Putnam
Managed
High Yield
Trust
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
11-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
While higher-risk investments such as lower-rated, high-yield corporate
bonds have delivered attractive long-term results, there will always be
occasional periods where the market goes against them. The following
report for Putnam Managed High Yield Trust addresses such a period, in
which a combination of macroeconomic factors -- interest-rate increases,
a higher default rate, and declines in several key industries -- created
a particularly challenging environment for your fund.
It is possible, though, that many of the challenges now lie behind us.
As your fund's manager, Rosemary Thomsen, explains her strategies, she
also points out Putnam Management's belief that the high-yield market
may be approaching a bottom. This could very well translate into a more
favorable environment in fiscal 2001.
We believe that Rosemary and her team have done an excellent job of
positioning this fund to benefit from a recovery in the high-yield
sector, and that shareholders who stay focused on their long-term goals
will be rewarded for their patience.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
January 17, 2001
REPORT FROM FUND MANAGEMENT
Rosemary H. Thomsen
and the Credit Team
As many high-yield investors know, calendar 2000 has been the worst year
for high-yield bonds since Drexel Burnham Lambert went bankrupt in 1990
and the high-yield market collapsed. There are several reasons for the
market's decline, including higher short-term interest rates, an
increase in defaults, an inverted U.S. Treasury yield curve, and the
effects of a glut of new issuance in 1997 and 1998. The negative
economic and market factors also contributed to the decline in the
Nasdaq index, affecting high yield issuers which have Nasdaq-traded
stock. During the semiannual period ended November 30, 2000, your fund
was not immune to these events, and its performance reflected the
difficulties in the market.
Total return for 6 months ended 11/30/00
NAV Market price
-----------------------------------------------------------------------
-7.56% -3.91%
-----------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods begins on page 6.
* FED TIGHTENING AFFECTED THE MARKET
The Federal Reserve Board's monetary tightening policy from June 1999 to
May 2000 involved six interest-rate increases totaling 1.75%. These have
had profound consequences for the high-yield market. Combined with the
federal government's buyback of long-term Treasuries, which lowered
long-term rates, the much higher short-term rates produced an inverted
yield curve. (The Treasury yield curve is said to be inverted when
short-term rates are higher than long-term rates.) Under these
conditions, bond markets become distorted. Approximately $5 billion has
flowed out of high-yield mutual funds this year, in part because
investors were attracted to less risky short-term bond investments
available at higher-than-usual rates. Finally, the inverted yield curve
has been viewed as a precursor to an economic slowdown. Investors
anticipate that higher interest rates may slow economic growth, reducing
any threat of inflation.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Telecommunications 8.6%
Broadcasting 7.1%
Gaming
and lottery 5.3%
Telephone 5.1%
Cable television 4.9%
Footnote reads:
*Based on net assets as of 11/30/00. Holdings will vary over time.
* CAUSES AND EFFECTS OF HIGH DEFAULT RATES
Default rates in the market remained elevated at almost 6% during the
six-month period. A company is in default when it cannot make interest
payments on its debt obligations. At the root of this increase is the
surge in high-yield bond issuance that took place in 1997 and 1998.
Since the period in which high-yield bonds are most likely to default is
roughly two to three years after issue, it is not surprising to see such
high default rates now. In fact, a recent study showed that 84 of the
152 bonds (55%) in default this year were issued in 1997 and 1998.*
Higher short-term interest rates also have contributed to the increase
in defaults because they have increased the cost of corporate borrowing
from banks and reduced the willingness of banks to lend. The tighter
credit environment that has ensued affected many companies that issue
high-yield bonds. Since some of these issuers are in capital-intensive
industries, they typically require significant financing to expand their
businesses. If the sources of this capital dry up, the firms may be more
likely to default on the bonds they have already issued.
*The New York Times, November 19, 2000.
The slowing economy, with decreasing revenue growth and lower profit
expectations, has not helped the default situation. The automotive
sector has been particularly hard hit by higher short-term interest
rates and a decrease in consumer spending, and this has affected issuers
in the auto industry and other related industries. Finally, many
high-yield issuers in the basic industries sector were hurt by a rise in
asbestos-related litigation claims.
* NASDAQ DECLINE HURT HIGH-YIELD ISSUERS
The dramatic decline in the Nasdaq in the past six months -- nearly a
50% drop between its high in March and recent lows at the end of the
fund's semiannual period -- has been another negative factor for
high-yield bonds. Many high-yield issuers also have issued stock trading
on the Nasdaq Index. When the stock market was strong in 1999 and in
early 2000, these companies were able to obtain high prices for their
equity, bolstering the equity portion of their balance sheets. The
strong stock market also helped companies to raise debt financing in the
high-yield markets. With the collapse of the Nasdaq in the past six
months, companies faced a very different set of circumstances. The huge
decline in the market value of their stock created much higher
debt-to-equity ratios, causing the market to punish the value of their
debt holdings. As a result, it became more difficult for these firms to
raise new financing in either the debt or equity markets, giving them
fewer options for expanding their businesses or servicing their
existing debt.
"The high-yield market tends to be forward-looking and historically has
anticipated an improvement in default rates before it occurs. While
there is still a chance the default rate could rise again, we believe a
sharp increase is unlikely."
-- Rosemary Thomsen, portfolio manager, Putnam Managed High Yield Trust
* FUND BENEFITED FROM POSITIONING STRATEGIES
Some of the larger sectors within the high-yield bond market have
experienced difficulties in the past few years. We began reducing our
telecommunications holdings in 1999, before the sector decline began in
earnest, and have continued to pare them throughout the year.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Midland Funding II Corp.
Series A, 11.75%, 2005
Power producers
Echostar Broadband Corp.
144A senior notes, 10.375%, 2007
Broadcasting
Trump Castle Funding
144A subordinated notes, 10.25%, 2003
Gaming and lottery
PHI Holdings, Inc.
Senior subordinated notes, zero %, 2001
Broadcasting
CSC Holdings, Inc.
Series M, $11.13 cumulative preferred
Cable television
Paxson Communications Corp.
144A, $13.25 cumulative preferred
Broadcasting
RBF Finance Co.
Company guaranty, 11.375%, 2009
Energy
Diva Systems Corp.
Cumulative preferred
Media
Diamond Cable Communication Co.
Senior discount notes, stepped-coupon,
0%, (10.75%, 2/15/02), 2007
(United Kingdom)
Cable television
Derby Cycle Corp. (The)
Senior notes, 10%, 2008
Consumer
Footnote reads:
These holdings represent 8.8% of the fund's net assets as of 11/30/00.
Portfolio holdings will vary over time.
The fund benefited from a high level of merger and acquisition activity
during the period. When a high-yield issuer is acquired by a larger
company with a strong balance sheet, the value of the high-yield bonds
can increase substantially. In some cases, the bonds are upgraded from
"junk" status to investment-grade, giving their prices an enormous
boost. Some examples in your fund include Verio, which was acquired by
NTT of Japan; OnePoint, which has announced that it will be acquired by
Verizon; and R&B Falcon, which has reported that it will be acquired by
Transocean. While these holdings and others discussed in this report
were viewed favorably at the end of the fiscal period, all holdings are
subject to review and adjustment in accordance with the fund's
investment strategy and may well vary in the future.
* MARKET CONSIDERED NEAR BOTTOM
We are cautiously optimistic about potential for a bottom in the
high-yield market next year and anticipate the beginnings of a recovery
that could spread over the next several years. The Fed's surprise rate
cut in early January 2001 should ease pressure on companies seeking
financing and give the economy a boost. A second possibility is a
leveling off of the default rate. Many of the companies that intended to
default already have done so, and they cannot default again.
The high-yield market tends to be forward-looking and historically has
anticipated improvement in default rates before it occurs. For example,
in 1991 when the default rate was roughly 10%, the high-yield market
anticipated an improvement and then returned over 40%. In fact,
high-yield bonds performed well for several subsequent years. While we
cannot predict what the high-yield market will do next year, or how long
it will take to recover, we believe that the end of this difficulty may
occur sometime next year. As soon as investors perceive a turnaround,
high-yield bond prices will have the potential to recover. We will
continue our efforts to position your fund to take advantage of such a
recovery.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 11/30/00, there is no guarantee the fund
will continue to hold these securities in the future. The lower credit
ratings of high-yield bonds reflect a greater possibility that adverse
changes in the economy or poor performance by the issuers of these bonds
may affect the issuer's ability to pay principal and interest.
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing regulations
for semiannual and annual reports and prospectuses. Putnam is now able to
send a single copy of these materials to customers who share the same address.
This change will automatically apply to all shareholders except those who
notify us. If you would prefer to receive your own copy, please call Putnam
at 1-800-225-1581.
PERFORMANCE SUMMARY
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Managed High Yield Trust is designed for investors seeking high current
income with a secondary objective of capital growth.
TOTAL RETURN FOR PERIODS ENDED 11/30/00
First Boston
Market High Yield Consumer
NAV price Bond Index price index
-------------------------------------------------------------------------------
6 months -7.56% -3.91% -4.19% 1.57%
-------------------------------------------------------------------------------
1 year -8.33 -8.13 -5.95 3.44
-------------------------------------------------------------------------------
5 years 18.43 11.60 23.77 13.26
Annual average 3.44 2.22 4.36 2.52
-------------------------------------------------------------------------------
Life of fund
(since 6/25/93) 44.38 30.88 52.01 20.64
Annual average 5.07 3.69 5.81 2.56
-------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns, net asset value, and market price will fluctuate so that an
investor's shares when redeemed may be worth more or less than their
original cost.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 11/30/00
-------------------------------------------------------------------------------
Distributions
-------------------------------------------------------------------------------
Number 6
-------------------------------------------------------------------------------
Income $0.604
-------------------------------------------------------------------------------
Capital gains --
-------------------------------------------------------------------------------
Total $0.604
-------------------------------------------------------------------------------
Share value NAV Market price
-------------------------------------------------------------------------------
5/31/00 $10.91 $10.188
-------------------------------------------------------------------------------
11/30/00 9.53 9.250
-------------------------------------------------------------------------------
Current return (end of period)
-------------------------------------------------------------------------------
Current dividend rate 1 12.47% 12.84%
-------------------------------------------------------------------------------
1 Income portion of most recent distribution, excluding capital gains,
annualized and divided by NAV or market price at end of period.
TOTAL RETURN FOR PERIODS ENDED 12/31/00(most recent calendar quarter)
Market
NAV price
----------------------------------------------------------------------------
6 months -7.79% 2.14%
----------------------------------------------------------------------------
1 year -8.82 14.50
----------------------------------------------------------------------------
5 years 17.89 23.56
Annual average 3.35 4.32
----------------------------------------------------------------------------
Life of fund
(since 6/25/93) 46.19 44.75
Annual average 5.18 5.04
----------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding common shares.
Market price is the current trading price of one share of the fund.
