Putnam
High Yield
Municipal
Trust
SEMIANNUAL REPORT
September 30, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Morningstar, Inc., an independent rating agency, awarded Putnam High
Yield Municipal Trust an overall rating of 4 out of a possible 5 stars for
the 5-year period ended September 30, 1997. This puts the fund among 22.5%
of the 196 closed-end tax-free municipal bond funds rated.*
* Lipper Analytical Services ranked the fund 3 out of 12 closed-end high-yield
municipal debt funds tracked for 5-year performance as of September 30, 1997,
placing it in the top 24% of the funds rated.+
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
12 Portfolio holdings
18 Financial statements
26 Results of October 9, 1997 shareholder meeting
* Morningstar ratings are subject to change every month and are calculated
from a fund's 3-, 5-, and 10-year average annual returns in excess of 90-day
Treasury bill returns, with appropriate sales charge adjustments and a risk
factor that reflects performance compared to 90-day Treasury bill monthly
returns. 10% of the funds in an investment category receive 5 stars; 22.5%
receive four stars, and 35% receive 3 stars.
+ Lipper is an industry research firm whose rankings are based on total
return performance, vary overtime, and do not reflect the effects of sales
charges. The fund ranked 9 out of 13 and 4 out of 13 for l- and 3-year
performance, respectively, as of 9/30/97. Performance of other share classes
will vary. Past performance is not indicative of future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
A substantially stronger municipal bond market brightened the first half of
Putnam High Yield Municipal Trust's fiscal year, helping to bring its
performance within a few basis points of its benchmark index. This is no small
achievement, considering that the index encompasses the full spectrum of
tax-free bonds in today's market, while the fund's portfolio emphasizes
higher-yielding lower-rated bonds -- generally characterized more by their
income-producing capability than their total return potential.
While your fund's strength in general reflects that of the market, its
performance is also the result of the skillful securities selection and
positioning strategies implemented by manager Blake Anderson. In the following
report, Blake explains some of the key portfolio events of the fiscal
year's first half and forecasts his expectations for the rest
of fiscal 1998.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
November 19, 1997
Report from the Fund Manager
Blake E. Anderson
In a market characterized by historically tight yield spreads between
municipal bonds at both ends of the credit-quality spectrum, higher-yielding
lower-rated bonds outperformed their higher-quality brethren amid continued
economic growth. This fact, coupled with low inflation, contributed to Putnam
High Yield Municipal Trust's total returns of 4.88% at net asset value and
7.31% at market price for the semiannual period ended September 30, 1997.
* DESPITE POSITIVE FUNDAMENTALS, STRONG ECONOMY WARRANTS DEFENSIVE TONE
Low volatility and narrow trading ranges characterized the fixed-income
markets during the period. In fact, bond prices have not moved more than three
quarters of a percentage point in either direction over the past two years.
This lack of direction stems from a strong tug of war between high economic
growth (negative for the bond market) and low inflation (positive for the bond
market). This is not to say that we haven't seen days of volatile trading, of
course; they exist. But over time, the markets have not traveled very far in
either direction.
What makes today's municipal bond market different from that of six months ago
is that yields there have recently become much more attractive relative to
Treasury yields. This change, in turn, has made the after-tax advantages of
investing in municipal bonds even more pronounced. Furthermore, relative
prices have not been this low since early 1996 -- implying that tremendous
value still exists in today's market. During September, the market experienced
a dramatic surge in supply from refundings and new issues. This boost in
supply was easily absorbed by the market's rigorous demand, much of which is
coming from nontraditional buyers and insurance companies.
* BARBELL STRATEGY HELPS FUND SEEK INCOME AND RELATIVE STABILITY
Our portfolio decisions over the period have focused on building high coupon
income and maintaining a stable net asset value. Accordingly we are
maintaining the fund's barbell configuration with holdings concentrated at the
higher-quality and higher-yielding ends of the municipal market. Our goal is
to select issues that produce high income while maintaining stable prices.
Nearly 30% of portfolio holdings are securities of the highest credit quality
(Aaa), while just over 60% of the holdings are invested in bonds rated Baa,
Ba, and B. This translates into an average quality rating of A.
During the period, the gap between yields of lower-rated versus higher-rated
securities narrowed. When interest rates are low and bond investors'
confidence level is strong, investors are often more comfortable with
higher-risk investments such as lower-rated higher-yielding bonds. As a
result, lower-quality bonds outperformed higher-quality bonds, and investors
were rewarded for taking on the extra credit risk. We believe the in-depth
credit research that is a hallmark of our investment process is invaluable in
allowing the fund to take advantage of these bonds' potential.
