Putnam
Municipal
Opportunities
Trust
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:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-04
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
During the past several months, Putnam has introduced a number of reforms
for the benefit of shareholders, including increasing the amount of
disclosure for our funds. We are now including additional information about
your fund's management team. Following the Outlook for Your Fund, we list
any changes in your fund's Portfolio Leader and Portfolio Members during
the prior year period, the current Portfolio Leader's and Portfolio
Members' other fund management responsibilities at Putnam, and the dollar
range of fund shares owned by these individuals.
We are also pleased to announce that three new Trustees have joined your
fund's Board of Trustees. Nominated by your fund's independent Trustees,
these individuals have had outstanding careers as leaders in the investment
management industry. Myra R. Drucker is a Vice Chair of the Board of
Trustees of Sarah Lawrence College and serves as Chair of the New York
Stock Exchange (NYSE) Pension Managers Advisory Committee and as a Trustee
of Commonfund, a not-for-profit asset management firm. Richard B. Worley is
Managing Partner of Permit Capital LLC, an investment management firm. Both
Ms. Drucker and Mr. Worley are independent Trustees (i.e., Trustees who are
not "interested persons" of your fund or its investment advisor). Charles
E. Haldeman, Jr., the third new Trustee, is President and Chief Executive
Officer of Putnam Investments.
During the period covered by the following report, Putnam Municipal
Opportunities Trust delivered respectable results. In the following pages,
the fund managers discuss fund performance, strategy, and their outlook for
fiscal 2005.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
December 15, 2004
Report from Fund Management
Fund highlights
* For the six months ended October 31, 2004, Putnam Municipal
Opportunities Trust's total return was 6.59% at net asset value (NAV)
and 4.65% at market price.
* The fund's benchmark, the Lehman Municipal Bond Index, returned 4.78%
for the period.
* The average return for its Lipper category, General Municipal Debt
Funds (leveraged closed-end) was 6.58%.
* The fund's dividend was reduced to $0.0735 in September. See page 6
for more information.
* See the Performance Summary beginning on page 10 for additional fund
performance, comparative performance, and Lipper data.
Performance commentary
Two factors drove positive performance for the high-yield, lower-quality
bonds in the fund's portfolio, enabling its results at NAV to surpass
those of its benchmark during the six months ended October 31, 2004. The
first factor was the improving economic climate, which increased
investor confidence in the relative financial stability of many
lower-rated bond issuers, lifting the price of the bonds. The second
factor was investor demand for higher-yielding municipal debt, which
increased while supply remained relatively small, driving up prices of
these bonds. The fund's position in lower-rated bonds also helped it
perform, at NAV, in line with its Lipper peer group average, in spite of
the fund's relatively conservative duration during the period. It is
important to note that a fund's performance at market price may differ
from its results at NAV. Although market price performance generally
reflects investment results, it may also be influenced by several other
factors, including changes in investor perceptions of the fund or its
investment advisor, market conditions, fluctuations in supply and demand
for the fund's shares, and changes in fund distributions.
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TOTAL RETURN FOR
PERIODS ENDED 10/31/04
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Market
(inception 5/28/93) NAV price
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6 months 6.59% 4.65%
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1 year 8.57 6.30
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5 years 47.05 45.48
Annual average 8.02 7.78
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10 years 107.44 112.98
Annual average 7.57 7.85
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Annual average
(life of fund) 6.56 5.62
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Data is historical. Past performance does not guarantee future results.
More recent returns may be less or more than those shown. Investment
return, net asset value, and market price will fluctuate and you may
have a gain or a loss when you sell your shares. Performance assumes
reinvestment of distributions and does not account for taxes.
FUND PROFILE
Putnam Municipal Opportunities Trust seeks to provide high current
income free from federal income tax consistent with the preservation of
capital, by investing in investment-grade and some below-investment-
grade municipal bonds. The fund may be appropriate for investors seeking
tax-free income and who are willing to accept a moderate degree of risk.
Market overview
Over the past six months, which constitute the first half of your fund's
2005 fiscal year, the yield on the 10-year Treasury bond fell, and bond
prices, which move in the opposite direction of yields, rose. In
mid-March, the bond market had begun to anticipate a change in the
Federal Reserve Board's (the Fed) monetary policy. Treasury bonds sold
off sharply and pushed yields upward, as strong economic growth and
rising corporate profitability increased the likelihood that the Fed
would raise short-term interest rates at its June 30 meeting.
Interestingly, when the Fed announced what had been a widely anticipated
25-basis-point increase, the bond market changed its course. Yields of
bonds with maturities in the range of 11-21 years trended downward. At
the same time, yields rose for bonds with short maturities and those
with very long maturities (over 21 years). This resulted in a flattening
of the yield curve -- that is, shorter- and longer-term interest rates
began to converge.
Among uninsured bonds and bonds rated A and below, yield spreads
remained essentially flat for the period. However, these higher-yielding
securities continued to provide attractive income streams that
contributed to the fund's total return during the period. Municipal
bonds issued by the State of California were generally strong
performers. The California economy improved to such an extent that three
bond-rating agencies -- Moody's, Standard & Poor's, and Fitch --
upgraded the state's credit rating. Tobacco settlement bonds performed
fairly well during the period. Yields on these bonds varied with the
results of ongoing legal battles, but declined overall since May, and
their prices rose accordingly. Airline-related industrial development
bonds (IDBs) performed poorly in general, as the industry continued to
face financial difficulties that were made worse by record high oil
prices. New York City general obligation (GO) bonds rose in price over
the past six months, reflecting a dearth of new issuance, as well as
investors' confidence in improving economic prospects for the city.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 10/31/04
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Bonds
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Lehman Municipal Bond Index (tax-exempt bonds) 4.78%
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Lehman Aggregate Bond Index (broad bond market) 4.23%
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Lehman Government Bond Index (U.S. Treasury and agency
securities) 3.96%
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JP Morgan Global High Yield Index (global high-yield
corporate bonds) 6.14%
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Equities
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S&P 500 Index (broad stock market) 2.96%
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Russell 1000 Index (large-company stocks) 3.04%
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Russell 2000 Index (stocks of small and midsize companies) 4.87%
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These indexes provide an overview of performance in different market
sectors for the six months ended 10/31/04.
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Strategy overview
Because we believe that the Fed is likely to continue to raise
short-term interest rates through mid-2005, we have positioned the
portfolio more defensively. This involves shortening the fund's
duration, which means reducing its sensitivity to changes in interest
rates. To accomplish this, we began the process of selling longer-term
bonds and replacing them with shorter-term bonds, which have a shorter
duration. Meanwhile, we continued to trim and diversify the fund's
positions in uninsured bonds and bonds rated A and below, which have
performed strongly. We maintained a neutral position, relative to the
fund's benchmark, in California municipal bonds, which were in high
demand as that state got its fiscal house in order and its debt rating
was upgraded by the major bond-rating agencies. The fund maintained its
overweight position in tobacco settlement bonds. We closely monitored
developments in that sector. The fund had less exposure to
airline-related IDBs during the period than did its peers.
In previous fiscal years, the fund emphasized non-callable bonds --
bonds that the issuer is not permitted to redeem (or call) before the
maturity date. These issues performed well as rates fell through March
2004, but during the spring we began to moderate this position, selling
non-callable bonds and purchasing callable issues scheduled to mature in
the 15- to 20-year range. We believe callable bonds may perform better
than non-callable bonds if interest rates rise and the yield curve
flattens further.
[GRAPHIC OMITTED: horizontal bar chart THE FUND'S MATURITY AND DURATION
COMPARED]
THE FUND'S MATURITY AND DURATION COMPARED
4/30/04 10/31/04
Average effective
maturity in years 9.0 7.3
Average effective
duration in years 9.2 8.3
Footnotes read:
This chart compares changes in the fund's duration (a measure of its
sensitivity to interest-rate changes) and its average effective maturity
(a weighted average of the holdings' maturities).
Average effective maturity also takes into account put and call
features, where applicable, and reflects prepayments for mortgage-backed
securities.
How fund holdings affected performance
When economic growth improves, the chances of a company or municipality
defaulting on its bond payments generally decrease, which can boost the
prices of lower-rated bonds significantly. The more credit-sensitive
pockets of the market benefited from this trend, as well as increased
demand from investors who were hungry for yield in a low-interest-rate
environment. Consequently, the fund's focus on lower-rate bonds helped
performance substantially. While we emphasize lower-quality bonds in
this fund's portfolio, we have also been trying to manage risk exposure
by diversifying holdings across a number of issuers, locations, and
sectors.
