[PUTNAM BALANCE SCALES LOGO]
Putnam
Managed
Municipal
Income
Trust
Annual
Report
October 31, 1993
For investors seeking
high current income
exempt from federal
income tax through
a diversified portfolio
of tax-exempt municipal
securities
<TABLE>
<CAPTION>
<S> <C>
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Annual Report
6 Report of Independent Accountants
7 Portfolio of investments owned
14 Financial statements
23 Fund performance supplement
24 Federal tax information
27 Your Trustees
</TABLE>
A member
of the Putnam
Family of Funds
<PAGE>
How your
fund performed
For periods ended October 31, 1993
<TABLE>
<CAPTION>
Total return*
Lehman
Fund Brothers
Market Municipal
NAV price Bond Index
<S> <C> <C>
1 year 20.20% 24.84% 14.10%
3 years 54.75 62.98 38.70
annualized 15.67 17.68 11.52
Life-of-fund
(since 2/24/89) 70.20 65.48 59.48
annualized 12.01 11.34 10.46
</TABLE>
<TABLE>
<CAPTION>
Share data (common shares) Market
NAV price
<S> <C> <C>
October 31, 1992 $ 9.81 $ 9.875
October 31, 1993 $ 10.88 $11.375
</TABLE>
<TABLE>
<CAPTION>
Distributions
(common shares) Investment Capital
12 months ended Number income gains Total
<S> <C> <C> <C> <C>
October 31, 1993 12 $0.762 $0.079 $0.841
</TABLE>
<TABLE>
<CAPTION>
(preferred shares)
12 months ended
October 31,
1993 Number Series Total
<S> <C> <C> <C>
550 A $2,585.73
550 B $2,567.72
650 C $2,532.88
</TABLE>
<TABLE>
<CAPTION>
Current returns Taxable
(common shares) equivalents+
at the end of the period NAV Market NAV Market
price price
<S> <C> <C> <C> <C>
Current dividend rate 7.00% 6.70% 11.59% 11.09%
</TABLE>
* 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, and income from this fund may be
subject to state and local taxes. For some investors, investment income may
also be subject to the alternative minimum tax.
+ Assumes maximum 39.6% federal tax rate. 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 adviser for 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 rate at which a taxable investment would
have to generate income to equal the fund's current dividend rate or yield.
Please see the fund performance supplement on page 23 for additional
information about performance comparisons.
<PAGE>
From the
Chairman
[George Putnam photo]
George Putnam
Chairman
of the Trustees
Dear Shareholder:
I'm pleased to report that for the 12 months ended October 31, 1993, Putnam
Managed Municipal Income Trust continued to provide a strong total return and
a steady stream of tax-free income, while leading its competitive universe.
Once again, the fund outdistanced its peers in the closed-end high-yield
municipal bond fund category, as tracked by Lipper Analytical Services.
According to Lipper, your fund ranked first in the high-yield municipal bond
fund category for calendar year-to-date performance as of October 31, 1993.
It also ranked first out of 12 funds for one- and two-year periods, and first
out of 11 funds for the three-year period ended October 31, 1993. (Lipper
rankings vary over time and do not reflect sales charges.)
In addition, based on risk-adjusted performance through October 31, 1993,
your fund received a five-star rating from Morningstar's Mutual Fund Values,
the independent mutual fund research firm that rates a fund relative to funds
with similar objectives. Based on risk-adjusted 3-, 5- and 10-year total
returns, as applicable, and adjusted for sales charges, the ratings range
from one to five stars, with five being the highest. While past performance
is no guarantee of future results, accolades such as these reflect the
experience and skill Putnam Management brings to the job of managing your
money.
A year ago, when discussing the tax-exempt markets, we reported that "the
volume of new issues broke all records. . . ." In the forthcoming year, we
expect the reverse. Going into 1994, we see a reduced number of municipal
securities coming to market, but a limited supply of bonds could enhance the
value of existing securities in the portfolio, adding to your fund's total
return.
In the months ahead, Fund Manager James Erickson and his team will be
analyzing the municipal market to determine if any changes to the fund's
leveraging strategies are needed, and we will continue to be diligent in
researching securities that offer value that might go unnoticed by others and
exploiting inefficiencies in the bond market to realize capital gains.
Respectfully yours,
[Signature of George Putnam]
George Putnam
December 15, 1993
<PAGE>
Report from
Putnam Management
Top 10 holdings (10/31/93)*
OH State Air Quality Dev. Auth. Poll. Control Rev. Bonds
Metro. Wtr. dist. Southern CA Waterworks RIBS
Tamp, Cap. Impt. Program Rev. Bonds
U. of CA Rev. Bonds
Burke Cnty., Dev. Auth. Poll. Control Rev. Bonds
Dallas-Fort Worth, Intl. Arpt. fac. Impt. Corp. Rev. Bonds
NY City, General Obligation Bonds
Burke Cnty., Dev. Auth. Poll Control Rev. Bonds (GA Pwr. Co.-Vogtle Project)
WA State Pub. Pwr. Supply Syst. Rev. Bonds
Tulsa, Muni. Arpt. Trust Rev. Bonds
*Reflects a % of the total portfolio based on net assets.
For the fiscal year ended October 31, 1993, Putnam Managed Municipal Income
Trust posted a total return of 20.20% at net asset value. In addition, your
fund's 7.00% dividend rate at net asset value at fiscal year's end was
equivalent to a 11.59% taxable rate for investors in the 39.6% maximum
federal income tax bracket. Although most taxpayers do not pay taxes at that
rate we encourage you to evaluate your fund's income on this tax-equivalent
basis.
