|
|
|
| UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
|
|
|
| CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
|
|
|
|
| Investment Company Act file number: | (811–07626) |
|
|
|
| Exact name of registrant as specified in charter: | Putnam Municipal Opportunities Trust |
|
|
|
| Address of principal executive offices: | 100 Federal Street, Boston, Massachusetts 02110 |
|
|
|
| Name and address of agent for service: | Robert T Burns, Vice President 100 Federal Street Boston, Massachusetts 02110 |
|
|
|
| Copy to: | Bryan Chegwidden, Esq. Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 |
|
|
|
| Registrant's telephone number, including area code: | (617) 292–1000 |
|
|
|
| Date of fiscal year end: | April 30, 2020 |
|
|
|
| Date of reporting period: | May 1, 2019 — April 30, 2020 |
|
|
|
|
Item 1. Report to Stockholders: | |
|
|
|
| The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: | |
Putnam Municipal
Opportunities
Trust
Annual report
4 | 30 | 20
The fund has adopted a managed distribution policy (the “Distribution Policy”) with the goal of providing shareholders with a consistent, although not guaranteed, monthly distribution. In accordance with the Distribution Policy, the fund currently expects to make monthly distributions to common shareholders at a distribution rate per share of $0.0531. Distributions may include ordinary and/or tax-exempt income, net capital gains, and/or a return of capital of your investment in the fund. You should not draw any conclusions about the fund’s investment performance from the amount of this distribution or from the terms of the Distribution Policy. The Distribution Policy provides that the Board of Trustees may amend or terminate the Distribution Policy at any time without prior notice to fund shareholders.
IMPORTANT NOTICE: Delivery of paper fund reports
In accordance with regulations adopted by the Securities and Exchange Commission, beginning on January 1, 2021, reports like this one will no longer be sent by mail unless you specifically request it. Instead, they will be on Putnam’s website, and you will be notified by mail whenever a new one is available, and provided with a website link to access the report.
If you wish to stop receiving paper reports sooner, or if you wish to continue to receive paper reports free of charge after January 1, 2021, please see the back cover or insert for instructions. If you invest through a bank or broker, your choice will apply to all funds held in your account. If you invest directly with Putnam, your choice will apply to all Putnam funds in your account.
If you already receive these reports electronically, no action is required.
Message from the Trustees
June 12, 2020
Dear Fellow Shareholder:
Financial markets worldwide continue to be challenged by volatility and economic uncertainty due to the COVID-19 pandemic. After considerable losses earlier in the year, equity markets rallied in April to recover partially from their steepest declines. Bond markets, which dealt with severe liquidity challenges, have in large part stabilized thanks to aggressive policy responses from central banks and governments worldwide.
It is still unclear what the costs will be and how long the effects of the COVID-19 pandemic will last, but history has shown that markets rebound from downturns over time. For investors, we believe the most important course of action is to remember your long-term goals and consult with your financial advisor. At Putnam, our investment professionals remain focused on actively managing fund portfolios with a research-intensive approach that includes risk management strategies.
We would like to take this opportunity to announce the arrival of Mona K. Sutphen to your fund’s Board of Trustees. Ms. Sutphen brings extensive professional and directorship experience to her role as a Trustee, and we are pleased to welcome her.
Thank you for investing with Putnam.
Putnam Municipal Opportunities Trust has the flexibility to invest in municipal bonds issued by any state in the country or U.S. territory. As a closed-end fund, it shares some common characteristics with open-end mutual funds, but there are some key differences that investors should understand as they consider their portfolio.
|
2 Municipal Opportunities Trust |
Looking at a closed-end fund’s performance
You will usually see that the NAV and the market price differ. The market price can be influenced by several factors that cause it to vary from the NAV, including fund distributions, changes in supply and demand for the fund’s shares, changing market conditions, and investor perceptions of the fund or its investment manager.
A mix of credit qualities
In addition to its flexible geographical focus, Putnam Municipal Opportunities Trust combines bonds of differing credit quality. The fund invests in high-quality bonds, but also includes an allocation to lower-rated bonds, which may offer higher income in return for more risk.
|
Municipal Opportunities Trust 3 |
Data are historical. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and net asset value 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 returns in the bar chart are at NAV. See below and pages 10–11 for additional performance information, including fund returns at market price. Index and Lipper results should be compared with fund performance at NAV.
* Source: Lipper, a Refinitiv company.
This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 4/30/20. See above and pages 10–11 for additional fund performance information. Index descriptions can be found on page 13.
|
4 Municipal Opportunities Trust |
Paul, how did municipal bond funds perform during the reporting period?
Municipal bonds enjoyed solid performance for much of the period, supported by stable U.S. economic fundamentals, falling interest rates, and positive supply/demand technicals. However, in late February 2020, fears about the spread of the coronavirus and its potential impact on global economic growth sparked a steep sell-off in equities and other high-risk assets. After experiencing their largest inflow year in 2019, municipal bond funds began to see outflows in March, particularly in the lowest tiers of the market. [Fund flows are a measure of investor demand for mutual funds.] The heavy selling in March led to one of the worst months of performance [–3.63%] for the asset class in decades, as measured by the Bloomberg Barclays Municipal Bond Index [the fund’s benchmark]. Volatility continued into April, but the asset class saw some demand support from banks and insurance companies. The benchmark closed the period with a return of 2.16%.
Credit spreads widened significantly, particularly among lower-quality, high-yield municipals led by airline/airport and tobacco bonds. As investors rushed to safety, even general
|
Municipal Opportunities Trust 5 |
Credit qualities are shown as a percentage of the fund’s net assets (common and preferred shares) as of 4/30/20. A bond rated BBB or higher (SP-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings may vary over time.
Cash and net other assets, if any, represent the market value weights of cash, derivatives, and short-term securities in the portfolio. The fund itself has not been rated by an independent rating agency.
Top ten state allocations are shown as a percentage of the fund’s net assets (common and preferred shares) as of 4/30/20. The fund did not have any investments in Puerto Rico as of 4/30/20. Summary information may differ from the portfolio schedule included in the financial statements due to the differing treatment of interest accruals, the floating rate portion of tender option bonds, derivative securities, if any, the timing of matured security transactions, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
|
6 Municipal Opportunities Trust |
obligation bonds of highly rated issuers, such as the State of California, sold off. The outflows depressed prices, and yields rose. In turn, the municipal bond market saw a dislocation in the municipal and U.S. Treasury yield relationship, referred to as the Municipal/Treasury [M/T] ratio. The M/T ratio measures the yield on AAA-rated municipal bonds relative to the yield on U.S. Treasury bonds of similar maturities. The higher, or cheaper, the ratio, the more attractive municipal bonds are relative to U.S. Treasuries. Given the sell-off, municipal bonds were yielding significantly more than 100% of Treasury yields. Historically, a ratio in excess of 100% is interpreted as a buy signal and suggests an attractive entry point for long-term investors.
With the health risks posed by the pandemic rising and economic and financial market conditions deteriorating, monetary and fiscal policy makers moved into action. The Federal Reserve lowered interest rates to near zero and increased its asset purchases to help ease tight credit markets. In an especially noteworthy move, the Fed announced on March 23 that it would start buying corporate and municipal debt. This allows cash-strapped states and cities to get loans to tide them over until the U.S. economy bounces back. On April 9, the Fed authorized the Municipal Liquidity Facility [MLF] to provide aid to state and local governments. On April 27, Fed officials increased the scope and duration of the MLF’s programs to include a broader group of counties and cities. With regard to fiscal initiatives, Congress finalized a $2.2 trillion relief package on March 27 to help hard-hit industries and to provide relief for families, small businesses, and hospitals and health-care systems. In April, Congress passed a new pandemic relief-package totaling $484 billion to aid small businesses and hospitals.
How did the fund perform during the reporting period?
For the 12 months ended April 30, 2020, the fund underperformed the benchmark but outperformed the average return of its Lipper peer group, General & Insured Municipal Debt Funds.
Did your investment approach shift in response to the pandemic and economic uncertainty?
We did become more cautious in our fundamental outlook. At this point, while we don’t expect widespread defaults in the municipal market, we believe some sectors could be hit harder than others. Small colleges, dorm financing, and weaker issuers in health care and transportation come to mind. As such, we have become select sellers of lower-rated bonds in sectors that we believe could encounter more challenging credit conditions and possibly see an uptick in defaults over the next 12 to 24 months. This includes certain project finance, retirement communities, and land development sectors. In addition, we trimmed bonds that we believe may be more susceptible to the economic challenges brought on by the pandemic. Finally, we were carrying 3% to 5% of assets in cash at period-end versus a 1% level that is typical of more stable times.
In our view, safe-harbor sectors include state and local general obligation bonds and utilities. We believe states and local governments are in a unique and flexible position with broad capabilities to raise revenue and reduce expenses. And, as I mentioned earlier, the Fed is providing states, and by extension localities, with emergency aid and helping to maintain liquidity across the municipal bond market. We believe that water, sewer, and electric utilities should also remain resilient during the crisis as they provide essential services, and most borrowers
|
Municipal Opportunities Trust 7 |
benefit from the ability to raise rates if needed. While we may see a moderate increase in payment delinquencies, we do not expect any of these sectors to encounter a significant spike in defaults.
At period-end, the fund held an overweight exposure to higher-quality bonds rated A-and BBB- and an underweight exposure to non-rated bonds relative to the fund’s Lipper peer group. Duration positioning, a measure of the portfolio’s interest-rate sensitivity, was slightly longer than that of its Lipper peer group at period-end. The fund’s yield-curve positioning was focused on longer intermediate-term securities with maturities of 10 to 15 years. As part of this strategy, the fund held underweight exposures to long maturity holdings compared with the benchmark.
What is your current assessment of the health of the municipal bond market?
We believe state and local governments can benefit from their unique flexibility during economic downturns. We also believe that the majority of state and local governments have ample reserves in preparation for potential revenue declines, and those without strong reserve levels will have some flexibility to balance their budgets using one-time measures. In our view, most states and local governments would only see prolonged fiscal stress should economic activity fail to stabilize over the next 12 to 18 months.
Our exposure to state and local governments is limited to credits with diverse tax bases and, in our view, the ability to enact broad revenue enhancements or expense cuts.
What is your outlook for the coming months?
With regard to the effects of the pandemic on the U.S. economy, it is too early to know the magnitude of the shock or how deep or long any recession will be. We’ll continue to work closely with our macroeconomic team and municipal credit research analysts to monitor the direction of U.S. economic activity and its potential impact on municipal credit fundamentals.
From a valuation perspective, municipals are starting to look very attractive to us. With our outlook improving in early to mid-April,
This chart shows how the fund’s top weightings have changed over the past six months. Allocations are shown as a percentage of the fund’s net assets (common and preferred shares). Current period summary information may differ from the information in the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, the timing of matured security transactions, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
|
8 Municipal Opportunities Trust |
we selectively added to the fund’s position in investment-grade municipal bonds. Against this backdrop, we believe our higher-in-credit-quality approach can continue to add both income and return opportunities for our shareholders.
Thank you, Paul, for your time and insights today.
The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice. Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk. Statements in the Q&A concerning the fund’s performance or portfolio composition relative to those of the fund’s Lipper peer group may reference information produced by Lipper Inc. or through a third party.
|
Municipal Opportunities Trust 9 |
Your fund’s performance
This section shows your fund’s performance, price, and distribution information for periods ended April 30, 2020, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end. Performance should always be considered in light of a fund’s investment strategy. Data represent 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.
Fund performance Total return and comparative index results for periods ended 4/30/20
|
|
|
|
|
|
|
|
|
|
Annual |
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
|
|
|
Life of |
|
|
|
|
|
|
|
|
fund (since |
|
Annual |
|
Annual |
|
Annual |
|
|
5/28/93) |
10 years |
average |
5 years |
average |
3 years |
average |
1 year |
NAV |
5.84% |
79.72% |
6.04% |
19.99% |
3.71% |
11.18% |
3.60% |
–1.22% |
Market price |
5.55 |
81.42 |
6.14 |
25.45 |
4.64 |
10.64 |
3.43 |
–0.19 |
Bloomberg Barclays |
|
|
|
|
|
|
|
|
Municipal Bond Index |
4.99 |
46.44 |
3.89 |
16.14 |
3.04 |
10.14 |
3.27 |
2.16 |
Lipper General & Insured |
|
|
|
|
|
|
|
|
Municipal Debt Funds |
|
|
|
|
|
|
|
|
(leveraged closed-end) |
5.68 |
74.33 |
5.69 |
16.58 |
3.10 |
7.60 |
2.46 |
–2.24 |
category average* |
|
|
|
|
|
|
|
|
Performance assumes reinvestment of distributions and does not account for taxes.
Index and Lipper results should be compared with fund performance at net asset value. Fund results reflect the use of leverage, while index results are unleveraged and Lipper results reflect varying use of, and methods for, leverage.
* Over the 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 4/30/20, there were 61, 59, 59, 54, and 26 funds, respectively, in this Lipper category.
Performance includes the deduction of management fees and administrative expenses.
|
10 Municipal Opportunities Trust |
Fund price and distribution information For the 12-month period ended 4/30/20
|
|
|
Distributions |
|
|
Number |
12 |
Income |
$0.2790 |
Capital gains2 |
|
|
Long-term gains |
0.2287 |
Short-term gains |
0.1295 |
Total |
$0.6372 |
|
Series B |
Series C |
Distributions — Preferred shares |
(2,876 shares) |
(2,673 shares) |
Number |
|
|
Income1 |
$398.86 |
$406.26 |
Capital gains2 |
|
|
Long-term gains |
180.96 |
176.25 |
Short-term gains |
118.04 |
115.00 |
Total |
$697.86 |
$697.51 |
Share value |
NAV |
Market price |
4/30/19 |
$13.26 |
$12.24 |
4/30/20 |
12.49 |
11.63 |
Current dividend rate (end of period) |
NAV |
Market price |
Current dividend rate3 |
5.10% |
5.48% |
Taxable equivalent4 |
8.61 |
9.26 |
The classification of distributions, if any, is an estimate. Final distribution information will appear on your year-end tax forms.
1 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 Capital gains, if any, are taxable for federal and, in most cases, state purposes.
3 Most recent distribution, including any return of capital and excluding capital gains, annualized and divided by NAV or market price at end of period.
4 Assumes maximum 40.80% federal tax rate for 2020. Results for investors subject to lower tax rates would not be as advantageous.
Fund performance as of most recent calendar quarter Total return for periods ended 3/31/20
|
|
|
|
|
|
|
|
|
|
Annual |
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
|
|
|
Life of |
|
|
|
|
|
|
|
|
fund (since |
|
Annual |
|
Annual |
|
Annual |
|
|
5/28/93) |
10 years |
average |
5 years |
average |
3 years |
average |
1 year |
NAV |
5.99% |
89.73% |
6.61% |
23.07% |
4.24% |
15.99% |
5.07% |
2.64% |
Market price |
5.65 |
85.23 |
6.36 |
27.08 |
4.91 |
15.95 |
5.06 |
2.21 |
See the discussion following the fund performance table on page 10 for information about the calculation of fund performance.
|
Municipal Opportunities Trust 11 |
Consider these risks before investing
Lower-rated bonds may offer higher yields in return for more risk. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have fees and expenses. The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. You can lose money by investing in the fund. The fund’s shares trade on a stock exchange at market prices, which may be lower than the fund’s net asset value. Our investment techniques, analyses, and judgments may not produce the intended outcome, and the investments we select for the fund may not perform as well as other securities that were not selected for the fund. We, or the fund’s other service providers, may experience disruptions or operating errors that could negatively impact the fund.
|
12 Municipal Opportunities Trust |
Terms and definitions
Important terms
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, divided by the number of outstanding 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 New York Stock Exchange.
Fixed-income terms
Current rate is the annual rate of return earned from dividends or interest of an investment. Current rate is expressed as a percentage of the price of a security, fund share, or principal investment.
Yield curve is a graph that plots the yields of bonds with equal credit quality against their differing maturity dates, ranging from shortest to longest. It is used as a benchmark for other debt, such as mortgage or bank lending rates.
Comparative indexes
Bloomberg Barclays Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds.
Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.
ICE BofA (Intercontinental Exchange Bank of America) U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.
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.
ICE Data Indices, LLC (“ICE BofA”), used with permission. ICE BofA permits use of the ICE BofA indices and related data on an “as is” basis; makes no warranties regarding same; does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofA indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.
Lipper, a Refinitiv company, is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.
|
Municipal Opportunities Trust 13 |
Other information for shareholders
Important notice regarding share repurchase program
In September 2019, the Trustees of your fund approved the renewal of a share repurchase program that had been in effect since 2005. This renewal allows your fund to repurchase, in the 356 days beginning October 10, 2019, up to 10% of the fund’s common shares outstanding as of October 9, 2019. At Putnam Management’s recommendation, the share repurchase program was temporarily suspended on March 24, 2020. Putnam Management has proposed to reinstate the share repurchase program effective July 1, 2020, subject to the approval of the Trustees of your fund.
Important notice regarding delivery of shareholder documents
In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.
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, 2019, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, 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
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-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.
Prior to its use of Form N-PORT, the fund filed its complete schedule of its portfolio holdings with the SEC on Form N-Q, which is available online at www.sec.gov.
Trustee and employee fund ownership
Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of April 30, 2020, Putnam employees had approximately $434,000,000 and the Trustees had approximately $71,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
|
14 Municipal Opportunities Trust |
Important notice regarding Putnam’s privacy policy
In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.
It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use.
Under certain circumstances, we must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.
|
Municipal Opportunities Trust 15 |
Summary of Putnam Closed-End Funds’ Amended and Restated Dividend Reinvestment Plans
Putnam Managed Municipal Income Trust, Putnam Master Intermediate Income Trust, Putnam Municipal Opportunities Trust and Putnam Premier Income Trust (each, a “Fund” and collectively, the “Funds”) each offer a dividend reinvestment plan (each, a “Plan” and collectively, the “Plans”). If you participate in a Plan, all income dividends and capital gain distributions are automatically reinvested in Fund shares by the Fund’s agent, Putnam Investor Services, Inc. (the “Agent”). If you are not participating in a Plan, every month you will receive all dividends and other distributions in cash, paid by check and mailed directly to you.
Upon a purchase (or, where applicable, upon registration of transfer on the shareholder records of a Fund) of shares of a Fund by a registered shareholder, each such shareholder will be deemed to have elected to participate in that Fund’s Plan. Each such shareholder will have all distributions by a Fund automatically reinvested in additional shares, unless such shareholder elects to terminate participation in a Plan by instructing the Agent to pay future distributions in cash. Shareholders who were not participants in a Plan as of January 31, 2010, will continue to receive distributions in cash but may enroll in a Plan at any time by contacting the Agent.
If you participate in a Fund’s Plan, the Agent will automatically reinvest subsequent distributions, and the Agent will send you a confirmation in the mail telling you how many additional shares were issued to your account.
To change your enrollment status or to request additional information about the Plans, you may contact the Agent either in writing, at P.O. Box 8383, Boston, MA 02266-8383, or by telephone at 1-800-225-1581 during normal East Coast business hours.
How you acquire additional shares through a Plan If the market price per share for your Fund’s shares (plus estimated brokerage commissions) is greater than or equal to their net asset value per share on the payment date for a distribution, you will be issued shares of the Fund at a value equal to the higher of the net asset value per share on that date or 95% of the market price per share on that date.
If the market price per share for your Fund’s shares (plus estimated brokerage commissions) is less than their net asset value per share on the payment date for a distribution, the Agent will buy Fund shares for participating accounts in the open market. The Agent will aggregate open-market purchases on behalf of all participants, and the average price (including brokerage commissions) of all shares purchased by the Agent will be the price per share allocable to each participant. The Agent will generally complete these open-market purchases within five business days following the payment date. If, before the Agent has completed open-market purchases, the market price per share (plus estimated brokerage commissions) rises to exceed the net asset value per share on the payment date, then the purchase price may exceed the net asset value per share, potentially resulting in the acquisition of fewer shares than if the distribution had been paid in newly issued shares.
How to withdraw from a Plan Participants may withdraw from a Fund’s Plan at any time by notifying the Agent, either in writing or by telephone. Such withdrawal will be effective immediately if notice is received by the Agent with sufficient time prior to any distribution record date; otherwise, such withdrawal will be effective with respect to any subsequent distribution following notice of withdrawal. There is no penalty for withdrawing from or not participating in a Plan.
Plan administration The Agent will credit all shares acquired for a participant under a Plan to the account in which the participant’s common shares are held. Each participant will
|
16 Municipal Opportunities Trust |
be sent reasonably promptly a confirmation by the Agent of each acquisition made for his or her account.
About brokerage fees Each participant pays a proportionate share of any brokerage commissions incurred if the Agent purchases additional shares on the open market, in accordance with the Plans. There are no brokerage charges applied to shares issued directly by the Funds under the Plans.
About taxes and Plan amendments Reinvesting dividend and capital gain distributions in shares of the Funds does not relieve you of tax obligations, which are the same as if you had received cash distributions. The Agent supplies tax information to you and to the IRS annually. Each Fund reserves the right to amend or terminate its Plan upon 30 days’ written notice. However, the Agent may assign its rights, and delegate its duties, to a successor agent with the prior consent of a Fund and without prior notice to Plan participants.
If your shares are held in a broker or nominee name If your shares are held in the name of a broker or nominee offering a dividend reinvestment service, consult your broker or nominee to ensure that an appropriate election is made on your behalf. If the broker or nominee holding your shares does not provide a reinvestment service, you may need to register your shares in your own name in order to participate in a Plan.
In the case of record shareholders such as banks, brokers or nominees that hold shares for others who are the beneficial owners of such shares, the Agent will administer the Plan on the basis of the number of shares certified by the record shareholder as representing the total amount registered in such shareholder’s name and held for the account of beneficial owners who are to participate in the Plan.
|
Municipal Opportunities Trust 17 |
Audited financial statements
These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund’s audited financial statements.
The fund’s portfolio lists all the fund’s investments and their values as ofthe 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 non-investment 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. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of 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 year.