The fund was more conservatively positioned than its peers in terms of
its duration -- a measure of the fund's sensitivity to interest rates.
We shortened duration in an effort to preserve the fund's principal
value from an increase in interest rates that has yet to affect the
long-term end of the market. In spite of the Federal Reserve Board's
tightening, which sent short-term interest rates up, intermediate- to
longer-term rates actually fell, and the fund missed some of the
resulting capital appreci ation. However, we continue to believe our
cautious approach is warranted, and the positives that resulted from our
emphasis on yield offset any negative effects of our conservative
duration.
Price appreciation of the fund's New York City's general obligation (GO)
bonds illustrate the benefits of an improving economy and narrowing
credit spreads. GOs are backed by taxpayer receipts and reflect investor
perceptions of the financial strength of the issuing municipality. After
three consecutive years of decline, New York City's employment outlook
is finally improving. The private sector has been adding new jobs,
boosting the city's employment rate and tax revenues. Although its per
capita debt is still higher than the average for other U.S. cities, New
York City's fundamental outlook has stabilized, and two major bond-rating
organizations recently upgraded their outlook for the city, causing bond
prices to rise and narrowing the gap between these bonds and others
issued by municipalities that have higher ratings.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa (49.4%)
Aa (5.5%)
A (11.2%)
Baa (23.3%)
Ba (5.5%)
B (1.4%)
Other (3.7%)
Footnote reads:
As a percentage of market value as of 10/31/04. A bond rated Baa or
higher is considered investment grade. The chart reflects Moody's
ratings; percentages may include bonds not rated by Moody's but
considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
The fund has a somewhat greater emphasis on tobacco settlement bonds
than many of its peers, which has proved beneficial in spite of the
volatile market environment for these issues. The payments from these
high-yielding bonds are secured by income promised to various states
through settlements from tobacco companies. This income could be
jeopardized as a result of multibillion-dollar judgments against the
companies, and prices in this sector have shifted as concerns about
litigation overshadowed optimism. Our analyst believes that, despite
several highly visible lawsuits against the tobacco industry, litigation
risk is receding from where it was in 1999. Also, long-term cigarette
consumption levels appear not to have been reduced. Considering the
risks, we have diversified the fund's investments in tobacco settlement
bonds and we remain watchful of the situation. Holdings include South
Carolina Tobacco Settlement revenue bonds and Badger Tobacco Settlement
Asset Securitization Corp. revenue bonds, issued in Wisconsin.
Although some airline-related industrial development bonds (IDBs) remain
in the portfolio, the fund's position in these securities is relatively
small. IDBs are bonds issued by municipalities but backed by the credit
of the company benefiting from the financing. Investor perceptions about
the backing company's health, or that of its industry group, affect the
prices of these bonds, not the rating of the municipality issuing them.
The airline industry has been under a cloud for several years, although
it regained some ground last year. However, the industry continues to
grapple with high operating costs and strong competition among carriers,
which is keeping the price of airline tickets down. These problems, plus
the ongoing threat of terrorism, make us cautious about the industry, so
we limited the fund's airline-related investments to what we believe to
be the strongest carriers.
Although high-yielding municipal securities generally performed well
during the past six months, there were a few individual securities that
had a negative impact on the fund's performance. Louisiana Development
Authority Revenue Bonds for St. James Place hurt the fund's performance.
St. James Place is a continuing-care retirement community. We purchased
these bonds originally in 1996, but over time the system suffered from
overly optimistic projections and marketing difficulties. We had been
hopeful that a turnaround was possible. However, recently we joined the
remaining bondholders in a tentative agreement to tender our bonds back
to the issuer in exchange for a position in a newer bond that more
closely reflects St. James's current income.
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.
OF SPECIAL INTEREST
As short-term interest rates increased during the period, your fund's
portfolio was structured defensively in order to protect investors'
principle. This positioning helped the fund to provide positive relative
returns, although it did prompt a reduction of the fund's monthly
distribution from $0.0795 to $0.0735 per share in September 2004.
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.
Judging from the flattened yield curve, the bond market appears to have
largely shrugged off the recent Fed rate hikes. However, we believe that
interest rates all along the yield curve are more likely to rise than
fall. After the close of the fiscal period, the Fed again raised the
discount rate by 25 basis points, or one quarter of a percentage point.
Going forward, we anticipate greater increases for bonds with shorter
maturities because we believe the Fed will continue to raise short-term
rates incrementally through mid-2005. This also suggests further
flattening of the yield curve. The fund is positioned defensively in
terms of duration, and we will continue to monitor and adjust the fund's
duration as seems appropriate. We believe inflation will remain low,
despite the threat posed by high oil prices. We also anticipate that the
rate of GDP growth will slow during the next two quarters, as the
effects of the Fed's tightening policy are felt.
In general, these signs indicate that we are headed into a more
challenging environment for bond investing. Our task will be to continue
to search for the most attrac tive opportunities among tax-exempt
securities and to balance the pursuit of attractive current income with
prudent risk management.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. Lower-rated bonds
may offer higher yields in return for more risk. Capital gains, if any,
are taxable for federal and, in most cases, state purposes. For some
investors, investment income may be subject to the federal alternative
minimum tax. Income from federally exempt funds may be subject to state
and local taxes. Mutual funds that invest in bonds are subject to
certain risks, including interest-rate risk, credit risk, and inflation
risk. As interest rates rise, the prices of bonds fall. Long-term bonds
are more exposed to interest-rate risk than short-term bonds. Unlike
bonds, bond funds have ongoing fees and expenses.
Your fund's management
Your fund is managed by the members of the Putnam Tax Exempt
Fixed-Income Team. David Hamlin is the Portfolio Leader, and Paul Drury,
Susan McCormack, and James St. John are Portfolio Members of your fund.
The Portfolio Leader and Portfolio Members coordinate the team's
management of the fund.
For a complete listing of the members of the Putnam Tax Exempt
Fixed-Income Team, including those who are not Portfolio Leaders or
Portfolio Members of your fund, visit Putnam's Individual Investor Web
site at www.putnaminvestments.com.
Fund ownership
The table below shows fund ownership, in dollar ranges, by the fund's
current Portfolio Leader and Portfolio Members. Information shown is for
the current and prior year ended November 30.
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FUND PORTFOLIO LEADER AND PORTFOLIO MEMBERS
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$1 - $10,001 - $50,001- $100,001 - $500,001 - $1,000,001
Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over
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David Hamlin 2004 *
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Portfolio Leader 2003 *
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Paul Drury 2004 *
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Portfolio Member 2003 *
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Susan McCormack 2004 *
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Portfolio Member 2003 *
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James St. John 2004 *
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Portfolio Member 2003 *
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Other funds managed by the Portfolio Leader and Portfolio Members
David Hamlin is the Portfolio Leader and Paul Drury, Susan McCormack,
and James St. John are Portfolio Members for Putnam's tax-exempt funds
for the following states: Arizona, California, Florida, Massachusetts,
Michigan, Minnesota, New Jersey, New York, Ohio, and Pennsylvania. The
same group also manages Putnam AMT-Free Insured Municipal Fund*, Putnam
California Investment Grade Municipal Trust, Putnam High Yield Municipal
Trust, Putnam Investment Grade Municipal Trust, Putnam Managed Municipal
Income Trust, Putnam Municipal Bond Fund, Putnam Municipal Income Fund,
Putnam New York Investment Grade Municipal Trust, Putnam Tax Exempt
Income Fund, Putnam Tax-Free Health Care Fund and Putnam Tax-Free High
Yield Fund.
David Hamlin, Paul Drury, Susan McCormack, and James St. John may also
manage other accounts advised by Putnam Management or an affiliate.
Changes in your fund's Portfolio Leader and Portfolio Members
During the year ended October 31, 2004, Portfolio Member Richard Wyke
left your fund's management team.
* Formerly Putnam Tax-Free Insured Fund.
Performance summary
This section shows your fund's performance during the first half of its
fiscal year, which ended October 31, 2004. In accordance with regulatory
requirements, we also include performance for the most current calendar
quarter-end. Performance should always be considered in light of a
fund's investment strategy. Data represents past performance. Past
performance does not guarantee future results. More recent returns may
be less or more than those shown. Investment return, net asset value,
and market price will fluctuate and you may have a gain or a loss when
you sell your shares.