Market prices are set by transactions between buyers and sellers on the
New York Stock Exchange.
COMPARATIVE BENCHMARKS
The First Boston High Yield Bond Index is a market-weighted index
including publicly traded bonds having a rating below BBB by Standard &
Poor's and Baa by Moody's. The index assumes reinvestment of all
distributions and interest payments and does not take into account
brokerage fees or taxes. Securities in the fund do not match those in
the index and performance of the fund will differ. It is not possible to
invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
November 30, 2000 (Unaudited)
CORPORATE BONDS AND NOTES (80.8%) (a)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
Advertising and Marketing Services (0.6%)
-------------------------------------------------------------------------------------------------------------------
$ 40,000 Adams Outdoor Advertising sr. notes 10 3/4s, 2006 $ 40,600
130,000 AOA Holdings LLC sr. notes 10 3/8s, 2006 123,500
160,500 Interact Operating Co. notes 14s, 2003 8,025
40,000 Lamar Media Corp. company guaranty 9 5/8s, 2006 40,400
67,000 Lamar Media Corp. sr. sub. notes 9 1/4s, 2007 66,498
140,000 Lamar Media Corp. company guaranty 8 5/8s, 2007 137,550
-------------
416,573
Aerospace and Defense (1.7%)
-------------------------------------------------------------------------------------------------------------------
280,000 Argo-Tech Corp. company guaranty 8 5/8s, 2007 218,400
80,000 Argo-Tech Corp. company guaranty Ser. D, 8 5/8s, 2007 62,400
255,000 BE Aerospace, Inc. sr. sub. notes Ser. B, 8s, 2008 229,500
240,000 Decrane Aircraft Holdings company guaranty
Ser. B, 12s, 2008 217,200
170,000 L-3 Communications Corp. sr. sub. notes Ser. B,
10 3/8s, 2007 173,825
100,000 L-3 Communications Corp. sr. sub. notes 8 1/2s, 2008 93,500
200,000 Sequa Corp. med. term notes 10s, 2001 201,062
-------------
1,195,887
Agriculture (0.6%)
-------------------------------------------------------------------------------------------------------------------
444,115 Premium Standard Farms, Inc. sr. sec. notes
11s, 2003 (PIK) 401,924
Airlines (1.0%)
-------------------------------------------------------------------------------------------------------------------
230,000 Airbus Industries 144A 12.266s, 2020 244,974
220,000 Calair LLC 144A company guaranty 8 1/8s, 2008 206,800
40,000 Continental Airlines, Inc. notes 8s, 2005 38,588
70,000 Northwest Airlines, Inc. company guaranty
8.52s, 2004 68,436
120,000 Northwest Airlines, Inc. company guaranty
7 5/8s, 2005 113,993
50,000 US Airways, Inc. pass-through certificates
Ser. 93A3, 10 3/8s, 2013 44,500
-------------
717,291
Automotive (1.9%)
-------------------------------------------------------------------------------------------------------------------
180,000 Aftermarket Technology Corp. sr. sub. notes
Ser. D, 12s, 2004 172,800
40,000 Collins & Aikman Products, Inc. company guaranty
11 1/2s, 2006 32,800
180,000 Dura Operating Corp. company guaranty
Ser. B, 9s, 2009 140,400
90,000 Exide Corp. sr. notes 10s, 2005 66,600
80,000 Federal Mogul Corp. notes 7 7/8s, 2010 12,000
220,000 Federal Mogul Corp. notes 7 3/4s, 2006 35,200
80,000 Federal Mogul Corp. notes 7 1/2s, 2009 12,000
30,000 Hayes Wheels International, Inc. company
guaranty 11s, 2006 19,500
260,000 Hayes Wheels International, Inc. 144A company
guaranty Ser. B, 9 1/8s, 2007 169,000
20,000 Hayes Wheels International, Inc. company guaranty
9 1/8s, 2007 11,600
190,000 Lear Corp. company guaranty Ser. B, 8.11s, 2009 175,317
160,000 Lear Corp. company guaranty Ser. B, 7.96s, 2005 151,749
200,000 Oxford Automotive, Inc. company guaranty Ser. D,
10 1/8s, 2007 154,000
500,000 Talon Automotive Group sr. sub. notes Ser. B,
9 5/8s, 2008 75,000
140,000 Tenneco Automotive, Inc. company guaranty
Ser. B, 11 5/8s, 2009 82,600
190,000 Transportation Manufacturing Operations, Inc.
company guaranty 11 1/4s, 2009 74,100
-------------
1,384,666
Banking (2.4%)
-------------------------------------------------------------------------------------------------------------------
35,000 Bangko Sentral Pilipinas bonds 8.6s, 2027 (Philippines) 22,050
40,000 Bank United Corp. sub. notes 8 7/8s, 2007 40,028
210,000 Chevy Chase Savings Bank, Inc. sub. deb. 9 1/4s, 2005 198,450
130,000 Colonial Capital II 144A company guaranty
8.92s, 2027 122,778
15,000 Dime Capital Trust I bank guaranty Ser. A, 9.33s, 2027 13,254
290,000 GS Escrow Corp. sr. notes 7 1/8s, 2005 270,889
265,000 Hanvit Bank 144A sub. notes 11 3/4s, 2010 (Korea) 249,100
140,000 Local Financial Corp. sr. notes 11s, 2004 140,000
150,000 Provident Capital Trust company guaranty 8.6s, 2026 129,756
85,000 Riggs Capital Trust 144A bonds 8 5/8s, 2026 51,282
150,000 Sovereign Bancorp, Inc. sr. notes 10 1/2s, 2006 151,500
125,000 Sovereign Capital Trust company guaranty 9s, 2027 94,143
140,000 Superior Financial 144A sr. notes 8.65s, 2003 136,303
90,000 Webster Capital Trust I 144A bonds 9.36s, 2027 78,026
-------------
1,697,559
Broadcasting (5.8%)
-------------------------------------------------------------------------------------------------------------------
190,000 Acme Television company guaranty 10 7/8s, 2004 167,200
100,000 Allbritton Communications Co. sr. sub. notes
Ser. B, 8 7/8s, 2008 91,000
206,700 AMFM Operating, Inc. deb. 12 5/8s, 2006 (PIK) 224,786
9,407 Australis Media, Ltd. sr. disc. notes 15 3/4s, 2003
(In default) (Australia) (NON) 1
190,000 Benedek Communications Corp. sr. disc. notes stepped-
coupon zero % (13 1/4s, 5/15/01), 2006 (STP) 161,263
70,000 CD Radio, Inc. sec. notes 14 1/2s, 2009 45,500
190,000 Chancellor Media Corp. company guaranty 8s, 2008 189,050
70,000 Citadel Broadcasting, Inc. sr. sub. notes 10 1/4s, 2007 68,950
770,000 Echostar Broadband Corp. 144A sr. notes 10 3/8s, 2007 716,100
170,000 Fox Family Worldwide, Inc. sr. disc. notes
stepped-coupon zero % (10 1/4s, 11/1/02), 2007 (STP) 119,000
65,000 Fox Family Worldwide, Inc. sr. notes 9 1/4s, 2007 60,775
70,000 Fox/Liberty Networks LLC sr. notes 8 7/8s, 2007 71,400
180,000 Golden Sky Systems company guaranty Ser. B,
12 3/8s, 2006 177,300
120,000 Granite Broadcasting Corp. sr. sub. notes 8 7/8s, 2008 60,000
185,000 Innova S De R.L. sr. notes 12 7/8s, 2007 (Mexico) 165,575
90,000 Lin Holdings Corp. sr. disc. notes stepped-coupon
zero % (10s, 3/1/03), 2008 (STP) 63,900
60,000 Lin Television Corp. company guaranty 8 3/8s, 2008 55,200
100,000 Pegasus Communications Corp. sr. notes 12 1/2s, 2007 102,500
100,000 Pegasus Media & Communications notes Ser. B,
12 1/2s, 2005 103,000
110,000 Pegasus Communications Corp. sr. notes Ser. B,
9 3/4s, 2006 101,200
40,000 Pegasus Communications sr. notes Ser. B, 9 5/8s, 2005 36,800
654,000 PHI Holdings, Inc. sr. sub. notes zero %, 2001 626,140
225,000 Radio One, Inc. company guaranty stepped-coupon
Ser. B, 7s, (12s, 5/15/01), 2004 (STP) 229,500
30,000 Sinclair Broadcast Group, Inc. company guaranty
9s, 2007 26,513
50,000 Sinclair Broadcast Group, Inc. sr. sub. notes
8 3/4s, 2007 43,500
110,000 Spanish Broadcasting System, Inc. company
guaranty 9 5/8s, 2009 100,925
220,000 TV Azteca S.A. de C.V. sr. notes 10 1/2s,
2007 (Mexico) 203,500
190,000 XM Satellite Radio, Inc. sec. notes 14s, 2010 121,600
-------------
4,132,178
Building Materials (0.9%)
-------------------------------------------------------------------------------------------------------------------
250,000 American Standard, Inc. company guaranty
7 1/8s, 2003 243,750
70,000 Atrium Companies, Inc. company guaranty Ser. B,
10 1/2s, 2009 58,100
170,000 Building Materials Corp. company guaranty 8s, 2008 40,800
200,000 Dayton Superior Corp. company guaranty 13s, 2009 195,000
120,000 NCI Building Systems, Inc. sr. sub. notes Ser. B,
9 1/4s, 2009 113,100
-------------
650,750
Cable Television (4.0%)
-------------------------------------------------------------------------------------------------------------------
160,000 Adelphia Communications Corp. sr. notes Ser. B,
9 7/8s, 2007 125,600
100,000 Adelphia Communications Corp. sr. notes
7 7/8s, 2009 69,000
160,000 Century Communications Corp. sr. notes 8 7/8s, 2007 117,600
480,000 Charter Communications Holdings LLC sr. notes
8 5/8s, 2009 411,600
50,000 CSC Holdings, Inc. sr. sub. deb. 9 7/8s, 2013 50,750
200,000 CSC Holdings, Inc. sr. sub notes 9 7/8s, 2006 202,000
795,000 Diamond Cable Communication Co. sr. disc. notes
stepped-coupon zero % (10 3/4s, 2/15/02), 2007
(United Kingdom) (STP) 540,600
230,000 Insight Midwest/Insight Capital, Inc. 144A sr. notes
10 1/2s, 2010 228,850
200,000 Knology Holdings, Inc. sr. disc. notes stepped-coupon
zero % (11 7/8s, 10/15/02), 2007 (STP) 56,000
