Putnam
Investment Grade
Municipal Trust
Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
5/31/04
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From the Trustees
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John A. Hill and George Putnam, III
Dear Fellow Shareholder:
Looking back on the past six months in the financial markets, stocks and
bonds had generally steady results for most of the period. Markets were
lifted by the resurgence of the economy, prompted in part by the 2003
tax cuts and the Federal Reserve Board's low interest-rate policy.
Corporate earnings rose to their highest levels in years and many states
even experienced minor improvements in tax revenues. However, since
March 2004, uncertainty and volatility have returned to the markets.
Bonds in particular experienced broad setbacks in April because of
concerns that inflation could be sparked by vigorous job creation and
rising energy prices. Markets continue to show vulnerability to these
concerns and to the situation in Iraq.
As observers of financial markets for many years, we have gained the
perspective that periods of uncertainty and transition as we have lately
witnessed usually reflect an effort by investors to incorporate new
facts into their thinking, a process that takes time. The resulting
volatility is uncomfortable, but over time, it allows investors to set
more realistic expectations for future investment performance.
Uncertainty on its own is no reason to alter a well-planned investment
strategy.
Putnam's portfolio management teams have monitored recent market
movements, relying on their analysis to manage risks and identify
opportunities. During the six-month period ended May 31, 2004, your
fund's defensive duration strategy and emphasis on higher-yielding bonds
helped its return at net asset value exceed those of its benchmark and
Lipper category average. You will find details on the facing page.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
July 21, 2004
Report from Fund Management
Fund highlights
* Putnam Investment Grade Municipal Trust returned 0.41% at net asset
value (NAV) and -5.46% at market price for the six months ended May 31,
2004.
* A defensive duration strategy and a greater-than-benchmark emphasis on
higher-yielding bonds helped the fund's results at NAV exceed those of
its benchmark, the Lehman Municipal Bond Index, which returned -0.22%
over the period.
* For the same reasons, the fund's results at NAV also surpassed the
-0.56% average return of the funds in the General Municipal Debt Funds
(leveraged closed-end) category tracked by Lipper.
* Due to declining yields, management recommended a reduction in the
fund's dividend, which was implemented in December 2003. See page 5 for
more information.
* See the Performance Summary beginning on page 7 for complete fund
performance, comparative performance, and Lipper data.
Performance commentary
Spurred by continued signs of stronger economic growth, interest rates rose
during the six months ended May 31, 2003. Rising interest rates typically
cause the price of bonds to decline, as investors worry about the potential
impact of higher inflation on fixed-income securities. Fortunately for
investors in this fund, the negative effect of rising rates was mitigated
somewhat by a defensive duration strategy implemented in anticipation of
rising rates. The fund's greater-than-benchmark emphasis on higher-yielding
bonds, an area that outperformed the broader municipal market as credit
spreads tightened, also contributed. Performance improvement in one of the
fund's larger holdings that had previously been struggling helped boost
returns and allowed us to reduce the size of the position by selling into
strength. These factors enabled the fund to outperform its benchmark and its
Lipper peer group during the period, based on results at NAV. The
performance of fund shares at market price reflects changes in investor
demand as well as the fund's investment results. We believe the December
2003 dividend cut contributed to the fund's lower return at market price.
FUND PROFILE
Putnam Investment Grade Municipal Trust seeks to maintain as high a
level of current income free from federal income tax as is consistent
with preservation of capital by investing primarily in investment-grade
municipal bonds. The fund may be suitable for conservative investors
seeking tax-exempt income.
Market overview
Municipal bond yields -- which move in the opposite direction of their
prices -- were volatile between December 1, 2003, and May 31, 2004.
Yields trended downward for much of the period but corrected sharply in
late March and April in response to stronger economic data. At the end
of the period, yields on 10-year AAA-rated municipal bonds were slightly
higher than they had been at the beginning of the period. The ratio of
municipal bond yields to Treasury yields fell to about 80% in December,
which means the difference between the yields of 10-year municipal bonds
and 10-year Treasuries increased. The ratio edged up to about 85% by the
end of the fiscal period. Overall, the yield curve, which shows the
difference in yields over a range of bond maturities, flattened
somewhat, and credit spreads, which show the difference in yields
between higher- and lower-rated bonds, generally narrowed. The economy
improved on nearly all fronts, including job growth. The Federal Reserve
Board held the federal funds rate steady at 1%, but hinted at a
potential rate hike in the near future. Municipal bond issuance was very
strong as states and municipalities sought to address budget shortfalls
that resulted from decreased tax revenues. In May, California issued the
first portion of its recently approved $15 billion bond issue to help
alleviate the state's budget crisis. Although ongoing tobacco litigation
continued to make headlines, the municipal bond market largely
discounted the news. Airline-related industrial development bonds (IDBs)
turned in mixed results as a period of strength was followed by
weakening toward period-end. In our opinion, the combination of higher
fuel costs and competition from low-cost carriers makes the prospects
for major airlines less certain.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 5/31/04
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Bonds
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Lehman Municipal Bond Index (tax-exempt bonds) -0.22%
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Lehman Aggregate Bond Index (broad bond market) 0.60%
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Lehman Government Bond Index (U.S. Treasury and agency
securities) 0.35%
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JP Morgan Global High Yield Index (global high-yield
corporate bonds) 3.29%
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Equities
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S&P 500 Index (broad stock market) 6.79%
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Russell 1000 Index (large-company stocks) 6.36%
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Russell 2000 Index (stocks of small and midsize companies) 4.53%
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These indexes provide an overview of performance in different market
sectors for the six months ended 5/31/04.
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Strategy overview
In an increasingly strong economy, it appears likely that interest rates
will rise further. Consequently, we shortened the fund's duration (a
measure of a fund's sensitivity to changes in interest rates) relative
to that of its peer group during the period.
We took the opportunity afforded by strong demand for higher-yielding
municipal bonds to sell into strength where we deemed appropriate. We
also continued to diversify the portfolio by adding selectively to the
fund's lower-quality holdings. These below-investment-grade,
higher-yielding bonds are not a component of the fund's benchmark, but
we believe that careful selection among them can continue to provide the
fund with attractive opportunities for income.
We carefully monitored developments in the tobacco industry,
particularly with regard to ongoing litigation and other factors
affecting demand for tobacco settlement bonds, which are secured by the
income stream from tobacco companies' settlement obligations to the
states. The municipal bond market has largely ignored recent unfavorable
headlines and the downgrading of some tobacco settlement bonds by
Moody's rating service. In our view, the backdrop for the tobacco
industry remains fundamentally positive, and the fund remains
overweighted in these bonds relative to the benchmark.
Performance of airline-related IDBs was mixed during the period; we sold
some of the fund's holdings as our outlook for the industry is less
certain given higher fuel costs.
[GRAPHIC OMITTED: horizontal bar chart TOP SECTOR WEIGHTINGS COMPARED]
TOP SECTOR WEIGHTINGS COMPARED
11/30/03 5/31/04
Health care 25.7% 25.7%
Utilities and power 19.2% 22.1%
Housing 8.9% 9.1%
Water and sewer 7.6% 6.6%
Transportation 8.0% 6.1%
Footnote reads:
This chart shows how the fund's top weightings have changed over the
last six months. Weightings are shown as a percentage of market value.
Holdings will vary over time.
How fund holdings affected performance
When economic growth improves, the chances of a company or a municipality
defaulting generally decrease. This helps explain why credit spreads -- the
difference between higher- and lower-rated bonds -- generally narrowed over
the course of the year, reflecting investors' rising confidence in the
economy and fiscal health of lower-rated issuers. We targeted an overweight
in lower-quality bonds, including BBB-rated bonds which are at the lower end
of the investment-grade spectrum, in anticipation of this credit spread
tightening. This strategy was one of the primary reasons for the fund's
strong relative performance during the period. Examples of the fund's
strong-performing higher-yielding holdings include bonds issued by the
Johnson City Health and Educational Facilities Board for Mountain States
Health in Tennessee; bonds issued by the Arkansas State Hospital Development
Finance Authority for Washington Regional Medical Center; and bonds issued
by the Indiana State Development Finance Authority for USX Corp.
