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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
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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.
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MASSMUTUAL PARTICIPATION INVESTORS
Springfield, Massachusetts 01115
[LOGO]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
TIME
Friday, April 21, 2006
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 2006 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 21, 2006. 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 elect two 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/ Roger W. Crandall
Roger W. Crandall
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 21, 2006, at 1:00 p.m., Eastern Time, for the following purposes:
(1) to elect Roger W. Crandall and Martin T. Hart 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 21, 2006, 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, 2006
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 21, 2006, 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.
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, 2006, to shareholders of record
on February 21, 2006, the record date. The Trust's principal business office is
MassMutual Participation Investors, c/o Babson Capital Management LLC ("Babson
Capital"), 1500 Main Street, Suite 600, Springfield, Massachusetts 01115.
Holders of the shares of beneficial interest of the Trust ("shares") of
record at the close of business on February 21, 2006 will be entitled to one
vote per share on all business of the meeting and any adjournments. There were
9,763,330 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.
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 two nominees for election as Trustees at
the Annual Meeting who receive the greatest number of votes properly cast for
the election of trustees shall be elected Trustees.
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
3
(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. 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 2006, 2007, and 2008. The terms of Roger W. Crandall and Martin T.
Hart expire this year. The Trust's Nominating Committee nominated Mr. Hart for
reelection as an independent Trustee to the Board of Trustees for a three-year
term. Upon the recommendation of the Nominating Committee, the Board of Trustees
nominated Mr. Crandall for election to the Board of Trustees for a three-year
term. Mr. Crandall was appointed as a Trustee and elected Chairman of the Board
of Trustees in 2005 to fill the vacancy created by the resignation of Stuart H.
Reese. 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, term of office and length of
such term served, and principal occupation or employment for the past five
years.
For purposes of the following Trustee tables, the term "fund complex"
includes the Trust, MassMutual Corporate Investors, MassMutual Premier Funds,
MML Series Investment Fund, MML Series Investment Fund II, and MassMutual Select
Funds.
4
INTERESTED TRUSTEES
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PORTFOLIOS
POSITION OFFICE TERM/ PRINCIPAL OVERSEEN
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING IN FUND OTHER DIRECTORSHIPS
ADDRESS FUND TIME SERVED PAST 5 YEARS COMPLEX HELD BY DIRECTOR
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Roger W. Crandall* (41) Trustee 3 years/ Executive Vice 2 Trustee, Chairman (since 2005),
(since 2005) 7 months** President and Chief President (2003-2005), and Vice
Massachusetts Mutual Investment Officer President (2002-2003), of the Trust;
Life Insurance Company Chairman 1 year/ (since 2005) of Director (since 2004), Babson Capital
1295 State Street (since 2005) 7 months*** MassMutual; and Europe Limited (an institutional
Springfield, MA 01111 Chairman (since 2005), debt-fund manager); Director (since
Vice Chairman (2005), 2005), Babson Capital Japan KK (a
NOMINEE Member of the Board of Japanese registered investment
FOR TRUSTEE Managers (since 2004), adviser); Non-Executive Director
Director (2003-2004), (since 2005), Baring Asset Management
and Managing Director Limited (an investment
of Babson Capital manager/adviser); Chairman (since
(2000-2005). 2005), Cornerstone Real Estate
Advisers LLC (an investment adviser);
Director (since 1996), HYP Management
LLC (LLC manager); Director (since
2003), MassMutual Corporate Value
Partners Limited (investment company);
Director (since 2003), MassMutual
Corporate Value Limited (investment
company); Director (since 2005),
MassMutual Holdings (Bermuda) Ltd.
(holding company); Director (since
2005), MassMutual Holding MSC, Inc.
(holding company); Director (since
1996), MMHC Investment LLC (investment
company); Director (since 2004), MML
Assurance, Inc. (a New York insurance
company); Director (since 2005),
Oppenheimer Acquisition Corp. (holding
company); Director (since 2004),
Jefferies Babson Finance LLC (a joint
venture between Jefferies Group Inc.
and Babson Capital); Director (since
2004), Great Lakes LLC (investment
company); Director (since 1999), SAAR
Holdings CDO Ltd. (investment
company); Trustee (since 2003),
President (2003- 2005), and Chairman
(since 2005), MMCI Subsidiary Trust
and MMPI Subsidiary Trust; and Trustee
(since 2005), Chairman (since 2005),
President (2003-2005), and Vice
President (2002-2003), of MassMutual
Corporate Investors (closed-end
investment company advised by Babson
Capital).
