Putnam
Florida
Tax Exempt
Income Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
11-30-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
This is the last letter to you and the other shareholders of Putnam
Florida Tax Exempt Income Fund that I will be signing. After more than 30
years as Chairman of the Trustees and President of the Putnam Funds, the
time has come for me to step aside.
In June, John Hill will become Chairman. John is currently an independent
Trustee and has served on the board for the past 14 years. In addition, my
son, George Putnam, III, will take on the role of President. I am
confident that the leadership of the funds will be in exceptionally strong
hands.
I will become Chairman Emeritus, remain a shareholder, and stay in close
touch with the funds. It has been my privilege to serve you.
In one final piece of news, I am pleased to announce the appointment of
Richard P. Wyke as your fund's manager. Rick is a senior portfolio manager
in the Municipal Bond Group. He has been with Putnam since 1987 and has 17
years of investment experience.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
January 19, 2000
Report from the Fund Manager
Richard P. Wyke
During the six months ended November 30, 1999, the municipal bond market
suffered from the same factors that influenced the performance of most
fixed-income securities: inflation fears, rising interest rates, and poor
investor sentiment. Unlike the taxable security markets, however, the
municipal yield curve steepened in the 10- to 30-year range, which further
restrained the performance of municipal bonds and long-term municipal bond
funds. Anemic investor demand and a seasonal influx of new issue supply
added to the market's malaise.
The performance of Putnam Florida Tax Exempt Income Fund over the
semiannual period reflects the inhospitable investment environment.
Nevertheless, the fact that your fund outperformed most other Florida
municipal bond funds with similar investment objectives (see page 3)
continues to make it one of the most attractive choices for Florida
investors seeking tax-free income.
Total return for 6 months ended 11/30/99
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
-2.70% -7.28% -3.13% -7.86% -2.85% -5.99%
- ------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods and explanation of performance calculation
methods begin on page 6.
* DURATION AND YIELD CURVE STRATEGIES HELP MITIGATE VOLATILITY
When managing a bond portfolio in a rising interest-rate environment,
duration and yield curve strategies play a vital role in how a fund will
weather the market volatility. Duration is a mathematical formula that
indicates the degree to which bond prices will move up or down with each
percentage point shift in interest rates. A shorter duration typically
helps preserve portfolio value when rates rise, while a longer duration
tends to give a fund greater price appreciation potential when rates
decline. The yield curve is a structure that plots the difference in
yields between bonds of the same quality with different maturities.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Hospitals/health care 28.2%
Utilities 13.8%
Education 9.1%
Transportation 8.8%
Water and sewer 7.2%
Footnote reads:
*Based on net assets as of 11/30/99. Holdings will vary over time.
Through careful monitoring and adjusting of the fund's duration and its
emphasis on different bond maturities along the yield curve, we believe we
have spared the fund the brunt of the market's downturn while positioning
it for the next turn in the road. At the period's outset, we kept your
fund's duration profile relatively short when interest rates were rising
in earnest. We also kept the bulk of the fund's net assets invested in
10-year maturity bonds. As yields rose at the longer end of the yield
curve, 10-year bonds declined less in price than longer-maturity bonds.
Near period's end, it seemed the worst of investors' fears had been priced
into the market. As a result, we began to extend the portfolio's duration
slightly to better participate in a market rally should the historic
January effect take place -- as we anticipate. The January effect refers
to the historic tendency of investors to renew their interest in bonds
once a new calendar year -- and for many institutional investors a new
fiscal year -- begins. Once the Y2K issue becomes history, there is a good
chance that the January effect may well be stronger than in years past,
although nothing is guaranteed. We have also begun to barbell, or cluster,
your fund's assets in bonds at both the short- and long-end of the yield
curve. We believe a market rally could lead to a flattening of the yield
curve, in which case a barbelled structure would perform best.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
Aa/AA -- 11.6%
A -- 7.8%
Baa/BBB -- 14.9%
Ba/BB -- 2.7%
VMIG1 -- 0.6%
Aaa/AAA -- 62.4%
Footnote reads:
*Based on percentage of market value as of 11/30/99. A bond rated Baa/BBB
or higher is considered investment grade. All ratings reflect Moody's and
Standard & Poors' descriptions unless noted otherwise; percentages may
include unrated bonds considered by Putnam Management to be of comparable
quality. Ratings will vary over time.
* COUPON STRUCTURE SEEKS TO COVER ALL BASES
Another somewhat esoteric interest-rate strategy involves managing your
fund's coupon structure. Throughout the semiannual period, we emphasized
premium coupon bonds and discount coupon bonds fairly equally. Premium
coupon bonds -- those selling at prices above their par, or face, values
- -- offer coupons higher than current rates and tend to be less seriously
affected when prices decline. Discount coupon bonds -- those selling at
prices below their par value -- are more likely to increase in value
during a market recovery. In our opinion, this dual positioning optimizes
your fund's performance potential in a changing rate environment.
