(logo)
Putnam
Tax Exempt
Income Fund
Semiannual
Report
March 31, 1994
(artwork)
For investors seeking
high current income
free from federal
income tax,
consistent with
capital preservation
A member
of the Putnam
Family of Funds
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Semiannual Report
6 Portfolio of investments owned
25 Financial statements
35 Fund performance supplement
<PAGE>
How your
fund performed
For periods ended March 31, 1994
Total return* Lehman Bros.
Class A Class B Municipal
NAV POP NAV CDSC Bond Index
6 months -5.56% -10.04% -5.83% -10.36% -4.16%
1 year 1.21 -3.57 0.61 -4.10 2.32
5 years 52.76 45.55 -- -- 52.91
annualized 8.84 7.80 -- -- 8.86
10 years 164.46 151.89 -- -- 165.26
annualized 10.21 9.68 -- -- 10.25
Life-of-class**
(class A shares)321.19 301.38 -- -- --
annualized 8.69 8.39 -- -- --
(class B shares) -- -- 4.62 0.74 6.12
annualized -- -- 3.71 0.60 4.87
Share data Class A Class B
NAV POP NAV
September 30, 1993 $9.66 $10.14 $9.66
March 31, 1994 $8.74 $9.18 $8.74
Distributions(a) Investment Capital gains
6 months ended Number income Short-term Long-term Total
March 31, 1994
Class A 7 $0.262553 $0.054 $0.087 $0.403553
March 31, 1994
Class B 7 $0.236168 $0.054 $0.087 $0.377168
Current returns Class A Taxable equivalents+
at the end of the period NAV POP NAV POP
Current dividend rate 6.18% 5.89% 10.23% 9.75%
Current 30-day yield 5.74 5.46 9.50 9.04
*Performance data represent past results. Investment return and
principal value will fluctuate so an investor's shares, when
redeemed, may be worth more or less than their original cost.
**On January 1, 1993, the fund began offering class B shares.
Performance for each share class will differ.
(a)Capital gains, if any, are taxable for federal and, in most
cases, state purposes. For some investors, investment income may
also be subject to the Alternative Minimum Tax. Investment income
may be subject to state and local tax.
+Assumes the maximum federal tax rate of 39.6%. Results for
investors subject to lower tax rates would not be as
advantageous, although many such investors would have the
opportunity to receive attractive tax benefits from a fund
investment. Consult your tax advisor for more guidance.
<PAGE>
Terms you need to know
Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions. It may be shown at net asset value or at
public offering price.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.
Public offering price (POP) is the price of a mutual fund share
plus the maximum sales charge levied at the time of purchase.
Contingent deferred sales charge (CDSC) is a charge applied at
the time of the redemption of shares rather than the time of
purchase. It generally declines and eventually disappears over a
stated period.
Class A shares are the shares of your fund offered subject to an
initial sales charge. Your fund's POP includes the maximum 4.75%
sales charge.
Class B shares are the shares of your fund offered with no
initial sales charge. Within the first six years of purchase,
they are subject to a CDSC declining from 5% to 1%. After the
sixth year, the CDSC no longer applies.
Current dividend rate is calculated by annualizing the net
investment income paid to shareholders in the fund's most recent
distribution, then dividing by the NAV or POP on the last day of
the period.
Current 30-day yield, based only on the fund's net investment
income earnings, is calculated in accordance with Securities and
Exchange Commission guidelines.
Taxable equivalent return is the rate at which a taxable
investment would have to generate income to equal the fund's
current dividend rate or yield.
<PAGE>
From the
Chairman
(photograph of George Putnam)
(c) Karsh, Ottawa
George Putnam
Chairman
of the Trustees
Dear Shareholder:
In the last six months we've experienced some of the lowest
short-term interest rates in the past decade -- along with
extremely favorable market conditions for tax-free investments.
As we moved into 1994, however, the story changed. Early February
brought the first in a series of short-term interest rate
increases by the Federal Reserve, and with it, the beginning of a
setback for municipal bond prices. Inevitably, this dampened the
performance of your fund.
Even in light of the price declines, your fund's current income
stream remains extremely attractive, especially relative to
taxable investments. At the end of the period, an investor in the
top federal income tax bracket (39.6%) would have had to earn
9.50% from an equivalent taxable investment to match the fund's
current yield of 5.74% for class A shares at NAV. Even with
higher rates, this remains a difficult feat in today's market.
Investors in the lower brackets would also have had the
opportunity for tax-advantaged earnings.
With the recent rise in interest rates, it is important for
investors to remember that mutual fund investing should be looked
at as a long-term investment. We often say that it is time, not
timing, combined with a proven strategy that will achieve the
most attractive results. Although there are no doubt
uncertainities ahead, as fund Manager David Eurkus explains in
the Report from Putnam Management, municipal bonds are expected
to continue to be attractive in light of increased tax rates and
decline in supply of new bonds.
Looking forward, we believe that the municipal bond market will
remain an attractive investment for individuals seeking tax-free
income.
Respectfully yours,
George Putnam
May 18, 1994
<PAGE>
Report from
Putnam Management
Rising rates dampen performance The Federal Reserve's decision to
raise short-term interest rates early in calendar 1994 affected
the entire fixed-income market. However, municipal bond
investments were among those hardest hit. Putnam Tax Exempt
Income Fund's return, for the six months ended March 31, 1994,
reflects the impact of these rate increases. The total return for
class A shares at net asset value was -5.56%; for class B shares
it was -5.83%.
To keep these events in perspective, however, it is important to
remember that the last quarter of 1993 brought with it some of
the lowest interest rates of the decade. With short-term rates at
historic lows, the gap between yields on short-term and long-term
bonds had widened, making long-term bond yields especially
attractive. Long-term bond prices reflected the increased demand.
As we entered 1994, however, we began to see a slight increase in
short-term rates. By the end of March, the Federal Reserve Board
had raised short-term interest rates twice in what was billed as
a pre-emptive strike against inflation. Combined, both increases
raised short-term rates by 1/2%.
Whenever rates rise, the value of existing bonds falls.
Ironically, the very people who are most eager to preserve bond
prices often contribute indirectly to their further decline.
Although your fund did not experience heavy redemptions, many
no-load fund shareholders sold their fund shares. As fund
managers tried to meet their shareholders' liquidation requests
by selling bonds, bond prices fell further because there was a
greater supply of bonds being sold than requests to buy.
Securities dealers weren't motivated to buy because their firms
already had a large inventory of bonds on hand due to their own
optimistic view of anticipated demand.
A positive result of this activity is that municipal bonds are
now, in our opinion, undervalued and are yielding close to the
same amount as Treasury bonds on a pre-tax basis.
In light of the recent bond market correction, it is important to
remember that mutual fund investments should be looked at as a
long-term investment -- even if their purpose is to provide
current income. Given a proven strategy and an appropriate time
frame, even an investor who consistently buys at the worst
possible time may achieve very attractive results. There is no
denying, however, that those who are able to take advantage of
price trends have the potential for greater gains. And, although
there can never be any assurance as to investing, we believe that
today's postcorrection prices and higher yields represent an
excellent opportunity for investors seeking tax exempt income.
<PAGE>
Municipal bond demand should outpace supply Throughout 1993, the
drop in short-term rates fueled a wave of municipal refundings.
Of the $290 billion in new issues last year, $203 billion -- or
about 70% -- represented refundings. However, now that interest
rates have reversed their direction, it is no longer as
advantageous for municipalities to refinance older, higher coupon
obligations. In fact, the year-to-date supply of new issues is
now running 30% behind what it was at this time last year.
Meanwhile, despite the recent sell-off, investor demand for
municipal bonds has continued to grow. With so many other tax
shelters gone, municipal bonds are now among the last tax refuges
for investment income. With federal tax rates rising, tax-free
investing has become increasingly important for a growing number
of taxpayers. The current after-tax yield advantage of municipal
bonds has further increased investor demand.
Looking forward As we move forward, we will continue to adjust
our holdings to best take advantage of changing market
conditions. We have reduced the holdings in hospitals slightly in
favor of higher-quality securities. Utilities and housing
continue to be a substantial portion of our portfolio. With a
strong economic recovery in the Southeast, we have begun to
invest more assets in the region.
We are maintaining our positive outlook for the municipal bond
market as a whole, although we remain cautious in the near term.
Despite the market's reaction -- or overreaction -- to the
Federal Reserve Board's increase in short-term interest rates,
inflation is still quite low and there seems to be no real sign
that it is rising. Once the market recognizes this, we believe it
will stabilize and focus once again on the strong fundamentals
that make municipal bonds such an attractive investment. Your
fund is well positioned to participate in what we regard as
positive market prospects.
Top industry sectors as a % of net assets as of 3/31/94
(BAR CHART)
Hospitals/Life Care ......................23.6%
Utilities ..................16.3%
Housing .............12.7%
Education ...........10.9%
Transportation ..........9.5%
<PAGE>
<TABLE>
<CAPTION>
Portfolio of
investments owned
March 31, 1994 (Unaudited)
Municipal Bonds and Notes (101.5%)(a)
Principal Amount Ratings(b) Value
<S> <C> <C> <C> <C>
Alabama (0.4%)
Birmingham, Impt.
Waste General
Obligation (G.O.)
Bonds
$ 3,625,000 6.6s, 7/1/12 AA $ 3,742,813
1,710,000 Ser. B, 5 3/4s, 4/1/22 AA 1,577,475
1,000,000 Ser. B, 5 3/4s, 4/1/21 AA 922,500
4,000,000 5 1/8s, 7/1/17 AA 3,430,000
9,672,788
Alaska (1.0%)
7,500,000 AK Energy Auth. Util.
Residual Interest Rate
Bonds (RIBS), 10.2s,
7/1/15 AAA 8,737,500
AK Hsg. Fin. Corp.
Rev. Bonds
690,000 1st Ser., 7.8s, 12/1/30 A 727,950
12,000,000 Ser. B, 7s, 12/1/27 A 12,435,000
2,100,000 Ser. A, 7s, 12/1/21 A 2,176,125
24,076,575
Arizona (0.3%)
6,510,000 AZ State Muni. Fin.
Program Certif. of
Participation, Bond
Investors Guaranty
Insurance (BIGI),
Ser. 34, 7 1/4s, 8/1/09 AAA 7,226,100<PAGE>
California (7.4%)
11,150,000 CA State Pub. Works
Board Lease Rev.
Bonds (Dept. of
Corrections-State
Prisons), Ser. A,
American Municipal
Bond Assurance
Corp. (AMBAC), 5s,
12/1/19 AAA 9,324,188
10,000,000 CA Statewide Cmntys.
Dev. Auth. Certif.
of Participation Rev.
Bonds (Childrens
Hosp.), 4 3/4s,
6/1/21 AAA 7,975,000
3,500,000 CA Poll.Cntrl. Fin.
