Putnam
High Yield
Municipal
Trust
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
9-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years during
which the global securities markets, the mutual fund industry, and
Putnam itself have experienced tremendous growth and change.
As we look to the future, we are certain that the changes will be
breathtaking in their scope. What will not change is the Trustees'
dedication to serving the best interests of our shareholders.
We welcome the challenges that lie ahead and are confident that Putnam
and your Board will continue to face those challenges successfully as
they have for more than 60 years. We look forward to helping you meet
your financial objectives for many years to come.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
November 15, 2000
REPORT FROM FUND MANAGEMENT
Blake E. Anderson
This year bond investors have been reminded of one of the basic
principles of investing: When a turnaround occurs in the financial
markets, it usually happens so quickly that unless one is already
positioned in the comeback sector, one will be too late to fully
benefit. When the Nasdaq plunged in March, setting off a long string of
declines in other equity markets, bonds were suddenly the place to be.
Most bond investors began to benefit as the equity markets fell. For
investors in Putnam High Yield Municipal Trust, however, the good news
of improving performance has been somewhat impaired by the fund's
emphasis on lower-rated tax-exempt bonds, which have underperformed
high-grade bonds during the semiannual period.
Total return for 6 months ended 9/30/00
NAV Market price
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2.83% 16.24%
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Past performance is no indication of future results. Performance
information for longer periods begins on page 5.
* GENERAL MUNICIPAL BOND MARKET IMPROVES, BUT LOWER-RATED BONDS LAG
Through much of the first half of your fund's fiscal year, we had been
anticipating the beginning of a slowdown in the economy -- and better
fund performance -- even though the Federal Reserve Board was absorbed
in an agenda of raising interest rates. Prior to the spring drop in the
Nasdaq, we had seen five consecutive years of positive returns in most
equity markets, and investors had been ignoring the bond markets to
chase those profits.
In general, bond prices moved up, but lower-rated municipal bonds
lagged. The highest-quality bonds -- AAA-rated bonds -- performed
better. As a result, we witnessed a dramatic difference in yield between
the highest-rated and lowest-rated municipal bonds (known as credit
spread).
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
AAA/Aaa -- 34.7%
AA/Aa -- 2.3%
A -- 5.3%
BBB/Baa -- 22.2%
BB/Ba -- 17.0%
B -- 15.6%
Other -- 2.9%
Footnote reads:
*As a percentage of market value as of 9/30/00. A bond rated Baa or higher
is considered investment grade. 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.
Your fund invests primarily in lower-rated higher-yielding municipal
bonds; in an environment that favored higher-quality bonds, its
performance lagged national municipal bond funds with higher-grade
orientations. We firmly believe that the lower-rated sector currently
offers an attractive opportunity and that today's wide credit spreads
will begin to close. Over time, funds with high-yield components tend to
outperform higher-grade funds with less price volatility.
* EXPECTING WIDE CREDIT SPREADS TO NARROW
One of the reasons for our faith in this sector is that the decline in
lower-rated bond prices was not caused by rising defaults or by a
looming recession. Rather, the decline was due to the earlier flow of
cash out of municipal bond funds. However there is a positive aspect
about waiting for the sector's recovery: Investors receive high monthly
income while they are waiting.
With better performance in the general municipal bond market, extremely
low valuations in the lower-rated sectors, and the return of many
investors to the muni market, we have begun to see signs that credit
spreads have peaked and are beginning to close. We recently observed the
first indications that sentiment about lower credits is changing within
the hospital, nursing home, and utility sectors. Together these sectors
make up approximately 31.5% of your fund's portfolio.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Iowa Financing Authority Health
Care Facility
9.25%, 7/1/25
Los Angeles, California, Regional
Airport Improvement Corp.
9.25%, 8/1/24
Delaware Valley Regional Finance
Authority
7.75%, 7/1/27
Butler, Alabama, Industrial
Development Board
8.00%, 9/1/28
Massachusetts State Port Authority
10.00%, 3/1/26
Texas State Housing and
Community Affairs Home Mortgage
9.075%, 7/2/24
California Statewide Community
Development Authority
6.02%, 1/1/22
Hodge County, Louisiana,
Combined Utility
9.00%, 3/1/10
Massachusetts State Industrial
Financing Agency
9.00%, 5/1/22
Indianapolis Industrial Airport
Agency
7.10%, 1/15/17
Footnote reads:
These holdings represent 27.3% of the fund's assets as of 9/30/00.