* TRANSPORTATION, UTILITIES, AND PREREFUNDINGS
As part of the fund's sector strategy, during the period we sought to add
securities that we believed were undervalued or whose issuers were in
turnaround situations while taking profits on those that have undergone marked
appreciation. At period's end, the portfolio's top three sectors were
transportation, utilities, and prerefundings.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
Aa 2.2%
Aaa 29.8%
Other and cash 2.0%
A 1.4%
B 16.3%
Ba 22.9%
Baa 23.7%
Below B 1.7%
Footnote reads:
*As a percentage of market value as of 9/30/97. All ratings reflect Moody's
descriptions unless noted otherwise; percentages may include unrated bonds
considered by Putnam Management to be of comparable quality. Ratings will vary
over time.
The transportation sector, which accounts for 25% of portfolio net assets,
mainly consists of airline and airport revenue bonds. Years of cost cutting
and industry consolidation have created healthier, more stable airline
companies. Furthermore, a strong economy coupled with steady capacity and
strong consumer demand is also boosting profits. Such positive fundamentals
resulted in several upgrades within your fund -- particularly Continental
Airlines bonds. Denver City and County Airport Revenue Bonds, perennial
favorites, appreciated on improving fundamentals. With the increased passenger
capacity on the airlines has come increased fees and cash flow from airport
operations and associated facilities such as restaurants, parking, hotels, and
retail outlets.
Investor-owned utilities represent another area in which deregulation and some
consolidation are creating investment opportunities. Public utility bonds are
a type of revenue bond that is self-funding; that is, user fees assessed for
water, electricity, gas, or sewer services become the source of the bonds'
payment to investors. Since the issuers have the ability to set user fees,
income from these bonds is relatively stable and the bonds carry a lower risk
of default than other types of municipal bonds. Of course, the economic health
and potential growth of the service area are important variables when
evaluating the credit risk of public utility bond issuers.
Prerefundings continued to make a healthy contribution to your fund's
performance and portfolio quality. A prerefunding occurs when inflation and
interest rates are low and a municipality takes steps to reduce the interest
costs. This is accomplished by issuing enough new bonds to pay off the
original issues at the first call date or maturity. Proceeds from the new
issue in an amount sufficient to pay off the entire original issue are
invested in an escrow fund made up of U.S. government obligations. Because of
the safety of principal represented by the government securities, the older
bonds generally are considered to have the quality of Aaa-rated bonds once the
escrow fund is established. Upgrades by the rating agencies will typically
follow. At the end of the period, 13.2% of the bonds in the portfolio were
prerefunded.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Iowa Financing Authority Health Care Facility
9.25%, 7/1/25
Los Angeles (California) Regional Airports Improvement Corp.
9.25%, 8/1/24
Denver (Colorado) City and County Airport
8.50%, 11/15/23
Delaware Valley Regional Financing Authority
7.75%, 7/1/27
Midland County (Michigan) Economic Development Corp.
9.50%, 7/23/09
Butler (Alabama) Industrial Development Board
8.00%, 9/1/28
Massachusetts State Port Authority Special Project
10.00%, 3/1/26
Hammond (Indiana) Industrial Port Authority
9.65%, 6/1/14
Texas State Housing and Community Affairs Home Mortgage
9.62%, 7/2/24
Massachusetts State Industrial Financing Agency
9.00%, 5/1/22
Footnote reads:
These holdings represent 28.3% of the fund's net assets as of 9/30/97.
Portfolio holdings will vary over time.
While we believe the future of the forest products and paper industries
remains promising over the longer term, this sector has been struggling for
some time. Paper products continue to be negatively impacted by declining
prices of recycled pulp, largely the result of abundant supply. The de-ink
pulp industry, which recycles office paper, has been particularly hard hit
with news of defaults, and your fund's holdings in this area were not spared.
The fund's performance was pinched as a result, but the bonds' high income
potential remains an attractive asset. We've begun to see signs that prices
may be bottoming out with some of the more distressed companies turning their
balance sheets around.
Intensive scrutiny of bond issuers' credit quality, funding sources, and
future prospects will continue to guide the fund's investment process. As
these bonds gain broader acceptability, it is likely that they will be
considered more creditworthy investments, and should upgrades occur, they
could be expected to reflect favorably on the bonds' prices.
* OUTLOOK REMAINS CAUTIOUS BUT OPPORTUNISTIC
As time goes on, we believe there will be moderate upward pressure on interest
rates most likely in the form of wage pressures. We anticipate that the news
on inflation will slowly deteriorate. With that expectation, we believe that
taking on excessive risk would not reward the fund and we plan to maintain our
defensive strategies. More specifically we will keep a slightly
shorter-than-market duration of 61/2 to 7 years, with maturities falling in
the 10- to 20-year range. As we have stated before, shorter durations can help
preserve principal value as interest rates gradually move upward.
Fund management will also keep a vigilant eye on the economy and continue to
rely on in-depth research to evaluate new and existing holdings. When the rope
in the strong economy/low inflation tug of war slowly begins to fray, we
believe that our defensive management strategies will be rewarded.
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 9/30/97, there is no guarantee the fund will continue to hold
these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam High Yield Municipal Trust is designed for investors
seeking high current income free from federal income tax through
higher-yielding, lower-rated municipal securities.