Auth. Rev. Bonds.
(Shell Oil Co.) 2.75s,
10/1/11 A 3,500,000
8,125,000 Calleguas-Las Virgines,
Pub. Fin. Auth.
Installment Purchase
Rev. Bonds
(Calleguas Muni.
Wtr. Dist. Rfdg.
Project), Financial
Guaranty Insurance
Co. (FGIC), 5 1/8s,
7/1/21 AAA 6,865,625
5,635,000 Culver City Dev. Fin.
Auth. Rev. Bonds.,
AMBAC, 5s, 11/1/23 AAA 4,599,569
4,490,000 Los Angeles Cnty.,
Metro. Trans. Auth.
Sales Tax Rev.
Bonds, FGIC, Ser. A,
5s, 7/1/21 AAA 3,709,863<PAGE>
5,000,000 Los Angeles Cnty.,
Sanitation Dist. Fin.
Auth. Rev. Bonds
(Capital Project),
Ser. A, 5s, 10/1/23 AA 4,087,500
7,000,000 Los Angeles, Regl.
Arpt. Impt. Rev.
Bonds (United
Airlines, Inc.),
Ser. G, 8.8s,
11/15/21 Baa 7,848,750
Los Angeles, Waste
Wtr. Syst. RIBS
9,350,000 7.737s, 11/1/09
(acquired 11/08/93,
cost $9,708,105)(c) AAA 8,298,125
5,350,000 7.566s, 11/1/06
(acquired 11/8/93,
cost $5,796,404)(c) AAA 4,962,125
1,500,000 Ser. 91-5, AMBAC,
3s, 6/1/21 (acquired
6/20/91, cost
$1,498,470)(c) AAA 1,816,875
5,000,000 Los Angeles,
Convention & Exhib.
Ctr. Rev. Bonds.
(Municipal Bond
Insurance Corp.
(MBIA), Ser. A,
5 1/8s, 8/15/21 AAA 4,212,500
21,655,000 Rancho, Wtr. Dist.
Fin. Auth. Rev.
Bonds, AMBAC,
4 3/4s, 8/15/21 AAA 17,269,863
10,565,000 Sacramento, City Fin.
Auth. Lease Rev.
Bonds, Ser. B, 5.4s,
11/1/20 A 9,178,344<PAGE>
29,500,000 San Joaquin Hills,
Trans. Corridor
Agcy. Toll Rd. Rev.
Bonds, 6 3/4s, 1/1/32 BB/P 28,209,375
2,620,000 Southern CA Pub.
Pwr. Auth. Rfdg.
Rev. Bonds
(Southern Transmission
Project), 6s, 7/1/20 AA 2,790,300
Southern CA
Pub. Pwr. Rev.
Bonds (Southern
Transmission
Project)
8,530,000 6s, 7/1/20 AA 8,082,175
2,000,000 5 3/4s, 7/1/10 AA 1,877,500
4,195,000 5 3/4s, 7/1/09 AA 3,964,275
10,000,000 Ser. A, FGIC,
zero%, 7/1/15 AAA 2,712,500
11,400,000 Ser. A, FGIC,
zero%, 7/1/14 AAA 3,277,500
12,200,000 Ser. A, FGIC,
zero%, 7/1/13 AAA 3,736,250
5,000,000 Ser. A, FGIC,
zero%, 7/1/12 AAA 1,643,750
U. of CA Rev. Bonds
18,000,000 (USCD Med. Ctr.
Satellite Med. Fac.),
7.9s, 12/1/19 BBB 19,440,000
9,000,000 (Multi-Purpose
Projects), Ser. C,
AMBAC, 5s, 9/1/23 AAA 7,301,250
1,500,000 (Multi-Purpose
Project), Ser. C,
AMBAC, 4 7/8s,
9/1/19 AAA 1,216,875
177,900,077
<PAGE>
Colorado (3.0%)
2,460,000 CO Hsg. Fin. Auth.
Single Fam. Rev.
Bonds, Ser. A,
7 1/4s, 11/1/31 AA 2,558,400
Denver, City &
Cnty. Arpt. Rev.
Bonds
44,000,000 Ser. A, 8 3/4s, 11/15/23 Baa 49,005,000
6,015,000 Ser. A, 8 1/2s, 11/15/23 Baa 6,541,313
9,550,000 Ser. A, 7 1/4s, 11/15/25 Baa 9,729,063
3,255,000 Ser. C, 5 3/4s, 8/1/07 AA 3,214,313
71,048,089
Connecticut (0.4%)
3,500,000 CT State Dev. Auth.
Solid Waste & Elec.
Rev. Bonds (Ogden
Martin Syst. Bristol,
Inc.), 10s, 7/1/14 BBB 3,793,125
2,000,000 CT State Hsg. Fin.
Auth. Mtge Rev.
Bonds, Ser. B, 6 3/4s,
11/15/23 AA 2,052,500
1,600,000 CT State Special
Tax Oblig. Rev.
Bonds (Trans.
Infrastructure),
Ser. A, 5 3/8s, 9/1/08 AA 1,510,000
1,150,000 Stratford, G.O. Bonds
7.3s, 3/1/12 BBB/P 1,303,813
8,659,438
District of Columbia (0.3%)
7,000,000 DC, Georgetown U.
RIBS, 10.309s,
4/25/22 AA 7,140,000
Florida (2.2%)
Broward Cnty.,
Resource Recvy.
Rev. Bonds
3,430,000 (Waste Energy
Project), 7.95s,
12/1/08 A 3,764,425
2,595,000 (South Project), 7.95s,
12/1/08 A 2,848,013
18,500,000 Hernando Cnty.
Complex Financing,
Rev. Bonds (Criminal
Justice Complex
Project), FGIC,
7.65s, 7/1/16 AAA 21,830,000
18,600,000 Palm Beach Cnty.,
Solid Waste Indl.
Dev. Rev. Bonds
(Okeelanta Pwr. &
Lt. Project), Ser. A,
6.85s, 2/15/21 BB/P 17,995,500
5,850,000 South Broward, Hosp.
Dist. RIBS Ser. C,
AMBAC, 10.352s,
5/13/21 AAA 6,142,500
52,580,438
Georgia (3.0%)
12,115,000 Atlanta Georgia
Wtr & Swr. Rev.
Bonds 4 3/4s 1/1/23 AA 9,692,000
13,015,000 Colquitt Cnty. Dev.
Auth. Rev. Bonds,
zero%, 12/1/21 AAA 1,968,519
12,000,000 De Kalb Cnty., Hsg.
Auth. Muni. Rev.
Bonds (Briarcliff
Park Apts. Project),
Ser. A, 7 1/2s, 4/1/17 B/P 12,225,000
De Kalb Cnty., Wtr &
Sew. Rev. Rfdg.
Bonds,
7,740,000 5 1/4s, 10/1/23 AA 6,637,050
3,575,000 5 1/8s, 10/1/14 AA 3,123,656
Fulton Cnty., G.O.
Bonds
1,000,000 Ser. A, 5 3/8s, 1/1/09 AA 953,750
1,000,000 Ser. A, 5 3/8s, 1/1/08 AA 955,000
945,000 GA Muni. Elec. Auth.
VRDN, (Project 1),
Ser. C, 2.9s, 9/1/09 A 945,000
3,000,000 GA Muni. Elec. Auth.
Pwr. Rev. Bonds
Ser.CC-, AMBAC
4 3/4s, 1/1/19 AAA 2,430,000
5,000,000 GA Muni. Elec. Auth.
Special Oblig.
Bonds (3rd Crossover),
6.6s, 1/1/18 AA 5,150,000
5,875,000 Gwinnett Cnty., School.,
Dist. Rfdg. Rev.
Bonds 4 1/2s, 2/1/13 AA 4,920,313
6,500,000 Middle GA. Colliseum
Rev. Rfdg. Bonds,
Ser A, 5 3/8s, 7/1/14 AA 5,882,500
6,410,000 Monroe Cnty., Dev.
Auth. Poll. Control
Rev. Bonds
(GA Pwr. Co. Plant
Scherer Project),
10 1/2s, 9/1/15 A 7,026,963
Richmond Cnty., Dev.
Auth. Rev. Bonds
25,080,000 Ser. A, zero% 12/1/21 AAA 3,856,050
3,965,000 Ser. C, zero% 12/1/21 AAA 609,619
11,750,000 Savannah, Econ. Dev.
Auth. Rev. Bonds,
Ser. C, zero%
12/1/21 AAA 1,777,188
2,000,000 Savannah, Port Auth.
Poll. Cntrl. Rev.
Bonds (Union
Carbide Corp.
Plastic Co., Inc.),
7.55s, 8/1/04 BBB 2,095,000
13,090,000 Washington Cnty.,
Wilkes Payroll Dev.
Auth. Rev. Bonds
Ser. C, zero%
12/1/21 AAA 1,979,863
72,227,471
Idaho (0.1%)
2,500,000 Boise, Indpendent
School Dist. Rev.
Bonds, AMBAC,
5.3s, 7/30/09 AAA 2,315,625
Illinois (3.7%)
4,055,000 Central Lake Cnty.,
Joint Action Wtr.
Agcy. Rev. Bonds,
6s, 2/1/19 Aa 3,872,525
Chicago, Metro. Hsg.
Dev. Corp. Rev.
Bonds, FHA Insd.
10,000,000 Ser. A, 6.85s, 7/1/22 AA 10,337,500
2,925,000 Ser. A, 6.7s, 7/1/12 AA 3,009,094
4,815,000 Chicago, O'Hare Intl.
Arpt. Special Fac.
Rev. Bonds (United
Airlines Inc. Project),
Ser. C, 8.2s, 5/1/18 Baa 5,164,088
4,450,000 IL Dedicated Tax Rev.
Bonds (Civic Ctr.),
AMBAC, 6 1/4s,
12/15/20 AAA 4,416,625
5,000,000 IL Dev. Fin. Auth. Poll.
Control Rev. Bonds
(Cmnwlth. Edison
Co. Project), 10 5/8s,
3/1/15 BBB 5,331,250<PAGE>
IL Dev. Fin. Auth.
Rev. Bonds
5,910,000 (Cmnty. Rehab.
Providers Fac.),
8 3/4s, 7/1/11 Ba 6,006,038
3,000,000 (Marriott Retirement
Project), Ser. A,
7 3/4s, 8/1/10 A 3,232,500
3,670,000 (Marriott Retirement
Project), Ser. B,
7 3/4s, 8/1/09 A 3,954,425
4,000,000 IL Edl. Fac. Auth.
Rev. Bonds
(Northwestern U.),
5 3/8s, 12/1/21 AA 3,500,000
IL Hlth. Fac. Auth.
