(logo)
Putnam
Managed
Income
Trust
Annual
Report
October 31, 1993
(artwork)
For investors seeking
high current return
from a diversified
portfolio of equity
and debt securities
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Annual Report
8 Report of Independent Accountants
9 Portfolio of investments owned
16 Financial statements
27 Federal tax information
27 Fund performance supplement
A member
of the Putnam
Family of Funds
<PAGE>
How your
fund performed
For periods ended October 31, 1993
Total return* Lehman Bros.
Fund S&P Gov't/Corp.
NAV POP 500 IndexBond Index
1 year 17.68% 10.89% 14.90% 13.68%
5 years 79.68 69.31 98.86 71.47
annualized 12.43 11.11 14.51 11.39
Life-of-fund 136.12 122.61 245.26 155.88
(since 4/19/85)
annualized 10.60 9.84 15.63 11.64
Share data NAV POP
October 31, 1992 $8.50 $9.02
October 31, 1993 $9.28 $9.85
Distributions Investment Capital
12 months ended Number income gains Total
October 31, 1993 4 $0.45 $0.21 $0.66
Current returns
at the end of the period NAV POP
Current dividend rate 6.03% 5.69%
Current 30-day yield 4.40 4.15
Total return at end of most recent calendar quarter
Periods ended September 30, 1993
Cumulative Annualized
NAV POP NAV POP
1 year 17.23% 10.43% -- --
5 years 81.10 70.65 12.61% 11.28%
Life-of-fund
(since 4/19/85) 133.83 120.45 10.57 9.81
*Performance data represent past results. Investment return and
net asset value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
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
public offering price.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.
Public offering price (POP) is the price of a mutual fund share
plus the maximum 5.75% sales charge levied at the time of
purchase.
Current dividend rate is calculated by annualizing the net
investment income paid to shareholders in the fund's most recent
distribution, then dividing by the NAV or POP on the last day of
the period.
Current 30-day yield, based only on the fund's net investment
income, is calculated in accordance with Securities and Exchange
Commission guidelines.
Please see the fund performance
supplement on page 27 for additional information about
performance comparisons.
<PAGE>
From the
Chairman
(photograph of George Putnam)
c. Karsh, Ottawa
George Putnam
Chairman
of the Trustees
Dear Shareholder:
With a very strong total return of nearly 18% at net asset value
for the fiscal year ended October 31, 1993, Putnam Managed Income
Trust demonstrated the effectiveness of its new investment
strategy. This period marked the first full year that the fund,
Putnam's most conservative diversified equity-oriented fund,
sought high current income exclusively through a portfolio of
common stocks and fixed income securities. Using this strategy,
the fund's total return at net asset value exceeded the return of
both the Standard & Poor's 500(registered mark) Index and the
Lehman Brothers Government/Corporate Bond Index.
For most of the year, the proportion of stocks to bonds in the
portfolio held fairly steady. In September, however, Fund Manager
Edward Bousa increased the stock side from about 40% to about 45%
of the fund's total holdings. This move reflected his belief that
stocks were becoming increasingly more attractive than bonds,
especially after a fall rally increased bond prices to the point
where higher prices cut into their rate of return. Still, in
keeping with the fund's essentially conservative orientation, the
portfolio was overweighted in favor of investment-grade bonds at
the end of the fiscal period. With their steady rate of return,
these highly-rated issues offer a measure of protection against
any possible downturn on the stock side.
Good news continues for the U.S economy. Corporate earnings have
improved and consumers are showing faith in the recovery by
increasing their spending. These are additional reasons for Ed to
see continuing growth potential in stocks. He is reasonably
optimistic that the worldwide economy is about due to pick up as
European interest rates continue to fall. Whether they will
descend to levels as low as those in the United States remains to
be seen, but even another relatively slight decline would have a
ripple effect that would probably benefit both stock and bond
markets around the world.
Putnam Management expects that the economic trends favoring your
fund will generally remain in place at least for the next
quarter. If the markets perform according to these expectations,
the fund should continue to satisfy investors seeking current
income while carefully managing their exposure to risk.
<PAGE>
Respectfully yours,
George Putnam
December 15, 1993
<PAGE>
Report from
Putnam Management
Putnam Managed Income Trust delivered a total return of 17.68% at
net asset value for the fiscal year ended October 31, 1993, well
ahead of the results measured by both the Lehman Brothers
Corporate/Government Bond Index (13.68%) and that of Standard and
Poor's 500 Index (14.90%) for the same period.
At this point, we'd like to explain why these comparisons to the
indexes are so important to us and what they mean to you. The
financial industry uses the Lehman Brothers Bond Index as a
standard measurement of the performance of a representative
selection of corporate and government bonds; the S&P 500 shows
the performance of a selected list of 500 stocks. Since your
fund's portfolio is composed of both stocks and bonds in roughly
equal proportions, we like to compare fund performance to that of
both markets in order to maintain the proper perspective.
A comparison of the fund's results to that of both indexes also
lends weight to the argument that by combining two different
types of securities, each with a distinct pattern of performance
independent of the other, the fund will generally outperform at
least one, if not both indexes. This strategy, in effect, gives
the fund a sort of super-diversification. The portfolio is not
only diversified across the different kinds of equities to
include common stocks and convertibles, it's also spread across a
wide variety of bonds. The fund's performance over the past
fiscal year shows how successful this strategy can be.
The chart below shows the fund's cumulative total return since it
was founded in 1985. Cumulative performance reflects a very
different investment strategy from the one now in place. Please
keep in mind that the returns for the fiscal year ended on
October 31, 1993 show the fund's performance under its new
investment strategy.
<PAGE>
(line graph)
Cumulative total return on a
$10,000 investment since 4/19/85
Putnam Managed Income Trust
.............at NAV
- -------------at POP
_____________S & P 500 Index
*************Lehman Govt/Corp. Bond Index
Plot points:
date/ S&P Lehman fund at fund at
year 500 Govt/Bond NAV POP
Index Index
4/19/85 10000 10000 10000 9425
10/31/85 10780 11035 10217 9633
10/31/86 14354 13243 11709 11040
10/31/87 15269 13492 10968 10341
10/31/88 17534 14925 13141 12390
10/31/89 22140 16737 15283 14409
10/31/90 20475 17659 13963 13164
10/31/91 27335 20373 18052 17020
10/31/92 30050 22515 20064 18917
10/31/93 34523 25591 23611 22261
Past performance is no assurance of future results.