Some of your fund's income is generated by the selective use of leveraging
strategies. With this approach, the fund issues preferred shares which pay
dividends at prevailing short-term rates. These shares are sold to corporate
and institutional investors; the resulting assets are then invested in
longer-term bonds with higher yields. The difference between the rates paid
to holders of preferred shares and the rates earned by the fund augment the
flow of income to holders of common shares.
Staying the course Although your fund balances portfolio holdings between
investment-grade and lower-rated, higher-yielding bonds, the macroeconomic
factors that prompted us to focus primarily on higher-quality bonds with
relatively long maturities prevailed throughout the fiscal year.
In general, the period was marked by slow economic growth, low inflation and
declining interest rates. Some of the factors that contributed to this
environment were reductions in defense spending, cutbacks or only marginal
increases in federal fiscal spending, and the paying down of debt on the part
of the government, corporations and consumers. Consumers' concerns about
unemployment further dampened prospects for a strong economic recovery. In
addition, recessions in many foreign countries and an increase in global
competition reduced the demand for U.S. goods and services.
The economy was also affected by a demographic element. Baby-boomers, who
were the big spenders a few years ago, are now moving into a different
era--one where college tuitions and, in some cases, retirement loom large in
the not-too-distant future. Typically, people who fuel a recovery are
younger, new entrants to the workforce, but demographically, the numbers for
this younger group are flat to declining.
A favorable outlook for munis Against this backdrop, prospects for the
municipal bond market remain positive. The tax increases on high income
earners voted into law last summer are retroactive to January 1, 1993. When
these new taxes are added to state and local taxes, higher-income investors
in some states have a combined tax rate of nearly 50%. As investors pursue
the few remaining avenues of tax relief, tax-free bonds currently present
attractive value relative to taxable bonds.
A changing supply/demand balance Over the past couple of years, the supply of
municipal bonds has been relatively plentiful. This is because, as interest
rates declined, municipalities refinanced most of their debt (in the same way
many home owners refinanced their mortgages at lower interest rates). Well
over 50% of new municipal bonds issued in the past couple of years have been
for the purposes of refunding old bonds, rather than for new projects. Going
into 1994, we expect that the bulk of new municipal issuance will be for new
projects, but this means that relatively few municipal bonds will come to
market. The total market value of new issues could be as little as $150
billion--25%-50% lower than new issuance in 1993. If this occurs, it will
create a large imbalance between supply and demand; and if demand for
municipal bonds rises, the prices of existing bonds will also increase. Both
events, if they transpire, could have a positive effect on your fund's total
return, although, of course there can be no assurance of this.
Looking to the new year Going into 1994, we believe the economic climate will
be largely unchanged. We feel the economic recovery will continue to be slow
but steady; and while interest rates and inflation may edge up somewhat, we
do not anticipate any steep upward climb. These conditions create a positive
environment for tax-free investing, and with our extensive research
capabilities, we should be able to keep your fund's portfolio well supplied
with securities that offer both genuine value and attractive yields.
<PAGE>
Putnam
Managed
Municipal
Income
Trust
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 ("The Fund"), including the portfolio
of investments owned, as of October 31, 1993, the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended and the "Financial
Highlights" for each of the four years in the period then ended, 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 Fund's management. Our responsibility is to express an opinion on
these financial statements and "Financial Highlights" based on our audits.
We conducted our audits in accordance with 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 October 31, 1993 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 October 31, 1993, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the "Financial
Highlights" for each of the four years in the period then ended 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
December 14, 1993
<PAGE>
Portfolio of
investments owned
October 31, 1993
Municipal Bonds and Notes (100.4%)(a)
<TABLE>
<CAPTION>
Principal Amount Ratings(b) Value
<C> <C> <C> <C>
Alabama (1.0%)
$ 1,825,000 Columbia, Indl. Dev. Board A $ 1,993,812
Poll. Control Rev. Bonds
(AL Pwr. Co.--Farley
Plant),
Ser. B, 10-7/8s, 11/1/14
4,450,000 Cullman, Med. Park South Baa 4,572,375
Med. Clinic Board Rev.
Bonds 6-1/2s, 2/15/13
6,566,187
Arizona (1.1%)
3,000,000 AZ Hlth. Fac. Auth. Hosp. Ba 3,247,500
Syst. Rev. Bonds (St.
Luke's Hosp. Syst.), Ser.
A, 10-1/8s, 11/1/15
1,880,000 Flagstaff, Street & Highway AAA 1,835,350
User Rev. Bonds Municipal
Bond Insurance Assn.
(MBIA), 4-3/4s, 7/1/07
2,000,000 Gila Cnty., Indl. Dev. Baa 2,317,500
Auth. Poll. Control Rev.
Bonds Ser. 85, 8.9s, 7/1/06
7,400,350
California (17.4%)
6,800,000 CA Statewide Cmnty. Dev. Aaa 6,825,500
Auth. Certif. of
Participation (Sutter Hlth.
Obligation Group), MBIA,
5-1/2s, 8/15/23
6,000,000 Central Valey, Fin. Auth. BBB 6,120,000
Rev. Bonds (Cogeneraton
Project), 6.1s, 7/1/13
2,775,000 Corona, Certif. of BB/P 3,087,187
Participation (Vista Hosp.
