(logo)
Putnam
Pennsylvania
Tax Exempt
Income Fund
Annual
Report
February 28, 1994
(artwork)
For investors seeking high current income free from federal and
Pennsylvania personal income tax, consistent with capital
preservation
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Annual Report
7 Report of Independent Accountants
8 Portfolio of investments owned
13 Financial statements
22 Tax information
23 Fund performance supplement
24 Your Trustees
A member
of the Putnam
Family of Funds
<PAGE>
How your
fund performed
For periods ended February 28, 1994
Total return* Lehman
Fund Brothers
Class A Class B Municipal Consumer
NAV POP NAV CDSC Bond Index Price Index
1 year 5.93% 0.89% -- -- 5.54% 2.51%
3 years 35.24 28.81 -- -- 32.05 8.82
annualized 10.59 8.81 -- -- 9.71 2.86
Life-of-class**
(class A shares) 50.62 43.53 -- -- 48.4617.93
annualized 9.29 8.15 -- -- 8.95 3.64
(class B shares) -- -- 2.18% -2.77% 3.27 1.59
Share data Class A Class B
NAV POP NAV
February 28, 1993 $9.40 $9.87 --
July 15, 1993
(inception of class B shares) -- -- $9.48
February 28, 1994 $9.39 $9.86 $9.38
Distributions(a) Capital gains
12 months ended Investment Short- Long-
February 28, 1994 Number income term termTotal
Class A 13 $0.530904 $0.023 $0.002 $0.555904
Class B 8 $0.281961 $0.023 $0.002 $0.306961
Current returns
Taxable Taxable
at the end of Class A equivalent+ Class B equivalent+
the period NAV POP NAV POP NAV NAV
Current dividend
rate 5.60% 5.33% 9.54% 9.08% 4.86% 8.28%
Current 30-day
yield 5.05 4.81 8.60 8.19 4.28 7.29
<PAGE>
[FN]
*Performance data represent past results. Investment return and
principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
**The fund began operations on July 21, 1989, offering shares now
known as class A shares. On July 15, 1993, the fund began
offering class B shares. Performance for each share class will
differ.
(a) Capital gains, if any, are taxable for federal purposes. For
some investors, investment income may also be subject to the
alternative minimum tax.
+Assumes maximum combined state and federal tax rate of 41.29%.
Results for investors subject to lower tax rates would not be as
advantageous, although many would have the opportunity to receive
attractive tax benefits from a fund investment. Consult your tax
advisor for more guidance.
Terms you need to know
Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions. It may be shown at net asset value or at
public offering price.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.
Public offering price (POP) is the price of a mutual fund share
plus the maximum sales charge levied at the time of purchase.
Contingent deferred sales charge (CDSC) is a charge applied at
the time of the redemption of shares rather than the time of
purchase. It generally declines and eventually disappears over a
stated period.
Class A shares are the shares of your fund offered subject to an
initial sales charge. Your fund's POP includes the maximum 4.75%
sales charge.
Class B shares are the shares of your fund offered with no
initial sales charge. Within the first six years of purchase,
they are subject to a CDSC declining from 5% to 1%. After the
sixth year, the CDSC no longer applies.
Current dividend rate is calculated by annualizing the net
investment income paid to shareholders in the fund's most recent
distribution, then dividing by the NAV or POP on the last day of
the period.
Current 30-day yield, based only on the fund's net investment
income earnings, is calculated in accordance with Securities and
Exchange Commission guidelines.
Taxable equivalent return is the rate at which a taxable
investment would have to generate income to equal the fund's
current dividend rate or yield.
Please see the fund performance supplement on page 23 for
additional information about the fund's most recent calendar
quarter and performance comparisons.
<PAGE>
From the
Chairman
(photograph of George Putnam)
(C) Karsh, Ottawa
George Putnam
Chairman
of the Trustees
Dear Shareholder:
In the 12 months ended February 28, 1994, Putnam Pennsylvania Tax
Exempt Income Fund continued to reward shareholders with a solid
stream of tax-free income and attractive gains in total return.
The portfolio's health care holdings once again contributed
handsomely to fund performance, as did new investments in the
higher-education sector and industries that recycle waste into
energy.
Most of the period was characterized by modest U.S. economic
growth, low interest rates, and a low rate of inflation. In this
auspicious investment environment, the municipal bond market
flourished, delivering strong performance. Toward the end of
February, however, the entire fixed-income market corrected after
the Federal Reserve Board raised short-term interest rates.
Rather than view this move as the Fed seemed to intend -- a
proactive hedge against the possibility of future inflation --
investors feared that inflationary pressures had already begun to
surface.
Despite this correction, Putnam believes the municipal bond
market remains fundamentally sound and capable of continuing to
reward investors over the long term. As Fund Manager Rick Wyke
explains in the following Report from Putnam Management,
inflation is still low, and Putnam expects that going forward,
the market should have more favorable supply/demand dynamics.
Still, the near term may bring some additional market correction
as investors meet the cash demands of tax season and wait for the
true inflation picture to emerge.
We believe that Putnam's superior credit research and Rick's
careful bond selection have positioned your fund well to weather
both near- and long-term events.
Respectfully yours,
(George Putnam's signature)
George Putnam
April 20, 1994
<PAGE>
Report from
Putnam Management
During fiscal 1994, Putnam Pennsylvania Tax Exempt Income Fund
once again met its objective of providing Keystone State
investors with a dependable source of tax-exempt income. The
fund's returns become even more impressive when viewed relative
to taxable investments.
For the 12 months ended February 28, 1994, the fund provided a
total return of 5.93% for class A shares at net asset value,
ahead of the 5.54% generated by the Lehman Brothers Municipal
Bond Index. In addition, taxpayers in the highest combined
federal and Pennsylvania income tax bracket would have had to
earn yields well over 9% from a taxable investment in order to
equal the fund's dividend rate, based on net asset value of class
A shares at the end of the period. (For class B shareholders, a
taxable investment would have had to generate over 8% in order to
match the fund's dividend rate as of the same date.)
