Edgar Filing: BARINGS PARTICIPATION INVESTORS

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)

	1500 Main Street, P.O. Box 15189, Springfield, MA 01115-5189
	(Address of principal executive offices) (Zip code)

	Janice M. Bishop, Vice President, Secretary and Chief Legal Officer Indepence Wharf, 470 Atlantic Ave., Boston, MA 02210
	(Name and address of agent for service)

Registrant's telephone number, including area code: 413-226-1000

Date of fiscal year end: 12/31

Date of reporting period: 12/31/16

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 110 F Street NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.

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.

BARINGS PARTICIPATION INVESTORS

Barings Participation Investors is a closed-end investment company, first offered to the public in 1988, whose shares are traded on the New York Stock Exchange.

INVESTMENT OBJECTIVE & POLICY

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.

The Trust's investment objective is to maximize total return by providing a high level of current income, the potential for growth of income, and capital appreciation. The Trust's principal investments are privately placed, below-investment grade, long-term debt obligations purchased directly from their issuers, which tend to be smaller companies. The Trust will also invest in publicly traded debt securities (including high yield securities) again with an emphasis on those with equity features, and in convertible preferred stocks and, subject to certain limitations, readily marketable equity securities. Below-investment grade or high yield securities have predominantly speculative characteristics with respect to the capacity of the issuer to pay interest and repay principal. The Trust is prohibited from purchasing below-investment grade securities if, after giving effect to the purchase, more than 75% of the Trust's total assets would be invested in below-investment grade securities, which are securities that are rated, at the time of purchase, BB or B by S&P or Ba or B by Moody's, or, if unrated, are believed by Barings LLC ("Barings") to be of an equivalent quality. In addition, the Trust will not invest in any debt security that is rated, at the time of acquisition, below B by S&P or Moody's, or if unrated, is believed by Barings to be of an equivalent quality. In addition, the Trust may invest in high quality, readily marketable securities.

Barings manages the Trust on a total return basis. 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 April 21, 2017 at 1:00 P.M. in Springfield, Massachusetts.

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. 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, 2016 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-Q

The Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. 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.

BARINGS PARTICIPATION INVESTORS

c / o Barings LLC

1500 Main Street

P.O. Box 15189

Springfield, Massachusetts 01115-5189

(413) 226-1516

http://www.barings.com/mpv

ADVISER

Barings LLC

1500 Main Street, P.O. Box 15189

Springfield, Massachusetts 01115-5189

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP

Boston, Massachusetts 02111

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

2016 Annual Report

PORTFOLIO COMPOSITION AS OF 12/31/16*

TOTAL ANNUAL PORTFOLIO RETURN (AS OF 12/31 EACH YEAR)*

Data for Barings Participation Investors (the "Trust") represents portfolio returns based on change in the Trust's net asset value (net of all fees and expenses) assuming the reinvestment of all dividends and distributions. These returns differ from the total investment return based on market value of the Trust's shares due to the difference between the Trust's net asset value and the market value of its shares outstanding (see page 12 for total investment return based on market value). Past performance is no guarantee of future results.

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

TO OUR SHAREHOLDERS

I am pleased to share with you the Trust's Annual Report for the year ended December 31, 2016.

PORTFOLIO PERFORMANCE

The Trust's net total portfolio rate of return for 2016 was 8.8%, as measured by the change in net asset value assuming the reinvestment of all dividends and distributions. The Trust's total net assets were $136,606,731 or $13.15 per share, as of December 31, 2016. This compares to $135,349,634 or $13.10 per share, as of December 31, 2015. The Trust paid a quarterly dividend of $0.27 per share for each of the four quarters of 2016, for a total annual dividend of $1.08 per share. In 2015, the Trust also paid four quarterly dividends of $0.27 per share, for a total annual dividend of $1.08 per share. Net taxable investment income for 2016 was $1.08 per share, including approximately $0.15 per share of non-recurring income, compared to 2015 net taxable investment income of $1.11 per share, which included approximately $0.25 per share of non-recurring income.

The Trust's stock price increased 3.3% during 2016, from $13.75 as of December 31, 2015 to $14.20 as of December 31, 2016. The Trust's stock price of $14.20 as of December 31, 2016 equates to an 8.0% premium over the December 31, 2016 net asset value per share of $13.15. The Trust's average quarter-end premium for the 3-, 5-, and 10-year periods ended December 31, 2016 was 0.7%, 7.0% and 7.1%, 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 Barclays Capital U.S. Corporate High Yield Index and the Russell 2000 Index for the 1-, 3-, 5-, 10- and 25-year periods ended December 31, 2016 are provided for comparison purposes only.


	The Trust	Barclays Capital U.S. Corporate High Yield Index	Russell 2000 Index

1 Year	8.75%	17.13%	21.32%

3 Years	9.49%	4.66%	6.74%

5 Years	11.04%	7.36%	14.46%

10 Years	9.43%	7.45%	7.07%

25 Years	12.21%	8.04%	9.69%

Past performance is no guarantee of future results.

2016 Annual Report

PORTFOLIO ACTIVITY

In 2016, the Trust closed 15 new private placement investments, as well as 10 "add-on" investments in existing portfolio companies. The 15 new investments were in AM Conservation Holding Corp; API Technologies Corp.; CORA Health Services, Inc.; Del Real LLC; Dunn Paper; Elite Sportswear Holding, LLC; Glynlyon Holding Companies, Inc.; Happy Floors Acquisition, Inc.; Midwest Industrial Rubber, Inc.; Money Mailer Equity LLC; NSi Industries Holdings, Inc.; PANOS Brands LLC; Software Paradigms International Group, LLC; Veritext Corporation and Wolf-Gordon, Inc. In addition, the Trust added to existing private placement investments in Church Services Holding Company; Clarion Brands Holding Corp.; CTM Holding, Inc.; ERG Holding Company LLC; Hollandia Produce LLC; HVAC Holdings, Inc.; JMH Investors LLC; Merex Holding Corporation; Petroplex Inv Holdings LLC and PPC Event Services. A brief description of these investments can be found in the Consolidated Schedule of Investments. The total amount invested by the Trust in these transactions was $27,190,494, which was only slightly less than the $27,511,179 of new private placement investments made by the Trust in 2015, and the fourth highest dollar volume over the past ten years. We are pleased to have generated strong new investment volume for the Trust three years in a row.

The Trust's level of new investment activity in 2016 benefited from larger average transaction sizes as compared to 2015, a steady flow of investment opportunities from an established network of private equity sponsors, and several follow-on investments in companies which the Trust had an existing investment. After spending most of 2016 at levels below prior year, middle market buyout volume ended the year flat compared to 2015, due to strong fourth quarter activity, particularly at the upper end of the middle market. Competition for new investment opportunities remains intense, as there continues to be an ever increasing abundance of private debt and equity capital looking to be invested. As a result, attractive companies are being aggressively pursued by both buyers and lenders alike. As a result, high purchase multiples and leverage levels continue to be prevalent in the market. In 2016, average purchase price multiples for middle market companies decreased modestly (approximately 3%) but remain higher than any year since 2000 (other than 2015). Average leverage multiples also remained elevated in 2016, albeit modestly lower than 2015. However, the average leverage multiple steadily increased each quarter during 2016 resulting in the fourth quarter average being the fourth highest since 2003.

Though we remained very active investors on behalf of the Trust in 2016, we did so, and will continue to do so, cautiously and with discipline, consistent with our longstanding investment philosophy of seeking to take prudent levels of risk and getting paid appropriately for the risk taken. In 2016, in the face of these aggressive market conditions, we continued our history of investing in companies at lower than market leverage levels. The average leverage of the Trust's new private placement investments in 2016 was 4.9 times EBITDA, compared to the average market multiple of 5.3 times EBITDA. This approach has served us well over the long term and through all kinds of market cycles.

In addition to strong new investment activity, the condition of the Trust's existing portfolio remained solid throughout the year. Sales and earnings for the Trust's portfolio companies as a whole continued their upward momentum. In addition, the number of companies on our watch list or in default remained at acceptable levels in 2016.

We had 19 companies exit from the Trust's portfolio during 2016. This level of exit activity remains relatively high for the Trust's portfolio, especially after the unprecedented 32 exits experienced in 2014 and 21 exits in 2015, and is another indicator of how active and aggressive the markets continued to be in 2016. In all but four of these exits, the Trust realized a positive return on its investment. Of note, 14 of

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

the 19 exits in 2016 were the realization of stub equity holdings in companies where the interest bearing debt securities had previously been prepaid.

During 2016, the Trust had five portfolio companies fully or partially prepay their debt obligations. The level of refinancing activity in the portfolio in 2016 was notably lower than in each of the prior three years when prepayments numbered 15, 20, and 32 in 2015, 2014, and 2013, respectively. 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 abundant availability of debt capital. Unless replaced by new private debt investments, these prepayments reduce net investment income.

As a result of the level of new investment activity, combined with the composition of the realizations (majority being the sale of non-cash pay equity securities) and lower level of prepayments, the Trust's recurring net investment income, increased over 9% to $0.94 per share as compared to $0.86 per share in 2015.

OUTLOOK FOR 2017

As we enter 2017, the pipeline of investment opportunities remains relatively healthy. The market appears optimistic that the new Presidential administration will result in a favorable economic environment, particularly for middle market companies, the very type of companies in which we focus our investment activities. Various surveys of middle market investment banks and capital providers would suggest the same. However, as previously mentioned, the market dynamics have, and are expected to continue to remain aggressive. And while there is much economic optimism, there is also a level of uncertainty that always comes with changes in governmental leadership. Rest assured that despite constantly changing 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 which 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 was able to maintain its $0.27 per share quarterly dividend in 2016 for a total annual dividend of $1.08 per share. However, it was once again necessary to supplement recurring investment income in each quarter of 2016 with non-recurring income and earnings carry forward in order to maintain the $1.08 per share annual dividend. As has been discussed in prior reports, recurring investment income alone has not been sufficient, and while improving, is not projected to be sufficient in the near term, to fully fund the current dividend rate. Net investment income has been below the dividend rate since 2013 due principally to the considerable reduction in the number of private debt securities in the portfolio resulting from the high level of exits and prepayment activity that occurred from 2013 through 2015, combined with generally lower investment returns available due to market and competitive dynamics over the past several years. As mentioned above, we made good progress in growing recurring investment income in 2016, but it remains below the dividend rate and will continue to require supplementation from non-recurring income in the near term. The level of expected recurring investment income generated by the Trust in 2017, combined with the availability of earnings carry forwards and other non-recurring income, maintenance of the current dividend rate over the next several quarters is expected. But over time, the Trust's dividend paying ability tends to be correlated with its recurring earnings capacity. As such, until recurring investment income reaches a level equal to the current dividend rate, there is the risk that the dividend may need to be reduced in the future.

2016 Annual Report

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 in Springfield on April 21, 2017.

Robert M. Shettle

President

Barings Participation Investors (formerly known as Babson Capital Participation Investors)


2016 Dividends	Record Date	Total Paid	Ordinary Income	Short-Term Gains	Long-Term Gains
Regular	5/2/2016	0.2700	0.2700	—	—
Regular	8/1/2016	0.2700	0.2700	—	—
Regular	11/7/2016	0.2700	0.2700	—	—
Regular	12/30/2016	0.2700	0.2700	—	—
		1.0800	1.0800	0.0000	0.0000


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
$1.08	13.4585%	0.1321	13.4585%	0.1321	0%	0.0000

***	Not available to individual shareholders

****	Qualified dividends are reported in Box 1b on IRS Form 1099-Div for 2016

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	13-41

Notes to Consolidated Financial Statements	42-49

Report of Independent Registered Public Accounting Firm	50

Interested Trustees	51-52

Independent Trustees	53-54

Officers of the Trust	55

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

December 31, 2016


Assets:
Investments
(See Consolidated Schedule of Investments)
Corporate restricted securities at fair value
(Cost - $97,075,180 )	$	94,771,586
Corporate restricted securities at market value
(Cost - $18,139,062 )		18,191,653
Corporate public securities at market value
(Cost - $26,042,529 )		26,734,649
Short-term securities at amortized cost		9,999,142

Total investments (Cost - $151,255,913 )		149,697,030

Cash		4,199,021
Interest receivable		1,748,514
Receivable for investments sold		152,188
Other assets		26,783

Total assets		155,823,536

Liabilities:
Note payable		15,000,000
Dividend payable		2,804,267
Tax payable		504,303
Deferred tax liability		415,014
Investment advisory fee payable		307,365
Interest payable		27,267
Accrued expenses		158,589

Total liabilities		19,216,805

Total net assets	$	136,606,731

Net Assets:
Common shares, par value $.01 per share	$	103,861
Additional paid-in capital		94,909,097
Retained net realized gain on investments, prior years		40,511,310
Undistributed net investment income		568,739
Accumulated net realized gain on investments		2,487,621
Net unrealized depreciation of investments		(1,973,897	)

Total net assets	$	136,606,731

Common shares issued and outstanding (14,787,750 authorized)		10,386,173

Net asset value per share	$	13.15

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED STATEMENT OF OPERATIONS

For the year ended December 31, 2016


Investment Income:
Interest	$	12,108,459
Dividends		427,016
Other		278,283

Total investment income		12,813,758

Expenses:
Investment advisory fees		1,250,835
Interest		613,500
Trustees' fees and expenses		225,000
Professional fees		165,146
Reports to shareholders		71,000
Custodian fees		16,171
Other		147,864

Total expenses		2,489,516

Investment income - net		10,324,242
Net realized and unrealized gain on investments:
Net realized gain on investments before taxes		1,931,283
Income tax expense		(651,292	)

Net realized gain on investments after taxes		1,279,991

Net increase (decrease) in unrealized appreciation (depreciation) of investments before taxes		(55,675	)
Net (increase) decrease in deferred income tax expense		94,074

Net increase (decrease) in unrealized appreciation (depreciation) of investments after taxes		38,399

Net gain on investments		1,318,390

Net increase in net assets resulting from operations	$	11,642,632

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended December 31, 2016


Net decrease in cash:
Cash flows from operating activities:
Purchases/Proceeds/Maturities from short-term portfolio securities, net	$	(5,948,810	)
Purchases of portfolio securities		(43,862,303	)
Proceeds from disposition of portfolio securities		49,663,363
Interest, dividends and other income received		11,244,327
Interest expense paid		(613,500	)
Operating expenses paid		(1,974,948	)
Income taxes paid		(621,436	)

Net cash provided by operating activities		7,886,693

Cash flows from financing activities:
Cash dividends paid from net investment income		(11,176,907	)
Receipts for shares issued on reinvestment of dividends		806,973
Net cash used for financing activities		(10,369,934	)
Net decrease in cash		(2,483,241	)
Cash - beginning of year		6,682,262

Cash - end of year	$	4,199,021

Reconciliation of net increase in net assets to net cash provided by operating activities:
Net increase in net assets resulting from operations	$	11,642,632

Increase in investments		(3,305,349	)
Increase in interest receivable		(135,252	)
Increase in receivable for investments sold		(152,188	)
Increase in tax payable		29,856
Decrease in deferred tax liability		(94,074	)
Increase in investment advisory fee payable		2,828
Decrease in accrued expenses		(101,760	)

Total adjustments to net assets from operations		(3,755,939	)