* Mr. Crandall is an "interested person" of the Trust and Babson Capital (as defined by the 1940 Act) because of his position as
an Officer of the Trust; an executive officer of MassMutual; and Chairman and Member of the Board of Managers of Babson Capital.
** Mr. Crandall was appointed to the Board of Trustees on July 15, 2005 to fill the vacant seat created by the resignation of
Stuart H. Reese, the term of which expires in 2006.
*** Mr. Crandall was elected Chairman of the Board of Trustees on July 15, 2005.
5
INTERESTED TRUSTEES
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PORTFOLIOS
POSITION OFFICE TERM/ PRINCIPAL OVERSEEN
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING IN FUND OTHER DIRECTORSHIPS
ADDRESS FUND TIME SERVED PAST 5 YEARS COMPLEX HELD BY DIRECTOR
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Robert E. Joyal* (61) Trustee 3 years/ President (2001-2003), 33 President (1999-2003) and Trustee
(since 2003) 1 year, Managing Director (since 2003), of the Trust; Director
MassMutual 10 months (2000-2001), and (since 2006), Jefferies Group Inc.
Participation Investors Executive Director (global investment bank and
1500 Main Street (1999-2000) of Babson institutional securities firm);
Suite 600 Capital; and Executive Director (since 2005), York Enhanced
Springfield, MA 01115 Director (1997-1999) of Strategies Fund (a closed-end
MassMutual. investment company); Director (since
2003), Pemco Aviation Group, Inc.
(aircraft maintenance and overhaul);
Trustee (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; and
President (1999-2003), Trustee (since
2003), MassMutual Corporate Investors
(closed-end investment company advised
by Babson Capital).
* Mr. Joyal retired as President of Babson Capital in June 2003. He continues to serve as a director or trustee of several
entities affiliated with MassMutual, Babson Capital's indirect parent company. Accordingly, the Trust classifies Mr. Joyal as an
"interested person" of the Trust and Babson Capital (as defined by the 1940 Act).
6
INDEPENDENT TRUSTEES
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PORTFOLIOS
POSITION OFFICE TERM/ PRINCIPAL OVERSEEN
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING IN FUND OTHER DIRECTORSHIPS
ADDRESS FUND TIME SERVED PAST 5 YEARS COMPLEX HELD BY DIRECTOR
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Michael H. Brown (49) Trustee 3 years/ Private Investor; 2 Trustee (since 2005), MassMutual
(since 2005) 7 months* and Managing Director Corporate Investors (a closed-end
MassMutual (1994-2005), investment company advised by Babson
Participation Investors Morgan Stanley.** Capital).
1500 Main Street
Suite 600
Springfield, MA 01115
* Mr. Brown was elected by the Board of Trustees to fill a newly created board seat on July 15, 2005.
** Prior to his election as a Trustee of the Trust, Mr. Brown was an employee of Morgan Stanley. During 2003 and 2004, Mr. Brown's
business line served as placement agent for two funds of collateralized loan obligations advised by Babson Captial for which
Morgan Stanley was paid less than $15 million in placement agency fees.
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INDEPENDENT TRUSTEES
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PORTFOLIOS
POSITION OFFICE TERM/ PRINCIPAL OVERSEEN
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING IN FUND OTHER DIRECTORSHIPS
ADDRESS FUND TIME SERVED PAST 5 YEARS COMPLEX HELD BY DIRECTOR
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Jack A. Laughery (71) Trustee 3 years/ President and Partner 2 Director (since 1993), Papa John's
(since 1996) 10 months (since 1996), International (food service
MassMutual Laughery Investments companies); and Trustee (since 1996),
Participation Investors (private investments). MassMutual Corporate Investors
1500 Main Street (closed-end investment company advised
Suite 600 by Babson Capital).
Springfield, MA 01115
Corine T. Norgaard (68) Trustee 3 years/ President, (2004-2005), 32 Trustee (since 2005), MML Series
(since 1998) 10 months Thompson Enterprises Investment Fund II (an open-end
MassMutual Real Estate Investment; investment company advised by
Participation Investors and Dean (1996-2004), MassMutual); Trustee (since 2004),
1500 Main Street Barney School of MassMutual Premier Funds, formerly The
Suite 600 Business, University of DLB Fund Group (an open-end investment
Springfield, MA 01115 Hartford. company advised by MassMutual);
Trustee (since 1993), ING Series Fund
(investment company); Director (since
1992), ING Variable Series Fund; and
Trustee (since 1998), MassMutual
Corporate Investors (a closed-end
investment company advised by Babson
Capital).
