Putnam
Dividend
Income Fund
[GRAPHIC OMITTED: ARTWORK]
SEMIANNUAL REPORT
December 31, 1995
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "Perpetual preferred stocks responded extremely well to calendar
1995's combination of moderate economic growth, subdued inflation, and
declining interest rates. Their performance was the primary force behind
Putnam Dividend Income Fund's success in fiscal 1996's first half."
-- Jeanne L. Mockard, Manager, Putnam Dividend Income Fund
* "[Fund manager Jeanne] Mockard made some well-timed calls heading
into 1995. She shifted the fund into longer-duration fare, cutting its
stake in adjustable-rate bonds and increasing Putnam Dividend Income
Fund's common stock holdings and fixed-rate preferreds. These moves have
helped the fund capture some of this year's market rebound."
--Morningstar Closed-End Funds, November 3, 1995
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
13 Portfolio holdings
17 Financial statements
[GRAPHIC OMITTED: photo of George Putnam]
(copyright) Karsh, Ottawa
From the Chairman
Dear Shareholder:
Putnam Dividend Income Fund wrapped up an eventful six months that ended
in the midst of one of the strongest bond-market rallies on record. As
Fund Manager Jeanne Mockard relates in the report that follows, results
for the semiannual fiscal period that ended on December 31, 1995, were
gratifying, especially in contrast to last year's challenges.
Jeanne's decision to increase the portfolio's weighting in fixed-rate
perpetual preferred stocks proved timely, as long-term interest rates
continued to fall, a condition that is especially beneficial to such
securities. Continued benign inflation provided even more impetus to the
market's rise.
Hardly anyone expects the bond market to be as exuberant in the months
ahead as it was in the period just ended. Nevertheless, as the fund
moves into the second half of fiscal 1996, Jeanne sees the potential for
increased market stability, which may enable the fund to further realize
the benefits of its high-yielding, high-quality portfolio.
Respectfully yours,
/s/George Putnam
George Putnam
Chairman of the Trustees
February 15, 1996
Report from the Fund Manager
Jeanne L. Mockard
Fixed-income markets continued their historic advance during the first
half of Putnam Dividend Income Fund's 1996 fiscal year, the six months
ended December 31, 1995. Bond-market strength buoyed the performance of
preferred stocks, which, although classified as equities on corporate
balance sheets, behave more like bonds in the marketplace.
The Merrill Lynch Perpetual Preferred Index -- your fund's principal
performance benchmark -- advanced by 5.63% during the period, an
impressive recovery from the -1.2% drubbing it suffered during the same
period in 1994. Your fund's 5.20% total return at market price nearly
matched its benchmark, demonstrating that the fund kept pace with the
market's rally while remaining true to its primary objective: generating
a high level of current income while keeping principal fluctuations to a
minimum.
* PERPETUAL PREFERREDS BENEFIT FROM FALLING INTEREST RATES, BENIGN
INFLATION
Perhaps the biggest change in your fund's portfolio during the period
was a sizable increase in fixed-rate perpetual preferred stocks and a
corresponding decrease in adjustable-rate preferreds (ARPs). Given that
perpetual preferreds respond to interest-rate movements as if they were
long-term bonds with no maturity dates, they performed extremely well in
calendar 1995's falling-rate environment. Fiscal 1996's strong
semiannual results also reflect the availability of high real yields
(that is, yields minus the prevailing inflation rate; high real yields
indicated relatively tame inflation, which increased the appeal of
fixed-income securities). Consequently, our somewhat more aggressive
approach enabled your fund to benefit as long-term rates declined.
As the chart on page 5 indicates, we increased the fund's perpetual
preferred weighting from approximately 45% of the portfolio at the
beginning of the fiscal year to over 60% at the midpoint. We actually
began adding perpetual preferreds as far back as December 1994, in the
wake of substantial tax-loss selling that depressed the prices of many
securities, especially those in the public utility sector. Market
weakness enabled us to purchase the perpetual preferreds of numerous
financially stable utilities at deeply discounted prices. Moreover, we
continued to add perpetual preferreds throughout the fiscal year, not
only in the utility sector, but also in the banking and financial
sectors.
* BANKING AND FINANCIAL SECURITIES PROVIDE MAJOR PERFORMANCE BOOST
We have been particularly pleased with the performance of the fund's
banking and financial investments during the fiscal year's first half.
Favorable interest-rate trends, improving operating results, and an
active merger-and-acquisition calendar propelled the sector into a
leadership role -- not only in the preferred market but in the broader
equity market as well. Nevertheless, given our value-oriented approach,
which entails a strict sell discipline when certain price levels are
reached, we began taking profits on some of the fund's banking positions
late in the period. We redeployed those assets into utilities, which had
underperformed the broader market and therefore represented greater
value.
* COLLARS INCREASE ARPs' ATTRACTIVENESS WHEN RATES ARE FALLING
As we reduced the fund's adjustable-rate preferred weighting -- to
approximately 10% of the portfolio by the end of the period -- we used
a very specific criterion to differentiate between those ARPs we chose
to sell and those we opted to retain. Because ARPs carry coupons that
reset with movements in short-term interest rates, they are essential
defensive holdings when rates are rising.
