Putnam
Municipal
Opportunities
Trust
ANNUAL REPORT
April 30, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "The key to the fund's performance was its emphasis on income. We
focused on high-yielding, defensively structured bonds to maneuver through
a choppy investment environment."
-- Blake E. Anderson, manager,
Putnam Municipal Opportunities Trust
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
18 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
In few places is the power of suggestion more aptly demonstrated than the
securities markets. For months, the market has translated conjecture over the
prospect of an increase in short-term interest rates by the Federal Reserve
Board into volatility. Instead of settling down after the Fed finally raised
rates by a quarter point in late March, the market immediately began
responding to the suggestion that the Fed was about to raise rates again, if
not in May, then at some point in the future.
Uncertainty heightens the intensity of volatility, as we have seen throughout
most of Putnam Municipal Opportunities Trust's fiscal year just ended. Over
the long term, however, rational research and analysis, backed by expertise
and experience, play a larger role in investment success -- and thus generally
work to the advantage of those who maintain a long-term investment
perspective.
Since Fund Manager Blake Anderson believes the current volatility may continue
for a while, this seems an appropriate time to counsel patience. In the
following report, Blake explains how he has been dealing with the current
market environment and what he sees in prospect for the months ahead.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
June 18, 1997
Report from the Fund Manager
Blake E. Anderson
Over the past 12 months, Putnam Municipal Opportunities Trust astutely
navigated shifting conditions in the municipal bond market as spurts, then
slowdowns in economic activity prompted investors to adjust their outlooks and
caused interest rates to fluctuate. By the end of the period, municipal bond
yields had trended marginally higher; prices were correspondingly lower.
However, your fund's income-oriented approach to total return, defensive
positioning, and successful targeting of sector opportunities enabled it to
outperform the average fund in Lipper's closed-end general municipal bond fund
category: for the 12 months ended April 30, 1997, the fund returned 8.14% at
net asset value and 9.24% at market price, compared with 7.74% for the
category average.
* SEVERAL FACTORS INFLUENCE MUNICIPAL BOND PERFORMANCE OVER PERIOD
Economic activity, along with its expected impact on future inflation, is the
most important factor driving interest-rate changes -- and in turn, bond
market performance. Within the municipal bond sector, however, other factors,
such as supply and demand or political issues, can have a more immediate
influence on performance.
During this reporting period, investors' expectations of economic strength
dominated market sentiment. Because of faster-than-expected growth and
changing conditions within particular sectors of the economy, investors faced
unusual levels of uncertainty in assessing economic conditions, the future
course of inflation, and monetary policy. This uncertainty created periods of
rising and falling interest rates, as well as a more trendless "saw-tooth"
pattern, as changing perceptions of economic activity emerged and quickly
faded.
As we closed the fund's fiscal year, the economy continued to exhibit
strength. Inflation remained well contained, although future inflation was
still of concern to investors. This concern was validated by the Federal
Reserve Board in late March, when it raised the benchmark federal funds rate
by a quarter of a percentage point as a preemptive strike against inflation.
The federal funds rate is the rate at which banks lend to each other
overnight. Over the near term, we believe the economy's strength and resulting
concerns about inflation could continue to prompt Fed action, and that
investors could witness a period of rising rates.
* ECONOMIC STRENGTH SPARKS OPPORTUNITY
Your fund capitalized on the economy's strength by emphasizing sectors and
credits that would benefit from stronger economic growth. Many of these
credits were rated Baa, which represents the higher-yielding lower end of the
investment-grade category. Demand for lower-rated bonds was unusually strong
over the past 12 months as investors reached for higher yields, and
undoubtedly enabled the category to outperform other investment-grade bonds
over the period.
We increased the fund's investment in bonds issued by -- or backed by the
credit of -- airports and airlines, as well as its positions in certain
industrial development bonds. Airports and airlines continued to exhibit the
sound industry dynamic that has prevailed over the past several years. Demand
for air travel has been strong, and with capacity expansion still modest,
demand continues to outstrip supply. These healthy sector fundamentals were
enhanced further by stronger-than-expected economic growth.
[GRAPHIC HORIZONTAL BAR CHART OMITTED: TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Transportation 25.0%
Utilities 23.7%
Health care 18.0%
Housing 7.9%
Cogeneration and
waste management 7.4%
Footnote reads:
* Based on net assets as of 4/30/97. Holdings will vary over time.
