Putnam
Investment
Grade
Municipal Trust
SEMIANNUAL REPORT
May 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "[G]iven that 1996 is an election year, the popularity of tax
deductions and complexity of implementing any substantial changes to the
tax codes help make the outlook for the muni market optimistic."
-- The Value Line Mutual Fund Survey, March 19, 1996
*"[I]n the months ahead, municipal bond funds may begin to provide
investors fewer bumps and better returns, many bond analysts say . . . .
Investors are becoming skittish about the sky-high returns on equity
funds and are beginning to seek some less-risky tax-free income; yields
on municipal bonds hover around an attractive 6 percent range, and
investors in some tax-high states can do better on an after-tax basis
investing in municipals than in Treasuries."
-- The New York Times, April 7, 1996
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
11 Portfolio holdings
17 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
One of the fascinating things about market watching is that you can
never tell what's going to trigger a defining event. Often what seems
like a defining event one moment is history the next. Who would have
guessed, for example, that a flat-tax proposal would swirl out of the
presidential primary election campaign to douse the municipal bond
market, only to blow away just as the rest of the bond market was
stumbling on statistics suggesting that inflation might flare up?
These were some of the challenges facing Fund Manager Michael F.
Bouscaren during the first half of Putnam Investment Grade Municipal
Trust's fiscal year, the six months ended May 31, 1996. Mike handled
them with his usual aplomb as the results on the following pages reveal.
Besides having the luxury of leaving the day-to-day details to Mike,
shareholders with a long-term investment perspective have the added
advantage of being able to let such events run their course without
undue concern.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
July 17, 1996
Report from the Fund Manager
Michael F. Bouscaren
As Putnam Investment Grade Municipal Trust began fiscal 1996, slowing
economic growth, low interest rates, and low inflation had created an
appealing environment for fixed-income investments. However, by the
fiscal year's midpoint on May 31, 1996, the bond market was dancing to a
different beat. Stronger-than-expected employment growth had fueled
fears of inflation, signaling a possible end to the Federal Reserve
Board's program of lowering short-term interest rates and bringing the
10-month bond market rally to an abrupt halt.
Your fund was poised to adapt to this changing economic environment.
Although sector weightings and core holdings remained essentially
unchanged throughout the period, we maximized the fund's potential by
exploring opportunities nationwide, purchasing bonds in states in which
economic activity was accelerating and maintaining those holdings that
continued to provide combinations of attractive income and possible
appreciation. For the semiannual period, the fund's common shares
provided a total return of -2.03% at net asset value and 1.84% at market
price.
* DURATION ADJUSTMENTS HELP FUND RESPOND TO CHANGING CONDITIONS
Adjusting duration in response to interest-rate trends is an important
component of the fund's strategy. Duration is a measure of the
portfolio's maturity structure and reflects the price sensitivity of
portfolio holdings to changes in interest rates. Typically, bonds with
longer maturities are more sensitive to these changes and, as a result,
may offer greater potential for appreciation when rates are declining.
Since the direction of interest rates was uncertain at the period's
start, we reviewed the portfolio duration in the expectation of a
rising-rate environment -- something of a worst-case scenario.
At the beginning of the period, the portfolio's duration was a
relatively long 10 years. In light of recent volatility, it seemed
prudent to us to reduce this to 7 1/2 years, and we were able to
accomplish the shift by period's end. The move proved timely; it
softened the impact of the market decline as bond prices readjusted to
the prospect of a stronger economy.
More recently, we've seen indications that this may not, in fact, be the
case; the employment and inflation data that sparked the market downward
appear to reflect short-term anomalies rather than true forecasts of a
change in direction. However, whether or not the Fed makes a change in
its interest-rate policy, our decision to acquire additional short- to
intermediate-term municipal bonds will bolster the fund's level of call
protection -- another important consideration in a volatile rate
environment.
* FUND BENEFITS FROM PROSPERING STATE ECONOMIES
We are considering selling additional New York, New Jersey, and
Pennsylvania bonds and increasing the fund's holdings in Texas and
California securities. The California and Texas economies are currently
growing faster than the national average, the result of flourishing new
businesses, rising employment rates, and accelerating residential
construction. When a state economy is strengthening, investor
perceptions of its bonds improve, the risk of any interruption in
interest payments lessens, and demand for the bonds may well increase.
This sequence of events, in turn, can lead to higher prices for the
bonds.
[GRAPHIC OMITTED; horizontal bar chart TOP INDUSTRY SECTORS*]
Utilities 13.6%
Transportation 8.5%
Housing 8.4%
Water and sewerage 6.9%
Hospitals 6.1%
Footnote reads:
Based on net assets as of 5/31/96. Holdings will vary over time.
Bonds issued to support the new Denver International Airport remain as a
significant portfolio position because of their favorable income and
credit features. Current law prohibits many municipal issuers from
refunding outstanding bonds with lower-cost debt. However, issuers do
have the ability to make tender offers, giving bondholders the
opportunity to sell securities back to them at an agreed-upon price.
