Item 1. Schedule of Investments:
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PUTNAM PREMIERE INCOME TRUST
QUARTERLY PORTFOLIO HOLDINGS
4-30-05
Putnam Premier Income Fund | ||||
Forward currency contracts to buy at April 30, 2005 (Unaudited) | ||||
(aggregate face value $176,034,834) | ||||
Unrealized | ||||
Aggregate | Delivery | appreciation/ | ||
Value | face value | date | (depreciation) | |
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Australian Dollar | $51,042,188 | $50,451,876 | 7/20/05 | $590,312 |
British Pound | 37,986,930 | 37,759,933 | 6/15/05 | 226,997 |
Danish Krone | 2,419,485 | 2,462,929 | 6/15/05 | (43,444) |
Euro | 8,667,064 | 8,787,075 | 6/15/05 | (120,011) |
Japanese Yen | 51,489,886 | 52,578,966 | 5/18/05 | (1,089,080) |
Norwegian Krone | 226,933 | 224,807 | 6/15/05 | 2,126 |
South Korean Won | 3,538,589 | 3,489,585 | 5/18/05 | 49,004 |
Swedish Krona | 6,920,447 | 6,973,543 | 6/15/05 | (53,096) |
Swiss Franc | 8,643,152 | 8,639,686 | 6/15/05 | 3,466 |
Taiwan Dollar | 3,705,372 | 3,600,672 | 5/18/05 | 104,700 |
Polish Zloty | 965,262 | 1,065,762 | 6/15/05 | (100,500) |
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$(429,526) |
Putnam Premier Income Fund | ||||
Forward currency contracts to sell at April 30, 2005 (Unaudited) | ||||
(aggregate face value $203,311,057) | ||||
Unrealized | ||||
Aggregate | Delivery | appreciation/ | ||
Value | face value | date | (depreciation) | |
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Australian Dollar | $15,000,729 | $14,738,486 | 7/20/05 | $(262,243) |
British Pound | 12,246,816 | 12,121,502 | 6/15/05 | (125,314) |
Canadian Dollar | 22,761,061 | 23,310,533 | 7/20/05 | 549,472 |
Euro | 89,211,867 | 90,296,170 | 6/15/05 | 1,084,303 |
Japanese Yen | 11,633,829 | 11,492,353 | 5/18/05 | (141,476) |
Norwegian Krone | 3,783,051 | 3,779,530 | 6/15/05 | (3,521) |
Swedish Krona | 38,869,454 | 40,259,429 | 6/15/05 | 1,389,975 |
Swiss Franc | 7,300,444 | 7,313,054 | 6/15/05 | 12,610 |
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$2,503,806 | ||||
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Putnam Premier Income Fund | ||||
Futures contracts outstanding at April 30, 2005 (Unaudited) | ||||
Unrealized | ||||
Number of | Expiration | appreciation/ | ||
contracts | Value | date | (depreciation) | |
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CBT Interest Rate Swap 10 yr (Long) | 30 | $3,314,063 | Jun-05 | $47,739 |
Euro-Bobl 5 yr (Long) | 171 | 25,138,587 | Jun-05 | 357,196 |
Euro-Bund 10 yr (Long) | 13 | 2,025,227 | Jun-05 | 49,964 |
Japanese Government Bond 10 yr -TSE (Long) | 16 | 21,431,459 | Jun-05 | 443,783 |
Japanese Government Bond - Mini 10 yr -TSE (Long) | 96 | 12,861,621 | Jun-05 | 271,436 |
U.K. Gilt 10 yr (Long) | 43 | 9,151,959 | Jun-05 | 144,794 |
U.S. Treasury Bond (Short) | 543 | 62,360,156 | Jun-05 | (875,690) |
U.S. Treasury Note 10 yr (Long) | 1,399 | 155,879,203 | Jun-05 | 1,219,446 |
U.S. Treasury Note 5 yr (Short) | 1,385 | 150,207,578 | Jun-05 | (486,121) |
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$1,172,547 | ||||
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Putnam Premier Income Fund | ||||
Interest rate swap contracts outstanding at April 30, 2005 (Unaudited) | ||||
Unrealized | ||||
Notional | Termination | appreciation/ | ||
amount | date | (depreciation) | ||
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Agreement with UBS, AG dated April 4, 2005 to pay quarterly the notional amount multiplied by 2.61% and receive semi-annually the notional amount multiplied by the six month EUR-EURIBOR-Telerate. | EUR | 151,000,000 | 4/6/07 | ($827,796) |
Agreement with UBS, AG dated April 25, 2005 to pay annually the notional amount multiplied by 2.974% and receive semi-annually the notional amount multiplied by the six month EUR-EURIBOR-Telerate. | EUR | 34,700,000 | 4/27/10 | (104,777) |
Agreement with UBS, AG dated April 25, 2005 to receive annually the notional amount multiplied by 2.453% and pay semi-annually the notional amount multiplied by the six month EUR-EURIBOR-Telerate. | EUR | 18,400,000 | 4/27/07 | 35,078 |
Agreement with UBS, AG dated April 25, 2005 to receive annually the notional amount multiplied by 3.563% and pay semi-annually the notional amount multiplied by the six month EUR-EURIBOR-Telerate. | EUR | 16,700,000 | 4/27/15 | 94,036 |
Agreement with Bank of America, N.A. dated March 25, 2004 to pay semi-annually the notional amount multiplied by 3.075% and receive quarterly the notional amount multiplied by the three month USD-LIBOR. | $32,700,000 | 3/30/09 | 1,380,472 | |
Agreement with Bank of America, N.A. dated January 22, 2004 to pay semi-annually the notional amount multiplied by 1.97375% and receive quarterly the notional amount multiplied by the three month USD-LIBOR. | 21,900,000 | 1/26/06 | 154,883 | |
Agreement with Bank of America, N.A. dated December 2, 2003 to pay semi-annually the notional amount multiplied by 2.444% and receive quarterly the notional amount multiplied by the three month USD-LIBOR. | 12,408,000 | 12/5/05 | 14,392 | |
Agreement with Bank of America, N.A. dated December 2, 2003 to pay semi-annually the notional amount multiplied by 2.444% and receive quarterly the notional amount multiplied by the three month USD-LIBOR. | 6,900,000 | 1/27/14 | 39,166 | |
Agreement with Credit Suisse First Boston International dated July 7, 2004 to pay semi-annually the notional amount multiplied by 4.945% and receive quarterly the notional amount multiplied by the three month USD-LIBOR. | 11,257,600 | 7/9/14 | (439,616) | |