Our position in Clark County, Nevada, Southwest Gas bonds represents another
improving situation. Nevada is one of the country's fastest-growing states and
on its own merits we believe Southwest Gas represents value. Furthermore, the
deregulation of the electric utility industry has prompted a number of mergers
and acquisitions, with the acquisition of gas companies by electric companies
emerging as a strong trend. We believe the sound financial condition and
location of Southwest Gas could make it an attractive takeover candidate. All
these factors provide price support for the debt of Southwest Gas in a rising
interest-rate environment and create the potential for significant price
appreciation, based on the credit's strong attributes.
* INCOME AND STABILITY ENHANCE TOTAL RETURN
From a structural standpoint, we have continued to emphasize bonds we believed
could provide both high current yields and low price volatility. Since the
market's uncertain nature curbed price appreciation over this period, current
income played an especially important role in total return. We kept the
portfolio fully invested throughout the year, focusing primarily on
high-coupon bonds, which generated a higher level of income that could be
invested as rates were rising. These bonds also were prized by many investors,
which increased their price support when the market was choppy. Finally,
quantitative analysis revealed that despite this strong demand for high-coupon
bonds, their prices had the potential to move higher, based on historical
price relationships.
By maintaining a relatively short duration throughout the year, we sought to
minimize changes in net asset value. Duration measures a portfolio's
sensitivity to changes in interest rates. A shorter duration helps protect
principal when interest rates are rising and bond prices are falling.
* OUTLOOK: STAYING THE COURSE
Going forward, we will continue to target those sectors and credits that we
believe offer attractive fundamentals and can benefit from the anticipated
economic environment. Health care, as well as pulp and paper are two sectors
we believe hold particular opportunity. Health-care bonds have continued to
perform well, largely because of a trend of nonprofit issuers being acquired
by major for-profit companies. In the pulp and paper sector, we think prices
are approaching a bottom and expect profitability to improve.
[GRAPHIC PIE CHART OMITTED: CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
A -- 9.4%
Aa -- 4.1%
Aaa/VMIGI -- 31.3%
Ba -- 14.3%
Baa -- 40.9%
Footnote reads:
As a percentage of market value as of 4/30/97. A bond rated Baa or higher is
considered investment grade. All ratings reflect Moody's descriptions unless
noted otherwise; percentages may include unrated bonds considered by Putnam
Management to be of comparable quality. Ratings will vary over time.
We look for sustained economic growth over the near term, with the possibility
that interest rates will continue to rise. Given this outlook, we will be
working to minimize price volatility while continuing to emphasize yield.
In support of this emphasis, the fund's Trustees have approved a change in the
fund's policies to permit it to invest in an additional type of lower-rated
bond. The fund may now invest up to 20% of its assets in bonds rated BB/B or
Ba/B. Previously, this 20% had been limited to bonds rated Ba/BB.
The Trustees have also approved a proposal to add to portfolio leverage. While
increased leverage will, of course, increase the volatility of the fund's net
asset value per common share, we believe it will also enable the fund to
provide greater long-term total returns. Consequently, the fund is currently
offering $81 million in additional preferred shares (resulting in a total of
$121 million in preferred shares). The preferred shares pay dividends based on
short-term interest rates while the proceeds from their sale is reinvested in
long-term municipal bonds. The difference between the income earned from the
long-term municipal bonds and the dividends paid to the preferred shareholders
would benefit the fund's common shareholders.
Value is created in all types of market conditions. We believe Putnam's
thorough research capabilities can discover and capitalize on these
opportunities. Through careful sector analysis and security selection, we look
for the fund to continue to provide generous yields and solid total returns to
the long-term investor seeking tax-advantage income.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed
favorably as of 4/30/97, there is no guarantee the fund will continue to hold
these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam Municipal Opportunities Trust is designed for investors
seeking high current income free from federal income tax consistent with
preservation of capital.
TOTAL RETURN FOR PERIODS ENDED 4/30/97
Lehman Bros.
