Putnam
Ohio
Tax Exempt
Income Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
11-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
Putnam Ohio Tax Exempt Income Fund's recently concluded semiannual
period coincided with some of the more anxiety-driven times in recent
memory. Uncertainties about the Federal Reserve Board's stance on
interest rates, the slowing pace of the economy, and the aftermath of
the presidential election contributed to the general sense of unease.
Typically, in such an environment, investors are drawn to the relative
security of fixed-income investments. In this case, they have also been
increasingly drawn to the tax advantages of municipal bonds, helping to
boost demand in the face of a diminishing supply. Consequently, your
fund, which had been under some pressure for much of its 2000 fiscal
year, begins fiscal 2001 with solid performance.
Seasoned investors realize that uncertainties such as we have recently
experienced are usually transitory and that eventually the market's mood
will take a turn for the better. Your fund's manager, Susan McCormack,
successfully positioned the fund to benefit as the market transitioned
into a more favorable climate. We are confident that her strategies will
enable it to take full advantages of the opportunities available in
fiscal 2001.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
January 17, 2001
REPORT FROM FUND MANAGEMENT
Susan McCormack
The winds of change began to favor the municipal bond market during the
past six months. As nervous investors fled the stock market in pursuit
of safer havens, demand for municipal bonds increased and their
performance improved. Other factors contributed to a more favorable
environment for fixed-income securities in general. The dissipation of
inflation fears and the Federal Reserve Board's transition to a
self-imposed holding pattern led to a decline in interest rates. The
Treasury yield curve, which had become inverted when short-term
securities were generating higher yields than longer-term bonds,
gradually normalized. The municipal yield curve moved somewhat in
sympathy and municipal bond prices rose. Against this backdrop, Putnam
Ohio Tax Exempt Income Fund posted modest gains for the six months ended
November 30, 2000.
Total return for 6 months ended 11/30/00
Class A Class B Class M
NAV POP NAV CDSC NAV POP
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6.39% 1.38% 6.05% 1.05% 6.23% 2.76%
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Past performance is no indication of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 5.
* CREDIT YIELD SPREADS REMAINED WIDE THROUGHOUT PERIOD
As your fund entered fiscal 2001 in early June, the municipal bond
market was experiencing downward pressure. The difference in yield among
bonds of different credit quality was extremely wide, due in large part
to heavy redemptions from municipal bond funds as investors pursued
fast-rising stocks. Adverse developments in the health-care sector had
further dampened the performance of many lower-rated credits. The Fed's
policy of monetary tightening had taken its toll as well. In order to
attract buyers, many municipal issuers had ratcheted up yields, which
pushed bond prices down.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Health care 18.4%
Education 16.2%
Water and sewer 13.0%
Transportation 10.2%
Housing 6.3%
Footnote reads:
*Based on net assets as of 11/30/00. Holdings will vary over time.
Throughout the period, credit quality spreads remained wide, even though
the Fed halted its tightening efforts, the economy began to cool, and
cash outflows from bond funds declined. As investors returned to the
municipal bond market, they heavily favored the highest-quality bonds.
Consequently, the prices of lower-rated securities remained extremely
attractive.
Prior to and throughout the semiannual period, we laid the groundwork
for your fund to participate in an eventual municipal bond market
recovery. Relying on Putnam's comprehensive credit research abilities,
we selectively purchased lower-grade bonds that stand to benefit should
the turnaround continue.
* PUERTO RICO BONDS INCREASE FUND'S INCOME LEVEL
Because of Putnam's in-depth analysis, we are comfortable with owning
securities that are either at the lowest end of the investment-grade
spectrum or are below investment grade. These higher-yielding issues
help sustain your fund's high level of tax-exempt income. Several new
purchases are worth noting, including bonds issued by Puerto Rico
Industrial, Tourist, Educational, Medical, and Environmental Control
Facilities Financing Authority. Proceeds were used to finance
construction of a coal-fired power plant that will help ease the
island's power shortage. The bond is rated at the lowest end of the
investment-grade spectrum by Moody's and Fitch, and has a stated coupon
of 6.625% with a maturity date in 2026. This bond and other Puerto Rico
bonds have performed well because the demand for Puerto Rico debt
remains high. Your fund is free to purchase Puerto Rico debt because the
dividends of all U.S. territory and commonwealth securities pass
tax-free to U.S. investors. Owning such issues adds another layer of
diversification to the fund's portfolio.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
Aaa/AAA -- 49.7%
Aa/AA -- 14.0%
A -- 4.3%
Baa/BBB -- 26.4%
Ba/BB -- 5.6%
Footnote reads:
*As a percentage of market value as of 11/30/00. A bond rated Baa/BBB or
higher is considered investment grade. Percentages may include unrated
bonds considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
* HIGH-GRADE, LONG-TERM BONDS WERE STRONGEST PERFORMERS
As investors' appetite for higher-quality bonds continued to build,
bonds with the highest credit ratings strengthened. When it became clear
that stock-market volatility would not end soon, we searched for
high-quality long-term bonds with low or discount coupons and longer
call dates. Discount coupon bonds, those selling at prices below par or
face value, tend to perform best when interest rates are declining. The
longer-term call structure of these bonds offered your fund a greater
measure of call protection. Many bonds carry the option of being called
back by the issuer at a specific date, should interest rate levels favor
such a move.