TOTAL RETURN FOR PERIODS ENDED 9/30/97
Lehman Bros. Consumer
Market Municipal Price
NAV price Bond Index Index
- ------------------------------------------------------------------------------
6 months 4.88% 7.31% 6.57% 0.75%
- ------------------------------------------------------------------------------
1 year 8.83 14.01 9.03 2.15
- ------------------------------------------------------------------------------
5 years 45.65 53.76 41.44 14.08
Annual average 7.81 8.99 7.18 2.67
- ------------------------------------------------------------------------------
Life of fund (5/25/89) 94.01 106.39 91.53 30.21
Annual average 8.26 9.04 8.11 3.22
- ------------------------------------------------------------------------------
Performance data represent past results and do not reflect future
performance. They do not take into account any adjustment for taxes
payable on reinvested distributions. Investment returns, net asset value,
and market price will fluctuate so that an investor's shares when sold may
be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 9/30/97
- ------------------------------------------------------------------------------
Distributions (common shares)
- ------------------------------------------------------------------------------
Number 6
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Income $0.345
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Capital gains1 --
- ------------------------------------------------------------------------------
Total $0.345
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Preferred shares Series A (900 shares)
- ------------------------------------------------------------------------------
Income $921.18
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Capital gains --
- ------------------------------------------------------------------------------
Total $921.18
- ------------------------------------------------------------------------------
Share value
(common shares): NAV Market price
- ------------------------------------------------------------------------------
3/31/97 $9.12 $10.25
- ------------------------------------------------------------------------------
9/30/97 9.24 10.625
- ------------------------------------------------------------------------------
Current return
(common shares): NAV Market price
- ------------------------------------------------------------------------------
End of period
- ------------------------------------------------------------------------------
Current dividend rate2 7.47% 6.49%
- ------------------------------------------------------------------------------
Taxable equivalent3 12.37 10.75
- ------------------------------------------------------------------------------
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, annualized and divided by
NAV or Market price at end of period.
3 Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to remarketed preferred shares,
divided by the number of outstanding common shares.
Market price is the current trading price of one share of the fund. Market
prices are set by transactions between buyers and sellers on the New York
Stock Exchange.
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.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. Securities in
the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
Portfolio of investments owned
September 30, 1997 (Unaudited)
Key to Abbreviations
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FNMA Coll. -- Federal National Mortgage Association Collateralized
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Collateralized
IF -- Inverse Floater
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES (98.3%) *
PRINCIPAL AMOUNT RATING ** VALUE
Alabama (2.6%)
<S> <C> <C> <C>
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$5,750,000 Butler, Indl. Dev. Board Rev. Bonds
(Solid Waste Disp. James River Corp.),
8s, 9/1/28 BBB $ 6,547,813
Arizona (2.5%)
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2,500,000 Coconino Cnty., Poll. Control Corp.
Rev. Bonds (Tuscon/Navajo Elec. Pwr.),
Ser. A, 7 1/8s, 10/1/32 B 2,753,125
3,000,000 Tucson, Arpt. Auth. Special Fac. Rev. Bonds
(Lockheed Aermod Ctr. Inc.), 8.7s, 9/1/19 A 3,386,250
--------------
6,139,375
California (7.3%)
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5,370,000 CA Hlth. Fac. Auth. Rev. Bonds (Valley
Presbyterian Hosp.), Ser. A, 9s, 5/1/12 BBB 5,383,264
5,700,000 CA Statewide Cmnty. Dev. Auth. IF COP
(Motion Picture & TV Fund), AMBAC,
5.35s, 1/1/22 AAA 4,852,125
6,415,000 Los Angeles, Regl. Arpts. Impt. Corp.
Rev. Bonds (Continental Airlines),
9 1/4s, 8/1/24 BB/P 7,738,094
--------------
17,973,483
Colorado (5.3%)
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Denver City & Cnty., Arpt. Rev. Bonds, Ser. A
1,330,000 Pre-refunded, 8 3/4s, 11/15/23 Aaa 1,569,400
3,670,000 8 3/4s, 11/15/23 Baa 4,316,838
6,350,000 MBIA, 8 1/2s, 11/15/23 # Baa 7,254,875
--------------
13,141,113
Delaware (2.8%)
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5,000,000 Delaware Valley, Regl. Fin. Auth. Govt.