Market Municipal Consumer
(common shares) NAV price Bond Index Price Index
- ------------------------------------------------------------------------------
1 year 8.14% 9.24% 6.65% 2.50%
- ------------------------------------------------------------------------------
Life of fund 28.40 22.79 24.77 11.10
(since 5/28/93)
Annual average 6.57 5.36 5.82 2.71
- ------------------------------------------------------------------------------
Performance data represent past results and do not reflect future
performance. They do not take into account any adjustment for taxes
payable on reinvested distributions. Investment returns, net asset value
and market price will fluctuate so that an investor's shares, when sold,
may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 4/30/97
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Distributions (common shares)
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Number 12
- ------------------------------------------------------------------------------
Income $0.985000
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Capital gains1 --
- ------------------------------------------------------------------------------
Total $0.985000
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Preferred shares Series A (800 shares)
- ------------------------------------------------------------------------------
Income $1,746.27
- ------------------------------------------------------------------------------
Total $1,746.27
- ------------------------------------------------------------------------------
Share value
(common shares): NAV Market price
- ------------------------------------------------------------------------------
4/30/96 $13.50 $13.625
- ------------------------------------------------------------------------------
4/30/97 13.61 13.875
- ------------------------------------------------------------------------------
Current return
(common shares): NAV Market price
- ------------------------------------------------------------------------------
End of period
Current dividend rate2 6.83% 6.70%
- ------------------------------------------------------------------------------
Taxable equivalent3 11.31 11.09
- ------------------------------------------------------------------------------
1 Capital gains, if any, are taxable for federal and, in most cases, state
tax purposes. For some investors, investment income may also be subject to
the federal alternative minimum tax. Investment income may be subject to
state and local taxes. 2 Income portion of most recent distribution,
annualized and divided by NAV or market price at end of period. 3 Assumes
maximum 39.6% federal tax rate. Results for investors subject to lower tax
rates would not be as advantageous.
TOTAL RETURN FOR PERIODS ENDED 3/31/97
(most recent calendar quarter)
Market
(common shares) NAV price
- ------------------------------------------------------------------------------
1 year 7.25% 13.34%
- ------------------------------------------------------------------------------
Life of fund 27.41 24.32
Annual average 6.51 5.83
- ------------------------------------------------------------------------------
Performance data represent past results and do not reflect future
performance. They do not take into account any adjustment for taxes
payable on reinvested distributions. Investment returns, net asset value
and market price will fluctuate so that an investor's shares, when sold,
may be worth more or less than their original cost.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to remarketed 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 the New York
Stock Exchange.
COMPARATIVE BENCHMARKS
Lehman Brothers Municipal Bond Index is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the
municipal bond market. The index does not take into account brokerage
commissions or other costs, may include bonds different from those in the
fund, and may pose different risks than the fund. The index assumes
reinvestment of all distributions and interest payments. It is not
possible to invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Report of independent accountants
For the fiscal year ended April 30, 1997
To the Trustees and Shareholders of
Putnam Municipal Opportunities Trust
We have audited the accompanying statement of assets and liabilities of Putnam
Municipal Opportunities Trust, including the portfolio of investments owned,
as of April 30, 1997, and the related statement of operations for the year
then ended and the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial
highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of April 30, 1997, by correspondence with the custodian and brokers.
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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Putnam Municipal Opportunities Trust as of April 30, 1997, the results of its
operations for the year then ended and the changes in its net assets for each
of the two years in the period then ended and the financial highlights for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 11, 1997
Portfolio of investments owned
April 30, 1997
Key to Abbreviations
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Collateralized
IFB -- Inverse Floating Rate Bonds
IF COP -- Inverse Floating Rate Certificate of Participation
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES (98.2%) *
PRINCIPAL AMOUNT RATINGS** VALUE
<S> <C> <C> <C>
Alabama (2.2%)
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$ 5,000,000 Butler, Indl. Dev. Board Rev. Bonds (Solid Waste
Disp. James River Corp.), 8s, 9/1/28 BBB $ 5,600,000
Arizona (1.2%)
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2,860,000 Scottsdale, Indl. Dev. Auth. Rev. Bonds
(Westminster Village), 7 7/8s, 6/1/09 BB/P 3,113,825
California (10.8%)
- ------------------------------------------------------------------------------------------------------------
5,000,000 Foothill/Eastern Trans. Corridor Agcy. Rev. Bonds
(CA Toll Roads), Ser. A, 5s, 1/1/35 BBB 4,100,000
3,000,000 Metropolitan Wtr. Dist. IFB (Southern CA
Waterwks.), 7.551s, 8/10/18 Aa 3,037,500
2,000,000 Orange Cnty., Pub. Fac. Corp. COP (Solid Waste
Management), 7 7/8s, 12/1/13 BBB 2,092,500
5,000,000 San Bernardino Cnty. COP (Med. Ctr. Fin.), Ser. A,
MBIA, 6 1/2s, 8/1/17 AAA 5,487,500
6,000,000 San Diego Cnty., COP, AMBAC, 5 5/8s, 9/1/12 AAA 6,000,000
3,000,000 San Diego, IF COP, AMBAC, 7.27s, 9/1/07 AAA 3,195,000
1,500,000 San Francisco, Bldg. Auth. Lease Rev. Bonds
(San Francisco Civic Ctr. Complex), Ser. A,
AMBAC, 5 1/4s, 12/1/16 AAA 1,415,625
3,000,000 Southern CA Pub. Pwr. Auth. IFB, FGIC,
6.72s, 7/1/17 AAA 2,685,000
--------------
28,013,125
Colorado (6.5%)
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Denver, City & Cnty. Arpt. Rev. Bonds
9,440,000 Ser. A, 8 3/4s, 11/15/23 BBB 11,033,000
3,160,000 MBIA, 8 1/2s, 11/15/23 AAA 3,602,400
2,000,000 Ser. D, 7 3/4s, 11/15/21 BBB 2,195,000
--------------
16,830,400
Florida (1.2%)
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2,890,000 Broward Cnty., Resource Recvy. Rev. Bonds
(SES Broward Cnty. LP South), 7.95s, 12/1/08 A 3,142,875
Illinois (14.0%)
- ------------------------------------------------------------------------------------------------------------
Chicago, O'Hare Intl. Arpt. Special Fac. Rev. Bonds
(United Air Lines, Inc.)