Market dynamics For much of fiscal 1994, the municipal bond
market basked in virtually ideal investment conditions. The U.S.
economy grew modestly, inflation remained low, and interest rates
continued their two-year decline. The entire fixed-income market
responded positively to this favorable climate, and Pennsylvania
municipal bonds shared in the rally.
During the last three weeks of February, the municipal bond
market experienced a sudden correction. Yields on municipal bonds
rose as prices fell, erasing the compelling relative values of
tax-exempt securities that had led them to outperform Treasuries
on an after-tax basis in the closing days of January. Despite the
market decline, municipal bonds were still performing relatively
well at the close of the period while providing investors with
the added advantage of tax-free returns.
Strong fundamentals Another key factor in the municipal bond
market's recent strength is a favorable relationship between
supply and demand. For almost two years, supply has surged to
record levels as municipalities took advantage of low interest
rates to refinance debt issued earlier at higher rates.
<PAGE>
(Line graph)
Cumulative total return on a $10,000 investment since July 21,
1989
Putnam Pennsylvania Tax Exempt Income Fund
_________ Class A shares at NAV
......... Class A shares at POP
********* Lehman Brothers Municipal Bond Index
+++++++++ Consumer Price Index
date/year CPI Lehman fund at fund at
Index Bros NAV POP
Muni Index
7/21/89 10000 10000 10000 9529
2/28/90 10289 10294 10263 9779
2/28/91 10836 11243 11138 10614
2/28/92 11142 12366 12435 11850
2/28/93 11503 14068 14219 13549
2/28/94 11793 14847 15063 14353
Past performance is no assurance of future results. Performace
of class B shares will vary from performance of class A shares
due to differences in sales charges and 12b-1 fees. For example,
$10,000 invested on July 15, 1993 subject to the maximum
contigent deferred sales charge would have been worth $9,723 if
redeemed February 28, 1994; if not redeemed, it would hjave been
worth $10,218 on 2/28/94.
In January 1994, the pace of this refinancing finally began to
ebb. Meanwhile, investor demand for municipal bonds has continued
to grow. With so many other tax shelters gone, municipal bonds
are now among the last tax refuges for investment income. With
federal tax rates rising, tax-free investing has become
increasingly important for a growing number of taxpayers. The
current after-tax yield advantage of municipal bonds has further
increased investor demand. The resulting supply/demand imbalance
helped boost bond prices for much of the period, and in turn, the
fund's net asset value.
We anticipate that this imbalance will become even more
pronounced this summer when many more municipal bonds will be
called or retired. We believe this shift in balance may lead to
stronger performance relative to taxable bonds, as well as a
continuation of the relative advantage of tax-free yields over
yields on comparable taxable investments. Investors who are fully
invested when this occurs -- such as this fund's shareholders --
could benefit from any resulting rise in bond prices. (Of course,
bond prices are determined by a number of factors, including
changes in interest rates.)
Ongoing values in health care Your fund evaluates and purchases
securities on a case-by-case basis. That said, we continue to
find a significant number of well-valued bonds in the health care
sector. In fact, health care has counted as your fund's largest
sector for more than a year, with bonds issued to finance
hospitals composing the majority of these holdings.
In selecting these issues, we have taken great care to purchase
bonds from institutions we believe will thrive in an environment
of reform. In our view, many of these bonds offer superior value.
The institutions they represent have already taken initiatives
such as cost control, facility modernization, and the
establishment of health maintenance organization alliances that
promise to become increasingly important -- no matter what form
any final legislation may take.
New opportunities In recent months, we have emphasized holdings
in the higher-education sector and invested in resource-recovery
and cogeneration facilities that convert waste into energy. The
higher-education bonds are higher-yielding credits that stand to
benefit from the mini baby boom of college-age students expected
over the next five years. Typically, higher-education bond
quality improves as college enrollments climb. Thus, these
holdings have the potential for an increase in credit quality in
addition to the solid income they now provide.
In the resource-recovery and cogeneration sectors, we have
purchased bonds issued by two companies that turn waste coal into
energy. A bulge in this sector's supply allowed us to take
advantage of some excellent prices, and given the country's new
emphasis on these environmentally oriented industries, we believe
the market will value this sector more favorably as time goes on.
Looking ahead We are maintaining our positive outlook for the
municipal bond market as a whole, although we remain cautious in
the near term. Despite the market's reaction -- or overreaction
- -- to the Federal Reserve Board's increase in short-term interest
rates, inflation is still quite low and there seems to be no real
sign that it is rising. Once the market recognizes this, we
believe it will stabilize and focus once again on the strong
fundamentals that make municipal bonds such an attractive
investment. Your fund is well positioned to participate in what
we regard as positve market prospects.
Top industry sectors (based on percentage of net assets as of
2/28/94)
(bar chart)
Hospitals/Healthcare .....................18.1%
Education ..............12.2%
Utilities .........9.6%
Housing .....6.9%
Transportation ..2.7%
<PAGE>
Putnam
Pennsylvania
Tax Exempt
Income Fund
Annual
Report
For the Year Ended February 28, 1994
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Pennsylvania Tax Exempt Income Fund
In our opinion, the accompanying statement of assets and
liabilities, including the portfolio of investments owned (except
for bond ratings), and the related statements of operations and
of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of
Putnam Pennsylvania Tax Exempt Income Fund (the "Fund") at
February 28, 1994, and the results of its operations, the changes
in its net assets, and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at
February 28, 1994 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed
above.
Price Waterhouse
Boston, Massachusetts
April 18, 1994
<PAGE>
<TABLE>
<CAPTION>
Putnam Pennsylvania Tax Exempt Income Fund
Portfolio of
investments owned
February 28, 1994
Municipal Bonds and Notes (98.4%)(a)
Principal Amount Ratings(b) Value
<S> <C> <C> <C> <C>
Pennsylvania (92.4%)
$1,000,000 Allegheny Cnty. Airport Rev. Bonds
(Pittsburgh Intl. Arpt.), Ser. C,
Municipal Bond Insurance Assoc.
