<PAGE> 1
PUTNAM
FLORIDA
TAX EXEMPT
INCOME FUND
SEMIANNUAL REPORT
December 31, 1994
[Logo]
BOSTON - LONDON - TOKYO
<PAGE> 2
PERFORMANCE HIGHLIGHTS
- -- "Even with all these negatives weighing on the muni market, the prospects
for a rally in 1995 are good. One reason is supply..With all that older
paper scheduled to disappear from the market, there is widespread belief
prices will improve."
-- Fortune, December 26, 1994
- -- Performance should always be considered in light of a fund's investment
strategy. Putnam Florida Tax Exempt Income Fund is designed for
investors seeking a high level of current income free from federal income
tax, consistent with capital preservation.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
FISCAL 1994 RESULTS AT A GLANCE
- ---------------------------------------------------------------------------------------
CLASS A CLASS B
TOTAL RETURN: NAV POP NAV CDSC
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(change in value during period
plus reinvested distributions)
6 months ended 12/31/94 -0.89% -5.62% -1.22% -6.03%
- ---------------------------------------------------------------------------------------
SHARE VALUE: NAV POP NAV
- ---------------------------------------------------------------------------------------
6/30/94 $8.77 $9.21 $8.76
12/31/94 8.44 8.86 8.43
</TABLE>
<TABLE>
<Captions>
DISTRIBUTIONS: NO. INCOME CAPITAL GAINS1 TOTAL
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 6 $0.252180 -- $0.252180
Class B 6 0.223870 -- 0.223870
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CURRENT RETURN:
(end of period) NAV POP NAV
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current dividend rate2 5.93% 5.65% 5.29%
Taxable equivalent3 9.82 9.35 8.76
Current 30-day SEC yield4 5.86 5.58 5.11
Taxable equivalent3 9.70 9.24 8.46
<FN>
Performance data represent past results and will differ for each share class. For
performance over longer periods, see pages 8 and 9. POP assumes 4.75% maximum
sales charge. CDSC for Class B shares assumes 5% maximum contingent deferred
sales charge. Effective 1/4/93, the fund began offering class B shares.
1Capital gains, if any, are taxable for federal and, in most cases, state
purposes. For certain high-income investors, investment income may
also be subject to the federal Alternative Minimum Tax. 2Income portion of most
recent distribution, annualized and divided by NAV or POP at end of period.
3Assumes maximum 39.6% federal tax rate. Results for investors subject to lower
tax rates would not be as advantageous. 4Based only on investment income,
calculated using SEC guidelines.
</TABLE>
2
<PAGE> 3
FROM THE CHAIRMAN
[PHOTOGRAPH OF GEORGE PUTNAM]
COPY RIGHTS KARSH, OTTAWA
DEAR SHAREHOLDER:
WITH A NEW YEAR NOW WELL BEGUN, INVESTORS UNDERSTANDABLY ARE STILL APPRAISING
THE DIFFICULT MONTHS JUST PAST. STOCK AND BOND PRICES BOTH AT HOME AND ABROAD
WERE ALMOST UNIVERSALLY WEAK THROUGHOUT MUCH OF 1994. FROM THE FEDERAL RESERVE
BOARD'S SERIES OF INTEREST RATE INCREASES EARLY ON TO MEXICO'S DEVALUATION OF
THE PESO IN THE YEAR'S CLOSING DAYS, 1994 PROVIDED A SUSTAINED STREAM OF
CHALLENGES.
EVENTS IN ORANGE COUNTY, CALIFORNIA, WERE NOT ONLY REMINDERS THAT EVEN
MUNICIPAL BONDS CAN ENCOUNTER DIFFICULTIES. TAX-FREE MUNICIPAL
BONDS, TRADITIONALLY A REFUGE OF CONSERVATIVE INVESTORS, HAD A DISAPPOINTING
YEAR AS THE RISE IN INTEREST RATES PUSHED BOND PRICES LOWER.
THE OUTLOOK FOR TAX-FREE BONDS MAY BE IMPROVING. THIS SHOULD COME AS WELCOME
NEWS TO SHAREHOLDERS OF PUTNAM FLORIDA TAX EXEMPT INCOME FUND. IN THE
MANAGEMENT REPORT THAT FOLLOWS, FUND MANAGER RICHARD WYKE REVIEWS THE FIRST
HALF OF YOUR FUND'S CURRENT FISCAL YEAR AND DISCUSSES PROSPECTS FOR THE MONTHS
AHEAD.
RESPECTFULLY YOURS,
/S/ GEORGE PUTNAM
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
FEBRUARY 15, 1995
3
<PAGE> 4
REPORT FROM THE FUND MANAGER
RICHARD WYKE
During the first half of Putnam Florida Tax Exempt Income Fund's fiscal
year, the Federal Reserve Board continued its tight stance on U.S. monetary
policy. In particular, the Fed increased rates by three quarters of a
percentage point in November. Not only was this the largest increase of the
calendar year, but it also reaffirmed the Fed's commitment to keeping inflation
in check.
Yields on fixed-income investments rose along with interest rates
throughout the semiannual period, which inevitably depressed municipal-bond
prices and, in turn, your fund's total return. For the six months ended
December 31, 1994, the fund's returns of -0.89% for class A shares and -1.22%
for class B shares, at net asset value (NAV), while disappointing, reflect the
performance of the municipal-bond market as a whole. The performance summary on
page 2 provides more detail.
Against this backdrop of higher interest rates and lower bond prices,
your fund's yield provides some heartening news. At the end of the semiannual
period, a Florida investor at the maximum 39.60% federal tax rate would have
had to receive a 9.82% return on a fully taxable investment to match the fund's
5.93% current dividend rate for class A shares at NAV. Investors in lower tax
rates would have benefited, but the benefit would not have been as great.
- - INVESTORS' YEAR-END STRATEGIES CREATE OPPORTUNITY
As the end of a tax year approaches, individual and institutional
investors typically employ several strategies to reduce the impact of federal,
state, and local taxes. Their actions created some attractive investment
opportunities for your fund during the first half of fiscal '95.
4
<PAGE> 5
In October and November, many investors began selling municipal bonds
with the intent of using the resulting capital losses to offset taxable profits
in other sectors. This tax-loss selling thwarted a brief bond market rally in
early October and led to further downward pressures on municipal-bond prices.
