UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

 

Investment Company Act file number   811-5531

 

 

 

 

 

  Barings Participation Investors  
  (Exact name of registrant as specified in charter)  
 

 

 

  
  300 South Tryon Street, Suite 2500, Charlotte, NC 28202  
  (Address of principal executive offices) (Zip code)  
 

 

 

  
 

Corporation Service Company (CSC)

251 Little Falls Drive, Wilmington, DE 19808

  
  (Name and address of agent for service)  

 

 

Registrant's telephone number, including area code: 704-805-7200

 

Date of fiscal year end: 12/31

 

Date of reporting period: 12/31/21

 

 

* Explanatory Note. The Registrant is filing this amendment to its Form N-CSR for the period ended December 31, 2021, originally filed with the Securities and Exchange Commission on March 18, 2022 (Accession No. 0001072613-22-000358).  The purpose of the amendment is to restate the 2020 and 2021 portfolio composition charts in the annual report in Item 1. 

 

 

 

 

ITEM 1. REPORT TO STOCKHOLDERS.

 

Attached hereto is the annual shareholder report transmitted to shareholders pursuant to Rule 30e-1 of the Investment Company Act of 1940, as amended.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   




 

 

 

 

 

 

2021   

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Barings

PARTICIPATION INVESTORS

2021 Annual Report

 

 

 

 

   

     
 

 

 

 

  
     

 

 

 

BARINGS PARTICIPATION INVESTORS

Barings Participation Investors (the “Trust”) is a closed-end management investment company, first offered to the public in 1988, whose shares are traded on the New York Stock Exchange under the trading symbol “MPV”. The Trust’s share price can be found in the financial section of newspapers under either the New York Stock Exchange listings or Closed-End Fund listings.

INVESTMENT OBJECTIVE & STRATEGIES

The Trust’s investment objective is to maintain a portfolio of securities providing a current yield and, when available, an opportunity for capital gains. The Trust’s principal investments are privately placed, below-investment grade, long-term debt obligations including bank loans and mezzanine debt instruments. Such private placement securities may, in some cases, be accompanied by equity features such as common stock, preferred stock, warrants, conversion rights, or other equity features. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers in private placement transactions. These investments are typically made to small or middle market companies. In addition, the Trust may invest, subject to certain limitations, in marketable debt securities (including high yield and/or investment grade securities) and marketable common stock. Below- investment grade or high yield securities have predominantly speculative characteristics with respect to the capacity of the issuer to pay interest and repay capital.

The Trust distributes substantially all of its net income to shareholders each year. Accordingly, the Trust pays dividends to shareholders four times a year in January, May, August, and November. All registered shareholders are automatically enrolled in the Dividend Reinvestment and Cash Purchase Plan unless cash distributions are requested.

In this report, you will find a complete listing of the Trust’s holdings. We encourage you to read this section carefully for a better understanding of the Trust. We cordially invite all shareholders to attend the Trust’s Annual Meeting of Shareholders, which will be held on May 19, 2022 at 8:00 A.M. (Eastern Time) in Charlotte, North Carolina, and virtually at the following website https://www.viewproxy.com/barings/broadridgevsm/.

 

PROXY VOTING POLICIES & PROCEDURES:
PROXY VOTING RECORD

The Trustees of the Trust have delegated proxy voting responsibilities relating to the voting of securities held by the Trust to Barings LLC (“Barings”). A description of Barings’ proxy voting policies and procedures is available (1) without charge, upon request, by calling, toll-free 1-866-399-1516; (2) on the Trust’s website at http://www.barings.com/mpv and (3) on the U.S. Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov. Information regarding how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2021 is available (1) on the Trust’s website at http://www.barings.com/mpv and (2) on the SEC’s website at http://www.sec.gov.

FORM N-PORT

The Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on part F of Form N-PORT. This information is available (i) on the SEC’s website at http://www.sec.gov; and (ii) at the SEC’s Public Reference Room in Washington, DC (which information on their operation may be obtained by calling 1-800-SEC-0330). A complete schedule of portfolio holdings as of each quarter-end is available on the Trust’s website at http://www.barings.com/mpv or upon request by calling, toll-free, 1-866-399-1516.

LEGAL MATTERS

The Trust has entered into contractual arrangements with an investment adviser, transfer agent and custodian (collectively “service providers”) who each provide services to the Trust. Shareholders are not parties to, or intended beneficiaries of, these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the Trust.

Under the Trust’s Bylaws, any claims asserted against or on behalf of the Trust, including claims against Trustees and officers must be brought in courts located within the Commonwealth of Massachusetts.

The Trust’s registration statement and this shareholder report are not contracts between the Trust and its shareholders and do not give rise to any contractual rights or obligations or any shareholder rights other than any rights conferred explicitly by federal or state securities laws that may not be waived.

 

 

 

BARINGS PARTICIPATION INVESTORS

c / o Barings LLC

300 South Tryon St., Suite 2500

Charlotte, NC 28202

1-866-399-1516

http://www.barings.com/mpv

ADVISER

Barings LLC

300 South Tryon St., Suite 2500

Charlotte, NC 28202

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP

Boston, Massachusetts 02110 

 

COUNSEL TO THE TRUST

Ropes & Gray LLP

Boston, Massachusetts 02110

CUSTODIAN

State Street Bank and Trust Company

Boston, MA 02110

TRANSFER AGENT & REGISTRAR

DST Systems, Inc.

P.O. Box 219086

Kansas City, MO 64121-9086

1-800-647-7374

 

 

 
 

2021 Annual Report

 

 

 

PORTFOLIO COMPOSITION AS OF 12/31/2021*

 

PORTFOLIO COMPOSITION AS OF 12/31/2020*

 

 

In July 2017, the head of the U.K. Financial Conduct Authority (the “FCA”), announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. In March 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the case of sterling, euro, Swiss franc, and Japanese yen, and the one week and two month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar settings. In addition, as a result of supervisory guidance from U.S. regulators, some U.S. regulated entities will cease to enter into new LIBOR contracts after January 1, 2022. At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although the Alternative Reference Rates Committee, a steering committee convened by the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York and comprised of large U.S. financial institutions, has recommended the use of the Secured Overnight Financing Rate, SOFR. There are many uncertainties regarding a transition from LIBOR to SOFR or any other alternative benchmark rate that may be established, including, but not limited to, the timing of any such transition, the need to amend all contracts with LIBOR as the referenced rate and, given the inherent differences between LIBOR and SOFR or any other alternative benchmark rate, how any transition may impact the cost and performance of impacted securities, variable rate debt and derivative financial instruments. In addition, SOFR or another alternative benchmark rate may fail to gain market acceptance, which could adversely affect the return on, value of and market for securities, variable rate debt and derivative financial instruments linked to such rates. The effects of a transition from LIBOR to SOFR or any other alternative benchmark rate on the Trust’s cost of capital and net investment income cannot yet be determined definitively. All of the Trust’s loan agreements with

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Barings Participation Investors

 

 

 

 

the Trust’s portfolio companies include fallback language in the event that LIBOR becomes unavailable. This language generally either includes a clearly defined alternative reference rate after LIBOR’s discontinuation or provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the lenders under the facility, or the consent of each lender, prior to identifying a replacement reference rate. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to the Trust and could have a material adverse effect on the Trust’s business, financial condition and results of operations.

 

 

 

Average Annual Returns
December 31, 2021		 1 Year 5 Year 10 Year
       
Barings Participation Investors 32.09% 8.07% 7.19%
       
Bloomberg Barclays U.S. Corporate High Yield Index 5.28% 6.30% 6.83%

Data for Barings Participation Investors (the “Trust”) represents returns based on the change in the Trust’s market price assuming the reinvestment of all dividends and distributions. Past performance is no guarantee of future results.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on distributions from the Trust or the sale of shares.

 

 

 

 

 

 

 

 

 

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2021 Annual Report

 

 

 

TO OUR SHAREHOLDERS

I am pleased to share with you the Trust’s Annual Report for the year ended December 31, 2021.

PORTFOLIO PERFORMANCE

The Trust’s net total portfolio rate of return for 2021 was 17.84%, as measured by the change in net asset value assuming the reinvestment of all dividends and distributions. The Trust’s total net assets were $161,080,475 or $15.19 per share, as of December 31, 2021. This compares to $144,177,379 or $13.60 per share, as of December 31, 2020. The Trust paid a quarterly dividend of $0.20 per share for each of the four quarters of 2021, for a total annual dividend of $0.80 per share. In 2020, the Trust paid four quarterly dividends of $0.20 per share, for a total annual dividend of $.80 per share. Net taxable investment income for 2021 was $0.89 per share, including approximately $0.12 per share of non-recurring income, compared to 2020 net taxable investment income of $1.00 per share, which included approximately $0.21 per share of non-recurring income.

The Trust’s stock price increased 24.6% during 2021, from $11.88 as of December 31, 2020 to $14.80 as of December 31, 2021. The Trust’s stock price of $14.80 as of December 31, 2021 equates to a 2.6% discount to the December 31, 2021 net asset value per share of $15.19. The Trust’s average quarter-end premium for the 3-, 5-, and 10-year periods ended December 31, 2021 was 0.1%, 2.1% and 3.9%, respectively.

The table below lists the average annual net returns of the Trust’s portfolio, based on the change in net assets and assuming the reinvestment of all dividends and distributions. Average annual returns of the Bloomberg Barclays U.S. Corporate High Yield Index for the 1-, 3-, 5-, 10- and 25-year periods ended December 31, 2021 and the Credit Suisse Leveraged Loan Index for the 1- and 3-year periods ended December 31, 2021 are provided for comparison purposes only.

 

  The Trust Bloomberg Barclays US
Corporate HY Index		 Credit Suisse
Leveraged
Loan Index
       
1 Year 17.84% 5.28% 5.40%
       
3 Years 11.77% 8.83% 5.43%
       
5 Years 10.35% 6.30%  
       
10 Years 10.69% 6.83%  
       
25 Years 11.57% 6.87%  

Past performance is no guarantee of future results

PORTFOLIO ACTIVITY

The Trust had an active fourth quarter, closing on 26 new private placement investments totaling $29.8 million and 19 add-on investments in existing portfolio companies totaling $5.3 million. For the year, the Trust closed 49 new private placement investments, and 45 add-on investments in existing portfolio companies. A brief description of these investments can be found in the Consolidated Schedule of Investments. The total amount invested by the Trust in private placement investments in 2021 was $73.5million, which was significantly more than the $31.6 million of private placement investments made by the Trust in 2020.

 

 

 

 

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Barings Participation Investors

 

 

 

New deal activity in 2021 occurred throughout the year with steady investment in the first three quarters ending the year with an exceptionally strong fourth quarter. The Trust was well-positioned to invest in 2021 due to the continuation of increased origination flow into 1st lien senior secured middle market assets, expansion of the private debt platform of Barings (the Trust’s investment adviser), and overall activity within the private debt market. These favorable items were partially offset by the continuance of hyper-competitive and aggressive market conditions. Competition for new investment opportunities remained intense due to the amount of fresh capital that flowed into the private debt and private equity markets. As a result, companies continued to be pursued aggressively by both buyers and lenders alike, leading to the continued prevalence of high purchase multiples and leverage levels in the market. We have strengthened our liquidity position by entering into a $15.0 million committed revolving credit facility with MassMutual (See Note 4). We drew $6.0 million on the facility at the end of the fourth quarter to fund new investments.

