Putnam
New Jersey
Tax Exempt
Income Fund
SEMIANNUAL REPORT
November 30, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "As a group, munis now have relatively high yields, paying 5.26% on
average. That is about 90% of what comparable, federally taxable
Treasuries earn -- well above the normal range of 75% to 80%."
-- The New York Times, December 14, 1997
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
11 Portfolio holdings
15 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The global flight to the relative safety of bonds in the aftermath of the
Southeast Asian currency crisis in late October provided a dramatic and
positive finale to the first half of Putnam New Jersey Tax Exempt Income
Fund's fiscal year. In the five months prior to that flare-up, the U.S.
municipal bond market had demonstrated solid, albeit tenuous, strength as many
investors cautiously set aside their lingering concerns about the economy,
interest rates, and renewed inflation.
Recognizing the fragility of the generally positive environment both prior to
and following the disruption in global markets, Fund Manager Leslie Burke had
pursued a slightly defensive policy in managing the fund. Therefore, as the
year unfolded she made relatively few changes to the portfolio.
In the report that follows, Leslie provides the specifics of her strategic
shift as well as details about the fiscal year's first half. Then she offers
some insights into what she believes is in store for the rest of the period.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
January 21, 1998
Report from the Fund Manager
Leslie J. Burke
All municipal bond funds are influenced by the overall dynamics of the
fixed-income markets. Single-state funds, however, such as Putnam New Jersey
Tax Exempt Income Fund, face certain challenges that more diversified funds
generally can sidestep. Over the past six months, your fund, faced with a slow
market and diminishing bond supply, was still able to take advantage of the
relative cheapness of municipal bonds and provide attractive tax-free income.
For the six months ended November 30, 1997, the fund's class A shares had a
total return of 5.00% at net asset value (0.01% at public offering price). The
Lehman Brothers Municipal Bond Index had a total return of 5.40% for the same
period. Results for class B and class M shares and for longer periods can be
found on pages 8 and 9.
* GENERAL MARKET FINDS POSITIVE DIRECTION
As the nation's economy continued to exhibit steady growth and minimal price
pressures over this period, interest rates declined, pushing municipal bond
prices higher. The healthy economic environment in the United States, combined
with turmoil in the international equity and currency markets, drew many
quality-seeking investors to the U.S. fixed-income market. This increased
demand for U.S. bonds drove the yield on the benchmark 30-year U.S. Treasury
bond to below 6.00%, a level of historical significance. For the tax-exempt
market, economic strength translated into higher tax revenues and improved
municipal balance sheets, strengthening state and local governments from a
credit standpoint. As cash flows increased, the need to issue bonds declined.
The lower bond supply also helped support attractive price levels for
tax-exempt debt.
* LACK OF NEW JERSEY ISSUANCE POSES CHALLENGE
New issuance of New Jersey municipal bonds has been relatively light this
year. Additionally, many of the bonds that did come to market did not meet the
criteria we've set for your fund. Each new addition to a portfolio can
incrementally add or detract from the broader risk and return attributes of
the portfolio, and in considering available new issues, we generally believed
that any potential advantages would be offset by their effect on the
portfolio's risk exposure. Therefore, during the period, we remained fully
invested in many of the New Jersey municipal bonds we've liked in the past and
sought other strategies to meet our goals.
One such strategy was owning municipal bonds issued by the Commonwealth of
Puerto Rico. Puerto Rico debt is free from federal, state, and local income
taxes and is commonly purchased by single-state municipal bond managers. Well
structured Puerto Rico bonds are easier to find in the marketplace, are issued
by municipal authorities similar to those in New Jersey, and can offer the
positive attributes that may not be readily available in the more scarce New
Jersey market. Currently our analysis indicates that Puerto Rico is in solid
fiscal and economic shape and the bonds we own either have their principal and
interest insured by a municipal insurance agency or come from what we believe
are creditworthy issuers.
[GRAPHIC OMITTED HORIZONTAL BAR CHART: TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Transportation 25.6%
Health care 21.0%
Education 9.7%
Water and sewerage 8.2%
Utilities 6.3%
Footnote reads:
* Based on net assets as of 11/30/97. Holdings will vary over time.
[GRAPHIC OMITTED PIE CHART: PORTFOLIO QUALITY OVERVIEW]
PORTFOLIO QUALITY OVERVIEW*
Short term -- 1.0%
Ba -- 14.7%
Baa -- 8.1%
A -- 8.9%
Aa -- 16.3%
B -- 1.5%
Aaa -- 49.5%
Footnote reads:
* As a percentage of market value as if 11/30/97. A bond rated Baa or higher is
considered investment grade. All ratings reflect Moody's descriptions unless
noted otherwise; percentages may include unrated bonds considered by Putnam
Management to be of comparable quality. Ratings will vary over time.