Putnam Florida Tax Exempt Income Fund's class A shares ranked in the top 25%
by Lipper for the 1-year period ended December 31, 1999. The fund ranked 16
out of 64 municipal bond funds ranked.
Past performance is not indicative of future results. For the 3- and 5-year
periods ended 12/31/99, the fund ranked 23 out of 59 (39%) and 22 out of 44
(49%), respectively. Lipper is an industry research firm whose rankings are
based on total return performance, vary over time, and do not reflect the
effects of sales charges. Performance of other share classes will vary.
* WIDENING CREDIT SPREADS SIGNALS OPPORTUNITY
Careful security selection and Putnam's in-depth credit research
capabilities have allowed us to take advantage of the attractive buying
opportunity provided by the market's downturn. While your fund remains
broadly diversified across industry sectors and general obligation and
revenue bonds, lower quality issues in the health care arena have garnered
our increased attention recently. In one fell swoop, stricter Medicare
reimbursement formulas and a reduction in funding at all levels negatively
influenced the performance of most hospital and long-term care bonds
nationwide -- whether or not the facility's fundamental underpinnings were
sound. As credit spreads (the difference in yield between bonds of varying
credit quality) widened, we utilized our research to uncover several
worthwhile portfolio candidates that stand to compensate the portfolio for
their added credit risk.
Thousands of projects financed by just two types of bonds
Municipal bonds are the most important means of financing thousands of
different public projects, but surprisingly there are only two basic types
of bonds. General obligation bonds (Gos), secured by the full faith and
credit of the city or town, are repaid by either a limited or an unlimited
tax on property. Cities and towns usually issue general obligation bonds for
school, park, or public building projects. The voters in a community must
approve each issue of general obligation bonds.
Revenue bonds, on the other hand, are secured by fees derived from tolls,
charges, or rents paid by the users of the facility. Highways, bridges, and
water and sewage treatment plants are typical projects financed or improved by
revenue bond proceeds. Industrial revenue bonds are issued through an
Industrial Development Authority to finance projects for a private user
(usually a corporation) that also guarantees repayment of the principal and
interest. Hospital, dormitory, airport, and housing projects are commonly
financed with industrial revenue bonds.
Florida's changing demographics point to a bright future for Shell Point
Village in Fort Myers and Halifax Hospital in Daytona Beach, two newly
purchased holdings. Shell Point Village is a well-established continuing
care retirement community with a consistently high occupancy rate and
sound management team. Halifax Hospital is the dominant player in its
market with strong utilization trends. While these holdings and others
discussed in this report were viewed favorably during the period, all
holdings are subject to review in accordance with the fund's investment
strategy and may vary in the future.
* CURRENT UNCERTAINTY NOT WITHOUT MERITS
As we enter the second half of fiscal 2000, the Federal Reserve Board's
next move, the rate of inflation, and direction of interest rates remain
open questions. Consequently, market unease could continue. Nevertheless,
we maintain a positive long-term view on the Florida municipal bond market
as a favorable population migration pattern drives growth in the building,
service, and tourism industries. Though we are mindful of the setbacks
that may lie ahead, we are optimistic that the defensive and opportunistic
strategies we have in place should serve your fund well in the months
ahead.
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 11/30/99, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
This section provides information about your fund's performance, which should
always be considered in light of its investment strategy. Putnam Florida Tax
Exempt Income Fund is designed for investors seeking a high level of current
income free from federal income tax consistent with preservation of capital.