Airline-related industrial development bonds (IDBs) turned in mixed
results over the six-month period. IDBs are backed by the credit of the
company benefiting from the financing -- in this case, airlines.
Consequently, investor perceptions about the backing company's health or
that of the industry as a whole affect the price of these bonds. While
airline-related IDBs had enjoyed a price recovery during the second half
of calendar 2003 and into early 2004, their prices fell during the
spring of 2004, as fuel prices climbed and low-cost carriers began to
eat into the major airlines' profits. Fortunately, we had trimmed the
fund's airline-related positions in December, January, and February
prior to the recent sell-off, selling IDBs backed by Delta and Northwest
on relative strength. An IDB backed by American Airlines was one of the
more significant contributors to fund performance for the period;
although the price of these bonds fell late in the period, they had
risen substantially during the period's early months, resulting in a net
positive contribution to relative performance. Another IDB, backed by
Continental Airlines, was a detractor from performance, as its price
dropped more substantially toward the period's end.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa/AAA - (46.5%)
Aa/AA - (3.1%)
A - (18.8%)
Baa/BBB - (21.5%)
Ba/BB - (3.4%)
B - (2.3%)
Caa/CCC - (0.7%)
D - (0.3%)
Other (VMIG1 - (3.4%)
Footnote reads:
As a percentage of market value as of 5/31/04. A bond rated Baa/BBB or
higher is considered investment grade. The chart reflects Moody's and
Standard & Poor's ratings; percentages may include unrated bonds
considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
The stronger economic outlook has improved prospects for one of the
fund's holdings, which had struggled during the economic slowdown. The
Connector 2000 Association Inc. revenue bonds for South Carolina Toll
Road Southern Connector Project were issued to finance a toll road in
the Greenville metropolitan area. Usage of the road has been well below
projections forecasted before the road was built. The bonds' price
declined and their yield climbed to reflect the perceived risk of the
project. However, with the general health of the municipal market
improving, investors are looking more favorably on these bonds as a
buying opportunity. As the bonds have recovered, we've been trimming the
position -- selling into the market's strength.
The fund's exposure to revenue bonds issued by Gilroy, California to
finance an amusement park, Bonfante Gardens, detracted from results
during the period. Attendance has fallen short of initial projections,
leading to lower revenues than originally anticipated. We are in
negotiations with the issuer of the Bonfante bonds concerning
undeveloped land adjacent to the project, which we hope will be sold to
ease the debt burden of the park.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
OF SPECIAL INTEREST
Yields have declined significantly across all fixed-income sectors over
the course of the prolonged bond-market rally. In addition, many issuers
called bonds, refinancing debt at lower rates. These factors required
the management team to reinvest fund assets at lower prevailing rates
and prompted a reduction of the monthly distribution from $0.0695 to
$0.0626 per share in December 2003.
The fund's management team
The fund is managed by the Putnam Tax Exempt Fixed-Income Team. The
members of the team are David Hamlin (Portfolio Leader), Paul Drury
(Portfolio Member), Susan McCormack (Portfolio Member), James St. John
(Portfolio Member), and Kevin Cronin.
The outlook for your fund
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
team's plans for responding to them.
Early in 2004, lingering unemployment had been an anomaly in an
otherwise robust economic recovery. However, in early April, employment
data at last showed marked improvement in job creation. We believe the
underlying strength in the economy will foster higher interest rates in
the future. In keeping with our views, the fund's duration is now
relatively short in order to keep the portfolio defensively positioned.
We expect that the credit quality of general obligation municipal bonds
will improve gradually as the economy improves and tax revenues
increase. Although yield spreads between high- and low-quality municipal
bonds have narrowed somewhat, we believe they remain attractive and
could narrow further. As a result, we believe credit risk is worth
taking in moderate amounts, while we continue to seek diversification by
sector and issuer. We will closely monitor market conditions as we
pursue a high level of tax-free income and seek to manage the fund's
risk exposure.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. This fund may have
a significant portion of its holdings in bonds. Mutual funds that invest
in bonds are subject to certain risks, including interest-rate risk,
credit risk and inflation risk. As interest rates rise, the prices of
bonds fall. Long-term bonds are more exposed to interest-rate risk than
short-term bonds. Unlike bonds, bond funds have ongoing fees and
expenses. Capital gains, if any, are taxable for federal and, in most
cases, state purposes. For some investors, investment income may be
subject to the federal alternative minimum tax. Income from federally
exempt funds may be subject to state and local taxes.
Performance summary
This section shows your fund's performance during the first half of its
fiscal year, which ended May 31, 2004. In accordance with regulatory
requirements, we also include performance for the most current calendar
quarter-end. Performance should always be considered in light of a
fund's investment strategy. Data represents past performance. Past
performance does not guarantee future results. More recent returns may
be less or more than those shown. Investment return, net asset value,
and market price will fluctuate and you may have a gain or a loss when
you sell your shares.
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TOTAL RETURN FOR PERIODS ENDED 5/31/04
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Lipper General
Lehman Municipal Debt
Municipal Funds (leveraged
Market Bond closed-end)
NAV price Index category average*
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6 months 0.41% -5.46% -0.22% -0.56%
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1 year 2.35 -7.68 -0.03 0.64
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5 years 29.02 -2.63 30.64 32.46
Annual average 5.23 -0.53 5.49 5.77
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10 years 77.13 57.72 84.79 91.80
Annual average 5.88 4.66 6.33 6.72
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Annual average
Life of fund
(since 10/26/89) 7.32 6.29 6.99 7.31
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Performance does not reflect taxes on reinvested distributions.
Index and Lipper results should be compared to fund performance at net
asset value.
* Over the 6-month, 1-, 5-, and 10-year periods ended 5/31/04, there
were 65, 64, 50, and 46 funds, respectively, in this Lipper category.
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PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 5/31/04
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Putnam Investment Grade Municipal Trust
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Distributions from common shares
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Number 6
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Income 1 $0.3756
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Capital gains 1 --
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Total $0.3756
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Series A
Distributions from preferred shares (1,400 shares)
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Income 1 $526.94
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Capital gains 1 --
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Total $526.94
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Share value (common shares): NAV Market price
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11/30/03 $10.71 $10.74
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5/31/04 10.38 9.80
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Current return (common shares,
end of period)
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Current dividend rate 2 7.24% 7.67%
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Taxable equivalent 3 11.14 11.80
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1 Capital gains, if any, are taxable for federal and, in most cases,
state purposes. For some investors, investment income may be subject to
the federal alternative minimum tax. Income from federally exempt funds
may be subject to state and local taxes.
2 Most recent distribution, excluding capital gains, annualized and
divided by NAV or market price at end of period.
3 Assumes maximum 35% federal tax rate for 2004. Results for investors
subject to lower tax rates would not be as advantageous.
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TOTAL RETURN FOR PERIODS ENDED 6/30/04 (MOST RECENT CALENDAR QUARTER)
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NAV Market price
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6 months -0.42% -9.55%
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1 year 2.58 -13.72
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5 years 31.50 -3.09
Annual average 5.63 -0.63
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10 years 78.96 50.09
Annual average 5.99 4.14
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Annual average
Life of fund
(since 10/26/89) 7.32 6.01
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Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to remarketed preferred shares
divided by the number of outstanding common shares.
Market price is the current trading price of one share of the fund.
Market prices are set by transactions between buyers and sellers on
exchanges such as the American Stock Exchange and the New York Stock
Exchange.
Comparative indexes
JP Morgan Global High Yield Index is an unmanaged index used to mirror
the investable universe of the U.S. dollar global high-yield corporate
debt market of both developed and emerging markets.