The Trust’s portfolio experienced an increased level of economic stress due to COVID-19 in early 2020. During the course of 2020 and 2021, in addition to working on new investment activity, we continued to maintain our focus on managing and maintaining the quality of the portfolio. Towards the end of the third quarter 2020, the credit quality of the Trust’s existing portfolio stabilized and began a trend of improvement that continued through the end of 2021. In our view, the number of companies on our watch list or in default has remained at acceptable levels.

We had 35 companies exit from the Trust’s portfolio during 2021. This level of exit activity in the Trust’s portfolio was above recent years as realization levels have ranged from 18-32 exits annually since 2014. In 33 of these exits, the Trust realized a positive return on its investment. This level of realization activity in recent years is yet another indicator of how active and aggressive the middle market M&A and debt markets have been, and continue to be.

During 2021, the Trust had 4 portfolio companies fully or partially pre-pay their debt obligations. These transactions, in which the debt instruments held by the Trust were fully or partially prepaid, are generally driven by performing companies seeking to take advantage of lower interest rates and the abundance of debt capital. Unless replaced by new private debt investments, these prepayments reduce net investment income. The level of refinancing activity the portfolio has experienced has remained relatively stable since 2016. Two portfolio companies paid dividends to the Trust on its equity holdings in those companies.

OUTLOOK FOR 2022

With demand for products and services continuing to increase, one key question in 2022 is whether supply chains can keep up with the renewed demand and whether we will see material increases in prices as a result of supply-chain bottlenecks, rising raw material and energy costs and labor shortages. Across the world, and particularly in regions with large manufacturing sectors which depend on international trade, these risks may be key. However, it is important to note that such issues do not affect every geography and sector the same. When constructing portfolios, we focus on investing in high-quality businesses which are leaders in their space and offer defensive characteristics which will allow them to perform through the cycle. Therefore, while segments of the broader economy may be affected by potential supply chain issues, increasing raw material and energy costs and labor shortages, we remain confident in the current diversified portfolio to perform through the cycle.

As we enter 2022, default rates remain at relatively low levels, there appears to be plenty of both private equity and private debt capacity, which should continue to drive middle market M&A activity, and our pipeline of investment opportunities remains relatively

 

 

 

 

 

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2021 Annual Report

 

 

 

stable and healthy. However, as mentioned above, the dynamics within that market have been, and are expected to remain, aggressive. Rest assured that regardless of market conditions, we will continue to employ on behalf of the Trust the same investment philosophy that has served it well since its inception: investing in companies that we believe have a strong business proposition, solid cash flow and experienced, ethical management. We believe this philosophy, along with Barings’ seasoned investment-management team, positions the Trust well to meet its long-term investment objectives.

The Trust maintained its quarterly dividend of $0.20 per share in 2021 for a total annual dividend of $0.80 per share. As has been mentioned in prior reports, recurring investment income alone has generally not been sufficient to fully fund the current dividend rate, which has required supplementation from non-recurring income and earnings carry forwards. While recurring investment income remains stable, it may not be sufficient to fully fund the current dividend rate in the future. Net investment income has generally been below the dividend rate since 2013 due principally to the considerable reduction in the number of higher yielding junior debt investment opportunities resulting from prepayments and realizations in the portfolio, combined with generally lower investment returns available due to market and competitive dynamics in recent years. Floating interest rates continue to be low by historic standards, and should such rates rise, the Trust’s income would likely also rise. The percentage of the portfolio in floating rate debt securities, which are often secured and generally of higher credit quality than higher-yielding junior debt, increased to 71% as of December 31, 2021, compared to 58% as of December 31, 2020. All of the above said, the level of recurring investment income expected to be generated by the Trust in 2022, combined with the availability of earnings carry forwards and other non-recurring income, is currently expected to be sufficient to maintain the current dividend rate over the next several quarters. Over time, however, the Trust’s dividend paying ability tends to be correlated with its recurring earnings capacity. We and the Board of Trustees will continue to evaluate the current and future earnings capacity of the Trust and formulate a dividend strategy that is consistent with the Trust’s recurring earnings.

As always, I would like to thank you for your continued interest in and support of Barings Participation Investors. I look forward to seeing you at the Trust’s annual shareholder meeting on Thursday May 19, 2022.

Sincerely,

 

Christina Emery

President

 

 

 

 

 

 

 

 

 

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Barings Participation Investors

 

 

 

 

           
2021
Dividends		 Record
Date		 Total
Paid		 Ordinary
Income		 Short-Term
Gains		 Long-Term
Gains
Regular      5/3/2021 0.2000 0.2000 - -
Regular      8/2/2021 0.2000 0.2000 - -
Regular    11/8/2021 0.2000 0.2000 - -
Regular 12/30/2021 0.2000 0.2000 - -
    0.8000 0.8000 0.0000 0.0000

 

The following table summarizes the tax effects of the relation of capital gains for 2021:

  Amount per Share Form 2439
2021 Gains Retained 0.3732 Line 1a
Long-Term Gains Retained 0.3732  
Taxes Paid 0.0784 Line 2*
Basis Adjustment 0.2948             **
*If you are not subject to federal capital gains tax (e.g. charitable organizations, IRAs and Keogh Plans) you may be able to claim a refund by filing Form 990-T.
**For federal income tax purposes, you may increase the adjusted cost basis of your shares by this amount (the excess of Line 1a over Line 2).

 

             
Annual
Dividend		 Qualified for Dividend
Received Deduction***		 Qualified Dividends**** Interest Earned on
U.S. Gov’t. Obligations
Amount per
Share		 Percent Amount per
Share		 Percent Amount per
Share		 Percent Amount per
Share
$0.80 0.5025% 0.0040 0.5025% 0.0040 0% 0.0000
***Not available to individual shareholders
****Qualified dividends are reported in Box 1b on IRS Form 1099-Div for 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

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BARINGS PARTICIPATION INVESTORS  
   
   
   
   
Financial Report  
   
Consolidated Statement of Assets and Liabilities 8
   
Consolidated Statement of Operations 9
   
Consolidated Statement of Cash Flows 10
   
Consolidated Statements of Changes in Net Assets 11
   
Consolidated Selected Financial Highlights 12
   
Consolidated Schedule of Investments 13-42
   
Notes to Consolidated Financial Statements 43-53
   
Report of Independent Registered Public Accounting Firm 54
   
Interested Trustees 55-56
   
Independent Trustees 57-58
   
Officers of the Trust 59-61
   
   

 

 

 

  
   
   
   
   

 

Barings Participation Investors

 

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

December 31, 2021

 

 

 

     
Assets:    
Investments     
(See Consolidated Schedule of Investments)     
Corporate restricted securities - private placement investments at fair value     
(Cost - $153,465,884)  $159,889,400 
Corporate restricted securities - rule 144A securities at fair value     
(Cost - $8,148,202)   8,843,569 
Corporate public securities at fair value     
(Cost - $4,278,408)   4,366,139 
      
Total investments (Cost - $165,892,494)   173,099,108 
      
Cash   11,611,912 
Foreign currencies (Cost - $6,830)   6,836 
Dividend and interest receivable   1,517,809 
Receivable for investments sold   440,668 
Deferred financing fees   49,429 
Other assets   250,722 
      
Total assets   186,976,484 
      
      
Liabilities:     
Note payable   15,000,000 
Credit facility   6,000,000 
Dividend payable   2,120,340 
Tax payable   1,162,575 
Payable for investments purchased   908,449 
Investment advisory fee payable   372,973 
Deferred tax liability   224,316 
Interest payable   31,782 
Accrued expenses   75,574 
      
Total liabilities   25,896,009 
      
Commitments and Contingencies (See Note 7)     
      
Total net assets  $161,080,475 
      
Net Assets:     
Common shares, par value $.01 per share  $106,017 
Additional paid-in capital   145,010,902 
Total distributable earnings   15,963,556 
      
Total net assets  $161,080,475 
      
Common shares issued and outstanding (14,787,750 authorized)   10,601,700 
      
Net asset value per share  $15.19 

 

 

 

See Notes to Consolidated Financial Statements

 

 

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2021 Annual Report

 

CONSOLIDATED STATEMENT OF OPERATIONS

For the year ended December 31, 2021

 

     
Investment Income:     
Interest  $11,624,654 
Dividends   337,519 
Other   337,412 
      
Total investment income   12,299,585 
      
Expenses:     
Investment advisory fees   1,424,174 
Interest and other financing fees   622,857 
Professional fees   300,259 
Trustees’ fees and expenses   291,848 
Reports to shareholders   104,000 
Custodian fees   24,000 
Other   96,651 
      
Total expenses   2,863,789 
      
Investment income - net   9,435,796 
      
Income tax, including excise tax expense   247,154 
Net Investment income after taxes   9,188,642 
      
Net realized and unrealized gain on investments and foreign currency:     
Net realized gain on investments before taxes   5,830,748 
Net realized gain on foreign currency transactions before taxes   312 
Income tax expenses   (963,279)
      
Net realized gain on investments and foreign currency transactions after taxes   4,867,781 
      
Net increase in unrealized appreciation of investments before taxes   11,552,343 
Net increase in unrealized appreciation of foreign currency translation before taxes   6 
Net (increase) in deferred income tax expense   (224,316)
      
Net increase in unrealized appreciation of investments and foreign currency translation after taxes   11,328,033 
      
Net gain on investments and foreign currency   16,195,814 
      
Net increase in net assets resulting from operations  $25,384,456 

 

 

 

See Notes to Consolidated Financial Statements

 

 

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Barings Participation Investors

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended December 31, 2021

 

 

     
Net decrease in cash & foreign currencies:     
      
Cash flows from operating activities:     
Purchases/Proceeds/Maturities from short-term portfolio securities, net  $5,004,257 
Purchases of portfolio securities   (78,420,291)
Proceeds from disposition of portfolio securities   65,688,651 
Interest, dividends and other income received   12,146,438 
Interest expense paid   (613,500)
Operating expenses paid   (2,125,654)
Income taxes paid   (166,003)
      
Net cash provided by operating activities   1,513,898 
      
Cash flows from financing activities:     
Borrowings under credit facility   6,000,000 
Cash dividends paid from net investment income   (8,481,360)
Financing fees paid   (54,271)
      
Net cash used for financing activities   (2,535,631)
      
Net decrease in cash & foreign currencies   (1,021,733)
      
Cash & foreign currencies - beginning of period   12,640,481 
      
Cash & foreign currencies - end of period  $11,618,748 
      
Reconciliation of net increase in net assets to net
cash provided by operating activities:		     
      
