Putnam
Tax-Free
High Yield
Fund
SEMIANNUAL REPORT
January 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Morningstar, an independent rating agency, awarded the fund's class B
shares its highest overall rating of five stars for the period ended
December 31, 1995 (based on the fund's average annual total returns
for the 3-, 5-, and 10-year periods). There were 770 funds in the
municipal rating category.*
* "...Tax-overhaul fears are overblown. Once these fears begin to
abate, investors are expected to return to the municipal market for
undervalued opportunities that have been created by the fear of tax
reform..."
--The Wall Street Journal, January 2, 1996
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
14 Portfolio holdings
29 Financial statements
*Morningstar ratings are subject to change every month and are
calculated from a fund's 3-, 5-, and 10-year average annual returns in
excess of 90-day Treasury bill returns, with appropriate
sales charge adjustments and a risk factor that reflects performance
compared to 90-day Treasury bill monthly returns. For the 3-, 5-, and
10-year period ended December 31, 1995, the fund received 4, 4, and 5
stars, respectively. There were 770, 499, and 186 funds in the
municipal rating category for the respective time periods. 10% of the
funds in an investment category receive 5 stars and 22.5% receive 4
stars. Performance for other share classes will vary. Past performance
is not indicative of future results.
[GRAPHIC OMMITTED: photo of George Putnam]
(copyright) Karsh, Ottawa
From the Chairman
Dear Shareholder:
By the time Putnam Tax Free High Yield Fund entered its new fiscal year
last August, municipal-bond investors had begun showing signs of
recovery from their initial gloom over the possible negative effect that
a flat tax might have on the tax-exempt market. As the fund reached the
fiscal year's midpoint on January 31, 1996, the market was in a somewhat
brighter mood and shareholders could look back on a period of positive
fund performance.
Fund Manager Triet Nguyen believes the market's renewed vigor will be
sustained during the second half of fiscal 1996 as tax-exempt bonds
continue to make up lost ground.
Triet also sees other factors that he believes hold favorable
implications for the municipal-bond market in the months ahead. One is
the continued high demand for tax-free securities, coupled with relative
scarcity of new issues. Another is a positive trend in interest rates.
His report, which follows, provides more detail.
Respectfully yours,
/S/George Putnam
Chairman of the Trustees
March 20, 1996
Report from the Fund Manager
Triet M. Nguyen
Putnam Tax-Free High Yield Fund rewarded shareholders well during the
semiannual period ended January 31, 1996, as astute strategic changes
and a rising municipal-bond market contributed to strong returns. The
fund provided shareholders with a total return of 7.39% (2.25% at POP)
for class A shares, 7.04% (2.04% at CDSC) for class B shares, and 7.23%
(3.77% at POP) for class M shares, all at net asset value. (For results
at public offering price and over longer periods, see the performance
section following this report.)
* FLAT-TAX UNCERTAINTY CONTINUES TO CREATE OPPORTUNITY
After overcoming a brief stall in midsummer, the broad fixed-income
market continued to rally throughout the period. Increased investor
confidence in the Federal Reserve Board's ability to thwart inflation
and effectively manage economic growth fueled the gains of most fixed-
income investments. Toward the end of the period, as government reports
confirmed additional cooling in the economy, the Fed responded with
another cut in short-term interest rates.
Municipal bonds shared in the broad market rally, although they have not
benefited to quite the same extent as taxable bonds. This is largely
because of investor concerns about the perceived effects of the flat-tax
proposal introduced last April -- which, in its purest form, would
deprive municipal bonds of their beneficial tax treatment. On the other
hand, yields on most high-grade municipal bonds rose toward 90% of the
yields of comparable taxable Treasury securities, a level that is
generally considered a buying opportunity (See chart on page 5).
As the presidential campaign picks up momentum, the flat-tax proposal
has begun to receive renewed attention. We view this as a positive
development, since open discussion has begun to highlight the very real
complexities of the issue. As we saw with the health-care reform
initiative, it appears that while many people may agree with the
concept, disagreement on critical details could hamper prospects for
actual enactment. That said, we still believe any change in the tax law,
should it occur at all, would not come until at least 1997 or 1998. In
the meantime, municipal-bond investors may continue to enjoy solid
returns.
* ECONOMIC SLOWDOWN PROMPTS DEFENSIVE CHANGES
In seeking to protect the fund's net asset value amid slowing economic
growth, we began to adopt a more defensive strategy toward the close of
the period. In doing so, we have begun to introduce greater liquidity
into the fund by "moving in on the yield curve": in other words,
purchasing securities with shorter maturities, an average of 10 to 15
years. These bonds, we believe, still generate a high level of income,
but their shorter maturities make them less volatile to changing
interest rates and economic conditions. We have also begun to upgrade
the average quality of fund holdings by selling some of our lower-rated
issues and reinvesting the proceeds into bonds with higher credit
ratings.
[GRAPHIC OMITTED: worm chart TAX-FREE VERSUS TAXABLE BOND YIELDS
Y-axis reads (top to bottom) 12.00% to 0.00% in 2% decrements
X-axis reads (left to right) Jan-95 to Jan-96 in one-month increments
A solid black line represents Municipal Bond yields
A solid white line represents U.S. Treasury bond yields
A solid gray line represents U.S. Taxable equivalent yields
Municipal U.S. Treasury Taxable
bond bond equivalent
yields yields yields
----------- ------------- ------------
Jan-95 6.39 7.70 10.58
Feb-95 6.00 7.44 9.93
Mar-95 6.00 7.43 9.93
Apr-95 6.03 7.33 9.98
May-95 5.76 6.65 9.54
Jun-95 6.00 6.62 9.93
Jul-95 6.00 6.84 9.93
Aug-95 6.02 6.64 9.97
Sep-95 5.96 6.50 9.87
Oct-95 5.74 6.33 9.50
Nov-95 5.56 6.13 9.21
Dec-95 5.28 5.96 8.74
Jan-96 5.20 6.04 8.61
Footnote reads:
Chart compares yields of U.S. Treasury securities and AAA-rated
municipal bonds of varying maturities from 1/31/95 through 1/31/96. The
taxable-equivalent yield for municipal bonds assumes the maximum 39.6%
federal income tax rate. Returns would not be as advantageous for
investors in lower tax brackets. No assurances can be made that the fund
will attain any particular yield. Unlike municipal bonds, principal and
interest payments on U.S. Treasury securities are backed by the full
faith and credit of the U.S. government; market prices and investment
returns will vary and are not guaranteed. Source: Bloomberg.]
* SECTOR STRATEGIES PAY OFF
As the economy seems to slow, we have also begun to shift portfolio
assets away from cyclical bonds in such sectors as paper and steel,
which tend to perform better in a stronger economic environment.
Instead, we continue to find good value and solid income in
transportation-related issues, particularly in major airport bonds and
in utilities. In fact, we are increasing the fund's allocation to
utility bonds, since we believe they offer excellent value in today's
market. Historically, utility bonds have performed well during periods
of slower economic growth.
The health-care sector continues as a mainstay of the fund's portfolio.
Recently, the fund benefited as one of its major holdings, San Bernadino
County (California) hospital bonds, were prerefunded when the county
took advantage of lower interest rates to reduce its borrowing costs. In
a prerefunding, the issuer floats a second bond to raise funds to pay
off an older issue -- in which your fund had invested -- at its first
call date. Proceeds from the new bond are invested in top-quality
instruments such as U.S. Treasury securities. Because of the safety of
principal represented by these securities, the older prerefunded bond is
generally perceived as having a substantial improvement in its
creditworthiness, and its rating is likely to be upgraded. Upgrades, in
turn, often herald higher prices; indeed, in this case, the fund's
holdings did appreciate in value.
* SUPPLY/DEMAND DYNAMICS CONTINUE TO IMPROVE
The balance between supply and demand continues to present a favorable
backdrop for market performance. In 1995, the supply of new and existing
municipal securities dropped 10% from the level of 1994, and 1994's
level was 45% lower than that of 1993. At the same time, demand has
picked up a bit as individual investors and mutual funds begin to view
the flat tax more as a potential concern for the future rather than the
present.
[GRAPHIC OMMITTED: horizontal bar chart TOP INDUSTRY SECTORS*
showing:
Transportation 17.8%
Hospital/Health care 17.4%
Utilities 13.5%
*Based on net assets as of 1/31/96. Holdings will vary over time.]
The interaction of flat-tax fears, improving supply/demand dynamics, and
more favorable interest rates will be shaping the tax-exempt market over
the remainder of fiscal 1996. With municipal bonds underperforming
Treasuries during the recent period, we believe that buying
opportunities exist and that there is good potential for further price
appreciation. We intend to retain our defensive posture, continuing to
upgrade the portfolio's quality and reallocating assets into sectors
that tend to perform well in a slower economic cycle. On balance, we
remain cautiously optimistic, based on strong market fundamentals,
favorable securities valuations, and our defensive investment strategy.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 1/31/96, there is no guarantee the fund will
continue to hold these securities in the future.
Performance should always be considered in light of a fund's investment
strategy. Putnam Tax-Free High Yield Fund is designed for investors
seeking high current income free from federal income tax through higher-
yielding, lower-rated tax-exempt securities.
This section provides, at a glance, information about your fund's
performance. 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.
TOTAL RETURN FOR PERIODS ENDED 1/31/96
Class A Class B Class M
Inception date (9/20/93) (9/9/85) (12/29/94)
NAV POP NAV CDSC NAV POP
- -------------------------------------------------------------------
6 months 7.39% 2.25% 7.04% 2.04% 7.23% 3.77%
- -------------------------------------------------------------------
1 year 14.26 8.88 13.53 8.53 13.89 10.19
- -------------------------------------------------------------------
5 years -- -- 51.68 49.68 -- --
Annual average -- -- 8.69 8.40 -- --
- -------------------------------------------------------------------
10 years -- -- 119.72 119.72 -- --
Annual average -- -- 8.19 8.19 -- --
- -------------------------------------------------------------------
Life of class 12.95 7.63 145.66 145.66 17.62 13.80
Annual average 5.27 3.15 9.03 9.03 14.88 11.68
- -------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/96
Lehman Bros. Consumer
Municipal Bond Index Price Index
- -------------------------------------------------------------------
6 months 6.92% 1.25%
- -------------------------------------------------------------------
1 year 15.05 2.73
- -------------------------------------------------------------------
5 years 51.73 14.71
Annual average 8.7 2.78
- -------------------------------------------------------------------
10 years 130.30 40.88
Annual average 8.70 3.49
- -------------------------------------------------------------------
Life of class A 13.80 6.41
Annual average 5.61 2.60
- -------------------------------------------------------------------
Life of class B 160.91 42.96
Annual Average 9.66 3.50
- -------------------------------------------------------------------
Life of class M 18.34 3.14
Annual Average 16.71 2.88
- -------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions.
