Putnam
Tax-Free
Health Care
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
11-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
Putnam Tax-Free Health Care Fund's recently concluded fiscal year
coincided with one of the more anxiety-driven times in recent memory.
Uncertainties generated by the Federal Reserve Board's interest-rate
policy, the slowing pace of the economy, and the aftermath of the
presidential election have all contributed to the general sense of
unease.
Typically, in such an environment, investors are drawn to the relative
security of fixed-income investments. In this case, they have also been
increasingly drawn to the tax advantages of municipal bonds, helping to
boost demand in the face of a diminishing supply. Consequently, your
fund, which had been under some pressure during the first half of its
2000 fiscal year, completed the year with solid performance and an
attractive level of tax exempt income.
Seasoned investors realize that uncertainties such as we have recently
experienced are usually transitory. Your fund's manager, Blake Anderson,
successfully positioned the fund to benefit as the market shifted into a
more favorable climate. We are confident that his strategies will enable
it to take full advantage of the opportunities available in fiscal 2001.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
January 17, 2001
REPORT FROM FUND MANAGEMENT
Blake E. Anderson
A number of factors have combined to generate improving results for
Putnam Tax-Free Health Care Fund in the first six months of its fiscal
period, which ended November 30, 2000. The bond market in general has
benefited from a slowing economy since early in the year. Secondly,
strong tax receipts at the federal and state level have provided a
somewhat more favorable background for the health-care sector. Finally,
yields in the sector proved to be attractive during a period of
heightened volatility in the stock market. Together, these conditions
contributed to relatively stable performance, and your fund enjoyed
modest benefits.
Total return for 6 months ended 11/30/00
NAV Market price
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4.84% 9.64%
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Past performance is not indicative of future results. Performance
information for longer periods begins on page 6.
* BONDS BENEFIT FROM VOLATILITY IN EQUITY MARKET
One of the positive influences on fund performance during the six-month
period was the unfavorable situation in the equity market. After several
years of robust returns, investors turned sour on stocks during the
course of 2000, shaken by turbulent markets and concerned about slowing
economic growth. Until December, 2000, the Federal Reserve Board had
viewed inflationary pressures as the chief risk to the economy, and had
tightened monetary policy in response. The consequent economic slowdown
caused many companies to lower their profit forecasts. The municipal
bond market had already begun to anticipate the beginning of a slowdown
in the economy and delivered better performance to investors who had
maintained their positions.
[GRAPHIC OMITTED: horizontal bar chart TOP STATE ALLOCATIONS]
TOP STATE ALLOCATIONS*
California 15.4%
Texas 12.9%
Massachusetts 11.2%
Michigan 7.3%
Pennsylvania 5.7%
Footnote reads:
*Based on net assets as of 11/30/00. Holdings will vary over time.
In the context of declining interest rates and investors' pursuit of
safer investments, the AAA/Aaa-rated sector of the municipal market has
benefited the most. Your fund had a large position in AAA/Aaa-rated
bonds, which helped it to achieve a small gain at net asset value while
its yield remained higher than that of most municipal bond funds. While
the lower credit-quality bonds in the portfolio did not perform well,
they helped keep the fund's yield at a very attractive level.
* POLITICAL ISSUES KEEP SECTOR YIELDS HIGH
As we have noted in previous fund reports, both government and private
insurers are under pressure to reduce the growth rate of health-care
spending. This continues to be a main source of risk surrounding
hospital bonds. While demographic developments, such as an aging
population, contribute to rising demand for hospital services, federal
and state governments as well as employers are striving to limit
increases in health-related expenses. The Federal Balanced Budget Act of
1997, in particular, placed new caps on federal reimbursements to
health-care facilities via the Medicare and Medicaid programs.
Meanwhile, health-maintenance organizations have proved to be tough
negotiators on behalf of employers, compelling hospitals to hold the
line on prices.
While the general trend is still toward a lower rate of growth in
health-care spending, the strength of the economy has eased some of the
pressure on hospitals. Thanks to better-than-expected tax receipts, the
federal government has been a bit more generous with reimbursements.
Private employers who are the main buyers of coverage have, in many
cases, been willing to shoulder a portion of rising costs in order to
maintain a level of benefits competitive enough to attract and retain
employees.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
Aaa/AAA -- 46.6%
Aa/AA -- 5.7%
A -- 5.1%
Baa/BBB -- 14.6%
Ba/BB -- 14.5%
B -- 13.1%
Other -- 0.4%
Footnote reads:
*As a percentage of market value as of 11/30/00. A bond rated Baa/BBB or
higher is considered investment grade. All ratings reflect Moody's and
Standard & Poor's descriptions unless noted otherwise; percentages may
include unrated bonds considered by Putnam Management to be of comparable
quality. Ratings will vary over time.