(MBIA), 8 1/4s, 1/1/16 AAA $1,136,250
1,000,000 Allegheny Cnty., General Obligation (G.O.)
Bonds Ser. 17, MBIA, 9 3/8s, 3/1/12 AAA 1,078,750
1,500,000 Allegheny Cnty., Hosp. Dev. Auth. Variable
Rate Demand Note (VRDN), MBIA, 2.35s,
3/1/20 VMIG1 1,500,000
Allegheny Cnty., Hosp. Dev. Auth. Rev.
Bonds
2,000,000 (Southside Hosp. Pittsburgh), Ser. A,
8 3/4s, 6/1/10 BBB 2,152,500
1,000,000 (St. Francis Med. Ctr. Project),
American Municipal Bond Assurance Corp.
(AMBAC), 8 1/8s, 6/1/13 AAA 1,108,750
Allegheny Cnty., Indl. Dev. Auth. Arpt.
Facs. Rev. Bonds
1,245,000 (USAir Inc. Project), Ser. A, 8 7/8s,
3/1/21 Ba 1,423,969
600,000 (Southwestern Arpt. Cargo Fac.), 8 3/4s,
2/15/09 BB 653,250
1,000,000 Beaver Cnty., Indl. Dev. Auth. Poll.
Control Rev. Bonds (OH Edison Co.-Beaver
Valley), Ser. A, 10 1/2s, 10/1/15 AAA 1,117,500
1,500,000 Blair Cnty., Hosp. Auth. Rev. Bonds
(Altoona Hosp. Project), AMBAC, 6 1/2s,
7/1/22 AAA 1,597,500
Cambria Cnty., Indl. Dev. Auth. Resource
Recvy. Rev. Bonds (Cambria Cogen Project)
1,100,000 Ser. F1, 7 3/4s, 9/1/19 A 1,178,375
400,000 Ser. F2, 7 3/4s, 9/1/19 A 428,500
Chichester, School Dist. Financial
Guaranty Insurance Co. (FGIC), Ser. B
1,180,000 zero %, 3/1/10 AAA 479,375
1,220,000 zero %, 3/1/09 AAA 529,175
960,000 College Township, Indl. Dev. Auth. Hlth.
Facs. Rev. Bonds (Nittany Valley Rehab.
Hosp. Project), 7 5/8s, 11/1/07 BBB/P 1,023,600
1,000,000 Dauphin Cnty., Indl. Dev. Auth. Wtr. Rev.
Bonds (Dauphin Cons. Wtr. Supply),
Ser. A, 6.9s, 6/1/24 A 1,152,500
3,000,000 Delaware Cnty., Hlth. Care Auth. Dev.
Bonds (Mercy Hlth. Corp., Southeastern),
Ser. A, 5 1/8s, 11/15/12 AAA 2,771,250
1,000,000 Delaware Cnty., Hosp. Auth. Rev. Rfdg.
Bonds (Crozer Chester Med. Ctr.),
Ser. A, B & C of 1990, MBIA, 7 1/2s,
12/15/20 AAA 1,178,750
900,000 Delaware Cnty., Indl. Dev. Rev. Bonds
(Resource Recvy. Project), Ser. A,
8.1s, 12/1/13 AA 984,375
2,900,000 Doylestown, Hosp. Auth. Rev. Bonds (Pine
Run), Ser. A, 7.2s, 7/1/23 BBB/P 2,958,000
3,000,000 Emmaus, General Auth. Rev. Bonds (Local
Govt. Bond Pool), Ser. A, Bond Investors
Guaranty Insurance, 8.15s, 5/15/18 AAA 3,240,000
2,000,000 Erie, Higher Edl. Bldg. Auth. College Rev.
Bonds (Gannon University), 5.85s, 6/1/15 Baa 1,945,000
Erie, Higher Edl. Bldg. Auth. College Rev.
Bonds (Mercyhurst College Project)
1,150,000 7.85s, 9/15/19 AAA 1,336,875
1,000,000 Ser. A, 5 3/4s, 3/15/13 BBB 981,250
1,860,000 Ser. B, 5 3/4s, 3/15/13 BBB 1,825,125
1,360,000 Erie Cnty., Indl. Dev. Auth. Rev. Rfdg.
Bonds (Beverly Enterprises), Ser. A,
6 5/8s, 5/1/02 BB 1,377,000
6,500,000 Erie Cnty., Prison Auth. Lease Rev. Bonds,
MBIA, 6 5/8s, 11/1/14 AAA 7,271,875
750,000 Erie-Western PA Port Auth. Gen. Rev. Bonds,
8 5/8s, 6/15/10 BBB 826,875
3,500,000 Erie, Wtr. Auth. Rev. Bonds, 7 1/8s,
12/1/11 BBB 3,714,375
Falls Township, Hosp. Auth. Rev. Bonds
Federal Housing Authority (FHA) Insd.
3,000,000 7s, 8/1/22 AAA 3,273,750
2,525,000 6.9s, 8/1/11 AAA 2,805,906
1,660,000 Greene Cnty., Hosp. Auth. Rev. Bonds
(Greene Cnty. Memorial Hosp.),
6 1/2s, 1/1/02 BBB 1,645,475
3,500,000 Harrisburg, Auth. Lease Rev. Bonds
(Green Cnty. Prison Project), 6 1/4s,
6/1/10 AAA 3,797,500
550,000 Jenkins Township, Sanitary Auth. Swr. Rev.
Bonds 8s, 12/1/09 BBB/P 644,875
700,000 Lancaster Cnty., Solid Waste Management
Auth. Rev. Bonds (Resource Recvy.