Agreement with Credit Suisse First Boston International dated July 7, 2004 to receive semi-annually the notional amount multiplied by 2.931% and pay quarterly the notional amount multiplied by the three month USD-LIBOR. | 9,973,300 | 7/9/06 | (26,398) | |
Agreement with Lehman Brothers Special Financing, Inc. dated January 22, 2004 to pay semi-annually the notional amount multiplied by 1.955% and receive quarterly the notional amount multiplied by the three month USD-LIBOR-BBA. | 21,900,000 | 1/26/06 | 157,153 | |
Agreement with Lehman Brothers Special Financing, Inc. dated December 9, 2003 to receive semi-annually the notional amount multiplied by 4.641% and pay quarterly the notional amount multiplied by the three month USD-LIBOR-BBA. | 18,032,000 | 12/15/13 | 332,464 | |
Agreement with Lehman Brothers Special Financing, Inc. dated January 22, 2004 to pay semi-annually the notional amount multiplied by 4.3375% and receive quarterly the notional amount multiplied by the three month USD-LIBOR-BBA. | 6,900,000 | 1/26/14 | 42,978 | |
Agreement with Merrill Lynch Capital Services, Inc. dated February 16, 2005 to receive semi-annually the notional amount multiplied by the six month Euribor and pay at maturity the notional amount multiplied by 2.5645%. | EUR | 92,500,000 | 2/19/07 | (523,128) |
Agreement with Merrill Lynch Capital Services, Inc. dated September 27, 2002 to receive semi-annually the notional amount multiplied by the six month JPY-LIBOR-BBA and pay semi-annually the notional amount multiplied by 0.399%. | JPY | 4,751,000,000 | 10/1/07 | (246,123) |
Agreement with Merrill Lynch Capital Services, Inc. dated November 17, 2000 to pay semi-annually the notional amount multiplied by the three month USD-LIBOR-BBA and receive the notional amount multiplied by 6.68%. | $12,500,000 | 11/21/05 | 519,916 | |
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$602,700 | ||||
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Putnam Premier Income Fund | ||||
Credit default contracts outstanding at April 30, 2005 (Unaudited) | ||||
Unrealized | ||||
Notional | appreciation/ | |||
amount | (depreciation) | |||
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Agreement with Citigroup Financial Products Inc effective April 28, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and receives quarterly 201 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 4 Index 25-35% tranche, the fund makes a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 4 Index 25-35% tranche. | $4,600,000 | $21,505 | ||
Agreement with Deutsche Bank AG effective April 15, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and receive quarterly 180 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 4 Index 25-35% tranche, the fund make a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 4 Index 25-35% tranche. | 4,600,000 | 19 | ||
Agreement with Citigroup Financial Products Inc effective April 15, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and receive quarterly 180 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 4 Index 25-35% tranche, the fund makes a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 4 Index 25-35% tranche. | 4,600,000 | (19,550) | ||
Agreement with Bank of America effective April 14, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and pay quarterly 360 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 3 Index, the fund receives a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 3 Index. | 3,700,000 | (38,699) | ||
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Agreement with Merrill Lynch International & Co. C.V. effective April 14,2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and receives quarterly 360 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 3 Index, the fund makes a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 3 Index. | 2,300,000 | (34,669) | ||
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Agreement with Goldman Sachs Capital Markets effective April 13, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and pay quarterly 360 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 3 Index, the fund receives a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 3 Index. | 1,900,000 | (79,040) | ||
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Agreement with Goldman Sachs Capital Markets effective April 1, 2005, maturing on December 20, 2009, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and pay quarterly 138 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 3 Index 25-35% tranche, the fund receives a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 3 Index 25-35% tranche. | 1,810,000 | (3,409) | ||
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Agreement with Lehman Brothers Finance, S.A. effective March 24, 2005, maturing on December 20, 2009, to receive quarterly 116 basis points times the notional amount. Upon a credit default event of any reference entity within the DJ IG CDX Series 3 Index that the counterparties agree advances within the 25-35 Loss Basket of the Index, the fund makes a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ IG CDX Series 3 Index. | 1,810,000 | (27,238) | ||
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Agreement with Bank of America effective April 13, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and receive quarterly 360 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 3 Index, the fund makes a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 3 Index. | 1,800,000 | (65,696) | ||
