-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LQXA2jYgzukxfWeNtpn3ZZ2NWFb5hwm393TplbfkywGwEdsSp6fxZyLCq63zHXmr 9af6JtJ0hsfoX1pJ3mj8CQ== 0000869392-95-000036.txt : 19951003 0000869392-95-000036.hdr.sgml : 19951003 ACCESSION NUMBER: 0000869392-95-000036 CONFORMED SUBMISSION TYPE: 485B24E PUBLIC DOCUMENT COUNT: 46 FILED AS OF DATE: 19950929 EFFECTIVENESS DATE: 19950929 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM ARIZONA TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000869392 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046665534 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-37992 FILM NUMBER: 95577851 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-06258 FILM NUMBER: 95577852 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II CENTRAL INDEX KEY: 0000792288 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046626127 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-05416 FILM NUMBER: 95577853 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-04518 FILM NUMBER: 95577854 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-292-14 MAIL ADDRESS: ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND /MA/ DATE OF NAME CHANGE: 19920609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II CENTRAL INDEX KEY: 0000794611 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046626130 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-08923 FILM NUMBER: 95577855 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-04529 FILM NUMBER: 95577856 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-292-14 MAIL ADDRESS: STATE: MA ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM MICHIGAN TAX EXEMPT INCOME FUND DATE OF NAME CHANGE: 19920609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II CENTRAL INDEX KEY: 0000794612 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046626128 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-08916 FILM NUMBER: 95577857 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-04527 FILM NUMBER: 95577858 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 MAIL ADDRESS: ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM MINNESOTA TAX EXEMPT INCOME FUND DATE OF NAME CHANGE: 19920609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000794615 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 043057637 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-28321 FILM NUMBER: 95577859 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-05802 FILM NUMBER: 95577860 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM OHIO TAX EXEMPT INCOME FUND II CENTRAL INDEX KEY: 0000794616 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046626129 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-08924 FILM NUMBER: 95577861 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-04528 FILM NUMBER: 95577862 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-292-14 MAIL ADDRESS: STATE: MA ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM OHIO TAX EXEMPT INCOME FUND DATE OF NAME CHANGE: 19920609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000857463 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 043073948 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-32550 FILM NUMBER: 95577863 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-05977 FILM NUMBER: 95577864 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM FLORIDA TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000864488 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 043091965 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1933 Act SEC FILE NUMBER: 033-35677 FILM NUMBER: 95577865 FILING VALUES: FORM TYPE: 485B24E SEC ACT: 1940 Act SEC FILE NUMBER: 811-06129 FILM NUMBER: 95577866 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 485B24E 1 As filed with the Securities and Exchange Commission on September 27, 1995 - ----------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM N-1A ---- REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / ---- ---- Pre-Effective Amendment No. / / ---- ---- Post-Effective Amendment No. 6 / X / and ---- ---- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X / ACT OF 1940 ---- ---- Amendment No. 8 / X / (Check appropriate box or boxes) ---- --------------- PUTNAM ARIZONA TAX EXEMPT INCOME FUND ( Registration No. 33- 11406; 811- 4531) (Exact name of registrant as specified in charter) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / ---- ---- Pre-Effective Amendment No. / / ---- ---- Post-Effective Amendment No. 6 / X / and ---- ---- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X / ACT OF 1940 ---- ---- Amendment No. 7 / X / (Check appropriate box or boxes) ---- --------------- PUTNAM FLORIDA TAX EXEMPT INCOME FUND (Registration No. 33-35677; 811-6129) (Exact name of registrant as specified in charter) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / ---- ---- Pre-Effective Amendment No. / / ---- ---- Post-Effective Amendment No. 15 / X / and ---- ---- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X / ACT OF 1940 ---- ---- Amendment No. 17 / X / (Check appropriate box or boxes) ---- --------------- PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND Registration No. 33-5416; 811-4518 (Exact name of registrant as specified in charter) ---- REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / ---- ---- Pre-Effective Amendment No. / / ---- ---- Post-Effective Amendment No. 15 / X / and ---- ---- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X / ACT OF 1940 ---- ---- Amendment No. 16 / X / (Check appropriate box or boxes) ---- --------------- PUTNAM MICHIGAN TAX EXEMPT INCOME FUND Registration No. 33-8923; 811-4529 PUTNAM MINNESOTA TAX EXEMPT INCOME FUND Registration No. 33-8916; 811-4527 PUTNAM OHIO TAX EXEMPT INCOME FUND Registration No. 33-8924; 811-4528 (Exact name of registrant as specified in charter) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / ---- ---- Pre-Effective Amendment No. / / ---- ---- Post-Effective Amendment No. 6 / X / and ---- ---- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X / ACT OF 1940 ---- ---- Amendment No. 8 / X / (Check appropriate box or boxes) ---- --------------- PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND (Registration No. 33-32550; 811-5977) (Exact name of registrant as specified in charter) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / ---- ---- Pre-Effective Amendment No. / / ---- ---- Post-Effective Amendment No. 8 / X / and ---- ---- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X / ACT OF 1940 ---- ---- Amendment No. 9 / X / (Check appropriate box or boxes) ---- --------------- PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND (Registration No. 33-28321; 811-5802) (Exact name of registrant as specified in charter) One Post Office Square, Boston, Massachusetts 02109 (Address of principal executive offices) . . Registrants' Telephone Number, including Area Code (617) 292-1000 It is proposed that this filing will become effective (check appropriate box) ---- / / immediately upon filing pursuant to paragraph (b) - ---- ---- /X / on October 1, 1995 pursuant to paragraph (b) - ---- ---- / / 60 days after filing pursuant to paragraph (a) (1) - ---- ---- / / on [date] pursuant to paragraph (a)(1) - ---- ---- / / 75 days after filing pursuant to paragraph (a)(2) - ---- ---- / / on (date) pursuant to paragraph (a) (2) of rule 485. - ---- If appropriate, check the following box: ---- / / this post-effective amendment designates a new - ---- effective date for a previously filed post-effective amendment. -------------- JOHN R. VERANI, Vice President PUTNAM ARIZONA TAX EXEMPT INCOME FUND PUTNAM FLORIDA TAX EXEMPT INCOME FUND PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND PUTNAM MICHIGAN TAX EXEMPT INCOME FUND PUTNAM MINNESOTA TAX EXEMPT INCOME FUND PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND PUTNAM OHIO TAX EXEMPT INCOME FUND PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND One Post Office Square Boston, Massachusetts 02109 (Name and address of agent for service) --------------- Copy to: JOHN W. GERSTMAYR, Esquire ROPES & GRAY One International Place Boston, Massachusetts 02110 ---------------------- Each Registrant has registered an indefinite number or amount of securities under the Securities Act of 1933 pursuant to Rule 24f-2. Rule 24f-2 notices for Putnam Arizona Tax Exempt Income Fund, Putnam Florida Tax Exempt Income Fund, Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam Ohio Tax Exempt Income Fund and Putnam Pennslyvania Tax Exempt Income Fund for the fiscal year ended May 31, 1995 were filed on July 31, 1995.
Putnam Arizona Tax Exempt Income Fund CALCULATION OF REGISTRATION FEE - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- Proposed Proposed maximum maximum Amount offering aggregate Amount of Title of securities being price per offering registration being registeredregistered unit* price** fee - ----------------------------------------------------------------------------------------- Shares of Beneficial Interest 778,568 shs. $9.43 $290,000 $100.00 - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- * Based on offering price per share on September 15, 1995. ** Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940. The total amount of securities redeemed or repurchased during the Registrant's previous fiscal year was 2,850,993 shares, 2,103,177 of which have been used for reductions pursuant to Rule 24e-2(a) or Rule 24f-2(c) under said Act in the current fiscal year, and 747,816 of which are being used for such reduction in this Amendment.
Putnam Florida Tax Exempt Income Fund CALCULATION OF REGISTRATION FEE - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- Proposed Proposed maximum maximum Amount offering aggregate Amount of Title of securities being price per offering registration being registeredregistered unit* price** fee - ----------------------------------------------------------------------------------------- Shares of Beneficial Interest 1,854,662 shs. $9.55 $290,000 $100.00 - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- * Based on offering price per share on September 15, 1995. ** Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940. The total amount of securities redeemed or repurchased during the Registrant's previous fiscal year was 9,260,386 shares, 7,436,090 of which have been used for reductions pursuant to Rule 24e-2(a) or Rule 24f-2(c) under said Act in the current fiscal year, and 1,824,296 of which are being used for such reduction in this Amendment.
Putnam New Jersey Tax Exempt Income Fund CALCULATION OF REGISTRATION FEE - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- Proposed Proposed maximum maximum Amount offering aggregate Amount of Title of securities being price per offering registration being registeredregistered unit* price** fee - ----------------------------------------------------------------------------------------- Shares of Beneficial Interest 619,559 shs. $9.36 $290,000 $100.00 - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- * Based on offering price per share on September 15, 1995. ** Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940. The total amount of securities redeemed or repurchased during the Registrant's previous fiscal year was 6,383,701 shares, 5,795,124 of which have been used for reductions pursuant to Rule 24e-2(a) or Rule 24f-2(c) under said Act in the current fiscal year, and 588,577 of which are being used for such reduction in this Amendment.
PUTNAM ARIZONA TAX EXEMPT INCOME FUND PUTNAM FLORIDA TAX EXEMPT INCOME FUND PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND PUTNAM MICHIGAN TAX EXEMPT INCOME FUND PUTNAM MINNESOTA TAX EXEMPT INCOME FUND PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND PUTNAM OHIO TAX EXEMPT INCOME FUND PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND CROSS REFERENCE SHEET (as required by Rule 481(a)) Part A N - 1A Item No. Location 1. Cover Page . . . . . . . . . . . Cover page 2. Synopsis . . . . . . . . . . . . Expenses summary 3. Condensed Financial Information Financial highlights; How performance is shown 4. General Description of Registrant Objectives; How the funds pursue their objectives ; Organization and history 5. Management of the Fund . . . . . Expenses summary; How the funds are managed; About Putnam Investments, Inc. 5A . . . . . . . . . . . . . . . . . Management's Discussion of Fund Performance . . . . . . . . (Contained in the annual report of the Registrants) 6. Capital Stock and Other Securities Cover page ; Organization and history; How a fund makes distributions to shareholders ; tax information 7. Purchase of Securities Being Offered How to buy shares; Distribution plans; How to sell shares; How to exchange shares; How a fund values its shares 8. Redemption or Repurchase . . . . How to buy shares; How to sell shares; How to exchange shares; Organization and history 9. Pending Legal Proceedings . . . Not applicable PART B N - 1A ITEM NO. LOCATION 10. Cover Page . . . . . . . . . . . Cover page 11. Table of Contents . . . . . . . Cover page 12. General Information and History Organization and history (Part A) 13. Investment Objectives and Policies How the funds pursues their objectives (Part A); Investment restrictions; Miscellaneous investment practices 14. Management of the Registrant . . Management (Trustees; Officers); Additional officers 15. Control Persons and Principal. . . . . Management (Trustees; Holders of Securities Officers); Charges and expenses (Share ownership) 16. Investment Advisory and Other. . . . . Management (Trustees; Services Officers; The management contract; Principal underwriter; Investor servicing agent and custodian); Charges and expenses; Distribution plans; Independent accountants and financial statements 17. Brokerage Allocation . . . . . . Management (Portfolio transactions); Charges and expenses 18. Capital Stock and Other Securities Organization and history (Part A); How a fund makes distributions to shareholders ; tax information (Part A); Suspension of redemptions 19. Purchase, Redemption , and Pricing How to buy shares of Securities Being Offered (Part A); How to sell shares (Part A); How to exchange shares (Part A); How to buy shares; Determination of net asset value; Suspension of redemptions 20. Tax Status . . . . . . . . . . . How a fund makes distributions to shareholders ; tax information (Part A); Taxes 21. Underwriters . . . . . . . . . . Management (Principal underwriter); Charges and expenses 22. Calculation of Performance Data How performance is shown (Part A); Investment performance; Standard performance measures 23. Financial Statements . . . . . . Independent accountants and financial statements PART C Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C of the Registration Statement. PROSPECTUS OCTOBER 1, 1995 PUTNAM ARIZONA TAX EXEMPT INCOME FUND (THE "ARIZONA FUND") PUTNAM FLORIDA TAX EXEMPT INCOME FUND (THE "FLORIDA FUND") PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND (THE "MASSACHUSETTS FUND") PUTNAM MICHIGAN TAX EXEMPT INCOME FUND (THE "MICHIGAN FUND") PUTNAM MINNESOTA TAX EXEMPT INCOME FUND (THE "MINNESOTA FUND") PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND (THE "NEW JERSEY FUND") PUTNAM OHIO TAX EXEMPT INCOME FUND (THE "OHIO FUND") PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND (THE "PENNSYLVANIA FUND") CLASS A, B AND M SHARES INVESTMENT STRATEGY: TAX-ADVANTAGED This prospectus explains concisely what you should know before investing in the funds . Please read it carefully and keep it for future reference. You can find more detailed information about each fund in the October 1, 1995 statement of additional information ("SAI") , as amended from time to time. For a free copy of the SAI or other information, call Putnam Investor Services at 1-800-225-1581. The SAI has been filed with the Securities and Exchange Commission and is incorporated into this prospectus by reference. Each fund invests primarily in a portfolio of tax- exempt securities (as defined on page 19) , which may include securities of issuers other than the relevant state and its political subdivisions. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED . BOSTON*LONDON*TOKYO ABOUT THE FUNDS EXPENSES SUMMARY PAGE NUMBER This section describes the sales charges, management fees, and annual operating expenses that apply to a fund's various classes of shares. Use it to help you estimate the impact of transaction costs on your investment over time. FINANCIAL HIGHLIGHTS PAGE NUMBER Study this table to see, among other things, how a fund performed each year for the past 10 years or since it began investment operations if it has been in operation for less than 10 years. OBJECTIVES PAGE NUMBER Read this section to make sure a fund's objectives are consistent with your own. HOW THE FUNDS PURSUE THEIR OBJECTIVES PAGE NUMBER This section explains in detail how a fund seeks its investment objectives. RISK FACTORS. All investments entail some risk. Read this section to make sure you understand certain risks that may be involved when investing in a fund. HOW PERFORMANCE IS SHOWN PAGE NUMBER This section describes and defines the measures used to assess a fund's performance. All data are based on a fund's past investment results and do not predict future performance. HOW THE FUNDS ARE MANAGED PAGE NUMBER Consult this section for information about a fund's management, allocation of a fund's expenses, and how purchases and sales of securities are made for a fund. ORGANIZATION AND HISTORY PAGE NUMBER In this section, you will learn when a fund was introduced, how it is organized, how it may offer shares, and who its Trustees are. ABOUT YOUR INVESTMENT ALTERNATIVE SALES ARRANGEMENTS PAGE NUMBER Read this section for descriptions of the classes of shares this prospectus offers and for points you should consider when making your choice. HOW TO BUY SHARES PAGE NUMBER This section describes the ways you may purchase shares and tells you the minimum amounts required to open various types of accounts. It explains how sales charges are determined and how you may become eligible for reduced sales charges on each class of shares. DISTRIBUTION PLANS PAGE NUMBER This section tells you what distribution fees are charged against each class of shares . HOW TO SELL SHARES PAGE NUMBER In this section you can learn how to sell shares of a fund, either directly to the fund or through an investment dealer. HOW TO EXCHANGE SHARES PAGE NUMBER Find out in this section how you may exchange shares of a fund for shares of other Putnam funds. The section also explains how exchanges can be made without sales charges and the conditions under which sales charges may be required. HOW A FUND VALUES ITS SHARES PAGE NUMBER This section explains how a fund determines the value of its shares. HOW A FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS ; TAX INFORMATION PAGE NUMBER This section describes the various options you have in choosing how to receive dividends from a fund. It also discusses the federal tax status of the payments and counsels shareholders to seek specific advice about their own situation. ABOUT PUTNAM INVESTMENTS, INC. PAGE NUMBER Read this section to learn more about the companies that provide the marketing, investment management, and shareholder account services to Putnam funds and their shareholders. APPENDIX Securities ratings PAGE NUMBER ABOUT THE FUND EXPENSES SUMMARY Expenses are one of several factors to consider when investing . The following table summarizes your maximum transaction costs and expenses incurred in its most recent fiscal year. The examples show the cumulative expenses attributable to a hypothetical $1,000 investment over specified periods. CLASS A CLASS B CLASS M SHARES SHARES SHARES SHAREHOLDER TRANSACTION EXPENSES Maximum sales charge imposed on purchases (as a percentage of offering price) 4.75% NONE* 3.25%* Deferred sales charge 5.0% in the first (as a percentage year, declining of the lower of to 1.0% in the original purchase sixth year, and price or redemption eliminated proceeds) NONE** thereafter NONE ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets) Total fund Management 12b-1 Otheroperating fees fees expenses expenses - ---------- ----- ---------------- --- Arizona fund class A 0.60% 0.20% 0.13% 0.93% class B 0.60% 0.85% 0.13% 1.58% class M 0.60% 0.50% 0.13% 1.23% Florida fund Class A 0.60% 0.20% 0.11% 0.91% Class B 0.60% 0.85% 0.10% 1.55% Class M 0.60% 0.50% 0.11% 1.21% Massachusetts fund class A 0.60% 0.20% 0.09% 0.89% class B 0.60% 0.85% 0.08% 1.53% class M 0.60% 0.50% 0.09% 1.19% Michigan fund class A 0.60% 0.20% 0.15% 0.95% class B 0.60% 0.85% 0.14% 1.59% class M 0.60% 0.50% 0.15% 1.25% Minnesota fund class A 0.60% 0.20% 0.19% 0.99% class B 0.60% 0.85% 0.18% 1.63% class M 0.60% 0.50% 0.19% 1.29% New Jersey fund class A 0.60% 0.20% 0.15% 0.95% class B 0.60% 0.85% 0.14% 1.59% class M 0.60% 0.50% 0.15% 1.25% Ohio fund class A 0.60% 0.20% 0.13% 0.93% class B 0.60% 0.85% 0.13% 1.58% class M 0.60% 0.50% 0.13% 1.23% Pennsylvania fund class A 0.60% 0.20% 0.04% 0.84% class B 0.60% 0.85% 0.04% 1.49% class M 0.60% 0.50% 0.04% 1.14% The tables are provided to help you understand the expenses of investing in each fund and your share of the operating expenses which that fund incurs. Expense information shown in the table for the Arizona, Florida, New Jersey and Pennslyvania funds has been annualized based on the expenses for each fund's most recent fiscal period. For the Arizona fund, actual management fees for class A and class B shares were 0.45%, actual "Other expenses " were 0.10%, and actual total operating expenses were 0.70% and 1.19% , respectively. For the Florida fund, actual management fees for class A, class B and class M shares were 0.55%, 0.55% and 0.10%, respectively, actual "Other expenses" were 0.10%, 0.09% and none, respectively, and actual total operating expenses were 0.83%, 1.42% and 0.10%, respectively. For the New Jersey fund actual management fees for class A and class B shares were 0.55%, actual "Other expenses" were 0.14% and 0.13%, respectively, and actual total operating expenses were 0.88% and 1.46%, respectively. For the Pennslyvania fund, actual management fees for class A and class B shares were 0.15%, actual "Other expenses" were 0.01% and actual total operating expenses were 0.21% and 0.38%, respectively. The 12b-1 fees for class M shares for each fund reflect amounts currently payable under each distribution plan. For each fund's class M shares, management fees and "Other expenses" are based on the corresponding expenses for class A shares. EXAMPLES Your investment of $1,000 would incur the following expenses, assuming 5% annual return and , except as indicated, redemption at the end of each period: 1 year 3 years 5 years 10 years ARIZONA FUND CLASS A $57 $76 $97 $156 CLASS B $66 $80 $106 $170*** CLASS B (NO REDEMPTION)$16 $50 $86 $170*** CLASS M $45 $70 $98 $177 FLORIDA FUND CLASS A $56 $75 $95 $154 CLASS B $66 $79 $104 $167*** CLASS B (NO REDEMPTION)$16 $49 $84 $167*** CLASS M $44 $70 $97 $174 MASSACHUSETTS FUND CLASS A $56 $75 $94 $152 CLASS B $66 $78 $103 $165*** CLASS B (NO REDEMPTION)$16 $48 $83 $165*** CLASS M $44 $69 $96 $172 MICHIGAN FUND CLASS A $57 $76 $98 $159 CLASS B $66 $80 $107 $172*** CLASS B (NO REDEMPTION)$16 $50 $87 $172*** CLASS M $45 $71 $99 $179 MINNESOTA FUND CLASS A $57 $76 $100 $163 CLASS B $67 $81 $109 $176*** CLASS B (NO REDEMPTION)$17 $51 $89 $176*** CLASS M $45 $72 $101 $183 NEW JERSEY FUND CLASS A $57 $76 $98 $159 CLASS B $66 $80 $107 $172*** CLASS B (NO REDEMPTION)$16 $50 $87 $172*** CLASS M $45 $71 $99 $179 OHIO FUND CLASS A $57 $76 $97 $156 CLASS B $66 $80 $106 $170*** CLASS B (NO REDEMPTION)$16 $50 $86 $170*** CLASS M $45 $70 $98 $177 PENNSYLVANIA FUND CLASS A $56 $73 $92 $146 CLASS B $65 $77 $101 $160*** CLASS B (NO REDEMPTION)$15 $47 $81 $160*** CLASS M $44 $68 $93 $167 The examples do not represent past or future expense levels. Actual expenses may be greater or less than those shown. Federal regulations require the examples to assume a 5% annual return, but actual annual return varies . * The higher 12b-1 fees borne by class B and class M shares may cause long-term shareholders to pay more than the economic equivalent of the maximum permitted front-end sales charge on class A shares. ** A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares that were purchased without an initial sales charge as part of an investment of $1 million or more. See "How to buy shares - Class A shares." *** Reflects conversion of class B shares to class A shares (which pay lower ongoing expenses) approximately eight years after purchase. See "Alternative sales arrangements." FINANCIAL HIGHLIGHTS The following tables present per share financial information for the funds. No class M shares were outstanding during these periods for the Arizona and Pennsylvania funds . This information has been audited and reported on by each fund's independent accountants. The " Report of independent accountants" and financial statements included in each fund's annual report to shareholders for the 1995 fiscal year are incorporated by reference into this prospectus. Each fund's annual report , which contains additional unaudited performance information, is available without charge upon request. Financial highlights* (For a share outstanding throughout the period) (The tables appear on pages ) FINANCIAL HIGHLIGHTS (For a share outstanding throughout the year)
For the period For the period For the July 15, 1993 For the January 30, 1991 nine months (commencement of nine months (commencement of endedYear ended operations) to ended operations) to May 31 Auugst 31 August 31 May 31 Year ended August 31 August 1995 1994 1993 1995 1994 1993 1992 1991 CLASS B CLASS A NET ASSET VALUE, BEGINNING OF PERIOD $8.83 $9.47 $9.39 $8.84 $9.47 $9.07 $8.66 $8.50 INVESTMENT OPERATIONS Net investment income .34 .45 .11 .38 .51 .54 .57 .33 Net realized and unrealized gain (loss) on investments .17 (.61) .03 .17 (.61) .47 .42 .16 TOTAL FROM INVESTMENT OPERATIONS .51 (.16) .14 .55 (.10) 1.01 .99 .49 LESS DISTRIBUTIONS FROM: Net investment income (.34) (.45) (.06) (.38) (.50) (.55) (.57) (.33) Net realized gain on investments -- -- -- -- -- (.06) (.01) -- In excess of net realized gain on investments -- (.03) -- -- (.03) -- -- -- TOTAL DISTRIBUTIONS (.34) (.48) (.06) (.38) (.53) (.61) (.58) (.33) NET ASSET VALUE, END OF PERIOD $9.00 $8.83 $9.47 $9.01 $8.84 $9.47 $9.07 $8.66 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%) 5.99 (1.80) 1.45 6.45 (1.07) 11.54 11.85 5.84 NET ASSETS, END OF PERIOD (in thousands) $21,538 $16,247 $2,974 $136,598 $142,950 $145,304 $88,566 $46,902 Ratio of expenses to average net assets (%) 1.19 1.60 .19 .70 .97 .89 .58 .16 Ratio of net investment income to average net assets (%) 3.89 4.82 .43 4.42 5.55 5.82 6.34 3.91 Portfolio turnover (%) 51.48 34.68 5.72 51.48 34.68 5.72 31.84 12.46 The fiscal year end has changed from August 31 to May 31. Reflects an expense limitation. As a result of the limitation, net investment income of the fund for the year ended August 31, 1992 and the period ended August 31, 1991, reflect expense reductions of $0.03 and $0.05 per share, respectively. Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. Not annualized. /TABLE FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
FOR THE PERIOD FOR THE MAY 1, 1995 ELEVEN JANUARY 4, 1993 (COMMENCEMENT MONTHS YEAR (COMMENCEMENT OF OPERATIONS) TO ENDED ENDEDOF OPERATIONS) TO MAY 31 MAY 31 JUNE 30 JUNE 30 1995(+) 1995* 1994 1993 Class M Class B NET ASSET VALUE, BEGINNING OF PERIOD $8.87 $8.76 $9.53 $9.17 INVESTMENT OPERATIONS Net investment income .04 .40 .44 .21 Net realized and unrealized gain (loss) on investments .25 .36 (.66) .36 TOTAL FROM INVESTMENT OPERATIONS .29 .76 (.22) .57 LESS DISTRIBUTIONS: From net investment income (.04) (.39) (.44) (.21) In excess of net investment income -- (.01) -- -- From net realized gain on investments -- -- (.09) -- In excess of net realized gain on investments -- -- (.02) -- TOTAL DISTRIBUTIONS (.04) (.40) (.55) (.21) NET ASSET VALUE, END OF PERIOD $9.12 $9.12 $8.76 $9.53 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%)(b) 3.28(c) 9.06(c) (2.55) 12.84(c) NET ASSETS, END OF PERIOD (in thousands) $1 $44,581 $36,930 $17,881 Ratio of expenses to average net assets (%) .10(c) 1.42(c) 1.51 .78(c) Ratio of net investment income to average net assets (%) .45(c) 4.62(c) 4.74 2.21(c) Portfolio turnover (%) 61.46 61.46 64.83 106.69 /TABLE FINANCIAL HIGHLIGHTS (continued)
For the eleven months ended May 31 Year ended June 30 August 24, 1990 (commencement of operations) to June 30 1995* 1994 1993 1992 1991 Class A $8.77 $9.53 $9.08 $8.65 $8.50 .46 .50 .56(a) .60(a) .52(a) .35 (.65) .53 .45 .15 .81 (.15) 1.09 1.05 .67 (.45) (.50) (.56) (.60) (.52) (.01) -- -- -- -- -- (.09) (.08) (.02) -- -- (.02) -- -- -- (.46) (.61) (.64) (.62) (.52) $9.12 $8.77 $9.53 $9.08 $8.65 9.58(c) (1.79) 12.44 12.57 9.46(c) $271,309$276,245$278,039 $195,963$109,739 .83(c) .91 .77(a) .60(a) .41(a)(c) 5.24(c) 5.38 5.94(a) 6.73(a) 5.94(a)(c) 61.46 64.83 106.69 72.7346.72(c) * The fiscal year end has changed from June 30 to May 31. + Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. (a) Reflects an absorption of expenses incurred by the fund and an expense limitation applicable during the period. As a result of this absorbtion and the limitations, expenses of the fund for the years ended June 30, 1992 and the period ended June 30, 1991, reflect a reduction of $0.02 and $0.04 per share, respectively. For the year ended June 30, 1993, expenses reflect a reduction of less than $0.01 per share. (b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Not annualized. FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
FOR THE PERIOD FOR THE PERIOD MAY 12, 1995 JULY 15, 1993 (COMMENCEMENT (COMMENCEMENT OF OPERATIONS) TO YEAR ENDEDOF OPERATIONS) TO MAY 31 MAY 31 MAY 31 1995 1995 1994 CLASS M* CLASS B NET ASSET VALUE, BEGINNING OF PERIOD $9.10 $9.05 $9.71 INVESTMENT OPERATIONS Net investment income .02 .49 .41 Net realized and unrealized gain (loss) on investments .12 .17 (.51) TOTAL FROM INVESTMENT OPERATIONS .14 .66 (.10) LESS DISTRIBUTIONS FROM: Net investment income (.03) (.49) (.41) Net realized gain on investments -- - -- (.15) In excess of net realized gain -- (.02) -- TOTAL DISTRIBUTIONS (.03) (.51) (.56) NET ASSET VALUE, END OF PERIOD $9.21 $9.20$9.05 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%)(b) 1.53(c) 7.64 (1.15)(c) NET ASSETS, END OF PERIOD (in thousands) $22 $47,573 $23,017 Ratio of expenses to average net assets (%) .06(c) 1.53 1.41(c) Ratio of net investment income to average net assets (%) .30(c) 5.46 4.32(c) Portfolio turnover (%) 47.53 47.53 36.20 FINANCIAL HIGHLIGHTS (continued)