Net cash provided by operating activities	$	7,886,693

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

For the years ended December 31, 2016 and 2015


	2016			2015
Increase/(decrease) in net assets:
Operations:
Investment income - net	$	10,324,242		$	9,762,813
Net realized gain on investments after taxes		1,279,991			161,395
Net change in unrealized appreciation/(depreciation) of investments after taxes		38,399			(1,368,494	)

Net increase in net assets resulting from operations		11,642,632			8,555,714

Increase from common shares issued on reinvestment of dividends
Common shares issued (2016 - 57,782; 2015 - 27,306)		806,973			368,734

Dividends to shareholders from:
Net investment income (2016 - $1.08 per share; 2015 - $1.08 per share)		(11,192,508	)		(11,143,733	)

Total increase/(decrease) in net assets		1,257,097			(2,219,285	)

Net assets, beginning of year		135,349,634			137,568,919

Net assets, end of year (including undistributed net investment income of $568,739 and $1,404,388, respectively)	$	136,606,731		$	135,349,634

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS

Selected data for each share of beneficial interest outstanding:

	For the years ended December 31,
	2016			2015			2014			2013			2012

Net asset value:
Beginning of year	$	13.10		$	13.35		$	12.83		$	12.56		$	11.90
Net investment income (a)		1.00			0.95			1.04			1.00			1.08
Net realized and unrealized gain (loss) on investments		0.13			(0.12	)		0.57			0.35			0.64

Total from investment operations		1.13			0.83			1.61			1.35			1.72

Dividends from net investment income to common shareholders		(1.08	)		(1.08	)		(0.96	)		(1.08	)		(1.04	)
Dividends from realized gain on investments to common shareholders		—			—			(0.12	)		—			(0.04	)
Increase from dividends reinvested		(0.00	)(b)		(0.00	)(b)		(0.01	)		(0.00	)(b)		0.02

Total dividends		(1.08	)		(1.08	)		(1.09	)		(1.08	)		(1.06	)

Net asset value: End of year	$	13.15		$	13.10		$	13.35		$	12.83		$	12.56

Per share market value: End of year	$	14.20		$	13.75		$	13.23		$	12.88		$	13.91

Total investment return
Net asset value (c)		8.75%			6.23%			13.61%			10.97%			15.89%
Market value (c)		11.45%			12.66%			12.54%			0.47%			(4.54%	)
Net assets (in millions):
End of year	$	136.61		$	135.35		$	137.57		$	131.42		$	127.87
Ratio of total expenses to average net assets		2.26%			2.17%			2.84%			2.15%			2.83%
Ratio of operating expenses to average net assets		1.35%			1.49%			1.49%			1.51%			1.51%
Ratio of interest expense to average net assets		0.44%			0.44%			0.45%			0.47%			0.49%
Ratio of income tax expense to average net assets (d)		0.47%			0.24%			0.90%			0.17%			0.83%
Ratio of net investment income to average net assets		7.45%			6.95%			7.82%			7.77%			8.82%
Portfolio turnover		31%			30%			32%			30%			34%

(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)

As additional information, this ratio is included to reflect the taxes paid on retained long-term gains. These taxes paid are netted against realized capital gains in the Statement of Operations. The taxes paid are treated as deemed distributions and a credit for the taxes paid is passed on to shareholders.

Senior borrowings:
Total principal amount (in millions)	$	15	$	15	$	15	$	15	$	15
Asset coverage per $1,000 of indebtedness	$	10,107	$	10,023	$	10,171	$	9,761	$	9,525

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2016


Corporate Restricted Securities - 82.69%: (A)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

Private Placement Investments - 69.38%: (C)

1492 Acquisition LLC
A leading producer of premium Italian cured meats and deli meats in the U.S.
Limited Liability Company Unit Class A Preferred (B)	102 uts.		10/17/12		$	102,270	$	139,857
Limited Liability Company Unit Class A Common (B)	11,364 uts.		10/17/12			11,364		153,737

						113,634		293,594


ABC Industries, Inc.
A manufacturer of mine and tunneling ventilation products in the U.S.
13% Senior Subordinated Note due 07/31/2019	$	139,205	08/01/12			131,977		137,087
Preferred Stock Series A (B)	125,000 shs.		08/01/12			125,000		197,584
Warrant, exercisable until 2022, to purchase common stock at $.02 per share (B)	22,414 shs.		08/01/12			42,446		32,955

						299,423		367,626


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.			*		207,910		—

* 12/07/12, 07/11/13 and 06/30/15.


AFC - Dell Holding Corporation
A distributor and provider of inventory management services for "C-Parts" used by OEMs in their manufacturing and production facilities.
12.5% (1% PIK) Senior Subordinated Note due 09/27/2020	$	1,203,330	03/27/15			1,185,568		1,227,396
Preferred Stock (B)	1,122 shs.		03/27/15			112,154		112,506
Common Stock (B)	346 shs.		03/27/15			346		—

						1,298,068		1,339,902


Airxcel Holdings
A leading manufacturer of a broad range of climate control solutions, including air-conditioners, heat pumps, cooking appliances, furnaces, powered vents, and water heaters.
12.5% (1.5% PIK) Senior Subordinated Note due 11/18/2020	$	1,483,333	11/18/14			1,462,362		1,483,333
Limited Liability Company Unit	288 uts.		11/18/14			288,000		509,686

						1,750,362		1,993,019

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

AM Conservation Holding Corp.
A supplier of energy efficiency ("EE") products, including lighting, shower heads and aerators, and weatherization products such as door seals and weather stripping.
11.75% (1.5% PIK) Senior Subordinated Note due 04/30/2023	$	1,572,233	10/31/16		$	1,541,418	$	1,555,661
Common Stock (B)	156,818 shs.		10/31/16			156,818		156,818

						1,698,236		1,712,479


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		254,622


API Technologies Corp.
A designer, developer and manufacturer of electronic systems, subsystems, modules and secure communications for technically demanding defense, aerospace and commercial applications in the U.S. and internationally.
12% (1% PIK) Senior Subordinated Note due 04/22/2023	$	1,389,522	04/22/16			1,369,530		1,392,570
Limited Liability Company Unit (B)	0.40% int.		04/20/16			345,000		265,650

						1,714,530		1,658,220


ARI Holding Corporation
A leading national supplier of products used primarily by specialty contractors.
11.5% (0.5% PIK) Senior Subordinated Note due 02/01/2020	$	1,713,112		*		1,695,985		1,713,112
Limited Partnership Interest	524 uts.		08/01/14			523,950		649,257

* 05/21/13 and 08/01/14.						2,219,935		2,362,369


ASC Holdings, Inc.
A manufacturer of capital equipment used by corrugated box manufacturers.
13% (1% PIK) Senior Subordinated Note due 05/18/2021	$	748,684	11/19/15			736,084		738,396
Limited Liability Company Unit (B)	111,100 uts.		11/18/15			111,100		34,663

						847,184		773,059

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


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.
11% Senior Subordinated Note due 02/17/2022	$	1,515,400	08/17/15		$	1,490,834	$	1,535,559
Preferred Stock (B)	210 shs.		08/17/15			209,390		174,632
Common Stock (B)	210 shs.		08/17/15			210		—

						1,700,434		1,710,191


Avantech Testing Services LLC
A manufacturer of custom Non-Destructive Testing ("NDT") systems and provider of NDT and inspections services primarily to the oil country tubular goods market.
15% (3.75% PIK) Senior Subordinated Note due 01/31/2021 (D)	$	500,587	07/31/14			491,228		—
Limited Liability Company Unit (B)(F)	45,504 uts.			*		—		—

* 07/31/14 and 10/14/15.						491,228		—


Blue Wave Products, Inc.
A distributor of pool supplies.
10% Senior Secured Term Note due 09/30/2018	$	139,007	10/12/12			138,017		139,007
13% (1% PIK) Senior Subordinated Note due 09/30/2019	$	331,416	10/12/12			319,314		331,416
Common Stock (B)	51,064 shs.		10/12/12			51,064		232,189
Warrant, exercisable until 2022, to purchase common stock at $.01 per share (B)	20,216 shs.		10/12/12			20,216		91,923

						528,611		794,535


BlueSpire Holding, Inc.
A marketing services firm that integrates strategy, technology, and content to deliver customized marketing solutions for clients in the senior living, financial services and healthcare end markets.
12.5% (1.5% PIK) Senior Subordinated Note due 06/30/2021	$	1,603,816	06/30/15			1,578,222		—
Common Stock (B)	1,417 shs.		06/30/15			156,800		—

						1,735,022		—


BP SCI LLC
A leading value-added distributor of branded pipes, valves, and fittings (PVF) to diversified end markets.
Limited Liability Company Unit Class A (B)(F)	417 uts.		10/17/12			41,667		77,385
Limited Liability Company Unit Class B (B)(F)	167 uts.		10/17/12			166,666		267,799

						208,333		345,184

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

CG Holdings Manufacturing Company
A coating provider serving the automotive, agricultural, heavy truck and other end markets.
13% Senior Subordinated Note due 11/01/2019	$	1,412,605		*	$	1,362,085	$	1,412,605
Preferred Stock (B)	1,350 shs.			*		134,972		169,355
Preferred Stock (B)	489 shs.			*		48,721		61,382
Common Stock (B)	140 shs.			*		14,864		131,712
Warrant, exercisable until 2023, to purchase common stock at $.01 per share (B)	58 shs.			*		5,430		54,709

* 05/09/13 and 11/01/13.						1,566,072		1,829,763


CHG Alternative Education Holding Company
A leading provider of publicly-funded, for profit pre-K-12 education services targeting special needs children at therapeutic day schools and "at risk" youth through alternative education programs.
13.5% (1.5% PIK) Senior Subordinated Note due 01/19/2018	$	779,888	01/19/11			770,565		779,888
14% (2% PIK) Senior Subordinated Note due 08/03/2019	$	205,009	08/03/12			203,185		205,009
Common Stock (B)	375 shs.		01/19/11			37,500		43,372
Warrant, exercisable until 2021, to purchase common stock at $.01 per share (B)	295 shs.		01/19/11			29,250		34,093

						1,040,500		1,062,362


Church Services Holding Company
A provider of diversified residential services to homeowners in the Houston, Dallas, and Austin markets.
14.5% (2% PIK) Senior Subordinated Note due 03/26/2018 (D)	$	191,888	03/26/12			189,978		—
Preferred Stock Series A (B)	65 shs.		09/22/16			6,465		—
Preferred Stock (B)	548 shs.		04/11/16			54,762		—
Common Stock (B)	1,327 shs.			*		132,700		—
Warrant, exercisable until 2022, to purchase common stock at $.01 per share (B)	57 shs.		03/26/12			5,740		—

* 03/26/12, 05/25/12 and 06/19/12.						389,645		—


Clarion Brands Holding Corp.
A portfolio of six over-the-counter (OTC) pharmaceutical brands whose products are used to treat tinnitus or ringing of the ear, excessive sweating, urinary tract infections, muscle pain, and skin conditions.
12.5% (1.5% PIK) Senior Subordinated Note due 04/01/2021	$	2,023,440		*		1,991,934		1,994,682
Limited Liability Company Unit	1,853 uts.		07/18/16			189,267		155,383

* 10/01/14, 01/07/16 and 07/18/16.						2,181,201		2,150,065

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

Clough, Harbour and Associates
An engineering service firm that is located in Albany, NY.
Preferred Stock (B)	147 shs.		12/02/08		$	146,594	$	623,893


Compass Chemical International LLC
A manufacturer and supplier of standard and specialty formulated chemicals, primarily phosphoric acid derivatives called phosphonates.
Limited Liability Company Unit (B)(F)	230 uts.		03/04/15			147,304		117,908


Connecticut Electric, Inc.
A supplier and distributor of electrical products sold into the retail and wholesale markets.
Limited Liability Company Unit Class A (B)	82,613 uts.		01/12/07			82,613		110,660
Limited Liability Company Unit Class C (B)	59,756 uts.		01/12/07			59,756		86,349
Limited Liability Company Unit Class D (B)	671,525 uts.		05/03/10			—		915,651
Limited Liability Company Unit Class E (B)	1,102 uts.		05/03/10			—		157,741

						142,369		1,270,401


CORA Health Services, Inc.
A provider of outpatient rehabilitation therapy services.
12.75% (1.75% PIK) Senior Subordinated Note due 06/30/2023	$	764,929	06/30/16			750,861		771,653
Common Stock Class A (B)	3,791 shs.		06/30/16			3,791		2,692
Preferred Stock Series A (B)	758 shs.		06/30/16			72,033		74,285

						826,685		848,630


CTM Holding, Inc.
A leading owner and operator of coin-operated children's rides, penny presses and candy kiosks in the U.S.
15% (3% PIK) Senior Subordinated Note due 11/22/2019	$	1,296,882	11/22/13			1,282,840		1,290,310
Common Stock (B)	90 shs.			*		514,284		377,036

* 11/22/13 and 09/16/16.						1,797,124		1,667,346


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	$	1,420,588	10/07/16			1,392,885		1,397,274
Limited Liability Company Unit (B)(F)	304,412 uts.		10/07/16			304,412		304,412

						1,697,297		1,701,686

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

DPL Holding Corporation
A distributor and manufacturer of aftermarket undercarriage parts for medium and heavy duty trucks and trailers.
14% (2% PIK) Senior Subordinated Note due 11/04/2020	$	1,403,960	05/04/12	$	1,392,283	$	1,359,968
Preferred Stock (B)	25 shs.		05/04/12		252,434		195,418
Common Stock (B)	25 shs.		05/04/12		28,048		—

					1,672,765		1,555,386


Dunn Paper
A provider of specialty paper for niche product applications.
9.75% Second Lien Term Loan due 08/31/2023	$	1,725,000	09/28/16		1,691,587		1,690,500


Eagle Family Foods, Inc.
A producer of low-cost branded and private label canned milk.
10.05% Last Out Term Loan due 12/31/2021	$	1,725,000	12/22/15		1,703,457		1,717,390


ECG Consulting Group
A healthcare management consulting company who provides strategic, financial, operational, and technology related consulting services to healthcare providers.
11.75% (0.75% PIK) Senior Subordinated Note due 11/21/2020	$	1,314,351	11/21/14		1,292,935		1,327,495
Limited Liability Company Unit (B)(F)	230 uts.		11/19/14		71,875		88,980

					1,364,810		1,416,475


Elite Sportwear Holding, LLC
A designer and manufacturer of gymnastics, competitive cheerleading and swimwear apparel in the U.S. and internationally.
11.5% (1% PIK) Senior Subordinated Note due 10/13/2021	$	1,568,713	10/14/16		1,542,205		1,551,115
Limited Liability Company Unit (B)(F)	101 uts.		10/14/16		159,722		159,726

					1,701,927		1,710,841


ERG Holding Company LLC
A provider of inpatient and outpatient clinical trial services to pharmaceutical companies and contract research organizations.
13.5% (1.5% PIK) Senior Subordinated Note due 10/04/2019	$	969,346	04/04/14		958,270		979,039
14% (2% PIK) Senior Subordinated Note due 10/04/2019	$	254,509	07/01/16		250,098		262,144
Common Stock (B)	0.31% int.		04/04/14		77,533		87,124