10,695,000 Ser. 84A, 8.85s, 5/1/18 BBB 11,965,031
8,755,000 Ser. C, 8.2s, 5/1/18 Baa 9,400,681
10,000,000 IL Hsg. Dev. Auth. Multi-Fam. Rev. Bonds, Ser. 91A,
8 1/4s, 7/1/16 A 10,800,000
1,500,000 IL Hsg. Dev. Auth. Res. Mtge. IFB, 10.166s, 2/1/20
(acquired 5/28/93, cost $2,152,225) [DBL. DAGGER] Aa 1,640,625
8,330,000 Metropolitan Pier & Exposition Auth. Rev. Bonds
(McCormick), Ser. A, MBIA, zero %,12/15/16 AAA 2,592,713
--------------
36,399,050
Indiana (0.8%)
- ------------------------------------------------------------------------------------------------------------
2,000,000 Indianapolis Indl. Arpt. Auth. Special Fac. Rev. Bonds
(Federal Express Corp.), 7.1s, 1/15/17 BBB 2,145,000
Kentucky (1.9%)
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Kenton Cnty., Arpt. Board Special Fac. Rev. Bonds
(Delta Air Lines, Inc.)
3,400,000 Ser. A, 7 1/2s, 2/1/20 BBB 3,646,500
1,300,000 Ser. B, 7 1/4s, 2/1/22 Baa 1,387,750
--------------
5,034,250
Louisiana (4.9%)
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5,500,000 Port of New Orleans, Indl. Dev. Rev. Bonds
(Continental Grain Co.), 7 1/2s, 7/1/13 BB 5,905,625
2,850,000 St. Charles Parish, Poll. Control, Rev. Bonds
(LA Pwr. & Lt. Co.), 8s, 12/1/14 BBB 3,081,563
3,800,000 West Feliciana Parish Poll. Ctrl. VRDN, 4s, 4/1/16 VMIGI 3,800,000
--------------
12,787,188
Massachusetts (5.0%)
- ------------------------------------------------------------------------------------------------------------
MA State Hlth. & Edl. Fac. Auth. Rev. Bonds
3,135,000 (Norwood Hosp.), Ser. E, 8s, 7/1/12 Ba 3,264,319
3,000,000 (Rehab. Hosp. Cape & Islands), Ser. A,
7 7/8s, 8/15/24 BB/P 3,187,500
MA State Indl. Fin. Agcy. Resource Recvy. Rev. Bonds
3,000,000 (Southeastern MA), Ser. A, 9s, 7/1/15 BB/P 3,378,750
1,000,000 (1st Mtge. Brookhaven), Ser. A, 7s, 1/1/15 BBB/P 1,038,750
2,500,000 MA State Wtr. Resource Auth. Rev. Bonds, Ser. B,
MBIA, 4 3/4s, 12/1/21 AAA 2,125,000
--------------
12,994,319
Michigan (1.0%)
- ------------------------------------------------------------------------------------------------------------
2,500,000 MI State Hsg. Dev. Auth. Rental Hsg. Rev. Bonds,
Ser. A, FSA, 7.55s, 4/1/23 Aaa 2,671,875
Mississippi (1.6%)
- ------------------------------------------------------------------------------------------------------------
Claiborne Cnty., Poll. Control Rev. Bonds
2,500,000 (Middle South Energy, Inc.), Ser. B, 8 1/4s, 6/1/14 BB/P 2,681,250
1,350,000 (Syst. Energy Resources, Inc.), 7.3s, 5/1/25 BBB 1,412,438
--------------
4,093,688
Nebraska (1.0%)
- ------------------------------------------------------------------------------------------------------------
2,300,000 NE Investment Fin. Auth. Single Fam. Mtge. IFB,
Ser. 2, GNMA Coll., 11.278s, 9/10/30 AAA 2,567,375
Nevada (2.3%)
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Clark Cnty., Indl. Dev. Rev. Bonds
(Southwest Gas Corp.)