220,000 NTL Communications Corp. sr. notes Ser. B,
11 1/2s, 2008 189,200
160,000 Onepoint Communications, Inc. company guaranty
Ser. B, 14 1/2s, 2008 195,200
100,000 RCN Corp. sr. notes 10 1/8s, 2010 58,000
30,000 Rogers Cablesystems, Ltd. company guaranty 11s,
2015 (Canada) 33,150
50,000 Rogers Cablesystems, Ltd. deb. 10 1/8s, 2012 (Canada) 52,500
190,000 Supercanal Holdings S.A. 144A sr. notes 11 1/2s, 2005
(In default) (Argentina) (NON) 60,800
70,000 TeleWest Communications PLC sr. discount notes
stepped-coupon zero % (11 3/8s, 2/1/05), 2010
(United Kingdom) (STP) 27,300
180,000 TeleWest Communications PLC deb. 11s, 2007
(United Kingdom) 145,800
30,000 TeleWest Communications PLC deb. 9 5/8s, 2006
(United Kingdom) 23,550
180,000 TeleWest Communications PLC sr. disc. notes
stepped-coupon zero % (9 1/4s, 4/15/04), 2009
(United Kingdom) 68,400
370,000 United Pan-Europe NV sr. notes Ser. B, 10 7/8s,
2009 (Netherlands) 210,900
-------------
2,866,800
Chemicals (3.1%)
-------------------------------------------------------------------------------------------------------------------
180,000 Arco Chemical Co. deb. 9.8s, 2020 169,200
150,000 Geo Specialty Chemicals, Inc. sr. sub. notes
10 1/8s, 2008 123,000
190,000 Huntsman Corp. 144A sr. sub. notes 9 1/2s, 2007 104,500
280,000 Huntsman ICI Chemicals, Inc. company guaranty
10 1/8s, 2009 261,800
170,000 ISP Holdings, Inc. sr. notes Ser. B, 9 3/4s, 2002 142,800
30,000 ISP Holdings, Inc. sr. notes Ser. B, 9s, 2003 23,100
400,000 Lyondell Chemical Co. sec. notes Ser. B, 9 7/8s, 2007 384,000
500,000 PCI Chemicals & Pharmaceuticals company guaranty
9 1/4s, 2007 (Canada) 175,000
250,000 Pioneer Americas Acquisition 144A sr. notes
9 1/4s, 2007 95,000
100,000 Polymer Group, Inc. company guaranty Ser. B, 9s, 2007 68,000
60,000 Polymer Group, Inc. company guaranty Ser. B,
8 3/4s, 2008 39,600
160,000 Royster-Clark, Inc. 1st mtge. 10 1/4s, 2009 118,400
30,000 Sterling Chemicals Holdings sr. disc. notes stepped-
coupon zero % (13 1/2s, 8/15/01), 2008 (STP) 7,200
150,000 Sterling Chemicals, Inc. company guaranty Ser. B,
12 3/8s, 2006 139,500
270,000 Sterling Chemicals, Inc. sr. sub. notes 11 3/4s, 2006 132,300
120,000 Sterling Chemicals, Inc. sr. sub. notes Ser. A,
11 1/4s, 2007 57,600
40,000 Texas Petrochemical Corp. sr. sub. notes Ser. B,
11 1/8s, 2006 34,000
185,000 Trikem S.A. 144A bonds 10 5/8s, 2007 (Brazil) 135,513
-------------
2,210,513
Coal (--%)
-------------------------------------------------------------------------------------------------------------------
310,000 Lodestar Holdings, Inc. company guaranty
11 1/2s, 2005 (In default) (NON) 27,900
Commercial and Consumer Services (0.6%)
-------------------------------------------------------------------------------------------------------------------
250,000 Coinmach Corp. sr. notes Ser. D, 11 3/4s, 2005 251,250
270,000 GS Superhighway Holdings sr. notes 9 7/8s,
2004 (China) 194,400
-------------
445,650
Components (0.1%)
-------------------------------------------------------------------------------------------------------------------
80,000 Seagate Technology International 144A company
guaranty 12 1/2s, 2007 (Cayman Islands) 72,800
Construction (0.8%)
-------------------------------------------------------------------------------------------------------------------
410,000 Better Minerals & Aggregates Co. company
guaranty 13s, 2009 319,800
220,000 Morrison Knudsen Corp. 144A company
guaranty 11s, 2010 156,200
80,000 Republic Group, Inc. sr. sub. notes 9 1/2s, 2008 80,000
-------------
556,000
Consumer (1.7%)
-------------------------------------------------------------------------------------------------------------------
1,400,000 Derby Cycle Corp. (The) sr. notes 10s, 2008 504,000
90,000 Derby Cycle Corp. (The) sr. notes 9 3/8s, 2008 14,417
260,000 Home Interiors & Gifts, Inc. company guaranty
10 1/8s, 2008 97,500
290,000 Jostens, Inc. 144A sr. sub notes 12 3/4s, 2010 263,900
550,000 Samsonite Corp. sr. sub. notes 10 3/4s, 2008 368,500
-------------
1,248,317
Consumer Finance (0.9%)
-------------------------------------------------------------------------------------------------------------------
215,000 Aames Financial Corp. company guaranty 9 1/8s, 2003 107,500
240,000 Conseco Finance Trust III, Inc. bonds 8.796s, 2027 84,000
160,000 Conseco Financial Corp. sr. sub. notes 10 1/4s, 2002 123,200
150,000 Contifinancial Corp. sr. notes 8 3/8s, 2003
(In default) (NON) 20,813
220,000 Contifinancial Corp. sr. notes 8 1/8s, 2008
(In default) (NON) 30,525
180,000 Contifinancial Corp. sr. notes 7 1/2s, 2002
(In default) (NON) 25,200
310,000 Delta Financial Corp. company guaranty 9 1/2s, 2004 139,500
100,000 Nationwide Credit, Inc. sr. notes Ser. A, 10 1/4s, 2008 26,000
130,000 Outsourcing Solutions, Inc. sr. sub. notes
Ser. B, 11s, 2006 104,000
-------------
660,738
Consumer Goods (1.4%)
-------------------------------------------------------------------------------------------------------------------
240,000 Albecca, Inc. company guaranty 10 3/4s, 2008 215,400
105,000 Doane Pet Care Co. sr. sub. notes 9 3/4s, 2007 74,550
130,000 Doskcil Manufacturing Co 144A sr. sub. notes
10 1/8s, 2007 32,500
150,000 French Fragrances, Inc. company guaranty Ser. D,
10 3/8s, 2007 135,000
270,000 NBTY, Inc. sr. sub. notes Ser. B, 8 5/8s, 2007 221,400
80,000 Playtex Family Products Corp. sr. sub. notes 9s, 2003 74,400
90,000 Revlon Consumer Products sr. notes 9s, 2006 65,700
50,000 Revlon Consumer Products sr. notes 8 1/8s, 2006 36,500
170,000 Sealy Mattress Co. company guaranty stepped-coupon
Ser. B, zero % (10 7/8s, 12/15/02), 2007 (STP) 129,200
-------------
984,650
Containers (1.6%)
-------------------------------------------------------------------------------------------------------------------
280,000 AEP Industries, Inc. sr. sub. notes 9 7/8s, 2007 232,400
320,000 Consumers International sr. notes 10 1/4s,
2005 (Canada) 41,600
80,000 Huntsman Packaging Corp. company guaranty
13s, 2010 47,200
280,000 Owens-Illinois, Inc. sr. notes 8.1s, 2007 142,800
50,000 Owens-Illinois, Inc. deb. 7.8s, 2018 22,500
30,000 Owens-Illinois, Inc. sr. notes 7.35s, 2008 14,700
355,000 Radnor Holdings, Inc. sr. notes 10s, 2003 314,175
330,000 Tekni-Plex, Inc. company guaranty Ser. B, 12 3/4s, 2010 254,100
70,000 U.S. Can Corp. 144A sr. sub. notes 12 3/8s, 2010 71,050
-------------
1,140,525
Distributors (0.3%)
-------------------------------------------------------------------------------------------------------------------
320,000 RAB Enterprises, Inc. company guaranty 10 1/2s, 2005 230,400
Electric Utilities (1.2%)
-------------------------------------------------------------------------------------------------------------------
60,000 CMS Energy Corp. sr. notes 7 1/2s, 2009 53,584
380,000 CMS Energy Corp. sr. notes Ser. B, 6 3/4s, 2004 352,450
425,783 Northeast Utilities System notes Ser. A, 8.58s, 2006 438,824
-------------
844,858
Energy (2.0%)
-------------------------------------------------------------------------------------------------------------------
80,000 Geophysique 144A sr. notes 10 5/8s, 2007 (France) 80,104
90,000 Grant Prideco, Inc. 144A sr. notes 9 5/8s, 2007 89,663
230,000 Parker Drilling Corp. company guaranty Ser. D,
9 3/4s, 2006 225,975
190,000 R & B Falcon Corp. sr. notes 12 1/4s, 2006 222,300
300,000 R & B Falcon Corp. sr. notes Ser. B, 7 3/8s, 2018 266,250
485,000 RBF Finance Co. company guaranty 11 3/8s, 2009 560,175
-------------
1,444,467
Entertainment (0.7%)
-------------------------------------------------------------------------------------------------------------------
30,000 AMC Entertainment, Inc. sr. sub. notes 9 1/2s, 2009 17,100
150,000 Cinemark USA, Inc. sr. sub. notes 8 1/2s,
2008 (Mexico) 93,000
120,000 Premier Parks, Inc. sr. notes 9 3/4s, 2007 111,150
480,000 Regal Cinemas, Inc. sr. sub. notes 9 1/2s, 2008 33,600
190,000 Regal Cinemas, Inc. sr. sub. notes 8 7/8s, 2010 19,000
100,000 Silver Cinemas, Inc. sr. sub. notes 10 1/2s, 2005
(In default) (NON) 8,000
250,000 Six Flags Corp. sr. notes 8 7/8s, 2006 241,250
550,000 United Artists Theatre sr. sub. notes 9 3/4s, 2008
(In default) (NON) 11,000
-------------
534,100
Financial (1.6%)
-------------------------------------------------------------------------------------------------------------------
100,000 Advanta Corp. med. term notes Ser. B, 7s, 2001 96,748
340,000 Advanta Corp. med-term notes Ser. D, 6.92s, 2002 309,267
10,000 AMRESCO, Inc. sr. sub. notes Ser. 97-A, 10s, 2004 5,600
170,000 AMRESCO, Inc. sr. sub. notes Ser. 98-A, 9 7/8s, 2005 90,100
50,000 Finova Capital Corp. sr. notes 7 5/8s, 2009 28,000
155,000 Imperial Credit Capital Trust I 144A company