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Government Bond Index is an unmanaged index of U.S. Treasury and
agency securities.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Russell 1000 Index is an unmanaged index of the largest 1,000 companies
in the Russell 3000 Index.
Russell 2000 Index is an unmanaged index of common stocks that generally
measure performance of small to midsize companies within the Russell
3000 Index.
S&P 500 Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Lipper is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. Our proxy voting guidelines and policies are
available on the Putnam Individual Investor Web site,
www.putnaminvestments.com, by calling Putnam's Shareholder Services at
1-800-225-1581, or on the SEC's Web site, www.sec.gov.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or loss
the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment
income ratios, and portfolio turnover in one summary table, reflecting
the five most recent reporting periods. In a semiannual report, the
highlight table also includes the current reporting period. For open-end
funds, a separate table is provided for each share class.
The fund's portfolio
May 31, 2004 (Unaudited)
Key to Abbreviations
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AMBAC AMBAC Indemnity Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FNMA Coll. Federal National Mortgage Association Collateralized
FSA Financial Security Assurance
GNMA Coll. Government National Mortgage Association Collateralized
G.O. Bonds General Obligation Bonds
IFB Inverse Floating Rate Bonds
MBIA MBIA Insurance Company
VRDN Variable Rate Demand Notes
Municipal bonds and notes (100.0%) (a)
Principal amount Rating (RAT) Value
Arizona (0.8%)
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$500,000 AZ Hlth. Fac. Auth. Hosp. Syst.
Rev. Bonds (John C. Lincoln Hlth.
Network), 6 3/8s, 12/1/37 BBB $508,125
1,175,000 Casa Grande, Indl. Dev. Auth.
Rev. Bonds (Casa Grande Regl. Med.
Ctr.), Ser. A, 7 5/8s, 12/1/29 B-/P 1,205,844
1,000,000 Scottsdale, Indl. Dev. Hosp. Auth.
Rev. Bonds (Scottsdale Hlth. Care),
5.8s, 12/1/31 A3 1,006,250
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2,720,219
Arkansas (2.8%)
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3,600,000 AR Dev. Fin. Auth. Rev. Bonds,
Ser. D, GNMA/FNMA Coll., 3s, 1/1/24 AAA 3,573,000
3,000,000 AR State Hosp. Dev. Fin. Auth.
Rev. Bonds (Washington Regl. Med.
Ctr.), 7 3/8s, 2/1/29 Baa3 3,315,000
1,000,000 Little Rock, G.O. Bonds (Cap.
Impt.), FSA, 3.95s, 4/1/19 Aaa 945,000
1,900,000 Northwest Regl. Arpt. Auth.
Rev. Bonds, 7s, 2/1/10 BB/P 1,964,999
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9,797,999
California (9.2%)
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2,000,000 Anaheim, Pub. Fin. Auth. Tax Alloc.
IFB, MBIA, 11.52s, 12/28/18 Aaa 2,542,500
150,000 Association of Bay Area Governments
(ABAG) Fin. Auth. for Nonprofit
Corps. Rev. Bonds (San Diego Hosp.
Assn.), Ser. C, 5 3/8s, 3/1/21 Baa1 146,438
2,500,000 CA Hlth. Fac. Auth. Rev. Bonds
(Sutter Hlth.), Ser. A, MBIA,
5 3/8s, 8/15/30 Aaa 2,525,000
CA State G.O. Bonds
500,000 5 1/8s, 4/1/23 A3 501,250
750,000 5.1s, 2/1/34 A3 726,563
CA State Dept. of Wtr. Resources
Rev. Bonds, Ser. A
1,500,000 6s, 5/1/15 A3 1,666,875
13,000,000 AMBAC, 5 1/2s, 5/1/13 Aaa 14,430,000
1,500,000 5 1/2s, 5/1/11 A3 1,646,250
CA State Econ. Recvy. G.O. Bonds,
Ser. A
500,000 FGIC, 5 1/4s, 7/1/14 Aaa 550,625
1,000,000 5s, 7/1/16 Aa3 1,037,500
1,750,000 CA Statewide Cmnty. Dev. Auth. COP
(The Internext Group), 5 3/8s,
4/1/30 BBB- 1,612,188
1,475,000 Gilroy, Rev. Bonds (Bonfante Gardens
Park), 8s, 11/1/25 D/P 945,844
Golden State Tobacco Securitization
Corp. Rev. Bonds
1,000,000 Ser. 2003 A-1, 6 1/4s, 6/1/33 BBB 887,500
1,500,000 Ser. B, 5 5/8s, 6/1/38 Baa1 1,481,250
450,000 Orange Cnty., Cmnty. Fac. Dist.
Special Tax Rev. Bonds (Ladera Ranch
- No. 02-1), Ser. A, 5.55s, 8/15/33 BB+/P 439,313
1,400,000 Vallejo, COP (Marine World
Foundation), 7.2s, 2/1/26 BBB-/P 1,391,250
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32,530,346
Colorado (2.5%)
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2,500,000 CO Hlth. Fac. Auth. Rev. Bonds
(Hlth. Fac.-Evangelical Lutheran),
3.35s, 10/1/06 A3 2,531,250
3,000,000 CO Springs, Hosp. Rev. Bonds,
6 3/8s, 12/15/30 A3 3,183,750
CO State Hsg. Fin. Auth. Rev. Bonds
(Single Fam.)
265,000 Ser. B-2 , 7s, 5/1/26 Aa2 267,851
135,000 Ser. B-3, 6.8s, 11/1/28 Aa2 135,000
2,500,000 Denver, City & Cnty. Arpt.
Rev. Bonds, MBIA, 5 1/2s, 11/15/25 Aaa 2,571,875
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8,689,726
Connecticut (0.7%)
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2,500,000 CT State Hlth. & Edl. Fac. Auth.
VRDN (Yale U.), Ser. V-2, 1.05s,
7/1/36 VMIG1 2,500,000
District of Columbia (1.2%)
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4,000,000 DC G.O. Bonds, Ser. B, FSA, 5 1/4s,
6/1/26 Aaa 4,095,000
Florida (3.0%)
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1,500,000 Cap. Trust Agcy. Rev. Bonds
(Seminole Tribe Convention), Ser. A,
10s, 10/1/33 B/P 1,807,500
2,395,000 Escambia Cnty., Hlth. Fac. Auth.
Rev. Bonds (Baptist Hosp. & Baptist
Manor), 5 1/8s, 10/1/19 A3 2,299,200
3,315,000 Florida State Dept. Gen. Svcs.
Division Fac. Mgmt. Rev. Bonds (FL
Fac. Pool), Ser. A, FSA,
5 1/4s, 9/1/17 Aaa 3,609,206
1,000,000 Lee Cnty., Indl. Dev. Auth.
Rev. Bonds (Alliance Cmnty.
Project), Ser. C, 5 1/2s, 11/15/29 BBB- 921,250
2,000,000 Miami Beach, Hlth. Fac. Auth. Hosp.
Rev. Bonds (Mount Sinai Med. Ctr.),
5 3/8s, 11/15/28 BB 1,667,500
400,000 St. Johns Cnty., Hlth. Care Indl.
Dev. Auth. Rev. Bonds (Glenmoor St.
Johns Project), Ser. A, 8s, 1/1/30 B-/P 377,000
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10,681,656
Georgia (2.4%)
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1,500,000 Atlanta, Arpt. Rev. Bonds, Ser. B,
FGIC, 5 5/8s, 1/1/30 Aaa 1,543,125
1,045,000 Atlanta, Waste Wtr. Rev. Bonds,
Ser. A, FGIC, 5s, 11/1/38 Aaa 1,140,356
2,300,000 Burke Cnty., Poll. Control Dev.