8
INDEPENDENT TRUSTEES
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PORTFOLIOS
POSITION OFFICE TERM/ PRINCIPAL OVERSEEN
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING IN FUND OTHER DIRECTORSHIPS
ADDRESS FUND TIME SERVED PAST 5 YEARS COMPLEX HELD BY DIRECTOR
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Donald E. Benson* (75) Trustee 3 years/ Executive Vice President 2 Director (since 1997), MAIR Holdings,
(since 1988) 1 year, and Director (since 1992), Inc. (commuter airline holding
MassMutual 10 months Marquette Financial company); Director (since 1997),
Participation Investors Companies (financial National Mercantile Bancorp (bank
1500 Main Street services); Partner (since holding company); and Trustee (since
Suite 600 1996), Benson Family 1986), MassMutual Corporate Investors
Springfield, MA 01115 Limited Partnership No. 1 (closed-end investment company advised
and Benson Family by Babson Capital).
Limited Partnership No. 2
(investment partnerships);
and Partner (1987-2004),
Benson, Pinckney, Oates
Partnership (building
partnership).
Donald Glickman (72) Trustee 3 years/ Chairman (since 1992), 2 Director (since 1984), Monro Muffler
(since 1992) 1 year, Donald Glickman and Brake, Inc. (automobile repair
MassMutual 10 months Company, Inc. service); Director (since 1998), MSC
Participation Investors (investment banking); Software, Corp. (simulation software);
1500 Main Street and Partner (since 1992), Director (2002-2006), OAOT, Inc. (ITC
Suite 600 J.F. Lehman & Co.** Services); and Trustee (since 1992),
Springfield, MA 01115 (private investments). MassMutual Corporate Investors
(closed-end investment company advised
by Babson Capital).
* Mr. Benson has a beneficial ownership interest in the Benson Family Limited Partnership No. 2, which owns 0.86% ($1,124,997 in
value) of MassMutual High Yield Partners II LLC and 1.80% ($1,020,153 in value) of Corporate Value Partners Limited, each an
investment fund that may be deemed to be controlled by MassMutual.
** MassMutual and its affiliates are limited partners in three private investment funds in which affiliates of J.F. Lehman serve as
the general partner and adviser and as such hold a carried interest. During the past two fiscal years MassMutual and its
affiliates have paid approximately $296,600 in management fees attributable to the investments in the limited partnerships.
9
INDEPENDENT TRUSTEES
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PORTFOLIOS
POSITION OFFICE TERM/ PRINCIPAL OVERSEEN
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING IN FUND OTHER DIRECTORSHIPS
ADDRESS FUND TIME SERVED PAST 5 YEARS COMPLEX HELD BY DIRECTOR
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Martin T. Hart* (70) Trustee 3 years/ Private Investor; and 2 Director (since 2004), Texas
(since 1991) 2 years, President and Director Roadhouse, Inc. (operates restaurant
MassMutual 10 months (since 1983), H Investment chain); Director (since 1999),
Participation Investors Company LLC ValueClick Inc. (internet advertising
1500 Main Street (family partnership). company); Director (since 2002),
Suite 600 Spectranetics Corp. (medical device
Springfield, MA 01115 company); and Trustee (since 1991),
MassMutual Corporate Investors
NOMINEE FOR TRUSTEE (closed-end investment company advised
by Babson Capital).
* Mr. Hart owns 0.878% ($1,217,352 in value) of MassMutual High Yield Partners II LLC and 0.90% ($586,936 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
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POSITION OFFICE TERM/ PRINCIPAL
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING
ADDRESS FUND TIME SERVED PAST 5 YEARS
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Clifford M. Noreen (48) President 1 year/ President (since 2005), Vice President (1993-2005) of the Trust;
7 months Managing Director (since 2000) of Babson Capital; Managing Director
MassMutual (1996-1999) of MassMutual; Trustee (since 2005), and President (since
Participation Investors 2005), MMCI Subsidiary Trust and MMPI Subsidiary Trust; and President
1500 Main Street (since 2005), Vice President (1993-2005), MassMutual Corporate
Suite 600 Investors.