As valuations sank to some of the lowest levels in years, we purchased some of
these otherwise attractive bonds at very affordable prices.
At year's end, trading activity was accentuated by a search for
securities exempt from your state's intangibles tax. Florida municipal bonds
are one source of investment income exempt from this tax. Taking advantage of
this temporary increase in demand, we sold some positions and reinstated the
fund's cash position, bringing it up to 2% of the portfolio.
We remain vigilant for opportunities to redeploy these assets.
Historically, the Florida bond market sells off early in the new year, at which
time several additional buying opportunities may occur.
Florida Debt Versus Treasuries
Florida municipal debt Treasury Bonds (after taxes)
12/31/89 -1.19% -1.78
3/31/90 -1.06% -2.18
6/30/90 4.13% 0.37
9/30/90 3.88% 0.29
12/31/90 7.53% 4.94
3/31/91 9.93% 6.30
6/30/91 12.11% 6.84
9/30/91 16.11% 12.03
12/31/91 19.07% 17.21
3/31/92 20.39% 14.23
6/30/92 28.87% 17.88
9/30/92 24.82% 22.85
12/31/92 31.71% 22.08
3/31/93 37.00% 26.78
6/30/93 40.32% 29.61
9/30/93 45.78% 32.95
12/31/93 48.94% 31.65
3/31/94 37.68% 28.87
6/30/94 40.70% 24.62
9/30/94 35.25% 24.29
12/31/94 36.16% 23.88
The graph compares cumulative total returns, plotted monthly, of
Florida tax-exempt bonds and U.S. Treasury bonds. Sources: Treasury bonds,
Lehman Brothers Treasury Bond Index; Florida municipal debt, Lipper Analytical
Services. After-tax returns assume the maximum 39.6% federal tax rate. Treasury
bonds' interest and principal payments are guaranteed by the full faith and
credit of the U.S. government.
5
<PAGE> 6
- - PROACTIVE MANAGEMENT MAXIMIZES TOTAL RETURN POTENTIAL
In our daily management of the fund, we continually search for
municipal bonds that offer the right balance of credit quality, yield, and
relative price stability. To do so, we constantly re-evaluate your current
portfolio holdings. Under the right circumstances, we may sell one holding
while simultaneously buying another issue in order to take advantage of
differences in such factors as coupon rates, maturity, and marketability -- a
strategy known as a bond swap.
This fall, we sold bonds priced at par, or face value, to individual
investors seeking debt with little price fluctuation. In turn, we purchased
bonds we believed offered greater price appreciation potential. While it's true
that the newer holdings may experience greater price fluctuation over the near
term, we believe they have the potential to make a noticeable impact on the
fund's overall total return, should the market rally. For example, during the
fund's semiannual period, we sold Gainesville general obligation bonds and
bought Florida Board of Education bonds. Both bonds have a credit rating of AA.
Education bonds, however, offer attractive long-term potential for
appreciation.
- - ADDITIONAL INTEREST-RATE INCREASES LIKELY DURING THE BALANCE OF FISCAL 1995
While a genuine economic recovery has been under way for some time,
certain sectors of the economy are experiencing slower growth. Decreased retail
sales and a leveling off in new home construction and industrial production
would suggest that the Fed's tight monetary policy is having some effect.
Further Fed tightening is likely early this year because the pace of
economic growth is still strong. We believe, however, the most dramatic rise in
interest rates is behind us. It is difficult to say when interest rates will
begin to fall, but we believe the need for future increases will diminish as
the effects of the Fed's tight monetary policy become more pervasive.
6
<PAGE> 7
<TABLE>
<CAPTION>
Top Industry Sectors*
<S> <C>
Healthcare 22.0%
Utilities 22.0%
Highway/Transportation 15.3%
Education 14.7%
Housing 5.0%
<FN>
* Based on net assets on 12/31/94. Holding will vary over time.
</TABLE>
The fund's positioning is likely to remain somewhat defensive in this
environment. We believe municipal-bond prices -- like those of all fixed-income
investments -- will continue to experience a downward bias through the first few
months of calendar 1995. However, favorable supply and demand trends have
played a pivotal role in your fund's performance and may help provide some
pricing support. All in all, we believe the second half of fiscal 1995 may well
shape up to be stronger than the first.
The views expressed about the securities mentioned in this report are
exclusively those of Putnam Management and are not meant as investment advice.
Although the described holdings were viewed favorably as of December 31, 1994,
there is no guarantee the fund will continue to hold these securities in the
future.
7
<PAGE> 8
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares changed over
time, assuming you held the shares through the entire period and reinvested all
distributions back into the fund. We show total return in two ways: on a
cumulative long-term basis and on average how the fund might have grown each
year over varying periods. For comparative purposes, we show how the fund
performed relative to appropriate indexes and benchmarks.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 12/31/94
LEHMAN BROS.
CLASS A CLASS B MUNICIPAL
NAV POP NAV CDSC BOND INDEX CPI
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6 months -0.89% -5.62% -1.22% -6.03% -0.78% 1.15%
1 year -6.15 -10.57 -6.78 -11.22 -5.17 2.68
3 years 14.37 8.91 -- -- 15.87 8.56
Annual average 4.58 2.89 -- -- 5.03 2.77
Life of class A 33.11 26.84 -- -- 35.61 13.75
(8/24/90)
Annual average 6.80 5.62 -- -- 7.25 3.01
Life of class B -- -- 2.31 -1.37 6.48 5.50
(1/4/93)
Annual average -- -- 1.15 -0.69 3.21 2.73
</TABLE>
POP assumes 4.75% maximum sales charge. CDSC assumes maximum contingent
deferred sales charge. Fund performance data does not take into account any
adjustment for taxes payable on reinvested distributions. The Fund began
operations on August 24, 1990, offering shares now known as class A. Effective
January 4, 1993, the Fund began offering class B shares. Performance of share
classes will differ. Performance data represent past results. Investment
returns and net asset value will fluctuate so an investor's shares, when sold,
may be worth more or less than their original cost.