Net increase in net assets resulting from operations  $25,384,456 
      
Increase in investments   (24,621,761)
Increase in interest receivable   (415,160)
Increase in receivable for investments sold   (423,188)
Decrease in other assets   717,791 
Decrease in payable for investments purchased   (521,621)
Increase in investment advisory fee payable   49,024 
Increase in tax payable   1,044,430 
Increase in deferred tax liability   224,316 
Increase in interest payable   4,515 
Increase in accrued expenses   71,096 
      
Total adjustments to net assets from operations   (23,870,558)
      
Net cash provided by operating activities  $1,513,898 

 

 

See Notes to Consolidated Financial Statements

 

 

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2021 Annual Report

 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

For the year ended December 31, 2021

 

 

 

         
  

For the
year ended
12/31/2021

  

For the
year ended
12/31/2020

 
Increase in net assets:          
           
Operations:          
Investment income - net  $9,188,642   $10,630,477 
Net realized gain on investments and foreign currency after taxes   4,867,781    240,048 
Net change in unrealized appreciation / (depreciation) of investments and foreign currency after taxes   11,328,033    (4,521,459)
           
Net increase in net assets resulting from operations   25,384,456    6,349,066 
           
Increase from common shares issued on reinvestment of dividends          
Common shares issued (2021 - nil; 2020 - 14,472)   —    227,533 
           
Dividends to shareholders from:          
Distributable earnings to Common Stock Shareholders (2021 - $0.80 per share; 2020 - $0.80 per share)   (8,481,360)   (8,481,360)
           
Total increase / (decrease) in net assets   16,903,096    (1,904,761)
           
Net assets, beginning of year   144,177,379    146,082,140 
           
Net assets, end of year  $161,080,475   $144,177,379 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

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Barings Participation Investors

 

CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS

Selected data for each share of beneficial interest outstanding:

 

   For the years ended December 31, 
   2021   2020   2019   2018   2017 
Net asset value:                    
Beginning of year  $13.60   $13.80   $13.18   $13.91   $13.15 
                          
Net investment income (a)   0.86    1.00    1.00    1.03    1.09 
Net realized and unrealized gain/(loss) on investments   1.53    (0.40)   0.69    (0.68)   0.75 
                          
Total from investment operations   2.39    0.60    1.69    0.35    1.84 
                          
Dividends from net investment income to common shareholders   (0.80)   (0.80)   (1.08)   (1.08)   (1.08)
Increase / (Decrease) from dividends reinvested   0.00    0.00 (b)   0.01 (b)   (0.00)(b)   (0.00)(b)
                          
Total dividends   (0.80)   (0.80)   (1.07)   (1.08)   (1.08)
                          
Net asset value: End of year  $15.19   $13.60   $13.80   $13.18   $13.91 
                          
Per share market value: End of year  $14.80   $11.88   $16.13   $15.05   $14.10 
                          
Total investment return                         
Net asset value (c)   17.84%    4.66%    13.21%    2.53%    14.29% 
Market value (c)   32.09%    (21.11%)   14.72%    15.02%    7.21% 
                          
Net assets (in millions):                         
End of year  $161.08   $144.18   $146.08   $138.75   $145.48 
Ratio of total expenses to average net assets (d)   2.66%    1.47%    2.26%    2.76%    3.23% 
Ratio of operating expenses to average net assets   1.46%    1.38%    1.45%    1.56%    1.49% 
Ratio of interest expense to average net assets   0.41%    0.43%    0.42%    0.42%    0.43% 
Ratio of income tax expense to average net assets   0.79%    (0.34%)   0.39%    0.78%    1.31% 
Ratio of net investment income to average net assets   5.99%    7.52%    7.30%    7.47%    7.92% 
Portfolio turnover   43%    34%    22%    48%    24% 

 

(a)Calculated using average shares.

(b)Rounds to less than $0.01 per share.

(c)Net asset value return represents portfolio returns based on change in the Trust’s net asset value assuming the reinvestment of all dividends and distributions which differs from the total investment return based on the Trust’s market value due to the difference between the Trust’s net asset value and the market value of its shares outstanding; past performance is no guarantee of future results.

(d)Total expenses include income tax expense.

                     
Senior borrowings:                         
                               
Total principal amount (in millions)  $21   $15   $15       $15        $15      
                          
Asset coverage per $1,000 of indebtedness  $8,670   $10,612   $10,739   $10,250   $10,699 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

12
 
 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2021

 

Corporate Restricted Securities - 104.75%: (A) 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
Private Placement Investments - 99.26%: (C)
 
1WorldSync, Inc.
A product information sharing platform that connects manufacturers/suppliers and key retailers via the Global Data Synchronization Network.
6.25% Term Loan due 06/24/2025
(LIBOR + 5.250%)		  $2,434,019   *   $2,402,780   $2,434,019 
* 07/01/19 and 12/09/20.                  

 

Accelerate Learning

A provider of standards-based, digital science education content of K-12 schools.
6.00% Term Loan due 12/31/2024
(LIBOR + 5.000%)		  $974,753   12/19/18    965,113    956,895 
6.00% Term Loan due 12/20/2024
(LIBOR + 5.000%)		  $750,247   09/30/21    736,415    736,501 
            1,701,528    1,693,396 
 
Advanced Manufacturing Enterprises LLC
A designer and manufacturer of large, custom gearing products for a number of critical customer applications.
Limited Liability Company Unit (B)    1,945 uts.    *    207,911    — 
* 12/07/12, 07/11/13 and 06/30/15.                  
 
Advantage Software
A provider of enterprise resource planning (ERP) software built for advertising and marketing agencies.
Limited Liability Company Unit Class A (F)    766 uts.    10/01/21    24,353    24,957 
Limited Liability Company Unit Class A (F)    197 uts.    10/01/21    6,320    6,448 
Limited Liability Company Unit Class B (F)    766 uts.    10/01/21    784    802 
Limited Liability Company Unit Class B (F)    197 uts.    10/01/21    202    207 
            31,659    32,414 
 
Aftermath, Inc.
A provider of crime scene cleanup and biohazard remediation services.
6.00% Term Loan due 04/10/2025
(LIBOR + 5.000%)		  $963,473   04/09/19    951,655    950,948 
6.00% Term Loan due 04/10/2025
(LIBOR + 5.000%)		  $759,623   04/23/21    748,261    748,988 
            1,699,916    1,699,936 

 

 

See Notes to Consolidated Financial Statements

 

 

13

 
 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
AIT Worldwide Logistics, Inc.
A provider of domestic and international third-party logistics services.
8.50% Second Lien Term Loan due 03/31/2029  $1,669,355   04/06/21   $1,635,272   $1,669,355 
Limited Liability Company Unit (B)    56 uts.    04/06/21    55,645    109,953 
            1,690,917    1,779,308 
 
AMS Holding LLC
A leading multi-channel direct marketer of high-value collectible coins and proprietary-branded jewelry and watches.
Limited Liability Company Unit Class A
Preferred (B)(F)		    114 uts.    10/04/12    113,636    238,597 
                   
Amtech Software                  
A provider of enterprise resource planning software and technology solutions for packaging manufacturers.
6.25% First Lien Term Loan due 11/02/2027
(LIBOR + 5.500%) (G)		  $1,000,000   11/02/21    526,002    525,455 
                   
ASC Holdings, Inc.                  
A manufacturer of capital equipment used by corrugated box manufacturers.
13% (1% PIK) Senior Subordinated Note due
12/31/2024		  $754,175   11/19/15    754,171    754,175 
Limited Liability Company Unit (B)    111,100 uts.    11/18/15    111,100    14,999 
            865,271    769,174 
 
ASPEQ Holdings
A manufacturer of highly-engineered electric heating parts and equipment for a range of industrial, commercial, transportation and marine applications.
6.25% Term Loan due 10/31/2025
(LIBOR + 5.250%)		  $1,134,929   11/08/19    1,124,002    1,134,929 
                   
Audio Precision                  
A provider of high-end audio test and measurement sensing instrumentation software and accessories.
7.00% Term Loan due 10/31/2024
(LIBOR + 6.000%)		  $1,746,000   10/30/18    1,729,528    1,746,000 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

14

 

 
 

 

 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

 

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Aurora Parts & Accessories LLC               
A distributor of aftermarket over-the-road semi-trailer parts and accessories sold to customers across North America.
Preferred Stock (B)    210 shs.    08/17/15   $209,390   $209,390 
Common Stock (B)    210 shs.    08/17/15    210    138,754 
            209,600    348,144 
 
BDP International, Inc.
A provider of transportation and related services to the chemical and life sciences industries.
6.25% Term Loan due 12/14/2024
(LIBOR + 5.250%)		  $2,391,050   12/18/18    2,367,478    2,355,184 
6.25% Incremental Term Loan due 12/19/2024
(LIBOR + 5.250%)		  $42,706   12/07/20    42,078    42,066 
6.25% Incremental Term Loan due 12/21/2024
(LIBOR + 5.250%)		  $40,854   03/30/21    40,202    40,241 
            2,449,758    2,437,491 
 
Best Lawyers (Azalea Investment Holdings, LLC)
A global digital media company that provides ranking and marketing services to the legal community.
12.00% HoldCo PIK Note due 05/19/2028  $289,712   11/30/21    283,996    283,917 
6.25% First Lien Term Loan due 11/19/2027
(LIBOR + 5.250%) (G)		  $1,391,058   11/30/21    1,031,914    1,031,505 
Limited Liability Company Unit    44,231 uts.    11/30/21    44,231    44,231 
            1,360,141    1,359,653 
 
Blue Wave Products, Inc.
A distributor of pool supplies.                  
Common Stock (B)    51,064 shs.    10/12/12    51,064    112,841 
Warrant, exercisable until 2022, to purchase
common stock at $.01 per share (B)		    20,216 shs.    10/12/12    20,216    44,673 
            71,280    157,514 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

15

 

 
 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
BrightSign
A provider of digital signage hardware and software solutions, serving a variety of end markets, including retail, restaurants, government, sports, and entertainment.
6.75% Term Loan due 10/14/2027
(LIBOR + 5.750%) (G)		  $1,427,877   10/14/21   $1,279,879   $1,279,396 
Limited Liability Company Unit (F)    111,835 uts.    10/14/21    111,835    114,631 
            1,391,714    1,394,027 
                   
Brown Machine LLC
A designer and manufacturer of thermoforming equipment used in the production of plastic packaging containers within the food and beverage industry.
6.25% Term Loan due 10/04/2024
(LIBOR + 5.250%)		  $854,448   10/03/18    848,840    854,448 
                   
Cadence, Inc.                  
A full-service contract manufacturer (“CMO”) and supplier of advanced products, technologies, and services to medical device, life science, and industrial companies.
6.00% First Lien Term Loan due 04/30/2025
(LIBOR + 5.000%)		  $879,427   05/14/18    870,892    854,803 
                   
Cadent, LLC                  
A provider of advertising solutions driven by data and technology.
6.00% Term Loan due 09/07/2023
(LIBOR + 5.000%)		  $890,428   09/04/18    887,404    890,428 
                   