Portfolio overview On October 31, 1993, the fund held a
combination of common and preferred stocks, convertibles and
fixed-income securities. During the past year, equity holdings
emphasized large companies that Wall Street was not closely
following or that we considered undervalued. These companies are
chosen because most offer above-average dividend yields and have
strong balance sheets, characteristics that help protect the
value of their stock.
During the fiscal year, the corporate bond markets enjoyed an
extended rally as investors searched out higher-yielding issues
as alternatives to low CD rates. With about 16% of the total bond
portfolio in high-yield corporates, this sector provided a good
source of core income for the fund.
Holdings in Treasury securities contributed both to current
income and the fund's overall performance. Compared to the Lehman
Brothers Index, the fund was focused on substantially longer
maturities and thus benefited as interest rates continued to fall
throughout the year. The past six months have seen a dramatic
flattening of the yield curve as the difference between long and
short rates narrowed. Much of the resulting appreciation occurred
in the seven-year sector where much of the fund's Treasury
holdings are positioned.
<PAGE>
On the following pages are profiles of companies that did
especially well during our fiscal year and whose substantial
gains considerably enhanced our total return. Most are large,
well-known companies; some are now on the comeback trail after
having recently restructured or undergone aggressive
cost-containment programs. Many do business on an international
scale; the overseas factor has become increasingly important in
almost every industry.
American Express This worldwide financial services leader, and
its array of travel-related, investment, international,
investment, banking, insurance, and information products, is
completing a turnaround. AmEx markets travelers' checks as well
as the American Express and Optima credit cards sold through the
company's TRS division, which accounted for 37% of the company's
1992 earnings. Yet TRS has lost market share; new marketing
programs should revive this group. At IDS, the financial services
group, profits have advanced. New efficiencies and restructuring
put the company in a good position for renewed growth. The fund's
AmEx holdings gained about 35% for the year.
Repsol, S.A. A Spanish company engaged in the oil business,
Repsol has made one of Europe's most successful transitions to
private enterprise. The company, with a large share of Spain's
fuel market and an extensive network of service stations, has
thrived on competition; it quickly established its ability to
satisfy customer needs and provide quality products at
competitive prices. Repsol's exploration, production, refining
and marketing activities take place throughout the world. One of
the few foreign companies held by the fund this year, our
holdings gained about 50% as measured in U. S. dollars. Most of
the fund's position was sold at a profit by fiscal year end.
Sprint Corporation The second largest independent local telephone
system and the third largest long-distance carrier, Sprint
recently merged with Centel. This $4.7 billion merger created the
only major U. S. telecommunications company offering both local
and long-distance capabilities along with cellular services. The
fund's holdings in Sprint appreciated by about 50% during the
fiscal year.
Varity Corporation Varity is an established manufacturer of farm
and industrial machinery, diesel engines and automotive products.
Currently the company's most popular products are its two- and
four-wheel anti-lock brake systems, which are rapidly gaining
market share around the world. When the fund's holdings in Varity
had increased in value by about 50%, we sold them at a profit and
locked in a sizable amount of capital appreciation.
<PAGE>
Xerox Corporation A more recent purchase, Xerox has returned to
its most profitable roots and will focus on document processing,
mainly copiers and fax machines. In '92, this group delivered
more than half the company's revenues and contributed about 80%
of its pretax profits. With cost-containment, increased
productivity and exciting new products including DocuTech, a
digital publishing system that promises to revolutionize the
printing business, Xerox is well-positioned to take on a larger
share of the market.
For the future On the equity side, we expect to add both tobacco
and drug stocks. Now that the proposals for higher sin taxes are
known, we feel the tobacco industry will retain its profit
potential. With the movement to make health care more accessible,
we feel that a growing market for prescription drugs will offset
any price reductions that may occur from increased regulation.
Since both tobacco and drug stocks currently enjoy a relatively
undervalued status, they offer exciting potential for investors.
Essentially, we feel that all markets have their undervalued
stocks and offer opportunity for the disciplined and
well-informed investor. As the recovery in Europe shows strength,
your fund will also be on the hunt for values in overseas
markets.
On the bond side of the portfolio, we expect to maintain the
current Treasury securities allocation of the portfolio and will
carefully target our position on the yield curve to take
advantage of any additional flattening. Our position in
mortgage-backed securities will be kept relatively low since we
feel pre-payments are still a risk.
Now that the U.S. economy appears to be well into a recovery
phase, we will most likely add to the fund's income holdings,
possibly in the financial services sector. Since we expect the
economy to gradually pick up in Western Europe, we will consider
investing in dollar-based Yankee bonds. These highly-rated bonds,
issued in U. S. dollars by foreign corporations, have the
potential to increase substantially in value as Europe shows
signs of greater economic health.
We will continue to keep about 16% of the portfolio in the
high-yield corporate bonds rated B or higher. Even after two
years of strong performance, we believe these issues will
maintain their potential for attractive returns.
The views expressed here are exclusively those of Putnam
Investment Management. They are not meant as investment advice.
Although the described holdings were viewed favorably during the
fiscal year ended October 31, 1993, there is no guarantee the
fund will continue to hold these securities in the future.
<PAGE>
Top industry secotrs (As a percentage of net assets as of
10/31/93)
Insurance & Finance ...............................19.2%
Utilities ......................13.4%
Oil & Gas .................11.0%
Basic Industrial Products .....4.2%
Consumer Non-Durables ....3.6%
Health Care ...3.3%
Chemicals ..3.2%<PAGE>
Putnam
Managed
Income
Trust
Annual
Report
For the Year Ended October 31, 1993
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Managed Income Trust
In our opinion, the accompanying statement of assets and
liabilities, including the portfolio of investments owned, and
the related statements of operations and of changes in net assets
and the financial highlights present fairly, in all material
respects, the financial position of Putnam Managed Income Trust
(the "Trust") at October 31, 1993, and the results of its
operations, the changes in its net assets, and the financial
highlights for the periods indicated in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of
investments owned at October 31, 1993 by correspondence with the
custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received,
provide a reasonable basis for the opinion expressed above.