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TOTAL RETURN AND COMPARATIVE INDEX RESULTS FOR PERIODS ENDED 10/31/04
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Lipper General
Municipal
Lehman Debt Funds
Municipal (leveraged
Market Bond closed-end)
NAV price Index category average*
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6 months 6.59% 4.65% 4.78% 6.58%
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1 year 8.57 6.30 6.02 8.93
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5 years 47.05 45.48 41.48 52.49
Annual average 8.02 7.78 7.19 8.78
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10 years 107.44 112.98 97.69 113.51
Annual average 7.57 7.85 7.05 7.86
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Annual average
Life of fund
(since 5/28/93) 6.56 5.62 6.22 6.53
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Performance assumes reinvestment of distributions and does not account
for taxes.
Index and Lipper results should be compared to fund performance at net
asset value.
* Over the 6-month and 1-, 5-, and 10-year periods ended 10/31/04, there
were 66, 65, 51, and 46 funds, respectively, in this Lipper category.
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TOTAL RETURN FOR PERIODS ENDED 9/30/04 (MOST RECENT CALENDAR QUARTER)
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NAV Market price
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6 months 1.83% -3.79%
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1 year 6.80 5.62
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5 years 41.83 41.09
Annual average 7.24 7.13
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10 years 99.24 106.46
Annual average 7.14 7.52
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Annual average
Life of fund
(since 5/28/93) 6.49 5.69
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PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 10/31/04
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Distributions from common shares
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Number 6
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Income 1 $0.465
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Capital gains 1 --
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Total $0.465
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Distributions from Series A Series B Series C
preferred shares (800 shares) (1,620 shares) (1,620 shares)
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Income 1 $332.29 $153.51 $153.44
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Capital gains 1 -- -- --
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Total $332.29 $153.51 $153.44
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Share value: NAV Market price
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4/30/04 $12.72 $12.47
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10/31/04 13.07 12.58
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Current return (common shares, end of period)
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Current dividend rate 2 6.75% 7.01%
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Taxable equivalent 3 10.38 10.78
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1 Capital gains, if any, are taxable for federal and, in most cases,
state purposes. For some investors, investment income may be subject to
the federal alternative minimum tax. Income from federally exempt funds
may be subject to state and local taxes.
2 Most recent distribution, excluding capital gains, annualized and
divided by NAV or market price at end of period.
3 Assumes maximum 35% federal tax rate for 2004. Results for investors
subject to lower tax rates would not be as advantageous.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to auction rate municipal
preferred shares, divided by the number of outstanding common shares.
Market price is the current trading price of one share of the fund.
Market prices are set by transactions between buyers and sellers on
exchanges such as the American Stock Exchange and the New York Stock
Exchange.
Comparative indexes
JP Morgan Global High Yield Index is an unmanaged index used to mirror
the investable universe of the U.S. dollar global high-yield corporate
debt market of both developed and emerging markets.
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Government Bond Index is an unmanaged index of U.S. Treasury and
agency securities.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Russell 1000 Index is an unmanaged index of the largest 1000 companies
in the Russell 3000 Index.
Russell 2000 Index is an unmanaged index of common stocks that generally
measure performance of small to midsize companies within the Russell
3000 Index.
S&P 500 Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Lipper is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Proxy voting
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. The Putnam funds' proxy voting guidelines and
procedures, as well as information regarding how your fund voted proxies
relating to portfolio securities during the 12-month period ended June
30, 2004, are available on the Putnam Individual Investor Web site,
www.putnaminvestments.com/individual, and on the SEC's Web site,
www.sec.gov. If you have questions about finding forms on the SEC's Web
site, you may call the SEC at 1-800-SEC-0330. You may also obtain the
Putnam funds' proxy voting guidelines and procedures at no charge by
calling Putnam's Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
For periods ending on or after July 9, 2004, the fund will file a
complete schedule of its portfolio holdings with the SEC for the first
and third quarters of each fiscal year on Form N-Q. Shareholders may
obtain the fund's Forms N-Q on the SEC's Web site at www.sec.gov. In
addition, the fund's Forms N-Q may be reviewed and copied at the SEC's
public reference room in Washington, D.C. You may call the SEC at
1-800-SEC-0330 for information about the SEC's Web site or the operation
of the public reference room.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or loss
the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by the fund's net investment gain or loss, by distributions to
shareholders, and by changes in the number of the fund's shares. It
lists distributions and their sources (net investment income or realized
capital gains) over the current reporting period and the most recent
fiscal year-end. The distributions listed here may not match the sources
listed in the Statement of operations because the distributions are
determined on a tax basis and may be paid in a different period from the
one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment
income ratios, and portfolio turnover in one summary table, reflecting
the five most recent reporting periods. In a semiannual report, the
highlight table also includes the current reporting period. For open-end
funds, a separate table is provided for each share class.
The fund's portfolio
October 31, 2004 (Unaudited)
Key to Abbreviations
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AMBAC AMBAC Indemnity Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FNMA Coll. Federal National Mortgage Association Collateralized
FSA Financial Security Assurance
GNMA Coll. Government National Mortgage Association Collateralized
G.O. Bonds General Obligation Bonds
IFB Inverse Floating Rate Bonds
IF COP Inverse Floating Rate Certificate of Participation
MBIA MBIA Insurance Company
PSFG Permanent School Fund Guaranteed
U.S. Govt. Coll. U.S. Government Collateralized
VRDN Variable Rate Demand Notes
Municipal bonds and notes (100.0%) (a)
Principal amount Rating (RAT) Value
Alabama (2.7%)
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Jefferson Cnty., Swr. Rev. Bonds
$7,000,000 Ser. D, FGIC, 5 3/4s, 2/1/27 Aaa $7,638,750
1,175,000 Ser. A, FGIC, U.S. Govt. Coll., 5s,
2/1/41 Aaa 1,313,063
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8,951,813
Arizona (1.1%)
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750,000 AZ Hlth. Fac. Auth. Hosp. Syst.
Rev. Bonds (John C. Lincoln Hlth.
Network), 6 3/8s, 12/1/37 BBB 787,500
950,000 Casa Grande, Indl. Dev. Auth.
Rev. Bonds (Casa Grande Regl. Med.
Ctr.), Ser. A, 7 5/8s, 12/1/29 B-/P 1,005,813
485,000 Cochise Cnty., Indl. Dev. Auth.
Rev. Bonds (Sierra Vista Cmnty.
Hosp.), Ser. A, 6 3/4s, 12/1/26 BB+/P 494,700
1,300,000 Scottsdale, Indl. Dev. Auth.
Rev. Bonds (Westminster Village),
7 7/8s, 6/1/09 AAA/P 1,370,343
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3,658,356
Arkansas (1.2%)
-------------------------------------------------------------------------------
2,815,000 AR Dev. Fin. Auth. Rev. Bonds,
Ser. D, GNMA/FNMA Coll., 3s, 1/1/24 AAA 2,871,300
1,000,000 Northwest Regl. Arpt. Auth.
Rev. Bonds, 7 5/8s, 2/1/27 BB/P 1,081,250
--------------
3,952,550
California (11.8%)
-------------------------------------------------------------------------------
CA State G.O. Bonds
500,000 5 1/8s, 4/1/23 A 533,125
750,000 5.1s, 2/1/34 A 763,125
CA State Dept. of Wtr. Resources
Rev. Bonds, Ser. A
2,000,000 6s, 5/1/15 A2 2,320,000
2,000,000 AMBAC, 5 1/2s, 5/1/16 Aaa 2,262,500
1,000,000 CA State Econ. Recvy. G.O. Bonds,
Ser. A, 5s, 7/1/16 Aa3 1,080,000
1,750,000 CA Statewide Cmnty. Dev. Auth. COP
(The Internext Group), 5 3/8s,
4/1/30 BBB- 1,743,438
4,000,000 Chula Vista COP, MBIA, 5s, 8/1/32 Aaa 4,100,000
1,475,000 Gilroy, Rev. Bonds (Bonfante Gardens
Park), 8s, 11/1/25 D/P 1,043,563
3,000,000 Metropolitan Wtr. Dist. IFB
(Southern CA Waterworks), 9.644s,
8/10/18 AA+ 4,245,000
2,000,000 Sacramento, City Unified School
Dist. G.O. Bonds (Election 1999),
Ser. D, FSA, 5s, 7/1/28 Aaa 2,070,000
5,000,000 San Bernardino Cnty., COP (Med. Ctr.
