Putnam
New Jersey
Tax Exempt
Income Fund
[FRONT COVER PHOTO]
SEMIANNUAL REPORT
November 30, 1995
[PUTNAM LOGO]
B O S T O N * L O N D O N * T O K Y O
1
<PAGE>
Fund highlights
(arrow) "Shifting assets away from long-term bets like resource
recovery and
into more highly liquid, high quality bonds in transportation and
other
sectors enabled the fund to participate fully in the recent
market rally."
-- Leslie
Burke, Manager,
Putnam New Jersey
Tax Exempt Fund
(arrow) "Munis offer unusually attractive yields right now
because of
unwarranted fears that a flat-rate income tax will end the tax
advantage
they have over taxable bonds."
-- Kiplinger's Personal
Finance Magazine,
December 1995
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
17 Financial statements
2
<PAGE>
From the Chairman
[PHOTO OF CHAIRMAN]
(c) Karsh, Ottawa
Dear Shareholder:
Tax-exempt bond investors will long remember 1995 as a year of
highs and
lows. The year began as the bond market was coming off one of its
worst
periods in recent memory. Just as things began to look brighter
for tax-
exempt bonds, talk in Washington about tax reform cast a wave of
uncertainty
over investors.
By the time Putnam New Jersey Tax Exempt Income Fund entered its
new fiscal
year in June, investors had begun to regain their composure,
realizing that
enactment of any tax-reform legislation was unlikely during an
election year.
As the fund reached the fiscal year's midpoint on November 30,
1995,
shareholders could look back on a period of impressive recovery.
Furthermore, because of the earlier interruption over tax-reform
proposals,
Fund Managers Leslie J. Burke and Triet M. Nguyen believe the
rally will be
sustained during the second half of fiscal 1996 as the tax-exempt
bond market
continues to make up lost ground. Leslie, who has co-managed the
fund since
September 1995, was named lead manager effective January 2, 1996.
Respectfully yours,
[SIGNATURE OF GEORGE PUTNAM]
George Putnam
Chairman of the Trustees
January 17, 1996
3
<PAGE>
Report from the Fund Managers
Leslie J. Burke, lead manager
Triet M. Nguyen
Putnam New Jersey Tax Exempt Income Fund rewarded shareholders
well during
the recent semiannual period, as astute strategic moves and a
rising
municipal bond market contributed to strong returns. For the
period ended
November 30, 1995, the fund provided shareholders with a total
return of
4.48% for class A shares, 4.15% for class B shares and 4.36% for
class M
shares, all at net asset value.
(arrow)STRONG RELATIVE PERFORMANCE: A MATTER OF PERSPECTIVE
After overcoming a brief stall in midsummer, the broad
fixed-income market
continued its impressive run throughout the six months ended
November 30,
1995. Increased investor confidence in the Federal Reserve
Board's ability to
thwart inflation and effectively manage economic growth over the
long term
fueled the gains of most fixed-income investments. Indeed, the
rally had
gained such momentum by period's end that the current yield on
the benchmark
30-year Treasury bond seems to be fast approaching the
historically low level
of 5.79% (as of October 15, 1993).
On an absolute basis, municipal bonds participated in the rally's
strength in
a highly respectable fashion. However, investors' lingering
concerns about
the perceived effects of the flat-tax proposal introduced in
April--which, in
its purest form, would deprive municipal bonds of their
beneficial tax
treatment--prevented your fund's investments from attaining the
full price
appreciation potential presented by the favorable investment
environment.
In any good year, your fund's performance would have been quite
satisfactory
- -- and even more so during 1994's bear market. Furthermore, on a
tax-equivalent basis, a New Jersey investor in the combined
maximum federal
and state income tax bracket of 43.57% would have had to earn
9.21% to match
the 5.20% current dividend rate at NAV your fund's class A shares
produced.
Comparable figures for class B and class M share-
4
<PAGE>
holders would have been 8.06% and 8.65%, respectively, to match
current
dividend rates of 4.55% and 4.88% at NAV.
(arrow)WELL-TIMED PORTFOLIO SHIFTS BOOST YOUR RETURNS
While a long-term commitment is essential to investment success,
there is no
question that making the right move at the right time can often
produce
exceptional short-term results. This was certainly the case with
two timely
portfolio shifts we made during the semiannual period. The first
shift was
our decision to sell a good portion of our resource recovery
holdings and
reinvest the proceeds into highly liquid, high quality issues in
various
municipal sectors. Although the resource recovery bonds had been
producing
income for the fund, delays in the passage of important state
legislation had
prevented them from appreciating to the same extent as other
sectors. This
more diversified position rallied along with the market, so the
fund was able
to participate fully in the bull market and realize significant
performance
gains. We still believe in this sector's long-term potential and
will be
watching this sector carefully in the months ahead.
The second timely strategy we pursued during the semiannual
period was to
begin extending the portfolio's duration over the summer.
Duration is a
mathematical formula used to assess a
[BEGIN PIE CHART]
PORTFOLIO QUALITY OVERVIEW 11/30/95
51.06% AAA
14.76% AA
11.19% A
7.03% BBB
15.96% BB and below
[END PIE CHART]
Based on portfolio market value as of 11/30/95 and will vary over
time. Based
on Standard and Poor's rating terminology. While the fund has the
flexibility
to invest in higher-yielding lower-rated bonds, generally at
least 75% of the
portfolio will be investment grade. Investment-grade securities
are those
rated BBB or higher by Standard & Poor's, or Baa or higher by
Moody's
Investor Service, Inc.