Issuers generally must pay bondholders above-market prices to persuade
them to tender their higher-coupon securities. Although there was an
offer to tender higher-coupon Denver airport bonds in March, we did not
offer the bonds for sale, since we perceived the tender prices to be
unattractive.
Some of your fund's income is generated by the selective use of
leveraging strategies. With this approach, the fund issues preferred
shares that pay dividends at prevailing short-term rates. These shares
are sold to corporate and institutional investors; the resulting assets
are then invested in longer-term bonds with higher yields. The
difference between the rates paid to holders of preferred shares and the
rates earned by the fund augment the flow of income to holders of common
shares. Since the yield curve steepened during the reporting period,
resulting in a profitable spread between short- and long-term yields,
the fund's leveraging strategies proved to be beneficial.
* FADING FLAT-TAX FEARS HELP IMPROVE INVESTOR PERSPECTIVES
During the past several months, investors have been particularly
sensitive to the potential effects of the flat-tax proposal being
considered by Congress. In its purest form, the flat tax would deprive
municipal bonds of their advantage as tax-exempt investments. Although
such discussions have influenced the municipal market for more than a
year now, investor concerns and fears have recently subsided, since the
flat tax did not appear to be a near-term event after all. Although we
expect discussions of broader tax reform to reappear this fall as the
presidential election nears, our current assessment is that any radical
changes to the tax code now appear unlikely. As a result, investors may
rediscover overlooked tax-advantaged opportunities. An increase in
investor demand is likely to have a beneficial effect on municipal bond
valuations.
[GRAPHIC OMITTED: pie chart PORTFOLIO QUALITY OVERVIEW*]
A 16.3%
Aa 5.9%
Aaa 46.3%
B 0.9%
Ba 6.5%
Baa 22.4%
Caa 0.1%
VMG1 1.6%
Footnote reads:
*As a percentage of market value as of 5/31/96. A bond rated Baa or
higher is considered investment grade. All ratings reflect Moody's
descriptions, unless noted otherwise.These may include unrated bonds
judged by Putnam management to be of considerable quality. Ratings
will vary over time.
* GUARDED APPROACH NECESSARY
A steadily growing economy presents a challenging environment for fixed-
income investing and clearly requires a more cautious strategy. Careful
attention to bond structure and emphasis on larger, well-known issuers
will play an important role in enhancing the price stability and
liquidity of your fund for the remainder of its fiscal period.
On a cheerier note, the summer months have historically been friendly to
municipal bonds, since cash from interest payments and bond calls is
frequently reinvested in the tax-exempt market. New-issue supply over
the next few months is not expected to keep pace with this year's
potential demand, creating the opportunity for a favorable supply/demand
imbalance.
Sustained interest from nontraditional buyers, including banks and
insurance companies, could provide further support. In addition, as the
risk of a flat tax diminishes, municipal returns could continue to
outpace those of taxables throughout the course of the year.
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 5/31/96, 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 Investment Grade Municipal Trust is designed for
investors seeking high current income free from federal income tax and
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 in the fund.
TOTAL RETURN FOR PERIODS ENDED 5/31/96
NAV Market price
- ------------------------------------------------------------------------
6 months -2.03% 1.84%
- ------------------------------------------------------------------------
1 year 4.26 12.06
- ------------------------------------------------------------------------
5 years 56.03 69.32
Annual average 9.31 11.11
- ------------------------------------------------------------------------
Life of fund
(since 10/26/89) 76.01 84.87
Annual average 8.94 9.76
- ------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 5/31/96
Lehman Bros.
Municipal Consumer
Bond Index Price Index
- ------------------------------------------------------------------------
6 months -0.58% 1.95%
- ------------------------------------------------------------------------
1 year 4.57 2.89
- ------------------------------------------------------------------------
5 years 41.06 15.49
Annual average 7.12 2.92
- ------------------------------------------------------------------------
Life of fund
(since 10/26/89) 62.31 24.68
Annual average 7.64 3.40
- ------------------------------------------------------------------------
Performance data for common shares represent past results and do not
reflect future performance. They do not take into account any adjustment
for taxes payable on reinvested distributions. Investment returns, net
asset value, and market price will fluctuate so that an investor's
shares, when sold, may be worth more or less than their original cost.
TOTAL RETURN FOR PERIODS ENDED 6/30/96
(most recent calendar quarter)
NAV Market price
- ------------------------------------------------------------------------
6 months -2.92% 0.29%
- ------------------------------------------------------------------------
1 year 5.16 10.25
- ------------------------------------------------------------------------
5 years 56.68 66.42
Annual average 9.40 10.72
- ------------------------------------------------------------------------
Life of fund
(since 10/26/89) 76.61 84.87
Annual average 8.89 9.64
- ------------------------------------------------------------------------
PRICE AND DISTRIBUTION INFORMATION
6 months ended 5/31/96
Distributions (common shares) (number) 6
- ------------------------------------------------------------------------
Income $0.480
- ------------------------------------------------------------------------
Total $0.480
- ------------------------------------------------------------------------
(Preferred shares) Series A (1400 shares)
- ------------------------------------------------------------------------
Income $1,955.89
- ------------------------------------------------------------------------
Capital gains1 32.17
- ------------------------------------------------------------------------
Total $1,988.06
- ------------------------------------------------------------------------
Share value: (common shares) NAV Market price
- ------------------------------------------------------------------------
11/30/95 $12.37 $13.50
- ------------------------------------------------------------------------
5/31/96 11.68 13.25
- ------------------------------------------------------------------------
Current return: (common shares) (end of period)
- ------------------------------------------------------------------------
Current dividend rate2 8.22% 7.25%
- ------------------------------------------------------------------------
Taxable equivalent3 13.61 12.00
- ------------------------------------------------------------------------
1Capital 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.
