Putnam
Managed
Municipal
Income Trust
Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-03
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
You may have read recent press coverage regarding investigations
involving Putnam Investments. Last month all Putnam shareholders were
sent a letter detailing the steps being taken by Putnam to address the
issues raised by federal and state regulators. Since then, a number of
remedial actions, some of which were discussed in last month's letter,
are being instituted under the terms of an order from the Securities and
Exchange Commission (SEC). These include stringent employee trading
restrictions, enhanced compliance standards and systems, new redemption
fees for certain fund shares held less than three months, and a process
for making full monetary restitution for any losses to fund
shareholders. This process will be directed by an independent third
party approved by the SEC and by Putnam's Board of Trustees.
The Board is also continuing its own independent investigation of these
issues and when complete a report will be issued detailing the
additional steps being taken to make sure that nothing like this happens
at Putnam again. We believe that the new senior management team at
Putnam is fully committed to re-establishing the firm as a model for the
highest ethical standards in the mutual fund industry. Our Board is
committed to working with Putnam's management to ensure that everything
possible is done to restore your full confidence in the Putnam
organization.
We are pleased to report strong performance of Putnam Managed Municipal
Income Trust during the fiscal year ended October 31, 2003. Your fund's
results at net asset value significantly outperformed both the fund's
primary benchmark and its Lipper peer group average. The details are
shown on the facing page. In their report, your fund's managers cite the
recovery in airline-related industrial development bond holdings as the
primary source of these positive results. They also offer their views on
prospects for the fiscal year that just began.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
December 17, 2003
Report from Fund Management
Fund highlights
* Putnam Managed Municipal Income Trust's total return for the fiscal
year ended October 31, 2003, was 9.67% at net asset value (NAV) and
6.44% at market price.
* The fund's return at net asset value was significantly better than the
Lehman Municipal Bond Index, which returned 5.12% for the same period,
largely because of strongly positive performance by airline-related
industrial development bond holdings (IDBs), as well as the fund's use
of leverage.
* Performance of these holdings, as well as adjustments in the fund's
portfolio duration, also helped it outperform, at NAV, the average for
Lipper's Closed-End High Yield Municipal Debt Funds category, which was
7.48% for the 12-month period.
* See the Performance Summary beginning on page 8 for complete fund
performance, comparative performance, and Lipper data.
Performance commentary
The financial markets experienced a major shift in the middle of fiscal
2003, but the fund's investment mix and the adjustments we made to its
duration -- a measure of interest-rate sensitivity -- helped it
outperform, at NAV, its benchmark and Lipper group in both environments.
In the first half, we maintained a relatively long duration that allowed
the fund to participate in the bond price rally. Although the fund's
lower-rated holdings lagged, its high-quality bonds were a positive, as
investors focused on relatively secure investments. By the spring,
however, interest rates had declined to the point where we considered
them unsustainably low. To protect the portfolio against the negative
effects of a potential rate increase, we shortened the duration. This
proved beneficial when rates spiked upward in late June and July. Prices
of the lower-quality, higher-yielding bonds subsequently proved more
resilient than the investment-grade holdings, and some positions,
particularly the airline-related IDBs, appreciated, boosting the fund's
returns. Market price performance reflects investor demand as well as
investment results, and we believe the recovery in the equity market
over the year's second half reduced investor demand for fixed-income
investments, accounting for the lower return at market price.
FUND PROFILE
Putnam Managed Municipal Income Trust seeks to provide as high a level
of current income free from federal in come tax as is consistent with
preser vation of capital through investments in investment- grade and
higher-yielding, lower-rated mu nicipal bonds. The fund is designed for
investors seeking tax-exempt income and willing to accept the risks
associated with below-investment-grade bonds.
Market overview
The municipal bond market was highly volatile during the fund's fiscal
year ended October 31, 2003. In the first few months, falling tax
revenues led to a decline in municipal credit quality. This, in
combination with a burgeoning supply of bonds, pushed yields higher and
bond prices lower. During the winter and spring, fears of an economic
slowdown and deflation led to lower yields and higher prices. Through
summer and early fall, mixed economic reports caused bond yields to
trace a very jagged path. Overall, yields ended the fiscal year higher.
The spread, or difference between yields of 10-year municipal bonds and
10-year Treasuries, widened, with municipals yielding close to their
long-term average of 85% of comparable Treasury yields at the end of
October, after yielding nearly 100% of Treasury yields earlier in the
year. Investor demand for higher-yielding municipals increased,
resulting in higher bond prices and lower yields. As the economy
improved, airline-related industrial development bonds outperformed.
California general obligation bonds were downgraded and underperformed
as the state's budget crisis worsened. Tobacco settlement bonds
initially underperformed following unfavorable rulings in some of the
industry's ongoing litigations, although they began to rally in the
second half following the Illinois Supreme Court's favorable ruling on
one of the industry's ongoing litigation matters.
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MARKET SECTOR PERFORMANCE 12 MONTHS ENDED 10/31/03
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Fixed-income securities
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Lehman Municipal Bond Index (tax-exempt bonds) 5.12%
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Lehman Aggregate Bond Index (broad bond market) 4.90%
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Lehman Government Bond Index (U.S. Treasury and agency
securities) 2.90%
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Lehman Intermediate Treasury Bond Index
(intermediate-maturity U.S. Treasury bonds) 2.29%
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Stocks
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S&P 500 Index (broad stock market) 20.80%
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S&P Utilities Index (utilities stocks) 26.25%
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Russell 2000 Growth Index (growth stocks of small and
midsize companies) 46.56%
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These indexes provide an overview of performance in different market
sectors for the 12 months ended 10/31/03.
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Strategy overview
We shortened the fund's duration (a measure of sensitivity to changes in
interest rates) in May because interest rates were at historically low
levels and were more likely, in our opinion, to rise than to fall. This
defensive strategy helped protect portfolio assets when rates rose
sharply between mid June and the end of July. We resumed a neutral
duration in August and September, as we believed rates were unlikely to
rise further. In September, rates fell again, so we shortened duration
somewhat. This was beneficial when rates rose in October. At the end of
the period, the portfolio's duration remained slightly defensive.
In late July, we closed out the fund's cross-market arbitrage position,
a strategy we had established earlier in the fiscal year. You may recall
that we sought to take advantage of a market anomaly in which municipal
bond yields, which are generally tax exempt, were nearly as high as
comparable taxable Treasury yields. We bought intermediate-term
municipal bonds and sold 10-year Treasury futures contracts,
anticipating that the muni/Treasury yield ratio would revert to its
long-term average and create an opportunity for gain. In fact, the yield
ratio did fall; however, we bought back the Treasury futures too soon
and the trade was not profitable for the fund.
We took the opportunity afforded by strong demand for higher-yielding
municipal bonds to reduce positions in some of the fund's lower-quality
holdings, particularly airline-related industrial development bonds.
This enabled us to expand the fund's diversification into other areas
where we saw stronger potential, such as utilities and real estate
development.
[GRAPHIC OMITTED: horizontal bar chart TOP SECTOR WEIGHTINGS COMPARED]
TOP SECTOR WEIGHTINGS COMPARED
as of 4/30/03 as of 10/31/03
Health care 26.7% 26.5%
Utilities 16.0% 20.2%
Transportation 19.5% 14.0%
Water and sewer 3.0% 3.8%
Housing 3.2% 3.6%
Footnote reads:
Weightings are shown as a percentage of portfolio market value. Holdings
will vary over time.
How fund holdings affected performance
While the fund's relatively long duration proved beneficial during the
first half of the year, the second half was dominated by the strong
price recovery from its airline-related industrial development bonds
(IDBs), which had detracted significantly from performance during fiscal
2002 and the first half of 2003. IDBs are usually issued to finance
local expansion by various businesses and are backed by revenues from
the companies benefiting from the financing. As a result, IDB prices are
affected by investor perceptions of the health of the backing company or
of the industry group. Especially since the terrorist attacks of
September 11, 2001, airline-related IDBs (generally issued to finance
airport facility expansion) have been negatively affected by declining
air traffic, high fixed costs, and high-profile bankruptcies. As the
prospects for economic recovery improved during the fiscal year, the
airline market strengthened and concerns about bankruptcies diminished.
We capitalized on the strong price recovery to trim the fund's airline
IDBs, including airport facility improvement bonds in Illinois,
Kentucky, Michigan, North Carolina, Pennsylvania, Texas, and Washington
state for American Airlines, United Airlines, Delta Airlines, US
Airways, and Northwest Airlines. Since all of these bonds have been in
the portfolio for some time, none of the sales resulted in a profit
based on their acquisition cost, but the fund was able to sell on
strength rather than in distress.
The airline business is one of many industries that have been recovering
with the economy. One of the fund's larger holdings, Pocahontas Parkway
Association Toll Road Revenue Bonds, also rose in value as traffic (and
tolls) picked up. We purchased $3.9 million of these bonds in 1998. They
have a coupon of 5.5%, mature in 2028, and are rated Baa3 by Moody's and
BB by Standard & Poor's. The Pocahontas Parkway, which opened in October
of 2002, is a major connector to the Richmond International Airport, and
includes the only bridge crossing the James River for 15 miles. During
construction, the price of the bonds fell as the sluggish economy caused
traffic projections to fall off and investors to become concerned about
the issuer's ability to service debt. However, road traffic has picked
up with the economy in the past six months and tolls are approaching
previous projections. The bonds are still trading at a discount, and
traffic will need to increase further in order to support the bond's
interest payments, but we are cautiously optimistic.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa/AAA (37.6%)
Aa/AA (2.2%)
A (10.6%)
Baa/BBB (26.0%)
Ba/BB (11.2%)
B (5.4%)
CCC and
below (1.8%)
VMIG1/A-1+ (5.2%)
Footnote reads:
As a percentage of market value as of 10/31/03. A bond rated Baa or
higher is considered investment grade. The chart reflects Moody's and
Standard & Poor's ratings; percentages may include unrated bonds
considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
Although the past several months have been positive for the bond market
as a whole, not every bond has gone up in value. For example, in 1998 we
bought Michigan State Strategic Fund Resource Recovery Revenue Bonds
issued for Central Wayne Energy Resources. These bonds were issued to
finance a trash-to-energy project in Detroit, but it experienced
numerous technical problems and the plant never met production
expectations. It was shut down in August of 2003 and we sold the
position at a loss. In another situation, we are in discussions with the
managers of Hoover Group, Inc., a Nebraska company that makes large
industrial containers for shipping products and raw materials. We own
IDBs issued for Hoover Group by Gage County, Nebraska in 1987 with a
coupon of 8.5%. The poor economy and competitive pricing have eroded
revenues and the company is seeking concessions from debt holders. As of
the end of October 2003, the fund's counsel was studying the situation.
All our purchase and sale decisions involve careful judgments, balancing
yield and credit quality as well as diversification by industry and
issuer. In March of this year, when several court cases threatened to go
against tobacco companies, we became concerned about possible weakness
in their revenues and began reducing the fund's exposure to some
high-yielding tobacco settlement bonds. (These bonds are issued by
municipalities and secured by settlements from class-action lawsuits
against the tobacco industry.) However, this fall, a series of rulings
has been more favorable for the tobacco companies. Since the bonds have
attractive coupons and give the fund exposure to a unique type of bond,
we have been rebuilding the position. For example, we recently added $3
million in Badger Tobacco Asset Securitization bonds issued in
Wisconsin. The series we purchased has a coupon of 7%, matures in 2028,
and is rated Baa2 by Moody's.
Another facet of our diversification strategy includes municipal bonds
issued to finance real estate developments. These deals are relatively
hard to come by, and our analysts' experience in this market is
especially valuable here. Two recent acquisitions are in California --
one in Sacramento for North Natomas Community Facilities District and
the other in Chula Vista for Otay Ranch Village. Both bonds have a
coupon of 6% and mature in 2033. Neither is rated by Moody's or S&P. In
both cases, the developers purchased a large tract of land and are
using the bond proceeds for such municipal improvements as roads, sewer
systems, and street lighting. Currently, taxes paid by each developer
are funding the bonds. The developers plan to sell large tracts of land
to home-building contractors who create developments that include
commercial properties as well as single- and multi-family homes. As
builders acquire tracts, the taxpayer base for each issue diversifies.
As people buy the new homes, their taxes pay interest on the bonds,
spreading out bondholders' risks still further. Since these issues are
not rated, we are careful about which developments we choose, and often
deal with developers we know from past experience.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
The fund's management team
The fund is managed by the Putnam Tax Exempt Fixed-Income Team. The
members of the team are David Hamlin (Portfolio Leader), Paul Drury
(Portfolio Member), Susan McCormack (Portfolio Member), James St. John
(Portfolio Member), Richard Wyke (Portfolio Member), and Kevin Cronin.
The outlook for your fund
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
team's plans for responding to them.
We anticipate continued market volatility in the coming six months, and
we believe the Federal Reserve Board will hold the federal funds rate
steady at 1%. Our 12- to 18-month outlook is less certain. If economic
policy succeeds, we may experience a classic bear market for bonds that
may push yields higher. However, it is also possible that the economy
may not respond satisfactorily to fiscal and monetary policy, and the
yield on 10-year Treasuries could fall. Given this degree of
uncertainty, we have, at this time, positioned the fund's duration
somewhat defensively, and we believe rates may rise in the short term.
Currently, we no longer see much opportunity to capitalize on yield
spreads between municipal bonds and Treasuries, as the relationship
between them is now near the long-term average. We expect that the
credit quality of general obligation municipal bonds will remain under
pressure because tax revenues cannot be expected to grow significantly
until taxpayers begin to report improved earnings. Although yield
spreads between high- and low-quality municipal bonds have narrowed
somewhat, we believe they could narrow further. As a result, we may see
more opportunity for potential gain in this area. In keeping with the
fund's objective, we will continue to monitor market conditions as we
pursue a high level of tax-free income and manage the fund's risk
exposures.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. Lower-rated bonds
may offer higher yields in return for more risk. Mutual funds that
invest in government securities are not guaranteed. Mortgage-backed
securities are subject to prepayment risk.