Rev. Bonds
8,000,000 (St. Luke's Med. Ctr.),
MBIA, 10.761s,
10/1/24 AAA 8,640,000
4,000,000 (Glen Oaks Med. Ctr.),
Ser. B, 6.95s,
11/15/13 BBB 3,970,000
10,000,000 (Masonic Medical Ctr.
Project), Ser. B,
5 1/2s, 10/1/19 A 8,537,500
2,000,000 IL Hlth. Fac. Auth.
RIBS (Methodist
Hlth. Project),
AMBAC, 10.987s,
5/1/21 AAA 2,190,000
8,000,000 IL Hsg. Dev. Auth.
Res. Mtge. RIBS
11.945s, 2/1/20
(acquired 4/8/92,
cost $8,535,040)(c) AA 8,510,000
9,000,000 IL State Sales Tax
Rev. Bonds, Ser. P,
6 1/2s, 6/15/22 AAA 9,258,750
89,930,295
Indiana (0.7%)
10,000,000 IN Trans. Fin. Auth.
Hwy. Rev. Bonds,
Ser. A, AMBAC,
5 1/4s, 6/1/15 AAA 8,787,500
3,500,000 Indianapolis, Gas
Util. Rev. Bonds,
Ser. B, FGIC, 4s,
6/1/15 AAA 2,594,375
5,200,000 Petersburg, Poll. Cntrl.
Rev. Bonds, Ser. B,
5.4s, 8/1/17 AA 4,537,000
15,918,875
Kansas (1.4%)
18,200,000 Burlington, Poll.
Control RIBS
(KS Gas & Elec.),
Ser. 91-4, MBIA,
10.8425, 6/1/31
(10,200,000 par
amount acquired
6/20/91, cost
$10,098,000;
8,000,000 par
amount acquired
2/14/94, cost
$10,083,360) AAA 20,634,250
12,000,000 Witchita, Hosp. RIBS,
Ser. III-A, MBIA,
10.111s, 10/1/17 AAA 12,705,000
33,339,250
Kentucky (2.2%)
Jefferson Cnty.
School Dist.
Rev. Bonds
3,650,000 Ser. A, 4 7/8s, 1/1/14 A 3,093,375
3,480,000 Ser. A, 4 7/8s, 1/1/13 A 2,962,350<PAGE>
5,100,000 Jefferson Cnty.,
Hosp. RIBS
(Alliant Hlth. Syst.
Project), MBIA,
9.799s, 10/1/14 AAA 5,437,875
18,640,000 KY Hosp. Auth.
Econ. Rev. Bonds
(Baptist Healthcare
Syst.), MBIA, 5s,
8/15/24 AAA 15,587,700
8,500,000 KY State Tpk. Auth.
Econ Rev. Bonds
(Revitalization
Project), FGIC,
zero%, 1/1/10 AAA 3,145,000
20,000,000 Kenton Cnty., Arpt.
Rev. Bonds (Delta
Airlines Project),
Ser. A, 7 1/2s,
2/1/12 Ba 20,200,000
3,900,000 U. of Louisville, Rev.
Rfdg. Bonds (Cons.
Bldg.), Ser. J, 5.1s,
5/1/11 AA 3,466,125
53,892,425
Louisiana (1.4%)
2,500,000 East Baton Rouge
Parish Poll. Control
Rev. Rfdg. Bonds
(Exxon Project),
zero %, 11/1/19 A 2,500,000
30,000,000 LA Pub. Fac. Auth.
Multi-Fam. Rev.
Bonds, Ser. A,
zero%, 2/1/20 AAA 5,137,500
50,000,000 LA Pub. Fac. Auth.
Rev. Bonds, Ser. B,
zero%, 12/1/19 AAA 8,687,500<PAGE>
15,000,000 Lake Charles, Harbor &
Term. Dist. Port Facs.
Rev. Bonds (Trunkline
Co. Project), 7 3/4s,
8/15/22 Ba 15,806,250
10,000,000 Orleans, Parish
School Board Rev.
Bonds, FGIC, zero%
2/1/15 AAA 2,462,500
34,593,750
Maine (0.2%)
5,000,000 Skowhegan, Poll.
Cntrl. Rev. Bonds
(Scott Paper Co.
Project), 5.9s,
11/1/13 BBB 4,575,000
Maryland (0.7%)
MD State Hlth. &
Higher Edl. Fac.
Auth. Rev. Bonds
3,000,000 (Doctors' Cmnty.
Hosp. Project),
5 3/4s, 7/1/13 Baa 2,666,250
10,000,000 (Howard Cnty. Genl.
Hosp. Project),
5 1/2s, 7/1/21 BBB 8,462,500
7,000,000 Prince George, Cnty.
Rev. Bonds
(Dimensions Hlth.
Care Corp. Project),
5.3s, 7/1/24 A 5,748,750
16,877,500
Massachusetts (10.9%)
Boston, Rev. Rfdg.
Bonds
15,850,000 (Boston City Hosp.),
Ser. A, FHA Insd.
7 5/8s, 2/15/21 AAA 18,267,125<PAGE>
5,000,000 (Boston City Hosp.),
Ser B, FHA Insd.,
5 3/4s, 2/15/13 AA 4,568,750
1,855,000 Lawrence G.O. Rev.
Bonds, 4 3/4s,
2/15/14 AAA 1,560,519
1,000,000 Lowell, G.O. Bonds
7 5/8s, 2/15/10 Baa 1,158,750
6,500,000 MA Bay Trans. Auth.
Rev. Bonds, Ser. B,
7 7/8s, 3/1/21 AAA 7,605,000
3,000,000 MA Cons. Loan Rev.
Bonds, Ser. A, 7 1/2s,
6/1/04 A 3,401,250
MA Hlth. & Edl. Fac.
Auth.Rev. Bonds
10,000,000 (St. Elizabeth Hosp.
Project), Ser. E,
10.92s, 8/15/21 AAA 11,075,000
8,000,000 (Waltham-Weston
Hosp.& Med. Ctr.
Project), Ser. B, 8 3/8s,
7/1/15 Baa 8,520,000
4,000,000 (MA Eye & Ear
Infirmary Project),
Ser A, 7 3/8s, 7/1/11 BBB 4,190,000
2,000,000 MA State Hlth. & Edl.
Facs. Auth. RIBS
(Boston U.), Ser. L,
10.511s, 10/1/31 AAA 2,150,000
5,000,000 MA State Hlth. & Edl.
Facs. Auth. Rev.
Bonds RIBS (Beth
Isarel Hosp.),
AMBAC, 9.384s,
7/1/25 AAA 4,825,000
7,000,000 MA Indl. Fin. Agcy.
Resource Recvy.
Rev. Bonds
(Southeastern MA
Project), Ser. A , 9s,
7/1/15 BB/P 7,875,000
MA Muni. Wholesale
Elec. Co. Pwr. Supply
Syst. Rev. Bonds
12,295,000 Ser. A, 8 3/4s, 7/1/18 BBB 14,062,406
5,000,000 Ser. B, 6 3/4s, 7/1/17 A 5,381,250
5,000,000 MA Muni. Wholesale
Elec. Co. Pwr. Supply
Syst. Rfdg. Rev.
Bonds, Ser. B, MBIA,
4 3/4s, 7/1/11 AAA 4,200,000
1,955,000 MA State Hsg. Fin.
Agcy. Multi-Fam
Hsg. Rev. Bonds
Ser. A, GNMA Coll.,
9 1/8s, 12/1/20 AAA 2,106,513
13,255,000 MA State Hsg. Fin.
Agcy. Rev. Bonds,
Ser. A, 9s, 12/1/18 A 14,298,831
MA State Cons. Loan
G.O. Bonds
2,090,000 Ser. B, 7 1/2s,4/1/09 A 2,356,475
4,215,000 Rfdg. Ser. B, 7 1/2s,
4/1/09 A 4,757,681
4,980,000 Ser. C, 7 1/2s, 12/1/07 A 5,733,225
5,020,000 Rfdg. Ser. C, 7 1/2s,
12/1/07 A 5,779,275
1,000,000 Ser. B, 6 1/2s, 8/1/08 A 1,047,500
MA State Hlth. & Edl.
Rfdg. Fac. Auth. Rev.
Bonds
10,000,000 (Boston College
Project), Ser. K,
5 1/4s, 6/1/23 A 8,550,000
5,625,000 (Holyoke Hosp.
Project), Ser A,
9 1/2s 7/1/5 BBB 5,934,375
4,340,000 (Youville Hosp.), Ser. A,
FHA Insd., 9.1s,
8/1/15 AA 4,687,200
7,510,000 (Melrose-Wakefield
Hosp.), Ser A,
8 5/8s, 7/1/18 AAA 8,354,875
4,770,000 (Charlton Memorial
Hosp.), Ser. B,
7 1/4s, 7/1/13 A 5,020,425
1,500,000 (Med. Ctr. of Central
MA), 7s, 7/1/12 A 1,545,000
5,000,000 MA State Hlth. & Edl.
Fac. Auth. Rev.
Bonds (Stars & Cars),
AMBAC, 6.55s,
6/23/22 AAA 5,193,750
MA State Hlth. & Edl.
Fac. Auth. Rev.
Bonds
5,000,000 (New England
Deaconess Hosp.),
Ser. D, 6 5/8s, 4/1/12 A 5,006,250
5,000,000 (Metro. West Hlth.
Inc.), Ser. C, 6.4s,
11/15/11 A 4,893,750
2,500,000 (Ctr. for New England
Hlth. Syst.), Ser. A,
6 1/8s, 8/1/13 Baa 2,262,500
4,410,000 (Beth Israel Hosp.),
Ser. G, AMBAC, 5.7s,
7/1/05 AAA 4,371,413
5,000,000 (Baystate Med. Ctr.),
Ser. D, FGIC, 5s,
7/1/12 AAA 4,393,750
5,600,000 (MA Institute of
Technology),
Ser. H, 5s, 7/1/10 AA 5,096,000<PAGE>
5,000,000 MA State Hsg. Fin.
Agcy. Residential
Dev. Rev. Bonds,
Ser. F, 6 1/4s, 11/15/12 AAA 5,037,500
685,000 MA State Hsg. Finance
Agcy. Rev. Bonds
(Home Impt.), Ser. 1,
8 7/8s, 7/1/02 A 699,556
880,000 Ser. 2, 8 1/4s, 6/1/14 AA 916,300
5,000,000 MA State Ind. Fin.
Agcy. Rev. Bonds
(Harvard Cmnty. Hlth.),
Ser. B, 8 1/8s, 10/1/17 A 5,462,500
3,000,000 MA State Indl.
Resource Recvy.
Fin. Agcy. Rev. Bonds
(Refuse Tech. Inc.
Project), 6.3s,
7/1/05 BBB 2,988,750
5,700,000 MA State Port Auth.
Tax Rev. Bonds
zero%, 7/1/13 AAA/P 4,161,000
4,000,000 MA State Tpk. Auth.
