<PAGE>
PUTNAM
FLORIDA
TAX EXEMPT
INCOME FUND
ANNUAL REPORT
May 31, 1995
[LOGO]
BOSTON * LONDON * TOKYO
<PAGE>
PERFORMANCE HIGHLIGHTS
"The gap is narrowing between Treasury and municipal yields, making
munis look increasingly attractive. Among municipal-bond experts,
there is little concern that any radical change in the tax system
could happen before 1997 and plenty of doubt that any such revolution
will happen at all."
- --The Wall Street Journal, May 19, 1995
FISCAL 1995 RESULTS AT A GLANCE
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C>
CLASS A CLASS B
TOTAL RETURN: NAV POP NAV CDSC
- ----------------------------------------------------------------------
- --
(change in value during
period plus reinvested
distributions)
11 months ended 5/31/95 9.58% 4.35% 9.06% 4.06%
- ----------------------------------------------------------------------
- --
CLASS A CLASS B CLASS M
SHARE VALUE: NAV POP NAV NAV POP
- ----------------------------------------------------------------------
- --
6/30/94 $8.77 $9.21 $8.76 -- --
5/1/95 (First offering
of M shares) -- -- -- $8.87 $9.17
5/31/95 9.12 9.57 9.12 9.12 9.43
- ----------------------------------------------------------------------
- --
CAPITAL GAINS(1)
LONG- SHORT-
DISTRIBUTIONS: NO. INCOME TERM TERM TOTAL
- ----------------------------------------------------------------------
- --
Class A 11 $0.456538 -- -- $0.456538
Class B 11 0.404517 -- -- 0.404517
Class M 1 0.040507 0.040507
- ----------------------------------------------------------------------
- --
CLASS A CLASS B
CURRENT RETURN: NAV POP NAV
- ----------------------------------------------------------------------
- --
End of period
Current dividend rate(2) 5.40% 5.14% 4.76%
Taxable equivalent(3) 8.94 8.51 7.88
Current 30-day SEC yield(4) 5.17 4.92 4.51
Taxable equivalent(3) 8.56 8.15 7.47
- ----------------------------------------------------------------------
- --
<FN>
Performance data represent past results and is no indication of future
results. Performance will differ for each share class. For performance
over longer periods, see pages 8 and 9. POP assumes 4.75% maximum
sales charge for class A and 3.25% for class M shares. CDSC assumes 5%
maximum contingent deferred sales charge. Effective 1/4/93, the fund
began offering class B shares, and on 5/1/95, class M shares. (1)
Capital gains, if any, are taxable for federal and, in most cases,
state purposes. (2) Income portion of most recent distribution,
annualized and divided by NAV or POP at end of period. (3) Assumes
maximum 39.6% federal tax rate. Results for investors subject to lower
tax rates would not be as advantageous. For some investors, investment
income may also be subject to the federal alternative minimum tax. (4)
Based only on investment income, calculated using SEC guidelines.
</TABLE>
<PAGE>
FROM THE CHAIRMAN
[PHOTO OF GEORGE PUTNAM]
(C) KARSH, OTTAWA
DEAR SHAREHOLDER:
YOU MAY NOT HAVE NOTICED, BUT THIS ANNUAL REPORT FOR PUTNAM FLORIDA
TAX EXEMPT INCOME FUND HAS ARRIVED SOMEWHAT EARLIER THAN USUAL. PUTNAM
MANAGEMENT HAS DECIDED TO REALIGN MANY OF ITS TAX-EXEMPT BOND FUNDS'
FISCAL YEARS SO THEY HAVE COMMON FISCAL YEAR ENDS.
YOUR FUND WAS AMONG THOSE AFFECTED BY THIS CHANGE. IN THE FUTURE, ITS
FISCAL YEAR WILL END ON MAY 31, INSTEAD OF JUNE 30, AS IN THE PAST.
CONSEQUENTLY, THIS REPORT COVERS A FISCAL PERIOD OF ONLY 11 MONTHS,
INSTEAD OF A FULL FISCAL YEAR.
THE CHANGE SHOULD PROVIDE SAVINGS FOR YOUR FUND IN THE FUTURE. IT WILL
ALLOW US TO TAKE ADVANTAGE OF ECONOMIES OF SCALE IN FINANCIAL
REPORTING, ACCOUNTING, LITERATURE PRODUCTION, AND THE LIKE.
IN THE REPORT THAT FOLLOWS, FUND MANAGER RICHARD WYKE REVIEWS
PERFORMANCE DURING THIS ABBREVIATED PERIOD, THEN OFFERS SOME INSIGHTS
ON PROSPECTS FOR THE MONTHS AHEAD.
RESPECTFULLY YOURS,
[SIGNATURE]
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
JULY 19, 1995
<PAGE>
REPORT FROM THE FUND MANAGER
RICHARD P. WYKE
Since our semiannual report to you dated December 31, 1994, the
municipal bond market has experienced a complete turnaround. The
dismal fixed-income environment of 1994 gave way to a more hospitable
climate in early 1995 as investors regained their confidence in the
Federal Reserve Board's ability to curb inflation. The improved mood
was such that the Fed's interest rate increase in February caused
barely a ripple in the market.
We believe Putnam Florida Tax Exempt Income Fund weathered the ups and
downs of the past 11 months well, posting competitive performance for
the period ended May 31, 1995. In fact, the market's strength over the
past several months enabled your fund to recoup virtually all of the
declines in the first half of fiscal 1995.
Your fund has also continued to provide a steady stream of attractive
tax-free income. A Florida investor in the maximum 39.60% federal tax
bracket would have had to receive a 8.94% return on a fully taxable
investment to match the fund's current dividend rate of 5.40% for
class A shares at NAV. Investors in lower tax brackets would have also
benefited, but not to the same extent.
LONG-TERM VIEW STOOD FUND IN GOOD STEAD
The market turbulence of 1994, particularly during October and
November, tested the mettle of even the most experienced bond fund
managers. Although the Fed's repeated interest- rate increases had
taken their toll on the psyche of most fixed- income investors, we
remained convinced that a turnaround was relatively close at hand. We
opted to stay the course, and kept the fund, for the most part, fully
invested.
As the market turned the corner into positive territory in January,
our efforts proved fruitful. Evidence of a slowing economy, a decrease
in new issuance supply, diminishing inflation fears, and ongoing
demand for tax relief combined
<PAGE>
to propel the municipal market -- and your fund -- forward. From
January 1 through May 31, your fund's class A shares returned a total
of 10.57% at net asset value.