Syst.), Ser. B, 9-1/2s,
7/1/20
2,760,000 Glendale, Hosp. Rev. Bonds A 2,991,150
(Verdugo Hills Hosp.),
Ser. A, 10-1/8s, 1/1/15
4,900,000 Irvine Ranch, Wtr. Dist. VMIG1 4,900,000
Certif. of Participation
Variable Rate Demand Note
(VRDN) 2.45s, 8/1/16
$ 3,500,000 Irvine, Apt. Dev. VRDN VMIG1 $ 3,500,000
2.55s, 4/1/22
5,000,000 Los Angeles Cnty., Metro. Aaa 4,750,000
Trans. Auth. Sales Tax Rev.
Bonds Ser. A, Federal
Guaranty Insurance
Corporation (FGIC), 5s,
7/1/21
7,500,000 Los Angeles, Waste Wtr. Aaa 9,815,625
Syst. Residual Interest
Bonds (RIBS) Ser. 91-5,
American Municipal Bond
Assurance Corp. (AMBAC),
11.001s, 6/1/21 (acquired
12/17/91, cost
$7,837,500)(c)
18,000,000 Metro. Wtr. Dist. Southern Aa 23,692,500
CA Waterworks RIBS 10.393s,
7/1/18 (acquired 8/5/91,
cost $17,640,000)(c)
7,440,000 Redding, Joint Pwrs. Fin. A 6,751,800
Auth. Solidwaste & Corp.
Yard Rev. Bonds Ser. A, 5s,
1/1/18 (d)
U. of CA Rev. Bonds
15,000,000 (UCSD Med. Ctr. Satellite BBB 16,968,750
Med. Fac.), 7.9s, 12/1/19
(acquired 3/2/92, cost
$15,687,450)(c)
10,000,000 (Multi. Purpose Project), Aaa 9,900,000
Ser. C, AMBAC, 5.2s,
9/1/10
9,000,000 (Multi. Purpose Project), Aaa 8,561,250
Ser. C, AMBAC, 5s, 9/1/23
6,070,000 Washington TWP. Hosp. Dist. A 5,774,088
Rev. Bonds 5-1/4s, 7/1/23
113,637,850
Colorado (3.2%)
Denver, City & Cnty. Arpt. Rev.
Bonds
8,050,000 Ser. D, 7-3/4s, 11/15/21 Baa 8,985,812
6,250,000 Ser. A, 7-1/4s, 11/15/25 Baa 6,859,375
$ 5,000,000 Ser. C, 6-3/4s, 11/15/13 Baa $ 5,300,000
21,145,187
Florida (6.9%)
8,065,000 Dade Cnty., Hlth. Fac. Ba 8,065,000
Auth. Rev. Bonds (St.
Francis Hosp.--Miami
Beach), 5s, 7/1/16
2,000,000 Hillsborough Cnty., Ba 2,282,500
Aviation Auth. Special Fac.
Rev. Bonds (USAir Project),
8.6s, 1/15/22
7,900,000 Lee Cnty., Board of Aaa 9,272,625
Directors Hosp. RIBS (Lee
Memorial Hosp.), MBIA,
9.524s, 3/26/20
3,000,000 Miami, Hlth. Fac. Auth. AAA/P 3,536,250
Rev. Bonds (Cedars Med.
Ctr.), Ser. A, 8.3s,
10/1/07
3,000,000 Palm Beach Cnty., Hlth. BBB 3,595,763
Fac. Auth. Rev. Bonds (JFK
Med. Ctr. Inc. Project),
8-7/8s, 12/1/18
16,350,000 Tampa, Cap. Impt. Program BBB 18,107,625
Rev. Bonds Ser. B, 8-3/8s,
10/1/18
44,859,763
Georgia (6.0%)
Burke Cnty., Dev. Auth.
Poll. Control Rev. Bonds
13,450,000 (GA Pwr. Co.--Vogtle Aaa 14,795,000
Project), Ser. 84, Bond
Investors Guaranty
Insurance, 12s, 10/1/14
5,125,000 (GA Pwr. Co.--Vogtle A 5,567,030
Project), Ser. 2, 11-5/8s,
9/1/14
1,650,000 (Oglethorpe Pwr. Co.--Vogtle A 1,683,000
Project), 10s, 1/1/10
$12,400,000 (GA Pwr. Co.--Vogtle Aaa $ 13,702,000
Project), Ser. 84, FGIC
113/4s, 11/1/14
3,250,000 Gwinnett Cnty., Indl. Dev. BBB/P 3,603,438
Auth. Rev. Bonds (Kawneer
Co. Inc. Project), Ser. 84,
9-1/2s, 6/1/15
39,350,468
Illinois (3.0%)
5,000,000 Chicago, O'Hare Intl. Arpt. A 5,537,500
Rev. Bonds Ser. B, 10-3/8s,
1/1/09
Chicago, O'Hare Intl. Arpt.
Special Fac. Rev. Bonds
5,608,000 (United Airlines Inc.), Baa 6,519,300
Ser. B, 8.95s, 5/1/18
3,375,000 (United Airlines Inc.), Ser. Baa 3,944,530
84A, 8.85s, 5/1/18
1,925,000 (United Airlines Inc.), Ser. Baa 2,249,844
84B, 8.85s, 5/1/18
2,500,000 IL Dev. Fin. Auth. B/P 1,550,000
Retirement Hsg. Rev. Bonds
(Regency
Park--Lincolnwood), Ser. A,
10-1/4s, 4/15/19
19,801,174
Iowa (0.9%)
IA Fin. Auth. Hlth. Care Fac.
