N-CSR 1 a_managedmuniincome.htm PUTNAM MANAGED MUNICIPAL INCOME TRUST a_managedmuniincome.htm
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
 
FORM N-CSR 
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED 
MANAGEMENT INVESTMENT COMPANIES 
 
Investment Company Act file number: (811-05740) 
 
Exact name of registrant as specified in charter:  Putnam Managed Municipal Income Trust 
 
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109 
 
Name and address of agent for service:  Robert T Burns, Vice President 
  One Post Office Square 
  Boston, Massachusetts 02109 
   
Copy to: John W. Gerstmayr, Esq. 
  Ropes & Gray LLP 
  800 Boylston Street 
  Boston, Massachusetts 02199-3600 
 
Registrant’s telephone number, including area code:  (617) 292-1000 
 
Date of fiscal year end: October 31, 2012   
 
Date of reporting period: November 1, 2011 - October 31, 2012 

Item 1. Report to Stockholders:

The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:




Putnam
Managed Municipal
Income Trust

Annual report
10 | 31 | 12

Message from the Trustees  1 
About the fund  2 
Performance snapshot  4 
Interview with your fund’s portfolio manager  5 
Your fund’s performance  11 
Terms and definitions  13 
Other information for shareholders  14 
Trustee approval of management contract  15 
Financial statements  19 
Federal tax information  48 
Shareholder meeting results  49 
About the Trustees  50 
Officers  52 

 

Consider these risks before investing: Lower-rated bonds may offer higher yields in return for more risk. Bond investments are subject to interest-rate risk, which means the prices of the fund’s bond investments are likely to fall if interest rates rise. Bond investments also are subject to credit risk, which is the risk that the issuer of the bond may default on payment of interest or principal. Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds, which may be considered speculative. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. The fund’s shares trade on a stock exchange at market prices, which may be lower than the fund’s net asset value.

 


Message from the Trustees

Dear Fellow Shareholder:

The U.S. economy has been exhibiting greater underlying strength than previously thought, with employment, consumer spending, manufacturing, and housing data all showing steady improvement this year. U.S. stocks and many international markets have responded by delivering strong returns.

Still, the rise in equities has been accompanied by heightened investor anxiety, fostered by Europe’s ongoing troubles, China’s economic slowdown, and the looming “fiscal cliff” in the United States. We believe volatility will remain a feature of market behavior until these challenges are resolved.

At Putnam, our portfolio managers and analysts are trained to uncover opportunities and manage risk in this type of environment. We also strongly believe that it is prudent for long-term investors to rely on the expertise of a trusted financial advisor, who can help them work toward their financial goals.

We would like to take this opportunity to announce the arrival of two new Trustees, Liaquat Ahamed and Katinka Domotorffy, CFA, to your fund’s Board of Trustees. Mr. Ahamed, who in 2010 won the Pulitzer Prize for History with his book, Lords of Finance: The Bankers Who Broke the World, also serves on the Board of Aspen Insurance and the Board of the Rohatyn Group, an emerging-market fund complex that manages money for institutional investors.

Ms. Domotorffy, who until year-end 2011 was a Partner, Chief Investment Officer, and Global Head of Quantitative Investment Strategies at Goldman Sachs Asset Management, currently serves as a member of the Anne Ray Charitable Trust’s Investment Committee, Margaret A. Cargill Philanthropies, and director for Reach Out and Read of Greater New York, an organization dedicated to promoting early childhood literacy.

We would also like to extend a welcome to new shareholders of the fund and to thank all of our investors for your continued confidence in Putnam.



About the fund

Potential for income exempt from federal income tax

Municipal bonds can help investors keep more of their investment income while also financing important public projects such as schools, roads, and hospitals. The bonds are typically issued by states and local municipalities to raise funds for building and maintaining public facilities, and they offer income that is generally exempt from federal, state, and local income tax.

Putnam Managed Municipal Income Trust has the flexibility to invest in municipal bonds issued by any state in the country. The bonds are backed by the issuing city or town or by revenues collected from usage fees, and have varying degrees of credit risk — the risk that the issuer would not be able to repay the bond.

The fund also combines bonds of differing credit quality. In addition to investing in high-quality bonds, the fund’s managers allocate a portion of the portfolio to lower-rated bonds, which may offer higher income in return for more risk. When deciding whether to invest in a bond, the managers consider factors such as credit risk, interest-rate risk, and the risk that the bond will be prepaid.

The managers are backed by Putnam’s fixed-income organization, where municipal bond analysts are grouped into sector teams and conduct ongoing research. Once a bond has been purchased, the managers continue to monitor developments that affect the bond market, the sector, and the issuer of the bond.

The goal of this research and active management is to stay a step ahead of the industry and pinpoint opportunities for investors.

How do closed-end funds differ from open-end funds?

More assets at work While open-end funds need to maintain a cash position to meet redemptions, closed-end funds are not subject to redemptions and can keep more of their assets invested in the market.

Traded like stocks Closed-end fund shares are traded on stock exchanges, and their market prices fluctuate in response to supply and demand, among other factors.

Net asset value vs. market price Like an open-end fund’s net asset value (NAV) per share, the NAV of a closed-end fund share is equal to the current value of the fund’s assets, minus its liabilities, divided by the number of shares outstanding. However, when buying or selling closed-end fund shares, the price you pay or receive is the market price. Market price reflects current market supply and demand and may be higher or lower than the NAV.




Data are historical. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and net asset value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart are at NAV. See pages 5 and 11–12 for additional performance information, including fund returns at market price. Index and Lipper results should be compared with fund performance at NAV. Lipper calculates performance differently than the closed-end funds it ranks, due to varying methods for determining a fund’s monthly reinvestment NAV.

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Interview with your fund’s portfolio manager


Putnam Managed Municipal Income Trust posted strong gains during its fiscal year. How would you describe the investment environment?

The past 12 months marked a particularly strong period for both municipal bonds and the fund. For much of the period, interest rates trended lower as investors focused on the possibility of a deteriorating situation in the European sovereign debt markets and a slowing economy in the United States. This downward trend in rates helped bond markets in general, as bond prices move in the opposite direction of rates. Meanwhile, the introduction in September of a third round of bond-buying by the U.S. Federal Reserve — known as “QE3” — kept downward pressure on longer-dated bonds. Technical factors were also a tailwind for investors, as strong market demand continued to outpace supply, particularly since many municipal issuers have been taking advantage of today’s low prevailing interest rates by refunding existing debt.

Against this backdrop, tax-exempt bonds posted solid returns and outpaced the broad taxable bond market, as measured by the Barclays U.S. Aggregate Bond Index. Moreover, I am pleased to report that the fund outperformed its benchmark during the past 12 months, although it trailed the average return of its Lipper peer group.


This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 10/31/12. See pages 4 and 11–12 for additional fund performance information. Index descriptions can be found on page 13.

Managed Municipal Income Trust  5 

 


What has the default picture looked like in the municipal bond market?

In the wake of the financial crisis in 2008, defaults in the municipal bond market remained relatively low. During the final months of 2011, however, a handful of high-profile bankruptcies led to an uptick in the overall default rate, with American Airlines and Jefferson County, Alabama, both filing for bankruptcy. By way of background, American Airlines and its parent company AMR had issued tax-exempt “special-facilities bonds” on the municipal market to finance airport-related expenses, such as gates and maintenance hangars. Bankruptcy filings continued to capture headlines in 2012, with three California cities — Mammoth Lakes, San Bernardino, and Stockton — all filing for protection in recent months. While these developments captured media attention, it’s important to put them in context.

Through the end of September 2012, $3.3 billion of the $3.7 trillion municipal bond market had defaulted, representing about 0.09% of the overall market. On an annualized basis, this figure is in line with the 10-year average annual default rate, and represents a marked decline from 2011’s annual cumulative default rate.

Looking ahead, we believe defaults are likely to remain in line with historical averages. That said, we also believe it’s likely that certain cities or counties will continue to capture headlines as we close out 2012 and begin 2013 as a number of municipalities work to find their fiscal footing; in our view, additional bankruptcy filings are certainly a possibility.

What effect have potential policy changes had on the tax-exempt bond market?

As the 2012 presidential election race heated up, there was more discussion about tax reform and federal spending levels. With


Credit qualities are shown as a percentage of the fund’s portfolio market value as of 10/31/12. A bond rated Baa or higher (MIG3/VMIG3 or higher, for short-term debt) is considered investment grade. The chart reflects Moody’s ratings; percentages may include bonds or derivatives not rated by Moody’s but rated by Standard & Poor’s (S&P) or, if unrated by S&P, by Fitch, and then included in the closest equivalent Moody’s rating. Ratings will vary over time. Credit qualities are included for portfolio securities and are not included for derivative instruments and cash. The fund itself has not been rated by an independent rating agency.

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President Obama having been reelected for a second term, we believe an across-the-board reduction in individual rates is now highly unlikely. Tax rates, of course, represent one component of the broader “fiscal cliff” looming at the start of 2013. Without additional legislation, the so-called Bush-era tax cuts will expire and federal funding will automatically be sequestered — per last year’s debt ceiling negotiations — beginning January 1, 2013. The Congressional Budget Office estimates that the combined effect of the spending cuts and tax hikes could negatively impact GDP anywhere from –2% to –4%. With the U.S. economy only growing at a rate of about 2% a year, that level of decline obviously would be detrimental. Lawmakers are keenly aware of the issues, and our belief is that Congress will likely act sometime before the end of the year. The market is hopeful that an extension deal can be reached before January, and we believe a longer-term solution to debt levels may be addressed in the first part of 2013.

All told, it’s difficult to gauge the net effect of this policy uncertainty. To date, the performance of the municipal bond market has been quite strong despite the uncertainty related to the fiscal cliff. As always, we are monitoring the political situation closely, and believe that, given the less-than-certain environment going forward, our funds are well positioned for helping investors pursue diverse tax-free income opportunities.


Top ten state allocations are shown as a percentage of the fund’s portfolio market value as of 10/31/12. Investments in Puerto Rico represented 2.1% of portfolio value. Holdings will vary over time. State concentrations listed in the portfolio schedule in the Financial Statements section of this shareholder report are inclusive of tender option bonds and exclusive of any interest accruals, and may differ from the summary information above.

Managed Municipal Income Trust  7 

 


How are states’ finances faring today?

We have definitely seen improvement across the board. The National Conference of State Legislatures recently reported that for the first time since 2008, more than half of the states are projected to finish their fiscal years with positive balances — an encouraging trend. That said, stresses continue to exist at the local level, where many states have lowered expenses by reducing their financial support. Moreover, should the economy begin to decelerate and growth begin to stall, that would almost certainly negatively affect municipal finances. With this in mind, we are taking a somewhat cautious view on the outlook for local general obligation bonds overall.

How did you position the portfolio during the fund’s fiscal year?

We sought to benefit from improving fundamentals in the municipal bond market. While we believed that the budget challenges faced by many municipalities were significant, we were confident that conditions would improve as long as the broad economy did not stall. Against this backdrop, we believed that essential service revenue bonds continued to be attractive, while we remained highly selective regarding the fund’s positioning in local general obligation bonds, which are securities issued at the city or county level. As the federal government looks to reduce transfer payments to the states, we believe that these types of bonds are at risk for downgrades or other headline-driven price volatility. And unlike state general obligation bonds, local G.O.s rely more on property tax revenue than on income or sales taxes. With real-estate prices still under pressure in many markets, property taxes have been slower to recover than other tax sources.

From a credit perspective, we held overweight positions in Baa-rated and Ba-rated securities


This chart shows how the fund’s top weightings have changed over the past six months. Weightings are shown as a percentage of portfolio market value. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of any interest accruals, the exclusion of as-of trades, if any, and the use of different classifications of securities for presentation purposes. Holdings will vary over time.

8  Managed Municipal Income Trust 

 


versus the fund’s benchmark. In terms of sectors, relative to the benchmark index, we favored higher education, utility, and health-care bonds, including those of hospitals and continuing-care retirement communities. Overall, this positioning generally helped the fund’s relative performance during its fiscal year.

On the other hand, our slightly short duration positioning was an overall detractor from performance relative to our Lipper peers. Also, an underweight position in non-rated municipal bonds hampered relative performance for the fund as well.

During the reporting period, the fund reduced its distribution rate. What was driving that decision?

In December 2011, the fund reduced its distribution rate from $0.0440 to $0.0389 per share. With heightened refinancing activity and interest rates on newer bonds paying lower coupons, the income offered in today’s municipal bond universe is generally lower, and the reduced distribution rate reflects that change.

What is your outlook for the months ahead?

We continue to be optimistic on the outlook for municipal bonds, given strong market technicals, and maintain our overweight position in essential-service revenue bonds. While spreads are well off their wides, they remain attractive. Technical factors in the market have been positive — specifically, higher refunding activity and strong investor demand. Like most asset classes, the municipal market will likely be more heavily influenced by the fiscal cliff the closer we get to January 1, as market participants look to Washington, D.C., for clues about a short-term extension of tax rates, the sequestration of funding, the debt ceiling, and the potential for broader tax reform in 2013. All of these factors could impact the value of municipal bonds’ tax exemption, the availability of those bonds, and the transfer of federal dollars to state and local municipalities, and therefore credit quality.

Thank you, Paul, for bringing us up to date.

The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.

Portfolio Manager Paul M. Drury has a B.A. from Suffolk University. A CFA charterholder, Paul has been in the investment industry since he joined Putnam in 1989.

In addition to Paul, your fund’s portfolio managers are Susan A. McCormack, CFA, and Thalia Meehan, CFA.

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IN THE NEWS

After decelerating in the middle of the year, the world’s two largest economies — the United States and China — are showing signs of growth. Stronger housing demand and hiring is appearing in the United States, and factory output and retail sales are rising in China, potentially marking an end to the recent slowdown in that economy. This fall, President Barack Obama was elected to a second term in the United States, and Xi Jinping, in a once-in-a-decade transition of power, was named President of China. Neither country is without its potential difficulties, however. The United States must produce a budget agreement that averts the across-the-board tax increases and austerity measures in the “fiscal cliff,” and China’s new leadership remains untested.

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Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended October 31, 2012, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance as of the most recent calendar quarter-end. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee 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.

Fund performance Total return for periods ended 10/31/12

        Lipper High Yield 
        Municipal Debt 
      Barclays Municipal  Funds (closed-end) 
  NAV  Market price  Bond Index  category average* 
Annual average         
Life of fund (since 2/24/89)  6.84%  6.66%  6.57%  5.99% 
10 years  98.89  116.86  66.60  95.32 
Annual average  7.12  8.05  5.24  6.87 
5 years  41.97  64.27  33.96  39.20 
Annual average  7.26  10.44  6.02  6.80 
3 years  38.70  55.94  21.95  44.11 
Annual average  11.52  15.96  6.84  12.92 
1 year  16.72  18.52  9.03  20.08 

 

Performance assumes reinvestment of distributions and does not account for taxes.

Index and Lipper results should be compared to fund performance at net asset value. Lipper calculates performance differently than the closed-end funds it ranks, due to varying methods for determining a fund’s monthly reinvestment NAV.

* Over the 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 10/31/12, there were 12, 12, 11, 8, and 6 funds, respectively, in this Lipper category.

Managed Municipal Income Trust  11 

 


Fund price and distribution information For the 12-month period ended 10/31/12

Distributions — common shares     
Number  12 
Income 1  $0.4719 
Capital gains 2  — 
Total  $0.4719 
  Series A  Series C 
Distributions — preferred shares  (245 shares)  (1,980 shares) 
Income 1  $148.78  $77.08 
Capital gains 2  —  — 
Total  $148.78  $77.08 
Share value — common shares  NAV  Market price 
10/31/11  $7.37  $7.50 
10/31/12  8.10  8.37 
Current yield (end of period)     
Current dividend rate 3  5.76%  5.58% 
Taxable equivalent 4  8.86%  8.58% 

 

The classification of distributions, if any, is an estimate. Final distribution information will appear on your year-end tax forms.

1 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 Capital gains, if any, are taxable for federal and, in most cases, state purposes.

3 Most recent distribution, excluding capital gains, annualized and divided by NAV or market price at end of period.

4 Assumes maximum 35% federal tax rate for 2012. Results for investors subject to lower tax rates would not be as advantageous.

Fund performance as of most recent calendar quarter
Total return for periods ended 9/30/12

  NAV  Market price 
Annual average     
Life of fund (since 2/24/89)  6.82%  6.70% 
10 years  90.43  98.90 
Annual average  6.65  7.12 
5 years  41.43  63.78 
Annual average  7.18  10.37 
3 years  35.15  52.08 
Annual average  10.56  15.00 
1 year  15.79  20.75 

 

12  Managed Municipal Income Trust 

 


Terms and definitions

Important terms

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 any outstanding 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 exchanges such as the New York Stock Exchange.

Fixed-income terms

Current yield is the annual rate of return earned from dividends or interest of an investment. Current yield is expressed as a percentage of the price of a security, fund share, or principal investment.

Yield curve is a graph that plots the yields of bonds with equal credit quality against their differing maturity dates, ranging from shortest to longest. It is used as a benchmark for other debt, such as mortgage or bank lending rates.

Comparative indexes

Barclays Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds.

Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

BofA (Bank of America) Merrill Lynch U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.

S&P 500 Index is an unmanaged index of common stock performance.

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 is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.

Managed Municipal Income Trust  13 

 


Other information for shareholders

Important notice regarding share repurchase program

In September 2012, the Trustees of your fund approved the renewal of a share repurchase program that had been in effect since 2005. This renewal will allow your fund to repurchase, in the 12 months beginning October 8, 2012, up to 10% of the fund’s common shares outstanding as of October 7, 2012.

Important notice regarding Putnam’s privacy policy

In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.

It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy 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 must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these 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. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2012, are available in the Individual Investors section at putnam.com, and on the Securities and Exchange Commission (SEC) website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room.

Trustee and employee fund ownership

Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of October 31, 2012, Putnam employees had approximately $338,000,000 and the Trustees had approximately $82,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.

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Trustee approval of management contract

General conclusions

The Board of Trustees of the Putnam funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”).

The Board of Trustees, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of the Putnam funds (“Independent Trustees”).

At the outset of the review process, members of the Board’s independent staff and independent legal counsel met with representatives of Putnam Management to review the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review and to discuss possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2012, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for the Putnam funds and the Independent Trustees.

In May 2012, the Contract Committee met in executive session with the other Independent Trustees to discuss the Contract Committee’s preliminary recommendations with respect to the continuance of the contracts. At the Trustees’ June 22, 2012 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its final recommendations. The Contract Committee then recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2012. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not evaluated PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.)

The Independent Trustees’ approval was based on the following conclusions:

• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds, and the costs incurred by Putnam Management in providing services, and

• That the fee schedule represented an appropriate sharing between fund shareholders and Putnam Management of such economies of

Managed Municipal Income Trust  15 

 


scale as may exist in the management of the fund at current asset levels.

These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years.

Management fee schedules and total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. In reviewing management fees, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment style, changes in Putnam Management’s operating costs, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund.

Your fund has the benefit of breakpoints in its management fee that provide shareholders with significant economies of scale in the form of reduced fee levels as the fund’s assets under management increase. In recent years, the Trustees have examined the operation of the existing breakpoint structure during periods of both growth and decline in asset levels. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale at that time.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. This comparative information included your fund’s percentile ranking for effective management fees and total expenses, which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the 1st quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the 2nd quintile in total expenses as of December 31, 2011 (the first quintile representing the least expensive funds and the fifth quintile the most expensive funds). The fee and expense data reported by Lipper as of December 31, 2011 reflected the most recent fiscal year-end data available in Lipper’s database at that time.

In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for

16  Managed Municipal Income Trust 

 


the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing of such economies of scale as may exist in the management of the funds at that time.

The information examined by the Trustees as part of their annual contract review for the Putnam funds has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, and the like. This information included comparisons of those fees with fees charged to the funds, as well as an assessment of the differences in the services provided to these different types of clients. The Trustees observed that the differences in fee rates between institutional clients and mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its institutional clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the investment oversight committees of the Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officer and other members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.

The Trustees considered the investment performance of each fund over multiple time periods and considered information comparing each fund’s performance with various benchmarks and, where applicable, with the performance of competitive funds or targeted annualized return. They noted that since 2009, when Putnam Management began implementing major changes to strengthen its investment personnel and processes, there has been a steady improvement in the number of Putnam funds showing above-median three-year performance results. They also noted the disappointing investment performance of some funds for periods ended December 31, 2011 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional actions to address areas of underperformance are warranted.