TOTAL RETURN FOR PERIODS ENDED 11/30/99
Class A Class B Class M
(inception dates) (8/24/90) (1/4/93) (5/1/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
6 months -2.70% -7.28% -3.13% -7.86% -2.85% -5.99%
- ------------------------------------------------------------------------
1 year -2.34 -6.94 -3.05 -7.69 -2.64 -5.82
- ------------------------------------------------------------------------
5 years 38.38 31.83 33.81 31.81 36.18 31.73
Annual average 6.71 5.68 6.00 5.68 6.37 5.67
- ------------------------------------------------------------------------
Life of fund 79.15 70.71 67.19 67.19 73.26 67.63
Annual average 6.49 5.94 5.70 5.70 6.11 5.73
- ------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 11/30/99
Lehman Brothers Municipal Consumer
Bond Index price index
- ---------------------------------------------------------------------
6 months -1.87% 1.32%
- ---------------------------------------------------------------------
1 year -1.08 2.68
- ---------------------------------------------------------------------
5 years 43.85 12.49
Annual average 7.54 2.38
- ---------------------------------------------------------------------
Life of fund 90.92 27.96
Annual average 7.24 2.70
- ---------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 4.75% and
3.25% respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their inception
are derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and in the case of class B and class M shares,
the higher operating expenses applicable to such shares. All returns
assume reinvestment of distributions at NAV. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 11/30/99
Class A Class B Class M
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Distributions (number) 6 6 6
- ------------------------------------------------------------------------------
Income $0.239060 $0.209692 $0.225496
- ------------------------------------------------------------------------------
Capital gains1 -- -- --
- ------------------------------------------------------------------------------
Total $0.239060 $0.209692 $0.225496
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
5/31/99 $9.30 $9.76 $9.30 $9.29 $9.60
- ------------------------------------------------------------------------------
11/30/99 8.81 9.25 8.80 8.80 9.10
- ------------------------------------------------------------------------------
Current return (end of period)
- ------------------------------------------------------------------------------
Current dividend rate2 5.41% 5.15% 4.76% 5.11% 4.95%
- ------------------------------------------------------------------------------
Taxable equivalent3 8.96 8.53 7.88 8.46 8.20
- ------------------------------------------------------------------------------
Current 30-day SEC yield4 4.84 4.61 4.19 4.55 4.40
- ------------------------------------------------------------------------------
Taxable equivalent3 8.01 7.63 6.94 7.53 7.28
- ------------------------------------------------------------------------------
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% federal 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 12/31/99 (most recent calendar quarter)
Class A Class B Class M
(inception dates) (8/24/90) (1/4/93) (5/1/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
6 months -2.10% -6.70% -2.42% -7.19% -2.36% -5.58%
- ------------------------------------------------------------------------
1 year -3.51 -8.07 -4.13 -8.72 -3.81 -6.96
- ------------------------------------------------------------------------
5 years 33.36 27.04 29.27 27.27 31.23 27.01
Annual average 5.93 4.90 5.27 4.94 5.59 4.90
- ------------------------------------------------------------------------
Life of fund 77.52 69.16 65.77 65.77 71.63 66.06
Annual average 6.33 5.78 5.55 5.55 5.95 5.57
- ------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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. See first
page of performance section for performance calculation method.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 4.75% maximum 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 class B 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. 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.
A guide to the financial statements
These sections of the report constitute the fund's financial
statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed here
may not match the sources listed in the Statement of operations because
the distributions are determined on a tax basis and may be paid in a
different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate
table is provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
November 30, 1999 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FRB -- Floating Rate Bonds
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
MUNICIPAL BONDS AND NOTES (99.5%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C> <C>
California (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
$ 2,195,000 San Francisco, City & Cnty. Arpt. Rev. Bonds,
FSA, 4 3/4s, 5/1/29 AAA $ 1,816,363
Florida (86.2%)
- --------------------------------------------------------------------------------------------------------------------------
Brevard Cnty., Health Fac. Auth. Rev. Bonds
(Courtenay Springs)
2,000,000 7 3/4s, 11/15/17 AAA/P 2,305,000
2,345,000 7 1/2s, 11/15/09 AAA/P 2,679,163
Broward Cnty., Edl. Fac. Auth. Rev. Bonds
(Nova U. Dorm), Ser. A
2,500,000 7 1/2s, 4/1/17 AAA/P 2,653,125
270,000 7 1/4s, 4/1/01 AAA/P 280,463
3,000,000 Broward Cnty., FL Arpt., AMBAC, 5 1/8s, 10/1/16 Aaa 2,793,750
1,000,000 Broward Cnty., Hlth. Fac. Auth. Rev. Bonds
(Broward Cnty. Nursing Home), 7 1/2s, 8/15/20 Aa3 1,055,000
Broward Cnty., Resource Recvy. Rev. Bonds
5,655,000 (SES Broward Cnty. LP South), 7.95s, 12/1/08 A+ 5,838,788
1,105,000 (Waste-Energy LP North), 7.95s, 12/1/08 A+ 1,139,531
1,400,000 Clay Cnty., Multi-Fam. Hsg. Fin. Auth. Rev. Bonds
(Oak Forest), Ser. A, GNMA Coll., 7.4s, 12/1/25 AAA 1,444,632
1,875,000 Clay Cnty., Single Fam. Hsg. Fin. Auth. Rev. Bonds,
Ser. A, GNMA Coll., 7.45s, 9/1/23 Aa1 1,928,906
1,400,000 Dade Cnty., Rev. Bonds (Seaport), MBIA,
6 1/2s, 10/1/09 Aaa 1,552,250
2,500,000 Dade Cnty., Seaport G.O. Bonds, AMBAC,
6 1/4s, 10/1/21 (SEG) Aaa 2,612,500
2,500,000 Dade Cnty., Edl. Facs. Auth. Rev. Bonds,
Ser. A, AMBAC, 5 3/4s, 4/1/13 AAA 2,578,125
8,000,000 Dade Cnty., Professional Sports Franchise
Fac. Tax Rev. Bonds, MBIA, 4 3/4s, 10/1/30 Aaa 6,550,000
5,500,000 Escambia Cnty., Poll. Control Rev. Bonds
(Champion Intl. Corp.), 6.9s, 8/1/22 Baa1 5,802,500
5,000,000 Escambia Cnty., Hlth. Facs. Auth. Rev. Bonds
(Ascension Hlth. Credit), Ser. A-1,
5 3/4s, 11/15/29 AAA 4,868,750
2,335,000 Escambia Cnty., Single Fam. Hsg. Fin. Auth. Mtge.
