Putnam
Florida
Tax Exempt
Income Fund
SEMIANNUAL REPORT
November 30, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "Given the state's strong economy and prospects for continued stable
interest rates and low inflation, Florida municipalities may be less
hesitant than those of other states to undertake debt for new projects.
Even so, demand should remain high enough to absorb new issues as they
come to market -- and to buoy the market for existing issues."
-- Leslie Burke, manager
Putnam Florida Tax Exempt Income Fund
* "Munis from high-income-tax states such as California and Minnesota
sell at a premium, with lower yields than bonds from income-tax-free
states. Other locales to consider: New York and Florida, where the
supply is heavier -- and yields may be higher -- than in other states."
-- Business Week, December 16, 1996
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
18 Financial statements
28 Results of December 5, 1996, shareholder meeting
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
The first half of Putnam Florida Tax Exempt Income Fund's fiscal 1997
presented a significantly brighter municipal bond market environment
than that which had prevailed in the preceding months. As the fiscal
year's first half unfolded, the municipal bond market -- including the
market for Florida tax-exempt bonds -- began to develop a sense of
serenity, closing the semiannual period on November 30, 1996, in an
almost upbeat mood.
During the period, Leslie Burke was appointed your fund's manager.
Leslie joined Putnam in 1992 as a credit analyst in the Tax-Exempt Bond
Group. Before joining Putnam, she was with Fidelity Investments. She has
10 years of investment experience.
In the report that follows, Leslie discusses the events and strategies
that drove your fund's performance during the fiscal year's first half
and takes a look at prospects for the second half.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
January 15, 1997
Report from the Fund Manager
Leslie J. Burke
Putnam Florida Tax Exempt Income Fund began its 1997 fiscal year last
spring during a period of uncertainty in the municipal bond market. For
the first three months, virtually every new economic statistic triggered
waves of speculation about the direction of interest rates. In turn,
bond prices, prompted by investors' reactions, fluctuated broadly. By
autumn, however, the investment environment for bonds had improved, and
bond prices had begun to rise.
Because the fund had been well positioned to take advantage of the
rally, it reached the fiscal year's midpoint on November 30, 1996, with
total returns of 6.57%, 6.22%, and 6.29% for its class A, class B, and
class M shares, respectively, at net asset value. Returns were 1.56%,
1.22%, and 2.83%, respectively, at the maximum public offering price.
Full performance details for other time periods can be found on pages 9
and 10 of this report.
* SLOWING ECONOMY AND STRONG DEMAND SPARK MUNICIPAL BOND RALLY
After a difficult and volatile year, the municipal bond market shifted
gears into a long-awaited rally in the fall. The U.S. economy's fast-
paced growth during calendar 1996's third quarter gave way to a
projection of significantly slower growth for the final three months of
the year. Economists expect this slowdown to continue into early l997.
This cooling of economic growth soothed investors' concerns over the
prospect of rising interest rates and helped lead fixed-income
investments, including municipal bonds, to higher price levels.
Strong demand also helped spur the revived bond rally. While large
numbers of individual investors in the United States focused their
attention on the unprecedented gains of the stock market, foreign
investors purchased approximately $175 billion in U.S. bonds -- an
amount that exceeds the federal budget deficit. Although foreign
investors, ineligible for the tax benefits of municipal bonds, invested
primarily in U.S. Treasury securities, their interest sparked greater
demand and, consequently, rising prices in the municipal market as well.
In terms of supply, the market for municipal securities was relatively
tight through the fiscal year's opening months. Traditionally, June and
July are months in which many bonds mature or reach their call dates and
September's municipal bond issuance was the lowest in more than a year.
Autumn's lower interest rates, however, made bond issuance more
attractive for cash-strapped municipalities, and the supply of new bonds
rose.
* MORE DEFENSIVE APPROACH SEEKS TO REDUCE PORTFOLIO VOLATILITY
Throughout the semiannual period, we maintained a strategy first put
into place toward the end of fiscal l996, taking several steps to reduce
the volatility of the portfolio. This more defensive strategy is
designed to preserve the fund's net asset value, reduce its sensitivity
to interest-rate changes, and enable it to continue providing
shareholders with a relatively high level of tax-free income. To achieve
these goals, we focused both on shortening the portfolio's overall
duration and improving its call protection.
Duration is a mathematical formula that indicates how much bond prices
are likely to move up or down with each percentage-point shift in
interest rates. Like maturity, duration is measured in years. Shorter
durations generally go hand in hand with lower levels of volatility.
To shorten the portfolio's duration, we redeployed assets to concentrate
fund holdings in intermediate-term securities with maturities of 6 to 10
years rather than splitting holdings between short- and long-term
securities. Balancing longer-term holdings with shorter-term bonds is
another way to achieve a shorter duration, but our assessment of current
market conditions led us to use intermediate securities.
[GRAPHIC HORIZONTAL BAR CHART OMITTED: TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Health care 21.1%
Utilities 17.1%
Transportation 13.6%
Education 12.8%
Housing 8.3%
Footnote reads:
* Based on net assets as of 11/30/96. Sector allocations will vary over
time.
To protect your fund from early bond calls, we selectively replaced a
portion of the portfolio's lower-coupon bonds that were approaching
their call dates with bonds whose call dates were farther away and with
higher-coupon noncallable bonds. We believe this action should provide
your fund with the dual benefits of reducing call risk and enhancing the
income stream.
* DESPITE SOME ROUGH AREAS, FLORIDA'S ECONOMY REMAINS SOLID
Even though Florida is currently coming to terms with a slight budget
shortfall, the state's economy is in relatively good shape. In fact, it
is currently part of the country's strongest region -- the Southeast.
Florida continues to benefit from population growth and from the
relocation of some corporations from other areas of the country.
Economically, Miami is going through a difficult period. Because of a
$69 million budget deficit, the city's general obligation bonds were
recently downgraded to below investment-grade status. Although your fund
does not own any Miami general obligation bonds, when such a situation
occurs, we review as a matter of course all of the portfolio's holdings
to make sure that other bonds in the portfolio will not be affected. In
analyzing your fund's portfolio, we have determined that none of its
current holdings are dependent on Miami's financial health. Of course,
we will be closely monitoring the situation in Miami to see what effect,
if any, its financial difficulties have on the rest of the state.