Rev. Bonds
3,000,000 (Mercy Hlth. Initiatives BB/P 3,183,750
Project), 9.95s, 7/1/19
2,350,000 (Mercy Hlth. Initiatives BB/P 2,491,000
Project), 9.85s, 7/1/09
5,674,750
Kansas (1.5%)
7,500,000 Burlington, Poll. Control Aaa 9,590,625
RIBS Ser. 91-4, MBIA,
10.919s, 6/1/31 (acquired
12/17/91, cost
$7,800,000)(c)
Kentucky (0.5%)
$3,290,000 Kenton Cnty., Arpt. Special Ba $ 3,150,175
Fac. Rev. Bonds (Delta
Airlines Project), Ser. A,
6-1/8s, 2/1/22
Louisiana (4.5%)
5,000,000 Hodge, Combined Util. Rev. B/P 4,981,250
Bonds (Stone Container
Corp.), 9s, 3/1/10
6,000,000 Lake Charles, Harbor & Ba 6,937,500
Term. Dist. Port Fac. Rev.
Bonds (Trunkline Co.
Project), 7-3/4s, 8/15/22
Port of New Orleans, Indl.
Dev. Rev. Bonds
4,000,000 (Continental Grain Co. BB 4,855,000
Project), Ser. A, 14-1/2s,
2/1/02
3,500,000 (Continental Grain Co. BB 4,243,750
Project), 14-1/2s, 1/1/02
2,000,000 West Feliciana Parish, Baa 2,215,000
Poll. Control Rev. Bonds
(Gulf States Util. Co.
Project)
Ser. C, 12s, 5/1/14
5,500,000 West Feliciana Parish, Aa 6,084,375
Poll. Control Rev. Bonds
(Gulf States Util. Co.
Project)
Ser. A, 10-5/8s, 5/1/14
29,316,875
Maine (0.5%)
3,000,000 ME Fin. Auth. Solid Waste Baa 3,393,750
Recycling Fac. Rev. Bonds
(Great Northern Paper
Project), 7-3/4s, 10/1/22
Maryland (0.8%)
4,000,000 MD State Hlth. & Higher BBB 5,105,000
Edl. Fac. Auth. Rev. Bonds
(Doctors Cmnty. Hosp.),
8-3/4s, 7/1/12
Massachusetts (3.1%)
$7,000,000 MA State G.O. Bonds Ser. B, VMIG1 $ 7,000,000
VRDN, 2.6s, 12/1/97
5,000,000 MA State Indl. Fin. Agcy. B/P 5,725,000
Resource Recvy. Rev. Bonds
(Southeastern MA Project),
Ser. B, 9-1/4s,
7/1/15
MA State Indl. Fin. Agcy.
Rev. Bonds
2,000,000 (Pioneer Valley Living B/P 1,982,500
Ctr.), 10s, 10/1/20
2,000,000 (Orchard Cove Inc.), 9s, BB/P 2,227,500
5/1/22
2,925,000 MA State Indl. Fin. Agcy. Baa/P 3,096,844
Tunnel Rev. Bonds (MA
Tpk.), 9s, 10/1/20
20,031,844
Michigan (5.9%)
5,000,000 Detroit, Dev. Fin. Auth. BBB/P 6,256,250
Tax Increment Rev. Bonds
ser. A, 9-1/2s, 5/1/21
1,500,000 Greater Detroit Resource BBB 1,648,125
Recvy. Auth. Rev. Bonds
Ser. G, 9-1/4s, 12/13/08
4,780,000 Highland Park, Hosp. Fin. B 5,114,600
Auth. Fac. Rev. Bonds (MI
Hlth. Care Corp. Project),
Ser. A, 9-7/8s, 12/1/19
MI State Hosp. Fin. Auth.
Rev. Bonds (Detroit--Macomb
Hosp. Corp.)
3,000,000 Ser. A, 7.4s, 6/1/13 B 3,011,250
4,800,000 Ser. A, 7.3s, 6/1/01 B 4,842,000
9,300,000 MI State Strategic Fund A/P 10,648,500
Rev. Bonds (Environmental
Research Project), 8-1/8s,
10/1/14
4,000,000 Midland Cnty., Econ. Dev. B/P 4,655,000
Corp. Poll. Control Rev.
Bonds Ser. B, 9-1/2s,
7/23/09
$ 2,150,000 Wayne Charter Cnty., B/P $ 2,340,813
Special Arpt. Fac. Rev.
Bonds (Republic Airlines
Inc. Project), Ser. C,
10-3/8s, 12/1/15
38,516,538
Minnesota (0.4%)
2,000,000 Chaska, Indl. Dev. Rev. BB/P 2,382,500
Bonds (Lifecore Biomedical
Inc. Project), 10-1/4s,
9/1/20
Mississippi (1.2%)
Claiborne Cnty., Poll.
Control Rev. Bonds
2,500,000 (Middle South Energy BBB/P 3,112,500
Inc.), Ser. C, 9-7/8s,
12/1/14
4,100,000 (Middle South Energy BBB/P 5,032,750
Inc.), Ser. A, 9-1/2s,
12/1/13
8,145,250
Missouri (0.8%)
4,000,000 Kansas City, Indl. Dev. BBB/P 4,505,000
Auth. Hlth. Fac. Rev. Bonds
(Park Lane Med. Ctr.
Project), 8-3/4s, 1/1/15
1,000,000 MO State Hlth. & Ed. Auth. VMIG1 1,000,000
VRDN 2.35s, 6/1/14
5,505,000
Nebraska (2.0%)
NE Investment Fin. Auth.