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 highlights table also includes the current reporting period.
|
18 Municipal Opportunities Trust |
Report of Independent Registered Public Accounting Firm
To the Trustees and Shareholders of
Putnam Municipal Opportunities Trust:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the fund’s portfolio, of Putnam Municipal Opportunities Trust (the “Fund”) as of April 30, 2020, the related statement of operations for the year ended April 30, 2020, the statement of changes in net assets for each of the two years in the period ended April 30, 2020, including the related notes, and the financial highlights for each of the five years in the period ended April 30, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of April 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2020 and the financial highlights for each of the five years in the period ended April 30, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of April 30, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 12, 2020
We have served as the auditor of one or more investment companies in the Putnam Investments family of mutual funds since at least 1957. We have not been able to determine the specific year we began serving as auditor.
|
Municipal Opportunities Trust 19 |
The fund’s portfolio 4/30/20
Key to holding’s abbreviations
|
|
ABAG Association Of Bay Area Governments |
may be subject to a cap or floor. For certain securities, |
AGM Assured Guaranty Municipal Corporation |
the rate may represent a fixed rate currently in place |
AMBAC AMBAC Indemnity Corporation |
at the close of the reporting period. |
BAM Build America Mutual |
G.O. Bonds General Obligation Bonds |
COP Certificates of Participation |
NATL National Public Finance Guarantee Corporation |
FGIC Financial Guaranty Insurance Company |
PSFG Permanent School Fund Guaranteed |
FRB Floating Rate Bonds: the rate shown is the current |
U.S. Govt. Coll. U.S. Government Collateralized |
interest rate at the close of the reporting period. Rates |
|
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* |
Rating** |
Principal amount |
Value |
Alabama (1.8%) |
|
|
|
Black Belt Energy Gas Dist. Mandatory Put Bonds |
|
|
|
(12/1/23), Ser. A, 4.00%, 12/1/48 |
A3 |
$1,700,000 |
$1,777,826 |
Jefferson Cnty., Swr. Rev. Bonds, Ser. D, |
|
|
|
6.50%, 10/1/53 |
BBB |
2,000,000 |
2,303,660 |
Jefferson, Cnty. Rev. Bonds, (Warrants) |
|
|
|
5.00%, 9/15/34 |
AA |
2,075,000 |
2,442,254 |
5.00%, 9/15/33 |
AA |
275,000 |
324,624 |
Selma, Indl. Dev. Board Rev. Bonds, (Gulf |
|
|
|
Opportunity Zone Intl. Paper Co.), Ser. A, |
|
|
|
5.80%, 5/1/34 |
Baa2 |
750,000 |
751,148 |
|
|
|
7,599,512 |
Alaska (1.4%) |
|
|
|
AK State Indl. Dev. & Export Auth. Rev. Bonds, |
|
|
|
(Tanana Chiefs Conference), Ser. A |
|
|
|
4.00%, 10/1/49 |
A+/F |
1,500,000 |
1,563,240 |
4.00%, 10/1/44 |
A+/F |
4,180,000 |
4,381,476 |
|
|
|
5,944,716 |
Arizona (2.5%) |
|
|
|
AZ Indl. Dev. Auth. Student Hsg. Rev. Bonds, (NCCU |
|
|
|
Properties, LLC Central U.), BAM, 5.00%, 6/1/49 |
AA |
2,000,000 |
2,226,480 |
AZ State Indl. Dev. Auth. Ed. 144A Rev. Bonds, (BASIS |
|
|
|
Schools, Inc.), Ser. D, 5.00%, 7/1/51 |
BB |
510,000 |
448,147 |
Glendale, Indl. Dev. Auth. Rev. Bonds, (Midwestern |
|
|
|
U.), 5.125%, 5/15/40 |
A+ |
2,125,000 |
2,127,826 |
Maricopa Cnty., Indl. Dev. Auth. Ed. Rev. Bonds |
|
|
|
(Reid Traditional Schools Painted Rock Academy), |
|
|
|
5.00%, 7/1/36 |
Baa3 |
350,000 |
370,801 |
(Horizon Cmnty. Learning Ctr.), 5.00%, 7/1/35 |
BB+ |
750,000 |
698,558 |
Phoenix, Indl. Dev. Auth. Ed. Rev. Bonds, (Great |
|
|
|
Hearts Academies), 3.75%, 7/1/24 |
BBB– |
480,000 |
486,504 |
Salt Verde, Fin. Corp. Gas Rev. Bonds, |
|
|
|
5.50%, 12/1/29 |
A3 |
1,350,000 |
1,657,814 |
Yavapai Cnty., Indl. Dev. Auth. Hosp. Fac. Rev. Bonds, |
|
|
|
(Yavapai Regl. Med. Ctr.), 5.00%, 8/1/34 |
A2 |
500,000 |
555,345 |
Yuma, Indl. Dev. Auth. Hosp. Rev. Bonds, (Yuma Regl. |
|
|
|
Med. Ctr.), Ser. A, 5.00%, 8/1/32 |
A |
2,065,000 |
2,235,445 |
|
|
|
10,806,920 |
|
20 Municipal Opportunities Trust |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
California (8.3%) |
|
|
|
ABAG Fin. Auth. for Nonprofit Corps. Rev. Bonds, |
|
|
|
(Episcopal Sr. Cmntys.), Ser. A, 5.00%, 7/1/32 |
A–/F |
$550,000 |
$566,957 |
Burbank, Unified School Dist. G.O. Bonds, (Election |
|
|
|
of 1997), Ser. C, NATL, FGIC, zero %, 8/1/23 |
A+ |
1,000,000 |
952,400 |
CA State G.O. Bonds, 4.00%, 3/1/37 |
Aa2 |
4,000,000 |
4,543,920 |
CA St G.O. Bonds, 4.00%, 11/1/33 T |
AA |
10,000,000 |
11,198,432 |
CA State Muni. Fin. Auth Mobile Home Park |
|
|
|
Rev. Bonds, (Caritas Affordable Hsg., Inc.), |
|
|
|
5.25%, 8/15/39 |
BBB+ |
400,000 |
428,732 |
CA State Poll. Control Fin. Auth. Rev. Bonds, (San |
|
|
|
Jose Wtr. Co.) |
|
|
|
5.10%, 6/1/40 |
A |
3,500,000 |
3,509,870 |
4.75%, 11/1/46 |
A |
750,000 |
831,300 |
CA State Poll. Control Fin. Auth. Wtr. Fac. Rev. Bonds, |
|
|
|
(American Wtr. Cap. Corp.), 5.25%, 8/1/40 |
A |
1,000,000 |
1,009,420 |
CA Statewide Cmnty. Dev. Auth. Rev. Bonds, (899 |
|
|
|
Charleston, LLC), Ser. A, 5.25%, 11/1/44 |
BB/P |
450,000 |
442,688 |
Golden State Tobacco Securitization Corp. Rev. |
|
|
|
Bonds, Ser. A-2, 5.00%, 6/1/47 |
BB/P |
2,500,000 |
2,436,900 |
Los Angeles, Dept. of Wtr. & Pwr. Rev. Bonds, (Power |
|
|
|
System), Ser. A, 5.00%, 7/1/39 |
Aa2 |
1,000,000 |
1,217,980 |
Los Angeles, Regl. Arpt. Impt. Corp. Lease Rev. |
|
|
|
Bonds, (Laxfuel Corp.), 4.50%, 1/1/27 |
A |
600,000 |
624,414 |
North Natomas, Cmnty. Fac. Special Tax Bonds, |
|
|
|
(Dist. No. 4), Ser. E, 5.00%, 9/1/30 |
BBB+ |
1,250,000 |
1,370,925 |
Salinas, Union High School Dist. G.O. Bonds, Ser. B, |
|
|
|
4.00%, 8/1/49 |
A+ |
3,400,000 |
3,753,260 |
San Bernardino Cnty., FRB, Ser. C, 1.214%, 8/1/23 |
AA+ |
2,250,000 |
2,227,883 |
Sunnyvale, Cmnty. Fac. Dist. Special Tax Bonds, |
|
|
|
7.65%, 8/1/21 |
B+/P |
150,000 |
150,435 |
|
|
|
35,265,516 |
Colorado (2.1%) |
|
|
|
CO State Hlth. Fac. Auth. Rev. Bonds |
|
|
|
(Valley View Hosp. Assn.), 5.00%, 5/15/40 |
A– |
1,000,000 |
1,078,110 |
(Covenant Retirement Cmnty.), Ser. A, |
|
|
|
5.00%, 12/1/35 |
A–/F |
1,000,000 |
1,018,790 |
CO State Hlth. Fac. Auth. Hosp. Rev. Bonds, |
|
|
|
(Christian Living Neighborhood), 5.00%, 1/1/37 |
BB/P |
550,000 |
496,826 |
Denver City & Cnty., Arpt. Rev. Bonds, (Sub. Syst.), |
|
|
|
Ser. A, 5.50%, 11/15/31 |
A2 |
950,000 |
1,049,228 |
Park Creek, Metro. Dist. Tax Allocation Bonds, (Sr. |
|
|
|
Ltd. Property Tax Supported), Ser. A, 5.00%, 12/1/45 |
A/F |
200,000 |
225,510 |
Pub. Auth. for CO Energy Rev. Bonds, (Natural Gas |
|
|
|
Purchase), 6.50%, 11/15/38 |
A2 |
2,250,000 |
3,177,383 |
Vauxmont, Metro. Dist. G.O. Bonds, AGM |
|
|
|
5.00%, 12/1/33 ### |
AA |
255,000 |
300,285 |
5.00%, 12/15/32 |
AA |
160,000 |
181,122 |
5.00%, 12/15/31 |
AA |
135,000 |
153,417 |
5.00%, 12/1/30 ### |
AA |
215,000 |
257,985 |
5.00%, 12/1/29 ### |
AA |
210,000 |
253,636 |
5.00%, 12/15/28 |
AA |
130,000 |
149,416 |
|
Municipal Opportunities Trust 21 |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Colorado cont. |
|
|
|
Vauxmont, Metro. Dist. G.O. Bonds, AGM |
|
|
|
5.00%, 12/1/28 ### |
AA |
$210,000 |
$250,958 |
5.00%, 12/1/27 ### |
AA |
200,000 |
235,710 |
5.00%, 12/15/26 |
AA |
135,000 |
155,975 |
5.00%, 12/1/26 ### |
AA |
190,000 |
220,801 |
|
|
|
9,205,152 |
Connecticut (2.0%) |
|
|
|
CT State G.O. Bonds, Ser. A, 5.00%, 4/15/35 |
A1 |
3,025,000 |
3,513,780 |
CT State Hsg. Fin. Auth. Rev. Bonds, Ser. B-2, |
|
|
|
4.40%, 11/15/43 |
Aaa |
4,000,000 |
4,051,480 |
Harbor Point Infrastructure Impt. Dist. 144A Tax |
|
|
|
Alloc. Bonds, (Harbor Point Ltd.), 5.00%, 4/1/39 |
BB/P |
1,000,000 |
1,016,890 |
|
|
|
8,582,150 |
Delaware (0.3%) |
|
|
|
DE State Econ. Dev. Auth. Rev. Bonds, (Delmarva |
|
|
|
Pwr.), 5.40%, 2/1/31 |
A– |
1,100,000 |
1,107,348 |
|
|
|
1,107,348 |
District of Columbia (1.6%) |
|
|
|
DC Rev. Bonds, (Howard U.), Ser. A, 6.50%, 10/1/41 |
BBB– |
1,575,000 |
1,573,079 |
DC U. Rev. Bonds, (Gallaudet U.), 5.50%, 4/1/34 |
A+ |
1,000,000 |
1,021,030 |
Metro. Washington DC, Arpt. Auth. Dulles Toll |
|
|
|
Rd. Rev. Bonds |
|
|
|
(Metrorail), Ser. A, zero %, 10/1/37 |
A– |
3,700,000 |
1,751,506 |
(Dulles Metrorail & Cap. Impt. Proj.), Ser. B, |
|
|
|
4.00%, 10/1/53 T |
Baa2 |
1,290,000 |
1,228,697 |
(Dulles Metrorail & Cap. Impt. Proj.), Ser. B, |
|
|
|
4.00%, 10/1/44 T |
Baa2 |
1,285,000 |
1,260,909 |
|
|
|
6,835,221 |
Florida (4.2%) |
|
|
|
Halifax Hosp. Med. Ctr. Rev. Bonds, 5.00%, 6/1/36 |
A– |
2,250,000 |
2,478,443 |
Lakeland, Hosp. Syst. Rev. Bonds, (Lakeland Regl. |
|
|
|
Hlth.), 5.00%, 11/15/40 |
A2 |
1,350,000 |
1,424,129 |
Martin Cnty., Rev. Bonds, (Indiantown |
|
|
|
Cogeneration), 4.20%, 12/15/25 |
A– |
1,400,000 |
1,400,000 |
Miami-Dade Cnty., Aviation Rev. Bonds, Ser. A |
|
|
|
5.00%, 10/1/36 |
A2 |
5,000,000 |
5,446,500 |
5.00%, 10/1/32 |
A2 |
3,790,000 |
4,163,088 |
Orange Cnty., Hlth. Fac. Auth. Rev. Bonds, |
|
|
|
(Presbyterian Retirement Cmntys.), 5.00%, 8/1/34 |
A–/F |
1,350,000 |
1,364,796 |
Southeast Overtown Park West Cmnty. Redev. Agcy. |
|
|
|
144A Tax Alloc. Bonds, Ser. A-1, 5.00%, 3/1/30 |
BBB+ |
360,000 |
393,912 |
Volusia Cnty., Edl. Fac. Auth. Rev. Bonds, (Embry- |
|
|
|
Riddle Aeronautical University, Inc.), Ser. A |
|
|
|
4.00%, 10/15/39 |
A3 |
600,000 |
613,458 |
4.00%, 10/15/36 |
A3 |
500,000 |
515,985 |
|
|
|
17,800,311 |
Georgia (2.0%) |
|
|
|
Atlanta, Tax Alloc. Bonds, (Atlantic Station) |
|
|
|
5.00%, 12/1/22 |
A3 |
1,625,000 |
1,763,873 |
5.00%, 12/1/21 |
A3 |
875,000 |
927,141 |
|
22 Municipal Opportunities Trust |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Georgia cont. |
|
|
|
Gainesville & Hall Cnty., Dev. Auth. Edl. Fac. Rev. |
|
|
|
Bonds, (Riverside Military Academy), 5.00%, 3/1/37 |
BB/F |
$1,100,000 |
$948,233 |
Muni. Election Auth. of GA Rev. Bonds |
|
|
|
(Plant Voltage Units 3 & 4), Ser. A, 5.50%, 7/1/60 |
A |
3,500,000 |
3,631,425 |
(Plant Vogtle Units 3 & 4), Ser. A, 5.00%, 1/1/56 |
A2 |
1,000,000 |
1,056,780 |
|
|
|
8,327,452 |
Idaho (0.1%) |
|
|
|
ID State Hlth. Fac. Auth. Rev. Bonds, (St. Luke’s Hlth. |
|
|
|
Sys. Oblig. Group), Ser. A, 5.00%, 3/1/37 |
A3 |
500,000 |
565,875 |
|
|
|
565,875 |
Illinois (21.6%) |
|
|
|
Chicago, G.O. Bonds |
|
|
|
Ser. A, 6.00%, 1/1/38 |
BBB+ |
1,920,000 |
1,998,778 |
Ser. G-07, 5.50%, 1/1/35 |
BBB+ |
3,175,000 |
3,224,371 |
Ser. A, 5.00%, 1/1/29 |
BBB+ |
100,000 |
101,711 |
Ser. A, 5.00%, 1/1/27 |
BBB+ |
1,850,000 |
1,888,314 |
Chicago, Board of Ed. G.O. Bonds |
|
|
|
Ser. C, 5.25%, 12/1/39 |
BB– |
2,250,000 |
2,169,000 |
Ser. H, 5.00%, 12/1/36 |
BB– |
500,000 |
485,440 |
(School Reform), Ser. B-1, NATL, zero %, 12/1/21 |
Baa2 |
3,500,000 |
3,338,335 |
Chicago, Motor Fuel Tax Rev. Bonds, 5.00%, 1/1/29 |
Ba1 |
500,000 |
491,195 |
Chicago, O’Hare Intl. Arpt. Rev. Bonds |
|
|
|
Ser. C, 5.375%, 1/1/39 |
A2 |
1,250,000 |
1,312,000 |
Ser. C, 5.25%, 1/1/28 |
A2 |
1,320,000 |
1,410,090 |
Ser. C, 5.25%, 1/1/27 |
A2 |
2,125,000 |
2,275,131 |
Ser. A, 5.00%, 1/1/38 |
A |
100,000 |
111,343 |
Ser. A, 5.00%, 1/1/37 |
A |
300,000 |
335,073 |
Chicago, Trans. Auth. Sales Tax Rev. Bonds, |
|
|
|
5.25%, 12/1/49 |
AA |
3,000,000 |
3,242,436 |
Chicago, Waste Wtr. Transmission Rev. Bonds |
|
|
|
Ser. C, 5.00%, 1/1/39 |
A |
900,000 |
977,463 |
(2nd Lien), 5.00%, 1/1/39 |
A |
1,835,000 |
1,925,099 |
Ser. A, NATL, zero %, 1/1/24 |
A+ |
1,600,000 |
1,425,312 |
Chicago, Wtr. Wks Rev. Bonds |
|
|
|
5.00%, 11/1/42 |
A |
645,000 |
660,744 |
5.00%, 11/1/39 |
A |
1,080,000 |
1,115,240 |
Cicero, G.O. Bonds, Ser. A, AGM, 5.00%, 1/1/21 |
AA |
2,000,000 |
2,045,920 |
IL State G.O. Bonds |
|
|
|
5.50%, 7/1/38 |
Baa3 |
2,280,000 |
2,203,643 |
5.00%, 11/1/41 |
Baa3 |
1,000,000 |
925,540 |
5.00%, 1/1/41 |
Baa3 |
500,000 |
463,510 |
5.00%, 2/1/39 |
Baa3 |
300,000 |
279,249 |
Ser. A, 5.00%, 5/1/38 |
Baa3 |
1,500,000 |
1,398,780 |
5.00%, 11/1/34 |
Baa3 |
1,000,000 |
945,720 |
Ser. A, 5.00%, 12/1/31 |
Baa3 |
5,750,000 |
5,505,970 |
Ser. C, 5.00%, 11/1/29 |
Baa3 |
1,850,000 |
1,782,290 |
5.00%, 2/1/29 |
Baa3 |
1,425,000 |
1,375,952 |
Ser. A, 5.00%, 12/1/28 |
Baa3 |
2,500,000 |
2,415,350 |
Ser. D, 5.00%, 11/1/28 |
Baa3 |
2,250,000 |
2,174,468 |
|
Municipal Opportunities Trust 23 |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Illinois cont. |
|
|
|
IL State G.O. Bonds |
|
|
|
Ser. D, 5.00%, 11/1/26 |
Baa3 |
$1,000,000 |
$976,000 |
Ser. A, 5.00%, 12/1/24 |
Baa3 |
2,370,000 |
2,347,106 |
IL State Fin. Auth. Mandatory Put Bonds (9/1/22), |
|
|
|
(Field Museum of Natural History), 1.169%, 11/1/34 |
A2 |
3,960,000 |
3,916,163 |
IL State Fin. Auth. Rev. Bonds |
|
|
|
(Three Crowns Park), 5.25%, 2/15/47 |
BB–/P |
700,000 |
551,943 |
(Three Crowns Park), 5.25%, 2/15/37 |
BB–/P |
375,000 |
318,979 |
(Lifespace Cmntys, Inc.), Ser. A, 5.00%, 5/15/35 |
BBB/F |
1,025,000 |
988,254 |
(Riverside Hlth. Syst.), 4.00%, 11/15/34 |
A+ |
500,000 |
526,805 |
IL State Fin. Auth. Academic Fac. Rev. Bonds, (U. |
|
|
|
of Illinois at Urbana-Champaign), Ser. A |
|
|
|
5.00%, 10/1/51 |
A1 |
1,000,000 |
1,112,110 |
5.00%, 10/1/44 |
A1 |
1,100,000 |
1,231,560 |
5.00%, 10/1/36 |
A1 |
600,000 |
686,304 |
5.00%, 10/1/34 |
A1 |
500,000 |
577,030 |
IL State Fin. Auth. Student Hsg. & Academic |
|
|
|
Fac. Rev. Bonds |
|
|
|
(U. of IL Chicago), 5.00%, 2/15/50 |
Baa3 |
2,000,000 |
1,984,280 |
(U. of IL-CHF-Chicago, LLC), Ser. A, 5.00%, 2/15/37 |
Baa3 |
1,000,000 |
1,014,340 |
Kendall & Kane Cntys., Cmnty. United School |
|
|
|
Dist. G.O. Bonds, (No. 115 Yorkville), NATL, FGIC, |
|
|
|
zero %, 1/1/21 |
Aa3 |
1,075,000 |
1,066,078 |
Lake Cnty., Cmnty. Cons. School Dist. No. |
|
|
|
73 Hawthorn G.O. Bonds, NATL |
|
|
|
zero %, 12/1/21 |
AA+ |
1,300,000 |
1,274,429 |
zero %, 12/1/21 (Escrowed to maturity) |
Aa2 |
505,000 |
498,142 |
zero %, 12/1/20 |
AA+ |
1,250,000 |
1,241,575 |
zero %, 12/1/20 (Escrowed to maturity) |
Aa2 |
245,000 |
243,851 |
Lake Cnty., Cmnty. Construction School Dist. G.O. |
|
|
|
Bonds, (No. 073 Hawthorn), U.S. Govt. Coll., NATL, |
|
|
|
zero %, 12/1/20 (Escrowed to maturity) |
AA+ |
155,000 |
154,273 |
Metro. Pier & Exposition Auth. Rev. |
|
|
|
Bonds, (McCormick Place Expansion), |
|
|
|
Ser. B, stepped-coupon zero % (4.700%, 6/15/31), |
|
|
|
12/15/37 †† |
BBB |
1,000,000 |
509,150 |
Metro. Pier & Exposition Auth. Dedicated State |
|
|
|
Tax Rev. Bonds, (McCormick), Ser. A, NATL, |
|
|
|
zero %, 12/15/30 |
Baa2 |
12,000,000 |
7,996,440 |
Metro. Wtr. Reclamation Dist. of Greater Chicago |
|
|
|
G.O. Bonds, (Green Bond), Ser. E, 5.00%, 12/1/30 |
AA+ |
1,310,000 |
1,503,369 |
Railsplitter Tobacco Settlement Auth. Rev. Bonds, |
|
|
|
5.00%, 6/1/24 |
A |
1,500,000 |
1,700,985 |
Sales Tax Securitization Corp. Rev. Bonds |
|
|
|
Ser. C, 5.50%, 1/1/36 |
AA– |
3,500,000 |
3,972,290 |
Ser. A, 5.00%, 1/1/36 |
AA– |
1,400,000 |
1,550,654 |
Ser. A, 4.00%, 1/1/39 |
AA– |
2,000,000 |
1,920,620 |
Ser. A, 4.00%, 1/1/38 |
AA– |
500,000 |
483,275 |
Southern IL U. Rev. Bonds, (Hsg. & Auxiliary), Ser. A, |
|
|
|
NATL, zero %, 4/1/25 |
A |
1,870,000 |
1,653,716 |
|
|
|
92,003,188 |
|
24 Municipal Opportunities Trust |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Indiana (2.3%) |
|
|
|
Hammond, Multi-School Bldg. Corp. Rev. Bonds, |
|
|
|
5.00%, 7/15/38 |
AA+ |
$1,750,000 |
$1,989,715 |
IN Bk. Special Program Gas Rev. Bonds, Ser. A, |
|
|
|
5.25%, 10/15/21 |
A2 |
180,000 |
188,842 |
IN State Fin. Auth. Rev. Bonds, (BHI Sr. Living), |
|
|
|
5.75%, 11/15/41 |
BBB/F |
1,000,000 |
1,017,680 |
IN State Fin. Auth. Hosp. Mandatory Put Bonds |
|
|
|
(11/1/26), (Goshen Hlth. Oblig. Group), Ser. B, |
|
|
|
2.10%, 11/1/49 |
A– |
2,700,000 |
2,719,953 |
Whiting, Env. Fac. Mandatory Put Bonds (6/5/26), |
|
|
|
(BP Products North America, Inc.), Ser. A, |
|
|
|
5.00%, 12/1/44 |
A1 |
3,450,000 |
3,842,472 |
|
|
|
9,758,662 |
Kentucky (3.2%) |
|
|
|
KY Pub. Trans. Infrastructure Auth. Rev. Bonds, (1st |
|
|
|
Tier Downtown Crossing), Ser. A, 6.00%, 7/1/53 |
Baa3 |
1,000,000 |
1,023,530 |
KY State Property & Bldg. Comm. Rev. Bonds |
|
|
|
(No. 119), 5.00%, 5/1/36 |
A1 |
1,000,000 |
1,116,610 |
(No. 122), Ser. A, 4.00%, 11/1/34 |
A1 |
750,000 |
790,050 |
KY State Pub. Energy Auth. Gas Supply |
|
|
|
Mandatory Put Bonds (6/1/25), Ser. C-1, |
|
|
|
4.00%, 12/1/49 |
A3 |
5,500,000 |
5,832,585 |
Mandatory Put Bonds (1/1/25), Ser. B, |
|
|
|
4.00%, 1/1/49 |
A1 |
3,000,000 |
3,119,700 |
Louisville, Regl. Arpt. Auth. Syst. Rev. Bonds, Ser. A |
|
|
|
5.00%, 7/1/32 |
A+ |
1,030,000 |
1,138,984 |
5.00%, 7/1/31 |
A+ |
385,000 |
426,218 |
|
|
|
13,447,677 |
Louisiana (1.8%) |
|
|
|
LA State Offshore Term. Auth. Deepwater Port |
|
|
|
Mandatory Put Bonds (12/1/23), (Loop, LLC), Ser. A, |
|
|
|
1.65%, 9/1/33 |
A3 |
1,600,000 |
1,576,112 |
St. John The Baptist Parish Mandatory Put Bonds |
|
|
|
(7/1/26), (Marathon Oil Corp.), Ser. A-3, 2.20%, 6/1/37 |
Baa3 |
3,010,000 |
2,505,313 |
St. Tammany Parish Hosp. Svcs. Dist. No. 1 Rev. |
|
|
|
Bonds, (St. Tammany Parish Hosp.), Ser. A |
|
|
|
5.00%, 7/1/37 |
A+/F |
1,400,000 |
1,606,696 |
5.00%, 7/1/32 |
A+/F |
1,600,000 |
1,873,056 |
|
|
|
7,561,177 |
Maryland (1.0%) |
|
|
|
Baltimore Cnty., Rev. Bonds, (Oak Crest Village, Inc.) |
|
|
|
4.00%, 1/1/50 |
A/F |
2,000,000 |
2,007,880 |
4.00%, 1/1/45 |
A/F |
1,750,000 |
1,763,895 |
Gaithersburg, Econ. Dev. Rev. Bonds, (Asbury, Oblig. |
|
|
|
Group), Ser. A, 5.00%, 1/1/36 |
BBB/F |
450,000 |
469,449 |
|
|
|
4,241,224 |
Massachusetts (6.2%) |
|
|
|
MA State Dev. Fin. Agcy. Rev. Bonds |
|
|
|
(Milford Regl. Med. Ctr. Oblig. Group), Ser. F, |
|
|
|
5.75%, 7/15/43 |
BB+ |
500,000 |
510,350 |
(Loomis Cmntys.), Ser. A, 5.75%, 1/1/28 |
BBB |
1,100,000 |
1,152,525 |
|
Municipal Opportunities Trust 25 |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Massachusetts cont. |
|
|
|
MA State Dev. Fin. Agcy. Rev. Bonds |
|
|
|
(Intl. Charter School), 5.00%, 4/15/33 |
BBB– |
$1,000,000 |
$1,053,740 |
(Atrius Hlth. Oblig. Group), Ser. A, 4.00%, 6/1/49 |
BBB |
5,470,000 |
5,269,032 |
(Linden Ponds, Inc.), Ser. B, zero %, 11/15/56 |
B–/P |
221,440 |
28,969 |
MA State Dev. Fin. Agcy. 144A Rev. Bonds, (Linden |
|
|
|
Ponds, Inc. Fac.), 5.00%, 11/15/38 |
BB/F |
1,410,000 |
1,228,223 |
MA State Edl. Fin. Auth. Rev. Bonds, (Ed. |
|
|
|
Loan — Issue 1) |
|
|
|
5.00%, 1/1/27 |
AA |
800,000 |
896,712 |
4.375%, 1/1/32 |