8
<PAGE> 9
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including any
initial or contingent deferred sales charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus
the maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the maximum 4.75% sales charge.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time
of the redemption of class B shares and assumes redemption at the end of the
period. Your fund's CDSC declines from a 5% maximum during the first year to 1%
during the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
LEHMAN BROTHERS MUNICIPAL BOND INDEX is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the municipal
bond market. The index does not take into account brokerage commissions or
other costs, may include bonds different from those in the fund, and may pose
different risks than the fund.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
9
<PAGE> 10
THE PUTNAM FUND SELECTOR[TM]
The Putnam Fund Selector shows the many opportunities for investors
within every investment strategy. All investors should first accumulate a base
of conservative, cash-equivalent investments. Then, with the help of your
investment advisor, diversify your portfolio by investing in the Putnam Family
of Funds.
PUTNAM GROWTH FUNDS
PUTNAM GROWTH
AND INCOME FUNDS
Risk/Reward
PUTNAM INCOME OR TAX-FREE FUNDS
MOST CONSERVATIVE INVESTMENTS
10
<PAGE> 11
PUTNAM FAMILY OF FUNDS
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
Investors Fund
Natural Resources Fund*
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
PUTNAM GROWTH
AND INCOME FUNDS
Convertible Income-Growth Trust
Dividend Growth Fund
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth
and Income
Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Balanced Government Fund
Corporate Asset Trust
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
U.S. Government Income Trust
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 FUNDS+
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio, and Pennsylvania
LIFESTAGE[SM] FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments to help
maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced
Portfolio
Putnam Asset Allocation: Conservative
Portfolio
Putnam Asset Allocation: Growth
Portfolio
MOST CONSERVATIVE INVESTMENTS++
Putnam money market funds:
Money Market Fund[ss]
Tax Exempt MoneY Market Fund
CDS AND SAVINGS ACCOUNTS**
* Formerly Energy-Resources Trust.
+ Not available in all states.
++ Relative to above.
[ss] Formerly Daily Dividend Trust.
** Not offered by Putnam Investments. Certificates of deposit offer a fixed
rate of return and may be insured, up to certain limits, by federal/state
agencies. Savings accounts may also be insured up to certain limits.
Please call your financial advisor or Putnam to obtain a prospectus for any
Putnam fund. It contains more complete information, including charges and
expenses. Read it carefully before you invest or send money.
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS OWNED
DECEMBER 31, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES (94.7%)(a)
PRINCIPAL AMOUNT RATINGS VALUE
Florida (89.6%)
- -------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,900,000 Atlantic Beach Variable Rate Demand Notes
(VRDN) (Fleet Landing), Ser. B, 4 3/4s, 10/1/24
(Barnett Bank LOC) VMIG1 $ 3,900,000
2,345,000 Brevard Cnty., Hlth. Fac. Auth. Rev. Bond
(Courtenay Springs Village), 7 1/2s, 11/15/09 BB/P 2,213,093
5,500,000 Brevard Cnty., Sch. Brd. Certif. of Participation,
Ser. A, American Municipal Bonds Insurance
Association (AMBAC), 6 1/2s, 7/1/12 AAA 5,451,875
Broward Cnty., Edl. Fac. Auth. Rev. Bonds
2,500,000 (Nova U. Dorm. Project), Ser. A, 7 1/2s, 4/1/17 BBB 2,753,125
820,000 (Nova U. Dorm. Project), Ser. A, 7 1/4s, 4/1/01 BBB 881,500
2,500,000 (Nova S. .E. U. Project), 6s, 4/1/10 AAA 2,396,875
1,000,000 Broward Cnty., Hlth. Fac. Auth. Rev. Bonds
Broward Cnty. Nursing Home), 7 1/2s, 8/15/20 A 1,027,500
Broward Cnty., Resource Recvy. Rev. Bonds
1,380,000 Waste Energy LP North Project), 7.95s, 12/1/08 A 1,480,050
3,260,000 (SES Broward Co. LP South Project), 7.95s, 12/1/08 A 3,496,350
Cape Coral, Special Obligation Rev. Bonds
3,000,000 (Wtr. Impt.), 6 3/8s, 6/1/09 AAA 3,000,000
3,000,000 (Waste Wtr. Impt.), 6 1/4s, 6/1/06 AAA 3,015,000
2,000,000 Charlotte Cnty., Util. Rev. Bonds, Financial
Guaranty Insurance Co. (FGIC), 6 7/8s, 10/1/21 AAA 2,157,500
2,520,000 Citrus Cnty., Indl. Dev. Auth. Rev. Bonds
(Beverly Enterprises Project), 7 1/4s, 4/1/03 BB/P 2,400,300
1,400,000 Clay Cnty., Multi-Fam. Hsg. Fin. Auth. Rev. Bonds
(Oak Forest), Ser. A, Government National
Mortgage Association (GNMA) Coll., 7.4s, 12/1/25 AAA 1,450,750
1,875,000 Clay Cnty., Single Fam. Hsg. Fin. Auth. Rev. Bonds,
Ser. A, GNMA Coll., 7.45s, 9/1/23 Aaa 1,912,500
1,100,000 Cocoa, Wtr. & Swr. Impt. Rev. Bonds, Ser. B,
AMBAC, 5 1/4s, 10/1/16 AAA 919,875
1,500,000 Coral Springs, Impt. Dist. Wtr. & Swr. Rev. Bonds,
Municipal Bond Insurance Assn.,
(MBIA), 8 1/4s, 6/1/14 AAA 1,657,500
1,900,000 Dade Cnty. Indl. Dev. Auth. Exempt Fac. VRDN
(Florida Pwr. & Lt. Co.), 4 3/4s, 6/1/21 VMIG1 1,900,000
4,250,000 Dade Cnty., Aviation Rev. Bonds,
Ser. B, MBIA, 6.55s, 10/1/13 AAA 4,202,187
100,000 Dade Cnty., Hlth. Fac. Auth. Hosp. Rev. Bonds
(North Shore Med. Ctr. Project),
AMBAC, 9 1/8s, 10/1/13 AAA 105,125
1,690,000 Dade Cnty., Single Fam. Hsg. Fin. Auth. Mtge.