Single Fam. Mtge. RIBS
1,800,000 Ser. B, Government National Aaa 2,164,500
Mortgage Association (GNMA)
Coll., 11.895s, 3/15/22
10,150,000 Ser. 1, MBIA, 8-1/8s, Aaa 10,809,750
8/15/38
12,974,250
Nevada (1.5%)
Clark Cnty., Indl. Dev. Rev. Bonds
$ 4,000,000 (NV Pwr. Co. Project), Baa $ 4,540,000
7.8s, 6/1/20
4,850,000 (Southwest Gas Corp.), Ba 5,389,562
Ser. B, 7-1/2s, 9/1/32
9,929,562
New Hampshire (0.9%)
2,275,000 NH Higher Edl. & Hlth. Fac. BAA/P 2,465,531
Auth. Rev. Bonds (Alice
Peck Day Memorial Hosp.
Project), 9-3/8s, 11/1/20
2,800,000 NH State Indl. Dev. Auth. Baa 3,454,500
Poll. Control Rev. Bonds
(United Illuminating Co.),
Ser. B, 10-3/4s, 10/1/12
5,920,031
New Jersey (3.4%)
3,000,000 NJ Econ. Dev. Auth. Elec. BB/P 3,390,000
Energy Fac. Rev. Bonds
(Vineland Cogeneration L.P.
Project), 7-7/8s, 6/1/19
2,000,000 NJ Econ. Dev. Auth. Rev. A/P 2,287,500
Bonds (Tevco Inc. Project),
8-1/8s, 10/1/09
NJ Hlth. Care Fac. Fin.
Auth. Rev. Bonds
4,680,000 (Mountainside Hosp.), Aa 5,206,500
Ser. A, Federal Housing
Administration Insd. 9s,
8/1/25
5,000,000 (St. Elizabeth Hosp.), Baa 5,618,750
Ser. B, 8-1/4s, 7/1/20
5,000,000 Union Cnty., Util. Auth. A 5,512,500
Solid Waste Rev. Bonds Ser.
A, 7.2s, 6/15/14
22,015,250
New York (7.0%)
NY City, General Obligation
Bonds
$ 7,000,000 Ser. F, 8-1/4s, 11/15/10 Baa $ 8,452,500
4,925,000 (Group C), Ser. D, 8s, Aaa 6,187,031
8/1/18
12,000,000 Ser. B, 7-1/2s, 2/1/04 Baa 13,785,000
5,000,000 Ser. C, 7s, 2/1/12 Baa 5,350,000
6,000,000 Ser. D, 7s, 2/1/07 Baa 6,630,000
4,970,000 NY State Dorm. Auth. Rev. Baa 5,094,250
Bonds (City U.), Ser. E,
5.7s, 7/1/05
45,498,781
North Dakota (0.5%)
2,950,000 ND State Hsg. Fin. Agcy. Aa 3,167,563
Single Fam. Mtge. Rev.
Bonds Ser. A, 8-3/8s,
7/1/21
Ohio (4.5%)
1,950,000 Dayton, Special Fac. Rev. B/P 2,340,000
Bonds (Emery Air Freight
Corp.), Ser. A, 12-1/2s,
10/1/09
965,000 Hamilton Cnty., Indl. Dev. D/P 482,500
Rev. Bonds (Provident
Assn.), 9s, 12/1/08(e)
1,500,000 Hudson, Fac. Rev. Bonds B/P 1,545,000
(Laurel Lake Project),
Ser. A, 10-3/4s, 2/1/18
20,000,000 OH State Air Quality Dev. Aaa 24,750,000
Auth. Poll. Control Rev.
Bonds (Cleveland Co.
Project), FGIC, 8s, 12/1/13
29,117,500
Oklahoma (2.2%)
3,000,000 Oklahoma Cnty., Indl. Auth. BB/P 3,262,500
Rev. Bonds (Epworth Villa
Project), Ser. A, 10-1/4s,
4/1/19
10,000,000 Tulsa, Muni. Arpt. Trust Baa 10,875,000
Rev. Bonds (AMR Corp.),
7.6s, 12/1/30
14,137,500
Pennsylvania (3.4%)
$ 4,000,000 Allegheny Cnty., Indl. Dev. Ba $ 4,505,000
Auth. Arpt. Special
Facility Rev. Bonds (USAir
Inc. Project), Ser. B,
8-1/2s,
3/1/21
4,000,000 Geisinger, Hlth. Syst. Rev. Aa 4,325,000
Bonds Ser. A, 5.45s, 7/1/22
6,000,000 PA State Higher Edl. Aaa 7,237,500
Assistance Agcy. Student
Loan RIBS Ser. B, MBIA,
12.079s, 3/1/20
Philadelphia Wtr. & Swr. Rev. Bonds
4,000,000 5.2s, 6/15/05 Aaa 4,110,000
4,000,000 4.8s, 6/15/05 Aaa 1,725,000
21,902,500
Puerto Rico (0.3%)
1,900,000 Cmnwlth. of Puerto Rico, VMIG1 1,900,000
Hwy. & Trans. Auth. VRDN
Ser. X, 2.2s, 7/1/99
South Carolina (0.8%)
5,000,000 SC State Hsg. Fin. & Dev. BBB 5,450,000
Auth. Multi-Fam. Mtge. Rev.
Bonds 8-1/2s, 10/1/21
Tennessee (1.5%)
8,840,000 Metro. Nashville & Davidson A 9,712,950
Cntys., Hlth. & Edl. Fac.
Rev. Bonds (Vanderbilt U.),
Ser. A, 10-1/2s, 12/1/14
Texas (9.1%)
3,225,000 Bexar Cnty., Hlth. Fac. BB 3,220,968
Dev. Corp. Rev. Bonds
(Heartway Corp.), Ser. A-1,
10-1/4s, 3/1/19
7,250,000 Brazos River, Poll. Control Baa 8,301,250
Auth. Rev. Bonds (TX Utils.