For the period October 23, 1989 (commencement of operations) to Year ended May 31 May 31 1995 1994 1993 1992 1991 1990 Class A $9.05 $9.55 $9.02 $8.70 $8.50 $8.50 .55 .55 .59 .61(a) .62(a) .35(a) .18 (.35) .54 .39 .20 -- .73 .20 1.13 1.00 .82 .35 (.55) (.55) (.59) (.61) (.62) (.35) -- (.15) (.01) (.07) -- -- (.02) -- -- -- -- -- (.57) (.70) (.60) (.68) (.62) (.35) $9.21 $9.05 $9.55 $9.02 $8.70 $8.50 8.45 1.92 12.80 11.96 10.10 6.84(c) $251,232 $244,519 $215,611 $149,011 $38,526 $18,249 .89 .96 .97 .88(a) .86(a) .80(a)(c) 6.11 5.69 6.24 6.82(a) 7.27(a) 6.97(a)(c) 47.53 36.20 53.18 94.95(d) 123.29 83.26(d) * Per share net investment income for the period ended May 31, 1995 has been determined on the basis of the weighted average number of shares outstanding during the period. (a)Reflects an expense limitation. As a result of this limitation, net investment income of the fund for the years ended May 31, 1992 and 1991 reflect expense reductions of approximately $0.01 and $0.02 respectively. (b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) No annualized (d) Portfolio turnover excludes the impact of assets received by the fund,then known as Putnam Massachusetts Tax Exempt Income Fund II, from the acquisition of Putnam Massachusetts Tax Exempt Income Fund. FINANCIAL HIGHLIGHTS (For a share outstanding throughout the year) FOR THE PERIOD FOR THE PERIOD APRIL 17, 1995 JULY 15, 1993 (COMMENCEMENT OF (COMMENCEMENT OF OPERATIONS) TO YEAR ENDED OPERATIONS) TO MAY 31 MAY 31 MAY 31 1995 1995 1994 CLASS M CLASS B NET ASSET VALUE, BEGINNING OF PERIOD $8.80 $8.90$9.43 INVESTMENT OPERATIONS Net investment income .05 .47 .41 Net realized/unrealized gain (loss) on investments .21 .10 (.46) TOTAL FROM INVESTMENT OPERATIONS .26 .57 (.05) LESS DISTRIBUTIONS FROM: Net investment income (.06) (.47) (.40) Net realized gain on investments -- -- -- In excess of net gain on investments -- - -- (.08) TOTAL DISTRIBUTIONS (.06) (.47) (.48) NET ASSET VALUE, END OF PERIOD $9.00 $9.00 $8.90 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%) 2.03 6.72 (.68) NET ASSETS, END OF PERIOD (in thousands) $119 $21,071 $10,251 Ratio of expenses to average net assets (%).20 1.59 1.42 Ratio of net investment income to average net assets (%) .84 5.31 4.25 Portfolio turnover (%) 82.91 82.91 41.77 FINANCIAL HIGHLIGHTS [continued] (For a share outstanding throughout the year) [continued] FOR THE PERIOD OCTOBER 23, 1989 (COMMENCEMENT OF OPERATIONS) TO YEAR ENDED MAY 31 MAY 31 1995 1994 1993 1992 1991 1990 CLASS A NET ASSET VALUE, BEGINNING OF PERIOD $8.90 $9.30 $8.80 $8.51 $8.43 $8.50 INVESTMENT OPERATIONS Net investment income .52 .52 .55 .56 .58 .33 Net realized/unrealized gain (loss) on investments .11 (.32) .52 .29 .08 (.07) TOTAL FROM INVESTMENT OPERATIONS .63 .20 1.07 .85 .66 .26 LESS DISTRIBUTIONS FROM: Net investment income (.52) (.52) (.56) (.56) (.58) (.33) Net realized gain on investments -- (.03) (.01) -- -- -- In excess of net gain on investments -- (.05) -- -- -- -- TOTAL DISTRIBUTIONS (.52) (.60) (.57) (.56) (.58) (.33) NET ASSET VALUE, END OF PERIOD $9.01 $8.90 $9.30 $8.80 $8.51 $8.43 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%) 7.45 2.03 12.38 10.25 8.13 3.17 NET ASSETS, END OF PERIOD (in thousands) $136,010 $128,921 $113,074 $80,310 $19,893 $9,280 Ratio of expenses to average net assets (%) .95 .99 1.04 .95 .87.45 Ratio of net investment income to average net assets (%) 6.03 5.58 6.04 6.28 6.78 3.84 Portfolio turnover (%) 82.91 41.77 15.89 71.68 16.21 6.46 Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. Reflects an expense limitation, and, during the period ended May 31, 1990, an absorption of expenses incurred by the Fund. As a result, net investment income of the Fund for the years ended May 31, 1992, 1991 and the period ended May 31, 1990 reflect expense reductions of approximately $0.01, $0.05, and $0.05, respectively. Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. Not annualized. Portfolio turnover excludes the impact of assets received from the fund, then known as Putnam Michigan Tax Exempt Income Fund II, from the acquisition of Putnam Michigan Tax Exempt Income Fund. /TABLE Financial Highlights (For a share outstanding throughout the period)
For the For the period period April 3, July 15, 1995 1993 (commencement (commencement of of operations) Year operations) to ended to May 31 May 31 May 31 Year ended May 31 1995 1995 1994 1995 1994 Class M Class B Class A Net asset value, beginning of period $ 8.77 $ 8.77 $ 9.18 $ 8.79 $ 9.06 Investment operations Net investment income .08 .45 .39 .51 .51 Net realized and unrealized gain (loss) on investments .17 .15 (.41) .15 (.27) Total from investment operations .25 .60 (.02) .66 .24 Less Distributions from: Net investment income (.07) (.45) (.39) (.50) (.51) Total distributions (.07) (.45) (.39) (.50) (.51) Net asset value, end of period $ 8.95 $ 8.92 $ 8.77 $ 8.95 $ 8.79 Total investment return at net asset value (%) (b) 2.89(c) 7.17 (.32)(c) 7.90 2.57 Net assets, end of period (in thousands) $1 $19,698 $8,873 $98,418 $95,587 Ratio of expenses to average net assets (%) .21(c) 1.63 1.47(c) .99 1.03 Ratio of net investment income to average net assets (%) .93(c) 5.15 4.23(c) 5.85 5.60 Portfolio turnover (%) 58.18(c) 58.18 28.19(c) 58.18 28.19 /TABLE For the period October 23, 1989 (commencement
of operations) to Year ended May 31 May 31 1993 1992 1991 1990 Class A Net asset value, beginning of period $ 8.74 $ 8.56 $ 8.43 $8.50 Investment operations Net investment income .55 .55(a) .59(a) .34(a) Net realized and unrealized gain (loss) on investments .33 .18 .13 (.07) Total from investment operations .88 .73 .72 .27 Less Distributions from: Net investment income (.56) (.55) (.59) (.34) Total distributions (.56) (.55) (.59) (.34) Net asset value, end of period $ 9.06 $ 8.74 $ 8.56 $8.43 Total investment return at net asset value (%) (b) 10.33 8.86 8.82 5.25(c) Net assets, end of period (in thousands) $86,611 $59,914 $16,615 $7,363 Ratio of expenses to average net assets (%) 1.08 .91(a) .66(a) .27(a)(d) Ratio of net investment income to average net assets (%) 6.12 6.34(a) 6.84(a) 4.09(a)(d) Portfolio turnover (%) 37.69 38.79(d) 14.85 98.54(d)
(a) Reflects an expense limitation incurred by the fund. As a result of the limitation, net investment income of the fund for the years ended May 31, 1992, and 1991 reflects expense reductions of approximately $0.02 and $0.07, respectively. (b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Not annualized. (d) Portfolio turnover excludes the impact of assets received from the fund then known as Putnam Minnesota Tax Exempt Income Fund II, from the acquisition of Putnam Minnesota Tax Exempt Income Fund. Financial Highlights (For a share outstanding throughout the year)
For the period For the period May 1, 1995 For the January 4, 1993 (commencement eleven months (commencement of operations) to ended Year endedof operations) to May 31, May 31 June 30 June 30 1995 1995* 1994 1993 Class M Class B Net asset value, beginning of period $8.74 $8.75 $9.46 $9.02 Investment operations Net investment income .04 .41 .45 .21 Net realized and unrealized gain (loss) on investments .28 .22 (.58) .43 Total from investment operations .32 .63 (.13) .64 Less distributions: From net investment income (.08) (.41) (.45) (.20) Net realized gain on investments -- (.02) -- In excess of realized gain on investments -- -- (.11) -- Total distributions (.08) (.41) (.58) (.20) Net asset value, end of period $8.98 $8.97 $8.75 $9.46 Total investment return at net asset value (%) (a)3.21(b) 7.51(b) (1.59) 7.21(b) Net assets, end of period (in thousands) $ 1 $58,591 $44,916 $15,113 Ratio of expenses to average net assets (%) .09(b) 1.46(b) 1.59 .77(b) Ratio of net investment income to average net assets (%) .42(b) 4.72(b) 4.77 2.42(b) Portfolio turnover (%) 51.86(b) 51.86(b) 51.74 44.58(b)
For the period For the February 20, eleven 1990 months (commencement ended of operations) May 31 Year ended June 30 to June 30 1995+ 1994 1993 1992 1991 1990 Class A Net asset value, beginning of period $ 8.75 $ 9.46 $ 8.97 $ 8.64 $ 8.50 $ 8.50 Investment operations Net investment income .46 .51 .54 .59(c) .62(c) .22(c) Net realized and unrealized gain (loss) on investments .23 (.58) .58 .38 .13 .01 Total from investment operations .69 (.07) 1.12 .97 .75 .23 Less distributions: From net investment income (.46) (.51) (.55) (.60) (.61) (.23) Net realized gain on investments -- (.08) (.08) (.04) -- -- In excess of realized gain on investments -- (.05) -- -- -- -- Total distributions (.46) (.64) (.63) (.64) (.61) (.23) Net asset value, end of period $8.98$ 8.75 $9.46$ 8.97 $ 8.64 $8.50 Total investment return at net asset value (%) (a) 8.25(b) (.94) 13.02 11.52 9.17 2.71(b) Net assets, end of period (in thousands) $242,569 $246,336 $235,243 $159,658 $99,978 $34,588 Ratio of expenses to average net assets (%) .87(b) .95 .92 .75(c) .66(c) .26(b)(c) Ratio of net investment income to average net assets (%) 5.36(b) 5.43 5.90 6.69(c) 7.09(c)3.06(b)(c) Portfolio turnover (%) 51.86(b) 51.74 44.58 80.21 101.21 `7.58(b)
* The fiscal year has been chnaged from June 30 to May 31. (a) Total Investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Not annualized. (c) Reflects an expense limitation. As a result of the limitation, expenses of the fund for the years ended June 30, 1992 and 1991 and for the period ended June 30, 1990 reflect a reduction of $0.01, $0.03 and $0.02, respectively. PAGE FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
FOR THE PERIOD FOR THE PERIOD APRIL 3, 1995 JULY 15, 1993 (COMMENCEMENT (COMMENCEMENT OF OPERATIONS)TO YEAR ENDEDOF OPERATIONS) TO MAY 31 MAY 31 MAY 31 1995 1995 1994 Class M Class B NET ASSET VALUE, BEGINNING OF PERIOD $8.76 $8.79 $9.37 INVESTMENT OPERATIONS Net investment income .08 .46 .40 Net realized and unrealized gain (loss) on investments .19 .16 (.46) TOTAL FROM INVESTMENT OPERATIONS .27 .62 (.06) LESS DISTRIBUTIONS FROM: Net investment income (.08) (.46) (.40) Net realized gain on investments -- (.01) (.12) TOTAL DISTRIBUTIONS (.08) (.47) (.52) NET ASSET VALUE, END OF PERIOD $8.95 $8.94 $8.79 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%)(b) 3.05(c) 7.39 (1.49)(c) NET ASSETS, END OF PERIOD (in thousands) $1 $32,847 $17,959 Ratio of expenses to average net assets (%) 0.20(c) 1.58 1.42(c) Ratio of net investment income to average net assets (%) 0.89(c) 5.24 4.35(c) Portfolio turnover (%) 66.29 66.29 44.45 /TABLE FINANCIAL HIGHLIGHTS (continued)
For the period October 23, 1989 (commencement of operations) to Year ended May 31 May 31 1995 1994 1993 1992 1991 1990 Class A $8.80 $9.26 $8.78 $8.55 $8.40 $8.50 52 .53 .54 .57(a) .59(a) .35(a) .15 (.35) .48 .23 .14 (.10) .67 .18 1.02 .80 .73 .25 (.51) (.52) (.54) (.57) (.58) (.35) (.01) (.12) -- -- -- -- (.52) (.64) (.54) (.57) (.58) (.35) $8.95 $8.80 $9.26 $8.78 $8.55 $8.40 8.04 1.88 11.94 9.65 9.09 4.94(c) $193,176 $194,130 $177,879 $140,309 $21,136 $7,684 .93 .99 1.04 .90(a) .87(a) .47(a)(d) 5.97 5.68 5.90 6.41(a) 6.83(a) 4.19(a)(d) 66.29 44.45 21.57 15.20(d) 17.40 23.27(d) (a) Reflects an expense limitation in effect during the period. As a result, net investment income of the fund for the years ended May 31, 1992 and 1991, reflect expense reductions of approximately $0.01 and $0.05, per class A share, respectively. (b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Not annualized. (d) Portfolio turnover excludes the impact of assets received from the fund, then known as Putnam Ohio Tax Exempt Income Fund II, from the acquisition of Putnam Ohio Tax Exempt Income Fund. /TABLE Financial Highlights (For a share outstanding throughout the year)
For the period For the period May 1, 1995 For the January 4, 1993 (commencement eleven months (commencement of operations) to ended Year endedof operations) to May 31, May 31 June 30 June 30 1995 1995* 1994 1993 Class M Class B Net asset value, beginning of period $8.74 $8.75 $9.46 $9.02 Investment operations Net investment income .04 .41 .45 .21 Net realized and unrealized gain (loss) on investments .28 .22 (.58) .43 Total from investment operations .32 .63 (.13) .64 Less distributions: From net investment income (.08) (.41) (.45) (.20) Net realized gain on investments -- (.02) -- In excess of realized gain on investments -- -- (.11) -- Total distributions (.08) (.41) (.58) (.20) Net asset value, end of period $8.98 $8.97 $8.75 $9.46 Total investment return at net asset value (%) (a)3.21(b) 7.51(b) (1.59) 7.21(b) Net assets, end of period (in thousands) $ 1 $58,591 $44,916 $15,113 Ratio of expenses to average net assets (%) .09(b) 1.46(b) 1.59 .77(b) Ratio of net investment income to average net assets (%) .42(b) 4.72(b) 4.77 2.42(b) Portfolio turnover (%) 51.86(b) 51.86(b) 51.74 44.58(b)
For the period For the February 20, eleven 1990 months (commencement ended of operations) May 31 Year ended June 30 to June 30 1995+ 1994 1993 1992 1991 1990 Class A Net asset value, beginning of period $ 8.75 $ 9.46 $ 8.97 $ 8.64 $ 8.50 $ 8.50 Investment operations Net investment income .46 .51 .54 .59(c) .62(c) .22(c) Net realized and unrealized gain (loss) on investments .23 (.58) .58 .38 .13 .01 Total from investment operations .69 (.07) 1.12 .97 .75 .23 Less distributions: From net investment income (.46) (.51) (.55) (.60) (.61) (.23) Net realized gain on investments -- (.08) (.08) (.04) -- -- In excess of realized gain on investments -- (.05) -- -- -- -- Total distributions (.46) (.64) (.63) (.64) (.61) (.23) Net asset value, end of period $8.98$ 8.75 $9.46$ 8.97 $ 8.64 $8.50 Total investment return at net asset value (%) (a) 8.25(b) (.94) 13.02 11.52 9.17 2.71(b) Net assets, end of period (in thousands) $242,569 $246,336 $235,243 $159,658 $99,978 $34,588 Ratio of expenses to average net assets (%) .87(b) .95 .92 .75(c) .66(c) .26(b)(c) Ratio of net investment income to average net assets (%) 5.36(b) 5.43 5.90 6.69(c) 7.09(c)3.06(b)(c) Portfolio turnover (%) 51.86(b) 51.74 44.58 80.21 101.21 `7.58(b)
* The fiscal year has been chnaged from June 30 to May 31. (a) Total Investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Not annualized. (c) Reflects an expense limitation. As a result of the limitation, expenses of the fund for the years ended June 30, 1992 and 1991 and for the period ended June 30, 1990 reflect a reduction of $0.01, $0.03 and $0.02, respectively. FINANCIAL HIGHLIGHTS (For a share outstanding throughout the year)
FOR THE PERIOD FOR THE PERIOD APRIL 17, 1995 JULY 15, 1993 (COMMENCEMENT OF (COMMENCEMENT OF OPERATIONS) TO YEAR ENDED OPERATIONS) TO MAY 31 MAY 31 MAY 31 1995 1995 1994 CLASS M CLASS B NET ASSET VALUE, BEGINNING OF PERIOD $8.80 $8.90$9.43 INVESTMENT OPERATIONS Net investment income .05 .47 .41 Net realized/unrealized gain (loss) on investments .21 .10 (.46) TOTAL FROM INVESTMENT OPERATIONS .26 .57 (.05) LESS DISTRIBUTIONS FROM: Net investment income (.06) (.47) (.40) Net realized gain on investments -- -- -- In excess of net gain on investments -- - -- (.08) TOTAL DISTRIBUTIONS (.06) (.47) (.48) NET ASSET VALUE, END OF PERIOD $9.00 $9.00 $8.90 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%) 2.03 6.72 (.68) NET ASSETS, END OF PERIOD (in thousands) $119 $21,071 $10,251 Ratio of expenses to average net assets (%).20 1.59 1.42 Ratio of net investment income to average net assets (%) .84 5.31 4.25 Portfolio turnover (%) 82.91 82.91 41.77 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) FOR THE PERIOD JULY 15, 1993 THREE MONTHS (COMMENCEMENT OF ENDED YEAR ENDED OPERATIONS) TO MAY 31 FEBRUARY 28 FEBRUARY 28 1995* 1995 1994 CLASS B NET ASSET VALUE, BEGINNING OF PERIOD $8.97 $9.38 $9.48 INVESTMENT OPERATIONS NET INVESTMENT INCOME .11 .47 .28 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .27 (.40) (.08) TOTAL FROM INVESTMENT OPERATIONS .38 .07 .20 LESS DISTRIBUTIONS: FROM NET INVESTMENT INCOME (.12) (.47) (.28) FROM NET REALIZED GAIN ON INVESTMENTS -- (.01) (.02) TOTAL DISTRIBUTIONS (.12) (.48) (.30) NET ASSET VALUE, END OF PERIOD $9.23 $8.97 $9.38 TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%)(B) 4.23(C) .93 2.18(C) NET ASSETS, END OF PERIOD (IN THOUSANDS) $44,252 $36,670 $12,633 RATIO OF EXPENSES TO AVERAGE NET ASSETS (%) .38(C) 1.57 1.00(C) RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS (%) 1.26(C) 5.23 2.90(C) PORTFOLIO TURNOVER (%) 4.15(C) 26.09 15.65(C) FINANCIAL HIGHLIGHTS (CONTINUED) FOR THE PERIOD JULY 21, 1989 THREE MONTHS (COMMENCEMENT ENDED OF OPERATIONS) MAY 31 YEAR ENDED FEBRUARY 28 TO FEBRUARY 28 1995* 1995 1994 1993 1992 1991 1990 CLASS A $8.98 $9.39 $9.40 $8.76 $8.42 $8.36 $8.50 .13 .53 .54 .57(A) .61(A) .62(A) .36(A) .26 (.40) .01 .65 .34 .06 (.14) .39 .13 .55 1.22 .95 .68 (.22) (.13) (.53) (.54) (.57) (.61) (.62) (.36) -- (.01) (.02) (.01) -- -- -- (.13) (.54) (.56) (.58) (.61) (.62) (.36) $9.24 $8.98 $9.39 $9.40 $8.76 $8.42 $8.36 4.39(C) 1.60 5.93 14.34 11.65 8.53 4.30(C) $178,785 $171,568 $171,757 $144,374 $93,086 $47,112 $19,203 .21(C) .92 .91 .72(A) .52(A) .41(A) .79(A)(C) 1.44(C) 5.94 5.36 6.31(A) 6.98(A) 7.43(A)6.96(A)(C) 4.15(C) 26.09 15.65 12.26 3.30 9.01 4.41(C) *THE FISCAL YEAR END HAS CHNAGED FROM FEBRUARY 28 TO MAY 31. (A)REFLECTS AN EXPENSE LIMITATION. AS A RESULT, NET INVESTMENT INCOME FOR THE YEARS ENDED FEBRUARY 28, 1993, 1992 AND 1991, REFLECTS EXPENSE REDUCTIONS OF APPROXIMATELY $0.01, $0.04, AND $0.06 PER SHARE, RESPECTIVELY. (B)TOTAL INVESTMENT RETURN ASSUMES DIVIDEND REINVESTMENT AND DOES NOT REFLECT THE EFFECT OF SALES CHARGES. (C)NOT ANNUALIZED.