5
<PAGE>
portfolio's price volatility; the longer the duration, the
greater the price
appreciation when interest rates decline, as they did over the
past several
months. When interest rates increase, prices decline.
In July, the Federal Reserve Board cut short-term interest rates
for the
first time in nearly three years, and although the Fed took no
additional
action during the period, rates continued to trend lower in
subsequent
months. With a longer duration, the fund was well positioned to
benefit from
the decline in interest rates. Fund holdings appreciated
handsomely,
especially in the closing three months of the period when rates
continued to
fall and the value of longer-term securities rose substantially.
(arrow) NEW EMPHASIS ON "SELF-SUPPORTING" BONDS
During the first half of fiscal 1996, the last leg of the New
Jersey
governor's much-heralded tax cut went into effect. The result has
been a drop
in state revenues of between 4% and 5%. At this point, there has
been no
corresponding cut in spending, nor has the state put forth any
meaningful
substitute sources of revenue. Given this situation, as well as
the fact that
New Jersey's economic recovery has lagged behind the rest of the
country's,
we have been avoiding investment in the state's general
obligation bonds.
Instead, we have been concentrating on so-called
"self-supporting" bonds in
such areas as hospitals, transportation, water and sewer, and
electric
utilities. These issuers do not rely on the state for their
monies; rather,
they generate revenues through fees or charges that can be used
to pay
interest and principal to bondholders such as this fund.
(arrow) SECTOR STRATEGIES
The supply of New Jersey municipal securities was down 24% year
to date as of
November 30, 1995, as compared with a corresponding drop of 14%
nationally.
Fortunately, supply began to pick up over the summer as two $800
million
transportation bond issues came to market in July and August,
providing ample
investment opportunity for the fund.
In addition to these transportation investments, we continue to
maintain a
significant commitment to the health-care sector, which has
performed very
well. While health-care consolidation, managed care, and
cost-containment
have taken hold strongly in
6
<PAGE>
[BEGIN BAR CHART]
TOP INDUSTRY SECTORS*
Hospitals/Health care 18.9%
Highways/Toll roads 12.4%
Transportation/Airlines 7.8%
Utilities/Water and sewerage 6.6%
Education 5.7%
[END BAR CHART]
*Based on net assets as of 11/30/95. Holdings may vary over time.
some parts of the country, New Jersey's health-care industry --
after years
of heavy state regulation -- has been slower to make these
transitions. Of
course, we will be monitoring federal budget negotiations very
carefully and
examining each fund holding with an eye toward the potential
impact of any
changes in funding for Medicare, Medicaid, and health-care
research.
Nonetheless, given the strong performance of the fund's holdings
to date, we
currently anticipate maintaining a strong exposure to the
health-care sector
for some time to come.
(arrow)FUNDAMENTALS SOUND, VALUATIONS APPEALING
As we enter the second half of fiscal 1996, we anticipate
conditions for
investing in municipal securities to remain hospitable. Subsiding
inflation,
a benign interest rate environment, and decelerating economic
growth seem
likely to continue. While the debate over tax reform is probably
the most
critical factor that could influence tax-exempt bond performance
over the
next twelve months, most investors seem to have realized that
changes are not
likely to occur until after the 1996 presidential election. Even
then, any
revisions would most likely involve simplifications rather than a
major
overhaul of the entire system. That said, we are upbeat about the
prospects
for the municipal market for several reasons:
First, with municipal bonds underperforming Treasuries during the
recent
semiannual period, we believe buying opportunities exist and that
there is
good potential for further price appreciation ahead. We intend to
take
advantage of investment opportu-
7
<PAGE>
nities to shorten the fund's duration slightly in coming months,
since we
believe interest rates are unlikely to decline as dramatically
this year as
they did in 1994 and a shorter duration portfolio is designed to
fluctuate
less with interest rates.
Second, municipal securities supply remains scant, while investor
demand is
firming up due to receding flat-tax concerns and the seasonal
reinvestment
surge that usually occurs in December and January. This scenario
is positive
for continued municipal securities price support.
Finally, both state and national governments are addressing the
issue of
becoming more efficient -- for the first time in history. Such
attention to
fiscal responsibility bodes well for the fundamental structure of
the
municipal market. Going forward, we will continue to monitor
market events in
New Jersey and the nation to position your fund to benefit from
longer-term
trends.
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 11/30/95, there is no guarantee the fund will
continue to
hold these securities in the future.
8
<PAGE>
Performance summary
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
state income tax
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 11/30/95
<TABLE>
<CAPTION>
Class A
(2/20/90) Class B Class M
Date of Inception (1/4/93) (5/1/95)
<S> <C> <C> <C> <C> <C>
<C>
NAV POP NAV CDSC NAV
POP
6 months 4.48% -0.50% 4.15% -0.85% 4.36%
0.98%
1 year 18.15 12.51 17.42 12.42 --
- --
5 years 47.79 40.76 -- -- --
- --
Annual average 8.13 7.08 -- -- --
- --
Life of class 58.36 50.90 18.13 14.13 7.71
4.25
Annual average 8.28 7.38 5.91 4.66 --
- --
</TABLE>
COMPARATIVE RETURNS FOR PERIODS ENDED 11/30/95
<TABLE>
<CAPTION>
Lehman Bros.