Portfolio holdings will vary over time.
The supply of municipal bonds has been notably light over the past
several months, both in terms of new issues and within the secondary
market. Because of the strong economy, state and local governments are
flush with revenues, holding down any desire to issue bonds. Light
supply in the face of improved demand has also helped outstanding
municipal bonds perform better.
* BETTER TIMES AHEAD FOR LOWER-RATED CREDIT SECTORS
Credit selection is extremely important in a fund such as yours that
emphasizes below-investment-grade bonds. These are the bonds that add
tremendously to a fund's income level, but they also mean greater credit
risk and require the most meticulous research efforts. We are firm
believers that as long as lower-rated credit investments are widely
diversified across public sectors, states, and maturities, they are an
intelligent investment choice for tax-free investors.
Recent economic reports indicate that the U.S. economy is still
expanding at a healthy clip, though at a somewhat slower pace than
earlier in the year. Comments by the Federal Reserve Board show that it
now believes the economy can grow for sustained periods without
triggering higher inflation. We believe that this line of thinking is
the primary reason why the Fed did not raise interest rates in October
while maintaining its tightening bias. Based on these reports and the
improving cash flow situation, the investments in your fund, especially
the lower-rated securities, are well positioned to reap the narrowing
yield spreads.
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 9/30/00, there is no guarantee the fund will
continue to hold these securities in the future. The lower credit
ratings of high-yield bonds reflect a greater possibility that adverse
changes in the economy or poor performance by the issuers of those bonds
may affect the issuer's ability to pay principal and interest.
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
High Yield Municipal Trust is designed for investors seeking high
current income free from federal income tax through higher-yielding,
lower-rated municipal bonds.
TOTAL RETURN FOR PERIODS ENDED 9/30/00
Lehman
Market Brothers Municipal Consumer
NAV price Bond Index price index
---------------------------------------------------------------------
6 months 2.83% 16.24% 3.97% 1.34%
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1 year 1.26 11.17 6.18 3.46
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5 years 26.17 21.75 32.52 13.32
Annual average 4.76 4.01 5.79 2.53
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10 years 93.78 94.37 102.67 30.82
Annual average 6.84 6.87 7.32 2.72
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Life of fund
(since 5/25/89)
Annual average 6.75 5.92 7.18 3.03
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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, net asset value, and market price will fluctuate so that an
investor's shares when redeemed may be worth more or less than their
original cost.
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.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 9/30/00
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Distributions from common shares
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Number 6
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Income 1 $0.288
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Capital gains 1 --
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Total $0.288
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Preferred shares Series A (900 shares)
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Income1 $1,084.61
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Capital gains 1 --
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Total $1,084.61
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Share value NAV Market price
-------------------------------------------------------------------------------
3/31/00 $8.18 $7.250
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9/30/00 8.11 8.125
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Current return (common shares/end of period)
-------------------------------------------------------------------------------
Current dividend rate 2 7.10% 7.09%
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Taxable equivalent 3 11.75 11.74
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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.
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 into 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.
