Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
Annual Report
For the year ended October 31, 2003
TH Lee
Putnam
Capital
TH Lee, Putnam Emerging Opportunities Portfolio
About the fund and TH Lee, Putnam Capital L.L.C.
TH Lee, Putnam Emerging Opportunities Portfolio ("the fund") is a
closed-end interval fund. This innovative fund pursues aggressive growth by
combining investments in publicly traded stocks and privately held
companies in a closed-end format. With this special structure, the fund can
tap into companies with the best growth potential while maintaining
diversification across public and private markets.
The fund is sponsored by an affiliate of TH Lee, Putnam Capital L.L.C.,
which is a joint venture of Putnam Investments ("Putnam") and Thomas H. Lee
Partners L.P. ("TH Lee"). This venture was founded in 1999 to offer
alternative investment products to individual investors who have
historically lacked access to the private-equity marketplace. Thomas H. Lee
Partners L.P., founded in 1974, is one of the oldest and most successful
private equity investment firms in the United States. The firm's investment
strategy targets growth companies with competitive advantages in expanding
or consolidating industries. Putnam Investments, founded in 1937, is one of
the world's largest mutual fund companies and a leader in investment
research and portfolio management through disciplined teamwork.
The fund is managed by Roland W. Gillis, CFA, Managing Director, and
Frederick Wynn, Senior Vice President, with research support from members
of Putnam's Specialty Growth Team, who analyze small- and
mid-capitalization growth stocks.
The fund's management structure also includes an Investment Committee
consisting of senior Putnam and TH Lee investment professionals. The
Investment Committee consults with the management team and gives final
approval to the structure of all private-equity deals.
Report from Fund Management
Roland Gillis, Portfolio Manager
Frederick Wynn, Portfolio Manager
Performance commentary
The fund achieved strong gains in its fiscal year, which ended October
31, 2003. During the year, stocks generally recovered from deeply
depressed prices and investors rewarded companies for a recovery in
profits. Aggressive growth stocks, which had been among the most
undervalued areas of the market early in the fiscal year, rallied to
lead the market for the period as a whole. The performance of the fund's
public equity holdings was in line with these market gains and we
achieved these results without taking on additional risks. The fund
maintained its broad sector diversification and emphasis on high-quality
companies with little debt. The fund underperformed its benchmark, the
Russell 2500 Growth Index, because the public equity holdings gained
approximately 43.7% while the private equity holdings appreciated by
approximately 12.4%. This difference in performance demonstrates that
the performance of private equities depends on different factors than
those that sparked the public equity rally. Private equities tend to
experience their strongest price appreciation because of
company-specific events like a new round of financing. In future
periods, it is possible that a different combination of conditions may
allow for the private equity holdings to perform better than the
publicly traded stocks.
RETURN FOR PERIODS ENDED OCTOBER 31, 2003
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TH Lee, Putnam Emerging Russell 2500
Opportunities Portfolio NAV POP Growth Index
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1 year 33.90% 27.88% 44.76%
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Life of fund
(since inception 7/30/01) 6.18 1.39 -1.16
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Annual average 2.69 0.61 -0.52
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RETURN FOR PERIODS ENDED SEPTEMBER 30, 2003 (most recent quarter)
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TH Lee, Putnam Emerging Russell 2500
Opportunities Portfolio NAV POP Growth Index
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1 year 34.10% 28.10% 41.45%
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Life of fund
(since inception 7/30/01) -0.40 -4.90 -8.67
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Annual average -0.18 -2.28 -4.09
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Past performance does not indicate future results. Performance assumes
reinvestment of distributions and does not account for taxes. More
recent returns may be less or more than those shown. Investment returns
will fluctuate and you may have a gain or a loss when you sell your
shares. Returns at public offering price (POP) reflect the highest
applicable sales charge of 4.50%. Sales charges differ with the original
purchase amount. See a prospectus for details. The Russell 2500 Growth
Index is an unmanaged index of those companies in the Russell 2500
chosen for their growth orientation. Indexes are not available for
direct investment. For a portion of the period this fund limited
expenses, without which returns would have been lower.
Market overview
Stocks climbed in spite of many economic and geopolitical uncertainties
during the fund's fiscal year, which ended October 31, 2003. In the
first half of the period, economic data were quite discouraging, with
U.S. gross domestic product expanding at only about 1% according to data
from the U.S. Bureau of Economic Analysis.
Actions by the Federal Reserve Board, as well as the U.S. government,
turned conditions around. The Fed continued on a course of massive
monetary stimulus, lowering short-term interest rates to 1%, their
lowest levels since the 1950s. Accelerated tax cuts spurred consumer
spending, lifting economic growth to approximately 8% in the third
quarter -- from July through September. And although the conflict in
Iraq has continued, geopolitical risks have generally been lower in
recent months than during the prelude to war, when markets demonstrated
great uncertainty.
These conditions improved the fundamental business conditions for
individual companies. Businesses that had slashed costs in the previous
two years were poised to translate better revenues into larger earnings.
Both public and privately held companies in our portfolio benefited in
this way. These conditions translated quickly into strong performance
for the public equities. For private companies, valuations increased
during the period. However, private equities typically record their
biggest gains when the companies undertake initial public offerings
(IPOs), and IPOs were still few and far between for most of the year.
Strategy overview
We maintained the fund's emphasis on company research and stock
selection and did not attempt to chase market trends. Of course, the
fund was favorably positioned from the outset since its aggressive
growth strategy was coming back into fashion. The fund's portfolio of
public equities was broadly diversified across sectors with few
overweights or underweights relative to the benchmark. Sectors in which
the portfolio typically holds the largest weightings were among the
market leaders. The fund's top-performing holdings included stocks in
many different sectors.
[GRAPHIC OMITTED: pie chart ASSET ALLOCATION AS OF 10/31/03]
ASSET ALLOCATION AS OF 10/31/03
ASSET CLASS PERCENT OF FUND
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* Public equities 77.8%
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* Private equities 20.6
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* Short-term instruments 1.6
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Weightings are shown as a percentage of investments. Holdings will
vary over time.
In the private equity market, we also remained on course, conducting
research on dozens of companies and talking with business leaders in
growth industries. At each stage of our research process, we have been
extremely selective. In keeping with our long-term strategy, we strove
to identify companies in the late stages of venture capital financing
that had solid products, strong market positions, and seasoned
management. We determine how we think each business is likely to grow
and what rate of return is reasonable to expect. With companies we
consider candidates for the portfolio, we then seek to negotiate the
most favorable investment terms that we can. During the period, we
undertook discussions with several companies, and were prepared to shift
assets from our public equity holdings, which represented approximately
75%-80% of the fund, toward private equities. However, we decided that
none of the potential deals offered the return potential we considered
necessary. We added no new private equities to the fund during the
fiscal year, although the fund made several additional investments in
existing holdings. Our talks with several companies are continuing.
How fund holdings affected performance
Fund holdings from a wide variety of sectors contributed gains over the
period. This reflected the fact that areas that had been most out of
favor with the market, especially aggressive growth stocks and small
companies, reversed course and became the best performers. In terms of
sectors, technology, communications services, and cyclicals posted
strong gains.
Many technology stocks appreciated during the period, based on a better
outlook for sales and signs of greater demand for computing and
communications equipment in coming quarters. One of the fund holdings
that benefited was Brooks Automation, Inc., a company that makes
machines for the manufacturing of semiconductors. In the private equity
portion of the portfolio, CommVault Systems contributed only modestly to
returns but on a fundamental level has continued executing its business
model and is expanding into new business partnerships with established
technology companies. The company's revenues have also continued to
grow.
Retail stocks also got a boost from consumer and business spending,
which was unexpectedly strong in the summer months. Fund holding Tractor
Supply Co. benefited from this trend. This company is expanding in rural
areas of the United States, where it sells a variety of farm equipment
and supplies. The agricultural sector is also benefiting from rising
food prices as the global economy strengthens.
TOP SECTOR WEIGHTINGS AS OF 10/31/03
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Technology 34.7%
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Health care 22.4
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Consumer cyclicals 14.7
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Consumer staples 14.7
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Transportation 4.0
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Weightings are shown as a percentage of net assets. Holdings will vary
over time.
TOP 10 HOLDINGS
(includes public and private companies) INDUSTRY
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CommVault Systems Computers
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Capella Education Co., Inc. Schools
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Refractec Medical Technology
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Hudson Highland Group, Inc. Staffing
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Silicon Image, Inc. Electronics
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Aspect Communications Corp. Communications equipment
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Interwoven, Inc. Software
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Multimedia Games, Inc. Leisure
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Tractor Supply Co. Retail
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American Tower Corp. Telecommunications
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These holdings represent 30.2% of the fund's net assets as of 10/31/03.
Portfolio holdings will vary over time.