Municipal Bond Consumer
Bond Index Price Index
<S> <C> <C>
6 months 5.18% 0.92%
1 year 18.90 2.61
5 years 51.82 14.80
Annual average 8.71 2.80
Life of class A 61.50 20.00
Annual average 8.65 3.20
Life of class B 23.88 8.24
Annual average 7.66 2.77
Life of class M 8.53 1.12
</TABLE>
Performance data represent past results, do not reflect future
performance,
and will differ for each share class. They do not take into
account any
adjustment for taxes payable on reinvested distributions.
Investment returns
and net asset value will fluctuate so that an investor's shares,
when sold,
may be worth more or less than their original cost. POP assumes
4.75% maximum
sales charge for class A shares and 3.25% for class M shares.
CDSC for class
B shares assumes 5% maximum contingent deferred sales charge.
9
<PAGE>
TOTAL RETURN FOR PERIODS ENDED 12/31/95
(most recent calendar quarter)
<TABLE>
<CAPTION>
Class A
(2/20/90) Class B
Class M
Date of Inception (1/4/93)
(5/1/95)
NAV POP NAV CDSC
NAV POP
<S> <C> <C> <C> <C>
<C> <C>
1 year 16.12% 10.56% 15.41% 10.41%
- -- --
5 years 48.89 41.78 -- --
- -- --
Annual average 8.29 7.23 -- --
- -- --
Life of class 59.88 52.35 19.22 15.22
8.84% 5.34%
Annual average 8.34 7.45 6.06 4.85
- -- --
</TABLE>
Performance data represent past results, do not reflect future
performance,
and will differ for each share class. They do not take into
account any
adjustment for taxes payable on reinvested distributions.
Investment returns
and net asset value fluctuate so that an investor's shares, when
sold, may be
worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 11/30/95
<TABLE>
<CAPTION>
Class A Class B
Class M
<S> <C> <C> <C> <C>
<C>
Distributions (number) 6 6
6
Income $0.243022 $0.214165
$0.232184
Capital gains(1) -- --
--
Total $0.243022 $0.214165
$0.232184
Share value: NAV POP NAV NAV
POP
5/31/95 $8.98 $9.43 $8.97 $8.98
$9.28
11/30/95 9.13 9.59 9.12 9.13
9.44
Current return
End of period
Current dividend
rate(2) 5.20% 4.95% 4.55% 4.88%
4.72%
Taxable equivalent(3) 9.21 8.77 8.06 8.65
8.36
Current 30-day SEC
yield(4) 4.65 4.43 4.01 4.36
4.21
Taxable equivalent()(3) 8.24 7.85 7.11 7.73
7.46
</TABLE>
(1)Capital gains are taxable for federal and, in most cases,
state tax
purposes. For some investors, investment income may also be
subject to the
federal alternative minimum tax. Investment income may be subject
to state
and local taxes. (2)Income portion of most recent distribution,
annualized
and divided by NAV or POP at end of period. (3)Assumes maximum
combined state
and federal tax rates of 43.57% . Results for investors subject
to lower tax
rates would not be as advantageous. (4)Based on investment
income, calculated
using SEC guidelines.
10
<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.
Class M shares have a lower initial sales charge and a
higher 12b-1 fee than class A shares and no sales charge on
redemption.
Net asset value (NAV) is the value of the 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.
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 for class A
shares and 3.25%
for class M shares.
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.
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.
11
<PAGE>
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
International New Opportunities Fund
Investors Fund
Natural Resources Trust
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
Voyager II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government Income Fund
Preferred Income Fund
U.S. Government Income Trust
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
LIFESTAGES(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:
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts++
* Not available in all states.
+ Relative to above.
++ 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.
Please call your financial advisor or Putnam at 1-800-225-1581 to
obtain a
prospectus for any Putnam fund. It contains more complete
information,
including charges and expenses. Please read it carefully before
you invest or
send money. 12
<PAGE>
Portfolio of investments owned
November 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Key to Abbreviations
COP -- Certificate of Participation
IFB -- Inverse Floating Rate Bonds
G.O. Bonds -- General Obligation Bonds
VRDN -- Variable Rate Demand Notes
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Administration
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance Corporation
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES (96.7%)*
PRINCIPAL AMOUNT
RATINGS** VALUE
<S> <C> <C>
<C>
New Jersey (76.8%)
$1,000,000 Atlantic City, Muni. Utils. Auth. Wtr. Rev.