[GRAPHIC OMITTED: horiontal bar chart COMPARATIVE PORTFOLIO
COMPOSITION*]
showing:
Perpetual preferreds 44.5% (black bar)
60.7% (grey bar)
Adjustable-rate preferreds 25.5% (black bar)
10.4% (grey bar)
Sinking-fund preferreds 14.4% (black bar)
15.5% (grey bar)
Common stocks 7.3% (black bar)
7.9% (grey bar)
Convertible securities 1.9% (black bar)
1.9% (grey bar)
Cash and short-term securities 5.8% (black bar)
3.2% (grey bar)
(black bar) 6/30/95
(grey bar) 12/31/95
Footnote reads:
Based on percentage of net assets. Composition will vary over time.
However, when rates are falling, as was the case throughout 1995, ARPs
are typically less desirable -- that is, unless they have reached their
coupon collars. All ARPs carry specific coupon collars which mark off
the high and low limits above or below which their coupons cannot reset.
Once an ARP has reached its lower coupon collar, its coupon income is
locked in at that level, providing the holder with income protection in
a falling-rate environment.
For example, the Texas Utilities Series B $7.00 preferred -- the fund's
tenth largest holding at the end of the period -- is an ARP that cannot
reset at a coupon below 7% or above 14.25%. Consequently, in the current
environment of flat-to-declining rates, this ARP's income stream can
never fall below 7%. Conversely, if rates begin to move back up, its
coupon will likewise move up, preserving the stock's value (unless rates
rise above 14.25%).
* LEVERAGE PROPOSED IN LIGHT OF LOWER SHORT-TERM RATES
Throughout most of the fund's history, we have maintained a leveraged
component in the portfolio, in effect borrowing money at low short-term
rates and reinvesting it at higher long-term rates and profiting from
the difference. Given that the yield curve has been relatively flat for
much of the past year, strategies involving leverage would not have
resulted in increased portfolio income, and consequently, the fund has
remained completely unleveraged during that time.
However, with the possibility of lower short-term interest rates in the
months ahead, we believe the yield curve may once again steepen,
resulting in a profitable spread between short- and long-term yields.
The fund, therefore, proposed to reintroduce leverage by issuing $60
million of auction preferred shares. The offering, if completed, is
expected to close sometime in March.
* TREASURY PROPOSALS PROMPT MARKET ADJUSTMENTS
Recently announced proposals out of Washington that, if enacted, would
lower the dividends-received deduction (DRD) to 50% from 70% resulted in
short-term price volatility in the preferred market as the semiannual
period came to a close. Investors reacted to the uncertainty introduced
by the proposals by bidding the prices of many preferreds downward to
approximate the levels at which they might trade should the DRD be
reduced. We will continue to monitor the Treasury's proposals -- which
contain potential positives and negatives for the preferred market -- as
we wait for the dust to clear from the ongoing federal budget debate.
Top 10 Holdings (12/31/95)*
McDermott, Inc. Series B, $2.60 sinking-fund preferred
Petroleum services
Detroit Edison Co. $1.9375 deposit-shares preferred
Electric utility
Boise Cascade Corp. Series F, $2.35 deposit-shares preferred
Forest products and paper manufacturing
AON Corp. $2.00 preferred
Insurance
Travelers Group Series D, $2.3125 deposit-shares preferred
Insurance and investment-management services
LASMO PLC Series A, $2.50 preferred
Petroleum services
W.R. Berkley Corp. Series A, $1.84375 deposit-shares preferred
Insurance
Connecticut Light and Power Co. Series 92, $3.615 sinking-fund pfd.
Electric utility
Unocal Corp. 144A $3.50 convertible preferred
Oil services
Texas Utilities Electric Co. Series B, $7.00 adjustable-rate pfd.
Electric utility
*Top 10 holdings represent 25.7% of the fund's net assets. Portfolio
holdings will vary over time.
During fiscal 1996's second half, we do not expect the fixed-income
markets to stage a repeat performance of 1995's extraordinary advance.
Nevertheless, we believe the slower economic environment may continue to
provide support for the markets, resulting in relatively neutral fixed-
income performance. And while we cannot provide guarantees, we believe
such an environment would enable the fund to reap the benefits of high
yields with modest total-return potential from the high-quality
securities it currently owns.
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 12/31/95, 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 Dividend Income Fund is designed for investors seeking
a high level of current income, consistent with preservation of capital.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions back into the fund.