* HOSPITAL BONDS LEAD LIST OF RECURRING THEMES
Health care has been a consistent theme in the portfolio and a sector
that has made a strong contribution to your fund's performance; many
Florida hospitals are benefiting from the changing health-care
environment. While nonprofit and for-profit hospitals exist in the
state, Florida has evolved into a primarily for-profit health-care
market, a factor that has particular implications for our security-
selection process.
[GRAPHIC PIE CHART OMITTED: PORTFOLIO QUALITY OVERVIEW]
PORTFOLIO QUALITY OVERVIEW*
Ba-- 1.5%
Baa-- 16.0%
A-- 9.7%
Aa-- 12.7%
VMIG1-- 2.6%
B-- 2.1%
Aaa-- 55.4%
Footnote reads:
* As a percentage of market value as of 11/30/96. A bond rated Baa or
higher is considered investment grade. All ratings reflect Moody's
descriptions, unless noted otherwise; percentages may include unrated
bonds considered by Putnam Management to be of comparable quality.
Ratings will vary over time.
When we select a hospital bond for the portfolio, we evaluate its
individual merits -- its credit quality, funding sources, and long-term
prospects. However, we are also aware that many of the attractive
nonprofit hospitals in the state may be appealing to profit-oriented
institutions as future acquisition candidates. When a nonprofit hospital
is acquired by a for-profit facility, the quality of the nonprofit's
bonds is usually enhanced. More often than not, this upgraded quality is
reflected in higher prices for the bonds.
In examining other areas for investment opportunities, we continue to
favor the cogeneration and resource-recovery sectors -- areas involved
in recycling and converting trash to fuel. While both are relatively
young industries, we believe the trend toward recycling will make them
more valuable in the future.
We have found infrastructure financing to be another important
investment area. One success story is the fund's investment in the new
Mid-Bay Bridge construction project. The fund has a meaningful position
in the project's bonds, which were issued about three years ago. Not
only did the new bridge open ahead of schedule, its financial condition
has exceeded all projections. In addition, the quality and sturdiness of
the bridge's construction have now been tested by two severe hurricanes
which it withstood with no resulting damage. The success of the Mid-Bay
Bridge construction project has contributed to the appreciation in value
of its bonds.
* CONSTRUCTIVE, YET CAUTIOUS, OUTLOOK PREVAILS
Going forward, we expect economic growth to remain at a moderate level
and interest rates to remain stable or move only slightly higher. We
also expect inflation to remain relatively low.
As your fund enters the second half of fiscal l997, we will continue to
scrutinize existing and new municipal bond issues to find securities
that will contribute to your fund's stream of tax-exempt income. In a
post-rally environment, however, we must remain mindful of an inevitable
tax consequence -- taxable capital gains from the sales of portfolio
holdings that have risen in value. In keeping with the fund's objective
of providing tax-free income, we plan to shift portfolio holdings only
when the potential benefits will substantially outweigh the effects of
any taxable distributions.
Footnote reads:
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 11/30/96, there is no guarantee the fund
will continue to hold these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam Florida Tax Exempt Income Fund is designed for
investors seeking a high level of current income free from federal tax
consistent with preservation of capital by investing in securities
exempt from the Florida intangibles tax.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions in the fund. 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.
TOTAL RETURN FOR PERIODS ENDED 11/30/96
Class A Class B Class M
(inception date) (8/24/90) (1/4/93) (5/1/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
6 months 6.57% 1.56% 6.22% 1.22% 6.29% 2.83%
- ------------------------------------------------------------------------
1 year 4.81 -0.13 4.12 -0.85 4.49 1.12
- ------------------------------------------------------------------------
5 years 41.84 35.13 -- -- -- --
Annual average 7.24 6.21 -- -- -- --
- ------------------------------------------------------------------------
Life of class 61.62 54.00 22.82 19.82 12.80 9.12
Annual average 7.96 7.13 5.40 4.73 7.87 5.64
- ------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 11/30/96
Lehman Bros. Consumer
Municipal Bond Index Price Index
- ------------------------------------------------------------------------
6 months 6.50% 1.28%
- ------------------------------------------------------------------------
1 year 5.89 3.26
- ------------------------------------------------------------------------
5 years 45.83 15.09
Annual average 7.83 2.85
- ------------------------------------------------------------------------
Life of class A 67.10 20.52
Annual average 8.56 3.02
- ------------------------------------------------------------------------
Life of class B 31.20 11.77
Annual average 7.18 2.89
- ------------------------------------------------------------------------
Life of class M 14.92 4.41
Annual average 9.15 2.75
- ------------------------------------------------------------------------
Footnote reads:
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions.
Investment returns and principal value will fluctuate so that an
investor's shares, when sold, may be worth more or less than their
original cost. POP assumes 4.75% maximum sales charge for class A shares
and 3.25% for class M shares. CDSC for class B shares assumes the
applicable sales charge, with the maximum being 5%.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 11/30/96
Class A Class B Class M
- ------------------------------------------------------------------------
Distributions (number) 6 6 6
- ------------------------------------------------------------------------
Income $0.237408 $0.207777 $0.223408
- ------------------------------------------------------------------------
Capital gains1 -- -- --
- ------------------------------------------------------------------------
Total $0.237408 $0.207777 $0.223408
- ------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------
5/31/96 $8.91 $9.35 $8.91 $8.91 $9.21
- ------------------------------------------------------------------------
11/30/96 9.25 9.71 9.25 9.24 9.55
- ------------------------------------------------------------------------
Current return (end of period)
- ------------------------------------------------------------------------
Current dividend rate2 5.17% 4.92% 4.52% 4.87% 4.71%
- ------------------------------------------------------------------------
Taxable equivalent3 8.56 8.15 7.48 8.06 7.80
- ------------------------------------------------------------------------
Current 30-day SEC yield4 4.88 4.64 4.23 4.52 4.37
- ------------------------------------------------------------------------
Taxable equivalent3 8.08 7.68 7.00 7.48 7.24
- ------------------------------------------------------------------------
1 Capital gains, if any, are taxable for federal and, in most cases,
state tax purposes. For some investors, investment income may also be
subject to the federal alternative minimum tax. Investment income may be
subject to state and local taxes.