Bonds 7-3/4s, 5/1/17 AAA
$1,153,750
Atlantic Cnty. COP
2,000,000 FGIC 7.4s, 3/1/10 AAA
2,455,000
1,000,000 (Pub. Facs. Lease Agreement), FGIC, 7.4s,
3/1/10 AAA
1,227,500
4,250,000 Camden Cnty., Impt. Auth. Rev. Bonds 8.4s,
4/1/24 (acquired 4/12/94 cost
$4,250,000)++ BB/P
4,350,938
1,200,000 Middle Township Sch. Dist. Rev. Bonds FGIC,
7s, 7/15/06 AAA
1,417,500
2,000,000 Middlesex Cnty., Poll. Control Auth. Rev. Bonds
6-7/8s, 12/1/22 BB/P
2,120,000
3,000,000 Middlesex Cnty., Utils. Auth. Swr. Rev. IFB
Ser. A, MBIA, 7.033s, 8/15/10 AAA
3,420,000
NJ Bldg. Auth. G. O. Bonds
3,750,000 5s, 6/15/18 AA
3,534,375
7,000,000 MBIA, 5s, 6/15/17 AAA
6,658,750
5,420,000 5s, 6/15/16 AA
5,121,900
NJ Econ. Dev. Auth. Rev. Bonds
5,300,000 (Stolt Terminals Project), 10-1/2s, 1/15/18 BB/P
5,942,625
4,550,000 (Holt Hauling Co.), Ser. D, 10-1/4s, 9/15/14 BB/P
4,831,918
5,000,000 (Tevco Inc. Project), 8-1/8s, 10/1/09 A/P
5,606,250
3,260,000 (Cadbury Corp.), 8s, 7/1/15 BB/P
3,467,825
1,200,000 (Ninette Group L P Project) 7-3/4s, 8/1/11 A
1,291,500
2,000,000 (Hartz Mountain Industries, Inc.) 7s, 2/1/14 A
2,247,500
3,080,000 (Lakewood School), Ser. R, 6.9s, 12/1/11 Aa
3,376,450
1,500,000 (NJ Performing Arts Ctr.), 6-3/4s, 6/15/12 A
1,621,875
2,835,000 (#89 Kiva L.P. Project), 6.4s, 8/1/15 AA
3,058,256
1,895,000 (Urban Holding Co.), 6-1/2s, 6/1/15 AA
2,013,438
2,000,000 6-1/8s, 5/15/15 AAA
2,090,000
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT
RATINGS** VALUE
<S> <C> <C>
<C>
New Jersey (continued)
$1,550,000 (Burlington Coat Factory) 6-1/8s, 9/1/10 A
$ 1,660,438
1,635,000 (American Wtr. Co. Project) FGIC, Ser.
A, 5.35s, 6/1/23 AAA
1,585,950
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
1,088,750
11,105,000 NJ Econ. Dev. Auth. Elec. Energy Fac. Rev.
Bonds(Vineland Cogeneration L.P. Project),
7-7/8s, 6/1/19 BB/P
12,007,277
5,000,000 NJ Econ. Dev. Auth. Hlth. Care Fac. Rev. Bonds
(Ocean Nursing Pavilion), Ser. A, 7-3/8s,
12/1/25 BB/P
5,006,250
NJ Econ. Dev. Auth. Natural Gas Fac. Rev.
Bonds(NJ Natural Gas Co. Project)
2,500,000 9s, 12/1/17 A
2,771,875
2,500,000 Ser. 84A, 7.05s, 3/1/16 A
2,668,750
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
3,400,313
NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds
4,250,000 (St. Elizabeth Hosp.), Ser. B, 8-1/4s, 7/1/20 Baa
4,627,188
3,095,000 (Jersey Shore Med. Ctr.), AMBAC, Ser. B, 8s,
7/1/18 AAA
3,447,056
4,000,000 (Kimball Med. Ctr.), Ser. C, 8s, 7/1/13 Baa
4,280,000
1,000,000 (East Orange Gen. Hosp.), Ser. B, 7-3/4s,
7/1/20 BBB
1,072,500
3,905,000 (Kimball Med. Ctr.) 7.3s, 7/1/99 Baa
3,989,309
9,000,000 (Raritan Bay Med. Ctr.) 7-1/4s, 7/1/27 BB/P
9,078,750
3,300,000 (Christ Hosp. Group) 7s, 7/1/06 AAA
3,869,250
5,000,000 (Gen. Hosp. Ctr.-Passaic Inc.), FSA, 6-3/4s,
7/1/19 AAA
5,556,250
4,400,000 (St. Mary's Hosp.) 5-7/8s, 7/1/12 Baa
4,273,500
2,325,000 (Union Hosp./Mega Care Inc.) 5-7/8s, 7/1/07 Baa
2,287,219
7,285,000 (Somerset Med. Ctr.), Ser. A, FGIC, 5.2s,
7/1/24 AAA
6,911,644
3,500,000 (St. Peters Med. Ctr.), Ser. F, MBIA, 5s,
7/1/21 AAA 3,233,125
3,935,000 NJ State Edl. Facs. Auth. Rev. Bonds (NJ
Institute of Technology), Ser 95-E, MBIA,
5-3/8s, 7/1/16 AAA
3,935,000
4,065,000 NJ State G.O. Bonds FGIC, 6s, 2/15/11 AAA
4,415,606
NJ State Hsg. & Mtge. Fin. Agcy. Rev. Bonds
3,000,000 Ser. I, 9.242s, 11/1/07 (acquired $2,000,000
par 2/11/93 cost $2,068,074, acquired
$1,000,000 par 6/14/93 cost $1,061,250)++ A
3,371,250
1,720,000 (Home Buyer Project), Ser. D, MBIA, 7.7s,
10/1/29 AAA
1,821,050
NJ State Hwy. Auth. Gen. Rev. Bonds
1,500,000 (Garden State Pkwy. Project), 6.2s, 1/1/10 AA
1,642,500
2,370,000 (Garden State Pkwy. Project), 6s, 1/1/19 Aaa
2,571,450
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT
RATINGS** VALUE
<S> <C> <C>
<C>
New Jersey (continued)
NJ State Tpk. Auth. Rev. Bonds
$1,800,000 MBIA, 10.232s, 1/1/16 (acquired
3/27/92, cost $1,817,856)++ AAA
$ 2,315,250
20,000,000 Ser. C, MBIA, 6-1/2s, 1/1/16 AAA
23,000,000
12,000,000 3.35s, 1/1/18 A
12,000,000
NJ State Transn. Trust Fund Auth. Rev. Bonds
5,000,000 (Transn. Syst.), Ser. A, MBIA, 6-1/2s,
6/15/11 AAA
5,762,500
2,900,000 (Transportation System), Ser. A, 5-1/2s,
6/15/12 AAA
2,947,125
7,000,000 NJ Wastewater Treatment Trust Rev. Bonds Ser.