AA |
165,000 |
165,137 |
MA State Hlth. & Edl. Fac. Auth. Rev. Bonds, |
|
|
|
(Northeastern U.), Ser. A, 5.00%, 10/1/35 |
A1 |
3,250,000 |
3,296,865 |
MA State Hsg. Fin. Agcy. Rev. Bonds, Ser. C, |
|
|
|
5.35%, 12/1/42 |
Aa2 |
410,000 |
410,869 |
MA State School Bldg. Auth. Dedicated Sales Tax |
|
|
|
Rev. Bonds, Ser. A, 5.00%, 2/15/44 |
AA |
3,500,000 |
4,198,320 |
MA State Trans. Fund Rev. Bonds, (Rail |
|
|
|
Enhancement & Accelerated Bridge Program), |
|
|
|
5.00%, 6/1/48 T |
Aa1 |
7,000,000 |
8,283,235 |
|
|
|
26,493,977 |
Michigan (8.4%) |
|
|
|
Detroit, G.O. Bonds, AMBAC, 5.25%, 4/1/24 |
A–/P |
222,425 |
220,937 |
Detroit, City School Dist. G.O. Bonds, Ser. A, AGM, |
|
|
|
6.00%, 5/1/29 |
Aa1 |
1,000,000 |
1,235,670 |
Flint, Hosp. Bldg. Auth. Rev. Bonds, (Hurley Med. |
|
|
|
Ctr.), 7.50%, 7/1/39 |
Ba1 |
500,000 |
505,240 |
Karegnondi, Wtr. Auth. Rev. Bonds, (Wtr. Supply |
|
|
|
Syst.), Ser. A, 5.25%, 11/1/31 |
A2 |
2,445,000 |
2,750,845 |
Kentwood, Economic Dev. Rev. Bonds, (Holland |
|
|
|
Home Oblig. Group), 5.00%, 11/15/37 |
BBB–/F |
1,750,000 |
1,706,093 |
MI State Bldg. Auth. Rev. Bonds, Ser. I, |
|
|
|
4.00%, 10/15/49 |
Aa2 |
4,630,000 |
5,076,008 |
MI State Fin. Auth. Rev. Bonds |
|
|
|
Ser. H-1, 5.00%, 10/1/39 (Prerefunded 10/1/24) |
AA– |
1,575,000 |
1,771,954 |
(MidMichigan Hlth.), 5.00%, 6/1/39 |
A1 |
1,000,000 |
1,075,100 |
(Local Govt. Loan Program — Detroit Wtr. & Swr. |
|
|
|
Dept. (DWSD)), Ser. C, 5.00%, 7/1/35 |
A+ |
1,100,000 |
1,260,622 |
(Local Govt. Loan Program — Detroit Wtr. & Swr. |
|
|
|
Dept. (DWSD)), Ser. C, 5.00%, 7/1/34 |
A+ |
1,900,000 |
2,180,459 |
(Local Govt. Loan Program — Detroit Wtr. & Swr. |
|
|
|
Dept. (DWSD)), Ser. D-2, 5.00%, 7/1/34 |
A+ |
1,000,000 |
1,147,610 |
(Local Govt. Program Detroit Wtr. & Swr.), Ser. D4, |
|
|
|
5.00%, 7/1/34 |
AA– |
100,000 |
108,922 |
(Detroit Wtr. & Swr.), Ser. C-6, 5.00%, 7/1/33 |
AA– |
850,000 |
927,580 |
(Detroit), Ser. C-3, 5.00%, 4/1/27 |
Aa2 |
750,000 |
907,305 |
MI State Hosp. Fin. Auth. Rev. Bonds |
|
|
|
(Trinity Health Corp. Oblig. Group), Ser. A, |
|
|
|
4.00%, 12/1/49 T |
Aa3 |
2,575,000 |
2,646,466 |
(Trinity Health Corp. Oblig. Group), Ser. A, U.S. |
|
|
|
Govt. Coll, 5.00%, 12/1/47 T |
Aa3 |
8,500,000 |
9,385,519 |
|
26 Municipal Opportunities Trust |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Michigan cont. |
|
|
|
MI State Hsg. Dev. Auth. Rev. Bonds, (Rental Hsg.), |
|
|
|
Ser. D, 3.95%, 10/1/37 |
AA |
$1,050,000 |
$1,071,074 |
MI Tobacco Settlement Fin. Auth. Rev. Bonds, Ser. A, |
|
|
|
6.00%, 6/1/34 |
B– |
575,000 |
569,095 |
Star Intl. Academy Rev. Bonds, (Pub. School |
|
|
|
Academy), 5.00%, 3/1/22 |
BBB |
1,170,000 |
1,184,871 |
|
|
|
35,731,370 |
Minnesota (—%) |
|
|
|
St. Cloud, Hlth. Care Rev. Bonds, (CentraCare Hlth. |
|
|
|
Syst.), Ser. A, 5.125%, 5/1/30 |
A2 |
160,000 |
160,288 |
|
|
|
160,288 |
Mississippi (1.5%) |
|
|
|
MS State Bus. Fin. Corp. Rev. Bonds, (System Energy |
|
|
|
Resources, Inc.), 2.50%, 4/1/22 |
BBB+ |
6,200,000 |
6,219,840 |
|
|
|
6,219,840 |
Missouri (1.3%) |
|
|
|
Kansas City, Indl. Dev. Auth. Arpt. Special Oblig. |
|
|
|
Rev. Bonds, (Kansas City Intl. Arpt. Terminal), Ser. B, |
|
|
|
5.00%, 3/1/36 |
A2 |
5,000,000 |
5,631,150 |
|
|
|
5,631,150 |
Nebraska (1.9%) |
|
|
|
Central Plains Energy Project Gas Supply Mandatory |
|
|
|
Put Bonds (8/1/25), 4.00%, 12/1/49 |
Aa2 |
2,150,000 |
2,327,160 |
Central Plains, Energy Mandatory Put Bonds |
|
|
|
(1/1/24), (No. 4), 5.00%, 3/1/50 |
A3 |
5,250,000 |
5,666,483 |
|
|
|
7,993,643 |
Nevada (1.3%) |
|
|
|
North Las Vegas, G.O. Bonds, AGM, 4.00%, 6/1/34 |
AA |
3,600,000 |
3,929,724 |
Sparks, Tourism Impt. Dist. No. 1 144A Rev. |
|
|
|
Bonds, Ser. A |
|
|
|
2.75%, 6/15/28 |
Ba2 |
1,200,000 |
1,096,908 |
2.50%, 6/15/24 |
Ba2 |
480,000 |
462,461 |
|
|
|
5,489,093 |
New Hampshire (1.0%) |
|
|
|
NH State Hlth. & Ed. Fac. Auth. Rev. Bonds |
|
|
|
(Catholic Med. Ctr.), 5.00%, 7/1/44 |
BBB+ |
1,000,000 |
1,065,460 |
(Elliot Hosp.), 5.00%, 10/1/38 |
A3 |
500,000 |
506,765 |
(Southern NH Med. Ctr.), 5.00%, 10/1/37 |
A– |
2,500,000 |
2,757,175 |
|
|
|
4,329,400 |
New Jersey (7.4%) |
|
|
|
Bayonne, G.O. Bonds, (Qualified Gen. Impt.), BAM, |
|
|
|
5.00%, 7/1/39 |
AA |
1,300,000 |
1,496,664 |
NJ State Econ. Dev. Auth. Rev. Bonds |
|
|
|
(NYNJ Link Borrower, LLC), 5.375%, 1/1/43 |
BBB |
500,000 |
508,920 |
Ser. WW, 5.25%, 6/15/32 |
Baa1 |
1,500,000 |
1,529,175 |
Ser. EEE, 5.00%, 6/15/48 |
Baa1 |
3,000,000 |
2,932,650 |
Ser. AAA, 5.00%, 6/15/36 |
Baa1 |
750,000 |
755,325 |
(Biomedical Research), Ser. A, 5.00%, 7/15/29 |
Baa1 |
400,000 |
408,832 |
Ser. B, 5.00%, 11/1/26 |
Baa1 |
4,500,000 |
4,675,950 |
5.00%, 6/15/26 |
BBB+ |
500,000 |
524,570 |
|
Municipal Opportunities Trust 27 |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
New Jersey cont. |
|
|
|
NJ State Econ. Dev. Auth. Special Fac. Rev. Bonds, |
|
|
|
(Port Newark Container Term., LLC), 5.00%, 10/1/37 |
Ba1 |
$2,000,000 |
$2,103,480 |
NJ State Econ. Dev. Auth. Wtr. Fac. Rev. Bonds, |
|
|
|
(NJ American Wtr. Co.), Ser. B, 5.60%, 11/1/34 |
A1 |
500,000 |
501,470 |
NJ State Higher Ed. Assistance Auth. Rev. Bonds, |
|
|
|
(Student Loan), Ser. 1A, 5.00%, 12/1/22 |
Aaa |
2,500,000 |
2,684,775 |
NJ State Hlth. Care Fac. Fin. Auth. Rev. Bonds, (St. |
|
|
|
Peter’s U. Hosp.), 5.75%, 7/1/37 |
Ba1 |
1,500,000 |
1,499,850 |
NJ State Trans. Trust Fund Auth. Rev. Bonds |
|
|
|
Ser. A, 5.00%, 12/15/39 |
Baa1 |
600,000 |
602,682 |
Ser. A, 5.00%, 12/15/34 |
Baa1 |
7,145,000 |
7,213,163 |
(Federal Hwy. Reimbursement Notes), |
|
|
|
5.00%, 6/15/30 |
A+ |
1,900,000 |
2,026,217 |
Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. A, |
|
|
|
5.00%, 6/1/34 |
A– |
1,750,000 |
1,990,240 |
|
|
|
31,453,963 |
New Mexico (1.2%) |
|
|
|
NM State Hosp. Equip. Loan Council Hosp. Rev. |
|
|
|
Bonds, Ser. A, 5.00%, 8/1/44 |
AA |
2,600,000 |
3,029,936 |
Sante Fe, Retirement Fac. Rev. Bonds |
|
|
|
(El Castillo Retirement Residences), Ser. A, |
|
|
|
5.00%, 5/15/44 |
BB+/F |
975,000 |
858,488 |
(El Castillo Retirement Res.), 5.00%, 5/15/42 |
BB+/F |
1,460,000 |
1,300,772 |
|
|
|
5,189,196 |
New York (9.7%) |
|
|
|
Metro. Trans. Auth. Rev. Bonds |
|
|
|
Ser. A-1, AGM, 4.00%, 11/15/42 |
AA |
5,000,000 |
5,035,750 |
(Green Bonds), Ser. C-1, 4.00%, 11/15/32 |
A2 |
1,000,000 |
948,670 |
Metro. Trans. Auth. Dedicated Tax Mandatory Put |
|
|
|
Bonds (6/1/22), Ser. A-2A, 0.67%, 11/1/26 |
AA |
3,370,000 |
3,271,091 |
NY Counties, Tobacco Trust III Rev. Bonds, (Tobacco |
|
|
|
Settlement Pass Through), 6.00%, 6/1/43 |
A3 |
60,000 |
60,071 |
NY State Dorm. Auth. Personal Income Tax Rev. |
|
|
|
Bonds, Ser. D |
|
|
|
4.00%, 2/15/47 |
Aa1 |
4,750,000 |
5,094,755 |
4.00%, 2/15/40 |
Aa1 |
1,500,000 |
1,637,625 |
4.00%, 2/15/39 |
Aa1 |
1,200,000 |
1,313,124 |
NY State Dorm. Auth. Sales Tax Rev. Bonds, Ser. A, |
|
|
|
5.00%, 3/15/42 T |
Aa1 |
10,845,000 |
12,388,589 |
NY State Liberty Dev. Corp. 144A Rev. Bonds, |
|
|
|
(3 World Trade Ctr., LLC), Class 1-3, 5.00%, 11/15/44 |
BB–/P |
2,000,000 |
1,918,140 |
NY State Trans. Special Fac. Dev. Corp. Rev. Bonds, |
|
|
|
(Laguardia Arpt. Term. B Redev. Program), Ser. A, |
|
|
|
5.00%, 7/1/41 |
Baa3 |
1,000,000 |
1,020,990 |
Port Auth. of NY & NJ Rev. Bonds, Ser. 207, |
|
|
|
5.00%, 9/15/31 |
Aa3 |
3,150,000 |
3,657,843 |
Triborough Bridge & Tunnel Auth. Mandatory Put |
|
|
|
Bonds (10/1/20), Ser. D, 0.507%, 11/15/38 |
Aa3 |
5,000,000 |
4,976,650 |
|
|
|
41,323,298 |
|
28 Municipal Opportunities Trust |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
North Carolina (0.7%) |
|
|
|
NC State Tpk. Auth. Rev. Bonds, (Triangle |
|
|
|
Expressway Auth.), AGM, 5.00%, 1/1/49 |
AA |
$2,800,000 |
$3,190,012 |
|
|
|
3,190,012 |
Ohio (10.6%) |
|
|
|
Akron, Income Tax Rev. Bonds |
|
|
|
4.00%, 12/1/37 |
AA |
525,000 |
576,886 |
4.00%, 12/1/36 |
AA |
655,000 |
721,587 |
4.00%, 12/1/35 |
AA |
1,260,000 |
1,392,325 |
Buckeye, Tobacco Settlement Fin. Auth. Rev. Bonds |
|
|
|
Ser. A-3, 6.25%, 6/1/37 (Prerefunded 6/1/22) |
Caa3 |
3,225,000 |
3,588,780 |
Ser. B-2, Class 2, 5.00%, 6/1/55 |
BB/P |
6,180,000 |
5,517,257 |
Ser. A-2, Class 1, 4.00%, 6/1/48 |
BBB+ |
1,250,000 |
1,254,088 |
Cleveland-Cuyahoga Cnty., Port Auth. Cultural |
|
|
|
Fac. Rev. Bonds, (Playhouse Square Foundation), |
|
|
|
5.50%, 12/1/53 |
BB+ |
500,000 |
452,085 |
Franklin Cnty., Hlth. Care Fac. Rev. Bonds, |
|
|
|
(Ohio Living) |
|
|
|
6.00%, 7/1/35 |
BBB/P |
1,060,000 |
1,097,132 |
6.00%, 7/1/35 (Prerefunded 7/1/22) |
AAA/P |
65,000 |
72,129 |
Franklin Cnty., Hosp. Fac. Rev. Bonds, (Nationwide |
|
|
|
Children’s Hosp.), Ser. A, 4.00%, 11/1/44 |
Aa2 |
2,050,000 |
2,186,797 |
Lake Cnty., Hosp. Fac. Rev. Bonds, (Lake Hosp. Syst., |
|
|
|
Inc.), Ser. C, 6.00%, 8/15/43 |
Baa1 |
495,000 |
495,906 |
Lancaster, Port Auth. Mandatory Put Bonds |
|
|
|
(2/1/25), Ser. A, 5.00%, 8/1/49 |
Aa2 |
2,850,000 |
3,193,653 |
Northeast Ohio Regl. Swr. Dist. Rev. Bonds, U.S. |
|
|
|
Govt. Coll., 5.00%, 11/15/44 T |
Aa1 |
10,000,000 |
11,860,072 |
OH State Higher Edl. Fac. Comm. Rev. Bonds |
|
|
|
(Kenyon College), 5.00%, 7/1/44 |
|
|
|
(Prerefunded 7/1/20) |
A |
3,265,000 |
3,286,941 |
(Kenyon College 2020), 4.00%, 7/1/44 |
A2 |
3,555,000 |
3,584,222 |
OH State Hosp. Fac. Rev. Bonds, (Cleveland Clinic |
|
|
|
Hlth. Syst.), Ser. A, 4.00%, 1/1/34 |
Aa2 |
1,250,000 |
1,374,500 |
OH State Private Activity Rev. Bonds, (Portsmouth |
|
|
|
Bypass), AGM, 5.00%, 12/31/35 |
AA |
1,125,000 |
1,280,914 |
Scioto Cnty., Hosp. Rev. Bonds, (Southern |
|
|
|
OH Med. Ctr.) |
|
|
|
5.00%, 2/15/33 |
A3 |
605,000 |
669,983 |
5.00%, 2/15/32 |
A3 |
745,000 |
828,820 |
Southeastern OH Port Auth. Hosp. Fac. Rev. Bonds |
|
|
|
5.75%, 12/1/32 |
BB–/F |
625,000 |
659,400 |
(Memorial Hlth. Syst. Oblig. Group), |
|
|
|
5.50%, 12/1/43 |
BB–/F |
120,000 |
123,550 |
Warren Cnty., Hlth. Care Fac. Rev. Bonds, (Otterbein |
|
|
|
Homes Oblig. Group) |
|
|
|
5.00%, 7/1/33 |
A |
500,000 |
530,160 |
5.00%, 7/1/32 |
A |
250,000 |
266,278 |
|
|
|
45,013,465 |
|
Municipal Opportunities Trust 29 |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Oregon (1.4%) |
|
|
|
Gilliam Cnty., Solid Waste Disp. Mandatory Put |
|
|
|
Bonds (5/2/22), (Waste Management, Inc.), Ser. A, |
|
|
|
2.40%, 7/1/38 |
A– |
$2,250,000 |
$2,245,208 |
Keizer, Special Assmt. Bonds, (Keizer Station), Ser. A, |
|
|
|
5.20%, 6/1/31 |
Aa3 |
1,385,000 |
1,389,169 |
Multnomah Cnty., Hosp. Fac. Auth. Rev. Bonds, |
|
|
|
(Terwilliger Plaza, Inc.), 5.00%, 12/1/36 |
BBB/F |
650,000 |
655,044 |
Salem, Hosp. Fac. Auth. Rev. Bonds, (Salem Hlth.), |
|
|
|
Ser. A, 5.00%, 5/15/33 |
A+ |
1,500,000 |
1,687,860 |
|
|
|
5,977,281 |
Pennsylvania (6.6%) |
|
|
|
Cap. Region Wtr. Rev. Bonds, 5.00%, 7/15/32 |
A+ |
1,000,000 |
1,215,430 |
Cumberland Cnty., Muni. Auth. Rev. Bonds, (Diakon |
|
|
|
Lutheran Social Ministries) |
|
|
|
5.00%, 1/1/32 |
BBB+/F |
200,000 |
204,876 |
5.00%, 1/1/31 |
BBB+/F |
1,000,000 |
1,027,480 |
Lancaster Cnty., Hosp. & Hlth. Ctr. Auth. Rev. Bonds, |
|
|
|
(St. Anne’s Retirement Cmnty.) |
|
|
|
5.00%, 3/1/50 |
BB+/F |
500,000 |
448,730 |
5.00%, 3/1/40 |
BB+/F |
500,000 |
463,750 |
Lancaster Cnty., Hosp. Auth. Hlth. Care Fac. |
|
|
|
Rev. Bonds, (Moravian Manors, Inc.), Ser. A, |
|
|
|
5.00%, 6/15/44 |
BB+/F |
1,000,000 |
927,310 |
PA State COP, Ser. A, 5.00%, 7/1/31 |
A2 |
425,000 |
517,076 |
PA State Econ. Dev. Fin. Auth. Exempt Fac. Rev. |
|
|
|
Bonds, (Amtrak), Ser. A, 5.00%, 11/1/32 |
A1 |
1,000,000 |
1,077,600 |
PA State Econ. Dev. Fin. Auth. Solid Waste |
|
|
|
Disp. Mandatory Put Bonds (8/1/24), (Waste |
|
|
|
Management, Inc.), Ser. A, 1.75%, 8/1/38 |
A– |
5,000,000 |
4,804,900 |
PA State Higher Edl. Fac. Auth. Rev. Bonds |
|
|
|
(Gwynedd Mercy College), Ser. KK1, |
|
|
|
5.375%, 5/1/42 |
BBB |
500,000 |
516,010 |
(St. Joseph’s U.), Ser. A, 5.00%, 11/1/40 |
|
|
|
(Prerefunded 11/1/20) |
A– |
3,000,000 |
3,062,610 |
PA State Hsg. Fin. Agcy. Rev. Bonds, Ser. 15-117A, |
|
|
|
3.95%, 10/1/30 |
AA+ |
240,000 |
251,417 |
PA State Tpk. Comm. Rev. Bonds |
|
|
|
Ser. A, 5.00%, 12/1/44 |
A3 |
2,400,000 |
2,702,976 |
zero %, 12/1/44 |
A2 |
4,385,000 |
4,564,127 |
PA State Tpk. Comm. Oil Franchise Tax Rev. Bonds, |
|
|
|
Ser. B, 5.00%, 12/1/38 |
A2 |
1,250,000 |
1,431,838 |
Philadelphia, Gas Wks. Rev. Bonds, 5.00%, 8/1/32 |
A |
1,000,000 |
1,153,890 |
Philadelphia, School Dist. G.O. Bonds, Ser. A, |
|
|
|
4.00%, 9/1/38 |
A2 |
1,750,000 |
1,910,948 |
Pittsburgh & Allegheny Cnty., Sports & Exhib. Auth. |
|
|
|
Hotel Rev. Bonds, AGM, 5.00%, 2/1/35 |
AA |
1,225,000 |
1,236,050 |
Westmoreland Cnty., Muni. Auth. Rev. Bonds, BAM, |
|
|
|
5.00%, 8/15/27 |
AA |
450,000 |
532,089 |
|
|
|
28,049,107 |
|
30 Municipal Opportunities Trust |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Rhode Island (0.7%) |
|
|
|
Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. B, |
|
|
|
5.00%, 6/1/50 |
BBB–/P |
$2,750,000 |
$2,812,563 |
|
|
|
2,812,563 |
South Carolina (4.0%) |
|
|
|
SC State Jobs-Econ. Dev. Auth. Rev. Bonds, (Bon |
|
|
|
Secours Mercy Hlth.), 4.00%, 12/1/44 |
A1 |
6,000,000 |
6,293,880 |
SC State Pub. Svcs. Auth. Rev. Bonds |
|
|
|
Ser. A, 5.50%, 12/1/54 |
A2 |
4,000,000 |
4,244,000 |
Ser. E, 5.50%, 12/1/53 |
A2 |
1,025,000 |
1,084,225 |
Ser. B, 5.00%, 12/1/56 |
A2 |
210,000 |
221,768 |
Ser. A, 5.00%, 12/1/55 |
A2 |
2,000,000 |
2,089,020 |
Ser. C, 5.00%, 12/1/46 |
A2 |
1,120,000 |
1,169,347 |
Ser. A, 5.00%, 12/1/36 |
A2 |
2,000,000 |
2,148,860 |
|
|
|
17,251,100 |
Tennessee (1.2%) |
|
|
|
Greeneville, Hlth. & Edl. Facs. Board Hosp. |
|
|
|
Rev. Bonds, (Ballad Hlth. Oblig. Group), Ser. A, |
|
|
|
4.00%, 7/1/40 |
A– |
5,000,000 |
5,227,550 |
|
|
|
5,227,550 |
Texas (13.0%) |
|
|
|
Arlington, Higher Ed. Fin. Corp. Rev. Bonds, (Uplift |
|
|
|
Ed.), Ser. A |
|
|
|
5.00%, 12/1/36 |
BBB– |
500,000 |
515,985 |
PSFG, 5.00%, 12/1/35 |
AAA |
500,000 |
585,850 |
Austin-Bergstrom Landhost Enterprises, |
|
|
|
Inc. Rev. Bonds |
|
|
|
5.00%, 10/1/35 |
A3 |
580,000 |
633,905 |
5.00%, 10/1/34 |
A3 |
530,000 |
581,495 |
Central TX Regl. Mobility Auth. Rev. Bonds |
|
|
|
Ser. A, 5.00%, 1/1/49 |
A– |
3,940,000 |
4,256,146 |
(Sr. Lien), Ser. A, 5.00%, 1/1/33 |
A– |
425,000 |
443,628 |
Clifton, Higher Ed. Fin. Corp. Rev. Bonds |
|
|
|
(Intl. Leadership), Ser. D, 6.125%, 8/15/48 |
BB–/P |
1,150,000 |
1,173,472 |
(IDEA Pub. Schools), 5.00%, 8/15/28 |
A– |
300,000 |
339,666 |
El Paso, G.O. Bonds |
|
|
|
Ser. A, 4.00%, 8/15/45 |
AA |
2,000,000 |
2,209,540 |
Ser. A, 4.00%, 8/15/36 |
AA |
1,000,000 |
1,128,840 |
4.00%, 8/15/34 |
AA |
1,000,000 |
1,144,790 |
Harris Cnty., Cultural Ed. Fac. Fin. Corp. Rev. Bonds |
|
|
|
(YMCA of the Greater Houston Area), Ser. A, |
|
|
|
5.00%, 6/1/38 |
Baa2 |
1,500,000 |
1,503,330 |
(Brazos Presbyterian Homes, Inc.), 5.00%, 1/1/37 |
BBB–/F |
1,000,000 |
942,710 |
(YMCA of the Greater Houston Area), Ser. A, |
|
|
|
5.00%, 6/1/33 |
Baa2 |
800,000 |
808,136 |
Houston, Util. Syst. Rev. Bonds, Ser. A, 5.00%, |
|
|
|
11/15/32 ### |
Aa2 |
5,000,000 |
6,461,100 |
Laredo, Wtr. Works Swr. Syst. Rev. Bonds |
|
|
|
4.00%, 3/1/49 |
Aa3 |
1,750,000 |
1,898,278 |
4.00%, 3/1/34 |
Aa3 |
400,000 |
448,856 |
|
Municipal Opportunities Trust 31 |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Texas cont. |
|
|
|
Love Field, Gen. Arpt. Modernization Corp. Rev. |
|
|
|
Bonds, 5.00%, 11/1/35 |
A1 |
$1,000,000 |
$1,043,510 |
Matagorda Cnty., Poll. Control Rev. Bonds, (Dist. |
|
|
|
No. 1), Ser. A, AMBAC, 4.40%, 5/1/30 |
A– |
1,500,000 |
1,651,185 |
New Hope, Cultural Ed. Fac. Fin. Corp. Rev. Bonds |
|
|
|
(Wesleyan Homes, Inc.), 5.50%, 1/1/43 |
BB–/P |
500,000 |
434,175 |
(TX Woman’s U. CHF-Collegiate Hsg. Dining), |
|
|
|
Ser. B-1, AGM, 4.125%, 7/1/53 |
AA |
1,000,000 |
1,001,950 |
(Woman’s U.-Collegiate Hsg. Denton, LLC), |
|
|
|
Ser. A-1, AGM, 4.125%, 7/1/53 |
AA |
1,000,000 |
1,001,950 |
(Children’s Hlth. Syst. of TX), Ser. A, 4.00%, 8/15/34 |
Aa2 |
600,000 |
655,734 |
North TX, Tollway Auth. Rev. Bonds, (1st Tier), Ser. I, |
|
|
|
6.50%, 1/1/43 |
A1 |
4,000,000 |
4,660,000 |
Tarrant Cnty., Cultural Ed. Fin. Corp. Retirement |
|
|
|
Fac. Rev. Bonds, (Buckner Retirement Svcs.), Ser. B, |
|
|
|
5.00%, 11/15/40 |
A/F |
2,000,000 |
2,145,620 |
TX Private Activity Surface Trans. Corp. Rev. Bonds, |
|
|
|
(Segment 3C), 5.00%, 6/30/58 |
Baa3 |
3,000,000 |
3,138,870 |
TX State Muni. Pwr. Agcy. Rev. Bonds, (Syst. Net/ |
|
|
|
Transmission Converting Security), 5.00%, 9/1/42 |
A+ |
1,400,000 |
1,415,008 |
TX State Private Activity Bond Surface Trans. Corp. |
|
|
|
Rev. Bonds, (Blueridge Trans. Group, LLC (SH 288 |
|
|
|
Toll Lane)), 5.00%, 12/31/50 |
Baa3 |
2,000,000 |
1,924,060 |
TX State Transportation Commission G.O. Bonds, |
|
|
|
Ser. A, 5.00% 10/1/44 T |
AAA |
9,855,000 |
11,100,260 |
Uptown Dev. Auth. Tax Alloc. Bonds, Ser. A, |
|
|
|
5.00%, 9/1/40 |
BBB |
300,000 |
325,068 |
|
|
|
55,573,117 |
Utah (0.1%) |
|
|
|
Salt Lake City, Hosp. Rev. Bonds, AMBAC, U.S. Govt. |
|
|
|
Coll., 6.75%, 5/15/20 (Escrowed to maturity) |
AAA/P |
300,000 |
300,543 |
|
|
|
300,543 |
Virginia (1.6%) |
|
|
|
Fairfax Cnty., Econ. Dev. Auth. Res. Care Fac. Rev. |
|
|
|
Bonds, (Goodwin House, Inc.), Ser. A, 5.00%, 10/1/42 |
BBB+/F |
425,000 |
428,455 |
Small Bus. Fin. Auth. Private Activity Rev. Bonds, |
|
|
|
(Transform 66-P3), 5.00%, 12/31/52 |
Baa3 |
4,250,000 |
4,277,668 |
VA State Small Bus. Fin. Auth. Rev. Bonds, |
|
|
|
(95 Express Lanes, LLC), 5.00%, 7/1/49 |
BBB– |
2,000,000 |
1,960,000 |
|
|
|
6,666,123 |
Washington (2.2%) |
|
|
|
King Cnty., Public Hosp. Dist. No. 1 G.O. Bonds, |
|
|
|
(Valley Med. Ctr.), 5.00%, 12/1/38 |
A2 |
2,365,000 |
2,747,752 |
Port of Seattle, Rev. Bonds, Ser. C, 5.00%, 4/1/40 |
A1 |
875,000 |
936,268 |
Tobacco Settlement Auth. of WA Rev. Bonds, |
|
|
|
5.25%, 6/1/32 |
A– |
2,125,000 |
2,156,429 |
WA State G.O. Bonds, Ser. 21A, 5.00%, 6/1/38 ### |
Aaa |
1,750,000 |
2,126,968 |
WA State Hlth. Care Fac. Auth. Mandatory Put Bonds |
|
|
|
(7/1/22), (Fred Hutchinson Cancer Research Ctr.), |
|
|
|
Ser. B, 1.37%, 1/1/42 |
A+ |
1,500,000 |
1,508,610 |
|
|
|
9,476,027 |
|
32 Municipal Opportunities Trust |
|
|
|
|
MUNICIPAL BONDS AND NOTES (140.6%)* cont. |
Rating** |
Principal amount |
Value |
Wisconsin (2.4%) |
|
|
|
Pub. Fin. Auth. Arpt. Fac. Rev. Bonds, (Sr. Oblig. |
|
|
|
Group), 5.25%, 7/1/28 |
BBB+ |
$350,000 |
$353,766 |
Pub. Fin. Auth. Higher Ed. Fac. Rev. Bonds, |