Performance summary
This section provides information about your fund's performance during
its fiscal year, which ended October 31, 2003. In accordance with
regulatory requirements, we also include performance for the most
current calendar quarter-end. Performance should always be considered in
light of a fund's investment strategy. Past performance does not
indicate future results. More recent returns may be less or more than
those shown. Investment return, net asset value, and market price will
fluctuate and you may have a gain or a loss when you sell your shares. A
profile of your fund's strategy appears on the first page of this
report. See page 9 for definitions of some terms used in this section.
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TOTAL RETURN FOR PERIODS ENDED 10/31/03
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Lipper Closed-
End High Yield
Lehman Municipal
Municipal Debt Funds
NAV Market price Bond Index category average*
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1 year 9.67% 6.44% 5.12% 7.48%
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5 years 17.70 -7.05 31.08 19.28
Annual average 3.31 -1.45 5.56 3.55
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10 years 55.18 36.52 78.34 66.54
Annual average 4.49 3.16 5.96 5.20
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Annual average
Life of fund
(since 2/24/89) 6.84 5.71 7.39 5.86
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Performance does not reflect taxes on reinvested distributions.
Index and Lipper results should be compared to fund performance at net
asset value.
* Over the 1-, 5-, and 10-year periods ended 10/31/03, there were 12,
12, and 12 funds, respectively, in this Lipper category.
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TOTAL RETURN FOR PERIODS ENDED 9/30/03 (MOST RECENT CALENDAR QUARTER)
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NAV Market price
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1 year 6.15% -0.03%
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5 years 17.83 -2.20
Annual average 3.34 -0.44
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10 years 56.60 41.28
Annual average 4.59 3.52
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Annual average
Life of fund
(since 2/24/89) 6.90 5.95
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PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 10/31/03
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Putnam Managed Municipal Income Trust
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Distributions from common shares
Number 12
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Income 1 $0.570
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Capital gains 1 --
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Total $0.570
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Distributions from Series A Series B Series C
preferred shares (550 shares) (550 shares) (650 shares)
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Income 1 $1,091.89 $1,090.74 $1,093.77
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Capital gains 1 -- -- --
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Total $1,091.89 $1,090.74 $1,093.77
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Share value (common shares) NAV Market price
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10/31/02 $7.84 $7.43
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10/31/03 7.98 7.34
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Current return (common shares, end of period)
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Current dividend rate 2 7.14% 7.77%
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Taxable equivalent 3 10.98 11.95
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1 Capital gains, if any, are taxable for federal and, in most cases,
state purposes. For some investors, investment income may be subject to
the federal alternative minimum tax. Income from federally exempt funds
may be subject to state and local taxes.
2 Most recent distribution, excluding capital gains, annualized and
divided by NAV or market price at end of period.
3 Assumes maximum 35% federal tax rate for 2003. Results for investors
subject to lower tax rates would not be as advantageous.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to remarketed preferred shares
divided by the number of outstanding common shares.
Market price is the current trading price of one share of the fund.
Market prices are set by transactions between buyers and sellers on
public exchanges such as the New York Stock Exchange or the American
Stock Exchange.
Comparative indexes
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Government Bond Index is an unmanaged index of U.S. Treasury and
agency securities.
Lehman Intermediate Treasury Bond Index is an unmanaged index of
Treasury bonds with maturities between 1 and 10 years.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Russell 2000 Growth Index is an unmanaged index of those companies in
the Russell 2000 Index chosen for their growth orientation.
S&P 500 Index is an unmanaged index of common stock performance.
S&P Utilities Index is an unmanaged index of common stock issued by
utilities companies.
Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Lipper Inc. is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
Putnam's policy on confidentiality
In order to conduct business with our shareholders, we must obtain
certain personal information such as account holders' addresses,
telephone numbers, Social Security numbers, and the names of their
financial advisors. We use this information to assign an account number
and to help us maintain accurate records of transactions and account
balances.
It is our policy to protect the confidentiality of your information,
whether or not you currently own shares of our funds, and in particular,
not to sell information about you or your accounts to outside marketing
firms. We have safeguards in place designed to prevent unauthorized
access to our computer systems and procedures to protect personal
information from unauthorized use.
Under certain circumstances, we share this information with outside
vendors who provide services to us, such as mailing and proxy
solicitation. In those cases, the service providers enter into
confidentiality agreements with us, and we provide only the information
necessary to process transactions and perform other services related to
your account. We may also share this information with our Putnam
affiliates to service your account or provide you with information about
other Putnam products or services. It is also our policy to share
account information with your financial advisor, if you've listed one on
your Putnam account.
If you would like clarification about our confidentiality policies or
have any questions or concerns, please don't hesitate to contact us at
1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or
Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time.
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. Our proxy voting guidelines and policies are
available on the Putnam Individual Investor Web site,
www.putnaminvestments.com, by calling Putnam's Shareholder Services at
1-800-225-1581, or on the SEC's Web site, www.sec.gov.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
preceded by the Independent Auditors' Report, constitute the fund's
financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or
loss the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal year.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment
income ratios, and portfolio turnover in one summary table, reflecting
the five most recent reporting periods. In a semiannual report, the
highlight table also includes the current reporting period. For open-end
funds, a separate table is provided for each share class.
Independent auditors' report
The Board of Trustees and Shareholders
Putnam Managed Municipal Income Trust
We have audited the accompanying statement of assets and liabilities of
Putnam Managed Municipal Income Trust, including the fund's portfolio,
as of October 31, 2003, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each
of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform our audit to obtain reasonable assurance about
whether the financial statements and 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 October 31, 2003 by correspondence with the custodian and brokers or
by other appropriate auditing procedures. 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 financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Putnam Managed Municipal Income Trust as of
October 31, 2003, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in
the period then ended in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
Boston, Massachusetts
December 9, 2003
The fund's portfolio
October 31, 2003
Key to Abbreviations
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AMBAC AMBAC Indemnity Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FNMA Coll. Federal National Mortgage Association Collateralized
FRB Floating Rate Bonds
FSA Financial Security Assurance
GNMA Coll. Government National Mortgage Association Collateralized
G.O. Bonds General Obligation Bonds
IFB Inverse Floating Rate Bonds
MBIA MBIA Insurance Company
PSFG Permanent School Fund Guaranteed
U.S. Govt. Coll. U.S. Government Collateralized
VRDN Variable Rate Demand Notes
Municipal bonds and notes (98.8%) (a)
Principal amount Rating (RAT) Value
Arizona (1.5%)
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$1,000,000 Apache Cnty., Indl. Dev. Auth. Poll.
Control Rev. Bonds (Tucson Elec.
Pwr. Co.), Ser. B, 5 7/8s, 3/1/33 Ba3 $928,750
1,000,000 AZ Hlth. Fac. Auth. Hosp. Syst.
Rev. Bonds (John C. Lincoln Hlth.
Network), 6 3/8s, 12/1/37 BBB 1,022,500
1,800,000 Casa Grande, Indl. Dev. Auth.
Rev. Bonds (Casa Grande Regl. Med.
Ctr.), Ser. A, 7 5/8s, 12/1/29 B-/P 1,854,000
3,000,000 Coconino Cnty., Poll. Control
Rev. Bonds (Tuscon/Navajo Elec.
Pwr.), Ser. A, 7 1/8s, 10/1/32 Ba3 3,045,000
560,000 Scottsdale, Indl. Dev. Auth.
Rev. Bonds (Westminster Village),
7 7/8s, 6/1/09 BB-/P 586,600
1,000,000 Scottsdale, Indl. Dev. Hosp. Auth.
Rev. Bonds (Scottsdale Hlth. Care),
5.8s, 12/1/31 A3 1,028,750
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8,465,600
Arkansas (1.5%)
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4,600,000 AR State Hosp. Dev. Fin. Auth.
Rev. Bonds (WA Regl. Med. Ctr.),
7 3/8s, 2/1/29 Baa3 4,979,500
2,750,000 Northwest Regl. Arpt. Auth.
Rev. Bonds, 7 5/8s, 2/1/27 BB/P 2,990,625
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7,970,125
California (13.6%)
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250,000 ABAG Fin. Auth. for Nonprofit Corps.
Rev. Bonds (San Diego Hosp. Assn.),
Ser. C, 5 3/8s, 3/1/21 Baa1 242,500
1,235,000 Brentwood, Infrastructure Auth.
Rev. Bonds, Ser. 94-1, 5 5/8s,
9/2/29 BB-/P 1,204,125
7,000,000 CA Hlth. Fac. Auth. IFB (Catholic
Hlth. Care West), AMBAC, 9.506s,
7/1/17 Aaa 7,535,150
2,000,000 CA State G.O. Bonds, FGIC, 6.6s,
2/1/11 Aaa 2,397,500
CA State Dept. of Wtr. Resources
Rev. Bonds, Ser. A
1,000,000 6s, 5/1/15 A3 1,117,500
20,000,000 AMBAC, 5 1/2s, 5/1/13 Aaa 22,450,000
3,000,000 5 1/2s, 5/1/11 A3 3,318,750
3,000,000 CA Statewide Cmnty. Dev. Auth. COP
(The Internext Group), 5 3/8s,
4/1/30 BBB- 2,760,000
1,250,000 Chula Vista, Cmnty. Fac. Dist.
Special Tax (No. 08-1 Otay Ranch
Village Six), 6s, 9/1/33 BB/P 1,223,438
Corona, COP
2,775,000 (Vista Hosp. Syst.), Ser. B, 9 1/2s,
7/1/20 (In default) (NON) D/P 1,110,000
5,000,000 (Hosp. Syst., Inc.), Ser. C, 8 3/8s,
7/1/11 (In default) (NON) D/P 2,000,000
750,000 Folsom, Special Tax (Cmnty. Facs.
Dist. No. 10), 5 7/8s, 9/1/28 BB/P 743,438
1,970,000 Gilroy, Rev. Bonds (Bonfante Gardens
Park), 8s, 11/1/25 B/P 1,615,400
2,500,000 Golden State Tobacco Securitization
Corp. Rev. Bonds, Ser. B, 5 5/8s,
6/1/38 Baa1 2,425,000
1,755,000 Lancaster, Redev. Agcy. Tax Alloc.
(Redev. Project Areas), MBIA, 5s,
8/1/16 Aaa 1,926,112
650,000 Orange Cnty., Cmnty. Fac. Dist.
Special Tax Bonds (Ladera Ranch -
No. 02-1), Ser. A, 5.55s, 8/15/33 BB+/P 632,938
1,250,000 Sacramento, Special Tax (North
Natomas Cmnty. Fac.), Ser. 4-C, 6s,
9/1/33 BB+/P 1,246,875
7,000,000 San Bernardino Cnty.,
Certificates of Participation (Med.
Ctr. Fin.), Ser. A, MBIA, 6 1/2s,
8/1/28 Aaa 7,778,750
3,000,000 San Luis Obispo, COP (Vista Hosp.
Syst., Inc.), 8 3/8s, 7/1/29 (In
default) (NON) D/P 1,200,000
8,750,000 Santa Clara Cnty., Fin. Auth. Lease
Rev. Bonds (VMC Fac. Replacement
Project), Ser. A, AMBAC, 6 3/4s,
11/15/20 Aaa 9,433,463
3,400,000 Valley Hlth. Syst. Hosp. Rev. Bonds
(Refunding & Impt.), Ser. A,
6 1/2s, 5/15/25 B+ 2,282,250
--------------
74,643,189
Colorado (1.9%)
-------------------------------------------------------------------------------
3,015,000 CO Hlth. Fac. Auth.
Rev. Bonds (Evangelical Lutheran),
3.05s, 10/1/05 A3 3,094,144
CO Hwy. Auth. Rev. Bonds (E-470 Pub.
Hwy.), Ser. B
15,500,000 zero %, 9/1/35 Baa3 1,472,500
16,500,000 zero %, 9/1/34 Baa3 1,691,250
Denver, City & Cnty. Arpt.
Rev. Bonds
1,050,000 Ser. D, AMBAC, 7 3/4s, 11/15/13 AAA 1,294,125
2,500,000 MBIA, 5 1/2s, 11/15/25 Aaa 2,618,750
--------------
10,170,769
District of Columbia (0.6%)
-------------------------------------------------------------------------------
4,000,000 DC Tobacco Settlement Fin. Corp.
Rev. Bonds, 6 1/2s, 5/15/33 Baa2 3,525,000
Florida (3.7%)
-------------------------------------------------------------------------------
2,000,000 Cap. Trust Agcy. Rev. Bonds
(Seminole Tribe Convention), Ser. A,
10s, 10/1/33 B/P 2,377,500
3,210,000 Escambia Cnty., Poll. Control
Rev. Bonds (Champion Intl. Corp.),
6.9s, 8/1/22 Baa2 3,345,687
1,000,000 Fishhawk, Cmnty. Dev. Dist. II
Rev. Bonds, Ser. B, 5s, 11/1/07 BB-/P 1,006,250
1,000,000 Gateway Svcs. Cmnty. Dev. Dist.
Special Assmt. (Stoneybrook),
5 1/2s, 7/1/08 BB-/P 1,013,750
500,000 Heritage Harbor, South Cmnty. Dev.
Distr. Rev. Bonds (Cap. Impt.),
Ser. A, 6 1/2s, 5/1/34 BB-/P 507,500
5,000,000 Hernando Cnty., Indl. Dev.
Rev. Bonds (FL Crushed Stone Co.),
8 1/2s, 12/1/14 A-/P 5,113,900
1,000,000 Lee Cnty., Indl. Dev. Auth.
Rev. Bonds (Alliance Cmnty.
Project), Ser. C, 5 1/2s, 11/15/29 BBB- 928,750
1,335,000 Miami Beach, Hlth. Fac. Auth. Hosp.
Rev. Bonds (Mount Sinai Med. Ctr.),
Ser. A, 6.7s, 11/15/19 BB 1,309,969
1,500,000 South Miami, Hlth. Fac. Auth.
Rev. Bonds (Baptist Hlth.), 5 1/4s,
11/15/33 Aa3 1,501,875
2,000,000 St. Johns Cnty., Hlth. Care Indl.
Dev. Auth. Rev. Bonds (Glenmoor St.