Investment returns and net asset value will fluctuate so that an
investor's shares, when sold, may be worth more or less than their
original cost. POP assumes 4.75% maximum sales charge for class A shares
and 3.25% for class M shares. CDSC for class B shares assumes the
applicable sales charge., with the maximum being 5%. The fund invests in
lower-rated, high-yield debt securities. The lower ratings reflect a
greater possibility that adverse changes in an issurers business
financial condition, or in general economic condition may impair the
issurer's ability to pay principal or interest on the securities.
TOTAL RETURN FOR PERIODS ENDED 12/31/95
(most recent calendar quarter)
Class A Class B Class M
(9/20/93) (9/9/85) (12/29/94)
NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------------
6 months 7.21% 2.08% 6.94% 1.94% 7.12% 3.67%
- ----------------------------------------------------------------------
1 year 16.76 11.20 16.00 11.00 16.19 12.43
- ----------------------------------------------------------------------
5 years -- -- 51.62 49.62 -- --
Annual average -- -- 8.68 8.39 -- --
- ----------------------------------------------------------------------
10 years -- -- 127.13 127.13 -- --
Annual average -- -- 8.55 8.55 -- --
- ----------------------------------------------------------------------
Life of class 12.14 6.86 144.20 144.20 16.88 13.09
Annual average 5.16 2.95 9.05 9.05 15.44 12.06
- ----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take
into account any adjustment for taxes payable on reinvested
distributions. Investment returns and principal value will fluctuate so
that an investor's shares, when sold, may be worth more or less than
their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/96
Class A Class B Class M
- ----------------------------------------------------------------------
Distributions
- ----------------------------------------------------------------------
Number 6 6 6
- ----------------------------------------------------------------------
Income $0.449988 $0.403021 $0.427127
- ----------------------------------------------------------------------
Total $.449988 $.403021 $.427127
- ----------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ----------------------------------------------------------------------
7/31/95 $14.14 $14.85 $14.14 $14.13 $14.60
- ----------------------------------------------------------------------
1/31/96 14.72 15.45 14.72 14.71 15.20
- ----------------------------------------------------------------------
Current return
- ----------------------------------------------------------------------
End of period
- ----------------------------------------------------------------------
Current dividend rate1 6.03% 5.75% 5.39% 5.73% 5.55%
- ----------------------------------------------------------------------
Taxable equivalent3 9.98 9.52 8.92 9.49 9.19
- ----------------------------------------------------------------------
Current 30-day SEC yield2 6.17 5.88 5.50 5.86 5.67
- ----------------------------------------------------------------------
Taxable equivalent3 10.22 9.74 9.11 9.70 9.39
- ----------------------------------------------------------------------
1 Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
2 Based on investment income, calculated using SEC guidelines.
3 Assumes maximum 39.6% federal tax rate. Results for investors subject
to lower tax rates would not be as advantageous.
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred 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. POP performance
figures shown here assume the maximum 4.75% sales charge for class A
shares and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B shares and assumes redemption at the end of
the period. Your fund's CDSC declines from a 5% maximum during the first
year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies.
COMPARATIVE BENCHMARKS
Lehman Brothers Municipal Bond Index is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the
municipal bond market. The index does not take into account brokerage
commissions or other costs, may include bonds different from those in
the fund, and may pose different risks than the fund.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A Putnam perspective on risk and reward
You've probably been told how important it is to understand the
relationship between an investment's potential rewards and its
accompanying risks. Given the cautionary nature of such
instructions, it may take most investors a while to realize that risk
has a positive side.
Every risk signals a potential reward. Selecting only those investments
that offer the greatest degree of security generally leads to only
modest rewards. Furthermore, even insured or guaranteed investments may
be subject to changes in their rates of return or, in some cases, in
their principal values. Experienced investors know that no investment is
truly risk free and are therefore willing to take on some measure of
risk in order to increase their potential gains.
The greater the risk, the greater the potential reward.
Accepting an appropriate level of investment risk can give you a better
chance of outpacing inflation over time and seeking to maximize your
investment's return. How much risk? Your financial advisor's feedback
and your time horizon can make all the difference in determining how
much risk is compatible with your investment goals and your peace of
mind.
* FITTING YOUR FUND SELECTION TO YOUR RISK TOLERANCE
How do you find the right balance between investment risks and their
potential rewards? It's helpful to understand the types of risks that
can apply to different types of investments, and to look at your own
portfolio with this perspective.
For short-term goals, your first priority may be managing market risk.
Longer-term investors may be more concerned with inflation risk. And all
income-oriented investors should consider interest-rate, credit, and
prepayment risks carefully. Within each of Putnam's four investment
categories, you can select funds with differing levels of risk and
reward potential to customize your portfolio.
This list covers only the most general types of risks; however, each
investment will also have its own specific risks. You will find a more
detailed discussion of these risk considerations in each fund's
prospectus.
* RUNDOWN OF RISK TYPES
MARKET RISK
Most important for stock funds, but relevant to all funds, this is a
measure of how sensitive a fund's holdings are to changes in general
market conditions. Remember, though, that securities that lose value
quickly in market declines may also show the strongest gains in more
favorable environments.
INTEREST-RATE RISK
Since bond prices fall as interest rates rise, this type of risk is a
particular concern for fixed-income investors. However, interest-rate
increases can also have a substantial negative effect on the stock market.
INFLATION RISK
If your investments cannot keep pace with inflation, your money will
begin to lose its purchasing power. Stock investments are generally
considered among the best ways of addressing inflation risk over the
long term.
CREDIT AND PREPAYMENT RISK
Credit risk is the concern that the security's issuer will not be able
to meet its payment, while prepayment risk involves the premature payoff
of a loan, with a resulting loss of interest income. Professional
management and in-depth research are invaluable in managing both these
risks.
LIQUIDITY RISK
Not all investments can be readily converted into cash at their
perceived market values. Liquidity risk can affect the price of
securities held in the fund's portfolio and, thus, the fund's share
prices.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
International New Opportunities Fund
Investors Fund
Natural Resources Fund
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds*
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
LIFESTAGE SM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments to help maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS+
Putnam money market funds:
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
* Not available in all states.
+ Relative to above.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
<TABLE>
<CAPTION>
Portfolio of investments owned
January 31, 1996 (Unaudited)
- ----------------------------------------------------------------------------------------------------------
Key Abbreviations:
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Federal Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration Insured
FNMA Coll. -- Federal National Mortgage Association Collaterallized
FRB -- Floating Rate Bond
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Colld
G.O. Bonds -- General Obligation Bonds
IF -- Inverse Floating
IFB -- Inverse Floating Bond
MBIA -- Municipal Bond Investors Assurance Corporation
TRAN -- Tax & Revenue Anticipation Notes
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (100.1%)*
PRINCIPAL AMOUNT RATING** VALUE
<S> <C> <C> <C> <C>
Alabama (0.7%)
- ----------------------------------------------------------------------------------------------------------
$ 5,000,000 Anniston Indl. Dev. Rev. Bonds (Hoover
Group Inc. Project), 8 1/2s, 9/1/10 BB/P $ 5,200,000
5,490,000 Courtland Indl. Dev. Board Solid Waste
Disp. Rev. Bonds (Champion Intl. Corp.
Project), Ser. A, 6 1/2s, 9/1/25 Baa 5,682,150
3,500,000 Jackson Cnty., Hlth. Care Auth. Hosp. Tax
Anticp. Rev. Bonds 7 7/8s, 5/1/19 BB/P 3,736,250
------------------
14,618,400
Alaska (0.2%)
- ----------------------------------------------------------------------------------------------------------
5,050,000 Valdez Marine Term Rev. Bonds (Amerada
Hess Pipeline Corp.), 6.1s, 2/1/24 BB/P 4,955,313
Arizona (1.7%)
- ----------------------------------------------------------------------------------------------------------
Phoenix Indl. Dev. Auth. Arpt. Fac. Rev. Bonds
(American West Airlines),
7,576,544 Ser. A-95-1, 8.3s, 1/1/06 B/P 7,762,094
3,157,894 Ser. B-95-2, 8.2s, 1/1/99 B/P 3,235,231
3,960,000 Phoenix, Indl. Dev. Auth. Rev. Bonds
(Christian Care Retirement Apts), Ser. A,
10 1/4s, 1/1/18 AA/P 4,370,850
3,625,000 Pinal Cnty., Indl. Dev. Auth. Rev. Bonds
(Casa Grande Regl. Med. Ctr.), Ser. B,
8 1/8s, 12/1/22 BB/P 3,915,000
4,500,000 Plainfield Indl. Economic Dev. Rev. Bonds
8 1/2s, 9/1/04 B/P 4,888,125
Scottsdale, Indl. Dev. Auth. 1st Mtg. Rev. Bonds
2,300,000 Ser. A, 8s, 6/1/11 BB/P 2,452,375
3,150,000 Ser. B, 7.05s, 6/1/16 BB/P 3,449,250
3,245,000 Ser. B, 6.7s, 6/1/17 BB/P 3,569,500
------------------
33,642,425
California (13.5%)
- ----------------------------------------------------------------------------------------------------------
6,500,000 Alameda Cnty. COP (Santa Rita Jail Project),
MBIA, 5s, 12/1/15 AAA 6,175,000
14,840,000 CA Hlth. Fac. Auth. Rev. Bonds (Valley
Presbyterian Hosp. Project), Ser. A, 9s,
5/1/12 BB 14,850,833
CA State Pub. Works Board Lease Rev. Bonds
10,225,000 (CA State Prison D-Susanville), MBIA,
5 3/8s, 6/1/18 AAA 10,046,063
16,065,000 (Dept of Corrections-State Prisons),
AMBAC, Ser. A, 5s, 12/1/19 AAA 15,502,725
7,640,000 Contra Costa Wtr. Dist. Wtr. Rev. Bonds,
Ser. G, MBIA, 5s, 10/1/24 AAA 7,238,900
6,000,000 Corona, COP (Vista Hosp. Syst.), Ser. B,
9 1/2s, 7/1/20 B/P 6,412,500
14,150,000 Foothill/Eastern Trans. Corridor Agcy. Rev.