Rev. Bonds, Ser. C, AMBAC, 7 3/4s, 7/1/27 Aaa 6,812,500
Georgia (3.2%)
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3,025,000 De Kalb Cnty., Hsg. Auth. Muni. Rev. Bonds
(Briarcliff Park Apts.), Ser. B, 10s, 4/1/17 B/P 3,350,188
3,900,000 GA Med. Ctr. Hosp. Auth. IFB (Columbus
Regl. Hlth. Care Syst.), Ser. B, MBIA, 8.729s,
8/1/10 AAA 4,563,000
--------------
7,913,188
Illinois (5.4%)
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Chicago, O'Hare Intl. Arpt. Special
Fac. Rev. Bonds
1,393,000 (United Air Lines, Inc.), Ser. B, 8.95s, 5/1/18 Baa 1,575,831
1,800,000 (United Air Lines, Inc.), Ser. 84A, 8.85s, 5/1/18 Baa 2,029,500
4,250,000 (American Airlines Inc.), 8.2s, 12/1/24 Baa 5,073,438
2,250,000 IL Dev. Fin. Auth. Rev. Bonds (Cmnty. Rehab
Fac.), Ser. A, 7 7/8s, 7/1/20 BB/P 2,550,938
1,945,000 IL Edl. Fac. Auth. Rev. Bonds (Steppenwolf
Theatre), 9.65s, 7/1/19 BB/P 2,030,872
--------------
13,260,579
Indiana (2.4%)
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5,480,441 Hammond, Indl. Port Auth. COP, 9.65s, 6/1/14 BB/P 5,912,027
Iowa (4.6%)
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8,500,000 IA Fin. Auth. Hlth. Care Fac. Rev. Bonds
(Care Initiatives), 9 1/4s, 7/1/25 BB/P 11,305,000
Kentucky (2.4%)
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4,000,000 Boone Cnty., Poll. Control Rev. Bonds (Dayton
Pwr. & Lt. Co.), Ser. A, 6 1/2s, 11/15/22 Aa 4,355,000
1,470,000 Jefferson Cnty., 1st Mtge. Rev. Bonds
(AHF/KY-IOWA Inc.), 10 1/4s, 1/1/20 B/P 1,543,500
--------------
5,898,500
Louisiana (6.3%)
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5,000,000 Hodge, Combined Util. Rev. Bonds
(Stone Container Corp.), 9s, 3/1/10 B/P 5,418,750
LA Pub. Fac. Auth. 1st Mtge. Rev. Bonds
1,889,447 (Emily Morten Foundation), 10 1/4s, 5/1/19 B/P 1,896,533
2,500,000 (St. James Place), 10s, 11/1/21 B/P 2,771,875
2,000,000 St. Charles Parish, Poll. Control Rev. Bonds
(LA Pwr. & Lt.), 8 1/4s, 6/1/14 Baa 2,157,500
3,000,000 St. James Parish, Solid Waste Disp. Rev. Bonds
(Kaiser Aluminum), 8s, 12/1/24 Ba 3,225,000
--------------
15,469,658
Massachusetts (15.3%)
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2,600,000 MA Muni. Whsl. Pwr. Supply VRDN,
Ser. C, 4s, 7/1/19 VMIG1 2,600,000
MA State Hlth. & Edl. Fac. Auth. IFB
3,000,000 (St. Elizabeth Hosp.), Ser. E, FSA, 9.57s, 8/15/21 Aaa 3,521,250
2,000,000 (New England Med. Ctr.), MBIA, 6.48s, 7/1/18 Aaa 1,950,000
MA State Indl. Fin. Agcy. Resource Recvy.
Rev. Bonds (Southeastern MA)
1,500,000 Ser. B, 9 1/4s, 7/1/15 BB/P 1,708,125
3,500,000 Ser. A, 9s, 7/1/15 BB/P 3,972,500
MA State Indl. Fin. Agcy. Rev. Bonds
950,000 (Odd Fellows Home of MA), 9.6s, 1/1/15 BB/P 1,015,313
4,500,000 (Orchard Cove Inc.), 9s, 5/1/22 AAA/P 5,467,500
4,250,000 (Emerson College), 8.9s, 1/1/18 BB/P 4,717,500
3,400,000 (Evanswood Bethzatha), 7.85s, 1/15/17 B/P 3,531,750
2,410,000 MA State Indl. Fin. Agcy. Tunnel Rev. Bonds
(MA Tpk.), 9s, 10/1/20 AAA/P 2,777,525
5,800,000 MA State Port Auth. Special Project
Rev. Bonds (Harborside Hyatt), 10s, 3/1/26 B/P 6,329,250
--------------
37,590,713
Michigan (6.5%)
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2,763,000 Detroit, Hosp. Fac. Fin. Auth. Rev. Bonds
(MI Hlth. Care Corp.), 10s, 12/1/20
(In default) + C 497,340
2,605,000 Detroit, Loc. Dev. Fin. Auth. Tax Increment
Rev. Bonds, Ser. A, 9 1/2s, 5/1/21 BBB/P 3,285,556
MI State Strategic Fund Ltd. Oblig. Rev. Bonds
4,800,000 (Mercy Svcs. for Aging), 9.4s, 5/15/20 AAA 5,454,000
960,000 (MI Hlth. Care Corp.), 9.1s, 12/1/14
(In default) + D/P 172,800
6,000,000 Midland Cnty., Econ. Dev. Corp. Rev. Bonds
(Poll. Ctrl.), Ser. B, 9 1/2s, 7/23/09 B/P 6,622,500
--------------
16,032,196
Mississippi (1.3%)
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3,035,000 Claiborne Cnty., Poll. Control Rev. Bonds (Middle
South Energy, Inc.), Ser. C, 9 7/8s, 12/1/14 Ba 3,300,563
Missouri (2.1%)