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
September 30, 2000 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Financial Guaranty Insurance Company
FNMA Coll. -- Federal National Mortgage Association Collateralized
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Collateralized
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
IF COP -- Inverse Floating Rate Certificate of Participation
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
U.S. Govt. Coll. -- U.S. Government Collateralized
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (97.7%) (a)
PRINCIPAL AMOUNT RATING(RAT) VALUE
<S> <C> <C> <C>
Alabama (2.8%)
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$ 5,750,000 Butler, Indl. Dev. Board Rev. Bonds (Solid Waste
Disp. James River Corp.), 8s, 9/1/28 BBB $ 6,210,000
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 Ba3 2,515,625
3,000,000 Tucson, Arpt. Auth. Special Fac. Rev. Bonds
(Lockheed Aermod Ctr. Inc.), 8.7s, 9/1/19 Baa3 3,075,000
-------------
5,590,625
Arkansas (0.9%)
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2,000,000 Northwest Regl. Apt. Auth. Rev. Bonds,
7 5/8s, 2/1/27 BB/P 2,095,000
California (8.8%)
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3,500,000 CA Hlth. Fac. Auth. Rev. Bonds (Cedar-Sinai
Med. Ctr.), MBIA, 5 1/8s, 8/1/27 Aaa 3,303,125
5,700,000 CA Statewide Cmnty. Dev. Auth. IF COP
(Motion Picture & TV Fund), AMBAC,
6.018s, 1/1/22 Aaa 5,172,750
4,000,000 Foothill/Eastern Corridor Agcy. CA Toll Road
Rev. Bonds, 5 3/4s, 1/15/40 BBB- 3,875,000
6,320,000 Los Angeles, Regl. Arpt. Impt. Corp Rev. Bonds
(Continental Airlines), 9 1/4s, 8/1/24 BB+/P 7,078,400
1,650,000 San Joaquin Hills, Trans. Corridor Agcy. Toll Road
Rev. Bonds, Ser. A, MBIA, zero %, 1/15/32 AAA 266,063
-------------
19,695,338
Colorado (2.8%)
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1,000,000 CO Edl. Fac. Auth. Rev. Bonds (Ocean Journey, Inc.),
8 3/8s, 12/1/26 B+/P 1,112,500
Denver, City & Cnty. Arpt. Rev. Bonds Ser. A
3,670,000 8 3/4s, 11/15/23 A2 3,871,850
1,330,000 8 3/4s, 11/15/23, Prerefunded Aaa 1,414,788
-------------
6,399,138
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 6,375,000
Florida (1.5%)
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1,500,000 Lee Cnty., Indl. Dev. Auth. Hlth. Care Facs. Rev.
Bonds (Cypress Cove Hlth. Pk.), Ser. A,
6 3/8s, 10/1/25 BB/P 1,305,000
2,000,000 St. Johns Cnty., FL Hlth. Care Indl. Dev. Auth. Rev.
Bonds (Glenmoor St. Johns Project), Ser. A,
8s, 1/1/30 B+/P 1,985,000
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3,290,000
Georgia (4.2%)
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3,025,000 De Kalb Cnty., Hsg. Auth. Muni. Rev. Bonds
(Briarcliff Park Apts.), Ser. B, 10s, 4/1/17 AAA/P 3,361,531
2,000,000 Forsyth Cnty., Hosp. Auth. Rev. Bonds
(Baptist Hlthcare Sys), 6 1/4s, 10/1/18 B/P 1,712,500
GA Med. Ctr. Hosp. Auth. IFB, MBIA
1,200,000 8.09s, 8/1/10 AAA 1,306,500
2,700,000 8.09s, 8/1/10, Prerefunded AAA 2,973,375
-------------
9,353,906
Illinois (6.5%)
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Chicago, O'Hare Intl. Arpt. Special Fac. Rev. Bonds
2,213,000 (United Air Lines, Inc.), Ser. B, 8.95s, 5/1/18 Baa2 2,284,325
1,670,000 (United Air Lines, Inc.), Ser. 84A, 8.85s, 5/1/18 Baa2 1,723,691
4,250,000 (American Airlines, Inc.), 8.2s, 12/1/24 Baa1 4,696,250
2,680,000 East Chicago, Ind. Exempt Fac. Rev. Bonds
(Ispat Inland, Inc.), 7s, 1/1/14 B1 2,539,300
IL Dev. Fin. Auth. Rev. Bonds (Cmnty. Rehab.
Providers Fac.), Ser. A
900,000 7 7/8s, 7/1/20 (acquired 1/25/96,
cost 900,000) (RES) D/P 810,000
1,235,000 7 7/8s, 7/1/20, Prerefunded AAA/P 1,417,163
1,045,000 Schaumburg, Indl. Dev. Rev. Bonds
(La Quinta Motor Inns), VRDN, 4 1/4s, 8/1/01
(Bank Of America (LOC)) Aa1 1,045,000
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14,515,729
Indiana (3.2%)
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3,000,000 Fort Wayne, Hosp. Auth. Rev. Bonds
(Parkview Hlth. Syst., Inc.), MBIA,
4 3/4s, 11/15/28 Aaa 2,475,000
4,500,000 Indianapolis Indl. Arpt. Auth. Special Fac. Rev.
