-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, r8FBWKGd7avWET1YG1OCvho2WvB6A0S8fkRRfV3kWCUZ/RH3y05uIXtWpP8tqeer DqYGMCdV7HGmalmBZ8NHWA== 0000950146-94-000122.txt : 19940701 0000950146-94-000122.hdr.sgml : 19940701 ACCESSION NUMBER: 0000950146-94-000122 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MANAGED MUNICIPAL INCOME TRUST CENTRAL INDEX KEY: 0000844790 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 046608976 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 001-10158 FILM NUMBER: 94536637 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ STREET 2: MAILSTOP A14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921536 N-30D 1 PUTNAM MANAGED MUNICIPAL INCOME TRUST SEMIANNUAL REPORT Putnam Managed Municipal Income Trust Semiannual Report April 30, 1994 For investors seeking high current income exempt from federal income tax through a diversified portfolio of tax-exempt municipal securities A member of the Putnam Family of Funds Contents 2 How your fund performed 3 From the Chairman 4 Report from Putnam Management Semiannual Report 6 Report of Independent Accountants 7 Portfolio of investments owned 14 Financial statements 22 Fund performance supplement How your fund performed For periods ended April 30, 1994
Total return* Fund Lehman Brothers Market Municipal Consumer NAV price Bond Index Price Index 6 months -4.05% -3.44% -3.53% 1.17% 1 year 4.73 4.66 2.16 2.36 5 years 61.01 62.27 50.63 19.74 annualized 9.99 10.17 8.54 3.67 Life-of-fund (since 2/24/89) 63.31 59.78 53.84 21.22 annualized 9.91 9.45 8.65 3.78
Share data (common shares) Market NAV price October 31, 1993 $10.88 $11.375 April 30, 1994 $ 9.98 $10.500
Distributions (a) Capital gains (common shares) Investment Short- Long- 6 months ended Number income term term Total April 30, 1994 6 $ 0.381 $ 0.034 $0.059 $ 0.474 (Preferred Shares) 6 months ended April 30, 1994 Number Series Total 550 A $1,297.46 550 B $1,122.76 650 C $1,210.17
Current returns Taxable (common shares) equivalents+ at the end of the period Market Market NAV price NAV price Current dividend rate 7.64% 7.26% 12.65% 12.02%
* Performance data represent past results. Investment return and principal value will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. (a) Capital gains, if any, are taxable for federal and, in most cases, state purposes. For some investors, investment income may also be subject to the Alternative Minimum Tax. Investment income may be subject to state and local tax. + Assumes the maximum federal tax rate of 39.6%. Results for investors subject to lower tax rates would not be as advantageous, although many such investors would have the opportunity to receive attractive tax benefits from a fund investment. Consult your tax advisor for more guidance. Terms you need to know Total return is the change in value of an investment from the beginning to the end of a period, assuming the reinvestment of all distributions. It may be shown at net asset value or at market price. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, the liquidation preference and cumulative unpaid dividends on the remarketed preferred shares, divided by the number of outstanding common shares. (See Note 1B on page 18.) Market price is the current trading price of one share of the fund. Market prices are set by transactions between buyers and sellers on the New York Stock Exchange. Current dividend rate is calculated by annualizing the income portion of the fund's most recent distribution and dividing by the NAV or market price on the last day of the period. Taxable equivalent return is the return that a taxable investment would have to produce to equal the fund's current return. Please see the fund performance supplement on page 22 for additional information about performance comparisons. From the Chairman (George Putnam photo) George Putnam Chairman of the Trustees (C) Karsh, Ottawa Dear Shareholder: Many shareholders have been asking us whether we think the volatility that hit the securities markets in February and March was a prelude to further decline during the rest of 1994. We have been pointing out that the recent adjustments in the markets are a natural occurrence at this stage of the economic recovery. Some volatility will likely continue for a while as investors digest new realities in areas such as interest rates, inflation, and the pace of the recovery. But the economy is still strong, interest rates remain historically low, and inflation appears under control. Although there can never be assurance about performance, our prospects for the long term are still positive. Seasoned investors know there will occasionally be periods of rough going. But experience has also taught them that long-term investment programs should rarely be altered in response to short-term events. In the report that follows, Fund Manager Howard Manning discusses the performance of Putnam Managed Municipal Income Trust in this market environment. Respectfully yours, (Signature George Putnam) George Putnam June 15, 1994 Report from Putnam Management The last six months have been a very volatile period in the bond market. At the end of 1993, we experienced some of the lowest interest rates in recent history--along with extremely favorable