guaranty 10 1/4s, 2002 58,900
75,000 Ocwen Capital Trust I company guaranty
10 7/8s, 2027 39,000
165,000 Ocwen Federal Bank FSB sub. deb. 12s, 2005 151,388
100,000 Ocwen Financial Corp. notes 11 7/8s, 2003 87,500
280,000 Resource America, Inc. 144A sr. notes 12s, 2004 254,800
-------------
1,121,303
Food (0.6%)
-------------------------------------------------------------------------------------------------------------------
50,000 Archibald Candy Corp. company guaranty
10 1/4s, 2004 28,500
40,000 Aurora Foods, Inc. sr. sub. notes Ser. B, 9 7/8s, 2007 28,800
240,000 Aurora Foods, Inc. sr. sub. notes Ser. D, 9 7/8s, 2007 172,800
130,000 Eagle Family Foods company guaranty Ser. B,
8 3/4s, 2008 67,925
50,000 Premier International Foods PLC sr. notes 12s,
2009 (United Kingdom) 38,000
255,000 Vlasic Foods Intl., Inc. sr. sub notes Ser. B,
10 1/4s, 2009 120,488
-------------
456,513
Gaming & Lottery (5.3%)
-------------------------------------------------------------------------------------------------------------------
50,000 Ameristar Casinos, Inc. company guaranty Ser. B,
10 1/2s, 2004 53,000
130,000 Anchor Gaming 144A sr. sub notes 9 7/8s, 2008 131,950
180,000 Autotote Corp. 144A company guaranty
12 1/2s, 2010 173,250
420,000 Fitzgeralds Gaming Corp. company guaranty Ser. B,
12 1/4s, 2004 (In default) (NON) 222,600
180,000 Harrahs Operating Co., Inc. company guaranty
7 7/8s, 2005 174,600
290,000 Hollywood Casino Corp. company guaranty
11 1/4s, 2007 297,975
130,000 Hollywood Park, Inc. company guaranty Ser. B,
9 1/4s, 2007 143,000
10,000 International Game Technology sr. notes 8 3/8s, 2009 9,800
140,000 Isle of Capri Casinos company guaranty 8 3/4s, 2009 121,100
120,000 Isle of Capri Black Hawk LLC 1st mortgage
Ser. B, 13s, 2004 130,800
190,000 Mandalay Resort Group sr. sub. notes Ser. B,
10 1/4s, 2007 188,100
160,000 MGM Grand, Inc. company guaranty 9 3/4s, 2007 164,400
180,000 Mohegan Tribal Gaming, Auth. sr. sub. notes
8 3/4s, 2009 174,600
60,000 Mohegan Tribal Gaming, Auth. sr. notes 8 1/8s, 2006 58,200
180,000 Park Place Entertainment Corp. sr. sub. notes
8 7/8s, 2008 177,300
40,000 Park Place Entertainment sr. sub. notes 7 7/8s, 2005 38,400
110,000 Riviera Black Hawk, Inc. 1st mtge. 13s, 2005 110,000
590,000 Trump A.C. 1st mtge. 11 1/4s, 2006 365,800
190,000 Trump Castle Funding, Inc. mortgage 11 3/4s, 2003 148,200
680,000 Trump Castle Funding, Inc. 144A sub. notes 10 1/4s, 2003 680,000
190,000 Venetian Casino, Inc. company guaranty 12 1/4s, 2004 186,200
-------------
3,749,275
Health Care (2.8%)
-------------------------------------------------------------------------------------------------------------------
140,000 ALARIS Medical Systems, Inc. company guaranty
9 3/4s, 2006 64,400
70,000 Bio-Rad Labs Corp. sr. sub. notes 11 5/8s, 2007 72,100
300,000 Conmed Corp. company guaranty 9s, 2008 238,500
100,000 HCA-The Healthcare Co. notes 8 3/4s, 2010 102,315
60,000 HCA-The Healthcare Co. deb. 8.36s, 2024 55,725
70,000 HCA-The Healthcare Co. med. term notes notes
7.69s, 2025 59,500
290,000 HCA-The Healthcare Co. med. term notes
6.63s, 2045 280,555
60,000 HCA-The Healthcare Co. notes 7s, 2007 55,050
50,000 HCA-The Healthcare Co. notes 6.91s, 2005 47,250
60,000 Kinetic Concepts, Inc. company guaranty Ser. B,
9 5/8s, 2007 50,925
80,000 Lifepoint Hospital Holdings company guaranty
Ser. B, 10 3/4s, 2009 83,200
190,000 Magellan Health Services sr. sub. notes 9s, 2008 118,750
180,000 Mediq, Inc. deb. stepped-coupon zero %
(13s, 6/1/03), 2009 (STP) 18
170,000 Mediq, Inc. company guaranty 11s, 2008 (In default) (NON) 5,100
310,000 Paracelsus Healthcare sr. sub. notes 10s, 2006
(In default) (NON) 122,450
200,000 Tenet Healthcare Corp. sr. notes 8 5/8s, 2003 201,000
280,000 Tenet Healthcare Corp. sr. notes Ser. B, 7 5/8s, 2008 266,700
160,000 Triad Hospitals Holdings company guaranty
Ser. B, 11s, 2009 164,800
-------------
1,988,338
Homebuilding (1.1%)
-------------------------------------------------------------------------------------------------------------------
110,000 D.R. Horton, Inc. company guaranty 8s, 2009 97,075
20,000 Del Webb Corp. sr. sub. deb. 10 1/4s, 2010 17,600
70,000 Del Webb Corp. sr. sub. deb. 9 3/8s, 2009 62,300
130,000 K. Hovnanian Enterprises, Inc. 144A company
guaranty 10 1/2s, 2007 121,550
80,000 Lennar Corp. company guaranty Ser. B, 9.95s, 2010 80,800
20,000 M.D.C. Holdings, Inc. sr. notes 8 3/8s, 2008 18,600
120,000 Ryland Group, Inc. sr. notes 9 3/4s, 2010 121,500
110,000 Standard Pacific Corp. sr. notes 9 1/2s, 2010 110,000
160,000 Toll Corp. company guaranty 8 1/8s, 2009 149,600
-------------
779,025
Lodging/Tourism (1.3%)
-------------------------------------------------------------------------------------------------------------------
160,000 Epic Resorts LLC company guaranty Ser. B, 13s, 2005 48,000
110,000 Felcor Lodging 144A sr. notes 9 1/2s, 2008 109,725
20,000 HMH Properties, Inc. sr. notes Ser. C, 8.45s, 2008 19,000
460,000 HMH Properties, Inc. company guaranty Ser. B,
7 7/8s, 2008 423,200
50,000 Host Marriott L.P. sr. notes Ser. E, 8 3/8s, 2006 48,250
310,000 ITT Corp. notes 6 3/4s, 2005 294,441
-------------
942,616
Manufacturing (1.4%)
-------------------------------------------------------------------------------------------------------------------
300,000 Blount, Inc. company guaranty 13s, 2009 255,000
170,000 Continental Global Group sr. notes Ser. B, 11s, 2007 59,500
100,000 Day International Group, Inc. company guaranty
9 1/2s, 2008 88,000
240,000 Flowserve Corp. 144A company guaranty
12 1/4s, 2010 234,000
180,000 Insilco Holding Co. sr. disc. notes stepped-coupon
zero % (14s, 8/15/03), 2008 (STP) 100,800
220,000 Motors and Gears, Inc. sr. notes Ser. D, 10 3/4s, 2006 209,000
90,000 Roller Bearing Co. company guaranty Ser. B,
9 5/8s, 2007 79,200
-------------
1,025,500
Medical Services (0.4%)
-------------------------------------------------------------------------------------------------------------------
220,000 Extendicare Health Services, Inc. company guaranty
9.35s, 2007 101,200
180,000 Integrated Health Services, Inc. sr. sub. notes Ser. A,
9 1/2s, 2007 (In default) (NON) 1,350
110,000 Integrated Health Services, Inc. sr. sub. notes Ser. A,
9 1/4s, 2008 (In default) (NON) 825
100,000 Mariner Post-Acute Network, Inc. sr. sub. notes
stepped-coupon Ser. B, zero % (10 1/2s, 11/1/02),
2007 (In default) (STP) (NON) 1,125
480,000 Mariner Post-Acute Network, Inc. sr. sub. notes
Ser. B, 9 1/2s, 2007 (In default) (NON) 5,400
40,000 Service Corp. Intl. debs. 7 7/8s, 2013 20,400
20,000 Service Corp. Intl. notes 7.7s, 2009 10,800
250,000 Service Corp. Intl. notes 6s, 2005 137,500
305,000 Sun Healthcare Group, Inc. sr. sub. notes Ser. B,
9 1/2s, 2007 (In default) (NON) 3,050
60,000 Sun Healthcare Group, Inc. 144A sr. sub. notes
9 3/8s, 2008 (In default) (NON) 1,200
-------------
282,850
Medical Technology (0.1%)
-------------------------------------------------------------------------------------------------------------------
150,000 Hanger Orthopedic Group, Inc. sr. sub. notes
11 1/4s, 2009 64,500
Metals (1.0%)
-------------------------------------------------------------------------------------------------------------------
160,000 AK Steel Corp. company guaranty 7 7/8s, 2009 140,000
80,000 Armco, Inc. sr. notes 8 7/8s, 2008 73,200
175,000 Kaiser Aluminum & Chemical Corp. sr. sub. notes
12 3/4s, 2003 61,250
10,000 Kaiser Aluminum & Chemical Corp. sr. notes
Ser. B, 10 7/8s, 2006 6,500
205,000 LTV Corp. company guaranty 11 3/4s, 2009 51,250
310,000 National Steel Corp. 1st mtge. Ser. D, 9 7/8s, 2009 114,700
90,000 Oregon Steel Mills 1st mortgage 11s, 2003 63,000
40,000 P & L Coal Holdings Corp. company guaranty
Ser. B, 9 5/8s, 2008 38,800
110,000 WCI Steel, Inc. sr. notes Ser. B, 10s, 2004 81,400
20,000 Weirton Steel Corp. sr. notes 10 3/4s, 2005 8,000
120,000 Wheeling-Pittsburgh Steel Corp. sr. notes
9 1/4s, 2007 (In default) (NON) 12,000
120,000 WHX Corp. sr. notes 10 1/2s, 2005 72,000
-------------
722,100
Oil & Gas (3.0%)
-------------------------------------------------------------------------------------------------------------------
330,000 Belco Oil & Gas Corp. company guaranty Ser. B,
10 1/2s, 2006 333,300
90,000 Belco Oil & Gas Corp. sr. sub. notes Ser. B,
8 7/8s, 2007 84,600
90,000 Giant Industries Corp. company guaranty 9s, 2007 82,800
20,000 Gulf Canada Resources, Ltd. sub. debs. 9 5/8s,
2005 (Canada) 20,575
160,000 HS Resources, Inc. sr. sub. notes Ser. B, 9 1/4s, 2006 161,200
125,000 Leviathan Gas Corp. company guaranty Ser. B,
10 3/8s, 2009 130,000
130,000 Nuevo Energy Co. sr. sub. notes Ser. B, 9 1/2s, 2008 129,350
50,000 Nuevo Energy Co. 144A sr. sub. notes 9 3/8s, 2010 49,625