Johns Project), Ser. A, 8s, 1/1/30 B-/P 1,905,000
1,000,000 Sterling Hill, Cmnty. Dev. Dist.
Rev. Bonds, Ser. B, 5 1/2s, 11/1/10 BB-/P 993,750
--------------
20,003,931
Georgia (0.9%)
-------------------------------------------------------------------------------
4,000,000 Burke Cnty., Poll. Control Dev.
Auth. Mandatory Put Bonds (GA Power
Co.), 4.45s, 1/1/32 A2 4,205,000
700,000 GA Med. Ctr. Hosp. Auth. IFB, MBIA,
11.568s, 8/1/10 Aaa 718,879
--------------
4,923,879
Hawaii (0.3%)
-------------------------------------------------------------------------------
1,760,000 HI Dept. of Trans. Special Fac.
Rev. Bonds (Continental Airlines,
Inc.), 7s, 6/1/20 B 1,665,400
Illinois (2.4%)
-------------------------------------------------------------------------------
Chicago, G.O. Bonds
4,850,000 Ser. A, AMBAC, 5 5/8s, 1/1/39 Aaa 5,110,678
3,500,000 Ser. C, FGIC, 5 1/2s, 1/1/40 Aaa 3,640,000
1,495,000 Chicago, O'Hare Intl. Arpt. Special
Fac. Rev. Bonds (American Airlines,
Inc.), 8.2s, 12/1/24 Caa2 1,044,631
3,250,000 IL Dev. Fin. Auth. Hosp. Rev. Bonds
(Adventist Hlth. Syst./Sunbelt
Obligation), 5.65s, 11/15/24 A 3,270,313
--------------
13,065,622
Indiana (2.0%)
-------------------------------------------------------------------------------
2,500,000 IN State Dev. Fin. Auth. Env. Impt.
Rev. Bonds (USX Corp.), 5.6s,
12/1/32 Baa1 2,440,625
6,500,000 IN Trans. Fin. Auth. Arpt. Facs.
Lease Rev. Bonds, Ser. A, AMBAC, 5s,
11/1/16 Aaa 6,857,500
1,750,000 Rockport, Poll. Control Mandatory
Put Bonds (Indiana Michigan Pwr.
Co.), Ser. C, 2 5/8s, 4/1/25 Baa2 1,739,063
--------------
11,037,188
Iowa (1.0%)
-------------------------------------------------------------------------------
IA Fin. Auth. Hlth. Care Fac.
Rev. Bonds (Care Initiatives)
$2,970,000 9 1/4s, 7/1/25 BBB-/P $3,526,875
1,555,000 9.15s, 7/1/09 BBB-/P 1,799,913
--------------
5,326,788
Kentucky (0.8%)
-------------------------------------------------------------------------------
2,035,000 Kenton Cnty., Arpt. Board Rev. Bonds
(Special Fac. - Delta Airlines,
Inc.), Ser. A, 7 1/2s, 2/1/20 B 2,034,349
1,700,000 KY Econ. Dev. Fin. Auth. Rev. Bonds
(Norton Healthcare, Inc.), Ser. A,
6 1/2s, 10/1/20 BBB/P 1,772,250
1,000,000 Scott Cnty., Indl. Dev. Rev. Bonds
(Hoover Group, Inc.), 8 1/2s,
11/1/14 Ba3 500,000
--------------
4,306,599
Louisiana (0.9%)
-------------------------------------------------------------------------------
2,000,000 LA Pub. Fac. Auth. Hosp. Rev. Bonds
(Lake Charles Memorial Hosp.
Project), 8 5/8s, 12/1/30 CCC/P 1,642,500
500,000 Tangipahoa Parish Hosp. Svcs.
Rev. Bonds (North Oaks Med. Ctr.
Project), Ser. A, 5s, 2/1/25 A 480,625
2,750,000 W. Feliciana Parish, Poll. Control
Rev. Bonds (Gulf States Util. Co.),
Ser. C, 7s, 11/1/15 Ba1 2,859,918
--------------
4,983,043
Maine (0.4%)
-------------------------------------------------------------------------------
2,000,000 Rumford, Solid Waste Disp.
Rev. Bonds (Boise Cascade Corp.),
6 7/8s, 10/1/26 Ba2 2,000,000
Massachusetts (5.0%)
-------------------------------------------------------------------------------
MA State Hlth. & Edl. Fac. Auth.
Rev. Bonds
2,000,000 (Civic Investments), Ser. A, 9s,
12/15/15 BB/P 2,272,500
3,240,000 (Rehab. Hosp. Cape & Islands),
Ser. A, (U.S. Govt. Coll.) 7 7/8s,
8/15/24 AAA/P 3,471,563
1,185,000 (Norwood Hosp.), Ser. C, 7s, 7/1/14 Ba2 1,494,581
1,200,000 (Jordan Hosp.), Ser. E, 6 3/4s,
10/1/33 BBB- 1,194,000
2,500,000 (UMass Memorial), Ser. C, 6 5/8s,
7/1/32 Baa2 2,578,125
1,875,000 (UMass Memorial), Ser. C, 6 1/2s,
7/1/21 Baa2 1,928,906
1,500,000 (Caritas Christi Oblig. Group),
Ser. A, 5 1/4s, 7/1/08 BBB 1,509,375
7,645,000 MA State Hsg. Fin. Agcy. IFB, AMBAC,
9.493s, 7/1/40 (acquired 6/3/98,
cost $7,739,951) (RES) AAA/P 7,950,800
2,000,000 MA State Hsg. Fin. Agcy. Rev. Bonds
(Rental Mtge.), Ser. C, AMBAC,
5 5/8s, 7/1/40 Aaa 2,035,000
1,000,000 MA State Indl. Fin. Agcy. Rev. Bonds
(1st Mtge. Brookhaven), Ser. A, 7s,
1/1/15 BBB/P 1,030,000
1,900,000 MA State Wtr. Resource Auth. VRDN
(Multi-Modal), Ser. C, 1.15s, 8/1/20 VMIG1 1,900,000
--------------
27,364,850
Michigan (3.5%)
-------------------------------------------------------------------------------
3,500,000 Detroit, Swr. Disp. VRDN, Ser. B,
FSA, 1.15s, 7/1/33 VMIG1 3,500,000
500,000 Flint, Hosp. Bldg. Auth. Rev. Bonds
(Hurley Med. Ctr.), 6s, 7/1/20 Baa3 468,750
2,200,000 Macomb Cnty., Hosp. Fin. Auth.
Rev. Bonds (Mt. Clemens Gen.
Hosp.), Ser. B, 5 7/8s, 11/15/34 BBB- 2,101,000
1,500,000 MI State Hosp. Fin. Auth. Rev. Bonds
(Oakwood Hosp.), Ser. A, 6s, 4/1/22 A2 1,599,375
2,700,000 Pontiac, Hosp. Fin. Auth. Rev. Bonds
(NOMC Obligation Group), Ser. B, 6s,
8/1/18 Ba1 2,227,500
2,975,000 Warren Cons. School Dist. G.O.
Bonds, FSA, 5 3/8s, 5/1/18 Aaa 3,227,875
6,780,000 Waterford, Econ. Dev. Corp.
Rev. Bonds (Canterbury Hlth.), 6s,
1/1/39 B-/P 4,618,875
2,000,000 Wayne Charter Cnty., Special Arpt.
Fac. Rev. Bonds (Northwest Airlines,
Inc.), 6s, 12/1/29 B+/P 1,587,500
--------------
19,330,875
Minnesota (1.1%)
-------------------------------------------------------------------------------
2,525,000 Chaska, Indl. Dev. Rev. Bonds
(Lifecore Biomedical, Inc. Project),
10 1/4s, 9/1/20 BB/P 2,641,125
3,200,000 St. Paul, Hsg. & Hosp. Redev. Auth.
Rev. Bonds (Healtheast), Ser. B,
6 5/8s, 11/1/17 Ba2 3,204,000
--------------
5,845,125
Mississippi (0.4%)
-------------------------------------------------------------------------------
2,250,000 Mississippi Bus. Fin. Corp. Poll.
Control Rev. Bonds (Syst. Energy
Resources, Inc.), 5.9s, 5/1/22 BBB- 2,250,000
Missouri (0.9%)
-------------------------------------------------------------------------------
1,500,000 Cape Girardeau Cnty., Indl. Dev.
Auth. Hlth. Care Fac. Rev. Bonds
(St. Francis Med. Ctr.),
Ser. A, 5 1/2s, 6/1/32 A 1,503,750
2,000,000 MO Hsg. Dev. Comm. Rev. Bonds (Home
Ownership), GNMA/FNMA Coll., 5.55s,
9/1/34 AAA 2,190,000
1,450,000 MO State Hlth. & Edl. Fac. Auth.
Rev. Bonds (BJC Hlth. Syst.),
5 1/4s, 5/15/32 Aa2 1,473,563
--------------
5,167,313
Montana (1.8%)
-------------------------------------------------------------------------------
1,775,000 Forsyth, Poll. Control Mandatory Put
Bonds (Avista Corp.), AMBAC, 5s,
10/1/32 Aaa 1,932,531
8,130,000 Forsyth, VRDN (Pacific Corp.
Project), 1.20s, 1/1/18 VMIG1 8,130,000
--------------
10,062,531
Nebraska (0.2%)
-------------------------------------------------------------------------------
2,000,000 Gage Cnty., Indl. Dev. Rev. Bonds
(Hoover Group, Inc.), 8 1/2s,
12/1/07 Ba3 1,000,000
2,410,239 Kearney, Indl. Dev. Rev. Bonds
(Great Platte River Road), 6 3/4s,
1/1/28 (In default) (NON) D/P 24
--------------
1,000,024
Nevada (1.3%)
-------------------------------------------------------------------------------
5,000,000 Clark Cnty., Indl. Dev. Rev. Bonds
(Southwest Gas Corp.), Ser. C,
AMBAC, 5.95s, 12/1/38 Aaa 5,425,000
1,595,000 Henderson, Local Impt. Dist. Special
Assmt. (No. T-14), 3.2s, 3/1/06 BB-/P 1,587,025
--------------
7,012,025
New Hampshire (1.1%)
-------------------------------------------------------------------------------
NH Muni. Bond Bank Rev. Bonds
1,000,000 Ser. A, 5s, 2/15/11 Aa2 1,102,500
1,600,000 Ser. B, ST GTD, 5s, 2/15/08 AA+ 1,770,000
625,000 Ser. B, ST GTD, 5s, 8/15/07 AA+ 689,063
2,565,000 NH State Bus. Fin. Auth. Rev. Bonds
(Alice Peck Day Hlth. Syst.),
Ser. A, 7s, 10/1/29 BB+/P 2,606,681
--------------
6,168,244
New Jersey (3.1%)
-------------------------------------------------------------------------------
NJ Econ. Dev. Auth. Rev. Bonds
1,000,000 (1st Mtge.-Cranes Mill), Ser. A,
7 1/2s, 2/1/27 BB-/P 1,040,000
1,250,000 (Cedar Crest Village, Inc. Fac.),
Ser. A, 7 1/4s, 11/15/31 BB-/P 1,278,125
NJ Hlth. Care Fac. Fin. Auth.
Rev. Bonds
3,000,000 (Trinitas Hosp. Oblig. Group),
7 1/2s, 7/1/30 Baa3 3,288,750
2,000,000 (Columbus Hosp.), Ser. A, 5 3/4s,
7/1/29 BB+ 1,872,500
1,250,000 (Atlantic City Med. Ctr.), 5 3/4s,
7/1/25 A3 1,289,063
1,000,000 (Somerset Med. Ctr.), 5 1/2s, 7/1/33 Baa2 955,000
6,500,000 NJ State Trans. Trust Fund Auth.
Rev. Bonds (Trans. Syst.), Ser. A,
FSA, 5 1/2s, 6/15/12 Aaa 7,369,375
--------------
17,092,813
New Mexico (1.4%)
-------------------------------------------------------------------------------
7,500,000 Farmington, Poll. Control VRDN (AZ
Pub. Svc. Co.), Ser. A, 1.20s,
5/1/24 VMIG1 7,500,000
New York (14.7%)
-------------------------------------------------------------------------------
3,000,000 Long Island, Pwr. Auth. VRDN, Ser.
2, 1.1s, 5/1/33 VMIG1 3,000,000
1,800,000 Long Island, Pwr. Auth. NY Elec.
Syst. IFB, 9.264s, 12/1/24
(acquired 10/20/03, cost $1,981,188)
(RES) BBB+/P 2,009,250
2,000,000 Metro. Trans. Auth. Rev. Bonds,
Ser. F, MBIA, 5s, 11/15/10 Aaa 2,232,500
13,000,000 Nassau Cnty., Interim Fin. Auth.
Rev. Bonds, Ser. B, MBIA, 5s,
11/15/10 Aaa 14,511,250
10,000,000 NY City, G.O. Bonds, Ser. B, 5 1/4s,
12/1/09 A2 11,062,500
1,500,000 NY City, Indl. Dev. Agcy. Rev. Bonds
(Visy Paper, Inc.), 7.95s, 1/1/28 B+/P 1,548,750
6,025,000 NY City, Indl. Dev. Agcy. Special
Fac. Rev. Bonds (British Airways),
5 1/4s, 12/1/32 Ba2 4,255,156
1,495,000 NY City, Indl. Dev. Agency
Rev. Bonds (Staten Island U. Hosp.
Project), 6.45s, 7/1/32 Baa3 1,569,750
4,200,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. VRDN, Ser. G, FGIC, 1.5s,
6/15/24 VMIG1 4,200,000
10,000,000 NY City, Muni. Wtr. Fin. Auth.
Rev. Bonds, Ser. C, MBIA, 5 1/2s,
6/15/17 Aaa 10,937,500
900,000 NY State Dorm. Auth. Rev. Bonds
(Winthrop-U. Hosp. Assn.), Ser. A,
5 1/2s, 7/1/32 Baa1 916,875
2,000,000 Onondaga Cnty., Indl. Dev. Agcy.
Rev. Bonds (Solvay Paperboard, LLC),
7s, 11/1/30 BB-/P 2,105,000
5,000,000 Port Auth. NY & NJ Rev. Bonds, Ser.