Rev. Rfdg. Bonds,
Ser. A, 5s, 1/1/20 A 3,325,000
MA State Wtr. Resource
Auth. Rev. Rfdg. Bonds
1,750,000 Ser. C 6s, 12/1/11 A 1,699,688
5,000,000 Ser. C 5 1/4s, 12/1/20 A 4,212,500
4,250,000 Ser. C, 5 1/4s, 12/1/15 A 3,681,563
10,000,000 Ser. C 4 3/4s, 12/1/23 A 7,712,500
MA State Wtr. Resource
Auth. Rev. Bonds,
9,400,000 Ser. A, 7 5/8s, 4/1/14 AAA 10,774,750
Plymouth-Carver
Regl. School Dist.
Rev. Bonds
550,000 8 3/4s, 10/1/05 AAA 604,313
1,000,000 8 3/4s, 10/1/04 AA 1,098,750
1,250,000 8 3/4s, 10/1/03 Aaa 1,373,438
1,300,000 8 3/4s, 10/1/02 Aaa 1,428,375
U. of MA Bldg. Auth.
Rev. Bonds, Ser. A
3,000,000 7.2s, 5/1/04 A 3,296,250
2,500,000 7.15s, 5/1/03 A 2,743,750
261,445,321
Michigan (3.4%)
5,000,000 Chippewa Valley,
School Rev. Bonds,
FGIC, 5s, 5/1/21 AAA 4,143,750
1,000,000 Grand Rapids, San.
Swr. Syst. Rev.
Bonds, 6s, 1/1/12 AAA 967,500
5,000,000 Kalamazoo, Hosp.
Fin. Auth. Rev.
Bonds (Bronson
Methodist Project),
Ser A, 6 1/4s, 5/15/12 A 4,850,000
9,355,000 Kent Hosp. Fin. Auth.
Rev. Bonds (Blodgett
Memorial Med. Ctr.),
Ser. A, 5 3/4s, 7/1/09 A 8,758,619
41,685,000 Lowell Area Schools
Cap. Apprec. Rev.
Bonds, FGIC, zero%,
5/1/20 AAA 7,451,194
15,000,000 MI State Stragetic
Fund Solid Waste
Disposal Rev.
Bonds (Genesee
Pwr. Station Project),
7 1/2s, 1/1/21 BBB/P 14,475,000
9,000,000 Monroe Cnty., Econ.
Dev. Ltd. Oblig.
Rev. Bonds (Detroit
Edison Co. Project),
Ser. AA, FGIC, 6.95s,
9/1/22 AAA 9,810,000
51,675,000 Okemos, Pub. School
Dist. Rev. Bonds,
Ser. I, MBIA, zero %,
5/1/21 AAA 8,849,344
12,585,000 Pellston Pub. School
Dist. Rev. Bonds,
zero%, 5/1/22 AAA 1,997,869
Romulus, Cmnty.
Schools Rev. Bonds
7,400,000 Ser. II, FGIC, zero%,
5/1/22 AAA 1,258,000
39,490,000 Ser. I, zero%, 5/1/17 AAA 8,934,613
36,490,000 West Ottawa, Pub.
School Dist. Bldg. &
Site Rev. Bonds,
MBIA, zero%, 5/1/15 AAA 9,533,013
81,028,902
Mississippi (0.4%)
1,000,000 Hinds Cnty., Rev
Bonds (MI Methodist
Hosp. & Rehabilitation),
AMBAC, 5.4s, 5/1/05 AAA 968,750
6,000,000 Jackson Cnty. Poll.
Cntrl. Rev. Bonds
(Chevron U.S.A.
Inc. Project) zero%,
12/1/16 P-1 6,000,000
3,000,000 MS River Bridge
Auth. Rev. Bonds,
6 3/4s, 11/1/12 A 3,071,250
10,040,000
Missouri (0.3%)
24,100,000 Greene Cnty., Single
Fam. Mtge. Rev.
Bonds, Ser. A,
zero%, 7/1/14 A 3,404,125
1,420,000 MO State Env.
Impt. & Energy
Resources Auth.
Poll. Control Rev.
Bonds Ser. 1984G,
8 1/4s, 11/15/14 AA 1,540,700
2,000,000 MO State Hlth. &
Edl. Fac. Auth.
VRDN (Sisters of
Mercy Project),
Ser. B 1.85s, 6/1/14 A 2,000,000
6,944,825
Montana (0.6%)
14,000,000 MT Hlth. Fac. Hosp. Auth.
RIBS (Deaconess
Med. Ctr. Project),
Ser. B, AMBAC,
10.31s, 3/8/16 AAA 14,630,000
Nebraska (1.7%)
3,000,000 NB Investment Fin.
Auth. Hosp. RIBS
MBIA, 10.358s,
12/8/16 AAA 3,198,750
NB Investment Fin.
Auth. Single Fam.
Mtge. RIBS
16,500,000 Ser. A, 8.881s
11/1/11 AAA 16,830,000
4,800,000 10.022s, 9/15/24 AAA 4,920,000
11,500,000 Ser. B, 11.189s,
9/19/23 AAA 12,506,250
3,000,000 NB Pub. Pwr. Auth.
Rev. Bonds, 6 1/8s,
1/1/15 A 2,951,250
40,406,250
Nevada (0.3%)
7,150,000 Clark Cnty., Indl.
Dev. Rev. Bonds
(Southwest Gas
Corp.), Ser. A,
6 1/2s, 12/1/33 Ba 6,479,688<PAGE>
New Hampshire (1.0%)
10,500,000 NH State Tpk.
Syst. Rfdg. RIBS,
FGIC, 11.136s,
11/1/17 AAA 12,403,125
NH State Tpk.
Syst. RIBS
15,600,000 7.669s, 2/1/24 A 11,856,000
24,259,125
New Jersey (0.3%)
5,000,000 NJ Econ. Dev. Auth.
Elec. Energy Fac.
Rev. Bonds
(Vineland
Cogeneration L.P.
Project), 7 7/8s,
6/1/19 BB/P 5,337,500
2,500,000 NJ Hlth. Care Fac.
Fin. Auth. Rev.
Bonds (Union
Hosp./Mega
Care Inc.), 5 7/8s,
7/1/07 Baa 2,343,750
7,681,250
New York (24.9%)
Battery Park, City
Auth. Rev. Bonds
5,635,000 Ser. A, 5 1/4s, 11/1/17 AA 4,830,469
10,000,000 Ser. A, 5 1/2s, 11/1/10 AA 9,175,000
Metro. Trans. Auth.
Transit Fac. Rev.
Bonds
4,850,000 Ser. F, 8 3/8s, 7/1/16 AAA 5,371,375
11,000,000 Ser. F, 6 1/2s, 7/1/16 BBB 11,027,500
6,650,000 Ser. O, 5 3/4s, 7/1/13 BBB 6,118,000
Muni. Assistance
Corp. for the City
of NY Rev. Bonds
7,040,000 Ser. 61, 5 3/4s, 7/1/08 AA 7,101,600
NY City G. O. Bonds
1,160,000 Ser. F, 8.4s, 11/15/08 A 1,349,950
5,000,000 Ser. F, 8.4s, 11/15/07 A 5,818,750
5,335,000 Ser. F, 8.4s, 11/15/06 A 6,208,606
5,500,000 Ser. F, 8.4s, 11/15/05 A 6,400,625
3,215,000 Ser. D, 8 1/4s, 8/1/13 A 3,709,306
30,000,000 Ser. D, 8 1/4s, 8/1/12 A 34,425,000
11,000,000 Ser. D, 8 1/4s, 8/1/11 A 12,622,500
5,000,000 Ser. B, 7 1/2s, 2/1/06 A 5,475,000
4,325,000 Ser. B, .7s, 10/1/13 A 4,665,594
7,250,000 Ser. C 6 1/2s, 8/1/06 A 7,331,563
15,000,000 Ser. H, 5.9s, 8/1/05 A 14,512,500
5,000,000 NY City, Hsg. Dev.
Corp. Multi-Fam.
Rev. Bonds Ser. B,
5.7s, 11/1/13 AA 4,756,250
NY City, Muni. Fin.
Auth. Wtr. & Swr.
Syst. Rev. Bonds
9,250,000 Ser. C, 7 3/4s, 6/15/20 AAA 10,776,250
10,000,000 Ser. C, FGIC, 6 3/8s,
6/15/22 AAA 9,925,000
NY City, G. O. Bonds
(VRDN)
3,800,000 1.597s, 8/15/22 A 3,800,000
4,500,000 2.35s, 8/15/21 A 4,500,000
3,800,000 Ser. B-3, 2.6s, 8/15/18 /P 3,800,000
NY State Dorm.
Auth. Rev. Bonds
17,000,000 (State U. Edl. Fac.),
Ser. A, 7.7s, 5/15/12 BBB 19,550,000
9,750,000 (City U. Syst.), Ser. B,
7 5/8s, 7/1/14 Baa 10,627,500
15,750,000 (City U. Syst.), Ser. A,
7 5/8s, 7/1/13 Baa 17,167,500
9,625,000 (City U. Syst.), Ser. C,
7 1/2s, 7/1/10 Baa 10,623,594<PAGE>
9,910,000 (City U.), Ser. B, 5 3/8s,
7/1/07 BBB 9,092,425
10,975,000 (City U. Syst.), Ser. F,
5 3/8s, 7/1/07 BBB 10,069,563
230,000 (City U. Syst.), Ser. V,
5 3/8s, 7/1/07 BBB 211,025
6,000,000 (State U. Edl. Fac.),
Ser. A, 5 1/4s,
5/15/15 Baa 5,152,500
NY State Energy
Research & Dev.
Auth. Poll. Control VRDN
13,000,000 (Niagara Mohawk
Pwr. Project), Ser. A,
2.65s, 7/1/15 A 13,000,000
4,400,000 NY State Envi. Fac.
Corp. Poll. Control
Rev. Bonds
(State Wtr. Revolving
Fund), Ser A, 7 1/2s,
6/15/12 A 4,961,000
NY State Hsg. Corp.
Rev Bonds
20,650,000 5 1/2s, 11/1/20 AA 18,378,500
60,785,000 5s, 11/1/18 AA 50,603,513
15,000,000 NY State Hsg. Fin.
Agcy. Svcs. Contract
Oblig. Rev. Bonds
Ser. C, 5 7/8s,
9/15/14 Baa 14,062,500
NY State Local Gov't.
Assistance Corp.
Rev. Bonds
3,300,000 Ser. D, 6 3/4s, 4/1/21 Aaa 3,663,000
4,600,000 Ser. C, 6 1/2s, 4/1/15 A 4,646,000
10,000,000 Ser. C, 6 1/4s, 4/1/18 A 9,837,500
10,000,000 Ser. B, 6s, 4/1/18 AAA 9,537,500
3,700,000 Ser. E, 5 1/4s, 4/1/16 A 3,228,250
15,000,000 Ser. E, 5s, 4/1/21 A 12,431,250
21,500,000 NY State Med. Care
Fac. Fin. Agcy.