					1,285,901		1,328,307

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage	Acquisition Date	Cost		Fair Value

F F C Holding Corporation
A leading U.S. manufacturer of private label frozen novelty and ice cream products.
Limited Liability Company Unit Preferred (B)	171 uts.	09/27/10	$	58,345	$	80,306
Limited Liability Company Unit Common (B)	171 uts.	09/27/10		17,073		232,843

				75,418		313,149


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 Preferred (B)	80,559 uts.	04/15/14		—		80,559
Limited Liability Company Unit Class B-1 (B)	65,789 uts.	12/15/10		65,789		167,831
Limited Liability Company Unit Class B-2 (B)	8,248 uts.	12/15/10		8,248		21,041
Limited Liability Company Unit Class B-3 (B)	6,522 uts.	08/30/12		15,000		18,333
Limited Liability Company Unit Class C (B)	1,575 uts.	12/20/10		16,009		32,637

				105,046		320,401


FMH Holdings Corporation
A designer and manufacturer of highly engineered components for the aerospace, defense and space industries.
Common Stock (B)	148 shs.	05/01/15		148,096		209,178


GD Dental Services LLC
A provider of convenient "onestop" general, specialty, and cosmetic dental services with 21 offices located throughout South and Central Florida.
Limited Liability Company Unit Preferred (B)	76 uts.	10/05/12		75,920		102,792
Limited Liability Company Unit Common (B)	767 uts.	10/05/12		767		15,704

				76,687		118,496


GenNx Novel Holding, Inc.
A manufacturer and distributor of nutraceutical ingredients.
15% (1% PIK) Senior Subordinated Note due 03/27/2020	$1,609,919	03/27/14		1,589,862		1,028,738
Common Stock (B)	15,500 shs.	03/27/14		155,000		—

				1,744,862		1,028,738

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

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.
14% (2% PIK) Senior Subordinated Note due 03/27/2019	$	1,220,021	03/27/13	$	1,209,282	$	1,220,021
Common Stock (B)	1,181 shs.		03/27/13		118,110		122,911

					1,327,392		1,342,932


Glynlyon Holding Companies, Inc.
A technology-enabled curriculum provider of K-12 and support services predominantly to small and medium public school districts.
12% (1% PIK) Senior Subordinated Note due 01/05/2022	$	1,592,781	01/15/16		1,564,860		1,631,491
Common Stock (B)	147 shs.		01/15/16		147,436		165,693

					1,712,296		1,797,184


GlynnDevins Acquisition Corporation
A marketing communications agency that services senior living facilities.
Preferred Stock Series A (B)	342 shs.		06/19/15		70,683		78,062
Common Stock (B)	342 shs.		06/19/15		2,945		28,444

					73,628		106,506


Grakon Parent
The leading designer and manufacturer of highly-engineered and customized LED and incandescent lighting systems for transportation-based markets.
Common Stock (B)	175 shs.		10/31/14		174,831		148,841


GTI Holding Company
A designer, developer, and marketer of precision specialty hand tools and handheld test instruments.
12% Senior Subordinated Note due 02/05/2020	$	727,865	02/05/14		696,212		712,430
Common Stock (B)	846 shs.		02/05/14		84,636		90,272
Warrant, exercisable until 2024, to purchase common stock at $.01 per share (B)	397 shs.		02/05/14		36,816		42,362

					817,664		845,064

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

Handi Quilter Holding Company (Premier Needle Arts)
A designer and manufacturer of long-arm quilting machines and related components for the consumer quilting market.
12% (1% PIK) Senior Subordinated Note due 06/19/2021	$	1,437,500	12/19/14		$	1,415,428	$	1,459,840
Limited Liability Company Unit Preferred (B)	359 uts.			*		359,375		324,132
Limited Liability Company Unit Common Class A (B)	3,594 uts.		12/19/14			—		—

* 12/19/14 and 04/29/16.						1,774,803		1,783,972


Happy Floors Acquisition, Inc.
A wholesale importer and value-added distributor of premium European flooring tile to residential and commercial end markets.
12.5% (1% PIK) Senior Subordinated Note due 07/01/2022	$	1,583,387	07/01/16			1,554,519		1,592,682
Common Stock (B)	150 shs.		07/01/16			149,500		132,063

						1,704,019		1,724,745


Hartland Controls Holding Corporation
A manufacturer and distributor of electronic and electromechanical components.
14% (2% PIK) Senior Subordinated Note due 08/14/2019	$	1,106,379	02/14/14			1,093,856		1,117,443
12% Senior Subordinated Note due 08/14/2019	$	431,250	06/22/15			428,306		439,875
Preferred Stock Series A (B)	1,140 shs.		02/14/14			114,011		129,337
Common Stock (B)	821 shs.		02/14/14			822		267,857

						1,636,995		1,954,512


Healthcare Direct Holding Company
A direct-to-customer marketer of discount dental plans.
Common Stock (B)	517 shs.		03/09/12			21,419		84,602


HHI Group, LLC
A developer, marketer, and distributor of hobby-grade radio control products.
14% (2% PIK) Senior Subordinated Note due 01/17/2020	$	1,714,377	01/17/14			1,696,404		942,907
Limited Liability Company Unit (B)(F)	102 uts.		01/17/14			101,563		—

						1,797,967		942,907

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

Hollandia Produce LLC
A hydroponic greenhouse producer of branded root vegetables.
14.25% (2.75% PIK) Senior Subordinated Note due 12/11/2020	$	1,355,622		*	$	1,333,186	$	1,292,672

* 12/30/15 and 12/23/16


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			—		—

						—		—


Hospitality Mints Holding Company
A manufacturer of individually-wrapped imprinted promotional mints.
12% Senior Subordinated Note due 10/01/2018	$	1,098,837	08/19/08			1,094,933		1,029,240
Common Stock (B)	251 shs.		08/19/08			251,163		20,012
Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B)	65 shs.		08/19/08			60,233		5,173

						1,406,329		1,054,425


HVAC Holdings, Inc.
A provider of integrated energy efficiency services and maintenance programs for HVAC systems.
12% (1% PIK) Senior Subordinated Note due 07/19/2022	$	1,128,821		*		1,116,749		1,130,185
Limited Liability Company Unit Class A Preferred (B)	1,127 uts.		09/27/12			112,726		169,495
Limited Liability Company Unit Class A Common (B)	910 uts.		09/27/12			910		92,165

* 7/19/16 and 9/6/16						1,230,385		1,391,845


Ideal Tridon Holdings, Inc.
A designer and manufacturer of clamps and couplings used in automotive and industrial end markets.
Common Stock	93 shs.		10/27/11			77,462		173,292

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Impact Confections
An independent manufacturer and marketer of confectionery products including Warheads^® brand sour candies, Melster^® brand classic candies, and co-manufactured/private label classic candies.
13% (1% PIK) Senior Subordinated Note due 11/10/2020	$	1,086,749	11/10/14	$	1,071,229	$	1,080,905
Common Stock (B)	2,300 shs.		11/10/14		230,000		208,926

					1,301,229		1,289,831


Insurance Claims Management, Inc.
A third party administrator providing auto and property claim administration services for insurance companies.
Common Stock (B)	47 shs.		02/27/07		1,424		142,344


Janus Group Holdings LLC
A manufacturer of roll-up doors and hallway systems that are primarily used in self-storage facilities.
13.5% (1.5% PIK) Senior Subordinated Note due 06/10/2019	$	577,581	12/11/13		571,372		577,581
Limited Liability Company Unit Class A (B)(F)	283 uts.		12/11/13		379,581		1,556,776

					950,953		2,134,357


JMH Investors LLC
A developer and manufacturer of custom formulations for a wide variety of foods.
Limited Liability Company Unit (B)(F)	1,038,805 uts.		12/05/12		232,207		—
Limited Liability Company Unit Class A-1 (B)(F)	163,043 uts.		10/31/16		163,043		163,043
Limited Liability Company Unit Class A-2 (B)(F)	1,032,609 uts.		10/31/16		—		—

					395,250		163,043


K N B Holdings Corporation
A designer, manufacturer and marketer of products for the custom framing market.
Common Stock (B)	71,053 shs.		05/24/06		71,053		87,415
Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B)	43,600 shs.		05/25/06		37,871		53,640

					108,924		141,055


K P I Holdings, Inc.
The largest player in the U.S. non-automotive, non-ferrous die casting segment.
Limited Liability Company Unit Class C Preferred (B)	40 uts.		06/30/15		—		77,840
Common Stock (B)	353 shs.		07/15/08		285,619		216,200

					285,619		294,040

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

Kyjen Company
A designer and distributor of branded and private label dog toys and accessories primarily in the US.
13% (1% PIK) Senior Subordinated Note due 10/14/2021	$	1,309,495	10/14/15		$	1,287,347	$	1,328,589


Mail Communications Group, Inc.
A provider of mail processing and handling services, lettershop services, and commercial printing services.
Limited Liability Company Unit	12,764 uts.			*		166,481		191,885
Warrant, exercisable until 2017, to purchase common stock at $.01 per share (B)(F)	1,787 shs.		05/04/07			22,781		26,866

* 05/04/07 and 01/02/08.						189,262		218,751


Manhattan Beachwear Holding Company
A designer and distributor of women's swimwear.
12.5% Senior Subordinated Note due 01/15/2018 (D)	$	419,971	01/15/10			404,121		—
15% (2.5% PIK) Senior Subordinated Note due 01/15/2018 (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 2019, 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 04/17/2020	$	872,543	04/17/15			865,307		820,770
Limited Liability Company Unit	5 uts.		04/17/15			678,329		183,327

						1,543,636		1,004,097


MC Sign Holdings LLC
A provider of sign and lighting services nationwide.
11.75% (0.75% PIK) Senior Subordinated Note due 09/15/2021	$	768,305	09/22/15			755,493		775,988
Limited Liability Company Unit Class B (B)	101,500 uts.		09/22/15			101,500		175,057

						856,993		951,045

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Merex Holding Corporation
A provider of after-market spare parts and components, as well as maintenance, repair and overhaul services for "out of production" or "legacy" aerospace and defense systems that are no longer effectively supported by the original equipment manufacturers.
16% Senior Subordinated Note due 10/30/2019 (D)	$	454,295	09/22/11	$	449,013	$	340,721
15% PIK Senior Subordinated Note due 04/30/2022 (D)	$	23,839	08/18/15		23,839		—
14% PIK Senior Subordinated Note due 06/30/2019	$	31,492	10/21/16		31,492		31,245
Common Stock Class A (B)	77,118 shs.		08/18/15		170,705		—

					675,049		371,966


MES Partners, Inc.
An industrial service business offering an array of cleaning and environmental services to the Gulf Coast region of the U.S.
12% (1% PIK) Senior Subordinated Note due 09/30/2021	$	1,106,636	09/30/14		1,090,069		1,078,937
Common Stock Class B (B)	219,545 shs.		09/30/14		219,545		90,843

					1,309,614		1,169,780


Midwest Industrial Rubber, Inc.
A supplier of industrial maintenance, repair, and operations ("MRO") products, specializing in the fabrication and distribution of lightweight conveyor belting and related conveyor components and accessories.
12% (1% PIK) Senior Subordinated Note due 12/02/2022	$	1,554,894	12/02/16		1,524,112		1,561,434
Preferred Stock (B)	1,711 shs.		12/02/16		171,116		171,116
Common Stock (B)	242 shs.		12/02/16		242		242

					1,695,470		1,732,792


MNX Holding Company
An international third party logistics company providing customized logistics services to customers across the globe.
14% (2% PIK) Senior Subordinated Note due 11/02/2019	$	1,309,766	11/02/12		1,297,100		1,309,766
Common Stock (B)	45 shs.		11/02/12		44,643		34,163

					1,341,743		1,343,929

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

Money Mailer Equity LLC
A leading provider of hyperlocal shared direct mail advertising as well as interactive and online advertising solutions through its nationwide production and distribution network.
12% (1% PIK) Senior Subordinated Note due 10/29/2021	$	1,735,179	04/29/16		$	1,704,360	$	1,702,229


Motion Controls Holdings
A manufacturer of high performance mechanical motion control and linkage products.
14.25% (1.75% PIK) Senior Subordinated Note due 08/15/2020	$	1,009,479	11/30/10			1,002,523		1,009,479
Limited Liability Company Unit Class B-1 (B)(F)	75,000 uts.		11/30/10			—		47,619
Limited Liability Company Unit Class B-2 (B)(F)	6,801 uts.		11/30/10			—		4,318

						1,002,523		1,061,416


NetShape Technologies, Inc.
A manufacturer of powder metal and metal injection molded precision components used in industrial, consumer, and other applications.
12% Senior Subordinated Note due 06/10/2020 (D)	$	810,000	02/02/07			809,408		—
Limited Partnership Interest of Saw Mill PCG Partners LLC (B)	1.46% int.		02/01/07			588,077		—
Limited Liability Company Unit Class D of Saw Mill PCG Partners LLC (B)	9 uts.			*		8,873		—
Limited Liability Company Unit Class D-1 of Saw Mill PCG Partners LLC (B)	121 uts.		09/30/09			121,160		—
Limited Liability Company Unit Class D-2 of Saw Mill PCG Partners LLC (B)	68 uts.		04/29/11			34,547		—
Limited Liability Company Unit Class D-3 of Saw Mill PCG Partners LLC (B)	104 uts.		12/10/14			103,904		—

* 12/18/08 and 09/30/09.						1,665,969		—


NSi Industries Holdings, Inc.
A manufacturer and distributor of electrical components and accessories to small to mid-sized electrical wholesalers.
12.75% (1.75% PIK) Senior Subordinated Note due 05/17/2023	$	1,527,814	06/30/16			1,500,242		1,533,103
Common Stock (B)	207 shs.		05/17/16			207,000		250,814

						1,707,242		1,783,917

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

O E C Holding Corporation
A provider of elevator maintenance, repair and modernization services.
Preferred Stock Series A (B)	554 shs.		06/04/10		$	55,354	$	71,791
Preferred Stock Series B (B)	311 shs.		06/04/10			31,125		55,532
Common Stock (B)	344 shs.		06/04/10			344		69,811

						86,823		197,134


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 07/29/2021	$	1,449,000	01/29/16			1,423,626		1,484,300
Common Stock Class A (B)	276,000 shs.		01/29/16			276,000		323,388

						1,699,626		1,807,688


Pearlman Enterprises, Inc.
A developer and distributor of tools, equipment and supplies to the natural and engineered stone industry.
Preferred Stock Series A (B)	1,236 shs.		05/22/09			59,034		1,235,800
Preferred Stock Series B (B)	7,059 shs.		05/22/09			290,050		243,168
Common Stock (B)	21,462 shs.		05/22/09			993,816		—

						1,342,900		1,478,968


Petroplex Inv Holdings LLC
A leading provider of acidizing services to E&P customers in the Permian Basin.
Limited Liability Company	0.40% int.			*		175,339		19,089

* 11/29/12 and 12/20/16


Polytex Holdings LLC
A manufacturer of water based inks and related products serving primarily the wall covering market.
13% (1% PIK) Senior Subordinated Note due 01/31/2020	$	1,062,000	07/31/14			1,048,573		1,036,310
Limited Liability Company Unit	148,096 uts.		07/31/14			148,096		48,102