Systs.), Ser. A, 8 1/2s, 12/15/10 A 805,875
2,200,000 Lebanon Cnty., Hosp. Auth Rev. Bonds
(Good Samaritan Hosp.), Ser. B,
8 1/4s, 11/1/18 BBB 2,648,250
595,000 Lehigh Cnty., G.O. Bonds, Ser. A, AMBAC,
zero %, 10/15/05 AAA 323,531
1,000,000 Lehigh Cnty., General Purpose Auth. Rev.
Bonds (Muhlenberg Hosp.), Ser. A, 8.1s,
7/15/10 AAA 1,111,250
600,000 Lehigh Cnty., Indl. Dev. Auth. Poll.
Control Rev. Bonds (PA Power and Light
Co. Project), Ser. A, 9 3/8s, 7/1/15 A 651,000
2,000,000 Luzerne Cnty., Indl. Dev. Auth. Rev. Bonds
(Gas & Wtr. Co. Project), Ser. B, 7 1/8s,
12/1/22 Baa 2,155,000
1,000,000 McKeesport, Hosp. Auth. Rev. Bonds
(McKeesport Hosp. Project), 6 1/4s,
7/1/03 Baa 1,008,750
Montgomery Cnty., Higher Ed. & Hlth. Auth.
Hosp. Rev. Bonds
2,000,000 Residual Interest Bonds (RIBS), (Abington
Hosp.), Ser. A, AMBAC, 10.755s, 6/1/11 AAA 2,375,000
1,000,000 Ser. B, 7 1/2s, 11/1/12 Ba 1,035,000
Montgomery Cnty., Indl. Dev. Auth. Poll.
Control Rev. Bonds
1,325,000 (Philadelphia Elec. Co.), Ser. A,
10 1/2s, 5/15/15 Baa 1,457,500
1,500,000 (Philadelphia Elec. Co.), Ser. B, MBIA,
6.7s, 12/1/21 Baa 1,608,750
1,000,000 Northeastern, PA Hosp. & Ed. Auth. College
Rev. Bonds (Kings College Project),
Ser. B, 6s, 7/15/11 BBB 996,250
1,750,000 PA Certif. of Participation, 6 1/4s,
11/1/06 AAA 1,885,625
2,000,000 PA EDA Res. Resource Recvy. Rev. Bonds,
6 1/2s, 1/1/13 BB 1,997,500
10,100,000 PA Fin. Auth. Rev. Bonds, (Muni Capital
Impt. Program), 6.6s, 11/1/09 A 10,529,250
2,400,000 PA Higher Edl. Assistance Agcy. Student
Loan RIBS Ser. B, MBIA, 12.258s, 3/1/20 AAA 2,790,000
PA Higher Edl. Facs. Auth. College & U.
Rev. Bonds
500,000 9s, 11/1/09 A 551,875
1,300,000 (Med. College), Ser. A, 8 3/8s, 3/1/11 Baa 1,467,375
2,500,000 (Duquesne U. Project), Ser. C, MBIA,
6 3/4s, 4/1/20 AAA 2,703,125
1,500,000 (Duquesne U. Project), MBIA, 6.35s,
1/15/17 AAA 1,575,000
2,600,000 (Allegheny College Project), Ser. B,
6 1/8s, 11/1/13 BBB 2,619,500
3,850,000 PA Higher Ed. Assistance Agcy. Student
Loan RIBS, AMBAC, 9.476s, 3/1/22 AAA 3,979,938
PA Hsg. Fin. Agcy. Single Fam. Mtge.
Rev. Bonds
825,000 Ser. R, 8 1/8s, 10/1/19 AA 868,312
385,000 Ser. U, 7.8s, 10/1/20 AA 419,650
400,000 Ser. 29, 7 3/8s, 10/1/16 AA 429,000
2,000,000 Ser. 33, 6.9s, 4/1/17 AA 2,147,500
2,000,000 4s, stepped-coupon (6.1s, 4/1/04),
10/1/13(c) AA 1,710,000
3,000,000 PA Intergovernmental Co-op Auth. Spl.
Tax Rev. Bonds, Ser. A, MBIA, 5s,
6/15/22 AAA 2,685,000
1,700,000 PA Pooled Fin. Auth. Lease RIBS, MBIA,
11.54s, 11/1/09 (acquired 11/29/90,
cost $1,789,250)(d) AAA 1,725,500
4,000,000 PA Rfdg. & Projects Rev. Bonds, 1st Ser.,
5s, 4/15/07 AA 3,900,000
PA Tpk. Comm. Rev. Bonds
1,000,000 Ser. L, FGIC, 6 1/2s, 12/1/13 AAA 1,058,750
2,000,000 Ser. M, MBIA, 6s, 6/1/15 AAA 2,040,000
2,000,000 Penn Hills, G.O. Bonds, AMBAC 5 7/8s,
12/1/15 AAA 2,050,000
1,875,000 Pennsbury, School Dist. Rev. Bonds, AMBAC,
zero %, 1/15/04 AAA 1,122,656
4,000,000 Philadelphia Penn Gas Wks. Rev. Bonds,
7.615s, 8/1/21 (acquired 1/24/94,
cost $3,747,680)(d) AAA 3,510,000
1,000,000 Philadelphia, G.O. Bonds, FGIC, 8 1/4s,
2/15/09 AAA 1,102,500
Philadelphia, Gas Works Rev. Bonds
1,225,000 Ser. 13, 7.7s, 6/15/21 BBB 1,462,343
2,250,000 Ser. 14A, 6 3/8s, 7/1/14 BBB 2,331,563
1,000,000 Philadelphia, Muni. Auth. Rev. Justice
Lease Bonds, FGIC, Ser. B, 7 1/8s,
11/15/18 AAA 1,165,000
1,000,000 Philadelphia, School Dist. Rev. Bonds,
Ser. A, AMBAC zero %, 7/1/01 AAA 703,750
Philadelphia, Wtr. & Swr. Rev. Bonds
3,250,000 Capital Guaranty Insurance Co. (CGIC),
Ser. 16, 7s, 8/1/21 AAA 3,745,625
3,000,000 Philadelphia, PA Wtr. & Wastewater Rev.
