Putnam
New Jersey
Tax Exempt
Income Fund
SEMIANNUAL REPORT
December 31, 1994
(Graphic- Balance Scales)
B O S T O N * L O N D O N * T O K Y O
<PAGE>
Performance highlights
>"The fund has not only kept its top-notch yield, but its
returns -- while in the red -- also rank close to that state's top third for
the year to date."*
- -- Morningstar Mutual Funds, November 25, 1994.
>Performance should always be considered in light of a fund's
investment strategy. Putnam New Jersey Tax Exempt Income Fund is designed for
investors seeking a high level of current income free from federal and New
Jersey personal income tax consistent with preservation of capital.
SEMIANNUAL RESULTS AT A GLANCE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Class A Class B
Total return: NAV POP NAV CDSC
.........................................................................................................
(change in value during period
plus reinvested distributions)
6 months ended 12/31/94 -1.66% -6.36% -2.09% -6.86%
Share value: NAV POP NAV
.........................................................................................................
6/30/94 $8.75 $9.19 $8.75
12/31/94 8.35 8.77 $8.34
Distributions: No. Income Capital gains(1) Total
.........................................................................................................
Class A 6 $0.256108 -- $0.256108
Class B 6 0.228625 -- 0.228625
Current return: NAV POP NAV
.........................................................................................................
(end of period:)
Current dividend rate(2) 6.12% 5.83% 5.50%
Taxable equivalent(3) 10.90 10.38 9.79
Current 30-day SEC yield(4) 6.14 5.85 5.40
Taxable equivalent(3) 10.93 10.41 9.61
</TABLE>
Performance data represent past results and will differ for each share class.
For performance over longer periods, see page 8. Class A shares at POP assume
a 4.75% maximum sales charge. CDSC for class B shares assumes a 5% maximum
contingent deferred sales charge. (1)Capital gains, if any, are taxable for
federal purposes. (2)Income portion of most recent distribution, annualized
and divided by NAV or POP at end of period. (3)Assumes maximum 43.83% federal
and New Jersey tax rate. Results for investors subject to lower tax rates
would not be as advantageous. For some investors, investment income may also
be subject to the federal alternative minimum tax. (4)Based only on
investment income, calculated using SEC guidelines.
*Morningstar, an independent rating agency, rates a fund in relation to other
funds with similar investment objectives, based on the fund's average annual
returns, adjusted for risk factors and sales charges. Ratings are updated
monthly. For the 1- and 3-year periods ending 12/31/94, the fund's class A
shares ranked in the top 67.5% among all 609 municipal bond funds rated. Past
performance is not indicative of future results.
<PAGE>
(George Putnam picture)
(c) Karsh, Ottawa
From the Chairman
Dear Shareholder:
With a new year now well begun, investors understandably are still appraising
the difficult months just past. Stock and bond prices both at home and abroad
were almost universally weak throughout much of 1994. From the Federal
Reserve Board's series of interest rate increases early on to Mexico's
devaluation of the peso in the year's closing days, 1994 provided a sustained
stream of challenges.
Events in Orange County, California, were not the only reminders that even
municipal bonds can encounter difficulties. Tax-free municipal bonds,
traditionally a refuge of conservative investors, had a disappointing year as
the rise in interest rates pushed bond prices lower.
The outlook for tax-free bonds appears to be improving. This should come as
welcome news to shareholders of Putnam New Jersey Tax Exempt Income Fund.
Thomas Goggins, your fund's manager, believes Garden State securities appear
particularly attractive as the state's economy improves and its politicians
seem firm in their commitment to fiscal prudence.
In the management report that follows, Tom reviews the first half of your
fund's current fiscal year and discusses prospects for the months ahead.
Respectfully yours,
(George Putnam Signature)
George Putnam
Chairman of the Trustees
February 15, 1995
<PAGE>
Report from the fund manager
Thomas C. Goggins
For most municipal-bond investors, 1994 was as frustrating as rush hour on
the Garden State Parkway. Like the majority of fixed- income investments,
which were buffeted by round after round of interest-rate increases, Putnam
New Jersey Tax Exempt Income Fund had a disappointing calendar year. For the
last six months of calendar 1994--which were also the first six months of
your fund's fiscal 1995--your fund's total return was -1.66% for
class A shares and -2.09% for class B shares, both at net
asset value.
What set your fund apart from the others, however, was the attractive level
of current income it provided. In fact, the fund's class A 12-month yield of
6.05% outshone the average New Jersey fund yield of 5.63%, according to
Lipper Analytical Services.
In the long run, we believe the fund is well positioned for the future.
Despite a challenging year for the municipal-bond market, we want to show you
why we believe the market offers great possibilities for tax-conscious
investors from the Garden State in 1995.
> 1994 -- AN OVERVIEW
Throughout 1994, many investors asked us, "What happened?" First and
foremost, the Federal Reserve Board raised short-term interest rates six
times. While the Fed's efforts were intended to head off inflation, which
erodes the value of fixed-income investments, investors believed the Fed was
not doing enough. Furthermore, since bond prices fall and their yields rise
when interest rates increase, continually declining bond prices, accompanied
by substantial market volatility, dominated the fixed-income market for most
of the year.
Interest-rate upturns were far from the only challenge facing the municipal
bond market this past year. By early October, when relative calm returned to
the market, tax-loss selling struck another blow to bond performance. The
fiscal-year-end adjustments that money managers and individuals made to their
portfolios for tax purposes depressed prices further. This selloff created
yet another disruption in an already-battered municipal-bond market.
<PAGE>
In early December, as municipals were enjoying a short rally, the financial
woes of Orange County, California, shook the market. The immediate drop in
value of county-related bonds was only the beginning of the fallout from the
$2 billion in losses sustained by the county's investment fund. As the major
rating agencies downgraded Orange County bonds almost overnight, investors
across the country began questioning the safety of all municipal bonds.