Health-care issues figured prominently in the 2000 U.S. election
campaigns at both federal and state levels. Given that both major
political parties' presidential campaigns proposed new health-care
spending, albeit primarily for prescription drugs, there is at least
some possibility that the federal budget surplus could be a source of
health-care funding. We will be monitoring developments in the new
Congress, since many congressional campaigns committed to tighter
regulation of HMOs. We'll watch for the effect this might have on
health-care institutions.
* PORTFOLIO STRUCTURE REMAINS CONSISTENT
Since your fund emphasizes one sector of the municipal bond market, we
focus primarily on our credit research to identify the best
opportunities for a high level of tax-exempt income. We also actively
manage the fund with techniques such as adjusting the credit structure
and duration stance of the portfolio. During the period, the fund
maintained its credit barbell profile, meaning that we have concentrated
assets at high and low credit levels, with little invested in the middle
levels. For example, nearly half of the fund's holdings have the highest
credit rating of AAA/Aaa, a position that is offset by investments in a
combination of BBB/Baa-rated bonds, the lowest investment-grade level,
and in bonds rated below-investment grade. The fund's duration -- its
sensitivity to interest rates -- has been neutral relative to the
market, meaning that we correctly anticipated that long-term interest
rates would be generally stable in most sectors.
In the past six months, there has been little reason to modify the
portfolio. Higher-quality bonds have enjoyed modest price appreciation,
while the lower credit tiers continue to offer an attractive level of
income to compensate for credit risks. This was true not only for
municipal bonds but also for other fixed-income securities.
In these conditions we have been able to add a small number of new
holdings with attractive yield characteristics. At the same time we have
renewed our focus on credit risk. Credit rating downgrades have far
exceeded upgrades in the health-care sector, and unease in the market
has created opportunities. For example, we took advantage of some
opportunities in which risk concerns pushed down the prices of bonds at
the lowest investment-grade tier, making their yields equivalent to
those of lower-rated, high-yield bonds.
* ECONOMIC CONDITIONS MAY REMAIN FAVORABLE
Most of the trends that we have discussed in this report are likely to
remain in place during the second half of the fund's fiscal year. The
contentious issues surrounding health-care funding are likely to remain,
keeping the sector among the most risky but also the highest-yielding
areas of the municipal market. The macroeconomic background should
remain mostly supportive. The Fed continues to adjust monetary policy
seeking stable, non-inflationary growth. Indeed, after deciding not to
raise interest rates at its November and December meetings, the Fed
subsequently cut interest rates in early January, 2001, after the close
of the fund's fiscal period, to prevent further slowing in business
activity. Continued economic growth is positive for employers and for
governments paying healthcare bills. In turn, these conditions may be
positive for hospitals and health-care institutions. At Putnam, our
credit analysts will continue the market for opportunities as economic
conditions and the yield curve change. We will continue to monitor
possibilities to improve the fund's credit profile while maintaining its
yield.
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 11/30/00, there is no guarantee the fund
will continue to hold these securities in the future. The fund
concentrates its investments in one industry and involves more risk than
a fund that invests more broadly.
A NOTE ABOUT DUPLICATE MAILINGS
In response to investors' requests, the SEC has modified mailing regulations
for semiannual and annual reports and prospectuses. Putnam is now able to
send a single copy of these materials to customers who share the same
address. This change will automatically apply to all shareholders except
those who notify us. If you prefer to receive your own copy, please call
Putnam at 1-800-225-1581.
PERFORMANCE SUMMARY
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Tax-Free Health Care Fund is designed for investors seeking high current
income free from federal income tax and consistent with the preservation
of capital through a portfolio of securities in the health-care sector.
TOTAL RETURN FOR PERIODS ENDED 11/30/00
Lehman Bros.
Market Municipal Consumer
NAV price Bond Index price index
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6 months 4.84% 9.64% 7.08% 1.57%
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1 year 4.95 14.01 8.18 3.44
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5 years 29.50 34.84 30.88 13.26
Annual average 5.31 6.16 5.53 2.52
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Life of fund
(since 6/29/92) 74.12 50.34 69.52 24.25
Annual average 6.81 4.96 6.47 2.61
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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, net asset value, and market price 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 11/30/00
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Distributions (number) 6
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Income 1 $0.45
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Capital gains 1 --
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Total $0.45
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Share value: NAV Market price
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5/31/00 $13.18 $11.750
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11/30/00 13.34 12.438
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Current return (end of period)
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Current dividend rate 2 6.75% 7.24%
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Taxable equivalent 3 11.18 11.99
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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 and market price 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.