CAi Software                  
A vendor of mission-critical, production-oriented software to niche manufacturing and distribution sectors.
7.25% Term Loan due 12/10/2028
(LIBOR + 6.250%) (G)		  $2,500,000   12/13/21    2,214,626    2,214,254 
                   
Cash Flow Management                  
A software provider that integrates core banking systems with branch technology and creates modern retail banking experiences for financial institutions
6.75% Term Loan due 12/27/2027
(LIBOR + 5.750%) (G)		  $986,967   12/28/21    892,636    892,600 
                   

 

 

 

See Notes to Consolidated Financial Statements

 

 

16

 

 
 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Claritas Holdings, Inc.               
A market research company that provides market segmentation insights to customers engaged in direct-to-consumer and business-to-business marketing activities.
6.75% Term Loan due 12/31/2023
(LIBOR + 5.750%)		  $1,543,682   12/20/18   $1,528,486   $1,543,682 
                   
CloudWave                  
A provider of managed cloud hosting and IT services for hospitals.
7.00% Term Loan due 01/04/2027
(LIBOR + 6.000%)		  $1,656,835   01/29/21    1,625,356    1,631,016 
Limited Liability Company Unit (B)(F)    55,645 uts.    01/29/21    55,645    38,673 
            1,681,001    1,669,689 
                   
Command Alkon
A vertical-market software and technology provider to the heavy building materials industry delivering purpose-built, mission critical products that serve as the core operating & production systems for ready-mix concrete producers, asphalt producers, and aggregate suppliers.
9.25% Term Loan due 04/17/2027
(LIBOR + 8.250%) (G)		  $2,495,330   *    2,003,189    2,050,597 
Limited Liability Company Unit (B)(F)    18 uts.    04/23/20    18,006    20,113 
Limited Liability Company Unit Class B    6,629 uts.    04/23/20    —    36,968 
* 04/23/20, 10/30/20 and 11/18/20.           2,021,195    2,107,678 
                   
Concept Machine Tool Sales, LLC
A full-service distributor of high-end machine tools and metrology equipment, exclusively representing a variety of global manufacturers in the Upper Midwest.
6.00% Term Loan due 01/31/2025
(LIBOR + 5.000%)		  $584,016   01/30/20    576,817    563,576 
Limited Liability Company Unit (F)    1,237 shs.    *    49,559    32,026 
* 01/30/20 and 03/05/21           626,376    595,602 
                   
CTS Engines
A provider of maintenance, repair and overhaul services within the aerospace & defense market.
6.50% Term Loan due 12/22/2026
(LIBOR + 5.500%)		  $1,388,868   12/22/20    1,365,834    1,341,647 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

17

 

 
 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Dart Buyer, Inc.               
A manufacturer of helicopter aftermarket equipment and OEM Replacement parts for rotorcraft operators, providers and OEMs.
6.25% Term Loan due 04/01/2025
(LIBOR + 5.250%) (G)		  $1,694,506   04/01/19   $1,394,995   $1,357,412 
                   
Decks Direct                  
An eCommerce direct-to-consumer seller of specialty residential decking products in the United States.
7.00% Term Loan due 12/28/2026
(LIBOR + 6.000%) (G)		  $1,630,909   12/29/21    1,221,981    1,221,928 
Common Stock    2,209 shs.    12/29/21    94,091    94,097 
            1,316,072    1,316,025 
                   
Del Real LLC
A manufacturer and distributor of fully-prepared fresh refrigerated Hispanic entrees as well as side dishes that are typically sold on a heat-and-serve basis at retail grocers.
11% Senior Subordinated Note due
04/06/2023 (D)		  $1,420,588   10/07/16    1,403,759    1,349,559 
Limited Liability Company Unit (B)(F)    368,799 uts.    *    368,928    83,529 
* 10/07/16, 07/25/18, 03/13/19 and 06/17/19.           1,772,687    1,433,088 
 
DistroKid (IVP XII DK Co-Invest, LP)
A subscription-based music distribution platform that allows artists to easily distribute, promote, and monetize their music across digital service providers, such as Spotify and Apple Music.
7.00% Term Loan due 09/30/2027
(LIBOR + 6.000%)		  $1,651,596   10/01/21    1,619,951    1,618,564 
Limited Liability Company Unit (F)    73,333 uts.    10/01/21    73,404    73,333 
            1,693,355    1,691,897 
 
Dunn Paper
A provider of specialty paper for niche product applications.
10.25% Second Lien Term Loan due
08/31/2023 (LIBOR + 9.250%)		  $1,725,000   09/28/16    1,714,183    1,512,825 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

18

 

 
 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership

Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Dwyer Instruments, Inc.               
A designer and manufacturer of precision measurement and control products for use with solids, liquids and gases.
6.25% Term Loan due 07/01/2027
(LIBOR + 5.500%) (G)		  $1,000,000   07/20/21   $849,918   $859,421 
                   
Echo Logistics                  
A provider of tech-enabled freight brokerage across various modes including Truckload, Less-than-Truckload, Parcel, and Intermodal, as well as managed (contracted) transportation services.
7.50% Second Lien Term Loan due 11/05/2029
(LIBOR + 7.250%)		  $1,679,204   11/22/21    1,650,222    1,649,817 
Limited Liability Company Unit    46 uts.    11/22/21    45,796    45,800 
            1,696,018    1,695,617 
                   
EFI Productivity Software
A provider of ERP software solutions purpose-built for the print and packaging industry.
6.50% Term Loan due 12/30/2027
(LIBOR + 6.00%) (G)		  $1,000,000   12/30/21    906,988    906,988 
                   
Electric Power Systems International, Inc.                  
A provider of electrical testing services for apparatus equipment and protection & controls infrastructure.
6.75% Term Loan due 04/19/2028
(LIBOR + 5.750%) (G)		  $1,250,282   04/19/21    1,113,869    1,117,190 
                   
Elite Sportswear Holding, LLC                  
A designer and manufacturer of gymnastics, competitive cheerleading and swimwear apparel in the U.S. and internationally.
Limited Liability Company Unit (B)(F)    1,218,266 uts.    10/14/16    159,722    — 
                   
Ellkay                  
A provider of data interoperability solutions for labs, hospitals and healthcare providers.
6.75% Term Loan due 09/14/2027
(LIBOR + 5.750%)		  $705,668   09/14/21    692,202    692,953 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

19

 

 
 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
English Color & Supply LLC               
A distributor of aftermarket automotive paint and related products to collision repair shops, auto dealerships and fleet customers through a network of stores in the Southern U.S.
11.5% (0.5% PIK) Senior Subordinated Note due
12/31/2023		  $1,357,489   06/30/17   $1,348,429   $1,352,948 
Limited Liability Company Unit (B)(F)    397,695 uts.    06/30/17    397,695    821,453 
            1,746,124    2,174,401 
                   
ENTACT Environmental Services, Inc.
A provider of environmental remediation and geotechnical services for blue-chip companies with regulatory-driven liability enforcement needs.
6.75% Term Loan due 12/15/2025
(LIBOR + 4.750%)		  $1,015,229   02/09/21    1,006,947    1,002,031 
                   
eShipping                  
An asset-life third party logistics Company that serves a broad variety of end markets and offers service across all major transportation modes.
6.75% Term Loan due 11/05/2027
(LIBOR + 5.750%) (G)		  $1,725,000   11/05/21    1,256,729    1,255,831 
                   
E.S.P. Associates, P.A.                  
A professional services firm providing engineering, surveying and planning services to infrastructure projects.
Limited Liability Company Unit (B)    273 uts.    *    295,518    272,945 
* 06/29/18 and 12/29/20.                  
                   
F G I Equity LLC                  
A manufacturer of a broad range of filters and related products that are used in commercial, light industrial, healthcare, gas turbine, nuclear, laboratory, clean room, hotel, educational system, and food processing settings.
Limited Liability Company Unit Class B-1 (B)    49,342 uts.    12/15/10    42,343    724,337 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

20

 

 
 

3

 

 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                   
Follett School Solutions                  
A provider of software for K-12 school libraries.                  
6.50% First Lien Term Loan due 07/09/2028
(LIBOR + 5.750%)		  $1,709,907   08/31/21   $1,676,653   $1,679,508 
LP Units (B)(F)    881 uts.    08/30/21    8,805    22,751 
LP Interest (B)(F)    200 shs.    08/30/21    2,003    5,175 
            1,687,461    1,707,434 
                   
FragilePAK
A provider of third-party logistics services focused on the full delivery life-cycle for big and bulky products.
5.85% Term Loan due 05/24/2027
(LIBOR + 5.750%) (G)		  $1,614,492   05/21/21    1,035,457    1,039,787 
Limited Liability Company Unit (B)(F)    108 shs.    05/21/21    107,813    106,475 
            1,143,270    1,146,262 
                   
GD Dental Services LLC
A provider of convenient “onestop” general, specialty, and cosmetic dental services with offices located throughout Florida and Georgia.
Limited Liability Company Unit Preferred (B)    76 uts.    10/05/12    75,920    55,583 
Limited Liability Company Unit Common (B)    767 uts.    10/05/12    767    — 
            76,687    55,583 
                   
gloProfessional Holdings, Inc.
A marketer and distributor of premium mineral-based cosmetics, cosmeceuticals and professional hair care products to the professional spa and physician’s office channels.
Preferred Stock (B)    650 shs.    03/29/19    649,606    805,606 
Common Stock (B)    1,181 shs.    03/27/13    118,110    27,664 
            767,716    833,270 

 

 

 

See Notes to Consolidated Financial Statements

 

 

21

 
 

 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
GraphPad Software, Inc.
A provider of data analysis, statistics and graphing software solution for scientific research applications, with a focus on the life sciences and academic end-markets.
7.00% Term Loan due 04/27/2027
(LIBOR + 6.000%)		  $2,390,711   *   $2,375,026   $2,402,665 
6.50% Term Loan due 04/27/2027
(PRIME + 5.500%)		  $84,102   04/27/21    82,611    84,523 
Preferred Stock (B)(F)    3,737 shs.    04/27/21    103,147    112,714 
* 12/19/17 and 04/16/19.           2,560,784    2,599,902 
                   
Handi Quilter Holding Company (Premier Needle Arts)
A designer and manufacturer of long-arm quilting machines and related components for the consumer quilting market.
Limited Liability Company Unit Preferred (B)    372 uts.    *    371,644    609,931 
Limited Liability Company Unit Common
Class A (B)		    3,594 uts.    12/19/14    —    20,944 
* 12/19/14 and 04/29/16.           371,644    630,875 
                   
Heartland Veterinary Partners
A veterinary support organization that provides a comprehensive set of general veterinary services as well as ancillary services such as boarding and grooming.
11.00% Opco PIK Note due 11/09/2028 (G)  $1,725,000   11/17/21    1,569,320    1,568,518 
                   
HHI Group, LLC                  
A developer, marketer, and distributor of hobby-grade radio control products.
Limited Liability Company Unit (B)(F)    102 uts.    01/17/14    101,563    500,024 
                   