96, FGIC, 6.6s, 10/1/23 Aaa 5,228,850
5,000,000 Port Auth. NY & NJ Special
Obligation IFB, Ser. N18, MBIA,
8.64s, 12/1/17 (acquired
7/19/00, cost $5,234,450) (RES) Aaa 6,631,250
10,000,000 Port Auth. NY & NJ Special
Obligation FRB, Ser. N18, MBIA,
1.15s, 12/1/17 Aaa 10,000,000
--------------
80,208,631
North Carolina (1.3%)
-------------------------------------------------------------------------------
NC Eastern Muni. Pwr. Agcy. Syst.
Rev. Bonds
1,500,000 Ser. D, 6 3/4s, 1/1/26 BBB 1,642,500
3,000,000 Ser. A, 5 3/4s, 1/1/26 BBB 3,056,250
NC State Muni. Pwr. Agcy. Rev. Bonds
1,000,000 (No. 1, Catawba Elec.), Ser. B,
6 1/2s, 1/1/20 Baa1 1,091,250
1,300,000 Ser. A, 5 1/2s, 1/1/13 Baa1 1,404,000
--------------
7,194,000
Ohio (2.0%)
-------------------------------------------------------------------------------
Cuyahoga Cnty., Rev. Bonds, Ser. A
1,280,000 6s, 1/1/16 A1 1,400,000
2,000,000 6s, 1/1/15 A1 2,205,000
1,000,000 Dayton, Fac. Rev. Bonds (Emery Air
Freight), Ser. A, 5 5/8s, 2/1/18 BB+ 801,250
1,000,000 Erie Cnty., Ohio Hosp. Fac.
Rev. Bonds (Firelands Regl. Med.
Ctr.), 5 5/8s, 8/15/32 A2 1,012,500
3,000,000 OH State Air Quality Dev. Auth.
Rev. Bonds (Toledo Poll. Control),
Ser. A, 6.1s, 8/1/27 Baa2 3,075,000
2,100,000 OH State Solid Waste Rev. Bonds
(General Motors Corp. Project),
6.3s, 12/1/32 Baa1 2,189,250
--------------
10,683,000
Oklahoma (2.3%)
-------------------------------------------------------------------------------
3,150,000 OK City Arpt. Trust Rev. Bonds (Jr.
Lien 27th Ser.), Ser. A, FSA, 5s,
7/1/18 Aaa 3,252,375
2,400,000 OK Dev. Fin. Auth. Rev. Bonds
(Hillcrest Hlth. Care), Ser. A,
5 5/8s, 8/15/29 B1 1,647,000
7,000,000 OK State Indl. Dev. Auth. Rev. Bonds
(Hlth. Syst.- Oblig. Group), Ser. A,
MBIA, 5 3/4s, 8/15/29 Aaa 7,446,250
--------------
12,345,625
Oregon (0.4%)
-------------------------------------------------------------------------------
2,000,000 Multnomah Cnty., Hosp. Fac. Auth.
Rev. Bonds (Terwilliger Plaza
Project), 6 1/2s, 12/1/29 BB-/P 1,902,500
Pennsylvania (7.6%)
-------------------------------------------------------------------------------
750,000 Allentown, Hosp. Auth. Rev. Bonds
(Sacred Heart Hosp.), Ser. A,
6 3/4s, 11/15/14 Baa3 748,125
2,165,000 Carbon Cnty., Indl. Dev. Auth.
Rev. Bonds (Panther Creek
Partners), 6.65s, 5/1/10 BBB- 2,327,375
3,500,000 Dauphin Cnty., Gen. Auth. Rev. Bonds
(Office & Pkg.), Ser. A, 6s,
1/15/25 CCC/P 1,505,000
350,000 Lebanon Cnty., Hlth. Fac. Auth.
Rev. Bonds (Good Samaritan Hosp.
Project), 6s, 11/15/35 Baa1 350,438
1,000,000 Lehigh Cnty., Gen. Purpose Auth.
Rev. Bonds (Lehigh Valley Hosp.
Hlth. Network), Ser. A, 5 1/4s,
7/1/32 A2 962,500
500,000 Monroe Cnty., Hosp. Auth. (Pocono
Med. Ctr.), 6s, 1/1/43 BBB+ 495,625
PA Convention Ctr. Auth. Rev. Bonds
750,000 Ser. A, 6 3/4s, 9/1/19 Baa2 785,753
7,250,000 MBIA, 6.7s, 9/1/14 Aaa 7,706,823
PA Econ. Dev. Fin. Auth. Rev. Bonds
7,750,000 (MacMillan Ltd. Partnership), 7.6s,
12/1/20 Baa2 8,844,688
1,000,000 (Amtrak Project), Ser. A, 6 3/8s,
11/1/41 A3 985,000
1,000,000 PA Econ. Dev. Fin. Auth. Resource
Recvy. Rev. Bonds (Colver Project),
Ser. D, 7 1/8s, 12/1/15 BBB- 1,033,810
4,200,000 PA State Econ. Dev. Fin. Auth.
Resource Recvy. Rev. Bonds
(Northampton Generating), Ser. A,
6.6s, 1/1/19 BBB- 4,236,750
PA State Higher Edl. Fac. Auth.
Rev. Bonds
1,000,000 (Widener U.), 5.4s, 7/15/36 BBB+ 996,250
995,000 (Philadelphia College of Osteopathic
Medicine), 5s, 12/1/07 A 1,092,013
5,715,000 Philadelphia, Gas Wks. Rev. Bonds
(1975 Gen. Ordinance 17th), FSA, 5s,
7/1/07 Aaa 6,279,356
2,739,243 Philadelphia, Hosp. & Higher Ed.
Fac. Auth. Rev. Bonds (Graduate
Hlth. Syst.), 7 1/4s, 7/1/10 (In
default) (NON) D/P 3,424
2,000,000 Philadelphia, Indl. Dev. Auth. Arpt.
Rev. Bonds (Aero Philadelphia, LLC),
5 1/2s, 1/1/24 BB/P 1,565,000
1,800,000 Sayre, Hlth. Care Fac. Auth.
Rev. Bonds (Guthrie Hlth.), Ser. A,
5 7/8s, 12/1/31 A- 1,842,750
--------------
41,760,680
South Carolina (2.1%)
-------------------------------------------------------------------------------
4,750,000 Connector 2000 Assn., Inc. SC Toll
Road Rev. Bonds (SR-Southern
Connector), Ser. A, 5 3/8s, 1/1/38 B- 2,030,625
775,000 Lexington Cnty. Rev. Bonds, 5 1/2s,
11/1/32 A2 784,688
5,000,000 Richland Cnty. Rev. Bonds (Intl.
Paper Co. Project), Ser. A, 4 1/4s,
10/1/07 Baa2 5,243,750
1,250,000 SC Hosp. Auth. Rev. Bonds (Med. U.),
Ser. A, 6 1/2s, 8/15/32 BBB+ 1,289,063
1,000,000 SC Jobs Econ. Dev. Auth. Hosp. Fac.
Rev. Bonds (Palmetto Hlth.
Alliance), Ser. A, 7 3/8s, 12/15/21 Baa2 1,271,250
1,300,000 SC Tobacco Settlement Rev. Mgt.
Rev. Bonds, Ser. B, 6 3/8s, 5/15/30 Baa2 1,126,125
--------------
11,745,501
South Dakota (0.3%)
-------------------------------------------------------------------------------
2,000,000 SD Edl. Enhancement Funding Corp.
Rev. Bonds, Ser. B, 6 1/2s, 6/1/32 Baa2 1,765,000
Tennessee (2.6%)
-------------------------------------------------------------------------------
6,000,000 Johnson City, Hlth. & Edl. Fac.
Board Hosp. IFB, Ser. A2, MBIA,
10.915s, 7/1/21 (acquired
2/8/00, cost $5,651,400) (RES) Aaa 7,575,000
4,200,000 Johnson City, Hlth. & Edl. Fac.
Board Hosp. Rev. Bonds (Mountain
States Hlth.), Ser. A, 7 1/2s,
7/1/33 Baa2 4,562,250
2,000,000 Shelby Cnty. Hlth. Edl. & Hsg. Fac.
Board Rev. Bonds (Methodist
Healthcare), 6 1/2s, 9/1/26 A- 2,165,000
--------------
14,302,250
Texas (6.9%)
-------------------------------------------------------------------------------
7,800,000 Alliance, Arpt. Auth. Rev. Bonds
(Federal Express Corp.), 6 3/8s,
4/1/21 Baa2 8,160,750
4,655,000 Carrollton, Farmers Branch Indpt.
School Dist. G.O. Bonds, PSFG, 5s,
2/15/17 Aaa 4,899,388
1,000,000 Comal Cnty. Hlth. Fac. Dev. Corp.
Rev. Bonds (Hlth. Care Syst. -
McKenna Memorial Project), Ser. A,
6 1/4s, 2/1/32 Baa2 1,002,500
2,360,000 Dallas-Fort Worth, Intl. Arpt. Fac.
Impt. Corp. Rev. Bonds (American
Airlines, Inc.), 6 3/8s, 5/1/35 Caa2 1,492,700
4,790,000 Garland, Indpt. School Dist. G.O.
Bonds, PSFG, 5s, 2/15/11 Aaa 5,274,964
3,000,000 Harris Cnty., Hlth. Fac. Rev. Bonds
(Memorial Hermann Hlth. Care),
Ser. A, 6 3/8s, 6/1/29 A2 3,206,250
3,880,000 Houston, Arpt. Syst. Rev. Bonds
(Continental Airlines, Inc.),
Ser. C, 5.7s, 7/15/29 B- 2,861,500
2,000,000 Lower Neches Valley Indl. Dev. Swr.
Auth. Rev. Bonds (Mobil Oil Refining
Corp.), 6.4s, 3/1/30 Aaa 2,082,500
1,400,000 Matagorda Cnty., Navigation Dist.
Mandatory Put Bonds, 2.15s, 5/1/30 Baa2 1,400,000
2,500,000 Sam Rayburn Muni. Pwr. Agcy.
Rev. Bonds, 6s, 10/1/21 Baa2 2,584,375
Tomball, Hosp. Auth. Rev. Bonds
2,000,000 (Tomball Regl. Hosp.), 6s, 7/1/29 Baa2 2,015,000
800,000 (Tomball Regl. Hosp.), 6s, 7/1/25 Baa2 807,000
800,000 (Tomball Reg. Hosp.), 6s, 7/1/19 Baa2 818,000
Tyler, Hlth. Fac. Dev. Corp.
Rev. Bonds (Mother Frances Hosp.)
745,000 5s, 7/1/08 Baa1 785,975
500,000 5s, 7/1/07 Baa1 528,750
--------------
37,919,652
Utah (2.8%)
-------------------------------------------------------------------------------
750,000 Carbon Cnty., Solid Waste Disp.
Rev. Bonds (Laidlaw Env.), Ser. A,
7 1/2s, 2/1/10 BB- 766,875
5,000,000 Intermountain Power Agency
Rev. Bonds, Ser. A, FSA, 5s, 7/1/11 Aaa 5,525,000
8,000,000 Tooele Cnty., Harbor & Term. Dist.
Port Fac. Rev. Bonds (Union
Pacific), Ser. A, 5.7s, 11/1/26 BBB 7,910,000
1,000,000 UT Cnty., Env. Impt. Rev. Bonds
(Marathon Oil Project), 5.05s,
11/1/17 Baa1 1,056,250
--------------
15,258,125
Vermont (0.2%)
-------------------------------------------------------------------------------
1,000,000 VT Hsg. Fin. Agcy. Rev. Bonds, Ser.
19A, FSA, 4.62s, 5/1/29 Aaa 1,043,750
Virginia (1.0%)
-------------------------------------------------------------------------------
1,500,000 Fredericksburg, Indl. Dev. Auth.
Rev. Bonds (Medicorp Hlth. Syst.),
Ser. B, 5 1/8s, 6/15/33 A3 1,455,000
1,000,000 James Cnty., Indl. Dev. Auth.
Rev. Bonds (1st. Mtge.
Williamsburg), Ser. A, 6 1/8s,
3/1/32 BB-/P 1,000,000
3,900,000 Pocahontas Parkway Assn. Toll Rd.
Rev. Bonds, Ser. A, 5 1/2s, 8/15/28 BB 3,027,375
--------------
5,482,375
Washington (1.3%)
-------------------------------------------------------------------------------
5,000,000 King Cnty., G.O. Bonds, Ser. C,
6 1/4s, 1/1/32 Aa1 5,612,500
1,600,000 Port of Seattle, Special Fac.
Rev. Bonds (Northwest Airlines,
Inc.), 7 1/4s, 4/1/30 B+/P 1,490,000
--------------
7,102,500
West Virginia (0.3%)
-------------------------------------------------------------------------------
2,500,000 Princeton, Hosp. Rev. Bonds (Cmnty.
Hosp. Assn., Inc.), 6.1s, 5/1/29 Ba3 1,806,250
Wisconsin (1.7%)
-------------------------------------------------------------------------------
Badger Tobacco Settlement
Asset Securitization Corp.
Rev. Bonds
3,000,000 7s, 6/1/28 Baa2 2,850,000
3,000,000 6 3/8s, 6/1/32 Baa2 2,606,250
3,900,000 WI State Hlth. & Edl. Fac. Auth.
Rev. Bonds (Wheaton Franciscan),
5 3/4s, 8/15/30 A2 3,987,750
--------------
9,444,000
--------------
Total Municipal bonds and notes
(cost $547,630,362) $540,844,772
Preferred stocks (1.2%) (a)
Number of shares Value
-------------------------------------------------------------------------------
2,000,000 Charter Mac. Equity Trust 144A
Ser. A, 6.625% cum. pfd. $2,140,000
4,000,000 MuniMae Tax Exempt Bond Subsidiary,
LLC 144A 6.875% cum. pfd. 4,320,000
--------------
Total Preferred stocks
(cost $6,000,000) $6,460,000
-------------------------------------------------------------------------------
Total Investments
(cost $553,630,362) $547,304,772
-------------------------------------------------------------------------------
(a) Percentages indicated are based on portfolio market value.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at October 31, 2003 for the
securities listed. Ratings are generally ascribed to securities at the
time of issuance. While the agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these
securities at October 31, 2003. Securities rated by Putnam are indicated
by "/P" and are not publicly rated. Ratings are not covered by the
Report of independent accountants.