OBJECTIVES EACH FUND SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAX AND , EXCEPT FOR THE FLORIDA FUND, PERSONAL INCOME TAX OF ITS RESPECTIVE STATE AS PUTNAM INVESTMENT MANAGEMENT, INC., THE FUNDS' INVESTMENT MANAGER ("PUTNAM MANAGEMENT") , BELIEVES IS CONSISTENT WITH PRESERVATION OF CAPITAL. None of the funds are intended to be a complete investment program, and there is no assurance that any fund will achieve its objective. HOW THE FUNDS PURSUE THEIR OBJECTIVES BASIC INVESTMENT STRATEGY EACH FUND SEEKS ITS OBJECTIVE BY FOLLOWING THE FUNDAMENTAL INVESTMENT POLICY OF INVESTING AT LEAST 80% OF ITS NET ASSETS IN TAX-EXEMPT SECURITIES (WHICH ARE DESCRIBED BELOW), EXCEPT WHEN INVESTING FOR DEFENSIVE PURPOSES DURING TIMES OF ADVERSE MARKET CONDITIONS. Under normal market conditions, the Florida fund will invest at least 65% of its net assets in tax-exempt securities issued by the State of Florida, its political subdivisions and their agencies and instrumentalities and in other tax-exempt securities which are exempt from the Florida intangibles tax. The Florida fund generally will seek to select investments which will enable its shares to be exempt from this tax, except when pursuing the alternative investment strategies described below. Such investments at times may have lower yields than other tax-exempt securities available for investment by the Florida fund. This investment strategy could also result in higher portfolio turnover and related transaction costs. See "How a fund makes distributions to shareholders--Florida taxes." Under current law, to the extent distributions by a fund are derived from interest on tax-exempt securities defined (as with respect to such fund), such distributions will be exempt from federal income tax and, except for the Florida fund, personal income tax in the relevant state (other than any applicable federal or state alternative minimum tax or any state minimum corporate income tax). In the case of the Minnesota fund, at least 95% of that fund's total exempt- interest dividends must also be derived from interest obligations of the State of Minnesota and its agencies, instrumentalities and political subdivisions in order for such distributions to be exempt, and in the case of the New Jersey fund, it must qualify as a "qualified investment fund" under New Jersey law. See "How how a fund makes distributions to shareholders; tax information" below. Each fund may also invest from time to time in securities exempt only from federal income tax and in taxable obligations described below under "Alternative investment strategies" to the extent permitted by its investment policies, or hold its assets in money market instruments or in cash . Each fund's investments in tax-exempt securities and taxable obligations will be limited to securities rated at the time of purchase not lower than the five highest grades assigned by Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A, Baa or Ba) and Standard & Poor's Corporation ("S&P") (AAA, AA, A, BBB or BB), for the Arizona, Massachusetts, Michigan, Minnesota and Ohio funds, by either Moody's and S&P for the Florida, New Jersey and Pennslyvnia funds, or for all funds, unrated securities that Putnam Management determines are of comparable quality. No funds will purchase a security rated both Ba by Moody's and BB by S&P at the time of purchase, or, if unrated, determined by Putnam Management to be of comparable quality if, as a result, more than 25% of the fund's total assets would be of that quality. The rating services' descriptions of the five highest grades of debt securities are included in the appendix to this prospectus. Securities rated Ba or BB (and comparable unrated securities) are considered to have speculative elements, with large uncertainties or major exposures to adverse conditions. Investors should carefully consider their ability to assume the risks of owning shares of a mutual fund which may invest in securities in the lower rating categories. Putnam Management expects that each fund will generally invest in tax-exempt securities of longer maturities (10 years or more), but each fund may invest in tax-exempt securities having a broad range of maturities. Under the Pennsylvania fund's investment policies, Putnam Management will not trade the fund's securities for the purpose of seeking profits . It is a fundamental policy of the fund that its portfolio securities may be varied only (i) to eliminate unsafe investments and investments not consistent with the preservation of the fund's capital or the tax status of the fund's investments; (ii) to honor redemption orders and meet anticipated redemption requirements and negate gains from discount purchases; (iii) to reinvest the earnings from securities in like securities; or (iv) to defray normal administrative expenses. For purposes of this fundamental policy, the fund may vary its portfolio securities if (i) there has been an adverse change in a security's credit rating or in that of its issuer or in Putnam Management's credit analysis of the security or its issuer; (ii) there has been, in the opinion of Putnam Management, a deterioration or anticipated deterioration in general economic or market conditions affecting issuers of tax-exempt securities, or a change or anticipated change in interest rates; (iii) adverse changes or anticipated changes in market conditions or economic or other factors temporarily affecting the issuers of one or more portfolio securities make necessary or desirable the sale of such security or securities in anticipation of the fund's repurchase of the same or comparable securities at a later date; or (iv) Putnam Management engages in the alternative investment practices described below. In addition, for purposes of this fundamental policy, the fund may purchase or sell financial futures contracts and related options and options on securities and securities indices for hedging purposes. As a result of these limitations, the fund may have less flexibility than other mutual funds in responding to market or interest rate changes and to new investment opportunities. ALTERNATIVE MINIMUM TAX INTEREST INCOME FROM CERTAIN TYPES OF TAX-EXEMPT SECURITIES MAY BE SUBJECT TO FEDERAL ALTERNATIVE MINIMUM TAX. In determining compliance with the 80% test described above, it is a fundamental policy of each fund to exclude from the definition of tax-exempt securities any securities the interest from which may be subject to federal alternative minimum tax for individuals. Corporate shareholders however, may be subject to federal alternative minimum tax on a portion of tax-exempt income the exempt-interest dividends they receive from a fund is generally included in the alternative minimum taxable income of corporations. ALTERNATIVE INVESTMENT STRATEGIES At times Putnam Management may judge that conditions in the markets for tax-exempt securities make pursuing a fund's basic investment strategy inconsistent with the best interests of its shareholders. At such times Putnam Management may temporarily use alternative strategies primarily designed to reduce fluctuations in the value of a fund's assets. In implementing these defensive strategies, a fund may invest without limit in taxable obligations, including: obligations of the U.S. government, its agencies or instrumentalities; obligations issued by governmental issuers in other states, the interest on which would be exempt from federal income tax; other debt securities rated within the four highest grades by either Moody's or S &P ; commercial paper rated in the highest grade by either rating service (Prime-1 or A-1+, respectively); certificates of deposit and bankers' acceptances; repurchase agreements ; or any other securities that Putnam Management considers consistent with such defensive strategies. It is impossible to predict when, or for how long, a fund will use these alternative strategies. TAX-EXEMPT SECURITIES THE TERM "TAX-EXEMPT SECURITIES" WHEN USED WITH RESPECT TOA PARTICULAR FUND, INCLUDES OBLIGATIONS OF A STATE , AND ITS POLITICAL SUBDIVISIONS AND THEIR AGENCIES, INSTRUMENTALITIES OR OTHER GOVERNMENTAL UNITS, THE INTEREST ON WHICH, IN THE OPINION OF BOND COUNSEL, IS EXEMPT FROM FEDERAL INCOME TAX AND (EXCEPT FOR FLORIDA, WHICH HAS NO PERSONAL INCOME TAX), PERSONAL OR GROSS INCOME TAX OF THE RELEVANT STATE . These securities are issued to obtain funds for various public purposes, such as the construction of public facilities, the payment of general operating expenses or the refunding of outstanding debts. They may also be issued to finance various private activities, including the lending of funds to public or private institutions for the construction of housing, educational or medical facilities, or to fund short-term cash requirements. They may also include certain types of industrial development bonds, private activity bonds or notes issued by public authorities to finance privately owned or operated facilities . Short-term tax-exempt securities may be issued as interim financing in anticipation of tax collections, revenue receipts or bond sales to finance various public purposes. Tax-exempt securities also include obligations issued by certain other governmental entities, such as U.S. territories, if these debt obligations generate interest income that is exempt from federal income tax and (except for Florida which has no personal income tax) the personal or gross income tax of the relevant state. THE TWO PRINCIPAL CLASSIFICATIONS OF TAX-EXEMPT SECURITIES ARE GENERAL OBLIGATION AND SPECIAL OBLIGATION (OR SPECIAL REVENUE OBLIGATION) SECURITIES. GENERAL OBLIGATION securities involve a pledge of the credit of an issuer possessing taxing power and are payable from the issuer's general unrestricted revenues. Their payment may depend on an appropriation by the issuer's legislative body. The characteristics and methods of enforcement of general obligation securities vary according to the law applicable to the particular issuer. SPECIAL OBLIGATION (or SPECIAL REVENUE OBLIGATION) securities are payable only from the revenues derived from a particular facility or class of facilities, or a specific revenue source, and generally are not payable from the unrestricted revenues of the issuer. Industrial development bonds and private activity bonds are in most cases special obligation securities, whose credit quality is tied to the private user of the facilities. A fund may also invest in securities representing interests in tax-exempt securities , known as "inverse floating obligations" or "residual interest bonds ." These obligations pay interest rates that vary inversely with changes in the interest rates of specified short-term tax - exempt securities or an index of short-term tax - exempt securities. The interest rates on inverse floating obligations or residual interest bonds will typically decline as short-term market interest rates increase and increase as short- term market rates decline. These securities have the effect of providing a degree of investment leverage . They will generally respond to changes in market interest rates more rapidly than fixed- rate long-term securities (typically twice as fast) . As a result, the market values of inverse floating obligations and residual interest bonds will generally be more volatile than the market values of fixed-rate tax - exempt securities. RISK FACTORS THE VALUES OF TAX-EXEMPT SECURITIES FLUCTUATE IN RESPONSE TO CHANGES IN INTEREST RATES. A decrease in interest rates will generally result in an increase in the value of a fund's assets. Conversely, during periods of rising interest rates, the value of a fund's assets will generally decline. The magnitude of these fluctuations generally is greater for securities with longer maturities. However, the yields on such securities are also generally higher. In addition, the values of fixed-income securities are affected by changes in general economic conditions and business conditions affecting the specific industries of their issuers. Changes by recognized rating services in their ratings of a fixed-income security and changes in the ability of an issuer to make payments of interest and principal may also affect the value of these investments. Changes in the value of portfolio securities generally will not affect income derived from these securities, but will affect a fund's net asset value. A fund will not necessarily dispose of a security when its rating is reduced below its rating at the time of purchase . However, Putnam Management will monitor the investment to determine whether continued investment in the security will assist in meeting a fund's investment objective. EACH FUND MAY INVEST IN BOTH HIGHER-RATED AND LOWER-RATED TAX-EXEMPT SECURITIES. LOWER-RATED SECURITIES ARE SECURITIES RATED BELOW BAA BY MOODY'S OR BBB BY S&P, AND ARE COMMONLY KNOWN AS "JUNK BONDS." The values of lower-rated securities generally fluctuate more than those of higher-rated securities. In addition, the lower rating reflects a greater possibility that the financial condition of the issuer, or adverse changes in general economic conditions, or both, may impair the ability of the issuer to make payments of income and principal. The tables below show the percentages of fund net assets invested during fiscal 1995 in securities assigned to various rating categories by S&P or if unrated by S&P, assigned to comparable rating categories by Moody's and in unrated securities determined by Putnam Management to be of comparable quality :
ARIZONA FUND FLORIDA FUND MASSACHUSETTS FUND MICHIGAN FUND ------------------------- -------------------------- ------------------------ ------------------------ UNRATED UNRATED UNRATED UNRATED RATED SECURITIES RATED SECURITIES RATED SECURITIES RATED SECURITIES SECURITIES OF COMPARABLE SECURITIES OF COMPARABLE SECURITIES OF COMPARABLE SECURITIES OF COMPARABLE AS PERCENTAGE QUALITY, AS AS PERCENTAGE QUALITY, AS AS PERCENTAGE QUALITY, AS AS PERCENTAGE QUALITY, AS OF NET PERCENTAGE OF OF NET PERCENTAGE OF OF FUND PERCENTAGE OF OF NET PERCENTAGE OF RATINGS ASSETS NET ASSETS ASSETS NET ASSETS ASSETS FUND ASSETS ASSETS NET ASSETS - ------------------------------------------------------------------------------------------------------------------------ "AAA" 40.83% - 62.93% - 41.37% 0.32% 48.48% - "AA" 16.14 - 10.05 - 4.76 0.22 9.38 - "A" 16.83 0.41% 7.54 0.58% 16.02 0.61 7.77 2.93% "BBB" 13.62 5.34 13.75 0.52 13.84 4.42 19.67 3.59 "BB" 1.86 4.82 - 2.96 1.23 15.94 0.64 6.32 "B" - 0.15 0.05 1.62 - 1.27 1.22 - ------ ------ ------ ------ ------- ------ ------ ------ 89.28% 10.72% 94.32% 5.68% 77.22% 22.78% 87.16% 12.84% - ------------------------------------------------------------------------------------------------------------------------ /TABLE
MINNESOTA FUND NEW JERSEY FUND OHIO FUND PENNSYLVANIA FUND ------------------------- -------------------------- ------------------------ ------------------------ UNRATED UNRATED UNRATED UNRATED RATED SECURITIES RATED SECURITIES RATED SECURITIES RATED SECURITIES SECURITIES OF COMPARABLE SECURITIES OF COMPARABLE SECURITIES OF COMPARABLE SECURITIES OF COMPARABLE AS PERCENTAGE QUALITY, AS AS PERCENTAGE QUALITY, AS AS PERCENTAGE QUALITY, AS AS PERCENTAGE QUALITY, AS OF FUND PERCENTAGE OF OF FUND PERCENTAGE OF OF FUND PERCENTAGE OF OF FUND PERCENTAGE OF RATINGS ASSETS FUND ASSETS ASSETS FUND ASSETS ASSETS FUND ASSETS ASSETS FUND ASSETS - ------------------------------------------------------------------------------------------------------------------------ "AAA" 34.80% - 43.83% - 57.43% 0.56% 56.46% 0.33% "AA" 21.75 - 15.61 0.05% 7.78 0.22 7.10 - "A" 25.18 - 13.61 1.32 7.16 - 11.03 - "BBB" 10.86 2.50% 7.80 2.32 13.28 6.63 15.17 3.61 "BB" - 4.91 0.38 15.08 1.21 5.42 1.85 3.91 "B" - - % - - 0.31 0.30 0.24 ------ ------ ------ ------ ------- ------ ------ ------ 92.59% 7.41% 81.23% 18.77% 86.86% 13.14% 91.91% 8.09% - ------------------------------------------------------------------------------------------------------------------------ /TABLE Putnam Management seeks to minimize the risks of investing in lower-rated securities through careful investment analysis. However, the amount of information available about the financial condition of an issuer of tax-exempt securities may not be as extensive as that which is made available by corporations whose securities are publicly traded. When a fund invests in tax- exempt securities in the lower rating categories, the achievement of the fund's goals is more dependent on Putnam Management's ability than would be the case if the fund were investing in tax-exempt securities in the higher rating categories. Investors should consider carefully their ability to assume the risks of owning shares of a mutual fund that may invest in securities in certain of the lower rating categories . At times, a substantial portion of each fund's assets may be invested in securities as to which that fund , by itself or together with other funds and accounts managed by Putnam Management and its affiliates, holds all or a major portion . Under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, a fund could find it more difficult to sell these securities when Putnam Management believes it advisable to do so or may be able to sell the securities only at prices lower than if they were more widely held. Under these circumstances, it may also be more difficult to determine the fair value of such securities for purposes of computing a fund's net asset value. In order to enforce its rights in the event of a default of these securities, a fund may be required to participate in various legal proceedings or take possession of and manage assets securing the issuer's obligations on the securities . This could increase a fund's operating expenses and adversely affect a fund's net asset value. Any income derived from a fund's ownership or operation of such assets would not be tax-exempt. The ability of a holder of a tax-exempt security to enforce the terms of that security in a bankruptcy proceeding may be more limited than would be the case with respect to privately-issued securities. Certain securities held by a fund may permit the issuer at its option to "call," or redeem, its securities. If an issuer were to redeem securities held by a fund during a time of declining interest rates, that fund may not be able to reinvest the proceeds in securities providing the same investment return as the securities redeemed. Each fund may invest in so-called "zero-coupon" bonds whose values are subject to greater fluctuation in response to changes in market interest rates than bonds that pay interest currently. Zero-coupon bonds are issued at a significant discount from face value and pay interest only at maturity rather than at intervals during the life of the security. Zero-coupon bonds allow an issuer to avoid the need to generate cash to meet current interest payments. Accordingly, such bonds may involve greater credit risks than bonds paying interest currently. A fund is required to accrue and distribute income from zero-coupon bonds on a current basis, even though it does not receive that income currently in cash. Thus a fund may have to sell other investments to obtain cash needed to make income distributions. The secondary market for tax-exempt securities is generally less liquid than that for taxable fixed-income securities, particularly for securities in the lower rating categories. Thus it may be more difficult from time to time to value or buy and sell certain securities . FOR ADDITIONAL INFORMATION CONCERNING THE RISKS ASSOCIATED WITH INVESTING IN SECURITIES IN THE LOWER RATING CATEGORIES, SEE THE SAI. SINCE THE FUNDS INVEST PRIMARILY IN TAX-EXEMPT SECURITIES , THE VALUE OF EACH FUND'S SHARES MAY BE ESPECIALLY AFFECTED BY FACTORS PERTAINING TO THE ECONOMY OF THE RELEVANT STATE AND OTHER FACTORS AFFECTING THE ABILITY OF ISSUERS OF TAX-EXEMPT SECURITIES TO MEET THEIR OBLIGATIONS. As a result, the value of each fund's shares may fluctuate more widely than the value of shares of a portfolio investing in securities relating to a number of different states. The ability of state, county or local governments to meet their obligations will depend primarily on the availability of tax and other revenues to those governments and on their fiscal conditions generally. The amounts of tax and other revenues available to governmental issuers of tax-exempt securities may be affected from time to time by economic, political and demographic conditions within or outside of the particular state. In addition, constitutional or statutory restrictions may limit a government's power to raise revenues or increase taxes. The availability of federal, state and local aid to issuers of tax-exempt securities may also affect their ability to meet their obligations. Payments of principal and interest on special obligation securities will depend on the economic condition of the facility or specific revenue source from whose revenues the payments will be made . The facility's economic status, in turn , could be affected by economic, political and demographic conditions affecting the particular state. Any reduction in the actual or perceived ability of an issuer of tax-exempt securities to meet its obligations would be likely to have an adverse effect on the market value and marketability of its obligations . A reduction in the rating of the issuer's outstanding securities would be included among these factors. Doubts surrounding such an issuer's ability to meet its obligations could adversely affect the values of other tax-exempt securities as well. DIVERSIFICATION AND CONCENTRATION POLICIES Under the Investment Company Act of 1940 and the Internal Revenue Code of 1986, funds may generally invest up to 25% of its total assets in the securities of any one issuer , and each of the Arizona, Florida and New Jersey funds, may generally invest up to 25% of its total assets in the securities of each of any two issuers. Otherwise, each