In the case of your fund, the Trustees considered that its common share cumulative

Managed Municipal Income Trust  17 

 


total return performance at net asset value was in the following quartiles of its Lipper Inc. peer group (Lipper High Yield Municipal Debt Funds (closed-end)) for the one-year, three-year and five-year periods ended December 31, 2011 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):

One-year period  2nd 
Three-year period  2nd 
Five-year period  1st 

 

Over the one-year, three-year and five-year periods ended December 31, 2011, there were 13, 13, and 12 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)

Brokerage and soft-dollar allocations; investor servicing

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft-dollar credits acquired through these means are used primarily to acquire research services that supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft-dollar credits continues to be allocated to the payment of fund expenses. The Trustees indicated their continued intent to monitor regulatory developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the potential benefits associated with fund brokerage and soft-dollar allocations and trends in industry practices to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.

Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor services. In conjunction with the annual review of your fund’s management and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”), an affiliate of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV for such services are reasonable in relation to the nature and quality of such services.

18  Managed Municipal Income Trust 

 


Financial statements

These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, 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 non-investment 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. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of 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 the fund’s net investment gain or loss, 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 highlights table also includes the current reporting period.

Managed Municipal Income Trust  19 

 


Report of Independent Registered Public Accounting Firm

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 (the fund), including the fund’s portfolio, as of October 31, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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, 2012, 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, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.


Boston, Massachusetts
December 14, 2012

20  Managed Municipal Income Trust 

 


The fund’s portfolio 10/31/12

Key to abbreviations

ABAG Association Of Bay Area Governments  G.O. Bonds General Obligation Bonds 
AGM Assured Guaranty Municipal Corporation  GNMA Coll. Government National Mortgage 
AMBAC AMBAC Indemnity Corporation  Association Collateralized 
COP Certificates of Participation  NATL National Public Finance Guarantee Corp. 
FGIC Financial Guaranty Insurance Company  Radian Insd. Radian Group Insured 
FHLMC Coll. Federal Home Loan Mortgage  U.S. Govt. Coll. U.S. Government Collateralized 
Corporation Collateralized  VRDN Variable Rate Demand Notes, which are 
FNMA Coll. Federal National Mortgage  floating-rate securities with long-term maturities, 
Association Collateralized  that carry coupons that reset every one or seven 
FRB Floating Rate Bonds: the rate shown is the current  days. The rate shown is the current interest rate at the 
interest rate at the close of the reporting period close of the reporting period. 

 

MUNICIPAL BONDS AND NOTES (126.1%)*  Rating**  Principal amount  Value 
 
Alabama (1.4%)       
Butler, Indl. Dev. Board Solid Waste Disp. Rev. Bonds       
(GA. Pacific Corp.), 5 3/4s, 9/1/28  A  $1,500,000  $1,561,425 
Courtland, Indl. Dev. Board Env. Impt. Rev. Bonds       
(Intl. Paper Co.), Ser. A, 5s, 11/1/13  BBB  1,500,000  1,561,620 
Cullman Cnty., Hlth. Care Auth. Rev. Bonds       
(Cullman Regl. Med. Ctr.), Ser. A, 6 3/4s, 2/1/29  Ba1  2,100,000  2,282,952 
Selma, Indl. Dev. Board Rev. Bonds (Gulf Opportunity       
Zone Intl. Paper Co.), Ser. A, 6 1/4s, 11/1/33  BBB  1,000,000  1,138,610 
      6,544,607 
Arizona (4.6%)       
Apache Cnty., Indl. Dev. Auth. Poll. Control Rev.       
Bonds (Tucson Elec. Pwr. Co.), Ser. A, 4 1/2s, 3/1/30  Baa3  1,750,000  1,839,705 
Casa Grande, Indl. Dev. Auth. Rev. Bonds       
(Casa Grande Regl. Med. Ctr.), Ser. A       
7 5/8s, 12/1/29  BB–/P  1,800,000  1,849,823 
7 1/4s, 12/1/19  BB–/P  1,000,000  1,028,020 
Cochise Cnty., Indl. Dev. Auth. Rev. Bonds (Sierra       
Vista Regl. Hlth. Ctr.), Ser. A, 6.2s, 12/1/21  BBB+/P  395,000  450,916 
Coconino Cnty., Poll. Control Rev. Bonds (Tucson       
Elec. Pwr. Co. — Navajo), Ser. A, 5 1/8s, 10/1/32  Baa3  2,000,000  2,123,360 
Maricopa Cnty., Poll. Control Rev. Bonds (El Paso       
Elec. Co.), Ser. A, 7 1/4s, 2/1/40  Baa2  2,200,000  2,612,521 
Navajo Cnty., Poll. Control Corp. Mandatory Put       
Bonds (6/1/16), Ser. E, 5 3/4s, 6/1/34  Baa1  1,950,000  2,255,603 
Phoenix, Indl. Dev. Auth. Ed. Rev. Bonds (Choice       
Academies, Inc.), 5 5/8s, 9/1/42  BB+  315,000  319,842 
Phoenix, Indl. Dev. Auth. Ed. 144A Rev. Bonds       
(Career Success Schools), 7 1/8s, 1/1/45  BB+  500,000  519,910 
Pima Cnty., Indl. Dev. Auth. Rev. Bonds       
(Tucson Elec. Pwr. Co.), Ser. A, 6 3/8s, 9/1/29  Baa3  500,000  505,380 
(Horizon Cmnty. Learning Ctr.), 5.05s, 6/1/25  BBB  1,140,000  1,125,351 
Salt River Agricultural Impt. & Pwr. Dist. Rev.       
Bonds, Ser. A, 5s, 12/1/31  Aa1  2,000,000  2,406,280 

 

Managed Municipal Income Trust  21 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Arizona cont.       
Salt Verde, Fin. Corp. Gas Rev. Bonds       
5 1/2s, 12/1/29  A–  $2,000,000  $2,415,680 
5s, 12/1/32  A–  570,000  661,924 
Tempe, Indl. Dev. Auth. Rev. Bonds       
(Friendship Village), Ser. A, 6 1/4s, 12/1/42  BB–/P  1,000,000  1,085,670 
Tempe, Indl. Dev. Auth. Sr. Living Rev. Bonds       
(Friendship Village), Ser. A, U.S. Govt. Coll.,       
5 3/8s, 12/1/13 (Escrowed to maturity)  BB–/P  138,000  141,551 
      21,341,536 
Arkansas (0.4%)       
Arkadelphia, Pub. Ed. Fac. Board Rev. Bonds       
(Ouachita Baptist U.), 6s, 3/1/33  BB+/P  840,000  927,813 
Rogers, Rev. Bonds (Sales and Use Tax),       
3 3/4s, 11/1/34  AA  850,000  913,776 
      1,841,589 
California (12.4%)       
ABAG Fin. Auth. for Nonprofit Corps. Rev. Bonds       
(Episcopal Sr. Cmnty.), 6s, 7/1/31  BBB+  660,000  757,291 
CA Edl. Fac. Auth. Rev. Bonds (U. of La Verne),       
Ser. A, 5s, 6/1/35  Baa2  500,000  517,535 
CA Muni. Fin. Auth. COP (Cmnty. Hosp. Central CA),       
5 1/4s, 2/1/37  Baa2  1,105,000  1,144,768 
CA Muni. Fin. Auth. Rev. Bonds       
(U. of La Verne), Ser. A, 6 1/8s, 6/1/30  Baa2  1,000,000  1,164,580 
(Emerson College), 6s, 1/1/42  Baa1  1,000,000  1,190,890 
CA Poll. Control Fin. Auth. Rev. Bonds (Pacific       
Gas & Electric Corp.), Class D, FGIC, 4 3/4s, 12/1/23  A3  2,500,000  2,720,124 
CA Poll. Control Fin. Auth. Solid Waste Disp. FRB       
(Waste Management, Inc.), Ser. C, 5 1/8s, 11/1/23  BBB  2,150,000  2,334,771 
CA Poll. Control Fin. Auth. Solid Waste Disp. 144A       
Rev. Bonds (Waste Management, Inc.), Ser. A-2,       
5.4s, 4/1/25  BBB  1,760,000  1,897,562 
CA State G.O. Bonds       
6 1/2s, 4/1/33  A1  5,000,000  6,271,100 
5s, 4/1/42  A1  2,000,000  2,216,620 
CA State Pub. Wks. Board Rev. Bonds       
Ser. I-1, 6 5/8s, 11/1/34  A2  5,560,000  6,901,406 
(Dept. of Corrections), Ser. C, 5 1/4s, 6/1/28       
(Prerefunded 12/1/13)  AA+  1,000,000  1,053,620 
(Dept. of Forestry & Fire), Ser. E, 5s, 11/1/32  A2  1,250,000  1,344,624 
(Capital Projects), Ser. A, 5s, 4/1/29  A2  2,000,000  2,245,420 
CA Statewide Cmnty. Dev. Auth. COP (The Internext       
Group), 5 3/8s, 4/1/30  BBB  2,000,000  2,005,060 
CA Statewide Cmnty. Dev. Auth. Rev. Bonds       
(Terraces at San Joaquin Gardens), Ser. A,       
6s, 10/1/47  BB/P  1,000,000  1,042,390 
(U. CA Irvine E. Campus Apts. Phase 1),       
5 3/8s, 5/15/38  Baa2  1,000,000  1,093,980 
(U. CA Irvine E. Campus Apts. Phase 1),       
5 1/8s, 5/15/31  Baa2  2,250,000  2,475,720 

 

22  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
California cont.       
CA Statewide Cmnty. Dev. Auth. 144A Rev. Bonds       
(Thomas Jefferson School of Law), Ser. A,       
7 1/4s, 10/1/38  BB  $560,000  $573,126 
(American Baptist Homes West), 5 3/4s, 10/1/25  BBB  3,000,000  3,281,760 
Cathedral City, Impt. Board Act of 1915 Special       
Assmt. Bonds (Cove Impt. Dist.), Ser. 04-02       
5.05s, 9/2/35  BB+/P  1,010,000  1,005,858 
5s, 9/2/30  BB+/P  245,000  245,943 
Chula Vista, Cmnty. Fac. Dist. Special Tax Rev. Bonds       
(No. 06-1 Eastlake Woods Area), 6.1s, 9/1/21  BBB/P  1,000,000  1,017,860 
(No. 07-I Otay Ranch Village Eleven), 5.8s, 9/1/28  BB+/P  275,000  279,868 
Foothill/Eastern Corridor Agcy. Rev. Bonds       
(CA Toll Road)       
5.85s, 1/15/23  Baa3  500,000  519,775 
5 3/4s, 1/15/40  Baa3  2,745,000  2,747,332 
Irvine Pub. Fac. & Infrastructure Auth. Special       
Assmt. Bonds, Ser. A, 4 1/4s, 9/2/24  BBB+  500,000  515,710 
Irvine, Impt. Board Act of 1915 Special Assmt. Bonds,       
5s, 9/2/25  BBB+  830,000  948,292 
Los Angeles, Regl. Arpt. Impt. Corp. Lease Rev.       
Bonds (Laxfuel Corp.), 4 1/2s, 1/1/27  A  400,000  428,172 
M-S-R Energy Auth. Rev. Bonds, Ser. A,       
6 1/2s, 11/1/39  A–  750,000  1,056,210 
Oakland, Unified School Dist. Alameda Cnty., G.O.       
Bonds (Election 2006), Ser. A, 5 1/2s, 8/1/32  BBB/P  500,000  552,745 
Orange Cnty., Cmnty. Fac. Dist. Special Tax       
Rev. Bonds (Ladera Ranch — No. 02-1), Ser. A,       
5.55s, 8/15/33  BBB–/P  900,000  902,502 
Sacramento, Special Tax Bonds (North Natomas       
Cmnty. Fac.), Ser. 4-C, 6s, 9/1/33  BBB–/P  1,245,000  1,268,928 
San Francisco City & Cnty. Arpt. Comm. Intl. Arpt.       
Rev. Bonds, Ser. A, 5s, 5/1/30  A1  600,000  680,424 
San Francisco, City & Cnty. Redev. Fin. Auth. Tax       
Alloc. Bonds (Mission Bay South), Ser. D,       
6 5/8s, 8/1/39  BBB  250,000  272,528 
Santaluz, Cmnty. Facs. Dist. No. 2 Special Tax       
Rev. Bonds (Impt. Area No. 1), Ser. A, 5 1/4s,       
9/1/26 (Prerefunded 9/1/21)  BBB+  1,640,000  1,806,411 
Sunnyvale, Special Tax Rev. Bonds (Cmnty. Fac.       
Dist. No. 1), 7 3/4s, 8/1/32  B+/P  835,000  835,977 
Vernon, Elec. Syst. Rev. Bonds, Ser. A,       
5 1/2s, 8/1/41  A–  250,000  273,648 
Yucaipa Special Tax Bonds (Cmnty. Fac. Dist.       
No. 98-1 Chapman Heights), 5 3/8s, 9/1/30  BBB+  375,000  399,495 
      57,990,025 
Colorado (3.5%)       
CO Hlth. Fac. Auth. Rev. Bonds       
(Christian Living Cmntys.), Ser. A, 8 1/4s,       
1/1/24 (Prerefunded 1/1/14)  BB–/P  375,000  412,586 
(Christian Living Cmnty.), 6 3/8s, 1/1/41  BB–/P  810,000  885,354 

 

Managed Municipal Income Trust  23 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Colorado cont.       
CO Hlth. Fac. Auth. Rev. Bonds       
(Total Longterm Care National), Ser. A,       
6 1/4s, 11/15/40  BBB–/F  $300,000  $335,256 
(Evangelical Lutheran), Ser. A, 6 1/8s, 6/1/38       
(Prerefunded 6/1/14)  A3  2,045,000  2,230,685 
(Christian Living Cmntys.), Ser. A, 5 3/4s, 1/1/26  BB–/P  1,925,000  2,008,487 
(Valley View Assn.), 5 1/4s, 5/15/42  BBB+  3,495,000  3,631,688 
(Covenant Retirement Cmnty.), Ser. A, 5s, 12/1/33  BBB–  900,000  950,283 
(Evangelical Lutheran Good Samaritan Society),       
5s, 12/1/33  A3  1,100,000  1,190,375 
CO Pub. Hwy. Auth. Rev. Bonds (E-470), Ser. C,       
5 3/8s, 9/1/26  Baa2  500,000  554,970 
E-470 CO Pub. Hwy. Auth. Rev. Bonds, Ser. C1,       
NATL, 5 1/2s, 9/1/24  Baa2  1,000,000  1,089,500 
Lycoming Cnty. Auth. Rev. Bonds, 5s, 5/1/26  A  2,000,000  2,266,340 
Regl. Trans. Dist. Rev. Bonds (Denver Trans.       
Partners), 6s, 1/15/41  Baa3  750,000  871,635 
      16,427,159 
Connecticut (0.4%)       
CT State Dev. Auth. 1st. Mtg. Gross Rev. Hlth. Care       
Rev. Bonds (Elim Street Park Baptist, Inc.),       
5.85s, 12/1/33  BBB  650,000  656,143 
Hamden, Fac. Rev. Bonds (Whitney Ctr.), Ser. A,       
7 3/4s, 1/1/43  BB/P  1,050,000  1,135,859 
      1,792,002 
Delaware (0.7%)       
DE St. Econ. Dev. Auth. Rev. Bonds       
(Delmarva Pwr.), 5.4s, 2/1/31  BBB+  500,000  561,365 
(Indian River Pwr.), 5 3/8s, 10/1/45  Baa3  2,600,000  2,851,238 
      3,412,603 
District of Columbia (1.7%)       
DC Rev. Bonds (Howard U.), Ser. A       
6 1/2s, 10/1/41  A3  2,500,000  3,035,875 
6 1/4s, 10/1/32  A3  1,000,000  1,222,370 
DC Tobacco Settlement Fin. Corp. Rev. Bonds,       
Ser. A, zero %, 6/15/46  B/F  17,500,000  1,454,250 
Metro. Washington, Arpt. Auth. Dulles Toll Rd. Rev.       
Bonds (2nd Sr. Lien), Ser. B, zero %, 10/1/40  Baa1  10,000,000  2,194,100 
      7,906,595 
Florida (5.8%)       
Broward Cnty., Arpt. Syst. Rev. Bonds, Ser. Q-2,       
5s, 10/1/31  A1  1,000,000  1,115,750 
Double Branch Cmnty. Dev. Dist. Special Assmt.       
Bonds, Ser. A, 6.7s, 5/1/34  BBB–  900,000  911,385 
Escambia Cnty., Env. Impt. Rev. Bonds (Intl.       
Paper Co.), Ser. A, 5s, 8/1/26  BBB  2,000,000  2,001,300 
Fishhawk, Cmnty. Dev. Dist. II Special Assmt. Bonds       
Ser. B, 7.04s, 11/1/14  B–/P  5,000  5,057 
Ser. A, 6 1/8s, 5/1/34  B–/P  425,000  435,714 
FL Hsg. Fin. Corp. Rev. Bonds, Ser. G, GNMA       
Coll., FNMA Coll., FHLMC Coll., 5 3/4s, 1/1/37  Aa1  560,000  582,411 

 

24  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Florida cont.       
Florida State Higher Edl. Fac. Rev. Bonds (U. of       
Tampa), Ser. A, 5s, 4/1/32  BBB+  $600,000  $654,984 
Halifax, Hosp. Med. Ctr. Rev. Bonds, Ser. A,       
5 3/8s, 6/1/46  A–  4,380,000  4,609,775 
Heritage Harbour Marketplace Cmnty., Dev. Dist.       
Special Assmt. Bonds, 5.6s, 5/1/36  B/P  360,000  331,794 
Heritage Harbour, South Cmnty. Dev. Distr.       
Special Assmt. Bonds, Ser. A, 6 1/2s, 5/1/34  BB+/P  440,000  450,534 
Hillsborough Cnty., Indl. Dev. Auth. Poll. Control       
Mandatory Put Bonds(9/1/13) (Tampa Elec. Co.),       
Ser. B, 5.15s, 9/1/25  A3  400,000  414,700 
Jacksonville, Econ. Dev. Comm. Hlth. Care Fac.       
Rev. Bonds (FL Proton Therapy Inst.), Ser. A,       
6s, 9/1/17  BB–/P  450,000  519,566 
Jacksonville, Econ. Dev. Comm. Indl. Dev. Rev.       
Bonds (Gerdau Ameristeel US, Inc.), 5.3s, 5/1/37  Baa3  2,450,000  2,450,343 
Lakeland, Retirement Cmnty. 144A Rev. Bonds       
(1st Mtge. — Carpenters), 6 3/8s, 1/1/43  BBB–/F  840,000  876,532 
Lee Cnty., Indl. Dev. Auth. Hlth. Care Fac. Rev. Bonds       
(Shell Pt./Alliance Oblig. Group), 5 1/8s, 11/15/36  BB  1,075,000  1,075,172 
(Shell Pt./Alliance Cmnty.), 5s, 11/15/22  BB  1,500,000  1,555,875 
Miami Beach, Hlth. Fac. Auth. Hosp. Rev. Bonds       
(Mount Sinai Med. Ctr.), 5s, 11/15/29  Baa2  1,000,000  1,103,660 
Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds       
(Acts Retirement-Life Cmnty.), 5 1/2s, 11/15/33  BBB+  2,000,000  2,227,480 
Palm Coast Pk. Cmnty. Dev. Dist. Special Assmt.       
Bonds, 5.7s, 5/1/37  B–/P  930,000  618,338 
South Lake Hosp. Dist. Rev. Bonds (South Lake       
Hosp.), Ser. A, 6s, 4/1/29  Baa1  1,000,000  1,152,840 
Tampa Bay, Cmnty. Dev. Dist. Special Assmt. Bonds       
(New Port), Ser. A, 5 7/8s, 5/1/38 (In default) †  D/P  655,000  257,088 
Tolomato, Cmnty. Dev. Dist. Special Assmt. Bonds,       
5.4s, 5/1/37  CCC/P  1,305,000  1,293,438 
Verandah, West Cmnty. Dev. Dist. Special Assmt.       
Bonds (Cap. Impt.), Ser. A, 6 5/8s, 5/1/33  B+/P  435,000  439,428 
Verano Ctr. Cmnty. Dev. Dist. Special Assmt. Bonds       
(Cmnty. Infrastructure), Ser. A, 5 3/8s, 5/1/37  B–/P  955,000  743,076 
Village Cmnty. Dev. Dist. No. 8 Special Assmt. Bonds       
(Phase II), 6 1/8s, 5/1/39  BB/P  455,000  537,027 
Village Cmnty. Dev. Dist. No. 9 Special Assmt. Bonds,       
5s, 5/1/22  B+/P  650,000  704,639 
      27,067,906 
Georgia (2.9%)       
Atlanta, Wtr. & Waste Wtr. Rev. Bonds, Ser. A,       
6 1/4s, 11/1/39  A1  2,500,000  3,049,350 
Clayton Cnty., Dev. Auth. Special Fac. Rev. Bonds       
(Delta Airlines), Ser. A, 8 3/4s, 6/1/29  B–  2,000,000  2,480,700 
Forsyth Cnty., Hosp. Auth. Rev. Bonds (Baptist Hlth.       
Care Syst.), U.S. Govt. Coll., 6 1/4s, 10/1/18       
(Escrowed to maturity)  AA+  1,520,000  1,764,766 