"Over the period, we focused on buying bonds that exhibited the most
favorable coupon, maturity, and quality structure for the current
climate."
-- Susan McCormack, portfolio manager, Putnam Ohio Tax Exempt Income Fund
During the period, your fund made several new purchases of this type,
including $1.4 million worth of general obligation bonds issued by
Cuyahoga County. These new bonds mature in 2018, and have a coupon of
5.00%. When adding both higher-grade and lower-rated securities to your
fund's portfolio, we remained broadly diversified across credit and
industry sectors.
"For investors tired of seesawing in the stock markets, some cautious
investments in bonds may be just the ticket."
-- Business Week, November 15, 2000
Two other holdings that performed well during the period include Oberlin
College and Case Western Reserve University, two educational
institutions that are benefiting from increased student enrollment.
While these holdings, along with others discussed in this report, were
viewed favorably at the end of the period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may
vary in the future.
* FISCAL 2001 APPEARS LIKELY TO CONTINUE FAVORABLY
While some investors and financial pundits are now beginning to worry
that the economic slowdown may become too severe, we are encouraged by
the Fed's long history of proactivity. In reponse to the growing
recessionary fears, the Fed made a bold move and cut the Fed Funds rate
by 50 basis points, the first interest rate cut in two years. Should
interest rates continue to decline and investors continue their
commitment to the municipal bond market, Putnam Ohio Tax Exempt Income
Fund is positioned to benefit.
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 11/30/00, there is no guarantee the fund
will continue to hold these securities in the future.
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing regulations
for semiannual and annual reports and prospectuses. Putnam is now able to send
a single copy of these materials to customers who share the same address. This
change will automatically apply to all shareholders except those who notify us.
If you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
PERFORMANCE SUMMARY
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Ohio Tax Exempt Income Fund is designed for investors seeking a high
level of current income free from federal and Ohio state income tax
consistent with capital preservation.
TOTAL RETURN FOR PERIODS ENDED 11/30/00
Class A Class B Class M
(inception dates) (10/23/89) (7/15/93) (4/3/95)
NAV POP NAV CDSC NAV POP
------------------------------------------------------------------------------
6 months 6.39% 1.38% 6.05% 1.05% 6.23% 2.76%
------------------------------------------------------------------------------
1 year 6.55 1.54 5.86 0.86 6.22 2.72
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5 years 23.00 17.21 19.17 17.28 21.13 17.15
Annual average 4.23 3.23 3.57 3.24 3.91 3.22
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10 years 82.52 73.88 69.96 69.96 76.32 70.56
Annual average 6.20 5.69 5.45 5.45 5.83 5.48
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Annual average
(life of fund) 6.23 5.77 5.45 5.45 5.84 5.53
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 11/30/00
Lehman Brothers Municipal Consumer
Bond Index price index
--------------------------------------------------------------------
6 months 7.08% 1.57%
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1 year 8.18 3.44
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5 years 30.88 13.26
Annual average 5.53 2.52
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10 years 98.76 30.19
Annual average 7.11 2.67
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Annual average
(life of fund) 7.28 3.00
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Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 4.75% and
3.25%, respectively. Class B share returns for the 1-year, 5- and
10-year, if available, and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their
inception are derived from the historical performance of class A shares,
adjusted to reflect both the initial sales charge or CDSC, if any,
currently applicable to each class and in the case of class B and class
M shares the higher operating expenses applicable to such shares. All
returns assume reinvestment of distributions at NAV. 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. Performance
data reflects an expense limitation currently in effect, without which
returns would have been lower.
PRICE AND DISTRIBUTION INFORMATION FOR THE PERIOD ENDED 11/30/00
Class A Class B Class M
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Distributions (number) 6 6 6
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Income 1 $0.21646 $0.18843 $0.203443
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Capital gains 1 -- -- --
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Total $0.21646 $0.18843 $0.203443
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Share value: NAV POP NAV NAV POP
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5/31/00 $8.29 $8.70 $8.28 $8.29 $8.57
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11/30/00 8.60 9.03 8.59 8.60 8.89
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Current return (end of period)
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Current dividend rate 2 5.35% 5.09% 4.66% 5.03% 4.86%
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Taxable equivalent 3 9.57 9.12 8.34 9.00 8.71
-------------------------------------------------------------------------------
Current 30-day SEC yield 4 4.87 4.63 4.22 4.56 4.41
-------------------------------------------------------------------------------
Taxable equivalent 3 8.72 8.29 7.55 8.16 7.89
-------------------------------------------------------------------------------
1 Capital gains, if any, are taxable for federal and, in most cases,
state tax purposes. For some investors, investment income may also be
subject to the federal alternative minimum tax. Investment income may be
subject to state and local taxes.