Private equity holdings in the education industry also did well on a
fundamental basis. Capella Education Co. continues to benefit from its
growth strategy and the strong demand for education from workers who
have lost their jobs or have sought retraining during the recession.
Capella's appreciation reflected both the company's fundamental progress
and signs of consolidation in the for-profit education industry. The
company's growth remains impressive, it is currently generating positive
cash flow, and it has a large reserve of cash that makes its balance
sheet more solid. The fund also has a public stock holding in the
education industry, Career Education, which also performed well.
In the airline industry, we had a mix of results. JetBlue Airways Corp.,
a young discount airline, enjoyed steady appreciation as leisure travel
gradually recovered. However, the fund also owned Atlantic Coast
Airlines Holdings, a stock that experienced significant volatility
because of disappointing earnings. It contributed negatively to
performance and we sold the fund's position because we saw the company
was losing business to competitors.
Other holdings that detracted from performance were Westwood One, which
operates a national radio network. This stock was disappointing because
advertising revenue did not increase this year to the extent that we had
anticipated. In the biotechnology sector, InterMune, Inc. underperformed
when the company's product trials went badly. We sold both positions
because we did not think the companies' prospects remained attractive in
the near term.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
The outlook for your fund
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
team's plans for responding to them.
We are optimistic about the performance potential of the portfolio and
for aggressive growth stocks in general. While we do not expect that the
economy will continue to grow at 8%, the economic recovery appears to be
sustainable and the companies in the portfolio generally are poised to
benefit from it with competitive cost structures and low debt levels. At
the same time, we recognize several risks. The first is that, after
their rapid appreciation in recent months, stocks could experience a
correction as they have at similar stages in the past. In addition, the
massive monetary stimulus being given to the economy could, at some
point in the future, spark inflation and higher interest rates that
would also be negative for stocks. Last, geopolitical risks such as an
act of terrorism cannot be ruled out and would have an adverse impact on
the economy and the stock market.
Still, we think the odds favor a continued economic expansion in 2004
that should support small companies and aggressive growth stocks. In
addition to support from low interest rates and tax cuts, we believe
business activity will get a boost from the presidential election cycle
and the summer Olympics, which draw advertisers and tend to help a
variety of companies in the consumer cyclicals sector. The private
equity market is also getting stronger. The bottleneck of companies in
the late stage of venture capital financing gives us, as fund managers,
many opportunities to choose from. These companies also benefit from a
stronger economy and the experience their management teams have learned
in a difficult recession. We are working hard to identify companies and
negotiate deals to increase the fund's investments in the private equity
market. We will focus on maintaining a diversified aggressive growth
portfolio by identifying high-quality companies with low debt levels and
products or services that give them competitive advantages.
The views expressed here are exclusively those of TH Lee, Putnam Capital
Management, L.L.C., the fund's manager. They are not meant as investment
advice. Although the described holdings were viewed favorably as of
10/31/03, there is no guarantee the fund will continue to hold these
securities in the future.
Shares of the Fund are offered only to investors who have a net worth of
more than $1,500,000 or who otherwise meet the requirements for a
"qualified client."
An investment in the Fund involves a considerable amount of risk and should
be considered speculative. Because it is possible that you may lose some or
all of your investment, you should not invest in the Fund unless you can
afford a total loss of investment. An investment in the Fund involves a
high degree of risk which includes the following specific types of risk:
the risks associated with venture-capital companies and venture-capital
funds; investing in securities that are illiquid and subject to substantial
transfer restrictions; the risks of investing in smaller companies; the
Fund's ability to focus holdings in a small number of industry sectors
which may be relatively new or emerging industries; the risk of investing
in a fund that will pay incentive fee; investing in a fund, many of whose
assets will be priced in the absence of a readily available market and may
be priced based on estimates of fair value, which may prove inaccurate; and
the risk involved in the Fund Manager's limited experience in
venture-capital investing.
Independent auditors' report
To the Trustees of the TH Lee, Putnam Investment Trust and Shareholders
of TH Lee, Putnam Emerging Opportunities Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the fund's portfolio, and the related statements of
operations, changes in net assets and of cash flows and the financial
highlights present fairly, in all material respects, the financial
position of TH Lee, Putnam Emerging Opportunities Portfolio (the "fund")
at October 31, 2003, and the results of its operations, the changes in
its net assets, its cash flows and the financial highlights for the
periods indicated, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the fund's management; our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance with
auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
investments owned at October 31, 2003 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 12, 2003
The fund's portfolio
October 31, 2003
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Common stocks (78.6%) (a)
NUMBER OF SHARES VALUE
Airlines (0.6%)
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9,500 JetBlue Airways Corp. (NON) $547,960
Automotive (1.4%)
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12,800 CLARCOR, Inc. 520,320
4,400 Donaldson Co., Inc. 251,768
13,200 Gentex Corp. 515,460
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1,287,548
Banking (1.0%)
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6,200 Investors Financial Services Corp. 219,046
13,600 TCF Financial Corp. 709,648
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928,694
Biotechnology (4.1%)
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31,903 Amylin Pharmaceuticals, Inc. (NON) 871,909
10,500 Celgene Corp. (NON) 437,745
39,600 Connetics Corp. (NON) 709,236
35,900 Genta, Inc. (NON) 384,130
29,100 Medicines Co. (NON) 775,515
7,540 Myogen, Inc. (NON) 120,640
17,600 Telik, Inc. (NON) 357,632
------------
3,656,807
Broadcasting (0.6%)
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30,200 Cumulus Media, Inc. Class A (NON) 565,646
Commercial and Consumer Services (0.9%)
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18,200 Robert Half International, Inc. (NON) 429,702
3,500 Strayer Education, Inc. 342,755
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772,457
Communications Equipment (3.5%)
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97,200 Aspect Communications Corp. (NON) 1,315,116
14,692 Foundry Networks, Inc. (NON) 341,736
38,500 Juniper Networks, Inc. (NON) 692,615
15,700 SafeNet, Inc. (NON) 523,595
37,487 Sonus Networks, Inc. (NON) 307,768
------------
3,180,830
Computers (1.4%)
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58,850 Captiva Software Corp. (NON) 706,200
20,300 Emulex Corp. (NON) 574,896
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1,281,096
Consumer Goods (0.6%)
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20,400 Yankee Candle Co., Inc. (The) (NON) 570,792
Consumer Services (0.6%)
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4,800 Alliance Data Systems Corp. (NON) 133,344
45,700 Valueclick, Inc. (NON) 368,342
------------
501,686
Distribution (1.2%)
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35,950 LKQ Corp. (NON) 621,935
12,100 Performance Food Group Co. (NON) 450,725
------------
1,072,660
Electronics (6.9%)
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27,400 Brooks Automation, Inc. (NON) 683,630
44,500 Integrated Device Technology, Inc. (NON) 698,650
48,100 Integrated Silicon Solutions, Inc. (NON) 679,172
24,800 Intersil Corp. Class A 639,592
15,600 Marvell Technology Group, Ltd.
(Bermuda) (NON) 684,372
12,896 QLogic Corp. (NON) 722,821
188,500 Silicon Image, Inc. (NON) 1,325,155
86,000 Skyworks Solutions, Inc. (NON) 737,880
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6,171,272
Energy (1.5%)
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4,800 Cooper Cameron Corp. (NON) 205,536
96,000 Grey Wolf, Inc. (NON) 308,160
19,100 Patterson-UTI Energy, Inc. (NON) 546,069
11,100 Tidewater, Inc. 304,251
------------
1,364,016
Engineering & Construction (0.5%)
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10,200 Jacobs Engineering Group, Inc. (NON) 472,464
Financial (0.8%)
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27,700 eSpeed, Inc. Class A (NON) 754,825
Gaming & Lottery (0.9%)
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16,000 Alliance Gaming Corp. (NON) 388,000
13,100 Station Casinos, Inc. 389,725
------------
777,725
Health Care Services (7.3%)
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15,400 AMERIGROUP Corp. (NON) 644,028
24,950 Centene Corp. (NON) 763,720
8,600 Coventry Health Care, Inc. (NON) 470,850
10,900 Henry Schein, Inc. (NON) 676,345
17,500 Manor Care, Inc. (NON) 582,400
32,075 Odyssey Healthcare, Inc. (NON) 889,761
10,900 Pediatrix Medical Group, Inc. (NON) 582,605
4,800 Universal Health Services, Inc.