Bonds (Federal Express Corp.), 7.1s, 1/15/17 Baa2 4,702,500
-------------
7,177,500
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 10,338,122
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 A2 4,095,000
1,415,000 Jefferson Cnty., 1st Mtge. Rev. Bonds
(AHF/KY-IOWA, Inc.), 10 1/4s, 1/1/20 CCC/P 1,420,306
-------------
5,515,306
Louisiana (4.4%)
-------------------------------------------------------------------------------------------------------------------
5,000,000 Hodge, Combined Util. Rev. Bonds (Stone
Container Corp.), 9s, 3/1/10 B/P 5,103,500
2,150,000 LA Local Govt. Env. Facs. Cmnty. Dev. Auth.
Env. Facs. Cmnty. Dev. Auth. Rev. Bonds
(St. James Place), Ser. A, 8s, 11/1/25 B-/P 2,155,375
2,500,000 LA Pub. Fac. Auth. 1st Mtge. Rev. Bonds
(St. James Place), 10s, 11/1/21 B-/P 2,687,475
-------------
9,946,350
Massachusetts (15.5%)
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Atlas Boston Tax Exempt Rev. Bonds
2,000,000 Ser. 99-1, 7 1/4s, 1/1/35 (acquired 11/18/99,
cost 2,000,000) (RES) B-/P 2,022,500
1,000,000 Ser. 1, 6.65s, 1/1/35 (acquired 11/18/99,
cost 1,000,000) (RES) BB+/P 1,012,500
MA State Hlth. & Edl. Fac. Auth. IFB
3,000,000 (St. Elizabeth Hosp.), Ser. E, FSA, 8.84s, 8/12/21 Aaa 3,201,540
2,000,000 (New England Medical Ctr.), MBIA, 4.70s, 7/1/18 Aaa 1,902,500
4,500,000 MA State Hsg. Fin. Agcy. Rev. Bonds, Ser. 53,
MBIA, 6.15s, 12/1/29 (SEG) Aaa 4,539,375
MA State Indl. Fin. Agcy. Res. Recvy. Rev. Bonds
(Southeastern MA)
1,400,000 Ser. B, 9 1/4s, 7/1/15 BB-/P 1,475,768
3,500,000 Ser. A, 9s, 7/1/15 BB-/P 3,685,780
MA State Indl. Fin. Agcy. Rev. Bonds
4,500,000 (Orchard Cove Inc.), U. S. Govt. Coll., 9s, 5/1/22 AAA/P 4,921,875
4,250,000 (Emerson College), 8.9s, 1/1/18 AAA/P 4,378,818
3,220,000 (Evanswood Bethzatha), 7.85s, 1/15/17
(acquired 12/13/96, cost 3,220,000) (RES) D/P 1,706,600
5,800,000 MA State Port Auth. Rev. Bonds
(Harborside Hyatt), 10s, 3/1/26 B/P 5,962,690
-------------
34,809,946
Michigan (1.6%)
-------------------------------------------------------------------------------------------------------------------
2,515,000 Detroit, Dev. Fin. Auth. Tax Increment Rev. Bonds,
Ser. A, 9 1/2s, 5/1/21 BBB+/P 2,816,800
1,000,000 MI State Strategic Fund Resource Recvy. Ltd.
Oblig. Rev. Bonds (Central Wayne Energy Rec.),
Ser. A, 7s, 7/1/27 CCC/P 906,250
-------------
3,723,050
Montana (1.4%)
-------------------------------------------------------------------------------------------------------------------
3,000,000 Montana State Board Investment Exempt Fac.