 

Managed Municipal Income Trust  25 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Georgia cont.       
Fulton Cnty., Res. Care Fac. Rev. Bonds       
(Canterbury Court), Class A, 6 1/8s, 2/15/34  BB/P  $600,000  $613,308 
GA State Private College & U. Auth. Rev. Bonds       
(Mercer U.)       
Ser. C, 5 1/4s, 10/1/30  Baa2  750,000  852,983 
Ser. A, 5 1/4s, 10/1/27  Baa2  1,000,000  1,151,040 
Ser. A, 5s, 10/1/32  Baa2  1,000,000  1,101,820 
Gainesville & Hall Cnty., Devauth Retirement       
Cmnty. Rev. Bonds (Acts Retirement-Life Cmnty.),       
Ser. A-2, 6 3/8s, 11/15/29  BBB+  700,000  819,658 
Marietta, Dev. Auth. Rev. Bonds (U. Fac. Life U., Inc.),       
Ser. PJ, 6 1/4s, 6/15/20  Ba3  1,165,000  1,228,423 
Rockdale Cnty., Dev. Auth. Rev. Bonds (Visy Paper),       
Ser. A, 6 1/8s, 1/1/34  B–/P  600,000  627,054 
      13,689,102 
Guam (—%)       
Territory of GU, Pwr. Auth. Rev. Bonds, Ser. A,       
5s, 10/1/34  BBB  200,000  216,388 
      216,388 
Hawaii (1.2%)       
HI Dept. of Trans. Special Fac. Rev. Bonds       
(Continental Airlines, Inc.), 7s, 6/1/20  B  1,120,000  1,121,064 
HI State Dept. Budget & Fin. Rev. Bonds       
(Craigside), Ser. A, 9s, 11/15/44  B/P  400,000  479,656 
(Hawaiian Elec. Co. — Subsidary), 6 1/2s, 7/1/39  Baa1  3,000,000  3,497,130 
(Kahala Nui), 5 1/8s, 11/15/32  BBB–/F  400,000  430,020 
      5,527,870 
Illinois (4.3%)       
Chicago, G.O. Bonds, Ser. A, 5s, 1/1/33  Aa3  2,000,000  2,226,560 
Chicago, Special Assmt. Bonds (Lake Shore East),       
6 3/4s, 12/1/32  BB/P  1,754,000  1,796,166 
Du Page Cnty., Special Svc. Area No. 31 Special       
Tax Bonds (Monarch Landing)       
5 5/8s, 3/1/36  B/P  350,000  350,441 
5.4s, 3/1/16  B/P  133,000  137,976 
IL Fin. Auth. Rev. Bonds       
(Provena Hlth.), Ser. A, 7 3/4s, 8/15/34  Baa1  1,500,000  1,944,630 
(Silver Cross Hosp. & Med. Ctr.), 7s, 8/15/44  BBB–  2,000,000  2,406,940 
(IL Rush U. Med Ctr.), Ser. C, 6 5/8s, 11/1/39  A2  1,075,000  1,299,697 
(Navistar Intl. Recvy. Zone), 6 1/2s, 10/15/40  B2  1,000,000  1,041,430 
(Roosevelt U.), 6 1/4s, 4/1/29  Baa2  1,500,000  1,704,735 
(Landing At Plymouth Place), Ser. A, 6s, 5/15/25  B+/P  200,000  187,768 
(Three Crowns Pk. Plaza), Ser. A, 5 7/8s, 2/15/26  B+/P  1,000,000  1,035,840 
(Landing At Plymouth Place), Ser. A,       
5.35s, 5/15/15  B+/P  600,000  603,786 
(American Wtr. Cap. Corp.), 5 1/4s, 10/1/39  BBB+  1,575,000  1,670,272 
IL Hlth. Fac. Auth. Rev. Bonds       
(Cmnty. Rehab. Providers Fac.), Ser. A,       
7 7/8s, 7/1/20  CCC/P  108,252  81,557 
(Elmhurst Memorial Hlth. Care), 5 5/8s, 1/1/28  Baa2  550,000  553,201 

 

26  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Illinois cont.       
IL State G.O. Bonds       
5s, 3/1/34  A2  $750,000  $823,140 
5s, 8/1/21  A2  750,000  870,780 
Railsplitter, Tobacco Settlement Auth. Rev. Bonds,       
6s, 6/1/28  A–  1,050,000  1,255,811 
      19,990,730 
Indiana (2.2%)       
IN State Fin. Auth. Rev. Bonds (OH Valley Elec. Corp.),       
Ser. A, 5s, 6/1/32  Baa3  750,000  808,523 
IN State Fin. Auth. Edl. Fac. Rev. Bonds (Butler U.),       
Ser. B       
5s, 2/1/32  BBB+  1,000,000  1,091,080 
5s, 2/1/29  BBB+  1,000,000  1,101,710 
Indianapolis, Arpt. Auth. Rev. Bonds (Federal       
Express Corp.), 5.1s, 1/15/17  Baa1  3,500,000  3,998,015 
Jasper Cnty., Indl. Poll. Control Rev. Bonds       
AMBAC, 5.7s, 7/1/17  Baa2  1,125,000  1,283,839 
NATL, 5.6s, 11/1/16  Baa2  700,000  791,273 
Ser. A, NATL, 5.6s, 11/1/16  Baa2  500,000  565,195 
St. Joseph Cnty., Econ. Dev. Rev. Bonds (Holy Cross       
Village Notre Dame), Ser. A, 5 3/4s, 5/15/15  B/P  455,000  477,195 
      10,116,830 
Iowa (1.6%)       
IA Fin. Auth. Hlth. Care Fac. Rev. Bonds       
(Care Initiatives), Ser. A       
5 1/4s, 7/1/17  BB+  1,040,000  1,145,030 
5s, 7/1/19  BB+  2,750,000  2,966,673 
IA Fin. Auth. Hlth. Fac. Rev. Bonds (Dev. Care       
Initiatives), Ser. A, 5 1/2s, 7/1/25  BB+  950,000  1,023,074 
Orange Cnty., Hosp. Rev. Bonds, 5 1/2s, 9/1/27  BB–/P  1,205,000  1,234,065 
Tobacco Settlement Auth. of IA Rev. Bonds,       
Ser. C, 5 3/8s, 6/1/38  B+  1,250,000  1,163,850 
      7,532,692 
Kansas (0.1%)       
Lenexa, Hlth. Care Fac. Rev. Bonds (LakeView       
Village), 7 1/8s, 5/15/29  BB/P  500,000  569,885 
      569,885 
Kentucky (1.4%)       
Breckinridge Cnty., Lease Program VRDN, Ser. A,       
0.23s, 2/1/32  VMIG1  3,080,000  3,080,000 
KY Econ. Dev. Fin. Auth. Rev. Bonds       
(First Mtge.), Ser. IA, 8s, 1/1/29  B+/P  271,000  278,238 
(Masonic Home Indpt. Living II), 7 1/4s, 5/15/41  BB–/P  500,000  574,700 
(Masonic Home Indpt. Living II), 7s, 5/15/30  BB–/P  500,000  578,505 
KY State Econ. Dev. Fin. Auth. Hlth. Care Rev.       
Bonds (Masonic Homes of KY), 5 3/8s, 11/15/42  BB–/P  900,000  910,764 
Louisville/Jefferson Cnty., Metro. Govt. College       
Rev. Bonds (Bellarmine U.), Ser. A, 6s, 5/1/28  Baa3  500,000  553,510 
Owen Cnty., Wtr. Wks. Syst. Rev. Bonds (American       
Wtr. Co.), Ser. A, 6 1/4s, 6/1/39  BBB+  700,000  782,495 
      6,758,212 

 

Managed Municipal Income Trust  27 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Louisiana (0.8%)       
Rapides, Fin. Auth. FRB (Cleco Pwr.), AMBAC,       
4.7s, 11/1/36  Baa2  $750,000  $756,510 
Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. 01-B,       
5 7/8s, 5/15/39  A3  2,700,000  2,771,253 
      3,527,763 
Maine (0.8%)       
ME Hlth. & Higher Edl. Fac. Auth. Rev. Bonds       
(ME Gen. Med. Ctr.), 7 1/2s, 7/1/32  Baa3  1,000,000  1,281,750 
Rumford, Solid Waste Disp. Rev. Bonds (Boise       
Cascade Corp.), 6 7/8s, 10/1/26  B2  2,500,000  2,499,850 
      3,781,600 
Maryland (1.4%)       
Baltimore Cnty., Rev. Bonds (Oak Crest       
Village, Inc. Fac.), Ser. A, 5s, 1/1/37  BBB+  2,000,000  2,065,720 
MD Econ. Dev. Corp. Poll. Control Rev. Bonds       
(Potomac Electric Power Co.), 6.2s, 9/1/22  A  550,000  676,979 
MD State Indl. Dev. Fin. Auth. Rev. Bonds       
(Synagro-Baltimore), Ser. A, 5 3/8s, 12/1/14  BBB+/F  1,000,000  1,048,380 
MD State Indl. Dev. Fin. Auth. Econ. Dev. Rev.       
Bonds (Our Lady of Good Counsel School), Ser. A,       
6s, 5/1/35  BB–/P  400,000  419,544 
Westminster, Econ. Dev. Rev. Bonds (Carroll       
Lutheran Village), Ser. A       
6 1/4s, 5/1/34  BB/P  600,000  601,764 
5 7/8s, 5/1/21  BB/P  1,600,000  1,608,912 
      6,421,299 
Massachusetts (7.7%)       
Boston, Indl. Dev. Fin. Auth. Rev. Bonds       
(Springhouse, Inc.), 6s, 7/1/28  BB–/P  1,600,000  1,600,320 
MA Dev. Fin. Agcy. Sr. Living Fac. 144A Rev. Bonds,       
Ser. B1, 7 1/4s, 6/1/16  BB–/P  2,000,000  1,321,640 
MA Edl. Fin. Auth. Rev. Bonds, Ser. B, 5 1/2s, 1/1/23  AA  830,000  918,179 
MA State Dev. Fin. Agcy. Rev. Bonds       
(Sabis Intl.), Ser. A, 8s, 4/15/39  BBB  690,000  849,300 
(Linden Ponds, Inc. Fac.), Ser. A-1,       
6 1/4s, 11/15/46  B–/P  850,850  646,289 
(Linden Ponds, Inc. Fac.), Ser. A-1,       
6 1/4s, 11/15/39  B–/P  532,400  413,622 
(Linden Ponds, Inc. Fac.), Ser. A-1,       
6 1/4s, 11/15/26  B–/P  275,400  240,008 
(Boston U.), 6s, 5/15/59  A2  500,000  622,515 
(Boston Biomedical Research), 5 3/4s, 2/1/29  Ba3  1,000,000  1,000,010 
(Linden Ponds, Inc. Fac.), Ser. A-2,       
5 1/2s, 11/15/46  B–/P  88,265  59,643 
(New England Conservatory of Music),       
5 1/4s, 7/1/38  Baa1  805,000  857,534 
(Wheelock College), Ser. C, 5 1/4s, 10/1/29  BBB  1,700,000  1,811,656 
(First Mtge. — Orchard Cove), 5s, 10/1/19  BB/P  550,000  558,091 
(Linden Ponds, Inc. Fac.), Ser. B, zero %, 11/15/56  B–/P  439,022  6,190 
MA State Dev. Fin. Agcy. Hlth. Care Fac. 144A       
Rev. Bonds (Adventcare), Ser. A, 6.65s, 10/15/28  B/P  1,050,000  1,117,946 

 

28  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Massachusetts cont.       
MA State Dev. Fin. Agcy. Solid Waste Disp.       
Mandatory Put Bonds (5/1/19) (Dominion Energy       
Brayton 1), Ser. 1, 5 3/4s, 12/1/42  A–  $1,050,000  $1,292,802 
MA State Hlth. & Edl. Fac. Auth. Rev. Bonds       
(Civic Investments, Inc.), Ser. A, U.S. Govt.       
Coll., 9s, 12/15/15 (Prerefunded 12/15/12)  AAA/P  1,775,000  1,820,689 
(Norwood Hosp.), Ser. C, 7s, 7/1/14 (Escrowed       
to maturity)  BB/P  1,185,000  1,259,382 
(Jordan Hosp.), Ser. E, 6 3/4s, 10/1/33  BB–  2,550,000  2,597,022 
(Suffolk U.), Ser. A, 6 1/4s, 7/1/30  Baa2  1,000,000  1,170,370 
(Quincy Med. Ctr.), Ser. A, 6 1/4s, 1/15/28       
(In default) †  D/P  377,889  378 
(Suffolk U.), Ser. A, 5 3/4s, 7/1/39  Baa2  950,000  1,069,282 
(Baystate Med. Ctr.), Ser. I, 5 3/4s, 7/1/36  A+  1,500,000  1,668,630 
(Springfield College), 5 5/8s, 10/15/40  Baa1  450,000  493,376 
(Springfield College), 5 1/2s, 10/15/31  Baa1  1,100,000  1,206,843 
(Springfield College), 5 1/2s, 10/15/26  Baa1  1,500,000  1,694,340 
(Fisher College), Ser. A, 5 1/8s, 4/1/37  BBB–  250,000  253,478 
(Emerson Hosp.), Ser. E, Radian Insd., 5s, 8/15/25  BB/P  1,500,000  1,506,825 
(Milford Regl. Med.), Ser. E, 5s, 7/15/22  Baa3  2,200,000  2,329,888 
MA State Indl. Fin. Agcy. Rev. Bonds (1st Mtge.       
Berkshire Retirement), Ser. A, 6 5/8s, 7/1/16  BBB  1,230,000  1,235,695 
MA State Port Auth. Special Fac. Rev. Bonds (Conrac),       
Ser. A, 5 1/8s, 7/1/41  A  750,000  823,260 
Metro. Boston Trans. Pkg. Corp. Rev. Bonds,       
5s, 7/1/41  A1  1,500,000  1,644,390 
Metro. Boston, Trans. Pkg. Corp. Rev. Bonds       
(Systemwide Pkg.), 5 1/4s, 7/1/33  A1  1,500,000  1,708,905 
      35,798,498 
Michigan (5.9%)       
Detroit, G.O. Bonds (Cap. Impt.), Ser. A-1,       
5s, 4/1/15  B  950,000  911,763 
Detroit, Wtr. & Swr. Dept. Rev. Bonds, Ser. A,       
5s, 7/1/32  A+  1,200,000  1,297,272 
Detroit, Wtr. Supply Syst. Rev. Bonds, Ser. B, AGM,       
6 1/4s, 7/1/36  AA–  1,660,000  1,932,057 
Flint, Hosp. Bldg. Auth. Rev. Bonds (Hurley Med. Ctr.),       
6s, 7/1/20  Ba1  945,000  961,235 
Garden City, Hosp. Fin. Auth. Rev. Bonds (Garden       
City Hosp.), Ser. A, 5 3/4s, 9/1/17  Ba3  340,000  340,377 
Kentwood, Economic Dev. Rev. Bonds       
(Holland Home), 5 5/8s, 11/15/32  BB+/F  2,195,000  2,301,326 
King Cnty., Wtr & Swr. Rev. Bonds, 5s, 1/1/45  AA+  1,500,000  1,680,900 
MI State Hosp. Fin. Auth. Rev. Bonds       
Ser. A, 6 1/8s, 6/1/39  A1  2,000,000  2,309,600 
(Henry Ford Hlth.), 5 3/4s, 11/15/39  A1  1,600,000  1,835,424 
(Henry Ford Hlth. Syst.), Ser. A, 5 1/4s, 11/15/46  A1  2,565,000  2,705,613 
(Chelsea Cmnty. Hosp. Oblig.), 5s, 5/15/25       
(Prerefunded 5/15/15)  AA+  755,000  838,412 

 

Managed Municipal Income Trust  29 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Michigan cont.       
MI State Strategic Fund Ltd. Oblig. Rev. Bonds       
(Cadillac Place Office Bldg.), 5 1/4s, 10/15/26  A1  $1,250,000  $1,439,525 
MI State Strategic Fund, Ltd. Rev. Bonds       
(Worthington Armstrong Venture), U.S. Govt.       
Coll., 5 3/4s, 10/1/22 (Escrowed to maturity)  AAA/P  1,350,000  1,715,162 
MI Tobacco Settlement Fin. Auth. Rev. Bonds,       
Ser. A, 6s, 6/1/48  B–  4,000,000  3,524,720 
Monroe Cnty., Hosp. Fin. Auth. Rev. Bonds (Mercy       
Memorial Hosp.), 5 1/2s, 6/1/20  BBB  1,480,000  1,615,968 
Wayne Cnty., Arpt. Auth. Rev. Bonds, Ser. A,       
5s, 12/1/21  A2  2,000,000  2,278,100 
      27,687,454 
Minnesota (3.1%)       
Douglas Cnty., Gross Hlth. Care Fac. Rev. Bonds       
(Douglas Cnty. Hosp.), Ser. A, 6 1/4s, 7/1/34  BBB–  3,000,000  3,338,430 
Inver Grove Heights, Nursing Home Rev. Bonds       
(Presbyterian Homes Care), 5 3/8s, 10/1/26  B/P  700,000  707,343 
Minneapolis & St. Paul, Hsg. & Redev. Auth. Hlth.       
Care VRDN (Allina Hlth. Syst.), Ser. B-1,       
0.25s, 11/15/35  VMIG1  1,500,000  1,500,000 
North Oaks, Sr. Hsg. Rev. Bonds (Presbyterian       
Homes North Oaks), 6 1/8s, 10/1/39  BB/P  315,000  336,149 
Northfield, Hosp. Rev. Bonds, 5 3/8s, 11/1/26  BBB–  750,000  803,948 
Rochester, Hlth. Care Fac. Rev. Bonds (Olmsted       
Med. Ctr.), 5 7/8s, 7/1/30  BBB+/F  1,000,000  1,104,500 
Sartell, Hlth. Care & Hsg. Facs. Rev. Bonds       
(Country Manor Campus, LLC)       
5 1/4s, 9/1/30  B–/P  500,000  509,960 
5 1/4s, 9/1/27  B–/P  750,000  779,708 
Sauk Rapids Hlth. Care & Hsg. Fac. Rev. Bonds       
(Good Shepherd Lutheran Home)       
7 1/2s, 1/1/39  B+/P  500,000  524,575 
6s, 1/1/34  B+/P  400,000  401,420 
St. Paul, Hsg. & Redev. Auth. Charter School Lease       
Rev. Bonds (Nova Classical Academy), Ser. A       
6 5/8s, 9/1/42  BBB–  250,000  270,170 
6 3/8s, 9/1/31  BBB–  250,000  270,368 
St. Paul, Hsg. & Redev. Auth. Hosp. Rev. Bonds       
(Healtheast), 6s, 11/15/35  BBB–  1,350,000  1,411,371 
St. Paul, Port Auth. Lease Rev. Bonds (Regions       
Hosp. Pkg. Ramp), Ser. 1, 5s, 8/1/36  BBB+/P  1,125,000  1,129,095 
Wayzata, Sr. Hsg. Rev. Bonds (Folkestone Sr.       
Living Cmnty.), Ser. B, 4 7/8s, 5/1/19  BB+/P  1,500,000  1,511,010 
      14,598,047 
Mississippi (0.5%)       
MS Home Corp. Rev. Bonds, Ser. B-2, GNMA Coll.,       
FNMA Coll., 6.45s, 12/1/33  Aaa  430,000  452,093 
Warren Cnty., Gulf Opportunity Zone Rev. Bonds       
(Intl. Paper Co.), Ser. A, 6 1/2s, 9/1/32  BBB  1,600,000  1,847,104 
      2,299,197 