Auth. Mandatory Put Bonds (GA Power
Co.), 4.45s, 12/1/08 A2 2,383,375
300,000 GA Med. Ctr. Hosp. Auth. IFB, MBIA,
11.334s, 8/1/10 Aaa 304,527
1,500,000 Muni. Elec. Auth. Rev. Bonds, AMBAC,
5s, 1/1/26 AAA 1,603,125
1,350,000 Rockdale Cnty., Dev. Auth. Solid
Waste Disp. Rev. Bonds (Visay Paper,
Inc.), 7.4s, 1/1/16 BB+/P 1,383,291
--------------
8,357,799
Hawaii (0.2%)
- -------------------------------------------------------------------------------
780,000 HI Dept. of Trans. Special Fac.
Rev. Bonds (Continental Airlines,
Inc.), 7s, 6/1/20 B 679,575
Illinois (5.5%)
- -------------------------------------------------------------------------------
Chicago, Board of Ed. G.O. Bonds
2,500,000 (School Reform Project), Ser. A,
AMBAC, 5 1/4s, 12/1/27 Aaa 2,515,625
3,830,000 (Chicago School Reform Board),
Ser. A, FGIC, 5 1/4s, 12/1/17 Aaa 4,150,763
Cook Cnty., Cmnty. G.O. Bonds (Cons.
School Dist. No. 64 Pk. Ridge), FSA
1,580,000 5 1/2s, 12/1/16 Aaa 1,755,775
1,445,000 5 1/2s, 12/1/15 Aaa 1,605,756
1,600,000 IL Dev. Fin. Auth. Rev. Bonds
(Midwestern U.), Ser. B, 6s, 5/15/26 BBB+ 1,668,000
2,500,000 IL Dev. Fin. Auth. Hosp. Rev. Bonds
(Adventist Hlth. Syst./Sunbelt
Obligation), 5.65s, 11/15/24 A 2,506,250
1,000,000 IL State Sales Tax Rev. Bonds,
Ser. I, FGIC, 6s, 6/15/27 Aaa 1,121,250
IL U. Rev. Bonds (Auxiliary Fac.
Syst.), Ser. A, AMBAC
1,945,000 5 1/4s, 4/1/19 Aaa 2,083,581
1,850,000 5 1/4s, 4/1/18 Aaa 1,991,063
--------------
19,398,063
Indiana (1.3%)
- -------------------------------------------------------------------------------
3,600,000 IN State Dev. Fin. Auth. Env. Impt.
Rev. Bonds (USX Corp.), 5.6s,
12/1/32 Baa1 3,573,000
1,000,000 Rockport, Poll. Control
Rev. Bonds (Indiana-Michigan Pwr.),
Ser. A, 4.9s, 6/1/25 Baa2 1,036,250
--------------
4,609,250
Iowa (0.6%)
- -------------------------------------------------------------------------------
1,715,000 IA Fin. Auth. Hlth. Care Fac.
Rev. Bonds (Care Initiatives),
9 1/4s, 7/1/25 BBB-/P 2,002,263
Kansas (1.3%)
- -------------------------------------------------------------------------------
4,500,000 Burlington, Poll. Control Rev. Bonds
(KS Gas & Elec. Co.), MBIA, 7s,
6/1/31 Aaa 4,527,675
Kentucky (0.3%)
- -------------------------------------------------------------------------------
1,200,000 KY Econ. Dev. Fin. Auth. Rev. Bonds
(Norton Hlth. Care, Inc.), Ser. A,
6 1/2s, 10/1/20 BBB/P 1,246,500
Louisiana (0.8%)
- -------------------------------------------------------------------------------
1,500,000 Ernest N. Morial-New Orleans Exhibit
Hall Auth. Special Tax Bonds,
Ser. A, AMBAC, 5 1/4s, 7/15/21 Aaa 1,561,875
1,140,000 LA Pub. Fac. Auth. Hosp. Rev. Bonds
(Lake Charles Memorial Hosp.
Project), 8 5/8s, 12/1/30 CCC/P 850,725
300,000 Tangipahoa Parish Hosp. Svcs.
Rev. Bonds (North Oaks Med. Ctr.
Project), Ser. A, 5s, 2/1/25 A 284,250
--------------
2,696,850
Maine (0.4%)
- -------------------------------------------------------------------------------
1,480,000 ME State Hsg. Auth. Rev. Bonds,
Ser. D-2-AMT, 5s, 11/15/27 Aa1 1,546,600
Maryland (0.1%)
- -------------------------------------------------------------------------------
500,000 MD State Hlth. & Higher Edl. Fac.
Auth. Rev. Bonds (Medstar Hlth.),
5 3/4s, 8/15/15 Baa2 520,625
Massachusetts (10.9%)
- -------------------------------------------------------------------------------
10,330,000 MA State G.O. Bonds, Ser. A, MBIA,
5 3/8s, 8/1/08 AAA 11,285,525
2,785,000 MA State Dev. Fin. Agcy. Rev. Bonds
(MA Biomedical Research), Ser. C,
6 3/8s, 8/1/17 A1 3,077,425
8,550,000 MA State Hlth. & Edl. Fac. Auth. IFB
(Med. Ctr. of Central MA), Ser. B,
AMBAC, 11.7s, 6/23/22 Aaa 10,441,688
MA State Hlth. & Edl. Fac. Auth.
Rev. Bonds
1,000,000 (Civic Investments), Ser. A, 9s,
12/15/15 BB/P 1,126,250
750,000 (Jordan Hosp.), Ser. E, 6 3/4s,
10/1/33 BBB- 742,500
1,450,000 (UMass Memorial), Ser. C, 6 5/8s,
7/1/32 Baa2 1,488,063
2,500,000 MA State Hsg. Fin. Agcy. Rev. Bonds,
Ser. C, AMBAC, 5 5/8s, 7/1/40 Aaa 2,565,625
7,000,000 MA State Wtr. Res. Auth. Rev. Bonds,
Ser. J, FSA, 5 1/4s, 8/1/17 Aaa 7,612,500
--------------
38,339,576
Michigan (3.0%)
- -------------------------------------------------------------------------------
4,200,000 Detroit, Swr. Disp. VRDN, Ser. B,
FSA, 1.08s, 7/1/33 VMIG1 4,200,000
300,000 Flint, Hosp. Bldg. Auth. Rev. Bonds
(Hurley Med. Ctr.), 6s, 7/1/20 Baa3 291,000
1,500,000 Macomb Cnty., Hosp. Fin. Auth.
Rev. Bonds (Mt. Clemens Gen. Hosp.),
Ser. B, 5 7/8s, 11/15/34 BBB- 1,348,125
1,000,000 MI State Hosp. Fin. Auth. Rev. Bonds
(Oakwood Hosp.), Ser. A, 5 3/4s,
4/1/32 A2 1,007,500
3,800,000 MI State Strategic Fund, Ltd.
Rev. Bonds (Detroit Edison Poll.
Control), 5.65s, 9/1/29 A- 3,833,250
--------------
10,679,875
Minnesota (0.5%)
- -------------------------------------------------------------------------------
1,705,000 Minneapolis, Cmnty. Dev. Agcy.
Supported Dev. Rev. Bonds, Ser. G-3,
5.45s, 12/1/31 A- 1,736,969
Mississippi (1.6%)
- -------------------------------------------------------------------------------
2,750,000 Mississippi Bus. Fin. Corp. Poll.
Control Rev. Bonds (Syst. Energy
Resources, Inc.), 5 7/8s, 4/1/22 BBB- 2,760,313
MS Dev. Bk. Special Obligation
Rev. Bonds (Jackson MS Project), FSA
1,455,000 5 1/4s, 3/1/22 Aaa 1,544,119
1,385,000 5 1/4s, 3/1/21 Aaa 1,478,488
--------------
5,782,920
Missouri (3.7%)
- -------------------------------------------------------------------------------
1,250,000 Cape Girardeau Cnty., Indl. Dev.