Bonds (CA Toll Roads), Ser. A, 5s, 1/1/35 Baa 11,850,625
10,000,000 Los Angeles Cnty., Metro. Trans. Auth. Sales
Tax Rev. Bonds, Ser. A, FGIC, 5s, 7/1/21 AAA 9,375,000
Los Angeles, Regl. Arpt. Impt. Corp.
Lease Rev. Bonds
5,700,000 (Air Canada Inc.-Los Angeles Intl.),
8 3/4s, 10/1/14 BB 6,369,750
5,070,000 (United Airlines, Inc.-Los Angeles Intl.),
6 7/8s, 11/15/12 Baa 5,336,175
8,500,000 (Western Air Lines, Inc. - Delta Air
Lines, Inc.), 11 1/4s, 11/1/25 Ba 8,879,015
5,000,000 Los Angeles, Wastewater Syst. IFB,
6.549s, 11/1/06 (acquired 11/8/93,
cost $5,417,200) ++ AAA 5,456,250
2,200,000 Orange Cnty., Wtr. Dist. Variable Rate COP
Ser. A, FGIC 5.35s, 8/15/15 A1 2,200,000
10,000,000 Orange Cnty., Pub. Fac. Corp. COP (Solid
Waste Management), 7 7/8s, 12/1/13 BBB 10,337,500
26,000,000 Orange Cnty, TRAN, Ser. A 5.45s, 6/30/96 B/P 25,610,000
Redondo Beach, Redev. Agcy. Multi-Fam.
Hsg. Rev. Bonds (Heritage Point Project),
3,130,000 Ser. B, 8 1/2s, 9/1/23 BB/P 3,259,113
5,100,000 Ser. A, 6 1/2s, 9/1/23 BB/P 5,240,250
14,000,000 Sacremento Pwr. Auth. Rev. Bonds
(Cogeneration Project), 5 7/8s, 7/1/15 BBB 13,685,000
San Bernardino Cnty. COP
(Med. Ctr. Fin. Project),
5,000,000 Ser. A, MBIA, 6 1/2s, 8/1/17 AAA 5,725,000
8,000,000 MBIA, 5s, 8/1/28 AAA 7,500,000
3,000,000 5s, 8/1/26 A 2,527,500
21,000,000 San Bernardino Cnty. IF COP (PA-100-Med.
Ctr. Fin. Project), MBIA, 8.639s, 8/1/28
(Acquired 6/27/95, cost $22,664,040) ++ AAA 28,035,000
13,845,000 San Diego Pub. Facs. Fin. Auth. Swr. Rev.
Bonds FGIC, 5s, 5/15/20 AAA 13,170,056
10,000,000 San Diego, Regl. Bldg. Auth. Lease Rev.
Bonds, MBIA, 6.9s, 5/1/23 AAA 10,475,000
3,000,000 Southern CA Pub. Pwr. Auth. IFB
(Transmission Project), 7.813s, 7/1/12 AA 3,288,750
1,800,000 Vallejo Hsg. Multi-Fam. VRDN Ser. A,
2.95s, 5/15/22 A1 1,800,000
18,820,000 Vallejo COP (Marine World Foundation),
8.1s, 2/1/21 BBB/P 20,537,325
10,500,000 Valley Hlth. Syst. COP 6 7/8s, 5/15/23 BBB/P 10,565,625
4,000,000 Valley Hlth. Syst. Hosp. Rev. Bonds
(Improvement Project), Ser. A,
6 1/2s, 5/15/15 BBB 3,905,000
------------------
275,353,955
Colorado (5.6%)
- ----------------------------------------------------------------------------------------------------------
20,000,000 Arapahoe Cnty. Cap. Impt Tr. Fund Hwy.
Rev. Bonds, Ser. E-470, 7s, 8/31/26 Baa 21,900,000
56,755,000 CO Hlth. Fac., Auth. Retirement Fac.
Rev. Bonds (Liberty Heights), Ser. B,
zero %, 7/15/24 AAA 9,222,688
Denver City & Cnty. Arpt. Rev. Bonds,
24,400,000 Ser. A, 8 3/4s, 11/15/23 BBB 28,914,000
10,000,000 (Airport & Marina Improvements),
Ser. A, 8 3/4s, 11/15/23 AAA 12,187,500
12,750,000 Ser. A, 8 1/2s, 11/15/23 AAA 15,140,625
8,000,000 Ser. D, 7 3/4s, 2013 AAA 9,910,000
5,450,000 Ser. A, 7 1/4s, 11/15/25 BBB 5,974,563
5,000,000 Ser. D, 7s, 11/15/25 BBB 5,250,000
6,420,000 Ser. C, 5 1/2s, 11/15/16 BBB 6,107,025
------------------
114,606,401
Connecticut (1.6%)
- ----------------------------------------------------------------------------------------------------------
CT State Dev. Auth. 1st. Mtge. Rev. Bonds
1,680,000 (Gladeview Hlth. Care Project), 9 3/4s,
12/15/16 BB/P 1,862,700
7,195,000 (East Hill Woods Project), 8 3/4s, 7/119 B/P 7,527,769
CT State Dev. Auth. Hlth. Care Rev. Bonds
(Alzheimers Resource Ctr.), Ser. A,
6,500,000 10s, 8/15/21 AAA/P 8,401,250
2,000,000 7 1/4s, 8/15/21 BB/P 2,060,000
4,625,000 7 1/8s, 8/15/14 BB/P 4,734,844
2,290,000 7s, 8/15/09 BB/P 2,358,700
5,500,000 CT State Hlth. & Edl. Facs. Auth. IFB (Yale U.),
7.791s, 6/1/30 AAA 5,857,500
------------------
32,802,763
District of Columbia (0.9%)
- ----------------------------------------------------------------------------------------------------------
10,500,000 District of Columbia COP 7.3s, 1/1/13 B 10,815,000
District of Columbia Natl. Pub. Radio
Rev. Bonds
4,400,000 7.7s, 1/1/23 BB/P 4,669,500
2,500,000 7 5/8s, 1/1/18 BB/P 2,650,000
------------------
18,134,500
Florida (3.0%)
- ----------------------------------------------------------------------------------------------------------
9,260,000 Brevard Cnty., Hlth. Auth. Rev. Bonds
(Courtenay Springs Village), 7 3/4s,
11/15/24 BB/P 9,364,175
24,000,000 Hernando Cnty., Indl. Dev. Rev. Bonds
(FL Crushed Stone Co.), 8 1/2s, 12/1/14 B/P 26,610,000
5,970,000 Hillsborough Cnty., Aviation Auth. Special
Purpose Fac. Rev. Bonds (U.S. Air Inc.
Project), 8.6s, 1/15/22 B 6,589,388
1,100,000 Jacksonville, Hlth. Fac. Auth. Rev. Bonds
(Mental Hlth. Ctr.), 9 1/8s, 10/15/19 B/P 1,149,500
4,000,000 Orange Cnty. Hsg. Fin. Auth. VRDN
(Sundown Assoc. II), Ser. B, 3.95s, 6/1/04 A1 4,000,000
2,250,000 Orange Cnty., Hlth. Fac. Auth. IFB, Ser. 91-C,
MBIA, 8.845s, 10/29/21 AAA 2,565,000
5,000,000 Palm Beach Cnty., Student Hsg. Rev. Bonds
(Palm Beach Cmnty. College), Ser. A,
8 1/2s, 3/1/23 B/P 5,025,000
Sanford Arpt. Auth. Indl. Dev. Rev. Bonds
(Terminals Inc. Project), Ser. A,
3,125,000 7 3/4s, 5/1/21 BB/P 3,070,313
2,880,000 7 1/2s, 5/1/15 BB/P 2,818,800
------------------
61,192,176
Georgia (4.9%)
- ----------------------------------------------------------------------------------------------------------
5,100,000 Cobb Cnty., Dev. Auth. Indl. Dev. Rev. Bonds
(Boise Cascade Corp. Project), 7s, 9/1/14 Baa 5,533,500
De Kalb Cnty., Muni. Hsg. Auth. Rev. Bonds
(Briarcliff Park Apts. Project),
8,000,000 Ser. B, 10s, 4/1/17 BB/P 8,440,000
5,900,000 Ser. A, 7 1/2s, 4/1/17 A 6,121,250
9,500,000 Forsyth Cnty., Dev. Auth. Indl. VRDN
(Hoover Group Inc. Project), 8 1/2s,
12/1/05 B 9,844,375
6,415,000 Fulton Cnty., Res. Elderly Care Fac. Auth.
Rev. Bonds (Lenbrook Sq. Foundation
Inc. Project), 9 3/4s, 1/1/17 B 6,567,356
GA Muni. Elec. Auth. Pwr. Rev. Bonds
5,000,000 Ser. EE, AMBAC, 7 1/4s, 1/1/24 AAA 6,393,750
21,500,000 Ser. Z, MBIA, 5 1/2s, 1/1/20 AAA 21,849,375
55,260,000 Richmond Cnty., Dev. Auth. Rev. Bonds
Ser. C, zero %, 12/1/21 AAA 10,568,475
Rockdale Cnty., Dev. Auth. Solid Waste
Disp. Rev. Bonds (Visay Paper Inc. Project),
3,875,000 7 1/2s, 1/1/26 BB/P 3,976,719
15,000,000 7.4s, 1/1/16 BB/p 15,675,000
3,160,000 Savannah Econ. Dev. Auth. Poll. Control Rev.
Bonds (Stone Container Corp. Project),
8 1/8s, 7/1/15 BB/P 3,539,200
------------------
98,509,000
Illinois (2.4%)
- ----------------------------------------------------------------------------------------------------------
5,000,000 Chicago Gas Supply Rev. Bonds (Peoples
Gas LT), Ser. A, 6 7/8s, 3/1/15 AA 5,543,750
2,210,000 Chicago, O'Hare Intl. Arpt. Special Fac. Rev.