TOTAL RETURN FOR PERIODS ENDED 12/31/95
Merrill Lynch
Perpetual
Preferred
NAV Market price Index CPI
- ------------------------------------------------------------------------
6 months 5.86% 5.20% 5.63% 0.66%
- ------------------------------------------------------------------------
1 year 17.31 17.46 20.41 2.54
- ------------------------------------------------------------------------
5 years 86.18 72.06 75.20 14.72
Annual average 13.24 11.46 11.86 2.78
- ------------------------------------------------------------------------
Life of fund
(Since 9/28/89) 88.24 48.38 85.10 22.80
Annual average 10.63 6.51 10.34 3.34
- ------------------------------------------------------------------------
Performance data represent past results. Investment returns and net
asset value will fluctuate so an investor's shares, when sold, may be
worth more or less than their original cost. Fund performance data do
not take into account any adjustment for taxes payable on reinvested
distributions.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 12/31/95
- ------------------------------------------------------------------------
Distributions (number): 6
- ------------------------------------------------------------------------
(Common shares)
- ------------------------------------------------------------------------
Income1 $0.36
- ------------------------------------------------------------------------
Total $0.36
- ------------------------------------------------------------------------
Share value: NAV Market price
- ------------------------------------------------------------------------
6/30/95 $10.57 $9.250
- ------------------------------------------------------------------------
12/31/95 $10.78 $9.375
- ------------------------------------------------------------------------
Current return:
- ------------------------------------------------------------------------
End of period
- ------------------------------------------------------------------------
Current dividend rate2 6.68% 7.68%
- ------------------------------------------------------------------------
Taxable equivalent3 9.20 10.57
- ------------------------------------------------------------------------
1 Investment income may be subject to state and local taxes for
corporate investors; federal, state and local taxes for noncorporate
investors.
2 Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
3 Assumes a corporation taxed at the 35% federal tax rate and that 100%
of the fund's distributions qualify for the 70% corporate dividends-
received deduction. For some investors, investment income may also be
subject to the federal alternative minimum tax.
TERMS AND DEFINITIONS
Net asset value (NAV) is the value of the fund's assets, minus any
liabilities and the liquidation preference and cumulative undeclared
dividends on any outstanding 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
Merrill Lynch Perpetual Preferred Index is an unmanaged list of
perpetual preferred stocks that is commonly used as a general measure of
performance for the preferred-stock market. The index assumes
reinvestment of all distributions and does not take into account
brokerage commissions or other costs. The securities that make up the
fund's portfolio do not match those in the index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A Putnam perspective on risk and reward
You've probably been told how important it is to understand the
relationship between an investment's potential rewards and its
accompanying risks. Given the cautionary nature of such instructions, it
may take most investors a while to realize that risk has a positive
side.
Every risk signals a potential reward. Selecting only those investments
that offer the greatest degree of security generally leads to only
modest rewards. Furthermore, even insured or guaranteed investments may
be subject to changes in their rates of return or, in some cases, in
their principal values. Experienced investors know that no investment is
truly risk free and are therefore willing to take on some measure of
risk in order to increase their potential gains.
The greater the risk, the greater the potential reward. Accepting an
appropriate level of investment risk can give you a better chance of
outpacing inflation over time and seeking to maximize your investment's
return. How much risk? Your financial advisor's feedback and your time
horizon can make all the difference in determining how much risk is
compatible with your investment goals and your peace of mind.
* FITTING YOUR FUND SELECTION TO YOUR RISK TOLERANCE
How do you find the right balance between investment risks and their
potential rewards. It's helpful to understand the types of risks that
can apply to different types of investments, and to look at your own
portfolio with this perspective.
For short-time goals, your first priority may be managing market risk.
Longer-term investors may be more concerned with inflation risk. And all
income-oriented investors should consider interest-rate, credit, and
prepayment risks carefully.
* A RUNDOWN OF RISK TYPES
This list covers only the most general types of risks; however, each
investment will also have its own specific risks.
MARKET RISK Most important for stock funds, but relevant to all funds,
this is a measure of how sensitive a fund's holdings are to changes in
general market conditions. Remember, though, that securities that lose
value quickly in market declines may also show the strongest gains in
more favorable environments.
INTEREST-RATE RISK Since bond prices fall as interest rates rise, this
type of risk is a particular concern for fixed-income inves-
tors. However, interest-rate increases can also have a substantial
negative effect on the stock market.
INFLATION RISK If your investments cannot keep pace with inflation, your
money will begin to lose its purchasing power. Stock investments are
generally considered among the best ways of addressing inflation risk
over the long term.
CREDIT AND PREPAYMENT RISK Credit risk is the concern that the
security's issuer will not be able to meet its payment, while prepayment
risk involves the premature payoff of a loan, with a resulting loss of
interest income. Professional management and in-depth research are
invaluable in managing both these risks.
LIQUIDITY RISK Not all investments can be readily converted into cash at
their perceived market values. Liquidity risk can affect the price of
securities held in the fund's portfolio and, thus, the fund's share
prices.
