Securities and Exchange Commission
Washington, D.C. 20549
Form 11-K
Annual Report
Pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For Fiscal Year Ended December 31, 2003
A. Full title of the plan:
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
B. Name the issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
MARSH & McLENNAN COMPANIES, INC.
1166 Avenue of the Americas
New York, NY 10036
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
The Trustees of the plan are Francis N. Bonsignore and Sandra S.
Wijnberg. Mr. Bonsignore is Senior Vice President - Executive Resources
& Development of MMC. Ms. Wijnberg is Senior Vice President and Chief
Financial Officer of MMC. The Benefits Administration Committee of MMC
has been appointed as Plan Administrator. The business address of all
the Trustees is c/o MMC, 1166 Avenue of the Americas, New York, NY
10036.
The financial statements of the Plan are included in this Form 11-K and
consist of the statements of net assets available for plan benefits as
of December 31, 2003 and 2002, and the statements of changes in net
assets available for plan benefits for the years ended December 31, 2003
and 2002 and the report and consent of Deloitte & Touche, independent
public accountants, with respect thereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustees (or other persons who administer the employee benefit plan) of
Putnam Investments, Inc. Profit Sharing Retirement Plan have duly caused
this annual report to be signed this 28th of June 2004 by the
undersigned thereunto duly authorized.
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
By /s/
-------------------------
Patricia A. Agnello
Delegate of Benefits
Administration Committee
Plan Administrator for
Putnam Investments Profit
Sharing Retirement Plan
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement
Nos. 2-65096 and 333-69774 of Marsh & McLennan Companies, Inc. on Form
S-8 of our report dated June 22, 2004, appearing in this Annual Report
on Form 11-K of the Putnam Investments Profit Sharing Retirement Plan
for the year ended December 31, 2003.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
June 28, 2004
Putnam Investments Profit Sharing Retirement Plan
Financial Statements for the Years Ended December 31, 2003 and 2002,
Supplemental Schedule as of December 31, 2003 and Report of Independent
Registered Public Accounting Firm
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
TABLE OF CONTENTS
------------------------------------------------------------------------------
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2003
AND 2002:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2003:
Form 5500, Schedule H, Part IV, Line 4i--Schedule of Assets
(Held at End of Year) 9-10
Schedules required under the Employee Retirement Income Security Act of
1974, other than the schedule listed above, are omitted because of the
absence of the conditions under which the schedules are required.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants of the Putnam Investments
Profit Sharing Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits of the Putnam Investments Profit Sharing Retirement Plan (the
"Plan") as of December 31, 2003 and 2002, and the related statements of
changes in net assets available for benefits for the years then ended.
These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
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. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the net assets available for benefits of the Plan as
of December 31, 2003 and 2002, and the changes in net assets available
for benefits for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule
listed in the Table of Contents is presented for the purpose of
additional analysis and is not a required part of the basic 2003
financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. This schedule
is the responsibility of the Plan's management. Such schedule has been
subjected to the auditing procedures applied in our audit of the basic
2003 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic 2003
financial statements taken as a whole.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
June 22, 2004
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
------------------------------------------------------------------------------
2003 2002
ASSETS:
Investments--at fair value $430,167,696 $328,262,466
Participant loans 10,611,759 8,517,015
------------ ------------
Total investments 440,779,455 336,779,481
Receivables:
Employer contributions receivable 35,180,860 35,378,223
Participant contributions receivable 1,309,062 1,412,410
------------ ------------
Total receivables 36,489,922 36,790,633
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $477,269,377 $373,570,114
============ ============
See notes to financial statements.
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2003 AND 2002
------------------------------------------------------------------------------
2003 2002
Investment activity:
Net appreciation (depreciation) in fair
value of investments $73,741,586 $(69,687,720)
Dividend income 5,345,191 4,848,731
Interest income 1,831,476 1,576,064
Investment activity -- net 80,918,253 (63,262,925)
Contributions:
Employer 35,180,860 35,378,223
Participants 20,143,425 21,043,559
Total contributions 55,324,285 56,421,782
DEDUCTIONS - Benefits paid to participants (32,543,275) (26,600,808)
NET INCREASE (DECREASE) 103,699,263 (33,441,951)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 373,570,114 407,012,065
End of year $477,269,377 $373,570,114
See notes to financial statements.