A, zero%, 9/1/07 AAA
3,876,250
1,800,000 Passaic Valley, Cmnty. Wtr. Supply Rev. Bonds
Ser. A., FGIC, 6.4s, 12/15/22 AAA
2,036,250
4,500,000 Rutgers State U. Rev. Bonds Ser. A,
6.4s, 5/1/13 AA
5,051,250
4,000,000 Salem Cnty., Indl. Poll. Control Fin. Auth.
Rev. Bonds (Pub. Svc. Elec. & Gas Co. Project),
Ser. C, MBIA, 5.55s, 11/1/33 AAA
3,940,000
1,975,000 Sayreville, Hsg. Dev. Corp. Mtge. Rev. Bonds
(Lakeview Section 8), FHA, 7-3/4s, 8/1/24 AAA
2,226,813
1,000,000 Stony Brook, Regional Swr. Rev. Bonds Ser. B,
5.45s, 12/1/12 AA
1,038,750
4,695,000 U. of Medicine & Dentistry G.O. Bonds Ser. E,
6-1/2s, 12/1/12 AA
5,364,038
1,300,000 Union Cnty., Indl. Poll. Ctrl. Fin. Auth. Rev.
Bonds (American Cyanamid Co.) 5.8s, 9/1/09 A
1,389,375
238,527,201
New York (5.6%)
7,500,000 Port Auth. NY & NJ Cons. Rev. Bonds 93rd Ser.,
6-1/8s, 6/1/94 AA
7,996,875
Port Auth. NY & NJ Cons. Rev. IFB
5,000,000 8.909s, 8/1/26 (acquired 8/29/91, cost
$5,164,940)++ AA
5,900,000
1,500,000 7.334, 11/15/15 AA
1,455,000
2,100,000 5.2s, 11/15/15 (acquired 2/9/94, cost
$2,107,875)++ AA
1,911,000
17,262,875
Pennsylvania (1.6%)
5,000,000 Delaware River Port Auth. PA & NJ Rev. Bonds
Ser. 1995 FGIC 5-1/2s 1/1/26 AAA
4,906,250
Puerto Rico (12.7%)
Cmnwlth. of Puerto Rico, Hwy. & Trans. Auth.
Rev. Bonds
1,500,000 Ser. Q, 7-3/4s, 7/1/16 AAA
1,747,500
2,000,000 Ser. X, 5-1/4s, 7/1/21 A
1,880,000
1,000,000 Ser. W, 5-1/2s, 7/1/15 A
993,750
1,200,000 Puerto Rico Comwlth. Hwy. & Transn. Auth. Hwy.
VRDN, Ser. X, 3.3s, 7/1/99 VMIGI
1,200,000
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT
RATINGS** VALUE
<S> <C> <C>
<C>
Puerto Rico (continued)
$4,000,000 Cmnwlth. of Puerto Rico, Pub. Impt. G.O. Bonds
6.8s, 7/1/21
AAA $ 4,600,000
Puerto Rico Commwlth. of G.O Bonds
2,250,000 Ser. A, MBIA, 5-3/8s, 7/1/22
AAA 2,247,188
4,500,000 3.3s, 12/1/15
VMIGI 4,500,000
11,000,000 Puerto Rico Elec Pwr. Auth. Rev. Bonds Ser.
Z, 5-1/4s, 7/1/21
A 10,463,750
Puerto Rico Pub. Bldgs. Auth., Gtd. Edl. & Hlth.
Facs. Rev. Bonds
1,250,000 Ser. G, 7-7/8s, 7/1/16
AAA 1,353,125
1,000,000 Ser. H, 7-7/8s, 7/1/16
AAA 1,082,500
3,750,000 Ser. K, 6-7/8s, 7/1/21
AAA 4,340,625
2,000,000 Puerto Rico, Indl. Med. & Env. Poll. Control
Fac. Fin. Auth. Rev. Bonds (Special
Facilities-American Airlines), Ser. A,
8-3/4s, 12/1/25
Baa 2,082,740
3,000,000 Puerto Rico Cmnwlth. of Rev Bonds AMBAC, 5s,
7/1/21
AAA 2,820,000
39,311,178
Total Municipal Bonds and Notes
(cost $282,759,687)
$300,007,504
MUNICIPAL COMMERCIAL PAPER (3.7%) (cost $11,506,711)*
PRINCIPAL AMOUNT
RATINGS** VALUE
$11,500,000 New Jersey Economic PSE&F 3.55s,
12/4/95
VMIGI $ 11,506,711
Total Investments
(cost $294,266,398)***
$311,514,215
</TABLE>
*Percentages indicated are based on net assets of $310,406,122.