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Agreement with Lehman Brothers Finance S.A. effective April 14, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and pay quarterly 360 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 3 Index, the fund receives a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 3 Index. | 1,800,000 | (17,941) | ||
Agreement with Lehman Brothers Finance S.A. effective April 18, 2005, maturing on June 20, 2010, to receive/(pay) a premium based on the difference between the original spread on issue and the market spread on day of execution and pay quarterly 194 basis points times the notional amount. Upon a credit default event of a reference entity within the DJ HY CDX 4 Index 25-35% tranche, the fund receives a payment of the proportional notional amount times the difference between the par value and the then-market value of the reference entity within the DJ HY CDX 4 Index 25-35% tranche. | 1,100,000 | (5,736) | ||
Agreement with Goldman Sachs effective September 2, 2004, terminating on the date on which the notional amount is reduced to zero or the date on which the assets securing the reference obligation are liquidated, the fund receives a payment of the outstanding notional amount times 2.35% and the fund pays in the event of a credit default in one of the underlying securities in the basket of BB CMBS securities. | 2,218,370 | 108,580 | ||
Agreement with Goldman Sachs effective September 2, 2004, terminating on the date on which the notional amount is reduced to zero or the date on which the assets securing the reference obligation are liquidated, the fund receives a payment of the outstanding notional amount times 2.55625% and the fund pays in the event of a credit default in one of the underlying securities in the basket of BB CMBS securities. | 2,218,370 | 70,619 | ||
Agreement with Goldman Sachs effective September 2, 2004, terminating on the date on which the notional amount is reduced to zero or the date on which the assets securing the reference obligation are liquidated, the fund receives a payment of the outstanding notional amount times 2.4625% and the fund pays in the event of a credit default in one of the underlying securities in the basket of BB CMBS securities. | 1,109,185 | 58,823 | ||
Agreement with Goldman Sachs effective September 2, 2004, terminating on the date on which the notional amount is reduced to zero or the date on which the assets securing the reference obligation are liquidated, the fund receives a payment of the outstanding notional amount times 2.433% and the fund pays in the event of a credit default in one of the underlying securities in the basket of BB CMBS securities. | 831,889 | 37,508 | ||
Agreement with Goldman Sachs effective September 2, 2004, terminating on the date on which the notional amount is reduced to zero or the date on which the assets securing the reference obligation are liquidated, the fund receives a payment of the outstanding notional amount times 2.475% and the fund pays in the event of a credit default in one of the underlying securities in the basket of BB CMBS securities. | 554,593 | 17,701 | ||
Agreement with Goldman Sachs effective September 2, 2004, terminating on the date on which the notional amount is reduced to zero or the date on which the assets securing the reference obligation are liquidated, the fund receives a payment of the outstanding notional amount times 2.5% and the fund pays in the event of a credit default in one of the underlying securities in the basket of BB CMBS securities. | 277,296 | 17,109 | ||
Agreement with Goldman Sachs effective September 2, 2004, terminating on the date on which the notional amount is reduced to zero or the date on which the assets securing the reference obligation are liquidated, the fund receives a payment of the outstanding notional amount times 2.6% and the fund pays in the event of a credit default in one of the underlying securities in the basket of BB CMBS securities. | 277,296 | 2,805 | ||
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| $42,691 |
KEY TO ABBREVIATIONS | |
FRB -- Floating Rate Bonds | |
FRN -- Floating Rate Notes | |
IFB -- Inverse Floating Rate Bonds | |
NOTES | |
(a) | Percentages indicated are based on net assets of $1,387,960,576. |
(b) | The aggregate identified cost on a tax basis is $1,505,489,367, resulting in gross unrealized appreciation and depreciation of $53,905,820 and $56,893,516, respectively, or net unrealized depreciation of $2,987,696. |
(c) | Senior loans are exempt from registration under the Security Act of 1933, as amended, but contain certain restrictions on resale and cannot be sold publicly. These loans pay interest at rates which adjust periodically. The interest rate shown for senior loans are the current interest rates at April 30, 2005. Senior loans are also subject to mandatory and/or optional prepayment which cannot be predicted. As a result, the remaining maturity may be substantially less than the stated maturity shown. |
(DEF) | Security is in default of principal and interest. |
(NON) | Non-income-producing security. |
(S) | Securities on loan, in part or in entirety, at April 30, 2005. |
(STP) | The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the fund will begin accruing interest at this rate. |