Home Care Assistance, LLC                  
A provider of private pay non-medical home care assistance services. 
5.75% Term Loan due 03/30/2027
(LIBOR + 4.750%) (G)		  $852,830   03/26/21    837,929    835,773 

 

 

 

See Notes to Consolidated Financial Statements

 

 

22

 
 

 

 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
HOP Entertainment LLC               
A provider of post production equipment and services to producers of television shows and motion pictures.
Limited Liability Company Unit Class F (B)(F)    47 uts.    10/14/11   $—   $— 
Limited Liability Company Unit Class G (B)(F)    114 uts.    10/14/11    —    — 
Limited Liability Company Unit Class H (B)(F)    47 uts.    10/14/11    —    — 
Limited Liability Company Unit Class I (B)(F)    47 uts.    10/14/11    —    — 
            —    — 
                   
IGL Holdings III Corp.
A specialty label and flexible packaging converter.
5.92% Term Loan due 10/23/2026
(LIBOR + 5.750%) (G)		  $1,712,044   11/02/20    1,501,742    1,512,191 
                   
IM Analytics Holdings, LLC                  
A provider of test and measurement equipment used for vibration, noise, and shock testing.
8.00% Term Loan due 11/22/2023
(LIBOR + 7.000%)		  $1,047,221   11/21/19    1,042,254    850,867 
Warrant, exercisable until 2026, to purchase
common stock at $.01 per share (B)		    8,885 shs.    11/25/19    —    — 
            1,042,254    850,867 
                   
Industrial Service Solutions
A provider of maintenance, repair and overhaul services for process equipment within the industrial, energy and power end-markets.
6.50% Term Loan due 01/31/2026
(LIBOR + 5.500%)		  $888,050   02/05/20    875,928    844,535 
                   
JF Petroleum Group                  
A provider of repair, maintenance, installation and projection management servicese to the US fueling infrastructure industry.
6.50% Term Loan due 07/31/2024
(LIBOR + 5.500%)		  $683,140   05/04/21    665,362    655,815 

 

 

 

 

 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

23

 
 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Kano Laboratories LLC               
A producer of industrial strength penetrating oils and lubricants.
6.00% Term Loan due 09/30/2026
(LIBOR + 5.000%) (G)		  $1,245,108   11/18/20   $829,812   $825,068 
6.00% Term Loan due 10/31/2027
(LIBOR + 5.000%) (G)		  $452,766   11/08/21    269,471    269,247 
Limited Liability Company Unit    20 uts.    11/19/20    19,757    19,940 
            1,119,040    1,114,255 
                   
LYNX Franchising
A global franchisor of B2B services including commercial janitorial services, shared office space solutions, and textile and electronics restoration services.
7.25% Term Loan due 12/18/2026
(LIBOR + 6.250%)		  $2,495,688*      2,452,557    2,445,774 
* 12/22/20 and 09/09/21                  
                   
Manhattan Beachwear Holding Company                  
A designer and distributor of women’s swimwear.
12.5% Senior Subordinated Note due
05/30/2022 (D)		  $419,971   01/15/10    404,121    — 
15% (2.5% PIK) Senior Subordinated Note due
05/30/2022 (D)		  $115,253   10/05/10    114,604    — 
Common Stock (B)    35 shs.    10/05/10    35,400    — 
Common Stock Class B (B)    118 shs.    01/15/10    117,647    — 
Warrant, exercisable until 2023, to purchase
common stock at $.01 per share (B)		    104 shs.    10/05/10    94,579    — 
            766,351    — 
                   
Master Cutlery LLC
A designer and marketer of a wide assortment of knives and swords.
13% Senior Subordinated Note due
07/20/2022 (D)		  $868,102   04/17/15    867,529    86,810 
Limited Liability Company Unit    5 uts.    04/17/15    678,329    — 
            1,545,858    86,810 

 

 

 

See Notes to Consolidated Financial Statements

 

 

24

 

 
 

 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
Media Recovery, Inc.
A global manufacturer and developer of shock, temperature, vibration and other condition indicators and monitors for in-transit and storage applications.
7.00% First Out Term Loan due 11/22/2025
(LIBOR + 6.000%)		  $488,583   11/25/19   $482,128   $488,583 
                   
MES Partners, Inc.                  
An industrial service business offering an array of cleaning and environmental services to the Gulf Coast region of the U.S.
Preferred Stock Series A (B)    30,926 shs.    07/25/19    12,412    19,604 
Preferred Stock Series C (B)    1,275 shs.    09/22/20    457,365    — 
Common Stock Class B (B)    259,252 shs.    *    244,163    — 
Warrant, exercisable until 2030, to purchase
common stock at $.01 per share (B)		    351,890 shs.    09/22/20    —    — 
* 09/30/14 and 02/28/18.           713,940    19,604 
                   
MeTEOR Education LLC
A leading provider of classroom and common area design services, furnishings, equipment and instructional support to K-12 schools.
12% Senior Subordinated Note due 06/20/2023  $915,819   03/09/18    910,345    915,819 
Limited Liability Company Unit (B)(F)    182 uts.    03/09/18    183,164    145,448 
            1,093,509    1,061,267 
                   
MNS Engineers, Inc.
A consulting firm that provides civil engineering, construction management and land surveying services.
6.50% Term Loan due 07/30/2027
(LIBOR + 5.500%)		  $1,197,000   08/09/21    1,174,611    1,176,120 
Limited Liability Company Unit (B)    100,000 uts.    08/09/21    100,000    102,000 
            1,274,611    1,278,120 
                   
Motion Controls Holdings
A manufacturer of high performance mechanical motion control and linkage products.
Limited Liability Company Unit Class B-1 (B)(F)    75,000 uts.    11/30/10    —    13,500 
Limited Liability Company Unit Class B-2 (B)(F)    6,801 uts.    11/30/10    —    1,224 
            —    14,724 
                   

 

 

See Notes to Consolidated Financial Statements

 

 

25

 

 
 

 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
Music Reports, Inc.
An administrator of comprehensive offering of rights and royalties solutions for music and cue sheet copyrights to music and entertainment customers.
7.25% Incremental Term Loan due 08/21/2026
(LIBOR + 6.250%)		  $820,507   11/05/21   $804,631   $804,097 
7.00% Term Loan due 08/21/2026
(LIBOR + 6.000%)		  $597,605   08/25/20    586,028    585,653 
            1,390,659    1,389,750 
                   
Narda-MITEQ (JFL-Narda Partners, LLC)
A manufacturer of radio frequency and microwave components and assemblies. 
6.25% Incremental Term Loan due 12/06/2027
(LIBOR + 5.250%) (G)		  $873,738   12/28/21    858,475    858,447 
6.25% First Lien Term Loan due 11/30/2027
(LIBOR + 5.250%) (G)		  $763,436   12/06/21    542,539    542,394 
Limited Liability Company Unit Class A
Preferred		    790 uts.    12/06/21    79,043    79,043 
Limited Liability Company Unit Class B
Common		    88 uts.    12/06/21    8,783    8,783 
            1,488,840    1,488,667 
                   
National Auto Care
A provider of professional finance and insurance products and consulting services to auto, RV, and powersports dealerships.
6.25% First Lien Term Loan due 09/28/2024
(LIBOR + 5.250%) (G)		  $998,707   12/20/21    496,175    496,027 
                   
Navia Benefit Solutions, Inc.                  
A third-party administrator of employee-directed healthcare benefits.
6.25% Term Loan due 02/01/2027
(LIBOR + 5.250%) (G)		  $1,719,825   02/10/21    1,150,459    1,165,786 
                   
Northstar Recycling                  
A managed service provider for waste and recycling services, primarily targeting food and beverage end markets.
5.75% Term Loan due 09/30/2027
(LIBOR + 4.750%)		  $749,313   10/01/21    734,956    734,326 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

26

 

 
 

 

 

 

 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

                
Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Office Ally (OA TOPCO, LP)               
A provider of medical claims clearinghouse software to office-based physician providers and healthcare insurance payers.
6.75% Term Loan due 12/10/2028
(LIBOR + 6.000%) (G)		  $983,176   12/20/21   $830,400   $830,388 
Limited Liability Company Unit    21,092 uts.    09/29/17    21,092    21,092 
            851,492    851,480 
                   
Omni Logistics, LLC
A specialty freight forwarding business specifically targeting the semiconductor, media, technology and healthcare end markets.
6.00% Term Loan due 12/30/2026
(LIBOR + 5.000%)		  $1,741,250   12/30/20    1,697,762    1,706,425 
                   
Options Technology Ltd                  
A provider of vertically focused financial technology managed services and IT infrastructure products for the financial services industry.
5.50% Term Loan due 12/18/2025
(LIBOR + 4.500%) (G)		  $1,586,986   12/23/19    1,565,908    1,555,246 
                   
PANOS Brands LLC                  
A marketer and distributor of branded consumer foods in the specialty, natural, better-for-you,“free from” healthy and gluten-free categories.
12% (1% PIK) Senior Subordinated Note
due 12/29/2023		  $1,775,705   02/17/17    1,770,896    1,775,705 
Common Stock Class A (B)    380,545 shs.    *    380,545    358,451 
* 01/29/16 and 02/17/17.           2,151,441    2,134,156 
 
PB Holdings LLC
A designer, manufacturer and installer of maintenance and repair parts and equipment for industrial customers.
5.47% Term Loan due 02/28/2024
(LIBOR + 5.250%)		  $783,253   03/06/19    774,963    754,273 

 

 

 

See Notes to Consolidated Financial Statements

 

 

27

 

 
 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Pearl Holding Group               
A managing general agent that originates, underwrites, and administers non-standard auto insurance policies for carries in Florida.
9.00% First Lien Term Loan due 12/16/2026
(LIBOR + 6.000%) (G)		  $1,725,000   12/20/21   $1,438,798   $1,438,435 
Warrant—Class A, to purchase common stock
at $.01 per share		    924 uts.    12/22/21    —    — 
Warrant—Class B, to purchase common stock
at $.01 per share		    312 uts.    12/22/21    —    — 
Warrant—Class CC, to purchase common stock
at $.01 per share		    32 uts.    12/22/21    —    — 
Warrant—Class D, to purchase common stock
at $.01 per share		    82 uts.    12/22/21    —    — 
            1,438,798    1,438,435 
                   
Pegasus Transtech Corporation
A provider of end-to-end document, driver and logistics management solutions, which enable its customers (carriers, brokers, and drivers) to operate more efficiently, reduce manual overhead, enhance compliance, and shorten cash conversion cycles.
7.75% Term Loan due 08/31/2026
(LIBOR + 6.750%)		  $383,766   09/29/20    373,176    383,766 
7.50% Term Loan due 11/17/2024
(LIBOR + 6.500%)		  $1,894,364   11/14/17    1,874,887    1,894,364 
            2,248,063    2,278,130 
                   
Petroplex Inv Holdings LLC
A leading provider of acidizing services to E&P customers in the Permian Basin. 
Limited Liability Company Unit    0.63 % int.   *    174,669    9,958 
* 11/29/12 and 12/20/16.                  
                   