Fin.), Ser. A, MBIA, 6 1/2s, 8/1/17 Aaa 6,350,000
San Diego Cnty., IF COP, AMBAC
3,000,000 9.47s, 9/1/12 Aaa 3,945,000
3,000,000 9.22s, 9/1/07 Aaa 3,581,250
2,500,000 San Jose, Redev. Agcy. Tax Alloc.
Bonds (Merged Area Redev. Project),
MBIA, 5s, 8/1/32 Aaa 2,562,500
790,000 Sunnyvale, Cmnty. Fac. Dist. Special
Tax Rev. Bonds, 7.65s, 8/1/21 BB-/P 796,913
1,300,000 Vallejo, COP (Marine World
Foundation), 7.2s, 2/1/26 BBB-/P 1,335,750
--------------
38,732,164
Colorado (3.2%)
-------------------------------------------------------------------------------
10,000,000 Denver, City & Cnty. Arpt.
Rev. Bonds, Ser. A, MBIA, 5.7s,
11/15/25 Aaa 10,560,700
District of Columbia (6.0%)
-------------------------------------------------------------------------------
12,450,000 DC G.O. Bonds, Ser. A, 6s, 6/1/26 A2 13,928,437
5,550,000 DC Wtr. & Swr. Auth. Pub. Util.
Rev. Bonds, FGIC, 5s, 10/1/28 Aaa 5,688,750
--------------
19,617,187
Florida (1.3%)
-------------------------------------------------------------------------------
1,000,000 Lee Cnty., Indl. Dev. Auth.
Rev. Bonds (Alliance Cmnty.
Project), Ser. C, 5 1/2s, 11/15/29 BBB- 970,000
600,000 Miami Beach, Hlth. Fac. Auth. Hosp.
Rev. Bonds (Mount Sinai Med. Ctr.),
Ser. A, 6.8s, 11/15/31 BB 625,500
2,700,000 Palm Coast, Util. Syst. Rev. Bonds,
MBIA, 5s, 10/1/33 Aaa 2,784,375
--------------
4,379,875
Georgia (5.3%)
-------------------------------------------------------------------------------
3,000,000 Atlanta, Arpt. Rev. Bonds, Ser. B,
FGIC, 5 5/8s, 1/1/30 Aaa 3,153,750
4,000,000 Atlanta, Waste Wtr. VRDN, Ser. C,
FSA, 1.74s, 11/1/41 VMIG1 4,000,000
4,000,000 Atlanta, Wtr. & Waste Wtr.
Rev. Bonds, FSA, 5s, 11/1/24 Aaa 4,230,000
1,500,000 Burke Cnty., Poll. Control Dev.
Auth. Mandatory Put Bonds (GA Power
Co.), 4.45s, 12/1/08 A2 1,591,875
1,400,000 Effingham Cnty., Indl. Dev. Auth.
Rev. Bonds (Pacific Corp.), 6 1/2s,
6/1/31 Ba3 1,457,750
1,215,000 Rockdale Cnty., Dev. Auth. Solid
Waste Disp. Rev. Bonds (Visay Paper,
Inc.), 7.4s, 1/1/16 B+/P 1,255,812
1,500,000 Savannah, Econ. Dev. Auth. Poll.
Control Rev. Bonds (Intl. Paper
Co.), Ser. A, 5.1s, 8/1/14 Baa2 1,597,500
--------------
17,286,687
Hawaii (0.4%)
-------------------------------------------------------------------------------
1,225,000 HI State Hsg. Fin. & Dev. Corp.
Rev. Bonds, Ser. A, FNMA Coll.,
5 3/4s, 7/1/30 Aaa 1,261,750
Illinois (3.1%)
-------------------------------------------------------------------------------
2,000,000 Chicago, G.O. Bonds, Ser. A, FSA,
5s, 1/1/25 Aaa 2,092,500
6,045,000 IL Hsg. Dev. Auth. Multi-Fam. Hsg.
Rev. Bonds, Ser. 91-A, 8 1/4s,
7/1/16 A1 6,093,420
1,770,000 Metropolitan Pier & Exposition Auth.
Rev. Bonds (McCormack Place
Expansion Project), MBIA, 5s,
12/15/28 Aaa 1,823,100
--------------
10,009,020
Indiana (3.7%)
-------------------------------------------------------------------------------
2,000,000 Carmel Clay, Indl. Parks Bldg. Corp.
Rev. Bonds, MBIA, 5s, 1/15/26 AAA 2,085,000
3,000,000 Fairfield, School Bldg. Corp. Ind.
Rev. Bonds, FGIC, 5s, 7/15/24 AAA 3,142,500
3,000,000 IN State Dev. Fin. Auth. Env. Impt.
Rev. Bonds (USX Corp.), 5.6s,
12/1/32 Baa1 3,052,500
2,500,000 Indianapolis, Arpt. Auth. Rev. Bonds
(Federal Express Corp.), 5.1s,
1/15/17 Baa2 2,628,125
1,300,000 Rockport, Poll. Control Mandatory
Put Bonds (Indiana Michigan Pwr.
Co.), Ser. C, 2 5/8s, 10/1/06 Baa2 1,296,750
--------------
12,204,875
Iowa (0.4%)
-------------------------------------------------------------------------------
985,000 IA Fin. Auth. Hlth. Care Fac.
Rev. Bonds (Care Initiatives),
9 1/4s, 7/1/25 BBB-/P 1,194,313
Louisiana (1.0%)
-------------------------------------------------------------------------------
2,000,000 LA Local Govt. Env. Fac. Cmnty. Dev.
Auth. Rev. Bonds (St. James Place),
Ser. A, 8s, 11/1/19 B-/P 1,345,000
2,000,000 Port of New Orleans, Indl. Dev.
Rev. Bonds (Continental Grain Co.),
7 1/2s, 7/1/13 BB- 2,030,720
--------------
3,375,720
Maine (0.2%)
-------------------------------------------------------------------------------
600,000 Rumford, Solid Waste Disp.
Rev. Bonds (Boise Cascade Corp.),
6 7/8s, 10/1/26 Ba2 634,500
Massachusetts (3.1%)
-------------------------------------------------------------------------------
MA State Hlth. & Edl. Fac. Auth.
Rev. Bonds
1,875,000 (UMass Memorial), Ser. C, 6 1/2s,
7/1/21 Baa2 2,017,969
1,300,000 (Berkshire Hlth. Syst.), Ser. E,
6 1/4s, 10/1/31 BBB+ 1,363,375
1,800,000 (Hlth. Care Syst. Covenant Hlth.),
Ser. E, 6s, 7/1/31 A- 1,890,000
3,685,000 MA State Hsg. Fin. Agcy. Rev. Bonds,
Ser. 53, MBIA, 6.15s, 12/1/29 Aaa 3,809,369
1,000,000 MA State Indl. Fin. Agcy. Rev. Bonds
(1st Mtge. Brookhaven), Ser. A, 7s,
1/1/15 BBB/P 1,027,500
--------------
10,108,213
Michigan (3.9%)
-------------------------------------------------------------------------------
4,500,000 Detroit, G.O. Bonds, Ser. A, FGIC,
5s, 7/1/30 Aaa 4,618,125
3,620,000 Detroit, Swr. Disp. VRDN, Ser. B,
FSA, 1.74s, 7/1/33 VMIG1 3,620,000
500,000 MI Higher Ed. Fac. Auth.
Rev. Bonds (Kalamazoo College),
5 1/2s, 12/1/18 A1 550,000
1,000,000 MI State Hosp. Fin. Auth. Rev. Bonds
(Oakwood Hosp.), Ser. A, 5 3/4s,
4/1/32 A2 1,045,000
1,650,000 MI State Strategic Fund, Ltd.
Rev. Bonds (Worthington Armstrong
Venture), U.S. Govt. Coll., 5 3/4s,
10/1/22 AAA/P 1,897,500
1,000,000 Midland Cnty., Econ. Dev. Corp.