Rev. Bonds, Ser. B, GNMA Coll., 8 3/4s, 7/1/17 AAA 1,749,150
4,250,000 Dade Cnty., Sch. Brd. Certif. of Participation,
Ser. A, 5 3/4s, 5/1/12 AAA 3,878,125
3,075,000 Escambia Cnty., Single Fam. Hsg. Fin. Auth. Mtge.
VRDN (Multi-Cnty. Program), Ser. A,
GNMA Coll., 7.15s, 10/1/24 Aaa 2,994,280
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT RATINGS VALUE
<S> <C> <C> <C>
FL Hsg. Fin. Agcy. Rev. Bonds
$ 705,000 (Home Ownership Dev. Program), Ser. G-1,
GNMA Coll., 7.9s, 3/1/22 Aaa $ 714,693
4,800,000 Ser. 1-B, GNMA Coll., 7.1s, 1/1/17 AAA 4,812,000
FL State Dept. Gen. Svc. Rev. Bonds (Fac. Mgmt.)
1,500,000 7 3/4s, 9/1/16 AAA 1,593,750
7,750,000 AMBAC, 5.4s, 9/1/17 AAA 6,597,187
FL State Mid-Bay Bridge Auth. Rev. Bonds, Ser. A
1,500,000 8s, 10/1/06 BBB/P 1,569,375
2,180,000 7 1/2s, 10/1/17 BB/P 2,226,325
2,140,000 6.1s, 10/1/22 BBB 1,765,500
2,000,000 FL State Muni. Pwr. Agcy. Linked Inverse Floating
Bonds (IFB), AMBAC, 8.739s, 10/1/20
(acquired 7/10/92, cost $2,101,200) (c) AAA 2,237,500
FL State Muni. Pwr. Agcy. Rev. Bonds
1,500,000 (Pwr. Supply Project), AMBAC, 6 1/4s, 10/1/21 AAA 1,560,000
5,100,000 (St. Lucie Project), FGIC, 5.7s, 10/1/16 AAA 4,609,125
3,000,000 FL State Tpke. Auth. Rev. Bonds,
Ser. A, FGIC, 5 1/4s, 7/1/22 AAA 2,478,750
11,345,000 FL Brd. of Ed. Rev. Bonds, Ser. C, 5 1/2s, 6/1/23 AA 9,600,706
2,500,000 Gulf Breeze, Local Govt. Rev. Bonds,
Ser. E, FGIC, 7 3/4s, 12/1/15 AAA 2,743,750
3,000,000 Hillsborough Cnty., Cap. Impt. Rev. Bonds,
8.3s, 8/1/16 AAA 3,161,250
2,500,000 Hillsborough Cnty., Indl. Dev. Auth. Poll.
Control Rev. Bonds
(Tampa Elec. Co. Project), Ser. 91, 7 7/8s, 8/1/21 AA 2,731,250
2,400,000 Hillsborough Cnty., Util. Rev. Bonds,
Ser. A, 6 1/2s, 8/1/16 Baa 2,280,000
3,000,000 Jacksonville, Cap. Impt. Rev. Bonds
(Gator Bowl Project), AMBAC, 5 1/2s, 10/1/19 AAA 2,595,000
1,000,000 Jacksonville, Elec. Auth. Rev. Bonds
(Bulk Pwr. Supply-Scherer 4 Project), Ser. A,
6 3/4s, 10/1/21 AA 1,066,250
Jacksonville, Hlth. Fac. Auth. Ind. Dev. Rev. Bonds
(Cypress Village Project)
1,350,000 7s, 12/1/22 Baa 1,211,625
3,650,000 7s, 12/1/14 Baa 3,358,000
Jacksonville, Hlth. Fac. Auth. Rev. Bonds
980,000 (Mental Hlth. Ctr.), 9 1/8s, 10/15/19 B/P 984,900
4,400,000 3 1/4s, 4/1/15 AAA 4,400,000
330,000 Jacksonville, Port Auth. Indl. Dev. Poll.
Control Rev. Bonds (FL Pwr. & Lt. Co. Project),
Ser. 84-B, 9 5/8s, 6/1/19 A 344,850
3,000,000 Lake Cnty., Res. Rcvy. Ind. Dev. Rev. Bonds
(Rcvy. Group), Ser. A, 5.85s, 10/1/09 Bbb 2,561,250
3,000,000 Lakeland, Elec. & Wtr. Rev. Bonds,
5 3/4s, 10/1/19 AA 2,673,750
7,000,000 Lee Cnty., Arpt. Rev. Bonds,
Ser. A, AMBAC, 5 1/2s, 10/1/10 AAA 6,370,000
4,000,000 Lee Cnty., Brd. of Directors Hosp. IFB,
MBIA, 9.469s, 4/1/20 AAA 3,870,000
2,250,000 Lee Cnty., Cap. & Trans. Fac. Rev. Bonds,
Ser. A, MBIA, 5.55s, 10/1/18 AAA 1,949,063
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT RATINGS VALUE
<S> <C> <C> <C>
Leesburg, Hosp. Rev. Bonds
(Leesbury 3 Regl. Med. Ctr. Project)
$1,000,000 Ser. 91-A, 7 1/2s, 7/1/21 AAA $1,108,750
2,065,000 6 1/8s, 7/1/18 BBB 1,719,113
1,750,000 Ser. B, 5.7s, 7/1/18 Bbb 1,371,563
5,125,000 Martin Cnty., Indl. Dev. Auth. Rev. Bonds
(Indiantown Co-generation Project), Ser. A,
7 7/8s, 12/15/25 BBB 5,169,844
Miami, Hlth. Fac. Auth. Rev. Bonds
(Cedars Med. Ctr.), Ser. A
1,000,000 8 3/8s, 10/1/17 AAA 1,092,500
1,300,000 8.2s, 10/1/02 AAA 1,413,750
7,940,000 Orange Cnty., Hlth. Fac. Auth. Rev. Bonds
(Pooled Hosp. Loan), Ser. A, FGIC, 7 7/8s,
12/1/25 AAA 8,049,175
1,815,000 Orange Cnty., Hsg. Fin. Auth. Mtge. Rev. Bonds,
Ser. E, GNMA Coll., 7.9s, 10/1/22 Aaa 1,842,225
3,000,000 Orange Cnty., Tourist Dev. Tax Rev. Bonds,
Ser. A, AMBAC, 6 1/2s, 10/1/10 AAA 3,030,000
Orlando & Orange Cnty., Expressway Auth.