Polara (VSC Polara LLC)                  
A manufacturer of pedestrian traffic management and safety systems, including accessible pedestrian signals, “push to walk” buttons, and related “traffic” control units.
5.75% First Lien Term Loan due 12/03/2027
(LIBOR + 4.750%) (G)		  $950,713   12/03/21    823,684    823,433 
Limited Liability Company Unit (F)    759 uts.    12/03/21    75,861    75,861 
            899,545    899,294 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

28

 

 
 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
Polytex Holdings LLC
A manufacturer of water based inks and related products serving primarily the wall covering market.
13.9% (5.5% PIK) Senior Subordinated Note due
12/31/2024 (D)		  $1,069,985   07/31/14   $1,064,183   $1,016,486 
Limited Liability Company Unit    148,096 uts.    07/31/14    148,096    33,944 
Limited Liability Company Unit Class F    36,976 uts.    *    24,802    24,442 
* 09/28/17 and 02/15/18.           1,237,081    1,074,872 
                   
Portfolio Group
A provider of professional finance and insurance products to automobile dealerships, delivering a suite of offerings that supplement earnings derived from vehicle transactions.
6.16% First Lien Term Loan due 12/02/2025
(LIBOR + 6.000%) (G)		  $1,207,500   11/15/21    946,068    945,300 
                   
PPC Event Services                  
A special event equipment rental business.                  
Preferred Stock Series P-1 (B)    71 shs.    07/21/20    71,018    211,285 
Common Stock (B)    170,927 shs.    07/21/20    —    — 
16.00% Term Loan due 05/28/2023 (D)  $1,021,607   07/21/20    846,461    911,322 
8.00% Term Loan due 05/28/2023 (D)  $765,931   07/21/20    616,911    689,338 
Limited Liability Company Unit (B)    3,450 uts.    11/20/14    172,500    — 
Limited Liability Company Unit Series A-1 (B)    339 uts.    03/16/16    42,419    — 
            1,749,309    1,811,945 
                   
Recovery Point Systems, Inc.
A provider of IT infrastructure, colocation and cloud based resiliency services.
7.50% Term Loan due 07/31/2026
(LIBOR + 6.500%)		  $1,339,558   08/12/20    1,318,966    1,339,558 
Limited Liability Company Unit (F)    21,532 uts.    03/05/21    21,532    17,226 
            1,340,498    1,356,784 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

29

 

 
 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
RedSail Technologies
A provider of pharmacy management software solutions for independent pharmacies and long-term care facilities.
6.25% Term Loan due 12/11/2027
(LIBOR + 5.500%)		  $1,643,455   12/09/20   $1,609,758   $1,643,455 
                   
ReelCraft Industries, Inc.                  
A designer and manufacturer of heavy-duty reels for diversified industrial, mobile equipment OEM, auto aftermarket, government/military and other end markets.
Limited Liability Company Unit Class B    293,617 uts.    11/13/17    184,689    834,179 
                   
Renovation Brands                  
A portfolio of seven proprietary brands that sell various home improvement products primarily through the e-Commerce channel.
6.50% Term Loan due 08/16/2027
(LIBOR + 5.500%)		  $970,874   11/15/21    947,145    946,602 
Limited Liability Company Unit    39,474 uts.    09/29/17    39,474    40,658 
            986,619    987,260 
                   
Resonetics, LLC
A provider of laser micro-machining manufacturing services for medical device and diagnostic companies.
7.75% Second Lien Term Loan due 04/28/2029
(LIBOR + 7.000%)		  $1,725,000   04/28/21    1,693,428    1,690,500 
7.16% Second Lien Term Loan due 04/28/2029
(LIBOR + 7.000%)		  $552,000   11/15/21    541,151    540,960 
            2,234,579    2,231,460 
                   
REVSpring, Inc.
A provider of accounts receivable management and revenue cycle management services to customers in the healthcare, financial and utility industries.
9.25% Second Lien Term Loan due 10/11/2026
(LIBOR + 8.250%)		  $1,725,000   10/11/18    1,694,113    1,725,000 

 

 

 

See Notes to Consolidated Financial Statements

 

 

30

 

 
 

 

 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

 

 

 

 

                
Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Rock-it Cargo               
A provider of specialized international logistics solutions to the music touring, performing arts, live events, fine art and specialty industries.
6.00% Term Loan due 06/22/2024
(LIBOR + 5.000%)		  $2,448,431   *   $2,422,669   $1,973,436 
* 07/30/18 and 09/30/20.                  
                   
ROI Solutions                  
Call center outsourcing and end user engagement services provider.
6.00% Term Loan due 07/31/2024
(LIBOR + 5.000%) (G)		  $1,592,918   07/31/18    1,044,585    1,058,290 
                   
RPX Corp
A provider of subscription services that help member companies mitigate the risk of patent disputes and reduce the cost of patent litigation.
7.00% Term Loan due 10/23/2025
(LIBOR + 6.000%)		  $2,488,641   *    2,442,468    2,437,470 
* 10/22/20 and 09/28/21.
                   
Ruffalo Noel Levitz                  
A provider of enrollment management, student retention and career services, and fundraising management for colleges and universities.
7.00% Term Loan due 05/29/2022
(LIBOR + 5.500%)		  $1,229,180   01/08/19    1,226,974    1,229,180 
                   
Safety Products Holdings, Inc.                  
A manufacturer of highly engineered safety cutting tools.
7.00% Term Loan due 12/15/2026
(LIBOR + 6.000%) (G)		  $1,672,310   12/15/20    1,641,229    1,634,683 
Common Stock    29 shs.    12/16/20    29,262    40,092 
            1,670,491    1,674,775 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

31

 

 
 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
Sandvine Corporation
A provider of active network intelligence solutions.
8.09% Second Lien Term Loan due 11/02/2026
(LIBOR + 8.000%)		  $1,725,000   11/01/18   $1,698,936   $1,725,000 
                   
Sara Lee Frozen Foods                  
A provider of frozen bakery products, desserts and sweet baked goods.
5.50% Lien Term Loan due 07/30/2025
(LIBOR + 4.500%)		  $1,491,123   07/27/18    1,473,987    1,373,324 
                   
Scaled Agile, Inc.                  
A provider of training and certifications for IT professionals focused on software development.
6.50% Term Loan due 12/15/2027
(LIBOR + 5.500%) (G)		  $1,725,000   12/16/21    1,171,950    1,171,614 
                   
SEKO Worldwide, LLC                  
A third-party logistics provider of ground, ocean, air and home delivery forwarding services.
6.00% Term Loan due 12/30/2026
(LIBOR + 5.000%) (G)		  $1,710,259   12/30/20    1,423,016    1,433,696 
                   
Smart Bear                  
A provider of web-based tools for software development, testing and monitoring.
8.00% Second Lien Term Loan due 03/03/2029
(LIBOR + 7.500%)		  $1,725,000   03/02/21    1,682,070    1,725,000 
                   
Smartling, Inc.                  
A provider in SaaS-based translation management systems and related translation services.
6.75% Term Loan due 10/26/2027
(LIBOR + 5.750%) (G)		  $1,725,000   11/03/21    1,386,944    1,386,088 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

32

 

 
 

 

 

2021 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
            
Specified Air Solutions (dba Madison Indoor Air Solutions)           
A manufacturer and distributor of heating, dehumidification and other air quality solutions.
Limited Liability Company Unit (B)    726,845 uts.    02/20/19   $2,298,574   $11,309,713 
                   
Springbrook Software                  
A provider of vertical-market enterprise resource planning software and payments platforms focused on the local government end-market.
6.50% Term Loan due 12/20/2026
(LIBOR + 5.500%)		  $1,633,473   12/23/19    1,308,442    1,328,754 
                   
Stackline                  
An e-commerce data company that tracks products sold through online retailers. 
8.75% Term Loan due 07/30/2028
(LIBOR + 7.750%)		  $1,682,927   07/29/21    1,651,308    1,653,943 
Common Stock (B)    1,340 shs.    07/30/21    42,078    54,739 
            1,693,386    1,708,682 
                   
Standard Elevator Systems
A scaled manufacturer of elevator components combining four elevator companies, Standard Elevator Systems, EMI Porta, Texacone, and ZZIPCO.
6.50% First Lien Term Loan due 12/02/2027
(LIBOR + 5.750%) (G)		  $1,725,000   12/02/21    930,803    930,331 
                   
Strahman Holdings Inc.                  
A manufacturer of industrial valves and wash down equipment for a variety of industries, including chemical, petrochemical, polymer, pharmaceutical, food processing, beverage and mining.
Preferred Stock Series A (B)    158,967 shs.    12/13/13    158,967    233,855 
Preferred Stock Series A-2 (B)    26,543 shs.    09/10/15    29,994    39,047 
            188,961    272,902 
                   
Stratus Unlimited
A nationwide provide of brand implementation services, including exterior and interior signage, refresh and remodel, and facility maintenance and repair.
6.50% Term Loan due 06/08/2027
(LIBOR + 5.500%) (G)		  $948,661   07/02/21    758,063    769,914 
Limited Liability Company Unit (B)    75 uts.    06/30/21    74,666    76,116 
            832,729    846,030 

 

 

See Notes to Consolidated Financial Statements

 

 

33

 
 

 

 

 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
Sunvair Aerospace Group Inc.
An aerospace maintenance, repair, and overhaul provider servicing landing gears on narrow body aircraft.
12% (1-1.5% PIK) Senior Subordinated Note
due 08/01/2024		  $2,006,384   *   $1,986,356   $1,996,517 
Preferred Stock Series A (B)    28 shs.    12/21/20    71,176    90,185 
Common Stock (B)    68 shs.    **   104,986    217,385 
* 07/31/15 and 12/21/20.           2,162,518    2,304,087 
** 07/31/15 and 11/08/17.
                   
Syntax Systems Ltd                  
A cloud management service provider.                  
6.25% Term Loan due 10/14/2028
(LIBOR + 5.500%) (G)		  $1,000,000   10/28/21    740,060    739,796 
                   
Tencarva Machinery Company
A distributor of mission critical, engineered equipment, replacement parts and services in the industrial and municipal end-markets.
6.50% Term Loan due 12/20/2027
(LIBOR + 5.500%) (G)		  $1,977,260   12/20/21    1,411,759    1,411,569 
                   
The Caprock Group (aka TA/TCG Holdings, LLC)
A wealth manager focused on ultra-high-net-worth individuals, who have $25-30 million of investable assets on average.
8.75% HoldCo PIK Note due 10/21/2028  $1,150,000   10/28/21    1,127,577    1,127,000 
1.21% Term Loan due 12/15/2027
(LIBOR + 4.250%) (G)		  $575,000   12/21/21    97,682    97,632 
            1,225,259    1,224,632 
                   
The Hilb Group, LLC                  
An insurance brokerage platform that offers insurance and benefits programs to middle-market companies throughout the Eastern seaboard.
6.75% Term Loan due 12/02/2026
(LIBOR + 5.750%) (G)		  $1,706,510   *    1,675,909    1,672,379 
* 12/02/19 and 12/15/20.