Bonds (United Air Lines, Inc.), Ser. 84A,
8.85s, 5/1/18 Baa 2,527,688
5,000,000 IL Dev. Fin. Auth. Retirement Hsg. Rev.
Bonds (Regency Park-Lincolnwood),
Ser. A, 10 1/4s, 4/15/19 + B/P 3,750,000
IL Dev. Fin. Auth. Rev. Bonds (Cmnty.
Rehab. Providers Fac.),
2,790,000 8 1/4s, 8/1/12 BBB 2,922,525
8,000,000 Ser. A, 7 7/8s, 7/1/20 BB/P 8,030,000
3,065,000 Ser. A, 7 1/2s, 3/1/14 BB/P 3,053,506
1,010,000 Ser. A, 7 1/4s, 3/1/04 Baa 1,020,100
1,215,000 IL Dev. Fin. Auth. Rev. Bonds (Mercy Hsg.
Corp. Project), 7s, 8/1/24 Baa 1,298,531
6,050,000 Lansing Tax Increment Rev. Bonds (Landing
Redev. Project),10s, 4/1/07 AAA/P 6,110,198
14,500,000 Robbins Res. Recvy. Rev. Bonds (Recov.
Partners), Ser. A, 9 1/4s, 10/15/14 B/P 14,210,000
------------------
48,466,298
Indiana (1.7%)
- ----------------------------------------------------------------------------------------------------------
East Chicago Poll. Control Rev. Bonds
12,000,000 (Inland Steel Co. Project Number 11),
7 1/8s, 6/1/07 Ba 12,795,000
5,000,000 (Inland Steel Co. Project Number 10),
6.8s, 6/1/13 BB 5,068,750
7,267,292 Hammond, Indl. Port Auth. COP 9.65s,
6/1/14 BB 7,803,255
5,000,000 Indianapolis Arpt. Auth. Spcl. Facs. Rev.
Bonds (United Airlines Project),
Ser. A, 6 1/2s, 11/15/31 Baa 5,100,000
2,325,000 Mishawaka Indl. Rev. Bonds (Stone
Container Corp. Project), 9 1/4s, 2/1/97 B/P 2,404,143
1,744,310 Westfield Econ. Dev. Rev. Bonds (Westfield
Village Hlth. Care Center), FHA Insd.,
12s, 5/15/14 A/P 2,062,647
------------------
35,233,795
Iowa (0.7%)
- ----------------------------------------------------------------------------------------------------------
IA Fin. Auth. Hlth. Care Fac. Rev. Bonds
(Mercy Hlth. Initiatives Project),
11,500,000 9.95s, 7/1/19 B/P 11,730,000
1,500,000 9.85s, 7/1/09 B/P 1,530,000
335,000 9.7s, 7/1/99 B/P 335,000
215,000 Marion 1st Mtge. Rev. Bonds (AHF/Kentucky
Iowa, Inc. Project), 10 1/4s, 1/1/20 B/P 226,825
------------------
13,821,825
Kentucky (1.3%)
- ----------------------------------------------------------------------------------------------------------
5,000,000 Jefferson Cnty., Hosp. IFB (Alliant Hlth.
Syst. Project), MBIA, 9.09s, 1/1/14 AAA 5,868,750
13,000,000 Kenton Cnty., Arpt. Board. Special. Facs.
Rev. Bonds (Delta Air Lines, Inc. Project),
Ser. A, 6 1/8s, 2/1/21 Ba 13,790,400
1,275,000 Lexington-Fayette Urban Cnty. Govt.
1st Mtge. Rev. Bonds (AHF/Kentucky
Iowa, Inc. Project), 10 1/4s, 1/1/20 B/P 1,345,125
3,550,000 Muhlenberg Cnty., Hosp. Rev. Bonds
(Muhlenberg Cmnty. Hosp. Project),
9 1/2s, 8/1/10 BBB/P 3,842,875
1,930,000 Owensboro Hosp. Auth. Rev. Bonds
(Children's Psychiatric Hosp.), 13s,
11/1/10 B/P 1,966,188
------------------
26,813,338
Louisiana (5.0%)
- ----------------------------------------------------------------------------------------------------------
2,900,000 Beauregard Parish Rev. Bonds (Boise
Cascade Corp. Project), 7 3/4s, 6/1/21 BBB 3,182,750
2,975,000 Calcasieu Parish, Indl. Dev. Poll. Control
Rev. Bonds (Gulf States Utilities Project),
6 3/4s, 10/1/12 BB 3,082,844
3,800,000 Hodge, Combined Util. Rev. Bonds (Stone
Container Corp.), 9s, 3/1/10 B/P 4,256,000
LA Pub. Fac. Auth. 1st Mtge. Rev. Bonds
2,418,329 (Emily Morten Foundation),10 1/4s,
5/1/19 B/P 2,596,681
2,000,000 (St. James Place Project),10s, 11/1/21 B/P 2,215,000
17,000,000 Lake Charles Harbor & Term. Dist. Port
Facs. Rev. Bonds (Trunkline Co. Project),
7 3/4s, 8/15/22 Baa 19,316,250
Port of New Orleans Indl. Dev. Rev. Bonds
3,700,000 (Continental Grain Co. Project), Ser. A,
14 1/2s, 2/1/02 BB 3,972,394
4,500,000 (Continental Grain Co. Project),14 1/2s,
1/1/02 BB 4,803,480
7,000,000 (Continental Grain Co. Project), 7 1/2s,
7/1/13 BB 7,455,000
6,500,000 St. Charles Parish Poll. Control Rev. Bonds
(LA Pwr. & Lt. Co.), 8s, 12/1/14 Baa 7,231,250
13,000,000 St. James Parish Solid Waste Disp. Rev. Bonds
(Kaiser Aluminum Project), 7 3/4s, 8/1/22 B/P 13,877,500
W. Feliciana Parish Poll. Control Rev. Bonds
(Gulf States Utilities Project),
6,000,000 8s, 12/1/24 Baa 6,517,500
19,000,000 7.7s, 12/1/14 BB 20,900,000
3,000,000 W. Feliciana Parish Poll. Control VRDN
(Gulf States Utilities Co.), 3 1/2s, 12/1/15 A1 3,000,000
------------------
102,406,649
Maryland (0.2%)
- ----------------------------------------------------------------------------------------------------------
2,975,000 Denton 1st. Mtge. Rev. Bonds (Wesleyan
Hlth. Care Ctr. Project), 10 1/4s, 4/1/20 B/P 3,153,500
Massachusetts (8.1%)
- ----------------------------------------------------------------------------------------------------------
4,150,000 Agawam Resource Rcvy. Rev. Bonds
(Springfield Resources Recvy. Project),
8 1/2s, 12/1/08 BBB 4,381,819
18,450,000 MA Bay Trans. Auth. IFB Ser. B, MBIA, 6.8s,
3/1/22 (acquired various dates from
12/14/93 to 2/2/94, cost $18,580,614) ++ AAA 18,242,438
12,605,000 MA Muni. Wholesale Elec. Co. Pwr. Supply
Syst. Rev. Bonds, Ser. A, 8 3/4s, 7/1/18 AAA 13,739,450
MA State Hlth. & Edl. Fac. Auth. IFB
5,000,000 (St. Elizabeth Hosp.),Ser. E, FSA, 9.43s,
8/15/21 AAA 5,943,750
5,600,000 (Beth Israel Hosp.), AMBAC, 9.289s, 7/1/25 AAA 6,062,000
MA State Hlth. & Edl. Fac. Auth. Rev. Bonds
2,445,000 (Summerfield Nursing Home), Ser. A,
9 1/2s, 7/1/14 B 2,536,688
3,325,000 (MA Eye & Ear Infirmary), Ser. A, 7 3/8s,
7/1/11 Baa 3,354,094
2,000,000 MA State Hlth. & Edl. Facs. Auth. IFB
(Boston U.), Ser. L, MBIA, 8.882s, 10/1/31 AAA 2,335,000
MA State Indl. Fin. Agcy. Res. Recvy. Rev.
Bonds (Southeastern MA Project),
4,000,000 Ser. B, 9 1/4s, 7/1/15 BB 4,520,000
30,225,000 Ser. A, 9s, 7/1/15 BB 34,040,906
MA State Indl. Fin. Agcy. Rev. Bonds
2,000,000 (Atlanticare Med. Ctr.), Ser. A, 10 1/8s,
11/1/14 B/P 1,900,000
6,000,000 (Atlanticare Med. Ctr.), Ser. B, 10 1/8s,
11/1/14 B/P 5,700,000
2,500,000 (1st Mtge.Berkshire Retirement), 9 7/8s,
7/1/18 AAA 2,663,600
8,800,000 (Orchard Cove Inc.), 9s, 5/1/22 BB 10,054,000
2,220,000 (Morton Hosp. & Med. Ctr.), Ser. A,
8 3/4s, 7/1/11 AAA 2,544,675
7,500,000 MA State Indl. Fin. Agcy. Solid Waste
Disposal Rev. Bonds (Molten Metal
Technology Project), 8 1/4s, 8/1/14 B/P 8,006,250
2,385,000 MA State Indl. Fin. Agcy. Tunnel Rev.
Bonds (Mass Tpk.,), 9s, 10/1/20 AAA 2,903,738
7,000,000 MA State Tpk. Auth. Anticipation Notes
Ser. A, 5s, 6/1/99 A 7,207,340
4,600,000 MA State VRDN, Ser. B, 2.45s, 12/1/97 A1 4,600,000
MA State Wtr. Resource Auth. Rev. Bonds
7,500,000 Ser. C, MBIA, 5 1/4s, 12/1/15 AAA 7,575,000
8,500,000 Ser. B, MBIA, 5s, 3/1/22 AAA 8,064,375
5,000,000 Ser. B, MBIA, 4 3/4s, 12/1/21 AAA 4,575,000
4,000,000 Worcester Mtge. Rev. Bonds (Briarwood
Issue), 9 1/4s, 12/1/22 BB/P 4,405,000
------------------
165,355,123
Michigan (8.1%)
- ----------------------------------------------------------------------------------------------------------
2,591,000 Ann Arbor, Econ. Dev. Corp. Ltd. Oblig. Rev.