2Income portion of most recent distribution, annualized and divided by
NAV or market price at end of period.
3Assumes maximum 39.60% federal tax rate. Results for investors subject
to lower tax rates would not be as advantageous.
TERMS AND DEFINITIONS
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, the liquidation preference and cumulative undeclared
dividends paid on the remarketed preferred shares, divided by the number
of outstanding common shares.
Market price is the current trading price of one share of the fund.
Market prices are set by transactions between buyers and sellers on the
New York Stock Exchange.
COMPARATIVE BENCHMARKS
Lehman Brothers Municipal Bond Index is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the
municipal bond market. The index does not take into account brokerage
commissions or other costs, may include bonds different from those in
the fund, and may pose different risks than the fund. It is not possible
to invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<TABLE>
<CAPTION>
Portfolio of investments owned
May 31,1996 (Unaudited)
Key to Abbreviations
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Collateralized
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (94.2%)*
PRINCIPAL AMOUNT RATINGS ** VALUE
<S> <C> <C> <C> <C>
Alabama (1.7%)
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$5,500,000 Gadsden East, Med. Clinic Board Rev. Bonds (Baptist Hosp. of Gadsden Inc.),
Ser. A, 7.8s, 11/1/21 BBB $6,345,625
Arizona (1.1%)
- ----------------------------------------------------------------------------------------------------------------------------
4,000,000 Gila Cnty., Indl. Dev. Auth. Poll. Control Rev. Bonds (Asarco Inc.
Project), Ser. 85, 8.9s, 7/1/06 Baa 4,261,760
California (10.8%)
- ----------------------------------------------------------------------------------------------------------------------------
1,500,000 CA Hlth. Facs. Fin. Auth. VRDN (St. Joseph Hlth. Syst.), Ser. A,
3.4s, 7/1/13 VMIG1 1,500,000
4,650,000 CA State U. IFB AMBAC 9.787s, 11/1/21 (aquired various dates from 8/5/91
to 8/31/94, cost $4,659,603) (double dagger) AAA 5,248,688
6,800,000 CA State G.O. Bonds 6.4s, 7/1/13 A 7,344,000
3,000,000 CA State G.O. Bonds 6 1/4s, 9/1/08 A 3,202,500
5,200,000 Central Valley Fin. Auth. Rev. Bonds (Carson Ice-Cogeneration Project),
6s, 7/1/09 BBB 4,992,000
10,000,000 Foothill/Eastern Trans. Corridor Agcy. Rev. Bonds (CA Toll Rd.), Ser. A,
zero %, 1/1/09 Baa 5,975,000
1,580,000 Los Angeles, Regl. Arpt. Impt. Corp. Rev. Bonds (Western Air Lines, Inc. -
Delta Air LineS, Inc.), 11 1/4s, 11/1/25 Baa 1,655,066
2,800,000 Orange Cnty., Local Trans. Auth. Sales Tax Rev. Bonds, FGIC, 6.1s, 2/14/11 Aaa 2,807,000
2,550,000 Orange Cnty., Pub. Fac. Corp. COP (Solid Waste Management), 7 7/8s, 12/1/13 Baa 2,658,375
5,000,000 U. of CA Rev. Bonds (UCSD Med. Ctr. Satellite Med. Fac.), 7.9s, 12/1/19
(aquired 3/2/92, cost $5,229,150) (double dagger) BBB 5,450,000
------------
40,832,629
Colorado (7.7%)
- ----------------------------------------------------------------------------------------------------------------------------
Denver, City & Cnty. Arpt. Rev. Bonds, Ser. A
1,000,000 8 3/4s, 11/15/23 Baa 1,176,250
4,775,000 8 1/2s, 11/15/23 Baa 5,467,375
4,900,000 8 1/4s, 11/15/12 Baa 5,561,500
5,200,000 8s, 11/15/25 Baa 5,817,500
Denver, City & Cnty. Arpt. Rev. Bonds, Ser. D
7,000,000 7 3/4s, 11/15/21 Baa 7,708,750
3,000,000 7 3/4s, 11/15/13 Baa 3,457,500
------------
29,188,875
Connecticut (0.6%)
- ----------------------------------------------------------------------------------------------------------------------------
2,000,000 CT State Res. Recvy. Auth. Rev. Bonds (Bridgeport Service Fee), Ser. A,
7 1/2s, 1/1/09 A 2,100,000
Florida (4.1%)
- ----------------------------------------------------------------------------------------------------------------------------
12,000,000 Broward Cnty. Resource Recvy. Rev. Bonds (SES Broward Cnty. LP South Project),
7.95s, 12/1/08 A 13,185,000
2,000,000 Hernando Cnty. Indl. Dev. Rev. Bonds (FL Crushed Stone Co.), 8 1/2s, 12/1/14 B/P 2,167,500
------------
15,352,500
Georgia (2.5%)