TOTAL RETURN FOR PERIODS ENDED 12/31/00 (most recent calendar quarter)
NAV Market price
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6 months 5.31% 9.49%
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1 year 7.94 22.69
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5 years 30.75 40.29
Annual average 5.51 7.01
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Life of fund
(since 6/29/92) 77.32 54.27
Annual average 6.96 5.23
-------------------------------------------------------------------------------
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.
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.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities divided by the number of outstanding shares.
Market price is the current trading price of one share of the fund.
Market prices are set by transactions between buyers and sellers on the
New York Stock Exchange.
COMPARATIVE BENCHMARKS
The Lehman Brothers Municipal Bond Index is an unmanaged list of
approximately 20,000 investment-grade, fixed-rate tax-exempt bonds
representative of the municipal bond market. Securities indexes assume
reinvestment of all distributions and interest payments and do not take
into account brokerage fees or taxes. Securities in the fund do not
match those in the index and performance of the fund will differ. It is
not possible to invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
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, 2000 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FNMA Coll. -- Federal National Mortgage Association Collateralized
FSA -- Financial Security Assurance
IFB -- Inverse Floating Rate Bonds
IF COP -- Inverse Floating Rate Certificate of Participation
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (101.7%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C> <C>
Alaska (1.1%)
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$ 2,000,000 Valdez, Marine Term. Rev. Bonds (Sohio Pipeline),
7 1/8s, 12/1/25 AA $ 2,092,260
Arizona (5.2%)
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6,380,000 Cochise Cnty., Indl. Dev. Rev. Bonds (Sierra Vista
Cmnty. Hosp.), Ser. B, 8 1/2s, 12/1/21 AAA 6,714,950
1,000,000 Pima Cnty., Indl. Dev. Auth. Hlth. Care Fac.
Rev. Bonds, Ser. A, 8 1/2s, 11/15/32 B/P 988,750
1,875,000 Pinal Cnty., Indl. Dev. Auth. Rev. Bonds (Casa
Grande Regl. Med. Ctr.), Ser. A, 8 1/8s, 12/1/22 B/P 1,846,875
-------------
9,550,575
California (15.4%)
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Anaheim, Pub. Fin. Auth. Lease Rev. Bonds
(Cap. Appn. Sub. Pub. Impt.) Ser. C, FSA
12,485,000 zero %, 9/1/34 Aaa 1,825,931
17,000,000 zero %, 9/1/30 Aaa 3,123,750
17,000,000 zero %, 9/1/29 Aaa 3,293,750
1,000,000 CA Statewide Cmnty. Dev. Auth. COP
(The Internext Group), 5 3/8s, 4/1/30 BBB 853,750
4,000,000 Corona, COP (Hosp. Syst. Inc.), Ser. C, 8 3/8s,
7/1/11(acquired 3/5/96, cost $4,000,000)
(In default) (NON) (RES) B-/P 1,600,000
17,105,000 Riverside Cnty., Asset Leasing Corp. Leasehold
Rev. Bonds (Riverside Cnty. Hosp.), MBIA,
zero %, 6/1/25 Aaa 4,212,106
3,000,000 San Bernardino Cnty., IF COP
(PA-100-Med. Ctr. Fin.), MBIA, 6 1/2s, 8/1/28
(acquired 6/27/95, cost $3,237,720) (RES) (SEG) AAA/P 3,701,250
4,750,000 San Francisco, City & Cnty. Arpts.
Rev. Bonds, FGIC, 7.386s, 5/1/25
(acquired 1/3/96, cost $5,354,105) (RES) AAA 5,563,438
1,000,000 San Joaquin Hills, Trans. Corridor Agcy. Toll Road
Rev. Bonds, Ser. A, MBIA, zero %, 1/15/32 AAA 168,750
4,075,000 Valley Hlth. Syst. COP, 6 7/8s, 5/15/23 BB+/P 4,018,969
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28,361,694
Colorado (3.0%)
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3,000,000 CO Hlth. Facs. Auth. Rev. Bonds
(Hosp. Impt.-NCMC, Inc.), FSA, 5 3/4s, 5/15/19 AAA 3,052,500
1,250,000 CO Springs Hosp. Rev. Bonds, 6 3/8s, 12/15/30 A 1,253,125
1,500,000 Denver, Hlth. & Hosp. Rev. Bonds, Ser. A,
5 3/8s, 12/1/28 Baa2 1,196,250
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5,501,875
Connecticut (5.0%)
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CT State Dev. Auth. 1st Mtge. Rev. Bonds
(Inter-Church Residences Inc.)