Elec. Co. Project), Ser. A,
7-7/8s, 3/1/21
$ 5,840,000 Conroe, Independent School Aaa $ 5,642,900
Dist. Rev. Bonds 4-3/4s,
2/1/08(d)
Dallas-Fort Worth, Intl.
Arpt. Fac. Impt. Corp. Rev.
Bonds
3,000,000 (Delta Airlines, Inc.), Ba 3,247,500
7.6s, 11/1/11
13,000,000 (American Airlines, Inc.), Baa 14,023,750
7-1/2s, 11/1/25
1,154,831 Harris Cnty., Indl. Dev. B/P 1,163,492
Corp. Arpt. Fac. Rev. Bonds
(Continental Airlines
Project), 7.95s, 7/1/19
Houston, Hsg. Fin. Corp.
Single Fam. Mtge. Rev.
Bonds
3,061,000 Ser. 84A, 10-7/8s, 2/15/16 Baa 3,175,788
2,430,000 (Lomas & Nettleton Baa 2,505,938
Administration Co.), Ser.
B, 10-3/8s, 12/15/13
3,825,000 North Central TX Hlth. Fac.
Dev. Corp. Rev. Bonds
(U. Med. Ctr. Inc. BBB/P 4,044,938
Project), 7-3/4s, 4/1/17
Southeast TX Hsg. Fin.
Corp. Multi-Fam. Rev. Bonds
3,000,000 (Bayou Park Village Apt. B/P 3,082,500
Project), Ser. B, 10.175s,
8/1/16
2,500,000 (Promenade Place Apts. B/P 2,543,750
Project), Ser. B, 9-1/2s,
8/1/16
5,000,000 (Pavilion Place Apts. BBB/P 5,243,750
Project), Ser. A, 7.6s,
7/1/16
$ 3,000,000 Tarrant Cnty., Hlth. Fac. B/P $ 3,288,750
Dev. Corp. Hosp. Rev. Bonds
(Cmnty. Hlth. Care
Foundation Inc. Project),
10-1/8s, 4/1/21
59,485,274
Virginia (1.8%)
5,400,000 Fredericksburg, Indl. Dev. Aaa 6,480,000
Auth. Hosp. Fac. RIBS FGIC,
10.239s, 8/15/23
5,000,000 Winchester Indl. Dev. Auth. Aaa 5,187,500
Hosp. VRDN AMBAC, 5.39s,
1/1/15
11,667,500
Washington (2.8%)
5,005,000 WA State Hosp. Dist. Rev. Aa 5,918,413
Bonds 7-1/2s, 7/1/15
10,995,000 WA State Pub. Pwr. Supply Aa 12,671,738
Syst. Rev. Bonds (Nuclear
Project No. 1), Ser. A,
7-1/2s, 7/1/15
18,590,151
Total Investments $655,042,098
(cost $600,642,528)(f)
<FN>
(a) Percentages indicated are based on net assets of $652,821,870. Net assets
available to common shareholders are $477,660,049, which corresponds to a net
asset value per common share of $10.88.
(b) The Moody's or Standard & Poor's ratings indicated are believed to be the
most recent ratings available at October 31, 1993 for the securities listed.
Ratings are generally ascribed to securities at the time of issuance. While
the rating agencies may from time to time revise such ratings, they undertake
no obligation to do so, and the ratings indicated do not necessarily
represent ratings which the rating agencies would ascribe to these securities
at October 31, 1993. Securities rated by Putnam are indicated by a "/P" and
are not publicly rated. Ratings are not covered by the Report of Independent
Accountants.
(c) Restricted, excluding 144A securities, as to public resale. At the date
of acquisition, these securities were 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
$60,067,500 or 9.2% of net assets.
(d) These securities, valued at $12,394,700 or 1.9% 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.
(e) Non-income-producing security
(f) The aggregate identified cost for federal tax purposes is $600,682,671,
resulting in gross unrealized appreciation and depreciation of $61,644,541
and $7,285,114, respectively, or net unrealized appreciation of $54,359,427.
The rates shown on Variable Rate Demand Notes (VRDN) and Residual Interest
Bonds (RIBS) are the current interest rates at October 31, 1993, which are
subject to change based on the terms of the security.
</TABLE>
The Fund had the following industry group concentrations greater than 10% on
October 31, 1993 (as a percentage of net assets):
Utilities 31.5%
Hospitals/Health Care 19.8
Transportation 14.5
The table below shows the percentage of the Fund's investments at October 31,
1993 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.