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4,800,000 Kansas City, Indl. Dev. Auth. Hlth. Fac. Rev. Bonds
(Park Lane Med. Ctr.), 8 3/4s, 1/1/15 BB/P 5,106,000
Nebraska (0.5%)
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1,000,000 NE Investment Hosp. Fin. Auth. IFB, MBIA,
9.203s, 12/8/16 Aaa 1,188,750
New Hampshire (3.4%)
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NH Higher Edl. & Hlth. Fac. Auth. Rev. Bonds
1,895,000 (Havenwood-Heritage Heights),
9 3/4s, 12/1/19 AAA/P 2,165,038
1,000,000 (NH College), 6 3/8s, 1/1/27 BBB 1,017,500
1,500,000 NH State Bus. Fin. Auth. Swr. & Solid
Waste Rev. Bonds (Crown Paper),
7 7/8s, 7/1/26 BB 1,708,125
3,500,000 NH State Indl. Dev. Auth. Poll. Control
Rev. Bonds (United Illuminating Co.),
Ser. B, 10 3/4s, 10/1/12 Baa 3,605,000
--------------
8,495,663
New York (7.4%)
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2,500,000 NY City, Hlth. & Hosp. Corp. VRDN (Hlth.
Syst.), Ser. A, 4s, 2/15/26 VMIG1 2,500,000
2,350,000 NY State Energy Res. & Dev. Auth. Poll.
Control IFB (Niagra Mohawk Pwr.),
FGIC, 10.05s, 7/1/29 (acquired 12/1/94
cost $2,453,729) [DBL. DAGGER] Aaa 3,057,933
4,000,000 NY State Energy Res. & Dev. Auth. Poll. Control
Rev. Bonds (Rochester Gas & Elec. Co.,),
Ser. C, FSA, 8 1/8s, 12/1/28 Aaa 4,270,000
3,000,000 NY State Hsg. Fin. Agcy. Svcs. Contract Oblig.
Rev. Bonds, Ser. A, 7 3/8s, 9/15/21 Aaa 3,423,750
NY State Local Govt. Assistance Corp.
Rev. Bonds
1,500,000 Ser. A, 7s, 4/1/16 Aaa 1,663,125
2,000,000 Ser. D, 6 3/4s, 4/1/21 Aaa 2,235,000
1,000,000 Port Auth NY & NJ Special Oblig. Rev. Bonds
(Continental/Eastern Laguardia), 9 1/8s,
12/1/15 BB/P 1,138,750
--------------
18,288,558
Ohio (2.0%)
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4,550,000 Dayton, Special Fac. Rev. Bonds (Emery Air
Freight Corp.), Ser. A, 12 1/2s, 10/1/09 BBB 4,976,881
Pennsylvania (6.3%)
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280,000 Allegheny Cnty., Indl. Dev. Auth. Arpt. Special
Fac. Rev. Bonds (U.S. Air, Inc.), Ser. A,
8 7/8s, 3/1/21 B 320,600
2,000,000 Montgomery Cnty., Higher Ed. & Hlth. Auth.
Hosp. Rev. Bonds (United Hosp. Inc.),
Ser. A, 8 3/8s, 11/1/11 AAA 2,207,500
3,250,000 PA Econ. Dev. Fin. Auth. Rev. Bonds
(MacMillan Ltd. Partnership), 7.6s, 12/1/20 Baa 3,741,563
2,500,000 PA State Higher Edl. Assistance Agcy. Student
Loan IFB, AMBAC, 9.409s, 9/3/26 Aaa 2,837,500
2,100,000 Philadelphia, Muni. Auth. Rev. Bonds (Justice
Lease), Ser. C, 8 5/8s, 11/15/16 AAA 2,480,625
3,400,000 Philadelphia, Regl. Port Auth. Lease IFB
(Kidder Mvrics), MBIA, 8.32s, 9/1/13 Aaa 3,918,500
--------------
15,506,288
Texas (3.8%)
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2,500,000 Alliance, Arpt. Auth. Special Fac. Rev. Bonds
(American Airlines, Inc.), 7 1/2s, 12/1/29 Baa 2,721,875
715,000 Cherokee Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds
(Nancy Travis Memorial Hosp.), 10s, 5/15/13 B/P 786,500
4,800,000 TX State Hsg. & Cmnty. Affairs Home Mtge. IFB,
Ser. C, FNMA Coll., GNMA Coll.,
9.622s, 7/2/24 AAA 5,802,000
--------------
9,310,375
Utah (3.2%)
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3,300,000 Carbon Cnty., Util. Rev. Bonds (Laidlaw
Solid Waste Disp.), Ser. A, 7 1/2s, 2/1/10 Baa 3,716,625
4,000,000 Tooele Cnty., Poll. Control Rev. Bonds
(Laidlaw Enviromental), Ser. A, 7.55s, 7/1/27 B/P 4,140,000
--------------
7,856,625
Washington (1.3%)
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5,000,000 Port Walla Walla, Pub. Corp. Solid Waste
Recycling Rev. Bonds (Ponderosa Fibres),
9 1/8s, 1/1/26 CCC/P 3,250,000
Wisconsin (0.4%)
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835,000 WI Hsg. & Econ. Dev. Auth. IFB (Home
Ownership Dev.), 9.895s, 10/25/22 Aa 931,025
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Total Investments (cost $232,647,901) *** $ 242,206,873
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $246,278,865.