market conditions for tax-free investments. The first quarter of 1994, however, was an abrupt change of pace. Early February brought the first in a series of short-term rate increases by the Federal Reserve Board, which resulted in interest rates generally increasing. Putnam Managed Municipal Income Trust's performance for six months ending on April 30, 1994 reflects the impact of the rate increases. The total return for common shares at NAV was -4.05% and at market price was -3.44%. Unanticipated growth spurs rate increases Responding to what it perceived as unexpected economic growth, the Federal Reserve Board raised short-term interest rates three times in the period between February and April. Because the Federal Reserve anticipated that economic growth could spur inflation, it decided to tighten the money supply, anticipating that the higher rates would curb inflation. Short-term market moves like the one we are experiencing now cannot be ignored, of course. Insofar as possible, we try to anticipate them and take appropriate defensive action when justified. But in general we tend to hold a longer view of your fund, one that considers underlying economic fundamentals, which do not necessarily drive short-term market trends. We also believe that every market, whether bull or bear, has the potential to create opportunities for your fund. Allocations shift in favor of high-yield bonds We are positioning the fund's portfolio to include a substantial position in higher-yielding bonds. These securities are not as sensitive to fluctuating interest rates as most investment grade bonds--which are highly liquid, due in part to their higher quality. The greater liquidity can contribute to price declines during market downtrends, as investors try to sell their most liquid assets first. Thus, in unfavorable market environments, less liquid, higher-yielding bonds may actually retain more of their value. Examples of higher- yielding bonds include health care sector bonds, industrial development bonds, and airline industry bonds. In the health care sector, we have been emphasizing hospital issues. Health care reform is evolving, and we believe that the market is leaning toward a managed-care approach, whether it is accomplished by the private sector or by the federal government. We generally look for securities of hospitals whose market position, quality of management, and financial performance have gone unnoticed by other investors or are just starting to become recognized. We believe these issues hold the greatest potential for appreciation. Careful research uncovers opportunities Our credit analysis also showed that California bonds were undervalued in 1993 and provided a good buying opportunity for your fund. These bonds have already started to rebound in the first quarter of 1994. Airline industry bonds, particularly those at United and American, have also been a recent focus, as we believe they should respond well as the economy continues to strengthen. Although we don't expect any decline in the demand for tax exempt securities, we do anticipate a fairly dramatic decrease in issuances of municipal bonds over the next several months. Last year, roughly $290 billion of municipal bonds were issued. Of this total, $170 billion represented refunding of existing issues. Just as homeowners aren't as eager to refinance their mortgages in a rising interest rate environment, bond issuers are now much less willing to refinance their old debt. Consequently, we believe new bond issuances will be in the $150-$200 billion range in 1994. In a climate of rising interest rates, we expect this smaller supply to keep municipal bond prices from falling as quickly as those of taxable issues. It may also lead to a narrowing of the spread between tax-exempt and taxable securities. There can be no guarantee, however, that this will occur. Top industry sectors (4/30/94) (bar chart) Utilities 23.5% Hospitals/health care 23.0% Transportation 14.0 Industrial development 9.6% Education 9.5% Housing 5.7% Political subdivision G.O. 5.3% (general obligation) bonds (end of bar chart) Outlook: Rates may continue to rise Continued strengthening of the economy could prompt the Federal Reserve to boost short-term interest rates once again. This could spark additional volatility in the municipal bond market. Nevertheless, our assessment of the long-term investment climate remains positive. Because municipal securities are among the last ways to shelter income from taxes, they should continue to benefit from strong demand, an expectation that bodes well for your fund's future long-term performance. Futhermore, we believe that your fund's inherent flexibility, combined with Putnam's credit research resources, will prove invaluable in enabling us to take advantage of whatever opportunities tomorrow's market may offer. Putnam Managed Municipal Income Trust Semiannual Report For the six months ended April 30, 1994 Report of Independent Accountants To the Trustees and Shareholders of Putnam Managed Municipal Income Trust We have audited the accompanying statement of assets and liabilities of Putnam Managed Municipal Income Trust, including the portfolio of investments owned, as of April 30, 1994, the related statement of operations for the six months then ended, the statement of changes in net assets for the six months ended April 30, 1994 and for the year ended October 31, 1993, and the "Financial Highlights" for the six months ended April 30, 1994, for each of the four years in the period ended October 31, 1993, and for the period February 24, 1989 (commencement of operations) to October 31, 1989. These financial statements and "Financial Highlights" are the responsibility of the Trust'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 generally accepted auditing standards. 