Auth. Hlth. Care Fac. Rev. Bonds
(St. Francis Med. Ctr.),
Ser. A, 5 1/2s, 6/1/16 A 1,287,500
1,500,000 MO Hsg. Dev. Comm. Rev. Bonds (Home
Ownership), GNMA/FNMA Coll., 5.55s,
9/1/34 AAA 1,627,500
1,000,000 MO State Hlth. & Edl. Fac. Auth.
Rev. Bonds (BJC Hlth. Syst.),
5 1/4s, 5/15/32 Aa2 1,005,000
8,830,000 SCA Tax Exempt Trust Multi-Fam.
Mtge. Rev. Bonds, FSA, 7.1s, 1/1/30 Aaa 9,100,816
--------------
13,020,816
Montana (0.4%)
- -------------------------------------------------------------------------------
1,175,000 Forsyth, Poll. Control Mandatory Put
Bonds (Avista Corp.), AMBAC, 5s,
12/30/08 Aaa 1,242,563
Nevada (0.3%)
- -------------------------------------------------------------------------------
1,205,000 Henderson, Local Impt. Dist. Special
Assmt. Bonds (No. T-14), 4 3/4s,
3/1/10 BB-/P 1,191,444
New Hampshire (0.3%)
- -------------------------------------------------------------------------------
950,000 NH State Bus. Fin. Auth. Poll.
Control Rev. Bonds, 3 1/2s, 7/1/27 Baa1 931,000
New Jersey (2.4%)
- -------------------------------------------------------------------------------
650,000 NJ Econ. Dev. Auth. Rev. Bonds
(Cedar Crest Village, Inc.), Ser. A,
7 1/4s, 11/15/31 BB-/P 660,563
675,000 NJ Hlth. Care Fac. Fin. Auth.
Rev. Bonds (Somerset Med. Ctr.),
5 1/2s, 7/1/33 Baa2 648,844
3,100,000 NJ State G.O. Bonds, Ser. F, MBIA,
5 1/2s, 8/1/11 AAA 3,475,875
1,000,000 NJ State Ed. Fac. Auth. Rev. Bonds
(Drew U.), Ser. C, FGIC, 5 1/4s,
7/1/18 Aaa 1,090,000
1,250,000 NJ State Edl. Fac. Auth. VRDN
(Princeton U.), Ser. B, MBIA, 1.05s,
7/1/21 VMIG1 1,250,000
Tobacco Settlement Fin. Corp.
Rev. Bonds
500,000 6 3/4s, 6/1/39 BBB 445,625
1,000,000 (Asset Backed Bonds), 6s, 6/1/37 BBB 800,000
--------------
8,370,907
New Mexico (1.1%)
- -------------------------------------------------------------------------------
4,000,000 Farmington, Poll. Control VRDN (AZ
Pub. Svc. Co.), Ser. A, 1.08s,
5/1/24 VMIG1 4,000,000
New York (9.2%)
- -------------------------------------------------------------------------------
1,875,000 Nassau Cnty., Indl. Dev. Agcy.
Rev. Bonds (North Shore Hlth.
Syst.), Ser. D, 5 1/2s, 11/1/08 A3 2,001,563
7,780,000 NY City, G.O. Bonds, Ser. B, 5 1/4s,
12/1/09 A2 8,382,950
NY City, Indl. Dev. Agcy. Rev. Bonds
1,000,000 (Visy Paper, Inc.), 7.95s, 1/1/28 B+/P 1,045,000
2,000,000 (Brooklyn Navy Yard Cogen.
Partners), Ser. G, 5 3/4s, 10/1/36 BBB- 1,780,000
750,000 NY City, Indl. Dev. Agcy. Special
Fac. Rev. Bonds (British Airways),
5 1/4s, 12/1/32 BB+ 541,875
4,100,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. Rev. Bonds, Ser. C, 5 3/4s,
6/15/26 Aa2 4,330,625
900,000 NY State Dorm. Auth. Rev. Bonds
(Winthrop-U. Hosp. Assn.), Ser. A,
5 1/2s, 7/1/32 Baa1 900,000
4,000,000 NY State Env. Fac. Corp. Rev. Bonds,
5s, 6/15/32 Aaa 3,975,000
1,000,000 NY State Thruway Auth. Rev. Bonds,
Ser. A, MBIA, 5 1/4s, 4/1/12 Aaa 1,101,250
1,750,000 Port Auth. NY & NJ Special
Obligation IFB, Ser. N18, MBIA,
14.9s, 12/1/17 (acquired
7/19/00, cost $1,832,058) (RES) Aaa 2,156,875
5,250,000 Port. Auth. NY & NJ Special
Obligation Rev. Bonds (JFK Intl. Air
Term. - 6), MBIA, 5.9s, 12/1/17 Aaa 5,656,875
650,000 Suffolk Cnty., Indl. Dev. Agcy.
Rev. Bonds (Peconic Landing),
Ser. A, 8s, 10/1/30 B+/P 655,688
--------------
32,527,701
North Carolina (2.0%)
- -------------------------------------------------------------------------------
NC Eastern Muni. Pwr. Agcy. Syst.
Rev. Bonds
1,000,000 Ser. D, 6 3/4s, 1/1/26 BBB 1,082,500
2,000,000 Ser. A, 5 3/4s, 1/1/26 BBB 2,017,500
3,500,000 NC State Muni. Pwr. Agcy. Rev. Bonds
(No. 1, Catawba Elec.), Ser. B,
6 1/2s, 1/1/20 Baa1 3,832,500
--------------
6,932,500
Ohio (4.1%)
- -------------------------------------------------------------------------------
1,000,000 Brookville, Local School Dist. G.O.
Bonds, FSA, 5s, 12/1/31 Aaa 990,000
5,000,000 Cuyahoga Cnty., Rev. Bonds, Ser. A,
6s, 1/1/16 A1 5,431,250
2,000,000 OH State Air Quality Dev. Auth.
Rev. Bonds (Toledo Poll. Control),
Ser. A, 6.1s, 8/1/27 Baa2 2,047,500
1,500,000 OH State Solid Waste Rev. Bonds
(General Motors Corp.), 6.3s,
12/1/32 Baa1 1,554,375
1,820,000 OH State Tpk. Comm. Rev. Bonds,
Ser. A, FGIC, 5 1/2s, 2/15/18 Aaa 2,017,925
2,500,000 Rickenbacker, Port Auth. Rev. Bonds
(OASBO Expanded Asset Pooled),
Ser. A, 5 3/8s, 1/1/32 A2 2,556,250
--------------
14,597,300
Oklahoma (0.3%)
- -------------------------------------------------------------------------------
1,050,000 OK Dev. Fin. Auth. Rev. Bonds
(Hillcrest Hlth. Care), Ser. A,
5 5/8s, 8/15/29 B1 1,008,000
Oregon (0.3%)
- -------------------------------------------------------------------------------
1,000,000 OR State Hsg. & Cmnty. Svcs. Dept.
Rev. Bonds Single Family Mtg.
(Single Family Mtg.),
Ser. K, 5 5/8s, 7/1/29 Aa2 1,068,750
Pennsylvania (3.1%)
- -------------------------------------------------------------------------------
1,110,000 Carbon Cnty., Indl. Dev. Auth.
Rev. Bonds (Panther Creek Partners),
6.65s, 5/1/10 BBB- 1,194,638
1,500,000 Lancaster Cnty., Hosp. Auth.
Rev. Bonds (Gen. Hosp.), 5 1/2s,
3/15/26 A- 1,481,250
250,000 Lebanon Cnty., Hlth. Fac. Auth.
Rev. Bonds (Good Samaritan Hosp.
Project), 6s, 11/15/35 Baa1 247,813
1,000,000 Lehigh Cnty., Gen. Purpose Auth.
Rev. Bonds (Lehigh Valley Hosp.
Hlth. Network), Ser. A, 5 1/4s,
7/1/32 A2 958,750
1,000,000 PA Econ. Dev. Fin. Auth.