 

30  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Missouri (0.6%)       
Kansas City, Indl. Dev. Auth. Hlth. Fac. Rev. Bonds       
(First Mtge. Bishop Spencer), Ser. A, 6 1/2s, 1/1/35  B/P  $1,500,000  $1,532,385 
St. Louis Arpt. Rev. Bonds (Lambert-St. Louis Intl.),       
Ser. A-1, 6 5/8s, 7/1/34  A–  1,000,000  1,178,850 
      2,711,235 
Montana (0.5%)       
MT Fac. Fin. Auth. Rev. Bonds (Sr. Living St. John’s       
Lutheran), Ser. A, 6s, 5/15/25  B+/P  500,000  515,330 
MT Fac. Fin. Auth. VRDN (Sisters of Charity       
of Leavenworth), Ser. A, 0.23s, 12/1/25  VMIG1  1,800,000  1,800,000 
      2,315,330 
Nebraska (0.6%)       
Central Plains, Energy Rev. Bonds (NE Gas No. 1),       
Ser. A, 5 1/4s, 12/1/18  B2  1,500,000  1,658,850 
Lancaster Cnty., Hosp. Auth. Rev. Bonds (Immanuel       
Oblig. Group), 5 1/2s, 1/1/30  A–/F  1,000,000  1,132,340 
      2,791,190 
Nevada (0.9%)       
Clark Cnty., Impt. Dist. Special Assmt. Bonds       
(Mountains Edge Local No. 142), 5s, 8/1/21  BBB–  675,000  734,191 
(Summerlin No. 151), 5s, 8/1/20  BB–/P  415,000  361,274 
(Summerlin No. 151), 5s, 8/1/16  BB–/P  980,000  930,549 
Henderson, Local Impt. Dist. Special Assmt. Bonds       
(No. T-17), 5s, 9/1/18  BB+/P  365,000  374,052 
(No. T-18), 5s, 9/1/16  CCC/P  995,000  779,821 
Las Vegas, Local Impt. Board Special Assmt. Bonds       
(Dist. No. 607), 5.9s, 6/1/18  BB/P  1,135,000  1,160,435 
      4,340,322 
New Hampshire (1.8%)       
NH Hlth. & Ed. Fac. Auth. Rev. Bonds       
(Rivermead), Ser. A, 6 7/8s, 7/1/41  BB+/P  2,000,000  2,265,200 
(Huntington at Nashua), Ser. A, 6 7/8s, 5/1/33  BB+/P  600,000  604,980 
(Rivermead), Ser. A, 6 5/8s, 7/1/31  BB+/P  1,320,000  1,474,018 
(Kendal at Hanover), Ser. A, 5s, 10/1/18  BBB+  1,875,000  2,001,825 
NH State Bus. Fin. Auth. Rev. Bonds (Elliot Hosp.       
Oblig. Group), Ser. A, 6s, 10/1/27  Baa1  1,700,000  1,993,913 
      8,339,936 
New Jersey (6.8%)       
Burlington Cnty., Bridge Comm. Econ. Dev. Rev.       
Bonds (The Evergreens), 5 5/8s, 1/1/38  BB+/P  2,150,000  2,218,134 
NJ Econ. Dev. Auth. Rev. Bonds       
(Newark Arpt. Marriott Hotel), 7s, 10/1/14  Ba1  2,400,000  2,407,487 
(United Methodist Homes), Ser. A-1, 6 1/4s, 7/1/33  BB+  1,000,000  1,035,870 
(First Mtge. Lions Gate), Ser. A, 5 7/8s, 1/1/37  B/P  430,000  433,285 
(Cigarette Tax), 5 3/4s, 6/15/29 (Prerefunded       
6/15/14)  Aaa  1,000,000  1,087,860 
(MSU Student Hsg. — Provident Group —       
Montclair LLC), 5 3/8s, 6/1/25  Baa3  2,000,000  2,263,120 
5s, 6/15/26  Baa1  500,000  568,180 
NJ Econ. Dev. Auth. Retirement Cmnty. Rev. Bonds       
(Seabrook Village, Inc.), 5 1/4s, 11/15/36  BB–/P  860,000  877,157 
NJ Econ. Dev. Auth. Solid Waste Mandatory Put       
Bonds (6/1/14) (Disp. Waste Mgt.), 5.3s, 6/1/15  BBB  1,750,000  1,867,652 

 

Managed Municipal Income Trust  31 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
New Jersey cont.       
NJ Econ. Dev. Auth. Wtr. Fac. Rev. Bonds       
(NJ American Wtr. Co.)       
Ser. A, 5.7s, 10/1/39  A2  $2,600,000  $2,859,350 
Ser. D, 4 7/8s, 11/1/29  A2  700,000  755,433 
NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds       
(St. Joseph Hlth. Care Syst.), 6 5/8s, 7/1/38  BBB–  2,250,000  2,611,574 
(St. Peter’s U. Hosp.), 6 1/4s, 7/1/35  BBB–  2,000,000  2,279,260 
(United Methodist Homes), Ser. A, 5 3/4s, 7/1/29  BB+  2,250,000  2,250,922 
(Holy Name Hosp.), 5s, 7/1/36  Baa2  2,500,000  2,555,924 
NJ State, Econ. Dev. Auth. Rev. Bonds       
(Continental Airlines, Inc.), 4 7/8s, 9/15/19  B  3,000,000  3,063,840 
North Hudson, Swr. Auth. Rev. Bonds, Ser. A,       
5s, 6/1/42  A–  1,000,000  1,122,820 
Union Cnty., Util. Auth. Resource Recvy. Fac. Lease       
Rev. Bonds (Covanta Union), Ser. A, 5 1/4s, 12/1/31  AA+  1,450,000  1,618,273 
      31,876,141 
New Mexico (1.6%)       
Farmington, Poll. Control Rev. Bonds       
(Public Service Co. of NM San Juan), Ser. D,       
5.9s, 6/1/40  Baa3  500,000  559,095 
(San Juan), Ser. B, 4 7/8s, 4/1/33  Baa3  4,500,000  4,674,015 
(AZ Pub. Svc. Co.), Ser. B, 4.7s, 9/1/24  Baa1  2,000,000  2,252,040 
      7,485,150 
New York (9.9%)       
Broome Cnty., Indl. Dev. Agcy. Continuing Care       
Retirement Rev. Bonds (Good Shepard Village),       
Ser. A, 6 3/4s, 7/1/28  B/P  600,000  650,040 
Huntington, Hsg. Auth. Sr. Hsg. Fac. Rev. Bonds       
(Gurwin Jewish Sr. Residence), Ser. A       
6s, 5/1/39  B+/P  500,000  501,910 
6s, 5/1/29  B+/P  750,000  750,330 
Livingston Cnty., Indl. Dev. Agcy. Civic Fac.       
Rev. Bonds (Nicholas H. Noyes Memorial Hosp.),       
5 3/4s, 7/1/15  BB  1,240,000  1,241,277 
Nassau Cnty., Indl. Dev. Agcy. Rev. Bonds       
(Keyspan-Glenwood), 5 1/4s, 6/1/27  A–  2,775,000  2,839,519 
Niagara Cnty., Indl. Dev. Agcy. Mandatory Put       
Bonds (11/15/12) (Solid Waste Disp.), Ser. A,       
5.45s, 11/15/26  Baa2  500,000  500,360 
NY City, G.O. Bonds, Ser. F, 5s, 8/1/31  Aa2  1,500,000  1,768,275 
NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds       
(American Airlines — JFK Intl. Arpt.), 7 1/2s,       
8/1/16 (In default) †  D/P  4,175,000  4,423,496 
(British Airways PLC), 5 1/4s, 12/1/32  BB  3,425,000  3,429,213 
(Jetblue Airways Corp.), 5s, 5/15/20  B–  295,000  294,628 
NY City, Muni. Wtr. & Swr. Fin. Auth. Rev.       
bonds 5s, 6/15/31 T  AA+  10,000,000  11,781,423 
NY City, Transitional Fin. Auth. Rev. Bonds       
(Future Tax), Ser. D-1, 5s, 11/1/32  AAA  2,000,000  2,373,740 
NY State Dorm. Auth. Rev. Bonds (Winthrop-U.       
Hosp. Assn.), Ser. A, 5 1/2s, 7/1/32       
(Prerefunded 7/1/13)  Baa1  900,000  930,870 

 

32  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
New York cont.       
NY State Dorm. Auth. Non-State Supported Debt Rev.       
Bonds (Orange Regl. Med. Ctr.), 6 1/4s, 12/1/37  Ba1  $725,000  $802,677 
NY State Dorm. Auth. Ser. C Rev bonds 5s, 3/15/31T  AAA  5,000,000  5,864,268 
NY State Energy Research & Dev. Auth. Gas Fac.       
Rev. Bonds (Brooklyn Union Gas), 6.952s, 7/1/26  A3  3,800,000  3,811,628 
Port Auth. NY & NJ Special Oblig. Rev. Bonds       
(Kennedy Intl. Arpt. — 5th Installment),       
6 3/4s, 10/1/19  BB+/P  180,000  180,007 
(JFK Intl. Air Term.), 6s, 12/1/42  Baa3  1,000,000  1,174,450 
Seneca Cnty., Indl. Dev. Agcy. Solid Waste Disp.       
Mandatory Put Bonds (10/1/13) (Seneca       
Meadows, Inc.), 6 5/8s, 10/1/35  BB–  670,000  676,559 
Suffolk Cnty., Indl. Dev. Agcy. Civic Fac. Rev. Bonds       
(Southampton Hosp. Assn.), Ser. A, 7 1/4s, 1/1/30  B–/P  1,250,000  1,251,375 
Syracuse, Indl. Dev. Agcy. Rev. Bonds       
(1st Mtge.— Jewish Home), Ser. A, 7 3/8s, 3/1/21  B+/P  745,000  746,192 
      45,992,237 
North Carolina (1.8%)       
NC Eastern Muni. Pwr. Agcy. Syst. Rev. Bonds,       
Ser. C, 6 3/4s, 1/1/24  A–  750,000  943,455 
NC Hsg. Fin. Agcy. FRB (Homeownership),       
Ser. 26-A, 5 1/2s, 1/1/38  Aa2  285,000  293,484 
NC Med. Care Cmnty. Hlth. Care Fac. Rev. Bonds       
(Presbyterian Homes), 5.4s, 10/1/27  BB/P  2,000,000  2,069,520 
(First Mtge. — Presbyterian Homes),       
5 3/8s, 10/1/22  BB/P  1,110,000  1,170,384 
NC Med. Care Comm. Retirement Fac. Rev. Bonds       
(Carolina Village), 6s, 4/1/38  BB/P  500,000  524,850 
(First Mtge.), Ser. A-05, 5 1/2s, 10/1/35  BB+/P  1,730,000  1,740,761 
(First Mtge.), Ser. A-05, 5 1/4s, 10/1/25  BB+/P  700,000  707,672 
(Forest at Duke), 5 1/8s, 9/1/27  BBB+/F  1,000,000  1,062,360 
      8,512,486 
Ohio (5.4%)       
American Muni. Pwr. — Ohio, Inc. Rev. Bonds (Prairie       
Street Energy Campus), Ser. A, 5 1/4s, 2/15/33  Aa3  5,000,000  5,602,150 
Buckeye, Tobacco Settlement Fin. Auth. Rev. Bonds,       
Ser. A-2       
5 7/8s, 6/1/30  B3  3,340,000  2,899,487 
5 3/4s, 6/1/34  B3  3,500,000  2,978,605 
5 1/8s, 6/1/24  B3  990,000  857,845 
Cleveland, Arpt. Syst. Rev. Bonds, Ser. A, 5s, 1/1/31  A–  400,000  448,968 
Franklin Cnty., Hlth. Care Fac. Rev. Bonds       
(Presbyterian Svcs.), Ser. A, 5 5/8s, 7/1/26  BBB  2,750,000  3,076,645 
Hickory Chase, Cmnty. Auth. Infrastructure Impt. Rev.       
Bonds (Hickory Chase), 7s, 12/1/38 (In default) †  D/P  644,000  380,604 
Lake Cnty., Hosp. Fac. Rev. Bonds (Lake Hosp. Syst.),       
Ser. C, 5 5/8s, 8/15/29  A3  1,530,000  1,668,557 
Lorain Cnty., Port Auth. Recovery Zone Fac. Rev.       
Bonds (U.S. Steel Corp.), 6 3/4s, 12/1/40  BB  1,000,000  1,083,260 
OH State Air Quality Dev. Auth. Rev. Bonds       
(Valley Elec. Corp.), Ser. E, 5 5/8s, 10/1/19  Baa3  1,300,000  1,547,078 

 

Managed Municipal Income Trust  33 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Ohio cont.       
OH State Higher Edl. Fac. Comm. Rev. Bonds       
(Kenyon College), 5s, 7/1/44  A1  $800,000  $863,216 
OH State Higher Edl. Fac. Commn. Rev. Bonds       
(U. Hosp. Hlth. Syst.), Ser. 09-A, 6 3/4s, 1/15/39       
(Prerefunded 1/15/15)  A2  2,000,000  2,275,280 
Southeastern OH Port Auth. Hosp. Fac. Rev. Bonds,       
5 3/4s, 12/1/32  BB/P  900,000  955,791 
Toledo-Lucas Cnty., Port Auth. Rev. Bonds (CSX       
Transn, Inc.), 6.45s, 12/15/21  Baa2  500,000  632,500 
      25,269,986 
Oklahoma (0.9%)       
OK Hsg. Fin. Agcy. Single Fam. Rev. Bonds       
(Homeownership Loan), Ser. B, 5.35s, 3/1/35  Aaa  1,205,000  1,273,058 
OK Hsg. Fin. Agcy. Single Family Mtge. Rev. Bonds       
(Homeownership Loan), Ser. C, GNMA Coll., FNMA       
Coll., 5.95s, 3/1/37  Aaa  1,085,000  1,157,847 
Tulsa Cnty., Indl. Auth. Rev. Bonds (Sr. Living       
Cmnty. Montereau, Inc.), Ser. A       
7 1/8s, 11/1/30  BB–/P  1,250,000  1,427,638 
6 7/8s, 11/1/23  BB–/P  500,000  532,630 
      4,391,173 
Oregon (0.9%)       
Multnomah Cnty., Hosp. Fac. Auth. Rev. Bonds       
(Terwilliger Plaza), 6 1/2s, 12/1/29  BBB/F  3,000,000  3,013,080 
(Terwilliger Plaza, Inc.), 5s, 12/1/29  BBB/F  350,000  381,196 
Warm Springs Reservation, Confederated Tribes       
144A Rev. Bonds (Pelton Round Butte Tribal),       
Ser. B, 6 3/8s, 11/1/33  A3  700,000  766,108 
      4,160,384 
Pennsylvania (6.5%)       
Allegheny Cnty., Higher Ed. Bldg. Auth. Rev. Bonds       
(Robert Morris U.), Ser. A, 5 1/2s, 10/15/30  Baa3  1,000,000  1,104,790 
Allegheny Cnty., Hosp. Dev. Auth. Rev. Bonds       
(Hlth. Syst.-West PA), Ser. A, 5 3/8s, 11/15/40  B–  1,205,000  859,599 
Allegheny Cnty., Indl. Dev. Auth. Rev. Bonds       
(U.S. Steel Corp.), 6 3/4s, 11/1/24  BB  2,000,000  2,160,260 
Allentown, Neighborhood Impt. Zone Dev. Auth.       
Rev. Bonds, Ser. A       
5s, 5/1/42  Baa2  800,000  842,616 
5s, 5/1/35  Baa2  500,000  532,650 
5s, 5/1/32  Baa2  200,000  216,318 
Bucks Cnty., Indl. Dev. Auth. Retirement Cmnty.       
Rev. Bonds (Ann’s Choice, Inc.), Ser. A       
6 1/8s, 1/1/25  BB/P  1,160,000  1,173,526 
5.3s, 1/1/14  BB/P  690,000  698,328 
5.2s, 1/1/13  BB/P  1,000,000  1,002,150 
Cumberland Cnty., Muni. Auth. Rev. Bonds       
(Presbyterian Homes Oblig.), Ser. A, 5.45s, 1/1/21  BBB+  550,000  551,656 
(Presbyterian Homes), Ser. A, 5.35s, 1/1/20  BBB+  515,000  516,633 
Delaware Cnty., Indl. Dev. Auth. Resource Recvy.       
Rev. Bonds, Ser. A, 6.1s, 7/1/13  Ba1  115,000  115,184 

 

34  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Pennsylvania cont.       
Lancaster Cnty., Hosp. Auth. Rev. Bonds       
(Brethren Village), Ser. A, 6 3/8s, 7/1/30  BB–/P  $625,000  $672,325 
Lebanon Cnty., Hlth. Facs. Rev. Bonds (Pleasant       
View Retirement), Ser. A, 5.3s, 12/15/26  BB/P  1,800,000  1,819,206 
Lycoming Cnty., Auth. Hlth. Syst. Rev. Bonds       
(Susquehanna Hlth. Syst.), Ser. A, 5 3/4s, 7/1/39  BBB+  3,000,000  3,305,790 
Montgomery Cnty., Indl. Auth. Resource Recvy. Rev.       
Bonds (Whitemarsh Cont. Care), 6 1/4s, 2/1/35  B–/P  1,100,000  1,120,053 
Northampton Cnty., Hosp. Auth. Mandatory Put       
Bonds (8/15/16) (Saint Luke’s Hosp.), Ser. C,       
4 1/2s, 8/15/32  A3  1,500,000  1,644,930 
PA Econ. Dev. Fin. Auth. Exempt Fac. Rev. Bonds       
(Allegheny Energy Supply Co.), 7s, 7/15/39  Baa3  2,000,000  2,399,880 
PA State Econ. Dev. Fin. Auth. Resource Recvy.       
Rev. Bonds (Colver), Ser. F, AMBAC, 5s, 12/1/15  BBB–  1,650,000  1,699,616 
PA State Higher Edl. Fac. Auth. Rev. Bonds       
(Shippensburg U.), 6 1/4s, 10/1/43  Baa3  500,000  561,645 
(Edinboro U. Foundation), 5.8s, 7/1/30  Baa3  1,000,000  1,137,410 
(Gwynedd Mercy College), Ser. KK1, 5 3/8s, 5/1/42  BBB–  785,000  830,734 
(Indiana U.), Ser. A, 5s, 7/1/41  BBB+  500,000  537,210 
Philadelphia, Auth. for Indl. Dev. Rev. Bonds       
(Master Charter School), 6s, 8/1/35  BBB+  600,000  656,580 
Philadelphia, Gas Wks. Rev. Bonds, Ser. 9, 5s, 8/1/30  BBB+  1,000,000  1,083,240 
Philadelphia, Hosp. & Higher Ed. Fac. Auth. Rev.       
Bonds (Graduate Hlth. Syst.), 7 1/4s, 7/1/13       
(In default) †  D/P  2,707,789  271 
Pittsburgh G.O. Bonds, Ser. B, 5s, 9/1/26  A1  1,000,000  1,159,790 
Susquehanna, Area Regl. Arpt. Syst. Auth. Rev.       
Bonds, Ser. A, 6 1/2s, 1/1/38  Baa3  1,325,000  1,408,674 
Wilkes-Barre, Fin. Auth. Rev. Bonds (Wilkes U.),       
5s, 3/1/22  BBB  560,000  604,352 
      30,415,416 
Puerto Rico (2.7%)       
Cmnwlth. of PR, G.O. Bonds       
Ser. C, 6 1/2s, 7/1/40  Baa1  2,000,000  2,242,860 
Ser. A, FGIC, 5 1/2s, 7/1/21  Baa1  1,000,000  1,101,090 
(Pub. Impt.), Ser. A, NATL, 5 1/2s, 7/1/20  Baa1  1,000,000  1,100,790 
(Pub. Impt.), Ser. E, 5 3/8s, 7/1/30  Baa1  3,000,000  3,125,130 
Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds,       
Ser. L, AMBAC, 5 1/4s, 7/1/38  Baa1  1,845,000  1,927,545 
Cmnwlth. of PR, Indl. Tourist Edl. Med. & Env. Control       
Facs. Rev. Bonds (Cogen. Fac.-AES), 6 5/8s, 6/1/26  Ba1  1,000,000  1,000,590 
Cmnwlth. of PR, Sales Tax Fin. Corp. Rev. Bonds,       
Ser. A, zero %, 8/1/30  A+  5,000,000  1,956,500 
      12,454,505 
Rhode Island (0.3%)       
Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. A,       
6 1/8s, 6/1/32  BBB  1,490,000  1,521,901 
      1,521,901 