Rev. Bonds (Multi-Cnty. Program), Ser. A,
GNMA Coll., 7.15s, 10/1/24 Aaa 2,355,431
3,750,000 First FL Govt. Fin. Comm. Rev. Bonds, AMBAC,
6s, 7/1/09 Aaa 4,031,250
305,000 FL Hsg. Fin. Agcy. Rev. Bonds (Home Ownership
Dev. Program), Ser. G-1, GNMA Coll.,
7.9s, 3/1/22 Aaa 314,702
FL State Board of Ed. G.O. Bonds
7,000,000 6.4s, 6/1/19 AA+ 7,288,750
9,000,000 4 3/4s, 6/1/28 AA+ 7,458,750
3,000,000 FL State Board of Ed. Rev. Bonds, Ser. D,
5 3/4s, 6/1/22 Aa2 2,910,000
6,745,000 FL State Board of Fin. Rev. Bonds, FSA, 8 1/4s,
7/1/13 (acquired 9/2/98, cost $8,719,396) (RES) Aaa/P 7,545,969
FL State Mid-Bay Bridge Auth. Rev. Bonds, Ser. A
1,500,000 8s, 10/1/06 BBB/P 1,627,500
2,180,000 7 1/2s, 10/1/17 BBB/P 2,346,225
3,540,000 6.1s, 10/1/22 BBB/P 3,411,675
2,000,000 FL State Muni. Pwr. Agcy. IFB, AMBAC, 8.99s,
10/1/20 (acquired 7/10/92, cost $2,101,200) (RES) Aaa 2,295,000
3,000,000 Halifax, Hosp. Med. Ctr. Rev. Bonds, Ser. A,
7 1/4s, 10/1/29 BB/P 2,895,000
Hillsborough Cnty., Indl. Dev. Auth. Poll. Control
Rev. Bonds (Tampa Elec. Co.)
2,500,000 Ser. 91, 7 7/8s, 8/1/21 AA 2,709,375
3,645,000 6 1/4s, 12/1/34 AA 3,727,013
2,400,000 Hillsborough Cnty., Util. Rev. Bonds, Ser. A,
FSA, 6 1/2s, 8/1/16 Aaa 2,511,000
Jacksonville, Hlth. Fac. Auth. Indl. Dev. Rev. Bonds
(Cypress Village)
1,350,000 7s, 12/1/22 Baa1 1,417,500
3,650,000 7s, 12/1/14 Baa1 3,846,188
Lee Cnty., Board of Directors Hosp. IFB, MBIA
5,000,000 (Lee Memorial Hosp.), 8.87s, 3/26/20 Aaa 5,225,000
4,000,000 9.468s, 4/1/20 Aaa 4,400,000
Lee Cnty., Indl. Dev. Auth Hlth. Care Fac. Rev. Bonds
5,250,000 (Cypress Cove Hlth. Pk.), Ser. A, 6 3/8s, 10/1/25 BB/P 4,889,063
9,000,000 (Shell Point Village), Ser. A, 5 1/2s, 11/15/29 BBB- 7,402,500
Leesburg, Hosp. Rev. Bonds
(Leesbury Regl. Med. Ctr.)
1,000,000 Ser. 91-A, 7 1/2s, 7/1/21 A- 1,092,500
2,065,000 6 1/8s, 7/1/18 A- 2,008,213
10,000,000 Martin Cnty., Poll. Control Rev. Bonds
(FL Pwr. & Lt. Co.), MBIA, 7.3s, 7/1/20 Aaa 10,351,700
2,750,000 Martin Cnty., Indl. Dev. Auth. Rev. Bonds
(Indian Cogeneration), Ser. A, 7 7/8s, 12/15/25 Baa3 2,842,813
5,000,000 Orange Cnty., School Board COP, Ser. 85, MBIA,
FRB, 7.219s, 8/1/22 (acquired 12/21/98,
cost $5,344,900) (RES) Aaa 4,381,250
4,000,000 Orange Cnty., Hlth. Fac. Auth. IFB, 9.7357s,
10/1/14 (acquired 4/19/95, cost $5,273,120) (RES) BBB+/P 5,180,000
5,000,000 Orange Cnty., Hlth. Fac. Auth. Rev. Bonds
(Orlando Regl. Hlthcare), MBIA, 6 1/4s, 10/1/18 Aaa 5,300,000
5,950,000 Orlando, Util. Comm. Wtr. & Elec. Rev. Bonds,
Ser. D, 6 3/4s, 10/1/17 Aa2 6,627,467
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 2,077,377
2,000,000 Palm Beach Cnty., Arpt. Syst. Rev. Bonds,
MBIA, 7 3/4s, 10/1/10 Aaa 2,150,000
7,000,000 Palm Beach Cnty., School Board COP, Ser. A,
AMBAC, 6 3/8s, 8/1/15 Aaa 7,577,500
185,000 Palm Beach Cnty., Single Fam. Hsg. Fin. Auth.