Rev. Bonds (Amtrak Project), Ser. A,
6 3/8s, 11/1/41 A3 1,018,750
PA State Econ. Dev. Fin. Auth.
Resource Recvy. Rev. Bonds
750,000 (Colver Proj.), Ser. E, 8.05s,
12/1/15 BBB-/P 777,923
750,000 (Northampton Generating), Ser. A,
6.6s, 1/1/19 BBB- 757,500
1,045,000 PA State Higher Edl. Fac. Auth.
Rev. Bonds (Philadelphia College of
Osteopathic Med.), 5s, 12/1/08 A 1,114,231
1,200,000 Sayre, Hlth. Care Fac. Auth.
Rev. Bonds (Guthrie Hlth.), Ser. A,
5 7/8s, 12/1/31 A- 1,224,000
2,200,000 West Shore, Area Hosp. Auth.
Rev. Bonds (Holy Spirit Hosp.),
6 1/4s, 1/1/32 BBB+ 2,222,000
--------------
10,996,855
Puerto Rico (1.6%)
- -------------------------------------------------------------------------------
5,000,000 Cmnwlth. of PR, Hwy. & Trans. Auth.
Rev. Bonds, Ser. B, 6s, 7/1/39 A 5,775,000
South Carolina (1.9%)
- -------------------------------------------------------------------------------
495,000 Connector 2000 Assn., Inc. SC Toll
Road Rev. Bonds (Southern
Connector), Ser. A, 5 3/8s, 1/1/38 B- 311,850
2,515,000 Florence Cnty., Hosp. Rev. Bonds
(McLeod Regl. Med. Ctr.), Ser. A,
FSA, 5 1/4s, 11/1/23 Aaa 2,593,594
500,000 Lexington Cnty. Hlth. Svcs. Dist.
Inc. Hosp. Rev. Bonds, 5 3/4s,
11/1/28 A2 513,125
1,000,000 SC Hosp. Auth. Rev. Bonds (Med. U.),
Ser. A, 6 1/2s, 8/15/32 BBB+ 1,036,250
600,000 SC Jobs Econ. Dev. Auth. Hosp. Fac.
Rev. Bonds (Palmetto Hlth.
Alliance), Ser. A, 7 3/8s, 12/15/21 Baa2 728,250
1,750,000 SC Tobacco Settlement Rev. Mgt.
Rev. Bonds, Ser. B, 6 3/8s, 5/15/28 BBB 1,509,375
--------------
6,692,444
South Dakota (0.5%)
- -------------------------------------------------------------------------------
2,000,000 SD Edl. Enhancement Funding Corp.
Rev. Bonds, Ser. B, 6 1/2s, 6/1/32 BBB 1,747,500
Tennessee (5.3%)
- -------------------------------------------------------------------------------
3,500,000 Johnson City, Hlth. & Edl. Fac.
Board Hosp. IFB, Ser. A2, MBIA,
10.555s, 7/1/21 (acquired
2/8/00, cost $3,296,650) (RES) Aaa 4,165,000
3,000,000 Johnson City, Hlth. & Edl. Fac.
Hosp. Board Rev. Bonds (Mountain
States Hlth.), Ser. A, 7 1/2s,
7/1/25 BBB+ 3,393,750
10,900,000 SCA Tax Exempt Trust Multi-Fam.
Mtge. Rev. Bonds (Steeplechase
Falls), Ser. A-10, FSA, 7 1/8s,
1/1/30 Aaa 11,233,322
--------------
18,792,072
Texas (5.1%)
- -------------------------------------------------------------------------------
4,000,000 Alliance, Arpt. Auth. Rev. Bonds
(Federal Express Corp.), 6 3/8s,
4/1/21 Baa2 4,165,000
1,000,000 Comal Cnty. Hlth. Fac. Dev. Corp.
Rev. Bonds (Hlth. Care Syst. -
McKenna Memorial Project), Ser. A,
6 1/4s, 2/1/32 Baa2 993,750
2,635,000 Dallas-Fort Worth, Intl. Arpt. Fac.
Impt. Corp. Rev. Bonds (American
Airlines, Inc.), 6 3/8s, 5/1/35 Caa2 1,745,688
1,500,000 Gulf Coast, Waste Disp. Auth.
Mandatory Put Bonds (Amoco Oil), 2s,
10/1/06 Aa1 1,492,500
1,250,000 Gulf Coast, Waste Disp. Auth.
Rev. Bonds, Ser. A, 6.1s, 8/1/24 Baa2 1,270,313
1,500,000 Harris Cnty., Hlth. Fac. Rev. Bonds
(Memorial Hermann Hlth. Care),
Ser. A, 6 3/8s, 6/1/29 A2 1,618,125
1,500,000 Houston, Arpt. Syst. Rev. Bonds
(Continental Airlines, Inc.),
Ser. E, 6 3/4s, 7/1/29 B- 1,192,500
500,000 Matagorda Cnty., Navigation Dist. TX
Poll. Control Mandatory Put Bonds
(American Electric Power), 2.15s,
11/1/04 Baa2 499,625
1,500,000 Sam Rayburn Muni. Pwr. Agcy.
Rev. Bonds, 6s, 10/1/21 Baa2 1,541,250
Tomball, Hosp. Auth. Rev. Bonds
(Tomball Regl. Hosp.)
600,000 6s, 7/1/25 Baa2 594,750
1,700,000 6s, 7/1/19 Baa2 1,721,250
1,000,000 Tyler, Hlth. Fac. Dev. Corp.
Rev. Bonds (Mother Frances Hosp.),
5s, 7/1/07 Baa1 1,038,750
--------------
17,873,501
Utah (5.1%)
- -------------------------------------------------------------------------------
2,850,000 Carbon Cnty., Solid Waste Disp.
Rev. Bonds (Laidlaw Env.), Ser. A,
7.45s, 7/1/17 BB-/P 2,889,188
675,000 UT Cnty., Env. Impt. Rev. Bonds
(Marathon Oil Project), 5.05s,
11/1/17 Baa1 713,813
UT State Pwr. Supply Rev. Bonds
(Intermountain Pwr. Agcy.), Ser. A,
MBIA
8,280,000 6.15s, 7/1/14 (prerefunded) Aaa 9,076,939
4,720,000 6.15s, 7/1/14 Aaa 5,192,000
--------------
17,871,940
Vermont (0.3%)
- -------------------------------------------------------------------------------
1,000,000 VT Hsg. Fin. Agcy. Rev. Bonds, Ser.
19A, FSA, 4.62s, 5/1/29 Aaa 1,037,500
Virginia (0.6%)
- -------------------------------------------------------------------------------
2,000,000 Prince William Cnty., Indl. Dev.
Auth. Hosp. Rev. Bonds (Potomac
Hosp. Corp.), 5.35s, 10/1/36 A3 1,962,500
Washington (1.3%)
- -------------------------------------------------------------------------------
2,435,000 Tobacco Settlement Auth. of WA
Rev. Bonds, 6 1/2s, 6/1/26 BBB 2,185,412
2,200,000 WA State G.O. Bonds (Vehicle Fuel),
Ser. R-03, FGIC, 5s, 9/1/08 Aaa 2,370,500
--------------
4,555,912
Wisconsin (2.0%)
- -------------------------------------------------------------------------------
Badger Tobacco Settlement
Asset Securitization Corp.
Rev. Bonds
1,800,000 7s, 6/1/28 BBB 1,671,750
3,500,000 6 3/8s, 6/1/32 BBB 2,970,625
2,500,000 WI State Hlth. & Edl. Fac. Auth.
Rev. Bonds (Wheaton Franciscan),
5 3/4s, 8/15/30 A2 2,562,500
--------------
7,204,875
- -------------------------------------------------------------------------------
Total Investments
(cost $345,095,440) $352,540,566
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on market value.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at May 31, 2004 for the securities
listed. Ratings are generally ascribed to securities at the time of
issuance. While the agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these
securities at May 31, 2004. Securities rated by Putnam are indicated by
"/P".