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Putnam Investments Profit Sharing
Retirement Plan (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
General -- The Plan is a defined contribution plan sponsored by Putnam
Investments LLC ("Putnam") and its subsidiaries (the "Company"). Putnam
is a wholly owned subsidiary of Putnam Investments Trust, which is
ultimately a majority-owned subsidiary of Marsh & McLennan Companies,
Inc. ("MMC"). The Plan is for the benefit of the Company's employees and
is intended to qualify as a profit-sharing plan under Section 401(a) of
the Internal Revenue Code (the "Code") and to constitute a qualified
cash or deferred arrangement under Section 401(k) of the Code. The Plan
document was amended on November 18th, 2003 to identify the Benefits
administration committee of MMC as the Plan administrator. The Plan
document was also amended and restated on January 1, 2001 to comply with
the applicable provisions of tax acts referred to as GUST. The Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA").
An employee is eligible to become a participant under the profit-sharing
portion of the Plan upon the completion of 12 months of service. An
employee is eligible to become a participant in the salary-deferral
portion of the Plan upon commencement of employment. A participant must
be employed on the last day of the Plan's fiscal year (December 31) to
be eligible for his or her portion of the Company's contribution for
that year.
Contributions -- Company contributions are determined at the discretion of
the Company's Board of Directors. Contributions may not exceed the
amount permitted as a deduction under the applicable provisions of the
Code. During the years ended December 31, 2003 and 2002, the Company
contributed 15% of eligible compensation.
It is the intention of the Trustees that the salary deferral portion of
the Plan be qualified under Section 401(k) of the Code. The terms of the
salary savings agreement provide that the participants' earnings
contribution to the Plan will be deducted from their payroll and that
the Company shall contribute this amount to the Plan on behalf of the
participants. Unless otherwise directed by the employee, all new
employees contribute 3% of their total earnings to the salary-deferred
portion of the Plan. The market value of assets relating to the salary
savings program at December 31, 2003 and 2002 was $115,778,720 and
$83,898,552, respectively.
Voluntary employee contributions are accepted within certain limits as
defined in the Plan. Participants making contributions are not allowed
to withdraw any appreciation on such contributions before termination of
employment but may withdraw their contributions subject to certain
restrictions.
Investment Programs -- The Plan allows each participant to elect to have
participant contributions, Company contributions and reallocated
forfeitures invested in one or more of the following authorized
investment vehicles:
(1) Any one or a combination of the open-end management investment
companies, excluding tax-exempt income funds, for which a subsidiary of
Putnam acts as an investment adviser ("Putnam-sponsored mutual funds").
(2) Prior to January 1997, any one or a combination of contracts with
insurance companies which guarantee principal and interest at a fixed
rate. Subsequent to January 1997, guaranteed investment contract
products are offered through the investment in the Putnam Fiduciary
Trust Company Stable Value Fund.
(3) MMC common stock (MMC is the parent company of Putnam).
(4) Other investment options approved by the Board of Directors of
Putnam, the trustees of the Plan (the "Trustees"), and the chief
executive officer of MMC. There were no investments in this option at
December 31, 2003 or 2002.
Participant and Company contributions and forfeitures must generally be
allocated with apportionments to be no less than 1% per investment.
With proper notification, participants may elect to change their
investment in either their participation or voluntary accounts up to
once a day.
Vesting -- The vesting of Company contributions is as follows:
Vested Interest
Years of continuous service:
Less than two None
Two but less than three 25%
Three but less than four 50%
Four but less than five 75%
Five or more 100%
If a participant reaches age 59?, dies, or becomes disabled 100%
Participants are automatically fully vested in their voluntary and
rollover contributions.
Forfeitures -- Forfeitures of invested Company contributions are used to
reduce future Company contributions one year after the fiscal year in
which the forfeitures occur. At December 31, 2003 and 2002, forfeited
non-vested accounts totaled $1,569,495 and $1,265,721, respectively.
Reduction of Company contributions amounted to $1,265,721 and $1,644,468
in 2003 and 2002, respectively, for forfeitures that occurred in 2002
and 2001, respectively.
Participant Accounts -- Individual accounts are maintained for each Plan
participant. Each participant's account is credited with the
participant's contribution, the Company's contribution, and allocations
of Plan earnings, and charged with withdrawals and an allocation of Plan
losses. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested account.
Company contributions are allocated annually based on a uniform
percentage of eligible earnings per participant.
Payment of Benefits -- Distributions are based on the vested portion of the
participant's account valuation as of the liquidation date coinciding
with or following the next valuation date after the individual ceases to
be a participant. Upon participant request, such distributions are made
within a reasonable period after the individual ceases to be a
participant, but not later than 60 days after the close of the fiscal
year. The Plan generally allows terminated participants to maintain
their accounts in the Plan, but such accounts do not share in
contributions and forfeiture reallocations. The value of these accounts
will continue to be determined each business day.