- ----------------------------------------------------------------------------------------------------------------------------
4,000,000 Burke Cnty. Dev. Auth. Control Rev. Bonds (Oglethorpe Pwr. Co. Vogtle Proj.),
MBIA, 8s, 1/1/22 AAA 4,680,000
4,800,000 De Kalb Cnty., Muni. Hsg. Auth. Rev. Bonds (Briarcliff Park Apts. Project),
Ser. A, 7 1/2s, 4/1/17 A 4,878,000
------------
9,558,000
Hawaii (1.2%)
- ----------------------------------------------------------------------------------------------------------------------------
4,500,000 HI State Dept. of Budget & Fin. Special Purpose Mtge. IFB, (Citizens
Utility Co.), Ser 91-B, 9.187s, 11/1/21 AAA 4,843,125
Illinois (2.6%)
- ----------------------------------------------------------------------------------------------------------------------------
10,000,000 Chicago Schl. Dist. Fin. Auth. Rev. Bonds, Ser. A, MBIA 4 1/2s, 6/1/01 AAA 9,812,500
Indiana (0.3%)
- ----------------------------------------------------------------------------------------------------------------------------
1,000,000 Indiana Bond Bank Note (Special Loan Program), Ser. B, 8 1/2s, 2/1/18 A 1,065,000
Kansas (1.4%)
- ----------------------------------------------------------------------------------------------------------------------------
5,000,000 Burlington Poll. Control Rev. Bonds (Kansas Gas & Electric Co.
Project), MBIA, 7s, 6/1/31 AAA 5,443,750
Louisiana (6.1%)
- ----------------------------------------------------------------------------------------------------------------------------
5,000,000 St. Charles Parish Poll. Control Rev. Bonds (LA Pwr. & Lt.), 8s, 12/1/14 Baa 5,437,500
W. Feliciana Parish Poll. Control Rev. Bonds
2,500,000 (Gulf States Utils. Co.) 8s, 12/1/24 Ba 2,653,125
5,100,000 (Gulf States Utils. II) 7.7s, 12/1/14 Ba 5,450,624
3,000,000 (Gulf States Utils. III) 7.7s, 12/1/14 Ba 3,206,206
6,000,000 (Gulf States Utils. Co.) Ser. A, 7 1/2s, 5/1/15 Ba 6,315,000
------------
23,062,499
Maryland (0.6%)
- ----------------------------------------------------------------------------------------------------------------------------
2,000,000 MD, State Hlth. & Higher Edl. Facs. Auth. Rev. Bonds (Doctors Cmnty. Hosp.),
8 3/4s, 7/1/12 AAA 2,330,000
Massachusetts (4.1%)
- ----------------------------------------------------------------------------------------------------------------------------
8,750,000 MA State Hlth. & Edl. Fac. Auth. IFB (Med. Ctr. of Central MA), Ser. B,
AMBAC, 9.12s, 6/23/22 AAA 9,570,313
5,000,000 MA State Indl. Fin. Agcy. Rev. Bonds (Cape Cod Hlth. Syst. Issue), 8 1/2s, 11/15/20 Aaa 5,837,500
------------
15,407,813
Michigan (3.8%)
- ----------------------------------------------------------------------------------------------------------------------------
2,200,000 Detroit Wtr. Supply Syst. Rev. IFB, FGIC, 8.714s, 7/1/22 AAA 2,277,000
1,755,000 Detroit, Loc. Dev. Fin. Auth. Tax Increment Rev. Bonds, Ser. A, 9 1/2s, 5/1/21 BBB/P 2,123,550
6,000,000 Greater Detroit Resource Recvy. Auth. Rev. Bonds Ser, A, AMBAC 5s, 12/12/2 AAA 5,962,500
1,690,000 Highland Park, Fin. Auth. Hosp. Fac. Rev. Bonds (MI Hlth. Care Corp. Project),
Ser. A, 9 3/4s, 12/1/06(In Default) + Caa 473,200
3,000,000 MI State Strategic Fund Rev. Bonds (Mercy Svcs. for Aging Project), 9.4s, 5/15/20 BBB/P 3,397,500
------------
14,233,750
Mississippi (1.5%)
- ----------------------------------------------------------------------------------------------------------------------------
4,950,000 Claiborne Cnty. Poll. Control Rev. Bonds (Middle South Energy, Inc.),
Ser. C, 9 7/8s, 12/1/14 Ba 5,556,375
Missouri (0.7%)
- ----------------------------------------------------------------------------------------------------------------------------
2,500,000 MD State Hlth. & Edl. Facs. Rev. Bonds (BJC Hlth. Syst.), Ser. A, 6 1/2s, 5/15/20 Aa 2,671,875
Montana (2.4%)
- ----------------------------------------------------------------------------------------------------------------------------
8,900,000 SCA Tax Exempt Trust Multi-Fam. Mtge. Rev. Bonds (Whispering Lake Project),
Ser. A-11, FSA, 7.1s, 1/1/30 AAA 9,244,875
Nebraska (2.7%)
- ----------------------------------------------------------------------------------------------------------------------------