Rev. Bonds, 6 3/4s, 7/23/09 Ba3 1,043,750
--------------
12,774,375
Minnesota (0.8%)
-------------------------------------------------------------------------------
2,500,000 Cohasset, Poll. Control Rev. Bonds
(Allete, Inc.), 4.95s, 7/1/22 A 2,546,875
Mississippi (0.8%)
-------------------------------------------------------------------------------
MS Bus. Fin. Corp. Poll. Control
Rev.Bonds (Syst. Energy Resources,
Inc.)
1,000,000 5.9s, 5/1/22 BBB 1,011,250
1,580,000 5 7/8s, 4/1/22 BBB 1,590,270
--------------
2,601,520
Missouri (2.0%)
-------------------------------------------------------------------------------
1,750,000 Cape Girardeau Cnty., Indl. Dev.
Auth. Hlth. Care Fac. Rev. Bonds
(St. Francis Med. Ctr.),
Ser. A, 5 1/2s, 6/1/16 A 1,879,063
2,500,000 MO State Hlth. & Edl. Fac. Auth.
Rev. Bonds (Washington U.), Ser. A,
5s, 2/15/33 Aa1 2,575,000
2,000,000 MO State Hlth. & Edl. Fac. Auth.
VRDN (Christian Brothers), Ser. A,
1.79s, 10/1/32 A-1+ 2,000,000
--------------
6,454,063
Montana (0.4%)
-------------------------------------------------------------------------------
1,075,000 Forsyth, Poll. Control Mandatory Put
Bonds (Avista Corp.), AMBAC, 5s,
12/30/08 Aaa 1,158,313
Nevada (3.7%)
-------------------------------------------------------------------------------
3,505,000 Clark Cnty., G.O. Bonds (Pk. & Regl.
Justice Ctr.), FGIC, 5 5/8s, 11/1/19 Aaa 3,903,694
5,000,000 Clark Cnty., Arpt. Rev. Bonds,
Ser. A-2, FGIC, 5 1/8s, 7/1/26 Aaa 5,231,250
3,000,000 Clark Cnty., Indl. Dev. Rev. Bonds
(Southwest Gas Corp.), Ser. A,
6 1/2s, 12/1/33 Baa2 3,040,860
--------------
12,175,804
New Hampshire (1.1%)
-------------------------------------------------------------------------------
NH Higher Ed. & Hlth. Fac. Auth.
Rev. Bonds
1,450,000 (Riverwoods at Exeter), Ser. A,
6 1/2s, 3/1/23 BB/P 1,460,875
1,250,000 (NH College), 6 3/8s, 1/1/27 BBB- 1,295,312
950,000 NH State Bus. Fin. Auth. Poll.
Control Rev. Bonds, 3 1/2s, 7/1/27 Baa2 957,125
--------------
3,713,312
New Jersey (2.8%)
-------------------------------------------------------------------------------
1,000,000 Newark, Hsg. Auth. Rev. Bonds (Port
Auth. Newark Marine Terminal), MBIA,
5 1/4s, 1/1/20 AAA 1,098,750
NJ Econ. Dev. Auth. Rev. Bonds
1,500,000 (Cigarette Tax), 5 3/4s, 6/15/29 Baa2 1,543,125
2,000,000 (Motor Vehicle), Ser. A, MBIA, 5s,
7/1/27 Aaa 2,085,000
1,000,000 NJ Econ. Dev. Auth. Special Fac.
Rev. Bonds (Continental Airlines,
Inc.), 6 1/4s, 9/15/29 B 727,500
500,000 NJ State Ed. Fac. Auth. Rev. Bonds
(Stevens Inst. of Tech.), Ser. C,
5 1/8s, 7/1/22 BBB+ 522,500
1,840,000 NJ State Edl. Fac. Auth. Rev. Bonds
(Rowan U.), Ser. C, MBIA, 5s, 7/1/23 Aaa 1,964,200
1,150,000 Tobacco Settlement Fin. Corp.
Rev. Bonds, 6 3/4s, 6/1/39 BBB 1,128,438
--------------
9,069,513
New Mexico (0.2%)
-------------------------------------------------------------------------------
820,000 Farmington, Poll. Control Mandatory
Put Bonds (Pub. Svc. San Juan),
Class B, 2.1s, 4/1/06 Baa2 813,850
New York (4.9%)
-------------------------------------------------------------------------------
1,000,000 Buffalo, G.O. Bonds, Ser. D, FGIC,
5 1/2s, 12/15/13 Aaa 1,146,250
3,000,000 NY City, G.O. Bonds, Ser. C, 5 1/4s,
8/1/11 A2 3,348,750
1,000,000 NY City, City Transitional Fin.
Auth. Rev. Bonds, AMBAC, 5 1/4s,
8/1/15 Aaa 1,113,750
750,000 NY City, Indl. Dev. Agcy. Rev. Bonds
(Brooklyn Navy Yard Cogen.
Partners), 6.2s, 10/1/22 BBB- 759,375
2,100,000 NY City, Indl. Dev. Agcy. Special
Arpt. Fac. Rev. Bonds (Airis JFK I
LLC), Ser. A, 5 1/2s, 7/1/28 Baa3 2,086,875
700,000 NY City, Indl. Dev. Agcy. Special
Fac. Rev. Bonds (British Airways),
5 1/4s, 12/1/32 BB+ 511,875
1,500,000 NY Cntys., Tobacco Trust III
Rev. Bonds, 6s, 6/1/43 BBB 1,423,125
2,000,000 NY State Dorm. Auth. Rev. Bonds,
Ser. A, 5 1/2s, 3/15/13 AA 2,290,000
800,000 Onondaga Cnty., Indl. Dev. Agcy.
Rev. Bonds (Solvay Paperboard, LLC),
7s, 11/1/30 (acquired 6/30/04, cost
$830,184) (RES) BB-/P 847,000
2,500,000 Triborough Bridge & Tunnel Auth.
Rev. Bonds, Ser. A, 5s, 1/1/32 Aa3 2,556,250
--------------
16,083,250
North Carolina (2.0%)
-------------------------------------------------------------------------------
NC Eastern Muni. Pwr. Agcy. Syst.
Rev. Bonds
2,000,000 Ser. B, MBIA, 6s, 1/1/22 Aaa 2,465,000
2,000,000 AMBAC, 6s, 1/1/18 Aaa 2,447,500
1,500,000 NC State Muni. Pwr. Agcy. Rev. Bonds
(No. 1, Catawba Elec.), Ser. B,
6 1/2s, 1/1/20 Baa1 1,695,000
--------------
6,607,500
Ohio (3.0%)
-------------------------------------------------------------------------------
5,700,000 Cleveland, Muni. School Dist. G.O.
Bonds, FSA, 5s, 12/1/27 Aaa 5,935,125
1,000,000 Montgomery Cnty., Hosp. Rev. Bonds
(Kettering Med. Ctr.), 6 3/4s,
4/1/22 A3 1,088,750
500,000 OH State Wtr. Dev. Auth. Poll.
Control Fac. Mandatory Put Bonds (OH
Edison Co.), Ser. A, 2 1/4s, 6/1/05 Baa1 499,310
2,165,000 Rickenbacker, Port Auth. Rev. Bonds
(OASBO Expanded Asset Pooled),
Ser. A, 5 3/8s, 1/1/32 A2 2,275,956
--------------
9,799,141
Oklahoma (0.3%)
-------------------------------------------------------------------------------
950,000 OK Dev. Fin. Auth. Rev. Bonds
(Hillcrest Hlth. Care Syst.),
Ser. A, U.S. Govt. Coll., 5 5/8s,
8/15/29 AAA 1,078,250
Pennsylvania (7.1%)
-------------------------------------------------------------------------------
5,000,000 Allegheny Cnty., Hosp. Dev. Auth.
Rev. Bonds (Pittsburgh Mercy Hlth.
Syst. ), AMBAC, 5 5/8s, 8/15/26 Aaa 5,262,500
1,350,000 Beaver Cnty., Indl. Dev. Auth. Poll.
Control Mandatory Put Bonds
(Cleveland Elec.), 1.76s, 10/1/08 Baa2 1,351,688
890,000 Carbon Cnty., Indl. Dev. Auth.
Rev. Bonds (Panther Creek Partners),
6.65s, 5/1/10 BBB- 964,538
750,000 Delaware Cnty., Indl. Dev. Auth.
Resource Recvy. Rev. Bonds, Ser. A,
6.1s, 7/1/13 BBB 805,313
4,000,000 Hempfield, Area School Dist. G.O.