 

 

See Notes to Consolidated Financial Statements

 

 

34

 

 
 

 

 

2021 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Therma-Stor Holdings LLC               
A designer and manufacturer of dehumidifiers and water damage restoration equipment for residential and commercial applications.
Limited Liability Company Unit (B)    19,696 uts.    11/30/17   $—   $10,698 
                   
Transit Technologies LLC
A software platform for the transportation market that offers end-to-end software solutions focused on operations, fleet management and telematics services.
4.91% Term Loan due 02/10/2025
(LIBOR + 4.750%) (G)		  $1,020,405   02/13/20    769,188    755,821 
                   
Trident Maritime Systems
A leading provider of turnkey marine vessel systems and solutions for government and commercial new ship construction as well as repair, refurbishment, and retrofit markets worldwide.
6.50% Term Loan due 02/26/2027
(LIBOR + 5.500%)		  $1,712,063   02/25/21    1,687,191    1,712,063 
                   
Tristar Global Energy Solutions, Inc.
A hydrocarbon and decontamination services provider serving refineries worldwide.
12.5% (1.5% PIK) Senior Subordinated Note due
03/31/2022 (D)		  $1,204,904   01/23/15    1,203,934    301,226 
                   
Truck-Lite
A leading provider of harsh environment LED safety lighting, electronics, filtration systems, and telematics for a wide range of commercial vehicles, specialty vehicles, final mile delivery vehicles, off-road/off-highway, marine, and other adjacent harsh environment markets.
7.25% Term Loan due 12/02/2026
(LIBOR + 6.250%)		  $1,696,471   *    1,672,489    1,662,542 
6.47% First Lien Term Loan due 04/28/2029
(LIBOR + 6.250%) (G)		  $803,529   11/15/21    487,003    486,672 
* 12/13/2019 and 11/15/2021.           2,159,492    2,149,214 

 

 

 

See Notes to Consolidated Financial Statements

 

 

35

 

 
 

 

 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

 

 

 

 

                
Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
 
Trystar, Inc.
A niche manufacturer of temporary power distribution products for the power rental, industrial, commercial utility and back-up emergency markets.
6.25% Term Loan due 10/01/2023
(LIBOR + 5.250%)		  $2,271,264   09/28/18   $2,255,554   $2,231,517 
5.90% Third Amendment Term Loan due
09/28/2023 (LIBOR + 5.750%)		  $215,038   10/27/21    211,550    211,275 
Limited Liability Company Unit (B)(F)    56 uts.    09/28/18    60,413    52,114 
            2,527,517    2,494,906 
                   
Turnberry Solutions, Inc.
A provider of technology consulting services.                  
7.00% Term Loan due 07/30/2026
(LIBOR + 6.000%)		  $1,628,981   07/29/21    1,599,166    1,600,926 
                   
U.S. Legal Support, Inc.                  
A provider of court reporting, record retrieval and other legal supplemental services.
6.75% Term Loan due 11/12/2024
(LIBOR + 5.750%)		  $2,089,362   *    2,069,059    2,089,362 
* 11/29/18 and 03/25/19.                  
 
UroGPO, LLC
A group purchasing organization that connects pharmaceutical companies with urology practices to facilitate the purchase of pharmaceutical drugs for discounted prices.
6.75% Term Loan due 12/15/2026
(LIBOR + 5.750%)		  $2,316,667   12/14/20    2,278,412    2,316,667 
                   
VitalSource
A provider of digital fulfillment software for the higher education sector.
6.17% Term Loan due 06/01/2028
(LIBOR + 6.000%)		  $1,694,196   06/01/21    1,663,149    1,666,901 
Limited Liability Company Unit (B)(F)    1,891 uts.    06/01/21    18,909    19,656 
            1,682,058    1,686,557 
                   
VP Holding Company
A provider of school transportation services for special-needs and homeless children in Massachusetts and Connecticut.
6.50% Term Loan due 05/22/2024
(LIBOR + 5.500%)		  $2,396,318   05/17/18    2,377,257    2,357,714 

 

 

 

See Notes to Consolidated Financial Statements

 

 

36

 

 
 

 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

  

Corporate Restricted Securities: (A)
(Continued)		 

Principal Amount,
Shares, Units or
Ownership Percentage

  

Acquisition
Date

 

Cost

  

Fair Value

 
                
Westminster Acquisition LLC               
A manufacturer of premium, all-natural oyster cracker products sold under the Westminster and Olde Cape Cod brands.
Limited Liability Company Unit (B)(F)    370,241 uts.    08/03/15   $370,241   $12,477 
                   
Wolf-Gordon, Inc.
A designer and specialty distributor of wallcoverings and related building products, including textiles, paint, and writeable surfaces.
Common Stock (B)    157 shs.    01/22/16    62,177    263,387 
 
Woodland Foods, Inc.
A provider of specialty dry ingredients such as herbs & spices, rice & grains, mushrooms & truffles, chilies, and other ingredients to customers within the industrial, foodservice, and retail end-markets.
6.50% Term Loan due 11/30/2027
(LIBOR + 5.500%) (G)		  $1,205,684   12/01/21    1,000,470    1,000,128 
Limited Liability Company Unit (F)    145.803 uts.    12/01/21    145,803    145,803 
            1,146,273    1,145,931 
                   
World 50, Inc.
A provider of exclusive peer-to-peer networks for C-suite executives at leading corporations.
6.25% Term Loan due 01/10/2026
(LIBOR + 5.250%)		  $377,197   09/21/20    368,605    377,198 
5.50% Term Loan due 12/31/2025
(LIBOR + 4.500%)		  $1,206,358   01/09/20    1,186,123    1,188,262 
            1,554,728    1,565,460 
                   
                   
Total Private Placement Investments (E)          $153,465,884   $159,889,400 

 

 

 

See Notes to Consolidated Financial Statements

 

 

37

 

 
 

 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

 

 

Corporate Restricted Securities: (A)
(Continued)		 

Interest
Rate

  

Maturity
Date

 

Principal
Amount

  

Cost

  

Market Value

 
                    
Rule 144A Securities - 5.49%: (H)                       
Bonds - 5.49%                       
American Airlines Inc   11.750%  07/15/25   $500,000   $496,226   $616,875 
BWAY Holding Company   7.250   04/15/25    750,000    708,217    751,901 
Cleveland-Cliffs Inc.   9.875   10/17/25    331,000    355,247    374,622 
CommScope Finance LLC   8.250   03/01/27    500,000    480,299    513,845 
Coronado Finance Pty Ltd.   10.750   05/15/26    247,000    242,824    266,246 
CVR Energy Inc.   5.750   02/15/28    500,000    459,831    480,000 
Diebold Nixdorf   9.375   07/15/25    350,000    367,817    376,860 
First Quantum Minerals Ltd.   7.500   04/01/25    500,000    476,875    514,350 
First Quantum Minerals Ltd.   7.250   04/01/23    238,000    237,132    240,737 
Houghton Mifflin Harcourt   9.000   02/15/25    500,000    493,530    522,500 
Neptune Energy Bondco PLC   6.625   05/15/25    500,000    494,930    510,625 
Panther BF Aggregator 2 LP   8.500   05/15/27    100,000    93,817    106,000 
Picou Holdings LLC   10.000   12/31/25    500,000    455,054    512,500 
Prime Security Services, LLC   6.250   01/15/28    885,000    788,721    922,613 
Terrier Media Buyer, Inc.   8.875   12/15/27    530,000    510,738    572,808 
The Manitowoc Company, Inc.   9.000   04/01/26    500,000    490,000    526,250 
Trident TPI Holdings Inc.   9.250   08/01/24    500,000    490,929    522,500 
Verscend Holding Corp   9.750   08/15/26    482,000    506,015    512,337 
                        
Total Bonds                8,148,202    8,843,569 
                        
Common Stock - 0.00%                       
TherOX, Inc. (B)           26    —    — 
Touchstone Health Partnership (B)           292    —    — 
                        
Total Common Stock                —    — 
                        
Total Rule 144A Securities               $8,148,202   $8,843,569 
                        
Total Corporate Restricted Securities               $161,614,086   $168,732,969 
                        

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

38

 

 
 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

  

 

Corporate Public Securities - 2.71%: (A) 

LIBOR
Spread

  

Interest
Rate

  

Maturity
Date

 

Principal
Amount

  

Cost

  

Market Value

 
                        
Bank Loans - 1.83%                            
Almonde, Inc.   7.250%   8.250%  06/13/25  $500,000   $505,000   $498,580 
Alpine US Bidco LLC   9.000    9.750   04/28/29   628,215    610,855    621,933 
Edelman Financial Services   6.750    6.854   06/08/26   128,178    127,812    128,392 
Kenan Advantage Group Inc.   7.250    8.000   08/17/27   264,317    259,305    262,996 
Magenta Buyer LLC   8.250    9.000   05/03/29   503,333    498,179    498,772 
STS Operating, Inc.   8.000    9.000   04/25/26   500,000    505,000    486,250 
Front Line Power Construction LLC   2.500    13.500   11/01/28   250,000    241,864    242,500 
Syncsort Incorporated   7.250    8.000   04/23/29   222,222    220,645    221,529 
                             
Total Bank Loans                     2,968,660    2,960,952 
                             
Bonds - 0.85%                            
Genesis Energy LP        6.500   10/01/25   337,000    323,788    332,787 
Hecla Mining Company        7.250   02/15/28   500,000    475,343    535,625 
Triumph Group, Inc.        7.750   08/15/25   500,000    502,481    496,250 
                             
Total Bonds                     1,301,612    1,364,662 
                             
Common Stock - 0.03%                            
Tourmaline Oil Corp                42,397    —    33,565 
Front Line Power Construction LLC                3,178    8,136    6,960 
                             
Total Common Stock                     8,136    40,525 
                             
Total Corporate Public Securities                    $4,278,408   $4,366,139 
                             
Total Investments        107.46%          $165,892,494   $173,099,108 
                             
Other Assets        8.62                 13,877,376 
Liabilities        (16.08)                (25,896,009)
                             
Total Net Assets        100.00%               $161,080,475 
(A)In each of the convertible note, warrant, and common stock investments, the issuer has agreed to provide certain registration rights.
(B)Non-income producing security.
(C)Security valued at fair value using methods determined in good faith by or under the direction of the Board of Trustees.
(D)Defaulted security; interest not accrued.
(E)Illiquid security. As of December 31, 2021 the values of these securities amounted to $159,889,400 or 99.26% of net assets.

(F)Held in PI Subsidiary Trust
(G)A portion of these securities contain unfunded commitments. As of December 31, 2021, total unfunded commitments amounted to $10,941,481 and had unrealized depreciation of $(826) or (0.00)% of net assets. See Note 7.
(H)Security exempt from registration under Rule 144a of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration, normally to qualified institutional buyers.