Class B (NON) 225,840
31,500 VCA Antech, Inc. (NON) 889,560
13,500 VistaCare, Inc. Class A (NON) 465,885
10,800 WellChoice, Inc. (NON) 351,000
------------
6,541,994
Investment Banking/Brokerage (0.6%)
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13,500 T. Rowe Price Group, Inc. 555,525
Leisure (1.3%)
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30,200 Multimedia Games, Inc. (NON) 1,135,822
Lodging/Tourism (0.4%)
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28,300 Scientific Games Corp. Class A (NON) 376,390
Manufacturing (0.6%)
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8,700 IDEX Corp. 323,466
5,300 Roper Industries, Inc. 261,926
------------
585,392
Medical Technology (3.3%)
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16,600 Cyberonics, Inc. (NON) 454,010
41,200 Epix Medical, Inc. (NON) 762,612
20,067 Merit Medical Systems, Inc. (NON) 525,555
13,600 Respironics, Inc. (NON) 566,984
44,600 Thoratec Corp. (NON) 686,394
------------
2,995,555
Oil & Gas (0.9%)
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9,800 Noble Corp. (NON) 336,434
19,200 XTO Energy, Inc. 454,464
------------
790,898
Pharmaceuticals (2.1%)
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5,200 Barr Laboratories, Inc. (NON) 399,204
8,500 Cephalon, Inc. (NON) 399,160
20,000 Penwest Pharmaceuticals Co.
(Private) (NON) 327,600
17,100 United Therapeutics Corp. (NON) 344,223
11,800 Watson Pharmaceuticals, Inc. (NON) 463,386
------------
1,933,573
Restaurants (0.8%)
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8,600 Outback Steakhouse, Inc. 361,200
7,600 P.F. Chang's China Bistro, Inc. (NON) 370,424
------------
731,624
Retail (9.2%)
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9,300 Advance Auto Parts, Inc. (NON) 727,446
24,200 BJ's Wholesale Club, Inc. (NON) 621,698
14,900 Chico's FAS, Inc. (NON) 559,346
42,900 CSK Auto Corp. (NON) 735,735
10,000 Dick's Sporting Goods, Inc. (NON) 459,800
17,300 Linens 'N Things, Inc. (NON) 510,696
15,700 Michaels Stores, Inc. 745,279
20,100 Pacific Sunwear of California, Inc. (NON) 464,109
10,500 PETCO Animal Supplies, Inc. (NON) 348,390
25,800 PETsMART, Inc. 660,738
13,600 Ross Stores, Inc. 680,136
23,300 Tractor Supply Co. (NON) 976,503
9,800 Tuesday Morning Corp. (NON) 312,522
13,800 Williams-Sonoma, Inc. (NON) 487,554
------------
8,289,952
Schools (2.3%)
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13,600 Career Education Corp. (NON) 728,280
9,700 Corinthian Colleges, Inc. (NON) 600,624
11,700 Education Management Corp. (NON) 739,206
------------
2,068,110
Semiconductor (2.0%)
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9,700 Cymer, Inc. (NON) 442,902
27,500 LAM Research Corp. (NON) 790,350
41,200 LTX Corp. (NON) 588,748
------------
1,822,000
Shipping (2.1%)
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10,900 Forward Air Corp. (NON) 316,972
26,391 Heartland Express, Inc. 655,552
13,400 J. B. Hunt Transport Services, Inc. (NON) 340,092
21,500 Knight Transportation, Inc. (NON) 541,155
------------
1,853,771
Software (9.5%)
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50,100 Agile Software Corp. (NON) 549,597
136,700 Atari, Inc. (NON) 527,662
8,900 Avid Technology, Inc. (NON) 460,486
21,700 Cognos, Inc. (Canada) (NON) 747,999
54,500 Informatica Corp. (NON) 594,050
328,000 Interwoven, Inc. (NON) 1,243,119
23,200 Macromedia, Inc. (NON) 443,352
23,100 Manhattan Associates, Inc. (NON) 643,104
82,000 Micromuse, Inc. (NON) 660,100
12,360 Portal Software, Inc. (NON) 197,760
14,077 RADWARE Ltd. (Israel) (NON) 325,883
54,000 RSA Security, Inc. (NON) 700,380
44,000 Verisity, Ltd. (NON) 549,560
199,000 Vignette Corp. (NON) 499,490
43,500 webMethods, Inc. (NON) 377,580
------------
8,520,122
Staffing (1.7%)
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69,500 Hudson Highland Group, Inc. (NON) 1,531,085
Technology Services (3.7%)
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64,400 DiamondCluster International, Inc.
Class A (NON) 573,160
13,400 Digital River, Inc. (NON) 366,892
23,140 DigitalNet Holdings, Inc. (NON) 534,765
8,300 Fair, Isaac and Co., Inc. 529,374
27,400 Neoware Systems, Inc. (NON) 464,430
48,740 Wireless Facilities, Inc. (NON) 837,353
------------
3,305,974
Telecommunications (1.4%)
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77,230 American Tower Corp. Class A (NON) 895,868
27,800 Crown Castle International Corp. (NON) 351,948
------------
1,247,816
Textiles (0.1%)
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1,860 Carter's, Inc. (NON) 52,080
Transportation (0.7%)
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18,900 UTI Worldwide, Inc. (Virgin Islands) 654,696
Transportation Services (0.6%)
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7,000 Landstar Systems, Inc. (NON) 511,280
Waste Management (1.5%)
- ---------------------------------------------------------------
27,100 Casella Waste Systems, Inc. Class A (NON) 341,189
12,100 Stericycle, Inc. (NON) 558,778
12,200 Waste Connections, Inc. (NON) 423,096
------------
1,323,063
------------
Total Common stocks (cost $55,149,128) $70,733,200
Convertible preferred stocks (20.8%) (a)
NUMBER OF SHARES VALUE
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449,640 Capella Education Co., Inc. Class F,
zero % cv. pfd. (Private) (acquired
2/14/02, cost $5,009,274) (RES) $6,744,597
2,235,708 CommVault Systems zero % cv. pfd.
(Private) (acquired various dates
from 1/30/02 through 9/4/03, cost
$7,011,031) (RES) 7,000,002
833,333 Refractec Ser. D, zero % cv. pfd.
(Private) (acquired various dates
from 8/16/02 through 6/30/03, cost
$4,999,998) (RES) (AFF) 4,999,998
------------
Total Convertible preferred stocks (cost
$17,020,304) $18,744,597
Short-Term Investments (1.6%) (a) (cost $1,458,000)
PRINCIPAL AMOUNT VALUE
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$1,458,000 Repurchase agreement dated October
31, 2003 with Goldman Sachs & Co.
due November 3, 2003 with respect to
various U.S. Government obligations --
maturity value of $1,458,128 for an
effective yield of 1.05% (collateralized
by Fannie Mae 3% due 6/15/04, valued
at $1,470,915) $1,458,000
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Total Investments (cost $73,627,432) $90,935,797
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(a) Percentages indicated are based on net assets of
$90,020,403.
(NON) Non-income-producing security.
(RES) Restricted, excluding 144A securities, as to public resale.
The total market value of restricted securities held at
October 31, 2003 was $18,744,597 or 20.8% of net assets.
(AFF) Affiliated Companies (Note 4).
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
October 31, 2003
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Assets
- -------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$73,627,432) (Note 1) $90,935,797
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Cash 252
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Dividends and interest receivable 1,396
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Receivable for shares of the fund sold 416,476
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Receivable for securities sold 659,478
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Total assets 92,013,399
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Liabilities
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Payable for securities purchased 1,335,049
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Payable for shareholder servicing fees (Note 2) 16,990
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Payable for compensation of Manager (Note 2) 168,293
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Payable for incentive fee (Note 2) 344,859
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Payable for investor servicing and custodian fees (Note 2) 24,487
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Payable for administrative services (Note 2) 7,559
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Other accrued expenses 95,759
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Total liabilities 1,992,996
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Net assets $90,020,403
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Represented by
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Paid-in capital (Note 1) $83,365,085
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (10,653,047)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 17,308,365
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $90,020,403
- -------------------------------------------------------------------------------
Computation of net asset value
- -------------------------------------------------------------------------------
Net asset value and redemption price per common share
($90,020,403 divided by 3,554,909 shares) $25.32
- -------------------------------------------------------------------------------
Offering price per class common share (100/95.50 of $25.32) * $26.51
- -------------------------------------------------------------------------------
* On single retail sales of less than $500,000. On sales of $500,000 or
more and on group sales, the offering price is reduced.
The accompanying notes are an integral part of these financial
statements.