2 Income portion of most recent distribution, excluding capital gains,
annualized and divided by NAV or POP at end of period.
3 Assumes maximum 44.13% federal and state combined tax rate. Results
for investors subject to lower tax rates would not be as advantageous.
4 Based only on investment income, calculated using SEC guidelines.
TOTAL RETURN FOR PERIODS ENDED 12/31/00 (most recent calendar quarter)
Class A Class B Class M
(inception dates) (10/23/89) (7/15/93) (4/3/95)
NAV POP NAV CDSC NAV POP
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6 months 6.32% 1.29% 5.98% 0.98% 6.16% 2.76%
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1 year 10.24 4.97 9.53 4.53 9.91 6.36
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5 year 24.71 18.74 20.83 18.91 22.84 18.81
Annual average 4.52 3.49 3.86 3.53 4.20 3.51
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10 year 85.67 76.86 72.80 72.80 79.52 73.66
Annual average 6.38 5.87 5.62 5.62 6.03 5.67
------------------------------------------------------------------------------
Life of fund
Annual average 6.39 5.93 5.62 5.62 6.01 5.70
------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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. See first
page of performance section for performance calculation method.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
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 4.75% maximum 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 or C shares and assumes redemption at the
end of the period. Your fund's class B 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 assumes reinvestment of all
distributions and interest payments and does not take into account
brokerage fees or taxes. Securities in the fund do not match those in
the index and performance of the fund will differ. It is not possible to
invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
November 30, 2000 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Financial Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration Insured
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Collateralized
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
MUNICIPAL BONDS AND NOTES (97.3%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C> <C>
Ohio (88.0%)
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$ 1,000,000 Akron, G.O. Bonds, 6s, 12/1/12 AA- $ 1,092,500
875,000 Akron, Econ. Dev. Rev. Bonds, MBIA, 6s, 12/1/12 Aaa 961,406
50,000 Akron-Wilbeth, Hsg. Dev. Corp. 1st Mtge.
Rev. Bonds, FHA Insd., 7.9s, 8/1/03 AAA 54,250
1,500,000 Brecksville-Broadview Heights, City School Dist.
G.O. Bonds, FGIC, 6 1/2s, 12/1/16 Aaa 1,631,250
5,000,000 Butler Cnty., Hosp. Impt. Rev. Bonds
(Fort Hamilton-Hughes), 7 1/2s, 1/1/10 Baa1 5,148,700
430,000 Cincinnati, Student Loan Funding Corp.
Rev. Bonds, Ser. B, 8 7/8s, 8/1/08 BBB/P 434,377
1,700,000 Cleveland, Arpt. Rev. Bonds
(Continental Airlines, Inc.), 5.7s, 12/1/19 Ba2 1,417,375
1,255,000 Cleveland, G.O. Bonds, MBIA, 5 3/4s, 8/1/15 Aaa 1,352,263
2,500,000 Cleveland, Pkg. Fac. Impt. Rev. Bonds, 8s, 9/15/12 BB/P 2,693,750
