Putnam
Florida
Tax Exempt
Income Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
5-31-00
[SCALE LOGO OMITTED]
From the Trustees
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM, III]
Dear Shareholder:
It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years in which
Putnam has experienced tremendous growth and transformed itself from a
respected U.S. investment management firm to a financial institution
with a global presence.
As the organization makes its way into the new century, we are certain
that the changes that lie ahead will be even more breathtaking in their
scope. What will not change is the Trustees' dedication to serving the
best interests of our shareholders.
We embark upon this new era of Putnam's rich heritage with confidence
and we look forward to the opportunity of continuing to help you meet
your financial objectives for many years to come.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
July 19, 2000
REPORT FROM THE FUND MANAGER
Richard P. Wyke
While municipal bond performance for the 12 months ended May 31, 2000,
may have been a bit discouraging for municipal bond investors,
shareholders in Putnam Florida Tax Exempt Income Fund can take heart in
the fact that their fund held up better than many of its peers,
outperforming most of the funds in its Lipper category for the past
year, three-year and five-year periods. (See page 2 for details.).
Total return for 12 months ended 5/31/00
Class A Class B Class M
NAV POP NAV CDSC NAV POP
----------------------------------------------------
-2.18% -6.79% -2.81% -7.44% -2.37% -5.53%
----------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 6.
* FED'S HAWKISH WAYS CREATE BUYING OPPORTUNITIES
Florida, like the rest of the nation, is enjoying strong economic
growth, providing municipalities with higher tax revenues and improving
creditworthiness. But for municipal bond holders, the prosperity poses a
dilemma. On the one hand, strong economic growth raises the risk of
higher inflation, and on the other hand, increases in interest rates to
combat that threat erode the value of tax-free investments. What is a
municipal bond investor to do?
Experience has taught us that uncertainty provides fertile ground for
bargain hunters with conviction and patience. Even if more interest-rate
increases are in the cards over the near term, the Federal Reserve
Board's war on inflation merits a vote of confidence for fixed-income
securities down the road. In the meantime, we have tried to make the
most of the buying opportunities in the bond market selloff by
positioning your fund for brighter days.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Hospitals and
health care 34.8%
Education 14.3%
Utilities 11.9%
Water and sewer 8.1%
Transportation 6.5%
Footnote reads:
*Based on net assets as of 5/31/00. Holdings will vary over time.
For much of the fund's fiscal year, strong economic growth and the
perceived risk of higher inflation eroded the value of all fixed-income
investments, including municipal bonds. The Fed's hawkish,
anti-inflation bent is strong medicine, but most analysts agree that it
is the best prescription. Bonds did experience a temporary reprieve in
mid February, when the U.S. Treasury announced a buyback program of its
outstanding debt.
Putnam Florida Tax Exempt Income Fund's class A shares were ranked in
the top 24% of the tax-exempt income funds tracked by Lipper Analytical
Services for the 1-year period ended May 31, 2000. The fund was 15 out
of 64 tax-exempt income funds ranked.*
*Past performance is no guarantee of future results. 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. For the 3- and
5-year periods, the fund ranked 22 out of 61 and 20 out of 48 tax-exempt
income funds, respectively. Performance of other share classes will vary.
This event, combined with rising expectations that the economy would
begin to slow down in the second half of the year, sparked a rally in
fixed-income markets.
New statistics came to light in March, April, and May, however,
suggesting that the economy was not yet cooling down. Consumer spending,
the growth engine for the past two years, remained robust, and
inflationary pressures still existed. With investors' upbeat mood
effectively squelched, municipal bond prices retreated for the balance
of the reporting period. Interest rates at both ends of the yield curve
began to climb again in expectation of more aggressive Fed tightening.
As expected, in May the Fed imposed an increase of half a percentage
point, its sixth and largest increase since June 1999.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
AAA/Aaa -- 63.2%
AA/Aa -- 11.3%
A -- 8.3%
BBB/Baa -- 13.0%
BB/Ba -- 3.5%
VMIG1 -- 0.7%
Footnote reads:
*As a percentage of market value as of 5/31/00. A bond rated BBB/Baa or
higher is considered investment grade. Percentages may include unrated
bonds considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
The municipal bond market may slowly be approaching the point at which
the news gets better. It may not seem like good news, but a responsible
Fed that proactively seeks to contain inflation is good news for bond
investors. True, Fed policy and rising interest rates have been the main
reason for the choppy municipal bond market this year, but municipal
bond yields are really not much higher and bond prices have not gone
much lower than they were in October 1999. Rather, it is the short-term
Treasury rates and mortgage interest rates that have seen the greatest
volatility.