* PORTFOLIO REMAINS FAIRLY DEFENSIVE
Although the U.S. economy remains healthy and interest rates have fallen, we
believe there is the risk that the economic environment for bonds could change
quickly. Therefore, the fund continues to have a defensive posture. During the
period, we sought bonds with structures that are well suited to a defensive
portfolio, such as noncallable bonds. Bonds that can be called in at a date
earlier than their maturity can often trade in a more volatile manner than
those that are noncallable. Two examples of noncallable bonds we favored were
from New Jersey Transportation Trust and the insured bonds from the Jersey
City Sewer Authority. While these holdings, along with others discussed in
this report, were viewed favorably at the end of the period, all are subject
to review and adjustment in accordance with the fund's investment strategy and
may vary in the future.
We also targeted premium-coupon bonds. These bonds offer coupons higher than
prevailing municipal interest rates -- and thus an attractive level of income
- -- while their prices tend to be less volatile. Premium bonds can be very
popular in the marketplace so we bought them whenever possible.
* POSITIVE DEVELOPMENTS
Despite the slow market for New Jersey municipal bonds, there were some
positive developments involving the state's revenue bonds. One issuer in the
health-care area, Kimball Medical Center, enjoyed a credit rating upgrade this
past June by a major credit rating agency, thus raising the value of the bonds
owned by the fund. The upgrade verified our long-term belief in the
creditworthiness of this issuer.
Following the close of the period, we purchased bonds issued by a long-term
care facility known as Franciscan Oaks. These bonds were issued for the
expansion of a facility that has enjoyed a high level of community support.
We've done a great amount of credit research on this issuer and we believe it
will be worthy of agency credit rating in the future.
* CAUTIOUS, BUT OPTIMISTIC OUTLOOK
As long as the U.S. economy retains a healthy pace of growth with few signs of
inflation, bonds should perform well. The economic recovery we've enjoyed in
the past several years has helped the fiscal positions of all states to
varying degrees. New Jersey must face the fiscal impact of the Whitman
administration's move to lower income taxes. Additionally, the state can't
rely on the short-term funding solutions it has used in the past. Given these
factors, we remain cautiously optimistic about the Garden State's prospects
and we will continue to focus on our objective of providing attractive
tax-free income while managing volatility.
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 11/30/97, there is no guarantee the fund will continue to hold
these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam New Jersey Tax Exempt Income Fund is designed for
investors seeking high current income free from federal and state income
taxes, consistent with capital preservation.
TOTAL RETURN FOR PERIODS ENDED 11/30/97
Class A Class B Class M
(inception date) (2/20/90) (1/4/93) (5/1/95)
NAV POP NAV CDSC NAV POP
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6 months 5.00% 0.01% 4.66% 0.34% 4.85% 1.47%
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1 year 6.84 1.80 6.03 1.03 6.40 2.90
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5 years 37.74 31.19 32.74 30.74 35.78 31.29
Annual average 6.61 5.58 5.83 5.51 6.31 5.60
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Life of fund 77.84 69.46 67.43 67.43 72.75 67.18
Annual average 7.68 7.01 6.85 6.85 7.28 6.83
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 11/30/97
Lehman Bros.
Municipal Bond Consumer
Index Price Index
- ------------------------------------------------------------------------------
6 months 5.40% 0.87%
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1 year 7.18 1.83
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5 years 42.06 13.73
Annual average 7.27 2.61
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Life of fund 83.34 26.17
Annual average 8.13 3.04
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 4.75% for class A shares and 3.25% for class M shares.
One-, five-, and ten-year (when available) and life of fund returns for
class B shares reflect the applicable contingent deferred sales charges
(CDSC), which is 5% in the first year, declines each year to 1% in the
sixth year, and is eliminated thereafter. Returns shown for class B and
class M shares for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
initial sales charge or CDSC, if any, currently applicable to each class
and, in the case of class B and class M shares, the higher operating costs
applicable to such shares. All returns assume reinvestment of
distributions at NAV and represent past performance; they do not guarantee
future results. Investment return and principal value will fluctuate so
that an investor's shares when redeemed may be worth more or less than
their original cost.