<TABLE>
<CAPTION>
Portfolio of investments owned
December 31, 1995 (Unaudited)
Preferred Stocks (86.6%)*
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Automobiles (3.6%)
- -------------------------------------------------------------------------------------------------------------
30,000 Ford Motor Co. Ser. B, $2.0625, dep. shs. Preferred (pfd.) $ 825,000
65,500 General Motors Corp. Ser. B, $2.28125, dep. shs. pfd. 1,768,500
59,000 General Motors Corp. Ser. G, $2.28, dep. shs. pfd. 1,652,000
--------------
4,245,500
Banks (18.1%)
- -------------------------------------------------------------------------------------------------------------
10,000 Ahmanson (H.F.) & Co. Ser. B, $2.40, dep. shs. pfd. 257,500
14,200 Ahmanson (H.F.) & Co. Ser. C, $2.10, dep. shs. pfd. 367,425
20,000 Bank of Boston Corp. Ser. E, $2.15, dep. shs. pfd. 517,500
60,000 BankAmerica Corp. Ser. H, $2.25, pfd. 1,552,500
38,200 BankAmerica Corp. Ser. K, $2.09375, pfd. 983,650
18,600 BankAmerica Corp. Ser. L, $2.04, dep. shs. pfd. 476,625
70,000 BankAmerica Corp. Ser. M, $1.96875, dep shs. pfd. 1,785,000
70,000 Bankers Trust New York Corp. Ser. Q, $1.4705,
Adjustable Rate Preferred (ARP) (CUS) 1,478,750
41,100 Chase Manhattan Corp. Ser. I, $2.71, pfd. 1,243,275
19,000 Chase Manhattan Corp. Ser. H, $2.44, pfd. 524,875
39,000 Chase Manhattan Corp. Ser. J, $2.27, pfd. 1,014,000
41,800 Chase Manhattan Corp. Ser. M, $2.10, pfd. 1,086,800
23,825 Chemical Banking Corp. Ser. H, $2.09375, pfd. 604,559
28,000 Chemical Banking Corp. Ser. I, $1.98, dep. shs. pfd. 714,000
10,000 Citicorp Ser. 8-B, $8.25, pfd. 985,000
13,000 Citicorp Ser. 3, $7.00, ARP 1,270,750
45,000 Citicorp Ser. 19, $1.323, ARP 961,875
13,000 First Chicago NBD Corp. Ser. E, $2.1125, dep. shs. pfd. 338,000
58,300 First Interstate Bancorp Ser. F, $2.46875, dep. shs. pfd. 1,501,225
67,000 First Interstate Bancorp Ser. G, $2.25, dep. shs. pfd. 1,733,625
26,100 Great Western Financial Corp. $2.075, dep. shs. pfd. 678,600
40,000 Sumitomo Bank Ltd. Ser. A, $2.03125, dep. shs. pfd. 980,000
--------------
21,055,534
Combined Utilities (14.5%)
- -------------------------------------------------------------------------------------------------------------
9,000 Baltimore Gas & Electric Co. Ser. 93, $7.125, pfd. 927,000
18,000 Baltimore Gas & Electric Co. $6.99, pfd. 1,833,750
9,694 Baltimore Gas & Electric Co. Sinking Fund, Ser. 87, $6.75, pfd. 954,859
10,000 Baltimore Gas & Electric Co. Ser. 93, $6.70, pfd. 1,010,000
10,000 Cincinnati Gas & Electric Co. Sinking Fund, $7.375, pfd. 1,000,000
71,162 Delmarva Power & Light Co. $1.9375, pfd. 1,779,050
77,000 New York State Electric & Gas Corp. Ser. B $1.36, ARP 1,655,500
25,000 Pacific Gas & Electric Co. Ser. U, $1.76, pfd. 656,250
6,750 Public Service Electric & Gas Co. $7.52, pfd. 675,000
19,000 Public Service Electric & Gas Co. Sinking Fund, $7.44, pfd. 1,914,250
12,000 Public Service Electric & Gas Co. $6.92, pfd. 1,188,000
7,000 Public Service of Colorado $7.15, pfd. 652,750
67,000 San Diego Gas & Electric Co. $1.70, pfd. 1,608,000
10,000 Western Resources, Inc. Sinking Fund, $8.50, pfd. 1,022,500
--------------
16,876,909
Electric Utilities (21.5%)
- -------------------------------------------------------------------------------------------------------------
8,284 Arkansas Power & Light Co. Sinking Fund, $8.52, pfd. 815,974
10,000 Commonwealth Edison Co. Sinking Fund, $9.00, pfd. 1,030,000
50,000 Connecticut Light & Power Co. Sinking Fund, Ser. 92, $3.615, pfd. 2,512,500
8,500 Detroit Edison Co. $7.45, pfd. 837,250
140,000 Detroit Edison Co. $1.9375, dep. shs. pfd. 3,570,000
50,000 Georgia Power Co. $1.9875, pfd. 1,262,500
8,916 Gulf States Utilities Co. $7.56, pfd. 775,692
11,000 Houston Light & Power $8.12, pfd. 1,111,000
50,000 Long Island Lighting Co. Sinking Fund, Ser. NN, $1.95, pfd. 975,000
9,000 Louisiana Power & Light Co. Sinking Fund, $7.00, pfd. 882,000
20,000 Niagara Mohawk Power Corp. $2.375, pfd. 467,500
15,200 Niagara Mohawk Power Corp. Ser. A, $1.625, ARP 254,600
6,600 Northern States Power Co. Ser. A, $5.50, ARP 620,400
14,100 Northern States Power Co. Ser. B, $5.50, ARP 1,325,400
16,000 PSI Energy, Inc. $1.86, pfd. 400,000
13,300 PacifiCorp Sinking Fund, $7.12, pfd. 1,328,337
5,000 Peco Energy $7.48, pfd. 500,000
72,000 Puget Sound Power & Light Co. $1.96875, pfd. 1,854,000
21,400 Texas Utilities Electric Co. Ser. B, $7.00, ARP 1,990,200
75,580 Texas Utilities Electric Co. Ser. A, $1.875, dep. shs. pfd. 1,946,185
25,000 Texas Utilities Electric Co. Ser. B, $1.805, dep. shs. pfd. 631,250
--------------
25,089,788
Finance (4.5%)
- -------------------------------------------------------------------------------------------------------------
40,000 Bear Stearns & Co. Ser. A, $2.75, ARP 1,720,000