FLAT TAX RHETORIC CAUSED SOME TREPIDATION
Most fixed-income investments have enjoyed a spectacular year-to-date
rally, with bond prices rising and yields declining virtually across
the board. The one low point, however, occurred briefly in late April.
The flat-tax proposal, now headed for congressional hearings, caused
uneasiness in the market as investors became spooked by the possible
effects of such a proposal, namely, that municipal bonds would be
deprived of their exclusivity as tax-exempt investments.
Fortunately, investors soon realized that passage of a flat tax was
far from certain -- and that many tax-reform proposals would be
discussed and dissected before being approved. Once their initial
fears were allayed, investors renewed their interest, pushing
municipal bond prices higher by period's end.
POSITIONING FAVORS AAA-RATED/INSURED BONDS, TARGETS BOTH PREMIUM AND
DISCOUNT COUPONS
Despite the rally's strength, the yield spread between AAA- rated and
BBB-rated bonds has remained relatively narrow, primarily because of
investors' ongoing appetite for yield. In this environment, investors
chasing incrementally higher yields
[LINE CHART]
MUNICIPAL BOND PRICES
- ----------------------------------------------------------------------
- --
Date
5/31/94 91.1563
6/30/94 90.4688
7/31/94 92.1875
8/31/94 91.9063
9/30/94 89.1250
10/31/94 86.0625
11/30/94 82.9375
12/31/94 85.2813
1/31/95 88.1875
2/28/95 90.9688
3/31/95 91.1875
4/30/95 91.0938
5/31/95 94.0625
Source: Bond Buyer 40 Municipal Index. Not intended to reflect
performance of the fund.
<PAGE>
at the lower-rated end of the investment grade spectrum are, in our
opinion, not getting compensated for the additional risk they are
undertaking.
We chose, rather, to cluster roughly 60% of the fund's assets in AAA-
rated and insured bonds. We began increasing the fund's weighting in
these bonds during the fall when their prices became too compelling to
ignore. As the market has rallied, these bonds have been performing
well and stand to appreciate further should the yield spread widen. We
plan to maintain some exposure in bonds rated BBB and below, however,
because they help provide the fund with an attractive stream of income
and an element of price stability.
Through intense research, we've been targeting premium and discount
bonds. Premium bonds -- those bonds selling at prices above par value
- -- typically carry coupons higher than current market rates and tend
to be more stable in price. Discount bonds -- those selling at prices
below par value -- are attractive for their significant appreciation
potential.
SUNSHINE STATE BONDS APPEAR POISED FOR BRIGHTER DAYS
Nearly $60 billion worth of high-coupon bonds that were issued in 1985
are due to mature or become callable this June and July. On the
national level, bond issuance is down by approximately 40% from this
time last year, while on the state level, issuance is down by roughly
20%. While many other factors influence the performance of municipal
bonds, it is certainly apparent that such a decline in supply is
likely to enhance the price appreciation potential of existing issues.
We believe the slowing economy, combined with a shrinking bond supply,
set the stage for a lasting turnaround in the municipal bond market.
As Washington prepares to scrutinize tax-reform proposals, keep in
mind that a revision to the tax code is not likely to occur until
after the 1996 presidential election. And, if history is any guide,
what is now being proposed will probably undergo several mutations
before being approved, if enacted at all. Rest
<PAGE>
TOP 5 SECTORS
- ----------------------------------------------------------------------
- --
Hospital/health care 21.0%
- ----------------------------------------------------------------------
- --
Utilities 12.6
- ----------------------------------------------------------------------
- --
Highway/transportation 8.0
- ----------------------------------------------------------------------
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Housing 6.4
- ----------------------------------------------------------------------
- --
Water and sewer 2.4
- ----------------------------------------------------------------------
- --
Based on net assets as of 5/31/95. Will vary over time.
assured, our investment strategy in the months ahead will take into
consideration the possible effects of any serious reform.
We believe your fund's 9.58% return for class A shares, and 9.06% for
class B shares, for the 11 months ended May 31, 1995, at net asset
value lend testimony not only to the resiliency of Florida municipal
debt, but also give credence to Putnam Management's ability to manage
tax-exempt securities in any market environment.
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
5/31/95, there is no guarantee the fund will continue to hold these
securities in the future.
<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions back into the fund.
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 as well as the Florida intangibles tax, as consistent with
capital preservation.
TOTAL RETURN FOR PERIODS ENDED 5/31/95
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
LEHMAN BROS.
CLASS A CLASS B MUNICIPAL
NAV POP NAV CDSC BOND INDEX CPI
- ----------------------------------------------------------------------
- --
11 months 9.58% 4.35% 9.06% 4.06% 9.75% 2.84%
- ----------------------------------------------------------------------
- --
1 year 9.23 4.05 8.52 3.52 9.11 3.19
- ----------------------------------------------------------------------
- --
3 years 23.14 17.25 -- -- 25.18 8.95
Annual average 7.18 5.45 -- -- 7.77 2.90
- ----------------------------------------------------------------------
- --
Life of class A (8/24/90)47.18 40.24 -- -- 50.01 15.65
Annual average 8.44 7.35 -- -- 8.87 3.10
- ----------------------------------------------------------------------
- --
Life of class B (1/4/93) -- -- 12.95 8.97 17.78 7.26
Annual average -- -- 5.18 3.63 7.03 2.95
- ----------------------------------------------------------------------
- --
</TABLE>
TOTAL RETURN FOR PERIODS ENDED 6/30/95
(most recent calendar quarter)
Class A Class B
NAV POP NAV CDSC
- ----------------------------------------------------------------------
- --
1 year 7.87 2.72 7.32 2.32
- ----------------------------------------------------------------------
- --
3 years 19.13 13.50 -- --
Annual average 6.01 4.31 -- --
- ----------------------------------------------------------------------
- --
Life of class A (8/24/90) 44.88 38.05 -- --
Annual average 7.94 6.87 -- --
- ----------------------------------------------------------------------
- --
Life of class B (1/4/93) -- -- 11.15 7.24
Annual average -- -- 4.34 2.85
- ----------------------------------------------------------------------
- --
[FN]
POP assumes 4.75% maximum sales charge for class A shares. CDSC
assumes 5% maximum contingent deferred sales charge. Fund performance
data do not take into account any adjustment for taxes payable on
reinvested distributions, or, for class A shares, distribution fees
prior to implementation of the class A distribution plan on 7/8/93.
Performance of share classes will differ. Performance data represent
past results and is no indication of future 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.
Performance for class M shares is not shown due to brevity of the
period.