**The Moody's or Standard & Poor's ratings indicated are
believed to be the
most recent ratings available at November 30, 1995 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 November
30, 1995. Securities rated by Putnam are indicated by "/P" and
are not
publicly rated.
***The aggregate identified cost on a tax cost basis is
$294,266,398
resulting in gross unrealized appreciation and depreciation of
$18,267,506
and $1,019,689, respectively, or net unrealized appreciation
of
$17,247,817.
++Restricted as to public resale. At the date of acquistion
these securities
were valued at cost. There were no outstanding securities of
the same
class as those held. Total market value of restricted
securities owned at
November 30, 1995 was $17,848,438 or 5.8% of net assets.
The rates shown on VRDN and IFB, which are securities paying
variable
interest rates that vary inversely to changes in the market
interest rates,
are the current interest rates at November 30, 1995, which are
subject to
change based on the terms of the security.
The fund had the following insurance concentration greater than
10% of net
assets at November 30, 1995:
MBIA 18.1%
The fund had the following industry group concentration greater
than 10% of
net assets at November 30, 1995:
Hospitals/ Health Care 18.9%
Highways/Tollroads 12.4
The accompanying notes are an integral part of these
financial statements.
16
<PAGE>
Statement of assets and liabilities
November 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S>
<C>
Assets
Investments in securities at value
(identified cost $294,266,398) (Note 1)
$311,514,215
Cash
149,669
Interest receivable
6,630,300
Receivable for shares of the fund sold
895,863
Receivable for securities sold
105,000
Total Assets
319,295,047
Liabilities
Payable for shares of the fund repurchased
162,026
Payable for securities purchased
7,770,555
Distributions payable to shareholders
377,513
Payable for compensation of Manager (Note 2)
401,644
Payable for administrative services (Note 2)
1,425
Payable for compensation of Trustees (Note 2)
139
Payable for distribution fees (Note 2)
126,427
Other accrued expenses
49,196
Total liabilities
8,888,925
Net assets
$310,406,122
Represented by
Paid-in capital (Note 4)
$304,240,185
Undistributed net investment income
10,661
Accumulated net realized loss on investment
transactions
(11,092,541)
Net unrealized appreciation of investments
17,247,817
Total--Representing net assets applicable to
capital shares outstanding
$310,406,122
Computation of net asset value and offering price
Net asset value and redemption price of
class A shares ($242,045,705 divided by
26,515,159 shares)
$9.13
Offering price per class A share (100/95.25
of $9.13)*
$9.59
Net asset value and offering price of class
B shares ($68,127,472 divided by 7,471,051
shares)+
$9.12
Net asset value and redemption price of
class M shares ($232,945 divided by 25,511
shares)
$9.13
Offering price per share (100/96.75 of
$9.13)** $
9.44
</TABLE>
*On single retail sales of less than $25,000. On sales of
$25,000 or more
and on group sales the offering price is reduced.
**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.
17
<PAGE>
Statement of operations
Six months ended November 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Tax exempt interest income $
9,386,154
Expenses:
Compensation of Manager (Note 2)
902,186
Investor servicing and custodian fees (Note 2)
159,230
Compensation of Trustees (Note 2)
6,270
Auditing
15,344
Legal
14,516
Reports to shareholders
14,443
Administrative services (Note 2)
4,266
Amortization of organization expenses (Note 1)
1,285
Distribution fees--Class A (Note 2)
238,840
Distribution fees--Class B (Note 2)
264,121
Distribution fees--Class M (Note 2)
182
Other expenses
32,298
Total expenses
1,652,981
Expense reduction (Note 2)
(282,715)
Net expenses
1,370,266
Net investment income
8,015,888
Net realized gain on investments (Notes 1 and 3)
557,906
Net realized loss on futures contracts (Notes 1 and 3)
(1,530,365)
Net unrealized appreciation of investments and
futures contracts during the period
6,039,506
Net gain on investment transactions
5,067,047
Net increase in net assets resulting from operations
$13,082,935
</TABLE>
The accompanying notes are an integral part of these financial
statements.
18
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Six months Eleven
months
ended ended
November 30 May 31
1995* 1995
<S> <C> <C>
Increase in net assets
Operations:
Net investment income $ 8,015,888 $
15,048,545
Net realized loss on investment
transactions (972,459)
(8,453,743)
Net unrealized appreciation of
investments 6,039,506
15,717,027
Net increase in net assets
resulting from operations 13,082,935
22,311,829
Distributions to shareholders from:
Net investment income
Class A (6,496,880)
(12,600,443)
Class B (1,487,505)
(2,404,816)
Class M (2,575)
Increase from capital share
transactions (Note 4) 4,149,595
2,601,270
Total increase in net assets 9,245,570
9,907,840
Net assets
Beginning of period $301,160,552
$291,252,712
End of period (including
undistributed net investment income
and distributions in excess of net
investment income of $10,661 and
$18,267 respectively $310,406,122
$301,160,552
</TABLE>
* Unaudited
The accompanying notes are an integral part of these financial
statements.