Springfield, MA 01115
Stephen L. Kuhn (59) Vice President, 1 year/ Vice President and Secretary (since 1988), and Chief Legal Officer
Secretary, and 7 months (since 2003) of the Trust; Senior Vice President (since 1999), Deputy
MassMutual Chief Legal General Counsel (since 1998), and Secretary (since 2005) of
Participation Investors Officer MassMutual; General Counsel and Secretary (2000-2006) of Babson
1500 Main Street Capital; Secretary (since 1998), MMCI Subsidiary Trust and MMPI
Suite 600 Subsidiary Trust; and Vice President (since 1989), Secretary (since
Springfield, MA 01115 1980) and Chief Legal Officer (since 2003), MassMutual Corporate
Investors.
James M. Roy (43) Vice President 1 year/ Vice President and Chief Financial Officer (since 2005), Treasurer
and Chief 7 months (2003-2005), and Associate Treasurer (1999-2003) of the Trust;
MassMutual Financial Officer Managing Director (since 2005), and Director (2000-2005) of Babson
Participation Investors Capital; Associate Director (1996-1999) of MassMutual; Trustee (since
1500 Main Street 2005), Treasurer (since 2005), and Controller (2003-2005), MMCI
Suite 600 Subsidiary Trust and MMPI Subsidiary Trust; and Vice President and
Springfield, MA 01115 Chief Financial Officer (since 2005), Treasurer (2003-2005) and
Associate Treasurer (1999-2003), MassMutual Corporate Investors.
11
OFFICERS OF THE TRUST
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POSITION OFFICE TERM/ PRINCIPAL
NAME (AGE) WITH THE LENGTH OF OCCUPATION(S) DURING
ADDRESS FUND TIME SERVED PAST 5 YEARS
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John T. Davitt, Jr. (38) Comptroller 1 year/ Comptroller (since 2001) of the Trust; Director (since 2000) of Babson
7 months Capital; Associate Director (1997-1999) of MassMutual; Controller
MassMutual (since 2005), MMCI Subsidiary Trust and MMPI Subsidiary Trust; and
Participation Investors Comptroller (since 2001), MassMutual Corporate Investors.
1500 Main Street
Suite 600
Springfield, MA 01115
Melissa M. LaGrant (32) Chief 6 months/ Chief Compliance Officer (since 2006) of the Trust; Managing Director
Compliance 1 month* (since 2005) of Babson Capital; Vice President and Senior Compliance
MassMutual Officer Trading Manager (2003-2005), Loomis, Sayles & Company, L.P.; Assistant
Participation Investors Vice President-Business Risk Management Group (2002-2003), and
1500 Main Street Assistant Vice President-Investment Compliance (2001-2002), Zurich
Suite 600 Scudder Investments/Deutsche Asset Management; and Chief Compliance
Springfield, MA 01115 Officer (since 2006), MassMutual Corporate Investors.
Laura L. Grant (33) Treasurer 1 year/ Treasurer (since 2005) of the Trust; Associate Director (since 2000)
MassMutual 7 months of Babson Capital; and Treasurer (since 2005), MassMutual Corporate
Participation Investors Investors.
1500 Main Street
Suite 600
Springfield, MA 01115
* Melissa LaGrant was elected Chief Compliance Officer by the Board on January 20, 2006 to fill the vacancy created by Mary Ellen
Wesneski's resignation as Chief Compliance Officer on November 18, 2005.
12
SHARE OWNERSHIP OF TRUSTEES, NOMINEES AND EXECUTIVE OFFICERS
Set forth below is information concerning beneficial ownership, as of
December 31, 2005, of the Trust's shares by each Trustee, nominee for Trustee,
and the Trust's Trustees, nominees for Trustee and Executive Officers as a
group.
BENEFICIAL OWNERSHIP OF TRUST SHARES
DECEMBER 31, 2005*
---------------------------------------------------------------------
NAME OF SHARES PERCENTAGE OF
INDIVIDUAL BENEFICIALLY OUTSTANDING
OR GROUP OWNED* SHARES OWNED
-------- ------ ------------
D. Benson 9,434 **
M. Brown 1,000 **
R. Crandall 800A **
D. Glickman 2,540 **
M. Hart 44,438 0.46%
R. Joyal 18,581 0.19%
J. Laughery 6,333AA **
C. Norgaard 1,756AAA **
All Trustees, Nominees
and Executive Officers
as a Group 104,858 1.07%
-------------------
* This information, not being within the knowledge of the Trust, has been
furnished by each nominee, Trustee and executive officer as of December 31,
2005. Beneficial ownership has been determined in accordance with Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). 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
A Mr. Crandall has shared voting and investment power with respect to the
shares listed in the table above.