Statement of operations
Year ended October 31, 2003
- -------------------------------------------------------------------------------
Investment income:
- -------------------------------------------------------------------------------
Dividends $82,550
- -------------------------------------------------------------------------------
Interest 21,126
- -------------------------------------------------------------------------------
Total investment income 103,676
- -------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 915,723
- -------------------------------------------------------------------------------
Incentive fee (Note 2) 344,859
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 112,593
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 75,669
- -------------------------------------------------------------------------------
Administrative services (Note 2) 76,292
- -------------------------------------------------------------------------------
Shareholder servicing fees (Note 2) 174,243
- -------------------------------------------------------------------------------
Other 132,455
- -------------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 2) (75,205)
- -------------------------------------------------------------------------------
Total expenses 1,756,629
- -------------------------------------------------------------------------------
Net investment loss (1,652,953)
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 2,697,373
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 21,817,464
- -------------------------------------------------------------------------------
Net gain on investments 24,514,837
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $22,861,884
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Year ended October 31
2003 2002
- -------------------------------------------------------------------------------
Increase (decrease) in net assets
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment loss $(1,652,953) $(1,503,651)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments 2,697,373 (11,906,349)
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 21,817,464 (898,909)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 22,861,884 (14,308,909)
- -------------------------------------------------------------------------------
Distributions to common shareholders: (Note 1)
- -------------------------------------------------------------------------------
From net investment income -- (132,237)
- -------------------------------------------------------------------------------
Return of capital -- (3,502)
- -------------------------------------------------------------------------------
Capital share transactions:
- -------------------------------------------------------------------------------
Proceeds from shares issued 1,771,897 7,019,410
- -------------------------------------------------------------------------------
Reinvestment of distributions -- 94,256
- -------------------------------------------------------------------------------
Cost of shares repurchased (Note 5) (8,295,425) (4,894,907)
- -------------------------------------------------------------------------------
Net increase (decrease) from capital share
transactions (6,523,528) 2,218,759
- -------------------------------------------------------------------------------
Total increase (decrease) in net assets 16,338,356 (12,225,889)
- -------------------------------------------------------------------------------
Net assets
- -------------------------------------------------------------------------------
Beginning of year 73,682,047 85,907,936
- -------------------------------------------------------------------------------
End of year $90,020,403 $73,682,047
- -------------------------------------------------------------------------------
Number of fund shares
- -------------------------------------------------------------------------------
Shares outstanding at beginning of year 3,897,584 3,827,683
- -------------------------------------------------------------------------------
Shares issued 77,710 303,850
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions -- 3,942
- -------------------------------------------------------------------------------
Shares repurchased (Note 5) (420,385) (237,891)
- -------------------------------------------------------------------------------
Shares outstanding at end of year 3,554,909 3,897,584
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of cash flows
For the year ended October 31, 2003
- -------------------------------------------------------------------------------
Increase in cash
- -------------------------------------------------------------------------------
Cash flows from operating activities:
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations $22,861,884
- -------------------------------------------------------------------------------
Adjustments to reconcile net increase in net assets from operations to
net cash used in operating and investing activities:
- -------------------------------------------------------------------------------
Purchase of investment securities (69,866,137)
- -------------------------------------------------------------------------------
Proceeds from disposition of investment
securities 74,841,619
- -------------------------------------------------------------------------------
Sale of short-term investment securities,
net 3,358,500
- -------------------------------------------------------------------------------
Decrease in dividends and interest
receivable 4,510
- -------------------------------------------------------------------------------
Decrease in payable for shareholder
servicing fees (39,712)
- -------------------------------------------------------------------------------
Decrease in payable for compensation of
Manager (23,087)
- -------------------------------------------------------------------------------
Increase in payable for incentive fee 344,859
- -------------------------------------------------------------------------------
Increase in payable for investor servicing
and custodian fees 7,603
- -------------------------------------------------------------------------------
Decrease in payable for administration
services (4,110)
- -------------------------------------------------------------------------------
Decrease in other accrued expenses (95,010)
- -------------------------------------------------------------------------------
Net realized gain on investments (2,697,373)
- -------------------------------------------------------------------------------
Net unrealized appreciation on investments
during the year (21,817,464)
- -------------------------------------------------------------------------------
Net cash used in operating and investing
activities 6,876,082
- -------------------------------------------------------------------------------
Cash flows from financing activities:
- -------------------------------------------------------------------------------
Proceeds from shares sold 1,419,422
- -------------------------------------------------------------------------------
Payment of shares redeemed (8,295,425)
- -------------------------------------------------------------------------------
Net cash provided by financing activities (6,876,003)
- -------------------------------------------------------------------------------
Net increase in cash 79
- -------------------------------------------------------------------------------
Cash balance, beginning of year 173
- -------------------------------------------------------------------------------
Cash balance, end of year $252
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
For the period
Per-share July 30, 2001+
operating performance Year ended October 31 to Oct. 31
- -----------------------------------------------------------------------------------
2003 2002 2001
- -----------------------------------------------------------------------------------
Net asset value,
beginning of period $18.91 $22.44 $23.88
- -----------------------------------------------------------------------------------
Investment operations:
- -----------------------------------------------------------------------------------
Net investment income (loss) (a)(b) (.45) (.38) --(e)
- -----------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 6.86 (3.11) (1.44)
- -----------------------------------------------------------------------------------
Total from
investment operations 6.41 (3.49) (1.44)
- -----------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------
From net
investment income -- (.04) --
- -----------------------------------------------------------------------------------
From return of capital -- --(e) --
- -----------------------------------------------------------------------------------
Total distributions -- (.04) --
- -----------------------------------------------------------------------------------
Net asset value,
end of period $25.32 $18.91 $22.44
- -----------------------------------------------------------------------------------
Total return at net asset value
after incentive fee (%)(c) 33.90 (15.61) (6.03)*
- -----------------------------------------------------------------------------------
Total return at net asset value
before incentive fee (%)(c) 34.43 (15.61) (6.03)*
- -----------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $90,020 $73,682 $85,908
- -----------------------------------------------------------------------------------
Ratio of expenses to average net assets
after incentive fee (%)(b)(d) 2.30 2.21 .58*
- -----------------------------------------------------------------------------------
Ratio of expenses to average net assets
before incentive fee (%)(b)(d) 1.85 2.21 .58*
- -----------------------------------------------------------------------------------
Ratio of net investment
loss to average net assets (%)(b) (2.17) (1.76) --*
- -----------------------------------------------------------------------------------
Portfolio turnover rate (%) 93.90 102.88 11.20*
- -----------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the
weighted average number of shares outstanding during the period.
(b) Reflects an expense limitation in effect during the period (Note 2). As a result
of such limitation, expenses of the fund for the periods ended October 31, 2003,
October 31, 2002 and October 31, 2001 reflect a reduction of 0.10%, 0.07%, and
0.04%, respectively, based on average net assets.
(c) Total return assumes dividend reinvestment and does not reflect the effect of
sales charges.
(d) Includes amounts paid through expense offset arrangements. (Note 2)
(e) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
Notes to financial statements
October 31, 2003
Note 1 Significant accounting policies
- ------------------------------------------------------------------------------
TH Lee, Putnam Emerging Opportunities Portfolio (the "fund "), is a
series of TH Lee, Putnam Investment Trust (the "trust ") which is
registered under the Investment Company Act of 1940, as amended, as a
non-diversified closed-end management investment company. The objective
of the fund is to seek long-term capital appreciation by investing at
least 80% of its total assets in publicly traded growth stocks and
privately issued venture capital investments. The fund may invest up to
50% of its portfolio in private equity investments as well as up to 5%
of its assets in private equity funds.
The fund offers its shares at net asset value plus a maximum front-end
sales charge of 4.50%. The fund provides a limited degree of liquidity
to its shareholders by conducting quarterly repurchase offers. In each
repurchase offer, the fund intends to repurchase 5% of its outstanding
shares at their net asset value. The fund may also, at any time, conduct
additional sales of its shares to qualified clients, as defined in the
Investment Advisers Act of 1940, as amended.
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
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 private equity securities: such investments are
initially valued at cost and then stated at fair value following procedures
approved by the Trustees. As part of those procedures, TH Lee, Putnam
Capital Management, LLC (the "Manager"), a subsidiary of Putnam, LLC
("Putnam ") and TH Lee, Putnam Capital, LLC (a joint venture of Putnam and
Thomas H. Lee Partners, LP) will monitor each fair valued security on a
daily basis and may adjust its value based on such factors as the financial
and/or operating results, the general developments in the issuer's business
including products and services offered, management changes, changes in
contracts with customers, issues relating to financing, the likelihood of a
public offering, the liquidity of the security, any legal or contractual
restrictions, the value of an unrestricted related public security and
other analytical data. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. For foreign
investments, if trading or events occurring in other markets after the
close of the principal exchange in which the securities are traded are
expected to materially affect the value of the investments, then those
investments are valued, taking into consideration these events, at their
fair value. Short-term investments having remaining maturities of 60 days
or less are stated at amortized cost, which approximates fair value.
B) 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. The Manager is responsible for determining that the value
of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
C) 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
value of the securities received.
D) 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 October 31, 2003, the fund had a capital loss carryover of
$10,650,861 available to the extent allowed by tax law to offset future
net capital gain, if any. This capital loss carryover will expire on
October 31, 2010.