3,500,000 9 5/8s, 4/1/21 Aaa 3,676,050
1,200,000 9 1/2s, 5/1/13 Aaa 1,259,772
CT State Hlth. & Edl. Fac. Auth. Rev. Bonds
2,000,000 (Norwalk Health Care Inc.), Ser. A, 8.7s, 7/1/22 AAA/P 2,182,500
2,080,000 (Edgehill), Ser. A, 6 7/8s, 7/1/27 B/P 2,098,200
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9,216,522
Florida (3.9%)
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4,850,000 Orange Cnty., Hlth. Fac. Auth. IFB, Ser. 91-C, MBIA,
8.239s, 10/29/21 Aaa 5,222,723
2,000,000 St. Johns Cnty., FL Hlth. Care Indl. Dev. Auth.
Rev. Bonds (Glenmoor St. Johns Project),
Ser. A, 8s, 1/1/30 B+/P 1,987,500
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7,210,223
Georgia (1.7%)
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1,000,000 Forsyth Cnty., Hosp. Auth. Rev. Bonds
(Babtist Hlthcare Sys), 6 1/4s, 10/1/18 B/P 857,500
2,000,000 GA Muni. Elec. Pwr. Auth. Rev. Bonds, Ser. Y,
AMBAC, 6.4s, 1/1/13 A 2,260,000
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3,117,500
Illinois (2.8%)
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IL Dev. Fin. Auth. Rev. Bonds
(Cmnty. Rehab. Providers Fac.)
2,010,000 8 3/4s, 7/1/11 B/P 2,092,008
1,030,000 8 3/4s, 7/1/11, Prerefunded AAA/P 1,068,738
2,000,000 IL Hlth. Fac. Auth. Rev. Bonds
(Childrens Mem Hosp), Ser. A, AMBAC,
5 3/4s, 8/15/25 AAA 2,010,000
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5,170,746
Indiana (0.5%)
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1,000,000 IN Hlth. Fac. Fin. Auth. Rev. Bonds
(Sister of St. Francis Hlth.), MBIA,
5 3/8s, 11/1/27 A 953,750
Iowa (0.8%)
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1,500,000 IA Fin. Auth. Hlth. Care Fac. Rev. Bonds
(Genesis Med. Ctr.), 6 1/4s, 7/1/25 A1 1,500,000
Kentucky (1.8%)
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Jefferson Cnty., Hosp. IFB, MBIA
1,400,000 9.242s, 10/23/14 Aaa 1,515,500
600,000 6.436s, 10/23/14 Aaa 661,500
1,125,000 KY Econ. Dev. Fin. Auth. Hlth. System Rev. Bonds
(Norton Healthcare, Inc.), Ser. A, 6 5/8s, 10/1/28 A- 1,099,688
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3,276,688
Louisiana (1.9%)
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1,500,000 LA Local Govt. Env. Facs.Comnty. Dev. Auth.