"Now is a particularly good time to look at [municipals] since muni debt
is paying as much as 30-year Treasuries -- and it's tax-exempt."
-- SmartMoney.com, April 20, 2000
* FINDING VALUE IN WIDENING CREDIT SPREADS
The increase in interest rates has created a dramatic widening of credit
spreads between lower-yielding higher-quality municipal bonds and
higher-yielding lower-quality municipal bonds. This spread was most
pronounced in January and March, and we took advantage of the more
affordable prices in the lower end of the credit spectrum to purchase
some BBB/Baa-rated bonds. At the start of the fiscal period, BBB-rated
bond yielded about a half percentage point more than a AAA-rated bond,
but now we are seeing a three-quarter point difference between the two
bonds, an extremely attractive yield difference that in our view
compensates investors for the slightly higher risk inherent in a
BBB-rated bond.
With the widening of spreads has come new, more reasonably valued
opportunities in the lower end of the credit spectrum, particularly in
Florida's community district development sector. We purchased Fleming
Island Plantation bonds, which are financing the construction of
approximately 2,800 housing units. Several factors bode well for this
residential development. Foremost, it is located in Jacksonville, a
substantial and growing metropolitan area. In addition, the project
includes homes for first-time buyers as well as those seeking higher-end
custom-built homes, creating flexibility to meet market demand and
changing real estate dynamics. Finally, the developer is a
well-respected, publicly traded homebuilder. While this holding, along
with others discussed in this report, were viewed favorably at the end
of the period, all are subject to review and adjustment in accordance
with the fund's investment strategy and may vary in the future.
* FLORIDA PROSPERS; INTANGIBLES TAX REDUCED
Florida is basking in the glow of a strong economy, and tax receipts
from the state's sales tax and other indirect fees, such as lottery and
motor vehicle licenses revenues, have created favorable cash flows. Even
the tobacco settlement is adding flexibility to the Sunshine State's
ability to fund additional capital programs. All of that
notwithstanding, however, the tremendous population growth is creating
the need for more services and capital improvements, including schools,
roads, open-space acquisition, and hospitals.
In May, the state legislature approved a reduction in Florida's
intangibles tax. The decrease in the tax from $1.50 to $1.00 per $1,000
in asset value will go into effect January 1, 2001, and is estimated to
save investors more than $240 million a year. To offset the revenue
loss, the state will redirect a portion of monies collected through
sales and user tax collections to local governments to make up the
difference.
We do not anticipate any change in the credit quality of the state or
counties. However, for holders of Florida tax-free investments, the tax
reduction may cause in-state municipal bonds to trade at a lower premium
and move more in line with national market levels. The legislature is
discussing more reductions with an eventual phaseout of the intangibles
tax over the next few years. Depending on market conditions, this event
could entice Florida investors to increase their investments in
out-of-state municipal bonds.
* PATIENCE WILL BE KEY
It is difficult to know exactly when the economy will begin to slow and
interest rates begin to fall, but we do know that as of the end of the
period, the signs were there: 30-year mortgage interest rates were close
to 9%, corporate bond rates were also approaching 9%, and the lure of
common stocks, particularly in the technology and telecommunications
sector, was fading. These three factors have historically correlated
with a weakening economy, a slowdown in consumer spending, and lower
interest rates.
Since the Fed's monetary policy acts with a lag, we continue to believe
that the Fed rate increases will eventually take hold and slow the
economy down. The markets are likely to be unstable near term and we may
see another rate increase, but once economic reports show that economic
growth is slowing, bond markets, including the municipal bond market,
should perform better.
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 5/31/00, 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
capital preservation.