2,750,000 Ser. B, 7 1/2s, 9/1/32 Baa 2,928,750
3,000,000 Ser. A, 6 1/2s, 12/1/33 BBB 3,015,000
--------------
5,943,750
New Jersey (9.7%)
- ------------------------------------------------------------------------------------------------------------
9,000,000 NJ Econ. Dev. Auth. Elec. Energy Fac. Rev. Bonds
(Vineland Cogeneration L.P.), 7 7/8s, 6/1/19 BB 9,697,500
NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds
1,500,000 (Kimball Med. Ctr.), Ser. C, 8s, 7/1/13 BBB 1,599,375
2,590,000 (Raritan Bay Med. Ctr.), 7 1/4s, 7/1/14 BB/P 2,725,975
10,000,000 Salem Cnty. Indl. Poll. Control Fin. Auth. IFB, MBIA,
8.707s, 10/1/29(acquired 10/28/94,
cost $9,750,000) [DBL. DAGGER] AAA 11,275,000
--------------
25,297,850
New York (2.8%)
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4,600,000 NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds
(American Airlines, Inc.), 8s, 7/1/20 BBB 4,864,500
2,500,000 NY State Dorm. Auth. Rev. Bonds
(U. Syst. Construction), Ser. A, 5 5/8s, 7/1/16 BBB 2,406,250
--------------
7,270,750
North Carolina (0.8%)
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2,000,000 NC Eastern Muni. Pwr. Agcy. Pwr. Syst. Rev. Bonds,
Ser. B, 6s, 1/1/22 BBB 1,977,500
Ohio (1.1%)
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2,663,000 OH Hsg. Fin. Agcy. Single Fam. Mtge. IFB, Ser. A-2,
GNMA Coll., 9.567s, 3/24/31 AAA 2,905,999
Pennsylvania (8.6%)
- ------------------------------------------------------------------------------------------------------------
5,000,000 Allegheny Cnty., Hosp. Dev. Auth. Rev. Bonds
(Pittsburgh Mercy Hlth. Syst.), AMBAC,
5 5/8s, 8/15/26 AAA 4,818,750
7,000,000 Montgomery Cnty., Higher Edl. & Hlth. Auth. Hosp.
Rev. Bonds (UTD Hosp.), Ser. B, 8 3/8s, 11/1/11 AAA 7,735,000
3,000,000 PA Econ. Dev. Fin. Auth. Wastewtr. Treatment Rev.
Bonds (Sun Co., Inc.), Ser. A, 7.6s, 12/1/24 BBB 3,330,000
1,000,000 PA State Econ. Dev. Fin. Auth. Res. Recvy. Rev.
Bonds (Colver), Ser. D, 7.15s, 12/1/18 BBB 1,045,000
5,000,000 PA State Higher Edl. Assistance Agcy. Student Loan
IFB, AMBAC, 9.652s, 9/3/26 AAA 5,587,500
--------------
22,516,250
South Carolina (1.9%)
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4,500,000 Spartanburg Cnty. Solid Waste Disp. Rev. Bonds
(Bayerische Motoren Werke), 7.55s, 11/1/24 A/P 4,848,750
Texas (11.7%)
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5,500,000 Alliance, Arpt. Auth. Special Fac. Rev. Bonds
(American Airlines, Inc.), 7 1/2s, 12/1/29 BBB 5,878,125
Bexar Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds
4,800,000 (St. Luke's Lutheran Hosp.), 7.9s, 5/1/18 AAA/P 5,514,000
2,000,000 (St. Luke's Lutheran Hosp.), 7.9s, 5/1/11 AAA/P 2,297,500
4,500,000 Brazos River, Poll. Control Auth. Rev. Bonds
(TX Utils. Elec. Co.), Ser. A, 7 7/8s, 3/1/21 BBB 4,910,625
2,420,000 Jefferson Cnty., Hlth. Fac. Dev. Corp. Hosp. Rev.
Bonds (Baptist Healthcare Syst.), 8 7/8s, 6/1/21 BB 2,528,900
3,535,000 Port Corpus Christi, Indl. Dev. Corp. Rev. Bonds
(Valero Refining & Marketing Co.), Ser. A,
10 1/4s, 6/1/17 BBB 3,656,321
5,000,000 Titus Cnty., Fresh Wtr. Supply Dist. No. 1 Poll. Rev.