2 Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
3 Assumes maximum 39.6% combined federal and state tax rate. Results for
investors subject to lower tax rates would not be as advantageous.
4 Based only on investment income, calculated using SEC guidelines.
TOTAL RETURN FOR PERIODS ENDED 12/31/96
(most recent calendar quarter)
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
6 months 4.70% -0.30% 4.38% -0.63% 4.43% 1.06%
- ------------------------------------------------------------------------
1 year 2.78 -2.12 2.12 -2.76 2.36 -1.01
- ------------------------------------------------------------------------
5 years 37.94 31.36 -- -- -- --
Annual average 6.64 5.61 -- -- -- --
- ------------------------------------------------------------------------
Life of class 60.54 52.98 21.96 18.96 12.03 8.37
Annual average 7.73 6.91 5.10 4.45 7.04 4.93
- ------------------------------------------------------------------------
Footnote reads:
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns
and principal value will fluctuate so that an investor's shares, when
sold, may be worth more or less than their original cost.
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 assumes reinvestment of all
distributions and interest payments and does not take in account
brokerage fees or taxes. Securities in the fund do not match those in
the index and performance of the fund will differ. It is not possible to
invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
WELCOME TO
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VISIT PUTNAM'S NEW SITE ON THE WORLD WIDE WEB TO FIND OUT:
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New features will be added to the site on an ongoing basis. So, visit us
at http://www.putnaminv.com -- often!
<TABLE>
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Portfolio of investments owned
November 30, 1996 (Unaudited)
Key to Abbreviations
AMBAC -- AMBAC Indemnity Corporation
CGIC -- Capital Guaranty Insurance Corporation
CLI Insd. -- Connie Lee Insurance Insured
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Collateralized
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
<S> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (98.1%)*
PRINCIPAL AMOUNT RATINGS** VALUE
California (0.8%)
- ------------------------------------------------------------------------------------------------------------
$2,250,000 Northern CA Transmission Rev. Bonds (Oregon
Transmission), Ser. A, MBIA, 6 1/2s, 5/1/16 Aaa $2,455,313
Colorado (0.9%)
- ------------------------------------------------------------------------------------------------------------
2,645,000 Denver, City & Cnty. Arpt. Rev. Bonds, Ser. B,
7 1/2s, 11/15/25 Baa 2,757,545
Florida (82.3%)
- ------------------------------------------------------------------------------------------------------------
Brevard Cnty., Hlth. Fac. Fin. Auth. Rev. Bonds
(Courtenay Springs Village)
2,000,000 7 3/4s, 11/15/17 BB/P 2,130,000
2,345,000 7 1/2s, 11/15/09 BB/P 2,473,975
Broward Cnty., Edl. Fac. Rev. Bonds
2,500,000 (Nova U. Dorm), Ser. A, 7 1/2s, 4/1/17 Aaa 2,850,000
605,000 (Nova U. Dorm), Ser. A, 7 1/4s, 4/1/01 Aaa 673,063
2,500,000 (Nova S.E. U.), CLI Insd. 6s, 4/1/10 AAA 2,615,625
1,000,000 Broward Cnty., Hlth. Fac. Auth. Rev. Bonds
(Broward Cnty. Nursing Home), 7 1/2s, 8/15/20 Aa 1,090,000
Broward Cnty., Resource Recvy. Rev. Bonds
6,585,000 (SES Broward Cnty. LP South), 7.95s, 12/1/08 A 7,284,656
1,290,000 (Waste-Energy LP North), 7.95s, 12/1/08 A 1,427,063
1,400,000 Clay Cnty., Multi-Fam. Hsg. Fin. Auth. Rev. Bonds
(Oak Forest), Ser. A, GNMA Coll., 7.4s, 12/1/25 Aaa 1,485,750
1,875,000 Clay Cnty., Single Fam. Hsg. Fin. Auth. Rev. Bonds,
Ser. A, GNMA Coll., 7.45s, 9/1/23 Aaa 1,973,438
1,500,000 Coral Springs Impt. Dist. Wtr. & Swr. Rev. Bonds,
MBIA, 8 1/4s, 6/1/14 Aaa 1,623,750
2,450,000 Correctional Privatization Cmnty. COP
(South Bay Correctional Fac.), MBIA, 5s, 8/1/17 Aaa 2,315,250
2,500,000 Dade Cnty., Seaport G.O. Bonds, AMBAC, 6 1/4s,
10/1/21# Aaa 2,731,250
2,800,000 Dade Cnty., Hlth & Hosp. Fac. Auth. VRDN
(Miami Children's Hospital), 4.2s, 9/1/20 VMIG1 2,800,000
1,690,000 Dade Cnty., Single Fam. Hsg. Fin. Auth. Mtge.
Rev. Bonds, Ser. B, GNMA Coll., 8 3/4s, 7/1/17 AA 1,738,131
2,000,000 Escambia Cnty., Poll. Control Rev. Bonds
(Champion Intl. Corp.), 6.9s, 8/1/22 Baa 2,127,500
2,335,000 Escambia Cnty., Single Fam. Hsg. Fin. Auth. Mtge.