160,000 Ocean Energy, Inc. company guaranty Ser. B,
8 7/8s, 2007 162,000
200,000 Ocean Energy, Inc. company guaranty Ser. B,
8 3/8s, 2008 200,000
140,000 Pioneer Natural Resources Co. company guaranty
9 5/8s, 2010 147,000
20,000 Port Arthur Finance Corp. company guaranty
12 1/2s, 2009 20,200
130,000 Snyder Oil Corp. sr. sub. notes 8 3/4s, 2007 136,140
50,000 Stone Energy Corp. company guaranty 8 3/4s, 2007 48,500
150,000 Triton Energy, Ltd. 144A sr. notes 8 7/8s, 2007
(Cayman Islands) 151,125
260,000 Vintage Petroleum sr. sub. notes 9 3/4s, 2009 272,350
-------------
2,128,765
Paper & Forest Products (3.0%)
-------------------------------------------------------------------------------------------------------------------
40,000 Abitibi-Consolidated, Inc. bonds 8.55s, 2010 (Canada) 38,795
265,000 APP China Group, Ltd. 144A sr. disc. notes 14s,
2010 (Bermuda) 84,800
300,000 APP Finance II Mauritius, Ltd. bonds stepped-coupon
12s, (16s, 2/15/04), 2049 (Indonesia) (STP) 75,000
20,000 Boise Cascade Co. med. term notes Ser. A, 7.43s, 2005 19,786
160,000 Doman Industries, Ltd. company guaranty 12s,
2004 (Canada) 153,600
370,000 Doman Industries, Ltd. 144A 8 3/4s, 2004 192,400
60,000 Four M Corp. sr. notes Ser. B, 12s, 2006 56,700
360,000 Gaylord Container Corp. sr. sub. notes 9 7/8s, 2008 151,200
60,000 Gaylord Container Corp. sr. notes Ser. B, 9 3/4s, 2007 40,200
180,000 Indah Kiat Financial Mauritius, Ltd. company guaranty
10s, 2007 (Indonesia) 65,700
80,000 Kappa Beheer BV company guaranty 10 5/8s,
2009 (Netherlands) 80,000
290,000 Pacifica Papers, Inc. sr. notes 10s, 2009 (Canada) 281,300
100,000 Packaging Corp. company guaranty 9 5/8s, 2009 102,750
185,000 Pindo Deli Finance Mauritius, Ltd. company guaranty
10 3/4s, 2007 (Indonesia) 64,750
495,000 Riverwood International Corp. company guaranty
10 7/8s, 2008 451,688
20,000 Riverwood International Corp. company guaranty
10 5/8s, 2007 19,650
30,000 Stone Container Corp. sr. notes 12.58s, 2016 30,600
70,000 Stone Container 144A company guaranty
11 1/2s, 2006 (Canada) 71,225
190,000 Tembec Industries, Inc. company guaranty
8 5/8s, 2009 (Canada) 186,200
-------------
2,166,344
Pharmaceuticals (0.6%)
-------------------------------------------------------------------------------------------------------------------
250,000 ICN Pharmaceuticals, Inc. sr. notes Ser. B, 9 1/4s, 2005 246,875
190,000 ICN Pharmaceuticals, Inc. 144A sr. notes 8 3/4s, 2008 190,950
20,000 ICN Pharmaceuticals, Inc. 144A sr. notes 8 3/4s, 2008 20,100
-------------
457,925
Power Producers (3.6%)
-------------------------------------------------------------------------------------------------------------------
175,000 AES China Generating Co. notes 10 1/8s,
2006 (Bermuda) 131,250
340,000 AES Corp. sr. notes 9 3/8s, 2010 348,935
90,000 Calpine Corp. sr. notes 10 1/2s, 2006 93,150
40,000 Calpine Corp. sr. notes 9 1/4s, 2004 39,985
110,000 Calpine Corp. sr. notes 8 3/4s, 2007 111,564
60,000 Calpine Corp. sr. notes 7 7/8s, 2008 58,060
10,000 Calpine Corp. sr. notes 7 3/4s, 2009 9,650
350,000 Cathay International, Ltd. 144A sr. notes
13s, 2008 (China) 133,000
890,000 Midland Funding II Corp. deb. Ser. A, 11 3/4s, 2005 969,290
545,000 Panda Global Energy Co. company guaranty
12 1/2s, 2004 (China) 267,050
366,000 York Power Funding company guaranty
12s, 2007 (Cayman Islands) 366,000
-------------
2,527,934
Publishing (0.5%)
-------------------------------------------------------------------------------------------------------------------
310,000 Affinity Group Holdings sr. notes 11s, 2007 251,100
50,000 PRIMEDIA, Inc. company guaranty Ser. B, 8 1/2s, 2006 47,875
60,000 PRIMEDIA, Inc. company guaranty 7 5/8s, 2008 54,150
-------------
353,125
Railroads (0.8%)
-------------------------------------------------------------------------------------------------------------------
150,000 Kansas City Southern Railway 144A sr. notes
9 1/2s, 2008 152,250
170,000 Railamerica Transportation Corp. company guaranty
12 7/8s, 2010 154,700
320,000 TFM S.A. de C.V. company guaranty stepped-coupon
zero % (11 3/4s, 6/15/02), 2009 (Mexico) (STP) 238,000
-------------
544,950
Restaurants (0.5%)
-------------------------------------------------------------------------------------------------------------------
170,000 FRD Acquisition Co. sr. notes Ser. B, 12 1/2s, 2004 61,200
130,000 Sbarro, Inc. company guaranty 11s, 2009 129,350
140,000 Tricon Global Restaurants, Inc. sr. notes 7.65s, 2008 133,837
40,000 Tricon Global Restaurants, Inc. sr. notes 7.45s, 2005 38,851
-------------
363,238
Retail (1.7%)
-------------------------------------------------------------------------------------------------------------------
290,000 Amazon.com, Inc. sr. disc. notes stepped-coupon
zero % (10s, 5/01/03), 2008 (STP) 142,100
190,000 Grupo Elektra SA de CV sr. notes 12s, 2008 (Mexico) 173,850
100,000 Iron Age Corp. company guaranty 9 7/8s, 2008 62,000
10,000 Iron Age Holdings Corp. sr. disc. notes stepped-coupon
zero % (12 1/8s, 5/1/03), 2009 (STP) 1,000
150,000 Mothers Work, Inc. sr. notes 12 5/8s, 2005 133,500
510,000 Saks, Inc. company guaranty 8 1/4s, 2008 295,800
500,000 Southland Corp. deb. Ser. A, 4 1/2s, 2004 413,750
-------------
1,222,000
Semiconductor (0.2%)
-------------------------------------------------------------------------------------------------------------------
120,000 Chippac Intl., Ltd. company guaranty Ser. B,
12 3/4s, 2009 120,600
Shipping (0.3%)
-------------------------------------------------------------------------------------------------------------------
90,000 Kitty Hawk, Inc. company guaranty 9.95s, 2004
(In default) (NON) 44,100
160,000 Navistar International Corp. sr. notes Ser. B, 8s, 2008 132,800
30,000 Navistar International Corp. sr. notes Ser. B, 7s, 2003 27,300
-------------
204,200
Software (--%)
-------------------------------------------------------------------------------------------------------------------
90,000 Telehub Communications Corp. company guaranty
stepped-coupon zero % (13 7/8s, 7/31/02), 2005 (STP) 16,200
Specialty Printing (0.2%)
-------------------------------------------------------------------------------------------------------------------
110,000 Perry-Judd company guaranty 10 5/8s, 2007 93,500
74,751 Von Hoffman Press, Inc. 144A sr. sub. notes
13 1/2s, 2009 59,801
-------------
153,301
Technology (1.7%)
-------------------------------------------------------------------------------------------------------------------
80,000 Amkor Technologies, Inc. sr. notes 9 1/4s, 2006 74,800
270,000 Fairchild Semiconductor Corp. company guaranty
10 3/8s, 2007 248,400
220,000 Flextronics International Ltd. 144A sr. sub. notes
9 7/8s, 2010 (Singapore) 208,450
80,000 Flextronics International, Ltd. sr. sub. notes Ser. B,
8 3/4s, 2007 (Singapore) 76,800
300,000 Telecommunications Techniques, Inc. company
guaranty 9 3/4s, 2008 252,000
375,000 Viasystems, Inc. sr. sub notes 9 3/4s, 2007 329,234
-------------
1,189,684
Technology Services (1.0%)
-------------------------------------------------------------------------------------------------------------------
80,000 Cooperative Computing, Inc. sr. sub. notes 9s, 2008 28,000
310,000 Equinix, Inc. sr. notes 13s, 2007 217,000
20,000 Exodus Communications, Inc. sr. notes 11 1/4s, 2008 16,000
250,000 Exodus Communications, Inc. 144A sr. notes
11 5/8s, 2010 202,500
70,000 Exodus Communications, Inc. sr. notes 10 3/4s, 2009 54,600
420,000 Firstworld Communication Corp. sr. disc. notes
stepped-coupon zero % (13, 4/15/03), 2008 (STP) 63,000
115,000 Globix Corp. sr. notes 12 1/2s, 2010 50,600
50,000 Iron Mountain, Inc. company guaranty 8 3/4s, 2009 47,750
100,000 Rhythms Netconnections sr. notes Ser. B, 14s, 2010 22,000
-------------
701,450
Telecommunications (8.0%)
-------------------------------------------------------------------------------------------------------------------
90,000 360Networks, Inc. sr. notes 13s, 2008 (Canada) 60,300
20,000 American Mobile Satellite Corp. company guaranty
12 1/4s, 2008 13,400
20,000 Arch Communications, Inc. sr. notes 13 3/4s, 2008 12,900
20,000 Arch Communications, Inc. sr. notes 12 3/4s, 2007 8,000
60,000 Barak I.T.C. sr. disc. notes stepped-coupon Ser. B,
zero % (12 1/2s, 11/15/02), 2007 (Israel) (STP) 31,200
170,000 Bestel S.A. de C.V. sr. disc. notes stepped-coupon
zero % (12 3/4s, 5/15/03), 2005 (Mexico) (STP) 102,000
140,000 Call-Net Enterprises, Inc. sr. notes 8s, 2008 (Canada) 40,600
180,000 Carrier1 Intl. SA sr. notes Ser. B, 13 1/4s,
2009 (Luxembourg) 111,600
440,000 Celcaribe S.A. sr. notes stepped-coupon zero %
(13 1/2s, 3/15/04), 2004 (Colombia) (STP) 264,000