Rev. Bonds
2,500,000 7 1/4s, 7/1/14 AAA 2,628,125
2,850,000 FGIC, 5 1/2s, 7/1/18 AAA 2,475,938
Orlando, Util. Comm. Wtr. & Elec. Rev. Bonds
7,500,000 Ser. B, 5 1/4s, 10/1/23 AA 6,084,375
5,000,000 Sub-Ser. B, 5 1/4s, 10/1/23 AA 4,106,250
1,996,000 Osceola Cnty., Indl. Dev. Auth. Rev. Bonds
(Cmnty. Provider Pooled Loan Program),
Ser. A, 7 3/4s, 7/1/10 AAA 2,018,455
3,350,000 Osceola Cnty., Sch. Brd. Certif. of Participation,
AMBAC, 5 3/4s, 6/1/14 AAA 3,031,750
7,000,000 Palm Beach Cnty. Sch. Brd. Certif. of Participation,
Ser. A, AMBAC, 6 3/8s, 8/1/15 AAA 6,877,500
2,000,000 Palm Beach Cnty., Arpt. Syst. Rev. Bonds,
MBIA, 7 3/4s, 10/1/10 AAA 2,205,000
Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds
(JFK Med. Ctr. Inc. Project)
2,560,000 Prfd., 8 7/8s, 12/1/18 AAA 2,896,000
1,835,000 8 7/8s, 12/1/18 AAA 1,961,156
7,000,000 5 3/4s, 12/1/14 AAA 6,273,750
215,000 Palm Beach Cnty., Single Fam. Hsg. Fin.
Auth. Mtge. Stepped-coupon, 7.2s, 10/1/24 Aaa 217,956
1,500,000 Palm Beach Cnty., Solid Waste Indl. Dev.
Rev. Bonds, 6.95s, 1/1/22 BB/P 1,335,000
4,000,000 Palm Beach Cnty., Student Hsg. Rev. Bonds
(Palm Beach Cmnty. College), Ser. A, 8 1/2s, 3/1/23 B/P 3,725,000
5,000,000 Pinellas Cnty., Poll. Control Rev. Bonds
(FL Pwr. Corp.), 7.2s, 12/1/14 A 5,168,750
655,000 Polk Cnty., Hsg. Fin. Auth. Rev. Bonds,
Ser. A, GNMA Coll., 7 7/8s, 9/1/22 Aaa 666,463
2,000,000 Polk Cnty., Sch. Brd. Certif. of Participation,
4 7/8s, 1/1/18 AAA 1,537,500
Port Everglades Auth. Port Impt. Rev. Bonds
5,000,000 7 1/8s, 11/1/16 AAA 5,456,250
5,000,000 Ser. A, 5s, 9/1/16 BBB 3,843,750
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT RATINGS VALUE
<S> <C> <C>
$ 2,935,000 Sanibel, Swr. Util. Rev. Bonds, 7 1/2s, 8/1/21 Baa $ 3,243,175
2,390,000 Santa Rosa Cnty., Hlth. Fac. Auth. Rev. Bonds
(Gulf Breeze Hosp. Inc.), Ser. A, 6.2s, 10/1/14 BBB 2,025,525
2,250,000 South Broward, Hosp. Dist. IFB,
Ser. C, AMBAC, 9.643s, 5/13/21 AAA 2,207,813
3,905,000 St. Lucie Cnty., Util. Syst. Rev. Bonds,
FGIC, 5 1/2s, 10/1/16 AAA 3,377,825
7,800,000 St. Petersburg, Hlth. Fac. Auth. Rev. Bonds
(Allegany Hlth.), Ser. A, MBIA, 7s, 12/1/15 AAA 8,034,000
3,490,000 Sumter Cnty., Capital Impt. Rev Bonds,
MBIA, 5s, 6/1/24 AAA 2,717,838
4,860,000 Sumter Cnty., Sch. Dist. Rev. Bonds
(Multi Dist. Loan Program), Capital Guaranty
Insurance Co. (CGIC), 7.15s, 11/1/15 AAA 5,194,125
6,000,000 Tampa, Allegany Hlth. Syst. Rev. Bonds
(St. Joseph), 6 1/2s, 12/1/23 AAA 5,857,500
11,030,000 Tampa, Cap. Impt. Rev. Bonds,
Ser. B, 8 3/8s, 10/1/18 BBB 11,443,625
3,965,000 Tampa, Parking Fac. Rev. Bonds,
AMBAC, 5 1/2s, 10/1/10 AAA 3,598,238
500,000 Tampa, Wtr. & Swr., Rev. Muni. Cap. Bonds,
Ser. A, FGIC, 3.34s, 10/1/12 AAA 481,250
1,500,000 Village Ctr., Cmnty. Dev. Dist. Util. Rev Bonds,
FGIC, 5 3/8s, 11/1/23 AAA 1,252,500
1,800,000 Volusia Cnty., Hlth. Fac. Auth. Rev. Bonds
(Memorial Hlth. Syst. Project), 8 1/8s, 6/1/08 BBB 2,025,000
------------
275,772,811
PUERTO RICO (5.1%)
- -------------------------------------------------------------------------------------------------------
3,000,000 Cmnwlth. of Puerto Rico General Obligation
(G.O.) Bonds, MBIA, 6.45s, 7/1/17 AAA 2,943,750
1,500,000 Cmnwlth. of Puerto Rico, Aqueduct & Swr.
Auth. Rev. Bonds, Ser. A, 7 7/8s, 7/1/17 Baa 1,599,375
Cmnwlth. of Puerto Rico, Hwy. & Trans. Auth
Rev. Bonds
2,400,000 Ser. W, 5 1/2s, 7/1/17 A 2,028,000
6,250,000 Ser. W, 5 1/4s, 7/1/20 A 5,046,875
2,900,000 Ser. X, 2.2s, 7/1/99 A 2,900,000
1,000,000 Cmnwlth. of Puerto Rico, Pub. Impt. G.O. Bonds,
7.7s, 7/1/20 AAA 1,117,500
------------
15,635,500
Total Investments ------------
(cost $301,348,927)(d) $291,408,311
------------
</TABLE>
15
<PAGE> 16
NOTES
-------------------------------------------------------------------------
(a) Percentages indicated are based on total net assets of $307,594,304, which
correspond to a net asset value per class A share and class B share of
$8.44 and $8.43, respectively.