AA Includes 3333 shares owned by Mr. Laughery's wife with respect to which he
disclaims beneficial ownership.
AAA Ms. Norgaard has shared voting and investment power with respect to 900 of
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, 2005.
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
M. Brown $50,001-$100,000 $50,001-$100,000
R. Crandall 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
J. Laughery $50,001-$100,000 Over $100,000
C. Norgaard $10,001-$50,000 $10,001-$50,000
-------------------
*** Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2)
under the Exchange Act.
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, a copy of which is set forth as Appendix A and which is also
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, 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 financial and accounting oversight
matters; and certain other matters as set forth in the Audit Committee 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, 2005, the Audit
Committee held eight 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 (eleven consents were executed by
Committee members, approving sixteen 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 (approving seven
investments during the past fiscal year).
The Trust's Nominating Committee currently is comprised of the following
Trustees: Donald E. Benson, Donald Glickman, Martin T. Hart, Jack A. Laughery
(Chairman), 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 met twice during fiscal year 2005.
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; and 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 five regular
meetings (one of which was 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 Capital (the "Contract"), Babson Capital 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 Capital,
with the exception of Messrs. Crandall and Kuhn, and Mr. John E. 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 paid by the Trust 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, 2005 was $120,957.
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, 2005. Each of the independent Trustees
also serves as a Trustee of one other closed-end investment company, MassMutual
Corporate Investors, managed by Babson Capital. Ms. Norgaard also serves as a
Trustee of two open-end investment companies, MassMutual Premier Funds and MML
Series Investment Fund II, both of which are managed by MassMutual, the ultimate
parent of Babson Capital. (The Trust, MassMutual Corporate Investors, MassMutual
Premier Funds, and MML Series Investment Fund II, 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 $ 23,625 $ 54,625
Michael H. Brown 7,125 18,125
Donald Glickman 15,000 37,000
Martin T. Hart 23,625 54,625
Jack A. Laughery 14,375 35,375
Corine T. Norgaard 23,625 132,125
Steven A. Kandarian* 4,250 23,500
--------- ---------
Total $ 111,625 $ 355,375
========= =========
* Mr. Kandarian resigned as a Trustee of the Trust, MassMutual Corporate
Investors and MassMutual Premier Funds in 2005.
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, 2005 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 2005 and 2004 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, 2005
audited financial statements in the Annual Report to shareholders for the
fiscal year ended December 31, 2005, 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, 2006, and, in
connection therewith, KPMG LLP will prepare all of the Trust's tax returns
for the fiscal year ending December 31, 2006.
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 6, 2006
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
Capital, and MassMutual for the fiscal year ended December 31, 2005. 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 2006 financial statements and prepare the Trust's 2006 tax
return.
17
FEES PAID TO INDEPENDENT AUDITORS
(1) FEES BILLED TO THE TRUST
----------------------------------------------------------------
KPMG LLP KPMG LLP
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
Audit Fees $ 39,000 $ 32,500
Audit-Related Fees 5,200 5,000
Tax Fees 32,900 33,500
All Other Fees 0 0
--------- ---------
Total Fees $ 77,100 $ 71,000
========= =========
(2) NON-AUDIT FEES BILLED TO
BABSON CAPITAL AND MASSMUTUAL
----------------------------------------------------------------
KPMG LLP KPMG LLP
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------- -----------------
Audit-Related Fees $1,271,816 $ 362,400
Tax Fees 0 0
All Other Fees 0 400,000
---------- ----------
Total Fees $1,271,816 $ 762,400
========== ==========
The category "Audit Related Fees" reflects fees billed by KPMG for services
reasonably related to the audit and tax services rendered to the Trust, Babson
Capital, and MassMutual, such as SAS 70 review, a Sarbanes-Oxley Readiness
Assessment and agreed upon procedures reports. 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 for tax consulting rendered to Babson Capital and MassMutual. The
Sarbanes-Oxley Act of 2002 and its implementing regulations allows the Trust's
Audit Committee to establish a preapproval policy for certain services rendered
by the Trust's independent accountants. During 2005, 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 2004 fees billed represent final 2004 amounts, which may differ from
the preliminary figures available as of the publication date of the Trust's 2005
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 2005 Proxy Statement,
but are now properly included in the 2004 fees billed to the Trust, Babson
Capital, and MassMutual.