Bonds (Southwestern Elec. Pwr. Co.), Ser. A,
8.2s, 8/1/11 AA 5,668,750
--------------
30,454,221
Utah (2.0%)
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5,000,000 Intermountain Pwr. Agcy. Rev. Bonds, Ser. D,
AMBAC, 7 3/4s, 7/1/20 A 5,262,500
Virginia (1.4%)
- ------------------------------------------------------------------------------------------------------------
3,000,000 Fairfax Cnty., Indl. Dev. Auth. IFB (Fairfax Hosp. Syst.),
Ser. C, 9.917s, 8/29/23 AAA 3,588,750
Washington (2.6%)
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7,150,000 Pierce Cnty., Econ. Dev. Corp. Rev. Bonds (Solid
Waste-Occidental Petroleum), 5.8s, 9/1/29 Baa 6,667,375
Wyoming (1.2%)
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2,925,000 Sweetwater Cnty., Solid Waste Disp. Rev. Bonds
(FMC Corp.), Ser. A, 7s, 6/1/24 BBB 3,085,874
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $251,970,042) *** $255,212,539
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $260,007,830.
** The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at April 30, 1997 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 April 30, 1997. Securities rated by Putnam are indicated
by "/P" and are not publicly rated. Ratings are not covered by the
Report of independent accountants.
*** The aggregate identified cost on a tax basis is $251,970,042,
resulting in gross unrealized appreciation and depreciation of
$7,404,463 and $4,161,966, respectively, or net unrealized appreciation
of $3,242,497.
[DBL. DAGGER] Restricted, excluding 144A securities, as to public resale. The total
market value of restricted securities held at April 30, 1997 was
$12,915,625 or 5.0% of net assets.
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's are the current interest rates at April 30, 1997.
The fund had the following industry group concentrations greater than
10% at April 30, 1997 (as a percentage of net assets):
Transportation 25.0%
Utilities 23.7
Health care 18.0
The fund had the following insurance concentration greater than 10% at
April 30, 1997 (as a percentage of net assets):
AMBAC 10.1%
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $251,970,042) (Note 1) $255,212,539
- ---------------------------------------------------------------------------------------------------
Cash 47,229
- ---------------------------------------------------------------------------------------------------
Interest receivable 5,906,226
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 580,000
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 6,888
- ---------------------------------------------------------------------------------------------------
Other assets 16,284
- ---------------------------------------------------------------------------------------------------
Total assets 261,769,166
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 1,252,132
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 441,524
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 22,857
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 5,949
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 609
- ---------------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 31,878
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 6,387
- ---------------------------------------------------------------------------------------------------
Total liabilities 1,761,336
- ---------------------------------------------------------------------------------------------------
Net assets $260,007,830
Represented by
- ---------------------------------------------------------------------------------------------------
Series A remarketed preferred shares (800 shares issued and
outstanding at $50,000 per share) (Note 4) $ 40,000,000
- ---------------------------------------------------------------------------------------------------
Paid-in capital -- common shares (Unlimited shares authorized) (Note 1) 226,378,565
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (415,009)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (9,198,223)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 3,242,497
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $260,007,830
Net assets available to:
- ---------------------------------------------------------------------------------------------------
Series A remarketed preferred shares $ 40,000,000
- ---------------------------------------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 74,751
- ---------------------------------------------------------------------------------------------------
Net assets allocated to remarketed preferred shares --
liquidation preference $ 40,074,751
- ---------------------------------------------------------------------------------------------------
Net assets available to common shares $219,933,079
- ---------------------------------------------------------------------------------------------------
Net asset value per common share
($219,933,079 divided by 16,157,092 shares) $13.61
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended April 30,1997
<S> <C>
Tax exempt interest income: $ 18,275,869
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,824,503
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 207,918
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 19,828
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 7,384
- --------------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 6,370
- --------------------------------------------------------------------------------------------------
Reports to shareholders 26,195
- --------------------------------------------------------------------------------------------------
Auditing 53,269
- --------------------------------------------------------------------------------------------------
Legal 18,930
- --------------------------------------------------------------------------------------------------
Postage 49,504
- --------------------------------------------------------------------------------------------------
Exchange listing fees 24,150
- --------------------------------------------------------------------------------------------------
Preferred share remarketing agent fees 109,391
- --------------------------------------------------------------------------------------------------
Other 40,625
- --------------------------------------------------------------------------------------------------
Total expenses 2,388,067
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (68,042)
- --------------------------------------------------------------------------------------------------
Net expenses 2,320,025
- --------------------------------------------------------------------------------------------------
Net investment income 15,955,844
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 375,642
- --------------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 440,942
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