Rev. Bonds (Multi-Cnty. Program), Ser. A,
GNMA Coll., 5s, 10/1/24 AAA 2,364,188
3,750,000 First Govt. Fin. Comm. Rev. Bonds, AMBAC, 6s,
7/1/09 Aaa 4,096,875
FL Hsg. Fin. Agcy. Rev. Bonds (Home Ownership
Dev. Program)
575,000 Ser. G-1, GNMA Coll., 7.9s, 3/1/22 Aaa 610,219
4,530,000 Ser. B-1, GNMA Coll., 7.1s, 1/1/17# Aaa 4,677,452
10,000,000 FL State Board of Ed. G.O. Bonds, 6.4s, 6/1/19 Aa 10,737,500
4,500,000 FL State Board of Ed. Rev. Bonds (Cap. Outlay
Pub. Ed.), Ser. D, 5 1/8s, 6/1/18 Aa 4,286,250
7,500,000 FL State Gen. Svcs. Rev. Bonds (Preservation 200),
Ser. A, AMBAC, 5 3/4s, 7/1/10 Aaa 7,846,875
FL State Mid-Bay Bridge Auth. Rev. Bonds, Ser. A
1,500,000 8s, 10/1/06 BBB/P 1,666,875
2,180,000 7 1/2s, 10/1/17 BBB/P 2,378,925
3,540,000 6.1s, 10/1/22 BBB/P 3,606,375
2,000,000 FL State Muni. Pwr. Agcy. IFB, AMBAC, 8.602s,
10/1/20 (acquired 7/10/92, cost $2,101,200)[DBL. DAGGER] Aaa 2,495,000
5,000,000 FL State Tpk. Auth. Rev. Bonds, Ser. A, FGIC,
5s, 7/1/19 Aaa 4,737,500
Gainesville, Util. Rev. Bonds
5,000,000 Ser. B, 5 1/2s, 10/1/13 Aa 5,056,250
2,000,000 Ser. A, 5s, 10/1/16 Aa 1,910,000
1,500,000 Ser. A, 5s, 10/1/15 Aa 1,434,375
2,500,000 Gulf Breeze, Local Govt. Rev. Bonds, Ser. E, FGIC,
7 3/4s, 12/1/15 AAA 2,790,625
Hillsborough Cnty., Indl. Dev. Auth. Poll. Control
Rev. Bonds (Tampa Elec. Co.)
2,500,000 Ser. 91, 7 7/8s, 8/1/21 Aa 2,893,750
3,645,000 6 1/4s, 12/1/34 Aa 3,904,706
2,400,000 Hillsborough Cnty., Util. Rev. Bonds, Ser. A, FSA,
6 1/2s, 8/1/16 Aaa 2,577,000
Jacksonville, Hlth. Fac. Auth. Indl. Dev. Rev. Bonds
(Cypress Village)
1,350,000 7s, 12/1/22 Baa 1,427,625
3,650,000 7s, 12/1/14 Baa 3,859,875
960,000 Jacksonville, Hlth. Fac. Auth. Rev. Bonds
(Mental Hlth. Ctr.), 9 1/8s, 10/15/19 B/P 993,600
Lake Cnty., Res. Recvy. Ind. Dev. Rev. Bonds
3,000,000 (Recvy. Group), Ser. A, 5.85s, 10/1/09 Baa 3,000,000
3,790,000 Ser. 93A, 5.95s, 10/1/13 Baa 3,790,000
Largo, Sun Coast Hlth. Syst. Rev. Bonds
2,020,000 6.3s, 3/1/20 BBB 1,956,875
1,130,000 6.2s, 3/1/13 BBB 1,100,338
4,000,000 Lee Cnty., Board of Directors Hosp. IFB, MBIA,
9.57s, 4/1/20 Aaa 4,625,000
3,625,000 Lee Cnty., COP (Master Lease), MBIA, 5s, 10/1/10 Aaa 3,525,313
5,000,000 Lee Cnty., Board of Directors Hosp. IFB
(Lee Memorial Hosp.), MBIA, 8.711s, 3/26/20 Aaa 5,593,750
Lee Cnty., School Board COP, Ser. A
1,500,000 FSA, 5s, 8/1/10 Aaa 1,458,750
1,500,000 FSA, 5s, 8/1/09 Aaa 1,475,625
Leesburg, Hosp. Rev. Bonds (Leesburg Regl. Med. Ctr.)
1,000,000 Ser. 91-A, 7 1/2s, 7/1/21 Aaa 1,165,000
2,065,000 6 1/8s, 7/1/18 Baa 2,095,975
1,750,000 Ser. B, 5.7s, 7/1/18 Baa 1,710,625
2,500,000 Martin Cnty., Indl. Dev. Auth. Rev. Bonds (Indiantown
Cogeneration), Ser. B, 8.05s, 12/15/25 Baa 2,903,125
2,000,000 Miami Beach, Wtr. & Swr. Rev. Bonds, FSA,
5 3/8s, 9/1/15 Aaa 2,002,500
4,000,000 Orange Cnty., Hlth. Fac. Auth. IFB, MBIA, 10.066s,
10/1/14 (acquired 4/19/95, cost $5,273,120) [DBL. DAGGER] B/P 5,540,000
10,000 Orange Cnty., Hlth. Fac. Auth. Rev. Bonds
(Pooled Hosp. Loan), Ser. A, FGIC, 7 7/8s, 12/1/25 Aaa 10,403
1,550,000 Orange Cnty., Hsg. Fin. Auth. Mtge. Rev. Bonds,
Ser. E, GNMA Coll., 7.9s, 10/1/22 Aaa 1,664,313
4,000,000 Orange Cnty., Hsg. Fin. Auth. VRDN (Sundown
Assoc. II), Ser. B, 3.6s, 6/1/04 VMIG1 4,000,000
1,996,000 Osceola Cnty., Indl. Dev. Auth. Rev. Bonds (Cmnty.
Provider Pooled Loan Program), Ser. A, FSA,
7 3/4s, 7/1/10 Aaa 2,128,235
2,000,000 Palm Beach Cnty., Arpt. Syst. Rev. Bonds, MBIA,
7 3/4s, 10/1/10 Aaa 2,312,500
7,000,000 Palm Beach Cnty., School Board COP, Ser. A,
AMBAC, 6 3/8s, 8/1/15 Aaa 7,533,750
Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds
(JFK Med. Ctr. Inc.)
1,700,000 8 7/8s, 12/1/18 AAA/P 1,889,125
3,975,000 Prerefunded, 8 7/8s, 12/1/18 AAA/P 4,422,188
4,000,000 5 3/4s, 12/1/14 Aaa 4,355,000
215,000 Palm Beach Cnty., Single Fam. Hsg. Fin. Auth. Mtge.