(RES) | Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at April 30, 2005 was $369,408 or 0.03% of net assets. |
(PIK) | Income may be received in cash or additional securities at the discretion of the issuer. |
(SEG) | This security was pledged and segregated with the custodian to cover margin requirements for futures contracts at April 30, 2005. |
(R) | Real Estate Investment Trust. |
(d) | The fund may lend securities, through its agents, to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agents; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the statement of operations. At April 30, 2005, the value of securities loaned amounted to $1,299,923. The fund received cash collateral of $1,326,755 which is pooled with collateral of other Putnam funds into 17 issuers of high-grade, short-term investments. |
(e) | Pursuant to an exemptive order from the Securities and Exchange Commission, the fund invests in Putnam Prime Money Market Fund, an open-end management investment company managed by Putnam Investment Management, LLC ("Putnam Management"), the fund's manager, an indirect wholly-owned subsidiary of Putnam, LLC. Management fees paid by the fund are reduced by an amount equal to the management and administrative fees paid by Putnam Prime Money Market Fund with respect to assets invested by the fund in Putnam Prime Money Market Fund. Income distributions earned by the fund totaled $2,180,924 for the period ended April 30, 2005. During the period ended April 30, 2005, cost of purchases and cost of sales of investments in Putnam Prime Money Market Fund aggregated $493,014,053 and $448,965,948, respectively. |
(F) | Security is valued at fair value following procedures approved by the Trustees. |
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. | |
TBA after the name of a security represents to be announced securities. | |
FLIRB represents Front Loaded Interest Reduction Bond. | |
The rates shown on Floating Rate Bonds (FRB) and Floating Rate Notes (FRN) are the current interest rates at April 30, 2005. | |
The rates shown on IFB's, which are securities paying interest rates that vary inversely to changes in the market interest rates, are the current interest rates at April 30, 2005. | |
Security valuation Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets. If no sales are reported -- as in the case of some securities traded over-the-counter -- a security is valued at its last reported bid price. Market quotations are not considered to be readily available for certain debt obligations; such investments are valued at fair value on the basis of valuations furnished by an independent pricing service or dealers, approved by the Trustees. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign securities taking into account multiple factors, including movements in the U.S. securities markets. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. | |
Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. | |
Short-term investments having remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. | |
Other investments, including certain restricted securities, are valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. | |
Forward currency contracts The fund may buy and sell forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short term investments). The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. | |
The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the statement of assets and liabilities. Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio. | |
Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns or expects to purchase. The fund may also write options on securities it owns or in which it may invest to increase its current returns. | |
The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparty to the contract is unable to perform. Risks may exceed amounts recognized on the statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to cost of investments. | |
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.” Exchange traded options are valued at the last sale price, or if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. Futures and written option contracts outstanding at period end, if any, are listed after the fund’s portfolio. | |
Interest rate swap contracts The fund may enter into interest rate swap contracts, which are arrangements between two parties to exchange cash flows based on a notional principal amount, to manage the fund’s exposure to interest rates. Interest rate swap contracts are marked-to-market daily based upon quotations from market makers and the change, if any, is recorded as unrealized gain or loss. Payments received or made are recorded as realized gains or loss. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or if the counterparty defaults on its obligation to perform. Risk of loss may exceed amounts recognized on the statement of assets and liabilities. Interest rate swap contracts outstanding at period end, if any, are listed after the fund’s portfolio. | |