18
(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 Capital provides investment management and certain administrative
services to the Trust pursuant to the Contract.
Babson Capital, an SEC registered investment adviser since 1940, currently
has over $92 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 Capital.
MassMutual owns all of the voting shares of MassMutual Holding LLC. MassMutual
and MassMutual Holding LLC are located at 1295 State Street, Springfield,
Massachusetts, 01111. Babson Capital has an office at 1500 Main Street, Suite
1100, in Springfield, Massachusetts, 01115, and its principal office is located
at Independence Wharf, 470 Atlantic Avenue, Boston, Massachusetts 02210.
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 Capital, the
Trust's investment adviser. MassMutual's principal business address is 1295
State Street, Springfield, MA, 01111.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Trust's Trustees and certain officers, investment advisers, certain
affiliated persons of the investment advisers, and persons who own more than 10%
of any class of outstanding securities of the Trust are required to file forms
reporting their affiliation with the Trust and reports of ownership and changes
in ownership of the Trust's securities with the SEC and the New York Stock
Exchange. These persons and entities are required by SEC regulation to furnish
the Trust with copies of all such forms they file. Based solely on a review of
these forms furnished to the Trust, the Trust believes that each of its Trustees
and relevant officers, Babson Capital, and relevant affiliated persons have
complied with all applicable filing requirements during the Trust's fiscal year
ended December 31, 2005, except that Michael T. Rollings and David Brennan of
Babson Capital each inadvertently filed a late Form 3. Additionally, one Form 5
filing was made in 2006 by Ms. Norgaard to disclose an inadvertently unreported
2004 transaction in Trust shares.
19
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 2007 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, 2006,
to be considered for inclusion in the Trust's proxy material for its 2007 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 2006 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 22, 2005 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, 2005,
INCLUDING FINANCIAL STATEMENTS, A SCHEDULE OF THE TRUST'S INVESTMENTS AS OF SUCH
DATE AND OTHER DATA, WAS MAILED ON OR ABOUT MARCH 1, 2006, TO ALL SHAREHOLDERS
OF RECORD. 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, 2006
21
APPENDIX A
MASSMUTUAL PARTICIPATION INVESTORS
SECTION B - FUND GOVERNANCE
MMPI AUDIT COMMITTEE CHARTER
----------------------------
ADOPTED APRIL 28, 2000
AMENDED AND RESTATED JULY 15, 2005,
AS FURTHER AMENDED JANUARY 20, 2006
1. COMPOSITION.
(a) The Audit Committee (the "Committee") shall be composed of not less
than three Trustees who are elected by a majority of the full Board of
Trustees. Each Committee member shall be:
(i) a member of the Trust's Board of Trustees;
(ii) an independent Trustee as defined by the applicable rules of
the New York Stock Exchange (the "NYSE") and the Investment
Company Act of 1940, as amended;
(iii) financially literate as such qualification is interpreted by
the Trust's Board of Trustees, or become financially literate
within a reasonable period of time after his or her
appointment to the Committee; and
(iv) at least one member of the Committee shall possess accounting
or related financial management expertise as determined by the
business judgment of the Trust's Board of Trustees.
(b) The Trust's Board of Trustees shall determine whether at least one
member of the Committee is an audit committee financial expert ("the
Audit Committee Financial Expert") under applicable U.S. Securities
and Exchange Commission rules. The Trust's Audit Committee Financial
Expert is not an "expert" for any purpose, including without
limitation for purposes of Section 11 of the Securities Act. The
designation of a member of the Committee as an Audit Committee
Financial Expert does not: (i) impose on that member any duties,
obligations or liability that are greater than the duties, obligations
and liability imposed on that member as a member of the Committee and
Board of Trustees; and (ii) affect the duties, obligations or
liability of any other member of the Committee or Board of Trustees.
2. PURPOSES.
The Committee's role is one of oversight. The Trust's adviser/management is
responsible for the preparation, presentation and integrity of the Trust's
financial statements and maintenance of appropriate systems for accounting and
internal
A-1
control. The Trust's Independent Registered Public Accounting Firm (the
"Independent Accountants") are responsible for planning and conducting proper
audits and reviews of the Trust's financial statements including gaining an
understanding of the internal controls to determine their sufficiency for
relying on the financial statements. Each member of the Committee shall be
entitled to rely on the accuracy of the financial and other information
provided, and the representations made, to the Committee by the Trust's
Independent Accountants, its management and its investment adviser (including
the adviser's internal auditor) or its affiliates.