Price Waterhouse
Boston, Massachusetts
December 20, 1993
<PAGE>
Portfolio of
investments owned
October 31, 1993
Common Stocks (37.4%)(a)
Number of Shares Value
Utilities (7.4%)
50,000 Allegheny Power Systems, Inc. $ 2,756,250
75,000 Baltimore Gas & Electric Co. 1,959,375
25,000 Bell Atlantic Corp. 1,590,625
10,000 BellSouth Corp. 627,500
120,000 Cincinnati Gas & Electric Co. 3,435,000
110,000 GTE Corp. 4,372,500
75,000 General Public Utilities Corp. 2,465,625
60,000 Houston Industries Inc. 2,902,500
55,000 Montana Power Co. 1,478,125
80,000 NIPSCO Industries, Inc. 2,720,000
70,000 National Service Industries, Inc. 1,680,000
110,000 PSI Resources, Inc. 2,928,750
40,000 Pacific Telesis Group 2,195,000
30,000 Sierra Pacific Resources 637,500
111,100 Sprint Corp. 3,999,600
30,000 Telefonica de Espana ADR(b) 1,166,250
10,000 US WEST, Inc. 501,250
50,000 United Illuminating Co. 2,187,500
30,000 Wicor Inc. 956,250
40,559,600
Insurance and Finance (5.6%)
23,000 Aegon NV ADR(b) 1,190,250
28,000 Aetna Life & Casualty Co. 1,841,000
120,000 American Express Co. 3,870,000
20,000 Bankers Trust New York Corp. 1,585,000
60,000 Beneficial Corp. 4,605,000
20,000 CIGNA Corp. 1,342,500
100,000 Comerica Inc. 2,637,500
30,000 CoreStates Capital Corp. 840,000
10,000 First Bank System, Inc. 317,500
60,000 Great Western Financial Corp. 1,147,500
60,000 Lincoln National Corp. 2,730,000
6,000 Morgan (J.P.) & Co., Inc. 428,250
51,200 NBD Bancorp, Inc. 1,606,400
30,000 National City Corp. $ 780,000
20,000 Nationsbank Corp. 932,500
16,000 St. Paul Companies, Inc. 1,500,000
30,000 Synovus Financial Corp. 562,500
60,000 Unitrin, Inc. 2,700,000
30,615,900
Oil and Gas (5.0%)
36,000 Amoco Corp. 2,011,500
50,000 British Petroleum Co. PLC
ADR(b) 3,112,500
10,000 Chevron Corp. 970,000
18,000 Equitable Resources Inc. 704,250
40,000 Exxon Corp. 2,615,000
40,000 Imperial Oil Ltd. 1,480,000
43,000 McDermott International, Inc. 1,220,125
40,000 Mobil Corp. 3,260,000
70,000 NOVA Corp. of Alberta 481,250
45,000 Occidental Petroleum Corp. 832,500
26,000 Repsol S.A. ADS(b) 770,250
50,000 Royal Dutch Petroleum Co.
ADR(b) 5,287,500
65,000 Texaco Inc. 4,428,125
24,000 YPF Sociedad Anonima
ADR(b) 657,000
27,830,000
Chemicals (3.2%)
50,000 Dow Chemical Co. 2,775,000
127,000 du Pont (E.I.) de Nemours &
Co., Ltd. 6,064,250
75,000 Grace (W.R.) & Co. 2,831,250
50,000 Olin Corp. 2,318,750
75,000 Union Carbide Corp. 1,481,250
80,000 Witco Corp. 2,390,000
17,860,500
Health Care (3.1%)
28,000 American Cyanamid Co. $ 1,526,000
75,000 American Home Products Corp. 4,687,500
20,000 Baxter International Inc. 475,000
3,600 Bristol-Myers Squibb Co. 211,950
65,000 Lilly (Eli) & Co. 3,518,125
8,000 McKesson Corp. 427,000
20,000 Merck & Co., Inc. 642,500
40,000 Nationwide Health Properties, Inc. 1,660,000
50,000 Upjohn Co. 1,631,250
32,000 Warner-Lambert Co. 2,224,000
17,003,325
Consumer Non-Durables (2.8%)
160,000 American Brands Inc. 5,520,000
16,000 Avon Products, Inc. 808,000
16,000 Clorox Co. 848,000
70,000 Kimberly-Clark Corp. 3,613,750
84,000 Philip Morris Cos., Inc. 4,515,000
15,304,750
Business Equipment and Services (1.8%)
60,000 IBM Corp. 2,760,000
245,000 Unisys Corp. 2,817,500
55,500 Xerox Corp. 4,398,375
9,975,875
Retail (1.2%)
58,000 American Stores Co. (New) 2,349,000
50,000 K-mart Corp. 1,225,000
65,000 Rite Aid Corp. 1,056,250
93,300 Shopko Stores, Inc. 967,988
55,000 Woolworth Corp. 1,244,375
6,842,613<PAGE>
Real Estate (1.1%)
100,000 Bradley Real Estate Trust $ 925,000
20,000 Camden Property Trust(c) 517,500
34,700 Commercial Net Lease
Realty, Inc. 498,813
63,000 Crown American Realty Corp.(c) 1,031,625
60,000 Dial Real Estate Investment
Trust 637,500
40,000 Health Care Reit Inc. 990,000
50,000 MGI Properties 718,750
35,000 Mark Centers Trust 586,250
19,000 Taubman Centers Inc. 251,750
6,157,188
Basic Industrial Products (1.0%)
78,000 Ball Corp. 2,018,250
15,000 Kennametal, Inc. 601,875
20,100 NUI Corp. 570,338
60,000 Sundstrand Corp. 2,287,500
5,477,963
Metals and Mining (0.9%)
30,000 Carpenter Technology Corp. 1,642,500
13,000 Lukens, Inc. (Delaware) 484,250
70,000 Reynolds Metal Co. 2,957,500
5,084,250
Transportation (0.7%)
50,000 GATX Corp. 1,906,250
28,000 Norfolk Southern Corp. 1,855,000
3,761,250
Conglomerates (0.6%)
72,500 E G & G, Inc. 1,295,938
36,000 Hanson PLC ADR(b) 724,500
8,500 Ogden Corp. 204,000
19,000 TRW, Inc. 1,280,125
3,504,563
Aerospace and Defense (0.6%)
82,000 GenCorp Inc. $ 1,291,500
55,000 Rockwell International Corp. 1,973,125
3,264,625
Automotive (0.4%)
22,000 Dana Corp. 1,284,250
25,000 General Motors Corp. 1,190,625
2,474,875
Electronics and Electrical Equipment (0.4%)
40,000 DQE, Inc. 1,440,000
19,000 Harris Corp. 878,750
2,318,750
Photography (0.4%)
32,000 Eastman Kodak Co. 2,016,000
Food and Beverages (0.3%)
90,000 Flowers Industries, Inc. 1,710,000
<PAGE>
Forest Products (0.3%)
10,000 Boise Cascade Corp. 205,000
50,000 Federal Paper Board Co., Inc. 1,012,500
8,000 Potlatch Corp. 351,000
1,568,500
Environmental Control (0.2%)
50,300 Browning-Ferris Industries, Inc. 1,138,038
Building and Construction (0.2%)
22,000 Armstrong World Industries, Inc. 1,017,500
Publishing (0.2%)
27,000 Times Mirror Co. Class A 891,000
Computer Software (--%)
5,123 Computervision Corp.