E) Distributions to shareholders
Distributions to shareholders from net investment income are recorded by
the fund on the ex-dividend date. Distributions from capital gains, 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. These differences include a temporary
difference of losses on wash sale transactions, organization costs and net
operating loss. 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. For the year ended
October 31, 2003, the fund reclassified $1,652,953 to decrease accumulated
net investment loss and $1,652,953 to decrease paid-in-capital. The
calculation of net investment income per share in the financial highlights
table excludes these adjustments.
The tax basis components of distributable earnings and the federal tax
cost as of period end were as follows:
Unrealized appreciation $18,757,974
Unrealized depreciation (1,451,795)
------------
Net unrealized appreciation 17,306,179
Capital loss carryforward (10,650,861)
Cost for federal income
tax purposes $73,629,618
F) Deal related costs
Deal related costs are comprised primarily of legal and consulting costs
incurred in connection with private equity investment transactions of
the fund, whether or not consummated. Deal related costs that are
attributable to existing private equity securities are added to the cost
basis of the investments. All other deal related costs are expensed as
incurred.
G) Statement of Cash Flows
The cash amount shown in the Statement of cash flows is the amount
reported as cash in the fund's Statement of assets and liabilities and
represents cash on hand at its custodian and does not include any
short-term investments at October 31, 2003.
Note 2 Management fee, administrative services and other transactions
- -----------------------------------------------------------------------
The fund has entered into a Management Contract with the Manager. As
compensation for the services rendered and expenses borne by the
Manager, the fund pays the Manager a fee at an annual rate of 1.20% of
the average daily net assets of the fund, computed daily and payable
monthly.
In addition, the fund will accrue daily a liability for incentive fees
payable equal to 20% of the realized and unrealized gains less realized
and unrealized losses on the fund's private equity holdings. The fund
will not accrue an incentive fee unless all realized and unrealized
losses from prior periods have been offset by realized (and, where
applicable unrealized) gains. The fund will pay annually, on December
31, to the Manager a fee equal to 20% of the aggregate incentive fee
base, calculated from the commencement of the fund's operations, less
the cumulative amount of the incentive fee paid to the Manager in
previous periods. The incentive fee base for a private equity security
equals realized gains less realized and unrealized losses until the
issuer of the security has completed an initial public offering and any
applicable lock-up period has expired and, thereafter, equals realized
and unrealized gains less realized and unrealized losses. In the case of
private equity funds, the incentive fee base equals the sum of all
amounts that are actually distributed to the fund less realized and
unrealized losses. The fund does not pay an incentive fee on a private
equity holding until the fund sells the holding or the holding becomes
freely sellable. For the year ended October 31, 2003, incentive fees
totaling $344,859 have been accrued based on the aggregate incentive fee
base.
The Manager has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through October 31, 2004, to the extent
that expenses of the fund (exclusive of the incentive fee, interest
expense on any borrowings, offering costs and any extraordinary
expenses) exceed an annual rate of 1.85% of its average daily net
assets.
The fund has entered into an Administrative Services Contract with
Putnam Fiduciary Trust Company ("PFTC "), an affiliate of the Manager,
to provide administrative services, including fund accounting and the
pricing of the fund shares. As compensation for the services, the fund
pays PFTC a fee at an annual rate of 0.10% of the average daily net
assets of the fund, computed daily and payable monthly.
Custodial functions for the fund's assets are provided by PFTC. 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 year ended October 31, 2003, the
fund's expenses were not reduced under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee of
$25,000. Trustees receive additional fees for attendance at certain
committee meetings.
The fund intends to pay compensation to selected brokers and dealers
that are not affiliated with the fund, the Manager or Putnam, that hold
shares for their customers in accordance with the shareholder servicing
agreements between the fund and the brokers and dealers. The shareholder
servicing fee is accrued daily and payable quarterly at an annual rate
of 0.25% of the average daily net assets attributable to outstanding
shares beneficially owned by customers of the brokers and dealers.
For the year ended October 31, 2003, Putnam Retail Management, acting as
underwriter received net commissions of $8,066 from the sale of common
shares.
Note 3 Purchases and sales of securities
- -----------------------------------------------------------------------
During the year ended October 31, 2003, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $70,607,628 and $75,462,686, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4 Transactions with affiliated issuers
- -----------------------------------------------------------------------
Transactions during the period with companies in which the fund owned at
least 5% of the voting securities were as follows:
Name of
Affiliates Purchase Cost Sales Cost Dividend Income Fair Value
- -----------------------------------------------------------------------
Refractec $1,999,998 $-- $-- $4,999,998
- -----------------------------------------------------------------------
Fair value amounts are shown for issues that are affiliated at
period end.
Note 5 Share repurchase
- -----------------------------------------------------------------------
To provide liquidity to the shareholders, the fund has a policy of
making offers to repurchase a portion of its shares on a quarterly
basis, in January, April, July and October of each year. Repurchase
offers are made for at least 5% but no more than 25% of the fund's then
outstanding shares at net asset value. Repurchase offers are scheduled
to commence each quarter and be completed the following month. During
the year ended October 31, 2003, the fund repurchased 420,385 shares
valued at $8,295,425.
Quarter End Shares Amount
- -----------------------------------------------------------------------
November 2002 120,555 $2,294,184
February 2003 113,642 2,018,275
May 2003 82,455 1,665,582
August 2003 103,733 2,317,384
- -----------------------------------------------------------------------
At October 31, 2003, the Manager owned 209,687 shares of the fund (5.9%
of shares outstanding) valued at $5,309,275.
Note 6 Regulatory matters and litigation
- -----------------------------------------------------------------------
On November 13, 2003, Putnam Investment Management, LLC, ("Putnam
Management") an indirect wholly-owned subsidiary of Putnam, LLC, and
an affiliate of TH Lee Putnam Capital Management, LLC, agreed to
entry of an order by the Securities and Exchange Commission (SEC) in
partial resolution of administrative and cease-and-desist
proceedings initiated by the SEC on October 28, 2003 in connection
with alleged excessive short-term trading by at least six Putnam
Management investment professionals. The SEC's findings reflect that
four of those employees engaged in such trading in funds over which
they had investment decision-making responsibility and had access to
non-public information regarding, among other things, current
portfolio holdings, and valuations. The six individuals no longer
have investment responsibilities with Putnam Management. Under the
order, Putnam Management will make restitution for losses
attributable to excessive short-term trading by Putnam employees,
institute new employee trading restrictions and enhanced employee
trading compliance, retain an independent compliance consultant, and
take other remedial actions. Putnam Management neither admitted nor
denied the order's findings, which included findings that Putnam
Management willfully violated provisions of the federal securities
laws. A civil monetary penalty and other monetary relief, if any,
will be determined at a later date. If a hearing is necessary to
determine the amounts of such penalty or other relief, Putnam
Management will be precluded from arguing that it did not violate
the federal securities laws in the manner described in the SEC
order, the findings set forth in the SEC order will be accepted as
true by the hearing officer and additional evidence may be
presented. Putnam Management, and not the investors in the fund or
any Putnam fund, will bear all costs, including restitution, civil
penalties and associated legal fees. Administrative proceedings
instituted by the Commonwealth of Massachusetts on October 28, 2003
against Putnam Management in connection with alleged market timing
activities by Putnam employees and by participants in some
Putnam-administered 401(k) plans are pending. Putnam Management has
committed to make complete restitution for any losses suffered by
Putnam shareholders as a result of any improper market-timing
activities by Putnam employees or within Putnam-administered 401(k)
plans.
The SEC's and Commonwealth's allegations and related matters also
serve as the general basis for numerous lawsuits, including
purported class action lawsuits filed against Putnam Management and
certain related parties, including certain Putnam funds. Putnam
Management has agreed to bear any costs incurred by Putnam funds in
connection with these lawsuits. Based on currently available
information, Putnam Management and the Manager believe that the
likelihood that the pending private lawsuits and purported class
action lawsuits will have a material adverse financial impact on the
fund is remote, and the pending actions are not likely to materially
affect its ability to provide investment management services to its
clients, including the fund and the Putnam funds and the Manager.
Putnam Management and Marsh & McLennan Companies, Inc., Putnam
Management's parent company, have engaged counsel to conduct a
separate review of Putnam Management's policies and controls related
to short-term trading.
Federal tax information
(Unaudited)
The Form 1099 you receive in January 2004 will show the tax status of
all distributions paid to your account in calendar 2003.
Trustees and officers
A listing of the trustees of TH Lee, Putnam Investments Trust (the
"Trust") and the officers of the Fund and their business experience for
the past five years follows. An asterisk(*) indicates trustees who are
interested persons of the Fund (as defined by the 1940 Act). Unless
otherwise noted, the address of each trustee and officer is one Post
Office Square, Boston, Massachusetts 02109.
Name Position(s) Held Principal Occupation(s)
With Fund During the Past 5 Years
- ------------------------------------------------------------------------------
Steven Spiegel* Trustee, Chairman Vice Chairman and Senior
(2/4/45) and President Managing Director, Putnam
Investments, LLC.