(b) The Moody's or Standard & Poor's ratings indicated are believed to be the
most recent ratings available at December 31, 1994 for the securities
listed. Ratings are generally ascribed to securities at the time of
issuance. While the agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings do not necessarily
represent what the agencies would ascribe to these securities at December
31, 1994. Securities rated by Putnam are indicated by "/P" and are not
publicly rated.
(c) Restricted as to public resale. At the end of acquisition, this security
was valued at cost. There were no outstanding unrestricted securities of
the same class as that held. Total market value of restricted securities
owned at December 31, 1994 was $2,237,500 or 0.7% of net assets.
(d) The aggregate identified cost on a tax basis is $301,366,549 resulting in
gross unrealized appreciation and depreciation of $3,755,093 and
$13,713,331 respectively, or net unrealized depreciation of $9,958,238.
The rates shown on Variable Rate Demand Notes (VRDN) and Inverse Floating
Bonds (IFB) which are securities paying interest rates that vary inversely
to changes in market interest rates, are the current interest rates at
December 31, 1994 which are subject to change based on the terms of the
security.
The Fund had the following insurance group concentrations greater than
10% at December 31, 1994 (as a percentage of net assets):
AMBAC 14.5%
The Fund had the following industry group concentrations greater than
10% on December 31, 1994 (as a percentage of net assets):
<TABLE>
<S> <C>
Health Care 22.0%
Utilities 22.0
Highway/Transportation 15.3
Education 14.7
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<S> <C>
ASSETS
-------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $301,348,927) (Note 1) $291,408,311
-------------------------------------------------------------------------------------------
Cash 6,157,913
-------------------------------------------------------------------------------------------
Interest receivable 4,847,695
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 7,287,252
-------------------------------------------------------------------------------------------
Receivable for securities sold 2,540,238
-------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 24,594
-------------------------------------------------------------------------------------------
TOTAL ASSETS 312,266,003
LIABILITIES
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 473,775
-------------------------------------------------------------------------------------------
Payable for fund shares repurchased 3,571,787
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 417,535
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 3,201
-------------------------------------------------------------------------------------------
Payable for administrative expenses (Note 2) 6,109
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 161,869
-------------------------------------------------------------------------------------------
Other accrued expenses 37,423
-------------------------------------------------------------------------------------------
TOTAL LIABILITIES 4,671,699
-------------------------------------------------------------------------------------------
NET ASSETS $307,594,304
-------------------------------------------------------------------------------------------
REPRESENTED BY
-------------------------------------------------------------------------------------------
Paid-in capital (Note 4) $326,227,762
Distributions in excess of net investment income (90,384)
Accumulated net realized loss on investment transactions (8,602,458)
Net unrealized depreciation of investments and futures contracts (9,940,616)
-------------------------------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO CAPITAL SHARES OUTSTANDING $307,594,304
-------------------------------------------------------------------------------------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
-------------------------------------------------------------------------------------------
Net asset value and redemption of class A shares
($267,424,467 divided by 31,697,514 shares) $8.44
-------------------------------------------------------------------------------------------
Offering price per share (100/95.25 of $8.44)* $8.86
-------------------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($40,169,837 divided by 4,762,619 shares)+ $8.43
-------------------------------------------------------------------------------------------
<FN>
* 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 deferred contingent
sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
17
<PAGE> 18
<TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1994
<S> <C>
TAX EXEMPT INTEREST INCOME $10,140,779
-------------------------------------------------------------------------------------------
EXPENSES:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 929,602
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 55,695
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 7,559
-------------------------------------------------------------------------------------------
Reports to shareholders 5,546
-------------------------------------------------------------------------------------------
Postage 9,831
-------------------------------------------------------------------------------------------
Auditing 10,969
-------------------------------------------------------------------------------------------
Legal 7,923
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 6,050
-------------------------------------------------------------------------------------------
Registration fees 13,106
-------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 6,303
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 271,051
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 164,972
-------------------------------------------------------------------------------------------
Other 7,455
-------------------------------------------------------------------------------------------
TOTAL EXPENSES 1,496,062
-------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,644,717
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (5,652,054)
-------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Notes 1 and 3) 251,708
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and futures contracts
during the period (6,157,817)
-------------------------------------------------------------------------------------------
NET LOSS ON INVESTMENTS (11,558,163)
-------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(2,913,446)
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31 JUNE 30
-----------------------------------
1994 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
-----------------------------------------------------------------------------------------------------------
Operations:
-----------------------------------------------------------------------------------------------------------
Net investment income $ 8,644,717 $ 17,034,968
-----------------------------------------------------------------------------------------------------------
Net realized loss on investments (5,652,054) (3,866,138)
-----------------------------------------------------------------------------------------------------------
Net realized gain on futures contracts 251,708 915,450
-----------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments
and futures contracts (6,157,817) (20,873,863)
-----------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (2,913,446) (6,789,583)
-----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
-----------------------------------------------------------------------------------------------------------
From net investment income:
Class A (7,801,910) (15,593,873)
Class B (989,348) (1,398,882)
-----------------------------------------------------------------------------------------------------------
From net realized gain on investments:
Class A -- (2,568,554)
Class B -- (262,203)
-----------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments:
Class A -- (722,405)
Class B -- (73,721)
-----------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 6,124,041 44,663,932
-----------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,580,663) 17,254,711
NET ASSETS
-----------------------------------------------------------------------------------------------------------
Beginning of year 313,174,967 295,920,256
-----------------------------------------------------------------------------------------------------------
END OF PERIOD (including distribution in excess of
net investment income of $90,384 and
undistributed net investment income of $56,157) $307,594,304 $313,174,967
-----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 20