** The Moody's or Standard & Poor's ratings indicated are believed to be the
most recent ratings available at September 30, 1997 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 September 30, 1997. Securities
rated by Putnam are indicated by "/P" and are not publicly rated.
The table below shows the percentage of the fund's investment on
September 30, 1997 in securities assigned to various rating categories
by Moody's and Standard & Poor's and in unrated securities determined by
Putnam Management to be of comparable quality.
Unrated securities
Rated securities of comparable quality,
as a percentage of as a percentage of
Rating fund's net assets fund's net assets
AAA/Aaa 25.1% 4.2%
AA/Aa 2.1 --
A/A 1.4 --
BBB/Baa 22.0 1.3
BB/Ba 3.3 19.2
B/B 1.2 14.8
Caa/CCC -- 1.3
Ca/CC -- --
C 0.2 --
D -- 0.1
A-1/VMIGI 2.1 --
---- ----
57.4% 40.9%
*** The aggregate identified cost on a tax basis is $232,647,901,
resulting in gross unrealized appreciation and depreciation of
$22,599,780 and $13,040,808, respectively, or net unrealized
appreciation of $9,558,972.
+ Non-income-producing security.
[DBL DAGGER] Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at September 30, 1997
was $3,057,933 or 1.2% of net assets.
# A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at
September 30, 1997.
The rates shown on IFB and IF COP, which are securities paying
interest rates that vary inversely to changes in the market interest
rates, and VRDN's are the current interest rates at September 30, 1997.
The fund had the following industry group concentrations greater
than 10% at September 30, 1997 (as a percentage of net assets):
Transportation 25.0%
Healthcare 20.2
Utilities 10.9
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Futures Contracts Outstanding at September 30, 1997 (Unaudited)
Total Aggregate Expiration Unrealized
Value Face Value Date Depreciation
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
U.S. Treasury 20 Year
Bond (Short) 8,300,250 8,104,373 12/20/97 (195,877)
- ----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
September 30, 1997 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities at value
(identified cost $232,647,901) $242,206,873
- ---------------------------------------------------------------------------------------------------
Cash 710,807
- ---------------------------------------------------------------------------------------------------
Interest receivable 5,069,902
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 35,000
- ---------------------------------------------------------------------------------------------------
Receivable for variation margin 24,750
- ---------------------------------------------------------------------------------------------------
Total assets 248,047,332
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 1,252,580
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 436,468
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 25,478
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 7,281
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,738
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 44,922
- ---------------------------------------------------------------------------------------------------
Total liabilities 1,768,467
- ---------------------------------------------------------------------------------------------------
Net assets $246,278,865
Represented by
- ---------------------------------------------------------------------------------------------------
Series A remarketed preferred shares, (8,000 shares authorized;
900 shares issued at $50,000 per share) (Note 4) $ 45,000,000
- ---------------------------------------------------------------------------------------------------
Paid-in capital -- common shares (unlimited shares authorized) (Note 1) 200,970,488
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,226,969
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (10,281,687)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 9,363,095
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $246,278,865
Computation of net asset value
- ---------------------------------------------------------------------------------------------------
Series A remarketed preferred shares $ 45,000,000
- ---------------------------------------------------------------------------------------------------
Cumulative undeclared dividends on Series A remarketed preferred shares 28,851
- ---------------------------------------------------------------------------------------------------
Net assets allocated to Series A remarketed preferred shares-
liquidation preference $ 45,028,851
- ---------------------------------------------------------------------------------------------------
Net assets available to common shares $201,250,014
- ---------------------------------------------------------------------------------------------------
Net assets per common share ($201,250,014 divided by 21,784,543 shares) $9.24
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended September 30, 1997 (Unaudited)
<S> <C>
Tax exempt interest income: $ 9,484,390
- --------------------------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 867,844
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 127,680
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 5,352
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,493
- --------------------------------------------------------------------------------------------------
Reports to shareholders 16,478
- --------------------------------------------------------------------------------------------------
Auditing 25,882
- --------------------------------------------------------------------------------------------------
Legal 13,752
- --------------------------------------------------------------------------------------------------
Postage 12,004
- --------------------------------------------------------------------------------------------------
Exchange listing fees 16,570
- --------------------------------------------------------------------------------------------------
Preferred share remarketing agent fees 55,750
- --------------------------------------------------------------------------------------------------
Other 21,487
- --------------------------------------------------------------------------------------------------
Total expenses 1,166,292
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (45,647)
- --------------------------------------------------------------------------------------------------