Rev. Bonds (St. James Place), Ser. A, 8s, 11/1/19 B-/P 1,509,375
2,000,000 LA Pub. Fac. Auth. Hosp. Rev. Bonds
(Lake Charles Memorial Hosp. Project),
8 5/8s, 12/1/30 B/P 1,967,500
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3,476,875
Maine (0.8%)
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1,500,000 ME Hlth. & Higher Edl. Fac. Auth. Rev. Bonds,
Ser. C, FSA, 5 3/4s, 7/1/30 AAA 1,509,375
Maryland (1.5%)
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2,695,000 Berlin, Hosp. Rev. Bonds (Atlantic Gen. Hosp. Fac.),
8 3/8s, 6/1/22 BB-/P 2,718,581
Massachusetts (11.2%)
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1,500,000 MA State Dev. Fin. Agcy. Rev. Bonds
(Merrimack Place), 6 3/4s, 7/1/30 B/P 1,310,625
MA State Hlth. & Edl. Fac. Auth. Rev. Bonds
3,585,000 (Rehab. Hosp. Cape & Islands), Ser. A,
7 7/8s, 8/15/24 AAA/P 4,019,681
3,360,000 (MA Eye & Ear Infirmary), Ser. A, 7 3/8s, 7/1/11 Ba1 3,482,035
2,000,000 (Charlton Memorial Hosp.), Ser. B, 7 1/4s, 7/1/07 A1 2,071,820
2,575,000 (Rev. Cooley Dickinson Hosp.), 7 1/8s, 11/15/18 AAA/P 2,777,781
3,500,000 (Sisters Providence Hlth. Syst), Ser. A,
6 5/8s, 11/15/22 Aaa 3,771,250
3,000,000 MA State Hsg. Fin. Agcy. Rev. Bonds
(Residential Dev.), Ser. E, FNMA Coll.,
6 1/4s, 11/15/12 Aaa 3,127,500
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20,560,692
Michigan (7.3%)
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4,500,000 Dickinson Cnty., Hosp. Rev. Bonds
(Memorial Hosp. Syst.), 8 1/8s, 11/1/24 Ba1 5,118,750
MI State Hosp. Fin. Auth. Rev. Bonds
4,130,000 (Garden City Hosp.), 8 1/2s, 9/1/17 Ba3 4,331,007
500,000 (Sinai Hosp.), 6.7s, 1/1/26 A- 426,250
1,500,000 Pontiac Hosp. Fin. Auth. Rev. Bonds, 6s, 8/1/23 Baa3 1,166,250
3,100,000 Waterford, Econ. Dev. Corp. Rev. Bonds
(Canterbury Hlth.), 6s, 1/1/39
(acquired 12/31/98, cost $3,225,625) (RES) B-/P 2,363,750
-------------
13,406,007
Minnesota (0.8%)
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1,250,000 Rochester Hlthcare Fac. Rev. Bonds
(Olmsted Med. Group), 7 1/2s, 7/1/19 BB+/P 1,392,188
Missouri (0.9%)
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1,700,000 MO State Hlth. & Edl. Fac. Auth. Hlth. Fac.
Rev. Bonds (Jefferson Memorial Hosp.),
6.8s, 5/15/25 Baa2 1,708,500
New Hampshire (1.2%)
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1,000,000 NH Higher Ed. & Hlth. Fac. Auth. Rev. Bonds
(Rivermead at Peterborough), 5 3/4s, 7/1/28 BB/P 793,750
1,500,000 NH State Bus. Fin. Auth. Rev. Bonds
(Alice Peck Day Hlth. Syst.), Ser. A, 7s, 10/1/29 BB+/P 1,301,250
-------------
2,095,000
New Jersey (3.6%)
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1,000,000 NJ Econ. Dev. Auth. Assisted Living Rev. Bonds
(Meridian Assisted Living), 6 3/4s, 8/1/30 B/P 872,500
NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds
2,500,000 (Trinitas Hosp. Oblig. Group), 7 1/2s, 7/1/30 BBB- 2,575,000
1,450,000 (Columbus Hosp.), Ser. A, 7 1/2s, 7/1/21 B2 1,310,438
1,900,000 NJ State Hlth. Care Fac. Fin. Auth.
(New Seasons of Mt. Arlingtion), 8 3/4s, 7/1/30 B/P 1,862,000
-------------
6,619,938
New York (2.5%)
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1,800,000 NY City, Hsg. Dev. Corp. Mtge. VRDN
(Multi-Fam. James Twr. Dev.), Ser. A,
3.95s, 7/1/05 AA 1,800,000
2,000,000 Suffolk Cnty., Indl. Dev. Agcy. Cont. Care Ret.
Rev. Bonds (Jefferson's Ferry), Ser. A,
7 1/4s, 11/1/28 BB-/P 1,962,500
1,000,000 Suffolk Cnty., Indl. Dev. Agcy. Fac. Rev. Bonds
(Southampton Hosp.), Ser. A, 7 1/4s, 1/1/20 B-/P 932,500
-------------
4,695,000
Ohio (0.5%)
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1,000,000 Montgomery Cnty., Hosp. Rev. Bonds
(Kettering Med. Ctr.), 6 3/4s, 4/1/22 Baa1 1,006,250
Oklahoma (1.0%)
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3,000,000 OK Dev. Fin. Auth. Rev. Bonds (Hillcrest Healthcare),
Ser. A, 5 5/8s, 8/15/29 Baa2 1,833,750
Pennsylvania (5.7%)
-------------------------------------------------------------------------------------------------------------------
2,210,000 Allegheny Cnty., Hosp. Dev. Auth. Rev. Bonds
(UPMC Hlth.), Ser. B, MBIA, 6s, 7/1/24 Aaa 2,339,838
2,305,000 College Township, Indl. Dev. Auth. 1st Mtge.