TOTAL RETURN FOR PERIODS ENDED 12/31/97
(most recent calendar quarter)
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 5.29% 0.32% 4.97% 0.03% 5.14% 1.67%
- ------------------------------------------------------------------------------
1 year 8.64 3.48 7.96 2.96 8.32 4.84
- ------------------------------------------------------------------------------
5 years 37.91 31.35 32.98 30.98 36.06 31.70
Annual average 6.64 5.61 5.87 5.55 6.35 5.66
- ------------------------------------------------------------------------------
Life of class 80.26 71.76 69.65 69.65 75.07 69.42
Annual average 7.78 7.12 6.96 6.96 7.38 6.94
- ------------------------------------------------------------------------------
Perfomance data represent past results and do not reflect future
performance. They do not take into account any adjustment for taxes
payable on reinvested distributions. Investment returns, net asset value,
and market price will fluctuate so that an investor's shares when sold may
be worth more or less that their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 11/30/97
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 6 6 6
- ------------------------------------------------------------------------------
Income $0.227316 $0.197146 $0.213631
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Capital gains1
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Long-term -- -- --
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Short-term -- -- --
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Total $0.227316 $0.197146 $0.213631
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Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
5/31/97 $9.02 $9.47 $9.01 $9.02 $9.32
- ------------------------------------------------------------------------------
11/30/97 9.24 9.70 9.23 9.24 9.55
- ------------------------------------------------------------------------------
Current return (end of period)
- ------------------------------------------------------------------------------
Current dividend rate2 4.88% 4.65% 4.24% 4.58% 4.44%
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Taxable equivalent3 8.63 8.22 7.50 8.10 7.85
- ------------------------------------------------------------------------------
Current 30-day SEC yield4 4.72 4.50 4.07 4.42 4.27
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Taxable equivalent3 8.35 7.96 7.2 7.82 7.55
- ------------------------------------------------------------------------------
1Capital gains, if any, are taxable for federal and, in most cases, state
tax purposes. For some investors, investment income may also be subject to
the federal alternative minimum tax. Investment income may be subject to
state and local taxes.
2Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
3Assumes maximum 43.45% combined federal and state tax rate. Results for
investors subject to lower tax rates would not be as advantageous.
4Based only on investment income, calculated using SEC guidelines.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
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 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 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.
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. Securities in the fund
do not match those in the indexes and performance of the fund will differ.
It is not possible to invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<TABLE>
<CAPTION>
Portfolio of investments owned
November 30, 1997 (Unaudited)
Key to Abbreviations
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration Insured
FSA -- Financial Security Assurance
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (96.9%) *
PRINCIPAL AMOUNT RATINGS** VALUE
New Jersey (78.7%)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,000,000 Atlantic City, Muni. Utils. Auth. Wtr. Rev. Bonds,
7 3/4s, 5/1/17 A- $ 1,100,000
Atlantic Cnty. COP
2,000,000 FGIC, 7.4s, 3/1/10 Aaa 2,492,500
1,000,000 (Pub. Fac. Lease Agreement), FGIC, 7.4s, 3/1/09 Aaa 1,238,750
4,250,000 Camden Cnty., Impt. Auth. Rev. Bonds, 8.4s, 4/1/24
(acquired 4/12/94, cost $4,250,000) [DBL. DAGGER] B/P 4,648,438
5,850,000 Camden Cnty., Muni. Util. Auth. Rev. Bonds, FGIC,
6s, 7/15/07 Aaa 6,486,183
6,625,000 Camden Cnty., Muni. Util. Auth. Swr. Rev. Bonds,
FGIC, 6s, 7/15/08 Aaa 7,295,781
3,000,000 Jersey City, G.O. Bonds, Ser. A, AMBAC, 6s,
10/1/10 AAA 3,296,250
1,700,000 Jersey City, Swr. Auth. Rev. Bonds, AMBAC,
6 1/4s, 1/1/14 Aaa 1,912,500
1,200,000 Middle Township, School Dist. Rev. Bonds,
FGIC, 7s, 7/15/06 Aaa 1,410,000
2,000,000 Middlesex Cnty., Poll. Control Auth. Rev.