9,000 Bear Stearns & Co. Ser. B, $1.97, dep. shs. pfd. 226,125
99,669 Berkley (W.R.) Corp. Ser. A, $1.84375, dep. shs. pfd. 2,516,642
4,400 Merrill Lynch & Co., Inc. Ser. A, $2.25, dep. shs. pfd. 124,850
25,000 Morgan Stanley Inc. $2.22, dep. shs. pfd. 643,750
--------------
5,231,367
Financial Services (0.5%)
- -------------------------------------------------------------------------------------------------------------
59,750 Household International Inc. Ser. 91-A, $0.95, dep. shs. pfd. 597,500
Food Chains (1.0%)
- -------------------------------------------------------------------------------------------------------------
45,000 McDonalds Corp. Ser E, $1.93, dep. shs. pfd. 1,170,000
Forest Products (2.7%)
- -------------------------------------------------------------------------------------------------------------
120,000 Boise Cascade Corp. Ser. F, $2.35, dep. shs. pfd. 3,135,000
Gas Utilities (1.0%)
- -------------------------------------------------------------------------------------------------------------
36,200 Phillips Gas Co. Ser. A, $2.35, pfd. 959,300
9,360 Washington Natural Gas Co. Ser. III, $2.125, pfd. 235,170
--------------
1,194,470
Health Care (0.8%)
- -------------------------------------------------------------------------------------------------------------
1,000 Rhone Poulenc Rorer Ser. 3, $5.84, dep. shs. pfd. 985,000
Insurance (8.8%)
- -------------------------------------------------------------------------------------------------------------
115,000 AON Corp. $2.00, pfd. 2,961,250
48,000 Progressive Corp. Ser. A, $2.34375, pfd. 1,218,000
40,000 Provident Life & Accident Insurance Co. $2.025, dep. shs. pfd. 1,010,000
9,000 SunAmerica Inc. Ser. C, $7.00, ARP 891,000
50,000 SunAmerica Inc. Ser. B, $2.3125, pfd. 1,300,000
108,000 Travelers Corp. Ser. D, $2.3125, dep. shs. pfd. 2,821,500
--------------
10,201,750
Oil Services (7.1%)
- -------------------------------------------------------------------------------------------------------------
111,000 LASMO PLC ADS Ser. A, $2.50, pfd. (United Kingdom) 2,650,125
190,537 McDermott Inc. Sinking Fund, Ser. B, $2.60, pfd. 5,668,476
--------------
8,318,601
Paper (0.4%)
- -------------------------------------------------------------------------------------------------------------
20,000 James River Corp. Ser. O, $2.0625, dep. shs. pfd. 502,500
Publishing (1.1%)
- -------------------------------------------------------------------------------------------------------------
49,000 Newscorp Overseas Corp. Ser. A, $2.15625, pfd. 1,243,375
Water Utilities (1.0%)
- -------------------------------------------------------------------------------------------------------------
12,000 United Water Resources, Inc. Ser. B, $7.625, pfd. 1,188,000
--------------
Total Preferred Stocks (cost $102,638,421) $101,035,294
Common Stocks (7.9%)*
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
Combined Utilities (2.1%)
- -------------------------------------------------------------------------------------------------------------
43,000 Pacific Gas & Electric Co. $ 1,220,125
56,000 Rochester Gas & Electric Corp. 1,267,000
--------------
2,487,125
Electric Utilities (5.7%)
- -------------------------------------------------------------------------------------------------------------
50,000 Entergy Corp. 1,462,500
60,000 Long Island Lighting Co. 982,500
58,000 Potomac Electric Power Co. 1,522,500
41,000 Public Service Enterprise Group, Inc. 1,255,625
34,000 Texas Utilities Electric Co. 1,398,250
--------------
6,621,375
Telephone Services (0.1%)
- -------------------------------------------------------------------------------------------------------------
4,100 Pacific Telesis Group 137,863
--------------
Total Common Stocks (cost $8,037,958) $ 9,246,363
CONVERTIBLE PREFERRED STOCKS (1.9%)* (cost $2,080,000)
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
Oils (1.9%)
- -------------------------------------------------------------------------------------------------------------
40,000 Unocal Corp. 144A $3.50, cv. pfd. $ 2,180,000
SHORT-TERM INVESTMENTS (3.2%)* (cost $3,725,831)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
$3,724,000 Interest in $308,242,000 joint repurchase agreement
dated December 29, 1995 with Lehman Brothers Inc.
due January 2, 1996 with respect to various U.S. Treasury
obligations -- maturity value of $3,726,441 for an
effective yield of 5.90% $ 3,725,831
- -------------------------------------------------------------------------------------------------------------
Total Investments (cost $116,482,210)*** $116,187,488
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Percentages indicated are based on net assets of $116,630,535.
(CUS) Bankers Trust New York Corp. provides sub-custodian services to
the fund.