Net expenses 1,120,645
- --------------------------------------------------------------------------------------------------
Net investment income 8,363,745
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (5,886,406)
- --------------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 47,788
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the period 8,211,731
- --------------------------------------------------------------------------------------------------
Net gain on investments 2,373,113
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $10,736,858
- --------------------------------------------------------------------------------------------------
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
September 30 March 31
1997* 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 8,363,745 $ 17,450,841
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (5,838,618) 800,327
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments 8,211,731 (2,627,862)
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 10,736,858 15,623,306
- ----------------------------------------------------------------------------------------------------------------------
Distributions to Series A remarketed preferred
shareholders from net investment income (829,062) (1,577,970)
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations applicable
to common shareholders (excluding cumulative undeclared
dividends on remarketed preferred shares of $28,851
and $22,191, respectively) 9,907,796 14,045,336
- ----------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders from
net investment income (7,500,477) (14,890,644)
- ----------------------------------------------------------------------------------------------------------------------
Increase from issuance of common shares in connection
with reinvestment of distributions 1,035,191 2,083,092
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 3,442,510 1,237,784
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 242,836,355 241,598,571
- ----------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $1,226,969 and $1,192,763, respectively) 246,278,865 242,836,355
Number of fund shares
- ----------------------------------------------------------------------------------------------------------------------
Common shares outstanding at beginning of period 21,679,818 21,458,424
- ----------------------------------------------------------------------------------------------------------------------
Shares issued in connection with reinvestment of distributions 104,725 221,394
- ----------------------------------------------------------------------------------------------------------------------
Common shares outstanding at end of period 21,784,543 21,679,818
- ----------------------------------------------------------------------------------------------------------------------
Remarketed preferred shares outstanding at beginning
and end of period 900 900
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-Share Sept. 30
operating performance (Unaudited) Year ended March 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period
(common shares) $9.12 $9.16 $9.03 $9.23 $9.49 $8.99
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .39 .80 .80 .81 .81 .86
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .12 (.08) .13 (.19) (.27) .51
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .51 .72 .93 .62 .54 1.37
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income:
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders (.04) (.07) (.08) (.07) (.05) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders (.35) (.69) (.72) (.75) (.75) (.81)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.39) (.76) (.80) (.82) (.80) (.87)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period (common shares) $9.24 $9.12 $9.16 $9.03 $9.23 $9.49
- ------------------------------------------------------------------------------------------------------------------------------------
Market value,
end of period (common shares) $10.625 $10.25 $10.00 $9.50 $9.25 $10.50
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return at
market value (%)
(common shares (a) 7.31* 10.26 13.60 11.50 (4.99) 15.48
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(total fund) (in thousands) $246,279 $242,836 $241,599 $236,333 $238,148 $241,187
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) .58* 1.15 1.17 1.17 1.17 1.17
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(b) 3.76* 8.05 7.79 8.27 7.97 8.58
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 9.76* 9.30 34.45 49.11 28.55 53.89
- ------------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Ratios reflect net assets available to common shares only; net investment income ratio also
reflects reduction for dividend payments to preferred shareholders.
(c) The ratio of expenses to average net assets for the year ended March 31, 1996 and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios exclude
these amounts (Note 3)
</TABLE>
Notes to financial statements
September 30, 1997 (Unaudited)
Note 1
Significant accounting policies
Putnam High Yield Municipal Trust (the "fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The fund's investment objective is to seek high
current income exempt from federal income tax. The fund intends to achieve its
objective by investing in high yielding tax-exempt municipal securities
constituting a portfolio that the fund's Manager, Putnam Investment
Management, Inc., ("Putnam Management"), a wholly owned subsidiary of Putnam
Investments, Inc., believes to be consistent with prudent investment
management.
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 generally accepted
accounting principles and requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
A) Security valuation Tax-exempt 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 Putnam Management following procedures
approved by the Trustees, and such valuations and procedures are reviewed
periodically by the Trustees.
B) Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis.
C) Futures 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.
Futures contracts are valued at the quoted daily settlement prices established
by the exchange on which they trade. Exchange traded options are valued at the
last sale price, or if no sales are reported, the last bid price for purchased
options and the last ask price for written options. Options traded
over-the-counter are valued using prices supplied by dealers.