960,000 CellNet Data Systems, Inc. sr. disc. notes stepped-coupon
zero % (14s, 10/1/02), 2007 (In default) (STP) (NON) 9,600
190,000 CFW Communications Co. 144A sr. notes 13s, 2010 133,000
350,000 Covad Communications Group, Inc. sr. disc. notes
stepped-coupon Ser. B, zero % (13 1/2s, 3/15/03),
2008 (STP) 66,500
10,000 Covad Communications Group, Inc. sr. notes
Ser. B, 12s, 2010 2,900
120,000 Crown Castle Intl., Corp. sr. notes 10 3/4s, 2011 121,500
120,000 Dobson Communications Corp. sr. notes
10 7/8s, 2010 115,200
130,000 Dobson/Sygnet Communications, Inc. sr. notes
12 1/4s, 2008 126,100
120,000 Esprit Telecom Group PLC sr. notes 11 1/2s, 2007
(United Kingdom) 9,600
180,000 Flag Ltd. sr. notes 8 1/4s, 2008 (Bermuda) 140,400
100,000 Global Crossing Holdings, Ltd. company guaranty
9 5/8s, 2008 (Bermuda) 85,000
210,000 Global Crossing Holdings, Ltd. company guaranty
9 1/8s, 2006 (Bermuda) 176,400
145,000 Grupo Iusacell SA de CV sr. notes 14 1/4s,
2006 (Mexico) 147,175
10,000 Hermes Europe Railtel B.V. sr. notes 11 1/2s,
2007 (Netherlands) 4,800
20,000 Hermes Europe Railtel B.V. sr. notes 10 3/8s,
2009 (Netherlands) 9,600
190,000 Level 3 Communications, Inc. sr. notes 11s, 2008 146,300
30,000 Level 3 Communications, Inc. sr. notes 9 1/8s, 2008 19,950
245,000 Maxcom Telecomunicaciones SA de CV company
guaranty Ser. B, 13 3/4s, 2007 (Mexico) 120,050
50,000 Metrocall, Inc. sr. sub. notes 11s, 2008 13,000
20,000 Metrocall, Inc. sr. sub. notes 10 3/8s, 2007 7,350
40,000 Metrocall, Inc. sr. sub. notes 9 3/4s, 2007 14,700
300,000 Metromedia Fiber Network, Inc. sr. notes Ser. B,
10s, 2008 228,000
280,000 Millicom International Cellular S.A. sr. disc. notes
stepped-coupon zero % (13 1/2s, 6/1/01), 2006
(Luxembourg) (STP) 229,600
60,000 Nextel Communications, Inc. sr. disc. notes stepped-
coupon zero % (12 1/8s, 4/15/03), 2008 (STP) 31,200
380,000 Nextel Communications, Inc. sr. notes 12s, 2008 395,200
520,000 Nextel Communications, Inc. sr. notes 9 3/8s, 2009 457,600
270,000 Nextel International, Inc. 144A sr. notes 12 3/4s, 2010 221,400
130,000 Nextel Partners, Inc. sr. notes 11s, 2010 117,000
130,000 Nextel Partners, Inc. 144A sr. notes 11s, 2010 122,200
140,000 NorthEast Optic Network, Inc. sr. notes 12 3/4s, 2008 84,000
200,000 Orbital Imaging Corp. sr. notes Ser. B, 11 5/8s, 2005 40,000
140,000 Pagemart Wireless, Inc. sr. disc. notes stepped-coupon
zero % (11 1/4s, 2/1/03), 2008 (STP) 53,900
80,000 Paging Network sr. sub. notes 10s, 2008 (In default) (NON) 10,400
50,000 Paging Network sr. sub. notes 8 7/8s, 2006 6,500
110,000 Paging Network Do Brasil sr. notes 13 1/2s, 2005
(In default) (Brazil) (NON) 7,700
130,000 Pierce Leahy Command Co. company guaranty
8 1/8s, 2008 (Canada) 120,738
470,000 Pinnacle Holdings, Inc. sr. disc. notes stepped-coupon
zero % (10s, 3/15/03), 2008 (STP) 244,400
130,000 Price Communications Wireless, Inc. 144A sr. notes
Ser. B, 9 1/8s, 2006 131,300
325,000 Primus Telecommunications Group, Inc. sr. notes
12 3/4s, 2009 104,000
40,000 PSINet, Inc. sr. notes 11 1/2s, 2008 12,000
290,000 PSINet, Inc. sr. notes 11s, 2009 87,000
10,000 PSINet, Inc. sr. notes Ser. B, 10s, 2005 3,000
130,000 Rogers Cantel, Inc. sr. sub. notes 8.8s, 2007 (Canada) 128,050
350,000 RSL Communications PLC company guaranty
12 7/8s, 2010 (United Kingdom) 26,250
140,000 RSL Communications PLC company guaranty
10 1/2s, 2008 (United Kingdom) 12,600
130,000 RSL Communications PLC company guaranty
9 1/8s, 2008 (United Kingdom) 11,700
200,000 Spectrasite Holdings, Inc. sr. disc. notes stepped-coupon
Ser. B, zero % (12 7/8s, 3/15/05), 2010 (STP) 98,000
30,000 Spectrasite Holdings, Inc. sr. disc. notes stepped-coupon
zero % (11 1/4s, 4/15/04), 2009 (STP) 15,300
60,000 USA Mobile Communication, Inc. sr. notes 14s, 2004 39,000
40,000 USA Mobile Communication, Inc. sr. notes 9 1/2s, 2004 20,000
915,000 Viatel, Inc. sr. disc. notes stepped-coupon zero %
(12 1/2s, 4/15/03), 2008 (STP) 183,000
133,000 Viatel, Inc. sr. notes 11 1/2s, 2009 41,230
110,000 Williams Communications Group, Inc. 144A sr. notes
11.7s, 2008 85,800
90,000 Williams Communications Group, Inc. sr. notes
10 7/8s, 2009 64,800
180,000 World Access, Inc. sr. notes Ser. B, 13 1/4s, 2008 120,600
-------------
5,666,593
Telephone (4.1%)
-------------------------------------------------------------------------------------------------------------------
120,000 Airgate PCS, Inc. sr. sub. notes stepped-coupon zero %
(13 1/2s, 10/1/04), 2009 (STP) 57,600
180,000 Alamosa PCS Holdings, Inc. company guaranty
stepped-coupon zero % (12 7/8s, 2/15/05),
2010 (STP) 68,400
105,000 Alaska Communications Systems Corp. company
guaranty 9 3/8s, 2009 86,100
70,000 Allegiance Telecom, Inc. sr. notes 12 7/8s, 2008 60,900
100,000 Allegiance Telecom, Inc. sr. disc. notes stepped-coupon
Ser. B, zero % (11 3/4s, 2/15/03), 2008 (STP) 56,000
100,000 Birch Telecommunications, Inc. sr. notes 14s, 2008 60,000
250,000 BTI Telecom Corp. sr. notes 10 1/2s, 2007 62,500
55,000 Focal Communications Corp. sr. disc. notes, stepped-
coupon Ser. B, zero % (12 1/8s, 2/15/03), 2008 (STP) 18,700
120,000 Focal Communications Corp. sr. notes Ser. B,
11 7/8s, 2010 62,400
650,000 ICG Holdings, Inc. sr. disc. notes 13 1/2s, 2005 (Canada) 84,500
20,000 ICG Holdings, Inc. company guaranty stepped-coupon
zero % (12 1/2s, 5/1/01), 2006 (In default) (STP) (NON) 2,500
120,000 Intermedia Communications, Inc. sr. disc. notes stepped-
coupon Ser. B, 12 1/4s, (12 1/4s, 3/1/04), 2009 (STP) 76,800
50,000 Intermedia Communications, Inc. sr. notes Ser. B,
8 1/2s, 2008 40,000
850,000 KMC Telecommunications Holdings, Inc. sr. disc. notes
stepped-coupon zero % (12 1/2s, 2/15/03), 2008 (STP) 85,000
80,000 Leap Wireless International, Inc. company guaranty
12 1/2s, 2010 48,000
300,000 Madison River Capital Corp. sr. notes 13 1/4s, 2010 195,000
250,000 McLeodUSA, Inc. sr. notes 9 1/2s, 2008 210,000
260,000 Microcell Telecommunications sr. disc. notes stepped-
coupon Ser. B, zero % (14s, 12/1/01), 2006
(Canada) (STP) 241,800
50,000 Netia Holdings B.V. 144A company guaranty stepped-
coupon zero % (11 1/4s, 11/1/01), 2007 (Poland) (STP) 28,500
300,000 Netia Holdings B.V. 144A company guaranty
10 1/4s, 2007 (Poland) 198,000
30,000 NEXTLINK Communications, Inc. sr. notes
10 1/2s, 2009 19,200
160,000 Telecorp PCS, Inc. company guaranty 10 5/8s, 2010 152,000
130,000 Tele1 Europe B.V. 13s, 2009 (Netherlands) 109,200
110,000 Time Warner Telecom, Inc. sr. notes 9 3/4s, 2008 93,500
100,000 Transtel S.A. pass-through certificates 12 1/2s, 2007 12,000
350,000 UbiquiTel Operating Co. company guaranty stepped-
coupon zero % (14s, 4/15/05), 2010 (STP) 133,000
250,000 US Unwired, Inc. company guaranty, stepped-coupon
Ser. B, zero % (13 3/8s, 11/1/04), 2009 (STP) 95,000
180,000 Versatel Telecom B.V. sr. notes 13 1/4s, 2008
(Netherlands) 118,800
70,000 Versatel Telecom B.V. sr. notes 13 1/4s, 2008
(Netherlands) 46,200
230,000 VoiceStream Wire, Inc. sr. notes 10 3/8s, 2009 243,800
650,000 WinStar Communications, Inc. sr. disc. notes
stepped-coupon zero % (14 3/4s, 4/15/05),
2010 (STP) 130,000
90,000 WinStar Communications, Inc. sr. notes 12 3/4s, 2010 51,300
-------------
2,946,700
Textiles (1.5%)
-------------------------------------------------------------------------------------------------------------------
80,000 Galey & Lord, Inc. company guaranty 9 1/8s, 2008 41,600
90,000 GFSI, Inc. sr. disc. notes stepped-coupon Ser. B,
zero % (11 3/8s, 9/15/04), 2009 (STP) 13,500
250,000 Guess Jeans, Inc. sr. sub. notes 9 1/2s, 2003 225,000
235,000 Kasper A.S.L., Ltd. sr. notes 12 3/4s, 2004 (In default) (NON) 94,000
210,000 Levi Strauss & Co. notes 6.8s, 2003 170,100
50,000 Westpoint Stevens, Inc. sr. notes 7 7/8s, 2008 33,750
410,000 Westpoint Stevens, Inc. sr. notes 7 7/8s, 2005 287,000
135,000 William Carter Holdings Co. sr. sub. notes Ser. A,
12s, 2008 122,850
95,000 William Carter Holdings Co. sr. sub. notes Ser. A,
10 3/8s, 2006 90,250
-------------
1,078,050
Waste Management (1.1%)
-------------------------------------------------------------------------------------------------------------------
280,000 Allied Waste Industries, Inc. company guaranty
Ser. B, 10s, 2009 238,000
490,000 Allied Waste Industries, Inc. company guaranty
Ser. B, 7 7/8s, 2009 421,400
90,000 Waste Management, Inc. sr. notes 7s, 2004 86,403
60,000 Waste Management, Inc. company guaranty
6 7/8s, 2009 54,689
20,000 Waste Management, Inc. company guaranty
6 1/2s, 2004 18,957
-------------
819,449
Water Utilities (0.1%)
-------------------------------------------------------------------------------------------------------------------
50,000 Azurix Corp. sr. notes Ser. B, 10 3/4s, 2010 43,500