						1,196,669		1,084,412


Power Stop Holdings LLC
A supplier of performance upgrade aftermarket brake products.
11% Senior Subordinated Note due 05/29/2022	$	1,610,100	05/29/15			1,584,654		1,642,302
Limited Liability Company Unit Preferred (B)(F)	1,149 uts.		05/29/15			114,900		131,223
Limited Liability Company Unit Common (B)(F)	1,149 uts.		05/29/15			—		79,165

						1,699,554		1,852,690

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

PPC Event Services
A special event equipment rental business.
14% (2% PIK) Senior Subordinated Note due 05/20/2020	$	1,166,893	11/20/14	$	1,151,233	$	1,166,893
Limited Liability Company Unit (B)	3,450 uts.		11/20/14		172,500		471,636
Limited Liability Company Unit Series A-1 (B)	339 uts.		03/16/16		42,419		53,747

					1,366,152		1,692,276


Randy's Worldwide Automotive
A designer and distributor of automotive aftermarket parts.
11.5% Senior Subordinated Note due 05/12/2021	$	1,135,898	05/12/15		1,119,043		1,158,616
Common Stock (B)	118 shs.		05/12/15		118,476		179,520

					1,237,519		1,338,136


Safety Infrastructure Solutions
A provider of trench safety equipment to a diverse customer base across multiple end markets in Texas and the Southwestern United States.
Preferred Stock (B)	2,098 shs.		03/30/12		83,920		126,487
Common Stock (B)	983 shs.		03/30/12		9,830		193,855

					93,750		320,342


Signature Systems Holding Company
A seller and installer of a variety of modular surfaces, industrial matting and related products used for ground protection.
Common Stock (B)	76 shs.		03/15/13		75,509		34,749
Warrant, exercisable until 2023, to purchase common stock A at $.01 per share (B)	31 shs.		03/15/13		28,316		14,197

					103,825		48,946


Smart Source Holdings LLC
A short-term computer rental company.
Limited Liability Company Unit (B)	328 uts.		*		261,262		415,349
Warrant, exercisable until 2020, to purchase common stock at $.01 per share (B)	83 shs.		*		67,467		105,208

* 08/31/07 and 03/06/08.					328,729		520,557

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date		Cost		Fair Value

SMB Machinery Holdings, Inc.
A reseller of used, rebuilt and refurbished packaging and processing equipment, primarily serving the bottling and food manufacturing industries.
14% (2% PIK) Senior Subordinated Note due 10/18/2019 (D)	$	738,694	10/18/13		$	726,147	$	—
Common Stock (B)	841 shs.		10/18/13			84,100		—

						810,247		—


Software Paradigms International Group, LLC
An outsourced IT services provider focused on the retail industry.
12.5% (1.5% PIK) Senior Subordinated Note due 11/23/2021	$	1,725,000	05/23/16			1,693,237		1,728,129


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.
14% (2% PIK) Senior Subordinated Note due 06/13/2019	$	1,059,783	12/13/13			1,045,337		1,042,835
Preferred Stock Series A (B)	158,967 shs.		12/13/13			158,967		135,122
Preferred Stock Series A-2 (B)	26,543 shs.		09/10/15			29,994		22,562

						1,234,298		1,200,519


Sunrise Windows Holding Company
A manufacturer and marketer of premium vinyl windows exclusively selling to the residential remodeling and replacement market.
16% Senior Subordinated Note due 12/14/2017 (D)	$	1,372,356		*		1,358,229		960,649
Common Stock (B)	38 shs.		12/14/10			38,168		—
Warrant, exercisable until 2020, to purchase common stock at $.01 per share (B)	37 shs.		12/14/10			37,249		—

* 12/14/10, 08/17/12 and 03/31/16.						1,433,646		960,649


Sunvair Aerospace Group Inc.
An aerospace maintenance, repair, and overhaul provider servicing landing gears on narrow body aircraft.
12% (1% PIK) Senior Subordinated Note due 07/31/2021	$	1,218,639	07/31/15			1,199,559		1,191,831
Common Stock (B)	68 shs.		07/31/15			78,150		37,434

						1,277,709		1,229,265

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Team Drive-Away Holdings LLC
An asset-light provider of over the road driveaway services for class 8 trucks and specialized equipment.
12.5% (1.5% PIK) Senior Subordinated Note due 04/15/2021	$	766,700	10/15/15	$	753,889	$	778,127
Limited Liability Company Unit (B)	95,800 uts.		10/15/15		95,800		107,392

					849,689		885,519


Torrent Group Holdings, Inc.
A contractor specializing in the sales and installation of engineered drywells for the retention and filtration of stormwater and nuisance water flow.
15% (7.5% PIK) Senior Subordinated Note due 12/05/2020 (D)	$	67,125	12/05/13		219,203		67,125
Warrant, exercisable until 2023, to purchase common stock at $.01 per share (B)	28,079 shs.		12/05/13		—		11,512

					219,203		78,637


Tranzonic Holdings LLC
A producer of commercial and industrial supplies, such as safety products, janitorial supplies, work apparel, washroom and restroom supplies and sanitary care products.
Limited Liability Company Unit Preferred Class A (B)	147,727 shs.		07/05/13		147,727		218,582


Tristar Global Energy Solutions, Inc.
A hydrocarbon and decontamination services provider serving refineries worldwide.
12.5% (1.5% PIK) Senior Subordinated Note due 07/31/2020	$	1,143,391	01/23/15		1,127,539		1,166,258


Veritext Corporation
A provider of stenographic staffing and other services used during the legal deposition process.
10.75% Second Lien Term Loan due 01/29/2023	$	1,725,000	01/21/16		1,695,060		1,725,000


VP Holding Company
A provider of school transportation services for special-needs and homeless children in Massachusetts.
Common Stock (B)	3,632 shs.		03/31/14		363,158		401,147

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

Wellborn Forest Holding Company
A manufacturer of semi-custom kitchen and bath cabinetry.
8% Senior Subordinated Note due 09/30/2017 (D)	$	1,680,931	11/30/06	$	867,531	$	1,512,838
Common Stock) (B)	101 shs.		11/30/06		101,250		—
Warrant, exercisable until 2017, to purchase common stock at $.01 per share (B)	51 shs.		11/30/06		45,790		—

					1,014,571		1,512,838


Westminster Acquisition LLC
A manufacturer of premium, all-natural oyster cracker products sold under the Westminster and Olde Cape Cod brands.
12% (1% PIK) Senior Subordinated Note due 02/03/2021	$	375,486	08/03/15		369,829		378,985
Limited Liability Company Unit (B)(F)	370,241 uts.		08/03/15		370,241		456,225

					740,070		835,210


Whitcraft Holdings, Inc.
A leading independent manufacturer of precision formed, machined, and fabricated flight-critical aerospace components.
Common Stock (B)	205 shs.		12/16/10		205,480		292,372
Warrant, exercisable until 2018, to purchase common stock at $.01 per share (B)	55 shs.		12/16/10		49,334		78,571

					254,814		370,943


Wolf-Gordon, Inc.
A designer and specialty distributor of wallcoverings and related building products, including textiles, paint, and writeable surfaces.
12.5% (1.5% PIK) Senior Subordinated Note due 07/22/2021	$	1,590,450	01/22/16		1,563,022		1,616,394
Common Stock (B)	157 shs.		01/22/16		156,818		172,197

					1,719,840		1,788,591


WP Supply Holding Corporation
A distributor of fresh fruits and vegetables to grocery wholesalers and foodservice distributors in the upper Midwest.
14.5% (2.5% PIK) Senior Subordinated Note due 06/12/2020	$	966,680	11/03/11		960,404		966,680
Common Stock (B)	1,500 shs.		11/03/11		150,000		145,020

					1,110,404		1,111,700

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value

York Wall Holding Company
A designer, manufacturer and marketer of wall covering products for both residential and commercial wall coverings.
12.5% (1.5% PIK) Senior Subordinated Note due 03/04/2021	$	1,584,137	03/04/15	$	1,560,355	$	1,369,132
Common Stock (B)	1,835 shs.		03/04/15		183,500		66,834

					1,743,855		1,435,966


Total Private Placement Investments (E)				$	97,075,180	$	94,771,586

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Interest Rate			Maturity Date	Principal Amount		Cost		Market Value

Rule 144A Securities - 13.31%:

Bonds - 13.31%

Altice Financing S.A.		7.500	%	05/15/26	$	400,000	$	400,000	$	416,000
Amsted Industries		5.375		09/15/24		240,000		240,000		235,800
A. Schulman Inc.		6.875		06/01/23		500,000		506,088		522,500
Beazer Homes USA, Inc.		8.750		03/15/22		160,000		160,000		172,800
Belden Inc.		5.250		07/15/24		210,000		210,000		211,050
Boise Cascade Company		5.625		09/01/24		130,000		130,000		129,025
CITGO Petroleum Corporation		6.250		08/15/22		425,000		425,000		442,000
Consolidated Energy Finance S.A.		6.750		10/15/19		500,000		495,038		500,000
Constellium N.V.		7.875		04/01/21		373,000		373,000		400,974
Cornerstone Chemical Company		9.375		03/15/18		500,000		503,745		501,250
CTP Transportation Products, LLC		8.250		12/15/19		310,000		310,000		267,375
CVR Partners, LP.		9.250		06/15/23		500,000		488,220		515,000
Dean Foods		6.500		03/15/23		329,000		329,000		346,272
Dell Inc.		4.420		06/15/21		600,000		626,826		620,847
Digicel Group Limited		6.000		04/15/21		500,000		459,222		452,235
First Data Corporation		5.000		01/15/24		406,000		406,000		408,160
HD Supply, Inc.		5.250		12/15/21		127,000		127,000		133,984
Hilcorp Energy Company		5.000		12/01/24		335,000		335,000		332,488
Hughes Satellite Systems Corporation		6.625		08/01/26		500,000		496,577		502,500
J.B. Poindexter Co., Inc.		9.000		04/01/22		500,000		500,000		525,000
Jupiter Resources Inc.		8.500		10/01/22		500,000		472,924		431,250
OPE KAG Finance Sub		7.875		07/31/23		500,000		520,954		505,000
LBC Tank Terminals Holding Netherlands B.V.		6.875		05/15/23		663,000		678,637		677,918
Mallinckrodt PLC		5.750		08/01/22		500,000		500,000		481,250
MEG Energy Corporation		6.375		01/30/23		500,000		500,000		445,000
Micron Technology, Inc.		5.250		08/01/23		494,000		494,000		495,853
Micron Technology, Inc.		7.500		09/15/23		203,000		203,000		224,823
Moog Inc.		5.250		12/01/22		500,000		503,281		510,000
Nielsen Finance LLC		5.000		04/15/22		271,000		272,565		276,081
Penske Corporation		4.875		07/11/22		500,000		498,616		536,556
Prime Security Services Borrower		9.250		05/15/23		500,000		500,000		544,375
Sabre GLBL, Inc.		5.250		11/15/23		122,000		122,000		125,278
Sinclair Broadcast Group, Inc.		5.875		03/15/26		204,000		204,000		204,510
Sinclair Television Group, Inc.		5.125		02/15/27		500,000		500,000		475,000

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Restricted Securities: (A) (Continued)	Interest Rate			Maturity Date	Principal Amount		Cost		Market Value

Suncoke Energy		7.375	%	02/01/20	$	500,000	$	472,952	$	497,500
Tallgrass Operations LLC		5.500		09/15/24		304,000		304,000		301,720
TeamHealth Holdings Inc		7.250		12/15/23		115,000		115,000		130,813
Topaz Marine S.A.		8.625		11/01/18		500,000		500,000		485,000
Unitymedia KabelBW GmbH		6.125		01/15/25		500,000		500,000		513,750
Univision Communications, Inc.		5.125		05/15/23		160,000		160,000		157,600
UPCB Finance IV Limited		5.375		01/15/25		208,000		208,000		209,560
Valeant Pharmaceuticals International		7.000		10/01/20		250,000		250,435		215,469
Virgin Media Secured Finance PLC		5.250		01/15/26		500,000		503,259		493,749
VRX Escrow Corp.		6.125		04/15/25		182,000		182,000		136,728
Welltec A/S		8.000		02/01/19		375,000		372,140		376,875
West Corporation		5.375		07/15/22		500,000		492,583		483,124
Western Digital Corporation		10.500		04/01/24		253,000		253,000		299,173
Wolverine World Wide, Inc.		5.000		09/01/26		335,000		335,000		322,438

Total Bonds								18,139,062		18,191,653


Common Stock - 0.00%

TherOX, Inc. (B)						2		—		—
Touchstone Health Partnership (B)						292		—		—

Total Common Stock								—		—


Total Rule 144A Securities								18,139,062		18,191,653


Total Corporate Restricted Securities							$	115,214,242	$	112,963,239

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Public Securities - 19.57%: (A)	Interest Rate			Maturity Date	Principal Amount		Cost		Market Value

Bank Loans - 0.36%

Aquilex Holdings LLC		5.000	%	12/31/20	$	157,303	$	157,077	$	153,173
Seadrill Partners Finco, LLC		4.000		02/21/21		494,898		238,437		337,026

Total Bank Loans								395,514		490,199


Bonds - 19.21%

ADT Security Services Corporation		4.125		06/15/23		500,000		440,305		477,500
Air Lease Corp.		3.000		09/15/23		600,000		594,612		573,232
Alcoa, Inc.		6.150		08/15/20		600,000		615,591		652,500
Anglogold Holdings PLC		5.375		04/15/20		600,000		602,613		616,500
Anixter, Inc.		5.125		10/01/21		165,000		165,000		171,600
Antero Resources Corporation		5.375		11/01/21		395,000		395,000		403,888
Bank of America Corporation		4.000		04/01/24		500,000		498,569		515,670
Brunswick Corporation		7.125		08/01/27		500,000		504,007		583,750
Bunge Limited Finance Corp.		3.250		08/15/26		600,000		602,135		576,165
Clearwater Paper Corporation		4.500		02/01/23		500,000		496,640		490,000
Commercial Metals Company		4.875		05/15/23		750,000		751,091		753,750
Crown Castle International Corp		5.250		01/15/23		600,000		671,906		645,750
CVR Refining LLC		6.500		11/01/22		350,000		341,324		347,375
Discovery Communications		4.900		03/11/26		600,000		653,571		631,811
Duke Realty Limited Partnership		3.875		10/15/22		500,000		501,271		520,063
EP Energy Corporation		9.375		05/01/20		406,000		198,984		374,279
Expedia Inc.		4.500		08/15/24		600,000		627,457		609,736
Ferrellgas Partners, L.P.		8.625		06/15/20		650,000		650,582		640,250
Ford Motor Credit Co. LLC		4.375		08/06/23		600,000		647,970		619,200
Forum Energy Technologies		6.250		10/01/21		160,000		160,000		160,000
Frontier Communications Corporation		6.875		01/15/25		500,000		490,730		423,750
General Motors Financial Co. Inc.		4.000		01/15/25		500,000		508,649		487,821
GEO Group, Inc.		5.875		01/15/22		500,000		475,066		506,250
HealthSouth Corporation		5.125		03/15/23		421,000		412,647		416,789
Hertz Corporation		6.750		04/15/19		79,000		78,541		79,000
Hornbeck Offshore Services, Inc.		1.500		09/01/19		500,000		257,500		354,688
Hospital Corporation of America		5.375		02/01/25		100,000		101,574		100,250
Hospital Corporation of America		5.250		06/15/26		174,000		174,000		179,873
Hewlett Packard Enterprise Company		4.900		10/15/25		500,000		498,571		514,407
Icahn Enterprises L.P.		6.000		08/01/20		600,000		607,084		612,750