Bonds, 6 7/8s, 12/1/22 BBB-/P 2,150,000
3,000,000 Middlesex Cnty., Utils. Auth. Swr. IFB, Ser. A,
MBIA, 6 1/4s, 8/15/10 Aaa 3,412,500
2,105,000 NJ Econ. Dev. Auth. Elec. Energy Fac. Rev. Bonds
(Vineland Cogeneration L.P.), 7 7/8s, 6/1/19 BB+ 2,310,238
8,000,000 NJ Econ. Dev. Auth. Hlth. Care Fac. Rev. Bonds
(Ocean Nursing Pavilion), Ser. A, 7 3/8s, 12/1/25 BB/P 8,620,000
2,500,000 NJ Econ. Dev. Auth. Natural Gas Fac. Rev. Bonds
(NJ Natural Gas Co.) Ser. 84A, 7.05s, 3/1/16 A 2,566,325
NJ Econ. Dev. Auth. Rev. Bonds
5,300,000 (Stolt Terminals), 10 1/2s, 1/15/18 BB/P 5,491,065
5,000,000 (Tevco Inc.), 8 1/8s, 10/1/09 BBB/P 5,437,500
1,200,000 (Ninette Group L P), 7 3/4s, 8/1/11 A/P 1,243,656
7,000,000 (1st Mtge.-Cranes Mill), Ser. A, 7 1/2s, 2/1/27 BB/P 7,700,000
2,000,000 (Hartz Mountain Industries, Inc.), 7s, 2/1/14 A+ 2,197,500
2,850,000 (Lakewood School), Ser. R, 6.9s, 12/1/11 AA3 3,085,125
1,500,000 (NJ Performing Arts Ctr.), 6 3/4s, 6/15/12 AAA 1,650,000
1,895,000 (Urban Holding Co.), 6 1/2s, 6/1/15 A 2,077,394
1,550,000 (Burlington Coat Factory), 6 1/8s, 9/1/10 AA3 1,679,813
1,500,000 (NJ Perfoming Arts Ctr.), Ser. C, AMBAC,
5 1/2s, 6/15/13 Aaa 1,552,500
2,925,000 NJ Econ. Dev. Auth. Waste Paper Recycling
Rev. Bonds (Marcal Paper Mills Inc.),
8 1/2s, 2/1/10 BB/P 3,436,875
NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds
7,250,000 (St. Elizabeth Hosp.), Ser. B, 8 1/4s, 7/1/20 AAA 8,101,875
3,095,000 (Jersey Shore Med. Ctr.), Ser. B, AMBAC,
8s, 7/1/18 [POUND] Aaa 3,230,840
8,500,000 (Kimball Med. Ctr.), Ser. C, 8s, 7/1/13 BBB- 9,137,500
1,000,000 (East Orange Gen. Hosp.), Ser. B, 7 3/4s, 7/1/20 BBB+ 1,075,000
1,425,000 (Columbus Hosp.), Ser. A, 7 1/2s, 7/1/21 BAA3 1,530,094
2,090,000 (Kimball Med. Ctr.), 7.3s, 7/1/99 BA1 2,114,390
9,000,000 (Raritan Bay Med. Ctr.), 7 1/4s, 7/1/27 BB/P 9,708,750
3,300,000 (Christ Hosp. Group), 7s, 7/1/06 AAA 3,856,875
5,000,000 (Gen. Hosp. Ctr.-Passaic Inc.), FSA, 6 3/4s, 7/1/19 Aaa 5,562,500
2,000,000 (AHS Hosp. Corp.), Ser. A, 6s, 7/1/07 Aaa 2,185,000
3,285,000 (Somerset Med. Ctr.), Ser. A, FGIC, 5.2s, 7/1/24 Aaa 3,243,938
NJ State G.O. Bonds
4,065,000 FGIC, 6s, 2/15/11 Aaa 4,527,394
4,000,000 Ser. E, 6s, 7/15/06 Aa1 4,425,000
3,000,000 NJ State Edl. Fac. Auth. Rev. Bonds (Princeton
U.), Ser. C, 6 3/8s, 7/1/22 Aaa 3,228,750
3,000,000 NJ State Hsg. & Mtge. Fin. Agcy. IFB, Ser. I,
8.186s, 11/1/07 (acquired various dates from
2/11/93 to 6/14/93 cost $3,134,370) [DBL. DAGGER] A+ 3,285,000
1,060,000 NJ State Hsg. & Mtge. Fin. Agcy. Rev. Bonds
(Home Buyer), Ser. D, MBIA, 7.7s, 10/1/29 Aaa 1,109,025
NJ State Hwy. Auth. Gen. Rev. Bonds
(Garden State Pkwy.)
1,500,000 6.2s, 1/1/10 AA- 1,681,875
2,370,000 6s, 1/1/19 Aaa 2,612,925
3,000,000 NJ State Hwy. Auth. Rev. Bonds (Garden
State Pkwy.), 5.2s, 1/1/08 AA- 3,105,000
1,800,000 NJ State Tpk. Auth. IFB, MBIA, 8.02s, 1/1/16
(acquired 03/27/92, cost $ 1,817,856) [DBL. DAGGER] Aaa 2,432,250
NJ State Tpk. Auth. Rev. Bonds, Ser. C
6,000,000 MBIA, 6 1/2s, 1/1/16 Aaa 7,065,000
5,000,000 AMBAC, 6 1/2s, 1/1/08 Aaa 5,756,250
3,000,000 NJ State Tpk. Auth. VRDN, FGIC, 3.70s, 1/1/18 VMIGI 3,000,000
NJ State Trans. Trust Fund Auth. Rev.