(acquired 8/24/92,
cost $46,107)(d) $ 10,566
Total Common Stocks
(cost $205,928,316) $206,387,631
Corporate Bonds and Notes (36.5%)(a)
Principal Amount Value
Insurance and Finance (10.8%)
$ 2,000,000 Bank of Scotland sub. notes,
8.8s, 2004(e) $ 2,353,750
4,200,000 Chemical Banking Corp. sub.
deb., 8 5/8s, 2002 4,866,750
3,000,000 Chrysler Financial Corp. sr.
note, 9 1/2s, 1999 3,511,875
5,000,000 Comerica, Inc. sub. notes,
6 7/8s, 2008 5,206,250
3,150,000 Den Danske Bank sub. notes,
6.55s, 2003(e) 3,165,750
3,000,000 First Bank System, Inc. sub.
notes, 8s, 2004 3,397,500
2,000,000 Goldman, Sachs & Co. deb.,
8s, 2013(e) 2,170,000
4,500,000 Great Western Finance
Corp. notes, 6 1/8s, 1998 4,598,438
4,700,000 Greyhound Financial Corp.
notes, 9 1/8s, 2002 5,566,563
4,490,000 Hartford National Corp. sub.
cap. notes, 9.85s, 1999 5,289,781
5,000,000 Home Savings of America sub.
notes, 10 1/2s, 1997 5,596,875
4,300,000 Household Finance Corp. sr.
notes, 7 5/8s, 2003 4,689,688
4,000,000 Integra Financial Corp. sub. deb.,
8 1/2s, 2002 4,567,500
4,500,000 Paine Webber Group Inc. sr.
notes, 6 1/2s, 2005 4,432,500
59,413,220
Utilities (5.8%)
$ 5,700,000 Beaver Valley Funding Corp.
coll. lease bonds, 9s, 2017 $ 5,714,250
5,000,000 CTC Mansfield Funding Corp.
secd. lease oblig. bonds
11 1/8s, 2016 5,368,750
5,000,000 Gulf States Utilities Co.
1st mtge., 8.7s, 2024 5,909,375
5,000,000 Old Dominion Electric Corp.
Ser. 93-A, 1st mtge.
Sinking Fund, 7.78s, 2023 5,453,125
4,700,000 Texas Utilities Electric Co.
secd. lease fac. bonds,
7.46s, 2015 4,899,750
4,350,000 Toledo Edison Co. med. term
notes, 7.82s, 2003 4,540,313
31,885,563
Oil and Gas (5.6%)
4,000,000 Arkla Inc. notes, 8s, 1997 4,030,000
4,000,000 Maxus Energy Corp. notes,
9 1/2s, 2003 4,100,000
4,000,000 McDermott, Inc. notes, 9 3/8s, 2002 4,610,000
4,000,000 Mitchell Energy & Development Corp.
sr. notes, 9 1/4s, 2002 4,497,500
4,400,000 Occidental Petroleum Corp. sr.
deb., 11 3/4s, 2011 5,222,250
2,200,000 Pennzoil Co. deb., 9s, 2017 2,338,875
2,700,000 Transcontinental Gas Pipe
Line Corp. deb., 9 1/8s, 2107 2,848,500
3,000,000 Transcontinental Gas Pipe
Line Corp. deb., 9s, 1996 3,208,125
30,855,250
Basic Industrial Products (3.1%)
4,200,000 Asarco, Inc. notes, 7 3/8s, 2003 4,452,000
4,000,000 Coastal Corp. sub. notes,
11 1/8s, 1998 4,270,000
$ 3,500,000 Coastal Corp. sr. notes, 10s, 2001 $ 4,114,688
4,000,000 News American Hldgs. Inc.
sr. notes, 8 1/2s, 2005 4,445,000
17,281,688
Consumer Services (2.2%)
5,000,000 Tele-Communications, Inc.
deb., 9.8s, 2012 6,275,000
5,200,000 Time-Warner Entertainment
Co. notes, 9 1/8s, 2103 5,817,500
12,092,500
Food and Beverages (2.0%)
5,000,000 Imperial Holly Corp. sr. notes,
8 3/8s, 1999 5,234,375
5,000,000 RJR Nabisco Inc. sr. notes,
10 1/2s, 1998 5,471,875
10,706,250
Transportation (1.8%)
4,000,000 GATX Corp. med. term notes,
9 1/2s, 2002 4,725,000
5,000,000 Owens-Illinois, Inc. deb., 9.95s,
2004 5,350,000
10,075,000
Business Equipment and Services (1.0%)
5,000,000 Valassis Communication Inc.
sr. sub. notes, 9 3/8s, 1999 5,500,000
Conglomerates (1.0%)
4,700,000 Pennsylvania Central Corp.
sub. deb., 10 7/8s, 2011 5,478,438
Metals and Mining (0.9%)
5,000,000 USX Corp. deb. 9 1/8s, 2013 5,181,250
Energy-Related (0.9%)
$ 1,500,000 Tenneco, Inc. deb, 10s, 2008 $ 1,924,688
2,800,000 Tosco Corp. 1st mtge. Ser. B,
9 5/8s, 2002 3,090,500
5,015,188
Automotive (0.8%)
3,775,000 Chrysler Corp. deb. 10.95s,
2017 4,596,063
Retail (0.6%)
3,000,000 Sears, Roebuck & Co. med. term
notes, 8s, 1999 3,281,250
Total Corporate Bonds
and Notes
(cost $192,789,762) $201,361,660
U.S. Government and Agency Obligations (18.1%)(a)
Principal Amount Value
Government National
Mortgage Association
$ 4,500,000 6 1/2s, TBA, January 15,
2024(f) $ 4,514,063
10,200,000 6 1/2s, TBA, November 15,
2023(f) 10,292,438
4,788,000 U.S. Treasury Bonds, 7 1/8s,
February 15, 2023 5,387,996
14,000,000 U.S. Treasury Notes, 9 1/4s,
August 15, 1998 16,629,375
36,500,000 U.S. Treasury Notes, 8 1/2s,
November 15, 2000 43,514,844
2,140,000 U.S. Treasury Notes, 5 1/4s,
July 31, 1998 2,179,456
8,470,000 U.S. Treasury Notes, 4 5/8s,
November 30, 1994 8,562,641
$ 8,490,000 U.S. Treasury Notes, 4 1/4s,
October 31, 1994 $ 8,551,022
Total U.S. Government
and Agency Obligations
(cost $98,569,442) $ 99,631,835
Convertible Bonds (4.2%)(a)
Principal Amount Value
Insurance and Finance (1.6%)
$ 1,200,000 Aegon NV euro. cv. sub.