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Corporate Public Securities: (A) (Continued)	Interest Rate			Maturity Date	Principal Amount		Cost		Market Value

Jabil Circuit, Inc.		4.700	%	09/15/22	$	500,000	$	499,988	$	510,000
Laboratory Corporation of America Holdings		3.600		02/01/25		500,000		499,343		497,810
Lamar Media Corp.		5.375		01/15/24		160,000		160,000		165,600
Laredo Petroleum, Inc.		5.625		01/15/22		500,000		473,387		503,750
Lazard Group LLC		4.250		11/14/20		500,000		499,030		523,378
Lifepoint Hospitals, Inc.		5.500		12/01/21		350,000		357,240		364,000
LyondellBasell Industries N.V.		5.750		04/15/24		500,000		593,852		572,213
MasTec, Inc.		4.875		03/15/23		500,000		492,649		488,750
Meritor, Inc.		6.750		06/15/21		1,000,000		1,000,000		1,022,500
MPLX LP		4.875		12/01/24		500,000		500,000		514,847
Netflix, Inc.		5.500		02/15/22		299,000		299,000		322,173
Owens Corning		4.200		12/01/24		600,000		636,839		614,628
Perry Ellis International, Inc.		7.875		04/01/19		125,000		124,487		125,000
Pitney Bowes Inc.		3.375		10/01/21		500,000		499,622		485,442
Precision Drilling Corporation		6.625		11/15/20		149,477		151,932		151,720
Reinsurance Group of America		3.950		09/15/26		500,000		503,150		494,665
R.R. Donnelley & Sons Company		6.000		04/01/24		500,000		500,000		471,250
Sanchez Energy Corporation		6.125		01/15/23		500,000		361,364		475,000
Sprint Corporation		7.125		06/15/24		155,000		155,000		159,650
Steelcase, Inc.		6.375		02/15/21		500,000		504,225		558,858
Suburban Propane Partners, L.P.		5.750		03/01/25		500,000		500,000		507,500
Summit Midstream Holdings, LLC		5.500		08/15/22		92,000		67,493		89,700
Time Warner Cable, Inc.		5.000		02/01/20		500,000		496,262		530,665
Tyson Foods, Inc.		4.500		06/15/22		500,000		510,045		532,063
William Lyon Homes		7.000		08/15/22		500,000		500,000		517,500
WPX Energy, Inc.		5.250		09/15/24		425,000		425,000		412,250
Xlit Ltd		4.450		03/31/25		600,000		614,117		594,941

Total Bonds								25,647,015		26,244,450


Total Corporate Public Securities							$	26,042,529	$	26,734,649

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016


Short-Term Security:	Interest Rate/Yield^			Maturity Date	Principal Amount		Cost		Market Value

Commercial Paper - 7.32%

Avangrid, Inc.		0.850	%	01/05/17	$	2,000,000	$	1,999,811	$	1,999,811
Kroger Co.		0.900		01/04/17		2,000,000		1,999,850		1,999,850
Kroger Co.		0.850		01/03/17		2,000,000		1,999,906		1,999,906
Southern Co.		0.900		01/06/17		2,000,000		1,999,750		1,999,750
Tate & Lyle International		1.050		01/04/17		2,000,000		1,999,825		1,999,825

Total Short-Term Security							$	9,999,142	$	9,999,142

Total Investments		109.58	%				$	151,255,913	$	149,697,030

Other Assets		4.49								6,126,506
Liabilities		(14.07	)							(19,216,805	)


Total Net Assets		100.00	%						$	136,606,731

(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, 2016 the values of these securities amounted to $94,771,586 or 69.38% of net assets.

(F)	Held in CI Subsidiary Trust

PIK - Payment-in-kind

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016

Industry Classification:	Fair Value/ Market Value

AEROSPACE & DEFENSE - 2.81%
API Technologies Corp.	$	1,658,220
FMH Holdings Corporation		209,178
Merex Holding Corporation		371,966
Sunvair Aerospace Group Inc.		1,229,265
Whitcraft Holdings, Inc.		370,943
		3,839,572

AUTOMOTIVE - 8.49%
Aurora Parts & Accessories LLC		1,710,191
CG Holdings Manufacturing Company		1,829,763
DPL Holding Corporation		1,555,386
Ford Motor Credit Co. LLC		619,200
General Motors Financial Co. Inc.		487,821
Grakon Parent		148,841
J.B. Poindexter Co., Inc.		525,000
Meritor, Inc.		1,022,500
Moog Inc.		510,000
Power Stop Holdings LLC		1,852,690
Randy's Worldwide Automotive		1,338,136
		11,599,528

BANKING - 0.38%
Bank of America Corporation		515,670

BROKERAGE, ASSET MANAGERS & EXCHANGES - 0.83%
Icahn Enterprises L.P.		612,750
Lazard Group LLC		523,378
		1,136,128

BUILDING MATERIALS - 10.70%
ARI Holding Corporation		2,362,369
Boise Cascade Company		129,025
Janus Group Holdings LLC		2,134,357
Happy Floors Acquisition, Inc.		1,724,745
NSi Industries Holdings, Inc.		1,783,917
Owens Corning		614,628
Pearlman Enterprises, Inc.		1,478,968

	Fair Value/ Market Value
Signature Systems Holding Company	$	48,946
Sunrise Windows Holding Company		960,649
Torrent Group Holdings, Inc.		78,637
Wellborn Forest Holding Company		1,512,838
Wolf-Gordon, Inc.		1,788,591
		14,617,670

CABLE & SATELLITE - 1.65%
Hughes Satellite Systems Corporation		502,500
Time Warner Cable, Inc.		530,665
Unitymedia KabelBW GmbH		513,750
UPCB Finance IV Limited		209,560
Virgin Media Secured Finance PLC		493,749
		2,250,224

CHEMICALS - 3.29%
A. Schulman Inc.		522,500
Compass Chemical International LLC		117,908
Consolidated Energy Finance S.A.		500,000
Cornerstone Chemical Company		501,250
CVR Partners, LP.		515,000
LBC Tank Terminals Holding Netherlands B.V.		677,918
LyondellBasell Industries N.V.		572,213
Polytex Holdings LLC		1,084,412
		4,491,201

CONSTRUCTION MACHINERY - 0.23%
Safety Infrastructure Solutions		320,342

CONSUMER CYCLICAL SERVICES - 3.49%
ADT Security Services Corporation		477,500
CHG Alternative Education Holding Company		1,062,362
Church Services Holding Company		—
GEO Group, Inc.		506,250
PPC Event Services		1,692,276
Prime Security Services Borrower		544,375
West Corporation		483,124
		4,765,887

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016

Industry Classification: (Continued)	Fair Value/ Market Value

CONSUMER PRODUCTS - 8.93%
AMS Holding LLC	$	254,622
Blue Wave Products, Inc.		794,535
Elite Sportwear Holding, LLC		1,710,841
gloProfessional Holdings, Inc.		1,342,932
GTI Holding Company		845,064
Handi Quilter Holding Company		1,783,972
HHI Group, LLC		942,907
K N B Holdings Corporation		141,055
Kyjen Company		1,328,589
Manhattan Beachwear Holding Company		—
MasTec, Inc.		488,750
Master Cutlery LLC		1,004,097
Perry Ellis International, Inc.		125,000
York Wall Holding Company		1,435,966
		12,198,330

DIVERSIFIED MANUFACTURING - 4.85%
ABC Industries, Inc.		367,626
Advanced Manufacturing Enterprises LLC		—
Airxcel Holdings		1,993,019
Amsted Industries		235,800
Belden Inc.		211,050
BP SCI LLC		345,184
CTP Transportation Products, LLC		267,375
F G I Equity LLC		320,401
Forum Energy Technologies		160,000
Ideal Tridon Holdings, Inc.		173,292
K P I Holdings, Inc.		294,040
Motion Controls Holdings		1,061,416
NetShape Technologies, Inc.		—
Strahman Holdings Inc		1,200,519
		6,629,722

ELECTRIC - 2.72%
AM Conservation Holding Corp.		1,712,479
Avangrid, Inc.		1,999,811
		3,712,290

	Fair Value/ Market Value

FINANCE COMPANIES - 0.42%
Air Lease Corp.	$	573,232

FINANCIAL OTHER - 0.10%
Insurance Claims Management, Inc.		142,344

FOOD & BEVERAGE - 11.76%
1492 Acquisition LLC		293,594
Bunge Limited Finance Corp.		576,165
Dean Foods		346,272
Del Real LLC		1,701,686
Eagle Family Foods, Inc.		1,717,390
F F C Holding Corporation		313,149
GenNx Novel Holding, Inc.		1,028,738
Hollandia Produce LLC		1,292,672
Hospitality Mints Holding Company		1,054,425
Impact Confections		1,289,831
JMH Investors LLC		163,043
PANOS Brands LLC		1,807,688
Tate & Lyle International		1,999,825
Tyson Foods, Inc.		532,063
Westminster Acquisition LLC		835,210
WP Supply Holding Corporation		1,111,700
		16,063,451

GAMING - 1.22%
CTM Holding, Inc.		1,667,346

HEALTHCARE - 3.30%
CORA Health Services, Inc.		848,630
ECG Consulting Group		1,416,475
GD Dental Services LLC		118,496
Healthcare Direct Holding Company		84,602
HealthSouth Corporation		416,789
Hospital Corporation of America		280,123
Laboratory Corporation of America Holdings		497,810
Lifepoint Hospitals, Inc.		364,000
TeamHealth Holdings Inc		130,813
TherOX, Inc.		—

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016

Industry Classification: (Continued)	Fair Value/ Market Value

Touchstone Health Partnership	$	—
Valeant Pharmaceuticals International		215,469
VRX Escrow Corp.		136,728
		4,509,935

HEALTH INSURANCE - 0.36%
Reinsurance Group of America		494,665

HOME CONSTRUCTION - 0.51%
Beazer Homes USA, Inc.		172,800
William Lyon Homes		517,500
		690,300

INDEPENDENT - 2.04%
Antero Resources Corporation		403,888
EP Energy Corporation		374,279
Jupiter Resources Inc.		431,250
Laredo Petroleum, Inc.		503,750
MEG Energy Corporation		445,000
Precision Drilling Corporation		151,720
Sanchez Energy Corporation		475,000
		2,784,887

INDUSTRIAL OTHER - 8.78%
AFC - Dell Holding Corporation		1,339,902
Aquilex Holdings LLC		153,173
Brunswick Corporation		583,750
Clough, Harbour and Associates		623,893
Connecticut Electric, Inc.		1,270,401
Hartland Controls Holding Corporation		1,954,512
HVAC Holdings, Inc.		1,391,845
Mail Communications Group, Inc.		218,751
MC Sign Holdings LLC		951,045
Midwest Industrial Rubber, Inc.		1,732,792
Nielsen Finance LLC		276,081
O E C Holding Corporation		197,134
Smart Source Holdings LLC		520,557
SMB Machinery Holdings, Inc.		—

	Fair Value/ Market Value

Steelcase, Inc.	$	558,858
Tranzonic Holdings LLC		218,582
		11,991,276


MEDIA & ENTERTAINMENT - 3.10%
BlueSpire Holding, Inc.		—
Discovery Communications		631,811
GlynnDevins Acquisition Corporation		106,506
HOP Entertainment LLC		—
Lamar Media Corp.		165,600
Money Mailer Equity LLC		1,702,229
Netflix, Inc.		322,173
R.R. Donnelley & Sons Company		471,250
Sinclair Broadcast Group, Inc.		204,510
Sinclair Television Group, Inc.		475,000
Univision Communications, Inc.		157,600
		4,236,679

METALS & MINING - 2.14%
Alcoa, Inc.		652,500
Anglogold Holdings PLC		616,500
Commercial Metals Company		753,750
Constellium N.V.		400,974
Suncoke Energy		497,500
		2,921,224

MIDSTREAM - 1.38%
CVR Refining LLC		347,375
Ferrellgas Partners, L.P.		640,250
Suburban Propane Partners, L.P.		507,500
Summit Midstream Holdings, LLC		89,700
Tallgrass Operations LLC		301,720
		1,886,545

NATURAL GAS - 1.46%
Southern Co.		1,999,750

OIL FIELD SERVICES - 1.70%
Avantech Testing Services LLC		—
Hilcorp Energy Company		332,488

See Notes to Consolidated Financial Statements

2016 Annual Report

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2016

Industry Classification: (Continued)	Fair Value/ Market Value

Hornbeck Offshore Services, Inc.	$	354,688
Petroplex Inv Holdings LLC		19,089
Seadrill Partners Finco, LLC		337,026
Topaz Marine S.A.		485,000
Welltec A/S		376,875
WPX Energy, Inc.		412,250
		2,317,416

OTHER - REITS - 0.38%
Duke Realty Limited Partnership		520,063

PACKAGING - 0.57%
ASC Holdings, Inc.		773,059

PAPER - 1.60%
Clearwater Paper Corporation		490,000
Dunn Paper		1,690,500
		2,180,500

PHARMACEUTICALS - 2.90%
Clarion Brands Holding Corp.		2,150,065
ERG Holding Company LLC		1,328,307
Mallinckrodt PLC		481,250
		3,959,622

PROPERTY & CASUALTY - 0.44%
Xlit Ltd		594,941

REFINING - 2.41%
CITGO Petroleum Corporation		442,000
MES Partners, Inc.		1,169,780
MPLX LP		514,847
Tristar Global Energy Solutions, Inc.		1,166,258
		3,292,885

RETAILERS - 0.33%
HD Supply, Inc.		133,984
Wolverine World Wide, Inc.		322,438
		456,422

SUPERMARKET - 2.93%
Kroger Co.		3,999,756

	Fair Value/ Market Value

TECHNOLOGY - 7.11%
Anixter, Inc.	$	171,600
Dell Inc.		620,847
Expedia Inc.		609,736
First Data Corporation		408,160
Glynlyon Holding Companies, Inc.		1,797,184
Hewlett Packard Enterprise Company		514,407
Jabil Circuit, Inc.		510,000
Micron Technology, Inc.		720,676
Pitney Bowes Inc.		485,442
Sabre GLBL, Inc.		125,278
Software Paradigms International Group, LLC		1,728,129
Veritext Corporation		1,725,000
Western Digital Corporation		299,173
		9,715,632

TELECOMMUNICATIONS - 0.29%
Altice Financing S.A.		416,000

TRANSPORTATION SERVICES - 2.75%
Hertz Corporation		79,000
MNX Holding Company		1,343,929
OPE KAG Finance Sub		505,000
Penske Corporation		536,556
Team Drive-Away Holdings LLC		885,519
VP Holding Company		401,147
		3,751,151

WIRELESS - 0.92%
Crown Castle International Corp		645,750
Digicel Group Limited		452,235
Sprint Corporation		159,650
		1,257,635

WIRELINES - 0.31%
Frontier Communications Corporation		423,750

Total Investments - 109.58% (Cost - $151,255,913)	$	149,697,030

See Notes to Consolidated Financial Statements

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

History

Barings Participation Investors (formerly known as Babson Capital 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. In order to clarify the Trust's relationship to Barings LLC (formerly known as Babson Capital Management LLC), as of September 12, 2016, the Trust's name was changed to replace "Babson Capital Participation Investors" with "Barings Participation Investors".