of the funds may not invest more than 5% of its assets in the securities of any one issuer. Because of these limitations and the relatively small number of issuers of tax-exempt securities available to each fund, each fund is more likely to invest a higher percentage of its assets in the securities of a single issuer than an investment company that invests in a broad range of tax-exempt securities. This practice involves an increased risk of loss to a fund if the issuer were unable to make interest or principal payments or if the market value of these securities were to decline. NO FUND WILL INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN ANY ONE INDUSTRY. Governmental issuers of tax-exempt securities are not considered part of any "industry." However, for this purpose (and for diversification purposes discussed above) tax-exempt securities backed only by the assets and revenues of nongovernmental users may be deemed to be issued by such nongovernmental users. Thus, the 25% limitation would apply to these obligations. It is possible that a fund may invest more than 25% of its assets in a broader segment of the market for tax- exempt securities , such as revenue obligations of hospitals and other health care facilities, housing revenue obligations, or airport revenue obligations. This would be the case only if Putnam Management determined that the yields available from obligations in a particular segment of the market justified the additional risks associated with such concentration. Although these obligations could be supported by the credit of governmental issuers or by the credit of nongovernmental issuers engaged in a number of industries, economic, business, political and other developments generally affecting the revenues of their issuers may have a general adverse effect on all tax-exempt securities in a market segment. (Examples would include proposed legislation or pending court decisions affecting the financing of such projects and market factors affecting the demand for their services or products.) Each fund reserves the right to invest more than 25% of its assets in industrial development bonds and private activity securities . INVESTMENTS IN PREMIUM SECURITIES During a period of declining interest rates, many of each fund's portfolio investments will likely bear coupon rates that are higher than current market rates, regardless of whether these securities were originally purchased at a premium. These securities would generally carry market values greater than the principal amounts payable on maturity, which would be reflected in the net asset value of a fund's shares. The values of these "premium" securities tend to approach the principal amount as the securities approach maturity (or call price in the case of securities approaching their first call date). As a result, an investor who purchases shares of a fund during these periods would initially receive higher monthly distributions (derived from the higher coupon rates payable on that fund's investments) than might be available from alternative investments bearing current market interest rates. But the investor may face an increased risk of capital loss as these higher coupon securities approach maturity (or first call date). In evaluating the potential performance of an investment in a fund, investors may find it useful to compare that fund's current dividend rate with that fund's "yield," which is computed on a yield-to-maturity basis in accordance with SEC regulations and which reflects amortization of market premiums. See "How performance is shown." PORTFOLIO TURNOVER The length of time a fund has held a particular security is not generally a consideration in investment decisions. A change in the securities held by a fund is known as "portfolio turnover." As a result of a fund's investment policies, under certain market conditions a fund's portfolio turnover rate may be higher than that of other mutual funds. Portfolio turnover generally involves some expense to a fund , including brokerage commissions or dealer markups and other transaction costs on the sale of securities and reinvestment in other securities. These transactions may result in realization of taxable capital gains. Portfolio turnover rates for the life of each fund are shown in the section "Financial highlights." FINANCIAL FUTURES AND OPTIONS EACH FUND MAY PURCHASE AND SELL FINANCIAL FUTURES CONTRACTS FOR HEDGING PURPOSES. Futures contracts on the Municipal Bond Index are traded on the Chicago Board of Trade. This index is intended to represent a numerical measure of market performance for long-term tax-exempt bonds. An "index future" is a contract to buy or sell units of a particular securities index at an agreed price on a specified future date. Depending on the change in value of the index between the time a fund enters into and terminates an index futures contract, that fund realizes a gain or loss. A fund may purchase and sell futures contracts on the index (or any other tax - exempt bond index approved for trading by the Commodity Futures Trading Commission) to hedge against general changes in market values of tax-exempt securities that such fund owns or expects to purchase. Each fund may also purchase and sell put and call options on index futures or on the indexes directly, in addition to or as an alternative to purchasing and selling index futures. For hedging purposes, each fund may also purchase and sell futures contracts and related options on U.S. Treasury securities, including U.S. Treasury bills, notes and bonds ("U.S. government securities") and options directly on U.S. government securities. U.S. government securities futures and options would be used for purposes similar to index futures and options. In addition, to the extent consistant with its investment restrictions, each fund may purchase put and call options on, or warrants to purchase tax-exempt securities, either directly or through custodial arrangements in which the funds and other investors own an interest in one or more options on tax-exempt securities. THE USE OF FUTURES AND OPTIONS INVOLVES CERTAIN SPECIAL RISKS AND MAY RESULT IN REALIZATION OF TAXABLE INCOME OR CAPITAL GAINS. FUTURES AND OPTIONS TRANSACTIONS INVOLVE COSTS AND MAY RESULT IN LOSSES. Certain risks arise from the possibility of imperfect correlations between movements in the prices of financial futures and related options and movements in the prices of the underlying bond index or U.S. government securities or of the tax-exempt securities that are the subject of the hedge. The successful use of futures and options further depends on Putnam Management's ability to forecast interest rate movements correctly. Other risks arise from the potential inability to close out futures or options positions . There can be no assurance that a liquid secondary market will exist for any futures contract or option at a particular time. Certain provisions of the Internal Revenue Code and certain regulatory requirements may limit the use of futures and options transactions. A MORE DETAILED EXPLANATION OF FINANCIAL FUTURES AND OPTIONS TRANSACTIONS AND THE RISKS ASSOCIATED WITH THEM IS INCLUDED IN THE SAI . OTHER INVESTMENT PRACTICES EACH FUND MAY ALSO ENGAGE IN THE FOLLOWING INVESTMENT PRACTICES, EACH OF WHICH MAY RESULT IN TAXABLE INCOME OR CAPITAL GAINS AND INVOLVES CERTAIN SPECIAL RISKS. THE SAI CONTAINS MORE DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING LIMITATIONS DESIGNED TO REDUCE THESE RISKS. REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS. Each fund may enter into repurchase agreements on up to 25% of its assets. These transactions must be fully collateralized at all times. Each fund may also purchase securities for future delivery, which may increase its overall investment exposure and involves a risk of loss if the value of the securities declines prior to the settlement date. These transactions involve some risk to a fund if the other party should default on its obligation and that fund is delayed or prevented from recovering the collateral or completing the transaction. DERIVATIVES Certain of the instruments in which a fund will invest, such as futures contract, options and inverse floating obligations, are considered to be "derivatives." Derivatives are financial instruments whose value depends upon, or is derived from, the value of an underlying asset, such as a security or an index. Further information about these instruments and the risks involved in their use is included elsewhere in this prospectus and in the SAI. LIMITING INVESTMENT RISK Specific investment restrictions help each fund limit investment risks for its shareholders. These restrictions prohibit a fund from investing more than: (a) (For the Massachusetts, Michigan, Minnesota, Ohio funds with respect to 100% of total assets, for the Pennsylvania fund with respect to 75% of total assets and for Arizona, Florida and New Jersey with respect to 50% of total assets) 5% of total assets in the securities of any one issuer (other than obligations of the U.S. government or its agencies or instrumentalities, and for the Massachusetts, Michigan, Minnesota and Ohio funds, tax-exempt securities); * (b) 5% of its net assets in securities of any issuer if the party responsible for payment, together with any predecessors, has been in operation for less than three consecutive years (except obligations of the U.S. government, or its agencies or instrumentalities and obligations backed by the faith, credit and taxing power of any person authorized to issue tax-exempt securities) ; (c) 15% of its net assets in securities restricted as to resale, excluding securities that have been determined by the Trustees (or the person designated by them to make such determinations) to be readily marketable;* (d) 25% of total assets in any one industry (other than tax-exempt securities backed by the governmental issuers and obligations of the U.S. government, its agencies or instrumentalities);* and (e) 15% of its net assets in securities that are not readily marketable, securities restricted as to resale (excluding securities determined by the Trustees (or the person designated by them to make such determinations) to be readily marketable), and repurchase agreements maturing in more than seven days. Restrictions marked with an asterisk (*) above are summaries of fundamental investment policies. See the SAI for the full text of these policies and the funds' other fundamental investment policies. Except for investment policies designated as fundamental in this prospectus or the SAI , and the policy that under normal market conditions at least 80% of each fund's net assets will be invested in tax-exempt securities (other than securities which may be subject to federal alternative minimum tax), the investment policies described in this prospectus and in the SAI are not fundamental investment policies. The Trustees may change any non-fundamental investment policies without shareholder approval. As a matter of policy, the Trustees would not materially change a fund's investment objective without shareholder approval. HOW PERFORMANCE IS SHOWN EACH FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME BE INCLUDED IN ADVERTISEMENTS ABOUT THAT FUND . "Yield" for each class of shares is calculated by dividing the annualized net investment income per share during a recent 30-day period by the maximum public offering price per share of the class on the last day of that period. For purposes of calculating yield , net investment income is calculated in accordance with SEC regulations and may differ from net investment income as determined for financial reporting purposes. SEC regulations require that net investment income be calculated on a "yield-to-maturity" basis, which has the effect of amortizing any premiums or discounts in the current market value of fixed income securities. The current dividend rate is based on net investment income as determined for tax purposes, which may not reflect amortization in the same manner. See "How the funds pursue their objectives -- Investments in premium securities." Yield is based on the price of the shares, including the maximum initial sales charge in the case of class A and class M shares, but does not reflect any contingent deferred sales charge in the case of class B shares. "Tax-equivalent" yield for each class of shares shows the effect on performance of the tax-exempt status of distributions received from each fund . It reflects the approximate yield that a taxable investment must earn for shareholders at stated income levels to produce an after-tax yield equivalent to a class's tax-exempt yield. "Total return" for the one-, five- and ten-year periods (or for the life of a class, if shorter) through the most recent calendar quarter represents the average annual compounded rate of return on an investment of $1,000 in a fund invested at the maximum public offering price (in the case of class A and class M shares) or reflecting the deduction of any applicable contingent deferred sales charge (in the case of class B shares). Total return may also be presented for other periods or based on investment at reduced sales charge levels. Any quotation of investment performance not reflecting the maximum initial sales charge or contingent deferred sales charge would be reduced if the sales charge were used. ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE PERFORMANCE. Investment performance, which will vary, is based on many factors, including market conditions, the composition of a fund's portfolio, a fund's operating expenses and which class of shares the investor purchases . Investment performance also often reflects the risks associated with a fund's investment objective and policies. These factors should be considered when comparing a fund's investment results with those of other mutual funds and other investment vehicles. Quotations of investment performance for any period when an expense limitation was in effect will be greater than if the limitation had not been in effect. Each fund's performance may be compared to that of various indexes. See the SAI . HOW THE FUNDS ARE MANAGED THE TRUSTEES OF EACH FUND ARE RESPONSIBLE FOR GENERALLY OVERSEEING THE CONDUCT OF THAT FUND'S BUSINESS. Subject to such policies as the Trustees of each fund may determine, Putnam Management furnishes a continuing investment program for each fund and makes investment decisions on its behalf. Subject to the control of the Trustees, Putnam Management also manages each fund's other affairs and business. Each fund pays Putnam Management a quarterly fee for these services based on that fund's average net assets. See "Expenses summary" and the SAI. The following officers of Putnam Management , have had primary responsibility for the day-to-day management of the indicated funds' portfolios since the year stated below: Business experience Year (at least 5 years) ------- ----------------- Howard K. Manning Employed as an investment Senior Vice President professional by Putnam Management Arizona fund 1995 since 1986. Michigan fund 1983 Minnesota fund 1983 Triet Nguyen Employed as an investment Senior Vice President professional by Putnam Management Massachusetts fund 1990 since 1985. New Jersey fund 1995 Richard P. Wyke Employed as an investment Senior Vice President professional by Putnam Management Florida fund 1990 since 1987. Ohio fund 1995 Pennsylvania fund 1990 Leslie J. Burke Employed as an investment Vice President professional by Putnam New Jersey fund 1995 Management since 1992. Prior to 1992, Ms. Burke was a Research Associate and Municipal Bond Trader at Fidelity Management and Research Company. James M. Prusko Employed as an investment Assistant Vice President professional by Putnam Ohio fund 1995 Management since 1992. Prior to 1992, Mr. Prusko was a Sales and Trading Associate at Salomon Brothers. Each fund pays all expenses not assumed by Putnam Management, including Trustees' fees, auditing, legal, custodial, investor servicing and shareholder reporting expenses and payments under its distribution plans (which are in turn allocated to the relevant class of shares). Each fund also reimburses Putnam Management for the compensation and related expenses of certain officers of that fund and their staff who provide administrative services to that fund . The total reimbursement is determined annually by the Trustees. Putnam Management places all orders for purchases and sales of a fund's securities. In selecting broker-dealers, Putnam Management may consider research and brokerage services furnished to it and its affiliates. Subject to seeking the most favorable price and execution available, Putnam Management may consider sales of shares of a fund (and, if permitted by law, of the other Putnam funds) as a factor in the selection of broker- dealers. ORGANIZATION AND HISTORY Each fund is a separate Massachusetts business trust . Putnam Arizona Tax Exempt Income Fund was organized on November 9, 1990. Putnam Florida Tax Exempt Income Fund was organized on June 27, 1990. Putnam Massachusetts Tax Exempt Income Fund, which prior to October 1, 1995 was known as Putnam Massachusetts Tax Exempt Income Fund II was organized on March 7, 1986. Each of Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund and Putnam Ohio Tax Exempt Income Fund, which prior to October 1, 1995 were known as Putnam Michigan Tax Exempt Income Fund II, Putnam Minnesota Tax Exempt Income Fund II and Putnam Ohio Tax Exempt Income Fund II , respectively, were organized on September 2, 1986. Putnam New Jersey Tax-Exempt Income Fund was organized on November 17, 1989. Putnam Pennsylvania Tax Exempt Income Fund was organized on April 20, 1989. A copy of each fund's Agreement and Declaration of Trust, which is governed by Massachusetts law, is on file with the Secretary of State of The Commonwealth of Massachusetts. Each of the Massachusetts, Michigan, Minnesota, Ohio and Pennsylvania funds are open-end, diversified management investment companies and each of the Arizona, Florida and New Jersey funds are open-end, non-diversified management investment companies. Each fund has an unlimited number of authorized shares of beneficial interest. Shares of each fund may be divided without shareholder approval into two or more series of shares representing separate investment portfolios. Any such series of shares may be divided without shareholder approval into two or more classes of shares having such preferences and special or relative rights and privileges as the Trustees determine. Each fund's shares are currently divided into three classes. Only the funds' class A, B and M shares are offered by this prospectus. Each fund may also offer other classes of shares with different sales charges and expenses. Because of these different sales charges and expenses, the investment performance of the classes will vary. For more information, including your eligibility to purchase any other class of shares, contact your investment dealer or Putnam Mutual Funds (at 1-800-225-1581). Each share has one vote, with fractional shares voting proportionally. Shares of each class will vote together as a single class except when otherwise required by law or as determined by the Trustees. Shares are freely transferable, are entitled to dividends as declared by the Trustees, and, if a fund were liquidated, would receive the net assets of that fund. A fund may suspend the sale of shares at any time and may refuse any order to purchase shares. Although none of the funds is required to hold annual meetings of its shareholders, shareholders holding at least 10% of the outstanding shares entitled to vote have the right to call a meeting to elect or remove Trustees, or to take other actions as provided in each fund's Agreement and Declaration of Trust. Although each fund is offering only its own shares in this prospectus , it is possible that a fund might become liable for any misstatement in the prospectus about another fund . The Trustees of each fund have considered this factor in approving the use of a single prospectus. If you own fewer shares than a minimum amount set by the Trustees (presently 20 shares), a fund may choose to redeem your shares . You will receive at least 30 days' written notice before a fund redeems your shares, and you may purchase additional shares at any time to avoid a redemption. A fund may also redeem shares if you own shares above a maximum amount set by the Trustees. There is presently no maximum, but the Trustees may establish one at any time, which could apply to both present and future shareholders. THE FUNDS' TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the Putnam funds. Chairman and Director of Putnam Management and Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director, Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE CHAIRMAN. Professor of Management, Alfred P. Sloan School of Management, Massachusetts Institute of Technology ; JAMESON ADKINS BAXTER, President, Baxter Associates, Inc.; HANS H. ESTIN, Vice Chairman, North American Management Corp.; JOHN A. HILL, Principal and Managing Director, First Reserve Corporation; ELIZABETH T. KENNAN, President Emeritus and Professor , Mount Holyoke College; LAWRENCE J. LASSER,* Vice President of the Putnam funds. President, Chief Executive Officer and Director of Putnam Investments, Inc. and Putnam Management. Director, Marsh & McLennan Companies, Inc.; ROBERT E. PATTERSON, Executive Vice President, Cabot Partners Limited Partnership; DONALD S. PERKINS,* Director of various corporations, including AT&T , Kmart Corporation and Time Warner Inc.; GEORGE PUTNAM, III,* President, New Generation Research, Inc. ; ELI SHAPIRO, Alfred P. Sloan Professor of Management, Emeritus, Alfred P. Sloan School of Management, Massachusetts Institute of Technology ; A.J.C. SMITH,* Chairman, Chief Executive Officer and Director, Marsh & McLennan Companies, Inc.; and