2,095,000 Cleveland, Pub. Pwr. Syst. Rev. Bonds,
MBIA, 4 3/4s, 11/15/16 Aaa 1,956,206
Cleveland Urban Renewal Increment Rev. Bonds
(Rock & Roll Hall of Fame)
1,900,000 6 3/4s, 3/15/18 BBB-/P 1,919,000
2,000,000 6 5/8s, 3/15/11 BBB-/P 2,022,500
7,950,000 Cleveland, Waterworks 1st Mtge. Rev. Bonds,
Ser. G, MBIA, 5 1/2s, 1/1/13 Aaa 8,367,375
1,500,000 Cleveland-Cuyahoga Cnty., G.O. Bonds, 5s, 12/1/18 AA+ 1,445,625
1,350,000 Cleveland-Cuyahoga Cnty., Port Auth. Rev. Bonds
(Rock & Roll Hall of Fame), 5.2s, 12/1/03 BBB-/P 1,344,938
4,500,000 Dayton, Fac. Rev Bonds (Emery Air Freight),
Ser. A, 5 5/8s, 2/1/18 BBB 3,988,125
3,500,000 Delaware Cnty., Swr. Dist. Impt. G.O. Bonds,
MBIA, 4 3/4s, 12/1/24 Aaa 3,106,250
1,000,000 Delaware Cnty., Cap. Facs. G.O. Bonds,
6 1/4s, 12/1/16 Aa 1,092,500
1,300,000 Dublin, G.O. Bonds, Ser. B, 6.4s, 12/1/14 AA1 1,456,000
2,170,000 Franklin Cnty., G.O. Bonds, 5 3/8s, 12/1/20 Aaa 2,167,288
Franklin Cnty., Hlth. Care Fac. Rev. Bonds
1,750,000 (Friendship Dublin), 5 5/8s, 11/1/22 BBB+/P 1,424,063
1,500,000 (OH Presbyterian Svcs.), 5 1/2s, 7/1/21 BBB+/P 1,198,125
2,000,000 Franklin Cnty., OH Dev. Rev. Bonds
(Amern Chem. Society), 5.8s, 10/1/14 A 2,047,500
Greene Cnty., Swr. Syst. Rev. Bonds
(Governmental Enterprise) AMBAC
1,380,000 5 5/8s, 12/1/13 Aaa 1,452,450
1,305,000 5 5/8s, 12/1/12 Aaa 1,383,300
2,000,000 Hamilton Cnty., City School Dist. G.O. Bonds,
Ser. A, 5 1/2s, 12/1/24 AA- 1,990,000
2,750,000 Hamilton Cnty., Hlth. Syst. Rev. Bonds
(Providence Hosp.), 6 7/8s, 7/1/15 Baa2 2,904,688
1,000,000 Hamilton Cnty., Swr. Syst. Rev. Bonds,
FGIC, 5 1/2s, 12/1/11 Aaa 1,061,250
3,000,000 Hilliard, School Dist. G.O. Bonds
(School Impts. Project), FGIC, 5 3/4s, 12/1/24 AAA 3,082,500
1,800,000 Huran Cnty., Human Svcs. Rev. Bonds,
MBIA, 6.55s, 12/1/20 Aaa 2,074,500
1,805,000 Jefferson Cnty., G.O. Bonds, FSA, 5.7s, 12/1/13 AAA 1,944,888
1,500,000 Kent, School Dist. G.O. Bonds, FGIC, 5 3/4s, 12/1/21 AAA 1,539,375
330,293 Lake Cnty. Indl. Dev. Rev. Bonds
(Madison Inn Hlth. Ctr.), FHA Insd., 12s, 5/1/14 A-/P 337,212
1,000,000 Lakota, Local School Dist. Rev. Bonds,
AMBAC, 7s, 12/1/10 Aaa 1,177,500
1,910,000 Lorain Cnty., Elderly Hsg. Corp. Multi-Fam.
Rev. Bonds (Harr Plaza & Intl.),
Ser. A, 6 3/8s, 7/15/19 A 1,952,975
Lorain Cnty., Fac. Rev. Bonds (Laurel Lake)
1,500,000 7.3s, 12/15/14 BB-/P 1,501,875
1,750,000 7 1/8s, 12/15/18 BB-/P 1,701,875
5,325,000 Lorain Cnty., Hosp. Rev. Bonds
(EMH Regl. Med. Ctr.), AMBAC, 7 3/4s, 11/1/13 Aaa 6,090,469
3,100,000 Lucas Cnty., Indl. Dev. Rev. Bonds (Kroger Co.),
8 1/2s, 7/1/11 Baa3 3,217,831
Marion Cnty., Hlth. Care Fac. Rev. Bonds
(United Church Homes)
3,520,000 6 3/8s, 11/15/10 BBB- 3,379,200
2,000,000 6.3s, 11/15/15 BBB- 1,840,000
1,205,000 Massillon Rev. Bonds (Lincoln Ctr. Phase II),
AMBAC, 6.95s, 12/1/10 Aaa 1,337,550
2,700,000 Miami, Cnty., Hosp. Fac. Rev. Bonds
(Upper Valley Med. Ctr.), Ser. A, 6 3/8s, 5/15/26 Baa2 2,514,375
1,500,000 Montgomery Cnty., Hosp. Rev. Bonds
(Kettering Med. Ctr.), 6 3/4s, 4/1/22 BBB+ 1,509,375
Montgomery Cnty., Hlth. Syst. Rev. Bonds
280,000 Ser. B-1, 8.1s, 7/1/18 Baa2 319,550