Thomas H. Lee* Trustee President of Thomas H. Lee
(3/27/44) Company (private equity
investment firm). Currently
serves or has served as a
Director of Finlay Enterprises
Inc., General Nutrition Companies,
Metris Companies, Inc., Playtex
Products, Inc., Snapple Beverage
Corp., Vertis Holdings, Inc.
and Wyndham International, Inc.
Member of The Chase Manhattan
Corporation National Advisory
Board. Has also served as
Trustee or Overseer of Brandeis
University, Harvard University,
Lincoln Center for the Performing
Arts, Mt. Sinai-NYU Medical Center
and Health System, Museum of
Fine Arts Boston, The Rockefeller
University and the Whitney
Museum of American Art.
Joseph L. Bower Trustee Donald K. David Professor of Business
(9/21/38) Administration, Harvard Business
School, and Chair of the General
Manager Program. Director, Anika
Therapeutics, Inc., Brown Shoe, Inc.,
ML-Lee/ Acquisition Funds, New
America High Income Fund and Sonesta
International Hotels Corporation.
Vice Chair of the New England
Conservatory of Music. Trustee of
the DeCordova and Dana Museum and Park.
John A. Hill Trustee Chairman and Trustee, Putnam Funds, Vice-
(1/31/42) Chairman and Managing Director, First
Reserve Corporation (a private equity
buyout firm that specializes in energy
investments in the diversified world-wide
energy industry). Director of Devon Energy
Corporation (formerly known as Snyder Oil
Corporation), TransMontaigne Oil Company,
St. Lukes-Roosevelt (a New York City
hospital), Sarah Lawrence College and
various private companies controlled by
First Reserve Corporation.
Stephen B. Kay Trustee Senior Director of Goldman, Sachs & Co.
(11/21/34) Director of CareGroup (consortium of
hospitals). Trustee, Chairman of the
Investment Committee and Member of the
Executive & Finance Committees of the
Board of the Dana-Farber Cancer
Institute. Member of the Dean's Advisory
Council, Harvard School of Public Health.
Member of the Board of Overseers of Harvard
University from 1994-1999. Chair of the
Board of Trustees and Member of the
Investment Committee, Brandeis University.
Former director of the Harvard Alumni
Association and past President of the
Harvard Business School Association of
Boston. Former Chairman of the Board of
Directors of Beth Israel Hospital and
former Chairman of the Board of CareGroup.
Karnig H. Durgarian Vice President and Senior Managing Director,
(1/13/56) Principal Executive Putnam Investments
Officer
Steven D. Krichmar Vice President and Managing Director, Putnam Investments.
(6/27/58) Principal Financial Prior to 2001, Partner,
Officer PricewaterhouseCoopers LLP
Linwood E. Bradford Vice President Managing Director, Putnam Investments
(4/24/68)
Michael T. Healy Vice President Managing Director, Putnam Investments
(1/24/58)
Amrit Kanwal Vice President Managing Director, Putnam Investments
(10/18/65) and Treasurer
William H. Woolverton Vice President Managing Director, Putnam Investments
(1/17/51) and Clerk
Charles A. Ruys de Perez Vice President Managing Director, Putnam Investments
(10/17/57) and Assistant Clerk
This page intentionally left blank.
Not FDIC Insured
May Lose Value
No Bank Guarantee
Fund information
INVESTMENT MANAGER
TH Lee, Putnam Capital Management, LLC
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Sullivan & Cromwell, LLP
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
TRUSTEES
Steven Spiegel
Chairman
Joseph L. Bower
John A. Hill
Stephen B. Kay
Thomas H. Lee
OFFICERS
Steven Spiegel
President
Linwood E. Bradford
Vice President
Karnig H. Durgarian
Vice President and Principal Executive Officer
Michael T. Healy
Vice President
Amrit Kanwal
Vice President and Treasurer
Steven D. Krichmar
Vice President and Principal Financial Officer
Charles A. Ruys de Perez
Vice President
William H. Woolverton
Vice President and Clerk
TH Lee Putnam Capital
7 Shattuck Road
Andover, Massachusetts 01810
203418 2WX 12/03
Item 2. Code of Ethics:
- -----------------------
All officers of the Fund, including its principal executive, financial and
accounting officers, are employees of TH Lee, Putnam Capital Management,
LLC ("THLPCM") or its affiliate, Putnam Investment Management, LLC. As
such, they are subject to a comprehensive Code of Ethics adopted and
administered by THLPCM which is designed to protect the interests of the
firm and its clients. In particular, the Code of Ethics of THLPCM provides
that all officers of THLPCM are subject to the restrictions, limitations
and reporting provisions of the Code of Ethics of Putnam Investments. In
addition, the Fund has adoped a Code of Ethics which incorporates the Code
of Ethics of THLPCM with respect to all of its officers and Trustes who are
also officers, directors or employees of THLPCM or any of its affiliates.
For this reason, the Fund has not adopted a separate code of ethics
governing its principal executive, financial and accounting officers.
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
The Fund's Audit Committee is comprised solely of Trustees who are
"independent" (as such term has been defined by the Securities and Exchange
Commission ("SEC") in regulations implementing Section 407 of the
Sarbanes-Oxley Act (the "Regulations")). The Trustees believe that each of
the members of the Audit Committee also possess a combination of knowledge
and experience with respect to financial accounting matters, as well as
other attributes, that qualify them for service on the Committee. In
addition, the Trustees have determined that Mr. Hill qualifies as an
"audit committee financial expert" (as such term has been defined in the
Regulations). The SEC has stated that the designation or identification of
a person as an audit committee financial expert pursuant to this Item 3 of
Form N-CSR does not impose on such person any duties, obligations or
liability that are greater than the duties, obligations and liability
imposed on such person as a member of the Audit Committee and Board of
Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Items 5-6. [Reserved]
- ---------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
- -------------------------------------------------------------------------
Management Investment Companies:
--------------------------------
The Fund has adopted the Proxy Voting Procedures and Proxy Voting
Guidelines of Putnam Investments (an affiliate of THLPCM) for purposes of
exercising its rights with respect to voting securities owned by the Fund.
May 6, 2003
Putnam Investments
Proxy Voting Procedures
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Introduction and Summary
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Many of Putnam's investment management clients have delegated to Putnam
the authority to vote proxies for shares in the client accounts Putnam
manages. Putnam believes that the voting of proxies can be an important
tool for institutional investors to promote best practices in corporate
governance and votes all proxies in the best interests of its clients
as investors. In Putnam's view, strong corporate governance policies,
most notably oversight by an independent board of qualified directors,
best serve investors' interests. Putnam will vote proxies and maintain
records of voting of shares for which Putnam has proxy voting authority
in accordance with its fiduciary obligations and applicable law.
This memorandum sets forth Putnam's policies for voting proxies. It
covers all accounts for which Putnam has proxy voting authority. These
accounts are primarily US and international institutional accounts
managed by The Putnam Advisory Company, L.L.C. and Putnam Fiduciary
Trust Company. In addition they include subadvised US mutual funds and
smaller separate accounts managed under 'wrap fee' programs by Putnam
Investment Management, L.L.C. In addition, this memorandum sets forth
Putnam's procedures for coordination of proxy voting for the Putnam
mutual funds. The Trustees of the Putnam mutual funds have retained
authority for voting proxies but refer many proxy issues to Putnam's
investment professionals for advice.
Proxy Committee
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Putnam has a Proxy Committee composed of senior professionals in the
Investment Division. The co-heads of the Investment Division appoint
the members of the Proxy Committee. The Proxy Committee is responsible
for setting general policy as to proxies. Specifically, the Committee:
1. reviews these procedures and the Proxy Guidelines annually and
approves any amendments considered to be advisable.
2. considers special proxy issues as they may from time to time arise.
Proxy Voting Administration
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The Putnam Legal and Compliance Department administers Putnam's proxy
voting through a Proxy Manager. (The Proxy Manager as of the date of
these procedures is Victoria Card). Under the supervision of senior
members of the Legal and Compliance Department the Proxy Manager has
the following duties:
1. annually prepares the Proxy Guidelines and distributes them to the
Proxy Committee for review.
2. coordinates the Proxy Committee's review of any new or unusual proxy
issues.
3. manages the process of referring issues to portfolio managers for
voting instructions.
4. oversees the work of any third party vendor hired to process proxy
votes (as of the date of these procedures Putnam has engaged
Institutional Shareholder Services to process proxy votes) and the
process of setting up the voting process with ISS and custodial banks
for new clients.
5. coordinates responses to investment professionals' questions on proxy
issues and proxy policies, including forwarding specialized proxy
research from ISS and other vendors and forwards information to
investment professionals prepared by other areas at Putnam.