deb., 7s, 2001(b)(e) $ 1,632,000
2,800,000 Chubb Corp. cv. deb., 6s, 1998 3,094,000
2,000,000 Old Republic International
Corp. cv. sub. deb., 5 3/4s, 2002 2,360,000
1,200,000 Scor U.S. Corp. cv. sub. deb.,
5 1/4s, 2000(e) 1,170,000
500,000 Trenwick Group, Inc. cv.
deb., 6s 1999 565,000
8,821,000
Consumer Non-Durables (0.7%)
500,000 Fieldcrest Cannon, Inc.,
Sinking Fund, cv. sub. deb.,
6s, 2012 415,000
2,000,000 Guilford Mills Inc. Sinking
Fund, cv. sub. deb., 6s,
2012 1,885,000
1,300,000 Interface Inc. Sinking Fund,
cv. deb., 8s, 2013 1,353,625
3,653,625
Consumer Services (0.5%)
$ 1,800,000 Hollinger, Inc. liquid yield option
notes (LYON), zero%, 2013 $ 555,750
4,500,000 Tele-Communications, Inc. cv.
sub. LYON, zero %, 2008 2,266,875
2,822,625
Metals and Mining (0.4%)
7,000,000 Freeport-McMoran, Inc. cv.,
zero %, 2006 2,283,750
Food and Beverages (0.3%)
3,000,000 Seagram Co., Ltd. cv.,
zero %, 2006 1,631,250
Health Care (0.2%)
900,000 Hillhaven Corp. cv. deb.,
7 3/4s, 2002 1,200,375
Oil and Gas (0.2%)
950,000 Noble Affiliates Inc. cv. deb.,
4 1/4s, 2003 973,750
Transportation (0.2%)
1,100,000 Delta Air Lines, Inc. cv. sub.,
3.23s, 2003 947,375
Retail (0.1%)
700,000 American Stores Co. cv. deb.,
7 1/4s, 2001 763,000
Total Convertible Bonds
(cost $22,121,766) $23,096,750
Convertible Preferred Stocks (2.3%)(a)
Number of Shares Value
Insurance and Finance (1.2%)
12,000 Chemical Banking Corp.
$5.00 cv. pfd. $ 1,002,000
5,000 Citicorp $5.375 cv. pfd. 545,000
35,000 First Bank System, Inc. Ser.
91-A, $3.5625 cv. pfd. 2,331,875
45,000 Republic New York Corp.
$3.375 cv. pfd. 2,722,500
6,601,375
Transportation (0.5%)
20,000 AMR Corp. Ser. A, $3.00,
cv. pfd. 1,080,000
30,000 Delta Air Lines, Inc. Ser. C,
$3.50 cv. pfd. 1,721,250
2,801,250
Automotive (0.2%)
10,000 Ford Motor Co. Ser. A,
$4.20 cv. pfd. 1,047,500
Oil and Gas (0.2%)
15,000 Unocal Corp. $3.50 cv. pfd. 900,000
Consumer Non-Durables (0.1%)
9,000 Fieldcrest Cannon, Inc. $3.00
cv. pfd.(e)(g) 522,000
Basic Industrial Products (0.1%)
10,000 AGCO Corp. $1.625 cv. pfd. 400,000
Metals and Mining (--%)
6,000 Cyprus Amax, Inc. Ser. A, $4.00
cv. pfd. 394,500
Forest Products (--%)
10,000 Boise Cascade Corp. Ser. G,
$1.58 cv. pfd. 215,000
Total Convertible
Preferred Stocks
(cost $11,622,165) $ 12,881,625
Asset-Backed Securities (0.9%)(a) (cost $4,560,932)
Principal Amount Value
Transportation (0.9%)
$ 4,700,000 Delta Air Lines Equipment
Trust 10s, 2013(e) $ 4,855,678
Preferred Stocks (0.4%)(a)
Number of Shares Value
Utilities (0.2%)
10,000 Cleveland Electric Iluminating
Co., Sinking Fund, Ser. N,
$9.125 pfd. $ 1,022,500
Forest Products (0.2%)
35,000 Boise Cascade Corp. Ser. F,
$2.35 dep. shs. pfd. 927,500
Total Preferred Stocks
(cost $1,959,600) $ 1,950,000
Short-Term Investments (2.6%)(a) (cost $14,110,468)
Principal Amount Value
$14,107,000 Interest in $363,172,000 joint
repurchase agreement
dated October 29, 1993
with Nomura Securities,
Inc. due November 1, 1993
with respect to various U.S.
Treasury obligations maturity
value of $14,110,468 for an
effective yield of 2.95% $ 14,110,468
Total Investments
(cost $551,662,451)(h) $564,275,647
<PAGE>
(a) Percentages indicated are based on net assets of
$551,390,958, which correspond to a net asset value per share of
$9.28.
(b) Securities whose values are determined or significantly
influenced by trading on exchanges not in the United States or
Canada. ADR or ADS after the name of a foreign holding stands for
American Depository Receipt or American Depository Shares,
respectively, representing securities on deposit with a domestic
custodian bank.
(c) Non-income-producing security.
(d) Restricted, excluding 144A securities, as to public resale.
At the date of acquisition, this security was valued at cost.
There were no outstanding unrestricted securities of the same
class as that held. Total market value of restricted securities
owned at October 31, 1993 was $10,566 or less than 0.01%
of net assets.
(e) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration normally to qualified
institutional buyers. At October 31, 1993, these securities
amounted to $15,869,178 or 2.9% of net assets.