<PAGE>
[MOUNTAIN CHART]
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------------
- --
Lehman Brothers
Date POP Municipal Bond Index CPI
- ----------------------------------------------------------------------
- --
8/90 $9,525 $10,000 $10,000
5/91 10307 $10,912 $10,304
5/92 11389 $11,983 $10,616
5/93 12834 $13,417 $10,957
5/94 12840 $13,748 $11,208
5/95 14024 $15,001 $11,565
Past performance is no assurance of future results. A $10,000
investment in the fund's class B shares at NAV on 1/4/93 would have
been valued at $11,295 on 5/31/95 ($10,897 with a redemption at the
end of the period).
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
CLASS M SHARES have a lower initial sales charge and a higher 12b-1
fee than class A shares and no sales charge on redemption.
NET ASSET VALUE (NAV) is the value of 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.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
for the eleven months ended May 31, 1995
TO THE TRUSTEES AND SHAREHOLDERS OF
PUTNAM FLORIDA TAX EXEMPT INCOME FUND
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned (except for bond
ratings), and the related statements of operations and of changes in
net assets and the financial highlights present fairly, in all
material respects, the financial position of Putnam Florida Tax Exempt
Income Fund (the "Fund") at May 31, 1995, and the results of its
operations, the changes in its net assets, and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the fund's management; our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of investments owned at
May 31, 1995 by correspondence with the custodian and brokers, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
July 17, 1995
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
May 31, 1995
KEY TO ABBREVIATIONS
AMBAC--American Municipal Bond Assurance Corporation
CGIC--Capital Guaranty Insurance Corporation
COP--Certificate of Participation
FGIC--Financial Guaranty Insurance Corporation
FSA--Financial Security Assurance
GNMA Coll.--Government National Mortgage Association Collateralized
G.O. Bonds--General Obligation Bonds
IFB--Inverse Floating Bonds
MBIA--Municipal Bond Investors Assurance Corporation
<TABLE><CAPTION>
<S> <C> <C>
MUNICIPAL BONDS AND NOTES (96.4%)*
PRINCIPAL AMOUNT RATINGS** VALUE
FLORIDA (92.2%)
- ----------------------------------------------------------------------
- --
$2,345,000 Brevard Cnty., Hlth. Fac. Auth.
Rev. Bonds (Courtenay Springs
Village), 7 1/2s, 11/15/09 BB/P $ 2,315,688
Broward Cnty., Edl. Fac. Auth. Rev. Bonds
2,500,000 (Nova U. Dorm Project), Ser. A,
7 1/2s, 4/1/17 BBB 2,890,625
715,000 (Nova U. Dorm Project), Ser. A,
7 1/4s, 4/1/01 BBB 807,056
2,500,000 (Nova S.E. Univ. Project), Connie
Lee 6s, 4/1/10 AAA 2,537,500
1,000,000 Broward Cnty., Hlth. Fac. Auth. Rev.
Bonds (Broward Cnty. Nursing Home),
7 1/2s, 8/15/20 A 1,091,250
Broward Cnty., Resource Recvy. Rev. Bonds
3,260,000 (SES Broward Cnty. LP South Project),
7.95s, 12/1/08 A 3,586,000
1,380,000 (Waste-Energy LP North Project),
7.95s, 12/1/08 A 1,518,000
2,000,000 Charlotte Cnty., Util. Rev. Bonds,
FGIC, 6 7/8s, 10/1/21 AAA 2,277,500
2,520,000 Citrus Cnty., Indl. Dev. Auth. Rev.
Bonds (Beverly Enterprises, Inc.
Project), 7 1/4s, 4/1/03 BB/P 2,516,850
1,400,000 Clay Cnty., Multi-Fam. Hsg. Fin.
Auth. Rev. Bonds (Oak Forest),
Ser. A, GNMA Coll., 7.4s, 12/1/25 AAA 1,496,250
1,875,000 Clay Cnty., Single Fam. Hsg. Fin.
Auth. Rev. Bonds, Ser. A, GNMA
Coll., 7.45s, 9/1/23 Aaa 1,978,125
1,100,000 Cocoa, Wtr. & Swr. Rev. Bonds,
Ser. B, AMBAC, 5 1/4s, 10/1/16 AAA 1,040,875
1,500,000 Coral Springs, Impt. Dist. Wtr. &
Swr. Rev. Bonds, MBIA, 8 1/4s, 6/1/14 AAA 1,689,375
100,000 Dade Cnty., Hlth. Fac. Auth. Hosp.
Rev. Bonds (North Shore Med. Ctr.
Project), AMBAC, 9 1/8s, 10/1/13 AAA 103,625
4,250,000 Dade Cnty., School Board COP,
Ser. A, MBIA, 5 3/4s, 5/1/12 AAA 4,244,688
<PAGE>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT RATINGS** VALUE
FLORIDA (continued)
- ----------------------------------------------------------------------
- --
$1,690,000 Dade Cnty., Single Fam. Hsg. Fin.
Auth. Mtge. Rev. Bonds, Ser. B,
GNMA Coll., 8 3/4s, 7/1/17 AAA $ 1,768,163
3,075,000 Escambia Cnty., Single Fam. Hsg.
Fin. Auth. Mtge. Rev. Bond
(Multi-Cnty. Program), Ser. A,
GNMA Coll., 7.15s, 10/1/24 Aaa 3,132,656
FL Hsg. Fin. Agcy. Rev. Bonds
675,000 (Home Ownership Dev. Program),
Ser. G-1, GNMA Coll., 7.9s, 3/1/22 Aaa 722,250
4,800,000 Ser. 1-B, GNMA Coll., 7.1s, 1/1/17 AAA 5,016,000
FL State Board of Ed. Rev. Bonds
(Cap. Outlay-Pub. Ed)
4,275,000 Ser. F, 6s, 6/1/20 AA 4,328,438
11,345,000 Ser. C, 5 1/2s, 6/1/23 AA 10,820,294
4,500,000 Ser. D, 5 1/8s, 6/1/18 AA 4,151,250
FL State Dept. of Gen. Svcs. Rev. Bonds
1,500,000 Prerefunded, (Fac. Mgmt.), 7 3/4s,
9/1/16 AAA 1,595,625
7,750,000 (Fac. Mgmt.), AMBAC, 5.4s, 9/1/17 AAA 7,478,750
FL State Mid-Bay Bridge Auth. Rev. Bonds, Ser. A
1,500,000 8s, 10/1/06 BBB/P 1,687,500
2,180,000 7 1/2s, 10/1/17 BB/P 2,395,275
2,140,000 6.1s, 10/1/22 BBB 1,987,525
2,000,000 FL State Muni. Pwr. Agcy. IFB, AMBAC,
8.421s, 10/1/20 (acquired 7/10/92 cost
$2,101,200)++ AAA 2,510,000
FL State Muni. Pwr. Agcy. Rev. Bonds
1,500,000 (Pwr. Supply Project), AMBAC,
6 1/4s, 10/1/21 AAA 1,668,750
5,100,000 (St. Lucie Project), FGIC, 5.7s,
10/1/16 AAA 5,061,750
3,000,000 FL State Tpke. Auth. Rev. Bonds,
Ser. A, FGIC, 5 1/4s, 7/1/22 AAA 2,797,500
2.500,000 Gulf Breeze, Local Govt. Rev. Bonds,
Ser. E, FGIC, 7 3/4s, 12/1/15 AAA 2,837,500
3,000,000 Hillsborough Cnty., Cap. Impt.