> MAINTAINING A DEFENSIVE POSTURE
Since the market remained unpredictable and volatile throughout this
semiannual period, Putnam Management maintained its defensive position.
Call protection continued to be a key focus in our bond selection. Callable
bonds purchased in today's rising-rate environment are likely to be redeemed
by issuers at some point in the future, when rates eventually fall. When this
happens, bondholders will be forced to reinvest at less attractive rates. By
purchasing bonds that
(Line Chart)
New Jersey Debt Versus Treasuries
(Plot Points)
New Jersey Treasury Bonds
Municipal Debt (after taxes)
"12/31" -1.18 -1.78
"5/90" 2.63 -0.91
2.2 -0.39
"11/90" 7.09 3.62
9.55 6.07
"5/91" 11.89 7.28
16.53 10
"11/91" 20.14 13.58
20.37 15.21
"5/92" 25.27 16.48
28.19 21.46
"11/92" 30.81 20.31
35.82 26.65
"5/93" 40.84 27.05
45.73 32.71
"11/93" 47.18 31.43
38.28 30.07
"5/94" 39.02 25.17
39.77 26.34
"11/94" 37.29 23.4
"12/31" 37.29 23.86
This graphic compares cumulative total returns, plotted monthly, of New
Jersey tax-exempt bonds and U.S. Treasury bonds. Sources: Treasury bonds,
Lehman Brothers Treasury Bond Index; New Jersey municipal debt. Lipper
Analytical Services. After-tax returns assume the maximum 39.6% federal tax
bracket. Treasury bonds are guaranteed by the full faith and credit of the
U.S. government.
<PAGE>
cannot be called or paid off by the issuer for several years, we assure our
ability to continue holding them.
Last year, when the Fed began to tighten short-term interest rates, we began
to shorten the portfolio's average duration. Duration is a measure of price
sensitivity of a bond or bond fund to a given change in interest rates. While
the fund's duration of 8.64 years is somewhat longer than that of the average
New Jersey fund (8.2 years, according to Putnam research), we have used
hedging techniques, such as our positions in the municipal-bond futures market,
to reduce volatility.
> MARKET DECLINES CAN MEAN OPPORTUNITY
Putnam Management believes long-term investors may gain some reward for
enduring a particularly hard year. The decline of the municipal-bond market
may result in attractive opportunities for decisive investors, especially in
certain key sectors of the market.
In particular, we increased our stake in the health-care sector, which we
consider to be the most undervalued sector in today's market. By purchasing
shares in this sector, we were able to secure attractive-yielding securities
at what we believe were low prices. Some examples of our health-care holdings
are the Franciscan Sisters of the Poor Health System (a division of St.
Mary's Hospital), Raritan Bay Medical Center, and the Ocean County Nursing
Pavilion.
Aside from the immediate yield benefits of these securities, we believe the
health-care sector holds strong potential for appreciation. For several
years, significant cost cutting and consolidation have made this area more
efficient and cost-effective. Additionally, some of the health-care debt the
fund owns has been or appears likely to be, in our opinion, the subject of
takeovers by for-profit organizations or merger/affiliation with stronger
not-for-profit organizations. Such takeovers are typically positive events
for bondholders because they often lead to a prerefunding of the bond issue.
When this occurs, the revenue source for interest payments of the bond shifts
from the underlying cash flow of the project itself to
<PAGE>
TOP INDUSTRY SECTORS
Health Care 22.2%
Transportation 13.2%
Education 5.6%
Housing 5.3%
Utilities 3.0%
*Based on net assets as of 12/31/94.
AAA-rated U.S. government securities. The resulting reduction in credit risk
brings about a credit upgrade of the original bonds, which, in turn, often
leads to an increase in their market price.
Because of the low prices in the municipal bond market today, we have also
been able to improve the portfolio's credit quality. When bond prices fall,
their yields rise. Therefore, we have been able to purchase higher-quality
securities with particularly attractive yields.
> LONG-TERM POTENTIAL IN NEW JERSEY
One positive event of 1994 was the emergence of a favorable supply and demand
imbalance. Nationally, the pace of refinancing was off by 44% in 1994. We
also anticipate a drop-off in the issuance of New Jersey securities in the
months ahead. The decrease in supply, coupled with the potential for
increased demand as inflation fears subside, could act as a strong price
support for New Jersey debt.
During the first half of 1995, we expect the Fed to tighten interest rates
further. The flattening of the Treasury yield curve, however, suggests that
the market believes the Fed's inflation-fighting measures will satisfactorily
slow economic expansion.
We also believe that as time goes on, municipal bonds-- particularly New
Jersey issues--will become more attractive to tax-conscious investors when
compared with taxable alternatives.
The views expressed about the securities mentioned in this report are
exclusively those of Putnam Management and are not meant as investment
advice. Although the described holdings were viewed favorably as of December
31, 1994, there is no guarantee the fund will continue to hold these
securities in the future.
<PAGE>
Performance summary
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. We show total return in two
ways: on a cumulative long-term basis and on average how the fund might have
grown each year over varying periods. For comparative purposes, we show how
the fund performed relative to appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDING 12/31/94
<TABLE>
<CAPTION>
Class A Class B
Lehman Bros.