(NON) Non-income-producing security.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at October 31, 2003
$24,166,300 or 4.4% of portfolio market value.
The rates shown on VRDN, mandatory put bonds, and Floating Rate Bonds
(FRB) are the current interest rates shown at October 31, 2003.
The rates shown on IFB which are securities paying interest rates that
vary inversely to changes in the market interest rates, are the current
interest rates at October 31, 2003.
The fund had the following industry group concentrations greater than
10% at October 31, 2003
(as a percentage of portfolio market value):
Health care 26.5%
Utilities 20.2
Transportation 14.0
The fund had the following insurance concentrations greater than 10% at
October 31, 2003
(as a percentage of portfolio market value):
MBIA 14.6%
AMBAC 12.8
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
October 31, 2003
Assets
-------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$553,630,362) (Note 1) $547,304,772
-------------------------------------------------------------------------------
Cash 22,571
-------------------------------------------------------------------------------
Interest and other receivables 10,107,796
-------------------------------------------------------------------------------
Receivable for securities sold 2,553,000
-------------------------------------------------------------------------------
Total assets 559,988,139
Liabilities
-------------------------------------------------------------------------------
Distributions payable to shareholders 2,242,301
-------------------------------------------------------------------------------
Accrued preferred shares distributions payable (Note 1) 48,393
-------------------------------------------------------------------------------
Payable for securities purchased 4,633,527
-------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 973,814
-------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 44,863
-------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 52,451
-------------------------------------------------------------------------------
Payable for administrative services (Note 2) 5,585
-------------------------------------------------------------------------------
Other accrued expenses 121,866
-------------------------------------------------------------------------------
Total liabilities 8,122,800
-------------------------------------------------------------------------------
Series A, B and C remarketed preferred shares: (8,000 shares
authorized; 1,750 shares issued at $100,000 per share (Note 4) 175,000,000
-------------------------------------------------------------------------------
Net assets $376,865,339
Represented by
-------------------------------------------------------------------------------
Paid-in capital -- common shares (Note 1) $434,708,664
-------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 913,954
-------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (52,431,689)
-------------------------------------------------------------------------------
Net unrealized depreciation of investments (6,325,590)
-------------------------------------------------------------------------------
Total -- Representing net assets applicable to common shares
outstanding $376,865,339
Computation of net asset value
-------------------------------------------------------------------------------
Net asset value per common share ($376,865,339 divided by
47,206,343 shares) $7.98
-------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of operations
Year ended October 31, 2003
Interest income: $33,747,210
-------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------
Compensation of Manager (Note 2) 3,808,647
-------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 335,730
-------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 15,737
-------------------------------------------------------------------------------
Administrative services (Note 2) 8,167
-------------------------------------------------------------------------------
Preferred share remarketing agent fees 453,494
-------------------------------------------------------------------------------
Other 142,552
-------------------------------------------------------------------------------
Total expenses 4,764,327
-------------------------------------------------------------------------------
Expense reduction (Note 2) (26,382)
-------------------------------------------------------------------------------
Net expenses 4,737,945
-------------------------------------------------------------------------------
Net investment income 29,009,265
-------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (26,004,045)
-------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (1,103,407)
-------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 33,501,746
-------------------------------------------------------------------------------
Net gain on investments 6,394,294
-------------------------------------------------------------------------------
Net increase in net assets resulting from operations $35,403,559
-------------------------------------------------------------------------------
Distributions to Series A, B, and C remarketed
preferred shareholders: (Note 1)
-------------------------------------------------------------------------------
From tax exempt income (1,911,395)
-------------------------------------------------------------------------------
Net increase in net assets resulting from operations
applicable to common shareholders $33,492,164
-------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets
Year ended October 31
Increase (decrease) in net assets 2003 2002
-------------------------------------------------------------------------------
Operations:
-------------------------------------------------------------------------------
Net investment income $29,009,265 $32,937,590
-------------------------------------------------------------------------------
Net realized loss on investments (27,107,452) (3,409,597)
-------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 33,501,746 (30,443,946)
-------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 35,403,559 (915,953)
Distributions to Series A, B, and C
remarketed preferred shareholders: (Note 1)
-------------------------------------------------------------------------------
From tax exempt income (1,911,395) (2,589,647)
-------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations applicable to
common shareholders 33,492,164 (3,505,600)
-------------------------------------------------------------------------------
Distributions to common shareholders: (Note 1)
-------------------------------------------------------------------------------
From tax exempt income (26,907,616) (26,888,250)
-------------------------------------------------------------------------------
Increase from issuance of common shares in
connection with reinvestment of
distributions -- 419,191
-------------------------------------------------------------------------------
Total increase (decrease) in net assets 6,584,548 (29,974,659)
Net assets
-------------------------------------------------------------------------------
Beginning of year 370,280,791 400,255,450
-------------------------------------------------------------------------------
End of year (including undistributed net
investment income of $913,954 and $726,898,
respectively) $376,865,339 $370,280,791
-------------------------------------------------------------------------------
Number of fund shares
-------------------------------------------------------------------------------
Common shares outstanding at beginning of
year 47,206,343 47,155,237
-------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions -- 51,106
-------------------------------------------------------------------------------
Common shares outstanding at end of year 47,206,343 47,206,343
-------------------------------------------------------------------------------
Remarketed preferred shares outstanding at
beginning and end of year 1,750 1,750
-------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
Per-share Year ended October 31
operating performance 2003 2002 2001 2000 1999
-----------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period
(common shares) $7.84 $8.49 $8.44 $8.77 $9.82
-----------------------------------------------------------------------------------------------------------------------
Investment operations:
-----------------------------------------------------------------------------------------------------------------------
Net investment income (a) .61 .70 .72 .75 .80
-----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .14 (.73) .04 (.16) (.96)
-----------------------------------------------------------------------------------------------------------------------
Total from investment operations .75 (.03) .76 .59 (.16)
-----------------------------------------------------------------------------------------------------------------------
Distributions to preferred shareholders:
-----------------------------------------------------------------------------------------------------------------------
From net investment income (.04) (.05) (.12) (.16) (.13)
-----------------------------------------------------------------------------------------------------------------------
Total from investment
operations: (applicable to
common shareholders) .71 (.08) .64 .43 (.29)
-----------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
-----------------------------------------------------------------------------------------------------------------------
From net investment income: (.57) (.57) (.59) (.76) (.76)
-----------------------------------------------------------------------------------------------------------------------
Total distributions (.57) (.57) (.59) (.76) (.76)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $7.98 $7.84 $8.49 $8.44 $8.77
-----------------------------------------------------------------------------------------------------------------------
Market price, end of period
(common shares) $7.34 $7.43 $8.44 $9.63 $9.81
-----------------------------------------------------------------------------------------------------------------------
Total return at market price (%)
(common shares) (b) 6.44 (5.57) (6.21) 6.84 (7.72)
-----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
-----------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(common shares) (in thousands) $376,865 $370,281 $400,255 $396,212 $408,419
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) 1.27 1.25 1.22 1.27 1.23
-----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) 7.21 7.84 7.01 6.97 7.12
-----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 40.82 20.44 17.95 16.72 12.88
-----------------------------------------------------------------------------------------------------------------------
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment.
(c) Ratios reflect net assets available to common shares only; net
investment income ratio also reflects reduction for dividend payments to
preferred shareholders.
(d) Includes amounts paid through expense offset arrangements (Note 2).
The accompanying notes are an integral part of these financial
statements.
Notes to financial statements
October 31, 2003
Note 1
Significant accounting policies
Putnam Managed Municipal Income Trust (the "fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified,
closed-end management investment company. The fund's investment
objective is to seek a high level of current income exempt from federal
income tax. The fund intends to achieve its objective by investing in a
diversified portfolio of tax-exempt municipal securities which Putnam
Investment Management, LLC ("Putnam Management"), the fund's manager, an
indirect wholly-owned subsidiary of Putnam, LLC, believes does not
involve undue risk to income or principal. Up to 50% of the fund's
assets may consist of high-yield tax-exempt municipal securities that
are below investment grade and involve special risk considerations. The
fund also uses leverage by issuing preferred shares in an effort to
increase the income to the common shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are valued on the basis
of valuations provided by an independent pricing service, approved by
the Trustees. Such services use information with respect to transactions
in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining value. Restricted securities are valued at fair value
following procedures approved by the Trustees. Such valuations and
procedures are reviewed periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. All premiums/discounts
are amortized/accreted on a yield-to-maturity basis. The premium in
excess of the call price, if any, is amortized to the call date;
thereafter, any remaining premium is amortized to maturity.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The fund and the broker
agree to exchange an amount of cash equal to the daily fluctuation in
the value of the futures contract. Such receipts or payments are known
as "variation margin." Exchange traded options are valued at the last
sale price, or if no sales are reported, the last bid price for
purchased options and the last ask price for written options. Options
traded over-the-counter are valued using prices supplied by dealers.
D) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At October 31, 2003, the fund had a capital loss carryover of
$50,158,346 available to the extent allowed by tax law to offset future
net capital gain, if any. The amount of the carryover and the expiration
dates are:
Loss Carryover Expiration
--------------------------------
$11,188,485 October 31, 2005
2,894,998 October 31, 2006
3,629,209 October 31, 2007
1,237,146 October 31, 2008
1,641,465 October 31, 2009
3,729,886 October 31, 2010
25,837,157 October 31, 2011
E) Distributions to shareholders Distributions to common and preferred
shareholders from net investment income are recorded by the fund on the
ex-dividend date. Distributions from capital gains, if any, are recorded
on the ex-dividend date and paid at least annually. Dividends on
remarketed preferred shares become payable when, as and if declared by
the Trustees. Each dividend period for the remarketed preferred shares
is generally a 28-day period for Series A and Series B shares, and a
7-day period for Series C shares. The applicable dividend rate for the
remarketed preferred shares on October 31, 2003 was 0.81% for Series A,
0.92% for Series B and 0.98% for Series C. The amount and character of
income and gains to be distributed are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. These differences include temporary and permanent
differences of the expiration of a capital loss carryover, dividends
payable, defaulted bond interest, realized gains and losses on certain
futures contracts and straddle loss deferrals. Reclassifications are
made to the fund's capital accounts to reflect income and gains
available for distribution (or available capital loss carryovers) under
income tax regulations. For the year ended October 31, 2003, the fund
reclassified $3,198 to decrease undistributed net investment income and
$317,415 to decrease paid-in-capital, with an decrease to accumulated
net realized losses of $320,613.
The tax basis components of distributable earnings and the federal tax
cost as of period end were as follows:
Unrealized appreciation $21,797,633
Unrealized depreciation (27,917,893)
------------
Net unrealized depreciation (6,120,260)
Undistributed tax-exempt
income 3,545,655
Undistributed ordinary income 45,159
Capital loss carryforward (50,158,346)
Cost for federal income
tax purposes $553,425,032
F) Determination of net asset value Net asset value of the common shares
is determined by dividing the value of all assets of the fund, less all
liabilities and the liquidation preference of any outstanding remarketed
preferred shares, by the total number of common shares outstanding as of
period end.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on 0.70% of the average weekly net assets.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred
shares for that period exceed the fund's gross income attributable to
the proceeds of the remarketed preferred shares during that period, then
the fee payable to Putnam Management for that period will be reduced by
the amount of the excess (but not more than .70% of the liquidation
preference of the remarketed preferred shares outstanding during the
period).
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam, LLC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the year ended October 31, 2003, the
fund's expenses were reduced by $26,382 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $733 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Trustee compensation and expenses in the
Statement of operations. Accrued pension liability is included in
Payable for Trustee compensation and expenses in the Statement of assets
and liabilities.
Note 3
Purchases and sales of securities
During the year ended October 31, 2003, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $227,587,273 and $215,390,036, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Preferred shares
The Series A (550), Series B (550)and Series C (650) shares are
redeemable at the option of the fund on any dividend payment date at a
redemption price of $100,000 per share, plus an amount equal to any
dividends accumulated on a daily basis but unpaid through the redemption
date (whether or not such dividends have been declared) and, in certain
circumstances, a call premium.
Under the Investment Company Act of 1940, the fund is required to
maintain asset coverage of at least 200% with respect to the remarketed
preferred shares as of the last business day of each month in which any
such shares are outstanding. Additionally, the fund is required to meet
more stringent asset coverage requirements under terms of the remarketed
preferred shares and the shares' rating agencies. Should these
requirements not be met, or should dividends accrued on the remarketed
preferred shares not be paid, the fund may be restricted in its ability
to declare dividends to common shareholders or may be required to redeem
certain of the remarketed preferred shares. At October 31, 2003, no such
restrictions have been placed on the fund.
Note 5
Regulatory matters and litigation
On November 13, 2003, Putnam Management agreed to entry of an order
by the Securities and Exchange Commission (SEC) in partial
resolution of administrative and cease-and-desist proceedings
initiated by the SEC on October 28, 2003 in connection with alleged
excessive short-term trading by at least six Putnam Management
investment professionals. The SEC's findings reflect that four of
those employees engaged in such trading in funds over which they had
investment decision-making responsibility and had access to
non-public information regarding, among other things, current
portfolio holdings, and valuations. The six individuals no longer
have investment responsibilities with Putnam Management. Under the
order, Putnam Management will make restitution for losses
attributable to excessive short-term trading by Putnam employees,
institute new employee trading restrictions and enhanced employee
trading compliance, retain an independent compliance consultant, and
take other remedial actions. Putnam Management neither admitted nor
denied the order's findings, which included findings that Putnam
Management willfully violated provisions of the federal securities
laws. A civil monetary penalty and other monetary relief, if any,
will be determined at a later date. If a hearing is necessary to
determine the amounts of such penalty or other relief, Putnam
Management will be precluded from arguing that it did not violate
the federal securities laws in the manner described in the SEC
order, the findings set forth in the SEC order will be accepted as
true by the hearing officer and additional evidence may be
presented. Putnam Management, and not the investors in any Putnam
fund, will bear all costs, including restitution, civil penalties
and associated legal fees. Administrative proceedings instituted by
the Commonwealth of Massachusetts on October 28, 2003 against Putnam
Management in connection with alleged market timing activities by
Putnam employees and by participants in some Putnam-administered
401(k) plans are pending. Putnam Management has committed to make
complete restitution for any losses suffered by Putnam shareholders
as a result of any improper market-timing activities by Putnam
employees or within Putnam-administered 401(k) plans.