Prerefunded. Rev. Bonds, 8.3s, 8/1/16 AAA 3,138,750
Hillsborough Cnty., Indl. Dev.
Auth. Poll. Control Rev. Bonds
2,500,000 (Tampa Elec. Co. Project), Ser. 91,
7 7/8s, 8/1/21 AA 2,937,500
3,645,000 (Tampa Elec. Co. Project), 6 1/4s,
12/1/34 AA 3,786,244
2,400,000 Hillsborough Cnty., Util. Rev. Bonds,
Ser. A, 6 1/2s, 8/1/16 Baa 2,484,000
3,000,000 Jacksonville, Cap. Impt. Rev. Bonds
(Gator Bowl Project), AMBAC,
5 1/2s, 10/1/19 AAA 2,928,750
1,000,000 Jacksonville, Elec. Auth. Prerefunded.
Rev. Bonds (Bulk Pwr. Supply),
Ser. A, 6 3/4s, 10/1/21 AAA 1,115,000
Jacksonville, Hlth. Fac. Auth. Ind. Dev. Rev. Bonds
1,350,000 (Cypress Village Project), 7s, 12/1/22Baa 1,373,625
3,650,000 (Cypress Village Project), 7s, 12/1/14Baa 3,745,813
980,000 Jacksonville, Hlth. Fac. Auth. Rev.
Bonds (Mental Hlth. Ctr.),
9 1/8s, 10/15/19 B/P 1,020,425
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 339,900
3,000,000 Lake Cnty., Res. Rcvy. Ind. Dev. Rev.
Bonds (Recvy. Group), Ser. A,
5.85s, 10/1/09 BBB 2,816,250
<PAGE>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT RATINGS** VALUE
FLORIDA (continued)
- ----------------------------------------------------------------------
- --
$3,000,000 Lakeland, Elec. & Wtr. Rev.
Bonds, 5 3/4s, 10/1/19 AA $ 3,000,000
Largo, Sun Coast Hlth. Syst. Rev. Bonds
2,000,000 6.3s, 3/1/20 BBB 1,770,000
1,000,000 6.2s, 3/1/13 BBB 900,000
4,000,000 Lee Cnty., Hosp Board of Directors
IFB, MBIA, 8.658s, 4/1/20 AAA 4,440,000
Leesburg, Hosp. Rev. Bonds
1,000,000 (Leesburg Regl. Med. Ctr. Project),
Ser. 91-A, Prerefunded, 7 1/2s, 7/1/21AAA 1,177,500
2,065,000 Ser. A, 6 1/8s, 7/1/18 Baa 2,008,213
1,750,000 Ser. B, 5.7s, 7/1/18 Baa 1,612,188
Miami, Hlth. Fac. Auth. Hosp. Prerefunded Rev. Bonds
1,000,000 (Cedars Med. Ctr.), Ser. A,
8 3/8s, 10/1/17 AAA 1,106,250
1,300,000 (Cedars Med. Ctr.), Ser. A,
8.2s, 10/1/02 AAA/P 1,433,250
5,300,000 Orange Cnty, Cap. Impt. Rev. Bonds,
AMBAC, 6s, 10/1/22 AAA 5,339,750
Orange Cnty., Hlth. Fac. Auth.
4,000,000 IFB, 9.512s, 10/1/14 (acquired 4/19/95,
cost $5,273,120)++ AAA 5,505,000
Orange Cnty., Hlth. Fac. Auth. Rev. Bonds
7,940,000 (Pooled Hosp. Loan), Ser. A, FGIC,
7 7/8s, 12/1/25 AAA 8,485,875
3,000,000 (Hosp.-Adventist Hlth. Syst.), AMBAC,
5 3/4s, 11/15/25 AAA 2,955,000
1,780,000 Orange Cnty., Hsg. Fin. Auth. Mtge.
Rev. Bonds, Ser. E, GNMA Coll.,
7.9s, 10/1/22 Aaa 1,866,775
12,325,000 Orange Cnty., Tourist Dev. Tax. Rev.
Bonds, Ser. B, MBIA, 6s, 10/1/24 AAA 12,494,469
Orlando & Orange Cnty., Expressway
Auth. Rev. Bonds
2,500,000 Prerefunded, 7 1/4s, 7/1/14 AAA 2,631,250
2,850,000 FGIC, 5 1/2s, 7/1/18 AAA 2,807,250
1,996,000 Osceola Cnty., Indl. Dev. Auth. Rev.
Bonds (Cmnty. Provider Pooled Loan
Program), Ser. A, CGIC, 7 3/4s, 7/1/10AAA 2,125,740
3,350,000 Osceola Cnty., School Board COP,
Ser A., AMBAC, 5 3/4s, 6/1/14 AAA 3,370,938
7,000,000 Palm Beach Cnty. School Board COP,
Ser. A, AMBAC, 6 3/8s, 8/1/15 AAA 7,350,000
Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds
(JFK Med. Ctr. Inc. Project)
1,835,000 8 7/8s, 12/1/18 BBB 2,018,500
2,560,000 Prefunded, 8 7/8s, 12/1/18 AAA/P 2,963,200
4,000,000 FSA, 5 3/4s, 12/1/14 AAA 4,010,000
215,000 Palm Beach Cnty., Single Fam. Hsg.
Fin. Auth. Mtge. Rev. Bonds, Ser A.,
GNMA Coll., 5.5s, 10/1/24 AAA 228,169
Palm Beach Cnty., Solid Waste Indl.
Dev. Rev. Bonds
1,500,000 (Osceola Pwr. LP.) Ser. A,
6.95s, 1/1/22 BB/P 1,505,625
3,000,000 Ser. A, 6.85s, 1/1/14 BB/P 3,000,000
4,000,000 Palm Beach Cnty., Student Hsg.