Rev. Bonds (Hosp.&
Nursing Home FHA
Insd. Mtge.), Ser. A,
8s, 2/15/27 AA 23,623,125
NY State Med. Care
Fac. Fin. Agcy. Rev.
Rfdg. Bonds (Mental
Hlth. Svcs. Fac.)
Ser. A
8,780,000 7.8s 2/15 /19 AAA 10,009,200
7,695,000 Ser. A, 7.7s, 2/15/18 AAA 8,656,875
NY State Med. Care
Fac. Fin. Agcy. Rev.
Bonds (Mental Hlth.
Svcs. Fac.)
4,860,000 Ser. A, 7.8s, 2/15/19 AAA 5,321,700
6,900,000 Ser A, 7.7s, 2/15/18 BBB 7,434,750
9,785,000 Ser. B, 7 5/8s, 8/15/17 Baa 10,641,188
270,000 Ser. D. 7.4s, 2/15/18 Baa 290,925
18,575,000 (Mental Hlth. Svcs.
Fac.), Ser. A, 5 1/4s,
8/15/23 AAA 15,208,281
NY State Med. Care
Fac. Fin. Agcy.
Rev. Bonds
3,970,000 (Beth Israel Med.
Ctr Project), Ser. A,
7.2s, 11/1/14 A 4,148,650
1,800,000 (Hosp. & Nursing
Home), Ser. C,
6.55s, 8/15/12 AA 1,824,750
11,755,000 (Hosp. & Nursing
Home Insd. Mtge.),
Ser. C, FHA Insd.,
6 3/8s, 8/15/29 AAA 11,652,144<PAGE>
37,205,000 (Mental Hlth. Svcs.
Fac.), Ser. F, 5 1/4s,
2/15/19 Baa 31,298,706
13,400,000 NY State Med. Care
Fac. Fin. Agcy.
Secured Hosp.
Rev. Bonds,
Ser. A, 7.35s, 8/15/11 BBB 14,455,250
NY State Urban Dev.
Corp. Correctional
Fac. Rev. Bonds
2,000,000 Ser. 1, 7 3/4s, 1/1/14 AAA 2,295,000
5,000,000 7 1/2s, 4/1/11 BBB 5,437,500
15,000,000 Ser. 2, 7 1/2s, 1/1/11 BBB 17,193,750
6,700,000 New York City, Muni.
Wtr. & Swr. Syst.
Anticipation Notes,
1.95s, 6/15/22 AAA 6,700,000
Triborough Bridge &
Tunnel Auth.
General Porpose
Rev. Bonds
2,000,000 (Convention Ctr.
Project), Ser. E,
7 1/4s, 1/1/10 Baa 2,170,000
10,000,000 Triborough Bridge &
Tunnel Auth. Rrdg.,
General Purpose
Rev. Bonds Ser. Y,
5 1/2s, 1/1/17 A 9,012,500
597,918,252
North Carolina (1.6%)
445,000 NC Eastern Muni Pwr.
Agcy. Rev. Bonds,
Ser. A, 7 1/4s, 1/1/21 A 485,606
NC Eastern Muni. Pwr.
Agcy. Rev. Bonds
3,155,000 8s, 1/1/21 A 3,573,038
395,000 8s, 1/1/21 A 447,338
2,985,000 Ser. A, 7 1/4s, 1/1/21 A 3,160,369
12,345,000 Ser. B, FGIC, 6 1/4s,
1/1/23 AAA 12,159,825
155,000 Ser. A, 5s, 1/1/17 A 127,100
19,200,000 NC Eastern Muni.
Pwr. Agcy. RIBS
FGIC, 8.873s,
1/1/25 (acquired
12/2/93, cost
$23,486,208)(c) AA 18,216,000
38,169,276
Ohio (1.7%)
1,650,892 Lake Cnty., Ind. Dev.
Rev. Bonds
(Madison Inn Hlth.
Ctr. Project), FHA
Insd., 12s, 5/1/14 BBB/P 1,735,500
83,385,000 Lucas-Plaza Hsg.
Dev. Corp. Mtge.
Rev. Bonds,
FHA Insd., zero%,
6/1/24 AAA 11,256,975
3,950,000 Mount Vernon, Hosp.
Rev. Bonds (Knox
Cmnty. Hosp.),
7 7/8s, 6/1/12 BB/P 4,211,688
6,250,000 OH Hsg. Fin. Agcy.
Single Fam. Mtge.
RIBS, Ser. A-2,
GNMA Coll.,
10.348s, 3/1/31 AAA 6,640,598
7,775,000 OH Hsg. Fin. Agcy.
Single Fam. Mtge.
Stepped-Coupon
Rev. Bonds (9s,
9/1/01), Government
National Mortgage
Assn. (GNMA) Coll.,
9s, 9/1/18 AAA 5,831,250<PAGE>
6,000,000 OH State Air Quality
Dev Auth. Rev.
Bonds (Ohio
Edison Project),
AMBAC, Ser. B,
5 5/8s, 11/15/29 AAA 5,452,500
2,750,000 OH State Bldg. Auth.
Correction Fac.
Rev. Bonds, Ser. A,
5 3/4s, 10/1/05 A 2,729,375
3,000,000 Stark Co., Hosp.
Rev. Bonds
6s, 4/1/24 BBB 2,598,750
40,456,636
Oklahoma (0.2%)
Grand River, Dam
Auth. Rev. Bonds
1,000,000 5 3/4s, 6/1/08 AAA 982,500
2,250,000 5 1/2s, 6/1/10 A 2,089,688
2,000,000 5 1/2s, 6/1/09 A 1,870,000
4,942,188
Pennsylvania (5.5%)
2,560,000 Allegheny Cnty.,
Hosp. Dev. Auth.
Rfdg. Rev. Bonds
(Southside Hosp.-
Pittsburgh), Ser. A,
8 3/4s, 6/1/10 BBB 2,704,000
2,760,000 Allegheny Cnty. Hosp.
Dev. Auth. VRDN
(Presbyterian Health
Ctr. Project), Ser. B,
MBIA, 3.05s, 3/1/29 VMIG1 2,760,000
6,000,000 Beaver Cnty., Indl.
Dev. Auth. Poll.
Control Rev. Rfdg.
Bonds (OH Edison
Project), Ser. A
7 3/4s, 9/1/24 Baa 6,352,500
5,635,000 Clearfield Hosp.
Auth. Rev. Rfdg.
Bonds
(Clearfield Hosp.
Project), 6 7/8s,
6/1/16 A 4,994,019
5,000,000 Dauphin Cnty., Gen.
Auth. Hosp. Rev.
Bonds (Hapsco-
Western PA Hosp.
Project), Ser. B,
MBIA, 6 1/4s, 7/1/16 AAA 4,862,500
Geisinger, Auth. Hlth.
Syst. Rev. Bonds
7,095,000 Ser. B, 6 1/2s, 7/1/07 AA 7,361,063
20,000,000 Ser. A, 5.45s, 7/1/22 AA 20,000,000
8,030,000 Montgomery Cnty.,
Indl. Dev. Auth. Poll.
Control Rev. Bonds
(Philadelphia Elec.
Co.), Ser. A, 10 1/2s,
5/15/15 BBB 8,732,625
PA State Certif. of
Particiaption
5,000,000 Ser. A, AMBAC,
5 1/4s, 7/1/10 AAA 4,487,500
6,000,000 Ser. A, AMBAC, 5s,
7/1/15 AAA 5,085,000
12,700,000 PA State Econ. Dev.
Fin. Auth. Rev. Bonds
(Northampton
Generating Project),
Ser. A, 6.4s,
1/1/09 BBB/P 11,969,750
12,560,000 PA State Hsg. Fin.
Agcy. VRDN
4s, 10/1/13 AA 10,597,500
PA State Hsg. Fin.
Agcy. Single-Family
Rev. Bonds
690,000 Ser. 29, 7 3/8s, 10/1/16 AA 736,575
3,000,000 Philadelphia, Gas
Works Rev. Bonds,
Ser. 14, 6 3/8s,
7/1/14 Baa 2,936,250
Philadelphia, Hosp. &
Higher Edl. Fac.
Auth. Rev. Bonds
3,000,000 (Children's Hosp.
Project), Ser. A,
8s, 7/1/18 AA 3,345,000
10,100,000 (Temple U. Hosp.),
Ser. A, 6 5/8s,
11/15/23 BBB 9,620,250
7,200,000 (Children's Hosp.
Project), Ser. A,
6 1/2s, 2/15/21 AA 7,821,000
2,000,000 (Temple U. Hosp.
Project), Ser. A,
6 1/2s, 11/15/08 BBB 2,035,000
Philadelphia, Wtr. & Swr.
Rev. Bonds, FGIC
5,000,000 5.2s, 6/15/05 AAA 4,550,000
5,000,000 4.8s, 6/15/05 AAA 1,956,250
5,000,000 Schuylkill Cnty., Indl.
Dev. Auth. Res.
Recvy. Rev. Bonds
(Schuylkill Energy
Res. Inc.), 6 1/2s,
1/1/10 BB/P 4,737,500
5,000,000 Scranton-Lackawanna
Hlth. & Welfare Auth.
Rev. Bonds (Moses
Taylor Hosp.), Ser. B,
8 1/2s, 7/1/20 BBB 5,493,750
133,138,032<PAGE>
Puerto Rico (0.3%)
3,640,000 Puerto Rico Hlth. &
Edl. Pub. Bldg.
Fac. Rev. Bonds,
Ser. M, 5.6s, 7/1/08 A 3,462,550
23,720,000 Puerto Rico Tel.
Auth. Rev. Bonds
2 1/4s, 1/1/03 A 4,388,200
7,850,750
Rhode Island (0.3%)
1,500,000 RI Clean Wtr.
Protection Fin.
Agcy. Wtr. Poll.
Control Rev. Bonds,
Ser. A, MBIA, 5.4s,
10/1/15 AAA 1,359,375
5,000,000 RI Hsg. & Mtge. Fin.
Corp. Rev. Bonds,
Ser. 10-A, 6 1/2s,
4/1/27 AA 5,062,500
6,421,875
South Carolina (0.5%)
5,000,000 Piedmont, Muni. Pwr.
& Elec. Agcy. Rev.
Bonds, FGIC, 5s,
1/1/22 AAA 4,112,500
1,000,000 Spartanburg Cnty.,
Waterworks Rev.
Bonds, 6 1/4s, 6/1/17 AA 998,750
6,750,000 Spartansburg Cnty.,
Hosp. Fac. RIBS,
10.039s, 4/13/22 AAA 6,876,563
11,987,813
South Dakota (0.5%)
Heartland, Consumer
Elec. Pwr. Dist.