1,720,000 Ser. B-1, 8.1s, 7/1/18, Prerefunded Aaa 2,033,900
580,000 Montgomery Cnty., Hosp. Rev. Bonds
(Grandview Hosp. & Med Ctr.), 5.6s, 12/1/11 BBB+ 614,800
3,000,000 North Olmsted, G.O. Bonds, AMBAC, 6.2s, 12/1/11 Aaa 3,360,000
835,000 Northwestern, School Dist. Rev. Bonds
(Wayne & Ashland Cntys. School Impt.),
FGIC, 7.2s, 12/1/10 Aaa 995,738
3,000,000 OH Hsg. Fin. Agcy. Mtge. Rev. Bonds, IFB,
Ser. 25, 7.77s, 3/1/29 (acquired 9/24/97,
cost $3,351,900) (RES) AAA/P 3,093,750
OH Hsg. Fin. Agcy. Single Fam. Mtge. IFB
3,114,000 Ser. A-2, GNMA Coll., 9.11s 3/24/31 Aaa 3,273,593
2,550,000 Ser. G-2, GNMA Coll., 9.45s, 3/2/23 Aaa 2,824,125
45,000 OH Hsg. Fin. Agcy. Single Fam. Mtge. Rev. Bonds,
Ser. 85-A, FGIC, zero %, 1/15/15 Aaa 11,194
OH State Air Quality Dev. Auth. Rev. Bonds
(Poll. Control)
5,000,000 Ser. B, 6s, 8/1/20 Baa3 4,800,000
2,500,000 Ser. A, 5.95s, 5/15/29 Baa1 2,431,250
555,000 OH State Econ. Dev. Rev. Bonds (Superior
Forge & Steel Corp.), Ser. 3, 7 5/8s, 6/1/11 A- 570,840
1,500,000 OH State Env. Impt. Rev. Bonds (USX Corp.),
5 5/8s, 5/1/29 Baa1 1,316,250
OH State Higher Ed. Fac. Rev. Bonds
4,500,000 (Case Western Reserve U.), 6 1/4s, 10/1/18 Aa 5,045,625
1,000,000 (Case Western Reserve U.), 6s, 10/1/14 Aa 1,102,500
2,000,000 (Oberlin College), 5s, 10/1/29 AA 1,842,500
3,000,000 (Northern U.), 4 3/4s, 5/1/19 A2 2,685,000
1,800,000 OH State Indl. Dev. Auth. Rev. Bonds (Kroger Co.),
8.65s, 6/1/11 Baa3 1,861,380
3,350,000 OH State Poll. Control Rev. Bonds
(Standard Oil Co.), 6 3/4s, 12/1/15 AA+ 3,827,375
7,000,000 OH State, Tpk. Comm. Rev. Bonds, Ser. B,
FGIC, 4 3/4s, 2/15/28 AAA 6,116,250
OH State Wtr. Dev. Auth. Solid Waste Disp.
Rev. Bonds
5,700,000 (North Star Broken Hill Steel), 6.45s, 9/1/20 A3 5,885,250
2,500,000 (Bay Shore Power Co.), Ser. A, 5 7/8s, 9/1/20 BB-/P 2,003,125
Sandusky Cnty., Hosp. Fac., Rev. Bonds
(Memorial Hosp.)
830,000 5.15s, 1/1/10 BBB- 758,413
500,000 5.15s, 1/1/08 BBB- 456,875
685,000 5.05s, 1/1/07 BBB- 631,056
2,260,000 Sprigboro Cmnty., City School Dist. G.O. Bonds,
AMBAC, 6s, 12/1/11 Aaa 2,494,475
Stark Cnty., School Dist. G.O. Bonds FGIC
1,000,000 5 3/4s, 12/1/21 AAA 1,028,750
1,100,000 5.65s, 12/1/16 AAA 1,141,250
1,500,000 Toledo, G.O. Bonds (Macys), Ser. A, MBIA,
6.35s, 12/1/25 Aaa 1,578,750
2,925,000 Toledo Swr. Syst. Mtge. Rev. Bonds, AMBAC,
6.2s, 11/15/12 (SEG) Aaa 3,265,031
1,175,000 Toledo Waterworks Mtge. Rev. Bonds, AMBAC,
6.2s, 11/15/12 Aaa 1,311,594
3,500,000 Toledo-Lucas Cnty., Ohio Port Auth. Rev. Bonds
(Transn, Inc. Project), 6.45s, 12/15/21 Baa2 3,591,875
1,100,000 Tuscarawas Cnty., Hosp. Fac. Rev. Bonds
(Union Hosp.), Ser. A, 6 1/2s, 10/1/21 Baa2 1,020,250
1,000,000 Twin Valley, Cmnty. Local School Dist. Rev. Bonds,
FGIC, 7.05s, 12/1/11 Aaa 1,187,500
1,850,000 Washington Cnty., Hlth. Care Fac. Rev. Bonds
(Glenwood Retirement Cmnty.), 6.35s, 10/1/27 BB-/P 1,600,250
Westerville, City School Dist. Rev. Bonds
(School Impt.)
1,610,000 6 1/4s, 12/1/09 A+ 1,779,050
1,590,000 6 1/4s, 12/1/08 A+ 1,745,025
3,000,000 Woodridge, School Dist. Rev. Bonds, AMBAC,
6.8s, 12/1/14 Aaa 3,558,750
Zanesville, Hsg. Dev. Corp. Mtge. Rev. Bonds,
FHA Insd.