TOTAL RETURN FOR PERIODS ENDED 5/31/00
Class A Class B Class M
(inception dates) (8/24/90) (1/4/93) (5/1/95)
NAV POP NAV CDSC NAV POP
----------------------------------------------------------------------
1 year -2.18% -6.79% -2.81% -7.44% -2.37% -5.53%
----------------------------------------------------------------------
5 years 22.39 16.63 18.48 16.59 20.56 16.61
Annual average 4.12 3.12 3.45 3.12 3.81 3.12
----------------------------------------------------------------------
Life of Fund 80.11 71.63 67.74 67.74 74.12 68.46
Annual average 6.21 5.68 5.44 5.44 5.84 5.48
----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 5/31/00
Lehman Brothers Municipal Consumer
Bond Index price index
----------------------------------------------------------------------
1 year -0.86% 3.07%
----------------------------------------------------------------------
5 years 28.55 12.55
Annual average 5.15 2.39
----------------------------------------------------------------------
Life of fund 92.89 30.17
Annual average 6.97 2.74
----------------------------------------------------------------------
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.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 8/24/90
Lehman Brothers
Fund's class A Municipal Bond Consumer price
Date shares at POP Index index
8/24/90 9,529 10,000 10,000
5/31/91 10,307 10,912 10,304
5/31/92 11,390 11,983 10,616
5/31/93 12,834 13,417 10,957
5/31/94 12,840 13,748 11,208
5/31/95 14,024 15,005 11,565
5/31/96 14,451 15,690 11,900
5/31/97 15,624 16,992 12,166
5/31/98 17,001 18,587 12,371
5/31/99 17,545 19,456 12,629
5/31/00 $17,163 $19,289 $13,017
Footnote reads:
Past performance is no assurance of future results. At the end of the same
time period, a $10,000 investment in the fund's class B shares would have
been valued at $16,774 and no contingent deferred sales charges would apply;
a $10,000 investment in the fund's class M shares would have been valued at
$17,412 ($16,846 at public offering price).
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 5/31/00
Class A Class B Class M
------------------------------------------------------------------------
Distributions (number) 12 12 12
------------------------------------------------------------------------
Income $0.474892 $0.417211 $0.447744
------------------------------------------------------------------------
Capital gains1 -- -- --
------------------------------------------------------------------------
Total $0.474892 $0.417211 $0.447744
------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
------------------------------------------------------------------------
5/31/99 $9.30 $9.76 $9.30 $9.29 $9.60
------------------------------------------------------------------------
5/31/00 8.62 9.05 8.62 8.62 8.91
------------------------------------------------------------------------
Current return (end of period)
------------------------------------------------------------------------
Current dividend rate2 5.44% 5.18% 4.78% 5.13% 4.96%
------------------------------------------------------------------------
Taxable equivalent3 9.01 8.58 7.91 8.49 8.21
------------------------------------------------------------------------
Current 30-day SEC yield4 5.11 4.86 4.46 4.81 4.65
------------------------------------------------------------------------
Taxable equivalent3 8.46 8.05 7.38 7.96 7.70
------------------------------------------------------------------------
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 6/30/00 (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
------------------------------------------------------------------------
1 year 1.82% -2.97% 1.06% -3.76% 1.40% -1.93%
------------------------------------------------------------------------
5 years 27.28 21.18 23.10 21.13 25.23 21.17
Annual average 4.94 3.92 4.24 3.91 4.60 3.92
------------------------------------------------------------------------
Life of fund 84.63 75.94 71.69 71.69 78.26 72.47
Annual average 6.42 5.90 5.64 5.64 6.04 5.69
------------------------------------------------------------------------
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 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, preceded by the Report of independent
accountants, 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.