Rev. Bonds
8,000,000 6s, 1/1/17 AAA 7,700,000
5,000,000 6s, 1/1/12 AAA 4,862,500
12,562,500
Tennessee (1.3%)
6,800,000 Chatanooga-Hamilton
Cnty., Hosp. Auth.
RIBS (Erlanger
Med. Ctr.), Ser. B,
8.354s, 5/25/21 AAA 8,364,000
3,145,000 Chatanooga-Hamilton
Cnty., Hosp. Auth.
Rev. Bonds (Erlanger
Med. Ctr.), 5.6s,
10/1/08 AAA 3,030,994
90,734,086 Metro. Nashville &
Davidson Cnty. Wtr.
& Swr. Rev. Bonds,
zero%, 6/1/21 AAA/P 12,293,561
8,060,000 TN State Rev. Bonds.
Ser. A, 5.7s, 3/1/13 AA 7,697,300
31,385,855
Texas (5.5%)
Cypress-Fairbanks,
Independent
School Dist. Rev.
Bonds
13,000,000 Ser. A, zero%, 2/15/13 AAA 3,932,500
14,000,000 Ser. A, zero%, 2/15/12 AAA 4,515,000
1,495,000 zero%, 2/1/01 AAA 1,025,944
10,000,000 Gulf Coast, Waste
Disposal Auth.
Rev. Bonds
(Champion Intl.
Corp.), 7.45s,
5/1/26 Baa 10,475,000
17,000,000 Harris Cnty., Toll
Roads Rev. Bonds
AMBAC, zero%,
8/15/18 AAA 3,633,750<PAGE>
Montgomery Cnty.,
Hlth. Fac. Dev.
Corp. Rev. Bonds
2,195,000 (Woodlands Med.
Ctr. Project), 8.85s,
8/15/14 BB/P 2,387,063
35,975,000 (Heritage Manor),
zero%, 7/15/23 AAA 5,171,406
20,000,000 North Central Hlth.
Fac. Dev. Corp.
RIBS (Baylor U.
Med. Ctr.), Ser. A,
11.084s, 5/15/16 AA 21,550,000
2,875,000 (U. Med. Ctr. Inc.
Project), 7 3/4s,
4/1/17 AA/P 2,964,844
Rio Grande, Hlth.
Fac. Dev. Corp.
RIBS
7,100,000 MBIA, 6.4s, 8/1/18 AAA 7,392,875
2,000,000 MBIA, 6.4s, 8/1/12 AAA 2,105,000
15,000,000 Sabine, River Auth.
Poll. Control Rev.
Bonds (Texas Util.
Elec. Co. Project),
Ser. A, FGIC, 6.55s,
10/1/22 AAA 15,393,750
Sam Rayburn, Muni.
Pwr. Supply Agcy.
Rev. Bonds
2,000,000 Ser. A, 6 3/4s, 10/1/14 Baa 1,932,500
1,000,000 Ser. A, 6 1/2s, 10/1/08 BBB 942,500
Southeast TX Hsg.
Fin. Corp. Multi-Fam.
Rev. Bonds
11,375,000 (Bayou Pk. Village
Project), Ser. A, 8s,
8/1/16 A/P 11,417,656<PAGE>
10,000,000 (Promenade Place
Apts. Project),
Ser. A, 8s, 8/1/16 BB 10,037,500
TX State Dept. of
Hsg. & Cmnty.
Affairs Home
Mtge. RIBS
10,000,000 Ser. A, GNMA Coll.,
10.93s, 7/18/23 AAA 10,675,000
5,000,000 Ser. B, 10.89s,
7/18/23 AAA 5,337,500
10,150,000 TX State G.O. RIBS
Ser. B, 8.719s, 9/30/11 AA 10,720,938
131,610,726
Utah (1.0%)
Intermountain Pwr.
Agcy. Pwr. Supply
Rev. Bonds
1,860,000 Ser. D, 8 5/8s, 7/1/21 AA 2,118,075
400,000 Ser. A, 7 3/4s, 7/1/17 AAA 437,000
Salt Lake City,
Hosp. Rev. Bonds
5,000,000 Ser. A, 8 1/8s,
5/15/15 AAA 5,693,750
7,855,000 6.1s, 2/15/09 AA 7,796,088
3,000,000 (IHC Hosps., Inc.),
6.05s, 2/15/12 AA 2,895,000
UT State Bldg. Auth.
Ownership Auth.
Rev. Bonds
2,185,000 Ser. A, 5 3/4s, 8/15/11 AA 2,075,750
2,060,000 Ser. A, 5 3/4s, 8/15/10 AA 1,962,150
1,945,000 Ser. A, 5 3/4s, 8/15/09 AA 1,864,769
24,842,582
Vermont (0.4%)
VT Edl. & Hlth. Bldg. Rev.
Bonds Fin. Agcy.
5,000,000 (Brattleboro Memorial
Hospital), 7s, 3/1/24 BBB/P 4,606,250
4,300,000 6s, 9/1/16 AAA 4,568,750
9,175,000
Virginia (4.0%)
4,000,000 Chesapeake Bay, Dist.
Bridge & Tunnel
Communication Rev.
Bonds MBIA, 6 3/8s,
7/1/22 AAA 4,060,000
1,805,000 Chesapeake, Rev.
Bonds, 5 1/4s, 12/1/06 AA 1,719,263
Fairfax Cnty. Indl.
Dev. Auth. Rfdg.
Rev. Bonds,
2,700,000 5s, 8/15/23 AA 2,173,500
1,145,000 (Inova Hlth. Syst.
Hosp. Project), 5s,
8/15/14 AA 963,231
Fairfax Cnty. Indl.
Dev. Auth. Rev.
Bond (Fairfax
Hosp. Syst. Project),
11,000,000 Ser. C, 10.757s,
8/29/23 AA 13,392,500
8,500,000 Henrico Cnty., Indl.
Dev. Auth. RIBS
(Secours Hlth.
Syst. Project),
9.008s, 8/23/27 AAA 7,862,500
9,200,000 Peninsula Port.
Auth. Rev. Bonds
(Shell Oil Co.),
Ser. A, 12/1/05 AAA 9,200,000
6,900,000 Richmond, Metro.
Auth. Expressway
Rev. Bonds, Ser. B,
FGIC, 6 1/4s,
7/15/22 AAA 6,917,250<PAGE>
10,200,000 Roanoke, Indl. Dev.
Auth. Hosp. RIBS
(Roanoke Memorial
Hosp.), Ser. B,
MBIA, 7/1/20 AAA 10,263,750
36,900,000 Winchester, Indl.
Dev. Auth. Hosp.
Rfdg. Bonds RIBS
(Winchester Med. Ctr.
Project ), AMBAC,
10.115s, 11/21/14 AAA 38,376,000
94,927,994
Washington (5.6%)
1,315,000 Clark Cnty.,
Washington School
Dist. No. 37 Rev.
Bonds (Vancouver
Pub. Schools),
5.55s, 12/1/09 Aa 1,242,675
Douglas Cnty., Pub.
Util. Dist. No. 001
Rev. Bonds (Wells
Hydroelectic)
1,000,000 Ser. A, 6.2s, 9/1/18 A 957,500
1,000,000 Ser. A, 6.15s, 9/1/13 A 961,250
2,165,000 Ser. A, 6s, 9/1/09 A 2,081,106
2,765,000 King Cnty.,
Washington School
Dist. 401 Rev.
Bonds (Highline
Pub. Schools), 5.8s,
12/1/06 A 2,720,069
8,660,000 Kitsap Cnty., School
Dist. 401 Rev. Bonds
(Central Kitsap),
Ser. A, 6 5/8s, 12/1/08 A 9,060,525
1,180,000 Okanogan Cnty.,
Washington School
Dist. No. 350 Rev.
Bonds (Methow
Valley), AMBAC,
5 1/2s, 12/1/12 AAA 1,076,750
2,595,000 Pierce Cnty.,
Washington School
Dist. No. 320 Rev.
Bonds (Summer)
6s, 12/1/06 A 2,585,269
5,200,000 Port of Moses Lake,
Poll. Control Rev.
Bonds (Union
Carbide Corp.),
7 1/2s, 8/1/04 Baa 5,408,000
4,060,000 Seattle G.O. Bonds
6 1/2s, 3/1/17 AA 4,171,650
3,305,000 Seattle, Metro. Muni.
Swr. Rev. Bonds,
Ser. W, 6 1/4s, 1/1/18 AA 3,251,294
5,000,000 Seattle, Wtr. Syst.
Rev. Bonds
5 1/4s, 12/1/23 AA 4,250,000
Snohomish Cnty.,
Washington School
Dist. No.2 Rev.
Bonds (Mukileto),
3,325,000 6 1/2s, 12/1/07 A 3,420,594
3,000,000 (Everett), MBIA, 6s,
12/1/07 AAA 2,985,000
10,000,000 Spokane, Regl.
Solid Waste Mgmt.
Syst. Rev. Bonds
AMBAC, 8.4s,
12/1/10 AAA 8,825,000
WA State Hlth. Care
Fac. Auth. Rev.
Bonds
8,400,000 (Hutchinson Cancer
Ctr.), Ser. D, 7 3/8s,
1/1/18 Aaa 9,187,500
5,200,000 (Hutchinson Cancer
Ctr.), Ser. D, 7.3s,
1/1/12 Aaa 5,668,000
3,425,000 (Empire Hlth. Svcs.),
MBIA, 5.7s, 11/1/06 AAA 3,347,938
14,100,000 WA State Hsg. Fin.
Cmnty. Single Fam.
Mtge. RIBS, 11.191s,
12/1/17 (acquired
5/29/91, cost
$14,100,000)(c) AAA 15,404,250
WA State Pub. Pwr.
Supply Syst. Rev.
Bonds (Nuclear
Project)
25,050,000 No. 2, Ser. A, 6 1/4s,
7/1/12 AA 24,392,438
2,000,000 No. 2, Ser. A, 6s,
7/1/05 AA 2,002,500
6,000,000 No. 2, 5.7s, 7/1/12 AA 5,895,000
17,560,000 No. 3, Ser. B, 5 1/2s,
7/1/17 AA 15,365,000
134,259,308
West Virginia (0.2%)
2,000,000 South Charleston, Poll.
Control Rev. Bonds
(Union Carbide
Corp.), 7 5/8s, 8/1/05 BBB 2,207,504
3,000,000 WV Certif. of
Participation (Morris
Sq. Complex), 9 1/4s,
8/15/08 B/P 2,891,250
5,098,754
Wisconsin (0.6%)
WI Hsg. & Econ.
Dev. Auth. RIBS
10,000,000 (Homeownership Dev.