220,000 7 3/8s, 10/1/21 Aaa 268,675
205,000 7 3/8s, 10/1/20 Aaa 249,588
185,000 7 3/8s, 10/1/19 Aaa 224,313
180,000 7 3/8s, 10/1/18 Aaa 218,925
160,000 7 3/8s, 10/1/17 Aaa 194,200
155,000 7 3/8s, 10/1/16 Aaa 188,127
-------------
176,821,271
Puerto Rico (9.3%)
-------------------------------------------------------------------------------------------------------------------
Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds
1,000,000 Ser. Z, MBIA, 6 1/4s, 7/1/15 Aaa 1,140,000
4,000,000 Ser. W, MBIA, 5 1/2s, 7/1/15 Aaa 4,275,000
4,180,000 Cmnwlth. of PR, Muni. Fin. Agcy. Rev. Bonds, Ser. A,
FSA, 6s, 7/1/11 AAA 4,660,700
Cmnwlth. of PR, Pub. Bldg. Auth. Fac. Rev. Bonds,
Ser. A, AMBAC
1,100,000 6 1/4s, 7/1/15 Aaa 1,254,000
1,440,000 6 1/4s, 7/1/12 Aaa 1,638,000
1,000,000 PR Indl. Tourist Edl. Med. & Env. Control Facs.
Rev. Bonds (Cogen Facs.--AES PR Project),
6 5/8s, 6/1/26 Baa2 1,046,250
3,000,000 PR Muni. Fin Agcy. G.O. Bonds, Ser. A, FSA,
5 7/8s, 8/1/14 AAA 3,240,000
1,400,000 PR Tel. Auth. IFB, MBIA, 6.51s, 1/16/15 Aaa 1,499,750
-------------
18,753,700
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $194,320,377) (b) $ 195,574,971
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $200,960,902.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at November 30, 2000 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 November 30, 2000. Securities rated by Putnam are
indicated by "/P" and are not publicly rated.
(b) The aggregate identified cost on a tax basis is $194,320,377,
resulting in gross unrealized appreciation and depreciation of
$6,772,901 and $5,518,307, respectively, or net unrealized appreciation
of $1,254,594.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at November 30, 2000
was $3,093,750 or 1.5% of net assets.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at November
30, 2000.
The rates shown on IFB, which are securities paying interest rates
that vary inversely to changes in the market interest rates, are the
current interest rates at November 30, 2000.
The fund had the following industry group concentrations greater
than 10% at November 30, 2000 (as a percentage of net assets):
Health care 18.4%
Education 16.2
Water and sewer 13.0
Transportation 10.2
The fund had the following insurance concentrations greater than
10% at November 30, 2000 (as a percentage of net assets):
AMBAC 14.1%
MBIA 13.1
------------------------------------------------------------------------------
Futures Contracts Outstanding at November 30, 2000 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
------------------------------------------------------------------------------
Muni Bond Index
(Short) $4,549,349 $4,465,431 Dec-00 $(83,918)
Muni Bond Index
(Short) 703,938 699,012 Mar-01 (4,926)
------------------------------------------------------------------------------
$(88,844)
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2000 (Unaudited)
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $194,320,377) (Note 1) $195,574,971
-------------------------------------------------------------------------------------------
Cash 2,219,791
-------------------------------------------------------------------------------------------
Interest and other receivables 3,941,177
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 146,392
-------------------------------------------------------------------------------------------
Total assets 201,882,331
Liabilities
-------------------------------------------------------------------------------------------
Payable for variation margin 30,701
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 480,551
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 16,993
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 250,856
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 15,429
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 13,345
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,318
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 85,659
-------------------------------------------------------------------------------------------
Other accrued expenses 25,577
-------------------------------------------------------------------------------------------
Total liabilities 921,429
-------------------------------------------------------------------------------------------
Net assets $200,960,902
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $205,879,882
-------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 57,382
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (6,142,112)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,165,750
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $200,960,902
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($148,776,021 divided by 17,302,100 shares) $8.60
-------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $8.60)* $9.03
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($50,798,573 divided by 5,914,180 shares)+ $8.59
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($1,386,308 divided by 161,259 shares) $8.60
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.60)** $8.89
-------------------------------------------------------------------------------------------
* 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 charges.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended November 30, 2000 (Unaudited)
<S> <C>
Tax exempt interest income: $ 5,899,200
-------------------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 504,804
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 89,070
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 5,722
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 2,741
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 149,841
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 213,259
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 3,337
-------------------------------------------------------------------------------------------
Other 56,547
-------------------------------------------------------------------------------------------
Total expenses 1,025,321
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (91,709)
-------------------------------------------------------------------------------------------
Net expenses 933,612
-------------------------------------------------------------------------------------------
Net investment income 4,965,588
-------------------------------------------------------------------------------------------
Net realized loss on investments (Note 1) (258,313)
-------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (668,743)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the period 8,189,135
-------------------------------------------------------------------------------------------
Net gain on investments 7,262,079
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $12,227,667
-------------------------------------------------------------------------------------------
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
November 30 May 31
2000* 2000
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 4,965,588 $ 11,330,737
--------------------------------------------------------------------------------------------------
Net realized loss on investments (927,056) (2,429,744)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 8,189,135 (16,133,464)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 12,227,667 (7,232,471)
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income
Class A (3,804,991) (8,922,553)