Hlth. Fac. Rev. Bonds (Nittany Valley
Rehab. Hosp.), 7 5/8s, 11/1/07 BBB-/P 2,400,081
1,285,000 PA State Higher Ed. Assistance Agcy. Student Loan,
Ser. A&B, 7 1/4s, 7/1/18 (In default) (NON) D 424,050
2,950,000 Philadelphia, Hosp. & Higher Ed. Fac. Auth. Hosp.
IFB, FGIC, 7.767s, 3/6/12 Aaa 3,005,313
1,000,000 Philadelphia, Hosp. & Higher Ed. Fac. Auth. Hosp.
Rev. Bonds (Graduate Hlth. Syst.), Ser. B,
6 1/4s, 7/1/13 (acquired 8/28/96, cost $940,480)
(In default) (NON) (RES) D 330,000
1,895,000 York Cnty., Indl. Dev. Auth. lst Mtge. Hlth. Fac.
Rev. Bonds (Rehabilitation Hosp. of York),
7 1/2s, 9/1/07 BBB-/P 1,961,325
-------------
10,460,607
South Carolina (2.2%)
-------------------------------------------------------------------------------------------------------------------
3,000,000 SC Jobs Econ. Dev. Auth. Rev. Bonds (St. Francis
Hosp.-Franciscan Sisters), 7s, 7/1/15 Baa1 3,236,250
800,000 SC State Jobs Econ. Dev. Auth. Hosp. Fac.
Rev. Bonds (Palmetto Hlth. Alliance),
Ser. A, 7 3/8s, 12/15/21 Baa1 803,000
-------------
4,039,250
South Dakota (1.1%)
-------------------------------------------------------------------------------------------------------------------
2,500,000 SD State Hlth. & Ed. Fac. Auth. Rev Bonds
(Prairie Lakes), 5.65s, 4/1/22 Baa2 2,100,000
Tennessee (2.3%)
-------------------------------------------------------------------------------------------------------------------
2,500,000 Johnson City, Hlth. & Edl. Facs. Rev. Bonds
(Mtn. States Hlth.), Ser. A, 7 1/2s, 7/1/33 AAA 2,509,375
1,700,000 Metropolitan Govt. Nashville & Davidson Cnty.,
Tenn. Wtr. & Swr. IFB, AMBAC, 7.425s, 1/1/22 Aaa 1,816,875
-------------
4,326,250
Texas (12.9%)
-------------------------------------------------------------------------------------------------------------------
3,650,000 Amarillo, Hlth. Fac. Hosp. Corp. IFB (High Plains
Baptist Hosp.), FSA, 8.074s, 1/1/22 (SEG) Aaa 3,955,432
5,000,000 Bexar Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds
(St. Luke's Lutheran Hosp.), 7.9s, 5/1/11 AAA/P 5,343,750
930,000 Cherokee Cnty., Hlth. Fac. Dev. Corp. Rev. Bonds
(Nancy Travis Memorial Hosp.), 10s, 5/15/13 B/P 1,013,700
2,500,000 Georgetown, Hlth. Facs. Dev. Corp. Rev. Bonds,
6 1/4s, 8/15/29 BB+ 2,050,000
5,000,000 Harris Cnty. Hlth. Fac. Dev. Corp. VRDN
(St. Lukes Episcopal Hosp), 3.4s, 2/15/27 AA 5,000,000
3,700,000 Lufkin, Hlth. Fac. Dev. Corp. Rev. Bonds
(Mem. Hlth. Syst. of East TX), 5.7s, 2/15/28 BBB- 2,876,750
North Central Hlth. Fac. Dev. Corp.
Rev. Bonds (Hosp.)
1,810,000 Ser. B, 7.861s, 5/15/08 Aa2 1,880,135
190,000 Ser. B, 7.861s, 5/15/08, Prerefunded AAA 201,875
1,500,000 North Central Hlth. Fac. Dev. Corp. VRDN
(Dates-Hosp. Prsbytrn Med. Ctr.)