2,400,000 NE Investment Fin. Auth. Single Fam. Mtge. IFB, Ser. B, GNMA Coll.,
11.141s, 3/15/22 AAA 2,655,000
7,065,000 NE Invt. Fin. Auth. Single Fam. Mtge. Rev. Bonds, Ser. 1, MBIA, 8 1/8s, 8/15/38 AAA 7,418,250
------------
10,073,250
Nevada (1.8%)
- ----------------------------------------------------------------------------------------------------------------------------
6,500,000 Clark Cnty. Indl. Dev. Rev. Bonds (NV Pwr. Co. Project), 7.8s, 6/1/20 Baa 6,971,250
New Jersey (0.3%)
- ----------------------------------------------------------------------------------------------------------------------------
1,000,000 NJ State G.O. Bonds Ser. E, 6s, 7/15/3 Aa 1,063,750
New York (12.3%)
- ----------------------------------------------------------------------------------------------------------------------------
9,070,000 NY City, Muni. Assit. Corp. G.O. Bonds Ser. E, 4.8s, 7/1/3 Aa 8,967,961
NY City Muni. Wtr. Fin. Auth. Wtr. & Swr. VRDN
1,400,000 Ser. A, FGIC 3.8s, 6/15/25 VMIG1 1,400,000
2,500,000 Ser G, FGIC 3.7s, 6/15/24 VMIG1 2,500,000
6,000,000 Ny City, Muni. Wtr. Fin. Auth. Wtr. & Swr. Rev. Bonds Ser. C, 7 3/4s, 6/15/20 Aaa 6,885,000
NY State Dorm. Auth. Rev. Bonds ( City U. Syst.)
4,500,000 Ser. F, 7 7/8s, 7/1/17 AAA 5,118,750
6,250,000 Ser. A, 7.7s, 5/15/12 AAA 7,046,875
2,000,000 Ser. A, 7 5/8s, 7/1/20 AAA 2,255,000
2,985,000 NY State Med. Care Facs. Fin. Agcy. Rev. Bonds (Mental Hlth. Svcs, Facs. )
Ser. A, 7 3/4s, 8/15/11 Aaa 3,402,900
2,450,000 NY State Energy Research & Dev. Auth. Elec. Fac. Rev. Bonds (Cons. Edison Co.
of NY, Inc. Project), Ser. A, 7 3/4s, 1/1/24 A 2,578,625
NY State Urban Dev. Corp. Rev. Bonds
1,535,000 (Syracuse U. Ctr.) 6s, 1/1/8 Baa 1,511,975
2,960,000 (Correctional Cap. Facs. ) Ser. 5, MBIA, AAA 2,763,900
1,115,000 Riverton Hsg. Corp. Mtge. Rev. Bonds (Conifer Genesee Apts. Sect. 8),
FHA Insd., 10 1/2s, 1/15/25 A 1,161,540
1,000,000 United Nations Dev. Corp. Rev. Bonds, Ser. A, 6s, 7/1/26 A 970,000
------------
46,562,526
Ohio (1.6%)
- ----------------------------------------------------------------------------------------------------------------------------
5,000,000 OH State Air Quality Dev. Auth. Rev. Bonds (Cleveland Co. Project),
FGIC, 8s, 12/1/13 AAA 5,881,250
Oklahoma (0.3%)
- ----------------------------------------------------------------------------------------------------------------------------
1,000,000 Tulsa OK Univeristy Indl. Dev. Rev. Bonds. MBIA 6s, 10/01/2016 AAA 1,021,250
Pennslyvania (4.9%)
- ----------------------------------------------------------------------------------------------------------------------------
3,270,000 Alleghny Cnty. Resc. Fin. Auth. Mtge. Rev. Bonds
(Single Fam.-GNMA Mtge. Backed Secs.), GNMA Coll., Ser. M, 7.9s, 6/1/11 AAA 3,408,975
5,000,000 Montgomery Cnty., Indl. Dev. Auth. Rev. Bonds, 7 1/2s, 1/1/12 A 5,231,250
2,000,000 PA Intergovernmental Coop. Auth. Rev. Bonds, FGIC, 5 1/2s, 6/15/16 AAA 1,900,000
7,600,000 PA State Higher Ed. Assistance Agcy. IFB, Ser. B, MBIA, 8.253s, 3/1/20 AAA 8,189,000
------------
18,729,225
Puerto Rico (0.7%)
- ----------------------------------------------------------------------------------------------------------------------------
3,000,000 Cmnwlth of PR, Hwy & Trans. Auth. Rev. Bonds, Ser Y, 5 1/2s, 07/01/2036 A 2,722,500
South Dakota (3.6%)
- ----------------------------------------------------------------------------------------------------------------------------
13,100,000 SD State Bldg. Auth. COP (Building Authority), Ser. A, 7 1/2s, 12/1/16 A 13,536,885
Tennessee (3.8%)
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2,600,000 Metro. Nashville & Davidson Cnty. Tenn. Wtr. & Swr. IFB, AMBAC, 8.216s, 1/1/22 AAA 2,616,250
10,900,000 SCA Tax Exempt Trust Multi-Fam. Mtge. Rev. Bonds (Steeplechase Falls Project),
Ser. A-10, FSA, 7 1/8s, 1/1/30 AAA 11,731,126
------------
14,347,376
Texas (7.0%)
- ----------------------------------------------------------------------------------------------------------------------------
2,500,000 Bexar Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds (St. Luke's Lutheran Hosp.