6. maintains required records of proxy votes on behalf of the
appropriate Putnam client accounts.
7. prepares and distributes reports required by Putnam clients.
Proxy Voting Guidelines
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Putnam maintains written voting guidelines ("Guidelines") setting forth
voting positions determined by the Proxy Committee on those issues
believed most likely to arise day to day. The Guidelines may call for
votes to be cast normally in favor of or opposed to a matter or may deem
the matter an item to be referred to investment professionals on a case
by case basis. A copy of the Guidelines is attached to this memorandum
as Exhibit A.
Putnam will vote all proxies in accordance with the Guidelines subject
to two exceptions as follows:
1. If the portfolio managers of client accounts holding the stock of a
company with a proxy vote believe that following the Guidelines in any
specific case would not be in clients' best interests, they may request
the Proxy Manager not to follow the guidelines in such case. The
request must be in writing and include an explanation of the rationale
for doing so. The Proxy Manager will review any such request with a
senior member of the Legal and Compliance Department prior to
implementing the request.
2. For clients with plan assets subject to ERISA, under rules of the U.
S. Department of Labor ("DOL") Putnam may accept instructions to vote
proxies in accordance with AFL-CIO proxy voting guidelines, in lieu of
Putnam's regular proxy voting guidelines. However, when in Putnam's
judgment voting in accordance with the AFL-CIO guidelines would be
inconsistent with ERISA, Putnam will not vote in accordance with those
guidelines. Putnam will use the Proxy Voter Services U.S. Proxy Voting
Policy Statement and Guidelines to implement voting under the AFL-CIO
guidelines. For clients not subject to ERISA, Putnam may accept
instructions to vote proxies under client specific guidelines subject to
review and acceptance by the Investment Division and the Legal and
Compliance Department.
Proxy Voting Referrals
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Under the Guidelines, certain proxy matters will be referred to the
Investment Division. The Putnam mutual funds maintain similar proxy
procedures which require certain matters to be referred to the
investment professionals. The Putnam Proxy Manager and Putnam Funds
Proxy Coordinator will coordinate efforts so that in cases where both
are referring matters, only one referral will be sent out. Normally
specific referral items will be referred to the portfolio team leader
(or another member of the portfolio team he or she designates) whose
accounts hold the greatest number of shares of the issuer of the proxies
using the attached Proxy Voting Recommendation Form. (attached as
Exhibit B). The Proxy Voting Recommendation Form contains (1) a field
that will be used by the portfolio team leader or member for
recommending a vote on each referral item, and (2) a field for
describing any contacts relating to the proxy referral item the
portfolio team may have had with any Putnam employee outside Putnam's
Investment Division or with any person other than a proxy solicitor
acting in the normal course of proxy solicitation.
The portfolio team leader or members who have been requested to provide
a recommendation on a proxy referral item will return a completed Proxy
Voting Recommendation Form. Upon receiving each completed Proxy Voting
Recommendation Form received from the Investment Division, the form will
be reviewed by the Proxy Manager or the Putnam Funds Proxy Coordinator
to be sure it has been completed correctly. If not, the Putnam Manager
or Putnam Funds Proxy Coordinator will follow up with representatives of
the Investment Division to be sure the form is completed correctly.
Conflicts of Interest
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A potential conflict of interest may arise when voting proxies of an
issuer which has a significant business relationship with Putnam. For
example, Putnam could manage a defined benefit or defined contribution
pension plan for the issuer. Putnam's policy is to vote proxies based
solely on the investment merits of the proposal. In order to guard
against conflicts the following procedures have been adopted:
1. The Proxy Committee is composed solely of professionals in the
Investment Division. Proxy administration is in the Legal and Compliance
Department. Neither the Investment Division nor the Legal and Compliance
Department report to Putnam's marketing businesses.
2. No Putnam employee outside the Investment Division may contact any
portfolio manager about any proxy vote without first contacting the
Proxy Manager or a senior lawyer in the Legal and Compliance Department.
There is no prohibition on Putnam employees seeking to communicate
investment related information to investment professionals. However, the
Proxy Manager will coordinate the delivery of such information to
investment professionals to avoid appearances of conflict.
3. Investment professionals responding to referral requests must
disclose any contacts with third parties other than normal contact with
proxy solicitation firms.
4. The Proxy Manager will review the name of the issuer of each proxy
that contains a referral item against a list of Putnam business
relationships maintained by the Legal and Compliance Department for
potential material business relationships (i.e., conflicts of interest).
If the issuer of the proxy is on the list of Putnam business
relationships, the Putnam Proxy Manager will confer with a senior lawyer
in the Putnam Investments Legal and Compliance Department prior to
voting. In addition, for referrals involving Putnam mutual funds the
Proxy Manager will fill out attached Proxy Voting Disclosure Form
(attached as Exhibit C) and deliver it to Putnam Fund Administration.
5. Putnam's Proxy Voting Guidelines may only be overridden with the
written recommendation of the Investment Division and concurrence of the
Legal and Compliance Department.
Recordkeeping
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The Legal and Compliance Department will retain copies of the following
books and records:
1. A copy of Proxy Procedures and Guidelines as are from time to time in
effect;
2. A copy of each proxy statement received with respect to securities in
client accounts;
3. Records of each vote cast for each client;
4. Internal documents generated in connection with a proxy referral to
the Investment Division such as emails, memoranda etc.
5. Written reports to clients on proxy voting and of all client requests
for information and Putnam's response.
All records will be maintained for seven years. A proxy vendor will
maintain the records noted in 2 and 3 above if it commits to providing
copies promptly upon request.
Exhibit A to Proxy Procedures
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Putnam Investments Proxy Voting Guidelines
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The proxy voting guidelines below summarize Putnam's positions on
various issues of concern to investors and indicate how client portfolio
securities will be voted on proposals dealing with a particular issue.
The proxy voting service is instructed to vote all proxies relating to
client portfolio securities in accordance with these guidelines, except
as otherwise instructed by the Proxy Manager.
The following guidelines are grouped according to the types of proposals
generally presented to shareholders. Part I deals with proposals which
have been approved and recommended by a company's board of directors.
Part II deals with proposals submitted by shareholders for inclusion in
proxy statements. Part III addresses unique considerations pertaining to
non US issuers.
I. Board-Approved Proposals
Proxies will be voted for board-approved proposals, except as follows:
A. Matters Relating to the Board of Directors
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The board of directors has the important role of overseeing management
and its performance on behalf of shareholders. Proxies will be voted for
the election of the company's nominees for directors and for
board-approved proposals on other matters relating to the board of
directors (provided that such nominees and other matters have been
approved by an independent nominating committee), except as follows:
* Putnam will withhold votes for the entire board of directors if
* The board does not have a majority of independent directors; or
* The board does not have nominating, audit and compensation committees
composed solely of independent directors.
For these purposes, an "independent director" is a director who meets
all requirements to serve as an independent director of a company under
the pending NYSE rule proposals (i.e., no material business
relationships with the company, no present or recent employment
relationship with the company (including employment of immediate family
members) and, in the case of audit committee members, no compensation
for non-board services). If a board does not meet these independence
standards, Putnam may refer board proposed items which would normally be
supported for case-by-case basis review.
* Putnam will withhold votes for any nominee for director who is
considered an independent director by the company and who has received
compensation from the company other than for service as a director
(e.g., investment banking, consulting, legal or financial advisory
fees).
* Putnam will withhold votes for the entire board of directors if the
board has more than 19 members or fewer than five members, absent
special circumstances.
* Putnam will vote on a case-by-case basis in contested elections of
directors.
* Putnam will withhold votes for any nominee for director who attends
less than 75% of board and committee meetings without valid reasons for
the absences (i.e., illness, personal emergency, etc.).
Putnam is concerned about over-committed directors. In some cases,
directors may serve on too many boards to make a meaningful
contribution. This may be particularly true for senior executives of
public companies (or other directors with substantially full-time
employment) who serve on more than a few outside boards. Putnam may
withhold votes from such directors on a case-by-case basis where it
appears that they may be unable to discharge their duties properly
because of excessive commitments.
* Putnam will withhold votes for any nominee for director of a public
company (Company A) who is employed as a senior executive of another
public company (Company B) if a director of Company B serves as a senior
executive of Company A (commonly referred to as an "interlocking
directorate").
Board independence depends not only on its members' individual
relationships, but also the board's overall attitude toward management.
Independent boards are committed to good corporate governance practices
and, by providing objective independent judgment, enhancing shareholder
value. Putnam may withhold votes on a case-by-case basis from some or
all directors that, through their lack of independence, have failed to
observe good corporate governance practices or, through specific
corporate action, have demonstrated a disregard for the interest of
shareholders.
* Putnam will vote against proposals to classify a board, absent special
circumstances indicating that shareholder interests would be better
served by this structure.