19
<PAGE>
Financial highlights
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
For the
period
May 1, 1995
Six months
(commencement
ended of operations)
to
November 30 May 31
1995* 1995+
Class M
<S> <C> <C>
Net asset value,
beginning of period $ 8.98 $ 8.74
Investment operations
Net investment income .23 .04
Net realized and unrealized
gain (loss) on investments .15 .28
Total from investment
operations .38 .32
Less distributions:
From net investment income (.23) (.08)
Net realized gain on
investments -- --
In excess of realized gain
on investments -- --
Total distributions (.23) (.08)
Net asset value, end of
period $ 9.13 $ 8.98
Total investment return at
net asset value (%) (a) 4.36(b) 3.21(b)
Net assets, end of period
(in thousands) $233 $ 1
Ratio of expenses to
average net assets (%) (d) 0.50(b) .09(b)
Ratio of net investment
income to average net
assets (%) 2.48(b) .42(b)
Portfolio turnover (%) 23.85(b) 51.86(b)
</TABLE>
<TABLE>
<CAPTION>
January 4, 1993
(commencement
Six months Eleven months
Year of operations)
ended ended
ended to
November 30 May 31
June 30 June 30
1995* 1995+
1994 1993
Class B
<S> <C> <C>
<C> <C>
Net asset value,
beginning of period $ 8.97 $ 8.75
$ 9.46 $ 9.02
Investment operations
Net investment income .21 .41
.45 .21
Net realized and unrealized
gain (loss) on investments .15 .22
(.58) .43
Total from investment
operations .36 .63
(.13) .64
Less distributions:
From net investment income (.21) (.41)
(.45) (.20)
Net realized gain on
investments --
(.02) --
In excess of realized gain
on investments -- --
(.11) --
Total distributions (.21) (.41)
(.58) (.20)
Net asset value, end of
period $ 9.12 $ 8.97
$ 8.75 $ 9.46
Total investment return at
net asset value (%) (a) 4.15(b) 7.51(b)
(1.59) 7.21(b)
Net assets, end of period
(in thousands) $68,127 $58,591
$44,916 $15,113
Ratio of expenses to
average net assets (%) (d) 0.81(b) 1.46(b)
1.59 .77(b)
Ratio of net investment
income to average net
assets (%) 2.40(b) 4.72(b)
4.77 2.42(b)
Portfolio turnover (%) 23.85(b) 51.86(b)
51.74 44.58
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Six months For the eleven
ended months ended
November 30 May 31
Year ended June 30
1995* 1995+
1994 1993 1992 1991
Class
A
<S> <C> <C> <C>
<C> <C> <C>
Net asset value,
beginning of period $8.98 $8.75
$9.46 $8.97 $8.64 $8.50
Investment operations
Net investment income .24 .46
.51 .54 .59(c) .62(c)
Net realized and
unrealized gain (loss)
on investments .15 .23
(.58) .58 .38 .13
Total from investment
operations .39 .69
(.07) 1.12 .97 .75
Less distributions:
From net investment
income (.24) (.46)
(.51) (.55) (.60) (.61)
Net realized gain on
investments -- --
(.08) (.08) (.04) --
In excess of realized
gain on invesmtnets -- --
(.05) -- -- --
Total distributions (.24) (.46)
(.64) (.63) (.64) (.61)
Net asset value, end of
period $9.13 $8.98
$8.75 $9.46 $8.97 $8.64
Total investment return
at net asset value (%)
(a) 4.48(b) 8.25(b)
(.94) 13.02 11.52 9.17
Net assets, end of
period (in thousands) $242,046 $242,569
$246,336 $235,243 $159,658 $99,978
Ratio of expenses to
average net assets
(%)(d) .48(b) .87(b)
.95 .92 .75(c) .66(c)
Ratio of net investment
income to average net
assets (%) 2.74(b) 5.36(b)
5.43 5.90 6.69(c) 7.09(c)
Portfolio turnover (%) 23.85(b) 51.86(b)
51.74 44.58 80.21 101.21
</TABLE>
* Unaudited
+ The fiscal year has been advanced from June 30 to May 31.
(a) Total Investment return assumes dividend reinvestment and
does not
reflect the effect of sales charges.
(b) Not annualized.
(c) Reflects a voluntary expenses 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.
(d) The ratio of expenses to average net assets for the year
ended November
30, 1995 included amounts paid through expenses offset
arrangements.
Prior period ratios exclude these amounts (See Note 2).
21
<PAGE>
Notes to financial statements
November 30, 1995 (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 Investment Management
("Putnam
Management"), the fund's Manager, a wholly-owned subsidiary of
Putnam
Investments, Inc., believes is consistent with preservation of
capital by
investing primarily in a portfolio of longer-term New Jersey tax
exempt
securities.
The fund offers class A, class B and class M shares. Class A
shares are sold
with a maximum front-end sales charge of 4.75%. Class B shares,
which convert
to class A shares after eight years, do not pay a front-end sales
charge, but
pay a higher ongoing distribution fee than class A shares and are
subject to
a contingent deferred sales charge, if those shares are redeemed
within six
years of purchase. Class M shares are sold with a maximum
front-end sales
charge of 3.25% and pay an ongoing distribution fee that is lower
than class
B shares and higher than class A shares.
Expenses of the fund are borne pro-rata by the holders of each
class of
shares, except that each class bears expenses unique to that
class (including
the distribution fees applicable to such class). Each class 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 Putnam Management
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 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 which it invests 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
22
<PAGE>
trade. Exchange traded options are valued at the last sale price,
or if no
sales are reported, the last bid price for purchased options and
the last ask
price for written options. Options traded over-the- counter are
valued using
prices supplied by dealers.