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 April 30, 1994, by correspondence with the custodian and brokers. 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 April 30, 1994, the results of its operations for the six months then ended, the changes in its net assets for the six months then ended and the year ended October 31, 1993, and the "Financial Highlights" for the six months ended April 30, 1994, for each of the four years in the period ended October 31, 1993, and for the period February 24, 1989 (commencement of operations) to October 31, 1989, in conformity with generally accepted accounting principles. Coopers & Lybrand Boston, Massachusetts June 17, 1994 Portfolio of investments owned April 30, 1994 Municipal Bonds and Notes (100.3%)(a)
Principal Amount Ratings (b) Value Alabama (0.7%) $4,450,000 Cullman Med. Park South Med. Clinic Board Rev. Rfdg. Bonds (Cullman Regl. Med. Ctr.), Ser. A, 6-1/2s, 2/15/13 Baa $ 4,149,625 Arizona (1.5%) 3,000,000 AZ Hlth. Fac. Auth. Hosp. Syst. Rev. Bonds (St. Luke's Hosp. Syst.), Ser. A, 10-1/8s, 11/1/15 Ba 3,172,500 2,000,000 Gila Cnty., Indl. Dev. Auth. Poll. Control Rev. Bonds, Ser. 85, 8.9s, 7/1/06 Baa 2,237,500 4,000,000 Payson, Ind. Dev. Auth. Hosp. Rev. Bonds (Payson Regional Med. Ctr. Inc. Project), 7.7s, 10/1/23 B/P 3,800,000 9,210,000 California (21.5%) 5,000,000 CA State Hth. Facs. Fin. Insd. Rev. Bonds, 6.75s, 6/1/15 A 5,000,000 CA State Pub. Works Board Lease Rev. Bonds 6,220,000 (U. of CA Projects), Ser. B, 5-3/8s, 6/1/09 A 5,714,625 5,000,000 (U. of CA Projects), Ser. B, 5-1/2s, 6/1/14 A 4,493,750 CA Statewide Cmntys. Dev. Auth. Certif. of Participation Rev. Bonds 6,800,000 (Sutter Hlth.) Municipal Bond Insurance Assoc. (MBIA), 5-1/2s, 8/15/23 AAA 5,992,500 5,000,000 (Childrens Hosp.), 4-3/4s, 6/1/21 AAA 3,968,750 $2,775,000 Corona, Certif. of Participation (Vista Hosp. Syst.), Ser. B, 9-1/2s, 7/1/20 BB/P $ 2,899,875 2,760,000 Glendale, Hosp. Rev. Bonds (Verdugo Hills Hosp.), Ser. A, 10-1/8s, 1/1/15 A 2,898,000 5,000,000 Los Angeles Cnty., Metro. Trans. Auth. Sales Tax Rev. Bonds, Financial Guaranty Insurance Co. (FGIC), Ser. A, 5s, 7/1/21 AAA 4,156,250 28,800,000 Metro. Wtr. Dist. Southern CA Waterworks Rev Rfdg. Bonds, 6-3/4s, 7/1/18 AAA 31,824,000 Orange Cnty., Certif. of Participation (VRDN) 11,200,000 3.05s, 8/1/15 (Nos. 1,3,5,7,11,13,14) A 11,200,000 8,000,000 (Nos. 1,2,3,6,7,11), Ser. C, FGIC, 1.7s, 8/1/17 VMIG1 8,000,000 7,440,000 Redding, Joint Pwrs. Fin. Auth. Solid Waste & Corp. Yard Rev. Bonds, Ser. A, 5s, 1/1/18 A 5,989,200 5,000,000 Sacramento Cnty., Sanitation Dist. Fin. Auth. Rev. Rfdg. Bonds, 4-3/4s, 12/1/23 AA 3,981,250 5,000,000 San Bernardino Cnty., Certif. of Participation (Med. Ctr. Financing Project), 5-1/2s, 8/1/24 A 4,200,000 U. of CA Rev. Rfdg. Bonds 15,000,000 (USCD Med. Ctr. Satellite Med. Fac.), 7.9s, 12/1/19 BBB 15,900,000 California (continued) $10,000,000 American Municipal Bond Assurance Corp, (AMBAC), (Multi. Purpose Projects), Ser. C, 5.2s, 9/1/10 AAA $ 9,037,500 9,000,000 AMBAC, (Multi. Purpose Projects), Ser. C, 5s, 9/1/23 AAA 7,402,500 132,658,200 Colorado (4.6%) Denver, City & Cnty. Arpt. Rev. Bonds 4,000,000 Ser. A, 8-3/4s, 11/15/23 Baa 4,355,000 7,000,000 Ser. A, 8-1/2s, 11/15/23 Baa 7,481,250 8,050,000 Ser. D, 7-3/4s, 11/15/21 Baa 8,180,813 6,500,000 (United Air Lines Project), Ser. A, 6-7/8s, 10/1/32 Baa 6,020,625 2,500,000 Ser. C, 6-3/4s, 11/15/13 Baa 2,300,450 28,338,138 Florida (6.4%) 5,000,000 Hernando Cnty., Indl. Dev. Rev. Bonds (FL Crushed Stone Co.), 8-1/2s, 12/1/14 B/P 5,181,250 2,000,000 Hillsborough Cnty., Aviation Auth. Special Purpose Rev. Bonds, (USAir Project), 8.6s, 1/15/22 Ba 2,010,000 7,900,000 Lee Cnty., Hosp. Board of Directors Hosp. RIBS (Lee Memorial Hosp.), MBIA, 9.219s, 3/26/20 Aaa 8,117,250 3,000,000 Miami, Hlth. Facs. Auth. Rev. Bonds (Cedars Med. Ctr.), Ser. A, 8.3s, 10/1/07 AAA/P 3,378,750 Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds $1,585,000 Rfdg.