|
|
|
(Gannon U.), 5.00%, 5/1/42 |
BBB+ |
1,100,000 |
1,130,503 |
Pub. Fin. Auth. Student Hsg. Fac. Rev. Bonds, |
|
|
|
(Appalachian State U.), Ser. A, AGM |
|
|
|
4.00%, 7/1/50 |
AA |
700,000 |
720,482 |
4.00%, 7/1/45 |
AA |
600,000 |
620,106 |
4.00%, 7/1/40 |
AA |
500,000 |
522,395 |
4.00%, 7/1/38 |
AA |
435,000 |
456,546 |
4.00%, 7/1/36 |
AA |
340,000 |
359,030 |
4.00%, 7/1/34 |
AA |
300,000 |
319,464 |
WI State Hlth. & Edl. Fac. Auth. Rev. Bonds |
|
|
|
(Hmong American Peace Academy, Ltd.), |
|
|
|
5.00%, 3/15/50 |
BBB |
1,000,000 |
1,090,950 |
(Prohealth Care, Inc.), 5.00%, 8/15/39 |
A1 |
750,000 |
808,808 |
(Three Pillars Sr. Living), 5.00%, 8/15/33 |
A/F |
430,000 |
454,265 |
(Advocate Aurora Hlth. Oblig. Group), Ser. A, |
|
|
|
4.00%, 8/15/35 |
AA |
3,000,000 |
3,217,620 |
WI State Pub. Fin. Auth Sr. Living 144A Rev. Bonds, |
|
|
|
(Mary’s Woods at Marylhurst), Ser. A, 5.25%, 5/15/37 |
BB/F |
250,000 |
253,070 |
|
|
|
10,307,005 |
Total municipal bonds and notes (cost $598,444,920) |
|
$598,911,211 |
|
|
|
|
|
Principal amount/ |
|
SHORT-TERM INVESTMENTS (3.7%)* |
|
shares |
Value |
Putnam Short Term Investment Fund 0.64% L |
Shares |
11,077,023 |
$11,077,023 |
U.S. Treasury Bills 1.574%, 5/7/20 |
|
$135,000 |
134,999 |
U.S. Treasury Bills 0.011%, 8/6/20 |
|
758,000 |
757,780 |
U.S. Treasury Bills 1.543%, 7/16/20 |
|
32,000 |
31,994 |
U.S. Treasury Bills 1.030%, 6/11/20 |
|
487,000 |
486,947 |
U.S. Treasury Bills 0.056%, 7/9/20 |
|
151,000 |
150,974 |
U.S. Treasury Bills 0.310%, 7/23/20 |
|
1,100,000 |
1,099,784 |
U.S. Treasury Bills 0.502%, 5/5/20 |
|
91,000 |
91,000 |
U.S. Treasury Bills zero%, 8/13/20 |
|
475,000 |
474,856 |
U.S. Treasury Bills zero%, 8/20/20 ∆ |
|
918,000 |
917,692 |
U.S. Treasury Bills 0.015%, 9/3/20 ∆ |
|
339,000 |
338,865 |
U.S. Treasury Bills 0.005%, 9/10/20 ∆ |
|
364,000 |
363,856 |
Total short-term investments (cost $15,925,486) |
|
|
$15,925,770 |
|
|
TOTAL INVESTMENTS |
|
Total investments (cost $614,370,406) |
$614,836,981 |
Notes to the fund’s portfolio
Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from May 1, 2019 through April 30, 2020 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.
* Percentages indicated are based on net assets of $426,108,691.
|
Municipal Opportunities Trust 33 |
** The Moody’s, Standard & Poor’s or Fitch ratings indicated are believed to be the most recent ratings available at the close of the reporting period 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 the close of the reporting period. Securities rated by Fitch are indicated by “/F.” Securities rated by Putnam are indicated by “/P.” The Putnam rating categories are comparable to the Standard & Poor’s classifications. If a security is insured, it will usually be rated by the ratings organizations based on the financial strength of the insurer. Ratings are not covered by the Report of Independent Registered Public Accounting Firm.
††The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the fund will begin accruing interest at this rate.
∆ This security, in part or in entirety, was pledged and segregated with the custodian for collateral on certain derivative contracts at the close of the reporting period. Collateral at period end totaled $1,343,538 and is included in Investments in securities on the Statement of assets and liabilities (Notes 1 and 9).
L See Note 6 to the financial statements regarding investments in Putnam Short Term Investment Fund. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
T Underlying security in a tender option bond transaction. This security has been segregated as collateral for financing transactions.
### When-issued security (Note 1).
At the close of the reporting period, the fund maintained liquid assets totaling $89,153,154 to cover certain derivative contracts, tender option bonds and the settlement of certain securities.
Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.
144A after the name of an issuer represents securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
On Mandatory Put Bonds, the rates shown are the current interest rates at the close of the reporting period and the dates shown represent the next mandatory put dates. Rates are set by remarketing agents and may take into consideration market supply and demand, credit quality and the current SIFMA Municipal Swap Index, 1 Month US LIBOR or 3 Month US LIBOR rates, which were 0.22%, 0.33% and 0.56%, respectively, as of the close of the reporting period.
The dates shown parenthetically on prerefunded bonds represent the next prerefunding dates.
The dates shown on debt obligations are the original maturity dates.
The fund had the following sector concentrations greater than 10% at the close of the reporting period (as a percentage of net assets):
|
|
|
|
|
|
|
|
|
|
|
Health care |
24.1% |
|
|
|
|
|
|
|
|
|
Transportation |
21.6 |
|
|
|
|
|
|
|
|
|
State debt |
19.3 |
|
|
|
|
|
|
|
|
|
Utilities |
18.7 |
|
|
|
|
|
|
|
|
|
Tax bonds |
14.0 |
|
|
|
|
|
|
|
|
|
Local debt |
10.1 |
|
|
|
|
|
|
|
|
|
|
34 Municipal Opportunities Trust |
|
|
|
|
|
|
|
OTC INTEREST RATE SWAP CONTRACTS OUTSTANDING at 4/30/20 |
|
|
|
|
Upfront |
|
|
|
|
|
|
premium |
Termina- |
|
|
Unrealized |
Swap counterparty/ |
|
received |
tion |
Payments |
Payments |
appreciation/ |
Notional amount |
Value |
(paid) |
date |
made by fund |
received by fund |
(depreciation) |
Citibank, N.A. |
|
|
|
|
|
|
$12,960,000 |
$868,722 E |
$— |
10/18/31 |
1.404% — |
SIFMA Municipal |
$(868,722) |
|
|
|
|
Quarterly |
Swap index — |
|
|
|
|
|
|
Quarterly |
|
24,000,000 |
818,424 E |
— |
10/18/26 |
SIFMA Municipal |
1.182% — Quarterly |
818,424 |
|
|
|
|
Swap index — |
|
|
|
|
|
|
Quarterly |
|
|
22,870,000 |
752,743 E |
— |
10/20/26 |
SIFMA Municipal |
1.159% — Quarterly |
752,743 |
|
|
|
|
Swap index — |
|
|
|
|
|
|
Quarterly |
|
|
6,732,000 |
865,197 E |
— |
10/21/41 |
1.559% — |
SIFMA Municipal |
(865,197) |
|
|
|
|
Quarterly |
Swap index — |
|
|
|
|
|
|
Quarterly |
|
Upfront premium received |
— |
|
Unrealized appreciation |
1,571,167 |
Upfront premium (paid) |
— |
|
Unrealized (depreciation) |
(1,733,919) |
Total |
|
$— |
|
Total |
|
$(162,752) |
E Extended effective date.
|
|
|
|
|
|
|
OTC TOTAL RETURN SWAP CONTRACTS OUTSTANDING at 4/30/20 |
|
|
|
|
Upfront |
|
|
|
|
|
|
premium |
Termina- |
Payments |
Total return |
Unrealized |
Swap counterparty/ |
|
received |
tion |
received (paid) |
received by |
appreciation/ |
Notional amount |
Value |
(paid) |
date |
by fund |
or paid by fund |
(depreciation) |
Citibank, N.A. |
|
|
|
|
|
|
$960,000 |
$78,863 |
$— |
5/21/20 |
— |
1.86% minus |
$(78,863) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
1,920,000 |
160,199 |
— |
6/4/20 |
— |
1.86% minus |
(160,199) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
2,500,000 |
164,470 |
— |
7/15/20 |
— |
1.97% minus |
(164,470) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
300,000 |
17,407 |
— |
5/14/20 |
— |
1.98% minus |
(17,407) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
|
Municipal Opportunities Trust 35 |
|
|
|
|
|
|
|
OTC TOTAL RETURN SWAP CONTRACTS OUTSTANDING at 4/30/20 cont. |
|
|
|
|
Upfront |
|
|
|
|
|
|
premium |
Termina- |
Payments |
Total return |
Unrealized |
Swap counterparty/ |
|
received |
tion |
received (paid) |
received by |
appreciation/ |
Notional amount |
Value |
(paid) |
date |
by fund |
or paid by fund |
(depreciation) |
Citibank, N.A. cont. |
|
|
|
|
|
|
$1,210,000 |
$77,183 |
$— |
7/15/20 |
— |
1.98% minus |
$(77,183) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
1,115,000 |
94,516 |
— |
6/2/20 |
— |
2.7% minus |
(94,516) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
2,225,000 |
192,585 |
— |
6/4/20 |
— |
2.71% minus |
(192,585) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
Morgan Stanley & Co. International PLC |
|
|
|
|
1,200,000 |
100,979 |
— |
5/21/20 |
— |
1.85% minus |
(100,979) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
1,200,000 |
98,579 |
— |
5/21/20 |
— |
1.86% minus |
(98,579) |
|
|
|
|
|
Municipal Market |
|
|
|
|
|
|
Data Index AAA |
|
|
|
|
|
|
municipal yields |
|
|
|
|
|
|
30 Year rate — At |
|
|
|
|
|
|
maturity |
|
Upfront premium received |
— |
|
Unrealized appreciation |
— |
Upfront premium (paid) |
— |
|
Unrealized (depreciation) |
(984,781) |
Total |
|
$— |
|
Total |
|
$(984,781) |
|
36 Municipal Opportunities Trust |
ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:
|
|
|
|
|
|
|
Valuation inputs |
|
Investments in securities: |
Level 1 |
Level 2 |
Level 3 |
Municipal bonds and notes |
$— |
$598,911,211 |
$— |
Short-term investments |
11,077,023 |
4,848,747 |
— |
Totals by level |
$11,077,023 |
$603,759,958 |
$— |
|
|
|
|
|
|
|
Valuation inputs |
|
Other financial instruments: |
Level 1 |
Level 2 |
Level 3 |
Interest rate swap contracts |
$— |
$(162,752) |
$— |
Total return swap contracts |
— |
(984,781) |
— |
Totals by level |
$— |
$(1,147,533) |
$— |
At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.
The accompanying notes are an integral part of these financial statements.
|
Municipal Opportunities Trust 37 |
Statement of assets and liabilities 4/30/20
|
|
ASSETS |
|
Investment in securities, at value (Notes 1 and 9): |
|
Unaffiliated issuers (identified cost $603,293,383) |
$603,759,958 |
Affiliated issuers (identified cost $11,077,023) (Notes 1 and 6) |
11,077,023 |
Cash |
146,501 |
Interest and other receivables |
7,581,134 |
Receivable for investments sold |
1,545,101 |
Receivable for custodian fees (Note 2) |
2,806 |
Unrealized appreciation on OTC swap contracts (Note 1) |
1,571,167 |
Prepaid assets |
32,089 |
Total assets |
625,715,779 |
|
LIABILITIES |
|
Payable for investments purchased |
1,489,434 |
Payable for purchases of delayed delivery securities (Note 1) |
9,994,657 |
Payable for compensation of Manager (Note 2) |
1,004,909 |
Payable for investor servicing fees (Note 2) |
36,883 |
Payable for Trustee compensation and expenses (Note 2) |
182,102 |
Payable for administrative services (Note 2) |
887 |
Payable for floating rate bonds issued (Note 1) |
43,348,524 |
Distributions payable to shareholders |
1,816,068 |
Distributions payable to preferred shareholders (Note 1) |
35,565 |
Unrealized depreciation on OTC swap contracts (Note 1) |
2,718,700 |
Preferred share remarketing agent fees |
67,050 |
Other accrued expenses |
187,309 |
Total liabilities |
60,882,088 |
Series B remarketed preferred shares: (2,876 shares authorized and issued at $25,000 per |
|
share) (Note 4) |
71,900,000 |
Series C remarketed preferred shares: (2,673 shares authorized and issued at $25,000 per |
|
share) (Note 4) |
66,825,000 |
Net assets |
$426,108,691 |
|
REPRESENTED BY |
|
Paid-in capital — common shares (Unlimited shares authorized) (Notes 1 and 5) |
$416,011,752 |
Total distributable earnings (Note 1) |
10,096,939 |
Total — Representing net assets applicable to common shares outstanding |
$426,108,691 |
|
COMPUTATION OF NET ASSET VALUE |
|
Net asset value per common share |
|
($426,108,691 divided by 34,109,686 shares) |
$12.49 |
The accompanying notes are an integral part of these financial statements.
|
38 Municipal Opportunities Trust |
Statement of operations Year ended 4/30/20
|
|
INVESTMENT INCOME |
|
Interest (including interest income of $70,490 from investments in affiliated issuers) (Note 6) |
$23,178,077 |
Total investment income |
23,178,077 |
|
EXPENSES |
|
Compensation of Manager (Note 2) |
3,330,383 |
Investor servicing fees (Note 2) |
232,363 |
Custodian fees (Note 2) |
11,684 |
Trustee compensation and expenses (Note 2) |
14,638 |
Administrative services (Note 2) |
13,109 |
Interest and fees expense (Note 2) |
753,043 |
Preferred share remarketing agent fees |
211,556 |
Other |
357,136 |
Fees waived and reimbursed by Manager (Note 2) |
(171,571) |
Total expenses |
4,752,341 |
Expense reduction (Note 2) |
(98,153) |
Net expenses |
4,654,188 |
|
|
Net investment income |
18,523,889 |
|
REALIZED AND UNREALIZED GAIN (LOSS) |
|
Net realized gain (loss) on: |
|
Securities from unaffiliated issuers (Notes 1 and 3) |
5,753,348 |
Futures contracts (Note 1) |
(195,260) |
Swap contracts (Note 1) |
3,009,929 |
Total net realized gain |
8,568,017 |
Change in net unrealized appreciation (depreciation) on: |
|
Securities from unaffiliated issuers |
(26,678,362) |
Swap contracts |
(1,284,495) |
Total change in net unrealized depreciation |
(27,962,857) |
|
|
Net loss on investments |
(19,394,840) |
|
|
Net decrease in net assets resulting from operations |
(870,951) |
|
Distributions to Series B and C remarketed preferred shareholders (Note 1): |
|
From ordinary income |
|
From tax exempt net investment income |
(2,233,067) |
Net realized short-term gain on investments |
(646,878) |
Net realized long-term gain on investments |
(991,557) |
Net decrease in net assets resulting from operations (applicable to common shareholders) |
$(4,742,453) |
The accompanying notes are an integral part of these financial statements.
|
Municipal Opportunities Trust 39 |
Statement of changes in net assets
|
|
|
DECREASE IN NET ASSETS |
Year ended 4/30/20 |
Year ended 4/30/19 |
Operations |
|
|
Net investment income |
$18,523,889 |
$21,745,811 |
Net realized gain on investments |
8,568,017 |
6,867,524 |
Change in net unrealized appreciation (depreciation) |
|
|
of investments |
(27,962,857) |
5,436,381 |
Net increase (decrease) in net assets resulting |
|
|
from operations |
(870,951) |
34,049,716 |
|
Distributions to Series B and C remarketed preferred shareholders (Note 1): |
|
From ordinary income |
|
|
Taxable net investment income |
— |
(52,937) |
From tax exempt net investment income |
(2,233,067) |
(2,582,755) |
Net realized short-term gains on investments |
(646,878) |
— |
From net realized long-term gains on investments |
(991,557) |
(1,063,299) |
Net increase (decrease) in net assets resulting from |
|
|
operations (applicable to common shareholders) |
(4,742,453) |
30,350,725 |
|
Distributions to common shareholders (Note 1): |
|
|
From ordinary income |
|
|
Taxable net investment income |
— |
(1,569,827) |
From tax exempt net investment income |
(9,552,797) |
(15,103,856) |
From net realized short-term gains on investments |
(4,445,510) |
— |
From net realized long-term gains on investments |
(7,850,397) |
(6,161,229) |
Decrease from capital shares repurchased (Note 5) |
(3,887,662) |
(32,062,110) |
Total decrease in net assets |
(30,478,819) |
(24,546,297) |
|
NET ASSETS |
|
|
Beginning of year |
456,587,510 |
481,133,807 |
End of year |
$426,108,691 |
$456,587,510 |
|
NUMBER OF FUND SHARES |
|
|
Common shares outstanding at beginning of year |
34,442,721 |
37,230,209 |
Shares repurchased (Note 5) |
(333,035) |
(2,787,487) |
Common shares outstanding at end of year |
34,109,686 |
34,442,721 |
|
Series B Remarketed preferred shares outstanding at |
|
|
beginning and end of year |
2,876 |
2,876 |
|
Series C Remarketed preferred shares outstanding at |
|
|
beginning and end of year |
2,673 |
2,673 |
The accompanying notes are an integral part of these financial statements.
|
40 Municipal Opportunities Trust |
Financial highlights (For a common share outstanding throughout the period)
|
|
|
|
|
|
PER-SHARE OPERATING PERFORMANCE |
|
|
|
|
|
|
|
|
Year ended |
|
|
|
4/30/20 |
4/30/19 |
4/30/18 |
4/30/17 |
4/30/16 |
Net asset value, beginning of period |
|
|
|
|
|
(common shares) |
$13.26 |
$12.92 |
$12.98 |
$13.72 |
$13.35 |
Investment operations: |
|
|
|
|
|
Net investment incomea |
.54 |
.61 |
.64 |
.69 |
.74 |
Net realized and unrealized |
|
|
|
|
|
gain (loss) on investments |
(.56) |
.36 |
(.14) |
(.70) |
.32 |
Total from investment operations |
(.02) |
.97 |
.50 |
(.01) |
1.06 |
|
|
|
|
|
|
Distributions to preferred shareholders: |
|
|
|
|
|
From net investment income |
(.07) |
(.07) |
(.07) |
(.05) |
(.01) |
From capital gains |
(.05) |
(.03) |
— |
— |
— |
Total from investment operations |
|
|
|
|
|
(applicable to common shareholders) |
(.14) |
.87 |
.43 |
(.06) |
1.05 |
|
|
|
|
|
|
Distributions to common shareholders: |
|
|
|
|
|
From net investment income |
(.28) |
(.47) |
(.63) |
(.68) |
(.71) |
From capital gains |
(.36) |
(.17) |
— |
— |
— |
Total distributions |
(.64) |
(.64) |
(.63) |
(.68) |
(.71) |
Increase from shares repurchased |
.01 |
.11 |
.03 |
—f |
.03 |
Increase from preferred shares |
|
|
|
|
|
tender offer |
— |
— |
.11 |
— |
— |
Net asset value, end of period |
|
|
|
|
|
(common shares) |
$12.49 |
$13.26 |
$12.92 |
$12.98 |
$13.72 |
Market price, end of period |
|
|
|
|
|
(common shares) |
$11.63 |
$12.24 |
11.57 |
$12.27 |
$13.10 |
Total return at market price (%) |
|
|
|
|
|
(common shares)b |
(0.19) |
11.74 |
(0.80) |
(1.19) |
14.76 |
Total return at net asset value (%) |
|
|
|
|
|
(common shares)b |
(1.22) |
7.85 |
4.36 |
(0.45) |
8.41 |
|
RATIOS AND SUPPLEMENTAL DATA |
|
|
|
|
|
Net assets, end of period |
|
|
|
|
|
(common shares)(in thousands) |
$426,109 |
$456,588 |
$481,134 |
$494,523 |
$523,023 |
Ratio of expenses to average |
|
|
|
|
|
net assets (including interest |
|
|
|
|
|
expense) (%)c,d,e |
1.02g |
1.14g |
1.12h |
1.12i |
.97 |
Ratio of net investment income |
|
|
|
|
|
to average net assets (%)d |
3.51 |
4.13 |
4.31 |
4.80 |
5.48 |
Portfolio turnover (%) |
48 |
41 |
38 |
22 |
18 |
(Continued on next page)
|
Municipal Opportunities Trust 41 |
Financial highlights cont.
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, if any (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.
e Includes interest and fee expense associated with borrowings which amounted to:
|
|
April 30, 2020 |
0.16% |
April 30, 2019 |
0.25 |
April 30, 2018 |
0.19 |
April 30, 2017 |
0.10 |
April 30, 2016 |
0.05 |
f Amount represents less than $0.01 per share.
g Reflects waiver of certain fund expenses in connection with the fund’s remarketing preferred shares during the period. As a result of such waivers, the expenses of the fund for the periods ended April 30, 2020 and April 30, 2019 reflect a reduction of 0.04% and 0.01% of average net assets, respectively (Note 2).
h Includes 0.04% of increased proxy solicitation and legal fees related to the 2018 annual shareholder meeting.
i Includes 0.10% of increased proxy solicitation and legal fees related to the 2017 annual shareholder meeting.