The SEC's and Commonwealth's allegations and related matters also
serve as the general basis for numerous lawsuits, including
purported class action lawsuits filed against Putnam Management and
certain related parties, including certain Putnam funds. Putnam
Management has agreed to bear any costs incurred by Putnam funds in
connection with these lawsuits. Based on currently available
information, Putnam Management believes that the likelihood that the
pending private lawsuits and purported class action lawsuits will
have a material adverse financial impact on the fund is remote, and
the pending actions are not likely to materially affect its ability
to provide investment management services to its clients, including
the Putnam funds.
Review of these matters by counsel for Putnam Management and by
separate independent counsel for the Putnam funds and their
independent Trustees is continuing. In addition, Marsh & McLennan
Companies, Inc., Putnam Management's parent company, has engaged
counsel to conduct a separate review of Putnam Management's policies
and controls related to short-term trading.
Federal tax information
(Unaudited)
The fund has designated 100% of dividends paid from net investment
income during the fiscal year as tax exempt for Federal income tax
purposes.
The Form 1099 you receive in January 2004 will show the tax status of
all distributions paid to your account in calendar 2003.
Results of October 7, 2003 shareholder meeting
(Unaudited)
An annual meeting of shareholders of the fund was held on October 7,
2003. At the meeting, each of the nominees for Trustees was elected, as
follows:
Common shares
Votes
Votes for withheld
-----------------------------------------------------------------
Jameson Adkins Baxter 40,520,151 902,275
Charles B. Curtis 40,532,196 890,229
Ronald J. Jackson 40,526,248 896,178
Paul L. Joskow 40,527,069 895,357
Elizabeth T. Kennan 40,508,704 913,722
Lawrence J. Lasser* 40,531,410 891,016
John H. Mullin III 40,543,758 878,668
George Putnam, III 40,524,063 898,362
A.J.C. Smith 40,500,558 921,868
W. Thomas Stephens 40,516,541 905,884
W. Nicholas Thorndike 40,493,265 929,161
Preferred Shares
Votes
Votes for withheld
-----------------------------------------------------------------
Jameson Adkins Baxter 1,620 0
Charles B. Curtis 1,620 0
John A. Hill 1,620 0
Ronald J. Jackson 1,620 0
Paul L. Joskow 1,620 0
Elizabeth T. Kennan 1,620 0
Lawrence J. Lasser* 1,620 0
John H. Mullin III 1,620 0
Robert E. Patterson 1,620 0
George Putnam, III 1,620 0
A.J.C. Smith 1,620 0
W. Thomas Stephens 1,620 0
W. Nicholas Thorndike 1,620 0
All tabulations are rounded to nearest whole number.
*Mr. Lasser resigned from the Board of Trustees of the Putnam funds on
November 3, 2003.
About the Trustees
Jameson A. Baxter (9/6/43), Trustee since 1994
Ms. Baxter is the President of Baxter Associates, Inc., a private
investment firm that she founded in 1986.
Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta
Corporation (a printing and digital imaging firm), Ryerson Tull, Inc. (a
steel service corporation), Advocate Health Care, and BoardSource,
formerly the National Center for Nonprofit Boards. She is Chairman
Emeritus of the Board of Trustees, Mount Holyoke College, having served
as Chairman for five years and as a board member for thirteen years.
Until 2002, Ms. Baxter was a Director of Intermatic Corporation (a
manufacturer of energy control products).
Ms. Baxter has held various positions in investment banking and
corporate finance, including Vice President and Principal of the Regency
Group, and Vice President of and Consultant to First Boston Corporation.
She is a graduate of Mount Holyoke College.
Charles B. Curtis (4/27/40), Trustee since 2001
Mr. Curtis is President and Chief Operating Officer of the Nuclear
Threat Initiative (a private foundation dealing with national security
issues) and serves as Senior Advisor to the United Nations Foundation.
Mr. Curtis is a member of the Council on Foreign Relations and the
Trustee Advisory Council of the Applied Physics Laboratory, Johns
Hopkins University. Until 2003, Mr. Curtis was a member of the Electric
Power Research Institute Advisory Council and the University of Chicago
Board of Governors for Argonne National Laboratory. Prior to 2002, Mr.
Curtis was a Member of the Board of Directors of the Gas Technology
Institute and the Board of Directors of the Environment and Natural
Resources Program Steering Committee, John F. Kennedy School of
Government, Harvard University. Until 2001, Mr. Curtis was a member of
the Department of Defense Policy Board and Director of EG&G Technical
Services, Inc. (a fossil energy research and development support
company).
Prior to May 1997, Mr. Curtis was Deputy Secretary of Energy. He served
as Chairman of the Federal Energy Regulatory Commission from 1977 to
1981 and has held positions on the staff of the U.S. House of
Representatives, the U.S. Treasury Department, and the Securities and
Exchange Commission.
John A. Hill (1/31/42), Trustee since 1985 and Chairman since 2000
Mr. Hill is Vice Chairman and Managing Director of First Reserve
Corporation, a private equity buyout firm that specializes in energy
investments in the diversified worldwide energy industry.
Mr. Hill is a Director of Devon Energy Corporation, TransMontaigne Oil
Company, Continuum Health Partners of New York, and various private
companies controlled by First Reserve Corporation, as well as a Trustee
of TH Lee Putnam Investment Trust (a closed-end investment company). He
is also a Trustee of Sarah Lawrence College.
Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held
executive positions in investment banking and investment management with
several firms and with the federal government, including Deputy
Associate Director of the Office of Management and Budget, and Deputy
Director of the Federal Energy Administration. He is active in various
business associations, including the Economic Club of New York, and
lectures on energy issues in the United States and Europe. Mr. Hill
holds a B.A. degree in Economics from Southern Methodist University and
pursued graduate studies there as a Woodrow Wilson Fellow.
Ronald J. Jackson (12/17/43), Trustee since 1996
Mr. Jackson is a private investor.
Mr. Jackson is President of the Kathleen and Ronald J. Jackson
Foundation (a charitable trust). He is also a member of the Board of
Overseers of WGBH (a public television and radio station) as well as a
member of the Board of Overseers of the Peabody Essex Museum.
Mr. Jackson is the former Chairman, President, and Chief Executive
Officer of Fisher-Price, Inc. (a major toy manufacturer), from which he
retired in 1993. He previously served as President and Chief Executive
Officer of Stride-Rite, Inc. (a manufacturer and distributor of
footwear) and of Kenner Parker Toys, Inc. (a major toy and game
manufacturer). Mr. Jackson was President of Talbots, Inc. (a distributor
of women's apparel) and has held financial and marketing positions with
General Mills, Inc. and Parker Brothers (a toy and game company). Mr.
Jackson is a graduate of the University of Michigan Business School.
Paul L. Joskow (6/30/47), Trustee since 1997
Dr. Joskow is the Elizabeth and James Killian Professor of Economics and
Management, and Director of the Center for Energy and Environmental
Policy Research at the Massachusetts Institute of Technology.
Dr. Joskow serves as a Director of National Grid Transco (a UK-based
holding company with interests in electric and gas transmission and
distribution, and telecommunications infrastructure). He also serves on
the board of the Whitehead Institute for Biomedical Research (a
non-profit research institution) and has been President of the Yale
University Council since 1993. Prior to February 2002, he was a Director
of State Farm Indemnity Company (an automobile insurance company) and
prior to March 2000 he was a Director of New England Electric System (a
public utility holding company).
Dr. Joskow has published five books and numerous articles on topics in
industrial organization, government regulation of industry, and
competition policy. He is active in industry restructuring,
environmental, energy, competition, and privatization policies --
serving as an advisor to governments and corporations worldwide. Dr.
Joskow holds a Ph.D. and M. Phil from Yale University and B.A. from
Cornell University.
Elizabeth T. Kennan (2/25/38), Trustee since 1992
Dr. Kennan is a partner in and Chairman of Cambus-Kenneth Bloodstock,
LLC (cattle and thoroughbred horses). She is President Emeritus of Mount
Holyoke College.
Dr. Kennan serves as a Trustee of Northeast Utilities and is a Director
of Talbots, Inc. She has served as Director on a number of other boards,
including Bell Atlantic, Chastain Real Estate, Shawmut Bank, Berkshire
Life Insurance, and Kentucky Home Life Insurance. She is a Trustee of
Centre College and of Midway College in Midway, Kentucky. She is also a
member of The Trustees of Reservations. Dr. Kennan has served on the
oversight committee of the Folger Shakespeare Library, as President of
Five Colleges Incorporated, as a Trustee of Notre Dame University, and
is active in various educational and civic associations.
As a member of the faculty of Catholic University for twelve years,
until 1978, Dr. Kennan directed the post-doctoral program in Patristic
and Medieval Studies, taught history, and published numerous articles.
Dr. Kennan holds a Ph.D. from the University of Washington in Seattle,
an M.S. from St. Hilda's College at Oxford University, and an A.B. from
Mount Holyoke College. She holds several honorary doctorates.
John H. Mullin, III (6/15/41), Trustee since 1997
Mr. Mullin is the Chairman and CEO of Ridgeway Farm (a limited liability
company engaged in timber and farming).
Mr. Mullin serves as a Director of Alex. Brown Realty, Inc., The Liberty
Corporation (a broadcasting company), Progress Energy, Inc. (a utility
company, formerly known as Carolina Power & Light), and Sonoco Products,
Inc. (a packaging company). Mr. Mullin is Trustee Emeritus of Washington
& Lee University, where he served as Chairman of the Investment
Committee. Prior to May 2001, he was a Director of Graphic Packaging
International Corp.
Mr. Mullin also served as a Director of Dillon, Read & Co., Inc. until
October 1997 and The Ryland Group, Inc. until January 1998. Mr. Mullin
is a graduate of Washington & Lee University and The Wharton Graduate
School, University of Pennsylvania.
Robert E. Patterson (3/15/45), Trustee since 1984
Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman
of Cabot Properties, Inc.
Mr. Patterson serves as Chairman of the Joslin Diabetes Center, as a
Trustee of Sea Education Association, and as a Director of Brandywine
Trust Company. Prior to December 2001, he was President and Trustee of
Cabot Industrial Trust (a publicly traded real estate investment trust).
Prior to February 1998, Mr. Patterson was Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership (a
registered investment advisor involved in institutional real estate
investments). Prior to 1990, he served as Executive Vice President of
Cabot, Cabot & Forbes Realty Advisors, Inc. (the predecessor company of
Cabot Partners) and as a Senior Vice President of the Beal Companies (a
real estate management, investment, and development firm).
Mr. Patterson practiced law and held various positions in state
government, and was the founding Executive Director of the Massachusetts
Industrial Finance Agency. Mr. Patterson is a graduate of Harvard
College and Harvard Law School.
W. Thomas Stephens (9/2/42), Trustee since 1997
Mr. Stephens serves on a number of corporate boards.
Mr. Stephens serves as a Director of Xcel Energy Incorporated (a public
utility company), TransCanada Pipelines Limited, Norske Canada, Inc. (a
paper manufacturer), and Qwest Communications. Until 2003, Mr. Stephens
was a Director of Mail-Well, Inc. (a diversified printing company). He
served as Chairman of Mail-Well until 2001 and as CEO of
MacMillan-Bloedel, Ltd. (a forest products company) until 1999.
Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of
Johns Manville Corporation. He holds B.S. and M.S. degrees from the
University of Arkansas.
W. Nicholas Thorndike (3/28/33), Trustee since 1992
Mr. Thorndike serves on the boards of various corporations and
charitable organizations.
Mr. Thorndike is a Director of Courier Corporation (a book publisher and
manufacturer) and The Providence Journal Co. (a newspaper publisher). He
is also a Trustee of Northeastern University and an honorary Trustee of
Massachusetts General Hospital, where he previously served as Chairman
and President. Prior to September 2000, he was a Director of Bradley
Real Estate, Inc.; prior to April 2000, he was a Trustee of Eastern
Utilities Associates; and prior to December 2001, he was a Trustee of
Cabot Industrial Trust.
Mr. Thorndike has also served as Chairman of the Board and Managing
Partner of Wellington Management Company/Thorndike, Doran, Paine & Lewis
(a registered investment advisor that manages mutual funds and
institutional assets), as a Trustee of the Wellington Group of Funds
(currently The Vanguard Group), and as Chairman and a Director of Ivest
Fund, Inc. Mr. Thorndike is a graduate of Harvard College.
George Putnam, III* (8/10/51), Trustee since 1984 and President
since 2000
Mr. Putnam is President of New Generation Research, Inc. (a publisher of
financial advisory and other research services), and of New Generation
Advisers, Inc. (a registered investment advisor to private funds). Mr.
Putnam founded the New Generation companies in 1986.
Mr. Putnam is a Director of The Boston Family Office, LLC (a registered
investment advisor). He is a Trustee of St. Mark's School, Shore Country
Day School, and until 2002 was a Trustee of the Sea Education
Association.
Mr. Putnam previously worked as an attorney with the law firm of Dechert
Price & Rhoads in Philadelphia. He is a graduate of Harvard College,
Harvard Business School, and Harvard Law School.
A.J.C. Smith* (4/13/34), Trustee since 1986
Mr. Smith is Chairman of Putnam Investments and a Director of Marsh &
McLennan Companies, Inc.
Mr. Smith is also a Director of Trident Corp. (a limited partnership
with over thirty institutional investors). He is also a Trustee of the
Carnegie Hall Society, the Educational Broadcasting Corporation, and the
National Museums of Scotland. He is Chairman of the Central Park
Conservancy and a Member of the Board of Overseers of the Joan and
Sanford I. Weill Graduate School of Medical Sciences of Cornell
University. Prior to May 2000 and November 1999, Mr. Smith was Chairman
and CEO, respectively, of Marsh & McLennan Companies, Inc.