Rev. Bonds (Palm Beach Cmnty.
College), Ser. A, 8 1/2s, 3/1/23 B/P 3,960,000
<PAGE>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT RATINGS** VALUE
FLORIDA (continued)
- ----------------------------------------------------------------------
- --
$2,000,000 Palm Beach Cnty., Arpt. Syst.
Rev. Bonds, MBIA, 7 3/4s, 10/1/10 AAA $ 2,327,500
5,000,000 Pinellas Cnty., Poll. Control Rev.
Bonds (FL Pwr. Corp.) 7.2s, 12/1/14 A 5,481,250
655,000 Polk Cnty., Hsg. Fin. Auth. Rev.
Bonds, Ser. A, GNMA Coll.,
7 7/8s, 9/1/22 Aaa 688,569
2,000,000 Polk Cnty., School Board COP,
FSA, 4 7/8s, 1/1/18 AAA 1,775,000
Port Everglades Auth. Port Impt. Rev. Bonds
5,000,000 Prerefunded, 7 1/8s, 11/1/16 AAA 6,156,250
5,000,000 Ser. A, 5s, 9/1/16 BBB 4,325,000
2,675,000 SCA Tax Exempt Trust, Multi-Fam.
Mtge. Rev. Bonds, Ser. A-1,
FSA, 7.05s, 1/1/30 AAA 2,798,719
2,935,000 Sanibel, Swr. Util. Rev. Bonds,
7 1/2s, 8/1/21 AAA/P 3,411,938
2,390,000 Santa Rosa Cnty., Hlth. Fac. Auth.
Rev. Bonds (Gulf Breeze Hosp. Inc.),
Ser. A, 6.2s, 10/1/14 BBB 2,300,375
2,250,000 South Broward, Hosp. Dist. IFB,
Ser. C, AMBAC, 8.538s, 5/1/21 AAA 2,520,000
3,905,000 St. Lucie Cnty., Util. Syst. Rev.
Bonds, FGIC, 5 1/2s, 10/1/16 AAA 3,905,000
7,800,000 St. Petersburg, Hlth. Fac. Auth. Rev.
Bonds (Allegany Hlth.), Ser. A,
MBIA, 7s, 12/1/15 AAA 8,667,750
3,490,000 Sumter Cnty., Capital Impt. Rev
Bonds, MBIA, 5s, 6/1/24 AAA 3,162,813
4,860,000 Sumter Cnty., School Dist. Rev.
Bonds (Multi Dist. Loan Program),
CGIC, 7.15s, 11/1/15 AAA 5,753,025
11,030,000 Tampa, Cap. Impt. Program Rev.
Bonds, Ser. B, 8 3/8s, 10/1/18 BBB 11,802,100
Tampa, Rev. Bonds
6,000,000 (Allegheny Hlth. Syst., St. Joseph),
MBIA, 6 1/2s, 12/1/23 AAA 6,450,000
11,350,000 (Allegheny Hlth. Syst. St. Joseph),
MBIA, 5 1/8s, 12/1/23 AAA 10,371,057
1,500,000 Village Ctr. Cmnty. Dev. Dist. FL
Util. Rev Bonds, FGIC, 5 3/8s, 11/1/23AAA 1,434,375
1,800,000 Volusia Cnty., Hlth. Fac. Auth.
Rev. Bonds (Hosp. Fac.-Memorial Hlth.
Syst. Project), 8 1/8s, 6/1/08 BBB 2,101,500
-------------
291,236,053
<PAGE>
MUNICIPAL BONDS AND NOTES
PRINCIPAL AMOUNT RATINGS** VALUE
MINNESOTA (2.3%)
- ----------------------------------------------------------------------
- --
$7,300,000 Bass Brook, Poll. Control, Rev.
Bonds (Pwr. & Lt. Co. Project),
6s, 7/1/22 A $ 7,281,750
PUERTO RICO (1.9%)
- ----------------------------------------------------------------------
- --
1,500,000 Cmnwlth. of PR, Aqueduct & Swr. Auth.
Rev. Bonds, Ser. A, 7 7/8s, 7/1/17 Baa 1,648,125
1,000,000 Cmnwlth. of PR, Pub. Impt. Prerefunded,
G.O. Bonds, 7.7s, 7/1/20 AAA 1,165,000
3,000,000 Cmnwlth. of PR, G.O. Bonds, MBIA,
6.45s, 7/1/17 AAA 3,213,750
------------
6,026,875
- ----------------------------------------------------------------------
- --
TOTAL INVESTMENTS (cost $290,638,746)*** $304,544,678
- ----------------------------------------------------------------------
- --
<PAGE>
<FN>
NOTES
- ----------------------------------------------------------------------
- --
* Percentages indicated are based on net assets of $315,891,059,
which corresponds to a net asset value per class A share, class B
share and class M share of $9.12, $9.12 and $9.12, respectively.
** The Moody's or Standard & Poor's ratings indicated are believed
to be the most recent ratings available at May 31, 1995 for the
securities listed. Ratings are generally ascribed to securities
at the time of issuance. While the agencies may from time to time
revise such ratings, they undertake no obligation to do so, and
the ratings do not necessarily represent what the agencies would
ascribe to these securities at May 31, 1995. Securities rated by
Putnam are indicated by "/P" and are not publicly rated. Ratings
are not covered by the Report of Independent Accountants.
++ Restricted as to public resale. At the date of acquisition these
securities were valued at cost. There were no outstanding
securities of the same class as those held. Total market value of
restricted securities owned at May 31, 1995 was $8,015,000 or
2.5% of net assets.
*** The aggregate identified cost for federal income tax purposes is
$290,638,746, resulting in gross unrealized appreciation and
depreciation of $15,283,035 and $1,377,103, respectively, or net
unrealized appreciation of $13,905,932.