(JFK Med. Ctr. Inc. Project), 8-7/8s, 12/1/18 BBB $ 1,860,394 1,380,000 (JFK Med. Ctr. Inc. Project), 8-7/8s, 12/1/18 BBB 1,528,350 16,350,000 Tampa, Cap. Impt. Rev. Bonds, Ser. B, 8-3/8s, 10/1/18 BBB 17,576,250 39,652,244 Georgia (0.6%) 3,250,000 Gwinnett Cnty., Indl. Dev. Auth. Rev. Bonds (Kawneer Co. Inc. Project), Ser. 84, 9-1/2s, 6/1/15 BBB/P 3,485,625 Illinois (3.1%) 5,000,000 Chicago, O'Hare Intl. Arpt. Rev. Bonds, Ser. B, 10-3/8s, 1/1/09 A 5,331,250 Chicago, O'Hare Intl. Arpt. Special Fac. Fac. Rev. Bond, (United Airlines Inc.), 5,608,000 Ser. B, 8.95s, 5/1/18 Baa 6,217,870 3,375,000 Ser. 84A, 8.85s, 5/1/18 Baa 3,758,906 1,925,000 Ser. 84B, 8.85s, 5/1/18 Baa 2,143,969 2,500,000 IL Dev. Fin. Auth. Retirement Hsg. Rev. Bonds (Regency Park-Lincolnwood), Ser. A, 10-1/4s, 4/15/19 (d) B/P 1,750,000 19,201,995 Iowa (0.9%) IA Fin. Auth. Hlth. Care Fac. Rev. Bonds (Mercy Hlth. Initatives Projects), 3,000,000 9.95s, 7/1/19 BB/P 3,093,750 2,350,000 9.85s, 7/1/09 BB/P 2,420,500 5,514,250 Kansas (2.8%) $7,500,000 Burlington, Poll. Control RIBS (Kansas Gas & Electric), Ser. 91-4, MBIA, 10.842s, 6/1/31 AAA $ 8,400,000 8,400,000 Witchita, Hosp. RIBS, Ser. III-A, MBIA, 10.32s, 10/1/17 AAA 8,694,000 17,094,000 Louisiana (3.5%) 5,000,000 Hodge, Combined Util. Rev. Bonds (Stone Container Corp.), 9s, 3/1/10 B/P 5,137,500 Port of New Orleans, Indl. Dev. Rev. Bonds (Continental Grain Co. Project), 4,000,000 Ser. A, 14-1/2s, 2/1/02 BB 4,640,000 3,500,000 14-1/2s, 1/1/02 BB 4,060,000 West Feliciana Parish, Poll. Control Rev. Bonds (Gulf States Util. Co, Project) 2,000,000 Ser. C, 12s, 5/1/14 Baa 2,135,000 5,500,000 Ser. A, 10-5/8s, 5/1/14 AA 5,864,375 21,836,875 Maine (0.5%) 3,000,000 ME Fin. Auth. Solid Waste Recycling Facs. Rev. Bonds (Great Northern Paper Project), 7-3/4s, 10/1/22 Baa 3,187,500 Maryland (0.8%) 4,000,000 MD State Hlth. & Higher Edl. Facs. Auth. Rev. Bonds (Doctors Cmnty. Hosp.), 8-3/4s, 7/1/12 BBB 4,815,000 Massachusetts (2.1%) $2,000,000 MA State Indl. Fin. Agcy. 1st. Mtge. Rev. Bonds (Pioneer Valley Living Ctr.), 7s, 10/1/20 B/P $ 1,882,500 5,000,000 MA State Indl. Fin. Agcy. Resource Recvy. Rev. Bonds (Southeastern MA Project), Ser. B, 9-1/4s, 7/1/15 BB 5,612,500 MA State Indl. Fin. Agcy. Rev. Bonds 2,000,000 (Orchard Cove Inc.), 9s, 5/1/22 BB/P 2,240,000 1,323,784 (Pioneer Valley Living Ctr.), 10s, 10/1/20 (d) B 1,655 2,925,000 MA State Indl. Fin. Agcy. Tunnel Rev. Bonds (MA Tpk.), 9s, 10/1/20 BB/P 2,976,188 12,712,843 Michigan (6.0%) 5,000,000 Detroit, Dev. Fin. Auth. Tax Increment Rev. Bonds Ser. A, 9.5s, 5/1/21 BBB/P 6,181,250 4,780,000 Highland Park, Hosp. Fin. Auth. Fac. Rev. Bonds (MI Hlth. Care Corp. Project), Ser. A, 9-7/8s, 12/1/19 B 5,030,950 MI State Hosp. Fin. Auth. Rev. Rfdg. Bonds (Detroit-Macomb Hosp. Corp.) 3,035,000 Ser. A, 7.4s, 6/1/13 B 2,947,744 4,800,000 Ser. A, 7.3s, 6/1/01 B 4,752,000 MI State Strategic Fund Ltd. Oblig. Rev. Bonds 4,000,000 (Blue Water Fiber Project), 8s, 1/1/12 B 3,920,000 7,000,000 (Environmental Research Project), 8-1/8s, 10/1/14 A 7,490,000 Michigan (continued) $4,000,000 Midland Cnty., Econ. Dev. Corp. Poll. Control Rev. Bonds Ser. B, 9-1/2s, 7/23/09 B $ 4,415,000 2,150,000 Wayne Charter Cnty., Special Arpt. Fac. Rev. Bonds (Republic Airlines Inc. Project), Ser. C, 10-3/8s, 12/1/15 B 2,305,875 37,042,819 Minnesota (1.0%) 2,000,000 Chaska, Indl. Dev. Rev. Bonds (Lifecore Biomedical Inc. Project), 10-1/4s, 9/1/20 BB 2,300,000 4,000,000 St. Paul, Hsg. & Redev. Auth. Rev. Bonds (Hosp. Crossover Healtheast Project), Ser. A, 6-5/8s, 11/1/17 Baa 3,780,000 6,080,000 Mississippi (1.2%) Claiborne Cnty., Poll. Control Rev. Bonds (Middle South Energy, Inc.) 2,500,000 Ser. C, 9-7/8s, 12/1/14 BBB/P 2,884,375 4,100,000 Ser. A, 9-1/2s, 12/1/13 BBB/P 4,674,000 7,558,375 Missouri (0.7%) 4,000,000 Kansas City, Indl. Dev. Auth. Hlth. Fac. Rev. Bonds (Park Lane Med. Ctr. Project), 8-3/4s, 1/1/15 BBB/P 4,350,000 Nebraska (1.7%) $1,600,000 NE Investment Fin. Auth. Single Fam. Mtge. Rev. Bonds, Ser. B, GNMA Coll. 9.452s, 3/15/22 AAA $ 1,768,000 8,005,000 NE Investment Fin. Auth. Single Fam. Mtge. RIBS, 1st. Ser., GNMA Coll., MBIA, 8-1/8s, 8/15/38 AAA 8,415,256 10,183,256 Nevada (1.5%) Clark Cnty., Indl. Dev. Rev. Bonds 4,000,000 (NV Pwr. Co. Project), 7.8s, 6/1/20 Baa 4,280,000 4,850,000 (Southwest Gas Corp.), Ser. B, 7-1/2s, 9/1/32 Ba 5,025,813 9,305,813 New Hampshire (1.3%) NH Higher Edl. & Hlth. Fac. Auth. Rev. Bonds 2,260,000 (Alice Peck Day Memorial Hosp. Project), 9-3/8s, 11/1/20 BBB/P 2,333,450 3,000,000 (Mary Hitchcock Mem. Hosp.), FGIC, 5-3/4s, 8/15/23 (c) AAA 2,756,250 2,800,000 NH State Indl. Dev. Auth. Poll. Control Rev. Bonds (United Illuminating Co.), Ser. B, 10-3/4s, 10/1/12 Baa 3,279,500 8,369,200 New Jersey (3.4%) 3,000,000 NJ Econ. Dev. Auth. Elec. Energy Fac. Rev. Bonds (Vineland Cogeneration L.P. Project), 7-7/8s, 6/1/19 BB/P 3,180,000 New Jersey (continued) $2,000,000 NJ Econ. Dev. Auth. Rev. Bonds (Tevco Inc. Project), 8-1/8s, 10/1/09 A/P $ 2,155,000 NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds 4,680,000 (Mountainside Hosp.), Ser. A, 9s, 8/1/25 AA 5,066,100 5,000,000 (St. Elizabeth Hosp.), Ser. B, 8-1/4s, 7/1/20 Baa 5,343,750 5,000,000 Union Cnty., Utils. Auth. Solid Waste Rev. Bonds, Ser. A, 7.2s, 6/15/14 A 5,131,250 20,876,100 New York (7.4%) 7,000,000 NY City G.O. VRDN 2.95s, 8/15/23 A 7,000,000 NY City, G.O. Bonds 7,000,000 Ser. F, 8-1/4s, 11/15/10 A 8,058,750 4,925,000 Ser. D, 8s, 8/1/01 Aaa 5,805,344 12,000,000 Ser. B, 7-1/2s, 2/1/04 A 13,095,000 5,000,000 Ser. C, 7s, 2/1/12 A 5,225,000 6,000,000 Ser. H, 7s, 2/1/07 A 6,322,500 45,506,594 North Dakota (0.3%) 1,930,000 ND State Hsg. Fin. Agcy. Single Fam. Mtge. Rev. Bonds Ser. A, 8-3/8s, 7/1/21 Aa 2,038,563 Ohio (4.2%) 1,950,000 Dayton, Special Fac. Rev. Bonds (Emery Air Freight Corp.), Ser. A, 12-1/2s, 10/1/09 B/P 2,269,313 965,000 Hamilton Cnty., Indl. Dev. Rev. Bonds (Provident Assn. Participation), 9s, 12/1/08 (d) D/P 386,000 Ohio (continued) $20,000,000 OH State Air Quality Dev. Auth. Poll. Control Rev. Bonds (Cleveland Co. Project), FGIC, 8s, 12/1/13 AAA $23,150,000 25,805,313 Oklahoma (2.2%) 3,000,000 Oklahoma Cnty., Indl. Auth. Rev. Bonds (Epworth Villa Project), Ser. A, 10-1/4s, 4/1/19 BB/P 3,183,750 10,000,000 Tulsa, Muni. Arpt. Trust Rev. Bonds (American Airlines Corp.), 7.6s, 12/1/30 Baa 10,212,500 13,396,250 Pennsylvania (3.2%) 4,000,000 Allegheny Cnty., Indl. Dev. Auth. Arpt. Special Facs. Rev. Bonds (USAir Inc. Project), Ser. B, 8-1/2s, 3/1/21 Ba 3,920,000 4,000,000 Geisinger, Auth. Hlth. Syst. Rev. Bonds, Ser. A, 5.45s, 7/1/22 AA 3,940,000 6,000,000 PA State Higher Ed. Assistance Agcy. Student Loan RIBS, Ser. B, MBIA, 8.253s, 3/1/20 AAA 6,675,000 Philadelphia, Wtr. & Swr Rev. Bonds, FGIC 4,000,000 5.2s, 6/15/05 AAA 3,760,000 4,000,000 4.8s, 6/15/05 AAA 1,640,000 19,935,000 Puerto Rico (1.0%) 6,245,000 Puerto Rico Elec. Pwr. Auth. Rev. Bonds, 6s, 7/1/16 A 6,018,619 South Carolina (0.9%) $5,000,000 SC State Hsg. Fin. & Dev. Auth. Multi-Fam. Mtge. Rev. Bonds, 8-1/2s, 10/1/21 BBB $ 5,512,500 Tennessee (1.5%) 8,840,000 Metro. Nashville & Davidson Cnty., Hlth. & Ed. Fac. Board Rev. Bonds (Vanderbilt U.), Ser. A, 10-1/2s, 12/1/14 A 9,348,300 Texas (8.6%) 2,750,000 Amarillo, Hlth. Fac. Hosp. Corp. RIBS (High Plains Baptist Hosp.), 9.672s, 1/3/22 AAA 2,822,188 Bexar Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds 3,200,000 (Heartway Corp.), Ser. A-1, 10-1/4s, 3/1/19 B/P 3,432,000 3,200,000 (St. Lukes Lutheran Hosp. Project), 7.9s, 5/1/11 Baa 3,384,000 7,250,000 Brazos River, Poll. Control Auth. Rev. Bonds (TX Utils. Elec. Co. Project), Ser. A, 7-7/8s, 3/1/21 Baa 7,784,688 11,500,000 Dallas-Fort Worth, Intl. Arpt. Fac. Impt. Corp. Rev. Bonds (American Airlines Inc.), 7-1/2s, 11/1/25 Baa 11,686,875 1,154,831 Harris Cnty., Indl. Dev. Corp. Arpt. Facs. Rev. Bonds (Continental Airlines Inc.), 7.95s, 7/1/19 B/P 1,094,202 Houston, Hsg. Fin. Corp. Single Fam. Mtge. Rev. Bonds 2,841,000 Ser. A, 10-7/8s, 2/15/16 Baa 2,926,230 $2,240,000 (Lomas & Nettleton Administration Co.), Ser. B, 10-3/8s, 12/15/13 Baa $ 2,290,400 3,825,000 North Central Hlth. Fac. Dev. Corp. Rev. Bonds (U. Med. Ctr. Inc. Project), 7-3/4s, 4/1/17 AA/P 3,920,625 Southeast TX Hsg. Fin. Corp. Multi-Fam. RIBS 3,000,000 (Bayou Park Village Apt. Project), Ser. B, 10.175s, 8/1/16 B/P 3,041,250 5,000,000 (Pavilion Place Apts. Project), Ser. A, 7.6s, 7/1/16 BBB/P 5,062,500 2,500,000 Southeast TX Hsg. Fin. Corp. Multi-Fam. Rev. Bonds (Promenade Place Apts. Project), Ser. B, 9-1/2s, 8/1/16 B/P 2,509,375 3,000,000 Tarrant Cnty., Hlth. Facs. Dev. Corp. Hosp. Rev. Bonds (Cmnty. Hlth. Care Foundation Inc. Project), 10-1/8s, 4/1/21 B/P 3,157,500 53,111,833 Virginia (1.7%) 5,400,000 Fredericksburg, Indl. Dev. Auth. Hosp. Facs. Inverse Rate Floaters, FGIC, 8.354s, 8/15/23 AAA 5,670,000 5,000,000 Winchester, Indl. Dev. Auth. Hosp. Inverse Rate Floaters, AMBAC, 5.534s, 1/1/15 AAA 4,718,750 10,388,750 Washington (2.9%) WA State Pub. Pwr. Supply Syst. Rev. Bonds (Nuclear Project No. 1) $9,685,000 Ser. A, 7-1/2s, 7/1/15 AA $ 10,871,408 6,315,000 Ser. A, 7-1/2s, 7/1/15 AA 6,772,838 17,644,246 West Virginia (0.6%) 4,000,000 Marion Cnty., Cmnty. Solid Waste Disp. Fac. Rev. Bonds (American Pwr. Paper Recycling Project), 8-1/4s, 12/1/11 (c) B/P 4,005,000 Total Investments (cost $603,163,250)(e) $618,332,826
(a)Percentages indicated are based on net assets of $616,737,297. Net assets available to common shareholders are $441,574,763, which corresponds to a net asset value per common share of $9.98. (b)The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at April 30, 1994, 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 April 30, 1994. Securities rated by Putnam are indicated by "/P" and are not publicly rated. Ratings are not covered by the Report of Independent Accountants. (c)These Securities, valued at $6,761,250 or 1.1% of the Fund's net assets, have been purchased on a "forward commitment" basis--that is, the Fund has agreed to take delivery of and make payment for these securities beyond the settlement time of five business days after the trade date and subsequent to the date of this report. The purchase price and interest rate of these securities are fixed at the trade date, although the Fund does not earn any interest on these securities until the settlement date. (d)Non-income-producing security. (e)The aggregate identified cost on a tax basis is $603,203,393, resulting in gross unrealized appreciation and depreciation of $28,596,644 and $13,467,211, respectively, or net unrealized appreciation of $15,129,433. The rates shown on Variable Rate Demand Notes (VRDN) and Residual Interest Bonds (RIBS) are the current interest rates at April 30, 1994, which are subject to change based on the terms of the security. The Fund had the following industry group concentrations greater than 10% on April 30, 1994 (as a percentage of net assets): Utilities 23.5% Hospitals/Health Care 23.0 Transportation 14.0 The table below shows the percentage of the Fund's investments at April 30, 1994 assigned to the various rating categories by Moody's and Standard and Poor's and in unrated securities determined by Putnam Management to be of comparable quality.