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 maximize total return by providing a high level of current income, the potential for growth of income, and capital appreciation. The Trust's principal investments are privately placed, below-investment grade, long-term debt obligations purchased directly from their issuers, which tend to be smaller companies. The Trust will also invest in publicly traded debt securities (including high yield securities), and in convertible preferred stocks and, subject to certain limitations, readily marketable equity securities. 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 addition, the Trust may invest in high quality, readily marketable securities.

On January 27, 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 orderly transaction between willing market participants at the measurement date.

Determination of Fair Value

The determination of the fair value of the Trust's investments is the responsibility of the Trust's Board of Trustees (the "Trustees"). The Trustees have adopted procedures for the valuation of the Trust's securities and has delegated responsibility for applying those procedures to Barings. Barings has established a Pricing Committee which is responsible for setting the guidelines used in following the procedures adopted by the Trustees ensuring that those guidelines are being followed. Barings considers all relevant factors that are reasonably available, through either public information or information available to Barings, when determining the fair value of a security. The Trustees meet at least once each quarter to approve the value of the Trust's portfolio securities as of the close of business on the last business day of the preceding quarter. This valuation requires the approval of a majority of the Trustees of the Trust, including a majority of the Trustees who are not interested persons of the Trust or of Barings. In approving valuations, the Trustees will consider reports by Barings analyzing each portfolio security in accordance with the procedures and guidelines referred to above, which include the relevant factors referred to below. Barings has agreed to provide such reports to the Trust at least quarterly. The consolidated financial statements include private placement restricted securities valued at $94,771,586 (69.38% of net assets) as of December 31, 2016 whose values have been estimated by the Trustees based on the process described above in the absence of readily ascertainable market values. Due to the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material.

Following is a description of valuation methodologies used for assets recorded at fair value.

Corporate Public Securities – Bank Loans, Corporate Bonds, Preferred Stocks and Common Stocks

The Trust uses external independent third-party pricing services to determine the fair values of its Corporate Public Securities. At December 31, 2016, 100% of the carrying value of these investments was from external pricing services. In the event that the primary pricing service does not provide a price, the

2016 Annual Report

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Trust utilizes the pricing provided by a secondary pricing service.

Public debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Trust's pricing services use multiple valuation techniques to determine fair value. In instances where significant market activity exists, the pricing services may utilize a market based approach through which quotes from market makers are used to determine fair value. In instances where significant market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, option adjusted spreads, credit spreads, estimated default rates, coupon rates, anticipated timing of principal underlying prepayments, collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

The Trust's investments in bank loans are normally valued at the bid quotation obtained from dealers in loans by an independent pricing service in accordance with the Trust's valuation policies and procedures approved by the Trustees.

Public equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sales price of that day.

Annually, Barings conducts reviews of the primary pricing vendors to validate that the inputs used in that vendors' pricing process are deemed to be market observable as defined in the standard. While Barings is not provided access to proprietary models of the vendors, the reviews have included on-site walk-throughs of the pricing process, methodologies and control procedures for each asset class and level for which prices are provided. The review also includes an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process Barings continues to perform annually. In addition, the pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of prices that fall outside expected ranges. Barings believes that the prices received from the pricing vendors are representative of prices that would be received to sell the assets at the measurement date (exit prices) and are classified appropriately in the hierarchy.

Corporate Restricted Securities – Corporate Bonds

The fair value of certain notes is determined using an internal model that discounts the anticipated cash flows of those notes using a specific discount rate. Changes to that discount rate are driven by changes in general interest rates, probabilities of default and credit adjustments. The discount rate used within the models to discount the future anticipated cash flows is considered a significant unobservable input. Significant increases/(decreases) in the discount rate would result in a significant (decrease)/increase to the notes' fair value.

The fair value of certain distressed notes is based on an enterprise waterfall methodology which is discussed in the equity security valuation section below.

Corporate Restricted Securities – Common Stock, Preferred Stock and Partnerships & LLC's

The fair value of equity securities is determined using an enterprise waterfall methodology. Under this methodology, the enterprise value of the company is first estimated and that value is then allocated to the company's outstanding debt and equity securities based on the documented priority of each class of securities in the capital structure. Generally, the waterfall proceeds from senior debt tranches of the capital structure to senior then junior subordinated debt, followed by each class of preferred stock and finally the common stock.

To estimate a company's enterprise value, the company's trailing twelve months earnings before interest, taxes, depreciation and amortization ("EBITDA") is multiplied by a valuation multiple.

Both the company's EBITDA and valuation multiple are considered significant unobservable inputs. Significant increases/(decreases) to the company's EBITDA and/or valuation multiple would result in significant increases/(decreases) to the equity value. An increase/(decrease) to the discount would result in a (decrease)/increase to the equity value.

Short-Term Securities

Short-term securities, of sufficient credit quality, with more than sixty days to maturity are valued at fair value, using external independent third-party services. Short-term securities having a maturity of sixty days or less are valued at amortized cost, which approximates fair value.

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Quantitative Information about Level 3 Fair Value Measurements

The following table represents quantitative information about Level 3 fair value measurements as of December 31, 2016:


	Fair Value	Valuation Technique	Unobservable Inputs	Range	Weighted Average
Bank Loans	$1,690,500	Broker Quote	Single Broker	98%	98%

	$3,442,390	Discounted Cash Flows	Discount Rate	8.8% to 9.2%	9.0%

Corporate Bonds	$64,814,541	Discounted Cash Flows	Discount Rate	9.3% to 17.1%	12.5%

	$4,785,853	Market Approach	Valuation Multiple	3.8x to 10.2x	7.4x

			EBITDA	$0.0 million to $9.2 million	$4.9 million

Equity Securities	$19,245,989	Market Approach	Valuation Multiple	3.8x to 12.2x	7.8x

			EBITDA	$0.0 million to $157.6 million	$23.4 million

Certain of the Trust's Level 3 investments have been valued using unadjusted inputs that have not been internally developed by the Trust, including recently purchased securities held at cost. As a result, fair value of assets of $792,313 have been excluded from the preceding table.

Fair Value Hierarchy

The Trust categorizes its investments measured at fair value in three levels, based on the inputs and assumptions used to determine fair value. These levels are as follows:

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3 – significant unobservable inputs (including the Trust's own assumptions in determining the fair value of investments)

The following table summarizes the levels in the fair value hierarchy into which the Trusts' financial instruments are categorized as of December 31, 2016.

The fair values of our investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of December 31, 2016 are as follows:


Assets:	Total		Level 1		Level 2		Level 3
Restricted Securities
Corporate Bonds	$	87,792,048	$	—	$	18,191,653	$	69,600,395
Bank Loans		5,132,890		—		—		5,132,890
Common Stock - U.S.		5,972,591		—		—		5,972,591
Preferred Stock		3,878,030		—		—		3,878,030
Partnerships and LLCs		10,187,680		—		—		10,187,680
Public Securities
Bank Loans		490,199		—		490,199		—
Corporate Bonds		26,244,450		—		26,244,450		—
Short-term Securities		9,999,142		—		9,999,142		—
Total	$	149,697,030	$	—	$	54,925,444	$	94,771,586

See information disaggregated by security type and industry classification in the Consolidated Schedule of Investments.

2016 Annual Report

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:


Assets:	Beginning balance at 12/31/2015		Included in earnings			Purchases		Sales			Prepayments			Transfers into Level 3		Transfers out of Level 3		Ending balance at 12/31/2016
Restricted Securities
Corporate Bonds	$	64,291,346	$	(4,240,349	)	$	21,708,153	$	(4,966,788	)	$	(7,191,967	)	$	—	$	—	$	69,600,395
Bank Loans		3,366,726		144,664			3,381,000		(1,759,500	)		—			—		—		5,132,890
Common Stock - U.S.		7,806,723		(330,138	)		1,182,594		(2,686,588	)		—			—		—		5,972,591
Preferred Stock		6,609,176		748,482			304,376		(3,784,004	)		—			—		—		3,878,030
Partnerships and LLCs		9,670,199		2,830,837			1,124,122		(3,437,478	)		—			—		—		10,187,680
	$	91,744,170	$	(846,504	)	$	27,700,245	$	(16,634,358	)	$	(7,191,967	)	$	—	$	—	$	94,771,586

There were no transfers into or out of Level 1 and Level 2 assets.

Income, Gains and Losses included in Net Increase in Net Assets resulting from Operations for the year are presented in the following accounts on the Statement of Operations:


	Net Increase in Net Assets Resulting from Operations			Change in Unrealized Gains & (Losses) in Net Assets from assets still held
Interest (Amortization)	$	250,345		$	—
Net realized gain on investments before taxes		3,160,604			—
Net change in unrealized depreciation of investments before taxes		(4,257,453	)		(4,533,796	)

B. Accounting for Investments:

Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis, including the amortization of premiums and accretion of discounts on bonds held using the yield-to-maturity method. The Trust does not accrue income when payment is delinquent and when management believes payment is questionable.

Realized gains and losses on investment transactions and unrealized appreciation and depreciation of investments are reported for financial statement and Federal income tax purposes on the identified cost method.

C. Use of Estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

D. Federal Income Taxes:

The Trust has elected to be taxed as a "regulated investment company" under the Internal Revenue Code, and intends to maintain this qualification and to distribute substantially all of its net taxable income to its shareholders. In any year when net long-term capital gains are realized by the Trust, management, after evaluating the prevailing economic conditions, will recommend that Trustees either designate the net realized long-term gains as undistributed and pay the federal capital gains taxes thereon, or distribute all or a portion of such net gains. For the year ended December 31, 2016, the Trust did not have any realized taxable long-term capital gains.

As of December 31, 2016, for federal income tax purposes, capital loss carryforwards of $62,362 were available to the extent provided by the regulations to offset future realized gains of the Trust. These unlimited capital loss carryforwards do not expire and are used to offset future realized gains. The Trust utilized $628,445 of capital loss carryforwards during the year ended December 31, 2016.

The Trust is taxed as a regulated investment company and is therefore limited as to the amount of

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

non-qualified income that it may receive as the result of operating a trade or business, e.g. the Trust's pro rata share of income allocable to the Trust by a partnership operating company. The Trust's violation of this limitation could result in the loss of its status as a regulated investment company, thereby subjecting all of its net income and capital gains to corporate taxes prior to distribution to its shareholders. The Trust, from time-to-time, identifies investment opportunities in the securities of entities that could cause such trade or business income to be allocable to the Trust. The PI Subsidiary Trust (described in Footnote 1, above) was formed in order to allow investment in such securities without adversely affecting the Trust's status as a regulated investment company.

Net investment income and net realized gains or losses of the Trust as presented under U.S. GAAP may differ from distributable taxable earnings due to earnings from the PI Subsidiary Trust as well as certain permanent and temporary differences in the recognition of income and realized gains or losses on certain investments. Permanent differences will result in reclassifications to the capital accounts. In 2016, the Trust increased undistributed net investment income by $32,617, increased accumulated net realized gain on investments by $1,119,320 and decreased additional paid in capital by $1,151,937 to more accurately display the Trust's capital financial position on a tax-basis in accordance with U.S. GAAP. These re-classifications had no impact on net asset value.

The PI Subsidiary Trust is not taxed as a regulated investment company. Accordingly, prior to the Trust receiving any distributions from the PI Subsidiary Trust, all of the PI Subsidiary Trust's taxable income and realized gains, including non-qualified income and realized gains, is subject to taxation at prevailing corporate tax rates.

The components of income taxes included in the consolidated statement of operations for the year ended December 31, 2016 were as follows:

Income tax expense (benefit)


Current:
Federal	$	411,581
State		239,711
Total current		651,292

Deferred:
Federal		(82,917	)
State		(11,157	)
Total deferred		(94,074	)

Total income tax expense from continuing operations	$	557,218

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities and their respective tax basis.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2016 were as follows:

Deferred tax liabilities:

Unrealized gain on investments		415,014

Total deferred tax liabilities		415,014
Net deferred tax liability	$	(415,014	)

The Trust recognizes a tax benefit from an uncertain position only if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authority's widely understood administrative practices and precedents. If this threshold is met, the Trust measures the tax benefit as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions not deemed to meet the "more-likely-than-not" threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. The Trust has evaluated and determined that the tax positions did not have a material effect on the Trust's financial position and results of operations for the year ended December 31, 2016.

A reconciliation of the differences between the PI Subsidiary Trust's income tax expense and the amount computed by applying the prevailing U.S. federal tax rate to pretax income for the year ended December 31, 2016 is as follows:


	Amount		Percentage

Provision for income taxes at the U.S. federal rate	$	311,048		34.00%

State tax, net of federal effect		228,553		24.98%

Change in valuation allowance		—		0.00%

Other		17,617		1.93%

Income tax expense	$	557,218		60.91%

Each of the Trust's Federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

2016 Annual Report

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

E. Distributions to Shareholders:

The Trust records distributions to shareholders from net investment income and net realized gains, if any, on the ex-dividend date. The Trust's net investment income dividend is declared four times per year, in April, July, October, and December. The Trust's net realized capital gain distribution, if any, is declared in December.

The components of capital shown in the following table represent the Trust's undistributed net investment income, undistributed net capital gains, losses the Trust may be able to offset against gains in future taxable years, as well as unrealized appreciation (depreciation) on securities and other fund investments, if any, at December 31, 2016, each of which determined on a U.S. Federal tax basis:


Undistributed (Overdistributed) Net Investment Income		Undistributed Net Capital Gain		Accumulated Loss Carryforward			Net Unrealized Appreciation (Depreciation) on Securities and Other Investments
$	1,329,982	$	0	$	(62,362	)	$	(3,094,878	)

The tax character of distributions declared during the years ended December 31, 2016 and 2015 was as follows:


Distributions paid from:	2016		2015

Ordinary Income	$	11,192,508	$	11,143,733

3.	Investment Advisory and Administrative Services Contract

A. Services:

Under an Investment Advisory and Administrative Services Contract (the "Contract") with the Trust, Barings has agreed to use its best efforts to present to the Trust a continuing and suitable investment program consistent with the investment objectives and policies of the Trust. Barings represents the Trust in any negotiations with issuers, investment banking firms, securities brokers or dealers and other institutions or investors relating to the Trust's investments. Under the Contract, Barings also provides administration of the day-to-day operations of the Trust and provides the Trust with office space and office equipment, accounting and bookkeeping services, and necessary executive, clerical and secretarial personnel for the performance of the foregoing services.

B. Fee:

For its services under the Contract, Barings is paid a quarterly investment advisory fee equal to 0.225% of the value of the Trust's net assets as of the last business day of each fiscal quarter, an amount approximately equivalent to 0.90% on an annual basis. A majority of the

Trustees, including a majority of the Trustees who are not interested persons of the Trust or of Barings, approve the valuation of the Trust's net assets as of such day.