Municipal Bond
NAV POP NAV CDSC Index CPI
<S> <C> <C> <C> <C> <C> <C>
6 months -1.66% -6.36% -2.09% -6.86% -0.78% 1.15%
1 year -6.30 -10.74 -6.91 -11.33 -5.17 2.68
3 years 14.53 9.14 -- -- 15.87 8.56
Annual average 4.63 2.96 -- -- 5.03 2.77
Life of class A 37.69 31.21 -- -- 38.82 16.95
(2/20/90)
Annual average 6.80 5.75 -- -- 6.98 3.27
Life of class B -- -- 3.30 -0.40 6.48 5.50
(1/4/93)
Annual average -- -- 1.64 -0.20 3.21 2.73
</TABLE>
Fund performance data do not take into account any adjustment for taxes
payable on reinvested distributions. Performance of share classes will
differ. Performance data represent past results. Investment returns and
principal value will fluctuate so an investor's shares, when sold, may be
worth more or less than their original cost.
<PAGE>
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including any
initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance figures
shown here assume the maximum 4.75% sales charge.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B shares and assumes redemption at the end of the
period. Your fund's CDSC declines from a 5% maximum during the first year to
1% during the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
Lehman Brothers Municipal Bond Index is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the municipal
bond market. The index 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.
Consumer Price Index (CPI) is a commonly used measure of inflation; it does
not represent an investment return.
<PAGE>
Life cycle investing
As we move through life, our investment needs change. As
these needs change, so does the way we allocate our assets. Here are some
basic rules for setting up and maintaining an investment program and some
examples of how assets might be allocated.
> DETERMINE YOUR INVESTMENT OBJECTIVES.
Objectives may include a new home, college education expenses, or retirement.
> EVALUATE YOUR RISK TOLERANCE.
Generally, risk tolerance is higher for younger investors with longer
timelines and lower for older investors who may depend on their investment
for current income.
> ALLOCATE YOUR INVESTABLE SAVINGS.
Your investment advisor will help you determine how much of your investable
dollars should be allocated to each investment category.
> CHOOSE THE APPROPRIATE PUTNAM FUNDS.
Using Putnam's free exchange privilege, you can adjust your own Putnam
portfolio of funds as your financial needs change -- without a service fee.*
Look at the facing page for some ways you can allocate your
assets, then turn the page to see how the Putnam Fund Selector(tm) can help
you make your choices.
*Putnam reserves the right to change or terminate the exchange privilege. In
some cases, a sales charge may apply. See prospectus for details.
<PAGE>
Four ways to allocate assets
Your investment advisor can help you determine your objectives, evaluate your
risk tolerance, and develop a long-term financial plan. These sample
portfolios can help you diversify your portfolio within the Putnam Family of
Funds. These illustrations are not intended as investment advice.
SEEKING MAXIMUM GROWTH (Pie Chart)
Risk tolerance: 30%--40% Growth and Income............
Generally
investors with a
higher risk 40%--50% Growth............
tolerance
(often in their 20s
and early 30s.) 5%--20% Income of tax-free income............
SEEKING GROWTH AND SOME INCOME (Pie Chart)
Risk tolerance: 40%--50% Growth and Income............
Generally
investors with a 30%--40% Growth............
high to moder-
ate risk toler-
ance (often in 10%--30% Income of tax-free income............
their late 30s
and early 40s.)
SEEKING INCOME AND SOME GROWTH (Pie Chart)
WITH PROTECTION AGAINST INFLATION
Risk tolerance: 30%--40% Growth and Income............
Generally
investors with a 10%--20% Growth............
moderate risk
tolerance (often
in their late 40s 25%--60% Income of tax-free income............
and 50s.)
SEEKING HIGH CURRENT INCOME AND (Pie Chart)
PROTECTION AGAINST INFLATION
Risk tolerance: 20%--30% Growth and Income............
Generally
investors with
a moderate 5%--10% Growth............
to low risk
tolerance 40%--70% Income of tax-free income............
(often over 60
and retired.)
<PAGE>
Putnam Family of Funds
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
Investors Fund
Natural Resources Fund*
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
PUTNAM GROWTH AND
INCOME FUNDS
Convertible Income-Growth Trust
Dividend Growth Fund
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Balanced Government Fund
Corporate Asset Trust
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
U.S. Government Income Trust
Please call your financial advisor or Putnam to
obtain a prospectus for any Putnam fund. It contains more complete
information, including charges and expenses. Read it carefully before you
invest or send money.
PUTNAM TAX-FREE INCOME FUNDS
Intermediate Tax Exempt Fund
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds+
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio, and
Pennsylvania
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments to help
maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS++
Putnam money market funds:
Money Market FundS.
California Tax Exempt Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts**
*Formerly Energy-Resources Trust.
+Not available in all states.
++Relative to above.
S.Formerly Daily Dividend Trust.
**Not offered by Putnam Investments. Certificates of deposit offer a fixed
rate of return and may be insured, up to certain limits, by federal/state
agencies. Savings accounts may also be insured up to certain limits.