Unrated securities of Rated securities comparable quality, as percentage of as percentage of Rating Fund's Net assets Fund's net assets "AAA"/"Aaa" 25.1% 0.5% "AA"/"Aa" 6.2 0.6 "A"/"A" 17.4 0.3 "BBB"/"Baa" 25.8 4.7 "BB"/"Ba" 5.0 3.2 "B"/"B" 3.8 6.0 "D"/"D" -- 0.1 VMIG1 -- 1.3
U.S. Treasury Bond Futures Outstanding at April 30, 1994
Aggregate Number of Total Face Expiration Unrealized Contracts Value Value Date Appreciation 50 US Treasury Bond Futures (Sell) $5,225,000 $5,285,937 Jun/94 $60,937
Statement of assets and liabilities April 30, 1994 Assets Investments in securities, at value (identified cost $603,163,250) (Note 1) $618,332,826 Cash 10,098,069 Interest and other receivables 13,458,614 Receivable for variation margins on futures 12,500 Total assets 641,902,009 Liabilities Distributions payable to shareholders $ 2,808,396 Payable for securities purchased 21,230,011 Payable for compensation of Manager (Note 3) 1,028,532 Payable for administrative services (Note 3) 4,655 Payable for investor servicing and custodian fees (Note 3) 82,525 Other accrued expenses 10,593 Total liabilities 25,164,712 Net assets $616,737,297 Represented by Series A, B, and C remarketed preferred shares, without par value; 8,000 shares authorized (1,750 shares issued at $100,000 per share liquidation preference) (Note 2) $175,000,000 Common shares, without par value; unlimited, shares authorized 44,226,908 shares outstanding 407,593,538 Undistributed net investment income 17,345,863 Accumulated net realized gain on investments 1,567,384 Net unrealized appreciation of investments 15,230,512 Net assets $616,737,297 Computation of Remarketed preferred shares at liquidation preference $175,000,000 net asset value Cumulative undeclared dividends on remarketed preferred shares 162,534 Net assets allocated to remarketed preferred shares at liquidation preference 175,162,534 Net assets available to common shares: Net asset value per share $9.98 ($441,574,763 divided by 44,226,908 shares) 441,574,763 Net assets $616,737,297
Statement of operations Six months ended April 30, 1994 Tax exempt interest income $ 23,838,483 Expenses: Compensation of Manager (Note 3) $2,126,496 Investor servicing and custodian fees (Note 3) 227,823 Compensation of Trustees (Note 3) 10,395 Auditing 25,563 Reports to shareholders 23,248 Legal 6,954 Postage 10,974 Administrative services (Note 3) 6,872 Exchange listing fees 18,923 Amortization of organization expenses (Note 1) 2,705 Preferred share remarketing agent fees 229,884 Other 19,259 Total expenses 2,709,096 Net investment income 21,129,387 Net realized gain on investments (Notes 1 and 4) 1,302,513 Net realized gain on futures contracts (Notes 1 and 4) 388,070 Net unrealized depreciation of investments during the period (39,169,058) Net loss on investments (37,478,475) Net decrease in net assets resulting from operations $(16,349,088)
Statement of changes in net assets
Six months ended Year ended April 30 October 31 1994 1993 Increase (decrease) Operations: in net assets Net investment income $ 21,129,387 $ 42,995,265 Net realized gain on investments 1,302,513 4,171,187 Net realized gain (loss) on futures contracts 388,070 (80,733) Net unrealized appreciation (depreciation) of investments (39,169,058) 40,690,659 Net increase (decrease) in assets resulting from operations (16,349,088) 87,776,378 Distributions to remarketed preferred shareholders from net investment income (2,116,306) (4,480,767) Net increase (decrease) in assets resulting from operations applicable to common shareholders (excluding cumulative undeclared dividends on remarketed preferred shares of $162,534 and $161,821, respectively) (18,465,394) 83,295,611 Distributions to common shareholders from: net investment income (16,801,392) (33,293,276) net realized gain on investments (4,091,847) (3,434,385) Increase from capital share transactions, common shares 3,274,060 5,405,135 Total increase (decrease) in net assets (36,084,573) 51,973,085 Net assets Beginning of period 652,821,870 600,848,785 End of period (including undistributed net investment income of $17,345,863 and $15,145,211, respectively) $616,737,297 $652,821,870 Number of fund shares Common shares outstanding at beginning of period 43,918,097 43,395,575 Common shares issued in connection with reinvestment of distributions 308,811 522,522 Common shares outstanding at end of period 44,226,908 43,918,097 Remarketed preferred shares outstanding at end of period 1,750 1,750
Financial Highlights (For a share outstanding throughout the period)
For the period February 24, 1989 Six months (commencement ended of operations) to April 30 Year ended October 31 October 31 Common Shares 1994 1993 1992 1991 1990 1989 Net Asset Value, Beginning of Period $10.88 $ 9.81 $ 9.44 $ 8.94 $ 9.31 $ 9.30 Investment Operations: Net Investment Income .48 .98 1.01 1.02 1.02 .54 Net Realized and Unrealized Gain (Loss) on Investments (.86) 1.04 .26 .44 (.35) --* Total from Investment Operations (.38) 2.02 1.27 1.46 .67 .54 Less Distributions from: Net Investment Income to Preferred Shareholders (.05) (.11) (.14) (.20) (.25) (.02) to Common Shareholders (.38) (.76) (.76) (.76) (.76) (.47) Net Realized Gain on Investments to Preferred Shareholders -- -- -- -- -- -- to Common Shareholders (.09) (.08) -- -- (.02) -- Total Distributions (0.52) (.95) (.90) (.96) (1.03) (.49) Change in Cumulative Undeclared Dividends on Remarketed Preferred Shares -- -- -- -- -- (.01) Initial Offering Expenses -- -- -- -- (.01) (.03) Net Asset Value, End of Period $ 9.98 $10.88 $ 9.81 $ 9.44 $ 8.94 $ 9.31 Market Value End of Period (common shares) $10.50 $11.38 $ 9.88 $10.00 $ 8.88 $ 9.50 Total Investment Return at Market Value (common shares) (%) (3.44)(c) 24.84 6.72 22.33 1.72 (.25)(a) Net Assets, End of Period (Total Fund) (in thousands) $616,737 $652,660 $600,849 $580,495 $555,583 $567,749 Ratio of Expenses to Average Net Assets (%) (b) 1.17(a) 1.22 1.24 1.33 1.29 .91(a) Ratio of Net Investment Income to Average Net Assets (%)(b) 8.23(a) 8.44 8.94 8.92 8.39 8.72(a) Portfolio Turnover Rate (%) 18.56(c) 35.16 67.72 49.62 41.48 107.11(c)