The fund had the following insurance concentrations greater than
10% on May 31,1995 (as a percentage of net assets):
MBIA 18.1%
AMBAC 11.8
The fund had the following industry group concentrations greater
than 10% on May 31,1995 (as a percentage of net assets):
Hospitals/Health Care 21.0%
Utilities 12.6
The rates shown on IFBs, which are securities paying variable
interest rates that vary inversely to changes in the market
interest rates and VRDNs are the current interest rates at May
31, 1995, which are subject to change based on the terms of the
security.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1995
</TABLE>
<TABLE>
<S> <C>
ASSETS
- ----------------------------------------------------------------------
- --
Investments in securities, at value
(identified cost $290,638,746) (Note 1) $304,544,678
- ----------------------------------------------------------------------
- --
Cash 433,127
- ----------------------------------------------------------------------
- --
Interest receivable 6,108,992
- ----------------------------------------------------------------------
- --
Receivable for shares of the fund sold 639,937
- ----------------------------------------------------------------------
- --
Receivable for securities sold 11,593,117
- ----------------------------------------------------------------------
- --
Unamortized organization expenses (Note 1) 8,752
- ----------------------------------------------------------------------
- --
TOTAL ASSETS 323,328,603
LIABILITIES
- ----------------------------------------------------------------------
- --
Distributions payable to shareholders 417,092
- ----------------------------------------------------------------------
- --
Payable for securities purchased 5,988,106
- ----------------------------------------------------------------------
- --
Payable for shares of the fund repurchased 532,878
- ----------------------------------------------------------------------
- --
Payable for compensation of Manager (Note 2) 307,582
- ----------------------------------------------------------------------
- --
Payable for compensation of Trustees (Note 2) 212
- ----------------------------------------------------------------------
- --
Payable for administrative services (Note 2) 1,562
- ----------------------------------------------------------------------
- --
Payable for distribution fees (Note 2) 120,979
- ----------------------------------------------------------------------
- --
Other accrued expenses 69,133
- ----------------------------------------------------------------------
- --
TOTAL LIABILITIES 7,437,544
- ----------------------------------------------------------------------
- --
NET ASSETS $315,891,059
- ----------------------------------------------------------------------
- --
REPRESENTED BY
- ----------------------------------------------------------------------
- --
Paid-in capital (Notes 1 and 4) $310,995,854
- ----------------------------------------------------------------------
- --
Distributions in excess of net investment income (Note 1) (365,028)
- ----------------------------------------------------------------------
- --
Accumulated net realized loss on investment transactions,
futures contracts and written options (Note 1) (8,645,699)
- ----------------------------------------------------------------------
- --
Net unrealized appreciation of investments 13,905,932
- ----------------------------------------------------------------------
- --
Total -- Representing net assets applicable
to capital shares outstanding $315,891,059
- ----------------------------------------------------------------------
- --
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- ----------------------------------------------------------------------
- --
Net asset value and redemption price of class A shares
($271,309,433 divided by 29,753,721 shares) $9.12
- ----------------------------------------------------------------------
- --
Offering price per class A share (100/95.25 of $9.12)* $9.57
- ----------------------------------------------------------------------
- --
Net asset value and offering price of class B shares
($44,580,595 divided by 4,890,302)+ $9.12
- ----------------------------------------------------------------------
- --
Net asset value and redemption price of class M shares
($1,031 divided by 113 shares) $9.12
- ----------------------------------------------------------------------
- --
Offering price per class M share (100/96.75 of $9.12)** $9.43
- ----------------------------------------------------------------------
- --
<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.
** On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales the offering price is reduced.
+ Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
Eleven months ended May 31, 1995*
<TABLE>
<S> <C>
TAX EXEMPT INTEREST INCOME $18,579,265
- ----------------------------------------------------------------------
- --
EXPENSES:
- ----------------------------------------------------------------------
- --
Compensation of Manager (Note 2) 1,686,928
- ----------------------------------------------------------------------
- --
Investor servicing and custodian fees (Note 2) 127,059
- ----------------------------------------------------------------------
- --
Compensation of Trustees (Note 2) 9,922
- ----------------------------------------------------------------------
- --
Reports to shareholders 51,248
- ----------------------------------------------------------------------
- --
Postage 3,202
- ----------------------------------------------------------------------
- --
Auditing 25,405
- ----------------------------------------------------------------------
- --
Legal 17,728
- ----------------------------------------------------------------------
- --
Administrative services (Note 2) 8,188
- ----------------------------------------------------------------------
- --
Registration fees 9,571
- ----------------------------------------------------------------------
- --
Amortization of organization expenses (Note 1) 23,555
- ----------------------------------------------------------------------
- --
Distribution fees -- class A (Note 2) 488,799
- ----------------------------------------------------------------------
- --
Distribution fees -- class B (Note 2) 312,328
- ----------------------------------------------------------------------
- --
Other 12,425
- ----------------------------------------------------------------------
- --
TOTAL EXPENSES 2,776,358
- ----------------------------------------------------------------------
- --
NET INVESTMENT INCOME 15,802,907
- ----------------------------------------------------------------------
- --
Net realized loss on investments (Notes 1 and 3) (4,371,432)
- ----------------------------------------------------------------------
- --
Net realized loss on written options (Notes 1 and 3) (202,838)
- ----------------------------------------------------------------------
- --
Net realized loss on futures contracts (Note 1) (834,580)
- ----------------------------------------------------------------------
- --
Net unrealized appreciation of investments and
futures contracts during the period 17,688,731
- ----------------------------------------------------------------------
- --
NET GAIN ON INVESTMENTS 12,279,881
- ----------------------------------------------------------------------
- --
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $28,082,788
- ----------------------------------------------------------------------
- --
<FN>
* The fiscal year end has advanced from June 30 to May 31.
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
<S> <C> <C>
ELEVEN MONTHS
ENDED YEAR ENDED
MAY 31 JUNE 30
----------------- ---------------
1995* 1994
- ----------------------------------------------------------------------
- --
INCREASE IN NET ASSETS
- ----------------------------------------------------------------------
- --
Operations:
- ----------------------------------------------------------------------
- --
Net investment income $15,802,907 $17,034,968
- ----------------------------------------------------------------------
- --
Net realized loss on investments,
written options and futures contracts (5,408,850) (2,950,688)
- ----------------------------------------------------------------------
- --
Net unrealized appreciation
(depreciation) of investments and
futures contracts 17,688,731 (20,873,863)
- ----------------------------------------------------------------------
- --
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS 28,082,788 (6,789,583)
- ----------------------------------------------------------------------
- --
Distributions to shareholders
- ----------------------------------------------------------------------
- --
From net investment income:
- ----------------------------------------------------------------------
- --
Class A (13,660,959) (15,593,873)
- ----------------------------------------------------------------------
- --
Class B (1,811,006) (1,398,882)
- ----------------------------------------------------------------------
- --
In excess of net investment income:
- ----------------------------------------------------------------------
- --
Class A (322,301) --
- ----------------------------------------------------------------------
- --
Class B (42,727) --
- ----------------------------------------------------------------------
- --
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 (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS (NOTE 4) (9,529,703) 44,663,932
- ----------------------------------------------------------------------
- --
TOTAL INCREASE IN NET ASSETS 2,716,092 17,254,711
Net assets
- ----------------------------------------------------------------------
- --
Beginning of period 313,174,967 295,920,256
- ----------------------------------------------------------------------
- --
END OF PERIOD (including distribution
in excess of net investment income and
undistributed net investment income
of $365,028 and $56,157, respectively)$315,891,059 $313,174,967
- ----------------------------------------------------------------------
- --
<FN>
* The fiscal year end has advanced from June 30 to May 31.