Bonds (CGIC), 5s, 6/15/16 AAA 2,722,500
500,000 Linked Floater Annuity FGIC, 4.8s, 6/15/05
(acquired 8/18/93, cost $209,650)(d) AAA 215,000
3,130,000 Philadelphia, Muni-Auth. Rev. Bonds, FGIC,
7.8s, 4/1/18 AAA 3,697,312
320,000 Philadelphia, Muni-Auth. Rev. Bonds, FGIC,
7.8s, 4/1/18 AAA 365,600
2,000,000 Pittsburgh, G.O. Bonds Ser. D, AMBAC,
6 1/8s, 9/1/17 AAA 2,097,500
2,000,000 Schuylkill, Cnty., Indl. Dev. Auth. Rev.
Bonds (Schuylkill Energy Res.), Ser. B,
6 1/2s, 1/1/10 BB/P 1,982,500
2,600,000 Schuylkill, Cnty., Indl. Dev. Auth. VRDN
(Westwood Energy Ppty.), 3 1/2s, 11/1/09 AA 2,600,000
1,000,000 Schuylkill, Cnty., Redev. Auth. Lease Rev.
Bonds, Ser. A, FGIC, 7 1/8s, 6/1/13 AAA 1,161,250
3,000,000 Scranton, Lackawanna Hlth. & Welfare Rev.
Bonds (Moses Taylor Hosp. Project),
Ser. B, 8 1/2s, 7/1/20 BBB 3,420,000
1,000,000 Smithfield, Swr. Auth. Rev. Gtd. Bonds,
8 5/8s, 1/15/11 BB/P 1,227,500
2,500,000 Somerset Cnty., Gen. Auth. Cmnwlth. Lease
Rev. Bonds FGIC, 6 1/4s, 10/15/11 AAA 2,737,500
500,000 Washington Cnty., Indl. Dev. Auth. 1st
Mtge. Rev. Bonds (AHF/Central States
Inc. Project), 10 1/4s, 11/1/19 B/P 500,000
1,760,000 Washington Cnty., Indl. Dev. Auth. Rev.
Bonds (Presbyterian Med. Ctr.), FHA
Insd., 6 3/4s, 1/15/23 AAA 1,894,200
1,800,000 Wilkins Area, Indl. Dev. Auth. 1st Mtge.
Rev. Bonds (Fairview Extended Care),
Ser. A, 10 1/4s, 1/1/21 BB/P 1,971,000
1,030,000 York Cnty., Hosp. Auth. Rev. Bonds (Hlth.
Ctr. Village at Sprenkle Dr.), Ser. A,
7 3/4s, 4/1/21 BBB/P 1,090,513
1,925,000 (Rehab. Hosp. of York Project), 7 1/2s,
9/1/07 BBB/P 2,038,094
York Cnty., Solid Waste & Refuse Auth.
Indl. Dev. Rev. Bonds (Resource Recvy.
Project)
650,000 Ser. A, 8.2s, 12/1/14 AA 730,438
300,000 Ser. B, 8.1s, 12/1/07 AA 335,625
170,377,275
Puerto Rico (6.0%)
Cmnwlth. of Puerto Rico, G.O. Rev. Bonds
1,000,000 MBIA, RIBS, 9.084s, 7/1/08 AAA 1,116,250
450,000 7 3/4s, 7/1/17 AAA 528,188
200,000 7 3/4s, 7/1/13 AAA 231,500
2,150,000 7.7s, 7/1/20 AAA 2,563,875
Cmnwlth. of Puerto Rico, Hwy. Auth. Rev.
Bonds
200,000 Ser. P, 8 1/8s, 7/1/13 AAA 234,500
250,000 Ser. O, 8s, 7/1/05 AAA 291,875
900,000 Ser. Q, 7 3/4s, 7/1/16 AAA 1,075,500
2,500,000 Ser. Q, 7 3/4s, 7/1/10 AAA 2,987,500
575,000 Cmnwlth. of Puerto Rico, Auth. Urban
Renewal & Hsg. Corp. Rev. Bonds, 7 7/8s,
10/1/04 A 661,250
1,200,000 Puerto Rico, Pub. Bldg. Auth. Ed. & Hlth.
Fac. Rev. Bonds Ser. H, 7 7/8s, 7/1/16 AAA 1,368,000
11,058,438
Total Investments (cost $170,098,634)(e) $181,435,713
<FN>
(a) Percentages indicated are based on total net assets of $184,389,370, which correspond
to a net asset value per class A share of $9.39 and class B share of $9.38, respectively.
(b) The Moody's or Standard & Poor's ratings indicated are believed to be the most recent
ratings available at February 28, 1994 for the securities listed. Ratings are generally
ascribed to securities at the time of issuance. While the agencies may from time to time
revise such ratings, they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these securities at February 28,
1994. Securities rated by Putnam are indicated by "/P" and are not publicly rated. Ratings
are not covered by the Report of Independent Accountants.
(c) The interest rate and date shown parenthetically represent the new interest to be paid
and the date the Fund will begin accruing this rate.
(d) Restricted as to public resale. At the date of acquisition these securities were
valued at cost. There were no unrestricted securities of the same class as that held.
Total market value of restricted securities owned at February 28, 1994 was $5,450,500 or
3% of net assets.
(e) The aggregate identified cost for federal income tax purposes is $170,098,634
resulting in gross unrealized appreciation and depreciation of $12,364,647 and $1,027,568,
respectively, or net unrealized appreciation of $11,337,079.
</FN>
The rates shown on Variable Rate Demand Notes (VDRN), Residual Interest Bonds (RIBS) and
Stepped-Coupon Bonds are the current interest rates at February 28, 1994 which are subject
to change based on the terms of the security.