*** The aggregate identified cost on a tax basis is $116,482,210,
resulting in gross unrealized appreciation and depreciation of
$2,905,708 and $3,200,430, respectively, or net unrealized depreciation
of $294,722.
ADS after the name of a holding stands for American Depository Shares
representing ownership of foreign securities on deposit with a domestic
custodian bank.
144A after the name of a security represents those securities exempt
from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
The accompanying notes are an integral part of these financial
statements.
<TABLE>
<CAPTION>
Statement of assets and liabilities
December 31,1995 (Unaudited)
<S> <C>
Assets
- --------------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $116,482,210) (Note 1) $116,187,488
- --------------------------------------------------------------------------------------------------------
Cash 859
- --------------------------------------------------------------------------------------------------------
Dividends and other receivables 1,384,785
- --------------------------------------------------------------------------------------------------------
Total assets 117,573,132
Liabilities
- --------------------------------------------------------------------------------------------------------
Distributions payable to shareholders 649,473
- --------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 3) 218,088
- --------------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 3) 239
- --------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 3) 2,192
- --------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 3) 28,792
- --------------------------------------------------------------------------------------------------------
Other accrued expenses 43,813
- --------------------------------------------------------------------------------------------------------
Total liabilities 942,597
- --------------------------------------------------------------------------------------------------------
Net assets $116,630,535
Represented by
- --------------------------------------------------------------------------------------------------------
Common shares, without par value, unlimited shares
authorized; 10,821,255 shares outstanding $122,964,096
- --------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (476,162)
- --------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (5,562,677)
- --------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (294,722)
- --------------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $116,630,535
Computation of net asset value
- --------------------------------------------------------------------------------------------------------
Net asset value per share ($116,630,535 divided by 10,821,255 shares) $10.78
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<TABLE>
<CAPTION>
Statement of operations
Six months ended December 31,1995 (Unaudited)
<S> <C>
Investment Income
- --------------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $20,824) $4,346,781
- --------------------------------------------------------------------------------------------------------
Interest 152,917
- --------------------------------------------------------------------------------------------------------
Total investment income 4,499,698
Expenses:
- --------------------------------------------------------------------------------------------------------
Compensation of Manager (Note 3) 433,835
- --------------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 3) 75,266
- --------------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 3) 6,204
- --------------------------------------------------------------------------------------------------------
Reports to shareholders 20,779
- --------------------------------------------------------------------------------------------------------
Auditing 3,268
- --------------------------------------------------------------------------------------------------------
Legal 3,270
- --------------------------------------------------------------------------------------------------------
Postage 19,538
- --------------------------------------------------------------------------------------------------------
Registration fees 617
- --------------------------------------------------------------------------------------------------------
Exchange listing fees 12,130
- --------------------------------------------------------------------------------------------------------
Administrative services (Note 3) 4,303
- --------------------------------------------------------------------------------------------------------
Other expenses 637
- --------------------------------------------------------------------------------------------------------
Total expenses 579,847
- --------------------------------------------------------------------------------------------------------
Expense reduction (Note 3) (21,970)
- --------------------------------------------------------------------------------------------------------
Net expenses 557,877
- --------------------------------------------------------------------------------------------------------
Net investment income 3,941,821
- --------------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 4) (1,581,212)
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments during the period 3,808,269
- --------------------------------------------------------------------------------------------------------
Net gain on investments 2,227,057
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $6,168,878
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
December 31 June 30
1995* 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- --------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------
Net investment income $3,941,821 $8,399,243
- --------------------------------------------------------------------------------------------------------
Net realized loss on investments and written options (1,581,212) (3,908,559)
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 3,808,269 4,004,697
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,168,878 8,495,381
- --------------------------------------------------------------------------------------------------------
Distributions to auction preferred shareholders:
From net investment income -- (93,670)
From net realized gain on investments -- (635,190)
- --------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
From net investment income (3,895,652) (8,465,986)
From net realized gain on investments -- (2,571,785)
- --------------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 2):
- --------------------------------------------------------------------------------------------------------
Auction preferred shares -- (25,000,000)
- --------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,273,226 (28,271,250)
- --------------------------------------------------------------------------------------------------------
Net assets
- --------------------------------------------------------------------------------------------------------
Beginning of period 114,357,309 142,628,559
- --------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income of $476,162 and $522,331,
respectively) $116,630,535 $114,357,309
- --------------------------------------------------------------------------------------------------------
Number of fund shares
- --------------------------------------------------------------------------------------------------------
Common shares outstanding at beginning and end of period 10,821,255 10,821,255
- --------------------------------------------------------------------------------------------------------
Auction preferred shares outstanding at beginning of period -- 250
- --------------------------------------------------------------------------------------------------------
Auction preferred shares repurchased -- (250)
- --------------------------------------------------------------------------------------------------------
Auction preferred shares outstanding at end of period -- --
- --------------------------------------------------------------------------------------------------------
* Unaudited.