The accompanying notes are an integral part of these financial statements.
|
42 Municipal Opportunities Trust |
Notes to financial statements 4/30/20
Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from May 1, 2019 through April 30, 2020.
Putnam Municipal Opportunities Trust (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a non-diversified closed-end management investment company. The fund is currently operating as a diversified fund. In the future, the fund may operate as a non-diversified fund to the extent permitted by applicable law. Under current law, shareholder approval would be required before the fund could operate as a non-diversified fund. The goal of the fund is to seek as high a level of current income exempt from federal income tax as Putnam Management believes is consistent with the preservation of capital. The fund intends to achieve its objective by investing in a portfolio of investment-grade and some below investment-grade municipal bonds selected by Putnam Management. The fund also uses leverage, primarily by issuing preferred shares in an effort to enhance the returns for the common shareholders. The fund’s shares trade on a stock exchange at market prices, which may be lower than the fund’s net asset value. The fund also uses leverage which involves risk and may increase the volatility of the fund’s net asset value.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.
The fund has entered into contractual arrangements with an investment adviser, administrator, transfer agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Note 1: Significant accounting policies
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. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.
Tax-exempt bonds and notes are generally valued 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. These securities will generally be categorized as Level 2.
Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.
|
Municipal Opportunities Trust 43 |
Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
Interest income, including amortization and accretion of premiums and discounts on debt securities, is recorded on the accrual basis.
Securities purchased or sold on a when-issued or delayed delivery basis may be settled at a future date beyond customary settlement time; interest income is accrued based on the terms of the securities. Losses may arise due to changes in the fair value of the underlying securities or if the counterparty does not perform under the contract.
Futures contracts The fund uses futures contracts, for hedging treasury term structure risk and for yield curve positioning.
The potential risk to the fund is that the change in value of futures 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, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”
Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Interest rate swap contracts The fund entered into OTC and/or centrally cleared interest rate swap contracts, which are arrangements between two parties to exchange cash flows based on a notional principal amount, for hedging interest rate risk, and for yield curve positioning.
An OTC and centrally cleared interest rate swap can be purchased or sold with an upfront premium. For OTC interest rate swap contracts, an upfront payment received by the fund is recorded as a liability on the fund’s books. An upfront payment made by the fund is recorded as an asset on the fund’s books. OTC and centrally cleared interest rate swap contracts are marked to market daily based upon quotations from an independent pricing service or market makers. Any change is recorded as an unrealized gain or loss on OTC interest rate swaps. Daily fluctuations in the value of centrally cleared interest rate swaps are settled through a central clearing agent and are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Payments, including upfront premiums, received or made are recorded as realized gains or losses at the reset date or the closing of the contract. Certain OTC and centrally cleared interest rate swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract.
The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or if the counterparty defaults, in the case of OTC interest rate contracts, or the central clearing agency or a clearing member defaults, in the case of centrally cleared interest rate swap contracts, on its respective obligation to perform under the contract. The fund’s maximum risk of loss from counterparty risk or central
|
44 Municipal Opportunities Trust |
clearing risk is the fair value of the contract. This risk may be mitigated for OTC interest rate swap contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared interest rate swap contracts through the daily exchange of variation margin. There is minimal counterparty risk with respect to centrally cleared interest rate swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
OTC and centrally cleared interest rate swap contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Total return swap contracts The fund entered into OTC and/or centrally cleared total return swap contracts, which are arrangements to exchange a market-linked return for a periodic payment, both based on a notional principal amount, for hedging sector exposure and for gaining exposure to specific sectors.
To the extent that the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty. OTC and/or centrally cleared total return swap contracts are marked to market daily based upon quotations from an independent pricing service or market maker. Any change is recorded as an unrealized gain or loss on OTC total return swaps. Daily fluctuations in the value of centrally cleared total return swaps are settled through a central clearing agent and are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Payments received or made are recorded as realized gains or losses. Certain OTC and/or centrally cleared total return swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. The fund’s maximum risk of loss from counterparty risk or central clearing risk is the fair value of the contract. This risk may be mitigated for OTC total return swap contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared total return swap contracts through the daily exchange of variation margin. There is minimal counterparty risk with respect to centrally cleared total return swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
OTC and/or centrally cleared total return swap contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.
At the close of the reporting period, the fund had a net liability position of $1,147,533 on open derivative contracts subject to the Master Agreements. Collateral posted by the fund at period end for these agreements totaled $1,343,538 and may include amounts related to unsettled agreements.
|
Municipal Opportunities Trust 45 |
Tender option bond transactions The fund may participate in transactions whereby a fixed-rate bond is transferred to a tender option bond trust (TOB trust) sponsored by a broker. The TOB trust funds the purchase of the fixed rate bonds by issuing floating-rate bonds to third parties and allowing the fund to retain the residual interest in the TOB trust’s assets and cash flows, which are in the form of inverse floating rate bonds. The inverse floating rate bonds held by the fund give the fund the right to (1) cause the holders of the floating rate bonds to tender their notes at par, and (2) to have the fixed-rate bond held by the TOB trust transferred to the fund, causing the TOB trust to collapse. The fund accounts for the transfer of the fixed-rate bond to the TOB trust as a secured borrowing by including the fixed-rate bond in the fund’s portfolio and including the floating rate bond as a liability in the Statement of assets and liabilities. At the close of the reporting period, the fund’s investments with a value of $69,352,179 were held by the TOB trust and served as collateral for $43,348,524 in floating-rate bonds outstanding. For the reporting period ended, the fund incurred interest expense of $534,874 for these investments based on an average interest rate of 1.40%.
Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (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.
The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. 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. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer certain capital losses of $155,193 recognized during the period between November 1, 2019 to its fiscal year ending April 30, 2020.
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. The fund uses targeted distribution rates to its common shareholders. Distributions are sourced first from tax-exempt and ordinary income. The balance of the distributions, if any, comes next from capital gain and then will constitute a return of capital. A return of capital is not taxable; rather it reduces a shareholder’s tax basis in their shares of the fund. The fund may make return of capital distributions to achieve the targeted distribution rates. 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 7 day period. The applicable dividend rate for the remarketed preferred shares on April 30, 2020 was 0.88% for Series B and 0.66% for Series C shares. 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.
During the reporting period, the fund has experienced unsuccessful remarketings of its remarketed preferred shares. As a result, dividends to the remarketed preferred shares have been paid at the “maximum dividend rate,” pursuant to the fund’s by-laws, which, based on the current credit quality of the remarketed preferred shares, equals 110% of the higher of the 30-day “AA” composite commercial paper rate and the taxable equivalent of the short-term municipal bond rate.
These differences include temporary and/or permanent differences from post-October loss deferrals, from dividends payable and from market discount. 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. At the close of the reporting period, the fund reclassified $706,639 to increase undistributed net investment income, $706,639 to decrease accumulated net realized gain.
Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:
|
46 Municipal Opportunities Trust |
|
|
Unrealized appreciation |
$16,562,044 |
Unrealized depreciation |
(17,130,285) |
Net unrealized depreciation |
(568,241) |
Undistributed ordinary income |
829,127 |
Undistributed tax-exempt income |
11,842,880 |
Post-October capital loss deferral |
(155,193) |
Cost for federal income tax purposes: |
$614,257,689 |
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 (redemption value of preferred shares, plus accumulated and unpaid dividends) 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
The fund pays Putnam Management for management and investment advisory services quarterly based on the average net assets of the fund, including assets attributable to preferred shares. Such fee is based on the following annual rates based on the average weekly net assets attributable to common and preferred shares.
The lesser of (i) 0.550% of average net assets attributable to common and preferred shares outstanding, or (ii) the following rates:
|
|
|
|
|
|
of the first $500 million of average |
|
|
of the next $5 billion of average weekly |
0.650% |
weekly net assets, |
|
0.425% |
net assets, |
|
of the next $500 million of average |
|
|
of the next $5 billion of average weekly |
0.550% |
weekly net assets, |
|
0.405% |
net assets, |
|
of the next $500 million of average |
|
|
of the next $5 billion of average weekly |
0.500% |
weekly net assets, |
|
0.390% |
net assets and |
|
of the next $5 billion of average weekly |
|
0.380% |
of any excess thereafter. |
0.450% |
net assets, |
|
|
|
For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.55% of the fund’s average 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 the effective management fees rate under the contract multiplied by the liquidation preference of the remarketed preferred shares outstanding during the period). For the reporting period, Putnam Management reimbursed $171,571 to the fund. Any amount in excess of the fee payable to Putnam Management for a given period will be used to reduce any subsequent fee payable to Putnam Management, as may be necessary. As of April 30, 2020, this excess amounted to $97,183.
Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.40% of the average net assets of the portion of the fund managed by PIL.
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 State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
|
Municipal Opportunities Trust 47 |
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.05% of the fund’s average daily net assets. The amounts incurred for investor servicing agent functions during the reporting period are included in Investor servicing fees in the Statement of operations.
The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $98,153 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $362, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
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 and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. 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 reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:
|
|
|
|
Cost of purchases |
Proceeds from sales |
Investments in securities (Long-term) |
$301,702,348 |
$302,740,523 |
U.S. government securities (Long-term) |
— |
— |
Total |
$301,702,348 |
$302,740,523 |
The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.
Note 4: Preferred Shares
The Series B (2,876) and C (2,673) Remarketed Preferred shares are redeemable at the option of the fund on any dividend payment date at a redemption price of $25,000 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. 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. Total additional dividends for the reporting period were $447,107.
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. Additionally, the fund’s bylaws impose more stringent asset coverage requirements and restrictions relating to the rating of the remarketed preferred shares by 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 year end, no such restrictions have been placed on the fund.
|
48 Municipal Opportunities Trust |
Note 5: Shares repurchased
In September 2019, the Trustees approved the renewal of the repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 356 day period ending September 30, 2020 (based on shares outstanding as of October 9, 2019). Prior to this renewal, the Trustees had approved a repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 12-month period ending October 9, 2019 (based on shares outstanding as of October 9, 2018). Repurchases are made when the fund’s shares are trading at less than net asset value and in accordance with procedures approved by the fund’s Trustees. At Putnam Management’s recommendation, the share repurchase program was temporarily suspended on March 24, 2020. Putnam Management has proposed to reinstate the share repurchase program effective July 1, 2020, subject to the approval of the Trustees of your fund.
For the reporting period, the fund repurchased 333,035 common shares for an aggregate purchase price of $3,887,662, which reflects a weighted-average discount from net asset value per share of 8.95%. The weighted-average discount reflects the payment of commissions by the fund to execute repurchase trades.
For the previous fiscal year, the fund repurchased 2,787,487 common shares for an aggregate purchase price of $32,062,110, which reflected a weighted-average discount from net asset value per share of 10.87%. The weighted-average discount reflected the payment of commissions by the fund to execute repurchase trades.
At the close of the reporting period, Putnam Investments, LLC owned approximately 1,316 shares of the fund (0.004% of the fund’s shares outstanding), valued at $16,450 based on net asset value.
Note 6: Affiliated transactions
Transactions during the reporting period with any company which is under common ownership or control were as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
outstanding |
|
|
|
|
|
and fair |
|
Fair value as |
Purchase |
Sale |
Investment |
value as |
Name of affiliate |
of 4/30/19 |
cost |
proceeds |
income |
of 4/30/20 |
Short-term investments |
|
|
|
|
|
Putnam Short Term |
|
|
|
|
|
Investment Fund* |
$— |
$132,942,151 |
$121,865,128 |
$70,490 |
$11,077,023 |
Total Short-term |
|
|
|
|
|
investments |
$— |
$132,942,151 |
$121,865,128 |
$70,490 |
$11,077,023 |
* Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.
Note 7: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. The fund may invest in higher-yielding, lower-rated bonds that may have a higher rate of default.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced a desire to phase out the use of LIBOR by the end of 2021. LIBOR has historically been a common benchmark interest rate index used to make adjustments to variable-rate loans. It is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments and borrowing arrangements. The transition process might lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. It could also lead to a reduction in the value of some LIBOR-based investments and reduce the effectiveness of new hedges placed against existing LIBOR-based investments. While some LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, not all may have such provisions and there may be significant uncertainty regarding the effectiveness of any such alternative methodologies. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur prior to the end of 2021.
|
Municipal Opportunities Trust 49 |
Beginning in January 2020, global financial markets have experienced, and may continue, to experience significant volatility resulting from the spread of a virus known as COVID–19. The outbreak of COVID–19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand, and general market uncertainty. The effects of COVID–19 have adversely affected, and may continue to adversely affect, the global economy, the economies of certain nations, and individual issuers, all of which may negatively impact the fund’s performance.
Note 8: Summary of derivative activity
The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:
|
|
Futures contracts (number of contracts) |
6 |
OTC interest rate swap contracts (notional) |
$66,900,000 |
OTC total return swap contracts (notional) |
$29,500,000 |
The following is a summary of the fair value of derivative instruments as of the close of the reporting period:
|
|
|
|
|
Fair value of derivative instruments as of the close of the reporting period |
|
|
ASSET DERIVATIVES |
LIABILITY DERIVATIVES |
Derivatives not |
|
|
|
|
accounted for as |
Statement of |
|
Statement of |
|
hedging instruments |
assets and |
|
assets and |
|
under ASC 815 |
liabilities location |
Fair value |
liabilities location |
Fair value |
Interest rate contracts |
Receivables |
$1,571,167 |
Payables |
$2,718,700 |
Total |
|
$1,571,167 |
|
$2,718,700 |
The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):
|
|
|
|
Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments |
|
Derivatives not accounted for as hedging |
|
|
|
instruments under ASC 815 |
Futures |
Swaps |
Total |
Interest rate contracts |
$(195,260) |
$3,009,929 |
$2,814,669 |
Total |
$(195,260) |
$3,009,929 |
$2,814,669 |
|
|
|
Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) |
on investments |
|
|
Derivatives not accounted for as |
|
|
hedging instruments under ASC 815 |
Swaps |
Total |
Interest rate contracts |
$(1,284,495) |
$(1,284,495) |
Total |
$(1,284,495) |
$(1,284,495) |
|
50 Municipal Opportunities Trust |
Note 9: Offsetting of financial and derivative assets and liabilities
The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.
|
|
|
|
|
Citibank, N.A. |
Morgan Stanley & Co. International PLC |
Total |
Assets: |
|
|
|
OTC Interest rate swap contracts*# |
$1,571,167 |
$— |
$1,571,167 |
OTC Total return swap contracts*# |
— |
— |
— |
Total Assets |
$1,571,167 |
$— |
$1,571,167 |
Liabilities: |
|
|
|
OTC Interest rate swap contracts*# |
1,733,919 |
— |
1,733,919 |
OTC Total return swap contracts*# |
785,223 |
199,558 |
984,781 |
Total Liabilities |
$2,519,142 |
$199,558 |
$2,718,700 |
Total Financial and Derivative Net Assets |
$(947,975) |
$(199,558) |
$(1,147,533) |
Total collateral received (pledged)†## |
$(947,975) |
$(199,558) |
|
Net amount |
$— |
$— |
|
Controlled collateral received (including |
|
|
|
TBA commitments)** |
$— |
$— |
$— |
Uncontrolled collateral received |
$— |
$— |
$— |
Collateral (pledged) (including TBA commitments)** |
$(1,121,616) |
$(221,922) |
$(1,343,538) |
* Excludes premiums, if any. Included in unrealized appreciation and depreciation on OTC swap contracts on the Statement of assets and liabilities.
** Included with Investments in securities on the Statement of assets and liabilities.
† Additional collateral may be required from certain brokers based on individual agreements.
# Covered by master netting agreement (Note 1).
## Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.
|
Municipal Opportunities Trust 51 |
Federal tax information (Unaudited)
The fund has designated 98.77% of dividends paid from net investment income during the reporting period as tax exempt for Federal income tax purposes.
Pursuant to §852 of the Internal Revenue Code, as amended, the fund hereby designates $3,215,994 as a capital gain dividend with respect to the taxable year ended April 30, 2020, or, if subsequently determined to be different, the net capital gain of such year.
The Form 1099 that will be mailed to you in January 2021 will show the tax status of all distributions paid to your account in calendar 2020.
|
52 Municipal Opportunities Trust |
Shareholder meeting results (Unaudited)
April 24, 2020 annual meeting
At the meeting, a proposal to fix the number of Trustees at 11 was approved as follows:
|
|
|
Votes for |
Votes against |
Abstentions |
28,765,375 |
654,564 |
556,671 |
At the meeting, each of the nominees for Trustees was elected as follows:
|
|
|
|
Votes for |
Votes withheld |
Liaquat Ahamed |
28,740,941 |
1,235,678 |
Ravi Akhoury |
28,190,105 |
1,786,514 |
Barbara M. Baumann |
28,314,434 |
1,662,185 |
Catharine Bond Hill |
28,847,835 |
1,128,784 |
Paul L. Joskow |
28,052,185 |
1,924,434 |
Kenneth R. Leibler |
28,321,828 |
1,654,791 |
Robert L. Reynolds |
28,860,988 |
1,115,631 |
Manoj P. Singh |
28,266,830 |
1,709,789 |
Mona K. Sutphen |
28,880,547 |
1,096,072 |
A quorum was not present with respect to the matter of electing two Trustees to be voted on by the preferred shareholders voting as a separate class. As a result, in accordance with the fund’s Declaration of Trust and Bylaws, independent Trustees George Putnam III and Robert E. Patterson remain in office and continue to serve as Trustees. Robert E. Patterson is retiring effective June 30, 2020, and the Board of Trustees has appointed Katinka Domotorffy to fill the resulting vacancy.
All tabulations are rounded to the nearest whole number.
|
Municipal Opportunities Trust 53 |
|
54 Municipal Opportunities Trust |
* Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund and Putnam Investments. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.
† Effective July 1, 2020.
The address of each Trustee is 100 Federal Street, Boston, MA 02110.
As of April 30, 2020, there were 102 Putnam funds. All Trustees serve as Trustees of all Putnam funds.
Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.
|
Municipal Opportunities Trust 55 |
Officers
In addition to Robert L. Reynolds, the other officers of the fund are shown below:
|
|
Robert T. Burns (Born 1961) |
Richard T. Kircher (Born 1962) |
Vice President and Chief Legal Officer |
Vice President and BSA Compliance Officer |
Since 2011 |
Since 2019 |
General Counsel, Putnam Investments, |
Assistant Director, Operational Compliance, Putnam |
Putnam Management, and Putnam Retail Management |
Investments and Putnam Retail Management |
|
|
James F. Clark (Born 1974) |
Susan G. Malloy (Born 1957) |
Vice President and Chief Compliance Officer |
Vice President and Assistant Treasurer |
Since 2016 |
Since 2007 |
Chief Compliance Officer and Chief Risk Officer, |
Head of Accounting and Middle Office Services, |
Putnam Investments and Chief Compliance Officer, |
Putnam Investments and Putnam Management |
Putnam Management |
|
|
Denere P. Poulack (Born 1968) |
Nancy E. Florek (Born 1957) |
Assistant Vice President, Assistant Clerk, |
Vice President, Director of Proxy Voting and Corporate |
and Assistant Treasurer |
Governance, Assistant Clerk, and Assistant Treasurer |
Since 2004 |
Since 2000 |
|
|
Janet C. Smith (Born 1965) |
Michael J. Higgins (Born 1976) |
Vice President, Principal Financial Officer, Principal |
Vice President, Treasurer, and Clerk |
Accounting Officer, and Assistant Treasurer |
Since 2010 |
Since 2007 |
|
Head of Fund Administration Services, |
Jonathan S. Horwitz (Born 1955) |
Putnam Investments and Putnam Management |
Executive Vice President, Principal Executive Officer, |
|
and Compliance Liaison |
Mark C. Trenchard (Born 1962) |
Since 2004 |
Vice President |
|
Since 2002 |
|
Director of Operational Compliance, Putnam |
|
Investments and Putnam Retail Management |
The principal occupations of the officers for the past five years have been with the employers as shown above, although in some cases they have held different positions with such employers. The address of each officer is 100 Federal Street, Boston, MA 02110.
|
56 Municipal Opportunities Trust |
Fund information
Founded over 80 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 manage funds across income, value, blend, growth, sustainable, asset allocation, absolute return, and global sector categories.
|
|
|
Investment Manager |
Trustees |
Michael J. Higgins |
Putnam Investment |
Kenneth R. Leibler, Chair |
Vice President, Treasurer, |
Management, LLC |
Liaquat Ahamed |
and Clerk |
100 Federal Street |
Ravi Akhoury |
|
Boston, MA 02110 |
Barbara M. Baumann |
Jonathan S. Horwitz |
|
Katinka Domotorffy* |
Executive Vice President, |
Investment Sub-Advisor |
Catharine Bond Hill |
Principal Executive Officer, |
Putnam Investments Limited |
Paul L. Joskow |
and Compliance Liaison |
16 St James’s Street |
Robert E. Patterson |
|
London, England SW1A 1ER |
George Putnam, III |
Richard T. Kircher |
|
Robert L. Reynolds |
Vice President and BSA |
Marketing Services |
Manoj P. Singh |
Compliance Officer |
Putnam Retail Management |
Mona K. Sutphen |
|
100 Federal Street |
|
Susan G. Malloy |
Boston, MA 02110 |
Officers |
Vice President and |
|
Robert L. Reynolds |
Assistant Treasurer |
Custodian |
President |
|
State Street Bank |
|
Denere P. Poulack |
and Trust Company |
Robert T. Burns |
Assistant Vice President, Assistant |
|
Vice President and |
Clerk, and Assistant Treasurer |
Legal Counsel |
Chief Legal Officer |
|
Ropes & Gray LLP |
|
Janet C. Smith |
|
James F. Clark |
Vice President, |
Independent Registered Public |
Vice President, Chief Compliance |
Principal Financial Officer, |
Accounting Firm |
Officer, and Chief Risk Officer |
Principal Accounting Officer, |
Pricewaterhouse Coopers LLP |
|
and Assistant Treasurer |
|
Nancy E. Florek |
|
|
Vice President, Director of |
Mark C. Trenchard |
|
Proxy Voting and Corporate |
Vice President |
|
Governance, Assistant Clerk, |
|
|
and Assistant Treasurer |
|
* Effective July 1, 2020.
Call 1-800-225-1581 Monday through Friday between 8:00 a.m. and 8:00 p.m. Eastern Time, or visit putnam.com anytime for up-to-date information about the fund’s NAV.
|
|
| (a) The Fund's principal executive, financial and accounting
officers are employees of Putnam Investment Management, LLC, the Fund's investment manager. As such they are subject
to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the
interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics
of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management,
LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial
and accounting officers. |
|
|
| (c) In October 2019, the Code of Ethics of Putnam Investments
was amended. The key changes to the Code of Ethics are as follows: (i) Employee notification to the Code of Ethics
Officer before acting as a public official for any government entity (ii) Clarifying changes to the Insider Trading
provisions and to the rules for trading in securities issued by Great-West Lifeco. |
|
|
| Item 3. Audit Committee Financial Expert: |
|
|
| The Funds' Audit, Compliance and Distributions Committee
is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities
and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the
“Regulations”)). The Trustees believe that each member of the Audit, Compliance and Distributions Committee
also possesses a combination of knowledge and experience with respect to financial accounting matters, as well as
other attributes, that qualifies him or her for service on the Committee. In addition, the Trustees have determined
that each of Ms. Baumann, Dr. Joskow, and Mr. Singh qualifies as an “audit committee financial expert”
(as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education;
in the case of Dr. Joskow, including his experience serving on the audit committees of several public companies and
institutions and his education and experience as an economist who studies companies and industries, routinely using
public company financial statements in his research. The SEC has stated, and the funds' amended and restated agreement
and Declaration of Trust provides, that the designation or identification of a person as an audit committee financial
expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability
that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance
and Distributions Committee and the Board of Trustees in the absence of such designation or identification. |
|
|
| Item 4. Principal Accountant Fees and Services: |
|
|
| The following table presents fees billed in each of the
last two fiscal years for services rendered to the fund by the fund's independent auditor: |
|
|
|
|
|
|
| Fiscal year ended | Audit Fees | Audit-Related
Fees | Tax
Fees | All
Other Fees |
|
|
| | | | | |
| April 30, 2020 | $78,933 | $ — | $12,294 | $
— |
| April 30, 2019 | $78,813 | $ — | $14,294 | $
— |
|
|
| For the fiscal years ended April 30, 2020 and April 30,
2019, the fund's independent auditor billed aggregate non-audit fees in the amounts of $296,010 and $561,278 respectively,
to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management
that provides ongoing services to the fund. |
|
|
| Audit Fees represent fees billed for the fund's last
two fiscal years relating to the audit and review of the financial statements included in annual reports and registration
statements, and other services that are normally provided in connection with statutory and regulatory filings or
engagements. |
|
|
| Audit-Related Fees represent fees billed in the fund's
last two fiscal years for services traditionally performed by the fund's auditor, including accounting consultation
for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services
not required by statute or regulation. |
|
|
| Tax Fees represent fees billed in the fund's last two
fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include
assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities. |
|
|
| Pre-Approval Policies of the Audit, Compliance and Distributions
Committee. The Audit, Compliance and Distributions Committee of the Putnam funds has determined that, as a matter
of policy, all work performed for the funds by the funds' independent auditors will be pre-approved by the Committee
itself and thus will generally not be subject to pre-approval procedures. |
|
|
| The Audit, Compliance and Distributions Committee also
has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds'
independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests
by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain,
among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed
by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among
other things, whether the provision of such services by the audit firm are compatible with the independence of the
audit firm. |
|
|
| The following table presents fees billed by the fund's
independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2–01 of Regulation
S-X. |
|
|
|
|
|
|
| Fiscal year ended | Audit-Related Fees | Tax
Fees | All
Other Fees | Total
Non-Audit Fees |
|
|
| April 30, 2020 | $ — | $283,716 | $
— | $
— |
| April 30, 2019 | $ — | $546,984 | $
— | $
— |
|
|
| Item 5. Audit Committee of Listed Registrants |
|
|
| (a) The fund has a separately-designated Audit, Compliance
and Distributions Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of
1934, as amended. The Audit, Compliance and Distribution Committee of the fund's Board of Trustees is composed of
the following persons: |
|
|
| Item 6. Schedule of Investments: |
|
|
| The registrant's schedule of investments in unaffiliated
issuers is included in the report to shareholders in Item 1 above. |
|
|
| Item 7. Disclosure of Proxy Voting Policies and Procedures
For Closed-End Management Investment Companies: |
|
|
| Proxy voting guidelines of The Putnam Funds
|
|
|
| The proxy voting guidelines below summarize the funds'
positions on various issues of concern to investors, and give a general indication of how fund portfolio securities
will be voted on proposals dealing with particular issues. The funds' proxy voting service is instructed to vote
all proxies relating to fund portfolio securities in accordance with these guidelines, except as otherwise instructed
by the Director of Proxy Voting and Corporate Governance (“Proxy Voting Director”), a member of the Office
of the Trustees who is appointed to assist in the coordination and voting of the funds' proxies. |
|
|
| The proxy voting guidelines are just that — guidelines.