Bonds (Trans. Syst.), Ser. A
17,000,000 MBIA, 6 1/2s, 6/15/11 Aaa 20,081,250
3,000,000 MBIA, 6s, 12/15/06 Aaa 3,315,000
NJ Wastewtr. Treatment Rev. Bonds
(Wastewtr. Treatment Trust)
6,670,000 Ser. C, 7s, 6/15/10 Aa2 8,045,688
2,955,000 Ser. B, 7s, 5/15/09 Aa2 3,538,613
7,000,000 NJ Wastewtr. Treatment Trust Rev. Bonds, Ser. A,
zero %, 9/1/07 Aaa 4,418,750
1,800,000 Passaic Valley, Cmnty. Wtr. Supply Rev. Bonds,
Ser. A., FGIC, 6.4s, 12/15/22 Aaa 1,998,000
7,500,000 Rutgers State U. Rev. Bonds, Ser. A, 6.4s, 5/1/13 AA 8,662,500
1,935,000 Sayreville, Hsg. Dev. Corp. Mtge. Rev. Bonds
(Lakeview Section 8), FHA Insd., 7 3/4s, 8/1/24 Aaa 1,947,481
South River, School Dist. G.O. Bonds
1,300,000 FGIC, 5s, 12/1/12 Aaa 1,306,500
1,250,000 FGIC, 5s, 12/1/11 Aaa 1,262,500
1,250,000 FGIC, 5s, 12/1/10 Aaa 1,267,188
1,000,000 Stony Brook, Regional Swr. Rev. Bonds, Ser. B,
5.45s, 12/1/12 Aa 1,058,750
8,695,000 U. of Medicine & Dentistry Rev. Bond, Ser. E, MBIA,
6 1/2s, 12/1/12 Aaa 10,227,494
3,400,000 Union Cnty., Indl. Poll. Ctrl. Fin. Auth. Rev. Bonds
(American Cynamid Co.), 5.8s, 9/1/09 A3 3,718,750
-------------
247,314,588
New York (8.4%)
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5,000,000 NY & NJ Port Auth. Rev. Bonds (Kennedy
Intl. Arpt.), 6 3/4s, 10/1/19 BB/P 5,418,750
Port Auth. NY & NJ Cons. IFB
2,100,000 7.729s, 11/15/15 (acquired 02/09/94,
cost $2,107,875) [DBL. DAGGER] A+/P 1,995,000
1,500,000 5.2s, 11/15/15 A+/P 1,501,875
5,000,000 Port Auth. NY & NJ IFB, 9.204s, 8/1/26
(acquired various dates from 8/29/91 to
1/21/92, cost $5,164,940) [DBL. DAGGER] AA- 5,800,000
3,000,000 Port Auth. NY & NJ Rev. Bonds (Delta
Airlines, Inc.), Ser. 1R, 6.95s, 6/1/08 BBB 3,292,500
7,500,000 Port Auth. NY & NJ Cons. Rev. Bonds, Ser. 93rd,
6 1/8s, 6/1/94 AA- 8,456,250
-------------
26,464,375
Puerto Rico (9.8%)
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5,665,000 Cmnwlth. of PR, Aqueduct & Swr. Auth. Rev. Bonds,
6 1/4s, 7/1/12 A 6,422,694
3,000,000 Cmnwlth. of PR, G.O. Bonds, MBIA, 6 1/4s, 7/1/08 Aaa 3,405,000
4,000,000 Cmnwlth. of PR, Pub. Impt. G.O. Bonds, 6.8s, 7/1/21 Aaa 4,480,000
1,000,000 Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds,
Ser. W, 5 1/2s, 7/1/15 A 1,040,000
1,500,000 Cmnwlth. of PR, Hwy. Auth. Rev. Bonds, Ser. Q,
7 3/4s, 7/1/16 Aaa 1,661,250
PR Elec. Pwr. Auth. Rev. Bonds
2,000,000 10.15s, 7/1/07(acquried 10/30/97,
cost $2,765,000) [DBL. DAGGER] AAA/P 2,777,500
1,375,000 Ser. S, MBIA, 6 1/8s, 7/1/08 Aaa 1,546,875
2,000,000 PR Indl. Med. & Env. Poll. Control Fac. Fin. Auth.
Rev. Bonds (Special Facilities-American
Airlines), Ser. A, 6.45s, 12/1/25 Baa2 2,167,500
3,750,000 PR Pub. Bldg. Auth. Rev. Bonds, Ser. K, 6 7/8s, 7/1/21 Aaa 4,209,375
3,250,000 PR Pub. Bldg. Auth. Rev. Gtd. (Govt. Fac.), Ser. B,
AMBAC, 5s, 7/1/27 Aaa 3,144,375
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30,854,569
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Total Investments (cost $286,921,665) *** $ 304,633,532
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* Percentages indicated are based on net assets of $314,109,845.