W. NICHOLAS THORNDIKE, Director of various corporations and charitable organizations, including Data General Corporation, Bradley Real Estate, Inc. and Providence Journal Co. Also, Trustee of Massachusetts General Hospital and Eastern Utilities Associates. The funds' Trustees are also Trustees of the other Putnam funds. Those marked with an asterisk (*) are or may be deemed to be "interested persons" of the funds , Putnam Management or Putnam Mutual Funds. ABOUT YOUR INVESTMENT ALTERNATIVE SALES ARRANGEMENTS This prospectus offers investors three classes of shares that bear sales charges in different forms and amounts and that bear different levels of expenses: CLASS A SHARES. An investor who purchases class A shares pays a sales charge at the time of purchase. As a result, class A shares are not subject to any charges when they are redeemed , except for sales at net asset value in excess of $1 million that are subject to a contingent deferred sales charge ("CDSC") . Certain purchases of class A shares qualify for reduced sales charges. Class A shares bear a lower 12b-1 fee than class B and class M shares. See "How to buy shares - - Class A shares " and "Distribution plans." CLASS B SHARES. Class B shares are sold without an initial sales charge, but are subject to a CDSC if redeemed within a specified period after purchase . Class B shares also bear a higher 12b-1 fee than class A and class M shares. Class B shares automatically convert into class A shares, based on relative net asset value , approximately eight years after purchase. For more information about the conversion of class B shares, see the SAI. This discussion will include information about how shares acquired through reinvestment of distributions are treated for conversion purposes. The discussion will also note certain circumstances under which a conversion may not occur. Class B shares provide an investor the benefit of putting all of the investor's dollars to work from the time the investment is made . Until conversion, class B shares will have a higher expense ratio and pay lower dividends than class A and class M shares because of the higher 12b-1 fee. See "How to buy shares - - Class B shares " and "Distribution plans." CLASS M SHARES. An investor who purchases class M shares pays a sales charge at the time of purchase that is lower than the sales charge applicable to class A shares. Certain purchases of class M shares qualify for reduced sales charges. Class M shares bear a 12b-1 fee that is lower than class B shares but higher than class A shares. Class M shares are not subject to any CDSC and do not convert into any other class of shares. See "How to buy shares -- Class M shares " and "Distribution plans." WHICH ARRANGEMENT IS BEST FOR YOU? The decision as to which class of shares provides a more suitable investment for an investor depends on a number of factors, including the amount and intended length of the investment. Investors making investments that qualify for reduced sales charges might consider class A or class M shares. Investors who prefer not to pay an initial sales charge might consider class B shares. Orders for class B shares for $250,000 or more will be treated as orders for class A shares or declined. For more information about these sales arrangements, consult your investment dealer or Putnam Investor Services. Shares may only be exchanged for shares of the same class of another Putnam fund. See "How to exchange shares." HOW TO BUY SHARES You can open a fund account with as little as $500 and make additional investments at any time with as little as $50. You can buy fund shares three ways - through most investment dealers, through Putnam Mutual Funds (at 1-800-225- 1581), or through a systematic investment plan. If you do not have a dealer, Putnam Mutual Funds can refer you to one. BUYING SHARES THROUGH PUTNAM MUTUAL FUNDS. Complete an order form and write a check for the amount you wish to invest, payable to the fund. Return the completed form and check to Putnam Mutual Funds, which will act as your agent in purchasing shares through your designated investment dealer. BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make regular investments of $25 or more per month through automatic deductions from your bank checking account. Application forms are available from your investment dealer or through Putnam Investor Services. Shares are sold at the public offering price based on the net asset value next determined after Putnam Investor Services receives your order. In most cases, in order to receive that day's public offering price, Putnam Investor Services must receive your order before the close of regular trading on the New York Stock Exchange. If you buy shares through your investment dealer, the dealer must receive your order before the close of regular trading on the New York Stock Exchange to receive that day's public offering price. CLASS A SHARES The public offering price of class A shares is the net asset value plus a sales charge that varies depending on the size of your purchase . The relevant fund receives the net asset value. The sales charge is allocated between your investment dealer and Putnam Mutual Funds as shown in the following table, except when Putnam Mutual Funds, in its discretion, allocates the entire amount to your investment dealer. SALES CHARGE AMOUNT OF AS A PERCENTAGE OF : SALES CHARGE ------------------ - REALLOWED TO NET DEALERS AS A AMOUNT OF TRANSACTION AMOUNT OFFERING PERCENTAGE OF AT OFFERING PRICE ($) INVESTED PRICEOFFERING PRICE - ----------------------------------------------------------------- Under 25,000 4.99% 4.75% 4.50% 25,000 but under 100,000 4.71 4.50 4.25 100,000 but under 250,000 3.90 3.75 3.50 250,000 but under 500,000 3.09 3.00 2.75 500,000 but under 1,000,0002.04 2.00 1.85 There is no initial sales charge on purchases of class A shares of $1 million or more. However, a CDSC of 1.00% or 0.50%, respectively, will be imposed if you redeem these shares within the first or second year after purchase, based on the lower of the shares' cost and current net asset value. Any shares acquired by reinvestment of distributions will be redeemed without a CDSC. Shares purchased by certain investors investing $1 million or more who have made arrangements with Putnam Mutual Funds and whose dealer of record waived the commission as described below are not subject to the CDSC. In determining whether a CDSC is payable, a fund will first redeem shares not subject to any charge. Putnam Mutual Funds receives the entire amount of any CDSC you pay. See the SAI for more information about the CDSC. Putnam Mutual Funds pays investment dealers of record commissions on sales of class A shares of $1 million or more based on an investor's cumulative purchases during the one- year period beginning with the date of the initial purchase at net asset value. Each subsequent one-year measuring period for these purposes will begin with the first net asset value purchase following the end of the prior period. Such commissions are paid at the rate of 1.00% of the amount under $3 million, 0.50% of the next $47 million and 0.25% thereafter. CLASS B SHARES Class B shares are sold without an initial sales charge, although a CDSC will be imposed if you redeem shares within a specified period after purchase , as shown in the table below . The following types of shares may be redeemed without charge at any time: (i) shares acquired by reinvestment of distributions and (ii) shares otherwise exempt from the CDSC, as described in "How to buy shares --General" below. For other shares, the amount of the charge is determined as a percentage of the lesser of the current market value or the cost of the shares being redeemed. YEAR 1 2 3 4 5 6 7+ - ------------------------------------------------------------- CHARGE 5% 4% 3% 3% 2% 1% 0% In determining whether a CDSC is payable on any redemption, a fund will first redeem shares not subject to any charge, and then shares held longest during the CDSC period. For this purpose, the amount of any increase in a share's value above its initial purchase price is not regarded as a share exempt from the CDSC. Thus, when a share that has appreciated in value is redeemed during the CDSC period, a CDSC is assessed only on its initial purchase price. For information on how sales charges are calculated if you exchange your shares, see "How to exchange shares." Putnam Mutual Funds receives the entire amount of any CDSC you pay. CLASS M SHARES The public offering price of class M shares is the net asset value plus a sales charge that varies depending on the size of your purchase. The relevant fund receives the net asset value. The sales charge is allocated between your investment dealer and Putnam Mutual Funds as shown in the following table , except when Putnam Mutual Funds, at its discretion, allocates the entire amount to your investment dealer. SALES CHARGE AMOUNT OF AS A PERCENTAGE OF: SALES CHARGE ------------------- REALLOWED TO NET DEALERS AS A AMOUNT OF TRANSACTION AMOUNT OFFERING PERCENTAGE OF AT OFFERING PRICE ($) INVESTED PRICE OFFERING PRICE - ----------------------------------------------------------------- Under 50,000 3.36% 3.25% 3.00% 50,000 but under 100,000 2.30 2.25 2.00 100,000 but under 250,000 1.52 1.50 1.25 250,000 but under 500,000 1.01 1.00 1.00 500,000 and above NONE NONE NONE GENERAL YOU MAY BE ELIGIBLE TO BUY CLASS A SHARES AND CLASS M SHARES AT REDUCED SALES CHARGES. Consult your investment dealer or Putnam Mutual Funds for details about Putnam's combined purchase privilege, cumulative quantity discount, statement of intention, group sales plan, employee benefit plans, and other plans. Descriptions are also included in the order form and in the SAI . In addition, sales charges will not apply to class M shares purchased with redemption proceeds received within the prior 90 days from non-Putnam mutual funds on which the investor paid a front-end or contingent deferred sales charge. Each fund may sell class A, class B and class M shares at net asset value without an initial sales charge or a CDSC to a fund's current and retired Trustees (and their families), current and retired employees (and their families) of Putnam Management and affiliates, registered representatives and other employees (and their families) of broker-dealers having sales agreements with Putnam Mutual Funds, employees (and their families) of financial institutions having sales agreements with Putnam Mutual Funds (or otherwise having an arrangement with a broker-dealer or financial institution with respect to sales of fund shares), financial institution trust departments investing an aggregate of $1 million or more in Putnam funds, clients of certain administrators of tax-qualified plans, employee benefit plans of companies with more than 750 employees, tax-qualified plans when proceeds from repayments of loans to participants are invested (or reinvested) in Putnam funds, "wrap accounts" for the benefit of clients of broker- dealers, financial institutions or financial planners adhering to certain standards established by Putnam Mutual Funds, and investors meeting certain requirements who sold shares of certain Putnam closed-end funds pursuant to a tender offer by the closed-end fund. In addition, each fund may sell shares at net asset value without an initial sales charge or a CDSC in connection with the acquisition by that fund of assets of an investment company or personal holding company, and the CDSC will be waived on redemptions of shares arising out of death or disability or in connection with certain withdrawals from IRA or other retirement plans. Up to 12% of the value of class B shares subject to a systematic withdrawal plan may also be redeemed each year without a CDSC. Each fund may sell class M shares at net asset value to members of qualified groups. See the SAI . Shareholders of other Putnam funds may be entitled to exchange their shares for, or reinvest distributions from their funds in, shares of the funds at net asset value. If you are considering redeeming or exchanging shares or transferring shares to another person shortly after purchase, you should pay for those shares with a certified check to avoid any delay in redemption, exchange or transfer. Otherwise a fund may delay payment until the purchase price of those shares has been collected or, if you redeem by telephone, until 15 calendar days after the purchase date. To eliminate the need for safekeeping, a fund will not issue certificates for your shares unless you request them. Putnam Mutual Funds will from time to time , at its expense, provide additional promotional incentives or payments to dealers that sell shares of the Putnam funds. These incentives or payments may include payments for travel expenses, including lodging, incurred in connection with trips taken by invited registered representatives and their guests to locations within and outside the United States for meetings or seminars of a business nature. In some instances, these incentives or payments may be offered only to certain dealers who have sold or may sell significant amounts of shares. Certain dealers may not sell all classes of shares. DISTRIBUTION PLANS CLASS A DISTRIBUTION PLAN. The class A plans provide for payments by each fund to Putnam Mutual Funds at the annual rate of up to 0.35% of average net assets attributable to class A shares. The Trustees currently limit payments under each class A plan to the annual rate of 0.20% of such assets. Putnam Mutual Funds makes quarterly payments to qualifying dealers (including, for this purpose, certain financial institutions) to compensate them for services provided in connection with sales of class A shares and the maintenance of shareholder accounts . The payments are based on the average net asset value of class A shares attributable to shareholders for whom the dealers are designated as the dealer of record. This calculation excludes until one year after purchase shares purchased at net asset value , known as "NAV shares," by shareholders investing $1 million or more . NAV shares are not subject to the one-year exclusion provision in cases where certain shareholders who invested $1 million or more have made arrangements with Putnam Mutual Funds and the dealer of record waived the sales commission. Putnam Mutual Funds makes quarterly payments at the annual rate of 0.15% of such average net asset value for class A shares outstanding as of March 5, 1993 for the Arizona fund, July 8, 1993 for the Florida and Pennsylvania funds, March 9, 1992 for the Michigan, Minnesota and Ohio funds, May 11, 1992 for the Massachusetts fund and December 31, 1992 for the New Jersey fund, and 0.20% of such average net asset value for shares acquired after such dates (including class A shares acquired through reinvestment of distributions.) CLASS B AND CLASS M DISTRIBUTION PLANS. The class B and class M plans provide for payments by each fund to Putnam Mutual Funds at the annual rate of up to 1.00% of average net assets attributable to class B shares and class M shares, as the case may be. The Trustees currently limit payments under the class B and class M plans to the annual rates of 0.85% and 50% of such assets , respectively. Although class B shares are sold without an initial sales charge, Putnam Mutual Funds pays a sales commission equal to 4.00% of the amount invested (including a prepaid service fee of 0.20% of the amount invested) to dealers who sell class B shares. These commissions are not paid on exchanges from other Putnam funds or on sales to investors exempt from the CDSC. The amount paid to dealers at the time of the sale of class M shares is set forth above under "How to buy shares - -- Class M shares. " In addition, to further compensate dealers (including qualifying financial institutions) for services provided in connection with sales of class B shares and class M shares and the maintenance of shareholder accounts, Putnam Mutual Funds makes quarterly payments to qualifying dealers . The payments are based on the average net asset value of class B shares and class M shares attributable to shareholders for whom the dealers are designated as the dealer of record ,except for the first year's service fees for class B shares , which are prepaid as described above. Putnam Mutual Funds makes the payments at an annual rate of 0.20% of such average net asset value of class B shares and class M shares, as the case may be. Putnam Mutual Funds also pays to dealers, as additional compensation with respect to the sale of class M shares, 0.20% of such average net asset value of class M shares. For class M shares, the total annual payment to dealers equals 0.40% of such average net asset value. GENERAL. Payments under the plans are intended to compensate Putnam Mutual Funds for services provided and expenses incurred by it as principal underwriter of fund shares, including the payments to dealers mentioned above. Putnam Mutual Funds may suspend or modify such payments to dealers. The payments are also subject to the continuation of the relevant distribution plan , the terms of service agreements between dealers and Putnam Mutual Funds, and any applicable limits imposed by the National Association of Securities Dealers, Inc. HOW TO SELL SHARES You can sell your shares to your fund any day the New York Stock Exchange is open, either directly to the fund or through your investment dealer. A fund will only redeem shares for which it has received payment. SELLING SHARES DIRECTLY TO YOUR FUND . Send a signed letter of instruction or stock power form to Putnam Investor Services, along with any certificates that represent shares you want to sell. The price you will receive is the next net asset value calculated after your fund receives your request in proper form less any applicable CDSC. In order to receive that day's net asset value, Putnam Investor Services must receive your request before the close of regular trading on the New York Stock Exchange. If you sell shares of a fund having a net asset value of $100,000 or more, the signatures of the registered owners or their legal representatives must be guaranteed by a bank, broker-dealer or certain other financial institutions. See the SAI for more information about where to obtain a signature guarantee. Stock power forms are available from your investment dealer, Putnam Investor Services and many commercial banks. If you want your redemption proceeds sent to an address other than your address as it appears on Putnam's records, a signature guarantee is required. Putnam Investor Services usually requires additional documentation for the sale of shares by a corporation, partnership, agent or fiduciary, or a surviving joint owner. Contact Putnam Investor Services for details. A FUND GENERALLY SENDS YOU PAYMENT FOR YOUR SHARES THE BUSINESS DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual circumstances, a fund may suspend redemptions, or postpone payment for more than seven days, as permitted by federal securities law. You may use Putnam's Telephone Redemption Privilege to redeem shares valued up to $100,000 from your account unless you have notified Putnam Investor Services of an address change within the preceding 15 days. Unless an investor indicates otherwise on the account application , Putnam Investor Services will be authorized to act upon redemption and transfer instructions received by telephone from a shareholder, or any person claiming to act as his or her representative, who can provide Putnam Investor Services with his or her account registration and address as it appears on Putnam Investor Services' records. Putnam Investor Services will employ these and other reasonable procedures to confirm that instructions communicated by telephone are genuine; if it fails to employ reasonable procedures, Putnam Investor Services may be liable for any losses due to unauthorized or fraudulent instructions. For information, consult Putnam Investor Services. During periods of unusual market changes and shareholder activity, you may experience delays in contacting Putnam Investor Services by telephone . In this event, you may wish to submit a written redemption request as described above, or contact your investment dealer, as described below. The Telephone Redemption Privilege is not available if you were issued certificates for shares that remain outstanding. The Telephone Redemption Privilege may be modified or terminated without notice. SELLING SHARES THROUGH YOUR INVESTMENT DEALER. Your dealer must receive your request before the close of regular trading on the New York Stock Exchange to receive that day's net asset value. Your dealer will be responsible for furnishing all necessary documentation to Putnam Investor Services, and may charge you for its services. HOW TO EXCHANGE SHARES You can exchange your shares for shares of the same class of certain other Putnam funds at net asset value beginning 15 days after purchase. Not all Putnam funds offer all classes of shares. If you exchange shares subject to a CDSC, the transaction will not be subject to the CDSC. However, when you redeem the shares acquired through the exchange, the redemption may be subject to the CDSC, depending upon when you originally purchased the shares . The CDSC will be computed using the schedule of any fund into or from which you have exchanged your shares that would result in your paying the highest CDSC applicable to your class of shares. For purposes of computing the CDSC, the length of time you have owned your shares will be measured from the date of original purchase and will not be affected by any exchange. To exchange your shares, simply complete an Exchange Authorization Form and send it to Putnam Investor Services. The form is available from Putnam Investor Services. For federal income tax purposes, an exchange is treated as a sale of shares and generally results in a capital gain or