Rev. Bonds, GNMA Coll., 7.2s, 10/1/24 Aaa 229,244
5,000,000 Pinellas Cnty., Poll. Control Rev. Bonds
(FL Pwr. Corp.), 7.2s, 12/1/14 Aaa 5,500,000
2,000,000 Polk Cnty., School Board COP, FSA, 4 7/8s, 1/1/18 Aaa 1,855,000
Port Everglades, Auth. Port. Impt. Rev. Bonds
5,000,000 (FL Port Impt.), 7 1/8s, 11/1/16 Aaa 5,943,750
5,000,000 Ser. A, 5s, 9/1/16 BBB 4,425,000
8,000,000 Reedy Creek, Impt. Dist. Rev. Bonds, Ser. C,
AMBAC, 4 3/4s, 6/1/15 Aaa 7,420,000
2,935,000 Sanibel, Swr. Util. Rev. Bonds, 7 1/2s, 8/1/21 AAA/P 3,367,913
2,390,000 Santa Rosa Cnty., Hlth. Fac. Auth. Rev. Bonds
(Gulf Breeze Hosp. Inc.), Ser. A, 6.2s, 10/1/14 BBB 2,425,850
2,675,000 SCA Tax Exempt Trust Multi-Fam. Mtge. Rev.
Bonds, Ser. A-1, FSA, 7.05s, 1/1/30 AAA 2,832,150
2,250,000 South Broward, Hosp. Dist. IFB, Ser. C, AMBAC,
9.732s, 5/13/21 Aaa 2,753,438
7,800,000 St. Petersburg, Hlth. Fac. Auth. Rev. Bonds
(Allegany Hlth.), Ser. A, MBIA, 7s, 12/1/15 Aaa 8,687,250
4,860,000 Sumter Cnty., School Dist Rev. Bonds (Multi Dist.
Loan Program), CGIC, 7.15s, 11/1/15 Aaa 5,953,500
6,000,000 Tampa, Rev. Bonds (Allegheny Hlth. Syst. St. Joseph),
MBIA, 6 1/2s, 12/1/23 Aaa 6,675,000
7,100,000 Tampa, Occupational License Tax Rev. Bonds, Ser. B,
FGIC, 5 1/2s, 10/1/27 Aaa 7,037,875
Tampa, Util. Tax Rev. Bonds, AMBAC
1,950,000 zero %, 10/1/21 Aaa 485,063
2,625,000 zero %, 4/1/21 Aaa 672,656
5,800,000 zero %, 10/1/17 Aaa 1,827,000
1,800,000 Volusia Cnty., Hlth. Fac. Auth. Rev. Bonds
(Hosp.-Facs Memorial Hlth. Syst.), 8 1/8s, 6/1/08 BBB 2,052,000
--------------
254,092,370
Indiana (1.8%)
- ------------------------------------------------------------------------------------------------------------
5,000,000 Indianapolis Indl. Arpt. Auth. Special Fac. Rev. Bonds
(Federal Express Corp.), 7.1s, 1/15/17 BBB 5,437,500
Puerto Rico (10.6%)
- ------------------------------------------------------------------------------------------------------------
1,500,000 Cmnwlth of PR, Aqueduct & Swr. Auth. Rev. Bonds,
Ser. A, 7 7/8s, 7/1/17 AAA 1,623,750
3,000,000 Cmnwlth. of PR, G.O. Bonds, MBIA, 6.45s, 7/1/17 Aaa 3,255,000
1,000,000 Cmnwlth. of PR, Govt. Dev. Bank VRDN, 3.2s,
12/1/15 VMIG1 1,000,000
1,000,000 Cmnwlth. of PR, Impt. G.O. Bonds, 7.7s, 7/1/20 Aaa 1,136,250
Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds
1,000,000 Ser. T, 6 5/8s, 7/1/18 AAA 1,126,250
5,000,000 Ser. Y, 5 1/2s, 7/1/18 A 4,968,750
PR Elec. Pwr. Auth. Rev. Bonds
5,900,000 Ser. S, 7s, 7/1/07 A 6,770,250
4,750,000 6 3/8s, 7/1/24 A 5,023,125
3,800,000 PR Indl. Tourist Edl. Med. & Environ. Control Facs.
Fing. Auth. Hosp. Rev. Bonds (Auxilio Muto
Obligation Group), Ser. A, MBIA, 6 1/4s, 7/1/16 Aaa 4,085,000
4,000,000 PR Pub. Bldg. Auth. Ed. & Hlth. Fac. Rev. Bonds,
4.8s, (5.7s, 7/1/98), 7/1/16 ++ A 3,805,000
--------------
32,793,375
Texas (1.7%)
- ------------------------------------------------------------------------------------------------------------
5,000,000 Lower Neches Valley, Indl. Dev. Swr. Auth. Rev. Bonds
(Mobil Oil Refining Corp.), 6.4s, 3/1/30 Aa 5,225,000
- ------------------------------------------------------------------------------------------------------------
Total Municipal Bonds and Notes (cost $288,287,175)*** $302,761,103
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $308,711,574.
** The Moody's or Standard & Poor's ratings indicated are believed to be the most recent
ratings available at November 30, 1996 for the securities listed. Ratings are generally
ascribed to securities at the time of issuance. While the agencies may from time to time
revise such ratings, they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these securities at November 30, 1996.
Securities rated by Putnam are indicated by "/P" and are not publicly rated.
*** The aggregate identified cost on a tax basis is $288,304,211, resulting in gross unrealized
appreciation and depreciation of $15,114,504 and $657,612, respectively, or net unrealized
appreciation of $14,456,892.
[DBL. DAGGER] Restricted, excluding 144A securities, as to public resale. The total market value of
restricted securities held at November 30, 1996 was $8,035,000 or 2.6% of net assets.
# A portion of these securities were pledged and segregated with the custodian to cover margin
requirements for futures contracts at November 30, 1996.
The rates shown on VRDN and IFB are the current interest rates shown at November 30, 1996 which
are subject to change based on the terms of the security.