Bonds (Westmoreland Cnty.), Ser. A,
FGIC, 5 1/4s, 3/15/21 AAA 4,430,000
1,500,000 Lancaster Cnty., Hosp. Auth.
Rev. Bonds (Gen. Hosp.), 5 1/2s,
3/15/26 A- 1,539,375
1,000,000 Lehigh Cnty., Gen. Purpose Auth.
Rev. Bonds (Lehigh Valley Hosp.
Hlth. Network), Ser. A, 5 1/4s,
7/1/32 A2 1,020,000
3,000,000 PA Econ. Dev. Fin. Auth. Wastewtr.
Treatment Rev. Bonds (Sun Co.,
Inc.), Ser. A, 7.6s, 12/1/24 Baa2 3,073,380
PA State Econ. Dev. Fin. Auth.
Resource Recvy. Rev. Bonds (Colver)
3,000,000 Ser. E, 8.05s, 12/1/15 BBB-/P 3,069,390
100,000 Ser. D, 7.15s, 12/1/18 BBB- 102,389
1,450,000 Sayre, Hlth. Care Fac. Auth.
Rev. Bonds (Guthrie Hlth.), Ser. A,
5 7/8s, 12/1/31 A- 1,509,813
--------------
23,128,386
Rhode Island (0.1%)
-------------------------------------------------------------------------------
200,000 Tobacco Settlement Fin. Corp.
Rev. Bonds, Ser. A, 6 1/4s, 6/1/42 BBB 179,500
South Carolina (4.2%)
-------------------------------------------------------------------------------
750,000 Lexington Cnty. Hlth. Svcs. Dist.
Inc. Hosp. Rev. Bonds, 5 1/2s,
5/1/37 A2 771,563
1,250,000 SC Jobs Econ. Dev. Auth. Hosp. Fac.
Rev. Bonds (Palmetto Hlth.
Alliance), Ser. C, 6s, 8/1/20 Baa2 1,350,000
5,000,000 SC State Pub. Svcs. Auth.
Rev. Bonds, Ser. A, AMBAC, 5s,
1/1/29 Aaa 5,187,500
3,000,000 SC Tobacco Settlement Rev. Mgt.
Rev. Bonds, Ser. B, 6 3/8s, 5/15/30 BBB 2,801,250
2,460,000 SC Trans. Infrastructure Bk.
Rev. Bonds, Ser. A, AMBAC, 5s,
10/1/27 Aaa 2,573,775
1,000,000 Spartanburg Cnty., Solid Waste Disp.
Rev. Bonds (BMW Project), 7.55s,
11/1/24 A1 1,032,600
--------------
13,716,688
South Dakota (0.1%)
-------------------------------------------------------------------------------
450,000 SD Edl. Enhancement Funding Corp.
Rev. Bonds, Ser. B, 6 1/2s, 6/1/32 BBB 428,063
Tennessee (1.0%)
-------------------------------------------------------------------------------
2,750,000 Johnson City, Hlth. & Edl. Fac.
Board Hosp. Rev. Bonds (Mountain
States Hlth.), Ser. A, 7 1/2s,
7/1/33 BBB+ 3,231,250
Texas (8.4%)
-------------------------------------------------------------------------------
1,000,000 Alliance, Arpt. Auth. Rev. Bonds
(American Airlines, Inc.), 7 1/2s,
12/1/29 Caa2 641,250
12,000,000 Bexar Cnty., Hlth. Fac. Dev. Corp.
Rev. Bonds (St. Luke's Hlth.
Syst.), FSA, 6.1s, 11/15/23 Aaa 12,646,320
1,000,000 Comal Cnty., Hlth. Fac. Dev. Corp.
Rev. Bonds (Hlth. Care Syst. -
McKenna Memorial), Ser. A, 6 1/4s,
2/1/32 Baa2 1,028,750
2,020,000 Edgewood, Indpt. School Dist. Bexar
Cnty. G.O. Bonds, Ser. A, PSFG, 5s,
2/15/26 Aaa 2,093,225
2,345,000 El Paso, Indpt. School Dist. G.O.
Bonds, Ser. A, PSFG, 5 1/4s, 8/15/21 AAA 2,579,500
750,000 Gateway, Pub. Fac. Corp. Rev. Bonds
(Stonegate Villas Apt.), FNMA Coll.,
4.55s, 7/1/34 Aaa 780,000
610,000 Harris Cnty., Hlth. Fac. Dev. Corp.
Hosp. Rev. Bonds (Memorial Hermann
Hlth. Care Syst.), Class A, 5 1/4s,
12/1/18 A2 652,700
3,000,000 Lower Neches Valley Indl. Dev. Swr.
Auth. Rev. Bonds (Mobil Oil Refining
Corp.), 6.4s, 3/1/30 Aaa 3,080,490
2,000,000 San Antonio Wtr. Rev. Bonds, Ser. A,
FSA, 5s, 5/15/32 Aaa 2,047,500
2,000,000 Tomball, Hosp. Auth. Rev. Bonds
(Tomball Regl. Hosp.), 6s, 7/1/29 Baa3 1,997,500
--------------
27,547,235
Utah (0.3%)
-------------------------------------------------------------------------------
1,000,000 Salt Lake City, Hosp. IFB (IHC Hosp.
Inc.), AMBAC, 11.725s, 5/15/20
(acquired 6/6/97, cost $1,168,906)
(RES) Aaa 1,006,250
Virginia (2.1%)
-------------------------------------------------------------------------------
500,000 Fredericksburg, Indl. Dev. Auth.
Rev. Bonds (Medicorp Hlth. Syst.),
Ser. B, 5 1/8s, 6/15/33 A3 504,375
2,500,000 Front Royal & Warren Cnty., Indl.
Dev. Auth. Lease Rev. Bonds (School
Cap. Impt.), Ser. B, FSA, 5s,
4/1/29 Aaa 2,590,625
1,000,000 Henrico Cnty. Econ. Dev. Auth.
Rev. Bonds (United Methodist),
Ser. A, 6.7s, 6/1/27 BB+/P 1,027,500
2,500,000 VA College Bldg. Auth. Rev. Bonds
(Washington and Lee U.), MBIA,
5 1/4s, 1/1/26 Aaa 2,796,875
--------------
6,919,375
Washington (3.7%)
-------------------------------------------------------------------------------
4,000,000 Chelan Cnty. Dev. Corp. Rev. Bonds
(Alcoa), 5.85s, 12/1/31 A2 4,139,160
2,250,000 King Cnty., G.O. Bonds, Ser. C,
6 1/4s, 1/1/32 Aa1 2,475,000
1,265,000 Tobacco Settlement Auth. of WA
Rev. Bonds, 6 1/2s, 6/1/26 BBB 1,249,181
4,000,000 WA State G.O. Bonds (Motor Vehicle
Fuel), Ser. B, MBIA, 5s, 7/1/24 Aaa 4,195,000
--------------
12,058,341
West Virginia (0.3%)
-------------------------------------------------------------------------------
1,300,000 Princeton, Hosp. Rev. Bonds (Cmnty.
Hosp. Assn., Inc.), 6.1s, 5/1/29 B2 971,750
Wisconsin (2.3%)
-------------------------------------------------------------------------------
Badger Tobacco Settlement
Asset Securitization Corp.
Rev. Bonds
2,600,000 7s, 6/1/28 BBB 2,609,750
2,500,000 6 3/8s, 6/1/32 BBB 2,340,625
2,400,000 WI State Hlth. & Edl. Fac. Auth.
Rev. Bonds (Wheaton Franciscan),
5 3/4s, 8/15/30 A2 2,532,000
--------------
7,482,375
-------------------------------------------------------------------------------
Total Investments
(cost $313,767,908) $327,472,702
-------------------------------------------------------------------------------
(a) Percentages indicated are based on portfolio market value.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at October 31, 2004 for the
securities listed. Ratings are generally ascribed to securities at the
time of issuance. While the agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these
securities at October 31, 2004. Securities rated by Putnam are indicated
by "/P" .
(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, 2004 was
$1,853,250 or 0.6% of portfolio market value.
The rates shown on IFB and IF COP, which are securities paying interest
rates that vary inversely to changes in the market interest rates, and
VRDN and mandatory put bonds are the current interest rates at October
31, 2004.