** The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available
at November 30, 1997 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 30,1997. Securities rated by Putnam are indicated by "/P" and are not publicly rated.
*** The aggregate identified cost on a tax basis is $286,921,665, resulting in gross unrealized appreciation
and depreciation of $18,552,572 and $840,705, respectively, or net unrealized appreciation of $17,711,867.
[DBL. DAGGER] Restricted, excluding 144A securities, as to public resale. The total market value of restricted
securities held at November 30, 1997 was $20,938,188 or less than 6.7% of net assets.
[POUND] A portion of this security was pledged and segregated with the custodian to cover margin
requirements for future contracts November 30, 1997.
The rates shown on IFB and IF COP, which are securities paying interest rates that vary inversely
to changes in the market interest rates, and VRDN's are the current interest rates at November 30,
1997.
The fund had the following industry group concentrations greater than 10% at November 30, 1997.
(as a percentage of net assets):
Transportation 25.6%
Health care 21.0
The fund had the following insurance concentrations greater than 10% at November 30, 1997. (as a
percentage of net assets):
MBIA 16.7%
FGIC 11.3
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Futures Contracts Outstanding at November 30, 1997
Aggregate
Total Face Expiration Unrealized
Value Value Date Depreciation
- -----------------------------------------------------------------------
20 yr T-bond
Future (Short) $18,235,688 $17,463,688 Dec-97 $(772,000)
- -----------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
November 30, 1997 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $286,921,665) (Note 1) $ 304,633,532
- ---------------------------------------------------------------------------------------------------
Cash 611,815
- ---------------------------------------------------------------------------------------------------
Interest and other receivables 7,042,695
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 249,191
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 2,670,000
- ---------------------------------------------------------------------------------------------------
Total assets 315,207,233
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for variation margin 14,344
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 282,232
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 99,307
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 468,043
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 44,759
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 7,662
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,105
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 136,837
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 43,099
- ---------------------------------------------------------------------------------------------------
Total liabilities 1,097,388
- ---------------------------------------------------------------------------------------------------
Net assets $ 314,109,845
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $ 304,166,792
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (2,652)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (6,994,162)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 16,939,867
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $ 314,109,845
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($225,014,000 divided by 24,365,192 shares) $9.24
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $9.24)* $9.70
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($88,352,395 divided by 9,575,341 shares)** $9.23
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($743,450 divided by 80,494 shares) $9.24
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $9.24)*** $9.55
- ---------------------------------------------------------------------------------------------------
* 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.
** Redemption price per share is equal to net asset value less any applicable contingent deferred
sales charge.
*** 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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended November 30, 1997 (Unaudited)
<S> <C>
Tax exempt interest income: $ 9,193,408
- --------------------------------------------------------------------------------------------------
Expenses:
Compensation of Manager (Note 2) 942,188
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 174,684
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 5,896
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,270
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 226,964
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 367,675
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 1,453
- --------------------------------------------------------------------------------------------------
Reports to shareholders 12,382
- --------------------------------------------------------------------------------------------------
Registration fees 134
- --------------------------------------------------------------------------------------------------
Auditing 13,726
- --------------------------------------------------------------------------------------------------
Legal 14,069
- --------------------------------------------------------------------------------------------------
Postage 12,351
- --------------------------------------------------------------------------------------------------
Other 8,289
- --------------------------------------------------------------------------------------------------
Total expenses 1,783,081
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (62,850)
- --------------------------------------------------------------------------------------------------
Net expenses 1,720,231
- --------------------------------------------------------------------------------------------------
Net investment income 7,473,177
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 603,380
- --------------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (1,132,317)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the period 8,074,018
- --------------------------------------------------------------------------------------------------
Net gain on investments 7,545,081
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $15,018,258
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
November 30 May 31
1997* 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 7,473,177 $ 15,733,850
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (528,937) 1,583,301
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 8,074,018 7,335,606
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 15,018,258 24,652,757
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
Class A (5,610,799) (12,203,229)
- ----------------------------------------------------------------------------------------------------------------------
Class B (1,854,339) (3,606,097)
- ----------------------------------------------------------------------------------------------------------------------
Class M (13,201) (18,592)
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) from capital share transactions (Note 4) (4,570,348) 1,936,873
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,969,571 10,761,712
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 311,140,274 300,378,562
- ----------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of net
investment income and undistributed net investment
income of $2,652 and $2,510, respectively) $314,109,845 $311,140,274
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended Eleven months
Per-share Nov. 30 ended
operating performance (Unaudited) Year ended May 31 May 31 Year ended June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1997 1996 1995 + 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.02 $8.76 $8.98 $8.75 $9.46 $8.97
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .23 .47 .48 .46 .51 .54
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .22 .26 (.22) .23 (.58) .58
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .45 .73 .26 .69 (.07) 1.12
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.23) (.47) (.48) (.46) (.51) (.55)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (.08) (.08)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of realized
gain on investments -- -- -- -- (.05) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.23) (.47) (.48) (.46) (.64) (.63)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.24 $9.02 $8.76 $8.98 $8.75 $9.46
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 5.00 * 8.57 2.92 8.25 * (0.94) 13.02
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $225,014 $228,361 $227,940 $242,569 $246,336 $235,243
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .48 * .96 .96 .87 * .95 .92
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.48 * 5.28 5.36 5.36 * 5.43 5.90
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 7.91 * 27.14 52.82 51.86 * 51.74 44.58
- ------------------------------------------------------------------------------------------------------------------------------------
++ Commencement of operations.