Ser D. 3.7s, 12/1/15 Aaa 1,500,000
-------------
23,821,642
Utah (0.6%)
-------------------------------------------------------------------------------------------------------------------
1,000,000 Salt Lake City, Hosp. IFB (IHC Hosps. Inc.),
8.40s, 5/15/20 Aaa 1,052,880
Vermont (0.9%)
-------------------------------------------------------------------------------------------------------------------
1,870,000 VT Edl. & Hlth. Bldg. Fin. Agcy. Rev. Bonds
(Northwestern Med. Ctr.), 6 1/4s, 9/1/18 BBB 1,673,650
Virginia (0.6%)
-------------------------------------------------------------------------------------------------------------------
1,000,000 Fairfax Cnty., Indl. Dev. Auth. IFB (Fairfax Hosp. Syst.),
Ser. C, 9.577s, 8/29/23 Aaa 1,067,910
West Virginia (1.0%)
-------------------------------------------------------------------------------------------------------------------
1,845,000 Randolph Cnty. Rev. Bonds (Davis Memorial Hosp.),
Ser. A, 7.65s, 11/1/21 Baa1 1,918,247
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $191,903,443) (b) $ 187,434,425
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $184,231,646.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at November 30, 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 November 30, 2000. Securities rated by Putnam are
indicated by "/P" and are not publicly rated.
(b) The aggregate identified cost on a tax basis is $191,903,443,
resulting in gross unrealized appreciation and depreciation of
$5,345,381 and $9,814,399, respectively, or net unrealized depreciation
of $4,469,018.
(NON) Non-income-producing security.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at November 30, 2000
was $13,558,438 or 7.4% of net assets.
(SEG) A portion of these securities were pledged and segregated with the
custodian to cover margin requirements for futures contracts at November
30, 2000.
The rates shown on IFB and IF COP, 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 November 30, 2000.
------------------------------------------------------------------------------
Futures Contracts Outstanding at November 30, 2000 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Appreciation
------------------------------------------------------------------------------
Municipal Bond
Index (Long) $10,817,031 $10,605,777 Dec-00 $211,254
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2000 (Unaudited)
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $191,903,443) (Note 1) $187,434,425
-------------------------------------------------------------------------------------------
Interest receivable 2,851,844
-------------------------------------------------------------------------------------------
Receivable for variation margin 63,531
-------------------------------------------------------------------------------------------
Total assets 190,349,800
Liabilities
-------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 4,690,036
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 1,035,400
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 321,644
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 34,972
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 303
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7,273
-------------------------------------------------------------------------------------------
Other accrued expenses 28,526
-------------------------------------------------------------------------------------------
Total liabilities 6,118,154
-------------------------------------------------------------------------------------------
Net assets $184,231,646
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Note 1) $191,849,398
-------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (746,872)
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (2,613,116)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (4,257,764)
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $184,231,646
Computation of net asset value
-------------------------------------------------------------------------------------------
Net asset value per share ($184,231,646 divided by 13,807,168 shares) $13.34
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended November 30, 2000 (Unaudited)
<S> <C>
Tax exempt interest income: $6,074,348
-------------------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 655,521
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 87,254
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 6,423
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 7,733
-------------------------------------------------------------------------------------------
Other 61,148
-------------------------------------------------------------------------------------------
Total expenses 818,079
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (58,028)
-------------------------------------------------------------------------------------------
Net expenses 760,051
-------------------------------------------------------------------------------------------
Net investment income 5,314,297
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (636,565)
-------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 971,476
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments
and futures contracts during the period 2,804,499
-------------------------------------------------------------------------------------------
Net gain on investments 3,139,410
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $8,453,707
-------------------------------------------------------------------------------------------
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
2000* 2000
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 5,314,297 $ 11,713,031
--------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 334,911 (1,540,167)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 2,804,499 (15,829,959)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 8,453,707 (5,657,095)
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income (6,212,638) (12,500,690)
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,241,069 (18,157,785)
Net assets
--------------------------------------------------------------------------------------------------
Beginning of period 181,990,577 200,148,362
--------------------------------------------------------------------------------------------------
End of period (including distributions in excess
and undistributed net investment income of
$746,872 and $151,469, respectively) $184,231,646 $181,990,577
--------------------------------------------------------------------------------------------------
Number of fund shares
--------------------------------------------------------------------------------------------------
Shares outstanding at beginning and end of period 13,807,168 13,807,168
--------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share Nov. 30
operating performance (Unaudited) Year ended May 31
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.18 $14.50 $15.02 $14.56 $14.11 $14.13
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income .38 .85 .89 .91 .93 .94
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .23 (1.26) (.46) .50 .42 (.03)
------------------------------------------------------------------------------------------------------------------
Total from
investment operations .61 (.41) .43 1.41 1.35 .91
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income (.45) (.91) (.90) (.91) (.90) (.93)
------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (.05) (.04) -- --
------------------------------------------------------------------------------------------------------------------
Total distributions (.45) (.91) (.95) (.95) (.90) (.93)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.34 $13.18 $14.50 $15.02 $14.56 $14.11
------------------------------------------------------------------------------------------------------------------
Market value,
end of period $12.438 $11.750 $14.563 $14.500 $14.125 $13.500
------------------------------------------------------------------------------------------------------------------
Total return at
market value (%)(a) 9.64* (13.19) 6.89 9.47 11.68 8.74
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $184,232 $181,991 $200,148 $207,331 $200,987 $194,755
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .44* .88 .90 .89 .90 .92
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.88* 6.19 5.98 6.11 6.45 6.62
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 13.05* 12.37 8.53 16.25 7.92 44.68
------------------------------------------------------------------------------------------------------------------
* Not annualized.