Credit default contracts The fund may enter into credit default contracts where one party, the protection buyer, makes an upfront or periodic payment to a counterparty, the protection seller, in exchange for the right to receive a contingent payment. The maximum amount of the payment may equal the notional amount, at par, of the underlying index or security as a result of a related credit event. An upfront payment received by the fund, as the protection seller, is recorded as a liability on the fund’s books. An upfront payment made by the fund, as the protection buyer, is recorded as an asset on the fund’s books. Periodic payments received or paid by the fund are recorded as realized gains or losses. The credit default contracts are marked-to-market daily based upon quotations from market makers and the change, if any, is recorded as unrealized gain or loss. Payments received or made as a result of a credit event or termination of the contract are recognized, net of a proportional amount of the upfront payment, as realized gains or losses. In addition to bearing the risk that the credit event will occur, the fund could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index, the possibility that the fund may be unable to close out its position at the same time or at the same price as if it had purchased comparable publicly traded securities or that the counterparty may default on its obligation to perform. Risks of loss may exceed amounts recognized on the statement of assets and liabilities. Credit default contracts outstanding at period end, if any, are listed after the fund’s portfolio. | |
TBA purchase commitments The fund may enter into “TBA” (to be announced) commitments to purchase securities for a fixed unit price at a future date beyond customary settlement time. Although the unit price has been established, the principal value has not been finalized. However, the amount of the commitments will not significantly differ from the principal amount. The fund holds, and maintains until settlement date, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or the fund may enter into offsetting contracts for the forward sale of other securities it owns. Income on the securities will not be earned until settlement date. TBA purchase commitments may be considered securities themselves, and involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in the value of the fund’s other assets. Unsettled TBA purchase commitments are valued at fair value of the underlying securities, according to the procedures described under “Security valuation” above. The contract is marked-to-market daily and the change in market value is recorded by the fund as an unrealized gain or loss. | |
Although the fund will generally enter into TBA purchase commitments with the intention of acquiring securities for its portfolio or for delivery pursuant to options contracts it has entered into, the fund may dispose of a commitment prior to settlement if Putnam Management deems it appropriate to do so. | |
TBA sale commitments The fund may enter into TBA sale commitments to hedge its portfolio positions or to sell mortgage-backed securities it owns under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, equivalent deliverable securities or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as “cover” for the transaction. | |
Unsettled TBA sale commitments are valued at fair value of the underlying securities, generally according to the procedures described under “Security valuation” above. The contract is marked-to-market daily and the change in market value is recorded by the fund as an unrealized gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the fund realizes a gain or loss. If the fund delivers securities under the commitment, the fund realizes a gain or a loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. TBA sale commitments outstanding at period end, if any, are listed after the fund’s portfolio. | |
Dollar Rolls To enhance returns, the fund may enter into dollar rolls (principally using TBAs) in which the fund sells securities for delivery in the current month and simultaneously contracts to purchase similar securities on a specified future date. During the period between the sale and subsequent purchase, the fund will not be entitled to receive income and principal payments on the securities sold. The fund will, however, retain the difference between the initial sales price and the forward price for the future purchase. The fund will also be able to earn interest on the cash proceeds that are received from the initial sale. The fund may be exposed to market or credit risk if the price of the security changes unfavorably or the counterparty fails to perform under the terms of the agreement. | |
For additional information regarding the fund please see the fund's most recent annual or semiannual shareholder report filed on the Securities and Exchange Commission's Web site, www.sec.gov, or visit Putnam's Individual Investor Web site at www.putnaminvestments.com | |
Item 2. Controls and Procedures:
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(a) The registrant's principal executive officer and principal
financial officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report, that the design and operation of
such procedures are generally effective to provide reasonable
assurance that information required to be disclosed by the registrant
in this report is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms.
(b) Changes in internal control over financial reporting:
Not applicable
Item 3. Exhibits:
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A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title):
/s/ Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: June 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title):
/s/ Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: June 28, 2005
By (Signature and Title):
/s/ Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: June 28, 2005