Project), 7.9s, 5/1/11 AAA/P 2,909,375
2,300,000 Dallas Waterworks & Swr. Syst. Rev. Bonds, 4 1/2s, 4/1/14 Aa 1,934,875
16,000,000 North Central TX Hlth. Fac. Dev. Corp. Rev. Bonds (Presbyterian Hlth. Syst.),
MBIA, 6.685s, 6/22/21 AAA 16,680,000
4,500,000 TX State Nat'l Research Lab Communication Superco, 7 1/8s, 4/1/20 Aaa 4,950,000
------------
26,474,250
Washington (1.7%)
- ----------------------------------------------------------------------------------------------------------------------------
6,075,000 WA State Pub. Pwr. Supply Syst. Rev. Bonds (Nuclear Project No. 1), Ser.
A, 7 1/2s, 7/1/15 Aa 6,530,625
West Virginia (0.3%)
- ----------------------------------------------------------------------------------------------------------------------------
1,400,000 Marion Cnty. Cmnty. Solid Waste Disp. Fac. Rev. Bonds (American Pwr. Paper
Recycling Project), 8 1/4s, 12/1/11 B/P 980,000
- ----------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $346,655,411)*** $356,205,088
- ----------------------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $378,054,261. Net assets available to common shareholders
are $238,040,683.
*** The aggregate identified cost on a tax basis is $346,893,536, resulting in gross unrealized appreciation and depreciation
of $13,710,453 and $4,398,901, respectively, or net unrealized appreciation of $9,311,552.
** The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at
May 31, 1996 for the securities listed. Ratings are generally sascribed 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 May 31, 1996.
Securities rated by Putnam are indicated by "/P" and are not publicly rated.
+ Non Income-producing security.
++ Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held
by the fund at May 31, 1996 was $10,698,688 or 2.8% of net assets.
The fund had the following industry group concentration greater than 10% of net assets at May 31, 1996:
Utilities 13.6%
The fund had the following insurance concentrations greater than 10% of net assets at May 31, 1996:
MBIA 16.8%
AMBAC 11.1%
The rates shown on IFB, 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 May 31, 1996.
<CAPTION>
- -----------------------------------------------------------------
Futures contracts outstanding at May 31, 1996
Aggregate Face Expiration Unrealized
Total Value Value Date Appreciation
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UST Bonds (Short) $13,441,406 $135,519,531 Sep 96 $78,125
- -------------------------------------------------------------------------
The accompanaying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
May 31, 1996 (Unaudited)
<S> <C>
Assets
- -------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $346,655,411) (Note 1) $356,205,088
- -------------------------------------------------------------------------------------------------
Cash 191,453
- -------------------------------------------------------------------------------------------------
Interest receivable 6,735,551
- -------------------------------------------------------------------------------------------------
Receivable for securities sold 42,207,093
- -------------------------------------------------------------------------------------------------
Receivable for variation margin 216,630
- -------------------------------------------------------------------------------------------------
Total assets 405,555,815
Liabilities
- -------------------------------------------------------------------------------------------------
Distributions payable to shareholders 1,712,476
- -------------------------------------------------------------------------------------------------
Payable for securities purchased 24,996,051
- -------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 684,482
- -------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 51,904
- -------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 300
- -------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,379
- -------------------------------------------------------------------------------------------------
Other accrued expenses 54,962
- -------------------------------------------------------------------------------------------------
Total liabilities 27,501,554
- -------------------------------------------------------------------------------------------------
Net assets $378,054,261
Represented by
- -------------------------------------------------------------------------------------------------
Series A Remarketed preferred shares (1,400 shares issued and
outstanding at $100,000 per share
liquidation preference) (Note 4) $140,000,000
- -------------------------------------------------------------------------------------------------
Paid in capital-common shares (Note 1) 225,182,073
- -------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 9,803,208
- -------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (6,558,822)
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 9,627,802
- -------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $378,054,261
Computation of net asset value:
- -------------------------------------------------------------------------------------------------
Remarketed preferred shares at liquidation preference $140,000,000
- -------------------------------------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 13,578
- -------------------------------------------------------------------------------------------------
Net assets allocated to remarketed preferred shares $140,013,578
- -------------------------------------------------------------------------------------------------
Net assets available to common shares $238,040,683
- -------------------------------------------------------------------------------------------------
Net asset value per common share ($238,040,683 divided by 20,379,278 shares) $11.68
- -------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended May 31, 1996 (Unaudited)
<S> <C>
Tax exempt interest income: $12,713,359
- ------------------------------------------------------------------------------------------------------
Expenses:
- ------------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,356,406
- ------------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 130,739
- ------------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 7,360
- ------------------------------------------------------------------------------------------------------
Administrative services (Note 2) 4,069
- ------------------------------------------------------------------------------------------------------
Reports to shareholders 18,998
- ------------------------------------------------------------------------------------------------------
Registration fees 75
- ------------------------------------------------------------------------------------------------------
Auditing 16,384
- ------------------------------------------------------------------------------------------------------
Legal 2,857
- ------------------------------------------------------------------------------------------------------
Postage 25,649
- ------------------------------------------------------------------------------------------------------
Exchange listing fees 16,588
- ------------------------------------------------------------------------------------------------------
Preferred share remarketing agent fees 193,556
- ------------------------------------------------------------------------------------------------------
Other 3,136
- ------------------------------------------------------------------------------------------------------
Total expenses 1,775,817