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
Six months ended
December 31 Year ended June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1995* 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.57 $10.84 $12.39 $ 11.38 $ 10.21 $ 10.26
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .37 .78 1.13 1.35 1.49 1.65
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments .20 .01 (1.13) .97 1.15 .05
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .57 .79 -- 2.32 2.64 1.70
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- (.01) (.16) (.21) (.27) (.49)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders (.36) (.78) (1.04) (1.08) (1.19) (1.25)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gains
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- (.06) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- (.24) (.38) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital: (a)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- -- -- -- -- (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.36) (1.09) (1.58) (1.29) (1.46) (1.78)
- ------------------------------------------------------------------------------------------------------------------------------------
Change in cumulative undeclared dividends on
remarketed preferred shares -- .03 .03 (.02) (.01) .03
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.78 $10.57 $10.84 $ 12.39 $ 11.38 $ 10.21
- ------------------------------------------------------------------------------------------------------------------------------------
Market value, end of period (common shares) $9.375 $9.250 $9.750 $11.875 $12.000 $10.375
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return at market value
(common shares) (%) (b) 5.20(e) 5.82 (6.78) 8.27 28.71 8.41
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (total fund)
(in thousands) $116,631 $114,357 $142,629 $208,076 $196,725 $182,003
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .50(e) 1.07 1.42 1.70 1.64 2.02
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets (%)(c) 3.40(e) 7.39 8.06 9.65(c) 11.14 11.67
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 29.09 27.39 73.63 166.44 160.44 197.67
- ------------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) See Note 1 to financial statements.
(b) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Ratios reflect net assets available to common shares only; net
investment income ratio also reflects reduction for dividend payments to
preferred shareholders.
(d) The ratio of expenses to average net assets for the year ended June
30, 1995 and for the six months ended December 31, 1995 include amounts
paid through expense offset arrangements. Prior period ratios exclude
these amounts. (See Note 3)
(e) Not annualized.
</TABLE>
Notes to financial statements
Six months ended December 31, 1995 (Unaudited)
Note 1
Significant accounting policies
The fund is registered under the Investment Company Act of 1940, as
amended, as a diversified, closed-end management investment company. The
fund's objective is to seek high current income eligible for dividends
received deduction allowed to corporations under Section 243 (C1) of the
Internal Revenue Code, consistent with preservation of capital by
investing in a portfolio of preferred and common equity securities. The
fund will invest at least 65% of its total assets in dividend-paying
securities. Non-convertible preferred stocks will be rated "investment
grade" at the time of investment or, if not rated, will be of comparable
quality as determined by Putnam Investment Management, Inc. ("Putnam
Management"), the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc. The fund may also use leverage by issuing preferred
shares in an effort to increase the income to the common shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements are in conformity
with generally accepted accounting principles 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 Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities traded over-the-counter--the last reported bid
price, except that certain U.S. government obligations are stated at the
mean between the bid and asked prices. Securities whose market
quotations are not readily available are stated at fair value on the
basis of valuations furnished by pricing services approved by the
Trustees, which determine valuations for normal, institutional-size
trading units of such securities using methods based on market
transactions for comparable securities and various relationships between
securities that are generally recognized by institutional traders.
Short-term investments having remaining maturities of 60 days or less
are stated at amortized cost, which approximates market value, and other
investments are stated at fair value following procedures approved by
the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account, along with the cash of other
registered investment companies managed by Putnam Management and certain
other accounts. These balances may be invested in one or more repurchase
agreements and/or short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to 102% of the resale price, including accrued
interest. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to
the resale price, including accrued interest.
D) 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), undeclared dividends on remarketed preferred shares and the
liquidation value of any outstanding remarketed preferred shares, by the
total number of common shares outstanding.
E) 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
and dividend income is recorded on the ex-dividend date except that
certain dividends from foreign securities are recorded as soon as the
fund is informed of the ex-dividend date.
F) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation of securities held and for excise tax on income and capital
gains.
At June 30, 1995, the fund had a capital loss carryover of approximately
$366,000 available to offset future net capial gain, if any, which will
expire on June 30, 2003. To the extent that the capital loss carryover
is used to offset realized gains, it is unlikely that the gains so
offset will be distributed to shareholders, since distribution might be
taxable as ordinary income.
G) Distributions to shareholders Distributions to shareholders are
recorded by the fund on the ex-dividend date. At certain times, the fund
may pay distributions at a level rate even though, as a result of market
conditions or investment decisions, the fund may not achieve projected
investment results for a given period. 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. These differences include dividends payable, post
October losses and capital loss carryover. 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. For the year ended June 30, 1995, the fund reclassified
$341,463 to decrease distributions in excess of net investment and
$341,434 to increase accumulated net realized loss, with a decrease to
paid-in-capital of $29. The calculation of net investment income per
share in the financial highlights excludes these adjustments.
H) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities
and Exchange Commission and various states and the initial public
offering of its shares were $79,675. These expenses were amortized on a
straight-line basis over a period not exceeding 60 months from the date
the fund commenced operations, and concluded during the six months ended
December 31, 1995.
Note 2
Auction Preferred Shares
On September 28, 1989, the fund issued 740 Auction Preferred Shares,
Series A. Proceeds to the fund before underwriting expenses of
$1,295,000 and $308,080 of offering expenses, amounted to $74,000,000.