<TABLE>
<CAPTION>
Unrated securities of
Rated securities comparable quality,
as percentage of as percentage of
Rating Fund's net assets Fund's net assets
<S> <C> <C>
"AAA"/"Aaa" 25.0% 0.5%
"AA"/"Aa" 9.4 --
"A"/"A" 7.0 2.0
"BBB"/"Baa" 29.9 5.7
"BB"/"Ba" 7.5 3.1
"B"/"B" 2.0 5.4
"CCC"/"Caa" -- --
"D" -- 0.1
"VMIG1" 2.8 --
83.6% 16.8%
</TABLE>
<PAGE>
Statement of
assets and liabilities
October 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Assets Investments in securities, at value (identified cost $655,042,098
$600,642,528) (Note 1)
Cash 15,073
Interest receivable 14,470,073
Receivable for securities sold 15,519
Unamortized organization expenses (Note 1) 2,705
Total assets 669,545,468
Liabilities Distributions payable to shareholders $ 2,788,795
Payable for securities purchased 12,662,400
Payable for compensation of Manager (Note 3) 1,141,210
Payable for administrative services (Note 3) 1,198
Payable for compensation of Trustees (Note 3) 141
Payable for investor servicing and custodian fees (Note 3) 73,833
Other accrued expenses 56,021
Total liabilities 16,723,598
Net assets $652,821,870
Represented by Series A, B, and C remarketed preferred shares, without par $175,000,000
value; 8,000 shares authorized (1,750 shares issued at
$100,000 per share liquidation preference) (Note 2)
Common shares, without par value; unlimited shares 404,319,474
authorized; 43,918,097 shares outstanding
Undistributed net investment income 15,145,211
Accumulated net realized gain on investments 3,957,615
Net unrealized appreciation of investments 54,399,570
Net assets $652,821,870
Computation of Remarketed preferred shares at liquidation preference $175,000,000
net asset value Cumulative undeclared dividends on remarketed preferred shares 161,821
Net assets allocated to remarketed preferred shares at 175,161,821
liquidation preference
Net assets available to common shares: Net asset value per 477,660,049
share $10.88 ($477,660,049 divided by 43,918,097 shares)
Net assets $652,821,870
</TABLE>
<PAGE>
Statement of
operations
Year ended October 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C>
Tax exempt interest income $48,536,014
Expenses:
Compensation of Manager (Note 3) $4,394,619
Investor servicing and custodian fees (Note 3) 382,251
Compensation of Trustees (Note 3) 20,644
Auditing 52,473
Reports to shareholders 15,987
Legal 15,256
Postage 122,954
Administrative services (Note 3) 21,260
Registration fees 682
Exchange listing fees 38,084
Amortization of organization expenses (Note 1) 8,999
Preferred share remarketing agent fees 452,314
Other 15,226
Total expenses 5,540,749
Net investment income 42,995,265
Net realized gain on investments (Notes 1 and 4) 4,171,187
Net realized loss on futures contracts (Notes 1 and (80,733)
4)
Net unrealized appreciation of investments during 40,690,659
the year
Net gain on investments 44,781,113
Net increase in net assets resulting from operations $87,776,378
</TABLE>
<PAGE>
Statement of
changes in net assets
<TABLE>
<CAPTION>
Year ended October 31
1993 1992
<S> <C> <C> <C>
Increase in net Operations:
assets
Net investment income $ 42,995,265 $ 43,518,200
Net realized gain on investments 4,171,187 3,985,728
Net realized loss on futures contracts (80,733) --
Net unrealized appreciation of investments 40,690,659 7,303,142
Net increase in assets resulting from operations 87,776,378 54,807,070
Distributions to remarketed preferred shareholders from net (4,480,767) (5,886,047)
investment income
Net increase in assets resulting from operations applicable to 83,295,611 48,921,023
common shareholders (excluding cumulative undeclared dividends
on remarketed preferred shares of $161,821 and $154,739,
respectively)
Distributions to common shareholders from (33,293,276) (32,911,962)
net investment income
Net realized gain on investments (3,434,385) --
Increase from capital share transactions, common shares 5,405,135 4,347,253
Offering costs on remarketed preferred shares -- (3,000)
Total increase in net assets 51,973,085 20,353,314
Net assets Beginning of year 600,848,785 580,495,471
End of year (including undistributed net investment income of $652,821,870 $600,848,785
$15,145,211 and $9,923,989, respectively)
Number of fund shares Common shares outstanding at beginning of year 43,395,575 42,951,118
Common shares issued in connection with reinvestment of 522,522 444,457
distributions
Common shares outstanding at end of year 43,918,097 43,395,575
Remarketed preferred shares outstanding at end of year 1,750 1,750
</TABLE>
<PAGE>
Financial Highlights*
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For the period
February 24, 1989
(commencement
Year ended of operations) to
October 31 October 31
Common Shares 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.81 $ 9.44 $ 8.94 $ 9.31 $ 9.30
Investment Operations:
Net Investment Income .98 1.01 1.02 1.02 .54
Net Realized and Unrealized Gain (Loss) on 1.04 .26 .44 (.35) --**
Investments
Total from Investment Operations 2.02 1.27 1.46 .67 .54
Less Distributions from:
Net Investment Income
to Preferred Shareholders (.11) (.14) (.20) (.25) (.02)
to Common Shareholders (.76) (.76) (.76) (.76) (.47)
Net Realized Gain on Investments (.08) -- -- (.02) --
to Common Shareholders
Total Distributions (.95) (.90) (.96) (1.03) (.49)
Change in Cumulative Undeclared Dividends on -- -- -- -- (.01)
Remarketed Preferred Shares
Initial Preferred Offering Expenses -- -- -- (.01) (.03)
Net Asset Value, End of Period $ 10.88 $ 9.81 $ 9.44 $ 8.94 $ 9.31
Market Value, End of Period (common shares) $ 11.38 $ 9.88 $ 10.00 $ 8.88 $ 9.50
Total Investment Return at Market Value 24.84 6.72 22.33 1.72 (.25)(a)
(common shares) (%)
Net Assets, End of Period $652,660 $600,849 $580,495 $555,583 $567,749
(Total Fund)
(in thousands)
Ratio of Expenses to Average Net 1.22 1.24 1.33 1.29 .91(a)
Assets(%)(b)
Ratio of Net Investment Income to Average 8.44 8.94 8.92 8.39 8.72(a)
Net Assets (%)(b)
Portfolio Turnover Rate (%) 35.16 67.72 49.62 41.48 107.11(c)
<FN>
*Financial Highlights for periods through October 31, 1992 have been restated
to conform with requirements issued by the SEC in December 1992.