Rev. Bonds (Still Water Mining Project),
8s, 7/1/20 BB 3,157,500
Nebraska (0.5%)
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1,000,000 NE Investment Fin. Auth. Hosp. IFB, MBIA,
8.707s, 11/15/16 Aaa 1,077,500
Nevada (3.0%)
-------------------------------------------------------------------------------------------------------------------
3,500,000 Clark Cnty. G.O. Bonds (Pk. & Regl. Justice Ctr.),
FGIC, 5 5/8s, 11/1/19 Aa2 3,517,500
3,000,000 Clark Cnty., Indl. Dev. Rev. Bonds (Southwest
Gas Corp.), Ser. B, 7 1/2s, 9/1/32 Baa2 3,131,250
-------------
6,648,750
New Hampshire (1.3%)
-------------------------------------------------------------------------------------------------------------------
1,000,000 NH Higher Ed. & Hlth. Fac. Auth. Rev. Bonds
(NH College), 6 3/8s, 1/1/27 BBB- 948,750
1,000,000 NH State Bus. Fin. Auth. Rev. Bonds (Franklin
Regl. Hosp. Assn. PJ), Ser. A, 6.05s, 9/1/29 BB 818,750
1,500,000 NH State Bus. Fin. Auth. Swr. & Solid Waste Rev.
Bonds (Crown Paper), 7 7/8s, 7/1/26
(In default) (NON) D/P 1,230,000
-------------
2,997,500
New Jersey (1.1%)
-------------------------------------------------------------------------------------------------------------------
2,500,000 NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds
(Trinitas Hosp. Oblig. Group), 7 1/2s, 7/1/30 BBB- 2,575,000
New York (5.9%)
-------------------------------------------------------------------------------------------------------------------
2,350,000 NY State Energy Res. & Dev. Auth. Poll. Control
IFB, FGIC, 9.526s, 7/1/29 (acquired 12/19/94,
cost 2,435,729) (RES) Aaa 2,726,000
3,000,000 NY State Hsg. Fin. Agcy. Svcs. Contract Oblig.
Rev. Bonds, Ser. A, 7 3/8s, 9/15/21 AAA 3,180,000
NY State Local Govt. Assistance Corp. Rev. Bonds
1,500,000 Ser. A, 7s, 4/1/16 Aaa 1,549,230
2,000,000 Ser. D, 6 3/4s, 4/1/21 Aaa 2,105,000
1,500,000 Onondaga Cnty., Indl. Dev. Agcy. Rev. Bonds
(Solvay Paperboard LLC), 7s, 11/1/30 B+/P 1,475,625
2,160,000 Port Auth. NY & NJ Special Oblig. Rev. Bonds
(Continental/Eastern Laguardia), 9 1/8s, 12/1/15 Ba2 2,215,728
-------------
13,251,583
North Dakota (0.9%)
-------------------------------------------------------------------------------------------------------------------
2,000,000 Grand Forks, Hlth. Care Syst. Rev. Bonds
(Altru Hlth. Syst. Oblig. Group), 7 1/8s, 8/15/24 Baa1 2,020,000
Ohio (0.7%)
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1,500,000 Montgomery Cnty., Hosp. Rev. Bonds
(Kettering Med. Ctr.), 6 3/4s, 4/1/22 Baa1 1,498,125
Oklahoma (0.4%)
-------------------------------------------------------------------------------------------------------------------
1,000,000 OK Indl. Dev. Auth. Rev. Bonds (Hlth. Syst.-Oblig.
Group), Ser. A, 5 3/4s, 8/15/29 AAA 978,750
Oregon (0.4%)
-------------------------------------------------------------------------------------------------------------------
1,000,000 Multnomah Cnty., Hosp. Fac. Auth. Rev. Bonds
(Terwilliger Plaza Project), 6 1/2s, 12/1/29 BB-/P 863,750
Pennsylvania (8.0%)
-------------------------------------------------------------------------------------------------------------------
280,000 Allegheny Cnty., Indl. Dev. Auth. Arpt. Special Fac.