* Not annualized.
+ 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) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number
of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended Eleven months For the period
Per-share Nov. 30 ended Year ended Jan. 4, 1993++
operating performance (Unaudited) Year ended May 31 May 31 June 30 to June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1997 1996 1995 + 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.01 $8.75 $8.97 $8.75 $9.46 $9.02
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .20 .41 .42 .41 .45 .21
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .22 .27 (.22) .22 (.58) .43
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .42 .68 .20 .63 (.13) .64
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.20) (.42) (.42) (.41) (.45) (.20)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (.02) --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of realized
gain on investments -- -- -- -- (.11) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.20) (.42) (.42) (.41) (.58) (.20)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.23 $9.01 $8.75 $8.97 $8.75 $9.46
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.66 * 7.87 2.25 7.51 * (1.59) 7.21 *
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $88,352 $82,407 $72,083 $58,591 $44,916 $15,113
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .80 * 1.61 1.61 1.46 * 1.59 .77 *
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.15 * 4.63 4.69 4.72 * 4.77 2.42 *
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 7.91 * 27.14 52.82 51.86 * 51.74 44.58
- ------------------------------------------------------------------------------------------------------------------------------------
++ Commencement of operations.
* Not annualized.
+ 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) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number
of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share Nov. 30 May 1, 1995++
operating performance (Unaudited) Year ended May 31 to May 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1997 1996 1995 +
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $9.02 $8.76 $8.98 $8.74
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .21 .45 (c) .45 .04
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .22 .26 (.21) .28
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .43 .71 .24 .32
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.21) (.45) (.46) (.08)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of realized
gain on investments -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.21) (.45) (.46) (.08)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.24 $9.02 $8.76 $8.98
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.85 * 8.25 2.65 3.21 *
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $743 $372 $355 $1
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .63 * 1.26 1.24 .09 *
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.27 * 4.95 4.92 .42 *
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 7.91 * 27.14 52.82 51.86 *
- ------------------------------------------------------------------------------------------------------------------------------------
++ Commencement of operations.
* Not annualized.
+ 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) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number
of shares outstanding during the period.
</TABLE>
Notes to financial statements
November 30, 1997 (Unaudited)
Note 1
Significant accounting policies
Putnam New Jersey Tax Exempt Income (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, Inc. ("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 approximately 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
preparation of financial statements is in conformity with generally accepted
accounting principles and requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are stated on the basis of
valuations provided by a pricing service, approved by the Trustees, which uses
information with respect to transactions in bonds, quotations from bond
dealers, market transactions in comparable securities and various
relationships between securities in determining value.
B) 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 in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparty to the contract is unable to perform. When
the contract is closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. Realized gains and losses on purchased
options are included in realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices established
by the exchange on which they trade. Exchange traded options are valued at the
last sale price, or if no sales are reported, the last bid price for purchased
options and the last ask price for written options. Options traded
over-the-counter are valued using prices supplied by dealers.
D) Line of credit The fund has entered into a committed line of credit with
certain banks. This line of credit agreement includes restrictions that the
fund maintain an asset coverage ratio of at least 300% and borrowings must not
exceed prospectus limitations. For the six months ended November 30, 1997, the
fund had no borrowings against the line of credit.
E) Federal taxes It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. It is also
the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
At May 31, 1997, the fund had a capital loss carryover of approximately
$4,669,000 available to offset future capital gains, if any. The amount of the
carryover and the expiration dates are:
Loss Carryover Expiration
- -----------------------------------------------
$ 1,185,000 May 31, 2003
$ 3,484,000 May 31, 2004
F) 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 at least 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.