The Fund had the following industry concentrations greater than 10% at February 28, 1994
(as a percentage of net assets):
Hospitals/Health Care 18.1%
Education 12.2
The Fund had the following insurance concentrations greater than 10% at February 28, 1994
(as a percentage of net assets):
MBIA 15.4%
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
assets and liabilities
February 28, 1994
<S> <C> <C>
Assets
Investments in securities, at value (identified cost
$170,098,634) (Note 1) $181,435,713
Cash 2,621,824
Interest receivable 3,065,393
Receivable for shares of the Fund sold 1,065,961
Unamortized organization expenses (Note 1) 11,066
Total assets 188,199,957
Liabilities
Payable for securities purchased $2,604,535
Distributions payable to shareholders 427,543
Payable for shares of the Fund repurchased 313,195
Payable for compensation of Manager (Note 2) 268,745
Payable for administrative services (Note 2) 1,008
Payable for compensation of Trustees (Note 2) 218
Payable for investor servicing and custodian fees
(Note 2) 30,536
Payable for distribution fees (Note 2) 65,922
Other accrued expenses 98,885
Total liabilities 3,810,587
Net assets $184,389,370
<PAGE>
Represented by
Paid-in capital (Notes 4 and 5) $172,878,117
Undistributed net investment income 4,404
Accumulated net realized gain on investments and futures
transactions 169,770
Net unrealized appreciation of investments 11,337,079
Total -- Representing net assets applicable to capital
shares outstanding $184,389,370
Computation of net asset value
Net asset value and redemption price per class A share
($171,756,748 divided by 18,296,064 shares) $9.39
-----
Offering price per class A share (100/95.25 of $9.39)* $9.86
Net asset value and offering price per class B share
($12,632,622 divided by 1,346,295 shares)** $9.38
<FN>
*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.
**The redemption price per share is equal to the net asset value less any applicable
contingent deferred sales charge.
</FN>
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
operations
Year ended February 28, 1994
<S> <C> <C>
Tax exempt interest income $10,739,884
Expenses:
Compensation of Manager (Note 2) $990,690
Investor servicing and custodian fees (Note 2) 152,278
Compensation of Trustees (Note 2) 12,606
Auditing 19,029
Legal 23,520
Postage 56,897
Reports to shareholders 38,267
Administrative services (Note 2) 5,536
Distribution fees -- class A (Note 2) 216,220
Distribution fees -- class B (Note 2) 32,062
Registration fees 14,355
Amortization of organization expenses (Note 1) 15,597
Other 5,560
Total expenses 1,582,617
Net investment income 9,157,267
Net realized gain on investments (Notes 1 and 3) 579,413
Net realized gain on futures contracts (Notes 1 and 3) 2,082
Net unrealized depreciation of investments during the year (643,257)
Net loss on investments (61,762)
Net increase in net assets resulting from operations $9,095,505
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
changes in net assets
Year ended February 28
--------------------------
1994 1993
<S> <C> <C>
Increase in net assets
Operations:
Net investment income $9,157,267 $7,305,170
Net realized gain on investments 579,413 186,802
Net realized gain (loss) on futures contracts 2,082 (95,211)
Net unrealized appreciation (depreciation) of
investments (643,257) 8,864,423
Net increase in net assets resulting from
operations 9,095,505 16,261,184
Distributions to shareholders from:
Net Investment income
Class A (9,026,558) (7,272,942)
Class B (170,225) --
Net realized gain on investments
Class A (438,817) (70,279)
Class B (15,999) --
Increase from capital share transactions
(Note 4) 40,571,165 42,370,147
Total increase in net assets 40,015,071 51,288,110
Net assets
Beginning of year 144,374,299 93,086,189
End of year (including undistributed
net investment income of $4,404 and
$33,138, respectively) $184,389,370 $144,374,299
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial
Highlights*
(For a share outstanding throughout the period)
For the period For the period
July 15, 1993 July 21, 1989
(commencement (commencement
of operations) to Year ended of operation
----------------- ------------------------------------------------
February 28 February 28 February 28February 29 February 28 February 28
----------------- ----------- ---------------------- ----------- -----------------
1994 1994 1993 1992 1991 1990
----------------- ----------------------------------
Class B Class A
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.48 $9.40 $8.76 $8.42 $8.36 $8.50
Investment Operations
Net Investment Income .28 .54 .57(a) .61(a) .62(a) .36(a)
Net Realized and Unrealized Gain (Loss)
on Investments (.08) (.01) .65 .34 .06 (.14)
Total from Investment Operations .20 .55 1.22 .95 .68 .22
Less Distributions from:
Net Investment Income (.28) (.54) (.57) (.61) (.62) (.36)
Net Realized Gain on Investments (.02) (.02) (.01) -- -- --
Total Distributions (.30) (.56) (.58) (.61) (.62) (.36)
Net Asset Value, End of Period $9.38 $9.39 $9.40 $8.76 $8.42 $8.36
Total Investment Return at Net Asset
Value (%)(b) 3.46(c) 5.93 14.34 11.65 8.53 4.30(c)
Net Assets, End of Period (in thousands) $12,633 $171,757 $144,374 $93,086 $47,112 $19,203
Ratio of Expenses to Average
Net Assets (%) 1.60(c) .91 .72(a) .52(a) .41(a) .79(
Ratio of Net Investment Income to Average
Net Assets (%) 4.63(c) 5.36 6.31(a) 6.98(a) 7.43(a) 6.96(a)(c)
Portfolio Turnover (%) 15.65(d) 15.65 12.26 3.30 9.01 4.41(d)
<FN>
*Financial highlights for periods ended through February 28, 1993 have been restated to conform with requirements issued
by the SEC in April, 1993.
(a) Reflects a voluntary expense limitation. As a result, net investment income for the years ended February 28, 1993,
the year ended February 28, 1992, the year ended February 28, 1991 and the period ended February 28, 1990, reflects
expense reductions of approximately $0.01, $0.04, $0.06 and $0.05 per share, respectively.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Annualized.
(d) Not annualized.