The guidelines are not exhaustive and do not address all potential voting issues. Because the circumstances of individual
companies are so varied, there may be instances when the funds do not vote in strict adherence to these guidelines.
For example, the proxy voting service is expected to bring to the Proxy Voting Director's attention proxy questions
that are company-specific and of a non-routine nature and that, even if covered by the guidelines, may be more appropriately
handled on a case-by-case basis. In addition, in interpreting the funds' proxy voting guidelines, the Trustees of
The Putnam Funds are mindful of emerging best practices in the areas of corporate governance, environmental stewardship
and sustainability, and social responsibility. Recognizing that these matters may, in some instances, bear on investment
performance, they may from time to time be considerations in the funds' voting decisions. |
|
|
| Similarly, Putnam Management's investment professionals,
as part of their ongoing review and analysis of all fund portfolio holdings, are responsible for monitoring significant
corporate developments, including proxy proposals submitted to shareholders, and notifying the Proxy Voting Director
of circumstances where the interests of fund shareholders may warrant a vote contrary to these guidelines. In such
instances, the investment professionals submit a written recommendation to the Proxy Voting Director and the person
or persons designated by Putnam Management's Legal and Compliance Department to assist in processing referral items
under the funds' “Proxy Voting Procedures.” The Proxy Voting Director, in consultation with a senior
member of the Office of the Trustees and/or the Chair of the Board Policy and Nominating Committee, as appropriate,
will determine how the funds' proxies will be voted. When indicated, the Chair of the Board Policy and Nominating
Committee may consult with other members of the Committee or the full Board of Trustees. |
|
|
| The following guidelines are grouped according to the
types of proposals generally presented to shareholders. Part I deals with proposals submitted by management and approved
and recommended by a company's board of directors. Part II deals with proposals submitted by shareholders. Part III
addresses unique considerations pertaining to non-U.S. issuers. |
|
|
| The Trustees of The Putnam Funds are committed to promoting
strong corporate governance practices and encouraging corporate actions that enhance shareholder value through the
judicious voting of the funds' proxies. It is the funds' policy to vote their proxies at all shareholder meetings
where it is practicable to do so. In furtherance of this, the funds' have requested that their securities lending
agent recall each domestic issuer's voting securities that are on loan, in advance of the record date for the issuer's
shareholder meetings, so that the funds may vote at the meetings. |
|
|
| The Putnam funds will disclose their proxy votes not
later than August 31 of each year for the most recent 12-month period ended June 30, in accordance with the timetable
established by SEC rules. |
|
|
| I. BOARD-APPROVED PROPOSALS1 |
|
|
| The vast majority of matters presented to shareholders
for a vote involve proposals made by a company itself (sometimes referred to as “management proposals”),
which have been approved and recommended by its board of directors. In view of the enhanced corporate governance
practices currently being implemented in public companies and of the funds' intent to hold corporate boards accountable
for their actions in promoting shareholder interests, the funds' proxies generally will be voted for
the decisions reached by majority independent boards of directors, except as otherwise indicated in these guidelines.
Accordingly, the funds' proxies will be voted for board-approved proposals, except as follows: |
|
|
1 | The
guidelines in this section apply to proposals at U.S. companies. Please refer to
Section III, Voting Shares of Non-U.S. Issuers, for additional guidelines applicable
to proposals at non-U.S. companies. |
|
|
| Matters relating to the Board of Directors |
|
|
| Uncontested Election of Directors |
|
|
| The funds' proxies will be voted for the
election of a company's nominees for the board of directors, except as follows: |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
the board does not have a majority of independent directors, |
| | • |
the board has not established independent nominating, audit,
and compensation committees, |
| | • |
the board has more than 15 members or fewer than
five members, absent special circumstances, |
| | • |
the board has not acted to implement a policy requested
in a shareholder proposal that received the support of a majority of the shares of the company cast at its previous two annual
meetings, or |
| | • |
the board has adopted or renewed a shareholder rights plan
(commonly referred to as a “poison pill”) without shareholder approval during the current or prior calendar year. |
| ► |
The funds will on a case-by-case basis withhold votes
from the entire board of directors, or from particular directors as may be appropriate, if the board has approved compensation
arrangements for one or more company executives that the funds determine are unreasonably excessive relative to the company's
performance or has otherwise failed to observe good corporate governance practices. |
| ► |
In light of the funds' belief that companies benefit from
diversity on the board, the funds will withhold votes from the chair of the nominating committee if: |
| | • |
there are no women on the board, or |
| | • |
in the case of a board of ten members or more, there are
fewer than two women on the board. |
| ► |
The funds will withhold votes from any nominee
for director: |
| | • |
who is considered an independent director by the company
and who has received compensation within the last three years from the company other than for service as a director (e.g.,
investment banking, consulting, legal, or financial advisory fees), |
| | • |
who attends fewer than 75% of board and committee meetings
without valid reasons for the absences (e.g., illness, personal emergency, etc.) (if the director attendance disclosure
does not explain the absences, or is otherwise inadequate, the funds will also withhold votes from the chair of the governance
committee), |
| | • |
of a public company (Company A) who is employed as a senior
executive of another company (Company B), if a director of Company B serves as a senior executive of Company A (commonly referred
to as an “interlocking directorate”), |
| | • |
who serves on more than four unaffiliated public company
boards (for the purpose of this guideline, boards of affiliated registered investment companies will count as one board), |
| | • |
who serves as an executive officer of any public company
(“home company”) while serving on more than two public company boards other than the home company board (the
funds will withhold votes from the nominee at each company where the funds are shareholders; in addition, if the funds are shareholders
of the executive's home company, the funds will withhold votes from members of the home company's governance committee), or |
| | • |
who is a member of the governance or other responsible committee,
if the company has adopted without shareholder approval a bylaw provision shifting legal fees and costs to unsuccessful plaintiffs
in intra-corporate litigation. |
|
|
| Board independence: Unless otherwise indicated,
for the purposes of determining whether a board has a majority of independent directors and independent nominating,
audit, and compensation committees, an “independent director” is a director who (1) meets all requirements
to serve as an independent director of a company under the NYSE Corporate Governance Rules (e.g., no material
business relationships with the company and no present or recent employment relationship with the company including
employment of an immediate family member as an executive officer), and (2) has not within the last three years accepted
directly or indirectly any consulting, advisory, or other compensatory fee from the company other than in his or
her capacity as a member of the board of directors or any board committee. The funds' Trustees believe that the recent
(i.e., within the last three years) receipt of any amount of compensation for services other than service
as a director raises significant independence issues. |
|
|
| Board size: The funds' Trustees believe that the
size of the board of directors can have a direct impact on the ability of the board to govern effectively. Boards
that have too many members can be unwieldy and ultimately inhibit their ability to oversee management performance.
Boards that have too few members can stifle innovation and lead to excessive influence by management. |
|
|
| Board diversity: The funds' Trustees believe that
a company benefits from diversity on the board, including diversity with respect to gender, ethnicity, race, and
experience. The Trustees are sensitive to the need for a variety of backgrounds among board members to further creative
and independent thought during board deliberations. The Trustees expect company boards to strive for diversity in
membership and to clearly explain their efforts and goals in this regard. |
|
|
| Time commitment: Being a director of a company
requires a significant time commitment to adequately prepare for and attend the company's board and committee meetings.
Directors must be able to commit the time and attention necessary to perform their fiduciary duties in proper fashion,
particularly in times of crisis. The funds' Trustees are concerned about over-committed directors. In some cases,
directors may serve on too many boards to make a meaningful contribution. This may be particularly true for senior
executives of public companies (or other directors with substantially full-time employment) who serve on more than
a few outside boards. Generally, the funds withhold support from directors serving on more than four unaffiliated
public company boards, although an exception may be made in the case of a director who represents an investing firm
with the sole purpose of managing a portfolio of investments that includes the company. The funds also withhold support
from directors who serve as executive officers at a public company and on the boards of more than two unaffiliated
public companies. The funds may also withhold votes from such directors on a case-by-case basis where it appears
that they may be unable to discharge their duties properly because of excessive commitments. |
|
|
| Interlocking directorships: The funds' Trustees
believe that interlocking directorships are inconsistent with the degree of independence required for outside directors
of public companies. |
|
|
| Corporate governance practices: Board independence
depends not only on its members' individual relationships, but also on the board's overall attitude toward management
and shareholders. Independent boards are committed to good corporate governance practices and, by providing objective
independent judgment, enhancing shareholder value. The funds may withhold votes on a case-by-case basis from some
or all directors who, through their lack of independence or otherwise, have failed to observe good corporate governance
practices or, through specific corporate action, have demonstrated a disregard for the interests of shareholders.
Such instances may include cases where a board of directors has approved compensation arrangements for one or more
members of management that, in the judgment of the funds' Trustees, are excessive by reasonable corporate standards
relative to the company's record of performance. It may also represent a disregard for the interests of shareholders
if a board of directors fails to register an appropriate response when a director who fails to win the support of
a majority of shareholders in an election (sometimes referred to as a “rejected director”) continues
to serve on the board, or if a board of directors permits an executive to serve on an excessive number of public
company boards. While the Trustees recognize that it may in some circumstances be appropriate for a rejected director
to continue his or her service on the board, steps should be taken to address the concerns reflected by the shareholders'
lack of support for the rejected director. Adopting a fee-shifting bylaw provision without shareholder approval,
which may discourage legitimate shareholders lawsuits as well as frivolous ones, is another example of disregard
for shareholder interests. |
|
|
| Contested Elections of Directors |
| ► |
The funds will vote on a case-by-case basis
in contested elections of directors. |
| ► |
The funds will vote against proposals to classify
a board, absent special circumstances indicating that shareholder interests would be better served by this structure. |
|
|
| Commentary: Under a typical classified
board structure, the directors are divided into three classes, with each class serving a three-year term. The classified
board structure results in directors serving staggered terms, with usually only a third of the directors up for re-election
at any given annual meeting. The funds' Trustees generally believe that it is appropriate for directors to stand
for election each year, but recognize that, in special circumstances, shareholder interests may be better served
under a classified board structure. |
|
|
| Other Board-Related Proposals |
|
|
| The funds will generally vote for proposals
that have been approved by a majority independent board, and on a case-by-case basis on proposals that
have been approved by a board that fails to meet the guidelines' basic independence standards (i.e., majority
of independent directors and independent nominating, audit, and compensation committees). |
|
|
| The funds generally favor compensation programs that
relate executive compensation to a company's long-term performance. The funds will vote on a case-by-case basis
on board-approved proposals relating to executive compensation, except as follows: |
| ► |
Except where the funds are otherwise withholding votes for
the entire board of directors, the funds will vote for stock option and restricted stock plans that will result
in an average annual dilution of 1.67% or less (based on the disclosed term of the plan and including all equity-based
plans). |
| ► |
The funds will vote against stock option and
restricted stock plans that will result in an average annual dilution of greater than 1.67% (based on the disclosed term
of the plan and including all equity-based plans). |
| ► |
The funds will vote against any stock option
or restricted stock plan where the company's actual grants of stock options and restricted stock under all equity-based compensation
plans during the prior three (3) fiscal years have resulted in an average annual dilution of greater than 1.67%. |
| ► |
The funds will vote against stock option plans
that permit the replacing or repricing of underwater options (and against any proposal to authorize a replacement or repricing
of underwater options). |
| ► |
The funds will vote against stock option plans
that permit issuance of options with an exercise price below the stock's current market price. |
| ► |
The funds will vote against stock option plans
with evergreen features providing for automatic share replenishment. |
| ► |
Except where the funds are otherwise withholding votes for
the entire board of directors, the funds will vote for an employee stock purchase plan that has the following features:
(1) the shares purchased under the plan are acquired for no less than 85% of their market value; (2) the offering period under
the plan is 27 months or less; and (3) dilution is 10% or less. |
| ► |
The funds will vote for proposals to approve
a company's executive compensation program (i.e., “say on pay” proposals in which the company's board proposes
that shareholders indicate their support for the company's compensation philosophy, policies, and practices), except that the
funds will vote against the proposal if the company is assigned to the lowest category, through independent third
party benchmarking performed by the funds' proxy voting service, for the correlation of the company's executive compensation program
with its performance. |
| ► |
The funds will vote for bonus plans under
which payments are treated as performance-based compensation that is deductible under Section 162(m) of the Internal Revenue Code
of 1986, as amended, except that the funds will vote on a case-by-case basis if any of the following circumstances
exist: |
| | • |
the amount per employee under the plan is unlimited, or |
| | • |
the plan's performance criteria is undisclosed, or |
| | • |
the company is assigned to the lowest category, through
independent third party benchmarking performed by the funds' proxy voting service, for the correlation of the company's executive
compensation program with its performance. |
|
|
| Commentary: Companies should have compensation
programs that are reasonable and that align shareholder and management interests over the longer term. Further, disclosure
of compensation programs should provide absolute transparency to shareholders regarding the sources and amounts of,
and the factors influencing, executive compensation. Appropriately designed equity-based compensation plans can be
an effective way to align the interests of long-term shareholders with the interests of management. However, the
funds may vote against these or other executive compensation proposals on a case-by-case basis where compensation
is excessive by reasonable corporate standards, where a company fails to provide transparent disclosure of executive
compensation, or, in some instances, where independent third-party benchmarking indicates that compensation is inadequately
correlated with performance, relative to peer companies. (Examples of excessive executive compensation may include,
but are not limited to, equity incentive plans that exceed the dilution criteria noted above, evergreen provisions,
excessive perquisites, performance-based compensation programs that do not properly correlate reward and performance,
“golden parachutes” or other severance arrangements that present conflicts between management's interests
and the interests of shareholders, and “golden coffins” or unearned death benefits.) In voting on a proposal
relating to executive compensation, the funds will consider whether the proposal has been approved by an independent
compensation committee of the board. |
|
|
| Many proxy proposals involve changes in a company's capitalization,
including the authorization of additional stock, the issuance of stock, the repurchase of outstanding stock, or the
approval of a stock split. The management of a company's capital structure involves a number of important issues,
including cash flow, financing needs, and market conditions that are unique to the circumstances of the company.
As a result, the funds will vote on a case-by-case basis on board-approved proposals involving changes
to a company's capitalization, except that where the funds are not otherwise withholding votes from the entire board
of directors: |
| ► |
The funds will vote for proposals relating
to the authorization and issuance of additional common stock, except that the funds will evaluate such proposals on a case-by-case
basis if they relate to a specific transaction or to common stock with special voting rights. |
| ► |
The funds will vote for proposals to effect
stock splits (excluding reverse stock splits). |
| ► |
The funds will vote for proposals authorizing
share repurchase programs, except that the funds will vote on a case-by-case basis if there are concerns that there
may be abusive practices related to the share repurchase programs. |
|
|
| Commentary: A company may decide to
authorize additional shares of common stock for reasons relating to executive compensation or for routine business
purposes. For the most part, these decisions are best left to the board of directors and senior management. The funds
will vote on a case-by-case basis, however, on other proposals to change a company's capitalization, including the
authorization of common stock with special voting rights, the authorization or issuance of common stock in connection
with a specific transaction (e.g., an acquisition, merger or reorganization), the authorization or issuance
of preferred stock, or the authorization of share repurchase programs that have the potential to facilitate abusive
practices. Actions such as these involve a number of considerations that may affect a shareholder's investment and
that warrant a case-by-case determination. One such consideration is the funds' belief that, as a general matter,
common shareholders should have equal voting rights. With respect to proposals authorizing share repurchase programs,
potentially abusive practices may involve programs that allow insiders' shares to be repurchased at a higher price
than the price that would be received in an open-market sale, using a share repurchase program to manipulate metrics
for incentive compensation, or engaging in greenmail or repurchases that may impact a company's long-term viability. |
|
|
| Acquisitions, Mergers, Reincorporations, Reorganizations
and Other Transactions |
|
|
| Shareholders may be confronted with a number of different
types of transactions, including acquisitions, mergers, reorganizations involving business combinations, liquidations,
and the sale of all or substantially all of a company's assets, which may require their consent. Voting on such proposals
involves considerations unique to each transaction. As a result, the funds will vote on a case-by-case basis
on board-approved proposals to effect these types of transactions, except as follows: |
| ► |
The funds will vote for mergers and reorganizations
involving business combinations designed solely to reincorporate a company in Delaware. |
|
|
| Commentary: A company may reincorporate
into another state through a merger or reorganization by setting up a “shell” company in a different
state and then merging the company into the new company. While reincorporation into states with extensive and established
corporate laws — notably Delaware — provides companies and shareholders with a more well-defined legal
framework, shareholders must carefully consider the reasons for a reincorporation into another jurisdiction, including
especially an offshore jurisdiction. |
|
|
| Some proxy proposals involve efforts by management to
make it more difficult for an outside party to take control of the company without the approval of the company's
board of directors. These include the adoption of a shareholder rights plan, requiring supermajority voting on particular
issues, the adoption of fair price provisions, the issuance of blank check preferred stock, and the creation of a
separate class of stock with disparate voting rights. Such proposals may adversely affect shareholder rights, lead
to management entrenchment, or create conflicts of interest. As a result, the funds will vote against
board-approved proposals to adopt such anti-takeover measures, except as follows: |
| ► |
The funds will vote on a case-by-case basis
on proposals to ratify or approve shareholder rights plans; and |
| ► |
The funds will vote on a case-by-case basis
on proposals to adopt fair price provisions. |
|
|
| Commentary: The funds' Trustees recognize
that poison pills and fair price provisions may enhance or protect shareholder value under certain circumstances,
and accordingly the funds will consider proposals to approve such matters on a case-by-case basis. |
|
|
| Many proxies involve approval of routine business matters,
such as changing a company's name, ratifying the appointment of auditors, and procedural matters relating to the
shareholder meeting. For the most part, these routine matters do not materially affect shareholder interests and
are best left to the board of directors and senior management of the company. The funds will vote for
board-approved proposals approving such matters, except as follows: |
| ► |
The funds will vote on a case-by-case basis
on proposals to amend a company's charter or bylaws (except for charter amendments necessary to effect stock splits, to change
a company's name or to authorize additional shares of common stock). |
| ► |
The funds will vote against authorization
to transact other unidentified, substantive business at the meeting. |
| ► |
The funds will vote on a case-by-case basis
on proposals to ratify the selection of independent auditors if there is evidence that the audit firm's independence or the integrity
of an audit is compromised. |
| ► |
The funds will vote on a case-by-case basis
on board-approved proposals that conflict with shareholder proposals. |
| ► |
The funds will vote on a case-by-case basis
on other business matters where the funds are otherwise withholding votes for the entire board of directors. |
|
|
| Commentary: Charter and bylaw amendments
(for example, amendments implementing proxy access proposals), board-approved proposals that conflict with shareholder
proposals, and the transaction of other unidentified, substantive business at a shareholder meeting may directly
affect shareholder rights and have a significant impact on shareholder value. As a result, the funds do not view
these items as routine business matters. Putnam Management's investment professionals and the funds' proxy voting
service may also bring to the Proxy Voting Director's attention company-specific items that they believe to be non-routine
and warranting special consideration. Under these circumstances, the funds will vote on a case-by-case basis. |
|
|
| The fund's proxy voting service may identify circumstances
that call into question an audit firm's independence or the integrity of an audit. These circumstances may include
recent material restatements of financials, unusual audit fees, egregious contractual relationships (including inappropriately
one-sided dispute resolution procedures), and aggressive accounting policies. The funds will consider proposals to
ratify the selection of auditors in these circumstances on a case-by-case basis. In all other cases, given the existence
of rules that enhance the independence of audit committees and auditors by, for example, prohibiting auditors from
performing a range of non-audit services for audit clients, the funds will vote for the ratification of independent
auditors. |
|
|
| II. SHAREHOLDER PROPOSALS |
|
|
| SEC regulations permit shareholders to submit proposals
for inclusion in a company's proxy statement. These proposals generally seek to change some aspect of the company's
corporate governance structure or to change some aspect of its business operations. The funds generally will vote
in accordance with the recommendation of the company's board of directors on all shareholder proposals,
except as follows: |
| ► |
The funds will vote on a case-by-case basis
on shareholder proposals requiring that the chairman's position be filled by someone other than the chief executive officer. |
| ► |
The funds will vote for shareholder proposals
asking that director nominees receive support from holders of a majority of votes cast or a majority of shares outstanding in
order to be (re)elected. |
| ► |
The funds will vote for shareholder proposals
to declassify a board, absent special circumstances which would indicate that shareholder interests are better served by a classified
board structure. |
| ► |
The funds will vote for shareholder proposals
to eliminate supermajority vote requirements in the company's charter documents, except that the funds will vote on a case-by-case
basis on such proposals at controlled companies (companies in which an individual or a group voting collectively holds
a majority of the voting interest). |
| ► |
The funds will vote for shareholder proposals
to require shareholder approval of shareholder rights plans. |
| ► |
The funds will vote for shareholder proposals to amend a
company's charter documents to permit shareholders to call special meetings, but only if both of the following conditions are
met: |
| | • |
the proposed amendment limits the right to call special
meetings to shareholders holding at least 15% of the company's outstanding shares, and |
| | • |
applicable state law does not otherwise provide shareholders
with the right to call special meetings. |
| ► |
The funds will vote on a case-by-case basis
on shareholder proposals relating to proxy access. |
| ► |
The funds will vote for shareholder proposals
requiring companies to make cash payments under management severance agreements only if both of the following conditions are met: |
| | • |
the company undergoes a change in control, and |
| | • |
the change in control results in the termination of employment
for the person receiving the severance payment. |
| ► |
The funds will vote for shareholder proposals
requiring companies to accelerate vesting of equity awards under management severance agreements only if both of the following
conditions are met: |
| | • |
the company undergoes a change in control, and |
| | • |
the change in control results in the termination of employment
for the person receiving the severance payment. |
| ► |
The funds will vote on a case-by-case basis
on shareholder proposals to limit a company's ability to make excise tax gross-up payments under management severance agreements
as well as proposals to limit income or other tax gross-up payments. |
| ► |
The funds will vote on a case-by-case basis
on shareholder proposals requesting that the board adopt a policy to recoup, in the event of a significant restatement of financial
results or significant extraordinary write-off, to the fullest extent practicable, for the benefit of the company, all performance-based
bonuses or awards that were paid to senior executives based on the company having met or exceeded specific performance targets
to the extent that the specific performance targets were not, in fact, met. |
| ► |
The funds will vote for shareholder proposals
calling for the company to obtain shareholder approval for any future golden coffins or unearned death benefits (payments or awards
of unearned salary or bonus, accelerated vesting or the continuation of unvested equity awards, perquisites or other payments
or awards in respect of an executive following his or her death), and for shareholder proposals calling for the
company to cease providing golden coffins or unearned death benefits. |
| ► |
The funds will vote for shareholder proposals
requiring a company to report on its executive retirement benefits (e.g., deferred compensation, split-dollar life insurance,
SERPs and pension benefits). |
| ► |
The funds will vote for shareholder proposals
requiring a company to disclose its relationships with executive compensation consultants (e.g., whether the company, the
board or the compensation committee retained the consultant, the types of services provided by the consultant over the past five
years, and a list of the consultant's clients on which any of the company's executives serve as a director). |
| ► |
The funds will vote on a case-by-case basis
on shareholder proposals related to environmental and social initiatives. |
| ► |
The funds will vote for shareholder proposals
that are consistent with the funds' proxy voting guidelines for board-approved proposals. |
| ► |
The funds will vote on a case-by-case basis
on shareholder proposals that conflict with board-approved proposals. |
| ► |
The funds will vote on a case-by-case basis
on other shareholder proposals where the funds are otherwise withholding votes for the entire board of directors. |
|
|
| Commentary: The funds' Trustees believe
that effective corporate reforms should be promoted by holding boards of directors — and in particular their
independent directors — accountable for their actions, rather than by imposing additional legal restrictions
on board governance through piecemeal proposals. As stated above, the funds' Trustees believe that boards of directors
and management are responsible for ensuring that their businesses are operating in accordance with high legal and
ethical standards and should be held accountable for resulting corporate behavior. Accordingly, the funds will generally
support the recommendations of boards that meet the basic independence and governance standards established in these
guidelines. Where boards fail to meet these standards, the funds will generally evaluate shareholder proposals on
a case-by-case basis. |
|
|
| There are some types of proposals that the funds will
evaluate on a case-by-case basis in any event. For example, when shareholder proposals conflict with board-approved
approvals, the funds will generally evaluate both proposals on a case-by-case basis, considering the materiality
of the differences between the proposals, the benefits to shareholders from each proposal, and the strength of the
company's corporate governance, among other factors, in determining which proposal to support. In addition, the funds
will also consider proposals requiring that the chairman's position be filled by someone other than the company's
chief executive officer on a case-by-case basis, recognizing that in some cases this separation may advance the company's
corporate governance while in other cases it may be less necessary to the sound governance of the company. The funds
will take into account the level of independent leadership on a company's board in evaluating these proposals. The
funds will be more likely to vote for shareholder proposals calling for the separation of the roles of the chief
executive and chair of the board if the company has a non-independent board, non-independent directors on the nominating,
compensation or audit committees, or a weak lead independent director role, or if the board has not worked toward
addressing material risks to the company, has chosen not to intervene when management interests conflict with shareholder
interests, or has had other material governance failures. |
|
|
| While the funds will also consider shareholder proposals
relating to proxy access on a case-by-case basis, the funds will generally vote in favor of market-standard proxy
access proposals (for example, proxy access proposals allowing a shareholder or group of up to 20 shareholders holding
three percent of a company's outstanding shares for at least three years the right to nominate the greater of up
to two directors or 20% of the board). The funds believe that shareholders meeting these criteria generally have
demonstrated a sufficient interest in the company that they should be granted access to a company's proxy materials
to include their nominees for election alongside the company's nominees. |
|
|
| The funds generally support shareholder proposals to
implement majority voting for directors, observing that majority voting is an emerging standard intended to encourage
directors to be attentive to shareholders' interests. The funds also generally support shareholder proposals to declassify
a board, to eliminate supermajority vote requirements, or to require shareholder approval of shareholder rights plans.