The address of each Trustee is One Post Office Square, Boston, MA 02109.
As of October 31, 2003, there were 102 Putnam Funds.
Each Trustee serves for an indefinite term, until his or her
resignation, retirement at age 72, death, or removal.
* Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund, Putnam
Management, Putnam Retail Management, or Marsh & McLennan Companies,
Inc., the parent company of Putnam, LLC and its affiliated companies.
Messrs. Putnam, III, and Smith are deemed "interested persons" by virtue
of their positions as officers or shareholders of the fund or Putnam
Management, Putnam Retail Management, or Marsh & McLennan Companies,
Inc. George Putnam, III is the President of your fund and each of the
other Putnam funds. Mr. Smith serves as a Director of Marsh & McLennan
Companies, Inc.
Officers
In addition to George Putnam, III, the other officers of the
fund are shown below:
Charles E. Porter (7/26/38)
Executive Vice President, Treasurer and
Principal Financial
Officer
Since 1989
Managing Director, Putnam Investments
and Putnam Management
Patricia C. Flaherty (12/1/46)
Senior Vice President
Since 1993
Senior Vice President, Putnam Investments and Putnam
Management
Karnig H. Durgarian (1/13/56)
Vice President and Principal Executive Officer
Since 2002
Senior Managing Director, Putnam Investments
Steven D. Krichmar (6/27/58)
Vice President and Principal Financial Officer
Since 2002
Managing Director, Putnam Investments. Prior to July 2001,
Partner, PricewaterhouseCoopers LLP
Michael T. Healy (1/24/58)
Assistant Treasurer and Principal
Accounting Officer
Since 2000
Managing Director, Putnam Investments
Beth S. Mazor (4/6/58)
Vice President
Since 2002
Senior Vice President, Putnam Investments
Gordon H. Silver (7/3/47)
Vice President
Since 1990
Senior Managing Director, Putnam Investments, Putnam
Management and Putnam Retail Management
Mark C. Trenchard (6/5/62)
Vice President and BSA Compliance Officer
Since 2002
Senior Vice President, Putnam Investments
William H. Woolverton (1/17/51)
Vice President and Chief Legal Officer
Since 2003
Managing Director, Putnam Investments, Putnam Management and
Putnam Retail Management
Judith Cohen (6/7/45)
Clerk and Assistant Treasurer
Since 1993
Clerk and Assistant Treasurer, The Putnam Funds
The address of each Officer is One Post Office Square, Boston, MA 02109.
Fund information
About Putnam Investments
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary Trust Company
Legal Counsel
Ropes & Gray LLP
Independent Auditors
KPMG LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President,
Treasurer and Principal Financial Officer
Patricia C. Flaherty
Senior Vice President
Karnig H. Durgarian
Vice President and Principal Executive Officer
Steven D. Krichmar
Vice President and Principal Financial Officer
Michael T. Healy
Assistant Treasurer and Principal Accounting Officer
Beth S. Mazor
Vice President
Gordon H. Silver
Vice President
Mark C. Trenchard
Vice President and
BSA Compliance Officer
William H. Woolverton
Vice President and
Chief Legal Officer
Judith Cohen
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9:00 a.m. to 5:00 p.m. Eastern Time,
or visit our Web site (www.putnaminvestments.com) anytime for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
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203415 052 12/03
Item 2. Code of Ethics:
-----------------------
All officers of the Fund, including its principal executive, financial and
accounting officers, are employees of Putnam Investment Management, LLC,
the Fund's investment manager. As such they are subject to a comprehensive
Code of Ethics adopted and administered by Putnam Investments which is
designed to protect the interests of the firm and its clients. The Fund
has adopted a Code of Ethics which incorporates the Code of Ethics of
Putnam Investments with respect to all of its officers and Trustees who are
employees of Putnam Investment Management, LLC. For this reason, the Fund
has not adopted a separate code of ethics governing its principal
executive, financial and accounting officers.
Item 3. Audit Committee Financial Expert:
-----------------------------------------
The Funds' Audit and Pricing Committee is comprised solely of Trustees
who are "independent" (as such term has been defined by the Securities
and Exchange Commission ("SEC") in regulations implementing Section 407
of the Sarbanes-Oxley Act (the "Regulations")). The Trustees believe
that each of the members of the Audit and Pricing Committee also possess
a combination of knowledge and experience with respect to financial
accounting matters, as well as other attributes, that qualify them for
service on the Committee. In addition, the Trustees have determined
that all members of the Funds' Audit and Pricing Committee meet the
financial literacy requirements of the New York Stock Exchange's rules
and that Mr. Patterson and Mr. Stephens qualify as "audit committee
financial experts" (as such term has been defined by the Regulations)
based on their review of their pertinent experience and education.
Certain other Trustees, although not on the Audit and Pricing Committee,
would also qualify as "audit committee financial experts." The SEC has
stated that the designation or identification of a person as an audit
committee financial expert pursuant to this Item 3 of Form N-CSR does
not impose on such person any duties, obligations or liability that are
greater than the duties, obligations and liability imposed on such
person as a member of the Audit and Pricing Committee and the Board of
Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services:
-----------------------------------------------
Not applicable
Items 5-6. [Reserved]
---------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
-------------------------------------------------------------------------
Management Investment Companies:
--------------------------------
Proxy Voting Guidelines of the Putnam Funds
-------------------------------------------
The proxy voting guidelines below summarize the Funds' positions on
various issues of concern to investors, and give a general indication of
how Fund portfolio securities will be voted on proposals dealing with a
particular issue. The Funds' proxy voting service is instructed to vote
all proxies relating to Fund portfolio securities in accordance with
these guidelines, except as otherwise instructed by the Proxy
Coordinator.
The proxy voting guidelines are just that - guidelines. The guidelines
are not exhaustive and do not include all potential voting issues.
Because proxy issues and the circumstances of individual companies are
so varied, there may be instances when the Funds may not vote in strict
adherence to these guidelines. For example, the proxy voting service is
expected to bring to the Proxy Coordinator's attention proxy questions
that are company-specific and of a non-routine nature and, although
covered by the guidelines, may be more appropriately handled on a
case-by-case basis.
Similarly, Putnam Management's investment professionals, as part of
their ongoing review and analysis of all Fund portfolio holdings, are
responsible for monitoring significant corporate developments, including
proxy proposals submitted to shareholders, and notifying the Proxy
Coordinator of circumstances where the interests of Fund shareholders
may warrant a vote contrary to these guidelines. In such instances, the
investment professionals will submit a written recommendation to the
Proxy Coordinator and the person or persons designated by Putnam
Management's Legal and Compliance Department to assist in processing
referral items pursuant to the Funds' "Proxy Voting Procedures." The
Proxy Coordinator, in consultation with the Senior Vice President,
Executive Vice President and/or the Chair of the Board Policy and
Nominating Committee, as appropriate, will determine how the Funds'
proxies will be voted. When indicated, the Chair of the Board Policy
and Nominating Committee may consult with other members of the Committee
or the full board of Trustees.
The following guidelines are grouped according to the types of proposals
generally presented to shareholders. Part I deals with proposals which
have been approved and recommended by a company's board of directors.
Part II deals with proposals submitted by shareholders for inclusion in
proxy statements. Part III addresses unique considerations pertaining
to foreign issuers.
I. Board-Approved Proposals
---------------------------
The vast majority of matters presented to shareholders for a vote
involve proposals made by a company itself (sometimes referred to as
"management proposals"), which have been approved and recommended by its
board of directors. In view of the enhanced corporate governance
practices currently being implemented in public companies and the Funds'
intent to hold corporate boards accountable for their actions in
promoting shareholder interests, the Funds' proxies generally will be
voted in support of decisions reached by independent boards of
directors. Accordingly, the Funds' proxies will be voted for
board-approved proposals, except as follows:
A. Matters Relating to the Board of Directors
---------------------------------------------
The board of directors has the important role of overseeing management
and its performance on behalf of shareholders. The Funds' proxies will
be voted for the election of the company's nominees for directors and
for board-approved proposals on other matters relating to the board of
directors (provided that such nominees and other matters have been
approved by an independent nominating committee), except as follows:
* The Funds will withhold votes for the entire board of directors if
* The board does not have a majority of independent directors; or
* The board does not have nominating, audit and compensation committees
composed solely of independent directors.
Commentary: While these requirements will likely become mandatory for
most public companies in the near future as a result of pending NYSE and
NASDAQ rule proposals, the Funds' Trustees believe that there is no
excuse for public company boards that fail to implement these vital
governance reforms at their next annual meeting. For these purposes, an
"independent director" is a director who meets all requirements to serve
as an independent director of a company under the pending NYSE rule
proposals (i.e., no material business relationships with the company, no
present or recent employment relationship with the company (including
employment of immediate family members) and, in the case of audit
committee members, no compensation for non-board services). As
indicated below, the Funds will generally vote on a case-by-case basis
on board-approved proposals where the board fails to meet these basic
independence standards.
* The Funds will withhold votes for any nominee for director who is
considered an independent director by the company and who has received
compensation from the company other than for service as a director
(e.g., investment banking, consulting, legal or financial advisory
fees).
Commentary: The Funds' Trustees believe that receipt of compensation
for services other than service as a director raises significant
independence issues. The Funds will withhold votes for any nominee for
director who is considered an independent director by the company and
who receives such compensation.
* The Funds will withhold votes for the entire board of directors if the
board has more than 19 members or fewer than five members, absent
special circumstances.
Commentary: The Funds' Trustees believe that the size of the board of
directors can have a direct impact on the ability of the board to govern
effectively. Boards that have too many members can be unwieldy and
ultimately inhibit their ability to oversee management performance.
Boards that have too few members can stifle innovation and lead to
excessive influence by management.
* The Funds will vote on a case-by-case basis in contested elections of
directors.
* The Funds will withhold votes for any nominee for director who attends
less than 75% of board and committee meetings without valid reasons for
the absences (i.e., illness, personal emergency, etc.).
Commentary: Being a director of a company requires a significant time
commitment to adequately prepare for and attend the company's board and
committee meetings. Directors must be able to commit the time and
attention necessary to perform their fiduciary duties in proper fashion,
particularly in times of crisis.
The Funds' Trustees are concerned about over-committed directors. In
some cases, directors may serve on too many boards to make a meaningful
contribution. This may be particularly true for senior executives of
public companies (or other directors with substantially full-time
employment) who serve on more than a few outside boards. The Funds may
withhold votes from such directors on a case-by-case basis where it
appears that they may be unable to discharge their duties properly
because of excessive commitments.
* The Funds will withhold votes for any nominee for director of a public
company (Company A) who is employed as a senior executive of another
public company (Company B) if a director of Company B serves as a senior
executive of Company A (commonly referred to as an "interlocking
directorate").
Commentary: The Funds' Trustees believe that interlocking directorships
are inconsistent with the degree of independence required for outside
directors of public companies.
Board independence depends not only on its members' individual
relationships, but also the board's overall attitude toward management.
Independent boards are committed to good corporate governance practices
and, by providing objective independent judgment, enhancing shareholder
value. The Funds may withhold votes on a case-by-case basis from some or
all directors that, through their lack of independence, have failed to
observe good corporate governance practices or, through specific
corporate action, have demonstrated a disregard for the interest of
shareholders.
* The Funds will vote against proposals to classify a board, absent
special circumstances indicating that shareholder interests would be
better served by this structure.
Commentary: Under a typical classified board structure, the directors
are divided into three classes, with each class serving a three-year
term. The classified board structure results in directors serving
staggered terms, with usually only a third of the directors up for
re-election at any given annual meeting. The Funds' Trustees generally
believe that it is appropriate for directors to stand for election each
year, but recognize that, in special circumstances, shareholder
interests may be better served under a classified board structure.
B. Executive Compensation
-------------------------
The Funds generally favor compensation programs that relate executive
compensation to a company's long-term performance. The Funds will vote
on a case-by-case basis on board-approved proposals relating to
executive compensation, except as follows:
* Except where the Funds are otherwise withholding votes for the entire
board of directors, the Funds will vote for stock option plans which
will result in an average annual dilution of 1.67% or less (including
all equity-based plans).
* The Funds will vote against stock option plans that permit replacing
or repricing of underwater options (and against any proposal to
authorize such replacement or repricing of underwater options).
* The Funds will vote against stock option plans that permit issuance of
options with an exercise price below the stock's current market price.
* Except where the Funds are otherwise withholding votes for the entire
board of directors, the Funds will vote for employee stock purchase
plans that have the following features: (1) the shares purchased under
the plan are acquired for no less than 85% of their market value, (2)
the offering period under the plan is 27 months or less, and (3)
dilution is 10% or less.
Commentary: Companies should have compensation programs that are
reasonable and that align shareholder and management interests over the
longer term. Further, disclosure of compensation programs should provide
absolute transparency to shareholders regarding the sources and amounts
of, and the factors influencing, executive compensation. Appropriately
designed equity-based compensation plans can be an effective way to
align the interests of long-term shareholders with the interests of
management. The Funds may vote against executive compensation proposals
on a case-by-case basis where compensation is excessive by reasonable
corporate standards, or where a company fails to provide transparent
disclosure of executive compensation. In voting on proposals relating to
executive compensation, the Funds will consider whether the proposal has
been approved by an independent compensation committee of the board.
C. Capitalization
-----------------
Many proxy proposals involve changes in a company's capitalization,
including the authorization of additional stock, the repurchase of
outstanding stock or the approval of a stock split. The management of a
company's capital structure involves a number of important issues,
including cash flow, financing needs and market conditions that are
unique to the circumstances of each company. As a result, the Funds will
vote on a case-by-case basis on board-approved proposals involving
changes to a company's capitalization, except that where the Funds are
not otherwise withholding votes from the entire board of directors:
* The Funds will vote for proposals relating to the authorization of
additional common stock (except where such proposals relate to a
specific transaction).
* The Funds will vote for proposals to effect stock splits (excluding
reverse stock splits.)
* The Funds will vote for proposals authorizing share repurchase
programs.