--------------------------------------------------------------------------------------------------
Class B (1,109,398) (2,499,352)
--------------------------------------------------------------------------------------------------
Class M (38,702) (92,072)
--------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (5,797,344) (28,701,885)
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 1,477,232 (47,448,333)
Net assets
--------------------------------------------------------------------------------------------------
Beginning of period 199,483,670 246,932,003
--------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $57,382 and $44,885, respectively) $200,960,902 $199,483,670
--------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS A
------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share Nov. 30
operating performance (Unaudited) Year ended May 31
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.29 $8.99 $9.26 $8.99 $8.76 $8.95
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income .22 .45 (a) .46 (a) .47 .46 .48
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .31 (.70) (.19) .27 .23 (.19)
------------------------------------------------------------------------------------------------------------------
Total from
investment operations .53 (.25) .27 .74 .69 .29
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income (.22) (.45) (.47) (.47) (.46) (.48)
------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (.07) -- -- --
------------------------------------------------------------------------------------------------------------------
Total distributions (.22) (.45) (.54) (.47) (.46) (.48)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.60 $8.29 $8.99 $9.26 $8.99 $8.76
------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.39* (2.72) 2.93 8.35 8.05 3.30
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $148,776 $149,434 $186,170 $186,130 $185,030 $186,633
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .43* .87 (a) .91 (a) .98 .98 .96
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.54* 5.24 (a) 4.96 (a) 5.06 5.22 5.39
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.84* 10.84 7.80 31.07 33.92 33.23
------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Reflects a management fee waiver during the period (Note 2). As a
result of such waiver, expenses of the fund for the year ended May 31,
2000, reflect a reduction of less than $0.01 per share for class A,
Class B and Class M, respectively. Expenses for the period ended May 31,
1999, reflect a reduction of $0.01 per share for class A, class B and
class M, respectively.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B
------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share Nov. 30
operating performance (Unaudited) Year ended May 31
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.28 $8.98 $9.25 $8.98 $8.75 $8.94
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income .19 .39 (a) .40 (a) .41 .41 .42
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .31 (.69) (.20) .27 .22 (.19)
------------------------------------------------------------------------------------------------------------------
Total from
investment operations .50 (.30) .20 .68 .63 .23
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income (.19) (.40) (.40) (.41) (.40) (.42)
------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (.07) -- -- --
------------------------------------------------------------------------------------------------------------------
Total distributions (.19) (.40) (.47) (.41) (.40) (.42)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.59 $8.28 $8.98 $9.25 $8.98 $8.75
------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.05* (3.37) 2.27 7.65 7.35 2.63
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $50,799 $48,424 $58,763 $53,689 $47,050 $41,655
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .76* 1.52 (a) 1.56 (a) 1.63 1.63 1.61
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.21* 4.59 (a) 4.31 (a) 4.40 4.56 4.71
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.84* 10.84 7.80 31.07 33.92 33.23
------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Reflects a management fee waiver during the period (Note 2). As a
result of such waiver, expenses of the fund for the year ended May 31,
2000, reflect a reduction of less than $0.01 per share for class A,
Class B and Class M, respectively. Expenses for the period ended May 31,
1999, reflect a reduction of $0.01 per share for class A, class B and
class M, respectively.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share Nov. 30
operating performance (Unaudited) Year ended May 31
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.29 $8.99 $9.26 $9.00 $8.76 $8.95
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income .20 .42 (a) .43 (a) .43 .44 .45
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .31 (.69) (.19) .27 .23 (.18)
------------------------------------------------------------------------------------------------------------------
Total from
investment operations .51 (.27) .24 .70 .67 .27
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income (.20) (.43) (.44) (.44) (.43) (.46)
------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (.07) -- -- --
------------------------------------------------------------------------------------------------------------------
Total distributions (.20) (.43) (.51) (.44) (.43) (.46)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.60 $8.29 $8.99 $9.26 $9.00 $8.76
------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.23* (3.02) 2.62 7.90 7.85 3.00
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,386 $1,626 $1,998 $2,212 $911 $495
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .58* 1.17 (a) 1.21 (a) 1.28 1.28 1.27
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.39* 4.94 (a) 4.67 (a) 4.76 4.87 4.85
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.84* 10.84 7.80 31.07 33.92 33.23
------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Reflects a management fee waiver during the period (Note 2). As a
result of such waiver, expenses of the fund for the year ended May 31,
2000, reflect a reduction of less than $0.01 per share for class A,
Class B and Class M, respectively. Expenses for the period ended May 31,
1999, reflect a reduction of $0.01 per share for class A, class B and
class M, respectively.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
November 30, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam Ohio Tax Exempt Income Fund (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 Ohio personal income tax as
Putnam Investment Management, LLC ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc., believes
is consistent with preservation of capital by investing primarily in a
portfolio of Ohio tax-exempt securities.
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 approximately 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 higher than class A but lower than
class B 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 is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are stated on the basis
of valuations provided by an independent 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. Restricted securities are stated at fair value following
procedures approved by the Trustees. Such valuations and procedures are
reviewed periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis. Non-cash dividends, if
any, are recorded at the fair market value of the securities received.