 

Managed Municipal Income Trust  35 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
South Carolina (0.3%)       
Georgetown Cnty., Env. Impt. Rev. Bonds (Intl.       
Paper Co.), Ser. A, 5s, 8/1/30  BBB  $1,135,000  $1,135,806 
SC Jobs Econ. Dev. Auth. Hosp. Fac. Rev. Bonds       
(Palmetto Hlth.), Ser. C, U.S. Govt. Coll., 6s,       
8/1/20 (Prerefunded 8/1/13)  Baa1  110,000  114,556 
      1,250,362 
South Dakota (0.4%)       
SD Edl. Enhancement Funding Corp. SD Tobacco Rev.       
Bonds, Ser. B, 6 1/2s, 6/1/32  A3  2,000,000  2,071,360 
      2,071,360 
Tennessee (0.6%)       
Johnson City, Hlth. & Edl. Fac. Board Hosp. Rev.       
Bonds (Mountain States Hlth. Alliance), 6s, 7/1/38  Baa1  1,450,000  1,701,097 
Johnson City, Hlth. & Edl. Facs. Board Retirement       
Fac. Rev. Bonds (Appalachian Christian Village),       
Ser. A, 6 1/4s, 2/15/32  BB–/P  1,000,000  1,009,640 
      2,710,737 
Texas (11.6%)       
Abilene, Hlth. Fac. Dev. Corp. Rev. Bonds (Sears       
Methodist Retirement)       
Ser. A, 7s, 11/15/33  CCC/P  600,000  392,718 
5 7/8s, 11/15/18  CCC/P  660,000  432,993 
Ser. A, 5 7/8s, 11/15/18  CCC/P  15,000  9,841 
Abilene, Hlth. Fac. Dev. Corp. Retirement Fac. Rev.       
Bonds (Sears Methodist Retirement), 6s, 11/15/29  CCC/P  1,124,000  736,153 
Brazos River, Auth. Poll. Control Rev. Bonds (TXU       
Energy Co., LLC), 5s, 3/1/41  Ca  1,500,000  139,335 
Brazos, Harbor Indl. Dev. Corp. Env. Fac. Mandatory       
Put Bonds (5/1/18) (Dow Chemical), 5.9s, 5/1/38  BBB  2,200,000  2,498,012 
Gulf Coast, Waste Disp. Auth. Rev. Bonds, Ser. A,       
6.1s, 8/1/24  BBB  450,000  451,742 
Harris Cnty., Cultural Ed. Fac. Fin. Corp. VRDN       
(Texas Med. Ctr.), Ser. B-1, 0.23s, 9/1/31  VMIG1  2,090,000  2,090,000 
Houston, Arpt. Syst. Rev. Bonds       
(Continental Airlines, Inc.), Ser. E, 7s, 7/1/29  B3  500,000  502,360 
(Continental Airlines, Inc.), Ser. E, 6 3/4s, 7/1/29  B3  4,000,000  4,014,880 
(Special Fac. — Continental Airlines, Inc.), Ser. E,       
6 3/4s, 7/1/21  B3  1,600,000  1,607,072 
(Continental Airlines, Inc.), Ser. C, 5.7s, 7/15/29  B3  6,185,000  6,202,009 
Ser. A, 5s, 7/1/24  A  1,500,000  1,724,670 
La Vernia, Higher Ed. Fin. Corp. Rev. Bonds       
(Kipp, Inc.), Ser. A       
6 3/8s, 8/15/44  BBB  1,100,000  1,272,040 
6 1/4s, 8/15/39  BBB  1,975,000  2,279,466 
Love Field, Arpt. Modernization Corp. Special       
Fac. Rev. Bonds (Southwest Airlines Co.),       
5 1/4s, 11/1/40  Baa3  3,500,000  3,796,625 
Matagorda Cnty., Poll. Control Rev. Bonds       
(Cent Pwr. & Light Co.), Ser. A, 6.3s, 11/1/29  Baa2  1,000,000  1,168,400 
(Dist. No. 1), Ser. A, AMBAC, 4.4s, 5/1/30  Baa2  1,250,000  1,330,338 
Newark, Cultural Ed. Facs. Fin. Corp. Rev. Bonds       
(AW Brown-Fellowship Leadership Academy),       
Ser. A, 6s, 8/15/42  BBB–  670,000  704,391 

 

36  Managed Municipal Income Trust 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Texas cont.       
North Texas Edl. Fin. Co. Rev. Bonds (Uplift Edl.),       
Ser. A, 5 1/4s, 12/1/47  BBB–  $2,000,000  $2,134,800 
North TX, Tollway Auth. Rev. Bonds       
Ser. A, 6s, 1/1/25  A2  1,000,000  1,170,920 
(Toll 2nd Tier), Ser. F, 5 3/4s, 1/1/38  A3  1,750,000  1,931,580 
Sam Rayburn, Muni. Pwr. Agcy. Rev. Bonds,       
5s, 10/1/21  BBB+  500,000  597,030 
Tarrant Cnty., Cultural Ed. Fac. Fin. Corp.       
Retirement Fac. Rev. Bonds       
(Sr. Living Ctr.), Ser. A, 8 1/4s, 11/15/39  B+/P  4,000,000  4,514,720 
(Buckner Retirement Svcs., Inc.), 5 1/4s, 11/15/37  A–  1,900,000  1,989,547 
(Air Force Village), 5 1/8s, 5/15/27  BBB/F  3,100,000  3,193,868 
TX Muni. Gas Acquisition & Supply Corp. I Rev. Bonds,       
Ser. A, 5 1/4s, 12/15/24  A–  2,000,000  2,287,700 
TX Private Activity Surface Trans. Corp. Rev. Bonds       
(NTE Mobility), 7 1/2s, 12/31/31  Baa2  2,000,000  2,540,140 
(LBJ Infrastructure), 7s, 6/30/40  Baa3  1,500,000  1,854,255 
TX State Dept. of Hsg. & Cmnty. Affairs Rev. Bonds,       
Ser. C, GNMA Coll., FNMA Coll., FHLMC Coll.,       
6.9s, 7/2/24  AA+  450,000  471,299 
      54,038,904 
Utah (0.7%)       
Murray City, Hosp. VRDN (IHC Hlth. Svcs., Inc.),       
Ser. B, 0.23s, 5/15/37  VMIG1  3,155,000  3,155,000 
      3,155,000 
Vermont (—%)       
VT Hsg. Fin. Agcy. Rev. Bonds (Single Fam.), Ser. 23,       
AGM, 5s, 5/1/34  Aa3  10,000  10,139 
      10,139 
Virginia (2.3%)       
Albemarle Cnty., Indl. Dev. Auth. Res. Care Fac.       
Rev. Bonds (Westminster-Canterbury), 5s, 1/1/24  B+/P  600,000  623,196 
Chesapeake, Toll Rd. Rev. Bonds (Sr. Trans. Syst.),       
Ser. A, 5s, 7/15/27 ∆  BBB  300,000  337,761 
Henrico Cnty., Econ. Dev. Auth. Res. Care Fac.       
Rev. Bonds       
(Westminster-Canterbury), 5s, 10/1/22  BBB  1,000,000  1,031,420 
(United Methodist Homes), 5s, 6/1/22  BB+/P  625,000  687,856 
James Cnty., Indl. Dev. Auth. Rev. Bonds       
(Williamsburg), Ser. A, 6 1/8s, 3/1/32  BB–/P  1,500,000  1,503,165 
Lynchburg, Indl. Dev. Auth. Res. Care Fac. Rev.       
Bonds (Westminster-Canterbury)       
5s, 7/1/31  BB/P  1,250,000  1,292,888 
4 7/8s, 7/1/21  BB/P  1,000,000  1,054,600 
VA ST Small Bus. Fin. Auth. Rev. Bonds       
(Elizabeth River Crossings OPCO, LLC), 6s, 1/1/37  BBB–  900,000  1,032,066 
(Express Lanes, LLC), 5s, 7/1/34  BBB–  900,000  952,101 
Washington Cnty., Indl. Dev. Auth. Hosp. Fac.       
Rev. Bonds (Mountain States Hlth. Alliance),       
Ser. C, 7 3/4s, 7/1/38  Baa1  1,700,000  2,128,961 
      10,644,014 

 

Managed Municipal Income Trust  37 

 


MUNICIPAL BONDS AND NOTES (126.1%)* cont.  Rating**  Principal amount  Value 
 
Washington (3.3%)       
WA State G.O. Bonds (Sr. 520 Corridor-Motor       
Vehicle Tax), Ser. C, 5s, 6/1/28 T  AA+  $5,000,000  $5,998,071 
Port Seattle, Port Indl. Dev. Corp. Rev. Bonds       
(Delta Airlines, Inc.), 5s, 4/1/30  B–  300,000  302,652 
Skagit Cnty., Pub. Hosp. Rev. Bonds (Dist. No. 001),       
5 3/4s, 12/1/35  Baa2  2,500,000  2,730,675 
Tobacco Settlement Auth. of WA Rev. Bonds       
6 5/8s, 6/1/32  Baa1  2,385,000  2,481,616 
6 1/2s, 6/1/26  A3  455,000  474,797 
WA State Higher Ed. Fac. Auth. Rev. Bonds       
(Whitworth U.), 5 5/8s, 10/1/40  Baa1  400,000  437,604 
WA State Hlth. Care Fac. Auth. Rev. Bonds       
(WA Hlth. Svcs.), 7s, 7/1/39  Baa3  1,000,000  1,161,040 
(Kadlec Med. Ctr.), 5 1/2s, 12/1/39  Baa3  1,500,000  1,626,945 
      15,213,400 
West Virginia (0.2%)       
WV State Hosp. Fin. Auth. Rev. Bonds (Thomas       
Hlth. Syst.), 6 3/4s, 10/1/43  B/P  735,000  770,978 
      770,978 
Wisconsin (0.7%)       
Pub. Fin. Auth. Arpt. Fac. Rev. Bonds (Sr. Oblig.       
Group), 5 1/4s, 7/1/28  BBB–  350,000  374,315 
WI State Hlth. & Edl. Fac. Auth. Rev. Bonds       
(St. Johns Cmntys. Inc.), Ser. A, 7 5/8s, 9/15/39  BB/P  1,150,000  1,338,646 
(Prohealth Care, Inc.), 6 5/8s, 2/15/39  A1  1,250,000  1,481,512 
      3,194,473 
 
Total municipal bonds and notes (cost $539,063,290)      $588,476,348 
 
 
PREFERRED STOCKS (1.1%)*    Shares  Value 
 
MuniMae Tax Exempt Bond Subsidiary, LLC 144A       
Ser. A-3, $7.50    2,000,000  $2,001,040 
MuniMae Tax Exempt Bond Subsidiary, LLC 144A       
Ser. A, 7.50% cum. pfd.    3,197,423  3,198,862 
Total preferred stocks (cost $5,197,423)      $5,199,902 
 
 
COMMON STOCKS (—%)*    Shares  Value 
 
Tembec, Inc. (Canada) †    1,750  $3,960 
Total common stocks (cost $1,273,944)      $3,960 
 
 
TOTAL INVESTMENTS       
Total investments (cost $545,534,657)      $593,680,210 

 

Notes to the fund’s portfolio

Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from November 1, 2011 through October 31, 2012 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures.

* Percentages indicated are based on net assets of $466,728,330.

38  Managed Municipal Income Trust 

 


** The Moody’s, Standard & Poor’s or Fitch ratings indicated are believed to be the most recent ratings available at the close of the reporting period 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 the close of the reporting period. Securities rated by Putnam are indicated by “/P.” Securities rated by Fitch are indicated by “/F.” The rating of an insured security represents what is believed to be the most recent rating of the insurer’s claims-paying ability available at the close of the reporting period, if higher than the rating of the direct issuer of the bond, and does not reflect any subsequent changes. Ratings are not covered by the Report of Independent Registered Public Accounting Firm.

† Non-income-producing security.

∆ Forward commitment, in part or in entirety (Note 1).

T Underlying security in a tender option bond transaction. The security has been segregated as collateral for financing transactions.

At the close of the reporting period, the fund maintained liquid assets totaling $13,587,075 to cover certain tender option bonds.

Debt obligations are considered secured unless otherwise indicated.

144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

The rates shown on Mandatory Put Bonds are the current interest rates at the close of the reporting period.

The dates shown parenthetically on Mandatory Put Bonds represent the next mandatory put dates.

The dates shown parenthetically on prerefunded bonds represent the next prerefunding dates.

The dates shown on debt obligations are the original maturity dates.

The fund had the following sector concentrations greater than 10% at the close of the reporting period (as a percentage of net assets):

Health care  44.3% 
Utilities  19.2 
Transportation  14.1 

 

ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1: Valuations based on quoted prices for identical securities in active markets.

Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:

    Valuation inputs  
Investments in securities:  Level 1  Level 2  Level 3 
Common stocks:       
Basic materials  $3,960  $—  $— 
Total common stocks  3,960  —  — 
 
Municipal bonds and notes  $—  $588,476,348  $— 
Preferred stocks  —  5,199,902  — 
Totals by level  $3,960  $593,676,250  $— 

 

The accompanying notes are an integral part of these financial statements.

 

Managed Municipal Income Trust  39 

 


Statement of assets and liabilities 10/31/12

ASSETS   
Investment in securities, at value (Note 1):   
Unaffiliated issuers (identified cost $545,534,657)  $593,680,210 
Cash  59,185 
Interest and other receivables  9,516,168 
Receivable for investments sold  500,000 
Receivable for sales of delayed delivery securities (Note 1)  331,000 
Total assets  604,086,563 
 
LIABILITIES   
Distributions payable to preferred shareholders (Note 1)  4,769 
Preferred share remarketing agent fees  91,596 
Distributions payable to shareholders  2,241,913 
Payable for purchases of delayed delivery securities (Note 1)  336,621 
Payable for compensation of Manager (Note 2)  830,159 
Payable for investor servicing fees (Note 2)  19,354 
Payable for custodian fees (Note 2)  4,833 
Payable for Trustee compensation and expenses (Note 2)  162,636 
Payable for administrative services (Note 2)  909 
Payable for floating rate notes issued (Note 1)  10,056,688 
Other accrued expenses  108,755 
Total liabilities  13,858,233 
 
Series A remarketed preferred shares: (245 shares   
authorized and issued at $100,000 per share) (Note 4)  24,500,000 
Series C remarketed preferred shares: (1,980 shares   
authorized and issued at $50,000 per share) (Note 4)  99,000,000 
Net assets  $466,728,330 
 
REPRESENTED BY   
Paid-in capital — common shares (Unlimited shares authorized) (Notes 1 and 5)  $459,313,365 
Distributions in excess of net investment income (Note 1)  (1,148,179) 
Accumulated net realized loss on investments  (39,582,409) 
Net unrealized appreciation of investments  48,145,553 
Total — Representing net assets applicable to common shares outstanding  $466,728,330 
 
COMPUTATION OF NET ASSET VALUE   
Net asset value per common share ($466,728,330 divided by 57,627,845 shares)  $8.10 

 

The accompanying notes are an integral part of these financial statements.

 

40  Managed Municipal Income Trust 

 


Statement of operations Year ended 10/31/12

INTEREST INCOME  $31,723,692 
 
EXPENSES   
Compensation of Manager (Note 2)  $3,149,331 
Investor servicing fees (Note 2)  224,508 
Custodian fees (Note 2)  11,138 
Trustee compensation and expenses (Note 2)  39,610 
Administrative services (Note 2)  13,697 
Interest and fee expense (Note 2)  67,538 
Preferred share remarketing agent fees  188,341 
Other  348,930 
Total expenses  4,043,093 
 
Expense reduction (Note 2)  (1,091) 
Net expenses  4,042,002 
 
Net investment income  27,681,690 
 
Net realized loss on investments (Notes 1 and 3)  (3,195,255) 
Net unrealized appreciation of investments during the year  44,600,253 
Net gain on investments  41,404,998 
 
Net increase in net assets resulting from operations  $69,086,688 
 
DISTRIBUTIONS TO SERIES A AND C REMARKETED PREFERRED SHAREHOLDERS (NOTE 1):   
From ordinary income   
Taxable net investment income  (1,401) 
From tax exempt net investment income  (187,662) 
Net increase in net assets resulting from operations   
(applicable to common shareholders)  $68,897,625 

 

The accompanying notes are an integral part of these financial statements.

 

Managed Municipal Income Trust  41 

 


Statement of changes in net assets

INCREASE (DECREASE) IN NET ASSETS  Year ended 10/31/12  Year ended 10/31/11 
Operations:     
Net investment income  $27,681,690  $29,242,868 
Net realized loss on investments  (3,195,255)  (4,842,454) 
Net unrealized appreciation (depreciation) of investments  44,600,253  (8,169,592) 
Net increase in net assets resulting from operations  69,086,688  16,230,822 
 
DISTRIBUTIONS TO SERIES A AND C REMARKETED PREFERRED SHAREHOLDERS (NOTE 1):   
From ordinary income     
Taxable net investment income  (1,401)  (346) 
From tax exempt net investment income  (187,662)  (237,674) 
Net increase in net assets resulting from operations     
(applicable to common shareholders)  68,897,625  15,992,802 
 
DISTRIBUTIONS TO COMMON SHAREHOLDERS (NOTE 1):     
From ordinary income     
Taxable net investment income  (168,479)  (30,748) 
From tax exempt net investment income  (26,996,651)  (30,288,181) 
Increase from issuance of common shares in connection with     
reinvestment of distributions  1,075,030  852,863 
Total increase (decrease) in net assets  42,807,525  (13,473,264) 
 
NET ASSETS     
Beginning of year  423,920,805  437,394,069 
End of year (including distributions in excess of net investment     
income of $1,148,179 and $1,108,566, respectively)  $466,728,330  $423,920,805 
 
NUMBER OF FUND SHARES     
Common shares outstanding at beginning of year  57,489,218  57,371,319 
Shares issued in connection with dividend reinvestment plan  138,627  117,899 
Common shares outstanding at end of year  57,627,845  57,489,218 
Remarketed preferred shares outstanding at beginning     
and end of year  2,225  2,225 

 

The accompanying notes are an integral part of these financial statements.

 

42  Managed Municipal Income Trust 

 


Financial highlights (For a common share outstanding throughout the period)

PER-SHARE OPERATING PERFORMANCE           
    Year ended     
  10/31/12  10/31/11  10/31/10  10/31/09  10/31/08 
Net asset value, beginning of period           
(common shares)  $7.37  $7.62  $7.17  $6.23  $8.04 
Investment operations:           
Net investment incomea  .48  .51  .52  .50  .56 
Net realized and unrealized           
gain (loss) on investments  .72  (.23)  .46  .92  (1.84) 
Total from investment operations  1.20  .28  .98  1.42  (1.28) 
Distributions to preferred shareholders:           
From net investment income  — e  — e  (.01)  (.02)  (.12) 
Total from investment operations           
(applicable to common shareholders)  1.20  .28  .97  1.40  (1.40) 
Distributions to common shareholders:           
From net investment income  (.47)  (.53)  (.52)  (.46)  (.42) 
Total distributions  (.47)  (.53)  (.52)  (.46)  (.42) 
Increase from shares repurchased  —  —  —  —  .01 
Net asset value, end of period           
(common shares)  $8.10  $7.37  $7.62  $7.17  $6.23 
Market price, end of period           
(common shares)  $8.37  $7.50  $7.73  $6.59  $5.70 
Total return at market price (%)           
(common shares)b  18.52  4.47  25.94  24.96  (15.69) 
 
RATIOS AND SUPPLEMENTAL DATA           
Net assets, end of period           
(common shares) (in thousands)  $466,728  $423,921  $437,394  $410,733  $356,857 
Ratio of expenses to average           
net assets (excluding interest           
expense) (%)c,d  .88  1.02  .92  .98  1.24 
Ratio of expenses to average           
net assets (including interest           
expense) (%)c,d  .89 f  1.03 f  .94 f  1.03 f  1.28 f 
Ratio of net investment income           
to average net assets (%)c  6.12  7.04  7.03  7.66  5.87 
Portfolio turnover (%)  15  17  17  25  41 

 

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).

e Amount represents less than $0.01 per share.

f Includes interest and fee expense associated with borrowings which amounted to 0.02%, 0.01%, 0.02% and 0.05% of the average net assets for the periods ended October 31, 2012, October 31, 2011, October 31, 2010 and October 31, 2009, respectively (Note 1).

