had no disagreements with D&T concerning
any matter of accounting principles or practices, financial statement disclosure
or auditing scope and procedure and D&T never advised the Trust that: (1) the
Trust's internal controls were unreliable; (2) the representations of the
Trust's management were unreliable or that D&T was unwilling to be associated
with the financial statements prepared by the Trust's management; (3) D&T needed
to expand significantly the scope of its audits (and D&T never, in fact, so
expanded such audit scope); (4) D&T became aware of any information that
materially impacted the fairness or reliability of either a previously issued
audit report or such report's underlying financial statements or that caused D&T
to cease reliance on the assertions of the Trust's management related to such
financial statements; and (5) an issue existed related to any of D&T's audit
reports or their underlying financial statements were resolved other than to the
satisfaction of D&T.
(2) 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.
INVESTMENT ADVISER
Babson provides investment management and certain administrative services
to the Trust pursuant to the Contract.
Babson, an SEC registered investment adviser since 1940, currently has over
$89 billion in assets under management and provides investment management
services to registered investment companies, unregistered investment companies,
institutional investors (such as insurance companies, pension plans, endowments
and foundations) and high net worth investors. MassMutual Holding LLC is the
direct owner of 100% of the voting shares of Babson. MassMutual owns all of the
voting shares of MassMutual Holding LLC. All of these entities are located at
1295 State Street, Springfield, Massachusetts, 01111. Babson also has an office
at 1500 Main Street, Suite 1100, in Springfield, Massachusetts, 01115, and its
principal office is located at One Memorial Drive, Cambridge, Massachusetts
02142.
19
CERTAIN ADMINISTRATIVE SERVICES
MassMutual indirectly provides certain administrative services to the Trust
including, but not limited to, accounting services, meeting facilities, legal
support, report preparation and other services provided to Babson, the Trust's
investment adviser. MassMutual's principal business address is 1295 State
Street, Springfield, MA, 01111.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year one Babson employee, William F. Glavin, Jr., who had
reporting responsibilities with respect to transactions in securities,
inadvertently failed to timely file a Form 4 relating to one transaction.
PROPOSALS BY SHAREHOLDERS AND COMMUNICATIONS WITH
THE BOARD OF TRUSTEES
Any Shareholder intending to present a proposal at the Annual Meeting to be
held in 2006 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, 2005,
to be considered for inclusion in the Trust's proxy material for its 2006 Annual
Meeting.
Pursuant to procedures approved by the Trust's Board of Trustees, including
a majority of the Trustees who are not "interested persons of the Trust" as
defined in Section 2(a)(19) of the 1940 Act, Shareholders may mail written
communications to the Board by writing the Trust's Chief Financial Officer at
the Office of the Trust's investment adviser or by emailing the Trust's Chief
Financial Officer at mpvmailbox@massmutual.com. When writing to the Trust's
Board, Shareholders should identify themselves, the fact that the communication
is directed to the Board, and any relevant information regarding their Trust
holdings.
ADDITIONAL INFORMATION
Proxies will be solicited by mail and may be solicited in person or by
telephone, electronically, 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 does retain such an outside firm, the
anticipated cost would be approximately $14,000. 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.
The Trust will arrange for at least one Trustee to attend its 2005 Annual
Meeting of Shareholders; encourages all of its Trustees to attend its Annual
Meetings of Shareholders; and will endeavor to arrange Annual Meetings of
Shareholders on the same date as a Board of Trustees meeting to facilitate such
attendance. Six of the Trust's Trustees attended the April 30, 2004 Annual
Meeting.
If any Shareholders desire additional information about the matters
proposed for action, management will be glad to hear from them and to provide
further information.
20
ANNUAL REPORT
The Annual Report of the Trust for its fiscal year ended December 31, 2004,
including financial statements, a schedule of the Trust's investments as of such
date and other data, was mailed on or about March 1, 2005, 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
Springfield, Massachusetts 01115
March 1, 2005
21
MASSMUTUAL PARTICIPATION INVESTORS
C/O BABSON CAPITAL MANAGEMENT LLC
1500 MAIN STREET
SUITE 600
SPRINGFIELD, MA 01115
TO VOTE BY MAIL
1) Read the Proxy Statement.
2) Check the appropriate boxes on the reverse side.
3) Sign and date the proxy card below.
4) Return the proxy card in the envelope provided.
MASSMUTUAL PARTICIPATION INVESTORS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Stephen L. Kuhn and Charles C. McCobb, Jr., and
each of them, attorneys and proxies of the undersigned, with power of
substitution to vote all shares of MassMutual Participation Investors (the
"Trust") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Trust to be held in the Oak Room of Massachusetts Mutual
Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111, on
Friday, April 22, 2005, at 1:00 p.m. Eastern time, and at any adjournments
thereof (the "Annual Meeting").
THIS PROXY WILL BE VOTED ON ITEM (1) 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 ITEM (1).
THIS PROXY WILL BE VOTED ON ITEM (2) IN THE SOLE AND ABSOLUTE DISCRETION OF THE
PROXY, AND IN THE ABSENCE OF INSTRUCTIONS, THE UNDERSIGNED HEREBY AUTHORIZES THE
AFORESAID PROXY OR PROXIES TO VOTE ON A MATTER RAISED PURSUANT TO ITEM (2).
Address changes: ____________________________
____________________________
____________________________
(If you noted any address changes
above, please mark corresponding
box on other side.)
Date _________________________
------------------------------------
| |
| |
------------------------------------
Signature(s) (if held jointly)
(Please sign in box)
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.
MASSMUTUAL PARTICIPATION INVESTORS
Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
1. Election of Trustees For Withhold For All
All All Except*
Nominees for re-election: (01) Steven A. Kandarian, [ ] [ ] [ ]
(02) Jack A. Laughery and (03) Corine T. Norgaard
for the terms set forth in the proxy statement.
*To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
________________________________________________________________________
2. 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.
YES NO
Please indicate if you plan to attend this meeting. [ ] [ ]
For address changes, please check this box and write
them on the reverse side of this card where indicated. [ ]
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.