The Committee assists the Board of Trustees in its oversight of the:
(a) integrity, quality and objectivity of the Trust's financial statements
and its accounting and financial reporting policies and practices;
(b) soundness of the Trust's systems of internal controls regarding
finance and accounting compliance;
(c) independence and qualifications of the Trust's Independent
Accountants;
(d) performance of the Adviser's limited internal audit coverage of the
Trust; and
(e) Trust's compliance with audit and accounting related legal and
regulatory requirements including, but not limited to, requirements
related to any codes of ethics adopted pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 and matters referred to under the heading
"Legal and Compliance Matters" of this Charter.
3. AUTHORITY.
To carry out its purposes, the Committee shall have the following powers and, to
the extent imposed by applicable law or regulation, duties:
Financial Statement and Disclosure Matters
(a) to review and discuss the Trust's annual financial statements with its
adviser/management and the Independent Accountants, including matters
required to be discussed by SAS 61, as amended, or any successor or
corollary accounting pronouncements;
(b) to review and discuss the Trust's quarterly financial statements with
the Trust's adviser/management and with the Trust's Independent
Accountants (at such time as such quarterly financial statements are
required to be audited or reviewed by the Independent Accountants);
(c) to review and discuss the Trust's press releases, as well as financial
information and earnings guidance provided to analysts and rating
agencies (including, but not limited to, net asset value and
distributions) with the Trust's management;
A-2
(d) to meet with the Trust's management, Independent Accountants, or the
adviser's internal auditors, including private meetings as necessary
or appropriate, to review any material issues regarding accounting
principles and financial statement presentations, including any
significant changes in the Trust's selection or application of
accounting principles, and major issues as to the adequacy of the
Trust's internal controls and any special audit procedures adopted in
light of material control deficiencies, if any. Such reviews may
consider:
(1) all critical accounting policies and practices to be used by the
Trust;
(2) significant financial reporting issues and judgments made in
connection with the preparation of the Trust's financial
statements, including any alternative accounting or disclosure
treatments that have been discussed with the Trust's
adviser/management; and
(3) any other material communications between the Independent
Accountants and the Trust's adviser/management.
(e) to review any reported audit problems or other difficulties
(including, but not limited to, any fraud, whether or not material,
encountered during the course of the audit process) and the
adviser/management's responses thereto with the Trust's Independent
Accountants;
(f) to resolve any reported disagreements between the Trust's Independent
Accountants and its adviser/management regarding financial reporting;
(g) to discuss the independent accountants' report on the Trust's system
of internal control required to be filed with its Form N-SAR;
Matters Related to Oversight of the Trust's Relationship with its Independent
Accountants
(h) to appoint or replace the Trust's Independent Accountants (subject to
shareholder ratification, if applicable) and, in connection therewith,
have the sole authority to approve the relevant engagement letter and
audit engagement fees and terms as well as significant non-audit
engagements with the Independent Accountants;
(i) to approve, in advance, all audit and non-audit services that are not
specifically prohibited pursuant to applicable law or regulation
provided by the Trust's Independent Accountants to the Trust, and all
non-audit services provided to the Trust's investment adviser (and its
affiliates) where the nature of the services provided have a direct
impact on the operations or financial reporting of the Trust, provided
that, no such advance approval shall be required for non-audit
services provided pursuant to pre-approval policies as may be adopted
by the Committee or are otherwise legally permissible without the
Committee's approval;
A-3
(j) to meet with the Trust's Independent Accountants, including private
meetings, as necessary (i) to review the arrangements for, and scope
of, the annual audit and any special audits, agreed upon procedures or
limited reviews; (ii) to discuss any matters of concern brought to
their attention relating to the Trust's financial statements,
including any adjustments to such statements recommended by the
Independent Accountants, or other results of said audit(s); (iii) to
consider the Independent Accountants' comments with respect to the
Trust's financial policies, procedures and internal accounting
controls and its adviser/management's responses thereto; and (iv) to
review the form of opinion the Independent Accountants propose to
render to the Board of Trustees and shareholders;
(k) to review, at least annually, the qualifications, performance and
independence of the Trust's Independent Accountants. In conducting
each annual review the Committee may:
(1) obtain and review a report by the Trust's Independent Accountants
describing:
(i) the Independent Accounting firm's internal quality
control procedures;
(ii) any material issues raised by the most recent internal
quality control review or peer review of the Independent
Accounting Firm, or by any inquiry or investigation by
governmental or professional authorities, within the past
five years, respecting one or more independent audits
carried out by the Independent Accounting Firm, and any
steps taken to deal with any such issues;and
(iii) all relationships between the Independent Accountants and
the Trust and its investment adviser and affiliates
thereof.