G) Amortization of bond premium and accretion of bond discount Any premium
resulting from the purchase of securities in excess of maturity value is
amortized on a yield-to-maturity basis. Discounts on zero coupon bonds and
original issue discount bonds are accreted according to the yield to maturity
basis.
Note 2
Management fee,
administrative services
and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund. Such
fee is based on the 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, 0.40% of the next $5 billion, 0.375% of the next $5 billion, 0.355%
of the next $5 billion, 0.34% of the next $5 billion and 0.33% thereafter.
The fund reimburses Putnam Management an allocated amount for the compensation
and related expenses of certain officers of the fund and their staff who
provide administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the six months ended November 30, 1997, fund expenses were reduced by
$62,850 under expense offset arrangements with PFTC. Investor servicing and
custodian fees reported in the Statement of operations exclude these credits.
The fund could have invested a portion of the assets utilized in connection
with the expense offset arrangements in an income producing asset if it had
not entered into such arrangements.
Trustees of the funds receive an annual Trustees fee of which $477 has been
allocated to the fund and an additional fee for each Trustee's meeting
attended. Trustees who are not interested persons of Putnam Management and who
serve on committees of the Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which
allows the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund and are
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of Trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
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 Plans provide for payments by the fund to Putnam Mutual Funds
Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the average net assets
attributable to class A, class B and class M shares, respectively. The
Trustees currently limit payment by the fund to 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, 1997, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $11,907 and $609 from the sale of
class A and class M shares, respectively and $100,567 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, 1997, Putnam Mutual Funds Corp., acting as
underwriter received $273 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended November 30, 1997, purchases and sales of
investment securities other than short-term investments aggregated
$23,600,945 and $29,840,568, respectively. There were no purchases and
sales of U.S. government obligations. In determining the net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Capital shares
At November 30, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
November 30, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 2,161,943 $ 19,771,703
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 347,396 3,189,318
- ------------------------------------------------------------
2,509,339 22,961,021
Shares
repurchased (3,471,905) (31,794,815)
- ------------------------------------------------------------
Net decrease (962,566) $ (8,833,794)
- ------------------------------------------------------------
Year ended
May 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 9,108,541 $ 81,241,088
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 762,738 6,820,657
- ------------------------------------------------------------
9,871,279 88,061,745
Shares
repurchased (10,560,633) (94,285,270)
- ------------------------------------------------------------
Net decrease (689,354) $ (6,223,525)
- ------------------------------------------------------------
Six months ended
November 30, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 1,039,805 $ 9,518,725
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 122,438 1,122,918
- ------------------------------------------------------------
1,162,243 10,641,643
Shares
repurchased (734,568) (6,738,527)
- ------------------------------------------------------------
Net increase 427,675 $ 3,903,116
- ------------------------------------------------------------
Year ended
May 31, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 1,955,385 $ 17,456,558
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 244,686 2,186,889
- ------------------------------------------------------------
2,200,071 19,643,447
Shares
repurchased (1,287,825) (11,488,444)
- ------------------------------------------------------------
Net increase 912,246 $ 8,155,003
- ------------------------------------------------------------
Six months ended
November 30, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 38,339 $ 352,333
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,112 10,209
- ------------------------------------------------------------
39,451 362,542
Shares
repurchased (242) (2,212)
- ------------------------------------------------------------
Net increase 39,209 $ 360,330
- ------------------------------------------------------------
Year ended
May 31, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 26,219 $ 233,233
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,600 14,291
- ------------------------------------------------------------
27,819 247,524
Shares
repurchased (27,083) (242,129)
- ------------------------------------------------------------
Net increase 736 $ 5,395
- ------------------------------------------------------------
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund *
International New Opportunities Fund
Investors Fund
New Opportunities Fund +
OTC & Emerging Growth Fund [DBL. DAGGER]
Vista Fund
Voyager Fund
Voyager Fund 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
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Total Return Fund
High Yield Trust +
Income Fund
Money Market Fund **
Intermediate U.S. Government
Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]
California, New York
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Overseas Growth Fund
+ Closed to new investors. Some exceptions may apply. Contact Putnam
for details.
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** An investment in a money market fund is neither insured nor
guaranteed by the U.S. government. These funds are managed to maintain a
price of $1.00 per share, although there is no assurance that this price
will be maintained in the future.
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.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William J. Curtin
Vice President
Jerome J. Jacobs
Vice President
Blake E. Anderson
Vice President
Leslie J. Burke
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
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. You can also learn more
at Putnam Investments' website: http://www.putnaminv.com.
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 the principal amount
invested.
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PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
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Putnam
Investments
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