(f) TBA's are mortgage-backed securities traded under delayed
delivery commitments, settling after October 31, 1993. Although
the unit price for the trades has been established, the principal
value has not been finalized. However, the amount of the
commitments will not fluctuate more than 2.0% from the principal
amount. Income on such securities will not be earned until
settlement date. The cost of TBA purchases held at October 31,
1993 was $14,759,279 or 2.7% of net assets.
(g) This security, having an aggregate value of $522,000 or 0.09%
of the Fund's net assets, has been purchased on a "when-issued"
basis -- that is, the Fund has agreed to take delivery of and
make payment for such security beyond the settlement time of 5
business days after the trade date. The purchase price and
dividend rate of such security are fixed at the trade date,
although the Fund does not earn any income on such security until
the settlement date.
(h) The aggregate identified cost for federal income tax purposes
is $551,936,094 resulting in gross unrealized appreciation and
depreciation of $33,792,716 and $21,453,163, respectively, or net
unrealized appreciation of $12,339,553.
<PAGE>
<TABLE>
<CAPTION>
Statement of
assets and liabilities
October 31, 1993
<S> <C> <C>
Assets
Investments in securities, at value (identified cost
$551,662,451) (Note 1) $564,275,647
Cash 235,767
Dividends, interest and other receivables 7,143,714
Receivable for shares of the Fund sold 48,399
Receivable for securities sold 19,129,174
Total assets 590,832,701
Liabilities
Payable for securities purchased $37,437,303
Payable for shares of the Fund repurchased 787,446
Payable for compensation of Manager (Note 2) 898,622
Payable for administrative services (Note 2) 1,542
Payable for compensation of Trustees (Note 2) 267
Payable for investor servicing and custodian
fees (Note 2) 123,082
Payable for distribution fees (Note 2) 113,952
Other accrued expenses 79,529
Total liabilities 39,441,743
Net assets $551,390,958
Represented by
Paid-in capital (Note 4) $599,007,819
Distributions in excess of net investment income (193,287)
Accumulated net realized loss on investment and
option transactions (60,036,770)
Net unrealized appreciation of investments 12,613,196
Total -- Representing net assets applicable to capital
shares outstanding $551,390,958
Computation of net asset value and offering price
Net asset value and redemption price per share ($551,390,958
divided by 59,389,922 shares) $9.28
Offering price per share (100/94.25 of $9.28)* $9.85
*On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales the offering price is reduced.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
operations
Year ended October 31, 1993
<S> <C> <C>
Investment income:
Interest $27,075,689
Dividends (net of foreign tax of $119,971) 9,119,729
Total investment income 36,195,418
Expenses:
Compensation of Manager (Note 2) $3,771,529
Investor servicing and custodian fees (Note 2) 793,007
Compensation of Trustees (Note 2) 23,647
Auditing 50,372
Legal 15,532
Distribution fees (Note 2) 1,406,671
Administrative services (Note 2) 26,194
Registration fees 350
Other 6,260
Total expenses 6,093,562
Net investment income 30,101,856
Net realized gain on investments (Notes 1 and 3) 14,464,868
Net realized loss on options (Notes 1 and 3) (3,131,875)
Net unrealized appreciation of investments and
options during the year 57,208,336
Net gain on investments and options 68,541,329
Net increase in net assets resulting from operations $98,643,185
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
changes in net assets
Year ended October 31
1993 1992
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income $ 30,101,856 $ 12,356,390
Net realized gain on investments 14,464,868 71,475,985
Net realized loss on options (3,131,875) (3,248,382)
Net unrealized appreciation (depreciation) of
investments and options 57,208,336 (9,746,293)
Net increase in net assets resulting
from operations 98,643,185 70,837,700
Undistributed net investment income included
in price of shares sold and repurchased, net (225,742) (57,190)
Distributions to shareholders:
From net investment income (29,766,067) (12,409,247)
In excess of net investment income (193,287) --
From net realized gain on investments (15,555,868) (62,403,913)
Decrease from capital share transactions
(Note 4) (134,692,175) (62,644,623)
Total decrease in net assets (81,789,954) (66,677,273)
Net assets
Beginning of year 633,180,912 699,858,185
End of year (including distributions in excess
of net investment income of $193,287 and
$110,047, respectively) $551,390,958 $633,180,912
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial highlights*
(For a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Year ended October 31
1993 1992*** 1991 1990 1989 1988
Net Asset Value,
Beginning of Period $8.50 $8.56 $7.47 $9.34 $9.15 $9.05
Investment Operations
Net Investment Income .45 .16 .21 .31 .39 .23
Net Realized and Unrealized Gain
(Loss) on Investments and Options .99 .74 1.87 (1.03) 1.00 1.37
Total from Investment Operations 1.44 .90 2.08 (.72) 1.39 1.60
Less Distributions from:
Net Investment Income (.45) (.16) (.21) (.31) (.39) (.27
Net Realized Gain
on Investments(b) (.21) (.80) (.75) -- (.31) (.23)
Paid-in Capital(b) -- -- (.03) (.84) (.50) (1.00)
Total Distributions (.66) (.96) (.99) (1.15) (1.20) (1.50)
Net Asset Value,
End of Period $9.28 $8.50 $8.56 $7.47 $9.34 $9.15
Total Investment Return
at Net Asset Value (%)(c) 17.68 11.15 29.29 (8.64) 16.30 19.81
Net Assets, End of Period
(in thousands) $551,391 $633,181 $699,858 $724,871 $1,138,983 $1,391,983
Ratio of Total Expenses to
Average Net Assets (%) 1.02 1.11 1.09 1.03 .82 .81
Ratio of Net Investment Income
to Average Net Assets (%) 5.06 1.87 2.56 3.65 4.20 2.57
Portfolio Turnover (%) 224.28 118.43 135.18 152.06 117.59 31.21
See page 20 for notes to financial highlights.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
For the period
Three April 19, 1985
months (commencement
ended Year ended of operations) to
October 31 July 31 July 31
1987 1987 1986 1985**
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.76 $11.40 $11.95 $11.71
Investment Operations
Net Investment Income .05 .20 .27 .12(a)
Net Realized and Unrealized Gain
(Loss) on Investments and Options .(2.34) 1.90 1.03 .12
Total from Investment Operations (2.29) 2.10 1.30 .24
Less Distributions from:
Net Investment Income (.02) (.37) (.40) --
Net Realized Gain
on Investments(b) (.40) (1.37) (1.45) --
Paid-in Capital(b) -- -- -- --
Total Distributions (.42) (1.74) (1.85) --
Net Asset Value,
End of Period $ 9.05 $11.76 $11.40 $11.95
Total Investment Return
at Net Asset Value (%)(c) (80.80)(d) 20.39 11.87 7.32(d)
Net Assets, End of Period
(in thousands) $1,497,312 $1,868,298 $1,026,462 $171,869
Ratio of Total Expenses to
Average Net Assets (%) .75(d) .78 .82 1.03(a)(d)
Ratio of Net Investment Income
to Average Net Assets (%) 1.79(d) 1.78 2.24 2.73(a)(d)
Portfolio Turnover (%) 49.66(e) 214.89 197.96 23.41(e)
*Financial highlights for periods ended through October 31, 1992 have been restated to conform with requirements issued
by the SEC in April, 1993.
