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