Mtge. Rev. Bonds, Ser. A, GNMA Coll.,
7.2s, 10/1/24 Aaa 191,706
5,000,000 Pinellas Cnty., Poll. Control Rev. Bonds
(FL Pwr. Corp.), 7.2s, 12/1/14 A1 5,256,250
Port Everglades, Auth. Rev. Bonds
5,000,000 (FL Port Impt.), 7 1/8s, 11/1/16 Aaa 5,781,250
5,000,000 Ser. A, 5s, 9/1/16 A- 4,512,500
2,935,000 Sanibel, Swr. Util. Rev. Bonds, 7 1/2s, 8/1/21 AAA/P 3,140,450
2,390,000 Santa Rosa Cnty., Hlth. Fac. Auth. Rev. Bonds
(Gulf Breeze Hosp. Inc.), Ser. A, 6.2s, 10/1/14 BBB+ 2,375,063
Sarasota Cnty., Pub. Hosp. Board Rev. Bonds
(Sarasota Memorial Hosp.), Ser. B, MBIA
2,000,000 5 1/4s, 7/1/16 Aaa 1,897,500
2,000,000 5 1/4s, 7/1/15 Aaa 1,927,500
2,000,000 Sarasota Cnty., Pub. Hosp. Rev. Bonds
(Sarasota Mem. Hosp.), Ser. B, MBIA,
5 1/4s, 7/1/14 AAA 1,942,500
2,675,000 SCA Tax Exempt Trust Multi-Fam. Mtge.
Rev. Bonds, Ser. A-1, FSA, 7.05s, 1/1/30 Aaa 2,792,031
2,250,000 South Broward, Hosp. Dist. IFB, Ser. C,
AMBAC, 8.933s, 5/13/21 Aaa 2,483,438
7,800,000 St. Petersburg, Hlth. Fac. Auth. Rev. Bonds
(Allegany Hlth.), Ser. A, MBIA, 7s, 12/1/15 Aaa 8,355,750
4,860,000 Sumter Cnty., School Dist. Rev. Bonds
(Multi Dist. Loan Program), FSA, 7.15s, 11/1/15 Aaa 5,722,650
2,395,000 Tallahassee, Energy Syst. Rev. Bonds, Ser. A,
5 1/4s, 10/1/12 Aaa 2,412,963
4,355,000 Tampa Bay Wtr. Util. Syst. Rev. Bonds, FGIC,
5 3/4s, 10/1/15 AAA 4,420,325
6,000,000 Tampa Rev. Bonds (Allegany Hlth. Syst. St. Joseph),
MBIA, 6 1/2s, 12/1/23 Aaa 6,607,500
3,000,000 Tampa Hosp. Rev. Bonds
(Cap. Impt.-H, Lee Moffitt), Ser. A, 5 3/4s, 7/1/29 A 2,805,000
4,500,000 Tampa, Hlth. Sys. Rev. Bonds (Catholic Hlth.),
Ser. A, 4 3/4s, 11/15/28 Aaa 3,695,625
Tampa, Util. Tax Rev. Bonds, AMBAC
1,950,000 zero %, 10/1/21 Aaa 536,250
2,625,000 zero %, 4/1/21 Aaa 741,563
5,800,000 zero %, 10/1/17 Aaa 2,066,250
1,800,000 Volusia Cnty., Hlth. Fac. Auth. Rev. Bonds
(Memorial Hlth. Syst.), 8 1/8s, 6/1/08 BBB+ 1,871,838
5,000,000 Winter Haven, Util. Sys. Rev. Bonds, MBIA,
4 3/4s, 10/1/28 Aaa 4,137,500
--------------
251,952,596
Guam (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,500,000 Guam, Pwr. Auth. Rev. Bonds, Ser. A, MBIA,
5 1/8s, 10/1/29 AAA 1,335,000
Puerto Rico (12.2%)
- --------------------------------------------------------------------------------------------------------------------------
3,000,000 Cmnwlth. of PR, G.O. Bonds, MBIA, 6.45s, 7/1/17 Aaa 3,292,500
2,000,000 Cmnwlth. of PR, Govt. Dev. Bank VRDN,
MBIA, 3.4s, 12/1/15 VMIGI 2,000,000
8,000,000 Cmnwlth. of PR, Pub. Impt. G.O. Bonds,
FSA, 5 1/2s, 7/1/13 AAA 8,120,000
Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds
1,000,000 Ser. T, 6 5/8s, 7/1/18 Aaa 1,072,500
5,280,000 Ser. Z, MBIA, 6 1/4s, 7/1/15 Aaa 5,709,000
4,750,000 PR Elec. Pwr. Auth. Rev. Bonds, Ser. T, 6 3/8s, 7/1/24 Baa1 5,195,307
3,800,000 PR Indl. Tourist Edl. Med. & Environ. Control Fac.