Program), 11.143s,
10/25/22 AA 10,975,000
4,000,000 Ser. B, 7.05s, 11/1/22 A 4,155,000
15,130,000
Wyoming (0.2%)
2,375,000 Platte Cnty. Poll. Ctrl.
Rev. Bonds 5.1s,
1/1/08 A 2,143,438
2,000,000 Wyoming Cnty., Cmnty.
Dev. Auth. Single-Fam.
Rev. Bonds Ser. A,
6.1s, 6/1/33 AA 1,902,500
4,045,938
Virgin Islands (0.1%)
1,250,000 Virgin Islands, Pub.
Fin. Auth. Rev.
Bonds (Matching
Funds Loan Notes),
Ser. A, 7 1/4s,
10/1/18 BBB/P 1,317,188
Total Investments
(cost $2,398,562,305)(d) $2,440,129,724
/TABLE
<PAGE>
(a) Percentages indicated are based on net assets of
$2,467,174,063 which corresponds to a net asset value per both
Class A share and Class B share of $8.74
(b) The Moody's or Standard & Poor's ratings indicated are
believed to be the most recent ratings available at March 31,
1994 for the securities listed. Ratings are generally ascribed to
securities at the time of issuance. While the rating agencies may
from time to time revise such ratings, they undertake no
obligation to do so, and the ratings indicated do not necessarily
represent ratings which the rating agencies would ascribe to
these securities at March 31, 1994. Securities rated by Putnam
are indicated by "/P" and are not publicly rated.
(c) Restricted, excluding 144A securities, as to public resale.
At the date of acquisition, these securities were valued at cost.
There were no outstanding unrestricted securities of the same
class as that held. Total market value of restricted securities
owned at March 31, 1994 was $41,803,125 or 1.7% of net assets.
(d) The aggregate identified cost on a tax basis is
$2,399,112,170, resulting in gross unrealized appreciation and
depreciation of $114,682,371 and $73,664,817, respectively, or
net unrealized appreciation of $41,017,554.
The rates shown on Variable Rate Demand Notes (VRDN) and Residual
Interest Bonds (RIBS) are current interest rates at March 31,
1994, which are subject to change based on the terms of the
security.
The Fund had the following industry group concentrations greater
than 10% on March 31, 1994 (as a percentage of net assets:)
Hospitals/Life Care 23.6%
Utilities 16.3
Housing 12.7
Education 10.9
U.S. Treasury Futures Outstanding at March 31, 1994
Aggregate Face Exp. Unrealized
Total Value Value Date Appreciation
U.S. Treasury
Note Futures
(Sell) $239,062,500 $245,265,025 Jun/94 $6,202,525
(e) These securities, valued at $31,342,500 or 1.3% of the Fund's
net assets have been purchased on a "forward commitment" basis --
that is, the Fund has agreed to take delivery of and make payment
for such securities beyond the settlement time of five business
days after the trade date and subsequent to the date of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
Statement of
assets and liabilities
March 31, 1994 (unaudited)
<S> <C> <C> <C>
Assets
Investments in securities, at value (identified cost
$2,398,562,305) (Note 1) $2,440,129,724
Cash 2,387,644
Interest receivable 38,274,689
Receivable for shares of the Fund sold 7,164,410
Receivable for securities sold 70,097,639
Prepaid expenses 53,032
Total assets 2,558,107,138
Liabilities
Payable for securities purchased $74,839,787
Distributions payable to shareholders 5,665,925
Payable for shares of the Fund repurchased 5,537,218
Payable for compensation of Manager (Note 2) 3,001,135
Payable for administrative services (Note 2) 34,793
Payable for investor servicing and custodian fees (Note 2) 505,009
Payable for distribution fees (Note 2) 1,349,208
Total liabilities 90,933,075
Net assets $2,467,174,063
Represented by
Paid-in capital (Note 4 and 5) $2,440,447,987
Undistributed net investment income 2,157,066
Accumulated net realized loss on investment transactions (23,200,934)
Net unrealized appreciation of investments 47,769,944
Total -- Representing net assets applicable to
capital shares outstanding $2,467,174,063
<PAGE>
Computation of net asset value and offering price
Net asset value and redemption price of Class A shares ($2,278,126,063
divided by 260,632,776 shares) $8.74
Offering price per share (100/95.25 of $8.74)* $9.18
Net asset value and offering price of Class B shares ($189,048,000
divided by 21,632,585 shares)** $8.74
*On single retail sales of less than $25,000. On sales of $25,000 or more and on group
sales the offering price is reduced.
**Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
operations
Six months ended March 31, 1994 (Unaudited)
<S> <C> <C> <C>
Tax exempt interest income $84,979,598
Expenses:
Compensation of Manager (Note 2) $6,064,431
Investor servicing and custodian fees (Note 2) 962,297
Compensation of Trustees (Note 2) 26,174
Auditing 33,524
Legal 17,268
Postage 74,781
Reports to shareholders 21,720
Administrative services (Note 2) 37,377
Distribution fees -- Class A (Note 2) 2,437,679
Distribution fees -- Class B (Note 2) 727,096
Registration fees 34,886
Other 45,281
Total expenses 10,482,514
Net investment income 74,497,084
Net realized loss on investments (Notes 1 and 3) (6,070,890)
Net realized gain on futures contracts (Notes 1 and 3) 2,306,460
Net unrealized depreciation of investments during the year (216,013,040)
Net loss on investment transactions (219,867,470)
Net decrease in net assets resulting from operations $(145,280,386)
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
changes in net assets
Six months ended Year ended
March 31 September 30
1994* 1993
<S> <C> <C>
Increase in net assets
Operations:
Net investment income $ 74,497,084 $ 133,196,436
Net realized gain (loss) on investments (6,070,890) 42,963,146
Net realized gain on futures contracts 2,306,460 (11,859,670)
Net unrealized depreciation of investments (216,013,040) 133,772,931
Net increase (decrease) in net assets
resulting from operations (145,280,386) 298,072,843
Distributions to shareholders from
net investment income:
Class A (67,699,377) (128,286,063)
Class B (4,256,700) (2,491,120)
In excess of net investment income
Class A -- (2,075,545)
Class B -- (33,404)
Net realized gain on investment
Class A (36,008,231) (27,403,273)
Class B (2,527,860) --
Increase from capital share transactions (Note 4)159,962,345 557,893,974
Total increase (decrease) in net assets (95,810,209) 695,677,412
Net assets
Beginning of period 2,562,984,272 1,867,306,860
End of period (including undistributed and distributions
in excess of net investment income of $2,157,066 and
$(2,108,949), respectively) $2,467,174,063 $2,562,984,272
*Unaudited.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial highlights*
(For a share outstanding
throughout the period)
Six months Six months
ended January 4, 1993+ ended
March 31 to September 30 March 31 Year ended September 30
1994** 1993 1994** 1993 1992 1991
Class B Class A
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $9.66 $9.02 $9.66 $9.11 $8.81 $8.29
Investment Operations
Net Investment Income .24 .34 .27 .57 .59 .58
Net Realized and
Unrealized Gain
(Loss) on Investments (.78) .64 (.79) .67 .47 .54
Total from
Investment Operations (.54) .98 (.52) 1.24 1.06 1.12
Distributions to Shareholders:
From Net Investment
Income (.24) (.34) (.26) (.56) (.60) (.58)
In Excess of Net
Investment Income -- -- -- (.01) -- --
Net Realized Gain
on Investments (.14) -- (.14) (.12) (.16) (.02)
Total Distributions (.38) (.34) (.40) (.69) (.76) (.60)
Net Asset Value,
End of Period $8.74 $9.66 $8.74 $9.66 $9.11 $8.81
<PAGE>
Total Investment Return
at Net Asset Value (%) (a) (11.66)(b) 15.00(b) (11.12)(b) 14.27 12.56 13.92
Net Assets,
End of Period
(in thousands) $189,048 $137,323 $2,278,126 $2,425,661 $1,867,307 $1,513,029
Ratio of Expenses to
Average Net Assets (%) 1.40(b) 1.41(b) .76(b) .74 .66 .59
Ratio of Net Investment
Income to Average
Net Assets (%) 5.07(b) 4.97(b) 5.78(b) 6.81 6.65 6.75
Portfolio Turnover (%) 32.77(c) 43.77 32.77(c) 43.77 58.14 78.04
See page 29 for notes to Financial highlights.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial highlights (continued)
Ten Months
ended Year ended
Year ended September 30 September 30 November 30
1990 1989 1988 1987 1986 1985 1984
Class A
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $8.54 $8.33 $7.68 $8.59 $7.44 $6.87 $7.28
Investment Operations
Net Investment Income .57 .59 .61 .61 .65 .56 .63
Net Realized and
Unrealized Gain
(Loss) on Investments (.20) .21 .65 (.83) 1.20 .57 (.41)
Total from
Investment Operations .37 .80 1.26 (.22) 1.85 1.13 .22
Distributions to Shareholders:
From Net Investment
Income (.58) (.59) (.61) (.61) (.65) (.56) (.63)
In Excess of Net
Investment Income -- -- -- -- -- -- --
Net Realized Gain
on Investments (.04) -- -- (.08) (.05) -- --
Total Distributions (.62) (.59) (.61) (.69) (.70) (.56) (.63)
Net Asset Value,
End of Period $8.29 $8.54 $8.33 $7.68 $8.59 $7.44 $6.87
Total Investment Return
at Net Asset Value (%) (a) 4.26 9.93 16.94 (3.10) 25.59 20.36(b) 3.12
<PAGE>
Net Assets,
End of Period
(in thousands) $1,306,100 $1,226,679 $1,037,074 $880,658 $625,574 $233,366 $119,014
Ratio of Expenses to
Average Net Assets (%) .54 .52 .51 .51 .53 .65(b) .68
Ratio of Net Investment
Income to Average
Net Assets (%) 6.67 6.99 7.48 7.09 7.72 9.02(b) 8.85
Portfolio Turnover (%) 73.70 98.90 112.52 171.00 123.27 249.54(c) 696.18
*Financial Highlights for periods ended through September 30, 1992 have been restated to conform with requirements
issued by the SEC in April, 1993. Table has been restated to reflect a 3-for-1 share split declared by the Fund to
shareholders of record on October 27, 1989, payable on October 28, 1989.
**Unaudited.
+Commencement of operations for Class B shares.
(a)Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b)Annualized.
(c)Not annualized.
/TABLE
<PAGE>
Notes to
financial statements
March 31, 1994 (unaudited)
Note 1 Significant accounting policies
The Fund is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment
company. The Fund seeks as high a level of current income exempt
from federal income tax as is consistent with preservation of
capital by investing primarily in a diversified portfolio of
longer-term tax exempt securities.