The fund had the following industry group concentrations greater than
10% at October 31, 2004 (as a percentage of portfolio market value):
Health care 16.2%
Utilities 13.5
Water and sewer 12.3
Transportation 10.7
The fund had the following insurance concentrations greater than 10% at
October 31, 2004 (as a percentage of portfolio market value):
MBIA 12.7%
FGIC 12.1
FSA 11.4
The dates shown on mandatory put bonds are the next mandatory put dates.
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
October 31, 2004 (Unaudited)
Assets
-------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$313,767,908) (Note 1) $327,472,702
-------------------------------------------------------------------------------
Cash 1,032,020
-------------------------------------------------------------------------------
Interest and other receivables 5,578,316
-------------------------------------------------------------------------------
Total assets 334,083,038
Liabilities
-------------------------------------------------------------------------------
Distributions payable to shareholders 1,187,460
-------------------------------------------------------------------------------
Accrued preferred shares distribution payable (Note 1) 41,184
-------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 544,006
-------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 45,751
-------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 33,924
-------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,524
-------------------------------------------------------------------------------
Other accrued expenses 68,516
-------------------------------------------------------------------------------
Total liabilities 1,922,365
-------------------------------------------------------------------------------
Series A remarketed preferred shares: (800 shares authorized
and issued at $50,000 per share (Note 4) 40,000,000
-------------------------------------------------------------------------------
Series B and C remarketed preferred shares: (3,240 shares
authorized and issued at $25,000 per share (Note 4) 81,000,000
-------------------------------------------------------------------------------
Net assets $211,160,673
Represented by
-------------------------------------------------------------------------------
Paid-in capital -- common shares (unlimited shares
authorized) (Note 1) $218,575,029
-------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 560,700
-------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (21,679,850)
-------------------------------------------------------------------------------
Net unrealized appreciation of investments 13,704,794
-------------------------------------------------------------------------------
Total -- Representing net assets applicable to common shares
outstanding $211,160,673
Computation of net asset value
-------------------------------------------------------------------------------
Net asset value per common share ($211,160,673 divided by
16,157,092 shares) $13.07
-------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of operations
Six months ended October 31, 2004 (Unaudited)
Interest income: $9,011,267
-------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,063,088
-------------------------------------------------------------------------------
Investor servicing fees (Note 2) 51,595
-------------------------------------------------------------------------------
Custodian fees (Note 2) 58,967
-------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 7,419
-------------------------------------------------------------------------------
Administrative services (Note 2) 4,561
-------------------------------------------------------------------------------
Preferred share remarketing agent fees 173,029
-------------------------------------------------------------------------------
Other 114,057
-------------------------------------------------------------------------------
Total expenses 1,472,716
-------------------------------------------------------------------------------
Expense reduction (Note 2) (20,648)
-------------------------------------------------------------------------------
Net expenses 1,452,068
-------------------------------------------------------------------------------
Net investment income 7,559,199
-------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (1,635,608)
-------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 7,941,526
-------------------------------------------------------------------------------
Net gain on investments 6,305,918
-------------------------------------------------------------------------------
Net increase in net assets resulting from operations $13,865,117
-------------------------------------------------------------------------------
Distributions to Series A, B, and C remarketed preferred shareholders:
(Note 1)
-------------------------------------------------------------------------------
From tax exempt income (763,094)
-------------------------------------------------------------------------------
Net increase in net assets resulting from operations
(applicable to common shareholders) $13,102,023
-------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Six months ended Year ended
October 31 April 30
Increase (decrease) in net assets 2004* 2004
-------------------------------------------------------------------------------
Operations:
-------------------------------------------------------------------------------
Net investment income $7,559,199 $16,110,203
-------------------------------------------------------------------------------
Net realized loss on investments (1,635,608) (6,531,161)
-------------------------------------------------------------------------------
Net unrealized appreciation of investments 7,941,526 2,904,581
-------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 13,865,117 12,483,623
Distributions to Series A, B, and C remarketed preferred shareholders:
(Note 1)
-------------------------------------------------------------------------------
From tax exempt income (763,094) (1,196,387)
-------------------------------------------------------------------------------
Net increase in net assets resulting from
operations (applicable to common
shareholders) 13,102,023 11,287,236
-------------------------------------------------------------------------------
Distributions to common shareholders: (Note 1)
-------------------------------------------------------------------------------
From tax exempt income (7,512,505) (15,412,973)
-------------------------------------------------------------------------------
Total increase (decrease) in net assets 5,589,518 (4,125,737)
Net assets
-------------------------------------------------------------------------------
Beginning of period 205,571,155 209,696,892
-------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $560,700 and
$1,277,100, respectively) $211,160,673 $205,571,155
-------------------------------------------------------------------------------
Number of fund shares
-------------------------------------------------------------------------------
Common shares outstanding at beginning and
end of period 16,157,092 16,157,092
-------------------------------------------------------------------------------
Remarketed preferred shares outstanding at
beginning and end of period 4,040 4,040
-------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
Six months
ended
October 31
Per-share (Unaudited) Year ended April 30
operating performance 2004 2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period
(common shares) $12.72 $12.98 $13.00 $13.00 $12.51 $14.11
---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
---------------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .47 1.00 1.09 1.16 1.15 1.18
---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .40 (.24) (.10) (.10) .56 (1.59)
---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .87 .76 .99 1.06 1.71 (.41)
---------------------------------------------------------------------------------------------------------------------------------
Distributions to preferred shareholders:
---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.05) (.07) (.10) (.15) (.31) (.28)
---------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations applicable to
common shareholders .82 .69 .89 .91 1.40 (.69)
---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.47) (.95) (.91) (.91) (.91) (.91)
---------------------------------------------------------------------------------------------------------------------------------
Total distributions: (.47) (.95) (.91) (.91) (.91) (.91)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $13.07 $12.72 $12.98 $13.00 $13.00 $12.51
---------------------------------------------------------------------------------------------------------------------------------
Market price, end of period
(common shares) $12.580 $12.470 $12.480 $12.500 $13.590 $11.625
---------------------------------------------------------------------------------------------------------------------------------
Total return at market price (%)
(common shares) (b) 4.65* 7.49 7.35 (1.57) 25.32 (15.25)
---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(common shares)
(in thousands) $211,161 $205,571 $209,697 $210,081 $210,097 $202,063
---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .71* 1.37 1.41 1.43 1.44 1.46
---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(d) 3.29* 7.05 7.65 7.63 6.50 6.93
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 22.98* 19.19 12.30 20.84 14.59 13.84
---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) Ratios reflect net assets available to common shares only: net
investment income ratio also reflects reduction for dividend payments to
preferred shareholders.
The accompanying notes are an integral part of these financial
statements.
Notes to financial statements
October 31, 2004 (Unaudited)
Note 1
Significant accounting policies
Putnam Municipal Opportunities Trust (the "fund"), a Massachusetts
business trust, is registered under the Investment Company Act of 1940,
as amended, as a non-diversified, closed-end management investment
company. The fund's investment objective is to seek a high level of
current income exempt from federal income tax and consistent with the
preservation of capital. The fund intends to achieve its objective by
investing primarily in a portfolio of investment grade municipal bonds
that Putnam Investment Management, LLC ("Putnam Management"), the fund's
manager, an indirect wholly-owned subsidiary of Putnam, LLC, believes to
be consistent with preservation of capital.
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 Tax-exempt bonds and notes are valued at fair
value on the basis of valuations provided by an independent pricing
service, approved by the Trustees. Such services use information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Other investments are valued at fair
value following procedures approved by the Trustees. Such valuations and
procedures are reviewed periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is exe cuted). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. All premiums/discounts
are amortized/accreted on a yield-to-maturity basis. The premium in
excess of the call price, if any, is amortized to the call date;
thereafter, any remaining premium is amortized to maturity.
C) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code of 1986 (the "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 Code, 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 April 30, 2004, the fund had a capital loss carryover of $19,135,231
available to the extent allowed by tax law to offset future net capital
gain, if any. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
---------------------------
$126,586 April 30, 2007
2,788,662 April 30, 2008
1,503,027 April 30, 2009
2,243,569 April 30, 2010
3,588,009 April 30, 2011
8,885,378 April 30, 2012
Pursuant to federal income tax regulations applicable to regulated
investment companies, the fund has elected to defer to its fiscal year
ending April 30, 2005, $515,102 of losses recognized during the period
November 1, 2003 to April 30, 2004.