The accompanying notes are an integral part of these financial statements.

Managed Municipal Income Trust  43 

 


Notes to financial statements 10/31/12

Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission and references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC. Unless otherwise noted, the “reporting period” represents the period from November 1, 2011 through October 31, 2012.

Putnam Managed Municipal Income Trust (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a diversified closed-end management investment company. The investment objective of the fund 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 Management believes does not involve undue risk to income or principal. Up to 60% 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.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

Note 1: Significant accounting policies

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. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.

Security valuation Tax-exempt bonds and notes are generally 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. These securities will generally be categorized as Level 2.

Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

Security transactions and related investment income Security transactions are recorded on the trade date (the 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. Securities purchased or sold on a delayed delivery basis may be settled a month or more after the trade date; interest income is accrued based on the terms of the securities. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.

Tender option bond transactions The fund may participate in transactions whereby a fixed-rate bond is transferred to a tender option bond trust (TOB trust) sponsored by a broker. The TOB trust funds the purchase of the fixed rate bonds by issuing floating-rate bonds to third parties and allowing the fund to retain the residual interest in the TOB trust’s assets and cash flows, which are in the form of inverse floating rate bonds. The inverse floating rate bonds held by the fund give the fund the right to (1) cause the holders of the floating rate bonds to tender

44  Managed Municipal Income Trust 

 


their notes at par, and (2) to have the fixed-rate bond held by the TOB trust transferred to the fund, causing the TOB trust to collapse. The fund accounts for the transfer of the fixed-rate bond to the TOB trust as a secured borrowing by including the fixed-rate bond in the fund’s portfolio and including the floating rate bond as a liability in the Statement of assets and liabilities. At the close of the reporting period, the fund’s investments with a value of $23,643,762 were held by the TOB trust and served as collateral for $10,056,688 in floating-rate bonds outstanding. For the reporting period ended, the fund incurred interest expense of $15,314 for these investments based on an average interest rate of 0.17%.

Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the 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 Code.

The fund is subject to the provisions of Accounting Standards Codification ASC 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. 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. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

At October 31, 2012, the fund had a capital loss carryover of $39,479,488 available to the extent allowed by the Code to offset future net capital gain, if any. The amounts of the carryovers and the expiration dates are:

Loss carryover 
Short-term  Long-term  Total  Expiration 
$—  $2,939,585  $2,939,585  * 
574,057  N/A  574,057  October 31, 2013 
3,275,525  N/A  3,275,525  October 31, 2014 
954,441  N/A  954,441  October 31, 2015 
11,265,981  N/A  11,265,981  October 31, 2016 
12,490,924  N/A  12,490,924  October 31, 2017 
3,146,619  N/A  3,146,619  October 31, 2018 
4,832,356  N/A  4,832,356  October 31, 2019 

 

* Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future years will be required to be utilized prior to the losses incurred in pre-enactment tax years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

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 Series A is generally a 28 day period. The applicable dividend rate for the remarketed preferred shares Series A on October 31, 2012 was 0.176%. Each dividend period for the remarketed preferred shares Series C is generally a 7 day period. The applicable dividend rate for the remarketed preferred shares Series C on October 31, 2012 was 0.176%.

During the reporting period, the fund has experienced unsuccessful remarketings of its remarketed preferred shares. As a result, dividends to the remarketed preferred shares have been paid at the “maximum dividend rate,” pursuant to the fund’s by-laws, which, based on the current credit quality of the remarketed preferred shares, equals 110% of the 60-day “AA” composite commercial paper rate.

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/or permanent differences of the expiration of capital loss carryovers, dividends payable, defaulted bond interest, market discount, and straddle loss deferrals. Reclassifications are made to the fund’s capital accounts

Managed Municipal Income Trust  45 

 


to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the reporting period ended, the fund reclassified $367,110 to increase distributions in excess of net investment income, $12,656,385 to decrease paid-in-capital and $13,023,495 to decrease accumulated net realized losses.

The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:

Unrealized appreciation  $58,079,604 
Unrealized depreciation  (9,919,532) 
Net unrealized appreciation  48,160,072 
Undistributed tax-exempt income  1,537,296 
Undistributed ordinary income  19,310 
Capital loss carryforward  (39,479,488) 
Cost for federal income tax purposes  $545,520,138 

 

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 (redemption value of preferred shares, plus accumulated and unpaid dividends) 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

The fund pays Putnam Management for management and investment advisory services quarterly based on the average net assets of the fund, including assets attributable to preferred shares. Such fee is based on the following annual rates based on the average weekly net assets attributable to common and preferred shares.

The lesser of (i) 0.55% of average weekly net assets attributable to common and preferred shares outstanding, or (ii) the following rates:

0.65%  of the first $500 million of average weekly  0.425%  of the next $5 billion of average weekly 
  net assets,    net assets, 
0.55%  of the next $500 million of average weekly  0.405%  of the next $5 billion of average weekly 
  net assets,    net assets, 
0.50%  of the next $500 million of average weekly  0.39%  of the next $5 billion of average weekly 
  net assets,    net assets, and 
0.45%  of the next $5 billion of average weekly  0.38%  of any excess thereafter. 
  net assets, 

 

Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.40% of the average net assets of the portion of the fund managed by PIL.

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 the effective management fee rate under the contracts multiplied by 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 State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provided investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.05% of the fund’s average net assets. The amounts incurred for investor servicing agent functions during the reporting period are included in Investor servicing fees in the Statement of operations.

46  Managed Municipal Income Trust 

 


The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc. and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $1,091 under the expense offset arrangements.

Each independent Trustee of the fund receives an annual Trustee fee, of which $364, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

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 and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. 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. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

Note 3: Purchases and sales of securities

During the reporting period, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $93,876,863 and $86,053,086, respectively. There were no purchases or proceeds from sales of long-term U.S. government securities.

Note 4: Preferred shares

The Series A (245) and Series C (1,980) Remarketed preferred shares are redeemable at the option of the fund on any dividend payment date at a redemption price of $100,000 per Series A Remarketed preferred share and at $50,000 per Series C Remarketed preferred 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.

It is anticipated that dividends paid to holders of remarketed preferred shares will be considered tax-exempt dividends under the Internal Revenue Code of 1986. To the extent that the fund earns taxable income and capital gains by the conclusion of a fiscal year, it may be required to apportion to the holders of the remarketed preferred shares throughout that year additional dividends as necessary to result in an after-tax equivalent to the applicable dividend rate for the period. Total additional dividends for the reporting period were $492.

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. Additionally, the fund’s bylaws impose more stringent asset coverage requirements and restrictions relating to the rating of the remarketed preferred shares by 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 period end, no such restrictions have been placed on the fund.

Note 5: Shares repurchased

In September 2012, the Trustees approved the renewal of the repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 12-month period ending October 7, 2013 (based on shares outstanding as of October 7, 2012). Prior to this renewal, the Trustees had approved a repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 12-month period ending October 7, 2012 (based on shares outstanding as of October 7, 2011). Repurchases are made when the fund’s shares are trading at less than net asset value and in accordance with procedures approved by the fund’s Trustees. For the reporting period, the fund did not repurchase any of its outstanding common shares.

At the close of the reporting period, Putnam Investments, LLC owned approximately 646 shares of the fund (0.001% of the fund’s shares outstanding), valued at $5,233 based on net asset value.

Managed Municipal Income Trust  47 

 


Note 6: Summary of derivative activity

As of the close of the reporting period, the fund did not hold any derivative instruments.

The following is a summary of realized and change in unrealized gains or losses of derivative instruments on the Statement of operations for the reporting period (see Note 1):

Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments

Derivatives not accounted for as hedging     
instruments under ASC 815  Warrants*  Total 
Equity contracts  $(154,422)  $(154,422) 
Total  $(154,422)  $(154,422) 

 

Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) on investments

 

Derivatives not accounted for as hedging     
instruments under ASC 815  Warrants*  Total 
Equity contracts  $154,363  $154,363 
Total  $154,363  $154,363 

 

* For the reporting period, the transaction volume for warrants was minimal.

Note 7: Share ownership

At period end, to the fund’s knowledge, a shareholder owned of record, beneficially, or on behalf of other accounts 15.9% of the fund’s outstanding common shares.

Note 8: Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default.

Note 9: New accounting pronouncements

In December 2011, the FASB issued ASU No. 2011–11 “Disclosures about Offsetting Assets and Liabilities”. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of assets and liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods. Putnam Management is currently evaluating the application of ASU 2011–11 and its impact, if any, on the fund’s financial statements.

Federal tax information (Unaudited)

The fund has designated 99.4% of dividends paid from net investment income during the reporting period as tax exempt for Federal income tax purposes.

The Form 1099 that will be mailed to you in January 2013 will show the tax status of all distributions paid to your account in calendar 2012.

48  Managed Municipal Income Trust 

 


Shareholder meeting results (Unaudited)

September 20, 2012 annual meeting

At the meeting, the proposal to fix the number of Trustees at 13 was approved as follows:

Votes for  Votes against  Abstentions 
50,428,656  1,746,205  839,417 

 

Additionally each of the nominees for Trustees was elected, as follows:

 

  Votes for  Votes withheld 
Ravi Akhoury  50,793,836  2,220,451 
Barbara M. Baumann  51,077,691  1,936,596 
Jameson A. Baxter  50,870,718  2,143,569 
Charles B. Curtis  50,652,339  2,361,948 
Robert J. Darretta  50,795,869  2,218,418 
Paul L. Joskow  50,839,383  2,174,904 
Elizabeth T. Kennan  50,771,684  2,242,604 
Kenneth R. Leibler  50,975,458  2,038,829 
George Putnam, III  50,888,914  2,125,373 
Robert L. Reynolds  51,131,967  1,882,320 
W. Thomas Stephens  50,908,629  2,105,659 

 

A quorum was not present with respect to the matter of electing two Trustees to be voted on by the preferred shareholders voting as a separate class. As a result, in accordance with the fund’s Declaration of Trust and Bylaws, independent fund Trustees John A. Hill and Robert E. Patterson remain in office and continue to serve as Trustees. On October 4, 2012, Liaquat Ahamed and Katinka Domotorffy were elected as Trustees of the fund by vote of the Board of Trustees.

All tabulations are rounded to the nearest whole number.

Managed Municipal Income Trust  49 

 


About the Trustees

Independent Trustees

50  Managed Municipal Income Trust 

 



* Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, and Putnam Retail Management. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.

The address of each Trustee is One Post Office Square, Boston, MA 02109.

As of October 31, 2012, there were 109 Putnam funds. All Trustees serve as Trustees of all Putnam funds.

Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.

Managed Municipal Income Trust  51 

 


Officers

In addition to Robert L. Reynolds, the other officers of the fund are shown below:

Jonathan S. Horwitz (Born 1955)  Janet C. Smith (Born 1965) 
Executive Vice President, Principal Executive  Vice President, Principal Accounting Officer, 
Officer, and Compliance Liaison  and Assistant Treasurer 
Since 2004  Since 2007 
Director of Fund Administration Services, 
Steven D. Krichmar (Born 1958)  Putnam Investments and Putnam Management 
Vice President and Principal Financial Officer 
Since 2002  Susan G. Malloy (Born 1957) 
Chief of Operations, Putnam Investments and  Vice President and Assistant Treasurer 
Putnam Management  Since 2007 
Director of Accounting & Control Services, 
Robert T. Burns (Born 1961)  Putnam Management 
Vice President and Chief Legal Officer 
Since 2011  James P. Pappas (Born 1953) 
General Counsel, Putnam Investments and  Vice President 
Putnam Management  Since 2004 
Director of Trustee Relations, 
Robert R. Leveille (Born 1969)  Putnam Investments and Putnam Management 
Vice President and Chief Compliance Officer 
Since 2007  Mark C. Trenchard (Born 1962) 
Chief Compliance Officer, Putnam Investments,  Vice President and BSA Compliance Officer 
Putnam Management, and Putnam Retail  Since 2002 
Management  Director of Operational Compliance, 
Putnam Investments and Putnam 
Michael J. Higgins (Born 1976)  Retail Management 
Vice President and Treasurer 
Since 2010  Judith Cohen (Born 1945) 
Manager of Finance, Dunkin’ Brands (2008–  Vice President, Clerk, and Associate Treasurer 
2010); Senior Financial Analyst, Old Mutual Asset  Since 1993 
Management (2007–2008); Senior Financial 
Analyst, Putnam Investments (1999–2007)  Nancy E. Florek (Born 1957) 
Vice President, Proxy Manager, Assistant Clerk, 
  and Associate Treasurer 
  Since 2000 

 

The principal occupations of the officers for the past five years have been with the employers as shown above although in some cases, they have held different positions with such employers. The address of each Officer is One Post Office Square, Boston, MA 02109.

 

52  Managed Municipal Income Trust 

 


Fund information

Founded 75 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 manage over 100 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.

Investment Manager  Trustees  Robert R. Leveille 
Putnam Investment  Jameson A. Baxter, Chair  Vice President and 
Management, LLC  Liaquat Ahamed  Chief Compliance Officer 
One Post Office Square  Ravi Akhoury   
Boston, MA 02109  Barbara M. Baumann  Michael J. Higgins 
  Charles B. Curtis  Vice President and Treasurer 
Investment Sub-Manager  Robert J. Darretta   
Putnam Investments Limited  Katinka Domotorffy  Janet C. Smith 
57–59 St James’s Street  John A. Hill  Vice President, 
London, England SW1A 1LD  Paul L. Joskow  Principal Accounting Officer, 
  Elizabeth T. Kennan  and Assistant Treasurer 
Custodian  Kenneth R. Leibler   
State Street Bank  Robert E. Patterson  Susan G. Malloy 
and Trust Company  George Putnam, III  Vice President and 
  Robert L. Reynolds  Assistant Treasurer 
Legal Counsel  W. Thomas Stephens   
Ropes & Gray LLP  James P. Pappas 
  Officers  Vice President 
Independent Registered  Robert L. Reynolds   
Public Accounting Firm  President  Mark C. Trenchard 
KPMG LLP  Vice President and 
  Jonathan S. Horwitz  BSA Compliance Officer 
  Executive Vice President,   
  Principal Executive Officer, and  Judith Cohen 
  Compliance Liaison  Vice President, Clerk, and 
  Associate Treasurer 
  Steven D. Krichmar   
  Vice President and  Nancy E. Florek 
  Principal Financial Officer  Vice President, Proxy 
  Manager, Assistant Clerk, and 
  Robert T. Burns  Associate Treasurer 
  Vice President and   
  Chief Legal Officer   

 

Call 1-800-225-1581 Monday through Friday between 8:00 a.m. and 8:00 p.m. Eastern Time, or visit putnam.com anytime for up-to-date information about the fund’s NAV.

 




Item 2. Code of Ethics:

(a) The Fund’s 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.

(c) In May 2008, the Code of Ethics of Putnam Investment Management, LLC was updated in its entirety to include the amendments adopted in August 2007 as well as a several additional technical, administrative and non-substantive changes. In May of 2009, the Code of Ethics of Putnam Investment Management, LLC was amended to reflect that all employees will now be subject to a 90-day blackout restriction on holding Putnam open-end funds, except for portfolio managers and their supervisors (and each of their immediate family members), who will be subject to a one-year blackout restriction on the funds that they manage or supervise. In June 2010, the Code of Ethics of Putnam Investments was updated in its entirety to include the amendments adopted in May of 2009 and to change certain rules and limits contained in the Code of Ethics. In addition, the updated Code of Ethics included numerous technical, administrative and non-substantive changes, which were intended primarily to make the document easier to navigate and understand. In July 2011, the Code of Ethics of Putnam Investments was updated to reflect several technical, administrative and non-substantive changes resulting from changes in employee titles.

Item 3. Audit Committee Financial Expert:

The Funds' Audit and Compliance 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 Compliance 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 each of Mr. Leibler, Mr. Hill, Mr. Darretta and Ms. Baumann qualifies as an "audit committee financial expert" (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education. 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 Compliance Committee and the Board of Trustees in the absence of such designation or identification.

Item 4. Principal Accountant Fees and Services:

The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor:

  Audit-     
Fiscal  Audit  Related  Tax  All Other 
year  Fees  Fees  Fees  Fees 

 


October 31, 2012  $68,324  $26,550  $6,300  $- 
October 31, 2011  $66,220  $25,300  $6,100  $- 

For the fiscal years ended October 31, 2012 and October 31, 2011, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $32,850 and $31,400 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund.

Audit Fees represent fees billed for the fund's last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements.

Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation.

Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.

Pre-Approval Policies of the Audit and Compliance Committee. The Audit and Compliance Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures.

The Audit and Compliance Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds’ independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm.

The following table presents fees billed by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

Fiscal  Audit-    All  Total 
year  Related  Tax  Other  Non-Audit 
ended  Fees  Fees  Fees  Fees 
October 31,         
2012  $ -  $ -  $ -  $ - 
October 31 ,         
2011  $ -  $ -  $ -  $ - 

 


Item 5. Audit Committee of Listed Registrants

(a) The fund has a separately-designated Audit and Compliance Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The Audit and Compliance Committee of the fund's Board of Trustees is composed of the following persons:

Kenneth R. Leibler (Chairperson)
Robert J. Darretta
John A. Hill
Barbara M. Baumann
Charles B. Curtis

(b) Not applicable

Item 6. Schedule of Investments:

The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

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 particular issues. 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 Manager, a member of the Office of the Trustees who is appointed to assist in the coordination and voting of the funds’ proxies.

The proxy voting guidelines are just that – guidelines. The guidelines are not exhaustive and do not address all potential voting issues. Because the circumstances of individual companies are so varied, there may be instances when the funds do not vote in strict adherence to these guidelines. For example, the proxy voting service is expected to bring to the Proxy Manager’s attention proxy questions that are company-specific and of a non-routine nature and that, even if 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 Manager of circumstances where the interests of fund shareholders may warrant a vote contrary to these guidelines. In such instances, the investment professionals submit a written recommendation to the Proxy Manager and the person or persons designated by Putnam Management’s Legal and Compliance Department to assist in processing referral items under the funds’ “Proxy Voting Procedures.” The Proxy Manager, in consultation with the funds’ 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 submitted by management and approved and recommended by a company’s board of directors. Part II deals with proposals submitted by shareholders. Part III addresses unique considerations pertaining to non-U.S. issuers.

The Trustees of the Putnam funds are committed to promoting strong corporate governance practices and encouraging corporate actions that enhance shareholder value through the judicious voting of the funds’ proxies. It is the funds’ policy to vote their proxies at all shareholder meetings where it is practicable to do so. In furtherance of this, the funds’ have requested that their securities lending agent recall each domestic issuer’s voting securities that are on loan, in advance of the record date for the issuer’s shareholder meetings, so that the funds may vote at the meetings.

The Putnam funds will disclose their proxy votes not later than August 31 of each year for the most recent 12-month period ended June 30, in accordance with the timetable established by SEC rules.

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 of the funds’ intent to hold corporate boards accountable for their actions in promoting shareholder interests, the funds’ proxies generally will be voted for the decisions reached by majority independent boards of directors, except as otherwise indicated in these guidelines. Accordingly, the funds’ proxies will be voted for board-approved proposals, except as follows:

Matters relating to the Board of Directors

Uncontested Election of Directors

The funds’ proxies will be voted for the election of a company’s nominees for the board of directors, except as follows:

► The funds will withhold votes from the entire board of directors if

• the board does not have a majority of independent directors,

• the board has not established independent nominating, audit, and compensation committees,


• the board has more than 19 members or fewer than five members, absent special circumstances,

• the board has not acted to implement a policy requested in a shareholder proposal that received the support of a majority of the shares of the company cast at its previous two annual meetings, or

• the board has adopted or renewed a shareholder rights plan (commonly referred to as a “poison pill”) without shareholder approval during the current or prior calendar year.