<PAGE>
Portfolio of investments owned
December 31, 1994
MUNICIPAL BONDS AND NOTES (99.9%)(a)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT RATINGS(b) VALUE
<S> <C> <C> <C>
New Jersey (87.2%)
$1,000,000 Atlantic City, Muni. Utils. Auth. Wtr. Rev. Bonds 7-3/4s, 5/1/17 A $1,107,500
1,000,000 Atlantic County Certif. of Participation (COP) Financial Guaranty Insurance
Co. (FGIC) 7.4s, 3/1/10 AAA 1,086,250
2,955,000 Camden Cnty., Impt. Auth. Hsg. Dev. Rev. Bonds (Chestbury Apts. Project),
8-3/4s, 12/15/16 BB/P 2,748,150
4,250,000 Camden Cnty., Impt. Auth. Rev. Bonds (acquired 9/12/94 cost $2,474,813)
8.4s, 4/1/24(c) BB/P 4,101,250
1,200,000 Middle Township Sch. Dist. Rev. Bonds FGIC, 7s, 7/15/06 AAA 1,282,500
2,000,000 Middlesex Cnty., Poll. Control Auth. Rev. Bonds 6-7/8s, 12/1/22 BBB/P 1,910,000
3,000,000 Middlesex Cnty., Utils. Auth. Swr. Rev. Inverse Floating Bond (IFB) Ser. A,
Municipal Bond Insurance Association (MBIA), 7.95s, 8/15/10(d) AAA 2,835,000
Monroe, Board of Ed. Rev. Bonds (Gloucester Cnty.) FGIC
898,000 5.2s, 8/1/18 AAA 749,830
875,000 5.2s, 8/1/17 AAA 737,188
875,000 5.2s, 8/1/16 AAA 740,468
825,000 5.2s, 8/1/15 AAA 705,375
1,338,000 Morris Cnty., General Obligation (G.O.) Bonds 5-1/8s, 5/13/11 AAA 1,165,733
7,000,000 NJ Bldg. Auth. St. Bldg. Rev. Bonds MBIA, 5s, 6/15/17 AA 5,591,250
1,000,000 NJ Econ. Dev. Auth. 1st Mtge. Gross Rev. Bonds (Stone Arch Nursing Home
Project), 8-3/4s, 12/1/10 BB/P 1,027,500
575,000 NJ Econ. Dev. Auth. 1st Mtge. Rev. Bonds (Delaire Nursing Home), Ser. A,
8-5/8s, 11/1/06 BB/P 587,219
8,695,000 NJ Econ. Dev. Auth. Elec. Energy Fac. Rev. Bonds (Vineland Cogeneration
L.P. Project), 7-7/8s, 6/1/19 BB/P 8,727,606
NJ Econ. Dev. Auth. Natural Gas Fac. Rev. Bonds (NJ Natural Gas Co.
Project)
2,500,000 9s, 12/1/17 A 2,759,375
2,500,000 Ser. 84A, 7.05s, 3/1/16 A 2,590,625
2,800,000 NJ Econ. Dev. Auth. Rev. Bonds
2,800,000 (Stolt Terminals Project), 10-1/2s, 1/15/18 BB/P 3,150,000
4,550,000 (Holt Hauling Co.), Ser. D, 10-1/4s, 9/15/14 AAA 4,908,313
3,000,000 (Tevco Inc. Project), 8-1/8s, 10/1/09 A/P 3,262,500
3,260,000 (Cadbury Corp.), 8s, 7/1/15 BB/P 2,986,975
1,200,000 (Ninette Group L P Project), 7-3/4s, 8/1/11 A 1,267,500
5,000,000 (Ocean Nursing Pavilion), Ser. A, 7-3/8s, 12/1/25 BB/P 4,587,500
2,000,000 (Hartz Mountain Industries, Inc.), 7s, 2/1/14 A 2,072,500
3,185,000 (Lakewood School), Ser. R, 6.9s, 12/1/11 Aa 3,288,513
1,500,000 (NJ Performing Arts Ctr.), 6-3/4s, 6/15/12 A 1,500,000
1,635,000 (American Wtr. Co. Project) FGIC, Ser. A 5.35s, 6/1/23 AAA 1,357,050
4,500,000 NJ Econ. Dev. Auth. St. Contract Rev. Bonds zero %, Ser. A, 9/15/13 AAA 1,310,625
2,925,000 NJ Econ. Dev. Auth. Waste Paper Recycling Rev. Bonds (Marcal Paper Mills
Inc. Project), 8-1/2s, 2/1/10 BB/P 3,111,468
NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds
1,300,000 (Gen. Hosp. Ctr.-Passaic Inc.), Ser. B, 10-3/8s, 7/1/14 BBB 1,360,125
4,300,000 (Dover Gen. Hosp. & Med. Ctr.), Issue C, 9s, 7/1/12 A 4,493,500
4,250,000 (St. Elizabeth Hosp.), Ser. B, 8 1/4s, 7/1/20 Baa 4,382,813
3,095,000 (Jersey Shore Med. Ctr.), AMBAC, 8s, 7/1/18 AAA 3,400,630
2,000,000 (Kimball Med. Ctr.), Ser. C, 8s, 7/1/13 Baa 2,040,000
<PAGE>
New Jersey (continued)
$ 1,000,000 (East Orange Gen. Hosp.), Ser. B, 7-3/4s, 7/1/20 BBB $ 1,002,500
3,000,000 (Elizabeth Genl. Med. Ctr.) 7-3/8s, 7/1/15 A 2,906,250
4,720,000 (Kimball Med. Ctr.), 7.3s, 7/1/99 BAA 4,843,900
10,300,000 (Raritan Bay Med. Ctr.) 7-1/4s, 7/1/27 BB/P 9,102,625
3,300,000 (Christ Hosp. Group) 7s, 7/1/06 AAA 3,518,625
3,000,000 (Englewood Hosp. & Med. Ctr.) 6-3/4s, 7/1/24 Baa 2,636,250
1,500,000 (Englewood Hosp. & Med. Ctr.) 6.7s, 7/1/15 Baa 1,344,375
1,070,000 (Union Hosp./Mega Care Inc.), 5-7/8s, 7/1/14 Baa 878,738
4,400,000 (St. Mary's Hosp.) 5-7/8s, 7/1/12 Baa 3,586,000
5,325,000 (Union Hosp./Mega Care Inc.), 5-7/8s, 7/1/07 Baa 4,732,593
3,500,000 (St. Peters Med. Ctr.), Ser. F, Municipal Bond Insurance Assn. (MBIA) 5s,
7/1/21 AAA 2,743,125
1,500,000 (Bayonne Hosp. Oblig.) Financial Security Assurance, Inc. (FSA), 6-1/4s,