(For proposals to eliminate supermajority vote requirements at companies in which an individual or a group voting
collectively holds a majority of the voting interest, the funds vote on a case-by-case basis, taking into account
the interests of minority shareholders.) The funds' Trustees believe that these shareholder proposals further the
goals of reducing management entrenchment and conflicts of interest, and aligning management's interests with shareholders'
interests in evaluating proposed acquisitions of the company. The Trustees also believe that shareholder proposals
to limit severance payments may further these goals in some instances. In general, the funds favor arrangements in
which severance payments are made to an executive only when there is a change in control and the executive loses
his or her job as a result. Arrangements in which an executive receives a payment upon a change of control even if
the executive retains employment introduce potential conflicts of interest and may distract management focus from
the long term success of the company. |
|
|
| In evaluating shareholder proposals that address severance
payments, the funds distinguish between cash and equity payments. The funds generally do not favor cash payments
to executives upon a change in control transaction if the executive retains employment. However, the funds recognize
that accelerated vesting of equity incentives, even without termination of employment, may help to align management
and shareholder interests in some instances, and will evaluate shareholder proposals addressing accelerated vesting
of equity incentive payments on a case-by-case basis. |
|
|
| When severance payments exceed a certain amount based
on the executive's previous compensation, the payments may be subject to an excise tax. Some compensation arrangements
provide for full excise tax gross-ups, which means that the company pays the executive sufficient additional amounts
to cover the cost of the excise tax. The funds are concerned that the benefits of providing full excise tax gross-ups
to executives may be outweighed by the cost to the company of the gross-up payments. Accordingly, the funds will
vote on a case-by-case basis on shareholder proposals to curtail excise tax gross-up payments. The funds generally
favor arrangements in which severance payments do not trigger an excise tax or in which the company's obligations
with respect to gross-up payments are limited in a reasonable manner. |
|
|
| The funds' Trustees believe that performance-based compensation
can be an effective tool for aligning management and shareholder interests. However, to fulfill its purpose, performance
compensation should only be paid to executives if the performance targets are actually met. A significant restatement
of financial results or a significant extraordinary write-off may reveal that executives who were previously paid
performance compensation did not actually deliver the required business performance to earn that compensation. In
these circumstances, it may be appropriate for the company to recoup this performance compensation. The funds will
consider on a case-by-case basis shareholder proposals requesting that the board adopt a policy to recoup, in the
event of a significant restatement of financial results or significant extraordinary write-off, performance-based
bonuses or awards paid to senior executives based on the company having met or exceeded specific performance targets
to the extent that the specific performance targets were not, in fact, met. The funds do not believe that such a
policy should necessarily disadvantage a company in recruiting executives, as executives should understand that they
are only entitled to performance compensation based on the actual performance they deliver. |
|
|
| The funds' Trustees disfavor golden coffins or unearned
death benefits, and the funds will generally support shareholder proposals to restrict or terminate these practices.
The Trustees will also consider whether a company's overall compensation arrangements, taking all of the pertinent
circumstances into account, constitute excessive compensation or otherwise reflect poorly on the corporate governance
practices of the company. As the Trustees evaluate these matters, they will be mindful of evolving practices and
legislation relevant to executive compensation and corporate governance. |
|
|
| The funds' Trustees recognize the importance of environmental
and social responsibility. In evaluating shareholder proposals with respect to environmental and social initiatives
(including initiatives related to climate change and gender pay equity), the funds will take into account the relevance
of the proposal to the company's business and the practicality of implementing the proposal, including the impact
on the company's business activities, operations, and stakeholders. The funds will generally vote for proposals calling
for reasonable study or reporting relating to climate change matters that are clearly relevant to the company's business
activities, taking into consideration, when appropriate, the company's current publicly available disclosure and
the company's level of disclosure and oversight of climate change matters relative to its industry peers. With respect
to shareholder proposals related to diversity initiatives, the funds will assess the proposals in a manner that is
broadly consistent with the funds' approach to holding the board of directors directly accountable for diversity
on the board. |
|
|
| The funds' Trustees also believe that shareholder proposals
that are intended to increase transparency, particularly with respect to executive compensation, without establishing
rigid restrictions upon a company's ability to attract and motivate talented executives, are generally beneficial
to sound corporate governance without imposing undue burdens. The funds will generally support shareholder proposals
calling for reasonable disclosure. |
|
|
| III. VOTING SHARES OF NON-U.S. ISSUERS |
|
|
| Many of the Putnam funds invest on a global basis, and,
as a result, they may hold, and have an opportunity to vote, shares in non-U.S. issuers — i.e., issuers that
are incorporated under the laws of foreign jurisdictions and whose shares are not listed on a U.S. securities exchange
or the NASDAQ stock market. |
|
|
| In many non-U.S. markets, shareholders who vote proxies
of a non-U.S. issuer are not able to trade in that company's stock on or around the shareholder meeting date. This
practice is known as “share blocking.” In countries where share blocking is practiced, the funds will
vote proxies only with direction from Putnam Management's investment professionals. |
|
|
| In addition, some non-U.S. markets require that a company's
shares be re-registered out of the name of the local custodian or nominee into the name of the shareholder for the
shareholder to be able to vote at the meeting. This practice is known as “share re-registration.” As
a result, shareholders, including the funds, are not able to trade in that company's stock until the shares are re-registered
back in the name of the local custodian or nominee following the meeting. In countries where share re-registration
is practiced, the funds will generally not vote proxies. |
|
|
| Protection for shareholders of non-U.S. issuers may vary
significantly from jurisdiction to jurisdiction. Laws governing non-U.S. issuers may, in some cases, provide substantially
less protection for shareholders than do U.S. laws. As a result, the guidelines applicable to U.S. issuers, which
are premised on the existence of a sound corporate governance and disclosure framework, may not be appropriate under
some circumstances for non-U.S. issuers. However, the funds will vote proxies of non-U.S. issuers in accordance
with the guidelines applicable to U.S. issuers except as follows: |
|
|
| Uncontested Board Elections |
|
|
| China, India, Indonesia, Philippines, Taiwan and Thailand |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
fewer than one-third of the directors are independent
directors, or |
| | • |
the board has not established audit, compensation and nominating
committees each composed of a majority of independent directors. |
|
|
| Commentary: Whether a director is considered
“independent” or not will be determined by reference to local corporate law or listing standards. |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
the board has not established audit and compensation committees
each composed of a majority of independent, non-executive directors, or |
| | • |
the board has not established a nominating committee composed
of a majority of independent directors. |
|
|
| Commentary: An “independent director”
under the European Commission's guidelines is one who is free of any business, family or other relationship, with
the company, its controlling shareholder or the management of either, that creates a conflict of interest such as
to impair his judgment. A “non-executive director” is one who is not engaged in the daily management
of the company. |
| ► |
For companies subject to “co-determination,”
the funds will vote for the election of nominees to the supervisory board, except that the funds will vote on a
case-by-case basis for any nominee who is either an employee of the company or who is otherwise affiliated with
the company (as determined by the funds' proxy voting service). |
| ► |
The funds will withhold votes for the election
of a former member of the company's managerial board to chair of the supervisory board. |
|
|
| Commentary: German corporate governance
is characterized by a two-tier board system — a managerial board composed of the company's executive officers,
and a supervisory board. The supervisory board appoints the members of the managerial board. Shareholders elect members
of the supervisory board, except that in the case of companies with a large number of employees, company employees
are allowed to elect some of the supervisory board members (one-half of supervisory board members are elected by
company employees at companies with more than 2,000 employees; one-third of the supervisory board members are elected
by company employees at companies with more than 500 employees but fewer than 2,000). This “co-determination”
practice may increase the chances that the supervisory board of a large German company does not contain a majority
of independent members. In this situation, under the Fund's proxy voting guidelines applicable to U.S. issuers, the
funds would vote against all nominees. However, in the case of companies subject to “co-determination”
and with the goal of supporting independent nominees, the Funds will vote for supervisory board members who are neither
employees of the company nor otherwise affiliated with the company. |
|
|
| Consistent with the funds' belief that the interests
of shareholders are best protected by boards with strong, independent leadership, the funds will withhold votes for
the election of former chairs of the managerial board to chair of the supervisory board. |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
fewer than one-third of the directors are independent
directors, or |
| | • |
the board has not established audit, compensation and nominating
committees each with at least a majority of its members being independent directors, or |
| | • |
the chair of the audit, compensation or nominating committee
is not an independent director. |
|
|
| Commentary. For purposes of these guidelines,
an “independent director” is a director that has no material, financial or other current relationships
with the company. In determining whether a director is independent, the funds will apply the standards included in
the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited Section 3.13. |
| ► |
The funds will withhold votes from any director
not identified in the proxy materials. |
|
|
| Commentary: In Italy, companies have
the right to nominate co-opted directors2 for election to the board at the next annual general meeting,
but do not have to indicate, until the day of the annual meeting, whether or not they are nominating a co-opted director
for election. When a company does not explicitly state in its proxy materials that co-opted directors are standing
for election, shareholders will not know for sure who the board nominees are until the actual meeting occurs. The
funds will withhold support from any such co-opted director on the grounds that there was insufficient information
for evaluation before the meeting. |
| ► |
For companies that have established a U.S.-style corporate
governance structure, the funds will withhold votes from the entire board of directors if |
| | • |
the board does not have a majority of outside directors, |
| | • |
the board has not established nominating and compensation
committees composed of a majority of outside directors, or |
| | • |
the board has not established an audit committee composed
of a majority of independent directors. |
| ► |
The funds will withhold votes for the appointment
of members of a company's board of statutory auditors if a majority of the members of the board of statutory auditors is not independent. |
|
|
| Board structure: Recent amendments to the Japanese
Commercial Code give companies the option to adopt a U.S.-style corporate governance structure (i.e., a board
of directors and audit, nominating, and compensation committees). The funds will vote for proposals
to amend a company's articles of incorporation to adopt the U.S.-style corporate structure. |
|
|
| Definition of outside director and independent director:
Corporate governance principles in Japan focus on the distinction between outside directors and independent directors.
Under these principles, an outside director is a director who is not and has never been a director, executive, or
employee of the company or its parent company, subsidiaries or affiliates. An outside director is “independent”
if that person can make decisions completely independent from the managers of the company, its parent, subsidiaries,
or affiliates and does not have a material relationship with the company (i.e., major client, trading partner,
or other business relationship; familial relationship with current director or executive; etc.). The guidelines have
incorporated these definitions in applying the board independence standards above. |
|
|
2 | A
co-opted director is an individual appointed to the board by incumbent directors to replace
a director who was elected by directors but who leaves the board (through resignation
or death) before the end of his or her term. |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
fewer than half of the directors are outside directors, |
| | • |
the board has not established a nominating committee with
at least half of the members being outside directors, or |
| | • |
the board has not established an audit committee composed
of at least three members and in which at least two-thirds of its members are outside directors. |
| ► |
The funds will vote withhold votes from nominees
to the audit committee if the board has not established an audit committee composed of (or proposed to be composed of) at least
three members, and of which at least two-thirds of its members are (or will be) outside directors. |
|
|
| Commentary: For purposes of these guidelines,
an “outside director” is a director that is independent from the management or controlling shareholders
of the company, and holds no interests that might impair the performance his or her duties impartially with respect
to the company, management or controlling shareholder. In determining whether a director is an outside director,
the funds will also apply the standards included in Article 415–2(2) of the Korean Commercial Code (i.e.,
no employment relationship with the company for a period of two years before serving on the committee, no director
or employment relationship with the company's largest shareholder, etc.) and may consider other business relationships
that would affect the independence of an outside director. |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
in the case of a board with an independent director
serving as chair, fewer than one-third of the directors are independent directors; or, in the case of a board not chaired
by an independent director, less than a majority of the directors are independent directors, |
| | • |
the board has not established audit and nominating committees
with at least a majority of the members being independent directors and all of the members being non-executive directors,
or |
| | • |
the board has not established a compensation committee with
at least a majority of the members being non-executive directors. |
|
|
| Commentary. For purposes of these guidelines,
an “independent director” is a director who has no material, financial or other current relationships
with the company. In determining whether a director is independent, the funds will apply the standards included in
the Malaysia Code of Corporate Governance, Commentary to Recommendation 3.1. A “non-executive director”
is a director who does not take on primary responsibility for leadership of the company. |
| ► |
The funds will vote on a case-by-case basis
for the election of nominees to the board of directors. |
|
|
| Commentary: In Russia, director elections
are typically handled through a cumulative voting process. Cumulative voting allows shareholders to cast all of their
votes for a single nominee for the board of directors, or to allocate their votes among nominees in any other way.
In contrast, in “regular” voting, shareholders may not give more than one vote per share to any single
nominee. Cumulative voting can help to strengthen the ability of minority shareholders to elect a director. |
|
|
| In Russia, as in some other emerging markets, standards
of corporate governance are usually behind those in developed markets. Rather than vote against the entire board
of directors, as the funds generally would in the case of a company whose board fails to meet the funds' standards
for independence, the funds may, on a case by case basis, cast all of their votes for one or more independent director
nominees. The funds believe that it is important to increase the number of independent directors on the boards of
Russian companies to mitigate the risks associated with dominant shareholders. |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
in the case of a board with an independent director
serving as chair, fewer than one-third of the directors are independent directors; or, in the case of a board not chaired
by an independent director, fewer than half of the directors are independent directors, |
| | • |
the board has not established audit and compensation committees,
each with an independent director serving as chair, with at least a majority of the members being independent directors,
and with all of the directors being non-executive directors, or |
| | • |
the board has not established a nominating committee, with
an independent director serving as chair, and with at least a majority of the members being independent directors. |
|
|
| Commentary: For purposes of these guidelines,
an “independent director” is a director that has no material, financial or other current relationships
with the company. In determining whether a director is independent, the funds will apply the standards included in
the Singapore Code of Corporate Governance, Guideline 2.3. A “non-executive director” is a director who
is not employed with the company. |
| ► |
The funds will withhold votes from the entire
board of directors if |
| | • |
fewer than half of the directors are independent non-executive
directors, |
| | • |
the board has not established a nomination committee composed
of a majority of independent non-executive directors, or |
| | • |
the board has not established compensation and audit committees
composed of (1) at least three directors (in the case of smaller companies, two directors) and (2) solely independent non-executive
directors, provided that, to the extent permitted under the United Kingdom's Combined Code on Corporate Governance, the company
chairman may serve on (but not serve as chairman of) the compensation and audit committees if the chairman was considered independent
upon his or her appointment as chairman. |
| ► |
The funds will withhold votes from any nominee
for director who is considered an independent director by the company and who has received compensation within the last three
years from the company other than for service as a director, such as investment banking, consulting, legal, or financial advisory
fees. |
| ► |
The funds will vote for proposals to amend
a company's articles of association to authorize boards to approve situations that might be interpreted to present potential conflicts
of interest affecting a director. |
|
|
| Application of guidelines: Although the United
Kingdom's Combined Code on Corporate Governance (“Combined Code”) has adopted the “comply and explain”
approach to corporate governance, the funds' Trustees believe that the guidelines discussed above with respect to
board independence standards are integral to the protection of investors in U.K. companies. As a result, these guidelines
will generally be applied in a prescriptive manner. |
|
|
| Definition of independence: For the purposes of
these guidelines, a non-executive director shall be considered independent if the director meets the independence
standards in section A.3.1 of the Combined Code (i.e., no material business or employment relationships with
the company, no remuneration from the company for non-board services, no close family ties with senior employees
or directors of the company, etc.), except that the funds do not view service on the board for more than nine years
as affecting a director's independence. Company chairmen in the U.K. are generally considered affiliated upon appointment
as chairman due to the nature of the position of chairman. Consistent with the Combined Code, a company chairman
who was considered independent upon appointment as chairman: may serve as a member of, but not as the chairman of,
the compensation (remuneration) committee; and, in the case of smaller companies, may serve as a member of, but not
as the chairman of, the audit committee. |
|
|
| Smaller companies: A smaller company is one that
is below the FTSE 350 throughout the year immediately prior to the reporting year. |
|
|
| Conflicts of interest: The Companies Act 2006
requires a director to avoid a situation in which he or she has, or can have, a direct or indirect interest that
conflicts, or possibly may conflict, with the interests of the company. This broadly written requirement could be
construed to prevent a director from becoming a trustee or director of another organization. Provided there are reasonable
safeguards, such as the exclusion of the relevant director from deliberations, the funds believe that the board may
approve this type of potential conflict of interest in its discretion. |
| ► |
The funds will vote for supervisory board
nominees when the supervisory board meets the funds' independence standards, otherwise the funds will vote against
supervisory board nominees. |
|
|
| Commentary: Companies in many jurisdictions
operate under the oversight of supervisory boards. In the absence of jurisdiction-specific guidelines, the funds
will generally hold supervisory boards to the same standards of independence as it applies to boards of directors
in the United States. |
|
|
| Contested Board Elections |
| ► |
The funds will vote for the management- or
board-sponsored slate of nominees if the board meets the funds' independence standards, and against the management-
or board-sponsored slate of nominees if the board does not meet the funds' independence standards; the funds will not vote on
shareholder-proposed slates of nominees. |
|
|
| Commentary: Contested elections in
Italy may involve a variety of competing slates of nominees. In these circumstances, the funds will focus their analysis
on the board- or management-sponsored slate. |
| ► |
The funds will vote for proposals to change
the size of a board if the board meets the funds' independence standards, and against proposals to change the size
of a board if the board does not meet the funds' independence standards. |
| ► |
The funds will vote for shareholder proposals
calling for a majority of a company's directors to be independent of management. |
| ► |
The funds will vote for shareholder proposals
seeking to increase the independence of board nominating, audit, and compensation committees. |
| ► |
The funds will vote for shareholder proposals
that implement corporate governance standards similar to those established under U.S. federal law and the listing requirements
of U.S. stock exchanges, and that do not otherwise violate the laws of the jurisdiction under which the company is incorporated. |
| ► |
The funds will vote on a case-by-case basis
on board spill resolutions. |
|
|
| Commentary: The Corporations Amendment
(Improving Accountability on Director and Executive Compensation) Bill 2011 provides that, if a company's remuneration
report receives a “no” vote of 25% or more of all votes cast at two consecutive annual general meetings,
at the second annual general meeting, a spill resolution must be proposed. If the spill resolution is approved (by
simple majority), then a further meeting to elect a new board (excluding the managing director) must be held within
90 days. The funds will consider board spill resolutions on a case-by-case basis. |
| ► |
The funds will vote for proposals to ratify
board acts, except that the funds will consider these proposals on a case-by-case basis if the funds' proxy voting
service has recommended a vote against the proposal. |
| ► |
The funds will vote against proposals to release
directors from their non-competition obligations (their obligations not to engage in any business that is competitive with the
company), unless the proposal is narrowly drafted to permit directors to engage in a business that is competitive with the company
only on behalf of a wholly-owned subsidiary of the company. |
| ► |
The funds will vote for proposals to approve
annual directors' fees, except that the funds will consider these proposals on a case-by-case basis in each case
in which the funds' proxy voting service has recommended a vote against such a proposal. |
| ► |
The funds will vote for non-binding proposals
to approve remuneration reports, except that the funds will vote against proposals to approve remuneration reports
that indicate that awards under a long-term incentive plan are not linked to performance targets. |
|
|
| Commentary: Since proposals relating
to directors' fees for non-U.S. issuers generally address relatively modest fees paid to non-executive directors,
the funds generally support these proposals, provided that the fees are consistent with directors' fees paid by the
company's peers and do not otherwise appear unwarranted. Consistent with the approach taken for U.S. issuers, the
funds generally favor compensation programs that relate executive compensation to a company's long-term performance
and will support non-binding remuneration reports unless such a correlation is not made. |
| ► |
In the case of proposals that do not include sufficient
information for determining average annual dilution, the funds will vote for stock option and restricted stock plans
that will result in an average gross potential dilution of 5% or less. |
|
|
| Commentary: Asia ex-Japan means China,
Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand. In these markets, companies
may not disclose the life of the plan and there may not be a specific number of shares requested; therefore, it may
not be possible to determine the average annual dilution related to the plan and apply the funds' standard dilution
test. |
| ► |
The funds will vote for an employee stock
purchase plan or share save scheme that has the following features: (1) the shares purchased under the plan are acquired for no
less than 70% of their market value; (2) the vesting period is greater than or equal to 10 years; (3) the offering period under
the plan is 27 months or less; and (4) dilution is 10% or less. |
|
|
| Commentary: To conform to local market
practice, the funds support plans or schemes at French issuers that permit the purchase of shares at up to a 30%
discount (i.e., shares may be purchased for no less than 70% of their market value). By comparison, for U.S.