During the fiscal year ended June 30, 1994, a total of 490 shares were
repurchased at a value of $49,000,000 plus interest. The remaining 250
shares were repurchased by the fund at a value of $25,000,000 plus
interest during the year ended June 30, 1995. The preferred shares were
redeemable at the option of the fund on any dividend payment date at a
redemption price of $100,000 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).
Under the Investment Company Act of 1940, the fund was required to
maintain asset coverage of at least 200% with respect to the auction
preferred shares as of the last business day of each month in which any
such shares are outstanding. Additionally, the fund was required to meet
more stringent asset coverage requirements under terms of the auctioned
preferred shares and the shares' rating agencies. Had these requirements
not been met, or had dividends accrued on the auctioned preferred shares
not been paid, the fund may have been restricted in its ability to
declare dividends to common shareholders or may have been required to
redeem certain of the auctioned preferred shares. At December 31, 1995,
no such restrictions have been placed on the fund.
Note 3
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, including proceeds from the auctioned preferred offering. Such
fee is based on the following annual rates: 0.75% of the first $500
million of average net assets, 0.65% of the next $500 million, 0.60% of
the next $500 million and 0.55% of any amount over $1.5 billion.
If dividends payable on auctioned preferred shares during any dividend
payment period plus any expenses attributable to auctioned preferred
shares for that period exceeded the fund's net income attributable to
the proceeds of the auctioned preferred shares during that period, then
the fee payable to Putnam Management for that period would have been
reduced by the amount of the excess (but not more than 0.85% of the
liquidation preference of the remarketed auction 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.
Trustees of the fund receive an annual Trustee's fee of $810 and an
additional fee for each Trustees' 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.
Custodial functions for the fund 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 December 31, 1995, fund expenses were reduced
by $21,970 under expense offset arrangements with PFTC. Investor
servicing and custodian fees reported in the Statement of operations
exclude these credits. The fund could have invested the assets utilized
in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
During the six months ended December 31, 1995, the fund adopted a
Trustee Fee Deferral Plan (the "Plan") which allows the Trustees to
defer the receipt of all or a portion of Trustees Fees payable on or
after July 1, 1995. The deferred fees remain in the fund and are
invested in the fund or in other Putnam funds until distribution in
accordance with the Plan.
Note 4
Purchases and sales of securities
During the six months ended December 31, 1995, purchases and sales of
investment securities other than short-term investments aggregated
$37,934,821 and $34,668,297, respectively. There were no purchases or
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.
Dividend Policy
It is the fund's dividend policy to pay monthly distributions from net
investment income and any net realized short-term gains (including gains
from options and futures transactions). Long-term capital gains are
distributed at least annually. In an effort to maintain a more stable
level of distributions, the fund's monthly distribution rate will be
based on Putnam Management's projections of the net investment income
and net realized short-term capital gains that the fund is likely to
earn over the long term. Such distributions at times may exceed the
current earnings of the fund, resulting in a nontaxable return of
capital to shareholders.
At the time of each distribution, shareholders are furnished Putnam
Management's current estimate of the sources of such distribution. These
estimates are subject to adjustment depending on investment results for
the fund's entire fiscal year. Final information regarding such matters
is furnished to shareholders in the fund's annual report and in tax
information provided following the end of each calendar year.
<TABLE>
<CAPTION>
Selected quarterly data
(Unaudited)
Available for common shareholders
Net realized
and unrealized Net increase
Investment Net investment gain (loss) in net assets Net assets at
income income on investments from operations end of period
- ------------------------------------------------------------------------------------------------------------------------------------
Quarter Per Per Per Per Per
Ended Total Share Total Share Total Share Total Share Total Share
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/93 $3,910,999 $.36 $3,131,259 $.29 $ 4,427,795 $ .41 $ 7,559,054 $ .70 $138,962,635 $12.84
12/31/93 3,742,849 .34 2,650,334 .24 (3,456,693) (.31) (806,359) (.07) 129,714,179 11.99
3/31/94 3,397,147 .32 2,445,713 .23 (7,942,482) (.75) (5,496,769) (.52) 121,879,941 11.26
6/30/94 2,962,961 .28 2,235,583 .21 (4,497,249) (.48) (2,261,666) (.27) 117,326,104 10.84
9/30/94 2,647,044 .24 2,281,816 .21 (1,372,663) (.12) 909,153 .09 115,932,585 10.71
12/31/94 2,480,140 .23 2,149,522 .20 (5,514,255) (.51) (3,364,733) (.31) 107,443,034 9.93
3/31/95 2,264,210 .21 2,003,551 .19 3,980,750 .36 5,984,301 .55 111,371,298 10.29
6/30/95 2,216,738 .21 1,931,367 .18 3,002,306 .28 4,933,673 .46 114,357,309 10.57
9/30/95 2,189,958 .20 1,904,327 .18 2,375,048 .21 4,279,375 .39 116,688,858 10.78
12/31/95 2,309,740 .22 2,037,494 .19 (147,990) (.01) 1,889,504 .18 116,630,535 10.78
</TABLE>
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
legal counsel
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Thomas Reilly
Vice President
Jeanne L. Mockard
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 or to request Putnam's
quarterly Closed-End Fund Commentary.
[LOGO: PUTNAM INVESTMENTS]
The Putnam Funds
One Post Office Square
Boston Massachusetts, 02109
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Putnam
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