D) Federal taxes It is the policy of the fund to distribute all
of its income
within the prescribed time and otherwise comply with the
provisions of the
Internal Revenue Code applicable to regulated investment
companies. It is
also the intention of the fund to distribute an amount sufficient
to avoid
imposition of any excise tax under Section 4982 of the Internal
Revenue Code
of 1986. 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.
At May 31, 1995, the fund had a capital loss carryover of
approximately
$2,872,000 available to offset future net capital gain, if any,
which will
expire May 31, 2003.
E) Distributions to shareholders Income dividends are recorded
daily by the
fund and are distributed monthly. Capital gain 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.
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. Discounts on zero coupon and original
issue discount
bonds are 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 shares were $49,086. The 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 Management, 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
Putnam
Management on the fund's portfolio transactions.
The fund reimburses Putnam Management for the compensation and
related
expenses of certain officers of the fund and their staff who
provide
administrative services to the fund. The aggregate amount of all
such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $790 and
an
additional fee for each Trustees' meeting attended. Trustees who
are not
interested persons of Putnam Management and who serve on
committees of the
Trustees receive additional fees for attendance at certain
committee
meetings.
During the six months ended Novem-
ber 30, 1995, the fund adopted a Trustee Fee Deferral Plan (the
"Plan") which
allows the Trustees to defer the receipt of all or a portion of
Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the
fund and
are invested in the fund or in other Putnam funds until
distribution in
accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary
Trust
23
<PAGE>
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 November 30, 1995, fund expenses were
reduced by
$282,715 under expense offset arrangements with PFTC. Investor
servicing and
custodian fees reported in the Statement of operations exclude
these credits.
The fund could have invested the assets utilized in connection
with the
expense offset arrangements in an income producing asset if it
had not
entered into such arrangements.
The fund has adopted distribution plans (the "Plans") with
respect to its
class A, class B and class M shares pursuant to Rule 12b-1 under
the
Investment Company Act of 1940. The purpose of the Plans 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
shares of the fund. The Trustees have approved payment by the
fund at an
annual rate of 0.20%, 0.85% and 0.50% of the average net assets
attributable
to class A, class B and class M shares respectively.
For the six months ended November 30, 1995, Putnam Mutual Funds
Corp., acting
as underwriter received net commissions of $28,295 and $365 from
the sale of
class A shares and class M shares, respectively, and received
$91,420 in
contingent deferred sales charges from redemptions of class B
shares. A
deferred sales charge of up to 1% is assessed on certain
redemptions of class
A shares. For the six months ended November 30, 1995, Putnam
Mutual Funds
Corp., acting as underwriter received $367,985 on class A
redemptions.
Note 3
Purchases and sales of securities
During the six months ended November 30, 1995, purchases and
sales of
investment securities other than short-term investments
aggregated
$104,060,218 and $92,642,278 respectively. In determining the net
gain or
loss on securities sold, the cost of securities has been
determined on the
identified cost basis.
24
<PAGE>
Note 4
Capital shares
At November 30, 1995, there was an unlimited number of shares of
beneficial
interest authorized. Transactions in capital shares were as
follows:
<TABLE>
<CAPTION>
Six months ended Eleven
months ended
November 30 May
31
1995 1995
Class A Shares Amount Shares
Amount
<S> <C> <C> <C>
<C>
Shares sold 2,032,076 18,086,133 3,583,766 $
30,919,620
Shares issued in
connection with
reinvestment of
distributions 415,152 3,689,273 815,266
7,017,119
2,447,228 21,775,406 4,399,032
37,936,739
Shares
repurchased (2,942,035) (26,206,705) (5,543,768)
(47,448,932)
Net decrease (494,807) (4,431,299) (1,144,736) $
(9,512,193)
</TABLE>
<TABLE>
<CAPTION>
Six months ended Eleven months
ended
November 30 May 31
1995 1995
Class B Shares Amount Shares
Amount
<S> <C> <C> <C> <C>
Shares sold 1,305,182 11,589,202 2,071,094
$17,921,544
Shares issued in
connection with
reinvestment of
distributions 100,042 888,127 163,594
1,407,101
1,405,224 12,477,329 2,234,688
19,328,645
Shares
repurchased (464,622) (4,121,672) (839,933)
(7,216,182)
Net increase 940,602 8,355,657 1,394,755
$12,112,463
</TABLE>
<TABLE>
<CAPTION>
Six months ended
November 30
1995
Class M Shares Amount
<S> <C> <C>
Shares sold 25,205 223,538
Shares issued in connection with
reinvestment of distributions 191 1,699
25,396 225,237
Shares
repurchased -- --
Net increase 25,396 225,237
</TABLE>
25
<PAGE>
Our commitment to quality service
(arrow) CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested
Service Seal for
the past six years. In 1995, over 146,000 tests of 56 shareholder
service
components demonstrated that Putnam outperformed the industry
standard in
every category.
(arrow) HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a
month from
a Putnam money market fund or from your checking or savings
account.*
(arrow) 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.)
(arrow) 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 the
original
cost of the shares.
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.
26
<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
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
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
James E. Erickson
Vice President
Leslie J. Burke
Vice President and Fund Manager
Triet M. Nguyen
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
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 or obligations 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. 27
<PAGE>
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
22193-019/329/537 1/96
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