REPORT OF INDEPENDENT ACCOUNTANTS
For the fiscal year ended May 31, 2000
To the Trustees and Shareholders of
Putnam Florida Tax Exempt Income Fund
In our opinion, the accompanying statement of assets and liabilities,
including the fund's portfolio (except for bond ratings) and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial
position of Putnam Florida Tax Exempt Income Fund (the "fund") at May
31, 2000, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at May 31,
2000 by correspondence with the custodian, provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 10, 2000
<TABLE>
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THE FUND'S PORTFOLIO
May 31, 2000
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 (98.4%) (a)
PRINCIPAL AMOUNT RATING(RAT) VALUE
<S> <C> <C> <C>
California (1.3%)
-------------------------------------------------------------------------------------------------------------------
$ 4,000,000 CA Statewide Cmnty. Dev. Auth. COP,
5 1/2s, 8/15/31 AAA $ 3,655,000
Florida (82.9%)
-------------------------------------------------------------------------------------------------------------------
Brevard Cnty., Hlth. Fac. Auth. Rev. Bonds
(Courtenay Springs)
2,000,000 7 3/4s, 11/15/17 AAA/P 2,242,500
2,345,000 7 1/2s, 11/15/09 AAA/P 2,605,881
3,000,000 Broward Cnty., Arpt. Syst. Rev. Bonds
(Passenger Fac.), Ser. H-2, AMBAC,
5 1/8s, 10/1/16 Aaa 2,748,750
Broward Cnty., Edl. Fac. Auth. Rev. Bonds
(Nova U. Dorm), Ser. A
2,500,000 7 1/2s, 4/1/17 AAA/P 2,604,725
140,000 7 1/4s, 4/1/01 AAA/P 142,890
1,000,000 Broward Cnty., Hlth. Fac. Auth. Rev. Bonds
(Broward Cnty. Nursing Home), 7 1/2s, 8/15/20 Aa3 1,041,250
Broward Cnty., Resource Recvy. Rev. Bonds
5,655,000 (SES Broward Cnty. LP South), 7.95s, 12/1/08 A+ 5,832,002
1,105,000 (Waste-Energy LP North), 7.95s, 12/1/08 A+ 1,139,465
1,400,000 Clay Cnty., Multi-Fam. Hsg. Fin. Auth. Rev. Bonds
(Oak Forest), Ser. A, GNMA Coll., 7.4s, 12/1/25 AAA 1,436,344
1,875,000 Clay Cnty., Single Fam. Hsg. Fin. Auth. Rev. Bonds,
Ser. A, GNMA Coll., 7.45s, 9/1/23 Aa1 1,921,875
2,500,000 Dade Cnty., Edl. Facs. Auth. Rev. Bonds, Ser. A,
AMBAC, 5 3/4s, 4/1/13 AAA 2,531,250
8,000,000 Dade Cnty., Professional Sports Franchise Fac.
Tax Rev. Bonds, MBIA, 4 3/4s, 10/1/30 Aaa 6,470,000
5,000,000 Escambia Cnty., Hlth. Facs. Auth. Rev. Bonds
(Ascension Hlth. Credit), Ser. A-1,
5 3/4s, 11/15/29 AAA 4,756,250
5,500,000 Escambia Cnty., Poll. Control Rev. Bonds
(Champion Intl. Corp.), 6.9s, 8/1/22 Baa1 5,534,375
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 2,308,731
275,000 FL Hsg. Fin. Agcy. Rev. Bonds (Home Ownership
Dev. Program), Ser. G-1, GNMA Coll.,
7.9s, 3/1/22 Aaa 281,504
FL State Board of Ed. G.O. Bonds
7,000,000 6.4s, 6/1/19 (SEG) AA+ 7,157,500
9,000,000 4 3/4s, 6/1/28 AA+ 7,290,000
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 7,301,463
FL State Mid-Bay Bridge Auth. Rev. Bonds, Ser. A
1,500,000 8s, 10/1/06 BBB/P 1,593,750
2,180,000 7 1/2s, 10/1/17 BBB/P 2,302,625
3,540,000 6.1s, 10/1/22 BBB/P 3,283,350
2,000,000 FL State Muni. Pwr. Agcy. IFB, AMBAC, 8.73s,
10/1/20 (acquired 7/10/92, cost $2,101,200) (RES) Aaa 2,212,500
2,000,000 Fleming Island, Plantation Cmnty. Dev. Dist. Special
Assmt. Notes, 6.299s, 9/1/00 BB/P 1,999,900
3,000,000 Halifax, Hosp. Med. Ctr. Rev. Bonds, Ser. A,
7 1/4s, 10/1/29 BB/P 2,835,000
Hillsborough Cnty., Indl. Dev. Auth. Poll. Control
Rev. Bonds (Tampa Elec. Co.)