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 in which it may invest 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. 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. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
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) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations.
For the six months ended November 30, 2000, the fund had no borrowings
against the line of credit.
E) 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, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At May 31, 2000, the fund had a capital loss carryover of approximately
$1,234,000 available to offset future capital gains, if any. The amount
of the carryover and the expiration dates are:
Loss Carryover Expiration
-------------- ------------------
$876,000 May 31, 2007
358,000 May 31, 2008
F) Distributions to shareholders Income dividends are recorded daily by
the fund and are paid monthly. Capital gain distributions, if any, are
recorded on the ex-dividend date and paid at least 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. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
G) Amortization of bond premium and accretion of bond 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 discount bonds are accreted according to
the yield-to-maturity basis.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the lesser of (i) an annual rate of 0.50%
of the average net assets of the fund or (ii) the following annual
rates: 0.60% of the first $500 million of average net assets, 0.50% of
the next $500 million, 0.45% of the next $500 million, 0.40% of the next
$5 billion, 0.375% of the next $5 billion, 0.355% of the next $5
billion, 0.34% of the next $5 billion, and 0.33% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended November 30,
2000, the fund's expenses were reduced by $91,709 under these
arrangments.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $510 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
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 Retail Management, Inc., 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 Retail Management, Inc. 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 to 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 November 30, 2000, Putnam Retail Management,
Inc., acting as underwriter received net commissions of $5,643 and $6
from the sale of class A and class M shares, respectively, and $26,596
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 November 30, 2000, Putnam
Retail Management, Inc., acting as underwriter received $1,116 on class
A redemptions that were purchased without an initial sales charge as
part of an investment of $1 million or more.
Note 3
Purchases and sales of securities
During the six months ended November 30, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $7,504,206 and $11,514,508, respectively. There
were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At six months ended November 30, 2000, there was an unlimited number of
shares of beneficial interest authorized. Transactions in capital shares
were as follows:
Six months ended November 30, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 340,306 $ 2,904,292
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distribution 300,614 2,564,335
---------------------------------------------------------------------------
640,920 5,468,627
Shares
repurchased (1,356,765) (11,548,604)
---------------------------------------------------------------------------
Net decrease (715,845) $ (6,079,977)
---------------------------------------------------------------------------
Year ended May 31, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 1,069,343 $ 9,135,737
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distribution 653,769 5,569,988
---------------------------------------------------------------------------
1,723,112 14,705,725
Shares
repurchased (4,408,450) (37,331,227)
---------------------------------------------------------------------------
Net decrease (2,685,338) $(22,625,502)
---------------------------------------------------------------------------
Six months ended November 30, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 380,423 $ 3,236,021
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 82,285 701,194
---------------------------------------------------------------------------
462,708 3,937,215
Shares
repurchased (393,910) (3,356,826)
---------------------------------------------------------------------------
Net increase 68,798 $ 580,389
---------------------------------------------------------------------------
Year ended May 31, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 760,260 $ 6,485,997
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 176,646 1,502,993
---------------------------------------------------------------------------
936,906 7,988,990
Shares
repurchased (1,634,608) (13,844,173)
---------------------------------------------------------------------------
Net decrease (697,702) $ (5,855,183)
---------------------------------------------------------------------------
Six months ended November 30, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 447 $ 3,792
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,722 31,738
---------------------------------------------------------------------------
4,169 35,530
Shares
repurchased (39,026) (333,286)
---------------------------------------------------------------------------
Net decrease (34,857) $(297,756)
---------------------------------------------------------------------------
Year ended May 31, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 16,852 $ 143,702
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,680 56,835
---------------------------------------------------------------------------
23,532 200,537
Shares
repurchased (49,686) (421,737)
---------------------------------------------------------------------------
Net decrease (26,154) $(221,200)
---------------------------------------------------------------------------
Note 5
New accounting pronouncement
In November 2000, the AICPA issued a revised Audit and Accounting Guide,
Audits of Investment Companies, which is effective for fiscal years
beginning after December 15, 2000. The revised Guide will require the
fund to amortize premium and accrete discount on all fixed-income
securities, and classify as interest income gains and losses realized on
paydowns on mortgage-backed securities which are presently included in
realized gain/loss. Adopting these accounting principles will not affect
the fund's net asset value, but will change the classification of
certain amounts between interest income and realized and unrealized
gain/loss in the Statement of operations. The fund has not at this time
quantified the impact, if any, resulting from the adoption of this
principle on the financial statements.
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, LLC
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
John A. Hill, Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Susan McCormack
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
This report is for the information of shareholders of Putnam Ohio 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, and the most recent copy of Putnam's Quarterly Performance Summary
and Putnam's Quarterly Ranking Summary. For more information or to
request a prospectus, call toll free: 1-800-225-1581.
You can also learn more at Putnam Investments' Web site:
www.putnaminvestments.com.
NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
SA053-67686 848/240/130 1/01