</FN>
/TABLE
<PAGE>
Notes to
financial statements
February 28, 1994
Note 1 Significant accounting policies
The Fund is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment
company. The Fund seeks as high a level of current income exempt
from federal income tax and Pennsylvania personal income tax as
Putnam Management believes is consistent with preservation of
capital by investing primarily in a diversified portfolio of
Pennsylvania tax-exempt securities.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles.
The Fund offers both class A and class B shares. The Fund
commenced its public offering of Class B shares on July 15, 1993.
Class A shares are sold with a maximum front-end sales charge of
4.75%. Class B shares do not pay a front-end sales charge but pay
a higher ongoing distribution fee than class A shares, and may be
subject to a contingent deferred sales charge if those shares are
redeemed within six years of purchase. Expenses of the Fund are
borne pro-rata by the holders of both classes of shares, except
that each class bears expenses unique to that class (including
the distribution fees applicable to such class) and votes as a
class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by
the Trustees. Shares of each class would receive their pro-rata
share of the net assets of the Fund if the Fund were liquidated.
In addition, the Trustees declare separate dividends on each
class of shares.
A) Security valuation Tax-exempt bonds and notes are stated on
the basis of valuations provided by a pricing service, approved
by the Trustees, which uses information with respect to
transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships
between securities in determining value. The fair value of
restricted securities is determined by the Manager following
procedures approved by the Trustees, and such valuations and
procedures are reviewed periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order
to buy or sell is executed). Interest income is recorded on the
accrual basis.
<PAGE>
C) Futures and index futures A futures contract is an agreement
between two parties to buy and sell a security at a set price on
a future date. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price
agreed upon when the contract is made. Upon entering into such a
contract, the Fund is required to pledge to the broker an amount
of cash or tax-exempt securities equal to the minimum "initial
margin" requirements of the futures exchange. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as "variation
margin," and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it
was closed. The potential risk to the Fund is that the change in
value of the underlying securities may not correspond to the
change in value of the futures contracts.
D) 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 of securities
held and excise tax on income and capital gains.
E) Distributions to shareholders Income dividends are recorded
daily by the Fund and are distributed monthly. Capital gains
distributions, if any, are recorded on the ex-dividend date and
paid annually or as necessary to meet the distribution
requirements described above.
F) Amortization of bond premium and discount Any premium
resulting from the purchase of securities is amortized using the
effective yield method for bonds issued after September 27, 1985,
and on a straight-line basis for bonds issued prior thereto. The
premium in excess of the call price, if any, is amortized to the
call date: thereafter, the remaining excess premium is amortized
to maturity. Discount on zero-coupon bonds is accreted according
to the effective yield method.
G) Unamortized organization expenses Expenses incurred by the
Fund in connection with its organization, its registration with
the Securities and Exchange Commission and with various states,
and the initial public offering of its shares aggregated $60,484.
These expenses are being amortized over a five-year period based
on current and projected net asset levels.
<PAGE>
Note 2 Management fee, administrative services, and other
transactions
Compensation of Putnam Investment Management, Inc. (formerly
known as the Putnam Management Company, Inc.), the Fund's
Manager, a wholly-owned subsidiary of Putnam Investments, Inc.
(formerly known as The Putnam Companies, Inc.), for management
and investment advisory services is paid quarterly based on the
average net assets of the Fund for the quarter. Such fee is based
on the following annual rates: 0.6% of the first $500 million of
average net assets, 0.5% of the next $500 million, 0.45% of the
next $500 million and 0.4% of any amount over $1.5 billion
subject to reduction in any year to the extent of certain
brokerage commissions and fees (less expenses) received by
affiliates of the Manager on the Fund's portfolio transactions.
The Fund also reimburses the Manager for the compensation and
related expenses of certain officers of the Fund and their staff
who provide administrative services to the Fund. The aggregate
amount of all such reimbursements is determined annually by the
Trustees. For the year ended February 28, 1994, the Fund paid
$5,536 for these services.
Trustees of the Fund receive an annual Trustee's fee of $1,070
and an additional fee for each Trustees' meeting attended.
Trustees who are not interested persons of the Manager and who
serve on committees of the Trustees receive additional fees for
attendance at certain committee meetings.
Custodial functions for the Fund are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam
Investor Services, a division of PFTC. Fees paid for these
investor servicing and custodial functions for the year ended
February 28, 1994 amounted to $152,278. Investor servicing and
custodian fees reported in the Statement of operations for the
year ended February 28, 1994 have been reduced by credits allowed
by PFTC.
The Fund has adopted a distribution plan with respect to class A
shares (the "class A Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the class A Plan
is to compensate Putnam Mutual Funds Corp., a wholly-owned
subsidiary of Putnam Investments, Inc., for services provided and
expenses incurred by it in distributing class A shares. The
Trustees have approved payment by the Fund to Putnam Mutual Funds
Corp. at an annual rate of 0.20% of the Fund's average net assets
attributable to class A shares. For the year ended February 28,
1994, the Fund paid $216,220 in distribution fees for class A
shares.
During the year ended February 28, 1994, Putnam Mutual Funds
Corp. (formerly known as Putnam Financial Services, Inc.), a
wholly-owned subsidiary of Putnam Investments, Inc., acting as an
underwriter, received net commissions of $75,566 from the sale of
class A shares of the Fund.
A deferred sales charge of up to 1.00% is assessed on certain
redemptions of class A shares purchased as part of an investment
of $1 million or more. For the year ended February 28, 1994,
Putnam Mutual Funds Corp., acting as an underwriter, received
$640 in contingent deferred sales charges on such redemptions.
The Fund has adopted a distribution plan with respect to class B
shares (the "class B Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the class B Plan
is to compensate Putnam Mutual Funds Corp. for services provided
and expenses incurred by it in distributing class B shares. The
class B Plan provides for payments by the Fund to Putnam Mutual
Funds Corp. at an annual rate of up to 0.85% of the Fund's
average net assets attributable to class B shares. For the period
ended February 28, 1994, the Fund paid Putnam Mutual Funds Corp.
distribution fees of $32,062 for class B shares.