**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
</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, 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 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 October 31, 1993 were: Series A 2.363%; Series B 2.50%; Series C
2.375%.
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.
Undeclared dividends on preferred shares on October 31, 1993 amounted to
$161,821.
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 the year ended
October 31, 1993, 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
October 31, 1993, no such restrictions have been placed on the Fund.
Note 3
Management fee,
administrative
services, and
other transactions
Compensation of Putnam Investment Management (formerly known as "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. Prior to
September 9, 1993 the fee was based on the annual rate of 0.70% of the
average weekly net assets.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred shares
for that period exceed the Fund's 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 the year ended
October 31, 1993, the Fund paid $21,260 for these services.
Trustees of the Fund receive an annual Trustee's fee of $1,370 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 for the Fund's common shares are currently 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
$382,251.
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.
Note 4
Purchases
and sales of
securities
During the year ended October 31, 1993, purchases and sales of investment
securities other than short-term investments aggregated $221,098,521 and
$212,977,162, respectively. Purchases and sales of short-term obligations
aggregated $133,038,635 and $135,892,560, respectively. 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.
<TABLE>
<CAPTION>
Sales of Futures Contracts
Number of Aggregate
Contracts Face Value
<S> <C> <C>
Contracts opened 300 $ 33,359,539
Contracts closed (300) (33,359,539)
Open at end of year -- $ --
</TABLE>
<PAGE>
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
approximately 8,000 investment-grade, fixed rate, long-term maturity
tax-exempt bonds, which are selected to be representative of the market in
terms of price movement and sector distribution. The average quality of bonds
held in the index may differ from the average quality of those bonds in which
the fund invests. The index does not include bonds in certain of the lower
rating classifications in which the fund may invest. The index does not take
into account brokerage commissions or other costs and may pose different
risks from the fund. Total return performance for the index reflects
mathematically derived changes of market price and reinvestment of interest
payments, as computed by Lehman Brothers. The fund's portfolio contains
securities that do not match those in the index.
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.
<PAGE>
Federal
tax information
The Fund has designated all net investment income dividends paid during the
fiscal year as exempt-interest dividends. The Fund has also distributed
$0.0560 and $0.0230 per share as short term and long term capital gains,
respectively.
The Form 1099 you will receive in January 1994 will show the tax status of
any taxable distributions paid to your account in calendar 1993, if any. The
income distributions from each state will also be reported to you at this
time.
<PAGE>
Selected
Quarterly
Data
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
October 31 July 31 April 30 January 31
1993 1993 1993 1993
<S> <C> <C> <C> <C>
Total investment income
Total $ 12,131,634 $ 12,114,324 $ 12,113,227 $ 12,176,829
Per share $ .28 $ .28 $ .28 $ .27
Net investment income available to
common shareholders
Total $ 9,644,213 $ 9,601,179 $ 9,772,176 $ 9,496,930
Per Share $ .21 $ .22 $ .23 $ .21
Net realized and unrealized gain
(loss) on investments
Total $ 12,792,002 $ 8,635,842 $ 7,911,957 $ 15,441,312
Per Share $ .30 $ .20 $ .18 $ .36
Net increase (decrease) in net
assets available to common
shareholders resulting from
operations
Total $ 22,436,215 $ 18,237,021 $ 17,684,133 $ 24,938,242
Per Share $ .51 $ .42 $ .41 $ .57
Net assets available to common
shareholders at the end of the
period
Total $477,660,049 $462,370,289 $451,177,789 $440,618,960
Per Share $ 10.88 $ 10.56 $ 10.33 $ 10.11
</TABLE>
<TABLE>
<CAPTION>
Three months ended
October 31 July 31 April 30 January 31
1992 1992 1992 1992
<S> <C> <C> <C> <C>
Total investment income
Total $ 12,077,608 $ 12,062,083 $ 12,190,166 $ 12,398,032
Per share $ .28 $ .28 $ .29 $ .28
Net investment income available to
common shareholders
Total $ 9,622,505 $ 9,279,368 $ 9,552,718 $ 9,177,562
Per Share $ .22 $ .22 $ .22 $ .21
Net realized and unrealized gain
(loss) on investments
Total $(22,383,227) $ 26,611,672 $ (1,170,558) $ 5,230,983
Per Share $ (.52) $ .68 $ (.02) $ .12
Net increase (decrease) in net
assets available to common
shareholders resulting from
operations
Total $(12,760,722) $ 38,891,040 $ 8,382,160 $ 14,408,545
Per Share $ (.30) $ .90 $ .20 $ .33
Net assets available to common
shareholders at the end of the
period
Total $425,694,046 $445,652,126 $413,804,418 $412,632,107
Per Share $ 9.81 $ 10.30 $ 9.59 $ 9.58
</TABLE>
<PAGE>
Your
Trustees
George Putnam
Chairman
Chairman and President,
The Putnam Funds
William F. Pounds
Vice Chairman
Professor of Management,
Alfred P. Sloan
School of Management,
Massachusetts Institute of
Technology
Hans H. Estin
Vice Chairman,
North American
Management Corporation
John 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
<PAGE>
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-9684
<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
Gary N. Coburn
Vice President
James E. 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
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
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 1-800-634-1587 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
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
<PAGE>
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Rule lines for tables are omitted.
(2) Bold 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 omitted.
(7) Dagger footnote symbol replaced with plus sign (+).