(2) consider the rotation of the lead audit and review partners, or
the Independent Accounting Firm itself;
(3) receive from the Trust's Independent Accountants specific
representations regarding their independence consistent with
Independent Standards Board Standard No.1, as amended, or any
corollary pronouncements, and discuss with the Trust's
Independent Accountants any relationships or services that may
impact their objectivity or independence; and
(4) present any observations or conclusions with respect to the
Independent Accountants to the Trust's Board of Trustees.
A-4
Legal and Compliance Matters
(l) to review periodically with the Trust's legal counsel, including legal
counsel retained by the Committee (if any), any legal matter that
could have a material impact on, or related to, the Trust's financial
statements;
(m) to review and approve the Committee reports required to be included in
the Trust's annual Proxy Statement;
(n) to receive the Trust's other filings with the SEC under the Securities
and Exchange Act of 1934 including, but not limited to, the Trust's
principal executive officer and principal financial officer
disclosures concerning (i) all significant deficiencies in the design
or operation of internal controls which could adversely affect the
Trust's ability to record, process, summarize and report financial
data; and (ii) any fraud, whether or not material, that involves its
adviser/management or other employees who have a significant role in
the Trust's internal controls, and to take such actions as are deemed
appropriate in connection therewith;
(o) to receive an update regarding any material inquiries from regulatory
entities and the results, if applicable, or current status of, any
regulatory examinations of the Trust, its investment adviser or its
affiliates that raises material issues regarding the Trust's financial
statements, results of operations, accounting policies or internal
controls; and
(p) to establish procedures for: (i) the receipt, retention and treatment
of complaints received by the Trust regarding accounting, internal
controls or auditing matters and (ii) the confidential, anonymous
submission by the Trust's officers and its investment adviser's
employees of concerns regarding questionable accounting, internal
controls or auditing matters related to the Trust.
4. MEETINGS AND OPERATING MATTERS.
The Committee:
(a) shall report its activities to the full Board of Trustees on a regular
basis and make such recommendations with respect to the above and
other matters as the Committee may deem necessary or appropriate;
(b) shall keep written minutes of its meetings, which minutes shall be
maintained with the Trust's books and records;
(c) shall meet as often as required by law and is empowered to hold
special meetings as circumstances require;
(d) shall schedule and meet periodically in executive session with the
Trust's adviser/management, Independent Accountants, internal auditors
and legal counsel, including legal counsel retained by the Committee
(if any);
A-5
(e) may form and delegate authority to subcommittees or individual members
when appropriate;
(f) shall have the resources and authority appropriate to discharge its
responsibilities, including the authority to retain the Trust's
Independent Accountants, special counsel and other experts or
consultants at the expense of the Trust;
(g) may perform a review and evaluation of the Committee's performance;
(h) may review this charter and recommend any changes to the full Board of
Trustees; and
(i) may, notwithstanding the Committee's authority and responsibility as
outlined above, perform such additional activities, and consider such
other matters, within the scope of its purpose, as stated above, as
the Committee of the Board of Trustees deems appropriate.
A-6
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
MASSMUTUAL PARTICIPATION INVESTORS below.
THIS PROXY IS SOLICITED ON BEHALF 4) Return the proxy card in the
OF THE BOARD OF TRUSTEES envelope provided.
The undersigned hereby appoints Stephen L. Kuhn and James M. Roy, 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 21, 2006,
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.
MMPI 06 KW
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 election: (01) Roger W. Crandall and
(02) Martin T. Hart as Trustees for three-year terms, 0 0 0
and until their respective successors are duly
elected and qualified.
*To withhold authority to vote, mark "For All Except"
and write the nominee's number on the line below.
2. The proxies are 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. 0 0
For address changes, please check this box and write them
on the reverse side of this card where indicated. 0
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
MMPI 06 KW