70,000 Azurix Corp. sr. notes Ser. B, 10 3/8s, 2007 62,300
-------------
105,800
-------------
Total Corporate Bonds and Notes
(cost $75,423,153) $ 57,762,874
<CAPTION>
PREFERRED STOCKS (6.1%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Banking (0.5%)
-------------------------------------------------------------------------------------------------------------------
6,240 Chevy Chase Preferred Capital Corporation
Ser. A, 5.189 pfd. $ 318,240
50,000 CSBI Capital Trust I 144A company guaranty
11.75% pfd. 50,000
-------------
368,240
Broadcasting (1.3%)
-------------------------------------------------------------------------------------------------------------------
116 Benedek Communications Corp. 11.50% pfd. (PIK) 50,460
2,003 Citadel Broadcasting Co. Ser. B, 13.25 cum. pfd. (PIK) 208,312
335 Granite Broadcasting 12.75% cum. pfd. (PIK) 50,250
60 Paxson Communications Corp. 13.25% cum. pfd. (PIK) 564,000
50 Pegasus Communications Corp. Ser. A, 12.75% cum. pfd. 50,500
-------------
923,522
Cable Television (0.9%)
-------------------------------------------------------------------------------------------------------------------
5,691 CSC Holdings, Inc. Ser. M, 11.125 cum. pfd. (PIK) 610,360
Consumer Goods (0.3%)
-------------------------------------------------------------------------------------------------------------------
8,200 Doane Pet Care Co. 7.125 pfd. 246,000
Financial (0.1%)
-------------------------------------------------------------------------------------------------------------------
80 First Republic 144A, 10.50% pfd. 66,400
Insurance (0.5%)
-------------------------------------------------------------------------------------------------------------------
14,500 CGA Group Ltd. 144A Ser. A, 13.75 pfd. 348,000
Media (0.8%)
-------------------------------------------------------------------------------------------------------------------
66,000 Diva Systems Corp. Ser. D, 6.00 pfd. 544,500
Medical Services (0.1%)
-------------------------------------------------------------------------------------------------------------------
80,000 Fresenius Medical Capital Trust I company guaranty
9.00% pfd. (Germany) 78,200
Restaurants (--%)
-------------------------------------------------------------------------------------------------------------------
6,445 AmeriKing, Inc. 3.25 cum. pfd. 6,445
Telecommunications (0.6%)
-------------------------------------------------------------------------------------------------------------------
7 Dobson Communications 13.00% pfd. (PIK) 6,195
278 Dobson Communications 144A 12.25 pfd. (PIK) 246,085
276 Rural Cellular Corp. 12.25% pfd. (PIK) 212,520
-------------
464,800
Telephone (1.0%)
-------------------------------------------------------------------------------------------------------------------
643 ICG Holdings, Inc. 14.0% cum. pfd. (In default) (PIK) (NON) 12,860
261 Intermedia Communications Ser. B, 13.5% pfd. (PIK) 195,750
211 Nextel Communications, Inc. 13.0% cum. pfd. (PIK) 208,890
159 Nextlink Communications, Inc. Ser. E, 13.5% pfd. (PIK) 71,550
5,307 Nextlink Communications, Inc. 7.0% cum. pfd. (PIK) 201,666
-------------
690,716
-------------
Total Preferred Stocks (cost $5,723,561) $ 4,347,183
<CAPTION>
FOREIGN GOVERNMENT BONDS AND NOTES (0.2%) (cost $162,254) (a)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
$ 190,000 Philippines (Republic of) notes 10 5/8s, 2025 $ 146,775
<CAPTION>
COMMON STOCKS (1.3%) (a) (NON)
NUMBER OF SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
7,310 360Networks, Inc. 144A (Canada) (acquired 5/11/00,
cost 81,872) (RES) $ 69,445
100 AmeriKing, Inc. 100
4,958 Aurora Foods, Inc. 12,085
1,800 Axia Holding, Inc. 144A (PIK) 21,600
50,942 Celcaribe S.A. 6,368
8,769 Fitzgeralds Gaming Corp. 88
12,997 Network Plus Corp. 38,991
244 Premium Holdings (L.P.) 144A 3,178
575 PSF Holdings LLC Class A 747,500
69 RCN Corp. 1
35 RSL Communications, Ltd. Class A 18
4,586 Spanish Broadcasting System, Inc. 21,210
12,750 Specialty Foods Acquisition Corp. 128
2,289 Tele1 Europe Holding AB ADR (Sweden) 12,876
-------------
Total Common Stocks (cost $2,150,809) $ 933,588
<CAPTION>
CONVERTIBLE BONDS AND NOTES (1.1%) (a)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
$ 140,000 Amkor Technologies, Inc. cv. sub. notes 5s, 2007 $ 91,175
490,000 Cybernet Internet Services Intl., Inc. 144A cv. sr. disc.
notes stepped-coupon zero % (13s, 8/15/04),
2009 (STP) 98,000
420,000 Exide Corp. 144A cv. sr. sub. notes 2.9s, 2005 189,000
40,000 Hexcel Corp. cv. sub. notes 7s, 2003 35,750
100,000 Pinnacle Holdings, Inc. 144A cv. sub. notes
5 1/2s, 2007 42,750
130,000 Telewest Finance Corp. cv. sub. notes 6s, 2005
(United Kingdom) 85,800
260,000 Waste Management, Inc. cv. sub. notes 4s, 2002 246,350
-------------
Total Convertible Bonds and Notes
(cost $1,100,493) $ 788,825
<CAPTION>
UNITS (0.7%) (a)
NUMBER OF UNITS VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
550 Australis Media, Ltd. units 15 3/4s, 2003
(In default) (Australia) (NON) $ 1
370 Colo.com 144A units 13 7/8s, 2010 240,500
220 Horizon Pcs., Inc. units stepped-coupon zero %
(14s, 10/1/05), 2010 (STP) 84,700
200 Ipcs Inc. units stepped-coupon zero % (14s 7/15/05),
2010 (STP) 84,000
8 Stone Container Corp. 12 1/4s, 2002 8,020
450 XCL Ltd. units sr. sec. notes 13 1/2s, 2004
(In default) (NON) 81,000
2,950 XCL, Ltd. 144A units cum. pfd. zero % (PIK) 1,475
-------------
Total Units (cost $1,875,466) $ 499,696
<CAPTION>
CONVERTIBLE PREFERRED STOCKS (0.3%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
500 Global Crossing, Ltd. 7.00% cum cv. pfd (Bermuda) $ 57,375
700 Global Crossing, Ltd. 6.75% cum cv. pfd (Bermuda) 97,213
2,300 Global Telesystems Group, Inc. 3.63 cum. cv. pfd. 5,463
5,060 Global Telesystems Group, Inc. 144A 3.625
cum. cv. pfd. 12,018
1,400 LTV Corp. (The) 144A 4.125 cv. pfd. 13,475
36 World Access, Inc. 144A zero % cv. pfd. 10,347
580 XCL, Ltd. 144A Ser. A, 9.50% cv. cum. pfd. 290
-------------
Total Convertible Preferred Stocks
(cost $746,831) $ 196,181
<CAPTION>
WARRANTS (0.3%) (a) (NON) EXPIRATION
NUMBER OF WARRANTS DATE VALUE
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
265 Asia Pulp & Paper Co., Ltd.144A 3/15/05 $ 3
170 Bestel S.A. (Mexico) 5/15/05 17,000
150 Birch Telecommunications, Inc. 144A (PIK) 6/15/08 15,000
1,490 CellNet Data Systems, Inc. 10/1/07 1
190 CFW Communications Co. 8/15/10 190
14,500 CGA Group, Ltd. 144A 2/11/07 145
250 Comunicacion Cellular 144A (Colombia) 11/15/03 500
200 Dayton Superior Corp. 144A 6/15/09 4,000
10 Decrane Holdings 9/30/08 1
20 Diva Systems Corp. 3/1/08 300
260 Firstworld Communication Corp. 4/15/08 3,380
6,691 ICG Communications 10/15/05 6,691
180 Insilco Corp. 144A 8/15/07 1
200 International Wireless Communications
Holdings 144A 8/15/01 1
440 Iridium World Com 144A 7/15/05 1
290 Jostens, Inc. 5/1/10 5,800
800 KMC Telecom Holdings, Inc. 4/15/08 1,600
700 Knology Holdings 10/22/07 2,450
80 Leap Wireless International 144A 4/15/10 20
245 Maxcom Telecomunicaciones SA de CV
144A (Mexico) 4/1/07 2
815 McCaw International, Ltd. 4/15/07 24,450
180 Mediq, Inc. 144A 6/1/09 2
30 Motient Corp. 144A 4/1/08 450
100 Onepoint Communications, Inc. 6/1/08 7,500
200 Orbital Imaging Corp. 144A 3/1/05 1,800
6,900 Pagemart, Inc. 144A 12/31/03 69,000
80 Pliant Corp. 144A 6/1/10 800
170 Railamerica, Inc. 8/15/10 1,700
300 Raintree Resort 12/1/04 3
500 Signature Brands, Ltd. 8/15/02 1
155 Sterling Chemicals Holdings 8/15/08 174
90 Telehub Communications Corp. 7/31/05 45
350 Ubiquitel, Inc. 144A 4/15/10 8,750
1,045 UIH Australia/Pacific, Inc. 144A 5/15/06 5,225
1,500 USN Communications Inc. 8/15/04 15
10 Versatel Telecom Intl. 5/15/08 1,000
100,640 Wright Medical Technology, Inc. 144A 6/30/03 1
190 XM Satellite Radio Holdings, Inc. 3/15/10 13,300
-------------
Total Warrants (cost $356,863) $ 191,302
<CAPTION>
SHORT-TERM INVESTMENTS (6.9%) (a)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
$ 2,500,000 Interest in $900,000,000 joint repurchase agreement
dated November 30, 2000 with Goldman Sachs &
Co. due December 1, 2000 with respect to various
U.S. Government obligations -- maturity value of
2,500,453 for an effective yield of 6.52% $ 2,500,000
2,467,000 Interest in $918,736,000 joint repurchase agreement
dated November 30, 2000 with Morgan (J.P.) & Co.,
Inc. due December 1, 2000 with respect to various
U.S. Government obligations -- maturity value of
$2,467,447 for an effective yield of 6.53% 2,467,000
-------------
Total Short-Term Investments (cost $4,967,000) $ 4,967,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $92,506,430) (b) $ 69,833,424
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $71,527,167.