► The funds will on a case-by-case basis withhold votes from the entire board of directors, or from particular directors as may be appropriate, if the board has approved compensation arrangements for one or more company executives that the funds determine are unreasonably excessive relative to the company’s performance or has otherwise failed to observe good corporate governance practices.

► The funds will withhold votes from any nominee for director:

• who is considered an independent director by the company and who has received compensation within the last three years from the company other than for service as a director (e.g., investment banking, consulting, legal, or financial advisory fees),

• who attends less than 75% of board and committee meetings without valid reasons for the absences (e.g., illness, personal emergency, etc.),

• of a public company (Company A) who is employed as a senior executive of another company (Company B), if a director of Company B serves as a senior executive of Company A (commonly referred to as an “interlocking directorate”), or

• who serves on more than five unaffiliated public company boards (for the purpose of this guideline, boards of affiliated registered investment companies will count as one board).

Commentary:

Board independence: Unless otherwise indicated, for the purposes of determining whether a board has a majority of independent directors and independent nominating, audit, and compensation committees, an “independent director” is a director who (1) meets all requirements to serve as an independent director of a company under the NYSE Corporate Governance Rules (e.g., no material business relationships with the company and no present or recent employment relationship with the company including employment of an immediate family member as an executive officer), and (2) has not within the last three years accepted directly or indirectly any consulting, advisory, or other compensatory fee from the company other than in his or her capacity as a member of the board of directors or any board committee. The funds’ Trustees believe that the


recent (i.e., within the last three years) receipt of any amount of compensation for services other than service as a director raises significant independence issues.

Board size: 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.

Time commitment: 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.

Interlocking directorships: The funds’ Trustees believe that interlocking directorships are inconsistent with the degree of independence required for outside directors of public companies.

Corporate governance practices: Board independence depends not only on its members’ individual relationships, but also on 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 who, through their lack of independence or otherwise, have failed to observe good corporate governance practices or, through specific corporate action, have demonstrated a disregard for the interests of shareholders. Such instances may include cases where a board of directors has approved compensation arrangements for one or more members of management that, in the judgment of the funds’ Trustees, are excessive by reasonable corporate standards relative to the company’s record of performance. It may also represent a disregard for the interests of shareholders if a board of directors fails to register an appropriate response when a director who fails to win the support of a majority of shareholders in an election (sometimes referred to as a “rejected director”) continues to serve on the board. While the Trustees recognize that it may in some circumstances be appropriate for a rejected director to continue his or her service on the board, steps should be taken to address the concerns reflected by the shareholders’ lack support for the rejected director.

Contested Elections of Directors

► The funds will vote on a case-by-case basis in contested elections of directors.


Classified Boards

► 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.

Other Board-Related Proposals

The funds will generally vote for proposals that have been approved by a majority independent board, and on a case-by-case basis on proposals that have been approved by a board that fails to meet the guidelines’ basic independence standards (i.e., majority of independent directors and independent nominating, audit, and compensation committees).

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 and restricted stock plans that will result in an average annual dilution of 1.67% or less (based on the disclosed term of the plan and including all equity-based plans).

► The funds will vote against stock option and restricted stock plans that will result in an average annual dilution of greater than 1.67% (based on the disclosed term of the plan and including all equity-based plans).

► The funds will vote against any stock option or restricted stock plan where the company’s actual grants of stock options and restricted stock under all equity-based compensation plans during the prior three (3) fiscal years have resulted in an average annual dilution of greater than 1.67%.

► The funds will vote against stock option plans that permit the replacing or repricing of underwater options (and against any proposal to authorize a 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 an employee stock purchase plan that has 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.

► The funds will vote for proposals to approve a company’s executive compensation program (i.e., “say on pay” proposals in which the company’s board proposes that shareholders indicate their support for the company’s compensation philosophy, policies, and practices), except that the funds will vote on a case-by-case basis if the company is assigned to the lowest category, through independent third party benchmarking performed by the funds’ proxy voting service, for the correlation of the company’s executive compensation program with its performance.

► The funds will vote for bonus plans under which payments are treated as performance-based compensation that is deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, except that the funds will vote on a case-by-case basis if any of the following circumstances exist:

the award pool or amount per employee under the plan is unlimited, or

the plan’s performance criteria is undisclosed, or

the company is assigned to the lowest category, through independent third party benchmarking performed by the funds’ proxy voting service, for the correlation of the company’s executive compensation program with its performance.

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. However, the funds may vote against these or other executive compensation proposals on a case-by-case basis where compensation is excessive by reasonable corporate standards, where a company fails to provide transparent disclosure of executive compensation, or, in some instances, where independent third-party benchmarking indicates that compensation is inadequately correlated with performance, relative to peer companies. (Examples of excessive executive compensation may include, but are not limited to, equity incentive plans that exceed the dilution criteria noted above, excessive perquisites, performance-based compensation programs that do not properly correlate reward and performance, “golden parachutes” or other severance arrangements that present conflicts between management’s interests and the interests of shareholders, and “golden coffins” or unearned death benefits.) In voting on a proposal relating to executive compensation, the funds will consider whether the proposal has been approved by an independent compensation committee of the board.


Capitalization

Many proxy proposals involve changes in a company’s capitalization, including the authorization of additional stock, the issuance of 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 the 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 and issuance 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 affect a shareholder’s investment and that warrant a case-by-case determination.

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 the 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, shareholders must carefully consider the


reasons for a reincorporation into another jurisdiction, including especially an offshore jurisdiction.

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 the adoption of a shareholder rights plan, requiring supermajority voting on particular issues, the adoption of fair price provisions, the issuance of blank check preferred stock, and the creation of 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; 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 or protect shareholder value under certain circumstances. For instance, where a company has incurred significant operating losses, a shareholder rights plan may be appropriately tailored to protect shareholder value by preserving a company’s net operating losses. Thus, the funds will consider proposals to approve such matters on a case-by-case basis.

Other Business Matters

Many proxies involve approval of routine business matters, such as changing a 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 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 proposals to ratify the selection of independent auditors if there is evidence that the audit firm’s independence or the integrity of an audit is compromised.


► 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 these items as routine business matters. Putnam Management’s investment professionals and the funds’ proxy voting service may also bring to the Proxy Manager’s attention company-specific items that they believe to be non-routine and warranting special consideration. Under these circumstances, the funds will vote on a case-by-case basis.

The fund’s proxy voting service may identify circumstances that call into question an audit firm’s independence or the integrity of an audit. These circumstances may include recent material restatements of financials, unusual audit fees, egregious contractual relationships, and aggressive accounting policies. The funds will consider proposals to ratify the selection of auditors in these circumstances on a case-by-case basis. In all other cases, given the existence of rules that enhance the independence of audit committees and auditors by, for example, prohibiting auditors from performing a range of non-audit services for audit clients, the funds will vote for the ratification of independent auditors.

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 the company’s corporate governance structure or to change some aspect of its business operations. The funds generally 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 on a case-by-case basis on shareholder proposals requiring that the chairman’s position be filled by someone other than the chief executive officer.

► The funds will vote for shareholder proposals asking that director nominees receive support from holders of a majority of votes cast or a majority of shares outstanding in order to be (re)elected.

► 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 eliminate supermajority vote requirements in the company’s charter documents.

► The funds will vote for shareholder proposals to require shareholder approval of shareholder rights plans.

► The funds will vote for shareholder proposals to amend a company’s charter documents to permit shareholders to call special meetings, but only if both of the following conditions are met:


• the proposed amendment limits the right to call special meetings to shareholders holding at least 15% of the company’s outstanding shares, and

• applicable state law does not otherwise provide shareholders with the right to call special meetings.

► The funds will vote for shareholder proposals requiring companies to make cash payments under management severance agreements only if both of the following conditions are met:

• the company undergoes a change in control, and

• the change in control results in the termination of employment for the person receiving the severance payment.

► The funds will vote on a case-by-case basis on shareholder proposals requiring companies to accelerate vesting of equity awards under management severance agreements only if both of the following conditions are met:

• the company undergoes a change in control, and

• the change in control results in the termination of employment for the person receiving the severance payment.

► The funds will vote on a case-by-case basis on shareholder proposals to limit a company’s ability to make excise tax gross-up payments under management severance agreements.

► The funds will vote on a case-by-case basis on shareholder proposals requesting that the board adopt a policy to recoup, in the event of a significant restatement of financial results or significant extraordinary write-off, to the fullest extent practicable, for the benefit of the company, all performance-based bonuses or awards that were paid to senior executives based on the company having met or exceeded specific performance targets to the extent that the specific performance targets were not, in fact, met.

► The funds will vote for shareholder proposals calling for the company to obtain shareholder approval for any future golden coffins or unearned death benefits (payments or awards of unearned salary or bonus, accelerated vesting or the continuation of unvested equity awards, perquisites or other payments or awards in respect of an executive following his or her death), and for shareholder proposals calling for the company to cease providing golden coffins or unearned death benefits.

► The funds will vote for shareholder proposals requiring a company to report on its executive retirement benefits (e.g., deferred compensation, split-dollar life insurance, SERPs and pension benefits).


► The funds will vote for shareholder proposals requiring a company to disclose its relationships with executive compensation consultants (e.g., whether the company, the board or the compensation committee retained the consultant, the types of services provided by the consultant over the past five years, and a list of the consultant’s clients on which any of the company’s executives serve as a director).

► The funds will vote for shareholder proposals that are consistent with the funds’ 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 by 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. The funds will also consider proposals requiring that the chairman’s position be filled by someone other than the company’s chief executive officer on a case-by-case basis, recognizing that in some cases this separation may advance the company’s corporate governance while in other cases it may be less necessary to the sound governance of the company. The funds will take into account the level of independent leadership on a company’s board in evaluating these proposals.

However, the funds generally support shareholder proposals to implement majority voting for directors, observing that majority voting is an emerging standard intended to encourage directors to be attentive to shareholders’ interests. The funds also generally support shareholder proposals to declassify a board, to eliminate supermajority vote requirements, or to require shareholder approval of shareholder rights plans. The funds’ Trustees believe that these shareholder proposals further the goals of reducing management entrenchment and conflicts of interest, and aligning management’s interests with shareholders’ interests in evaluating proposed acquisitions of the company. The Trustees also believe that shareholder proposals to limit severance payments may further these goals in some instances. In general, the funds favor arrangements in which severance payments are made to an executive only when there is a change in control and the executive loses his or her job as a result. Arrangements in which an executive receives a payment upon a change of control even if the executive retains employment


introduce potential conflicts of interest and may distract management focus from the long term success of the company.

In evaluating shareholder proposals that address severance payments, the funds distinguish between cash and equity payments. The funds generally do not favor cash payments to executives upon a change in control transaction if the executive retains employment. However, the funds recognize that accelerated vesting of equity incentives, even without termination of employment, may help to align management and shareholder interests in some instances, and will evaluate shareholder proposals addressing accelerated vesting of equity incentive payments on a case-by-case basis.

When severance payments exceed a certain amount based on the executive’s previous compensation, the payments may be subject to an excise tax. Some compensation arrangements provide for full excise tax gross-ups, which means that the company pays the executive sufficient additional amounts to cover the cost of the excise tax. The funds are concerned that the benefits of providing full excise tax gross-ups to executives may be outweighed by the cost to the company of the gross-up payments. Accordingly, the funds will vote on a case-by-case basis on shareholder proposals to curtail excise tax gross-up payments. The funds generally favor arrangements in which severance payments do not trigger an excise tax or in which the company’s obligations with respect to gross-up payments are limited in a reasonable manner.

The funds’ Trustees believe that performance-based compensation can be an effective tool for aligning management and shareholder interests. However, to fulfill its purpose, performance compensation should only be paid to executives if the performance targets are actually met. A significant restatement of financial results or a significant extraordinary write-off may reveal that executives who were previously paid performance compensation did not actually deliver the required business performance to earn that compensation. In these circumstances, it may be appropriate for the company to recoup this performance compensation. The funds will consider on a case-by-case basis shareholder proposals requesting that the board adopt a policy to recoup, in the event of a significant restatement of financial results or significant extraordinary write-off, performance-based bonuses or awards paid to senior executives based on the company having met or exceeded specific performance targets to the extent that the specific performance targets were not, in fact, met. The funds do not believe that such a policy should necessarily disadvantage a company in recruiting executives, as executives should understand that they are only entitled to performance compensation based on the actual performance they deliver.

The funds’ Trustees disfavor golden coffins or unearned death benefits, and the funds will generally support shareholder proposals to restrict or terminate these practices. The Trustees will also consider whether a company’s overall compensation arrangements, taking all of the pertinent circumstances into account, constitute excessive compensation or otherwise reflect poorly on the corporate governance practices of the company. As the Trustees evaluate these matters, they will be mindful of evolving practices and legislation relevant to executive compensation and corporate governance.


The funds’ Trustees also believe that shareholder proposals that are intended to increase transparency, particularly with respect to executive compensation, without establishing rigid restrictions upon a company’s ability to attract and motivate talented executives, are generally beneficial to sound corporate governance without imposing undue burdens. The funds will generally support shareholder proposals calling for reasonable disclosure.

III. VOTING SHARES OF NON-U.S. ISSUERS

Many of the Putnam funds invest on a global basis, and, as a result, they may hold, and have an opportunity to vote, shares in non-U.S. issuers – i.e., issuers that are incorporated under the laws of foreign jurisdictions and whose shares are not listed on a U.S. securities exchange or the NASDAQ stock market.

In many non-U.S. markets, shareholders who vote proxies of a non-U.S. issuer are not able to trade in that company’s stock 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.

In addition, some non-U.S. markets require that a company’s shares be re-registered out of the name of the local custodian or nominee into the name of the shareholder for the shareholder to be able to vote at the meeting. This practice is known as “share re-registration.” As a result, shareholders, including the funds, are not able to trade in that company’s stock until the shares are re-registered back in the name of the local custodian or nominee following the meeting. In countries where share re-registration is practiced, the funds will generally not vote proxies.

Protection for shareholders of non-U.S. issuers may vary significantly from jurisdiction to jurisdiction. Laws governing non-U.S. issuers may, in some cases, provide substantially less protection for shareholders than do U.S. laws. As a result, the guidelines applicable to U.S. issuers, which are premised on the existence of a sound corporate governance and disclosure framework, may not be appropriate under some circumstances for non-U.S. issuers. However, the funds will vote proxies of non-U.S. issuers in accordance with the guidelines applicable to U.S. issuers, except as follows:

Uncontested Board Elections

Germany

► For companies subject to “co-determination,” the funds will vote for the election of nominees to the supervisory board, except that the funds will vote on a case-by-case basis for any nominee who is either an employee of the company or who is otherwise affiliated with the company (as determined by the funds’ proxy voting service).

► The funds will withhold votes for the election of a former member of the company’s managerial board to chair of the supervisory board.


Commentary: German corporate governance is characterized by a two-tier board system—a managerial board composed of the company’s executive officers, and a supervisory board. The supervisory board appoints the members of the managerial board. Shareholders elect members of the supervisory board, except that in the case of companies with a large number of employees, company employees are allowed to elect some of the supervisory board members (one-half of supervisory board members are elected by company employees at companies with more than 2,000 employees; one-third of the supervisory board members are elected by company employees at companies with more than 500 employees but fewer than 2,000). This “co-determination” practice may increase the chances that the supervisory board of a large German company does not contain a majority of independent members. In this situation, under the Fund’s proxy voting guidelines applicable to U.S. issuers, the funds would vote against all nominees. However, in the case of companies subject to “co-determination” and with the goal of supporting independent nominees, the Funds will vote for supervisory board members who are neither employees of the company nor otherwise affiliated with the company.

Consistent with the funds’ belief that the interests of shareholders are best protected by boards with strong, independent leadership, the funds will withhold votes for the election of former chairs of the managerial board to chair of the supervisory board.

Japan

► For companies that have established a U.S.-style corporate governance structure, the funds will withhold votes from the entire board of directors if

• the board does not have a majority of outside directors,

• the board has not established nominating and compensation committees composed of a majority of outside directors, or

• the board has not established an audit committee composed of a majority of independent directors.

► The funds will withhold votes for the appointment of members of a company’s board of statutory auditors if a majority of the members of the board of statutory auditors is not independent.

Commentary:

Board structure: Recent amendments to the Japanese Commercial Code give companies the option to adopt a U.S.-style corporate governance structure (i.e., a board of directors and audit, nominating, and compensation committees). The funds will vote for proposals to amend a company’s articles of incorporation to adopt the U.S.-style corporate structure.

Definition of outside director and independent director: Corporate governance principles in Japan focus on the distinction between outside directors and independent directors. Under these principles, an outside director is a director who is not and has


never been a director, executive, or employee of the company or its parent company, subsidiaries or affiliates. An outside director is “independent” if that person can make decisions completely independent from the managers of the company, its parent, subsidiaries, or affiliates and does not have a material relationship with the company (i.e., major client, trading partner, or other business relationship; familial relationship with current director or executive; etc.). The guidelines have incorporated these definitions in applying the board independence standards above.

Korea

► The funds will withhold votes from the entire board of directors if

• fewer than half of the directors are outside directors,

• the board has not established a nominating committee with at least half of the members being outside directors, or

• the board has not established an audit committee composed of at least three members and in which at least two-thirds of its members are outside directors.

Commentary: For purposes of these guidelines, an “outside director” is a director that is independent from the management or controlling shareholders of the company, and holds no interests that might impair performing his or her duties impartially from the company, management or controlling shareholder. In determining whether a director is an outside director, the funds will also apply the standards included in Article 415-2(2) of the Korean Commercial Code (i.e., no employment relationship with the company for a period of two years before serving on the committee, no director or employment relationship with the company’s largest shareholder, etc.) and may consider other business relationships that would affect the independence of an outside director.

Russia

► The funds will vote on a case-by-case basis for the election of nominees to the board of directors.

Commentary: In Russia, director elections are typically handled through a cumulative voting process. Cumulative voting allows shareholders to cast all of their votes for a single nominee for the board of directors, or to allocate their votes among nominees in any other way. In contrast, in “regular” voting, shareholders may not give more than one vote per share to any single nominee. Cumulative voting can help to strengthen the ability of minority shareholders to elect a director.

In Russia, as in some other emerging markets, standards of corporate governance are usually behind those in developed markets. Rather than vote against the entire board of directors, as the funds generally would in the case of a company whose board fails to meet the funds’ standards for independence, the funds may, on a case by case basis, cast all of their votes for one or more independent director nominees. The funds believe that


it is important to increase the number of independent directors on the boards of Russian companies to mitigate the risks associated with dominant shareholders.

United Kingdom

► The funds will withhold votes from the entire board of directors if

• the board does not have at least a majority of independent non-executive directors,

• the board has not established a nomination committee composed of a majority of independent non-executive directors, or

• the board has not established compensation and audit committees composed of (1) at least three directors (in the case of smaller companies, two directors) and (2) solely independent non-executive directors, provided that, to the extent permitted under the United Kingdom’s Combined Code on Corporate Governance, the company chairman serve on (but not serve as chairman of) the compensation and audit committees if the chairman was considered independent upon his or appointment as chairman.

► The funds will withhold votes from any nominee for director who is considered an independent director by the company and who has received compensation within the last three years from the company other than for service as a director, such as investment banking, consulting, legal, or financial advisory fees.

► The funds will vote for proposals to amend a company’s articles of association to authorize boards to approve situations that might be interpreted to present potential conflicts of interest affecting a director.

Commentary:

Application of guidelines: Although the United Kingdom’s Combined Code on Corporate Governance (“Combined Code”) has adopted the “comply and explain” approach to corporate governance, the funds’ Trustees believe that the guidelines discussed above with respect to board independence standards are integral to the protection of investors in U.K. companies. As a result, these guidelines will generally be applied in a prescriptive manner.