The fund had the following industry group concentrations greater than 10% at November 30, 1996
(as a percentage of net assets):
Health Care 21.1%
Utilities 17.1
Transportation 13.6
Education 12.8
The fund had the following insurance concentrations greater than 10% at November 30, 1996
(as a percentage of net assets):
MBIA 16.4%
AMBAC 12.3
<CAPTION>
- --------------------------------------------------------------------------------------------
Futures Contracts Outstanding at November 30, 1996
Aggregate Unrealized
Total Face Expiration Appreciation/
Value Value Date (Depreciation)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Municipal Bond Index
Futures (Long) $6,660,500 $6,608,000 Dec. 96 $52,500
U.S. Treasury Bond
Futures (Long) 5,810,938 5,546,875 Dec. 96 264,063
U.S. Treasury Bond
Futures (Short) 5,810,938 5,760,938 Dec. 96 (50,000)
- --------------------------------------------------------------------------------------------
$266,563
- --------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
November 30, 1996 (Unaudited)
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $288,287,175) (Note 1) $302,761,103
- ----------------------------------------------------------------------------------------------
Cash 900,092
- ----------------------------------------------------------------------------------------------
Interest and other receivables 6,046,432
- ----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 356,878
- ----------------------------------------------------------------------------------------------
Receivable for securities sold 370,000
- ----------------------------------------------------------------------------------------------
Receivable for variation margin 47,250
- ----------------------------------------------------------------------------------------------
Total assets 310,481,755
Liabilities
- ----------------------------------------------------------------------------------------------
Distributions payable to shareholders 470,026
- ----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 657,287
- ----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 440,853
- ----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 6,044
- ----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,211
- ----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 122,503
- ----------------------------------------------------------------------------------------------
Other accrued expenses 72,257
- ----------------------------------------------------------------------------------------------
Total liabilities 1,770,181
- ----------------------------------------------------------------------------------------------
Net assets $308,711,574
Represented by
- ----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $299,834,237
- ----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (283,207)
- ----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (5,579,947)
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 14,740,491
- ----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $308,711,574
Computation of net asset value and offering price
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($250,330,962 divided by 27,066,372 shares) $9.25
- ----------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $9.25)* $9.71
- ----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($57,122,179 divided by 6,178,159 shares)+ $9.25
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($1,258,433 divided by 136,173 shares) $9.24
- ----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $9.24)** $9.55
- ----------------------------------------------------------------------------------------------
* On single retail sales of less than $25,000. On sales of $25,000 or more and on group sales the
offering price is reduced.
+ Redemption price per share is equal to net asset value less any applicable contingent deferred
sales charge.
** On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the
offering price is reduced.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended November 30, 1996 (Unaudited)
<S> <C>
Tax exempt interest income: $9,291,354
- ----------------------------------------------------------------------------------------------
Expenses:
- ----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 907,838
- ----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 142,993
- ----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 11,968
- ----------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,609
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 247,222
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 229,047
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 2,724
- ----------------------------------------------------------------------------------------------
Reports to shareholders 19,823
- ----------------------------------------------------------------------------------------------
Registration fees 241
- ----------------------------------------------------------------------------------------------
Auditing 11,981
- ----------------------------------------------------------------------------------------------
Legal 14,654
- ----------------------------------------------------------------------------------------------
Postage 45,664
- ----------------------------------------------------------------------------------------------
Other 10,064
- ----------------------------------------------------------------------------------------------
Total expenses 1,647,828
- ----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (159,991)
- ----------------------------------------------------------------------------------------------
Net expenses 1,487,837
- ----------------------------------------------------------------------------------------------
Net investment income 7,803,517
- ----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (2,240,308)
- ----------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 1,406,822
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the period 12,053,216
- ----------------------------------------------------------------------------------------------
Net gain on investments 11,219,730
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $19,023,247
- ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
November 30 May 31
1996* 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- --------------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------------
Net investment income $7,803,517 $16,125,073
- --------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (833,486) 4,016,288
- --------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments 12,053,216 (11,218,657)
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 19,023,247 8,922,704
- --------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------------
From net investment income
Class A (6,532,450) (13,857,960)
- --------------------------------------------------------------------------------------------------------------
Class B (1,245,406) (2,288,453)
- --------------------------------------------------------------------------------------------------------------
Class M (27,059) (21,671)
- --------------------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (3,953,930) (7,198,507)
- --------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 7,264,402 (14,443,887)
- --------------------------------------------------------------------------------------------------------------
Net assets
- --------------------------------------------------------------------------------------------------------------
Beginning of period 301,447,172 315,891,059
- --------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess
of net investment income of $283,207 and
$281,809, respectively) $308,711,574 $301,447,172
- --------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the period
Six months May 1, 1995 Six months
ended (commencement ended
November 30 Year ended of operations) November 30
(Unaudited) May 31 to May 31 (Unaudited)
- -----------------------------------------------------------------------------------------------------
1996 1996 1995 1996
- -----------------------------------------------------------------------------------------------------
Class M
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $8.91 $9.12 $8.87 $8.91
- -----------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------
Net investment income .22 .46 .04(d) .21
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments .33 (.21) .25 .34
- -----------------------------------------------------------------------------------------------------
Total from investment operations .55 .25 .29 .55
- -----------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------
From net investment income (.22) (.46) (.04) (.21)
- -----------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- --
- -----------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- -- --
- -----------------------------------------------------------------------------------------------------
In excess of net realized gain
on investments -- -- -- --
- -----------------------------------------------------------------------------------------------------
Total distributions (.22) (.46) (.04) (.21)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $9.24 $8.91 $9.12 $9.25
- -----------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%)(b) 6.29* 2.76 3.28* 6.22*
- -----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,258 $986 $1 $57,122
- -----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .66* 1.23 .10* .82*
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (%) 2.46* 4.82 .45* 2.31*
- -----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 26.14* 81.99 61.46* 26.14*
- -----------------------------------------------------------------------------------------------------
See page 23 for Notes to Financial Statements.