**Activity for the period from March 5, 1985 to April 18, 1985 is not included.
***During fiscal 1992, the Fund expanded its investment flexibility to include corporate bonds, foreign securities,
warrants and restricted securities. Accordingly, results of operations prior to fiscal 1992, as presented above may not
reflect those that would have been achieved under the Fund's current investment policies (Note 1).
(a)Reflects a voluntary expense limitation in effect during the period. As a result of such limitation, expenses of the
Fund for the period ended July 31, 1985 reflect a reduction of less than $0.01 per share.
(b)See Note 1 to the Financial statements. For federal income tax purposes, $0.02 per share of net investment income
distributions were redesignated as distributions from paid-in capital for the year ended October 31, 1991, $0.02 per
share of paid-in-capital distributions were redesignated as distributions from net investment income for the year ended
October 31, 1990, and $0.02 per share of paid-in capital were redesignated as distributions from net realized gains for
the year ended October 31, 1989. For the year ended October 31, 1988, $0.148 per share of net realized capital gains
distributions represented return of capital for federal income tax purposes.
(c)Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(d)Annualized.
(e)Not annualized.
/TABLE
<PAGE>
Notes to
financial statements
October 31, 1993
Note 1
Significant
accounting
policies
The Fund is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment
company. The Fund seeks high current return by investing in a
diversified portfolio of equity and debt securities.
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 Investments for which market quotations are
readily available are stated at market value, which is determined
using the last reported sale price, or, if no sales are reported
- -- as in the case of some securities traded over-the-counter --
the last reported bid price, except that certain U.S. government
obligations are stated at the mean between the bid and asked
prices. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates
market value, and other investments are stated at fair value
following procedures approved by the Trustees. (See paragraph F
of Note 1 with respect to valuation of options outstanding).
B) TBA purchase commitments The Fund may enter into "TBA" (to be
announced) purchase commitments to purchase securities for a
fixed unit price at a future date beyond customary settlement
time. Although the unit price has been established, the principal
value has not been finalized. However, the amount of the
commitment will not fluctuate more than 2.0% from the principal
amount. The Fund holds, and maintains until settlement date, cash
or high-grade debt obligations in an amount sufficient to meet
the purchase price, or the Fund enters into offsetting contracts
for the forward sale of other securities it owns. TBA purchase
commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in the value of the Fund's other
assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, generally
according to the procedures described under "Security valuation"
above.
Although the Fund will generally enter into TBA purchase
commitments with the intention of acquiring securities for its
portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to
settlement if Putnam Management deems it appropriate to do so.
C) Joint trading account Pursuant to an exemptive order issued by
the Securities and Exchange Commission, the Fund may transfer
uninvested cash balances into a joint trading account along with
the cash of other registered investment companies managed by
Putnam Investment Management, Inc. (Putnam Management) (formerly
known as Putnam Management Company, Inc.), the Fund's Manager, a
wholly-owned subsidiary of Putnam Investments, Inc. (formerly
known as The Putnam Companies, Inc.), and certain other accounts.
These balances may be invested in one or more repurchase
agreements and/or short-term money market instruments.
D) Repurchase agreements The Fund, or any joint trading account,
through its custodian, receives delivery of the underlying
securities, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price,
including accrued interest. The Fund's Manager is responsible for
determining that the value of these underlying securities is at
all times at least equal to the resale price, including accrued
interest.
E) 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 and dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are
recorded as soon as the Fund is informed of the ex-dividend date.
F) Option accounting principles When the Fund writes a call or
put option, an amount equal to the premium received by the Fund
is included in the Fund's "Statement of assets and liabilities"
as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the
current market value of the option written. The current market
value of a written option is the last sale price or, in the
absence of a sale, the last offering price. If an option expires
on its stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or loss
if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any
unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written
call option is exercised, the Fund realizes a gain or loss from
the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. If a written
put option is exercised, the amount of the premium originally
received reduces the cost of the security which the Fund
purchases upon exercise of the option.
The Fund writes covered call options; that is, options for which
it holds the underlying security or its equivalent. Accordingly,
the risk in writing a call option is that the Fund relinquishes
the opportunity to profit if the market price of the underlying
security increases and the option is exercised. In writing a put
option, the Fund assumes the risk of incurring a loss if the
market price of the underlying security decreases and the option
is exercised.
The premium paid by the Fund for the purchase of an option is
included in the Fund's "Statement of assets and liabilities" as
an investment and is subsequently "marked-to-market" to reflect
the current market value of the option. If an option the Fund has
purchased expires on the stipulated expiration date, the Fund
realizes a loss in the amount of the cost of the option. If the
Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether the proceeds from the closing
sale transaction are greater or less than the cost of the option.
If the Fund exercises a call option, the cost of the securities
acquired by exercising the call is increased by the premium paid
to buy the call. If the Fund exercises a put option, it realizes
a gain or loss from the sale of the underlying security and the
proceeds from such sale are decreased by the premium originally
paid.
Stock index options are similar to options on individual
securities in that the purchaser of an index option acquires the
right to buy, and the writer undertakes the obligation to sell,
an index at a stated exercise price during the term of the
option. Instead of giving the right to take or make actual
delivery of securities, the holder of a stock index option has
the right to receive a cash exercise settlement amount. This
amount is equal to the amount by which the fixed exercise price
of the option exceeds (in the case of a put) or is less than (in
the case of a call) the closing value of the underlying index on
the date of the exercise, multiplied by a fixed "index
multiplier." The Fund writes options on stock indices only to the
extent that it holds in its portfolio underlying securities,
which, in the judgment of Putnam Management, correlate closely
with the stock index.