</TABLE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
FOR THE PERIOD FOR THE
MAY 1, 1995 ELEVEN JANUARY 4, 1993
(COMMENCEMENT MONTHS YEAR (COMMENCEMENT
OF OPERATIONS) TO ENDED ENDED OF OPERATIONS) TO
MAY 31 MAY 31 JUNE 30 JUNE 30
----------------- --------- --------- -----------------
1995(+) 1995* 1994 1993
- ----------------------------------------------------------------------
- --
Class M Class B
- ----------------------------------------------------------------------
- --
NET ASSET VALUE,
BEGINNING OF PERIOD $8.87 $8.76 $9.53 $9.17
- ----------------------------------------------------------------------
- --
INVESTMENT OPERATIONS
Net investment income .04 .40 .44 .21
Net realized and
unrealized gain (loss)
on investments .25 .36 (.66) .36
- ----------------------------------------------------------------------
- --
TOTAL FROM INVESTMENT
OPERATIONS .29 .76 (.22) .57
- ----------------------------------------------------------------------
- --
LESS DISTRIBUTIONS:
From net investment
income (.04) (.39) (.44) (.21)
- ----------------------------------------------------------------------
- --
In excess of net
investment income -- (.01) -- --
- ----------------------------------------------------------------------
- --
From net realized gain
on investments -- -- (.09) --
- ----------------------------------------------------------------------
- --
In excess of net realized
gain on investments -- -- (.02) --
- ----------------------------------------------------------------------
- --
TOTAL DISTRIBUTIONS (.04) (.40) (.55) (.21)
- ----------------------------------------------------------------------
- --
NET ASSET VALUE,
END OF PERIOD $9.12 $9.12 $8.76 $9.53
- ----------------------------------------------------------------------
- --
TOTAL INVESTMENT RETURN
AT NET ASSET
VALUE (%)(b) 3.28(c) 9.06(c) (2.55) 12.84(c)
- ----------------------------------------------------------------------
- --
NET ASSETS, END OF
PERIOD (in thousands) $1 $44,581 $36,930 $17,881
- ----------------------------------------------------------------------
- --
Ratio of expenses to
average net assets (%) .10(c) 1.42(c) 1.51 .78(c)
- ----------------------------------------------------------------------
- --
Ratio of net investment
income to average
net assets (%) .45(c) 4.62(c) 4.74 2.21(c)
- ----------------------------------------------------------------------
- --
Portfolio turnover (%) 61.46 61.46 64.83 106.69
- ----------------------------------------------------------------------
- --
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE><CAPTION>
<C> <C> <C> <C> <C>
For the
eleven
months
ended
May 31 Year ended June 30 August 24, 1990
(commencement
of operations) to
June 30
1995* 1994 1993 1992 1991
- ----------------------------------------------------------------------
- --
Class A
- ----------------------------------------------------------------------
- --
$8.77 $9.53 $9.08 $8.65 $8.50
---------------------------------------------------------------------
- ---
.46 .50 .56(a) .60(a) .52(a)
.35 (.65) .53 .45 .15
- ----------------------------------------------------------------------
- --
.81 (.15) 1.09 1.05 .67
- ----------------------------------------------------------------------
- --
(.45) (.50) (.56) (.60) (.52)
(.01) -- -- -- --
-- (.09) (.08) (.02) --
-- (.02) -- -- --
- ----------------------------------------------------------------------
- --
(.46) (.61) (.64) (.62) (.52)
- ----------------------------------------------------------------------
- --
$9.12 $8.77 $9.53 $9.08 $8.65
- ----------------------------------------------------------------------
- --
9.58(c) (1.79) 12.44 12.57 9.46(c)
- ----------------------------------------------------------------------
- --
$271,309 $276,245 $278,039 $195,963 $109,739
- ----------------------------------------------------------------------
- --
.83(c) .91 .77(a) .60(a) .41(a)(c)
- ----------------------------------------------------------------------
- --
5.24(c) 5.38 5.94(a) 6.73(a) 5.94(a)(c)
- ----------------------------------------------------------------------
- --
61.46 64.83 106.69 72.73 46.72(c)
- ----------------------------------------------------------------------
- --
<FN>
* The fiscal year end has advanced from June 30 to May 31.
+ Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the
period.
(a) Reflects a voluntary 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 years
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.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
May 31, 1995
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 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 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. 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. The fund
commenced its public offering of class M shares May 1, 1995, however,
there were no shares sold to non-affiliates as of May 31, 1995.
Expenses of the fund are borne pro-rata by the holders of each class
of shares. Each class, however, bears expenses unique to that class
(including the distribution fees applicable to such class), and votes
as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined
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
<PAGE>
gains or unrealized appreciation of securities held and excise tax on
income and capital gains.
At May 31, 1995 the fund had two capital loss carryovers of
approximately $218,093 and $3,149,303 which may be available to offset
future realized capital gains to the extent provided by regulations.
These amounts will expire on June 30, 2002 and May 31, 2003,
respectively.
D DISTRIBUTIONS TO SHAREHOLDERS Income dividends are declared daily
by the fund and are distributed monthly. Capital gains distributions,
if any, are recorded on the ex-dividend date and paid annually.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences
include the treatment of post-October losses, dividends payable, loss
deferrals and market discount.
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.
For the eleven months ended May 31, 1995, the fund reclassified
$387,099 to decrease undistributed net investment income, $34,737 to
increase accumulated net realized losses, and $421,836 to increase
paid-in capital.
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 OPTION ACCOUNTING PRINCIPLES The fund may, to the extent
consistent with its investment objectives and policies, seek to
increase its current returns by writing covered call and put options
on securities it owns or in which it may invest. When a fund writes a
call or put option, an amount equal to the premium received by the
fund is included in the fund's "Statement of assets and liabilities"
as an asset and an equivalent liability. The amount of the liability
is subsequently "marked-to- market" to reflect the current market
value of an option written. The current market value of an option is
the last sale price or, in the absence of a sale, the last offering
price. If an option expires on its stipulated expiration date, or if
the fund enters into a closing purchase transaction, the fund realizes
a gain (or loss if the cost of a closing purchase transaction exceeds
the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written call
option is exercised, the fund realizes a gain or loss from the sale of
the underlying security and the proceeds of the sale are increased by
the premium originally received. If a written put option is exercised,
the amount of the premium originally received reduces the cost of the
security that the fund purchases upon exercise of the option.