* The amount shown in this caption, while mathematically determinable by the summation of amounts computed daily is also the balancing figure derived from the other figures in the statement and has been so computed. (a) Annualized. (b) Ratios reflect net assets available to common shares only; net investment income ratio also reflects reduction for dividend payments to preferred shareholders. (c) Not annualized. Notes to financial statements April 30, 1994 Note 1 Significant accounting policies The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Fund's investment objective is to seek a high level of current income exempt from federal income tax. The Fund intends to achieve its objective by investing in a diversified portfolio of tax-exempt municipal securities which Putnam believes does not involve undue risk to income or principal. Up to 50% of the Fund's assets may consist of high-yield tax-exempt municipal securities that are below investment grade and involve special risk considerations. The Fund also uses leverage by issuing preferred shares in an effort to increase the income to the common shares. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A) Security valuation Tax-exempt bonds and notes are stated on the basis of valuations provided by a pricing service, approved by the Trustees, which uses information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. The fair value of restricted securities is determined by the Manager following procedures approved by the Trustees, and such valuations and procedures are reviewed periodically by Trustees. B) Determination of net asset value Net asset value of the common shares is determined by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses), and the liquidation value and cumulative unpaid dividends of any outstanding remarketed preferred shares, by the total number of common shares outstanding. C) Futures contracts A futures contract is an agreement between two parties to buy or sell a security at a set price on a future date. Upon entering into such a contract the Fund is required to pledge to the broker an amount of cash or securities equal to the minimum "initial margin" requirements of the exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as "variation margin," and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The potential risk to the Fund is that the change in value of the underlying securities may not correspond to the change in value of the futures contracts. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis. E) Federal taxes It is the policy of the Fund to distribute all of its income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the Fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation of securities held and excise tax on income and capital gains. F) Distributions to shareholders Distributions to common and preferred shareholders are recorded by the Fund on the ex-dividend date. Dividends on each share of remarketed preferred shares will accumulate from its Date of Original Issue and will be payable, when, as and if declared by the Board of Trustees, on the applicable Dividend Payment Dates. The dividend period for Series A and B is a 28-day period, and the dividend period for Series C is a 7-day period. The applicable dividend rates for the remarketed preferred shares on April 30, 1994 were: Series A-- 2.54%; Series B--2.69%; Series C--3.125%. G) Amortization of bond premium and discount Any premium resulting from the purchase of securities in excess of maturity value is amortized on a yield-to-maturity basis. Discount on zero-coupon bonds, original issued discount bonds and step-up bonds is accreted according to the effective yield method. H) Unamortized organization expenses Expenses incurred by the Fund in connection with its organization aggregated $44,495. These expenses are being amortized on a straight-line basis over a five-year period. Note 2 Remarketed Preferred Shares On September 28, 1989 the Fund issued 550 shares Series A Remarketed Preferred (RP), 550 shares Series B RP and 650 shares Series C RP (collectively, the "Original RP"). The Original RP Shares are redeemable at the option of the Fund on any dividend payment date at a redemption price of $100,000 per share, plus an amount equal to any dividends accumulated on a daily basis but unpaid through the redemption date (whether or not such dividends have been declared) and, in certain circumstances, a call premium. 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, as amended. To the extent that the Fund earns taxable income and capital gains by the conclusion of a fiscal year, it will 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 yield equivalent to the applicable dividend rate for the period. For six months ended April 30, 1994, the Fund has earned no such taxable income or gains. Under the Investment Company Act of 1940, the Fund is required to maintain asset coverage of at least 200% with respect to the remarketed preferred shares as of the last business day of each month in which any such shares are outstanding. Additionally, the Fund is required to meet more stringent asset coverage requirements under the terms of the remarketed preferred shares and the shares' rating agencies. Should these requirements not be met, or should dividends accrued on the remarketed preferred shares not be paid, the Fund may be restricted in its ability to declare dividends to common shareholders or may be required to redeem certain of the remarketed preferred shares. At April 30, 1994, no such restrictions have been placed on the Fund. Note 3 Management fee, administrative services, and other transactions Compensation of Putnam Management, for management and investment advisory services, is paid quarterly based on the average net assets of the Fund, including proceeds from the remarketed preferred offering. Such fee is based on the annual rate of 0.70% of the first $500 million, 0.60% of the next $500 million, 0.55% of the next $500 million and 0.50% of any amount over $1.5 billion. 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 net income attributable to the proceeds of the remarketed preferred shares during that period, then the fee payable to Putnam for that period will be reduced by the amount of the excess (but not more than .70% of the liquidation preference of the remarketed preferred shares outstanding during the period). The Fund also reimburses the Manager 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. For six months ended April 30, 1994, the Fund paid $ 6,872 for these services. Trustees of the Fund receive an annual Trustee's fee of $1,320 and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of the Manager and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. Custodial functions for the Fund are provided by Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing agent functions are currently provided by Putnam Investor Services, a division of PFTC. Fees paid for these investor servicing and custodial functions for six months ended April 30, 1994, amounted to $227,823. Investor servicing and custodian fees reported in the Statement of operations for six months ended April 30, 1994, have been reduced by credit allowed by PFTC. Note 4 Purchases and sales of securities During six months ended April 30, 1994, purchases and sales of investment securities other than short-term investments aggregated $115,829,173 and $127,496,056, respectively. There were no purchase or sales of short term obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Transactions in U.S. Treasury Bond futures contracts during the period are summarized as follows.