2,500,000 Ser. 91, 7 7/8s, 8/1/21 AA 2,662,500
3,645,000 6 1/4s, 12/1/34 AA 3,676,894
2,400,000 Hillsborough Cnty., Util. Rev. Bonds, Ser. A, FSA,
6 1/2s, 8/1/16 Aaa 2,472,000
Jacksonville, Hlth. Fac. Auth. Indl. Dev. Rev. Bonds
(Cypress Village)
1,350,000 7s, 12/1/22 Baa1 1,338,188
3,650,000 7s, 12/1/14 Baa1 3,727,563
Lee Cnty., Board of Directors Hosp. IFB, MBIA
5,000,000 (Lee Memorial Hosp.), 8.269s, 3/26/20 Aaa 5,137,500
4,000,000 8.049s, 4/1/20 Aaa 4,261,120
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 4,410,000
9,000,000 (Shell Point Village), Ser. A, 5 1/2s, 11/15/29 BBB- 6,907,500
Leesburg, Hosp. Rev. Bonds
(Leesbury Regl. Med. Ctr.)
1,000,000 Ser. 91-A, 7 1/2s, 7/1/21 A- 1,067,500
2,065,000 6 1/8s, 7/1/18 A3 1,974,656
2,750,000 Martin Cnty., Indl. Dev. Auth. Rev. Bonds
(Indian Cogeneration), Ser. A, 7 7/8s, 12/15/25 Baa3 2,753,438
10,000,000 Martin Cnty., Poll. Control Rev. Bonds
(FL Pwr. & Lt. Co.), MBIA, 7.3s, 7/1/20 Aaa 10,211,700
4,000,000 Orange Cnty., Hlth. Fac. Auth. IFB, 8.572s,
10/1/14 (acquired 4/19/95, cost $5,273,120) (RES) BBB+/P 5,040,000
5,000,000 Orange Cnty., Hlth. Fac. Auth. Rev. Bonds
(Orlando Regl. Hlthcare), MBIA, 6 1/4s, 10/1/18 Aaa 5,231,250
5,000,000 Orange Cnty., School Board COP, Ser. 85, MBIA,
FRB, 4.64s, 8/1/22 (acquired 12/21/98,
cost $5,344,900) (RES) Aaa 4,206,250
5,950,000 Orlando, Util. Comm. Wtr. & Elec. Rev. Bonds,
Ser. D, 6 3/4s, 10/1/17 AA- 6,597,063
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 2,039,812
2,265,000 Osceola Cnty., School Board COP, Ser. A, AMBAC,
5s, 6/1/18 Aaa 1,996,031
2,000,000 Palm Beach Cnty., Arpt. Syst. Rev. Bonds, MBIA,
7 3/4s, 10/1/10 Aaa 2,110,000
7,000,000 Palm Beach Cnty., School Board COP, Ser. A,
AMBAC, 6 3/8s, 8/1/15 Aaa 7,402,500
175,000 Palm Beach Cnty., Single Fam. Hsg. Fin. Auth. Mtge.
Rev. Bonds, Ser. A, GNMA Coll., 7.2s, 10/1/24 Aaa 180,250
5,000,000 Pinellas Cnty., Poll. Control Rev. Bonds
(FL Pwr. Corp.), 7.2s, 12/1/14 A1 5,191,650
Port Everglades, Auth. Rev. Bonds
5,000,000 (FL Port Impt.), 7 1/8s, 11/1/16 Aaa 5,681,250
5,000,000 Ser. A, 5s, 9/1/16 A- 4,431,250
2,390,000 Santa Rosa Cnty., Hlth. Fac. Auth. Rev. Bonds
(Gulf Breeze Hosp. Inc.), Ser. A, 6.2s, 10/1/14 BBB+ 2,240,625
Sarasota Cnty., Pub. Hosp. Board Rev. Bonds
(Sarasota Memorial Hosp.), Ser. B, MBIA
2,000,000 5 1/4s, 7/1/16 Aaa 1,852,500
2,000,000 5 1/4s, 7/1/15 Aaa 1,860,000
2,000,000 5 1/4s, 7/1/14 Aaa 1,872,500
2,675,000 SCA Tax Exempt Trust Multi-Fam. Mtge.