G) 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 on securities
held and excise tax on income and capital gains.
H) Distributions to shareholders Distributions to shareholders
are recorded by the Fund on the ex-dividend date. Distributions
are declared from projected net investment income and net
realized short-term capital gains that the Fund is likely to earn
over the longer term.
I) Equalization The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and
costs of repurchases of shares of beneficial interest equivalent,
on a per share basis, to the amount of distributable investment
income on the date of the transaction is credited or charged to
undistributed net investment income. As a result, undistributed
net investment income per share is unaffected by sales or
repurchases of Fund shares.
Note 2
Management fee,
administrative
services, and
other transactions
Compensation of Putnam Investment Management, for management and
investment advisory services is paid quarterly based on the
average net assets of the Fund for the quarter. Such fee is based
on the following annual rates: 0.65% of the first $500 million of
average net assets, 0.55% of the next $500 million, 0.50% of the
next $500 million, 0.45% of any amount over $1.5 billion. This
fee is subject, under current law, to reduction in any year to
the extent that expenses (exclusive of distribution fees,
brokerage, interest and taxes) of the Fund exceed 2.5% of the
first $30 million of average net assets, 2.0% of the next $70
million and 1.5% of any amount over $100 million, and by the
amount of certain brokerage commissions and fees (less expenses)
received by affiliates of the Manager on the Fund s portfolio
transactions.
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 the year ended October 31, 1993, the Fund paid
$26,194 for these services.
Trustees of the Fund receive an annual Trustee's fee of $1,520,
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 the Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided
by Putnam Investor Services, a division of PFTC. Fees paid for
these investor servicing and custodial functions for the year
ended October 31, 1993, amounted to $793,007. Investor servicing
and custodian fees reported in the Statement of operations for
the year ended October 31, 1993, have been reduced by credits
allowed by PFTC.
The Fund has adopted a distribution plan ("The Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940. The purpose
of the Plan is to compensate Putnam Mutual Funds Corp. (formerly
known as Putnam Financial Services, Inc.), a wholly-owned
subsidiary of Putnam Investments, Inc., for services provided and
expenses incurred by it in distributing shares of the Fund. The
Trustees have approved payment by the Fund to Putnam Mutual Funds
Corp. at an annual rate of 0.25% of the Fund's average net
assets. For the period ended October 31, 1993, the Fund paid
$1,406,671 in distribution fees.
During the year ended October 31, 1993, Putnam Mutual Funds
Corp., acting as an underwriter, received net commissions of
$63,319 from the sale of shares of the Fund.
Note 3
Purchases
and sales of
securities
During the year ended October 31, 1993, purchases and sales of
investment securities other than U.S. government obligations and
short-term investments aggregated $617,270,689 and $787,061,316,
respectively. Purchases and sales of U.S. government obligations
aggregated $642,385,803 and $543,011,319, respectively. In
determining the net gain or loss on securities sold, the cost of
securities has been determined on the identified cost basis.
Written options on stock indices during the year are summarized
as follows:
Number of Premiums
Contracts Received
Options outstanding at beginning of year 4,000 $3,738,125
Options expired (4,000) (3,738,125)
Written options outstanding at end of year -- $ --
Purchased option transactions during the year are summarized as
follows:
Number of
Contracts Cost
Options outstanding at beginning of year 4,000 $6,870,000
Options expired (4,000) (6,870,000)
Purchased options outstanding at end of year -- $ --
<PAGE>
<TABLE>
<CAPTION>
Note 4
Capital shares
At October 31, 1993, there was an unlimited number of shares of beneficial interest
authorized. Transactions in capital shares were as follows:
<S> <C> <C> <C> <C>
Year ended October 31
1993 1992
Shares Amount Shares Amount
Shares sold 2,314,999 $ 20,453,900 2,988,710 $ 25,508,714
Shares issued in connection with
reinvestment of distributions 2,676,939 23,302,220 4,333,326 36,374,197
4,991,938 43,756,120 7,322,036 61,882,911
Shares repurchased (20,087,445) (178,674,037) (14,631,240) (124,584,724)
Portion represented by undistributed
net investment income -- 225,742 -- 57,190
Net decrease (15,095,507) $(134,692,175) (7,309,204) $(62,644,623)
/TABLE
<PAGE>
Federal tax
information
For the fiscal year ended October 31, 1993, the Fund made
distributions of $0.45 per share from net investment income gain,
constitute "dividend income" for federal income tax purposes. The
Fund has designated 18.53% of the investment income as qualifying
for the dividends-received deductions for corporations.
In addition, the long-term capital gain of $0.21 per share is
taxable as "capital gains" for federal income tax purposes.
The Form 1099 you will receive in January 1994 will show the tax
status of all distributions paid to your account in calendar
1993.
As required by law, your Fund reports to the Internal Revenue
Service on a calendar year basis the amount of distributions paid
to each shareholder.
Fund
performance
supplement
Putnam Managed Income Trust is a fund managed for current return
through a diversified portfolio of equity and fixed income
securities.
The Lehman Brothers Government/Corporate Bond Index is an
unmanaged list of publicly issued U.S. Treasury obligations, debt
obligations of U.S. government agencies (excluding
mortgage-backed securities), fixed rate, nonconvertible
investment-grade corporate debt securities and U.S.
dollar-denominated SEC-registered nonconvertible debt issued by
foreign governmental entities or international agencies and
assumes reinvestment of all distributions.
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.
<PAGE>
Putnam
Managed
Income
Trust
Fund information
Investment manager
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
Marketing services
Putnam Mutual Funds Corp.
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
Price Waterhouse
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.
<PAGE>
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
Peter Carman
Vice President
Thomas V. Reilly
Vice President
Edward Bousa
Vice President
and Fund Manager
William N. Shiebler
Vice President
John D. Hughes
Vice President
and Treasurer
Paul O'Neil
Vice President
Beverly Marcus
Clerk and Assistant
Treasurer
Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
Hans H. Estin, John A. Hill,
Elizabeth T. Kennan, Lawrence J. Lasser,
Robert E. Patterson, Donald S. Perkins,
George Putnam, III, A.J.C. Smith,
W. Nicholas Thorndike
<PAGE>
This report is for the information of shareholders of Putnam
Managed 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.
A14-9689
- ----------------
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
- ------------------
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS:
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.