issuers, the funds do not support employee stock purchase plans that permit shares to be acquired at more than a
15% discount (i.e., for less than 85% of their market value); in the United Kingdom, up to a 20% discount
is permitted. |
| ► |
The funds will vote for an employee stock
purchase plan or share save scheme that has the following features: (1) the shares purchased under the plan are acquired for no
less than 80% of their market value; (2) the offering period under the plan is 27 months or less; and (3) dilution is 10% or less. |
|
|
| Commentary: These are the same features
that the funds require of employee stock purchase plans proposed by U.S. issuers, except that, to conform to local
market practice, the funds support plans or schemes at United Kingdom issuers that permit the purchase of shares
at up to a 20% discount (i.e., shares may be purchased for no less than 80% of their market value). By comparison,
for U.S. issuers, the funds do not support employee stock purchase plans that permit shares to be acquired at more
than a 15% discount (i.e., for less than 85% of their market value). |
|
|
| Unless a proposal is directly addressed by a country-specific
guideline: |
| ► |
The funds will vote for proposals |
| | • |
to issue additional common stock representing up to 20%
of the company's outstanding common stock, where shareholders do not have preemptive rights, or |
| | • |
to issue additional common stock representing up to 100%
of the company's outstanding common stock, where shareholders do have preemptive rights. |
| ► |
The funds will vote for proposals to authorize
share repurchase programs that are recommended for approval by the funds' proxy voting service; otherwise, the funds will vote
against such proposals. |
| ► |
The funds will vote for proposals to carve
out, from the general cap on non-pro rata share issues of 15% of total equity in a rolling 12-month period, a particular
proposed issue of shares or a particular issue of shares made previously within the 12-month period, if the company's board meets
the funds' independence standards; if the company's board does not meet the funds' independence standards, then the funds will
vote against these proposals. |
| ► |
The funds will vote for proposals to approve
the grant of equity awards to directors, except that the funds will consider these proposals on a case-by-case basis
if the funds' proxy voting service has recommended a vote against the proposal. |
| ► |
The funds will vote for proposals to issue
and/or to trade in non-convertible, convertible and/or exchangeable debt obligations, except that the funds will consider these
proposals on a case-by-case basis if the funds' proxy voting service has recommended a vote against the proposal. |
| ► |
The funds will vote for proposals to approve
a general mandate permitting the company to engage in non-pro rata share issues of up to 20% of total equity in a year
if the company's board meets the funds' independence standards; if the company's board does not meet the funds' independence standards,
then the funds will vote against these proposals. |
| ► |
The funds will for proposals to approve the reissuance
of shares acquired by the company under a share repurchase program, provided that: (1) the funds supported (or would have supported,
in accordance with these guidelines) the share repurchase program, (2) the reissued shares represent no more than 10% of the company's
outstanding shares (measured immediately before the reissuance), and (3) the reissued shares are sold for no less than 85% of
current market value. |
| ► |
The funds will vote for proposals to increase
authorized shares, except that the funds will consider these proposals on a case-by-case basis if the funds' proxy
voting service has recommended a vote against the proposal. |
| ► |
The funds will vote against proposals to authorize
the issuance of common stock or convertible debt instruments and against proposals to authorize the repurchase and/or reissuance
of shares where those authorizations may be used, without further shareholder approval, as anti-takeover measures. |
| ► |
The funds will vote for proposals to approve
the grant of equity awards to directors, except that the funds will consider these proposals on a case-by-case basis
if the funds' proxy voting service has recommended a vote against the proposal. |
|
|
| Commentary: In light of the prevalence
of certain types of capitalization proposals in Australia, China, Hong Kong, France and New Zealand, the funds have
adopted guidelines specific to those jurisdictions. |
| ► |
The funds will vote for proposals permitting
companies to deliver reports and other materials electronically (e.g., via website posting). |
| ► |
The funds will vote for proposals permitting
companies to issue regulatory reports in English. |
| ► |
The funds will vote against proposals to shorten
shareholder meeting notice periods to fourteen days. |
|
|
| Commentary: Under Directive 2007/36/EC
of the European Parliament and the Council of the European Union, companies have the option to request shareholder
approval to set the notice period for special meetings at 14 days provided that certain electronic voting and communication
requirements are met. The funds believe that the 14 day notice period is too short to provide overseas shareholders
with sufficient time to analyze proposals and to participate meaningfully at special meetings and, as a result, have
determined to vote against such proposals. |
| ► |
The funds will vote for proposals to amend
a company's charter or bylaws, except that the funds will consider these proposals on a case-by-case basis if the
funds' proxy voting service has recommended a vote against the proposal. |
|
|
| Commentary: If the substance of any
proposed amendment is covered by a specific guideline included herein, then that guideline will govern. |
| ► |
The funds will vote for proposals to approve
a company's related party transactions, except that the funds will consider these proposals on a case-by-case basis
if the funds' proxy voting service has recommended a vote against the proposal. |
| ► |
If a company has not proposed an opt-out clause in its articles
of association and the implementation of double-voting rights has not been approved by shareholders, the funds will vote against
the ratification of board acts for the previous fiscal year, will withhold votes from the re-election of
members of the board's governance committee (or in the absence of a governance committee, against the chair of the board or the
next session board member up for re-election) and, if there is no opportunity to vote against ratification of board acts or to
withhold votes from directors, will vote against the approval of the company's accounts and reports. |
|
|
| Commentary: In France, shareholders
are generally requested to approve any agreement between the company and: (i) its directors, chair of the board,
CEO and deputy CEOs; (ii) the members of the supervisory board and management board, for companies with a dual structure;
and (iii) a shareholder who directly or indirectly owns at least 10% of the company's voting rights. This includes
agreements under which compensation may be paid to executive officers after the end of their employment, such as
severance payments, supplementary retirement plans and non-competition agreements. The funds will generally support
these proposals unless the funds' proxy voting service recommends a vote against, in which case the funds will consider
the proposal on a case-by-case basis. |
|
|
| Under French law, shareholders of French companies with
shares held in registered form under the same name for at least two years will automatically be granted double-voting
rights, unless a company has amended its articles of association to opt out of the double-voting rights regime. Awarding
double-voting rights in this manner is likely to disadvantage non-French institutional shareholders. Accordingly,
the funds will take actions to signal disapproval of double-voting rights at companies that have not opted-out from
the double-voting rights regime and that have not obtained shareholder approval of the double-voting rights regime. |
| ► |
The funds will vote in accordance with the recommendation
of the company's board of directors on shareholder countermotions added to a company's meeting agenda, unless the countermotion
is directly addressed by one of the funds' other guidelines. |
|
|
| Commentary: In Germany, shareholders
are able to add both proposals and countermotions to a meeting agenda. Countermotions, which must correspond to a
proposal on the agenda, generally call for shareholders to oppose the existing proposal, although they may also propose
separate voting decisions. Countermotions may be proposed by any shareholder and they are typically added throughout
the period between the publication of the meeting agenda and the meeting date. This guideline reflects the funds'
intention to focus on the original proposal, which is expected to be presented a reasonable period of time before
the shareholder meeting so that the funds will have an appropriate opportunity to evaluate it. |
| ► |
The funds will vote for proposals to approve
profit-and-loss transfer agreements between a controlling company and its subsidiaries. |
|
|
| Commentary: These agreements are customary
in Germany and are typically entered into for tax purposes. In light of this and the prevalence of these proposals,
the funds have adopted a guideline to vote for this type of proposal. |
| ► |
The funds will vote for proposals to amend
a Taiwanese company's procedural rules. |
|
|
| Commentary: Since procedural rules,
which address such matters as a company's policies with respect to capital loans, endorsements and guarantees, and
acquisitions and disposal of assets, are generally adopted or amended to conform to changes in local regulations
governing these transactions, the funds have adopted a guideline to vote for these transactions. |
|
|
| As adopted January 24, 2020 |
|
|
| Proxy voting procedures of The Putnam Funds |
|
|
| The proxy voting procedures below explain the role of
the funds' Trustees, proxy voting service, and Director of Proxy Voting and Corporate Governance (“Proxy Voting
Director”), as well as how the process works when a proxy question needs to be handled on a case-by-case basis,
or when there may be a conflict of interest. |
|
|
| The role of the funds' Trustees |
|
|
| The Trustees of The Putnam Funds exercise control of
voting proxies through their Board Policy and Nominating Committee, which is composed entirely of independent Trustees.
The Board Policy and Nominating Committee oversees the proxy voting process and participates, as needed, in the resolution
of issues that need to be handled on a case-by-case basis. The Committee annually reviews and recommends, for Trustee
approval, guidelines governing the funds' proxy votes, including how the funds will vote on specific proposals and
which matters are to be considered on a case-by-case basis. The Trustees are assisted in this process by the Proxy
Voting Director, independent legal counsel, and an independent proxy voting service. The Trustees also receive assistance
from Putnam Investment Management, LLC (“Putnam Management”), the funds' investment adviser, on matters
involving investment judgments. In all cases, the ultimate decision on voting proxies rests with the Trustees, acting
as fiduciaries on behalf of the shareholders of the funds. |
|
|
| The role of the proxy voting service |
|
|
| The funds have engaged an independent proxy voting service
to assist in the voting of proxies. The proxy voting service is responsible for coordinating with the funds' custodian(s)
to ensure that all proxy materials received by the custodians relating to the funds' portfolio securities are processed
in a timely fashion. To the extent applicable, the proxy voting service votes all proxies in accordance with the
proxy voting guidelines established by the Trustees. The proxy voting service will refer proxy questions to the Proxy
Voting Director for instructions under circumstances where: (1) the application of the proxy voting guidelines is
unclear; (2) a particular proxy question is not covered by the guidelines; or (3) the guidelines call for specific
instructions on a case-by-case basis. The proxy voting service is also requested to call to the attention of the
Proxy Voting Director specific proxy questions that, while governed by a guideline, appear to involve unusual or
controversial issues. The funds also utilize research services relating to proxy questions provided by the proxy
voting service and by other firms. |
|
|
| The role of the Proxy Voting Director |
|
|
| The Proxy Voting Director, a member of the Office of
the Trustees (the Trustees' independent administrative staff), assists in the coordination and voting of the funds'
proxies. The Proxy Voting Director deals directly with the proxy voting service and, in the case of proxy questions
referred by the proxy voting service, solicits voting recommendations and instructions from the Chair of the Board
Policy and Nominating Committee and Putnam Management's investment professionals, as appropriate. The Proxy Voting
Director is responsible for ensuring that these questions and referrals are responded to in a timely fashion and
for transmitting appropriate voting instructions to the proxy voting service. In addition, the Proxy Voting Director
is the contact person for receiving recommendations from Putnam Management's investment professionals with respect
to any proxy question in circumstances where the investment professional believes that the interests of fund shareholders
warrant a vote contrary to the fund's proxy voting guidelines. |
|
|
| On occasion, representatives of a company in which the
funds have an investment may wish to meet with the company's shareholders in advance of the company's shareholder
meeting, typically to explain and to provide the company's perspective on the proposals up for consideration at the
meeting. As a general matter, the Proxy Voting Director will participate in meetings with these company representatives. |
|
|
| The Proxy Voting Director is also responsible for ensuring
that the funds file the required annual reports of their proxy voting records with the Securities and Exchange Commission.
The Proxy Voting Director coordinates with the funds' proxy voting service to prepare and file on Form N‑PX,
by August 31 of each year, the funds' proxy voting record for the most recent twelve-month period ended June 30.
In addition, the Proxy Voting Director is responsible for coordinating with Putnam Management to arrange for the
funds' proxy voting record for the most recent twelve-month period ended June 30 to be available on the funds' website. |
|
|
| Voting procedures for referral items |
|
|
| As discussed above, the proxy voting service will refer
proxy questions to the Proxy Voting Director under certain circumstances. Unless the referred proxy question involves
investment considerations (i.e., the proxy question might be seen as having a bearing on the economic interests
of a shareholder in the company) and is referred to Putnam Management's investment professionals for a voting recommendation
as described below, the Proxy Voting Director will assist in interpreting the guidelines and, if necessary, consult
with the Chair of the Board Policy and Nominating Committee on how the funds' shares will be voted or confer with
a senior member of the Office of the Trustees. |
|
|
| The Proxy Voting Director will refer proxy questions
that involve investment considerations, through an electronic request form, to Putnam Management's investment professionals
for a voting recommendation. These referrals will be made in cooperation with the person or persons designated by
Putnam Management's Legal and Compliance Department to assist in processing referral items. In connection with each
item referred to Putnam Management's investment professionals, the Legal and Compliance Department will conduct a
conflicts of interest review, as described below under “Conflicts of interest,” and provide electronically
a conflicts of interest report (the “Conflicts Report”) to the Proxy Voting Director describing the results
of the review. After receiving a referral item from the Proxy Voting Director, Putnam Management's investment professionals
will provide a recommendation electronically to the Proxy Voting Director and the person or persons designated by
the Legal and Compliance Department to assist in processing referral items. The recommendation will set forth (1)
how the proxies should be voted; and (2) any contacts the investment professionals have had with respect to the referral
item with non-investment personnel of Putnam Management or with outside parties (except for routine communications
from proxy solicitors). The Proxy Voting Director will review the recommendation of Putnam Management's investment
professionals (and the related Conflicts Report) in determining how to vote the funds' proxies. The Proxy Voting
Director will maintain a record of all proxy questions that have been referred to Putnam Management's investment
professionals, the voting recommendation, and the Conflicts Report. An exception to this referral process is that
the Proxy Voting Director will not refer proxy questions in respect of portfolio securities that are held only in
funds sub-advised by PanAgora Asset Management, Inc. |
|
|
| In some situations, the Proxy Voting Director may determine
that a particular proxy question raises policy issues requiring consultation with the Chair of the Board Policy and
Nominating Committee, who, in turn, may decide to bring the particular proxy question to the Committee or the full
Board of Trustees for consideration. |
|
|
| Occasions may arise where a person or organization involved
in the proxy voting process may have a conflict of interest. A conflict of interest may exist, for example, if Putnam
Management has a business relationship with (or is actively soliciting business from) either the company soliciting
the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying
for a particular outcome of a proxy vote. Any individual with knowledge of a personal conflict of interest (e.g.,
familial relationship with company management or a significant personal investment in the company) relating to a
particular referral item shall disclose that conflict to the Proxy Voting Director and the Legal and Compliance Department
and may be asked to remove himself or herself from the proxy voting process. The Legal and Compliance Department
will review each item referred to Putnam Management's investment professionals to determine if a conflict of interest
exists and will provide the Proxy Voting Director with a Conflicts Report for each referral item that: (1) describes
any conflict of interest; (2) discusses the procedures used to address such conflict of interest; and (3) discloses
any contacts from parties outside Putnam Management (other than routine communications from proxy solicitors) with
respect to the referral item not otherwise reported in an investment professional's recommendation. The Conflicts
Report will also include written confirmation that any recommendation from an investment professional provided under
circumstances where a conflict of interest exists was made solely on the investment merits and without regard to
any other consideration. |
|
|
| As adopted March 11, 2005 and revised most recently
on January 24, 2020. |
|
|
| Item 8. Portfolio Managers of Closed-End Management
Investment Companies |
|
|
| (a)(1) Portfolio Managers. The officers of Putnam
Management identified below are primarily responsible for the day-to-day management of the fund's portfolio as of
the filing date of this report. |
|
Portfolio
Managers |
Joined
Fund |
Employer |
Positions
Over Past Five Years |
|
Paul
Drury |
2002 |
Putnam
Management
1989
– Present |
Portfolio
Manager |
|
Garrett
Hamilton |
2016 |
Putnam
Management
2016
– Present
BNY
Mellon
2010
– 2016 |
Portfolio
Manager,
Portfolio
Manager
|
|
|
| (a)(2) Other Accounts Managed by the Fund's Portfolio
Managers. |
|
|
| The following table shows the number and approximate
assets of other investment accounts (or portions of investment accounts) that the fund's Portfolio Managers managed
as of the fund's most recent fiscal year-end. Unless noted, none of the other accounts pays a fee based on the account's
performance. |
|
|
|
|
|
|
|
|
| Portfolio
Leader or Member | Other
SEC-registered open-end and closed-end funds | Other
accounts that pool assets from more than one client | Other
accounts (including separate accounts, managed account programs and single-sponsor defined
contribution plan offerings) |
| | Number
of accounts | Assets | Number
of accounts | Assets | Number
of accounts | Assets |
| Paul
Drury | 13 | $5,301,100,000 | 0 | $
— | 0 | $0 |
| Garret
Hamilton | 13 | $5,301,100,000 | 0 | $
— | 1 | $200,000 |
|
|
| Potential conflicts of interest in managing multiple
accounts. Like other investment professionals with multiple clients, the fund's Portfolio Managers may face certain
potential conflicts of interest in connection with managing both the fund and the other accounts listed under “Other
Accounts Managed by the Fund's Portfolio Managers” at the same time. The paragraphs below describe some of
these potential conflicts, which Putnam Management believes are faced by investment professionals at most major financial
firms. As described below, Putnam Management and the Trustees of the Putnam funds have adopted compliance policies
and procedures that attempt to address certain of these potential conflicts. |
|
|
| The management of accounts with different advisory fee
rates and/or fee structures, including accounts that pay advisory fees based on account performance (“performance
fee accounts”), may raise potential conflicts of interest by creating an incentive to favor higher-fee accounts.
These potential conflicts may include, among others: |
| | • |
The most attractive investments could be allocated to higher-fee
accounts or performance fee accounts. |
| | • |
The trading of higher-fee accounts could be favored as to
timing and/or execution price. For example, higher-fee accounts could be permitted to sell securities earlier than other accounts
when a prompt sale is desirable or to buy securities at an earlier and more opportune time. |
| | • |
The trading of other accounts could be used to benefit higher-fee
accounts (front-running). |
| | • |
The investment management team could focus their time and
efforts primarily on higher-fee accounts due to a personal stake in compensation. |
|
|
| Putnam Management attempts to address these potential
conflicts of interest relating to higher-fee accounts through various compliance policies that are generally intended
to place all accounts, regardless of fee structure, on the same footing for investment management purposes. For example,
under Putnam Management's policies: |
| | • |
Performance fee accounts must be included in all standard
trading and allocation procedures with all other accounts. |
| | • |
All accounts must be allocated to a specific category of
account and trade in parallel with allocations of similar accounts based on the procedures generally applicable to all accounts
in those groups (e.g., based on relative risk budgets of accounts). |
| | • |
All trading must be effected through Putnam's trading desks
and normal queues and procedures must be followed (i.e., no special treatment is permitted for performance fee accounts or higher-fee
accounts based on account fee structure). |
| | • |
Front running is strictly prohibited. |
| | • |
The fund's Portfolio Manager(s) may not be guaranteed or
specifically allocated any portion of a performance fee. |
|
|
| As part of these policies, Putnam Management has also
implemented trade oversight and review procedures in order to monitor whether particular accounts (including higher-fee
accounts or performance fee accounts) are being favored over time. |
|
|
| Potential conflicts of interest may also arise when the
Portfolio Manager(s) have personal investments in other accounts that may create an incentive to favor those accounts.
As a general matter and subject to limited exceptions, Putnam Management's investment professionals do not have the
opportunity to invest in client accounts, other than the Putnam funds. However, in the ordinary course of business,
Putnam Management or related persons may from time to time establish “pilot” or “incubator”
funds for the purpose of testing proposed investment strategies and products prior to offering them to clients. These
pilot accounts may be in the form of registered investment companies, private funds such as partnerships or separate
accounts established by Putnam Management or an affiliate. Putnam Management or an affiliate supplies the funding
for these accounts. Putnam employees, including the fund's Portfolio Manager(s), may also invest in certain pilot
accounts. Putnam Management, and to the extent applicable, the Portfolio Manager(s) will benefit from the favorable
investment performance of those funds and accounts. Pilot funds and accounts may, and frequently do, invest in the
same securities as the client accounts. Putnam Management's policy is to treat pilot accounts in the same manner
as client accounts for purposes of trading allocation — neither favoring nor disfavoring them except as is
legally required. For example, pilot accounts are normally included in Putnam Management's daily block trades to
the same extent as client accounts (except that pilot accounts do not participate in initial public offerings). |
|
|
| A potential conflict of interest may arise when the fund
and other accounts purchase or sell the same securities. On occasions when the Portfolio Manager(s) consider the
purchase or sale of a security to be in the best interests of the fund as well as other accounts, Putnam Management's
trading desk may, to the extent permitted by applicable laws and regulations, aggregate the securities to be sold
or purchased in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades
may create the potential for unfairness to the fund or another account if one account is favored over another in
allocating the securities purchased or sold — for example, by allocating a disproportionate amount of a security
that is likely to increase in value to a favored account. Putnam Management's trade allocation policies generally
provide that each day's transactions in securities that are purchased or sold by multiple accounts are, insofar as
possible, averaged as to price and allocated between such accounts (including the fund) in a manner which in Putnam
Management's opinion is equitable to each account and in accordance with the amount being purchased or sold by each
account. Certain exceptions exist for specialty, regional or sector accounts. Trade allocations are reviewed on a
periodic basis as part of Putnam Management's trade oversight procedures in an attempt to ensure fairness over time
across accounts. |
|
|
| “Cross trades,” in which one Putnam account
sells a particular security to another account (potentially saving transaction costs for both accounts), may also
pose a potential conflict of interest. Cross trades may be seen to involve a potential conflict of interest if, for
example, one account is permitted to sell a security to another account at a higher price than an independent third
party would pay, or if such trades result in more attractive investments being allocated to higher-fee accounts.
Putnam Management and the fund's Trustees have adopted compliance procedures that provide that any transactions between
the fund and another Putnam-advised account are to be made at an independent current market price, as required by
law. |
|
|
| Another potential conflict of interest may arise based
on the different investment objectives and strategies of the fund and other accounts. For example, another account
may have a shorter-term investment horizon or different investment objectives, policies or restrictions than the
fund. Depending on another account's objectives or other factors, the Portfolio Manager(s) may give advice and make
decisions that may differ from advice given, or the timing or nature of decisions made, with respect to the fund.
In addition, investment decisions are the product of many factors in addition to basic suitability for the particular
account involved. Thus, a particular security may be bought or sold for certain accounts even though it could have
been bought or sold for other accounts at the same time. More rarely, a particular security may be bought for one
or more accounts managed by the Portfolio Manager(s) when one or more other accounts are selling the security (including
short sales). There may be circumstances when purchases or sales of portfolio securities for one or more accounts
may have an adverse effect on other accounts. As noted above, Putnam Management has implemented trade oversight and
review procedures to monitor whether any account is systematically favored over time. |
|
|
| The fund's Portfolio Manager(s) may also face other potential
conflicts of interest in managing the fund, and the description above is not a complete description of every conflict
that could be deemed to exist in managing both the fund and other accounts. |
|
|
| (a)(3) Compensation of portfolio managers. Portfolio
managers are evaluated and compensated across the group of specified products they manage, in part, based on their
performance relative to peers or performance ahead of the applicable benchmark, depending on the product, based on
a blend of 3-year and 4-year performance. In addition, evaluations take into account individual contributions and
a subjective component.
Each portfolio manager is assigned an industry-competitive incentive compensation target
consistent with this goal and evaluation framework. Actual incentive compensation may be higher or lower than the
target, based on group, individual, and subjective performance, and may also reflect the performance of Putnam as
a firm.
Incentive compensation includes a cash bonus and may also include grants of deferred cash, stock or options.
In addition to incentive compensation, portfolio managers receive fixed annual salaries typically based on level
of responsibility and experience. |
|
|
| For Putnam Managed Municipal Income Trust and Putnam
Municipal Opportunities Trust, Putnam evaluates performance based on the fund's peer ranking in the fund's Lipper
category. This peer ranking is based on pre-tax performance. |
|
|
| For Putnam Master Intermediate Income Trust and Putnam
Premier Income Trust, Putnam evaluates performance based on the peer ranking of related products managed by Putnam
Management with similar strategies in those products' Lipper categories. This peer ranking is based on pre-tax performance. |
|
|
| One or more of the portfolio managers of Putnam Master
Intermediate Income Trust and Putnam Premier Income Trust receive a portion of the performance fee payable by several
private funds managed by Putnam (the “Private Funds”) in connection with their service as members of
the Private Funds' portfolio management team. See “Other Accounts Managed by the Fund's Portfolio Managers
— Potential conflicts of interest in managing multiple accounts” in (a)(2) above for information on how
Putnam Management addresses potential conflicts of interest resulting from an individual's management of more than
one account. |
|
|
| (a)(4) Fund ownership. The following table shows
the dollar ranges of shares of the fund owned by the professionals listed above at the end of the fund's last two
fiscal years, including investments by their immediate family members and amounts invested through retirement and
deferred compensation plans. |
|
Year |
$0 |
$0-$10,000 |
$10,001-$50,000 |
$50,001-$100,000 |
$100,001-$500,000 |
$500,001-$1,000,000 |
$1,000,001
and over |
Paul
M. Drury |
2020 |
X |
|
|
|
|
|
|
|
2019 |
X |
|
|
|
|
|
|
Garrett
L. Hamilton |
2020 |
X |
|
|
|
|
|
|
|
2019 |
X |
|
|
|
|
|
|
|
|
| Item 9. Purchases of Equity Securities by Closed-End
Management Investment Companies and Affiliated Purchasers: |
|
|
|
|
|
|
| Registrant Purchase of Equity Securities | | |
| | | | | Maximum |
| | | | Total Number | Number
(or |
| | | | of Shares | Approximate |
| | | | Purchased | Dollar
Value) |
| | | | as Part | of
Shares |
| | | | of Publicly | that
May Yet Be |
| | Total Number | Average | Announced | Purchased |
| | of Shares | Price Paid | Plans
or | under
the Plans |
| Period | Purchased | per
Share | Programs* | or
Programs** |
| | | | | |
| | | | | |
| May 1 — May 31, 2019 | 101,262 | $12.40 | 101,262 | 1,876,646 |
| June 1 — June 30, 2019 | 21,342 | $12.50 | 21,342 | 1,855,304 |
| July 1 — July 31, 2019 | — | — | — | 1,855,304 |
| August 1 — August 31,
2019 | — | — | — | 1,855,304 |
| September 1 — September
30, 2019 | — | — | — | 1,855,304 |
| October 1 — October 9,
2019 | — | — | — | 1,855,304 |
| October 10 — October 31,
2019 | — | — | — | 3,432,011 |
| November 1 — November
30, 2019 | — | — | — | 3,432,012 |
| December 1 — December
31, 2019 | — | — | — | 3,432,012 |
| January 1 — January 31,
2020 | | | | 3,432,012 |
| February 1 — February
28, 2020 | — | — | — | 3,432,012 |
| March 1 — March 31, 2020 | 210,431 | $11.24 | 210,431 | 3,221,581 |
| April 1 — April 30, 2020 | — | — | — | 3,221,581 |
| | | | | |
* |
In October 2005, the Board of Trustees of the Putnam Funds
initiated the closed-end fund share repurchase program, which, as subsequently amended, authorized the fund to repurchase of up
to 10% of its fund's outstanding common shares over the two-years ending October 5, 2007. The Trustees have subsequently renewed
the program on an annual basis. The program renewed by the Board in September 2018, which was in effect between October 10, 2018
and October 9, 2019, allowed the fund to repurchase up to 3,607,201 of its shares. The program renewed by the Board in September
2019, which is in effect between October 10, 2019 and September 30, 2020, allows the fund to repurchase up to 3,432,011 of its
shares. At Putnam Management's recommendation, the share repurchase program was temporarily suspended on March 24, 2020. Putnam
Management has proposed to reinstate the share repurchase program effective July 1, 2020, subject to the approval of the Trustees
of your fund. |
** |
Information prior to October 10, 2019 is based on the total
number of shares eligible for repurchase under the program, as amended through September 2018. Information from October 10, 2019
forward is based on the total number of shares eligible for repurchase under the program, as amended through September 2019. |
|
|
| Item 10. Submission of Matters to a Vote of Security
Holders: |
|
|
| Item 11. 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 180 days of the filing date of this report,
that the design and operation of such procedures are generally effective to provide reasonable assurance that information
required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms. |
|
|
| (b) Changes in internal control over financial reporting:
Not applicable |
|
|
| Item 12. Disclosures of Securities Lending Activities
for Closed-End Management Investment Companies: |
|
|
| (a)(1) The Code of Ethics of The Putnam Funds, which
incorporates the Code of Ethics of Putnam Investments, is filed herewith. |
|
|
| Pursuant to the requirements of the Securities Exchange
Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. |
|
|
| Putnam Municipal Opportunities Trust |
|
|
| By (Signature and Title): |
|
|
| /s/ Janet C. Smith Janet C. Smith Principal
Accounting Officer
|
|
|
| Pursuant to the requirements of the Securities Exchange
Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated. |
|
|
| By (Signature and Title): |
|
|
| /s/ Jonathan S. Horwitz Jonathan S. Horwitz Principal
Executive Officer
|
|
|
| By (Signature and Title): |
|
|
| /s/ Janet C. Smith Janet C. Smith Principal
Financial Officer
|