Fing. Auth. Hosp. Rev. Bonds (Auxilio Muto
Obligation Group), Ser. A, MBIA, 6 1/4s, 7/1/16 Aaa 4,013,750
5,950,000 PR Muni. Fin. Agcy. Rev. Bonds, Ser. A,
FSA, 6s, 7/1/12 AAA 6,396,250
--------------
35,799,307
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $293,650,409) (b) $ 290,903,266
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $292,408,833.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at
November 30, 1999 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, 1999. Securities
rated by Putnam are indicated by "/P" and are not publicly rated.
(b) The aggregate identified cost on a tax basis is $293,792,387, resulting in gross unrealized appreciation and
depreciation of $7,739,697 and $10,628,818, respectively, or net unrealized depreciation of $2,889,121.
(RES) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at
November 30, 1999 was $19,402,219 or 6.6% of net assets.
(SEG) A portion of this security was pledged and segregated with the custodian to cover margin requirements for futures
contracts at November 30, 1999.
The rates shown on IFB and FRB are the current interest rates shown at November 30, 1999, 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, 1999 (as a percentage of
net assets):
Hospitals/health care 28.2%
Utilities 13.8
The fund had the following insurance concentrations greater than 10% at November 30, 1999 (as a percentage of net
assets):
MBIA 27.7%
FSA 12.6
- -------------------------------------------------------------------------------
Futures Contracts Outstanding at November 30, 1999 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
- -------------------------------------------------------------------------------
Municipal Bond
Index (Long) $5,390,000 $5,441,592 Dec-99 $(51,592)
Municipal Bond
Index (Long) 2,339,062 2,340,586 Mar-00 (1,524)
- -------------------------------------------------------------------------------
$(53,116)
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
November 30, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $293,650,409) (Note 1) $290,903,266
- -----------------------------------------------------------------------------------------------
Cash 689,428
- -----------------------------------------------------------------------------------------------
Interest receivables 5,543,824
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 132,531
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 2,965,000
- -----------------------------------------------------------------------------------------------
Receivable for variation margin 30,374
- -----------------------------------------------------------------------------------------------
Total assets 300,264,423
Liabilities
- -----------------------------------------------------------------------------------------------
Distributions payable to shareholders 338,157
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 5,515,735
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,450,785
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 370,885
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 10,014
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 10,761
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,064
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 127,520
- -----------------------------------------------------------------------------------------------
Other accrued expenses 30,669
- -----------------------------------------------------------------------------------------------
Total liabilities 7,855,590
- -----------------------------------------------------------------------------------------------
Net assets $292,408,833
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $299,182,978
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (31,495)
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (3,942,391)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (2,800,259)
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $292,408,833
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($213,596,950 divided by 24,257,705 shares) $8.81
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $8.81)* $9.25
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($77,594,860 divided by 8,814,953 shares)+ $8.80
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($1,217,023 divided by 138,281 shares) $8.80
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.80)** $9.10
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $25,000. On sales of $25,000 or more and on group
sales, the offering price is reduced.
** On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
+ Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended November 30, 1999 (Unaudited)
<S> <C>
Tax exempt interest income: $ 9,280,462
- -----------------------------------------------------------------------------------------------
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 790,290
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 145,444
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 5,893
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,942
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 223,740
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 335,895
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 3,315
- -----------------------------------------------------------------------------------------------
Reports to shareholders 7,055
- -----------------------------------------------------------------------------------------------
Auditing 22,323
- -----------------------------------------------------------------------------------------------
Legal 4,779
- -----------------------------------------------------------------------------------------------
Postage 8,066
- -----------------------------------------------------------------------------------------------
Other 24,263
- -----------------------------------------------------------------------------------------------
Total expenses 1,575,005
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (26,543)
- -----------------------------------------------------------------------------------------------
Net expenses 1,548,462
- -----------------------------------------------------------------------------------------------
Net investment income 7,732,000
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (1,473,044)
- -----------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (524,832)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
futures contracts during the period (14,659,935)
- -----------------------------------------------------------------------------------------------
Net loss on investments (16,657,811)
- -----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (8,925,811)
- -----------------------------------------------------------------------------------------------
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
1999* 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 7,732,000 $ 15,034,689
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (1,997,876) 373,313
- ---------------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (14,659,935) (5,962,276)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (8,925,811) 9,445,726
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (5,946,296) (11,373,102)
- ---------------------------------------------------------------------------------------------------------------
Class B (1,841,616) (3,223,202)
- ---------------------------------------------------------------------------------------------------------------
Class M (33,341) (67,118)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) from capital share transactions (Note 4) (7,481,748) 10,776,187
- ---------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (24,228,812) 5,558,491
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 316,637,645 311,079,154
- ---------------------------------------------------------------------------------------------------------------
End of period (including distribution in excess of net
investment income and undistributed net investment
income of $31,495 and $57,758, respectively) $292,408,833 $316,637,645
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share November 30
operating performance (Unaudited) Year ended May 31
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.30 $9.45 $9.14 $8.91 $9.12
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .24 .46 .47 .48 .48
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.49) (.16) .32 .23 (.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.25) .30 .79 .71 .27