The risk in writing a call option is that the fund relinquishes the
opportunity to profit if the market price of the underlying security
increases and the option is exercised. In writing a put option, the
fund assumes the risk of incurring a loss if the market price of the
underlying security decreases and the option is exercised. In
addition, there is the risk the fund may not be able to enter into a
closing transaction because of an illiquid secondary market.
The fund may also, to the extent consistent with its investment
objectives and policies, buy put options to protect its portfolio
holdings
<PAGE>
in an underlying security against a decline in market value. The fund
may buy call options to hedge against an increase in the price of the
securities that the fund ultimately wants to buy. These funds may also
buy and sell combinations of put and call options on the same
underlying security to earn additional income. The premium paid by a
fund for the purchase of a put or call option is included in the
fund's "Statement of assets and liabilities" as an investment and is
subsequently "marked-to-market" to reflect the current market value of
the option. If an option the fund has purchased expires on the
stipulated expiration date, the fund realizes a loss in the amount of
the cost of the option. If the fund enters into a closing sale
transaction, the fund realizes a gain or loss, depending on whether
proceeds from the closing sale transaction are greater or less than
the cost of the option. If the fund exercises a call option, the cost
of securities acquired by exercising the call is increased by the
premium paid to buy the call. If the fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security and
the proceeds from such sale are decreased by the premium originally
paid. The risk associated with purchasing options is limited to the
premium originally paid.
G FUTURES The fund may purchase and sell financial futures contracts
to hedge against changes in the values of tax-exempt municipal
securities the fund owns or expects to purchase. A futures contract is
an agreement between two parties to buy or sell units of a particular
index or a certain amount of a U.S. government 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 futures contracts primarily
corresponds with the value of underlying instruments which may not
correspond to the change in value of the hedged instruments. In
addition, there is a risk that the fund may not be able to close out
its futures positions due to an illiquid secondary market.
H 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 over a five-year period based on current
and projected net asset levels.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund for the quarter. Such fee is based on the following annual
rates: 0.6% 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 the next $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.
<PAGE>
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 $780, 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 wholly owned 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 eleven months ended May 31, 1995 have been reduced
by credits allowed by PFTC.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred
by it in distributing shares of the fund. The Trustees have approved
payment by the fund at an annual rate of .20%, .85% and 0.50% of the
average net assets attributable to class A, class B and class M
shares, respectively.
For the eleven months ended May 31, 1995, Putnam Mutual Funds Corp.,
acting as the underwriter, received net commissions of $39,037 from
the sale of class A shares and $153,120 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
purchased as part of an investment of $1 million or more. For the
eleven months ended May 31, 1995, Putnam Mutual Funds Corp., acting as
the underwriter, received $19,781 on class A redemptions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the eleven months ended May 31, 1995, purchases and sales of
investment securities other than short-term municipal obligations
aggregated $180,918,117 and $187,661,698, respectively. Purchases and
sales of short-term municipal obligations aggregated $32,900,000 and
$34,900,000, respectively. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
The following is a summary of written options activity during the
eleven months ended May 31, 1995.
<TABLE><CAPTION>
<S> <C> <C>
CONTRACT PREMIUM
AMOUNT RECEIVED
- ----------------------------------------------------------------------
- --
CONTRACTS OUTSTANDING AT
BEGINNING OF PERIOD -- $ --
- ----------------------------------------------------------------------
- --
Options opened 27,200,014 527,962
- ----------------------------------------------------------------------
- --
Options closed (27,200,014) (527,962)
- ----------------------------------------------------------------------
- --
WRITTEN OPTIONS OUTSTANDING
AT END OF PERIOD -- $ --
- ----------------------------------------------------------------------
- --
</TABLE>
<PAGE>
NOTE 4
CAPITAL SHARES
At May 31, 1995, there was an unlimited number of shares of beneficial
interest authorized, divided into three classes, class A, class B and
class M capital stock. Class M shares became effective on May 1, 1995
and 113 shares were sold to Putnam Investments, Inc. for $1,003.
Transactions in capital shares were as follows:
<TABLE><CAPTION>
<S> <C> <C>
ELEVEN MONTHS ENDED MAY 31
- ----------------------------------------------------------------------
- --
1995
- ----------------------------------------------------------------------
- --
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------
- --
Shares sold 5,779,235 $49,373,332
Shares issued in connection with
reinvestment of distributions 687,442 5,977,266
- ----------------------------------------------------------------------
- --
6,466,677 55,350,598
- ----------------------------------------------------------------------
- --
Shares repurchased (8,212,455) (70,755,752)
- ----------------------------------------------------------------------
- --
NET DECREASE (1,745,778) $(15,405,154)
- ----------------------------------------------------------------------
- --
YEAR ENDED JUNE 30
- ----------------------------------------------------------------------
- --
1994
- ----------------------------------------------------------------------
- --
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------
- --
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
- ----------------------------------------------------------------------
- --
ELEVEN MONTHS ENDED MAY 31
- ----------------------------------------------------------------------
- --
1995
- ----------------------------------------------------------------------
- --
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------
- --
Shares sold 1,642,091 $14,208,252
Shares issued in connection with
reinvestment of distributions 82,121 714,840
- ----------------------------------------------------------------------
- --
1,724,212 14,923,092
- ----------------------------------------------------------------------
- --
Shares repurchased (1,047,931) (9,048,644)
- ----------------------------------------------------------------------
- --
NET INCREASE 676,281 $5,874,448
- ----------------------------------------------------------------------
- --
YEAR ENDED JUNE 30
- ----------------------------------------------------------------------
- --
1994
- ----------------------------------------------------------------------
- --
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------
- --
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>
- ----------------------------------------------------------------------
- --
FEDERAL TAX INFORMATION
The fund has designated all income dividends paid during the fiscal
year as exempt-interest dividends. Thus, 100% of these distributions
are exempt from federal income tax. The Form 1099 you will receive in
January 1996 will show you the tax status of capital gain
distributions, if any, paid to your account in calendar 1995.
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
James Erickson
Vice President
Richard Wyke
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam 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.
<PAGE>
PUTNAM INVESTMENTS
THE PUTNAM FUNDS
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
19000-037/365
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND
EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Italic typefaces is displayed in normal type.
(3) Boldface type is displayed in capital letters.
(4) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(5) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(6) Bullet points and similar graphic symbols are omitted.
(7) Page numbering is different.