4.	Senior Indebtedness

MassMutual holds the Trust's $15,000,000 Senior Fixed Rate Convertible Note (the "Note") issued by the Trust on December 13, 2011. The Note is due December 13, 2023 and accrues interest at 4.09% per annum. MassMutual, at its option, can convert the principal amount of the Note into common shares. The dollar amount of principal would be converted into an equivalent dollar amount of common shares based upon the average price of the common shares for ten business days prior to the notice of conversion. For the year ended December 31, 2016, the Trust incurred total interest expense on the Note of $613,500.

The Trust may redeem the Note, in whole or in part, at the principal amount proposed to be redeemed together with the accrued and unpaid interest thereon through the redemption date plus the Make Whole Premium. The Make Whole Premium equals the excess of (i) the present value of the scheduled payments of principal and interest which the Trust would have paid but for the proposed redemption, discounted at the rate of interest of U.S. Treasury obligations whose maturity approximates that of the Note plus 0.50% over (ii) the principal of the Note proposed to be redeemed.

Management estimates that the fair value of the Note was $15,405,615 as of December 31, 2016. The fair value of the Note is categorized as a Level 3 under ASC 820.

5.	Purchases and Sales of Investments

	For the year ended 12/31/16
	Cost of Investments Acquired		Proceeds from Sales or Maturities

Corporate restricted securities	$	33,373,750	$	34,533,703

Corporate public securities		10,488,553		15,129,660

The difference between book-basis and tax-basis cost is primarily due to holdings of partnerships. The net unrealized depreciation of investments for financial reporting and Federal tax purposes as of December 31, 2016 is $1,558,883 and consists of $11,658,423 appreciation and $13,217,306 depreciation.

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Net unrealized depreciation of investments on the Statement of Assets and Liabilities reflects the balance net of a deferred tax liability of $415,014 on net unrealized gains on the PI Subsidiary Trust.

6.	Quarterly Results of Investment Operations

(Unaudited)


	March 31, 2016
	Amount			Per Share
Investment income	$	2,914,218
Net investment income		2,253,036		$	0.22
Net realized and unrealized gain on investments (net of taxes)		655,058			0.06


	June 30, 2016
	Amount			Per Share
Investment income	$	3,195,325
Net investment income		2,534,391		$	0.25
Net realized and unrealized gain on investments (net of taxes)		1,008,402			0.10


	September 30, 2016
	Amount			Per Share
Investment income	$	3,089,755
Net investment income		2,425,345		$	0.23
Net realized and unrealized gain on investments (net of taxes)		2,299,389			0.22


	December 31, 2016
	Amount			Per Share
Investment income	$	3,614,460
Net investment income		3,111,470		$	0.30
Net realized and unrealized loss on investments (net of taxes)		(2,644,459	)		(0.26	)

7.	Investment Risks

In the normal course of its business, the Trust trades various financial instruments and enters into certain investment activities with investment risks. These risks include: (i) market risk, (ii) volatility risk and (iii) credit, counterparty and liquidity risk. It is the Trust's policy to identify, measure and monitor risk through various mechanisms including risk management strategies and credit policies. These include monitoring risk guidelines and diversifying exposures across a variety of instruments, markets and counterparties. There can be

no assurance that the Trust will be able to implement its credit guidelines or that its risk monitoring strategies will be successful.

8.	Commitments and Contingencies

During the normal course of business, the Trust may enter into contracts and agreements that contain a variety of representations and warranties. The exposure, if any, to the Trust under these arrangements is unknown as this would involve future claims that may or may not be made against the Trust and which have not yet occurred. The Trust has no history of prior claims related to such contracts and agreements. At December 31, 2016, the Trust had the following unfunded commitments:

Investment	Unfunded Amount

CORA Health Services, Inc.	$	890,933

HVAC Holdings, Inc.	$	600,572

9.	Aggregate Remuneration Paid to Officers, Trustees and Their Affiliated Persons

For the year ended December 31, 2016, the Trust paid its Trustees aggregate remuneration of $212,600. During the year, the Trust did not pay any compensation to any of its Trustees who are "interested persons" (as defined by the 1940 Act) of the Trust. The Trust classifies Messrs. Noreen and Joyal as "interested persons" of the Trust.

All of the Trust's officers are employees of Barings or MassMutual. Pursuant to the Contract, the Trust does not compensate its officers who are employees of Barings or MassMutual (except for the Chief Compliance Officer of the Trust unless assumed by Barings). For the year ended December 31, 2016, Barings paid the compensation of the Chief Compliance Officer of the Trust.

Mr. Noreen, one of the Trust's Trustees, is an "affiliated person" (as defined by the 1940 Act) of MassMutual and Barings.

The Trust did not make any payments to Barings for the year ended December 31, 2016, other than amounts payable to Barings pursuant to the Contract.

10.	Certifications

As required under New York Stock Exchange ("NYSE") Corporate Governance Rules, the Trust's principal executive officer has certified to the NYSE that he was not aware, as of the certification date, of any violation by the Trust of the NYSE's Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Trust's principal executive and principal financial officers have made quarterly

2016 Annual Report

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

certifications, included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Trust's disclosure controls and procedures and internal control over financial reporting, as applicable.

11.	Subsequent Events

The Trust has evaluated the possibility of subsequent events after the balance sheet date of December 31, 2016, through the date that the financial statements are issued. The Trust has determined that there are no material events that would require recognition or disclosure in this report through this date.

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and Board of Trustees of Barings Participation Investors:

We have audited the accompanying consolidated statement of assets and liabilities of Barings Participation Investors (f/k/a Babson Capital Participation Investors) (the "Trust"), including the consolidated schedule of investments, as of December 31, 2016, and the related consolidated statements of operations and cash flows for the year then ended, the consolidated statements of changes in net assets for each of the years in the two-year period then ended, and the consolidated selected financial highlights for each of the years in the five-year period then ended. These consolidated financial statements and consolidated selected financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these consolidated financial statements and consolidated selected financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements and consolidated selected financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2016, by correspondence with custodian and counterparties. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements and consolidated selected financial highlights referred to above present fairly, in all material respects, the financial position of Barings Participation Investors (f/k/a Babson Capital Participation Investors), as of December 31, 2016, the consolidated results of their operations and cash flows for the year then ended, the consolidated changes in their net assets for each of the years in the two-year period then ended, and the consolidated selected financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts

February 24, 2017

2016 Annual Report

INTERESTED TRUSTEES


Name (Age), Address	Position With The Trust	Office Term / Length of Time Served	Principal Occupations During Past 5 Years	Portfolios Overseen in Fund Complex	Other Directorships Held by Director


Clifford M. Noreen* (59) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Trustee, Chairman	Term expires 2018; Trustee since 2009	Deputy Chief Investment Officer and Managing Director (since 2016), MassMutual; President (2008-2016), Vice Chairman (2007-2008), Member of the Board of Managers (2006-2016), Managing Director (2000-2016), Barings; President (2005-2009), Vice President (1993-2005) of the Trust.	2	Chairman and Trustee (since 2009), President (2005-2009), Vice President (1993-2005), Barings Corporate Investors; President (since 2009), Senior Vice President (1996-2009), HYP Management LLC (LLC Manager); Director (2005-2013), MassMutual Corporate Value Limited (investment company); Director (2005-2013), MassMutual Corporate Value Partners Limited (investment company); Director (since 2008), Jefferies Finance LLC (finance company); Chairman and Chief Executive Officer (since 2009), Manager (since 2007), MMC Equipment Finance LLC; Director (2011-2016), Wood Creek Capital Management, LLC (investment advisory firm); Chairman (since 2009), Trustee (since 2005), President (2005-2009), CI Subsidiary Trust and PI Subsidiary Trust; Member of Investment Committee (since 1999), Diocese of Springfield; and Member of Investment Committee (since 2015), Baystate Health Systems.

*	Mr. Noreen is classified as an "interested person" of the Trust and Barings (as defined by the Investment Company Act of 1940, as amended) because of his position as an Officer of the Trust and his former position as President of Barings.

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

INTERESTED TRUSTEES


Name (Age), Address	Position With The Trust	Office Term / Length of Time Served	Principal Occupations During Past 5 Years	Portfolios Overseen in Fund Complex	Other Directorships Held by Director


Robert E. Joyal* (72) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Trustee	Term expires 2019; Trustee since 2003	Retired (since 2003); President (2001-2003), Barings; and President (1993-2003) of the Trust.	95	Trustee (since 2003), President (1993-2003), Barings Corporate Investors; Director (2006-2014), Jefferies Group, Inc. (financial services); Director (2007-2011), Scottish Re Group Ltd. (global life reinsurance specialist); Trustee (since 2003), MassMutual Select Funds (an open-end investment company advised by MassMutual); Trustee (since 2003), MML Series Investment Fund (an open-end investment company advised by MassMutual); Trustee (since 2012), MML Series Investment Fund II (an open-ended investment company advised by MassMutual); Trustee (since 2012), MassMutual Premier Funds (an open-ended investment company advised by MassMutual); Director (since 2012), Ormat Technologies, Inc. (a geothermal energy company); Director (2013-2016), Leucadia National Corporation (holding company owning businesses ranging from insurance to telecommunications); and Director (2013-2016), Baring Asset Management Korea Limited (company that engages in asset management, business administration and investment management).

Mr. Joyal retired as President of Barings in June 2003. In addition and as noted above, Mr. Joyal is a director of Leucadia National Corporation, which is the parent company of Jefferies Group, Inc., and a former Director of Jefferies Group, Inc., which has a wholly-owned broker-dealer subsidiary that may execute portfolio transactions and/or engage in principal transactions with the Trust, other investment companies advised by Barings or any other advisory accounts over which Barings has brokerage placement discretion. Accordingly, the Trust has determined to classify Mr. Joyal as an "interested person" of the Trust and Barings (as defined by the Investment Company Act of 1940, as amended).

2016 Annual Report

INDEPENDENT TRUSTEES


Name (Age), Address	Position With The Trust	Office Term / Length of Time Served	Principal Occupations During Past 5 Years	Portfolios Overseen in Fund Complex	Other Directorships Held by Director


Michael H. Brown (59) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Trustee /Nominee	Term expires 2017; Trustee since 2005	Private Investor; and Managing Director (1994-2005), Morgan Stanley.	2	Trustee (since 2005), Barings Corporate Investors; Independent Director (2006-2014), Invicta Holdings LLC and its subsidiaries (a derivative trading company owned indirectly by MassMutual).

Barbara M. Ginader (60) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Trustee /Nominee	Term expires 2017; Trustee since 2013	Managing Director and General Partner (since 1993), Boston Ventures Management (private equity firm).	2	Trustee (since 2013), Barings Corporate Investors; Managing Director (since 1993), Boston Ventures V L.P. (private equity fund); Managing Director (since 1993), Boston Ventures VI L.P. (private equity fund); Member of the Board Overseers (2013-2014), MSPCA-Angell; Member of the Grants Committee (2013-2014), IECA Foundation; and President of the Board (2006-2012), Codman Academy Public Charter School.

Edward P. Grace III (66) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Trustee	Term expires 2018; Trustee since 2012	President (since 1997), Phelps Grace International, Inc. (investment management); Managing Director (since 1998), Grace Ventures Partners LP (venture capital fund); Senior Advisor (since 2011), Angelo Gordon & Co. (Investment adviser).	2	Trustee (since 2012), Barings Corporate Investors; Director (since 2010), Larkburger, Inc. (restaurant chain); Director (since 2012), Benihana, Inc. (restaurant chain); Director (since 2011), Firebirds Wood Fired Holding Corporation (restaurant chain); Director (since 1998), Shawmut Design and Construction (construction management and general contracting firm); Director (2004-2012), Not Your Average Joe's, Inc. (restaurant chain).

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

INDEPENDENT TRUSTEES


Name (Age), Address	Position With The Trust	Office Term / Length of Time Served	Principal Occupations During Past 5 Years	Portfolios Overseen in Fund Complex	Other Directorships Held by Director


Susan B. Sweeney (64) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Trustee	Term expires 2019; Trustee since 2012	Retired (since 2014); Senior Vice President and Chief Investment Officer (2010-2014), Selective Insurance Company of America; Senior Managing Director (2008-2010), Ironwood Capital.	95	Trustee (since 2012), Barings Corporate Investors; Trustee (since 2009), MassMutual Select Funds (an open-ended investment company advised by MassMutual); Trustee (since 2009), MML Series Investment Fund (an open-ended investment company advised by MassMutual); Trustee (since 2012), MassMutual Premier Funds (an open-ended investment company advised by MassMutual); Trustee (since 2012), MML Series Investment Fund II (an open-ended investment company advised by MassMutual).

Maleyne M. Syracuse (60) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Trustee / Nominee	Term expires 2017; Trustee since 2007	Private Investor; Managing Director (2000-2007), JP Morgan Securities, Inc. (investments and banking); Managing Director (1999-2000), Deutsche Bank Securities; Managing Director (1981-1999), Bankers Trust / BT Securities.	2	Trustee (since 2007), Barings Corporate Investors.

2016 Annual Report

OFFICERS OF THE TRUST


Name (Age), Address	Position With The Trust	Office Term / Length of Time Served	Principal Occupations During Past 5 Years


Robert M. Shettle (49) Barings Corporate Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	President	Since 2016	Vice President (2015-2016) of the Trust; President (since 2016), Vice President (2015-2016), Barings Corporate Investors; Managing Director (since 2006), Director (1998-2006), Barings; President (since 2016), Vice President (2005-2016), CI Subsidiary Trust and PI Subsidiary Trust.

Janice M. Bishop (52) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Vice President, Secretary and Chief Legal Officer	Since 2015	Associate Secretary (2008-2015) of the Trust; Vice President, Secretary and Chief Legal Officer (since 2015), Associate Secretary (2008-2015), Barings Corporate Investors; Vice President, Secretary and Chief Legal Officer (since 2013), Barings Funds Trust; Vice President, Secretary and Chief Legal Officer (since 2012), Barings Global Short Duration High Yield Fund; Senior Counsel and Managing Director (since 2014), Counsel (2007-2014), Barings; Vice President and Secretary (since 2015), Assistant Secretary (2008-2015), CI Subsidiary Trust and PI Subsidiary Trust.

James M. Roy (54) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Vice President and Chief Financial Officer	Since 2005	Treasurer (2003-2005), Associate Treasurer (1999-2003) of the Trust; Vice President and Chief Financial Officer (since 2005), Treasurer (2003-2005), Associate Treasurer (1999-2003), Barings Corporate Investors; Managing Director (since 2005), Director (2000-2005), Barings; and Trustee (since 2005), Treasurer (since 2005), Controller (2003-2005), CI Subsidiary Trust and PI Subsidiary Trust.

Melissa M. LaGrant (43) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Chief Compliance Officer	Since 2006	Chief Compliance Officer (since 2006), Barings Corporate Investors; Chief Compliance Officer (since 2013), Barings Finance LLC; Chief Compliance Officer (since 2013), Barings Funds Trust; Chief Compliance Officer (since 2012), Barings Global Short Duration High Yield Fund; Managing Director (since 2005), Barings.

Daniel J. Florence (44) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Treasurer	Since 2008	Associate Treasurer (2006-2008) of the Trust; Treasurer (since 2008), Associate Treasurer (2006-2008), Barings Corporate Investors; and Director (since 2013), Associate Director (2008-2013), Analyst (2000-2008), Barings.