- ------------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (47,853)
- ------------------------------------------------------------------------------------------------------
Net expenses 1,727,964
- ------------------------------------------------------------------------------------------------------
Net investment income 10,985,395
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 570,222
- ------------------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Notes 1 and 3) 611,297
- ------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and futures contracts during the period (13,955,754)
- ------------------------------------------------------------------------------------------------------
Net loss on investments (12,774,235)
- ------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations ($1,788,840)
- ------------------------------------------------------------------------------------------------------
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
May 31 November 30
1996* 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- -------------------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------------------
Net investment income $10,985,395 $23,652,493
- -------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 1,181,519 (5,837,577)
- -------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (13,955,754) 30,521,242
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (1,788,840) 48,336,158
- -------------------------------------------------------------------------------------------------------------------
Distributions to remarketed preferred shareholders:
- -------------------------------------------------------------------------------------------------------------------
From net investment income (2,738,246) (5,504,552)
- -------------------------------------------------------------------------------------------------------------------
From net realized gains (45,038) -
- -------------------------------------------------------------------------------------------------------------------
In excess of net realized gains - (107,562)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations
applicable to common shareholders (excluding cumulative undeclared income
dividends on remarketed preferred shares of $13,578 and $161,420, respectively) (4,572,124) 42,724,044
- -------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
- -------------------------------------------------------------------------------------------------------------------
From net investment income (9,760,269) (18,869,148)
- -------------------------------------------------------------------------------------------------------------------
In excess of net realized gains - (492,000)
- -------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions from issuance of common shares 1,383,894 2,826,196
- -------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (12,948,499) 26,189,092
- -------------------------------------------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 391,002,760 364,813,668
- -------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income
of $9,803,208 and $11,316,328, respectively) $378,054,261 $391,002,760
- -------------------------------------------------------------------------------------------------------------------
Number of fund shares
- -------------------------------------------------------------------------------------------------------------------
Common shares outstanding at beginning of period 20,272,824 20,039,145
- -------------------------------------------------------------------------------------------------------------------
Common shares issued in connection with reinvestment of distributions 106,454 233,679
- -------------------------------------------------------------------------------------------------------------------
Common shares outstanding at end of period 20,379,278 20,272,824
- -------------------------------------------------------------------------------------------------------------------
Remarketed preferred shares outstanding at beginning and end of period 1,400 1,400
- -------------------------------------------------------------------------------------------------------------------
*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
May 31, Year ended November 30
--------------------------------------------------------------------
1996 * 1995 1994 1993 1992 1991
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period
(common shares) $12.37 $11.22 $13.44 $12.36 $11.51 $11.03
- ---------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------
Net investment income .54 1.17 1.20 1.32 1.35 1.27
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (.61) 1.23 (2.03) .91 .65 .43
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations (.07) 2.40 (.83) 2.23 2.00 1.70
- ---------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------
From net investment income
- ---------------------------------------------------------------------------------------------------------------------
to Common Shareholders (.48) (.94) (.97) (.96) (.91) (.89)
- ---------------------------------------------------------------------------------------------------------------------
to Preferred Shareholders (.14) (.28) (.19) (.16) (.24) (.29)
- ---------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
- ---------------------------------------------------------------------------------------------------------------------
to Common Shareholders -- -- (.21) -- -- --
- ---------------------------------------------------------------------------------------------------------------------
to Preferred Shareholders -- -- -- (.03) -- --
- ---------------------------------------------------------------------------------------------------------------------
In excess of realized gains
- ---------------------------------------------------------------------------------------------------------------------
to Common Shareholders -- (.02) (.02) -- -- --
- ---------------------------------------------------------------------------------------------------------------------
to Preferred Shareholders -- (.01) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (.62) (1.25) (1.39) (1.15) (1.15) (1.18)
- ---------------------------------------------------------------------------------------------------------------------
Preferred shares offering costs -- -- -- -- -- (.04)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period (common shares) $11.68 $12.37 $11.22 $13.44 $12.36 $11.51
- ---------------------------------------------------------------------------------------------------------------------
Market value, end of period (common shares) $13.25 $13.50 $11.88 $14.00 $13.25 $11.88
- ---------------------------------------------------------------------------------------------------------------------
Total investment return at market price (common
shares) (%)(a) 1.84 (d) 22.95 (6.74) 13.54 20.24 14.23
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (total fund) (in
thousands) $378,054 $391,003 $364,814 $405,670 $381,681 $362,974
- ---------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b)(c) .72 (d) 1.50 1.45 1.40 1.45 1.46
- ---------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets (%)(b) 4.46 (d) 7.50 8.07 8.59 9.20 8.70
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 104.86 (d) 122.65 78.97 33.73 44.39 72.49
- ---------------------------------------------------------------------------------------------------------------------
* Unaudited
(a) Total investment return assumes dividend reinvestment
and does not reflect the effect of sales charges.