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at May 31, 2004 was
$6,321,875 or 1.8% of portfolio market value.
The rates shown on IFB, which are securities paying interest rates that
vary inversely to changes in the market interest rates, VRDN and
mandatory put bonds are the current interest rates at May 31, 2004.
The dates shown on mandatory put bonds are the next mandatory put dates.
The fund had the following sector concentrations greater than 10% at May
31, 2004 (as a percentage of market value):
Health care 25.7%
Utilities and power 22.1
The fund had the following insurance concentrations greater than 10% at
May 31, 2004 (as a percentage of market value):
MBIA 15.8%
FSA 14.7
AMBAC 10.9
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
May 31, 2004 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$345,095,440) (Note 1) $352,540,566
- -------------------------------------------------------------------------------
Cash 5,232,768
- -------------------------------------------------------------------------------
Interest and other receivables 6,635,502
- -------------------------------------------------------------------------------
Receivable for securities sold 170,000
- -------------------------------------------------------------------------------
Total assets 364,578,836
Liabilities
- -------------------------------------------------------------------------------
Distributions payable to shareholders 1,374,204
- -------------------------------------------------------------------------------
Accrued preferred shares distribution payable (Note 1) 12,887
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 607,626
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 40,124
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 31,460
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 760
- -------------------------------------------------------------------------------
Other accrued expenses 57,363
- -------------------------------------------------------------------------------
Total liabilities 2,124,424
- -------------------------------------------------------------------------------
Series A remarketed preferred shares: (1,400 shares
authorized and outstanding at $100,000 per share) (Note 4) 140,000,000
- -------------------------------------------------------------------------------
Net assets $222,454,412
Represented by
- -------------------------------------------------------------------------------
Paid-in capital -- common shares (unlimited shares
authorized) (Note 1) $238,266,890
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 371,429
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (23,629,033)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 7,445,126
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to common shares
outstanding $222,454,412
Computation of net asset value
- -------------------------------------------------------------------------------
Net asset value per common share ($222,454,412 divided by
21,438,811 shares) $10.38
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of operations
Six months ended May 31, 2004 (Unaudited)
Interest income: $10,015,382
- -------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,192,951
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 124,011
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 7,674
- -------------------------------------------------------------------------------
Administrative services (Note 2) 4,306
- -------------------------------------------------------------------------------
Preferred share remarketing agent fees 178,240
- -------------------------------------------------------------------------------
Other 63,893
- -------------------------------------------------------------------------------
Total expenses 1,571,075
- -------------------------------------------------------------------------------
Net investment income 8,444,307
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 640,321
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (7,466,267)
- -------------------------------------------------------------------------------
Net loss on investments (6,825,946)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,618,361
Distributions to Series A remarketed preferred
shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax exempt income (737,709)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations
(applicable to common shareholders) $880,652
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Six months ended Year ended
May 31 November 30
Increase (decrease) in net assets 2004* 2003
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $8,444,307 $17,938,467
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments 640,321 (12,673,654)
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments (7,466,267) 20,337,621
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,618,361 25,602,434
Distributions to Series A remarketed preferred
shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax exempt income (737,709) (1,494,296)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations (applicable to common
shareholders) 880,652 24,108,138
- -------------------------------------------------------------------------------
Distributions to common shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax exempt income (8,046,617) (17,791,911)
- -------------------------------------------------------------------------------
Increase from issuance of common shares in
connection with reinvestment of
distributions 479,879 1,392,553
- -------------------------------------------------------------------------------
Total increase (decrease) in net assets (6,686,086) 7,708,780
Net assets
- -------------------------------------------------------------------------------
Beginning of period 229,140,498 221,431,718
- -------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $371,429 and $711,448,
respectively) $222,454,412 $229,140,498
- -------------------------------------------------------------------------------
Number of fund shares
- -------------------------------------------------------------------------------
Common shares outstanding at beginning of
period 21,394,578 21,262,820
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 44,233 131,758
- -------------------------------------------------------------------------------
Common shares outstanding at end of period 21,438,811 21,394,578
- -------------------------------------------------------------------------------
Remarketed preferred shares outstanding at
beginning and end of period 1,400 1,400
- -------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning
of period (common shares) $10.71 $10.41 $10.96 $10.88 $10.71 $11.98
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .39 .84 .95 1.01 1.03 1.06
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.31) .36 (.60) (.02) .26 (1.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .08 1.20 .35 .99 1.29 (.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to preferred shareholders:
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.03) (.07) (.10) (.20) (.28) (.23)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations:
(applicable to
common shareholders) .05 1.13 .25 .79 1.01 (.31)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.38) (.83) (.80) (.71) (.84) (.96)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (.83) (.80) (.71) (.84) (.96)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $10.38 $10.71 $10.41 $10.96 $10.88 $10.71
- ---------------------------------------------------------------------------------------------------------------------------------
Market price, end of period
(common shares) $9.80 $10.74 $10.75 $10.67 $9.81 $11.94
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at market price
(common shares) (%)(b) (5.46)* 8.07 8.58 15.96 (11.14) (13.96)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
common shares
(in thousands) $222,454 $229,140 $221,432 $231,983 $229,854 $225,172
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .68* 1.42 1.46 1.49 1.47 1.46
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) 3.33* 7.26 7.99 7.19 7.10 7.24
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 6.64* 32.72 19.25 23.05 24.90 14.92
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment.
(c) Ratios reflect net assets available to common shares only; net
investment income ratio also reflects reduction for dividend payments to
preferred shareholders.
(d) Includes amounts paid through expense offset arrangements (Note 2).
The accompanying notes are an integral part of these financial
statements.
Notes to financial statements
May 31, 2004 (Unaudited)
Note 1
Significant accounting policies
Putnam Investment Grade Municipal Trust (the "fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified,
closed-end management investment company. The fund's investment
objective is to provide as high a level of current income exempt from
federal income tax as is believed to be consistent with preservation of
capital. The fund intends to achieve its objective by investing in a
diversified portfolio of tax-exempt municipal securities that Putnam
Investment Management, LLC ("Putnam Management"), the fund's manager, an
indirect wholly-owned subsidiary of Putnam, LLC, believes do not involve
undue risk to income or principal. Under normal circumstances, the fund
will invest at least 80% of its net assets in investment grade
securities (rated "investment grade" at the time of investment or, if
not rated, determined by Putnam Management to be of comparable quality).
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are valued at fair
value on the basis of valuations provided by an independent pricing
service, approved by the Trustees. Such services use information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Other investments, including restricted
securities, are valued at fair value following procedures approved by
the Trustees. Such valuations and procedures are reviewed periodically
by the Trustees.
B) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. All premiums/discounts
are amortized/accreted on a yield-to-maturity basis. The premium in
excess of the call price, if any, is amortized to the call date;
thereafter, any remaining premium is amortized to maturity.
C) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986 (the "Code"), as amended.
Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
At November 30, 2003, the fund had a capital loss carryover of
$20,916,906 available to the extent allowed by the Code to offset future
net capital gain, if any. The amount of the carryover and the expiration
dates are:
Loss Carryover Expiration
- ----------------------------------
$1,485,741 November 30, 2004
612,177 November 30, 2005
1,661,946 November 30, 2006
2,968,039 November 30, 2007
535,007 November 30, 2009
1,282,640 November 30, 2010
12,371,356 November 30, 2011
The aggregate identified cost on a tax basis is $345,095,440, resulting
in gross unrealized appreciation and depreciation of $13,348,380 and
$5,903,254, respectively, or net unrealized depreciation of $7,445,126.