(b) The aggregate identified cost on a tax basis is $92,565,538,
resulting in gross unrealized appreciation and depreciation of
$1,698,084 and $24,430,198, respectively, or net unrealized depreciation
of $22,732,114.
(NON) Non-income-producing security.
(STP) The interest rate and date shown parenthetically represent the new
interest rate to be paid and the date the fund will begin receiving
interest at this rate.
(PIK) Income may be received in cash or additional securities at the
discretion of the issuer.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at November 30, 2000
was $69,445 or 0.10% of net assets.
144A after the name of a security represents those exempt from
registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
ADR after the name of a foreign holding stands for American
Depositary Receipts, representing ownership of foreign securities on
deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2000 (Unaudited)
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $92,506,430) (Note 1) $ 69,833,424
-------------------------------------------------------------------------------------------
Cash 126,706
-------------------------------------------------------------------------------------------
Dividends, interest and other receivables 1,821,090
-------------------------------------------------------------------------------------------
Receivable for securities sold 1,602,983
-------------------------------------------------------------------------------------------
Total assets 73,384,203
Liabilities
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 743,125
-------------------------------------------------------------------------------------------
Payable for securities purchased 871,783
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 145,863
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 49,446
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 15,872
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,713
-------------------------------------------------------------------------------------------
Other accrued expenses 29,234
-------------------------------------------------------------------------------------------
Total liabilities 1,857,036
-------------------------------------------------------------------------------------------
Net assets $ 71,527,167
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Note 1) $106,219,718
-------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (873,189)
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (Note 1) (11,154,560)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
assets and liabilities in foreign currencies (22,664,802)
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $ 71,527,167
Computation of net asset value
-------------------------------------------------------------------------------------------
Net asset value per share ($71,527,167 divided by 7,507,107 shares) $9.53
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended November 30, 2000 (Unaudited)
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Dividends $ 288,581
-------------------------------------------------------------------------------------------
Interest income 4,913,851
-------------------------------------------------------------------------------------------
Total investment income 5,202,432
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 305,016
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 92,334
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 5,104
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 2,036
-------------------------------------------------------------------------------------------
Other 40,319
-------------------------------------------------------------------------------------------
Total expenses 444,809
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (5,872)
-------------------------------------------------------------------------------------------
Net expenses 438,937
-------------------------------------------------------------------------------------------
Net investment income 4,763,495
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (2,412,268)
-------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (397)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the period 61
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (8,187,643)
-------------------------------------------------------------------------------------------
Net loss on investments (10,600,247)
-------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(5,836,752)
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six months ended Year ended
November 30 May 31
2000* 2000
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 4,763,495 $ 8,733,996
--------------------------------------------------------------------------------------------------
Net realized loss on investments and
foreign currency transactions (2,412,665) (1,821,193)
--------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
assets and liabilities in foreign currencies (8,187,582) (7,759,645)
--------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (5,836,752) (846,842)
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income (4,533,837) (8,884,513)
--------------------------------------------------------------------------------------------------
In excess of net investment -- (247,729)
--------------------------------------------------------------------------------------------------
From return of capital -- (490,983)
--------------------------------------------------------------------------------------------------
Total decrease in net assets (10,370,589) (10,470,067)
Net assets
--------------------------------------------------------------------------------------------------
Beginning of period 81,897,756 92,367,823
--------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income of $873,189 and
$1,102,847, respectively) $71,527,167 $81,897,756
--------------------------------------------------------------------------------------------------
Number of fund shares
--------------------------------------------------------------------------------------------------
Shares outstanding at beginning and end of period 7,507,107 7,507,107
--------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share Nov. 30
operating performance (Unaudited) Year ended May 31
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.91 $12.30 $14.83 $14.08 $13.78 $13.04
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income .63 1.16 1.24 1.44 1.34 1.27
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (1.41) (1.27) (2.23) .69 .29 .79
------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.78) (.11) (.99) 2.13 1.63 2.06
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income (.60) (1.18) (1.38) (1.38) (1.33) (1.30)
------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.03) -- -- -- (.02)
------------------------------------------------------------------------------------------------------------------
From net realized
gain on investments -- -- (.16) -- -- --
------------------------------------------------------------------------------------------------------------------
Return of capital -- (.07) -- -- -- --
------------------------------------------------------------------------------------------------------------------
Total distributions (.60) (1.28) (1.54) (1.38) (1.33) (1.32)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.53 $10.91 $12.30 $14.83 $14.08 $13.78
------------------------------------------------------------------------------------------------------------------
Market value,
end of period $9.25 $10.188 $13.500 $15.375 $14.375 $13.750
------------------------------------------------------------------------------------------------------------------
Total return at
market value (%)(a) (3.91)* (15.61) (2.06) 16.96 14.88 15.30
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $71,527 $81,898 $92,368 $111,333 $105,690 $103,466
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .56* 1.08 1.11 1.05 1.06 1.04
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.98* 9.92 9.50 9.75 9.70 9.49
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 51.07* 97.22 47.56 85.45 62.57 74.70
------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
November 30, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam Managed High Yield Trust (the "fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified,
closed-end management investment company. The fund's investment
objective is to seek high current income. The fund intends to achieve
its objective by investing in high yielding income securities.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sales price on its principal exchange, or if no sales
are reported -- as in the case of some securities traded
over-the-counter -- the last reported bid price. Short-term investments
having remaining maturities of 60 days or less are stated at amortized
cost, which approximates market value. Other investments, including
restricted securities, are stated at fair value following procedures
approved by the Trustees. Market quotations are not considered to be
readily available for certain debt obligations; such investments are
stated at fair value on the basis of valuations furnished by an
independent pricing service or dealers, approved by the Trustees, which
determine valuations for normal institutional-size trading units of such
securities using methods based on market transactions for comparable
securities and variable relationships between securities that are
generally recognized by institutional traders.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management, LLC ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Collateral for certain tri-party repurchase agreements is held at the
counterparty's custodian in a segregated account for the benefit of the
fund and the counterparty. Putnam Management is responsible for
determining that the value of these underlying securities is at all
times at least equal to the resale price, including accrued interest.
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). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends, if any, are recorded at the fair
market value of the securities received. Discounts on zero coupon bonds,
original issue discount bonds, stepped-coupon bonds and payment in kind
bonds are accreted according to the yield-to-maturity basis. Any premium
resulting from the purchase of stepped-coupon bonds is amortized on a
yield-to-maturity basis.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies and the difference between the amount
of investment income and foreign withholding taxes recorded on the
fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net unrealized appreciation and depreciation of assets and
liabilities in foreign currencies arise from changes in the value of
open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange
rate. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.
F) Federal taxes It is the policy of the fund to distribute all of its
taxable 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, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At May 31, 2000, the fund had a capital loss carryover of approximately
$6,752,000 available to offset future capital gains, if any. The amount
of the carryover and the expiration dates are:
Loss Carryover Expiration
-------------- ------------------
$2,584,000 May 31, 2007
4,168,000 May 31, 2008
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations.
Note 2
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. Such fee is based on the following annual rates: 0.75% of the
first $500 million of average net assets, 0.65% of the next $500
million, 0.60% of the next $500 million, and 0.55% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended November 30,
2000, the fund's expenses were reduced by $5,872 under these
arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $475 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
Note 3
Purchases and sales of securities
During the six months ended November 30, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $38,071,751 and $42,754,691, respectively. There
were no purchases and sales of U.S. government obligations.
Note 4
New accounting pronouncement
In November 2000, the AICPA issued a revised Audit and Accounting Guide,
Audits of Investment Companies, which is effective for fiscal years
beginning after December 15, 2000. The revised Guide will require the
fund to amortize premium and accrete discount on all fixed-income
securities, and classify as interest income gains and losses realized on
paydowns on mortgage-backed securities which are presently included in
realized gain/loss. Adopting these accounting principles will not affect
the fund's net asset value, but will change the classification of
certain amounts between interest income and realized and unrealized
gain/loss in the Statement of operations. The fund has not at this time
quantified the impact, if any, resulting from the adoption of this
principle on the financial statements.
Note 5
Change in independent accountants
(unaudited)
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP as this fund's independent accountants and voted to appoint KPMG LLP
for the fund's fiscal year ended May 31, 2001. During the two previous
fiscal years, PricewaterhouseCoopers LLP audit reports contained no
adverse opinion or disclaimer of opinion; nor were its reports qualified
or modified as to uncertainty, audit scope, or accounting principle.
Further, in connection with its audits for the two previous fiscal years
and through July 24, 2000, there were no disagreements between the fund
and PricewaterhouseCoopers LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused it to make reference to the
disagreements in its report on the financial statements for such years.
RESULTS OF OCTOBER 5, 2000 SHAREHOLDER MEETING
(Unaudited)
An annual meeting of shareholders of the fund was held on October 5,
2000. At the meeting, each of the nominees for Trustees was elected, as
follows:
Votes
Votes for withheld
Jameson Adkins Baxter 6,546,564 139,729
Hans H. Estin 6,527,380 158,913
J. A. Hill 6,548,055 138,238
Ronald J. Jackson 6,547,494 138,799
Paul L. Joskow 6,549,592 136,701
Elizabeth T. Kennan 6,549,689 136,604
Lawrence J. Lasser 6,541,919 144,374
John H. Mullin III 6,549,357 136,936
R. E. Patterson 6,541,256 145,037
George Putnam, III 6,545,058 141,235
A.J.C. Smith 6,539,899 146,394
W. Thomas Stephens 6,548,957 137,336
W. Nicholas Thorndike 6,540,362 145,931
A proposal to ratify the selection of KPMG LLP as independent
accountants for the fund was approved as follows: 6,587,916 votes for,
and 35,255 votes against, with 63,122 abstentions and non-broker votes.
All tabulations are rounded to nearest whole number.
WELCOME TO WWW.PUTNAMINVESTMENTS.COM
Now you can use your PC to get up-to-date information about your funds,
learn more about investing and retirement planning, and access market
news and economic outlooks from Putnam.
VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
* the benefits of investing with Putnam
* Putnam's money management philosophy
* complete fund information, daily pricing and long-term performance
* the latest on new funds and other Putnam news
You can also read Putnam economist Dr. Robert Goodman's commentary and
Putnam's Capital Markets outlook, search for a particular fund by name
or objective, use our glossary to decode investment terms . . . and much
more.
The site can be accessed through any of the major online services
(America Online, CompuServe, Prodigy) that offer web access. Of course,
you can also access it via Netscape or Microsoft Internet Explorer,
using an independent Internet service provider.
New features will be added to the site regularly. So be sure to bookmark us at
http://www.putnaminvestments.com
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, LLC
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
John A. Hill, Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Rosemary H. Thomsen
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or
visit our Web site (www.putnaminvestments.com) any time for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
67695 590 1/01