Rev. Bonds, Ser. A-1, FSA, 7.05s, 1/1/30 Aaa 2,755,250
2,250,000 South Broward, Hosp. Dist. IFB, Ser. C, AMBAC,
8.58s, 5/13/21 Aaa 2,417,670
4,860,000 Sumter Cnty., School Dist. Rev. Bonds
(Multi Dist. Loan Program), FSA, 7.15s, 11/1/15 Aaa 5,631,525
2,395,000 Tallahassee, Energy Syst. Rev. Bonds, Ser. A,
5 1/4s, 10/1/12 Aaa 2,332,131
4,355,000 Tampa Bay Wtr. Util. Syst. Rev. Bonds, FGIC,
5 3/4s, 10/1/15 AAA 4,371,331
4,500,000 Tampa Hlth. Sys. Rev. Bonds (Catholic Hlth.),
Ser. A, 4 3/4s, 11/15/28 Aaa 3,600,000
3,000,000 Tampa Hosp. Rev. Bonds (Cap. Impt.-H, Lee Moffitt),
Ser. A, 5 3/4s, 7/1/29 A 2,606,250
6,000,000 Tampa Rev. Bonds (Allegany Hlth. Syst. St. Joseph),
MBIA, 6 1/2s, 12/1/23 Aaa 6,450,000
Tampa, Util. Tax Rev. Bonds, AMBAC
1,950,000 zero %, 10/1/21 Aaa 524,060
2,625,000 zero %, 4/1/21 Aaa 728,438
5,800,000 zero %, 10/1/17 Aaa 2,051,750
5,000,000 Winter Haven, Util. Sys. Rev. Bonds, MBIA,
4 3/4s, 10/1/28 Aaa 4,068,750
----------------
225,644,525
Puerto Rico (10.7%)
-------------------------------------------------------------------------------------------------------------------
3,000,000 Cmnwlth. of PR, G.O. Bonds, MBIA, 6.45s, 7/1/17 Aaa 3,202,500
2,000,000 Cmnwlth. of PR, Govt. Dev. Bank VRDN, MBIA,
3.4s, 12/1/15 VMIG1 2,000,000
8,000,000 Cmnwlth. of PR, Pub. Impt. G.O. Bonds, FSA,
5 1/2s, 7/1/13 Aaa 8,130,000
5,280,000 Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds,
Ser. Z, MBIA, 6 1/4s, 7/1/15 Aaa 5,662,800
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 3,909,250
5,950,000 PR Muni. Fin. Agcy. Rev. Bonds, Ser. A,
FSA, 6s, 7/1/12 AAA 6,277,250
----------------
29,181,800
Tennessee (3.5%)
-------------------------------------------------------------------------------------------------------------------
10,000,000 Elizabethton, Hlth. & Ed. Facs. Board Rev. Bonds
(Hosp. Ref. & Impt.), Ser. B, MBIA, 5 3/4s, 7/1/23 AAA 9,537,500
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $277,371,306) (b) $ 268,018,825
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $272,285,466.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at May 31, 2000 for the securities
listed. Ratings are generally ascribed to securities at the time of
issuance. While the agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these
securities at May 31, 2000. Securities rated by Putnam are indicated by
"/P" and are not publicly rated. Ratings are not covered by the Report
of independent accountants.
(b) The aggregate identified cost on a tax basis is $277,371,306
resulting in gross unrealized appreciation and depreciation of
$4,975,784 and $14,328,265, respectively, or net unrealized depreciation
of $9,352,481.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at May 31, 2000 was
$18,760,213 or 6.9% of net assets.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at May 31,
2000.
The rates shown on Floating Rate Bonds (FRB) are the current
interest rates at May 31, 2000, which are subject to change based on the
terms of the security.
The rates shown on IFB, which are securities paying interest rates
that vary inversely to changes in the market interest rates, and
VRDN's are the current interest rates at May 31, 2000.