(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
November 30, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam Tax-Free Health Care Fund (the "fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The fund seeks as high a level of current
income exempt from federal income tax as Putnam Investment Management,
LLC, ("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
tax-exempt securities in the health care sector of the tax-exempt
securities market.
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 accounting principles generally accepted in the United States of
America 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) 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
$2,265,000 available to offset future capital gains, if any. The amount
of the carryover and the expiration dates are:
Loss Carryover Expiration
-------------- ------------------
$ 277,000 May 31, 2007
1,988,000 May 31, 2008
E) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
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.
F) 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, original issue discount 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 annual rate of 0.70% of average
weekly net assets.
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.
Under the subcustodian contract between the subcustodian bank and PFTC,
the subcustodian bank has a lien on the securities of the fund to the
extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At November 30, 2000, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
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.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended November 30,
2000, the fund's expenses were reduced by $58,028 under these
arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $565
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.
Notes 3
Purchase 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 $24,805,350 and $23,610,400, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
New accounting pronouncement
In November 2000, the AICPA issued a revised Audit and Accounting Guide,
Audits of Investment Companies, which is effective for fiscal years
beginning after December 15, 2000. The revised Guide will require the
fund to amortize premium and accrete discount on all fixed-income
securities, and classify as interest income gains and losses realized on
paydowns on mortgage-backed securities which are presently included in
realized gain/loss. Adopting these accounting principles will not affect
the fund's net asset value, but will change the classification of
certain amounts between interest income and realized and unrealized
gain/loss in the Statement of operations. The fund has not at this time
quantified the impact, if any, resulting from the adoption of this
principle on the financial statements.
Note 5
Change in independent accountants
(unaudited)
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP as this funds' independent accountants and voted to appoint KPMG LLP
for the fund's fiscal year ended May 31, 2001. During the two previous
fiscal years, PricewaterhouseCoopers LLP audit reports contained no
adverse opinion or disclaimer of opinion; nor were its reports qualified
or modified as to uncertainty, audit scope, or accounting principle.
Further, in connection with its audits for the two previous fiscal years
and through July 24, 2000, there were no disagreements between the fund
and PricewaterhouseCoopers LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused it to make reference to the
disagreements in its report on the financial statements for such years.
RESULTS OF OCTOBER 5, 2000 SHAREHOLDER MEETING
(Unaudited)
An annual meeting of shareholders of the fund was held on October 5,
2000. At the meeting, each of the nominees for Trustees was elected, as
follows:
Votes
Votes for withheld
Jameson Adkins Baxter 11,617,477 103,928
Hans H. Estin 11,607,183 114,222
John A. Hill 11,617,655 103,750
Ronald J. Jackson 11,617,284 104,121
Paul L. Joskow 11,618,549 102,856
Elizabeth T. Kennan 11,615,764 105,641
Lawrence J. Lasser 11,613,596 107,809
John H. Mullin III 11,619,142 102,263
Robert E. Patterson 11,617,104 104,301
George Putnam, III 11,619,992 101,413
A.J.C. Smith 11,611,771 109,634
W. Thomas Stephens 11,613,212 108,193
W. Nicholas Thorndike 11,609,290 112,115
A proposal to ratify the selection of KPMG LLP as the independent
auditors of your fund was approved as follows: 11,597,711 votes for, and
30,788 votes against, with 92,906 abstentions and broker non-votes.
All tabulations are rounded to nearest whole number.
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FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, LLC
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
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
Blake E. Anderson
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or
visit our Web site (www.putnaminvestments.com) any time for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
---------------------
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PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
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