7/1/12 AAA 1,449,375
3,425,000 NJ Sports & Exposition Auth. Convention Ctr. Luxury Tax Rev. Bonds Ser. A,
MBIA, 5-1/2s, 7/1/22 AAA 2,906,968
NJ State G.O. Bonds
12,800,000 Ser. D, 6s, 2/15/11 AA 12,272,000
3,000,000 Ser. D, 5.8s, 2/15/07 AA 2,861,250
2,200,000 Ser. D, 5-3/4s, 2/15/06 AA 2,112,000
5,000,000 Ser. D, zero %, 2/15/07 AA 2,362,500
NJ State Hsg. & Mtge. Fin. Agcy. Rev. Bonds
455,000 (Home Mtge. Purchase), Ser. C, MBIA, 8-3/8s, 4/1/17 AAA 482,300
2,290,000 (Home Buyer Project), Ser. D, MBIA, 7.7s, 10/1/29 AAA 2,344,388
3,000,000 NJ State Hsg. & Mtge. Fin. Agcy. IFB, Ser. I, (acquired 2,000,000 par
2/11/93 cost $2,068,074, acquired 1,000,000 par 7.821s, 11/1/07(c) A 2,880,000
NJ State Hwy. Auth. Gen. Rev. Bonds
1,500,000 (Garden State Pkwy. Project), 6.2s, 1/1/10 AA 1,460,625
2,370,000 (Garden State Pkwy. Project), 6s, 1/1/19 Aaa 2,227,800
190,000 NJ State Tpk. Auth. Rev. Bonds, 10-3/8s, 1/1/03 AAA 224,200
1,800,000 NJ State Tpk. Auth. 1FB, MBIA (acquired 3/27/92, cost $1,817,856) 9.033s,
1/1/16(c) AAA 1,811,250
19,775,000 Ser. C, 6-1/2s, 1/1/16 A 19,527,813
9,000,000 NJ State Trans. Trust Fund Auth. Rev. Bonds. Ser. A 6-1/4s, 12/15/03 Aa 9,270,000
10,870,000 NJ Wastewater Treatment Trust Rev. Bonds zero %, Ser. A, 9/1/07 AAA 4,959,438
Passaic Valley, Cmnty. Wtr. Supply Rev. Bonds
1,800,000 Ser. A., FGIC 6.4s, 12/15/22 AAA 1,890,000
200,000 Ser. A., FGIC 6.4s, 12/15/22 AAA 189,500
4,500,000 Rutgers State U. Rev. Bonds Ser. A, 6.4s, 5/1/13 AA 4,477,500
3,500,000 Salem Cnty. Indl. Poll. Control Fin. Auth. Rev. Bonds
(Pub. Svc. Elec. & Gas Co. Project) Ser. C, MBIA, 6.2s, 8/1/30 AAA 3,237,500
5,000,000 (Pub. Svc. Elec. & Gas Co. Project), Ser. C, MBIA, 5.55s,
11/1/33 AAA 4,143,750
1,990,000 Sayreville, Hsg. Dev. Corp. Mtge. Rev. Bonds (Lakeview Section 8), Federal
Housing Administration Insured (FHA Insd.), 7-3/4s, 8/1/24(d) AAA 2,054,675
1,000,000 Stony Brook, Regional Swr. Rev. Bonds Ser. B, 5.45s, 12/1/12 AA 880,000
<PAGE>
New Jersey (continued)
U. of Medicine & Dentistry G.O. Bonds
$4,695,000 Ser. E, 6-1/2s, 12/1/12 AA $ 4,747,818
4,250,000 Ser. E, 5-3/4s, 12/1/21 AA 3,777,188
Union City, G.O. Bonds
995,000 FSA, 6.4s, 11/1/13 AAA 980,075
1,560,000 FSA, 6-3/8s, 11/1/07 AAA 1,571,700
1,300,000 Union Cnty., Indl. Poll. Ctrl. Fin. Auth. Rev. Bonds (American Cynamid Co.)
5.8s, 9/1/09 A 1,202,500
Union Cnty., Util. Auth. Solid Waste Rev. Bonds
9,000,000 Ser. A, 7.2s, 6/15/14 A 8,797,500
4,500,000 Ser. A, 7.15s, 6/15/09 A 4,449,375
237,778,800
New York (5.1%)
Port Auth. NY & NJ Cons. IFB,
5,000,000 (acquired 8/29/91, cost $5,164,940) 8.531s, 8/1/26(c) AA 5,012,500
2,100,000 (acquired 2/9/94, cost $2,107,875) 6.546s, 11/15/15(c) AA 1,015,875
Port Auth. NY & NJ Cons. Rev. Bonds
7,500,000 93rd Ser. 6-1/8s, 6/1/94 AA 6,750,000
1,500,000 5.2s, 11/15/15 A 1,228,125
14,006,500
Puerto Rico (7.6%)
Cmnwlth. of Puerto Rico, Hwy. & Trans. Auth. Rev. Bonds
300,000 Ser. T, 6-5/8s, 7/1/18 A 319,500
1,500,000 Ser. X, 5s, 7/1/99 VMIG1 1,500,000
1,500,000 Cmnwlth. of Puerto Rico, Hwy. Auth. Rev. Bonds Ser. Q, 7-3/4s, 7/1/16 AAA 1,680,000
4,000,000 Cmnwlth. of Puerto Rico, Pub. Impt. G.O. Bonds 6.8s, 7/1/21 AAA 4,305,000
2,500,000 Puerto Rico, Hsg. Fin. Corp. Single Fam. Mtge. IFB Government National
Mortgage Association (GNMA), 8.785s, 8/4/25 AAA 2,284,375
1,940,000 Puerto Rico, Hsg. Fin. Corp. Single Fam. Mtge. Rev. Bonds,
Ser. B, GNMA Coll., 7.65s, 10/15/22 AAA 2,003,050
2,000,000 Puerto Rico, Indl. Med. & Env. Poll. Control Fac. Fin. Auth. Rev. Bonds
(American Airlines), Ser. A, 8-3/4s, 12/1/25 Baa 2,090,000
1,250,000 Puerto Rico, Pub. Bldgs. Auth. Gtd. Edl. & Hlth. Fac. Rev. Bonds Ser. G,
7-7/8s, 7/1/16 AAA 1,351,563
1,000,000 Ser. H, 7-7/8s, 7/1/16 AAA 1,081,250
Puerto Rico, Pub. Bldgs. Auth. Rev. Bonds
3,750,000 Ser. K, 6-7/8s, 7/1/21 AAA 4,050,000
20,664,738
Total Investments (cost $286,949,303) $272,450,038
</TABLE>
<PAGE>
(a) Percentages indicated are based on total net assets of $272,657,954,
which correspond to a net asset value per class A and class B shares of $8.35
and $8.34, respectively.