The fund had the following industry group concentrations greater
than 10% at May 31, 2000 (as a percentage of net assets):
Hospitals/health care 34.8%
Education 14.3
Utilities 11.9
The fund had the following insurance concentrations greater than
10% at May 31, 2000 (as a percentage of net assets):
MBIA 28.7%
FSA 12.7
------------------------------------------------------------------------
Futures Contracts Outstanding at May 31, 2000
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
------------------------------------------------------------------------
Muni Bond Index
(Long) $2,997,000 $2,997,551 Jun-00 $(551)
------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $277,371,306) (Note 1) $268,018,825
-------------------------------------------------------------------------------------------
Cash 675,000
-------------------------------------------------------------------------------------------
Interest and other receivables 4,969,239
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 35,862
-------------------------------------------------------------------------------------------
Receivable for variation margin 26,000
-------------------------------------------------------------------------------------------
Total assets 273,724,926
Liabilities
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 353,478
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 560,965
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 348,183
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 12,198
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 990
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 119,095
-------------------------------------------------------------------------------------------
Other accrued expenses 44,551
-------------------------------------------------------------------------------------------
Total liabilities 1,439,460
-------------------------------------------------------------------------------------------
Net assets $272,285,466
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $285,166,808
-------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (26,269)
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (3,502,041)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (9,353,032)
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $272,285,466
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($200,960,740 divided by 23,306,239 shares) $8.62
-------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $8.62)* $9.05
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($70,805,044 divided by 8,213,739 shares)+ $8.62
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($519,682, divided by 60,289 shares) $8.62
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.62)** $8.91
-------------------------------------------------------------------------------------------
* 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
Year ended May 31, 2000
<S> <C>
Tax exempt interest income: $ 18,004,447
-------------------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,490,862
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 286,554
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 12,754
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 6,799
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 430,050
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 649,230
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 4,894
-------------------------------------------------------------------------------------------
Reports to shareholders 15,118
-------------------------------------------------------------------------------------------
Auditing 39,704
-------------------------------------------------------------------------------------------
Legal 9,294
-------------------------------------------------------------------------------------------
Postage 14,481
-------------------------------------------------------------------------------------------
Other 44,669
-------------------------------------------------------------------------------------------
Total expenses 3,004,409
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (115,515)
-------------------------------------------------------------------------------------------
Net expenses 2,888,894
-------------------------------------------------------------------------------------------
Net investment income 15,115,553
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1) (946,024)
-------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (611,935)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
futures contracts during the year (21,212,708)
-------------------------------------------------------------------------------------------
Net loss on investments (22,770,667)
-------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (7,655,114)
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended May 31
----------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $15,115,553 $15,034,689
--------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (1,557,959) 373,313
--------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (21,212,708) (5,962,276)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (7,655,114) 9,445,726
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income
Class A (11,553,402) (11,373,102)
--------------------------------------------------------------------------------------------------
Class B (3,600,385) (3,223,202)
--------------------------------------------------------------------------------------------------
Class M (49,473) (67,118)
--------------------------------------------------------------------------------------------------
Increase (decrease) from capital share transactions (Note 4) (21,493,805) 10,776,187
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (44,352,179) 5,558,491
Net assets
--------------------------------------------------------------------------------------------------
Beginning of year 316,637,645 311,079,154
--------------------------------------------------------------------------------------------------
End of year (including distribution in excess of net
investment income and undistributed net investment
income of $26,269 and $57,758, respectively) $272,285,466 $316,637,645
--------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended May 31
------------------------------------------------------------------------------------------------
2000 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 .47 .46 .47 .48 .48
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.68) (.16) .32 .23 (.21)
------------------------------------------------------------------------------------------------
Total from
investment operations (.21) .30 .79 .71 .27
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.47) (.45) (.48) (.48) (.48)
------------------------------------------------------------------------------------------------
Total distributions (.47) (.45) (.48) (.48) (.48)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.62 $9.30 $9.45 $9.14 $8.91
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (2.18) 3.20 8.80 8.12 3.04
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $200,961 $233,454 $237,910 $239,196 $247,920
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .86 .98 .96 .96 .95
------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.35 4.87 5.06 5.28 5.31
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 15.32 32.08 42.40 70.30 81.99
------------------------------------------------------------------------------------------------
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended May 31
------------------------------------------------------------------------------------------------
2000 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 .42 .40 .42 .42 .42
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.68) (.16) .31 .23 (.21)