The aggregate identified cost on a tax basis is $313,824,574, resulting
in gross unrealized appreciation and depreciation of $17,215,324 and
$3,567,196, respectively, or net unrealized appreciation of
$13,648,128.
D) Distributions to shareholders Distributions to common and preferred
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. Dividends on
remarketed preferred shares become payable when, as and if declared by
the Trustees. Each dividend period for the remarketed preferred shares
is generally a 28-day period for Series A and a 7-day period for Series
B and Series C. The applicable dividend rate for the remarketed
preferred shares on October 31, 2004 was 1.39% for Series A, 1.70% for
Series B and 1.65% for Series C. The amount and character of income and
gains to be distributed are determined in accordance with income tax
regulations, which may differ from generally accepted accounting
principles. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations.
E) Determination of net asset value Net asset value of the common shares
is determined by dividing the value of all assets of the fund, less all
liabilities and the liquidation preference of any outstanding remarketed
preferred shares, by the total number of common shares outstanding as of
period end.
Note 2
Management fee, administrative services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on 0.65% of the fund's average weekly net assets attributable
to common and preferred shares outstanding.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred
shares for that period exceed the fund's gross income attributable to
the proceeds of the remarketed preferred shares during that period, then
the fee payable to Putnam Management for that period will be reduced by
the amount of the excess (but not more than 0.65% of the liquidation
preference of the remarketed preferred shares outstanding during the
period).
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company ("PFTC"), a subsidiary of Putnam, LLC. Putnam
Investor Services, a division of PFTC, provides investor servicing agent
functions to the fund. During the six months ended October 31, 2004, the
fund paid PFTC $110,562 for these services.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended October 31,
2004, the fund's expenses were reduced by $20,648 under these
arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $710, as a quarterly retainer, has been allocated to the fund, and
an additional fee for each Trustees meeting attended. Trustees receive
additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have served
as a Trustee for at least five years. Benefits under the Pension Plan are
equal to 50% of the Trustee's average total retainer and meeting fees for
the three years preceding retirement. Pension expense for the fund is
included in Trustee compensation and expenses in the statement of
operations. Accrued pension liability is included in Payable for Trustee
compensation and expenses in the statement of assets and liabilities.The
Trustees have terminated the Pension Plan with respect to any Trustee first
elected after 2003.
Note 3
Purchases and sales of securities
During the six months ended October 31, 2004, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $72,373,893 and $76,495,542, respectively. There
were no purchases or sales of U.S. government securities.
Note 4
Preferred shares
The Series A, B and C shares are redeemable at the option of the fund on
any dividend payment date at a redemption price of $50,000, $25,000 and
$25,000, respectively per share, plus an amount equal to any dividends
accumulated on a daily basis but unpaid through the redemption date
(whether or not such dividends have been declared) and, in certain
circumstances, a call premium.
It is anticipated that dividends paid to holders of remarketed preferred
shares will be considered tax-exempt dividends under the Internal
Revenue Code of 1986. To the extent that the fund earns taxable income
and capital gains by the conclusion of a fiscal year, it may be required
to apportion to the holders of the remarketed preferred shares
throughout that year additional dividends as necessary to result in an
after-tax equivalent to the applicable dividend rate for the period.
Under the Investment Company Act of 1940, the fund is required to
maintain asset coverage of at least 200% with respect to the remarketed
preferred shares as of the last business day of each month in which any
such shares are outstanding. Additionally, the fund is required to meet
more stringent asset coverage requirements under terms of the remarketed
preferred shares and the shares' rating agencies. Should these
requirements not be met, or should dividends accrued on the remarketed
preferred shares not be paid, the fund may be restricted in its ability
to declare dividends to common shareholders or may be required to redeem
certain of the remarketed preferred shares. At October 31, 2004, no such
restrictions have been placed on the fund.
Note 5
Regulatory matters and litigation
On April 8, 2004, Putnam Management entered into agreements with the
Securities and Exchange Commission ("SEC") and the Massachusetts
Securities Division representing a final settlement of all charges
brought against Putnam Management by those agencies on October 28, 2003
in connection with excessive short-term trading by Putnam employees and,
in the case of the charges brought by the Massachusetts Securities
Division, by participants in some Putnam-administered 401(k) plans. The
settlement with the SEC requires Putnam Management to pay $5 million in
disgorgement plus a civil monetary penalty of $50 million, and the
settlement with the Massachusetts Securities Division requires Putnam
Management to pay $5 million in restitution and an administrative fine
of $50 million. The settlements also leave intact the process
established under an earlier partial settlement with the SEC under which
Putnam Management agreed to pay the amount of restitution determined by
an independent consultant, which may exceed the disgorgement and
restitution amounts specified above, pursuant to a plan to be developed
by the independent consultant.
Putnam Management, and not the investors in any Putnam fund, will bear
all costs, including restitution, civil penalties and associated legal
fees stemming from both of these proceedings. The SEC's and
Massachusetts Securities Division'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 believes 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
Putnam funds.
Results of October 14, 2004 shareholder meeting
(Unaudited)
An annual meeting of shareholders of the fund was held on October 14,
2004. At the meeting, each of the nominees for Trustees was elected, as
follows:
Common shares
Votes
Votes for withheld
----------------------------------------------------------------
Jameson Adkins Baxter 14,387,628 311,413
Charles B. Curtis 14,375,407 323,634
Myra R. Drucker 14,381,237 317,804
Charles E. Haldeman, Jr. 14,395,640 303,401
Ronald J. Jackson 14,390,638 308,403
Paul L. Joskow 14,387,628 311,413
Elizabeth T. Kennan 14,375,579 323,462
John H. Mullin, III 14,380,396 318,645
George Putnam, III 14,382,069 316,972
A.J.C. Smith 14,384,612 314,429
W. Thomas Stephens 14,373,209 325,832
Richard B. Worley 14,386,872 312,169
Preferred Shares
Votes
Votes for withheld
----------------------------------------------------------------
Jameson Adkins Baxter 3,668 74
Charles B. Curtis 3,668 74
Myra R. Drucker 3,668 74
Charles E. Haldeman, Jr. 3,668 74
John A. Hill 3,668 74
Ronald J. Jackson 3,668 74
Paul L. Joskow 3,668 74
Elizabeth T. Kennan 3,668 74
John H. Mullin, III 3,668 74
Robert E. Patterson 3,668 74
George Putnam, III 3,668 74
A.J.C. Smith 3,668 74
W. Thomas Stephens 3,668 74
Richard B. Worley 3,668 74
All tabulations are rounded to nearest whole number.
Fund information
About Putnam Investments
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
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
Ropes & Gray LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
Richard B. Worley
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President, Associate Treasurer and Principal Executive
Officer
Jonathan S. Horwitz
Senior Vice President and Treasurer
Steven D. Krichmar
Vice President and Principal Financial Officer
Michael T. Healy
Assistant Treasurer and Principal Accounting Officer
Daniel T. Gallagher
Vice President and Legal and Compliance Liaison Officer
Beth S. Mazor
Vice President
James P. Pappas
Vice President
Richard S. Robie, III
Vice President
Mark C. Trenchard
Vice President and BSA Compliance Officer
Francis J. McNamara, III
Vice President and Chief Legal Officer
Charles A. Ruys de Perez
Vice President and Chief Compliance Officer
Judith Cohen
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or
visit our Web site (www.putnaminvestments.com) anytime for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Do you want to save paper and receive this document faster?
Shareholders can sign up for email delivery of shareholder reports on
www.putnaminvestments.com.
216531 12/04
Item 2. Code of Ethics:
-----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
-----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
-----------------------------------------------
Not applicable
Item 5. Audit Committee: Not applicable
-------------------------
Item 6. Schedule of Investments: Not applicable
--------------------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End
-------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. Purchases of Equity Securities by Closed-End Management Investment
--------------------------------------------------------------------------
Companies and Affiliated Purchasers: Not applicable
------------------------------------
Item 9. Submission of Matters to a Vote of Security Holders:
------------------------------------------------------------
Not applicable
Item 10. Controls and Procedures:
---------------------------------
(a) The registrant's principal executive officer and principal
financial officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report on Form N-CSR, that the design and
operation of such procedures are generally 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.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
------------------
(a) Not applicable
(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
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: December 29, 2004
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/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: December 29, 2004
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: December 29, 2004