Definition of independence: For the purposes of these guidelines, a non-executive director shall be considered independent if the director meets the independence standards in section A.3.1 of the Combined Code (i.e., no material business or employment relationships with the company, no remuneration from the company for non-board services, no close family ties with senior employees or directors of the company, etc.), except that the funds do not view service on the board for more than nine years as affecting a director’s independence. Company chairmen in the U.K. are generally considered affiliated upon appointment as chairman due to the nature of the position of


chairman. Consistent with the Combined Code, a company chairman who was considered independent upon appointment as chairman: may serve as a member of, but not as the chairman of, the compensation (remuneration) committee; and, in the case of smaller companies, may serve as a member of, but not as the chairman of, the audit committee.

Smaller companies: A smaller company is one that is below the FTSE 350 throughout the year immediately prior to the reporting year.

Conflicts of interest: The Companies Act 2006 requires a director to avoid a situation in which he or she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company. This broadly written requirement could be construed to prevent a director from becoming a trustee or director of another organization. Provided there are reasonable safeguards, such as the exclusion of the relevant director from deliberations, the funds believe that the board may approve this type of potential conflict of interest in its discretion.

All other jurisdictions

► The funds will vote for supervisory board nominees when the supervisory board meets the funds’ independence standards, otherwise the funds will vote against supervisory board nominees.

Commentary: Companies in many jurisdictions operate under the oversight of supervisory boards. In the absence of jurisdiction-specific guidelines, the funds will generally hold supervisory boards to the same standards of independence as it applies to boards of directors in the United States.

Contested Board Elections

Italy

► The funds will vote for the management- or board-sponsored slate of nominees if the board meets the funds’ independence standards, and against the management- or board-sponsored slate of nominees if the board does not meet the funds’ independence standards; the funds will not vote on shareholder-proposed slates of nominees.

Commentary: Contested elections in Italy may involve a variety of competing slates of nominees. In these circumstances, the funds will focus their analysis on the board- or management-sponsored slate.

Corporate Governance

► The funds will vote for proposals to change the size of a board if the board meets the funds’ independence standards, and against proposals to change the size of a board if the board does not meet the funds’ independence standards.


► The funds will vote for shareholder proposals calling for a majority of a company’s 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.

Taiwan

► The funds will vote against proposals to release directors from their non-competition obligations (their obligations not to engage in any business that is competitive with the company), unless the proposal is narrowly drafted to permit directors to engage in a business that is competitive with the company only on behalf of a wholly-owned subsidiary of the company.

Compensation

► The funds will vote for proposals to approve annual directors’ fees, except that the funds will consider these proposals on a case-by-case basis in each case in which the funds’ proxy voting service has recommended a vote against such a proposal.

► The funds will vote for non-binding proposals to approve remuneration reports, except that the funds will vote against proposals to approve remuneration reports that indicate that awards under a long-term incentive plan are not linked to performance targets.

Commentary: Since proposals relating to directors’ fees for non-U.S. issuers generally address relatively modest fees paid to non-executive directors, the funds generally support these proposals, provided that the fees are consistent with directors’ fees paid by the company’s peers and do not otherwise appear unwarranted. Consistent with the approach taken for U.S. issuers, the funds generally favor compensation programs that relate executive compensation to a company’s long-term performance and will support non-binding remuneration reports unless such a correlation is not made.

Capitalization

► The funds will vote for proposals

• to issue additional common stock representing up to 20% of the company’s outstanding common stock, where shareholders do not have preemptive rights, or


• to issue additional common stock representing up to 100% of the company’s outstanding common stock, where shareholders do have preemptive rights.

► The funds will vote for proposals to authorize share repurchase programs that are recommended for approval by the funds’ proxy voting service; otherwise, the funds will vote against such proposals.

Australia

► The funds will vote for proposals to carve out, from the general cap on non-pro rata share issues of 15% of total equity in a rolling 12-month period, a particular proposed issue of shares or a particular issue of shares made previously within the 12-month period, if the company’s board meets the funds’ independence standards; if the company’s board does not meet the funds’ independence standards, then the funds will vote against these proposals.

Hong Kong

► The funds will vote for proposals to approve a general mandate permitting the company to engage in non-pro rata share issues of up to 20% of total equity in a year if the company’s board meets the funds’ independence standards; if the company’s board does not meet the funds’ independence standards, then the funds will vote against these proposals.

Commentary: In light of the prevalence of certain types of capitalization proposals in Australia and Hong Kong, the funds have adopted guidelines specific to those jurisdictions.

Other Business Matters

► The funds will vote for proposals permitting companies to deliver reports and other materials electronically (e.g., via website posting).

► The funds will vote for proposals permitting companies to issue regulatory reports in English.

► The funds will vote against proposals to shorten shareholder meeting notice periods to fourteen days.

Commentary: Under Directive 2007/36/EC of the European Parliament and the Council of the European Union, companies have the option to request shareholder approval to set the notice period for special meetings at 14 days provided that certain electronic voting and communication requirements are met. The funds believe that the 14 day notice period is too short to provide overseas shareholders with sufficient time to analyze proposals and to participate meaningfully at special meetings and, as a result, have determined to vote against such proposals.


France

► The funds will vote for proposals to approve a company’s related party transactions, except that the funds will consider these proposals on a case-by-case basis if the funds’ proxy voting service has recommended a vote against the proposal.

Commentary: In France, shareholders are generally requested to approve any agreement between the company and: (i) its directors, chair of the board, CEO and deputy CEOs; (ii) the members of the supervisory board and management board, for companies with a dual structure; and (iii) a shareholder who directly or indirectly owns at least 10% of the company’s voting rights. This includes agreements under which compensation may be paid to executive officers after the end of their employment, such as severance payments, supplementary retirement plans and non-competition agreements. The funds will generally support these proposals unless the funds’ proxy voting service recommends a vote against, in which case the funds will consider the proposal on a case-by-case basis.

Germany

► The funds will vote in accordance with the recommendation of the company’s board of directors on shareholder countermotions added to a company’s meeting agenda, unless the countermotion is directly addressed by one of the funds’ other guidelines.

Commentary: In Germany, shareholders are able to add both proposals and countermotions to a meeting agenda. Countermotions, which must correspond to a proposal on the agenda, generally call for shareholders to oppose the existing proposal, although they may also propose separate voting decisions. Countermotions may be proposed by any shareholder and they are typically added throughout the period between the publication of the meeting agenda and the meeting date. This guideline reflects the funds’ intention to focus on the original proposal, which is expected to be presented a reasonable period of time before the shareholder meeting so that the funds will have an appropriate opportunity to evaluate it.

► The funds will vote for proposals to approve profit-and-loss transfer agreements between a controlling company and its subsidiaries.

Commentary: These agreements are customary in Germany and are typically entered into for tax purposes. In light of this and the prevalence of these proposals, the funds have adopted a guideline to vote for this type of proposal.

Taiwan

► The funds will vote for proposals to amend a Taiwanese company’s procedural rules.

Commentary: Since procedural rules, which address such matters as a company’s policies with respect to capital loans, endorsements and guarantees, and acquisitions and disposal of assets, are generally adopted or amended to conform to changes in local


regulations governing these transactions, the funds have adopted a guideline to vote for these transactions.

As adopted December 9, 2011

Proxy voting procedures of the Putnam funds 

 

The proxy voting procedures below explain the role of the funds’ Trustees, the proxy voting service and the Proxy Manager, as well as how the process will work when a proxy question needs to be handled on a case-by-case basis, or when there may be a conflict of interest.

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 that need to be handled on a case-by-case basis. The Committee annually reviews and recommends, for Trustee approval, 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 (“Office of the Trustees”), independent legal counsel, and an independent proxy voting service. The Trustees also receive assistance from Putnam Investment Management, LLC (“Putnam Management”), the funds’ investment advisor, 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 Manager (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 Manager’s attention specific proxy questions that, 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 Manager


Each year, a member of the Office of the Trustees is appointed Proxy Manager to assist in the coordination and voting of the funds’ proxies. The Proxy Manager 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 the Office of the Trustees, the Chair of the Board Policy and Nominating Committee, and Putnam Management’s investment professionals, as appropriate. The Proxy Manager 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 Manager 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 Manager will assist in interpreting the guidelines and, as appropriate, consult with one or more senior staff members of the Office of the Trustees 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 Manager will refer such questions, through an electronic request form, 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 referral item, the Legal and Compliance Department will conduct a conflicts of interest review, as described below under “Conflicts of interest,” and provide electronically a conflicts of interest report (the “Conflicts Report”) to the Proxy Manager describing the results of such review. After receiving a referral item from the Proxy Manager, Putnam Management’s investment professionals will provide a recommendation electronically to the Proxy Manager 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 Manager will then review the investment professionals’ recommendation and the Conflicts Report with one or more senior staff members of the Office of the Trustees in determining how to vote the funds’ proxies. The Proxy Manager 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 Manager and/or one or more senior staff members of the Office of the Trustees 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 Manager 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 Manager 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 11, 2005 and revised June 12, 2009

Item 8. Portfolio Managers of Closed-End Management Investment Companies

(a)(1) Portfolio Managers. The officers of Putnam Management identified below are primarily responsible for the day-to-day management of the fund’s portfolio as of the filing date of this report.

Portfolio Managers  Joined     
  Fund  Employer  Positions Over Past Five Years 
Paul Drury  2002  Putnam  Portfolio Manager, 
    Management  Previously, Tax Exempt Specialist 
    1989 – Present   
 
Susan McCormack  2002  Putnam  Portfolio Manager, 
    Management  Previously, Tax Exempt Specialist 
    1994 – Present   

 


Thalia Meehan  2006  Putnam  Portfolio Manager, 
    Management  Previously, Team Leader of Tax Exempt 
    1989 – Present  Group 

(a)(2) Other Accounts Managed by the Fund’s Portfolio Managers.

The following table shows the number and approximate assets of other investment accounts (or portions of investment accounts) that the fund’s Portfolio Managers managed as of the fund’s most recent fiscal year-end. Unless noted, none of the other accounts pays a fee based on the account’s performance.

         
          Other accounts (including 
      separate accounts, managed 
  account programs and 
Other SEC-registered open-end  Other accounts that pool  single-sponsor defined 
Portfolio Leader or  and closed-end funds  assets from more than one  contribution plan offerings) 
Member      client 
  Number  Assets  Number  Assets  Number  Assets 
  of    of    of   
  accounts    accounts    accounts   
Paul Drury  13  $8,115,900,000  0  $-  0  $- 
 
Susan McCormack  13  $8,115,900,000  0  $-  1  $1,500,000 
 
Thalia Meehan  13  $8,115,900,000  0  $-  1  $1,100,000 

Potential conflicts of interest in managing multiple accounts. Like other investment professionals with multiple clients, the fund’s Portfolio Managers may face certain potential conflicts of interest in connection with managing both the fund and the other accounts listed under “Other Accounts Managed by the Fund’s Portfolio Managers” at the same time. The paragraphs below describe some of these potential conflicts, which Putnam Management believes are faced by investment professionals at most major financial firms. As described below, Putnam Management and the Trustees of the Putnam funds have adopted compliance policies and procedures that attempt to address certain of these potential conflicts.

The management of accounts with different advisory fee rates and/or fee structures, including accounts that pay advisory fees based on account performance (“performance fee accounts”), may raise potential conflicts of interest by creating an incentive to favor higher-fee accounts. These potential conflicts may include, among others:

• The most attractive investments could be allocated to higher-fee accounts or performance fee accounts.


• The trading of higher-fee accounts could be favored as to timing and/or execution price. For example, higher-fee accounts could be permitted to sell securities earlier than other accounts when a prompt sale is desirable or to buy securities at an earlier and more opportune time.

• The trading of other accounts could be used to benefit higher-fee accounts (front-running).

• The investment management team could focus their time and efforts primarily on higher-fee accounts due to a personal stake in compensation.

Putnam Management attempts to address these potential conflicts of interest relating to higher-fee accounts through various compliance policies that are generally intended to place all accounts, regardless of fee structure, on the same footing for investment management purposes. For example, under Putnam Management’s policies:

• Performance fee accounts must be included in all standard trading and allocation procedures with all other accounts.

• All accounts must be allocated to a specific category of account and trade in parallel with allocations of similar accounts based on the procedures generally applicable to all accounts in those groups (e.g., based on relative risk budgets of accounts).

• All trading must be effected through Putnam’s trading desks and normal queues and procedures must be followed (i.e., no special treatment is permitted for performance fee accounts or higher-fee accounts based on account fee structure).

• Front running is strictly prohibited.

• The fund’s Portfolio Manager(s) may not be guaranteed or specifically allocated any portion of a performance fee.

As part of these policies, Putnam Management has also implemented trade oversight and review procedures in order to monitor whether particular accounts (including higher-fee accounts or performance fee accounts) are being favored over time.

Potential conflicts of interest may also arise when the Portfolio Manager(s) have personal investments in other accounts that may create an incentive to favor those accounts. As a general matter and subject to limited exceptions, Putnam Management’s investment professionals do not have the opportunity to invest in client accounts, other than the Putnam funds. However, in the ordinary course of business, Putnam Management or related persons may from time to time establish “pilot” or “incubator” funds for the purpose of testing proposed investment strategies and products prior to offering them to clients. These pilot accounts may be in the form of registered investment companies, private funds such as partnerships or separate accounts established by Putnam Management or an affiliate. Putnam Management or an affiliate supplies the funding for these accounts. Putnam employees, including the fund’s Portfolio Manager(s), may also invest in certain pilot accounts. Putnam Management, and to the extent applicable, the Portfolio Manager(s) will benefit from the favorable investment performance of those funds and accounts. Pilot funds and accounts may, and frequently do, invest in the same securities as the client accounts. Putnam Management’s policy is to treat pilot accounts in the same manner as client accounts for purposes of trading allocation – neither


favoring nor disfavoring them except as is legally required. For example, pilot accounts are normally included in Putnam Management’s daily block trades to the same extent as client accounts (except that pilot accounts do not participate in initial public offerings).

A potential conflict of interest may arise when the fund and other accounts purchase or sell the same securities. On occasions when the Portfolio Manager(s) consider the purchase or sale of a security to be in the best interests of the fund as well as other accounts, Putnam Management’s trading desk may, to the extent permitted by applicable laws and regulations, aggregate the securities to be sold or purchased in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential for unfairness to the fund or another account if one account is favored over another in allocating the securities purchased or sold – for example, by allocating a disproportionate amount of a security that is likely to increase in value to a favored account. Putnam Management’s trade allocation policies generally provide that each day’s transactions in securities that are purchased or sold by multiple accounts are, insofar as possible, averaged as to price and allocated between such accounts (including the fund) in a manner which in Putnam Management’s opinion is equitable to each account and in accordance with the amount being purchased or sold by each account. Certain exceptions exist for specialty, regional or sector accounts. Trade allocations are reviewed on a periodic basis as part of Putnam Management’s trade oversight procedures in an attempt to ensure fairness over time across accounts.

“Cross trades,” in which one Putnam account sells a particular security to another account (potentially saving transaction costs for both accounts), may also pose a potential conflict of interest. Cross trades may be seen to involve a potential conflict of interest if, for example, one account is permitted to sell a security to another account at a higher price than an independent third party would pay, or if such trades result in more attractive investments being allocated to higher-fee accounts. Putnam Management and the fund’s Trustees have adopted compliance procedures that provide that any transactions between the fund and another Putnam-advised account are to be made at an independent current market price, as required by law.

Another potential conflict of interest may arise based on the different investment objectives and strategies of the fund and other accounts. For example, another account may have a shorter-term investment horizon or different investment objectives, policies or restrictions than the fund. Depending on another account’s objectives or other factors, the Portfolio Manager(s) may give advice and make decisions that may differ from advice given, or the timing or nature of decisions made, with respect to the fund. In addition, investment decisions are the product of many factors in addition to basic suitability for the particular account involved. Thus, a particular security may be bought or sold for certain accounts even though it could have been bought or sold for other accounts at the same time. More rarely, a particular security may be bought for one or more accounts managed by the Portfolio Manager(s) when one or more other accounts are selling the security (including short sales). There may be circumstances when purchases or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts. As noted above, Putnam Management has implemented trade


oversight and review procedures to monitor whether any account is systematically favored over time.

The fund’s Portfolio Manager(s) may also face other potential conflicts of interest in managing the fund, and the description above is not a complete description of every conflict that could be deemed to exist in managing both the fund and other accounts.

(a)(3) Compensation of portfolio managers. Putnam’s goal for our products and investors is to deliver strong performance versus peers or performance ahead of benchmark, depending on the product, over a rolling 3-year period. Portfolio managers are evaluated and compensated, in part, based on their performance relative to this goal across the products they manage. In addition to their individual performance, evaluations take into account the performance of their group and a subjective component.

Each portfolio manager is assigned an industry competitive incentive compensation target consistent with this goal and evaluation framework. Actual incentive compensation may be higher or lower than the target, based on individual, group, and subjective performance, and may also reflect the performance of Putnam as a firm. Typically, performance is measured over the lesser of three years or the length of time a portfolio manager has managed a product.

Incentive compensation includes a cash bonus and may also include grants of deferred cash, stock or options. In addition to incentive compensation, portfolio managers receive fixed annual salaries typically based on level of responsibility and experience.

For this fund, the peer group Putnam compares fund performance against is its broad investment category as determined by Lipper Inc. and identified in the shareholder report included in Item 1.

(a)(4) Fund ownership. The following table shows the dollar ranges of shares of the fund owned by the professionals listed above at the end of the fund’s last two fiscal years, including investments by their immediate family members and amounts invested through retirement and deferred compensation plans.

* - Assets in the fund         
  $0  $1-  $10,001-  $50,001-  $100,001-  $500,001-  $1,000,001 
    $10,000  $50,000  $100,000  $500,000  $1,000,000  and Over 
Name               
PUTNAM MANAGED MUNI INC TR
Drury, Paul  * 
M.               

 


McCormack,  * 
Susan A.               
Meehan,  * 
Thalia               


(b) Not applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:

Registrant Purchase of Equity Securities

        Maximum 
      Total Number  Number (or 
      of Shares  Approximate 
      Purchased  Dollar Value ) 
      as Part  of Shares 
      of Publicly  that May Yet Be 
  Total Number  Average  Announced  Purchased 
  of Shares  Price Paid  Plans or  under the Plans 
Period  Purchased  per Share  Programs*  or Programs** 
November 1 -         
November 30,         
2011  -  -  -  5,747,266 
December 1 -         
December 31,         
2011  -  -  -  5,747,266 
January 1 -         
January 31, 2012 -   -  -  5,747,266 
February 1 -         
February 28, 2012  -  -  -  5,747,266 
March 1 - March         
31, 2012  -  -  -  5,747,266 
April 1 - April 30,         
2012  -  -  -  5,747,266 
May 1 - May 31,         
2012  -  -  -  5,747,266 
June 1 - June 30         
2012  -  -  -  5,747,266 
July 1 - July 31,         
2012  -  -  -  5,747,266 
August 1 - August         
31, 2012  -  -  -  5,747,266 
September 1 -         
September 30,         
2012  -  -  -  5,747,266 
October 1 –  -  -  -  5,747,266 

 


October 7, 2012     
October 8 –     
October 31, 2012  -  -  -  5,761,514 

* In October 2005, the Board of Trustees of the Putnam Funds initiated the closed-end fund share repurchase program, which, as subsequently amended, authorized the fund to repurchase of up to 10% of its fund's outstanding common shares over the two-years ending October 5, 2007. The Trustees have subsequently renewed the program on an annual basis. The program renewed by the Board in September 2011, which remained in effect between October 8, 2011 and October 7, 2012, allowed the fund to repurchase up to 5,747,266 of its shares. The program renewed by the Board in September 2012, which will remain in effect between October 8, 2012 and October 7, 2013, allows the fund to repurchase up to 5,761,514 of its shares.

**Information prior to October 7, 2012 is based on the total number of shares eligible for repurchase under the program, as amended through September 2011. Information from October 8, 2012 forward is based on the total number of shares eligible for repurchase under the program, as amended through September 2012.

Item 10. Submission of Matters to a Vote of Security Holders:

Not applicable

Item 11. Controls and Procedures:

(a) The registrant's principal executive officer and principal financial officer 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, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report 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 12. Exhibits:

(a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith.

(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and 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.

Putnam Managed Municipal Income Trust

By (Signature and Title):

/s/Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: December 28, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934 and 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/Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer

Date: December 28, 2012

By (Signature and Title):

/s/Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Date: December 28, 2012