futures during the year 2,427,269
- --------------------------------------------------------------------------------------------------
Net gain on investments 3,243,853
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 19,199,697
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year Ended April 30
--------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 15,955,844 $ 16,028,262
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 816,584 2,139,601
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,427,269 3,617,324
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 19,199,697 21,785,187
- ----------------------------------------------------------------------------------------------------------------------
Distributions to remarketed preferred shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income (1,397,016) (1,455,352)
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations
applicable to common shareholders
(excluding cumulative undeclared dividends on
remarketed preferred shares of $74,751
and $71,506, respectively) 17,802,681 20,329,835
- ----------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income (15,499,239) (15,995,243)
- ----------------------------------------------------------------------------------------------------------------------
In excess of net investment income (415,009) --
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,888,433 4,334,592
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of year 258,119,397 253,784,805
- ----------------------------------------------------------------------------------------------------------------------
End of year (including distributions in excess of
net investment income and undistributed net investment
income of $415,009 and $940,417, respectively) $260,007,830 $258,119,397
- ----------------------------------------------------------------------------------------------------------------------
Number of fund shares
- ----------------------------------------------------------------------------------------------------------------------
Common shares outstanding at beginning and end of year 16,157,092 16,157,092
- ----------------------------------------------------------------------------------------------------------------------
Remarketed preferred shares outstanding at
beginning and end of year 800 800
- ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share May 28, 19993+
operating performance Year ended April 30 to April 30
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period
(common shares) $13.50 $13.23 $13.57 $14.07 (e)
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .99 .99 1.02 .94 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .20 .36 (.16) (.59)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.19 1.35 .86 .35
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income:
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders (.09) (.09) (.08) (.05)(f)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders (.96) (.99) (.99) (.70)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income:
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders (.03) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gains on investments:
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- -- (.09) (.05)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of capital gains:
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- -- (.03) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions: (1.08) (1.08) (1.19) (.80)
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred share offering costs -- -- -- (.05)
- ------------------------------------------------------------------------------------------------------------------------------------
Common share offering costs -- -- (.01)(g) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $13.61 $13.50 $13.23 $13.57
- ------------------------------------------------------------------------------------------------------------------------------------
Market value, end of period
(common shares) $13.875 $13.625 $12.250 $12.625
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return, at market value
(common shares) (%)(b) 9.24 19.64 5.82 (11.22)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $260,008 $258,119 $253,785 $259,295
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) 1.08 1.05 .95 .94*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) 6.60 6.54 6.04 6.14*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 20.52 49.97 59.13 60.52*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Reflects a waiver of the management fee for the period May 28, 1993 to June 13, 1993.
As a result of the waiver, expenses of the fund for the period ended April 30, 1994 reflect a
reduction of less than $0.01 per share.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Ratios reflect net assets available to common shares only: net investment income ratio also reflects
reduction for dividend payments to preferred shareholders.
(d) The ratio of expenses to average net assets for the year ended April 30, 1996 and thereafter,
include amounts paid through expense offset arrangements. Prior period ratios exclude
these amounts. (Note 2)
(e) Represents initial net asset value of $14.10 less offering expenses of $0.03.
(f) Preferred shares were issued on August 3, 1993.
(g) Adjustments of the original offering costs to reflect actual costs incurred.
</TABLE>
Notes to financial statements
April 30, 1997
Note 1
Significant accounting policies
Putnam Municipal Opportunities Trust (the "fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, closed-end
management investment company. The fund's investment objective is to seek a
high level of current income exempt from federal income tax, consistent with
preservation of capital. The fund intends to achieve its objective by
investing in a portfolio of investment grade municipal bonds that Putnam
Investment Management, Inc. ("Putnam Management"), the fund's Manager, a
wholly-owned subsidiary of Putnam Investments, Inc., 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 generally accepted
accounting principles and requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are stated on the basis of
valuations provided by a pricing service, approved by the Trustees, which uses
information with respect to transactions in bonds, quotations from bond
dealers, market transactions in comparable securities and various
relationships between securities in determining value. The fair value of
restricted securities is determined by Putnam Management following procedures
approved by the Trustees, and such valuations and procedures are reviewed
periodically by the Trustees.
B) Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund owns
or expects to purchase. The fund may also write options on securities it owns
or in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparty to the contract is unable to perform.