Bonds (Glacier Hills Inc. Project), 8 3/8s,
1/15/19 B/P 2,691,401
4,000,000 Detroit Wtr. Supply Syst. Rev. Bonds, FGIC,
5s, 7/1/23 AAA 3,785,000
18,677,000 Detroit, Hosp. Fac. Fin. Auth. Rev. Bonds
(MI Hlth. Care Corp.), 10s, 12/1/20 + Caa 7,097,260
20,865,000 Detroit, Loc. Dev. Fin. Auth. Tax Increment
Rev. Bonds, Ser. A, 8.72s, 5/1/21 BBB 26,081,250
2,000,000 Grand Rapids Wtr. Supply Syst. VRDN
FGIC, 3.4s, 1/1/20 A1 2,000,000
Greater Detroit Resource Recvy. Auth.
Rev. Bonds
8,875,000 Ser. A, 9 1/4s, 12/13/08 BBB 9,185,625
6,050,000 Ser. E, 9 1/4s, 12/13/08 BBB 6,261,750
5,750,000 Ser. G, 9 1/4s, 12/13/08 BBB 5,951,250
5,790,000 Highland Park, Hosp. Fin. Auth. Fac. Rev.
Bonds (MI Hlth. Care Corp. Project),
Ser. A, 9 7/8s, 12/1/19 + Caa 2,200,200
9,405,000 MI State Hosp. Fin. Auth. Rev. Bonds
(Detroit-Macomb Hosp. Corp.),
Ser. A, 7.4s, 2013 BB 9,405,000
15,000,000 MI State Stragetic Fund Ltd. Obligation
Rev. Bonds (Detroit Edison Co. Coll- AA),
MBIA, 6.4s, 9/1/25 AAA 16,275,000
14,000,000 MI State Stragetic Fund Solid Waste Disp.
Rev. Bonds (Genesee Pwr. Station Project),
7 1/2s, 1/1/21 BB/P 14,350,000
MI State Strategic Fund Ltd. Oblig. Rev. Bonds
5,900,000 (Mercy Svcs. for Aging Project), 9.4s,
5/15/20 BBB 6,600,625
930,000 (MI Hlth. Care Corp. Project), 9.1s,
12/1/14 + B 353,400
15,500,000 (Blue Wtr. Fiber Project), 8s, 1/1/12 B/P 14,976,875
4,900,000 MI State Underground Storage Tank Fin.
Assurance Auth. VRDN Ser. I, 3.9s, 12/1/04 A1 4,900,000
19,500,000 Midland Cnty., Econ. Dev. Corp. Poll. Control
Rev. Bonds Ser. B, 9 1/2s, 7/23/09 B/P 21,620,625
5,390,000 Waterford, Econ. Dev. Corp. Rev. Bonds
(Canterbury Hlth. Care), 8 3/8s, 7/1/23 BB/P 5,686,450
5,700,000 Wayne Charter Cnty., Special Arpt. Facs.
Rev. Bonds (Northwest Airlines Inc.),
6 3/4s, 12/1/15 B/P 5,835,375
------------------
165,257,086
Minnesota (0.7%)
- ----------------------------------------------------------------------------------------------------------
2,950,000 Chaska Indl. Dev. Rev. Bonds (Lifecore
Biomedical Inc. Project), 10 1/4s, 9/1/20 BB/P 3,433,063
5,000,000 Intl. Falls, Env. Fac. Rev. Bonds (Boise
Cascade Corp. Project), 7.2s, 10/1/24 Baa 5,543,750
Minneapolis, Cmnty. Dev. Agcy. Multi-Fam.
Hsg. Rev. Rental Bonds
1,820,000 (Lindsay Bros. Project), Ser. A, 9 1/2s,
12/1/07 B/P 1,890,525
1,200,000 (Lindsay Bros. Project), Ser. B, 1 1/2s,
12/1/07 B/P 412,500
3,200,000 Shakopee Multi-Fam. Rev. Bonds (Riva
Ridge Apts. Project), 8 1/2s, 12/1/08 B/P 3,288,000
------------------
14,567,838
Mississippi (1.5%)
- ----------------------------------------------------------------------------------------------------------
Claiborne Cnty. Pool. Control Rev. Bonds
4,500,000 (Middle South Energy, Inc.), Ser. C, 9 7/8s,
12/1/14 BBB/P 5,197,500
10,000,000 (Middle South Energy, Inc.), Ser. A, 9 1/2s,
12/1/13 BBB/P 11,450,000
4,620,000 (Syst. Energy Resources Inc.), 9 1/2s, 4/1/16 BBB 4,792,465
2,800,000 Jackson Cnty., Poll. Control FRB (Chevron
USA Project), 3.4s, 6/1/23 A1 2,800,000
2,250,000 Lee Cnty. Indl. Rev. Bonds (Great Southern
Box Co. Inc. Project), 9.55s, 5/1/97 B/P 2,354,063
4,000,000 MS Hosp. Equip. & Fac. Auth. Rev. Bonds
(MS Methodist Hosp & Rehab.), Ser. 1,
9 3/8s, 5/1/12 AAA 4,570,000
------------------
31,164,028
Montana (0.6%)
- ----------------------------------------------------------------------------------------------------------
10,000,000 MT, State Hlth. Fac. Auth. Hosp. Fac. IFB
AMBAC, 6.608s, 2/25/25 AAA 9,712,500
3,000,000 Missoula Cnty. Rev. Bonds (Cmnty. Med.
Ctr. Inc.), Ser. B, 9s, 6/1/18 BBB 3,213,750
------------------
12,926,250
Nebraska (1.4%)
- ----------------------------------------------------------------------------------------------------------
2,000,000 NE Investment Fin. Auth. Hosp. IFB
MBIA, 9.335s, 12/8/16 AAA 2,330,000
NE Investment Fin. Auth. Single Fam. Mtge. IFB
5,500,000 Ser. 2, GNMA Coll., 11.186s, 9/10/30 AAA 6,276,875
1,900,000 Ser. B, GNMA Coll., 11.12s, 3/15/22 AAA 2,187,375
1,900,000 Ser. B, GNMA Coll., 9.883s, 9/15/23 AAA 2,132,750
1,950,000 GNMA Coll., 8.664s, 9/15/24 AAA 2,113,313
12,100,000 Ser. D, GNMA Coll., 7.388s, 3/10/20 AAA 12,689,875
------------------
27,730,188
New Hampshire (1.7%)
- ----------------------------------------------------------------------------------------------------------
NH Higher Edl. & Hlth. Fac. Auth. Rev. Bonds
2,885,000 (Havenwood/Heritage Heights), 9 3/4s,
12/1/19 B/P 3,523,306
5,900,000 (Havenwood/Heritage Heights), 7.35s,
1/1/18 B/P 5,951,625
2,425,000 (Franklin Regl. Hosp.), 8 3/4s, 9/1/19 BBB 2,619,000
9,000,000 (1st. Mtge. Rivermead Peterboro), 8 1/2s,
7/1/24 B/P 9,495,000
5,500,000 (1st. Mtge. River Woods at Exeter), 8s,
3/1/00 B/P 5,613,575
6,750,000 (Wentworth-Douglass Hosp.), 5 3/8s,
1/1/15 AAA 6,724,688
------------------
33,927,194
New Jersey (2.8%)
- ----------------------------------------------------------------------------------------------------------
5,000,000 Camden Cnty., Impt. Auth. Rev. Bonds,
8.4s, 4/1/24 (acquired 4/12/93,
cost $5,000,000)++ BB 5,143,750
7,730,000 Mercer Cnty., Impt. Auth. Rev. Bonds
(solid waste), Ser. B, 6.8s, 4/1/05 Ba 7,778,313
NJ Econ. Dev. Auth. Rev. Bonds
2,700,000 (Stolt Terminals Project), 10 1/2s, 1/15/18 BB 3,010,500
4,700,000 (Holt Hauling Co.),Ser. D, 10 1/4s, 9/15/14 BB 4,962,025
5,000,000 NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds
(St. Elizabeth Hosp.), Ser. B, 8 1/4s, 7/1/20 Baa 5,550,000
4,000,000 NJ State Hsg. & Mtge. Fin. Agcy. Rev. IFB,
Ser. I, 8.062s, 11/1/07 (acquired various
dates from 2/11/93 to 8/24/95,
cost $4,143,120)++ A 4,450,000
5,450,000 NJ State Hwy. Auth. Rev. Bonds (Garden
State Pkwy.), 5.2s, 1/1/08 AA 5,674,813
10,000,000 NJ State Transn. Trust Fund Auth. Rev. Bonds
(Transportation System), Ser. B, MBIA,
6 1/2s, 6/15/10 AAA 11,500,000
4,000,000 Salem Cnty., Indl. Poll. Control Fing. Auth.
IFB, 8.72s, 10/1/29 (acquired 10/28/94,
cost $3,785,680) ++ AAA 4,740,000
3,000,000 Salem Cnty., Indl. Poll. Control Fing. Auth.
Rev. Bonds (Pub. Svc. Elec. & Gas Co.
Project), Ser. B, MBIA, 6 1/4s, 6/1/31 AAA 3,176,250
------------------
55,985,651
New Mexico (0.8%)
- ----------------------------------------------------------------------------------------------------------
Farmington Poll. Control Rev. Bonds
9,000,000 (Pub. Svcs. Co. San Juan Project), Ser. A,
6.4s, 8/15/23 BB 8,955,000
7,200,000 (Arizona Pub. Svcs. Co.), Ser. B, 3 1/2s,
9/1/24 A1 7,200,000
------------------
16,155,000
New York (12.7%)
- ----------------------------------------------------------------------------------------------------------
Metro. Trans. Auth. Svcs. Contract Commuter
Fac. Rev. Bonds
4,000,000 Ser. O, 5 3/4s, 7/1/13 Baa 4,055,000
8,250,000 Ser. O, 5 3/4s, 7/1/13 Baa 8,363,438
NY City G.O. Bonds
20,750,000 Ser. G, 5 3/4s, 2/1/20 BBB 20,075,625
13,500,000 5 3/4s, 2/1/14 BBB 13,162,500
10,100,000 NY City Muni Wtr. Fin. Auth. Wtr. & Swr. Syst.