------------------------------------------------------------------------------------------------
Total from
investment operations (.26) .24 .73 .65 .21
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.42) (.39) (.42) (.42) (.42)
------------------------------------------------------------------------------------------------
Total distributions (.42) (.39) (.42) (.42) (.42)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.62 $9.30 $9.45 $9.14 $8.91
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (2.81) 2.56 8.10 7.42 2.37
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $70,805 $81,876 $71,925 $58,926 $52,541
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.51 1.63 1.61 1.61 1.60
------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.70 4.23 4.40 4.62 4.64
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 15.32 32.08 42.40 70.30 81.99
------------------------------------------------------------------------------------------------
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended May 31
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.29 $9.44 $9.14 $8.91 $9.12
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income .45 .43 .45 .45 .46
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.67) (.16) .30 .23 (.21)
------------------------------------------------------------------------------------------------
Total from
investment operations (.22) .27 .75 .68 .25
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.45) (.42) (.45) (.45) (.46)
------------------------------------------------------------------------------------------------
Total distributions (.45) (.42) (.45) (.45) (.46)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.62 $9.29 $9.44 $9.14 $8.91
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (2.37) 2.88 8.36 7.80 2.76
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $520 $1,308 $1,244 $1,355 $986
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.16 1.28 1.26 1.26 1.23
------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.02 4.60 4.74 4.97 4.82
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 15.32 32.08 42.40 70.30 81.99
------------------------------------------------------------------------------------------------
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
May 31, 2000
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 municipal 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 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 last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
D) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the year ended
ended May 31, 2000, 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, 2000, the fund had a capital loss carryover of approximately
$3,255,000 available to offset future capital gains, if any. The amount
of the carryover and the expiration dates are:
Loss Carryover Expiration
-------------- ------------------
$ 222,000 May 31, 2003
908,000 May 31, 2004
4,000 May 31, 2005
2,121,000 May 31, 2008
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. These differences include temporary and
permanent differences of dividends payable, unrealized gains and losses
on certain futures contracts, market discount and prior year straddle
loss deferrals. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations. For the
year ended May 31, 2000, the fund reclassified $3,680 to decrease
distributions in excess of net investment income and $4,113 to decrease
paid-in-capital, with a decrease to accumulated net realized losses of
$433. The calculation of net investment income per share in the
financial highlights table excludes these adjustments.
G) Amortization of bond premium and accretion of bond discount Any
premium resulting from the purchase of securities in excess of maturity
value is amortized on a yield-to-maturity basis. Discounts on zero
coupon bonds and original issue discount bonds are accreted according to
the yield to maturity basis.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based upon the lesser of (i) an annual rate of
0.50% of the average net asset value of the fund or (ii) 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. Prior to July 1, 1999, the
management fee was based on (ii) 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 year ended May 31, 2000, fund expenses were reduced by $115,515
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 $560
has been allocated to the fund, and an additional fee for each Trustees
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 Retail Management, Inc., 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 Retail Management, Inc. 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 year ended May 31, 2000, Putnam Retail Management, Inc., acting
as underwriter received net commissions of $17,369 and $244 from the
sale of class A and class M shares, respectively and $215,094 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 year ended May 31, 2000, Putnam Retail
Management, Inc., acting as underwriter received $11,128 on class A
redemptions.
Note 3
Purchases and sales of securities
During the year ended May 31, 2000, cost of purchases and proceeds from
sales of investment securities other than short-term investments
aggregated $44,119,968 and $68,890,026, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Capital shares
At May 31, 2000, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended May 31, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 4,308,728 $ 37,808,735
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 568,933 5,011,356
---------------------------------------------------------------------------
4,877,661 42,820,091
Shares
repurchased (6,676,063) (58,457,795)
---------------------------------------------------------------------------
Net decrease (1,798,402) $(15,637,704)
---------------------------------------------------------------------------
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)
---------------------------------------------------------------------------
Year ended May 31, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 1,611,662 $14,263,853
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 163,977 1,444,352
---------------------------------------------------------------------------
1,775,639 15,708,205
Shares
repurchased (2,368,874) (20,864,861)
---------------------------------------------------------------------------
Net decrease (593,235) $(5,156,656)
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Year ended May 31, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 18,265 $163,024
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,380 20,964
---------------------------------------------------------------------------
20,645 183,988
Shares
repurchased (101,059) (883,433)
---------------------------------------------------------------------------
Net decrease (80,414) $(699,445)
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
FEDERAL TAX INFORMATION
(Unaudited)
The fund has designated 100% of dividends paid from net investment
income during the fiscal year as tax exempt for Federal income tax
purposes.
The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.
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
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 Century Growth Fund
New Opportunities Fund
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Classic Equity 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
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 Growth and Income Fund 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 Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
TRUSTEES
John A. Hill, 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, III
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
Richard G. Leibovitch
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
AN046-62258 037/365/453 7/00