Rev. Bonds (U.S. Air, Inc.), Ser. A, 8 7/8s, 3/1/21 B3 287,350
1,000,000 Carbon Cnty., Indl. Dev. Auth. Rev. Bonds
(Panter Creek Partners PJ), 6.65s, 5/1/10 BBB- 1,021,250
3,250,000 PA Econ. Dev. Fin. Auth. Rev. Bonds
(MacMillan Ltd. Partnership), 7.6s, 12/1/20 A3 3,700,938
2,500,000 PA State Higher Ed. Assistance Agcy. Student
Loan IFB, AMBAC, 8.963s, 9/1/26 Aaa 2,986,775
4,000,000 Philadelphia Auth. For Indl. Dev. Special Fac.
Rev. Bonds (U.S. Airways Inc. Project),
8 1/8s, 5/1/30 B/P 4,070,000
2,100,000 Philadelphia, Muni. Auth. Rev. Bonds, Ser. C,
8 5/8s, 11/15/16 Aaa 2,233,875
3,400,000 Philadelphia, Regl. Port Auth. Lease IFB
(Kidder Peabody), MBIA, 8.963s, 9/1/13 Aaa 3,650,750
-------------
17,950,938
South Carolina (0.3%)
-------------------------------------------------------------------------------------------------------------------
600,000 SC State Jobs Econ. Dev. Auth. Hosp. Fac. Rev.
Bonds (Palmetto Hlth. Alliance), Ser. A,
7 3/8s, 12/15/21 Baa1 616,500
Tennessee (1.1%)
-------------------------------------------------------------------------------------------------------------------
2,500,000 Johnson City, Hlth. & Edl. Facs. Rev. Bonds
(Mtn. States Hlth.), Ser. A, 7 1/2s, 7/1/33 AAA 2,506,250
Texas (5.1%)
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1,000,000 Abilene, Hlth. Fac. Dev. Corp. Rev. Bonds
(Sears Methodist Retirement), 5 7/8s, 11/15/18 BB+/P 817,500
2,500,000 Alliance, Arpt. Auth. Special Fac. Rev. Bonds
(American Airlines, Inc.), 7 1/2s, 12/1/29 Baa1 2,558,550
650,000 Cherokee Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds
(Nancy Travis Memorial Hosp.), 10s, 5/15/13 AAA/P 712,563
2,500,000 Tomball, Hosp. Auth. Rev. Bonds
(Tomball Regl. Hosp.), 6s, 7/1/29 Baa2 2,056,250
4,800,000 TX State Hsg. & Cmnty. Affairs Home Mtge. IFB,
Ser. C, GNMA Coll, FNMA Coll, 9.075s, 7/2/24 AAA 5,448,000
-------------
11,592,863
Utah (1.5%)
-------------------------------------------------------------------------------------------------------------------
3,300,000 Carbon Cnty., Util. Rev. Bonds (Laidlaw Solid
Waste Disp.), Ser. A, 7 1/2s, 2/1/10 B3 3,225,750
4,000,000 Tooele Cnty., Poll. Control Rev. Bonds
(Laidlaw Environmental), Ser. A, 7.55s, 7/1/27
(In default) (NON) D/P 160,000
-------------
3,385,750
Virginia (0.4%)
-------------------------------------------------------------------------------------------------------------------
1,000,000 Pocahontas Pk. Way Assn. Toll Rd. Rev. Bonds,
Ser. A, 5 1/2s, 8/15/28 Baa3 818,750
West Virginia (1.0%)
-------------------------------------------------------------------------------------------------------------------
2,500,000 Princeton, Hosp. Rev. Bonds (Cmnty. Hosp.
Assn., Inc.), 6.1s, 5/1/29 BBB 2,203,125
Wisconsin (0.2%)
-------------------------------------------------------------------------------------------------------------------
430,000 WI Hsg. & Econ. Dev. Auth. IFB
(Home Ownership Dev.), 9.449s, 10/25/22 Aa3 443,321
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $224,208,137) (b) $219,620,965
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $224,837,369.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at September 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 September 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 $224,208,137,
resulting in gross unrealized appreciation and depreciation of
$7,693,585 and $12,280,757, respectively, or net unrealized depreciation
of $4,587,172.
(NON) Non-income-producing security.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at September 30, 2000
was $8,277,600 or 3.7% of net assets.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at
September 30, 2000.