(b) The Moody's or Standard & Poor's ratings indicated are believed to be the
most recent ratings available at December 31, 1994 for the securities listed.
Ratings are generally ascribed to securities at the time of issuance. While
the agencies may from time to time revise such ratings, they undertake no
obligation to do so, and the ratings do not necessarily represent what the
agencies would ascribe to these securities at December 31, 1994. Securities
rated by Putnam are indicated by "/P" and are not publicly rated.
(c) Restricted as to public resale. At the date of acquisition these
secutities were valued at cost. There were no outstanding unrestricted
securities of the same class held. Total market value of restricted
securities owned at December 31,1994 was $10,931,875 or 4.0% of net assets.
(d) This security was pledged to cover margin requirements for futures
contracts at December 31, 1994. The market value of segregated securities
with the custodian for transactions on futures contracts is $4,889,675.
(e) The aggregate identified cost on a tax basis is $287,070,193 resulting in
gross unrealized appreciation and depreciation of $2,253,585 and $16,873,740,
respectively, or net unrealized depreciation of $14,620,155.
U.S. Treasury Bond Futures Outstanding
at December 31, 1994
<TABLE>
<CAPTION>
Aggregate
Total Face Expiration Unrealized
Value Value Date Depreciation
<S> <C> <C> <C> <C>
U.S. Treasury Bond Futures (Sell) $19,831,250 $19,762,500 Mar/95 $68,750
The Fund had the following industry group concentrations greater than 10% on December 31, 1994 (as a
percentage of net assets):
Health Care 22.2%
Transportation 13.2
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of assets and liabilities
December 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Investments in securities at value (identified cost
$286,949,303) (Note 1) $272,450,038
Interest receivables 5,856,388
Unamortized organization expenses 6,053
Receivable for shares of the fund sold 346,071
Receivable for variation margin on futures contracts 62,500
Receivable for securities sold 754,352
Total assets 279,475,402
Liabilities
Payable to subcustodian $ 63,232
Payable for securities purchased 4,542,525
Payable for shares of the fund repurchased 1,082,616
Distributions payable to shareholders 440,599
Payable for compensation of Manager (Note 2) 418,750
Payable for administrative services (Note 2) 8,098
Payable for compensation of Trustees (Note 2) 2,385
Payable for investor servicing and custodian fees (Note
2) 53,113
Payable for distribution fees -- class A (Note 2) 115,179
Payable for distribution fees -- class B (Note 2) 35,052
Other accrued expenses 55,899
Total liabilities 6,817,448
Net assets $272,657,954
Represented by
Paid-in capital (Note 4) $292,458,820
Distributions in excess of net investment income (82,860)
Accumulated net realized loss on investment transactions (5,149,991)
Net unrealized depreciation of investments (14,568,015)
Total--Representing net assets applicable to capital
shares outstanding $272,657,954
Computation of net asset value and offering price
Net asset value and redemption price of class A shares
($223,902,306 divided by 26,822,200 shares) $8.35
Offering price per class A share (100/95.25 of $8.35) * $8.77
Net asset value and redemption price of class B shares
($48,755,648 divided by 5,845,210 shares)+ $8.34
</TABLE>
*On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
+Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of operations
Six months ended December 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Tax exempt interest income $ 9,924,558
Expenses:
Compensation of Manager (Note 2) 872,155
Investor servicing and custodian fees (Note 2) 148,189
Compensation of Trustees (Note 2) 7,058
Auditing 13,206
Legal 8,082
Reports to shareholders 49,627
Administrative services (Note 2) 5,041
Amortization of organization expenses 5,621
Distribution fees--class A (Note 2) 235,885
Distribution fees--class B (Note 2) 205,242
Registration fees 12,603
Postage 30,862
Other expenses 8,225
Total expenses 1,601,796
Net investment income 8,322,762
Net realized loss on investments (Notes 1 and 3) (3,262,545)
Net realized loss on futures contracts (233,189)
Net unrealized depreciation of investments and futures
contracts during the year (10,059,299)
Net gain/loss on investment transactions (13,555,033)
Net decrease in net assets resulting from operations $ (5,232,271)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Six months
ended Year ended
December 31 June 30
1994* 1994
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 8,322,762 $ 15,328,319
Net realized loss on investments and
futures contracts (3,495,734) (38,889)
Net unrealized depreciation of
investments (10,059,299) (19,449,337)
Net decrease in net assets resulting
from operations (5,232,271) (4,159,907)
Distributions to shareholders from:
Net investment income
Class A (7,099,776) (13,734,969)
Class B (1,284,051) (1,545,308)
Net realized gain on investments
Class A -- (2,166,642)
Class B -- (78,061)
In excess of realized gain on investments
Class A -- (1,336,885)
Class B -- (369,008)
Increase (decrease) from capital share
transactions (Note 4) (4,978,660) 64,287,614
Total increase (decrease) in net assets (18,594,758) 40,896,834
Net assets
Beginning of period 291,252,712 250,355,878
End of period (including distributions
in excess of $82,860 and $21,796
respectively) $272,657,954 $291,252,712