D) Federal taxes It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. It is also
the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, 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 March 31, 1997, the fund had a capital loss carryover of approximately
$4,443,000 available to offset future capital gains, if any. The amount of the
carryover and the expiration dates are:
Loss Carryover Expiration
- --------------------------------------------
3,135,000 March 31, 2003
1,308,000 March 31, 2004
E) Distributions to shareholders Distributions to common and preferred
shareholders are recorded by the fund on the ex-dividend date. Dividends on
remarketed preferred shares become payable when, as and if declared by the
Trustees. Each dividend period for the remarketed preferred shares is
generally a seven day period. The applicable dividend rate for the remarketed
preferred shares on September 30, 1997 was 3.9%. 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.
F) Determination of net asset value Net asset value of the common shares is
determined by dividing the value of all assets of the fund (including accrued
interest and dividends), less all liabilities (including accrued expenses) and
the liquidation preference of any outstanding remarketed preferred shares, by
the total number of common shares outstanding.
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,
original issue discount, stepped-coupon bonds and payment in kind bonds are
accreted according to the effective yield method.
Note 2
Management fee,
administrative services
and other transactions
Compensation of Putnam Management, for management investment advisory, and
administrative services is paid quarterly based on the average net assets of
the fund. Such fee is based on the annual rate of 0.70% of average weekly net
assets.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred shares
for that period exceed the fund's net income attributable to the proceeds of
the remarketed preferred shares during that period, then the fee payable to
Putnam Management for that period will be reduced by the amount of the excess
(but not more than .70% of the liquidation preference of the remarketed
preferred shares outstanding during the period).
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended September 30, 1997, fund expenses were reduced by
$45,647 under expense offset arrangements with PFTC. Investor servicing and
custodian fees reported in the Statement of operations exclude these credits.
The fund could have invested a portion of the assets utilized in connection
with the expense offset arrangements in an income producing asset if it had
not entered into such arrangements.
Trustees of the fund receive an annual Trustees fee of $553 and an additional
fee for each Trustee's meeting attended. Trustees who are not interested
persons of Putnam Management and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
The fund 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 in the fund and are
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
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.
Note 3
Purchase and sales of securities
During the six months ended September 30, 1997, purchases and sales of
investment securities other than short-term investments aggregated $23,787,740
and $22,757,443, respectively. There were no purchases and sales of U.S.
government obligations. In determining the net gain or loss on securities
sold, the cost of securities has been determined on the identified cost basis.
Note 4
Remarketed preferred shares
The Series A shares are redeemable at the option of the fund on any dividend
payment date at a redemption price of $50,000 per share, plus an amount equal
to any dividends accumulated on a daily basis but unpaid through the
redemption date (whether or not such dividends have been declared) and, in
certain circumstances, a call premium.
It is anticipated that dividends paid to holders of remarketed preferred
shares will be considered tax-exempt dividends under the Internal Revenue Code
of 1986 as amended. To the extent that the fund earns taxable income and
capital gains by the conclusion of a fiscal year, it will be required to
apportion to the holders of the remarketed preferred shares throughout that
year additional dividends as necessary to result in an after-tax equivalent to
the applicable dividend rate for the period.
Under the Investment Company Act of 1940, the fund is required to maintain
asset coverage of at least 200% with respect to the remarketed preferred
shares as of the last business day of each month in which any such shares are
outstanding. Additionally, the fund is required to meet more stringent asset
coverage requirements under terms of the remarketed preferred shares and the
shares' rating agencies. Should these requirements not be met, or should
dividends accrued on the remarketed preferred shares not be paid, the fund may
be restricted in its ability to declare dividends to common shareholders or
may be required to redeem certain of the remarketed preferred shares. At
September 30, 1997, no such restrictions have been placed on the fund.
Results of October 9, 1997 shareholder meeting
A meeting of shareholders of the fund was held on October 9, 1997. At the
meeting, each of the nominees for Trustees was elected, as follows:
Common Shares Preferred Shares
Votes Votes
Votes for withheld Votes for withheld
Jameson Adkins Baxter 19,344,535 341,833 899 0
Hans H. Estin 19,335,131 351,237 899 0
R.J. Jackson 19,345,815 340,553 899 0
Elizabeth T. Kennan 19,335,785 350,583 899 0
Lawrence J. Lasser 19,329,161 357,207 899 0
Donald S. Perkins 19,321,407 364,961 899 0
William F. Pounds 19,319,730 366,638 899 0
George Putnam 19,328,386 357,982 899 0
George Putnam, III 19,313,023 373,345 899 0
A.J.C. Smith 19,346,415 339,953 899 0
W. Nicholas Thorndike 19,338,496 347,872 899 0
A proposal to ratify the selection of Price Waterhouse L.L.P. as auditors for
the fund was approved as follows: Common Shares -- 19,266,068 votes for, and
102,602 votes against, with 317,698 abstentions and broker non-votes;
Preferred Shares -- 899 votes for, and 0 votes against, with 0 abstentions and
broker non-votes. All tabulations are rounded to nearest whole number.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William J. Curtin
Vice President
Jerome J. Jacobs
Vice President
Blake E. Anderson
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
36851-054 11/97