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.24) (.45) (.48) (.48) (.48)
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of
net investment income -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.24) (.45) (.48) (.48) (.48)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.81 $9.30 $9.45 $9.14 $8.91
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (2.70)* 3.20 8.80 8.12 3.04
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $213,597 $233,454 $237,910 $239,196 $247,920
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .43* .98 .96 .96 .95
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.63* 4.87 5.06 5.28 5.31
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 8.61* 32.08 42.40 70.30 81.99
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
++ The fiscal year advanced from June 30 to May 31.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter, includes amounts paid through
expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during
the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A (continued)
- ---------------------------------------------------------------------------------------------------------------------------------
For the
eleven months
Per-share ended Year ended
operating performance May 31 June 30
- ---------------------------------------------------------------------------------------------------------------------------------
1995++ 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $8.77 $9.53
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .46 .50
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .35 (.65)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .81 (.15)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.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 (.46) (.61)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.12 $8.77
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 9.58* (1.79)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $271,309 $276,245
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .83* .91
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.24* 5.38
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 61.46* 64.83
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
++ The fiscal year advanced from June 30 to May 31.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter, includes amounts paid through
expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during
the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share November 30
operating performance (Unaudited) Year ended May 31
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.30 $9.45 $9.14 $8.91 $9.12
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .21 .40 .42 .42 .42
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.50) (.16) .31 .23 (.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.29) .24 .73 .65 .21
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.21) (.39) (.42) (.42) (.42)
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of
net investment income -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.21) (.39) (.42) (.42) (.42)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.80 $9.30 $9.45 $9.14 $8.91
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (3.13)* 2.56 8.10 7.42 2.37
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $77,595 $81,876 $71,925 $58,926 $52,541
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .76* 1.63 1.61 1.61 1.60
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.31* 4.23 4.40 4.62 4.64
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 8.61* 32.08 42.40 70.30 81.99
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
++ The fiscal year advanced from June 30 to May 31.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter, includes amounts paid through
expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during
the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B (continued)
- ---------------------------------------------------------------------------------------------------------------------------------
For the
eleven months
Per-share ended Year ended
operating performance May 31 June 30
- ---------------------------------------------------------------------------------------------------------------------------------
1995++ 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $8.76 $9.53
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .40 .44
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .36 (.66)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .76 (.22)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.39) (.44)
- ---------------------------------------------------------------------------------------------------------------------------------
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 (.40) (.55)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.12 $8.76
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 9.06* (2.55)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $44,581 $36,930
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.42* 1.51
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.62* 4.74
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 61.46* 64.83
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
++ The fiscal year advanced from June 30 to May 31.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter, includes amounts paid through
expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during
the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share November 30 May 1, 1995+
operating performance (Unaudited) Year ended May 31 to May 31
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.29 $9.44 $9.14 $8.91 $9.12 $8.87
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .23 .43 .45 .45 .46 .04 (c)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.49) (.16) .30 .23 (.21) .25
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.26) .27 .75 .68 .25 .29
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.23) (.42) (.45) (.45) (.46) (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of
net investment income -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.23) (.42) (.45) (.45) (.46) (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.80 $9.29 $9.44 $9.14 $8.91 $9.12
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (2.85)* 2.88 8.36 7.80 2.76 3.28*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,217 $1,308 $1,244 $1,355 $986 $1
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .58* 1.28 1.26 1.26 1.23 .10*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.49* 4.60 4.74 4.97 4.82 .45*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 8.61* 32.08 42.40 70.30 81.99 61.46*
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
++ The fiscal year advanced from June 30 to May 31.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended May 31, 1996 and thereafter, includes amounts paid through
expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during
the period.
</TABLE>
Notes to financial statements
November 30, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam Florida Tax Exempt Income Fund (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 securities exempt from
the Florida intangibles tax.
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 higher than class A but lower than class B
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
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
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. Restricted
securities are stated at fair value following procedures approved by the
Trustees. 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). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on securities
it owns or in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of
the underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparty to the contract is unable to
perform. When the contract is closed, the fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the lasts sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices supplied
by dealers.
D) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended November 30, 1999, the fund had no borrowings against the line of
credit.
E) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
It is also the intention of the fund to distribute an amount sufficient to
avoid imposition of any excise tax under Section 4982 of the Internal
Revenue Code of 1986, as amended. Therefore, no provision has been made
for federal taxes on income, capital gains or unrealized appreciation on
securities held nor for excise tax on income and capital gains.