</TABLE>
* Unaudited
<PAGE>
Financial Highlights
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
January 4, 1993
Six months (commencement
ended Year ended of operations)
December 31 June 30 to June 30
1994* 1994 1993
Class B
<S> <C> <C> <C>
Net asset value, beginning of period $8.75 $9.46 $9.02
Investment operations
Net investment income .19 .45 .21
Net realized and unrealized gain (loss) on investments (.41) (.58) .43
Total from investment operations (.22) (.13) .64
Less distributions:
From net investment income (.19) (.45) (.20)
Net realized gain on investments -- (.02) --
In excess of realized gain on investments -- (.11) --
Total distributions (.19) (.58) (.20)
Net asset value, end of period $8.34 $8.75 $9.46
Total investment return at net asset value (%) (a) (2.09)(c) (1.59) 7.21(c)
Net assets, end of period (in thousands) $48,756 $44,916 $15,113
Ratio of expenses to average net assets (%) .84(c) 1.59 .77(c)
Ratio of net investment income to average net assets (%) 2.66(c) 4.77 2.24(c)
Portfolio turnover (%) 36.14(c) 51.74 44.58(c)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the period
February 20, 1990
Six months (commencement of
ended operations)
December 31 Year ended June 30 June 30
1994 1994 1993 1992 1991 1990
Class A
<S> <C> <C> <C> <C> <C>
$8.75 $9.46 $8.97 $8.64 $8.50 $8.50
.23 .51 .54 .59(a) .62(a) .22(a)
(.41) (.58) .58 .38 .13 .01
(.18) (.07) 1.12 .97 .75 .23
(.22) (.51) (.55) (.60) (.61) (.23)
(.08) (.08) (.04) -- --
(.05) -- -- -- --
(.22) (.64) (.63) (.64) (.61) (.23)
$8.35 $8.75 $9.46 $8.97 $8.64 $8.50
(1.66)(c) (.94) 13.02 11.52 9.17 2.71(c)
$223,902 $246,336 $235,243 $159,658 $99,978 $34,588
.50(c) .95 .92 .75(d) .66(d) .26(c)(d)
2.95(c) 5.43 5.90 6.69(d) 7.09(d) 3.06(c)(d)
36.14(c) 51.74 44.58 80.21 101.21 7.58(c)
</TABLE>
*Unaudited
(a) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b) Annualized.
(c) Not annualized.
(d) Reflects a voluntary expense limitation. As a result, expenses of the
fund for the years ended June 30, 1992 and 1991 and for the period ended June
30, 1990 reflect a reduction of $0.01, $0.03 and $0.02, respectively.
<PAGE>
Notes to financial statements
December 31, 1994 (Unaudited) Note 1
Significant accounting policies
The fund is registered under the Investment Company Act of 1940, as amended,
as a non-diversified, open-end management investment company. The fund seeks
as high a level of current income exempt from federal income tax and New
Jersey personal income tax as Putnam Management believes is consistent with
preservation of capital by investing primarily in a portfolio of longer-term
New Jersey tax exempt securities.
The fund offers both class A and class B shares. Class A shares are sold with
a maximum front-end sales charge of 4.75%. Class B shares do not pay a front-
end sales charge, but pay a higher ongoing distribution fee than class A
shares, and may be subject to a contingent deferred sales charge if those
shares are redeemed within six years of purchase. Expenses of the fund are
borne pro-rata by the holders of both classes of shares, except that each
class bears expenses unique to that class (including the distribution fees
applicable to such class) and votes as a class only with respect to its own
distribution plan or other matters on which a class vote is required by law
or determined by the Trustees. Shares of each class would receive their
pro-rata share of the net assets of the fund, if the fund were liquidated. In
addition, the Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A) Security valuation Tax-exempt bonds and notes are stated on the basis of
valuations provided by a pricing service, approved by the Trustees, which
uses information with respect to transactions in bonds, quotations from bond
dealers, market transactions in comparable securities and various
relationships between securities in determining value. The fair value of
restricted securities is determined by the Manager following procedures
approved by the Trustees.
B) Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis.
C) Futures A futures contract is an agreement between two parties to buy and
sell a security at a set price on a future date. Upon entering into such a
contract, the fund is required to pledge to the broker an amount of cash or
tax- exempt securities equal to the minimum "initial margin" requirements of
the exchange. Pursuant to the contract, the fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as "variation margin,"
and are recorded by the fund as unrealized gains or losses. When the contract
is closed, the fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed. The potential risk to the fund is that the change in
value of the underlying securities may not correspond to the change in value
of the futures contracts.
D) Federal taxes It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of
<PAGE>
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 excise tax on income and capital gains.
E) Distributions to shareholders Income dividends are recorded daily by the
fund and are distributed to the shareholders monthly. Capital gains
distributions, if any, are recorded on the ex-dividend date and paid
annually.
The amount and character of income and gains to be distributed are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
F) 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. Discount on zero-coupon bonds is accreted according
to the effective yield method.
G) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities and
Exchange Commission and with various states, and the initial public offering
of its class A shares aggregated $49,086. These expenses are being amortized
over a five-year period based on current and projected net asset levels.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Investment Management, the fund's Manager, a
wholly-owned subsidiary of Putnam Investments, Inc., for management and
investment advisory services is paid quarterly based on the average net
assets of the fund for the quarter. Such fee is based on the following annual
rates: 0.60% of the first $500 million of average net assets, 0.50% of the
next $500 million, 0.45% of the next $500 million and 0.40% of any amount
over $1.5 billion, subject to reduction in any year to the extent of certain
brokerage commissions and fees (less expenses) received by affiliates of the
Manager on the fund's portfolio transactions.
The fund also reimburses the Manager 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 $790 and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of the Manager and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
Custodial functions are being provided to the fund by Putnam Fiduciary Trust
Company (PFTC), a subsidiary of the Putnam Companies, Inc. Investor servicing
agent functions are provided by Putnam Investor Services, a division of PFTC.
Investor servicing and custodian fees reported in the Statement of operations
for the six months ended December 31, 1994 have been reduced by credits
allowed by PFTC.
The fund has adopted a distribution plan with respect to its class A shares
(the "Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act
of 1940. The purpose of the Class A
<PAGE>
Plan is to compensate Putnam Mutual Funds Corp., a wholly owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by it in
distributing class A shares. The Class A Plan provides for payments by the
fund to Putnam Mutual Funds Corp. at an annual rate of 0.35% of the fund's
average net assets attributable to class A shares. Currently, the Trustees
have limited payments to 0.20% of such assets.
For the six months ended December 31, 1994, Putnam Mutual Funds Corp., acting
as underwriter, received net commissions of $22,639 from the sale of class A
shares of the fund.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of
class A shares purchased as part of an investment of $1 million or more. For
the six months ended December 31, 1994, Putnam Mutual Funds Corp, acting as
underwriter, did not receive any commissions on such redemptions.
The fund has adopted a separate distribution plan with respect to its class B
shares (the "Class B Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The purpose of the class B Plan is to compensate Putnam
Mutual Funds Corp. at an annual rate of 0.85% of the fund's average net
assets attributable to class B shares. Payments under the plan cannot exceed
1% without shareholder approval. For the six months ended December 31, 1994,
the fund paid Putnam Mutual Funds Corp. distribution fees of $205,242 for
class B shares.
Putnam Mutual Funds Corp. also receives the proceeds of the contingent
deferred sales charges levied on class B share redemptions within six years
of purchase. The charge is based on declining rates, which begin at 5% of the
net asset value of the redeemed shares. Putnam Mutual Funds Corp. has
received contingent deferred sales charges of $93,998 from such redemptions
during the six months ended December 31, 1994.
Note 3
Purchases and sales of securities
During the six months ended December 31, 1994, purchases and sales of
investment securities other than short-term investments aggregated
$53,106,753 and $65,819,587 respectively. Purchases and sales of short-term
municipal obligations aggregated $1,500,000, and $6,100,000, respectively. In
determining the net gain or loss on securities sold, the cost of securities
has been determined on the identified cost basis.
<PAGE>
Note 4
Capital shares
At December 31, 1994 there was an unlimited number of shares of beneficial
interest authorized divided into two classes of shares, class A and class B
capital stock. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1994 Year ended June 30, 1994
Class A Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,946,636 $ 16,684,011 6,502,086 $ 60,620,771
Shares issued in
connection with
reinvestment of
distributions 459,287 3,912,214 1,019,504 9,472,472
2,405,923 20,596,225 7,521,590 70,093,243
Shares repurchased (3,738,424) (31,735,750) (4,232,774) (38,876,147)
Net increase (1,332,501) $(11,139,525) 3,288,816 $ 31,217,096
Six months ended
December 31, 1994 Year ended June 30, 1994
Class B Shares Amount Shares Amount
Shares sold 1,114,598 $ 9,597,670 3,704,434 $ 34,534,469
Shares issued in
connection with
reinvestment of
distributions 87,437 743,317 129,718 1,197,579
1,202,035 10,340,987 3,834,152 35,732,048
Shares repurchased (492,519) (4,180,122) (296,170) (2,661,530)
Net increase 709,516 $ 6,160,865 3,537,982 $ 33,070,518
</TABLE>
<PAGE>
Our commitment to quality service
> CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service Seal for
the past five years, through 1994. DALBAR, an independent research firm, ran
more than 10,000 tests of 38 shareholder service components. In every
category, Putnam outperformed the industry standard.
> HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from
a Putnam fund or from your own checking or savings account.*
> SWITCH FUNDS EASILY.
You can move money from one account to another with the same class of shares
without a service charge. (This privilege is subject to change or
termination.)
> ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day at the
then-current net asset value, which may be more or less than their original
cost.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative.
> To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number: 1-800-225-1581.
*Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market. Investors should consider their ability to
continue purchasing shares during periods of low price levels.
<PAGE>
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
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John R. Verani
Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
James Erickson
Vice President
Thomas C. Goggins
Vice President
and Fund Manager
William N. Shiebler
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New Jersey Tax
Exempt Income Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales charges,
investment objectives and operating policies of the fund, and the most recent
copy of Putnam's quarterly Performance Summary. For more information or to
request a prospectus, call toll-free: 1-800-225-1581.
Shares of mutual funds are not deposits of, or guaranteed or endorsed by, any
financial institution, are not insured by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency, and
involve risk, including the possible loss of principal amount invested.
<PAGE>
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
019/329-16661
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Bold and italic typefaces are displayed in normal type.
(2) Headers (e.g., the name of the fund) are omitted.
(3) Certain tabular and columnar headings and symbols are displayed
differently in this filing.
(4) Bullet points and similar graphic signals are omitted.
(5) Page numbering is omitted.
(6) Trademark symbol replaced with (TM)