D) Distributions to shareholders Distributions to common and preferred
shareholders from net investment income are recorded by the fund on the
ex-dividend date. Distributions from capital gains, if any, are recorded
on the ex-dividend date and paid at least annually. Dividends on
remarketed preferred shares become payable when, as and if declared by
the Trustees. Each dividend period for the remarketed preferred shares
is generally a seven-day day period. The applicable dividend rate for
the remarketed preferred shares at May 31, 2004 was 1.12 %. The amount
and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
E) Determination of net asset value Net asset value of the common shares
is determined by dividing the value of all assets of the fund, less all
liabilities and the liquidation preference of any outstanding remarketed
preferred shares, by the total number of common shares outstanding as of
period end.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the annual rate of 0.65% of the weekly average net assets of
the fund.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred
shares for that period exceed the fund's gross income attributable to
the proceeds of the remarketed preferred shares during that period, then
the fee payable to Putnam Management for that period will be reduced by
the amount of the excess (but not more than 0.65% of the liquidation
preference of the remarketed preferred shares outstanding during the
period).
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company ("PFTC"), a subsidiary of Putnam, LLC. Putnam
Investor Services, a division of PFTC, provides investor servicing agent
functions to the fund. During the six months ended May 31, 2004, the
fund paid PFTC $124,011 for these services.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended May 31, 2004,
the fund did not realize any credits related to this arrangement.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $708, as a quarterly retainer, has been allocated to the fund, and
an additional fee for each Trustees meeting attended. Trustees receive
additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have served
as a Trustee for at least five years. Benefits under the Pension Plan are
equal to 50% of the Trustee's average total retainer and meeting fees for
the three years preceding retirement. Pension expense for the fund is
included in Trustee compensation and expenses in the Statement of
operations. Accrued pension liability is included in Payable for Trustee
compensation and expenses in the Statement of assets and liabilities.
Note 3
Purchases and sales of securities
During the six months ended May 31, 2004, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $23,480,342 and $29,244,523, respectively. There were no
purchases or sales of U.S. government securities.
Note 4
Preferred shares
The Series A shares are redeemable at the option of the fund on any
dividend payment date at a redemption price of $100,000 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.
Additionally, the fund has authorized a separate series of 2,000 Serial
Remarketed Preferred shares, which are issuable only under certain
conditions in exchange for Series A shares. No Serial Remarketed
Preferred shares are currently outstanding.
It is anticipated that dividends paid to holders of remarketed preferred
shares will be considered tax-exempt dividends under the Internal
Revenue Code of 1986. To the extent that the fund earns taxable income
and capital gains by the conclusion of a fiscal year, it may be required
to apportion to the holders of the remarketed preferred shares
throughout that year additional dividends as necessary to result in an
after-tax equivalent to the applicable dividend rate for the period.
Under the Investment Company Act of 1940, the fund is required to
maintain asset coverage of at least 200% with respect to the remarketed
preferred shares as of the last business day of each month in which any
such shares are outstanding. Additionally, the fund is required to meet
more stringent asset coverage requirements under terms of the remarketed
preferred shares and the shares' rating agencies. Should these
requirements not be met, or should dividends accrued on the remarketed
preferred shares not be paid, the fund may be restricted in its ability
to declare dividends to common shareholders or may be required to redeem
certain of the remarketed preferred shares. At May 31, 2004, no such
restrictions have been placed on the fund.
Note 5
Regulatory matters and litigation
On April 8, 2004, Putnam Management entered into agreements with the
Securities and Exchange Commission and the Massachusetts Securities Division
representing a final settlement of all charges brought against Putnam
Management by those agencies on October 28, 2003 in connection with
excessive short-term trading by Putnam employees and, in the case of the
charges brought by the Massachusetts Securities Division, by participants in
some Putnam-administered 401(k) plans. The settlement with the SEC requires
Putnam Management to pay $5 million in disgorgement plus a civil monetary
penalty of $50 million, and the settlement with the Massachusetts Securities
Division requires Putnam Management to pay $5 million in restitution and an
administrative fine of $50 million. The settlements also leave intact the
process established under an earlier partial settlement with the SEC under
which Putnam Management agreed to pay the amount of restitution determined
by an independent consultant, which may exceed the disgorgement and
restitution amounts specified above, pursuant to a plan to be developed by
the independent consultant.
Putnam Management, and not the investors in any Putnam fund, will bear
all costs, including restitution, civil penalties and associated legal
fees stemming from both of these proceedings. The SEC's and
Massachusetts Securities Division's allegations and related matters also
serve as the general basis for numerous lawsuits, including purported
class action lawsuits filed against Putnam Management and certain
related parties, including certain Putnam funds. Putnam Management has
agreed to bear any costs incurred by Putnam funds in connection with
these lawsuits. Based on currently available information, Putnam
Management believes that the likelihood that the pending private
lawsuits and purported class action lawsuits will have a material
adverse financial impact on the fund is remote, and the pending actions
are not likely to materially affect its ability to provide investment
management services to its clients, including the Putnam funds.
Review of these matters by counsel for Putnam Management and by separate
independent counsel for the Putnam funds and their independent Trustees
is continuing.
Fund information
About Putnam Investments
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary Trust Company
Legal Counsel
Ropes & Gray LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President,
Associate Treasurer and
Principal Executive Officer
Jonathan S. Horwitz
Senior Vice President
and Treasurer
Patricia C. Flaherty
Senior Vice President
Steven D. Krichmar
Vice President and Principal
Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Beth S. Mazor
Vice President
Daniel T. Gallagher
Vice President and Legal and
Compliance Liaison Officer
James P. Pappas
Vice President
Richard S. Robie, III
Vice President
Mark C. Trenchard
Vice President and BSA
Compliance Officer
Francis J. McNamara, III
Vice President and Chief
Legal Officer
Judith Cohen
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9:00 a.m. to 5:00 p.m. Eastern Time,
or visit our Web site (www.putnaminvestments.com) anytime for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Do you want to save paper and receive this document faster?
Shareholders can sign up for email delivery of shareholder reports on
www.putnaminvestments.com.
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
215023 058 7/04
Item 2. Code of Ethics:
- -----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Items 5-6. [Reserved]
- ---------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. [Reserved]
- ------------------
Item 9. Submission of Matters to a Vote of Security Holders:
- ------------------------------------------------------------
Not applicable
Item 10. Controls and Procedures:
- ---------------------------------
(a) The registrant's principal executive officer and principal financial
officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report on Form N-CSR, that the design and
operation of such procedures are generally effective to provide
reasonable assurance that information required to be disclosed by
the investment company in the reports that it files or submits under
the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
Commission's rules and forms.
Although such officers reached the conclusion expressed in the
preceding paragraph, they are aware of matters that raise concerns
with respect to controls, each of which arose in connection with the
administration of 401(k) plans by Putnam Fiduciary Trust Company.
The first matter, which occurred in early 2001, involved the willful
circumvention of controls by certain Putnam employees in connection
with the correction of operational errors with respect to a 401(k)
client's investment in certain Putnam Funds, which led to losses in
five Putnam Funds (not including the registrant). Such officers
became aware of this matter in February 2004. The second matter,
which occurred in 2002, involved the willful circumvention by
certain Putnam employees of policies and procedures in connection
with the payment of Putnam corporate expenses. Such officers did
not learn that this matter involved a Putnam Fund until January
2004. Putnam has made restitution to the affected Funds,
implemented a number of personnel changes, including senior
personnel, begun to implement changes in procedures to address these
items and informed the SEC, the Funds' Trustees and independent
auditors. An internal investigation and review of procedures and
controls are currently ongoing.
In reaching the conclusion expressed herein, the registrant's
principal executive officer and principal financial officer
considered a number of factors, including the nature of the matters
described above, when the matters occurred, the individuals
involved, personnel changes that have occurred since these matters
occurred, the results to date of the current ongoing investigation
and the overall quality of controls at Putnam at this time.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: July 27, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: July 27, 2004
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: July 27, 2004