Sales of Futures Contracts Number of Aggregate Contracts Face Value Contracts opened 350 $ 37,729,280 Contracts closed (300) (32,443,343) Open at end of year 50 $ 5,285,937
Note 5 Reclassification of Capital Accounts Effective November 1, 1993, Putnam Managed Municipal Income Trust has adopted the provisions of Statement of Position 93-2 (SOP) "Determination, Disclosure and Financial Statement Presentation of Income, Capital Gain and Return of Capital distributions by Investment Companies". The purpose of this SOP is to report the accumulated net investment income (loss) and accumulated net realized gain (loss) accounts in such a manner as to approximate amounts available for future distributions (or to offset future realized capital gains) and to achieve uniformity in the presentation of distributions by investment companies. As a result of the SOP, the Fund has reclassified $11,037 to decrease undistributed net investment income and $11,033 to increase accumulated net realized gain and $4 to increase additional paid in capital. These adjustments represent the cumulative amounts necessary to report these balances through October 31, 1993, the close of the Fund's last fiscal year end for financial reporting and tax purposes. Selected Quarterly Data (Unaudited)
Three months ended April January October July April January October July April January 30 31 31 31 30 31 31 31 30 31 1994 1994 1993 1993 1993 1993 1992 1992 1992 1992 Total investment income Total $11,884,996 $11,953,487 $12,131,634 $12,114,324 $12,113,227 $12,176,829 $12,077,608 $12,062,083 $12,190,166 $12,398,032 Per share $.27 $.27 $.28 $.28 $.28 $.27 $.28 $.28 $.29 $.28 Net investment income available to common shareholders Total $9,602,081 $9,411,000 $9,644,213 $9,601,179 $9,772,176 $9,496,930 $9,622,505 $9,279,368 $9,552,718 $9,177,562 Per share $.22 $.21 $.21 $.22 $.23 $.21 $.22 $.22 $.22 $.21 Net realized and unrealized gain (loss) on investments Total $(40,050,878) $2,572,403 $12,792,002 $8,635,842 $7,911,957 $15,441,312 $(22,383,227) $26,611,672 $(1,170,558) $5,230,983 Per share $(.92) $.06 $.30 $.20 $.18 $.36 $(.52) $.68 $(.02) $.12 Net increase (decrease) in net assets available to common shareholders resulting from operations Total $(30,448,797) $11,983,403 $22,436,215 $18,237,021 $17,684,133 $24,938,242 $(12,760,722) $38,891,040 $8,382,160 $14,408,545 Per share $(.70) $.27 $.51 $.42 $.41 $.57 $(.30) $.90 $.20 $.33 Net assets available to common shareholders at the end of the period Total $441,574,763$479,160,197$477,660,049$462,370,289 $451,177,789 $440,618,960 $425,694,046$445,652,126$413,804,418$412,632,107 Per share $9.98 $10.87 $10.88 $10.56 $10.33 $10.11 $9.81 $10.30 $9.59 $9.58
Fund Performance Supplement Putnam Managed Municipal Income Trust is a portfolio managed for high current income exempt from federal income tax through a diversified portfolio of tax-exempt municipal securities. The fund invests in lower-rated, high-yielding securities, which pose a greater risk to principal than higher-rated securities. High-yield securities are rated lower than investment-grade securities because there is a greater possibility that negative changes in the issuer's financial condition, or in general economic conditions, may hinder the issuer's ability to pay principal and interest on securities. Fund performance data do not take into account any adjustment made for taxes payable on reinvested distributions. The Lehman Brothers Municipal Bond Index is an unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market. The index does not take into account brokerage commissions or other costs, may include bonds different from those in the fund, and may pose different risks from the fund. The Consumer Price Index is a commonly used measure of inflation; it does not represent an investment return. The fund performance supplement has been prepared by Putnam Management to provide additional information about the fund and the indexes used for performance comparisons. The information is not part of the portfolio of investments owned or the financial statements. Your Trustees George Putnam Chairman Chairman and President, The Putnam Funds William F. Pounds Vice Chairman Professor of Management Jameson Adkins Baxter President, Baxter Associates, Inc. Hans H. Estin Vice Chairman, North American Management CorporationJohn A. Hill Principal and Managing Director, First Reserve Corp. Elizabeth T. Kennan President, Mount Holyoke College Lawrence J. Lasser President and Chief Executive Officer, Putnam Investments, Inc. Robert E. Patterson Executive Vice President, Cabot Partners Limited Partnership Donald S. Perkins Director of various corporations George Putnam, III President, New Generation Research, Inc. A.J.C. Smith Chairman of the Board and Chief Executive Officer, Marsh & McLennan Companies, Inc. W. Nicholas Thorndike Director of various corporations Putnam Managed Municipal Income Trust Fund information Investment manager Putnam Investment Management One Post Office Square Boston, MA 02109 Marketing services Putnam Mutual Funds One Post Office Square Boston, MA 02109 Investor servicing agent Putnam Investor Services Mailing address: P.O. Box 41203 Providence, RI 02940-1203 1-800-225-1581 Custodian Putnam Fiduciary Trust Company Legal counsel Ropes & Gray Independent accountants Coopers & Lybrand (DALBAR LOGO) Putnam Investor Services has received the DALBAR award each year since the award's 1990 inception. In more than 10,000 tests of 38 shareholder service components, Putnam outperformed the industry standard in every category. MMM-12457 Officers George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President John R. Verani Vice President Gary N. Coburn Vice President James P. Erickson Vice President and Fund Manager William N. Shiebler Vice President John D. Hughes Vice President and Treasurer Paul O'Neil Vice President Beverly Marcus Vice President and Clerk This report is for the information of shareholders of Putnam Managed Municipal Income Trust. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund. Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time for up-to-date information about the fund's NAV or to request Putnam's quarterly Closed-End Fund Commentary PUTNAMINVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 Bulk Rate U.S. Postage Paid Boston, MA Permit No. 53749 APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS: (1) Bold and italic typefaces are displayed in normal type. (2) Headers (e.g., the name of the fund) are omitted. (3) Certain tabular and columnar headings and symbols are displayed differently in this filing. (4) Bullet points and similar graphic signals are omitted. (5) Page numbering is omitted. (6) Pound sterling symbol replaced with (pound); Japanese yen replaced with (yen). -----END PRIVACY-ENHANCED MESSAGE-----