(b) Ratio reflect net assets available to common shares only; net investment
income ratio also reflects reduction for dividend payments to preferred
shareholders.
(c) The ratio of expenses to average net assets for the year ended November 30,
1995 and thereafter, include amounts paid through expense offset arrangements.
Prior period ratios exclude these amounts (See Note 3).
(d) Not annualized
</TABLE>
Notes to financial statements
May 31, 1996 (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 investment objective is to provide as high a level of current
income exempt from federal income tax as is believed to be consistent
with preservation of capital. The fund intends to achieve its objective
by investing in a diversified portfolio of tax-exempt municipal
securities that Putnam Investment Management ("Putnam Management"), the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc.,
believes do not involve undue risk to income or principal. Under normal
market conditions, the fund will invest at least 80% of its total assets
in tax-exempt municipal securities rated "investment grade" at the time
of investment or, if not rated, determined by Putnam Management to be of
comparable quality.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates. Certain amounts from the prior year have been reclassified to
conform with their current year presentation.
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.
B) 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) less all liabilities (including accrued expenses and
undeclared dividends on remarketed preferred shares) and the liquidation
value of any outstanding remarketed preferred shares, by the total
number of common shares outstanding.
C) 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.
D) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
E) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held and for excise tax on income and capital
gains.
F) Distributions to shareholders Distributions to common and preferred
shareholders are recorded by the fund on the ex-dividend date. Dividends
on remarketed preferred shares become payable when, as and if declared
by the Trustees. Each dividend period for the remarketed preferred
shares is generally a seven day period. The applicable dividend rate for
the remarketed preferred shares on May 31, 1996 was 3.54%. The amount
and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
G) Amortization of bond premium and 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
bonds are accreted according to the effective yield method.
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,
including those allocated to the remarketed preferred shares. Such fee
is based on the annual rate of 0.70% of the average weekly net assets.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred
shares for that period exceed the fund's net income attributable to the
proceeds of the remarketed preferred shares during that period, then the
fee payable to Putnam 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 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 Trustees fee of $840 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund 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 invested in
certain Putnam funds until distribution in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended May 31, 1996, fund expenses were reduced by
$47,853 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.
Note 3
Purchase and sales of securities
During the six months ended May 31, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$380,317,645 and $403,394,684 respectively. There were no purchases and
sales of U.S. government obligations. In determining the net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Remarketed preferred shares
The Series A remarketed preferred shares are 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) 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 of the remarketed preferred shares. At May 31, 1996, no such
restrictions have been placed on the fund.
<TABLE>
<CAPTION>
Selected Quarterly Data
(Unaudited)
Net realized and Net increase (decrease)
Investment Net investment unrealized gain in net assets
income income* (loss) on investments* from operations*
- ----------------------------------------------------------------------------------------------------------
Quarter Per Per Per Per
Ended Total Share Total Share Total Share Total Share
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/28/94 $7,111,996 $.35 $5,495,212 $.27 $(3,137,847) $(.15) $2,357,365 $.12
5/31/94 6,855,768 .35 5,062,217 .26 (16,604,981) (.84) (11,630,317) (.58)
8/31/94 6,585,179 .34 4,650,396 .24 616,807 .02 5,267,203 .26
11/30/94 6,977,508 .33 4,852,138 .24 (21,330,357) (1.06) (16,480,666) (.82)
2/28/95 6,674,323 .33 4,383,933 .22 15,132,946 .75 19,516,879 .97
5/31/95 6,817,481 .34 4,437,600 .22 2,944,726 .15 7,382,326 .37
8/31/95 6,665,460 .33 4,454,620 .22 (1,310,532) (.07) 3,144,088 .15
11/30/95 6,960,711 .35 4,784,941 .23 7,763,925 .39 12,574,346 .63
2/29/96 6,491,527 .32 4,306,717 .21 (1,770,768) (.09) 2,535,949 .12
5/31/96 6,221,832 .30 4,043,236 .19 (11,003,467) (.53) (6,960,231) (.34)
* Available to common shareholders.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
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
Gary N. Coburn
Vice President
James E. Erickson
Vice President
Michael F. Bouscaren
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.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------
25865--058 7/96
</TABLE>