PIK - Payment-in-kind

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

39

 
 

 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

 

     
Industry Classification: 

Fair Value/
Market Value

 
 
AEROSPACE & DEFENSE - 5.73%
CTS Engines  $1,341,647 
Dart Buyer, Inc.   1,357,412 
Narda-MITEQ (JFL-Narda Partners, LLC)   1,488,667 
Sunvair Aerospace Group Inc.   2,304,087 
Trident Maritime Systems   1,712,063 
Trident TPI Holdings Inc.   522,500 
Triumph Group, Inc.   496,250 
    9,222,626 
AIRLINES - 1.44%
American Airlines Inc   616,875 
Echo Logistics   1,695,617 
    2,312,492 
AUTOMOTIVE - 3.37%
Aurora Parts & Accessories LLC   348,144 
English Color & Supply LLC   2,174,401 
JF Petroleum Group   655,815 
Panther BF Aggregator 2 LP   106,000 
Truck-Lite   2,149,214 
    5,433,574 
BROKERAGE, ASSET MANAGERS &
       EXCHANGES - 1.80%
The Caprock Group (aka TA/TCG Holdings, LLC)   1,224,632 
The Hilb Group, LLC   1,672,379 
    2,897,011 
BUILDING MATERIALS - 0.98%
Decks Direct   1,316,025 
Wolf-Gordon, Inc.   263,387 
    1,579,412 
CHEMICALS - 1.36%
Kano Laboratories LLC   1,114,255 
Polytex Holdings LLC   1,074,872 
    2,189,127 

 

 

   Fair Value/
Market Value		 
      
CONSUMER CYCLICAL SERVICES - 6.57%     
Accelerate Learning  $1,693,396 
LYNX Franchising   2,445,774 
MeTEOR Education LLC   1,061,267 
PPC Event Services   1,811,945 
Prime Security Services, LLC   922,613 
ROI Solutions   1,058,290 
Turnberry Solutions, Inc.   1,600,926 
    10,594,211 
CONSUMER PRODUCTS - 2.13%
AMS Holding LLC   238,597 
Blue Wave Products, Inc.   157,514 
Elite Sportswear Holding, LLC   — 
gloProfessional Holdings, Inc.   833,270 
Handi Quilter Holding Company   630,875 
HHI Group, LLC   500,024 
Manhattan Beachwear Holding Company   — 
Master Cutlery LLC   86,810 
Renovation Brands   987,260 
    3,434,350 
DIVERSIFIED MANUFACTURING - 6.82%
Advanced Manufacturing Enterprises LLC   — 
F G I Equity LLC   724,337 
MNS Engineers, Inc.   1,278,120 
Motion Controls Holdings   14,724 
Reelcraft Industries, Inc.   834,179 
Resonetics, LLC   2,231,460 
Safety Products Holdings, Inc.   1,674,775 
Standard Elevator Systems   930,331 
Strahman Holdings Inc.   272,902 
The Manitowoc Company, Inc.   526,250 
Therma-Stor Holdings LLC   10,698 
Trystar, Inc.   2,494,906 
    10,992,682 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

40

 
 

2021 Annual Report

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

 

     
Industry Classification: (Continued) 

Fair Value/
Market Value

 
 
ELECTRIC - 1.23%
Dwyer Instruments, Inc.  $859,421 
Electric Power Systems International, Inc.   1,117,190 
    1,976,611 
ENVIRONMENTAL - 1.08%
ENTACT Environmental Services, Inc.   1,002,031 
Northstar Recycling   734,326 
    1,736,357 
FINANCE COMPANIES - 0.59%
Portfolio Group   945,300 
 
FINANCIAL OTHER - 0.39%
Edelman Financial Services   128,392 
National Auto Care   496,027 
    624,419 
FOOD & BEVERAGE - 4.17%
Alpine US Bidco LLC   621,933 
Del Real LLC   1,433,088 
PANOS Brands LLC   2,134,156 
Sara Lee Frozen Foods   1,373,324 
Westminster Acquisition LLC   12,477 
Woodland Foods, Inc.   1,145,931 
    6,720,909 
HEALTHCARE - 6.52%
Cadence, Inc.   854,803 
Ellkay   692,953 
GD Dental Services LLC   55,583 
Heartland Veterinary Partners   1,568,518 
Home Care Assistance, LLC   835,773 
Navia Benefit Solutions, Inc.   1,165,786 
Office Ally (OA TOPCO, LP)   851,480 
RedSail Technologies   1,643,455 
TherOX, Inc.   — 
Touchstone Health Partnership   — 
UroGPO, LLC   2,316,667 
Verscend Holding Corp   512,337 
    10,497,355 

 

     
    Fair Value/
Market Value		 
      
INDUSTRIAL OTHER - 15.47%       
Aftermath, Inc.  $1,699,936 
ASPEQ Holdings   1,134,929 
Concept Machine Tool Sales, LLC   595,602 
E.S.P. Associates, P.A.   272,945 
Front Line Power Construction LLC   249,460 
IGL Holdings III Corp.   1,512,191 
IM Analytics Holdings, LLC   850,867 
Industrial Service Solutions   844,535 
Media Recovery, Inc.   488,583 
PB Holdings LLC   754,273 
Polara (VSC Polara LLC)   899,294 
Specified Air Solutions (dba Madison Indoor Air Solutions)   11,309,713 
Stratus Unlimited   846,030 
STS Operating, Inc.   486,250 
Tencarva Machinery Company   1,411,569 
World 50, Inc.   1,565,460 
    24,921,637 
MEDIA & ENTERTAINMENT - 4.03%
Advantage Software   32,414 
BrightSign   1,394,027 
Cadent, LLC   890,428 
DistroKid (IVP XII DK Co-Invest, LP)   1,691,897 
HOP Entertainment LLC   — 
Houghton Mifflin Harcourt   522,500 
Music Reports, Inc.   1,389,750 
Terrier Media Buyer, Inc.   572,808 
    6,493,824 
METALS & MINING - 1.52%
Cleveland-Cliffs Inc.   374,622 
Coronado Finance Pty Ltd.   266,246 
First Quantum Minerals Ltd.   755,087 
Hecla Mining Company   535,625 
Picou Holdings LLC   512,500 
    2,444,080 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

41

 
 

Barings Participation Investors

 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2021

 

 

     
Industry Classification: (Continued) 

Fair Value/
Market Value

 
 
MIDSTREAM - 0.21%
Genesis Energy LP  $332,787 
      
OIL FIELD SERVICES - 0.34%     
Neptune Energy Bondco PLC   510,625 
Petroplex Inv Holdings LLC   9,958 
Tourmaline Oil Corp   33,565 
    554,148 
PACKAGING - 1.47%
ASC Holdings, Inc.   769,174 
Brown Machine LLC   854,448 
BWAY Holding Company   751,901 
    2,375,523 
PAPER - 0.94%
Dunn Paper   1,512,825 
      
PROPERTY & CASUALTY - 0.89%     
Pearl Holding Group   1,438,435 
 
REFINING - 0.50%
CVR Energy Inc.   480,000 
MES Partners, Inc.   19,604 
Tristar Global Energy Solutions, Inc.   301,226 
    800,830 
TECHNOLOGY - 27.59%
1WorldSync, Inc.   2,434,019 
Almonde, Inc.   498,580 
Amtech Software   525,455 
Audio Precision   1,746,000 
Best Lawyers (Azalea Investment Holdings, LLC)   1,359,653 
CAi Software   2,214,254 
Cash Flow Management   892,600 
Claritas Holdings, Inc.   1,543,682 
CloudWave   1,669,689 
Command Alkon   2,107,678 
CommScope Finance LLC   513,845 
Diebold Nixdorf   376,860 

 

 

 

   Fair Value/
Market Value		 
      
EFI Productivity Software  $906,988 
Follett School Solutions   1,707,434 
GraphPad Software, Inc.   2,599,902 
Magenta Buyer LLC   498,772 
Options Technology Ltd   1,555,246 
Recovery Point Systems, Inc.   1,356,784 
REVSpring, Inc.   1,725,000 
RPX Corp   2,437,470 
Ruffalo Noel Levitz   1,229,180 
Sandvine Corporation   1,725,000 
Scaled Agile, Inc.   1,171,614 
Smart Bear   1,725,000 
Smartling, Inc.   1,386,088 
Springbrook Software   1,328,754 
Stackline   1,708,682 
Syncsort Incorporated   221,529 
Syntax Systems Ltd   739,796 
Transit Technologies LLC   755,821 
U.S. Legal Support, Inc.   2,089,362 
VitalSource   1,686,557 
    44,437,294 
      
TRANSPORTATION SERVICES - 10.36%
AIT Worldwide Logistics, Inc.   1,779,308 
BDP International, Inc.   2,437,491 
eShipping   1,255,831 
FragilePAK   1,146,262 
Omni Logistics, LLC   1,706,425 
Pegasus Transtech Corporation   2,278,130 
Rock-it Cargo   1,973,436 
SEKO Worldwide, LLC   1,433,696 
VP Holding Company   2,357,714 
Kenan Advantage Group Inc.   262,996 
    16,631,289 
      
Total Investments - 107.46%
(Cost -$165,892,494)		  $173,099,108 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

 

42

 
 

2021 Annual Report

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

1.History

Barings Participation Investors (the “Trust”) was organized as a Massachusetts business trust under the laws of the Commonwealth of Massachusetts pursuant to a Declaration of Trust dated April 7, 1988.

The Trust is a diversified closed-end management investment company. Barings LLC (“Barings”), a wholly-owned indirect subsidiary of Massachusetts Mutual Life Insurance Company (“MassMutual”), acts as its investment adviser. The Trust’s investment objective is to maintain a portfolio of securities providing a current yield and, when available, an opportunity for capital gains. The Trust’s principal investments are privately placed, below-investment grade, long-term debt obligations including bank loans and mezzanine debt instruments. Such direct placement securities may, in some cases, be accompanied by equity features such as common stock, preferred stock, warrants, conversion rights, or other equity features. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers in private placement transactions. These investments are typically made to small or middle market companies. In addition, the Trust may invest, subject to certain limitations, in marketable debt securities (including high yield and/or investment grade securities) and marketable common stock. Below-investment grade or high yield securities have predominantly speculative characteristics with respect to the capacity of the issuer to pay interest and repay capital.

In 1998, the Board of Trustees authorized the formation of a wholly-owned subsidiary of the Trust (“PI Subsidiary Trust”) for the purpose of holding certain investments. The results of the PI Subsidiary Trust are consolidated in the accompanying financial statements. Footnote 2.D below discusses the Federal tax consequences of the PI Subsidiary Trust.

2.Significant Accounting Policies

The following is a summary of significant accounting policies followed consistently by the Trust in the preparation of its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The Trustees have determined that the Trust is an investment company in accordance with Accounting Standards Codification (“ASC”) 946, Financial Services - Investment Companies, for the purpose of financial reporting.

A. Fair Value Measurements:

Under U.S. GAAP, fair value represents the price that should be received to sell an asset (exit price) in an