<CAPTION>
Financial highlights (continued)
For the January 4, 1993
eleven months (commencement
Year ended ended Year ended of operations)
May 31 May 31 June 30 to June 30
- -----------------------------------------------------------------------------------------------------
1996 1995+ 1994 1993
- -----------------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $9.12 $8.76 $9.53 $9.17
- -----------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------
Net investment income .42 .40 .44 .21
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments (.21) .36 (.66) .36
- -----------------------------------------------------------------------------------------------------
Total from investment operations .21 .76 (.22) .57
- -----------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------
From net investment income (.42) (.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 (.42) (.40) (.55) (.21)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $8.91 $9.12 $8.76 $9.53
- -----------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%)(b) 2.37 9.06* (2.55) 12.84*
- -----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $52,541 $44,581 $36,930 $17,881
- -----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) 1.60 1.42* 1.51 .78*
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.64 4.62* 4.74 2.21*
- -----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 81.99 61.46* 64.83 106.69
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
Six months For the
ended eleven months
November 30 Year ended ended Year ended
(Unaudited) May 31 May 31 June 30
- -----------------------------------------------------------------------------------------------------
1996 1996 1995+ 1994
- -----------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $8.91 $9.12 $8.77 $9.53
- -----------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------
Net investment income .24 .48 .46 .50
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments .34 (.21) .35 (.65)
- -----------------------------------------------------------------------------------------------------
Total from investment operations .58 .27 .81 (.15)
- -----------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------
From net investment income (.24) (.48) (.45) (.50)
- -----------------------------------------------------------------------------------------------------
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 (.24) (.48) (.46) (.61)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $9.25 $8.91 $9.12 $8.77
- -----------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%)(b) 6.57* 3.04 9.58* (1.79)
- -----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $250,331 $247,920 $271,309 $276,245
- -----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) .48* .95 .83* .91
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.64* 5.31 5.24* 5.38
- -----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 26.14* 81.99 61.46* 64.83
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
Year ended
June 30
- -----------------------------------------------------------------------
1993 1992
- -----------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $9.08 $8.65
- -----------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------
Net investment income .56(a) .60(a)
- -----------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments .53 .45
- -----------------------------------------------------------------------
Total from investment operations 1.09 1.05
- -----------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------
From net investment income (.56) (.60)
- -----------------------------------------------------------------------
In excess of net investment income -- --
- -----------------------------------------------------------------------
From net realized gain
on investments (.08) (.02)
- -----------------------------------------------------------------------
In excess of net realized gain
on investments -- --
- -----------------------------------------------------------------------
Total distributions (.64) (.62)
- -----------------------------------------------------------------------
Net asset value, end of period $9.53 $9.08
- -----------------------------------------------------------------------
Total investment return at
net asset value (%)(b) 12.44 12.57
- -----------------------------------------------------------------------
Net assets, end of period
(in thousands) $278,039 $195,963
- -----------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) .77(a) .60(a)
- -----------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.94(a) 6.73(a)
- -----------------------------------------------------------------------
Portfolio turnover (%) 106.69 72.73
- -----------------------------------------------------------------------
* Not annualized.
+ The fiscal year advanced from June 30 to May 31.
(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 year
ended June 30, 1992 reflects a reduction of $0.02 per share. 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) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter, includes
amounts paid through expense offset arrangements. Prior period ratios exclude these amounts. (Note 2).
(d) Per share net investment income has been determined on the basis of the weighted average number of
shares outstanding during the period.
</TABLE>
Notes to financial statements
November 30, 1996 (Unaudited)
Note 1
Significant accounting policies
The fund is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management investment company.
The fund seeks as high a level of current income exempt from federal
income tax as Putnam Investment Management ("Putnam Management"), the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc.,
believes is consistent with preservation of capital by investing
primarily in a portfolio of 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,
which convert to class A shares after approximately eight years, do not
pay a front-end sales charge, but pay a higher ongoing distribution fee
than class A shares, and are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front-end sales charge of 3.25% and pay
an ongoing distribution fee that is lower than class B shares and higher
than class A shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
A) Security valuation Tax exempt bonds and notes are stated on the basis
of valuations provided by a pricing service, approved by the Trustees,
which uses information with respect to transactions in bonds, quotations
from bond dealers, market transactions in comparable securities and
various relationships between securities in determining value. 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) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
D) 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 on securities held nor for excise tax on income and capital
gains.
At May 31, 1996, the fund had a capital loss carryover of approximately
$4,236,000 available to offset future capital gains, if any. The amount
of the carryover and the expiration dates are:
Loss Carryover Expiration
- ------------------------------------------
$ 218,000 May 31, 2002
3,111,000 May 31, 2003
907,000 May 31, 2004
E) Distributions to shareholders Income dividends are recorded daily by
the fund and are distributed monthly. Capital gain distributions if any,
are recorded on the ex-dividend date and paid annually. The amount and
character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
F) Amortization of bond premium and discount Any premium resulting from
the purchase of securities in excess of maturity value is amortized on a
yield-to-maturity basis. Discounts on zero coupon bonds, stepped-coupon
bonds and original issue bonds are accreted according to the effective
yield method.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the following annual rates: 0.60% of the
first $500 million, 0.50% of the next $500 million, 0.45% of the next
$500 million, 0.40% of the next $5 billion, 0.375% of the next $5
billion, 0.355% of the next $5 billion, 0.34% of the next $5 billion,
and 0.33% thereafter. Prior to September 20, 1996, any amount over $1.5
billion was based on 0.40%.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by 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.
For the six months ended November 30, 1996, fund expenses were reduced
by $159,991 under expense offset arrangements with PFTC. Investor
servicing and custodian fees reported in the Statement of operations
exclude these credits. The fund could have invested a portion of the
assets utilized in connection with the expense offset arrangements in an
income producing asset if it had not entered into such arrangements.
Trustees of the fund receive an annual Trustees fee of $750 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in certain Putnam funds until distribution in
accordance with the Plan.