The Fund offers both Class A and Class B shares. The Fund
commenced its public offering of Class B shares on January 4,
1993. Class A shares are sold with a maximum front-end sales
charge of 4.75%. Class B shares do not pay a front-end sales
charge, but pay a higher ongoing distribution fee than Class A
shares, and may be subject to a contingent deferred sales charge,
if those shares are redeemed within six years of purchase. In
addition, the Trustees declare separate dividends on each class
of shares. Expenses of the Fund are borne pro-rata by the holders
of both classes of shares, except that each class bears expenses
unique to that class (including the distribution fees applicable
to such class) and votes as a class only with respect to its own
distribution plan or other matters on which a class vote is
required by law or determined by the Trustees. Shares of each
class would receive their pro-rata share of the net assets of the
Fund, if the Fund were liquidated.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles.
A) Security valuation Tax-exempt bonds and notes are stated on
the basis of valuations provided by a pricing service, approved
by the Trustees, which uses information with respect to
transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships
between securities in determining value. The fair value of
restricted securities is determined by the Manager following
procedures approved by the Trustees, and such valuations and
procedures are reviewed periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order
to buy or sell is executed). Interest income is recorded on the
accrual basis.
C) Futures A futures contract is an agreement between two parties
to buy and sell a security at a set price on a future date. Upon
entering into such a contract the Fund is required to pledge to
the broker an amount of cash or tax-exempt securities equal to
the minimum "initial margin'' requirements of the exchange.
Pursuant to the contract, the Fund agrees to receive from or pay
to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as
"variation margin'' and are recorded by the Fund as unrealized
gains or losses. 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. The potential risk to the Fund is that the
change in value of the underlying securities may not correspond
to the change in value of the futures contracts.
D) Distributions to shareholders Income dividends are recorded
daily by the Fund and are distributed monthly. Capital gains
distributions, if any, are recorded on the ex-dividend date and
paid annually.
E) Amortization of bond premium and accretion of bond discount
Any premium resulting from the purchase of securities is
amortized using the effective yield method for bonds issued after
September 27, 1985 and on a straight-line basis for bonds issued
prior thereto. The premium in excess of the call price, if any,
is amortized to the call date; thereafter, the remaining excess
premium is amortized to maturity. Discount on zero-coupon bonds,
original issue discount bonds and stepped coupon bonds is
accreted according to the effective yield method.
Note 2 Management fee, administrative services, and other
transactions
Compensation of Putnam Investment Management, Inc., the Fund's
Manager, a wholly-owned subsidiary of Putnam Investments, Inc.,
for management and investment advisory services is paid quarterly
based on the average net assets of the Fund for the quarter. Such
fee is based on the following annual rates: 0.6% of the first
$500 million of average net assets, 0.5% of the next $500
million, 0.45% of the next $500 million and 0.4% of any amount
over $1.5 billion, subject to reduction under current law in any
year to the extent that expenses (exclusive of brokerage,
interest and taxes) of the Fund exceed 2.5% of the first $30
million of average net assets, 2.0% of the next $70 million and
1.5% of any amount over $100 million and by the amount of certain
brokerage commissions and fees (less expenses) received by
affiliates of the Manager on the Fund's portfolio transactions.
The Fund also reimburses the Manager 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. For the six months then ended March 31, 1994, the Fund
paid $37,377 for these services.
Trustees of the Fund receive an annual Trustee's fee of $4.110
and an additional fee for each Trustees' meeting attended.
Trustees who are not interested persons of the Manager and who
serve on committees of the Trustees receive additional fees for
attendance at certain committee meetings.
Custodial functions for the Fund are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam
Investor Services, a division of PFTC. Fees paid for these
investor servicing and custodial functions for the six months
ended March 31, 1994 amounted to $962,297.
Investor servicing and custodian fees reported in the Statement
of operations for the six months ended March 31, 1994, have been
reduced by credits allowed by PFTC.
The Fund has adopted a Distribution Plan with respect to its
Class A shares (the "Class A Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Class A
Plan is to compensate Putnam Mutual Funds Corp., a wholly-owned
subsidiary of Putnam Investments Inc., for services provided and
expenses incurred by it in distributing Class A shares. The
Trustees have approved payment by the Fund to Putnam Mutual Funds
Corp. at an annual rate of 0.20% of the Fund's average net assets
attributable to Class A shares. For the six months ended March
31, 1994, the Fund paid $2,437,679 in distribution fees for Class
A shares.
During the six months ended March 31, 1994, Putnam Mutual Funds
Corp., acting as an underwriter, received net commissions of
$287,912 from the sale of Class A shares of the Fund.
A deferred sales charge of up to 1% is assessed on certain
redemptions of Class A shares purchased as part of an investment
of $1 million or more. For the six months then ended March 31,
1994, Putnam Mutual Funds Corp., acting as an underwriter,
received $22,646 on Class A redemptions.
The Fund has adopted a Distribution Plan with respect to its
Class B shares (the "Class B Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of Class B Plan
is to compensate Putnam Mutual Funds Corp. for services provided
and expenses incurred by it in distributing Class B shares. The
Class B Plan provides for payments by the Fund to Putnam Mutual
Funds Corp. at an annual rate of 0.85% of the Fund's average net
assets attributable to Class B shares. For the six months ended
March 31, 1994, the Fund paid Putnam Mutual Funds Corp.
distribution fees of $727,096 for Class B shares.
Putnam Mutual Funds Corp. also receives the proceeds on the
contingent deferred sales charges on its Class B share
redemptions within six years of purchase. The charge is based on
declining rates, which begin at 5% of the net asset value of the
redeemed shares. Putnam Mutual Funds Corp. received contingent
deferred sales charges of $102,818 from redemptions for the six
months ended March 31, 1994.
Note 3 Purchases and sales of securities
During the six months ended March 31, 1994, purchases and sales
of investment securities other than short-term investments
aggregated $1,056,645,608 and $993,231,074, respectively.
Purchases and sales of short-term municipal obligations
aggregated $156,185,002 and $103,908,800, respectively. In
determining the net gain or loss on securities sold, the cost of
securities has been determined on the identified cost basis.
Transactions in U.S. Treasury Bond futures contracts during the
year are summarized as follows:
Sales of Futures Contracts
Number of Aggregate
Contracts Face Value
Contracts opened 8,250 $914,606,831
Contracts closed (6,000) (669,341,806)
Contracts outstanding at end of year 2,250 $245,265,025
<PAGE>
<TABLE>
<CAPTION>
Note 4 Capital Shares
At March 31, 1994, there was an unlimited number of shares of beneficial interest
authorized divided into two classes, Class A and Class B capital stock. Transactions in
capital shares were as follows:
Six months ended Year ended
March 31 September 30
1994 1993
Class A Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 41,188,639 $388,198,693 92,015,736 $852,186,925
Shares issued in connection with
reinvestment of distributions 7,015,840 65,937,505 10,831,126 99,934,475
48,204,479 454,136,198 102,846,862 952,121,400
Shares repurchased (38,773,801) (364,408,595) (56,666,397) (527,609,676)
Net increase 9,430,678 $ 89,727,603 46,180,465 $424,511,724
January 4, 1993
(commencement of
Six months ended operations) to
March 31 September 30
1994 1993
Class B Shares Amount Shares Amount
Shares sold 8,814,625 $83,246,105 14,809,951 $139,012,296
Shares issued in connection with
reinvestment of distributions 521,382 4,894,015 176,742 1,676,252
9,336,007 88,140,120 14,986,693 140,688,548
Shares repurchased (1,920,273) (17,905,378) (769,842) (7,306,298)
Net increase 7,415,734 $70,234,742 14,216,851 $133,382,250
/TABLE
<PAGE>
Note 5 Reclassification of Capital Accounts
Effective October 1, 1993, Putnam Tax Exempt Income Fund has
adopted the provisions of Statement of Position 93-2 (SOP)
"Determination, Disclosure and Financial Statement Presentation
of Income, Capital Gain and Return of Capital Distributions, by
Investment Companies." The purpose of this SOP is to report the
accumulated net investment income (loss) and accumulated net
realized gain (loss) accounts in such a manner as to approximate
amounts available for future distributions (or to offset future
realized capital gains) and to achieve uniformity in the
presentation of distributions by investment companies.
As a result of the SOP, the Fund has reclassified $1,725,008 to
increase undistributed net investment income and $1,194,998 to
increase accumulated net realized loss with a decrease of
$530,010 to additional paid in capital.
These adjustments represent the cumulated amounts necessary to
report these balances through September 30, 1993, the close of
the Fund most recent fiscal year end for financial reporting and
tax purposes.
Note 6 Proposed Merger
As of May 5, 1994, Putnam Tax Exempt Income Fund acquired the
assets of Putnam Texas Tax Exempt Income Fund in exchange for the
assumption of the acquired Fund's liabilities and for a number of
Tax Exempt Fund's shares equal in value to the value of the net
assets of Texas Tax Exempt Income Fund transferred to Tax Exempt
Income Fund.
<PAGE>
Fund
performance
supplement
Putnam Tax Exempt Income Fund is a portfolio managed for high
current income free from federal income taxes and consistent with
capital preservation. This fund invests at least 75% of its
portfolio in investment-grade tax-exempt bonds. The balance may
be invested in securities rated below investment-grade.
The Lehman Brothers Municipal Bond Index is an unmanaged list of
approximately 8,000 investment-grade, fixed rate, long-term
maturity tax-exempt bonds, which are selected to be
representative of the market in terms of price movement and
sector distribution. The average quality of bonds held in the
index may differ from the average quality of those bonds in which
the fund invests. The index does not include bonds in certain of
the lower rating classifications in which the fund may invest.
The index does not take into account brokerage commissions or
other costs and may pose different risks from the fund. Total
return performance for the index reflects mathematically derived
changes of market price and reinvestment of interest payments, as
computed by Lehman Brothers. The fund's portfolio contains
securities that do not match those in the index.
The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and
the indexes used for performance comparisons. The information is
not part of the portfolio of investments owned or the financial
statements.
<PAGE>
Putnam
Tax Exempt
Income Fund
Fund information
Investment manager
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
Marketing services
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
(DALBAR logo)
Putnam Investor Services
has received the DALBAR
award each year since the
award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components,
Putnam outperformed
the industry standard
in every category.
AOB-A61-11909<PAGE>
Officers
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John R. Verani
Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
James E. Erickson
Vice President
David J. Eurkus
Vice President
and Fund Manager
William N. Shiebler
Vice President
John D. Hughes
Vice President
and Treasurer
Paul O'Neil
Vice President
Beverly Marcus
Clerk and
Assistant Treasurer
Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter, Hans H. Estin,
John A. Hill, Elizabeth T. Kennan,
Lawrence J. Lasser, Robert E. Patterson,
Donald S. Perkins, George Putnam, III,
A.J.C. Smith, W. Nicholas Thorndike
<PAGE>
This report is for the information of shareholders of Putnam Tax
Exempt Income Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives
details of sales charges, investment objectives and operating
policies of the fund.
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ----------------
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
- -----------------
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS:
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.