Participant Loans -- Upon the approval of the Retirement Savings Plan
Committee, appointed by the Plan administrator, participants of the Plan
may borrow from their accounts, to alleviate financial need as defined
by the Plan, an amount which, when added to all other loans to the
participant, would not exceed the lesser of (1) a maximum borrowing
limit of $50,000 or (2) 50% of the vested balance of the participant's
account. All loans shall be secured by the participant's account and
will be repaid through payroll deductions according to a fixed repayment
schedule which includes interest at a rate equal to the prime rate at
the time the loan originated. Loans outstanding at December 31, 2003 and
2002 were $10,611,759 and $8,517,015, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting -- The accompanying financial statements of the Plan
have been prepared on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of
America. Certain prior-year amounts have been reclassified to conform to
the current-year presentation.
Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Plan's management to make estimates and assumptions that
affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates. The
Plan utilizes various investment instruments. Investment securities, in
general, are exposed to various risks such as interest rate, credit, and
overall market volatility. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the
financial statements.
Investment Valuation and Income Recognition -- The Plan's investments are
stated at fair value except for its benefit-responsive investment
contracts, which are valued at contract value. Quoted market prices are
used to value investments. Shares of mutual funds are valued at the net
asset value of shares held by the Plan at year-end. Investment
transactions are recorded on the trade-date basis. Dividend income is
recorded on the ex-dividend date. Interest income is recorded as earned.
Administrative Expenses--Expenses of the Plan have been paid by the
Company, but such payment is at the Company's discretion.
Benefits--Benefits to participants are recorded when paid.
3. INVESTMENTS
Investments that represent 5% or more of the Plan's net assets available
for benefits at December 31 are as follows:
2003 2002
Putnam Money Market Fund $44,306,288 $39,943,548
Putnam Voyager Fund 29,891,395 23,553,525
Putnam New Opportunities Fund 27,541,240 20,576,944
The Putnam Fund for Growth and Income 25,900,370 20,326,365
Putnam Stable Value Fund 29,814,645 23,355,227
Putnam International Equity Fund 24,098,719 18,711,029
During the years ended December 31, the Plan's investments (including
gains and losses on investments bought and sold, as well as held, during
the year) appreciated (depreciated) in value as follows:
2003 2002
Investments at fair value, based on quoted
market prices:
Putnam-sponsored mutual funds $72,878,679 $(67,748,445)
MMC common stock, 343,778 and 323,311
shares, respectively 862,907 (1,939,275)
Total $73,741,586 $(69,687,720)
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their
accounts.
5. SUBSEQUENT DISTRIBUTIONS
At December 31, 2003 and 2002, amounts allocated to accounts of persons
who have elected to withdraw from the Plan but have not yet been paid
were $1,646,793 and $1,017,871, respectively. These amounts by
investment type are as follows:
Source 2003 2002
Mutual funds $1,529,873 $900,652
Stable Value Fund -- guaranteed
investment products 83,844 85,159
MMC common stock* 33,076 32,060
Total $1,646,793 $1,017,871
*Putnam and MMC are parties-in-interest to the Plan.
6. TAX STATUS OF THE PLAN
The Plan obtained its latest determination letter on December 6, 2002 in
which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Code. The Plan has been amended since receiving the determination
letter, however the Plan administrator believes that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Code. Accordingly, no provision for income taxes has
been included in the Plan's financial statements.
7. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of Putnam-sponsored mutual funds and
collective trust. Putnam is the Plan sponsor as defined by the Plan, and
therefore these transactions qualify as party-in-interest transactions.
Fees paid by the Plan for investment management services were included
as a reduction of the return earned on each fund.
At December 31, 2003 and 2002, the Plan held 343,778 and 323,311 shares,
respectively, of common stock of MMC, the parent company of the
sponsoring employer, with a cost basis of $14,090,462 and $13,243,193,
respectively, and with a fair value of $16,463,546 and $14,940,179,
respectively. During the years ended December 31, 2003 and 2002, the
Plan recorded dividend income of $426,578 and $310,734, respectively.