At May 31, 1999, the fund had a capital loss carryover of approximately
$1,133,000 available to offset future capital gains, if any. The amount of
the carryover and the expiration dates are:
Loss Carryover Expiration
- -------------- ------------
$221,000 May 31, 2003
908,000 May 31, 2004
4,000 May 31, 2005
F) Distributions to shareholders Income dividends are recorded daily by
the fund and are paid monthly. Capital gain distributions, if any, are
recorded on the ex-dividend date and paid at least annually. The amount
and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
G) Amortization of bond premium and accretion of bond discount Any premium
resulting from the purchase of securities in excess of maturity value is
amortized on a yield-to-maturity basis. The premium in excess of the call
price, if any, is amortized to the call date; thereafter, the remaining
excess premium is amortized to maturity. Discounts on zero coupon bonds
and original issue discount bonds are accreted according to the
yield-to-maturity basis.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 0.60% of the first $500
million of average net assets, 0.50% of the next $500 million, 0.45% of
the next $500 million, 0.40% of the next $5 billion, 0.375% of the next $5
billion, 0.355% of the next $5 billion, 0.34% of the next $5 billion and
0.33% thereafter. On June 4, 1999, the Trustees approved a management fee
schedule that became effective July 1, 1999, based upon the lesser of (i)
an annual rate of 0.50% of the average net asset value of the fund or (ii)
the initial tiers mentioned above.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended November 30, 1999, fund expenses were reduced by
$26,543 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.
Each Trustee of the fund receives an annual Trustee fee, of which $557 has
been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and meeting
fees for the three years preceding retirement. Pension expense for the
fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to compensate
Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments
Inc., for services provided and expenses incurred by it in distributing
shares of the fund. The Plans provide for payments by the fund to Putnam
Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the
average net assets attributable to class A, class B and class M shares,
respectively. The Trustees have approved payment by the fund to an annual
rate of 0.20%, 0.85% and 0.50% of the average net assets attributable to
class A, class B and class M shares, respectively.
For the six months ended November 30, 1999, Putnam Mutual Funds Corp.,
acting as underwriter, received net commissions of $9,400 and $237 from
the sale of class A and class M shares, respectively, and $105,184 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 that were purchased without an initial sales charge as part
of an investment of $1 million or more. For the six months ended November
30, 1999, Putnam Mutual Funds Corp., acting as underwriter, received
$1,276 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended November 30, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$25,849,876 and $33,888,380, respectively. There were no purchases and
sales of U.S. government obligations.
Note 4
Capital shares
At November 30, 1999 there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended November 30, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,113,503 $10,001,358
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 287,146 2,569,614
- -----------------------------------------------------------------------------
1,400,649 12,570,972
Shares
repurchased (2,247,585) (20,094,516)
- -----------------------------------------------------------------------------
Net decrease (846,936) $(7,523,544)
- -----------------------------------------------------------------------------
Year ended May 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,753,569 $35,542,486
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 510,916 4,832,920
- -----------------------------------------------------------------------------
4,264,485 40,375,406
Shares
repurchased (4,336,973) (41,013,184)
- -----------------------------------------------------------------------------
Net decrease (72,488) $ (637,778)
- -----------------------------------------------------------------------------
Six months ended November 30, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 919,511 $ 8,248,671
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 84,137 752,692
- -----------------------------------------------------------------------------
1,003,648 9,001,363
Shares
repurchased (995,669) (8,940,750)
- -----------------------------------------------------------------------------
Net increase 7,979 $ 60,613
- -----------------------------------------------------------------------------
Year ended May 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,464,112 $23,332,610
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 131,904 1,247,346
- -----------------------------------------------------------------------------
2,596,016 24,579,956
Shares
repurchased (1,403,040) (13,260,558)
- -----------------------------------------------------------------------------
Net increase 1,192,976 $11,319,398
- -----------------------------------------------------------------------------
Six months ended November 30, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 11,946 $ 108,138
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,217 10,888
- -----------------------------------------------------------------------------
13,163 119,026
Shares
repurchased (15,585) (137,843)
- -----------------------------------------------------------------------------
Net decrease (2,422) $ (18,817)
- -----------------------------------------------------------------------------
Year ended May 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 238,390 $2,253,605
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,326 31,680
- -----------------------------------------------------------------------------
241,716 2,285,285
Shares
repurchased (232,788) (2,190,718)
- -----------------------------------------------------------------------------
Net increase 8,928 $ 94,567
- -----------------------------------------------------------------------------
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds. Please
call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus
for any Putnam fund. It contains more complete information, including charges
and expenses. Please read it carefully before you invest or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Europe Growth Fund
Global Equity Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Opportunities Fund [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Small Cap Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]**
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Diversified Income Trust II
[DBL. DAGGER] Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
Fund information
WEB SITE
www.putnaminv.com
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Jerome J. Jacobs
Vice President
Richard P. Wyke
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
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' Web site: www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA046 57656 037/365/453 1/00