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 4, 1993
SIX MONTHS (COMMENCEMENT OF SIX MONTHS
ENDED YEAR ENDED OPERATIONS) TO ENDED
DECEMBER 31 JUNE 30 JUNE 30 DECEMBER 31
1994 1994 1993 1994
- -------------------------------------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.76 $9.53 $9.17 $8.77
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------
Net Investment Income .22 .44 .21 .25
- -------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments (.33) (.66) .36 (.33)
- -------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (.11) (.22) .57 (.08)
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
- -------------------------------------------------------------------------------------------------------------------------
From net investment income (.22) (.44) (.21) (.25)
- -------------------------------------------------------------------------------------------------------------------------
From net realized gain on Investments -- (.09) -- --
- -------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on
Investments -- (.02) -- --
- -------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.22) (.55) (.21) (.25)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $8.43 $8.76 $9.53 $8.44
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE (%)(B) (1.22)(c) (2.55) 6.29(c) (.89)(c)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (in thousands) $40,170 $36,930 $17,881 $267,424
- -------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets (%) .78(c) 1.51 .78(c)(d) .45(c)
- -------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average
Net Assets (%) 2.54(c) 4.74 2.21(c)(d) 2.89(c)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover (%) 24.90(c) 64.83 106.69(c) 24.90(c)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 24, 1990
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED JUNE 30 TO JUNE 30
1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.53 $9.08 $8.65 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income .50 .56(a) .60(a) .52(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments (.65) .53 .45 .15
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (.15) 1.09 1.05 .67
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income (.50) (.56) (.60) (.52)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on Investments (.09) (.08) (.02) --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on
Investments (.02) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.61) (.64) (.62) (.52)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $8.77 $9.53 $9.08 $8.65
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE (%)(B) (1.79) 12.44 12.57 8.04(c)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (in thousands) $276,245 $278,039 $195,963 $109,739
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets (%) .91 .77(a) .60(a) .41(a)(c)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average
Net Assets (%) 5.38 5.94(a) 6.73(a) 5.94(a)(c)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover (%) 64.83 106.69 72.73 46.72(c)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects an absorption of expenses incurred by the fund and an
expense limitation applicable during the period. As a result of these
limitations, expenses of the fund for the year ended June 30, 1992 and the
period ended June 30, 1991, reflect a reduction of $0.02 and $0.04 per
share, respectively. For the year ended June 30, 1993, expenses reflect a
reduction of less than $0.01 per share.
(b) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Not annualized.
(d) Per share investment income, expenses and net investment income for
the periods ended June 30, 1991 and June 30, 1993 have been determined
on the basis of the weighted average number of shares outstanding for
the period.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
December 31 1994
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 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
Florida tax-exempt securities.
The fund offers both class A and class B shares. The fund commenced its public
offering of class B shares on January 4, 1993. Class A shares are sold with a
maximum front-end sales charge of 4.75%. Class B shares do not pay a front-end
sales charge, but pay a higher ongoing distribution fee than class A shares,
and may be subject to a contingent deferred sales charge if those shares are
redeemed within six years of purchase. Expenses of the fund are borne pro-rata
by the holders of both classes of shares. Each class, however, 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 necessary 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 followed by the
fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A SECURITY VALUATION Tax exempt bonds and notes are stated on the basis of
valuations provided by a pricing service, approved by the Trustees, which
uses information with respect to transactions in bonds, quotations from bond
dealers, market transactions in comparable securities and various
relationships between securities in determining value. The fair value of
restricted securities is determined by the Manager following procedures
approved by the Trustees, and such valuations and procedures are reviewed
periodically 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 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.
D DISTRIBUTIONS TO SHAREHOLDERS Income dividends are declared daily
22
<PAGE> 23
by the fund and are distributed monthly. Capital gains distributions, if any,
are recorded on the ex-dividend date and paid annually.
E AMORTIZATION OF BOND PREMIUM AND DISCOUNT Any premium resulting from the
purchase of securities in excess of maturity value is amortized on a
yield-to-maturity basis. Discount on zero-coupon bonds is accreted according
to the effective yield method.
F FUTURES A futures contract is an agreement between two parties to buy or
sell a security at a set price on a future date. Upon entering into such a
contract the fund is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, the fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as "variation margin," and are
recorded by the fund as unrealized gains or losses. When the contract is
closed, the fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed. The potential risk to the fund is that the change in
value of the underlying securities may not correspond to the change in value
of the futures contracts.
G UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the fund in
connection with its organization, its registration with the Securities and
Exchange Commission and with various states, and the initial public offering
of its Class A shares aggregated $75,474. These expenses are being amortized
on a straight line basis over a five-year period.
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: 0.6% of the
first $500 million of the fund's average net assets, 0.5% of the next $500
million, 0.45% of the next $500 million and 0.4% of any amount over $1.5
billion, subject to reduction in any year by the amount of certain brokerage
commissions and fees (less expenses) received by affiliates of the Manager on
the fund's portfolio transactions.
The fund also reimburses the Manager for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $790, and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of the Manager and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
Custodial functions for the fund are provided by the 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.
Investor servicing and custodian fees reported in the Statement of operations
for the six months ended December 31, 1994 have been reduced by credits
allowed by PFTC.
On July 8, 1993, the fund adopted a distribution plan with respect to its
class A shares (the "Class A Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Class A Plan is to
compensate Putnam Mutual Funds Corp., a wholly owned subsidiary of
23
<PAGE> 24
Putnam Investments Inc., for services provided and expenses incurred by it in
distributing class A shares. The Trustees have approved payment by the fund
to Putnam Mutual Funds Corp. at an annual rate of 0.20% of average net assets
attributable to class A shares. Payments under the plan cannot exceed 0.35%
without shareholder approval.
The fund has adopted a Distribution Plan with respect to its class B shares
(the "Class B Plan") pursuant to Rule 12b-1 under the Investment Company Act
of 1940. The purpose of the Class B Plan is to compensate Putnam Mutual Funds
Corp. for services provided and expenses incurred by it, in distributing
class B shares. The Class B Plan provides for payments by the fund to Putnam
Mutual Funds Corp. at an annual rate of 0.85% of the fund's average net
assets attributable to class B shares. Payments under the plan cannot exceed
1.00% without shareholder approval.