Putnam Mutual Funds Corp. also receives the proceeds on the
contingent deferred sales charges on its class B share
redemptions within six years of purchase. The charge is based on
declining rates, which begin at 5.00% of the net asset value of
the redeemed shares. For the period ended February 28, 1994,
Putnam Mutual Funds Corp., acting as an underwriter, received
$2,473 in contingent deferred sales charges from redemptions.
Note 3 Purchases and sales of securities
During the year ended February 28, 1994, purchases and sales of
investment securities other than short-term municipal obligations
aggregated $61,354,988 and $25,156,636, respectively. Purchases
and sales of short-term municipal obligations aggregated
$12,100,000 and $9,000,000, respectively. In determining the net
gain or loss on securities sold, the cost of securities has been
determined on the identified cost basis.
The following is a summary of futures contracts activity during
the year:
Purchases of Futures Contracts
------------------------------
Number of Aggregate
Contracts Face Value
Contracts opened 45 $4,625,025
Contracts closed (45) (4,625,025)
Open at end of year -- $--
<PAGE>
<TABLE>
<CAPTION>
Note 4 Capital shares
At February 28, 1994, there was an unlimited number of shares of beneficial interest
authorized divided into two classes, Class A and Class B Capital stock. Transactions in
capital shares were as follows:
Year ended Year ended
February 28, 1994 February 29, 1993
----------------------- -----------------------
Class A Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 4,612,523 $43,626,301 5,977,007 $53,494,339
Shares issued in
connection with
reinvestment of
distributions 554,144 5,240,173 441,376 3,960,202
5,166,667 48,866,474 6,418,383 57,454,541
Shares repurchased (2,227,002) (21,139,190) (1,689,850) (15,084,394)
Net increase 2,939,665 $27,727,284 4,728,533 $42,370,147
July 15, 1993 (commencement
of operations) to
February 28, 1994
---------------------------
Class B Shares Amount
Shares sold 1,365,905 $13,030,991
Shares issued in connection with reinvestment
of distributions 10,492 99,743
1,376,397 13,130,734
Shares repurchased (30,102) (286,853)
Net increase 1,346,295 $12,843,881
/TABLE
<PAGE>
Note 5 Reclassification of Capital Accounts
Effective March 1, 1993, Putnam Pennsylvania Tax Exempt Income
Fund has adopted the provisions of Statement of Position 93-2
"Determination, Disclosure and Financial Statement Presentation
of Income, Capital Gain and Return of Capital Distributions by
Investment Companies (SOP). The purpose of this SOP is to report
the accumulated net investment income (loss) and accumulated net
realized gain (loss) accounts in such a manner as to approximate
amounts available for future distributions (or to offset future
realized capital gains) and to achieve uniformity in the
presentation of distributions by investment companies.
As a result of the SOP, the Fund has reclassified $10,782,
reducing distributions in excess of net investment income and
decreasing additonal paid-in capital.
These adjustments represent the cumulative amounts necessary to
report these balances through February 28, 1993, the close of the
Fund's most recent fiscal year-end, for the financial reporting
and tax purposes
Tax information
The Fund has designated all dividends paid during the fiscal year
as exempt-interest dividends. Thus, 100% of these distributions
are exempt from federal income tax. For residents of the state of
Pennsylvania, 100% of the Fund's distributions are also exempt
from Pennsylvania personal income tax.
The Fund also paid long-term capital gains distribution of $0.002
and $0.002 per share and short-term capital gains of $0.023 and
$0.023 on November 29, 1993 on class A and class B shares,
respectively. This amount was previously reported to you on Form
1099 in January 1994. Any additional capital gains paid
subsequent to February 28, 1994 will be reported to you on the
Form 1099 you will receive in January 1995.
Fund performance supplement
Putnam Pennsylvania Tax Exempt Income Fund is a portfolio managed
for high current income, exempt from federal income taxes,
consistent with capital preservation. This fund invests at least
75% of its portfolio in investment-grade tax-exempt bonds. The
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 from the fund. The Consumer Price Index is a
commonly used measure of inflation; it does not represent an
investment return.
The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and
the indexes used for performance comparisons. The information is
not part of the portfolio of investments owned or the financial
statements.
Total return at end of most recent calendar quarter
Periods ended March 31, 1994
Cumulative Annualized
NAV POP NAV POP
1 year 3.09% -1.78% -- --
3 years 29.98 23.78 9.13% 7.37%
Life-of-class
(class A shares) 45.13 38.30 8.27 7.16
(class B shares) -1.60 -6.34 -- --
The fund began operations on July 21, 1989, offering shares now
known as class A shares. On July 15, 1993, the fund began
offering class B shares. Performance for each share class will
differ.
<PAGE>
Putnam
Pennsylvania
Tax Exempt
Income Fund
Fund information
Investment manager
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
Marketing services
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
Independent accountants
Price Waterhouse
(DALBAR logo)
Putnam Investor Services has received the DALBAR award each year
since the award's 1990 inception. In more than 10,000 tests of
38 shareholder service components, Putnam outperformed the
industry standard in every category.
24/99-11524<PAGE>
Officers
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
James Erickson
Vice President
Richard Wyke
Vice President
and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
Trustees
George Putnam, Chairman,
William F. Pounds, Vice Chairman,
Jameson Adkins Baxter, Hans H. Estin,
John A. Hill, Elizabeth T. Kennan,
Lawrence J. Lasser, Robert E. Patterson,
Donald S. Perkins, George Putnam, III,
A.J.C. Smith, W. Nicholas Thorndike
This report is for the information of shareholders of Putnam
Pennsylvania Tax Exempt Income Fund. It may also be used as sales
literature when preceded or accompanied by the current
prospectus, which gives details of sales charges, investment
objectives and operating policies of the fund.
<PAGE>
- ---------------
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
- ---------------
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS:
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.
<PAGE>