Futures contracts are valued at the quoted daily settlement prices established
by the exchange on which they trade. Exchange traded options are valued at the
last sale price, or if no sales are reported, the last bid price for purchased
options and the last ask price for written options. Options traded
over-the-counter are valued using prices supplied by dealers.
D) 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 applicable to regulated investment companies. It is also
the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
At April 30, 1997, the fund had a capital loss carryover of approximately
$8,475,000 available to offset future capital gains, if any. The amount of the
carryover and the expiration dates are:
Loss Carryover Expiration
- -------------------------------------------
$3,894,000 April 30, 2003
$4,581,000 April 30, 2004
E) Distributions to shareholders Distributions to common and preferred
shareholders are recorded by the fund on the ex-dividend date. 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. The applicable dividend rate for the remarketed
preferred shares on April 30, 1997 was 3.59%. The amount and character of
income and gains to be distributed are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. These differences include treatment of organization expenses.
Reclassifications are made to the fund's capital accounts to reflect income
and gains available for distribution (or available capital loss carryovers)
under income tax regulations. For the year ended April 30, 1997, the fund
reclassified $6 to increase distributions in excess of net investment income
and $6 to increase paid-in-capital. The calculation of net investment income
per share in the financial highlights table excludes these adjustments.
F) Determination of net asset value Net asset value of the common shares is
determined by dividing the value of all assets of the fund (including accrued
interest and dividends), less all liabilities (including accrued expenses)
and the liquidation preference of anyoutstanding remarketed preferred shares,
by the total number of common shares outstanding.
G) Amortization of bond premium and accretion of bond discount Any premium
resulting from the purchase of securities in excess of maturity value is
amortized on a yield-to-maturity basis. Discounts on zero coupon bonds and
original issue discount bonds are accreted according to the effective yield
method.
H) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities and
Exchange Commission and with various states and the initial public offering
of its shares were $31,878. These expenses are being amortized on
straight-line basis over a five-year period.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for management and investment advisory
services and administrative services is paid quarterly based on the average
net assets of the fund, including amounts attributable to any preferred shares
that may be outstanding. Such fees in the aggregate are based on the annual
rate of 0.70% of the first $500 million of the average net asset value of the
fund, 0.60% of the next $500 million, 0.55% of the next $500 million, and
0.50% of any amount over $1.5 billion.
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 net 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 .70% of the liquidation preference of the remarketed
preferred shares outstanding during the period).
The fund reimburses Putnam Management 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 wholly-owned subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the year ended April 30, 1997, fund expenses were reduced by $68,042 under
expense offset arrangements with PFTC. Investor servicing and custodian fees
reported in the Statement of operations exclude these credits. The fund could
have invested a portion of the assets utilized in connection with the expense
offset arrangements in an income producing asset if it had not entered into
such arrangements.
Trustees of the fund receive an annual Trustees fee of $580 and an additional
fee for each Trustee's meeting attended. Trustees who are not interested
persons of Putnam Management and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "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 in the fund and are invested
in certain Putnam funds until distribution in accordance with the Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
covering all Trustees of the Fund who have served as Trustee for at least five
years. Benefits under the 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 fees in the Statement of
operations for the year ended April 30, 1997. Accrued pension liability is
included in Payable for compensation of Trustees in the Statement of assets
and liabilities.
Note 3
Purchase and sales of securities
During the year ended April 30, 1997, purchases and sales of investment
securities other than U.S. government and agency obligations and short-term
investments aggregated $51,549,344 and $53,998,854, respectively. In
determining the net gain or loss on securities sold, the cost of securities
has been determined on the identified cost basis.
Note 4
Remarketed preferred shares
The Series A shares are redeemable at the option of the fund on any dividend
payment date at a redemption price of $50,000 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, as amended. To the extent that the fund earns taxable income and
capital gains by the conclusion of a fiscal year, it will 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 April
30, 1997, no such restrictions have been placed on the fund.
Note 5
Remarketed preferred shares offering
The Trustees have approved the proposal to offer 1,620 of Series B and 1,620
of Series C remarketed preferred shares, both with a liquidation preference of
$25,000 per share plus accumulated and unpaid dividends. Underwriting expenses
and offering expenses will be charged to net assets available to common
shareholders.
Federal tax information
(Unaudited)
The fund has designated 99.55% of dividends paid from net investment income
during the fiscal year as tax exempt for Federal income tax purposes.
The Form 1099 you receive in January 1998 will show the tax status of all
distributions paid to your account in calendar 1997.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William J. Curtin
Vice President
Jerome J. Jacobs
Vice President
Blake E. Anderson
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
33884-582 6/97