VRDN Ser. A, FGIC, 3 1/4s, 6/15/25 A1 10,100,000
NY State Dorm. Auth. Rev. Bonds
21,500,000 (City U. Syst.), Ser. A, 5 3/4s, 7/1/13 Baa 21,795,625
7,000,000 (City U. Syst.), Ser. A, AMBAC, 5 3/4s,
7/1/09 AAA 7,551,250
6,500,000 (State U. Edl. Facs.), Ser. B, FGIC, 5 3/8s,
5/15/07 AAA 6,841,250
10,100,000 (City U.), Ser. F, 5s, 7/1/20 BBB 9,115,250
7,750,000 (City U.), Ser. F, 5s, 7/1/14 BBB 7,139,688
8,000,000 NY State Energy Research & Dev. Auth.
Poll. Control IFB, FGIC, 8.506s, 7/1/29 AAA 10,320,000
(acquired 12/19/94, cost $8,353,120++
13,400,000 NY State Energy Resh. & Dev. Auth. Poll.
Control VRDN (NY State Elec. & Gas Co.),
Ser. C, 3.55, 6/1/29 A1 13,400,000
NY State Local Gov't. Assist. Corp. Rev. Bonds
8,000,000 Ser. C, 5 1/2s, 4/1/17 A 8,150,000
2,225,000 Ser. E, 5 1/4s, 4/1/16 A 2,197,188
NY State Med. Care Fac. Fin. Agcy. Rev. Bonds
9,750,000 (Mental Health Svcs.),Ser. D, FSA, 5 1/4s,
8/15/23 AAA 9,347,813
9,830,000 (Mental Health Svcs.),Ser. F, FSA, 5 1/4s,
2/15/19 AAA 9,559,675
5,500,000 Ser. A, AMBAC, 6 1/2s, 8/15/29 AAA 5,974,375
9,750,000 NY State Pwr. Auth. Rev. Bonds Ser. Z, 6 1/2s,
1/1/19 AA 10,603,125
NY State Urban Dev. Corp. Rev. Bonds
7,000,000 (State Fac.), 7 1/2s, 4/1/20 A 8,190,000
13,575,000 (Correctional Fac.), Ser. 4, 5 3/8s, 1/1/23 Baa 12,862,313
8,850,000 5.6s, 4/1/15 Baa 8,883,188
13,400,000 Ser. 6, 5 3/8s, 1/1/25 Baa 12,646,250
9,000,000 NY City Indl. Dev. Rev. Bonds (Solid Waste
Disp-Visy Paper Project), 7.8s, 1/1/16 BB/P 9,270,000
Port Auth. NY & NJ G.O. Bonds Ser. 104, AMBAC,
6,890,000 5.2s, 7/15/13 AAA 6,872,775
6,555,000 5 1/8s, 7/15/12 AAA 6,536,646
6,300,000 Port Auth. NY & NJ Rev. Bonds FGIC, 4.99s,
11/15/20 AAA 6,134,625
------------------
258,422,599
North Carolina (1.6%)
- ----------------------------------------------------------------------------------------------------------
NC Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Bonds
9,250,000 Ser. A, 6 1/2s, 1/1/18 A 10,117,188
7,480,000 Ser. B, 6 1/8s, 1/1/09 A 7,825,950
13,000,000 Ser. B, 6s, 1/1/22 A 13,455,000
------------------
31,398,138
Ohio (0.6%)
- ----------------------------------------------------------------------------------------------------------
7,200,000 Dayton Special Fac. Rev. Bonds (Emery Air
Freight Corp.), Ser. A, 12 1/2s, 10/1/09 BB/P 8,532,000
14,315,000 Lucas Plaza Hsg. Dev. Corp. Mtge. Rev.
Bonds FHA Insd., zero %, 6/1/24 AAA 2,576,700
------------------
11,108,700
Oregon (0.1%)
- ----------------------------------------------------------------------------------------------------------
1,700,000 Portland Poll. Control VRDN (Reynolds
Metals), 6.1s, 12/1/09 A1 1,700,000
Pennsylvania (3.8%)
- ----------------------------------------------------------------------------------------------------------
Allegheny Cnty., Indl. Dev. Auth. Arpt. Special
Fac. Rev. Bonds (U.S. Air, Inc. Project),
1,290,000 Ser. A, 8 7/8s, 3/1/21 B 1,427,063
4,935,000 Ser. B, 8 1/2s, 3/1/21 B 5,342,138
1,545,000 Allegheny Cnty., Indl. Dev. Auth. Rev. Bonds
(Southwestern Arpt. Cargo Fac.), 8 3/4s,
2/15/09 BB 1,658,944
Montgomery Cnty., Higher Edl. & Hlth. Auth.
Hosp. Rev. Bonds (United Hosp. Inc. Project),
3,745,000 8 1/2s, 11/1/17 Ba 3,941,613
5,300,000 Ser. A, 8 3/8s, 11/1/11 Ba 5,737,250
29,200,000 PA Economic Dev. Fing. Auth. Recycling Rev.
Bonds (Ponderosa Fibres Project), Ser. A,
9 1/4s, 1/1/22 B/P 30,806,000
6,000,000 PA Economic Dev. Fing. Auth. Resource Recvy.
Rev. Bonds (Colver Project), Ser. E, 8.05s,
12/1/15 BBB 6,480,000
2,500,000 PA State Higher Edl. Assistance Agcy. Student
Loan IFB, 8.405s, 9/3/26 AAA 2,762,500
5,300,000 Philadelphia, Muni. Auth. Rev. Bonds (Justice
Lease), Ser. C, 8 5/8s, 11/15/16 AAA 6,558,750
4,760,000 Philadelphia Wtr. & Wastewater Rev. Bond,
FGIC, 10s, 6/15/05 AAA 6,675,900
------------------
76,454,158
Puerto Rico (0.4%)
- ----------------------------------------------------------------------------------------------------------
8,000,000 Puerto Rico Cmnwlth. of Rev. Bonds,
5.64s, 7/1/08 AAA 8,500,000
South Carolina (0.7%)
- ----------------------------------------------------------------------------------------------------------
3,150,000 Lee Cnty. Indl. Rev. Bonds (Mid-American
Waste Syst. Project), 7s, 9/15/13 B/P 2,732,625
5,000,000 Spartanburg Cnty. Solid Waste Disp. Rev.
Bonds (Bayerische Motoren Werke),
7.55s, 11/1/24 A 5,500,000
5,000,000 Spartansburg Cnty. Hosp. Fac. IFB, FSA,
8.756s, 4/13/22 AAA 5,737,500
------------------
13,970,125
South Dakota (0.1%)
- ----------------------------------------------------------------------------------------------------------
2,865,000 Rapid City Econ. Dev. FRB (Civic Ctr. Assoc.
Partnership), 3.15s, 12/1/16 P1 2,865,000
Tennessee (1.6%)
- ----------------------------------------------------------------------------------------------------------
15,000,000 Maury Cnty. Indl. Dev. Board Poll. Control
Rev. Bond (Saturn Corp. Project), 6 1/2s,
9/1/24 A 15,862,500
28,920,000 Metro. Nashville & Davidson Cnty. Hlth. &
Edl. Fac. Board Rev. Bonds (Volunteer
Hlth. Care), zero %, 6/1/21 AAA 5,711,700
TN State G.O. Bonds
5,660,000 Ser A, 5.7s, 5/1/09 AAA 5,590,665
5,660,000 Ser. A, 4.8s, 5/1/10 AAA 5,559,535
------------------
32,724,400
Texas (4.4%)
- ----------------------------------------------------------------------------------------------------------
Bell Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds
(Adv. Living Tech. Inc. Project), Ser. A,
1,530,000 10 1/2s, 12/1/27 B/P 1,331,100
5,255,000 10 1/2s, 6/15/18 B/P 4,571,850
4,785,000 Bexar Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds
(Heartway Corp.), Ser. A-1, 10 1/4s,
3/1/19 + CCC/P 4,306,500
5,890,000 Cherokee Cnty., Hlth. Fac. Dev. Corp. Rev.
Bonds (Nancy Travis Memorial Hosp.
Project),10s, 5/15/13 B/P 6,390,650
10,000,000 Dallas Cnty. G.O. Bonds (Flood Control
Dist. #1), zero %, 4/1/16 BB 7,825,000
12,000,000 Dallas-Fort Worth Intl. Arpt. Fac. Impt. Corp.
Rev. Bonds (American Airlines Inc.), 6s,
11/1/14 BB 12,000,000
5,600,000 Harris Cnty., Indl. Dev. Corp. Poll. Control
VRDN (Exxon Project-1984), Ser. B,
3.6s, 3/1/24 A1 5,600,000
Harris Cnty., Single Fam. Hsg. Fin. Corp.
Rev. Bonds
870,000 Ser. 1983A, 10 3/8s, 7/15/14 BBB 871,061
765,000 9 7/8s, 3/15/14 BB 765,765
Houston, Hsg. Fin. Corp. Single Fam. Mtge.
Rev. Bonds,
3,497,000 Ser. A, 10 7/8s, 2/15/16 A 3,545,700
2,135,000 10s, 9/15/14 B 2,134,637
35,160,000 Montgomery Cnty., Hlth. Fac. Dev. Corp.
Rev. Bonds (Heritage Manor), zero %,
7/15/23 AAA 6,065,100
2,000,000 Port Corpus Christi, Indl. Dev. Corp. Rev.
Bonds (Valero Refining & Marketing Co),
Ser. A, 10 1/4s, 6/1/17 Baa 2,197,500
Southeast TX Multi-Fam. Hsg. Fin. Corp.
Rev. Bonds
5,500,000 (Bayou Pk. Village Apt. Project), Ser. B,
10.175s, 8/1/16 B/P 5,637,500
4,500,000 (Promenade Place Apts. Project), Ser. B,
10.175s, 8/1/16 B/P 4,578,750
6,000,000 (Pavilion Place Apts. Project), Ser. A, 7.6s,
7/1/16 BBB 6,060,000
9,700,000 (Pavilion Place Apts. Project), Ser. B, 2.61s,
7/1/16 + CCC 3,880,000
8,000,000 TX State Hsg. & Cmnty. Affairs Home Mtg. IFB,
Ser. C, GNMA Coll., FNMA Coll., 9.735s,
7/2/24 AAA 9,040,000
5,000,000 Tarrant Cnty., Hlth. Facs. Dev. Corp. Hosp.