The Fund has adopted an unfunded noncontributory defined benefit pension
plan (The "Pension Plan") covering all Trustees of the Fund who have
served as Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average compensation for the
three years preceding retirement. Pension expense for the fund is
included in Compensation of trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00% and 1.00% of the average net assets attributable to class A, class
B and class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of 0.20%, 0.85% and 0.50% of the average
net assets attributable to class A, class B and class M shares,
respectively.
For the six months ended November 30, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $13,620 and $177 from
the sale of class A and class M shares, respectively and $63,376 in
contingent deferred sales charges from redemptions of class B shares. A
deferred sales charge of up to 1% is assessed on certain redemptions of
class A shares. For the six months ended November 30, 1996, Putnam
Mutual Funds Corp., acting as underwriter received no monies on class A
redemptions.
Note 3
Purchase and sales of securities
During the six months ended November 30, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$75,661,455 and $87,090,706, respectively. There were no purchases and
sales of U.S. government obligations. In determining the net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Capital shares
At November 30, 1996, there was
an unlimited number of shares of beneficial interest authorized.
Transactions in capital shares were
as follows:
Six months ended
November 30, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 1,437,940 $13,004,656
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 304,149 2,747,904
- ----------------------------------------------------
1,742,089 15,752,560
Shares
repurchased (2,489,115) (22,507,078)
- ----------------------------------------------------
Net decrease (747,026) $(6,754,518)
- ----------------------------------------------------
Year ended
May 31, 1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 4,006,206 $36,822,972
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 652,398 5,934,307
- ----------------------------------------------------
4,658,604 42,757,279
Shares
repurchased (6,598,927) (60,191,515)
- ----------------------------------------------------
Net decrease (1,940,323) $(17,434,236)
- ----------------------------------------------------
Six months ended
November 30, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 646,310 $5,865,652
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 51,146 462,096
- ----------------------------------------------------
697,456 6,327,748
Shares
repurchased (415,739) (3,758,556)
- ----------------------------------------------------
Net increase 281,717 $2,569,192
- ----------------------------------------------------
Year ended
May 31, 1995
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 1,874,095 $17,158,170
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 95,475 868,283
- ----------------------------------------------------
1,969,570 18,026,453
Shares
repurchased (963,430) (8,813,940)
- ----------------------------------------------------
Net increase 1,006,140 $9,212,513
- ----------------------------------------------------
Six months ended
November 30, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 29,335 $266,401
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,645 14,866
- ----------------------------------------------------
30,980 281,267
Shares
repurchased (5,524) (49,871)
- ----------------------------------------------------
Net increase 25,456 $231,396
- ----------------------------------------------------
Year ended
May 31, 1995
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 116,164 $1,074,575
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,563 14,255
- ----------------------------------------------------
117,727 1,088,830
Shares
repurchased (7,123) (65,614)
- ----------------------------------------------------
Net increase 110,604 $1,023,216
- ----------------------------------------------------
Results of December 5, 1996 shareholder meeting
(Unaudited)
A meeting of shareholders of the fund was held on December 5, 1996. At
the meeting, each of the nominees for Trustees was elected, as follows:
Votes
Votes for withheld
Jameson Adkins Baxter 20,724,801 265,457
Hans H. Estin 20,688,287 301,971
John A. Hill 20,735,998 254,260
Ronald J. Jackson 20,724,233 266,025
Elizabeth T. Kennan 20,683,506 306,752
Lawrence J. Lasser 20,731,459 258,799
Robert E. Patterson 20,688,590 301,668
Donald S. Perkins 20,685,582 304,676
William F. Pounds 20,689,108 301,150
George Putnam 20,639,660 350,598
George Putnam, III 20,679,947 310,311
Eli Shapiro 20,630,689 359,569
A.J.C. Smith 20,732,460 257,798
W. Nicholas Thorndike 20,720,166 270,092
A proposal to ratify the selection of Price Waterhouse LLP as auditors
for the fund was approved as follows: 20,270,160 votes for, and 166,230
votes against, with 553,868 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in the securities of a single issuer was approved
as follows: 18,296,972 votes for, and 953,877 votes against, with
1,739,409 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to making loans through purchases of debt obligations,
repurchase agreements and securities loans was approved as follows:
17,920,147 votes for, and 1,365,057 votes against, with 1,705,054
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investment in real estate was approved as follows: 18,339,177
votes for, and 1,046,936 votes against, with 1,604,145 abstentions and
broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to concentration of its assets was approved as follows:
18,652,789 votes for, and 721,130 votes against, with 1,616,339
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to senior securities was approved as follows: 18,586,794 votes
for, and 752,974 votes against, with 1,650,490 abstentions and broker
non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in commodities or commodity contracts was
approved as follows: 17,767,746 votes for, and 1,583,050 votes against,
with 1,639,462 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in securities of issuers in which management
of the fund or Putnam Investment Management, Inc. owns securities was
approved as follows: 17,943,813 votes for, and 1,329,202 votes against,
with 1,717,243 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to margin transactions was approved as follows: 17,784,000
votes for, and 1,533,715 votes against, with 1,672,543 abstentions and
broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to short sales was approved as follows: 17,867,007 votes
for, and 1,458,185 votes against, with 1,665,066 abstentions and broker
non-votes.
A proposal to eliminate the fund's fundamental investment restriction
which limits the fund's ability to pledge assets was approved as
follows: 17,651,815 votes for, and 1,597,017 votes against, with
1,741,426 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in restricted securities was approved as
follows: 17,798,254 votes for, and 1,464,157 votes against, with
1,727,847 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in certain oil, gas and mineral interests
was approved as follows: 17,997,274 votes for, and 1,346,106 votes
against, with 1,646,878 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investing to gain control of a company's management was
approved as follows: 17,902,141 votes for, and 1,355,508 votes against,
with 1,732,609 abstentions and broker non-votes.
All tabulations are rounded to nearest whole number.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
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
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William J. Curtin
Vice President
Jerome J. Jacobs
Vice President
Leslie J. Burke
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam 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. You can also learn more at Putnam Investments'
website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, are not insured by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of
principal amount invested.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- ---------------------
29948-037/365/453 1/97