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, 2000.
The fund had the following industry group concentrations greater
than 10% at September 30, 2000 (as a percentage of net assets):
Health care 26.0%
Transportation 24.3
------------------------------------------------------------------------------
Futures Contracts Outstanding at September 30, 2000
Aggregate Face Expiration Unrealized
Total Value Value Date Appreciation
------------------------------------------------------------------------------
Muni Bond Index (short) $2,838,375 $2,871,783 Dec-00 $33,408
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000 (Unaudited)
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investment in securities at value (identified cost $224,208,137) (Note 1) $219,620,965
-------------------------------------------------------------------------------------------
Cash 327,428
-------------------------------------------------------------------------------------------
Interest receivable 4,054,033
-------------------------------------------------------------------------------------------
Receivable for securities sold 2,386,485
-------------------------------------------------------------------------------------------
Total assets 226,388,911
Liabilities
-------------------------------------------------------------------------------------------
Payable for variation margin 2,719
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 1,064,899
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 394,660
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 26,367
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 15,360
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,455
-------------------------------------------------------------------------------------------
Other accrued expenses 46,082
-------------------------------------------------------------------------------------------
Total liabilities 1,551,542
-------------------------------------------------------------------------------------------
Net assets $224,837,369
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 (Note 1) 204,999,890
-------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (928,899)
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (19,679,858)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (4,553,764)
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $224,837,369
Computation of net asset value
-------------------------------------------------------------------------------------------
Series A remarketed preferred shares $ 45,000,000
-------------------------------------------------------------------------------------------
Cumulative undeclared dividends on Series A remarketed preferred shares 16,458
-------------------------------------------------------------------------------------------
Net assets allocated to Series A remarketed preferred
shares-liquidation preference $ 45,016,458
-------------------------------------------------------------------------------------------
Net assets available to common shares $179,820,911
-------------------------------------------------------------------------------------------
Net assets per common share ($179,820,911 divided by 22,185,403 shares) $8.11
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended September 30, 2000 (Unaudited)
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Tax exempt interest income: $ 8,004,635
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 787,178
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 86,630
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 6,345
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 2,896
-------------------------------------------------------------------------------------------
Other 90,631
-------------------------------------------------------------------------------------------
Total expenses 973,680
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (52,811)
-------------------------------------------------------------------------------------------
Net expenses 920,869
-------------------------------------------------------------------------------------------
Net investment income 7,083,766
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (1,611,555)
-------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (96,345)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
futures contracts during the period 266,902
-------------------------------------------------------------------------------------------
Net loss on investments (1,440,998)
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 5,642,768
-------------------------------------------------------------------------------------------
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
2000* 2000
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 7,083,766 $ 15,135,325
--------------------------------------------------------------------------------------------------
Net realized loss on investments (1,707,900) (713,173)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 266,902 (20,305,634)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 5,642,768 (5,883,482)
--------------------------------------------------------------------------------------------------
Distributions to Series A remarketed preferred shareholders:
--------------------------------------------------------------------------------------------------
From net investment income: (976,152) (1,610,955)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations applicable to common shareholders
(excluding cumulative undeclared dividends on remarketed
preferred shares of $16,458 and $9,987, respectively) 4,666,616 (7,494,437)
--------------------------------------------------------------------------------------------------
Distributions to common shareholders
--------------------------------------------------------------------------------------------------
From net investment income: (6,384,089) (13,800,296)
--------------------------------------------------------------------------------------------------
Increase from issuance of common shares in connection
with reinvestment of distributions 193,289 973,394
--------------------------------------------------------------------------------------------------
Total decrease in net assets (1,524,184) (20,321,339)
Net assets
--------------------------------------------------------------------------------------------------
Beginning of period 226,361,553 246,682,892
--------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income of $928,899 and
$652,424, respectively) $224,837,369 $226,361,553
--------------------------------------------------------------------------------------------------
Number of fund shares
--------------------------------------------------------------------------------------------------