B. Executive Compensation
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Putnam will vote on a case-by-case basis on board-approved proposals
relating to executive compensation, except as follows:
* Except where Putnam would otherwise be withholding votes for the entire
board of directors, Putnam will vote for stock option plans which will
result in an average annual dilution of 1.67% or less (including all
equity-based plans).
* Putnam will vote against stock option plans that permit replacing or
repricing of underwater options (and against any proposal to authorize
such replacement or repricing of underwater options).
* Putnam will vote against stock option plans that permit issuance of
options with an exercise price below the stock's current market price.
* Except where Putnam is otherwise withholding votes for the entire board
of directors, Putnam will vote for employee stock purchase plans that
have the following features: (1) the shares purchased under the plan
are acquired for no less than 85% of their market value, (2) the
offering period under the plan is 27 months or less, and (3) dilution is
10% or less.
Putnam may vote against executive compensation proposals on a
case-by-case basis where compensation is excessive by reasonable
corporate standards, or where a company fails to provide transparent
disclosure of executive compensation. In voting on proposals relating to
executive compensation, Putnam will consider whether the proposal has
been approved by an independent compensation committee of the board.
C. Capitalization
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Putnam will vote on a case-by-case basis on board-approved proposals
involving changes to a company's capitalization.
* Putnam will vote for proposals relating to the authorization of
additional common stock (except where such proposals relate to a
specific transaction).
* Putnam will vote for proposals to effect stock splits (excluding
reverse stock splits.)
* Putnam will vote for proposals authorizing share repurchase programs.
D. Acquisitions, Mergers, Reincorporations, Reorganizations and
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Other Transactions
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Putnam will vote on a case-by-case basis on business transactions such
as acquisitions, mergers, reorganizations involving business
combinations, liquidations and sale of all or substantially all of a
company's assets, except as follows:
* Putnam will vote for mergers and reorganizations involving business
combinations designed solely to reincorporate a company in Delaware.
E. Anti-Takeover Measures
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Putnam will vote against board-approved proposals to adopt anti-takeover
measures such as a shareholder rights plan, supermajority voting
provisions, adoption of fair price provisions, issuance of blank check
preferred stock and the creation of a separate class of stock with
disparate voting rights, except as follows:
* Putnam will vote on a case-by-case basis on proposals to ratify or
approve shareholder rights plans (commonly referred to as "poison
pills"); and
* Putnam will vote on a case-by-case basis on proposals to adopt fair
price provisions.
F. Other Business Matters
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Putnam will vote for board-approved proposals approving routine business
matters such as changing the company's name, ratifying the appointment
of auditors and procedural matters relating to the shareholder meeting,
except as follows:
* Putnam will vote on a case-by-case basis on proposals to amend a
company's charter or bylaws (except for charter amendments necessary or
to effect stock splits to change a company's name or to authorize
additional shares of common stock).
* Putnam will vote against authorization to transact other unidentified,
substantive business at the meeting.
II. Shareholder Proposals
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Putnam will vote in accordance with the recommendation of the company's
board of directors on all shareholder proposals, except as follows:
* Putnam will vote for shareholder proposals to declassify a board,
absent special circumstances which would indicate that shareholder
interests are better served by a classified board structure.
* Putnam will vote for shareholder proposals to require shareholder
approval of shareholder rights plans.
* Putnam will vote for shareholder proposals that are consistent with
Putnam's proxy voting guidelines for board-approved proposals.
III. Voting Shares of Non US Issuers
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Putnam recognizes that the laws governing non US issuers will vary
significantly from US law and from jurisdiction to jurisdiction.
Accordingly it may not be possible or even advisable to apply these
guidelines mechanically to non US issuers. However, Putnam believes that
shareholders of all companies are protected by the existence of a sound
corporate governance and disclosure framework. Accordingly, Putnam will
vote proxies of non US issuers in accordance with the foregoing
guidelines where applicable, except as follows:
* Putnam will vote for shareholder proposals calling for a majority of
the directors to be independent of management.
* Putnam will vote for shareholder proposals seeking to increase the
independence of board nominating, audit and compensation committees.
* Putnam will vote for shareholder proposals that implement corporate
governance standards similar to those established under U.S. federal law
and the listing requirements of U.S. stock exchanges, and that do not
otherwise violate the laws of the jurisdiction under which the company
is incorporated.
* Putnam will vote on case-by-case basis on proposals relating to (1)
the issuance of common stock in excess of 20% of a company's outstanding
common stock where shareholders do not have preemptive rights, or (2)
the issuance of common stock in excess of 100% of a company's
outstanding common stock where shareholders have preemptive rights.
Many non US jurisdictions impose material burdens on voting proxies.
There are three primary types of limits as follows:
(1) Share blocking. Shares must be frozen for certain periods of time to
vote via proxy.
(2) Share re-registration. Shares must be reregistered out of the name
of the local custodian or nominee into the name of the client for the
meeting and, in may cases, then reregistered back. Shares are normally
blocked in this period.
(3) Powers of Attorney. Detailed documentation from a client must be
given to the local subcustodian. In many cases Putnam is not authorized
to deliver this information or sign the relevant documents.
Putnam's policy is to weigh the benefits to clients from voting in these
jurisdictions against the detriments of doing so. For example, in a
share blocking jurisdiction, it will normally not be in a client's
interest to freeze shares simply to participate in a non contested
routine meeting. More specifically, Putnam will normally not vote shares
in non-US jurisdictions imposing burdensome proxy voting requirements
except in significant votes (such as contested elections and major
corporate transactions) where directed by portfolio managers.
Exhibit B to Proxy Procedures
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Proxy Vote Referral Request: Company XYZ, Vote Due X/X/XX
Proxy Voting Referral Request Form
From: Victoria Card ext. 1-1168
Please describe any contacts with any person you may have had, apart
from the Investment Division, Putnam's Proxy Administration staff, or
proxy soliciting firms regarding the proxy: .
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Meeting Date:
Vote Recommendation Due Date:
Company Name: XYZ Inc.
* Please indicate FOR, AGAINST or ABSTAIN for each agenda item
referenced below.
* Please provide vote rationale when you believe additional information
is necessary to explain your vote.
Examples: "Stock option plan will create excessive dilution,"
"Shareholder proposal would be disruptive"
Referral items: Putnam Rec.* ISS Rec.
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1. [Description of item]
Rationale:
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* Assuming Board meets Putnam Independence Standards for the Board of Directors
Please see attached ISS analysis for information on the proposals.
Exhibit C to Proxy Procedures
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PUTNAM INVESTMENTS
PROXY VOTING CONFLICT
OF INTEREST DISCLOSURE FORM
1. Company name:
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2. Date of Meeting:
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3. Referral Item(s):
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4. Description of Putnam's Business Relationship with Issuer of Proxy
which may give rise to a conflict of
interest:
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5. Describe procedures used to address any conflict of interest:
Investment professional who was solicited to provide a recommendation
was advised that the recommendation must be provided without regard to
any client or other business relationship between Putnam and the
company. In addition, Putnam has made arrangements that, unless
authorized by Putnam's Legal and Compliance Department, contacts from
outside parties, except for representatives of the issuing company, with
respect to referral items will be handled by Putnam's Legal and
Compliance Department to prevent any influence on the investment
process. In the case of contact between Putnam investment professionals
and representatives of issuing companies, any such contact will be
documented and included in the proxy voting files.
6. Describe any contacts from parties outside Putnam Management (other
than routine communications from proxy solicitors) with respect to the
referral item not otherwise reported in an investment professional's
recommendation:
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CERTIFICATION
The undersigned officer of Putnam Investments certifies that, to the
best of his or her knowledge, any recommendation of an investment
professional provided under circumstances where a conflict of interest
exists was made solely on the investment merits and without regard to
any other consideration.
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Name: Victoria R. Card
Title: Assistant Vice President, Proxy Voting Project Manager
Item 8. [Reserved]
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Item 9. Controls and Procedures:
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The registrant's principal executive officer and principal financial
officers 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
on Form N-CSR, that the design and operation of such procedures are
effective to provide reasonable assurance that information required to
be disclosed by the investment company in the reports that it files or
submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized, and reported within the time periods specified in
the Commission's rules and forms.
There have been no significant changes in the registrant's internal
controls subsequent to the date of their evaluation.
Item 10. Exhibits:
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(a) The Code of Ethics of the Fund, which incorporates the Code of Ethics
of TH Lee, Putnam Capital Management, LLC, is filed herewith.
(b) 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, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act of 2002
are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
an 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
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Michael T. Healy
Principal Accounting Officer
Date: December 23, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
an 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/Karnig H. Durgarian
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Karnig H. Durgarian
Principal Executive Officer
Date: December 23, 2003
By (Signature and Title): /s/Steven D. Krichmar
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Steven D. Krichmar
Principal Financial Officer
Date: December 23, 2003