Rev. Bonds (Cmnty. Hlth. Care Foundation.),
10 1/8s, 4/1/21 B/P 2,500,000
------------------
89,301,113
Utah (0.3%)
- ----------------------------------------------------------------------------------------------------------
5,000,000 Salt Lake City Hosp. Rev. Bonds (IHC Hosp.
Inc.), MBIA 6 1/4s, 2/15/23 AAA 5,337,500
Virginia (0.9%)
- ----------------------------------------------------------------------------------------------------------
4,500,000 Fredericksburg, Indl. Dev. Auth. Hosp. Fac. IFB,
FGIC, 9.321s, 8/15/23 AAA 5,242,500
2,000,000 Henrico Cnty., Indl. Dev. Auth. IFB (Bon
Secours Hlth. Syst. Project), FSA Insd.,
7.738s, 8/23/27 AAA 2,307,500
Upper Occoquan Sew. Auth. Regl. Swr. Rev. Bonds
8,000,000 Ser. A, MBIA, 5.15s, 7/1/20 AAA 7,960,000
3,400,000 Ser. A, MBIA 5s, 7/1/25 AAA 3,272,500
------------------
18,782,500
Washington (2.1%)
- ----------------------------------------------------------------------------------------------------------
18,000,000 Port Walla Walla Pub. Corp. Solid Waste
Recycling Rev. Bonds (Ponderosa Fibres
Project), 9 1/8s, 1/1/26 B/P 19,102,500
3,600,000 WA State Hlth. Care Fac. Auth. IFB (Sisters
Providence), Ser. C, 3 1/2s, 10/1/05 A1 3,600,000
8,200,000 WA State Hsg. Fin. Comm. Single Family
Mtge. IFB, GNMA Coll., 9.989s, 12/1/17 AAA 8,868,218
(acquired 4/12/95, cost $9,225,000)++
WA State Pub. Pwr. Supply Syst. Rev. Bonds
(Nuclear Project No. 3),
4,000,000 Ser. C, 7 1/2s, 7/1/08 AAA 4,925,000
5,000,000 Ser. B, 7 1/8s, 7/1/16 AAA 6,043,750
------------------
42,539,468
West Virginia (1.6%)
- ----------------------------------------------------------------------------------------------------------
Marion Cnty. Cmnty. Solid Waste Disp. Fac.
Rev. Bonds (American Pwr. Paper Recycling),
12,000,000 9s, 12/1/11 B/P 11,805,000
10,000,000 8 1/4s, 12/1/11 B/P 9,212,500
2,935,000 Preston Cnty., Bldg. Cmnty. Hosp. Rev. Bonds
(Preston Mem. Hosp. Corp.), Ser. B, 10s,
4/1/14 BB 3,136,781
4,045,000 WV State COP (Morris Sq. Complex),
9 1/4s, 8/15/08 BB/P 3,852,863
3,600,000 Weirton Poll. Control Rev. Bonds (Weirton
Steel Project), Ser. B, 8 5/8s, 11/1/14 B 3,847,500
------------------
31,854,644
Wisconsin (0.1%)
- ----------------------------------------------------------------------------------------------------------
2,112,000 WI Hsg. & Econ. Dev. Auth. IFB (Home
Ownership Dev. Program), 9.475s,
10/25/22 AA 2,391,840
Wyoming (-%)
- ----------------------------------------------------------------------------------------------------------
1,000,000 Uinta Cnty., Poll. Control VRDN (Chevron
USA Inc. Project), 2 3/4s, 8/15/20 P1 1,000,000
------------------
Total Municipal Bonds and Notes
(cost $1,938,258,795)*** $2,035,128,881
- ----------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $2,032,411,916.
** The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings
available at January 31, 1996 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 obligations to do so, and the ratings do not necessarily represent what the agencies would ascribe
to these securities at January 31, 1996. Securities rated by Putnam are indicated by "/P" are not
publicly rated.
+ Non-income-producing security.
++ Restricted as to public resale. At the date of acquisition these securities were valued at cost.
There were no outstanding securities of the same class as those held. Total market value of restricted
securities owned at January 31, 1996 was $85,255,656 or 4.2% of net assets.
*** The aggregate identified cost on a tax basis is $1,938,337,475, resulting in gross unrealized
appreciation and depreciation of $127,817,199, and $31,025,793, respectively, or net unrealized appreciation
of $96,791,406.
The rates shown on IF,IFB and FRB which are securities paying variable interest rates that vary inversely
to changes in the market interest rates, and VRDNs are the current interest rates at January 31, 1996, which
are subject to change based on the terms of the security.
The fund had the following industry group concentrations greater than 10% of net assets at January 31, 1996
Transporation 17.8%
Hospitals/Health Care 17.4
Utilities 13.6
The table below shows the percentage of the fund's investments on January 31, 1996 in securities
assigned to the various rating categories by Moody's and Standard & Poor's and in unrated securities
determined by Putnam Management to be of comparable quality:
Unrated securities
Rated securities of comparable quality
as a percentage of as a percentage of
Rating fund's net assets fund's net assets
- --------------------------------------------------------------------------------------------
"AAA"/"Aaa" 27.5% 0.7%
"AA"/"Aa" 1.6 0.2
"A"/"A" 4.7 0.1
"BBB"/"Baa" 19.7 2.7
"BB"/"Ba" 11.4 8.0
"B"/"B" 2.4 17.0
"CCC"/"Caa" 0.4 0.2
"VMIG1"/"A1" 3.3 --
"P1"/-- 0.2 --
- --------------------------------------------------------------------------------------------
71.2% 28.9%
- --------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31,1996 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $ 1,938,258,795) (Note 1) $2,035,128,881
- ---------------------------------------------------------------------------------------------------
Cash 82,850
- ---------------------------------------------------------------------------------------------------
Interest and other receivables 30,057,458
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 8,466,927
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 30,625,493
- ---------------------------------------------------------------------------------------------------
Total assets 2,104,361,609
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders $ 3,999,927
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 60,064,926
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 5,483,716
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 912,518
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 1,334
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,158
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,156,180
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 218,799
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 110,135
- ---------------------------------------------------------------------------------------------------
Total liabilities 71,949,693
- ---------------------------------------------------------------------------------------------------
Net assets $2,032,411,916
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in-capital (Note 4) $1,976,028,848
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (3,408,362)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (37,078,656)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 96,870,086
- ---------------------------------------------------------------------------------------------------
Total - Representing net assets applicable to
capital shares outstanding $2,032,411,916
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($ 536,797,063 divided by 36,478,032 shares) $14.72
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $14.72)* $15.45
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($ 1,490,654,506 divided by 101,267,749 shares)*** $14.72
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price of class M shares
($ 4,960,347 divided by 337,216 shares) $14.71
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $14.71)** $15.20
- ---------------------------------------------------------------------------------------------------
* 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.
** On single retail sales of less than $50,000. On sales of $50,000 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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended January 31,1996 (Unaudited)
<S> <C>
Tax exempt interest income $69,126,677
- ---------------------------------------------------------------------------------------------------
Expenses:
- ---------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) $ 5,313,413
- ---------------------------------------------------------------------------------------------------
Investor Servicing and custodian fees (Note 2) 760,301
- ---------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 23,088
- ---------------------------------------------------------------------------------------------------
Reports to shareholders 34,928
- ---------------------------------------------------------------------------------------------------
Auditing 29,860
- ---------------------------------------------------------------------------------------------------
Legal 56,416
- ---------------------------------------------------------------------------------------------------
Postage 64,335
- ---------------------------------------------------------------------------------------------------
Registration Fees 13,724
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 503,449
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 6,240,584
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 9,370
- ---------------------------------------------------------------------------------------------------
Administrative services (Note 2) 12,999
- ---------------------------------------------------------------------------------------------------
Other 31,607
- ---------------------------------------------------------------------------------------------------
Total expenses 13,094,074
- ---------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (310,855)
- ---------------------------------------------------------------------------------------------------
Net expenses 12,783,219
- ---------------------------------------------------------------------------------------------------
Net investment income 56,343,458
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 22,933,306
- ---------------------------------------------------------------------------------------------------
Net realized loss on futures (Note 1) (1,750,784)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments during the period 58,164,204
- ---------------------------------------------------------------------------------------------------
Net gain on investments 79,346,726
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $135,690,184
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
January 31 July 31
1996* 1995
<S> <C> <C>
- --------------------------------------------------------------------------------------------------- -------------------
Increase in net assets
- --------------------------------------------------------------------------------------------------- -------------------
Operations:
- --------------------------------------------------------------------------------------------------- -------------------
Net investment income $ 56,343,458 $ 115,552,397
- --------------------------------------------------------------------------------------------------- -------------------
Net realized gain (loss) on investments 21,182,522 (39,422,053)
- --------------------------------------------------------------------------------------------------- -------------------
Net unrealized appreciation of investments 58,164,204 25,168,624
- --------------------------------------------------------------------------------------------------- -------------------
Net increase in net assets resulting from operations 135,690,184 101,298,968
- --------------------------------------------------------------------------------------------------- -------------------
Distributions to shareholders
- --------------------------------------------------------------------------------------------------- -------------------
From net investment income:
Class A (15,576,405) (27,401,547)
- --------------------------------------------------------------------------------------------------- -------------------
Class B (40,728,955) (87,980,365)
- --------------------------------------------------------------------------------------------------- -------------------
Class M (108,728) (43,754)
- --------------------------------------------------------------------------------------------------- -------------------
Increase from capital share transactions (Note 4) 39,339,541 43,374,216
- --------------------------------------------------------------------------------------------------- -------------------
Total increase in net assets 118,615,637 29,247,518
- --------------------------------------------------------------------------------------------------- -------------------
Net Assets
- --------------------------------------------------------------------------------------------------- -------------------
Beginning of period 1,913,796,279 1,884,548,761
- --------------------------------------------------------------------------------------------------- -------------------
End of period (including distributions in excess
of net investment income of $3,408,362
and $3,337,732, respectively) $2,032,411,916 $1,913,796,279
- --------------------------------------------------------------------------------------------------- -------------------
* Unaudited
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout the period.)