Sean Feeley (49) Barings Participation Investors 1500 Main Street P.O. Box 15189 Springfield, MA 01115-5189	Vice President	Since 2011	Vice President (since 2011), Barings Corporate Investors; Vice President (since 2012), Barings Global Short Duration High Yield Fund; Managing Director (since 2003), Barings; and Vice President (since 2011), CI Subsidiary Trust and PI Subsidiary Trust.

*	Officers hold their position with the Trust until a successor has been duly elected and qualified. Officers are generally elected annually by the Board of Trustees of the Trust. The officers were last elected on July 20, 2016.

Barings Participation Investors (formerly known as Babson Capital Participation Investors)

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Barings Participation Investors (formerly known as Babson Capital Participation Investors)

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

Barings Participation Investors (the "Trust") offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan"). The Plan provides a simple and automatic way for shareholders to add to their holdings in the Trust through the receipt of dividend shares issued by the Trust or through the reinvestment of cash dividends in Trust shares purchased in the open market. The dividends of each shareholder will be automatically reinvested in the Trust by DST Systems, Inc., the Transfer Agent, in accordance with the Plan, unless such shareholder elects not to participate by providing written notice to the Transfer Agent. A shareholder may terminate his or her participation by notifying the Transfer Agent in writing.

Participating shareholders may also make additional contributions to the Plan from their own funds. Such contributions may be made by personal check or other means in an amount not less than $100 nor more than $5,000 per quarter. Cash contributions must be received by the Transfer Agent at least five days (but no more then 30 days) before the payment date of a dividend or distribution.

Whenever the Trust declares a dividend payable in cash or shares, the Transfer Agent, acting on behalf of each participating shareholder, will take the dividend in shares only if the net asset value is lower than the market price plus an estimated brokerage commission as of the close of business on the valuation day. The valuation day is the last day preceding the day of dividend payment. When the dividend is to be taken in shares, the number of shares to be received is determined by dividing the cash dividend by the net asset value as of the close of business on the valuation date or, if greater than net asset value, 95% of the closing share price. If the net asset value of the shares is higher than the market value plus an estimated commission, the Transfer Agent, consistent with obtaining the best price and execution, will buy shares on the open market at current prices promptly after the dividend payment date.

The reinvestment of dividends does not, in any way, relieve participating shareholders of any federal, state or local tax. For federal income tax purposes, the amount reportable in respect of a dividend received in newly-issued shares of the Trust will be the fair market value of the shares received, which will be reportable as ordinary income and/or capital gains.

As compensation for its services, the Transfer Agent receives a fee of 5% of any dividend and cash contribution (in no event in excess of $2.50 per distribution per shareholder.)

Any questions regarding the Plan should be addressed to DST Systems, Inc., Agent for Barings Participation Investors' Dividend Reinvestment and Cash Purchase Plan, P.O. Box 219086, Kansans City, MO 64121-9086.

Members of the Board of Trustees
Michael H. Brown* Private Investor	Barbara M. Ginader Managing Director and General Partner Boston Ventures Management	Edward P. Grace President Phelps Grace International, Inc
Robert E. Joyal Retired President, Barings LLC	Clifford M. Noreen Deputy Chief Investment Officer Massachusetts Mutual Life Insurance Company	Susan B. Sweeney* Private Investor
Maleyne M. Syracuse* Private Investor

Officers
Clifford M. Noreen Chairman	Robert M. Shettle President	James M. Roy Vice President & Chief Financial Officer
Janice M. Bishop Vice President, Secretary & Chief Legal Officer	Sean Feeley Vice President	Daniel J. Florence Treasurer
Melissa M. LaGrant Chief Compliance Officer

* Member of the Audit Committee

ITEM 2. CODE OF ETHICS.

The Registrant adopted a Code of Ethics for Senior Financials Officers (the "Code") on October 17, 2003, which is available on the Registrant's website at www.barings.com/mpv. During the period covered by this Form N-CSR, there were no amendments to, or waivers from, the Code.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Registrant's Board of Trustees has determined that Mr. Michael H. Brown, a Trustee of the Registrant and a member of its Audit Committee, is an audit committee financial expert. Mr. Brown is "independent" for purposes of this Item 3 as required by applicable regulation.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The Registrant has engaged its principal accountant, KPMG LLP, to perform audit services, audit-related services, tax services and other services during the past two fiscal years. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years by KPMG LLP.

Fees Billed to the Registrant:

	KPMG LLP		KPMG LLP
	Year Ended		Year Ended
	December 31, 2016		December 31, 2015
Audit Fees	$	78,100	$	71,000
Audit-Related Fees		0		0
Tax Fees		45,665		45,665
All Other Fees		0		0
Total Fees	$	123,765	$	116,665

Non-Audit Fees Billed to Barings and MassMutual:

	KPMG LLP		KPMG LLP
	Year Ended		Year Ended
	December 31, 2016		December 31, 2015
Audit-Related Fees	$	1,239,527	$	1,393,808
Tax Fees		227,500		333,000
All Other Fees		35,000		23,100
Total Fees	$	1,502,027	$	1,749,908

The category "Audit Fees" refers to performing an audit of the Registrant's annual financial statements or services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements for those fiscal years. The category "Audit-Related Fees" reflects fees billed by KPMG LLP for various non-audit and non-tax services rendered to the Registrant, Barings and MassMutual, such as a SOC - 1 review, consulting and agreed upon procedures reports. Preparation of Federal, state and local income tax and tax compliance work are representative of the fees reported in the "Tax Fees" category. The category "All Other Fees" represents fees billed by KPMG LLP for consulting rendered to the Registrant, Barings and MassMutual.

The Sarbanes-Oxley Act of 2002 and its implementing regulations allow the Registrant's Audit Committee to establish a pre-approval policy for certain services rendered by the Registrant's principal accountant. During 2016, the Registrant's Audit Committee approved all of the services rendered to the Registrant by KPMG LLP and did not rely on such a pre-approval policy for any such services.

The Audit Committee has also reviewed the aggregate fees billed for professional services rendered by KPMG LLP for 2015 and 2016 for the Registrant and for the non-audit services provided to Barings, and Barings' parent, MassMutual. As part of this review, the Audit Committee considered whether the provision of such non-audit services was compatible with maintaining the principal accountant's independence.

The 2015 fees billed represent final 2015 amounts, which may differ from the preliminary figures available as of the filing date of the Registrant's 2016 Annual Form N-CSR and includes, among other things, fees for services that may not have been billed as of the filing date of the Registrant's 2016 Annual Form N-CSR, but are now properly included in the 2015 fees billed to the Registrant, Barings and MassMutual.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

The Registrant maintains an Audit Committee composed exclusively of Trustees of the Registrant who qualify as "independent" Trustees under the current listing standards of the New York Stock Exchange and the rules of the U.S. Securities and Exchange Commission. The Audit Committee operates pursuant to a written Audit Committee Charter, which is available (1) on the Registrant's website, www.barings.com/mpv; and (2) without charge, upon request, by calling, toll-free 866-399-1516. The current members of the Audit Committee are Michael H. Brown, Susan B. Sweeney and Maleyne M. Syracuse.

ITEM 6. SCHEDULE OF INVESTMENTS

A schedule of investments for the Registrant is included as part of this report to shareholders under Item 1 of this Form N-CSR.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

The Registrant's Board of Trustees has delegated proxy voting responsibilities relating to the voting securities held by the Registrant to its investment adviser, Barings LLC ("Barings"). A summary of Barings' proxy voting policies and procedures are set forth below.

Summary of Barings' Proxy Voting Policy:

Barings understands that the voting of proxies is an integral part of its investment management responsibility and believes, as a general principle, that proxies should be acted upon (voted or abstained) solely in the best interest of its clients (i.e. in a manner believed by Barings to best pursue a client's investment objectives). To implement this general principle, Barings engages a proxy service provider (the "Service Provider") that is responsible for processing and maintaining records of proxy votes. In addition, the Service Provider will retain the services of an independent third party research provider (the "Research Provider") to provide research and recommendations on proxies. It is Barings' Proxy Voting Policy to generally vote proxies in accordance with the recommendations of the Research Provider. In circumstances where the Research Provider has not provided recommendations with respect to a proxy, Barings will vote in accordance with the Research Provider's proxy voting guidelines (the "Guidelines"). In circumstances where the Research Provider has not provided a recommendation or has not contemplated an issue within its Guidelines, the proxy will be analyzed on a case-by-case basis.

Barings recognizes that there could be times when it is in the best interest of clients to vote proxies (i) against the Research Provider's recommendations or (ii) in instances where the Research Provider has not provided a recommendation vote against the Guidelines. Barings can vote, in whole or in part, against the Research Provider's recommendations or Guidelines, as it deems appropriate. The procedures set forth in the Proxy Voting Policy are designed to ensure that votes against the Research Provider's recommendations or Guidelines are made in the best interests of clients and are not the result of any material conflict of interest (a "Material Conflict"). For purposes of the Proxy Voting Policy, a Material Conflict is defined as any position, relationship or interest, financial or otherwise, of Barings or a Barings associate that could reasonably be expected to affect the independence or judgment concerning proxy voting.

Summary of Barings' Proxy Voting Procedures:

Barings will vote all client proxies for which it has proxy voting discretion, where no Material Conflict exists, in accordance with the Research Provider's recommendations or Guidelines, unless (i) Barings is unable or determines not to vote a proxy in accordance with the Proxy Voting Policy or (ii) an authorized investment person or designee (a "Proxy Analyst") determines that it is in the client's best interests to vote against the Research Provider's recommendations or Guidelines. In such cases where a Proxy Analyst believes a proxy should be voted against the Research Provider's recommendations or Guidelines, the proxy administrator will vote the proxy in accordance with the Proxy Analyst's recommendation as long as (i) no other Proxy Analyst disagrees with such recommendation and (ii) no known Material Conflict is identified by the Proxy Analyst(s) or the proxy administrator. If a Material Conflict is identified by a Proxy Analyst or the proxy administrator, the proxy will be submitted to the Trading Practices Committee to determine how the proxy is to be voted in order to achieve that client's best interests.

No associate, officer, director or board of managers/directors of Barings or its affiliates (other than those assigned such responsibilities under the Proxy Voting Policy) can influence how Barings votes client proxies, unless such person has been requested to provide assistance by a Proxy Analyst or Trading Practices Committee member and has disclosed any known Material Conflict. Pre-vote communications with proxy solicitors are prohibited. In the event that pre-vote communications occur, it should be reported to the Trading Practices Committee or Barings' Chief Compliance Officer prior to voting. Any questions or concerns regarding proxy-solicitor arrangements should be addressed to Barings' Chief Compliance Officer.

Investment management agreements generally delegate the authority to vote proxies to Barings in accordance with Barings' Proxy Voting Policy. In the event an investment management agreement is silent on proxy voting, Barings should obtain written instructions from the client as to their voting preference. However, when the client does not provide written instructions as to their voting preferences, Barings will assume proxy voting responsibilities. In the event that a client makes a written request regarding voting, Barings will vote as instructed.

Obtaining a Copy of the Proxy Voting Policy:

Clients can obtain a copy of Barings' Proxy Voting Policy and information about how Barings voted proxies related to their securities, free of charge, by contacting the Chief Compliance Officer, Barings LLC, 1500 Main Street, Suite 2800, P.O. Box 15189, Springfield, MA 01115-5189, or calling toll-free, 1-877-766-0014.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

The following disclosure item is made as of the date of this Form N-CSR unless otherwise indicated.

PORTFOLIO MANAGER. Robert M. Shettle serves as the President of the Registrant (since June 2016) and as one of its Portfolio Managers. Mr. Shettle began his service to the Registrant in 2015 as a Vice President. With over 17 years of industry experience, Mr. Shettle is a Managing Director of Barings and Head of the North America Mezzanine and Private Equity Group of Barings. He joined Barings in 2006. Prior to joining Barings, he spent six years at Fleet National Bank as a Vice President and commercial loan officer and three years at Anderson Consulting. At Barings, he has focused on originating, analyzing, structuring and documenting mezzanine and private equity investments. Mr. Shettle holds a B.S. from the University of Connecticut and a M.B.A. from Rensselaer Polytechnic Institute. He is also a Chartered Financial Analyst. Mr. Shettle also presently serves as President of Barings Participation Investors, another closed-end management investment company advised by Barings.

PORTFOLIO MANAGEMENT TEAM. Mr. Shettle has primary responsibility for overseeing the investment of the Registrant's portfolio, with the day-to-day investment management responsibility of the Registrant's portfolio being shared with the following Barings' investment professional (together with the Portfolio Manager, the "Portfolio Team").

Sean Feeley is responsible for the day-to-day management of the Registrant's public high yield and investment grade fixed income portfolio. Mr. Feeley has been a Vice President of the Registrant since 2011. Mr. Feeley is a Managing Director of Barings and head of the High Yield Research Team with over 22 years of industry experience in high yield bonds and loans in various investment strategies. Prior to joining Barings in 2003, he was a Vice President at Cigna Investment Management in project finance and a Vice President at Credit Suisse in leveraged loan finance. Mr. Feeley holds a B.S. from Canisius College and an M.B.A. from Cornell University. Mr. Feeley is a Certified Public Accountant and a Chartered Financial Analyst. Mr. Feeley also serves as Vice President of Barings Participation Investors, another closed-end management investment company advised by Barings.

OTHER ACCOUNTS MANAGED BY THE PORTFOLIO TEAM. The members of the Registrant's Portfolio Team also have primary responsibility for the day-to-day management of other Barings advisory accounts, including, among others, closed-end and open-end investment companies, private investment funds, MassMutual-affiliated accounts, as well as separate accounts for institutional clients. These advisory accounts are identified below.

OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGEMENT TEAM.

NUMBER OF

ACCOUNTS

APPROXIMATE

TOTAL

WITH

ASSET SIZE OF

NUMBER

APPROXIMATE

PERFORMANCE-

PORTFOLIO

ACCOUNT

TOTAL ASSET

BASED

BASED ADVISORY

TEAM

(A)	Account asset size has been calculated as of December 31, 2016.

(B)	Asset size in millions.

(C)	Represents accounts advised by Barings over which Messrs. Lloyd, Feeley and Shettle have day-to-day management responsibilities.

(D)	Mr. Lloyd, as head of Barings' Global Private Finance Group, has overall responsibility for all private placement mezzanine assets managed by Barings. Except for the accounts noted in the table above, Mr. Lloyd is not primarily responsible for the day-to-management of the other accounts managed by Barings' Global Private Finance Group.

(E)	Mr. Feeley manages the high yield sector of the general investment account of Massachusetts Mutual Life Insurance Company and C.M. Life Insurance Company; however, these assets are not represented in the table above.

(F)	Mr. Shettle manages the private placement mezzanine debt securities of the general investment account of Massachusetts Mutual Life Insurance Company and C.M. Life Insurance Company; however, these assets are not represented in the table above.

Portfolio Management Team:		Dollar Range of Beneficially Owned* Equity Securities of the Registrant:

Eric Lloyd		None
Sean Feeley		None
Robert M. Shettle		None

(Registrant):	Barings Participation Investors


By:	/s/ Robert M. Shettle
	Robert M. Shettle, President

Date:	March 10, 2017