* * * * * *
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i--SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
---------------------------------------------------------------------------------------------------------------------------
(c) Description of (e) Current
(a) Shares (b) Identity of Issue Investment (d) Cost ** Value
MUTUAL FUNDS AND COLLECTIVE TRUSTS:
* 44,306,288 Putnam Money Market Fund Registered Investment Company 44,306,288
* 1,832,704 Putnam Voyager Fund Registered Investment Company 29,891,395
* 29,814,645 Putnam Stable Value Fund Collective Trust 29,814,645
* 709,643 Putnam New Opportunities Fund Registered Investment Company 27,541,240
* 1,460,822 The Putnam Fund for Growth and Income Registered Investment Company 25,900,370
* 277,716 Putnam International Growth & Income Fund Registered Investment Company 2,754,946
* 996,458 The George Putnam Fund of Boston Registered Investment Company 16,959,722
* 1,616,848 Putnam Vista Fund Registered Investment Company 13,371,331
* 878,265 Putnam Small Cap Value Fund Registered Investment Company 14,895,375
* 1,756,528 Putnam OTC Emerging Growth Fund Registered Investment Company 12,278,130
* 178,530 Putnam Health Sciences Trust Registered Investment Company 10,590,399
* 989,621 Putnam Investors Fund Registered Investment Company 11,192,619
* 974,505 Putnam International New Opportunities Fund Registered Investment Company 10,066,637
* 1,203,629 Putnam Global Equity Fund Registered Investment Company 9,231,838
* 595,894 Putnam New Value Fund Registered Investment Company 9,337,662
* 603,091 Putnam Growth Opportunities Registered Investment Company 7,840,188
* 877,067 Putnam High Yield Trust Registered Investment Company 6,990,225
* 621,527 Putnam Equity Income Trust Registered Investment Company 9,782,838
* 587,428 Putnam Research Fund Registered Investment Company 7,648,310
* 635,736 Putnam Income Fund Registered Investment Company 4,310,291
* 607,302 Putnam Capital Opportunities Fund Registered Investment Company 6,224,841
* 508,779 Putnam Mid Cap Value Fund Registered Investment Company 6,420,792
* 283,204 Putnam American Gov't Income Trust Registered Investment Company 2,557,331
* 286,317 Putnam Capital Appreciation Fund Registered Investment Company 4,661,248
* 359,613 Putnam Classic Equity Fund Registered Investment Company 4,247,025
* 328,036 Putnam Global Income Trust Registered Investment Company 4,080,770
* 235,930 Putnam Convertible Income-Growth Trust Registered Investment Company 3,857,456
* 621,509 Putnam High Yield Advantage Trust Registered Investment Company 3,778,773
(Continued)
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
FORM 5500--SCHEDULE H--PART IV--LINE 4i--SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
---------------------------------------------------------------------------------------------------------------------------
(c) Description of (e) Current
(a) Shares (b) Identity of Issue Investment (d) Cost ** Value
* 171,784 Putnam Europe Equity Fund Registered Investment Company 3,076,643
* 528,125 Putnam Asset Allocation Fund: Balanced Registered Investment Company 5,217,875
* 168,060 Putnam U.S. Government Income Trust Registered Investment Company 2,215,032
* 476,424 Putnam Asset Allocation Fund: Growth Registered Investment Company 4,821,412
* 256,777 Putnam Diversified Income Trust Registered Investment Company 2,567,766
* 103,265 Putnam Global Natural Resources Fund Registered Investment Company 2,113,836
* 266,670 Putnam Intermediate U.S. Governement Income Fund Registered Investment Company 1,376,018
* 185,864 Putnam Asset Allocation Fund: Conservative Registered Investment Company 1,641,176
* 265,329 Putnam Small Cap Growth Fund Registered Investment Company 4,982,885
* 122,469 Putnam Utilities Growth and Income Fund Registered Investment Company 1,055,682
* 637,474 Putnam Discovery Growth Registered Investment Company 10,320,703
* 1,159,707 Putnam International Equity Fund Registered Investment Company 24,098,719
* 529,300 Putnam International Cap Opportunities Registered Investment Company 9,683,718
Total Mutual Funds and Collective Trust 413,704,150
* 343,778 Marsh & McLennan Companies, Inc. Common Stock 16,463,546
* Participants Participant loans -
Various maturities from
2003 and 2013 at interest
rates ranging from
4.0% to 12.375% 10,611,759
------------
TOTAL INVESTMENTS $440,779,455
(Concluded)
* Permitted party-in-interest.
(Note - The Putnam mutual funds are sponsored by Putnam Investments Trust, a party-in-interest
to the Plan.)
** Cost information is not required for participant-directed investments and is therefore not included.