- ---------------------------------------------------------------------------------------------------------------
For the
period
December 29,
1994
Six months (commencement Six months
ended of operations) to ended Year ended
January 31 July 31 January 31 July 31
- ---------------------------------------------------------------------------------------------------------------
1996* 1995 1996* 1995
- ---------------------------------------------------------------------------------------------------------------
Class M Class A
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.13 $13.43 $14.14 $14.24
- ---------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------
Net investment income .42 .58 .45 .94
- ---------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .58 .70 .58 (.10)
- ---------------------------------------------------------------------------------------------------------------
Total from investment operations 1.00 1.28 1.03 .84
- ---------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------
From net investment income (.42) (.58) (.45) (.94)
- ---------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investment -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Total distributions (.42) (.58) (.45) (.94)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.71 $14.13 $14.72 $14.14
- ---------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 7.23(b) 9.69(b) 7.39(b) 6.24
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $4,960 $2,331 $536,797 $474,984
- ---------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) (c) .57(b) .71(b) .42(b) .87
- ---------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.91(b) 3.98(b) 3.12(b) 6.73
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 38.19(b) 60.41 38.19(b) 60.41
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (Continued)
- ---------------------------------------------------------------------------------------------------------------
For the
period
September 20
1993
(commencement Six months
of operations) to ended
July 31 January 31 Year ended July 31
- ---------------------------------------------------------------------------------------------------------------
1994 1996* 1995 1994
- ---------------------------------------------------------------------------------------------------------------
Class B
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $15.34 $14.14 $14.24 $15.01
- ---------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------
Net investment income .83 .40 .85 .86
- ---------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (.98) .58 (.10) (.65)
- ---------------------------------------------------------------------------------------------------------------
Total from investment operations (.15) .98 .75 .21
- ---------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------
From net investment income (.83) (.40) (.85) (.85)
- ---------------------------------------------------------------------------------------------------------------
In excess of net investment income (.02) -- -- (.03)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investment (.05) -- -- (.05)
- ---------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments (.05) -- -- (.05)
- ---------------------------------------------------------------------------------------------------------------
Total distributions (.95) (.40) .85 (.98)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.24 $14.72 $14.14 $14.24
- ---------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) (.99)(b) 7.04(b) 5.54 1.36
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $361,593 $1,490,655 $1,436,481 $1,522,955
- ---------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) (c) .71(b) .75(b) 1.51 1.45
- ---------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.58(b) 2.79(b) 6.10 5.76
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 44.41 38.19(b) 60.41 44.41
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (Continued)
- ------------------------------------------------------------------------------------------------
Year ended July 31
- ------------------------------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.64 $13.79 $13.87
- ------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------
Net investment income .95 .99 .99
- ------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .41 .94 (.07)
- ------------------------------------------------------------------------------------------------
Total from investment operations 1.36 1.93 .92
- ------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------
From net investment income (.95) (.99) (1.00)
- ------------------------------------------------------------------------------------------------
In excess of net investment income -- -- --
- ------------------------------------------------------------------------------------------------
From net realized gain on investment (.04) (.09) --
- ------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- --
- ------------------------------------------------------------------------------------------------
Total distributions (.99) (1.08) (1.00)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $15.01 $14.64 $13.79
- ------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 9.68 14.60 6.98
- ------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,501,535 $1,015,866 $738,113
- ------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) (c) 1.38 1.45 1.52
- ------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 6.39 7.03 7.26
- ------------------------------------------------------------------------------------------------
Portfolio turnover (%) 52.29 82.31 49.83
- ------------------------------------------------------------------------------------------------
* Unaudited
(a) Total investment return assumes dividend reinvestment
(b) Not annualized.
(c) The ratio of expenses to average net assets for the period ended January 31, 1996 included
amounts paid through expense offset arrangements. Prior period ratios exclude these amounts
(Note 2).
</TABLE>
Notes to financial statements
January 31, 1996 (Unaudited)
Note 1
Significant accounting policies
The fund is a series of Putnam Tax- Free Income Trust (the "Trust")
which is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The
fund pursues its objective of seeking high current income exempt from
federal income tax by investing primarily in high-yielding, lower rated
tax exempt securities constituting a portfolio that Putnam Management
believes does not involve undue risk to income or principal.
The fund offers class A, class B and class M shares. Class A shares are
sold with a maximum front-end sales charge of 4.75%. Class B shares,
which convert to class A shares after eight years, do not pay a front-
end sales charge, but pay a higher ongoing distribution fee than class A
shares and are subject to a contingent deferred sales charge, if those
shares are redeemed within six years of purchase. Class M shares are
sold with a maximum front-end sales charge of 3.25% and pay an ongoing
distribution fee that is lower than class B shares and higher than class
A shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
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. In addition, the
Trustees declare separate dividends on each class of shares.
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 are in conformity
with generally accepted accounting principles and require management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
A) Security valuation Tax-exempt securities 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. Short-term
investments that will mature in 60 days or less are valued at amortized
cost, which approximates market value, and restricted securities are
stated at fair value following procedures approved by the Trustees.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or which it invests to increase its current returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
D) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held and for excise tax on income and capital
gains.
E) Distributions to shareholders Income dividends are recorded daily by
the fund and are distributed monthly. Capital gain distributions if any,
are recorded on the ex-dividend date and paid annually. 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.
F) Amortization of bond premium and discount Any premium resulting from
the purchase of securities in excess of maturity value is amortized on a
yield-to-maturity basis. Discounts on zero coupon bonds and original
issue bonds are accreted according to the effective yield method.
G) Expenses of the Trust Expenses directly charged or attributable to
the fund will be paid from the assets of the fund. Generally, expenses
of the Trust will be allocated and charged to the assets of each fund on
a basis that the Trustees deem fair and equitable, which may be based on
the relative assets of each fund or the nature of the services performed
and relative applicability to each fund.
Note 2
Management fee, administrative services, and
other transactions
Compensation of Putnam Investment Management Inc. ("Putnam Management"),
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 0.65% of the first $500 million of average net assets; 0.55% of
the next $500 million; 0.50% of the next $500 million and 0.45% of any
amount over $1.5 billion.
The fee is subject to reduction, under current law, in any year to the
extent that expenses (exclusive of distribution fees, 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 excess
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 reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustees fee of $2,620 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in the fund or in other Putnam funds until distribution
in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended January 31, 1996, fund expenses were reduced by
$310,855 under expense offset arrangements with PFTC. Investor servicing
and custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested the assets utilized in connection
with the expense offset arrangements in an income producing asset if it
had not entered into such arrangements.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans 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 shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to
0.35%,1.00% and 1.00% of the average net assets attributable to class A,
class B and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.20%, 0.85% and 0.50% of the
average net assets attributable to class A, class B and class M shares
respectively.
For the six months ended January 31, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $59,859 and $1,825
from the sale of class A and class M shares, respectively and received
$1,252,658 in contingent deferred sales charges from redemptions of
class B shares. A deferred sales charge of up to 1% is assessed on
certain redemptions of class A shares. For the six months ended January
31, 1996, Putnam Mutual Funds Corp., acting as underwriter received $266
on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended January 31, 1996, purchases and sales of
investment securities other than short-term municipal obligations
aggregated $740,393,842 and $716,160,225, respectively. Purchases and
sales of short-term municipal obligations aggregated $256,682,520 and
$199,905,600, respectively. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
Note 4
Capital shares
At January 31, 1996, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended
January 31, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 4,478,634 $64,866,174
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 574,473 8,273,776
- ----------------------------------------------------
5,053,107 73,139,950
Shares
repurchased (2,176,060) (31,393,630)
- ----------------------------------------------------
Net increase 2,877,047 $41,746,320
- ----------------------------------------------------
For the year ended
July 31, 1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 12,577,731 $173,500,764
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,065,564 14,825,327
- ----------------------------------------------------
13,643,295 188,326,091
Shares
repurchased (5,436,536) (75,318,844)
- ----------------------------------------------------
Net increase 8,206,759 $113,007,247
- ----------------------------------------------------
Six months ended
January 31, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 11,224,202 $161,865,833
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,326,127 19,099,179
- ----------------------------------------------------
12,550,329 180,965,012
Shares
repurchased (12,874,055) (185,848,250)
- ----------------------------------------------------
Net (decrease) (323,726) $(4,883,238)
- ----------------------------------------------------
For the year ended
July 31, 1995
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 21,898,422 $305,485,198
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,993,689 41,602,126
- ----------------------------------------------------
24,892,111 347,087,324
Shares
repurchased (30,242,197) (419,033,947)
- ----------------------------------------------------
Net (decrease) (5,350,086) $(71,946,623)
- ----------------------------------------------------
Six months ended
January 31, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 191,534 $2,759,113
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 5,530 79,851
- ----------------------------------------------------
197,064 2,838,964
Shares
repurchased (24,811) (362,505)
- ----------------------------------------------------
Net increase 172,253 $2,476,459
- ----------------------------------------------------
For the period
December 29, 1994
(commencement of
operations) to
July 31, 1995
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 165,046 $2,314,737
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,323 32,847
- ----------------------------------------------------
167,369 2,347,584
Shares
repurchased (2,406) (33,992)
- ----------------------------------------------------
Net increase 164,963 $2,313,592
- ----------------------------------------------------
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service Seal
for the past six years. In 1995, over 146,000 tests of 56 shareholder
service components demonstrated that Putnam outperformed the industry
standard in every category.
* HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market fund or from your checking or savings
account.*
* SWITCH FUNDS EASILY
You can move money from one account to another with the same class of
shares without a service charge. (This privilege is subject to change or
termination.)
* ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day at
the then-current net asset value, which may be more or less than the
original cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a
helpful Putnam representative.
To make an additional investment in this or any other Putnam fund,
contact your financial advisor or call our toll-free number: 1-800-225-
1581.
* Regular investing of course, does not guarantee a profit or protect
against a loss in a declining market.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
legal counsel
Ropes & Gray
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
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
James E. Erickson
Vice President
Triet M. Nguyen
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Tax-Free
High Yield 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, and
the most recent copy of Putnam's Quarterly Performance Summary. For more
information, or to request a prospectus, call toll free: 1-800-225-1581.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, are not insured by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of
principal amount invested.
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ----------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- ----------------------
23313-500/036/679 3/96