Common shares outstanding at beginning of period 22,161,672 22,063,316
--------------------------------------------------------------------------------------------------
Shares issued in connection with reinvestment of distributions 23,731 98,356
--------------------------------------------------------------------------------------------------
Common shares outstanding at end of period 22,185,403 22,161,672
--------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period
(common shares) $8.18 $9.14 $9.28 $9.12 $9.16 $9.03
-------------------------------------------------------------------------------------------------------------
Investment operations
-------------------------------------------------------------------------------------------------------------
Net investment income .32 .68 .71 .75 .80 .80
-------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.06) (.95) (.09) .18 (.08) .13
-------------------------------------------------------------------------------------------------------------
Total from
investment operations .26 (.27) .62 .93 .72 .93
-------------------------------------------------------------------------------------------------------------
Less distributions:
-------------------------------------------------------------------------------------------------------------
From net
investment income:
-------------------------------------------------------------------------------------------------------------
To preferred shareholders (.04) (.07) (.07) (.08) (.07) (.08)
-------------------------------------------------------------------------------------------------------------
To common shareholders (.29) (.62) (.69) (.69) (.69) (.72)
-------------------------------------------------------------------------------------------------------------
Total distributions (.33) (.69) (.76) (.77) (.76) (.80)
-------------------------------------------------------------------------------------------------------------
Net asset value,
end of period (common shares) $8.11 $8.18 $9.14 $9.28 $9.12 $9.16
-------------------------------------------------------------------------------------------------------------
Market value,
end of period (common shares) $8.13 $7.25 $10.94 $10.50 $10.25 $10.00
-------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
-------------------------------------------------------------------------------------------------------------
Total return at
market value (%)
(common shares)(a) 16.24* (28.75) 11.35 9.67 10.26 13.60
-------------------------------------------------------------------------------------------------------------
Net assets, end of period
(total fund)(in thousands) $224,837 $226,362 $246,683 $248,063 $242,836 $241,599
-------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) .54* 1.19 1.14 1.15 1.15 1.17
-------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(b) 3.40* 7.09 6.90 7.27 8.05 7.79
-------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 4.67* 16.17 6.92 16.78 9.30 34.45
-------------------------------------------------------------------------------------------------------------
(a) Total return assumes dividend reinvestment.
(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 includes amounts paid
through expense offset arrangements (Note 2).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
September 30, 2000 (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 of 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 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.
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.
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) 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, 2000 the fund had a capital loss carryover of
approximately $17,728,000 available to offset future capital gains, if
any. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
-------------- ------------------
$3,134,000 March 31, 2003
1,309,000 March 31, 2004
7,979,000 March 31, 2005
3,861,000 March 31, 2006
1,445,000 March 31, 2007
E) Distributions to shareholders Distributions to common and preferred
shareholders from net investment income are recorded by the fund on the
ex-dividend date. Capital gains, if any, are recorded on the ex-dividend
date and paid at least annually. 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, 2000 was 4.20%. 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, less all
liabilities 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 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 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 gross 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 0.70% of the liquidation
preference of the remarketed preferred shares outstanding during the
period).
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.
For the six months ended September 30, 2000, fund expenses were reduced
by $52,811 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.
Each Trustee of the fund receives an annual Trustee fee, of which $565
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.
Note 3
Purchase and sales of securities
During the six months ended September 30, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $11,293,520 and $10,297,411, respectively.
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. 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 remarketed preferred shares. At September 30, 2000, no such
restrictions have been placed on the fund.
Note 5
Change in independent accountants
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP as this funds' independent accountant and voted to appoint KPMG LLP
for the fund's fiscal year ending March 31, 2001. During the two
previous fiscal years, PricewaterhouseCoopers LLP audit reports
contained no adverse opinion or disclaimer of opinion; nor were its
reports qualified or modified as to uncertainty, audit scope, or
accounting principle. Further, in connection with its audits for the two
previous fiscal years and through July 24, 2000, there were no
disagreements between the fund and PricewaterhouseCoopers LLP on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which if not resolved to the
satisfaction of PricewaterhouseCoopers LLP would have caused it to make
reference to the disagreements in its report on the financial statements
for such years.
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FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
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
Blake E. Anderson
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or
visit our Web site (www.putnaminvestments.com) any 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
---------------------
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---------------------
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