Commentary: A company may decide to authorize additional shares of
common stock for reasons relating to executive compensation or for
routine business purposes. For the most part, these decisions are best
left to the board of directors and senior management. The Funds will
vote on a case-by-case basis, however, on other proposals to change a
company's capitalization, including the authorization of common stock
with special voting rights, the authorization or issuance of common
stock in connection with a specific transaction (e.g., an acquisition,
merger or reorganization) or the authorization or issuance of preferred
stock. Actions such as these involve a number of considerations that may
impact a shareholder's investment and warrant a case-by-case
determination.
D. Acquisitions, Mergers, Reincorporations, Reorganizations and
Other Transactions
---------------------------------------------------------------
Shareholders may be confronted with a number of different types of
transactions, including acquisitions, mergers, reorganizations involving
business combinations, liquidations and sale of all or substantially all
of a company's assets, which may require their consent. Voting on such
proposals involves considerations unique to each transaction. As a
result, the Funds will vote on a case-by-case basis on board-approved
proposals to effect these types of transactions, except as follows:
* The Funds will vote for mergers and reorganizations involving business
combinations designed solely to reincorporate a company in Delaware.
Commentary: A company may reincorporate into another state through a
merger or reorganization by setting up a "shell" company in a different
state and then merging the company into the new company. While
reincorporation into states with extensive and established corporate
laws - notably Delaware - provides companies and shareholders with a
more well-defined legal framework, generally speaking, shareholders must
carefully consider the reasons for a reincorporation into another
jurisdiction, including especially offshore jurisdictions.
E. Anti-Takeover Measures
-------------------------
Some proxy proposals involve efforts by management to make it more
difficult for an outside party to take control of the company without
the approval of the company's board of directors. These include adoption
of a shareholder rights plan, requiring supermajority voting on
particular issues, adoption of fair price provisions, issuance of blank
check preferred stock and creating a separate class of stock with
disparate voting rights. Such proposals may adversely affect shareholder
rights, lead to management entrenchment, or create conflicts of
interest. As a result, the Funds will vote against board-approved
proposals to adopt such anti-takeover measures, except as follows:
* The Funds will vote on a case-by-case basis on proposals to ratify or
approve shareholder rights plans (commonly referred to as "poison
pills"); and
* The Funds will vote on a case-by-case basis on proposals to adopt fair
price provisions.
Commentary: The Funds' Trustees recognize that poison pills and fair
price provisions may enhance shareholder value under certain
circumstances. As a result, the Funds will consider proposals to approve
such matters on a case-by-case basis.
F. Other Business Matters
-------------------------
Many proxies involve approval of routine business matters, such as
changing the company's name, ratifying the appointment of auditors and
procedural matters relating to the shareholder meeting. For the most
part, these routine matters do not materially affect shareholder
interests and are best left to the board of directors and senior
management of the company. The Funds will vote for board-approved
proposals approving such matters, except as follows:
* The Funds will vote on a case-by-case basis on proposals to amend a
company's charter or bylaws (except for charter amendments necessary or
to effect stock splits to change a company's name or to authorize
additional shares of common stock).
* The Funds will vote against authorization to transact other
unidentified, substantive business at the meeting.
* The Funds will vote on a case-by-case basis on other business matters
where the Funds are otherwise withholding votes for the entire board of
directors.
Commentary: Charter and bylaw amendments and the transaction of other
unidentified, substantive business at a shareholder meeting may directly
affect shareholder rights and have a significant impact on shareholder
value. As a result, the Funds do not view such items as routine business
matters. Putnam Management's investment professionals and the Funds'
proxy voting service may also bring to the Proxy Coordinator's attention
company-specific items which they believe to be non-routine and
warranting special consideration. Under these circumstances, the Funds
will vote on a case-by-case basis.
II. Shareholder Proposals
-------------------------
SEC regulations permit shareholders to submit proposals for inclusion in
a company's proxy statement. These proposals generally seek to change
some aspect of a company's corporate governance structure or to change
some aspect of its business operations. The Funds will vote in
accordance with the recommendation of the company's board of directors
on all shareholder proposals, except as follows:
* The Funds will vote for shareholder proposals to declassify a board,
absent special circumstances which would indicate that shareholder
interests are better served by a classified board structure.
* The Funds will vote for shareholder proposals to require shareholder
approval of shareholder rights plans.
* The Funds will vote for shareholder proposals that are consistent with
the Fund's proxy voting guidelines for board-approved proposals.
* The Funds will vote on a case-by-case basis on other shareholder
proposals where the Funds are otherwise withholding votes for the entire
board of directors.
Commentary: In light of the substantial reforms in corporate governance
that are currently underway, the Funds' Trustees believe that effective
corporate reforms should be promoted by holding boards of directors -
and in particular, their independent directors - accountable for their
actions, rather than imposing additional legal restrictions on board
governance through piecemeal proposals. Generally speaking, shareholder
proposals relating to business operations are often motivated primarily
by political or social concerns, rather than the interests of
shareholders as investors in an economic enterprise. As stated above,
the Funds' Trustees believe that boards of directors and management are
responsible for ensuring that their businesses are operating in
accordance with high legal and ethical standards and should be held
accountable for resulting corporate behavior. Accordingly, the Funds
will generally support the recommendations of boards that meet the basic
independence and governance standards established in these guidelines.
Where boards fail to meet these standards, the Funds will generally
evaluate shareholder proposals on a case-by-case basis.
III. Voting Shares of Foreign Issuers
-------------------------------------
Many of the Funds invest on a global basis and, as a result, they may be
required to vote shares held in foreign issuers - i.e., issuers that are
incorporated under the laws of a foreign jurisdiction and that are not
listed a U.S. securities exchange or the NASDAQ stock market. Because
foreign issuers are incorporated under the laws of countries and
jurisdictions outside the U.S., protection for shareholders may vary
significantly from jurisdiction to jurisdiction. Laws governing foreign
issuers may, in some cases, provide substantially less protection for
shareholders. As a result, the foregoing guidelines, which are premised
on the existence of a sound corporate governance and disclosure
framework, may not be appropriate under some circumstances for foreign
issuers. The Funds will vote proxies of foreign issuers in accordance
with the foregoing guidelines where applicable, except as follows:
* The Funds will vote for shareholder proposals calling for a majority
of the directors to be independent of management.
* The Funds will vote for shareholder proposals seeking to increase the
independence of board nominating, audit and compensation committees.
* The Funds will vote for shareholder proposals that implement corporate
governance standards similar to those established under U.S. federal law
and the listing requirements of U.S. stock exchanges, and that do not
otherwise violate the laws of the jurisdiction under which the company
is incorporated.
* The Funds will vote on case-by-case basis on proposals relating to (1)
the issuance of common stock in excess of 20% of a company's outstanding
common stock where shareholders do not have preemptive rights, or (2)
the issuance of common stock in excess of 100% of a company's
outstanding common stock where shareholders have preemptive rights.
Commentary: In many non-U.S. markets, shareholders who vote proxies for
shares of a foreign issuer are not able to trade in that company's stock
within a given period of time on or around the shareholder meeting date.
This practice is known as "share blocking." In countries where share
blocking is practiced, the Funds will vote proxies only with direction
from Putnam Management's investment professionals.
As adopted March 14, 2003
Proxy Voting Procedures of the Putnam Funds
-------------------------------------------
The Role of the Funds' Trustees
-------------------------------
The Trustees of the Putnam Funds exercise control of the voting of
proxies through their Board Policy and Nominating Committee, which is
composed entirely of independent Trustees. The Board Policy and
Nominating Committee oversees the proxy voting process and participates,
as needed, in the resolution of issues which need to be handled on a
case-by-case basis. The Committee annually reviews and recommends for
approval by the Trustees guidelines governing the Funds' proxy votes,
including how the Funds vote on specific proposals and which matters are
to be considered on a case-by-case basis. The Trustees are assisted in
this process by their independent administrative staff ("Fund
Administration"), independent legal counsel, and an independent proxy
voting service. The Trustees also receive assistance from Putnam
Investment Management, LLC ("Putnam Management"), the Funds' investment
adviser, on matters involving investment judgments. In all cases, the
ultimate decision on voting proxies rests with the Trustees, acting as
fiduciaries on behalf of the shareholders of the Funds.
The Role of the Proxy Voting Service
------------------------------------
The Funds have engaged an independent proxy voting service to assist in
the voting of proxies. The proxy voting service is responsible for
coordinating with the Funds' custodians to ensure that all proxy
materials received by the custodians relating to the Funds' portfolio
securities are processed in a timely fashion. To the extent applicable,
the proxy voting service votes all proxies in accordance with the proxy
voting guidelines established by the Trustees. The proxy voting service
will refer proxy questions to the Proxy Coordinator (described below)
for instructions under circumstances where: (1) the application of the
proxy voting guidelines is unclear, (2) a particular proxy question is
not covered by the guidelines, or (3) the guidelines call for specific
instructions on a case-by-case basis. The proxy voting service is also
requested to call to the Proxy Coordinator's attention specific proxy
questions which, while governed by a guideline, appear to involve
unusual or controversial issues. The Funds also utilize research
services relating to proxy questions provided by the proxy voting
service and by other firms.
The Role of the Proxy Coordinator
---------------------------------
Each year, a member of Fund Administration is appointed Proxy
Coordinator to assist in the coordination and voting of the Funds'
proxies. The Proxy Coordinator will deal directly with the proxy voting
service and, in the case of proxy questions referred by the proxy voting
service, will solicit voting recommendations and instructions from Fund
Administration, the Chair of the Board Policy and Nominating Committee,
and Putnam Management's investment professionals, as appropriate. The
Proxy Coordinator is responsible for ensuring that these questions and
referrals are responded to in a timely fashion and for transmitting
appropriate voting instructions to the proxy voting service.
Voting Procedures for Referral Items
-------------------------------------
As discussed above, the proxy voting service will refer proxy questions
to the Proxy Coordinator under certain circumstances. When the
application of the proxy voting guidelines is unclear or a particular
proxy question is not covered by the guidelines (and does not involve
investment considerations), the Proxy Coordinator will assist in
interpreting the guidelines and, as appropriate, consult with the Senior
Vice President of Fund Administration, the Executive Vice President of
Fund Administration and the Chair of the Board Policy and Nominating
Committee on how the Funds' shares will be voted.
For proxy questions that require a case-by-case analysis pursuant to the
guidelines or that are not covered by the guidelines but involve
investment considerations, the Proxy Coordinator will refer such
questions, through a written request, to Putnam Management's investment
professionals for a voting recommendation. Such referrals will be made
in cooperation with the person or persons designated by Putnam
Management's Legal and Compliance Department to assist in processing
such referral items. In connection with each such referral item, the
Legal and Compliance Department will conduct a conflicts of interest
review, as described below under "Conflicts of Interest," and provide a
conflicts of interest report (the "Conflicts Report") to the Proxy
Coordinator describing the results of such review. After receiving a
referral item from the Proxy Coordinator, Putnam Management's investment
professionals will provide a written recommendation to the Proxy
Coordinator and the person or persons designated by the Legal and
Compliance Department to assist in processing referral items. Such
recommendation will set forth (1) how the proxies should be voted, (2)
the basis and rationale for such recommendation, and (3) any contacts
the investment professionals have had with respect to the referral item
with non-investment personnel of Putnam Management or with outside
parties (except for routine communications from proxy solicitors). The
Proxy Coordinator will then review the investment professionals'
recommendation and the Conflicts Report with the Senior Vice President
and/or Executive Vice President in determining how to vote the Funds'
proxies. The Proxy Coordinator will maintain a record of all proxy
questions that have been referred to Putnam Management's investment
professionals, the voting recommendation and the Conflicts Report.
In some situations, the Proxy Coordinator, the Senior Vice President
and/or the Executive Vice President may determine that a particular
proxy question raises policy issues requiring consultation with the
Chair of the Board Policy and Nominating Committee who, in turn, may
decide to bring the particular proxy question to the Committee or the
full board of Trustees for consideration.
Conflicts of Interest
---------------------
Occasions may arise where a person or organization involved in the proxy
voting process may have a conflict of interest. A conflict of interest
may exist, for example, if Putnam Management has a business relationship
with (or is actively soliciting business from) either the company
soliciting the proxy or a third party that has a material interest in
the outcome of a proxy vote or that is actively lobbying for a
particular outcome of a proxy vote. Any individual with knowledge of a
personal conflict of interest (e.g., familial relationship with company
management) relating to a particular referral item shall disclose that
conflict to the Proxy Coordinator and the Legal and Compliance
Department and otherwise remove himself or herself from the proxy voting
process. The Legal and Compliance Department will review each item
referred to Putnam Management's investment professionals to determine if
a conflict of interest exists and will provide the Proxy Coordinator
with a Conflicts Report for each referral item that (1) describes any
conflict of interest; (2) discusses the procedures used to address such
conflict of interest; and (3) discloses any contacts from parties
outside Putnam Management (other than routine communications from proxy
solicitors) with respect to the referral item not otherwise reported in
an investment professional's recommendation. The Conflicts Report will
also include written confirmation that any recommendation from an
investment professional provided under circumstances where a conflict of
interest exists was made solely on the investment merits and without
regard to any other consideration.
As adopted March 14, 2003
Item 8. [Reserved]
------------------
Item 9. Controls and Procedures:
--------------------------------
(a) The registrant's principal executive officer and principal financial
officers have concluded, based on their evaluation of the effectiveness
of the design and operation of the registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report
on Form N-CSR, that the design and operation of such procedures are
effective to provide reasonable assurance that information required to
be disclosed by the investment company in the reports that it files or
submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized, and reported within the time periods specified in
the Commission's rules and forms.
(b) Changes in internal control over financial reporting:
Not applicable
Item 10. Exhibits:
------------------
(a) The Code of Ethics of The Putnam Funds, which incorporates the
Code of Ethics of Putnam Investments, is filed herewith.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act of 2002
are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: December 23, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Karnig H. Durgarian
---------------------------
Karnig H. Durgarian
Principal Executive Officer
Date: December 23, 2003
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Financial Officer
Date: December 23, 2003
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: December 23, 2003