During the six months ended December 31, 1994, Putnam Mutual Funds Corp.,
acting as an underwriter, received net commissions of $17,218 from the sale of
class A shares of the fund.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of
class A shares purchased as part of an investment of $1 million or more. For
the six months ended December 31, 1994, Putnam Mutual Funds Corp., acting as
underwriter, received no monies on such redemptions.
Putnam Mutual Funds Corp. also receives the proceeds on the contingent
deferred sales charges on its class B certain share redemptions within six
years of purchase. The charge is based on declining rates, which begin at
5.00% of the net asset value of the redeemed shares. Putnam Mutual Funds
Corp. has received contingent deferred sales charges of $111,094 from
redemptions during the period July 1, 1994 to December 31, 1994.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 1994, purchases and sales of
investment securities other than short-term municipal obligations aggregated
$73,637,273 and $81,311,733, respectively. Purchases and sales of short-term
municipal obligations aggregated $24,200,000 and $13,100,000 respectively. In
determining the net gain or loss on securities sold, the cost of securities
has been determined on the identified cost basis.
Transactions in futures contracts during the period are summarized as
follows:
<TABLE>
<CAPTION>
SALES OF FUTURES CONTRACTS
- ----------------------------------------------------------------------------------------
NUMBER OF AGGREGATE
CONTRACTS FACE VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Contracts open
at beginning of year 100 $ 10,256,250
Contracts opened 1,270 128,036,812
- ----------------------------------------------------------------------------------------
Contracts closed (1,370) (138,293,062)
- ----------------------------------------------------------------------------------------
Open at end
of period -- $ --
- ----------------------------------------------------------------------------------------
</TABLE>
NOTE 4
CAPITAL SHARES
At December 31, 1994, there was an unlimited number of shares of beneficial
interest authorized, divided into two classes, class A and class B capital
stock. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 4,057,566 $34,311,156
- ----------------------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 384,118 3,292,060
- ----------------------------------------------------------------------------------------
4,441,684 37,603,216
Shares
repurchased (4,243,669) (36,193,636)
- ----------------------------------------------------------------------------------------
Net increase 198,015 $ 1,409,580
- ----------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1994
- -------------------------------------------------------------
CLASS A SHARES AMOUNT
- -------------------------------------------------------------
<S> <C> <C>
Shares sold 7,628,566 $71,929,859
- -------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 883,895 8,253,240
- -------------------------------------------------------------
8,512,461 80,183,099
Shares
repurchased (6,175,278) (57,536,138)
- -------------------------------------------------------------
NET INCREASE 2,337,183 $22,646,961
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1994
- -------------------------------------------------------------
CLASS B SHARES AMOUNT
- -------------------------------------------------------------
<S> <C> <C>
Shares sold 1,035,022 $ 8,831,174
- -------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 44,443 381,182
- -------------------------------------------------------------
1,079,465 9,212,356
Shares
repurchased (530,867) (4,497,895)
- -------------------------------------------------------------
NET INCREASE 548,598 $ 4,714,461
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1994
- -------------------------------------------------------------
CLASS B SHARES AMOUNT
- -------------------------------------------------------------
<S> <C> <C>
Shares sold 2,854,067 $26,806,006
- -------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 82,909 770,376
- -------------------------------------------------------------
2,936,976 27,576,382
Shares
repurchased (599,788) (5,559,411)
- -------------------------------------------------------------
NET INCREASE 2,337,188 $22,016,971
- -------------------------------------------------------------
</TABLE>
25
<PAGE> 26
OUR COMMITMENT TO QUALITY SERVICE
-- CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service
Seal for the past five years, through 1994. DALBAR, an independent
research firm, ran more than 10,000 tests of 38 shareholder service
components. In every category, Putnam outperformed the industry
standard.
-- HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a
month from a Putnam fund or from your checking or savings account.
-- SWITCH FUNDS EASILY
You can move money from one account to another with
same class of shares without a service charge. (This
privilegeis subject to change or termination.)
-- ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares
any business day at the then-current net asset value, which may
be more or less than their original cost.
For details about any of these or other services,
contact your financial advisor or call the toll-free number shown
below and speak with a helpful Putnam representative.
-- To make an additional investment in this or any other
Putnam fund, contact your financial advisor or call our toll-free
number: 1-800-225-1581.
* Regular investing, of course, does not guarantee a profit
or protect against a loss in a declining market. Investors should
consider their ability to continue purchasing shares during
periods of low price levels.
26
<PAGE> 27
FUND INFORMATION
INVESTMENT MANAGER OFFICERS
Putnam Investment Management, Inc. George Putnam
One Post Office Square President
Boston, MA 02109
Charles E. Porter
MARKETING SERVICES Executive Vice President
Putnam Mutual Funds Corp.
One Post Office Square Patricia C. Flaherty
Boston, MA 02109 Senior Vice President
CUSTODIAN John R. Verani
Putnam Fiduciary Trust Company Vice President
LEGAL COUNSEL Lawrence J Lasser
Ropes & Gray Vice President
TRUSTEES Gordon H Silver
George Putnam, Chairman Vice President
William F. Pounds, Vice Chairman Gary N. Coburn
Vice President
Jameson Adkins Baxter
James Erickson
Hans H. Estin Vice President
John A. Hill Richard Wyke
Vice President and Fund Manager
Elizabeth T. Kennan
William N. Shiebler
Lawrence J. Lasser Vice President
Robert E. Patterson Paul M. O'Neil
Vice President
Donald S. Perkins
John D. Hughes
George Putnam, III Vice President and Treasurer
A.J.C. Smith Beverly Marcus
Clerk and Assistant Treasurer
W. Nicholas Thorndike
This report is for the information of shareholders of Putnam Florida Tax
Exempt Income Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales charges,
investment objectives and operating policies of the fund, and the most recent
copy of Putnam's quarterly Performance Summary. For more information or to
request a prospectus, call toll-free: 1-800-225-1581.
Shares of mutual funds are not deposits of, or guaranteed or endorsed by, any
financial institution, are not insured by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency, and
involve risk, including the possible loss of principal amount invested.
27
<PAGE> 28
_______________
PUTNAM INVESTMENTS Bulk Rate
U.S. Postage
The Putnam Funds PAID
One Post Office Square Putnam
Boston, Massachusetts 02109 Investments
_______________
037/365-16664