loss. A Telephone Exchange Privilege is currently available for amounts up to $500,000. Putnam Investor Services' procedures for telephonic transactions are described above under "How to sell shares." The Telephone Exchange Privilege is not available if you were issued certificates for shares that remain outstanding. Ask your investment dealer or Putnam Investor Services for prospectuses of other Putnam funds. Shares of certain Putnam funds are not available to residents of all states. The exchange privilege is not intended as a vehicle for short- term trading. Excessive exchange activity may interfere with portfolio management and have an adverse effect on all shareholders. In order to limit excessive exchange activity and in other circumstances where Putnam Management or the Trustees believe doing so would be in the best interests of a fund, the fund reserves the right to revise or terminate the exchange privilege, limit the amount or number of exchanges or reject any exchange. Shareholders would be notified of any such action to the extent required by law. Consult Putnam Investor Services before requesting an exchange. See the SAI to find out more about the exchange privilege. HOW A FUND VALUE ITS SHARES A FUND CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH CLASS BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS LIABILITIES, BY THE NUMBER OF SHARES OUTSTANDING. SHARES ARE VALUED AS OF THE CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK EXCHANGE EACH DAY THE EXCHANGE IS OPEN. Tax-exempt securities are valued 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. Each fund believes that reliable market quotations generally are not readily available for purposes of valuing its portfolio securities. As a result, it is likely that most of the valuations provided by a pricing service will be based upon fair value determined on the basis of the factors listed above. Non-tax-exempt securities for which market quotations are readily available are valued at market value. Short-term investments that will mature in 60 days or less are valued at amortized cost, which approximates market value. All other securities and assets are valued at their fair value following procedures approved by the Trustees. HOW A FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS ; TAX INFORMATION EACH FUND DECLARES ALL OF ITS NET INTEREST INCOME AS A DISTRIBUTION ON EACH DAY IT IS OPEN FOR BUSINESS. Net interest income consists of interest accrued on portfolio investments of a fund , less accrued expenses, computed in each case since the most recent determination of net asset value. Normally, a fund pays distributions of net interest income monthly. A fund will distribute at least annually all net realized capital gains, if any, after applying any available capital loss carryovers. A capital loss carryover is currently available for each fund . Distributions paid by a fund with respect to class A shares will generally be greater than those paid with respect to class B and class M shares because expenses attributable to class B and class M shares will generally be higher. You begin earning distributions on the business day after Putnam Mutual Funds receives payment for your shares. It is your responsibility to see that your dealer forwards payment promptly. YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS: -Reinvest all distributions in additional shares of your fund without a sales charge; -Receive distributions from net interest income in cash while reinvesting net capital gains distributions, if any, in additional shares of your fund without a sales charge; or - Receive all distributions in cash. You can change your distribution option by notifying Putnam Investor Services in writing. If you do not select an option when you open your account, all distributions will be reinvested. All distributions not paid in cash will be reinvested in shares of the class on which the distributions are paid. You will receive a statement confirming reinvestment of distributions in additional fund shares (or in shares of other Putnam funds for Dividends Plus accounts) promptly following the quarter in which the reinvestment occurs. If a check representing a fund distribution is not cashed within a specified period, Putnam Investor Services will notify you that you have the option of requesting another check or reinvesting the distribution in your fund or in another Putnam fund. If Putnam Investor Services does not receive your election, the distribution will be reinvested in that fund . Similarly, if correspondence sent by a fund or Putnam Investor Services is returned as "undeliverable," fund distributions will automatically be reinvested in the fund or in another Putnam fund. FEDERAL TAXES Each fund intends to qualify as a "regulated investment company" for federal income tax purposes and to meet all other requirements necessary for that fund to be relieved of federal taxes on income and gains it distributes to shareholders. Each fund will distribute substantially all of its ordinary income and capital gain net income on a current basis. Fund distributions designated by a fund as "exempt- interest dividends" are not generally subject to federal income tax. However, if you receive social security or railroad retirement benefits, you should consult your tax adviser to determine what effect, if any, an investment in a fund may have on the taxation of your benefits. In addition, an investment in a fund may result in liability for federal alternative minimum tax and state and local taxes, both for individual and corporate shareholders. Each fund may at times purchase tax-exempt securities at a discount from the price at which they were originally issued, especially during periods of rising interest rates . For federal income tax purposes, some or all of the market discount will be included in each fund's ordinary income and will be taxable to you as such when it is distributed to you . Each fund's distributions other than exempt-interest dividends will be taxable to you as ordinary income, except that any distributions of net long-term capital gains will be taxable as such, regardless of how long you have held your shares. Distributions will be taxable as described above whether received in cash or in shares through the reinvestment of distributions. Early in each year Putnam Investor Services will notify you of the amount and tax status of distributions paid to you for the preceding year. STATE TAXES GENERAL. Except as described below, to the extent not tax-exempt under the state income tax regime to which you are subject , your proportionate share of distributions from a fund's net investment income and short-term capital gains, if any, will be taxable as ordinary income, whether you take them in cash or reinvest them in additional shares of that fund (except that distributions reinvested in shares of the Michigan fund are exempt from Michigan intangibles tax). ARIZONA. It is the published position of the Arizona Department of Revenue that distributions by a regulated investment company are exempt from Arizona state income tax to the extent such dividends are derived from interest on obligations the interest on which is exempt from Arizona state income tax. As long as the Arizona fund qualifies as a regulated investment company, to the extent distributions by the Arizona fund are derived from interest income with respect to U.S. Treasury securities or, as described below, tax-exempt securities as defined above under "How the funds pursue their objectives-- Tax-exempt securities". Such distributions will be exempt from Arizona state income tax. In addition, it is the published position of the Arizona Department of Revenue that distributions by a regulated investment company derived from certain other governmental obligations as to which federal law specifically precludes state taxation of interest received by a direct investor in such obligations are exempt from Arizona state income tax. Some tax-exempt securities of Arizona issuers have a direct income tax exemption under Arizona law, independent of federal tax treatment. However, in most cases, interest with respect to tax-exempt securities of Arizona issuers is exempt from Arizona state income tax only so long as that interest is excluded from gross income for federal income tax purposes. Therefore, if interest with respect to tax-exempt securities of Arizona issuers held by the Arizona fund ceases to be exempt from federal income tax (or is retroactively determined to be taxable under federal law), then, unless that obligation has an independent statutory tax exemption under Arizona law, distributions by the Arizona fund derived from interest on that obligation will cease to be exempt from state income taxes (and, if interest on the obligation is determined to be taxable under federal law retroactive to any date, those distributions may be considered not to have been exempt from state income taxes from that date). For Arizona income tax purposes, dividends by the Arizona fund, other than dividends exempt from Arizona state income tax, will be taxable as ordinary income, whether paid in cash or reinvested in additional shares. Under current Arizona income tax law, distributions of net capital gains earned by the Arizona fund are not exempt from taxation and are taxed at ordinary income tax rates. FLORIDA. Florida does not currently impose an income tax on individuals. Thus individual shareholders of the fund will not be subject to any Florida state income tax on distributions received from the Florida fund. However, certain distributions will be taxable to corporate shareholders which are subject to Florida corporate income tax. Florida currently imposes an "intangibles tax" at the annual rate of 0.2% on certain securities and other intangible assets owned by Florida residents. Certain types of tax-exempt securities of Florida issuers, U.S. government securities and tax-exempt securities issued by certain U.S. territories and possessions are exempt from this intangibles tax. The Florida fund has received a ruling from Florida authorities that, if on December 31 of any year the Florida fund's portfolio consists solely of such exempt assets, the Florida fund's shares will be exempt from the Florida intangibles tax payable for the following year. In order to take advantage of the exemption from the intangibles tax in any year, the Florida fund must sell any non-exempt assets held in its portfolio and reinvest the proceeds in exempt assets prior to December 31. Transaction costs involved in restructuring the portfolio in this fashion would likely reduce the Florida fund's investment return and might exceed any increased investment return the Florida fund achieved by investing in non-exempt assets during the year. MASSACHUSETTS. Distributions received from the Massachusetts fund are exempt from Massachusetts personal income tax to the extent that they are derived from interest on tax-exempt securities and are designated as such. The Massachusetts fund has obtained a tax ruling which recognizes for Massachusetts personal income tax purposes the tax - exempt character of gains realized by the fund on the sale of certain tax-exempt securities when those gains are distributed to shareholders and designated as such. Distributions from investment income and capital gains, including exempt-interest dividends, may be subject to Massachusetts corporate excise tax. MICHIGAN. Distributions received from the Michigan fund are exempt from Michigan personal income tax and Michigan intangibles tax to the extent they are derived from interest on tax-exempt securities , under the current position of the Michigan Department of Treasury. Such distributions, if received in connection with a shareholder's business activity, may, however, be subject to Michigan single business tax. See the SAI . For Michigan personal income tax, intangibles tax and single business tax purposes, fund distributions attributable to any source other than interest on tax-exempt securities will be fully taxable. Fund distributions may be subject to the uniform city income tax imposed by certain Michigan cities. MINNESOTA. The 1995 Minnesota Legislature has enacted a statement of intent that interest on obligations of Minnesota governmental units and Indian tribes be included in net income of individuals, estates and trusts for Minnesota income tax purposes if a court determines that Minnesota's exemption of such interest unlawfully discriminates against interstate commerce because interest on obligations of governmental issuers located in other states is so included. This provision applies to taxable years that begin during or after the calendar year in which any such court decision becomes final, irrespective of the date on which the obligations were issued. Putnam Management is not aware of any decision in which a court has held that a state's exemption of interest on its own bonds or those of its political subdivisions or Indian tribes, but not of interest on the bonds of other states or thier political subdivisions or Indian tribes, unlawfully discriminates against interstate commerce or otherwise contravenes the United States Constitution. However, there can be no assurance that interest on the Minnesota bonds held by the Minnesota fund would not become taxable under this Minnesota statutory provision. Shareholders of the Minnesota fund who are individuals, estates or trusts will not be subject to Minnesota personal income tax on fund distributions to the extent that such distributions qualify as exempt-interest dividends and represent interest income attributable to interest on tax- exempt securities , provided that at least 95% of the fund's total exempt-interest dividends are derived from interest on obligations of the State of Minnesota and its agencies, instrumentalities and political subdivisions. Exempt-interest dividends attributable to interest on certain private activity bonds issued after August 7, 1986 will be included in Minnesota "alternative taxable income" of individuals, estates and trusts for purposes of computing Minnesota's alternative minimum tax. Losses of individuals, estates and trusts that are disallowed or treated as long-term losses under current federal law by reason of the shareholder's receipt of exempt-interest dividends or capital gain dividends, respectively, are treated similarly under Minnesota law, notwithstanding, in the case of exempt-interest dividends, that such dividends may not be fully excludable from Minnesota gross income. Fund distributions are not excluded in determining the Minnesota franchise tax on corporations measured by net income or the Minnesota alternative minimum tax on corporations. NEW JERSEY. The New Jersey fund intends to qualify as a "qualified investment fund" under the New Jersey Gross Income Tax law except when investing for defensive purposes under certain circumstances. As long as the New Jersey fund is a qualified investment fund and to the extent its distributions are derived from interest or net gains on tax-exempt securities, such distributions will be exempt from New Jersey tax, but will be reflected in the net income tax base for purposes of computing the corporate business tax. The exemption from the New Jersey Gross Income Tax will also extend to interest or net gains on obligations of the United States, its territories and certain of its agencies and instrumentalities which pay interest free from state or local taxation under any laws of New Jersey or under the Constitution or laws of the United States. Gains resulting from the redemption or sale of shares of the New Jersey fund will also be exempt from New Jersey Gross Income Tax. In order to be a qualified investment fund, the New Jersey fund must, as of the end of each fiscal quarter, invest at least 80% of the aggregate principal amount of its investments (excluding financial options, futures, forward contracts, or other similar financial instruments related to interest-bearing obligations, obligations issued at a discount or bond indexes related thereto to the extent such instruments are authorized under the regulated investment company rules under the Internal Revenue Code, and cash and cash items, which cash items shall include receivables) in the exempt obligations referred to above and have no investments other than interest bearing or discounted obligations, cash or cash items (including receivables) and financial options, futures, forward contracts or certain other similar instruments related to interest-bearing or discounted obligations or bond indexes related thereto. If the New Jersey fund fails to be a qualified investment fund, as a result of employing alternative investment strategies or otherwise, none of its distributions for the entire taxable year will qualify for tax-exempt status under New Jersey law. For New Jersey Gross Income Tax purposes, distributions by the fund derived from income or net gains on investments other than tax-exempt securities and obligations of the United States, its territories and certain of its agencies and instrumentalities will be taxable as ordinary income, whether paid in cash or reinvested in additional shares. OHIO. Distributions received from the Ohio fund with respect to shares are exempt from Ohio personal income tax and school district municipal income taxes in Ohio to the extent they are properly attributable to interest on obligations issued by the State of Ohio , political subdivisions , therefor, or agencies or instrumentalities therefor , provided that the Ohio fund continues to qualify as a regulated investment company for federal income tax purposes and that at all times at least 50% of the value of the total assets of the fund consist of securities or similar obligations of other states or their subdivisions. It is assumed for purposes of this discussion of Ohio taxation that these requirements are satisfied. All distributions received from the Ohio fund are excluded from the net income base of the Ohio corporation franchise tax to the extent that they (a) are properly attributable to interest on securities, or (b) represent exempt-interest dividends for federal income tax purposes. The Ohio fund's shares will be included in a shareholder's tax base for purposes of computing the Ohio franchise tax on the net worth basis. Distributions of capital gain with respect to shares of the Ohio fund will be exempt from Ohio personal income tax and school district income taxes and municipal income taxes in Ohio and will be excluded from the net income base of the Ohio corporation franchise tax, in each case to the extent that such distributions are properly attributable to profit made on the sale, exchange or other disposition by the Ohio fund of Ohio state securities. Distributions with respect to shares properly attributable to interest on obligations of the United States or of any authority, commission, or instrumentality of the United States or obligations of Puerto Rico, the Virgin Islands, or Guam or their authorities or instrumentalities will be exempt from Ohio personal income tax and school district income taxes and municipal income taxes in Ohio , and are excluded from the net income base of the Ohio corporation franchise tax . PENNSYLVANIA. Distributions paid by the Pennslyvania fund will not be subject to the Pennsylvania personal income tax or to the Philadelphia School District investment net income tax to the extent that the distributions are attributable to interest received by the Pennsylvania fund from its investments in tax- exempt securities and obligations of the United States, its territories and certain of its agencies and instrumentalities. Distributions by the Pennsylvania fund to a Pennsylvania resident that are attributable to other sources may be subject to the Pennsylvania personal income tax and (for residents of Philadelphia) to the Philadelphia School District investment net income tax whether paid in cash or reinvested in additional shares. Distributions paid by the Pennsylvania fund which are excludable as exempt income for federal tax purposes are not subject to the Pennsylvania corporate net income tax. For a more detailed description of Pennsylvania corporate income tax see the SAI. Individual shareholders of the Pennslyvania fund who are subject to the personal property taxes levied by certain Pennsylvania counties, cities and school districts will be exempt from such tax on their shares of the Pennsylvania fund to the extent that the Pennsylvania fund's portfolio consists of tax-exempt securities and obligations of the United States, its territories and certain of its agencies and instrumentalities. Corporations are not subject to Pennsylvania personal property taxes. GENERAL The foregoing is a summary of certain federal and state income tax consequences of investing in the funds . You should consult your tax adviser to determine the precise effect of an investment in a fund on your particular tax situation (including possible liability for federal alternative minimum tax and for state and local taxes). ABOUT PUTNAM INVESTMENTS, INC. PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937. Putnam Mutual Funds is the principal underwriter of each fund and of other Putnam funds. Putnam Fiduciary Trust Company is each fund's custodian. Putnam Investor Services, a division of Putnam Fiduciary Trust Company, is each fund's investor servicing and transfer agent. Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust Company are subsidiaries of Putnam Investments, Inc., which is wholly owned by Marsh & McLennan Companies, Inc., a publicly- owned holding company whose principal businesses are international insurance and reinsurance brokerage, employee benefit consulting and investment management. APPENDIX SECURITY RATINGS The ratings services' descriptions are as follows : MOODY'S INVESTORS SERVICE, INC.: BONDS AAA -- Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt- edged ." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than in the Aaa securities. A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper - medium - grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. BAA -- Bonds which are rated Baa are considered as medium grade obligations ( i.e., they are neither highly protected nor poorly secured ) . Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. BA -- Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well - assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Moody's ratings for state and municipal notes and other short- term loans are designated Moody's Investment Grade (MIG). This distinction is in recognition of the differences between short- term credit risk and long-term risk. Factors affecting the liquidity of the borrower are uppermost in importance in short- term borrowing, while various factors of the first importance in bond risk are of lesser importance in the short run. Loans bearing the MIG 1 designation are of the best quality, enjoying strong protection from established cash flows of funds for their servicing or from established and broad-based access to the market for refinancing, or both. Loans bearing the MIG 2 designation are of high quality, with margins of protection ample although not so large as in the preceding group. STANDARD & POOR'S : BONDS AAA -- Debt rated `AAA' has the highest rating assigned by Standard & Poor's to a debt obligation. Capacity to pay interest and repay principal is extremely strong. AA -- Debt rated `AA' has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A -- Debt rated `A' has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB -- Debt rated `BBB' is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than for debt in higher rated categories. BB -- Debt rated `BB' is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. RATINGS OF CORPORATE OBLIGATIONS The Moody's corporate obligations ratings of Aaa, Aa, A and Baa and the Standard & Poor's corporate obligations ratings of AAA, AA, A and BBB do not differ materially from those set forth above for tax-exempt securities. COMMERCIAL PAPER A-1 -- This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated`A-1'. GLOSSARY OF TERMS BOND An IOU issued by a government or corporation that usually pays interest. - ----------------------------------------------------------------- CAPITAL A profit or loss on the sale of securities (stocks GAIN/LOSS or bonds). - ----------------------------------------------------------------- CLASS A, B, Types of shares, each class offering investors a M shares different choice about how to pay sales charges and distribution fees. A fund's prospectus explains the availability and attributes of each type. - ----------------------------------------------------------------- COMMON A unit of ownership of a corporation. STOCK - ----------------------------------------------------------------- DISTRIBUTION A payment from a mutual fund to shareholders. It may include interest from bonds and dividends from stocks (dividend distributions). It may also include profits from the sale of securities from the fund's portfolio (capital gains distributions). - ----------------------------------------------------------------- NET ASSET The basic value of one share of a mutual fund VALUE (NAV) without regard to sales charges. Some bond funds aim for a steady NAV, representing stability; most stock funds work to raise NAV, representing growth in the value of an investment. - ----------------------------------------------------------------- PUBLIC The purchase price of one class A share or class M OFFERING share of a mutual fund, including the applicable PRICE (POP) up-front sales charge. - ----------------------------------------------------------------- TOTAL RETURN A measure of performance showing change in the value of an investment over a given period, assuming all earnings are invested back into the fund. - ----------------------------------------------------------------- YIELD The percentage rate at which a fund's portfolio earns income from its investments . MAKE THE MOST OF YOUR PUTNAM PRIVILEGES As a Putnam mutual fund shareholder, you have access to a number of services that can help you build a more effective and flexible financial program. Here are some of the ways you can use these privileges to make the most of your Putnam mutual fund investment. SYSTEMATIC INVESTMENT PLAN Invest as much as you wish ($25 or more) on any business day of the month except for the 29th, 30th, or 31st. The amount will be automatically transferred from your checking or savings account. SYSTEMATIC WITHDRAWAL Make regular withdrawals of $50 or more monthly, quarterly, or semiannually from an account valued at $10,000 or more. You may establish your withdrawal on any business day of the month except for the 29th, 30th, or 31st. SYSTEMATIC EXCHANGE Transfer assets automatically from one Putnam account to another on a regular, prearranged basis. There is no additional charge for this service. FREE EXCHANGE PRIVILEGE Exchange money between Putnam funds in the same class of shares without charge. The exchange privilege allows you to adjust your investments as your objectives change. A signature guarantee is required for exchanges of more than $500,000. DIVIDENDS PLUS Diversify your portfolio by investing dividends and other distributions from one Putnam fund automatically into another at net asset value. STATEMENT OF INTENTION To reduce a front-end sales charge, you agree to invest a minimum dollar amount over 13 months. Depending on your fund, the minimum is $25,000, $50,000, or $100,000. Whenever you make an investment under this arrangement, you or your investment advisor should notify Putnam that a Statement of Intention is in effect. Investors may not maintain, within the same fund, simultaneous plans for systematic investment or exchange and systematic withdrawal or exchange. These privileges are subject to change or termination. For more information about any of these services and privileges, call your investment advisor or a Putnam customer service representative toll - free at 1-800-225-1581. PUTNAM FAMILY OF FUNDS PUTNAM GROWTH FUNDS Putnam Asia Pacific Growth Fund Putnam Diversified Equity Trust Putnam Europe Growth Fund Putnam Global Growth Fund Putnam Health Sciences Trust Putnam International New Opportunities Fund Putnam Investors Fund Putnam Natural Resources Fund Putnam New Opportunities Fund Putnam OTC Emerging Growth Fund Putnam Overseas Growth Fund Putnam Vista Fund Putnam Voyager Fund Putnam Voyager Fund II* PUTNAM GROWTH AND INCOME FUNDS Putnam Balanced Retirement Fund Putnam Convertible Income-Growth Trust Putnam Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income Putnam Growth and Income Fund II Putnam Utilities Growth and Income Fund PUTNAM INCOME FUNDS Putnam Adjustable Rate U.S. Government Fund Putnam American Government Income Fund Putnam Diversified Income Trust Putnam Federal Income Trust Putnam Global Governmental Income Trust Putnam High Yield Advantage Fund Putnam High Yield Trust Putnam Income Fund Putnam Intermediate U.S. Government Fund Putnam Preferred Income Fund Putnam U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Putnam Intermediate Tax Exempt Fund Putnam Municipal Income Fund Putnam Tax Exempt Income Fund Putnam Tax-Free High Yield Fund Putnam Tax-Free Insured Fund Putnam State tax - free income funds+ Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, and Pennsylvania LIFESTAGE(SM) FUNDS Putnam Asset Allocation Funds -- three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments seeking to help maximize your return and reduce your risk. THE THREE PORTFOLIOS: Balanced Portfolio Conservative Portfolio Growth Portfolio PUTNAM MONEY MARKET FUNDS Putnam Money Market Fund Putnam California Tax Exempt Money Market Fund Putnam New York Tax Exempt Money Market Fund Putnam Tax Exempt Money Market Fund *Formerly Putnam Growth Fund +Not available in all states. Please call your financial advisor or Putnam to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Read it carefully before you invest or send money. PUTNAM ARIZONA TAX EXEMPT INCOME FUND PUTNAM FLORIDA TAX EXEMPT INCOME FUND PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND PUTNAM MICHIGAN TAX EXEMPT INCOME FUND PUTNAM MINNESOTA TAX EXEMPT INCOME FUND PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND PUTNAM OHIO TAX EXEMPT INCOME FUND PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND One Post Office Square Boston, MA 02109 FUND INFORMATION INVESTMENT MANAGER: Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 INVESTOR SERVICING AGENT Putnam Investor Services Mailing address: P.O. Box 41203 Providence, RI 02940-1203 CUSTODIAN Putnam Fiduciary Trust Company One Post Office Square Boston, MA 02109 LEGAL COUNSEL Ropes & Gray One International Place Boston, MA 02110 INDEPENDENT ACCOUNTANTS Arizona, Michigan , New Jersey and Ohio funds Coopers & Lybrand L.L.P. One Post Office Square Boston, MA 02109 Florida, Massachusetts , Minnesota and Pennsylvania funds Price Waterhouse LLP 160 Federal Street Boston, MA 02110 PUTNAMINVESTMENTS One Post Office Square Boston, Massachusetts 02109 Toll-free 1-800-225-1581 PUTNA M ARIZONA TAX EXEMPT INCOME FUND (T HE "ARIZONA FUND") PUTNA M FLORIDA TAX EXEMPT INCOME FUND (T HE "FLORIDA FUND") PUTNA M MASSACHUSETTS TAX EXEMPT INCOME FUND (THE "MASSACHUSETTS FUND") PUTNA M MICHIGAN TAX EXEMPT INCOME FUND (THE "MICHIGAN FUND") PUTNA M MINNESOTA TAX EXEMPT INCOME FUND (THE "MINNESOTA FUND") PUTNA M NEW JERSEY TAX EXEMPT INCOME FUND (THE "NEW JERSEY FUND") PUTNA M OHIO TAX EXEMPT INCOME FUND (THE "OHIO FUND") PUTNA M PENNSYLVANIA TAX EXEMPT INCOME FUND (THE "PENNSYLVANIA FUND") (EACH A "FUND" AND COLLE CTIVELY, THE "FUNDS") FORM N-1A PART B STATEMENT OF ADDITIONAL INFORMATION ("SAI") OCTOBER 1, 1995 This SAI is not a prospectus and is only authorized for distribution when accompanied or preceded by the prospectus of the funds dated October 1, 1995 , as revised from time to time. This SAI contains information which may be useful to investors but which is not included in the prospectus. If a fund has more than one form of current prospectus , each reference to the prospectus in this SAI shall include all of that fund's prospectuses , unless otherwise noted. The SAI should be read together with the applicable prospectus . Investors may obtain a free copy of the applicable prospectus from Putnam Investor Services, Mailing address: P.O. Box 41203, Providence, RI 02940-1203. Part I of this SAI contains specific information about each fund . Part II includes information about the funds and the other Putnam funds. TABLE OF CONTENTS PART I PAGE TAX - EXEMPT SECURITIES. . . . . . . . . . . . . I- 4 INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . I-6 CHARGES AND EXPENSES. . . . . . . . . . . . . . . . . . . . I- 12 INVESTMENT PERFORMANCE. . . . . . . . . . . . . . . . . . . . I-23 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . I- 30 EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES. . I- 34 ADDITIONAL OFFICERS . . . . . . . . . . . . . . . . . . . . . I-43 INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS. . . . . . I- 44 PART II MISCELLANEOUS INVESTMENT PRACTICES. . . . . . . . . . . . . . . . . . II-1 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-22 MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . . . II-27 DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . . . . . . II-36 HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . II-38 DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . II-49 INVESTOR SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . II-50 SIGNATURE GUARANTEES. . . . . . . . . . . . . . . . . . . . . . . . II-56 SUSPENSION OF REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . II-56 SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . II- 56 STANDARD PERFORMANCE MEASURES . . . . . . . . . . . . . . . . . . . II-57 COMPARISON OF PORTFOLIO PERFORMANCE . . . . . . . . . . . . . . . . II-58 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-63 SAI PART I TAX - EXEMPT SECURITIES GENERAL DESCRIPTION. As used in the prospectus and in this SAI, the term "tax-exempt securities" includes obligations of a state and its political subdivisions and their agencies, instrumentalities or other governmental units, the interest , the interest on which , in the opinion of bond counsel, is exempt from federal income tax and (except for Florida, which has no personal income tax) personal or gross income tax of the relevant state . Such obligations are issued to obtain funds for various public purposes, including the construction of a wide range of public facilities, such as airports, bridges, highways, housing, hospitals, mass transportation, schools, streets and water and sewer works. Other public purposes for which tax-exempt securities may be issued include the refunding of outstanding obligations or the payment of general operating expenses. Short -term tax-exempt securities are generally issued by state and local governments and public authorities as interim financing in anticipation of tax collections, revenue receipts, or bond sales to finance such public purposes . In addition, certain types of "private activity" bonds may be issued by public authorities to finance such projects as privately operated housing facilities and certain local facilities for water supply, gas, electricity or sewage or solid waste disposal, student loans, or the obtaining of funds to lend to public or private institutions for the construction of facilities such as educational, hospital and housing facilities. Such obligations are included within the term tax-exempt securities if the interest paid thereon is, in the opinion of bond counsel, exempt from federal income tax and (except for the Florida fund) personal or gross income tax of the relevant state (such interest may, however, be subject to federal alternative minimum tax ) . Other types of private activity bonds, the proceeds of which are used for the construction, repair or improvement of, or to obtain equipment for, privately operated industrial or commercial facilities, may constitute tax-exempt securities , although the current federal tax laws place substantial limitations on the size of such issues. Tax-exempt securities also include short - term discount notes (tax - exempt commercial paper), which are promissory notes issued by municipalities to enhance their cash flows. STAND-BY COMMITMENTS. When a fund purchases tax- exempt securities , it has the authority to acquire stand-by commitments from banks and broker-dealers with respect to those tax-exempt securities . A stand-by commitment may be considered a security independent of the tax-exempt security to which it relates. The amount payable by a bank or dealer during the time a stand-by commitment is exercisable, absent unusual circumstances, would be substantially the same as the market value of the underlying tax-exempt security to a third party at any time. Each fund expects that stand-by commitments generally will be available without the payment of direct or indirect consideration. None of the funds expect to assign any value to stand-by commitments. YIELDS. The yields on tax-exempt securities depend on a variety of factors, including general money market conditions, effective marginal tax rates, the financial condition of the issuer, general conditions of the tax-exempt security market, the size of a particular offering, the maturity of the obligation and the rating of the issue. The ratings of Moody's Investors Service, Inc. and Standard & Poor's represent their opinions as to the quality of the tax-exempt securities which they undertake to rate. It should be emphasized, however, that ratings are general and are not absolute standards of quality. Consequently, tax-exempt securities with the same maturity and interest rate but with different ratings may have the same yield. Yield disparities may occur for reasons not directly related to the investment quality of particular issues or the general movement of interest rates, due to such factors as changes in the overall demand or supply of various types of tax-exempt securities or changes in the investment objectives of investors. Subsequent to purchase by a fund , an issue of tax-exempt securities or other investments may cease to be rated or its rating may be reduced below the minimum rating required for purchase by a fund . Neither event will require the elimination of an investment from a fund's portfolio, but Putnam Management will consider such an event in its determination of whether a fund should continue to hold an investment in its portfolio. "MORAL OBLIGATION" BONDS. Each fund does not currently intend to invest in so-called "moral obligation" bonds, where payment is backed by a moral commitment of an entity other than the issuer, unless the credit of the issuer itself, without regard to the "moral obligation , " meets the investment criteria established for investments by the fund . ADDITIONAL RISKS. Securities in which each fund may invest, including tax-exempt securities , are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the federal Bankruptcy Code (including special provisions related to municipalities and other public entities) , and to laws, if any, which may be enacted by Congress or the appropriate state legislature extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations. There is also the possibility that as a result of litigation or other conditions the power , ability or willingness of issuers to meet their obligations for the payment of interest and principal on their tax- exempt securities may be materially affected. From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on debt obligations issued by states and their political subdivisions. Federal tax laws limit the types and amounts of tax-exempt bonds issuable for certain purposes, especially industrial development bonds and private activity bonds. Such limits may affect the future supply and yields of these types of tax-exempt securities . Further proposals limiting the issuance of tax- exempt bonds may well be introduced in the future. If it appeared that the availability of tax-exempt securities for investment by a fund and the value of that fund's portfolio could be materially affected by such changes in law, the Trustees of that fund would reevaluate its investment objective and policies and consider changes in the structure of that fund or its dissolution. INVESTMENT RESTRICTIONS AS FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH MAY NOT BE CHANGED WITHOUT A VOTE OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES, A FUND MAY NOT AND WILL NOT: (1) Borrow money in excess of 10% of the value (taken at the lower of cost or current value) of its total assets (not including the amount borrowed) at the time the borrowing is made, and then only from banks as a temporary measure to facilitate the meeting of redemption requests (not for leverage) which might otherwise require the untimely disposition of portfolio investments or for extraordinary or emergency purposes. Such borrowings will be repaid before any additional investments are purchased. (2) (All funds except Arizona and New Jersey funds) Pledge, hypothecate, mortgage or otherwise encumber its assets in excess of 15% of its total assets (taken at current value) in connection with borrowings permitted by restriction 1 above. (3) (Arizona fund only) Pledge, hypothecate, mortgage or otherwise encumber its assets in excess of 15% of its total assets (taken at the lower of cost or current value) in connection with borrowings permitted by restriction 1 above. (4) (New Jersey fund only) Pledge, hypothecate, mortgage or otherwise encumber its assets in excess of 15% of its total assets (taken at current value) and then only to secure borrowings permitted by restriction 1 above. (The deposit of underlying securities and other assets in escrow and collateral arrangements with respect to margin for financial futures contracts, options on such contracts and on securities indices are not deemed to be pledges or other encumbrances.) (5) (Massachusetts, Michigan, Minnesota and Ohio funds only) Purchase securities on margin, except such short-term credits as may be necessary for the clearance of purchases and sales of securities, and except that it may make margin payments in connection with options on financial futures contracts and on futures contracts. (6) (Florida, New Jersey and Pennsylvania funds only) Purchase securities on margin, except such short-term credits as may be necessary for the clearance of purchases and sales of securities, and except that it may make margin payments in connection with futures contracts and related options. (7) (Arizona fund only) Purchase securities on margin, except such short-term credits as may be necessary for the clearance of purchases and sales of securities, and except that it may make margin payments in connection with futures contracts and options. (8) Make short sales of securities or maintain a short sale position for the account of the fund unless at all times when a short position is open it owns an equal amount of such securities or owns securities which, without payment of any further consideration, are convertible into or exchangeable for securities of the same issue as, and equal in amount to, the securities sold short. (9) Underwrite securities issued by other persons except to the extent that, in connection with the disposition of its portfolio investments, it may be deemed to be an underwriter under certain federal securities laws. (10) (Massachusetts, Michigan, Minnesota, Ohio and Pennsylvania funds only) Purchase or sell real estate, although it may purchase or sell securities which are secured by or represent interests in real estate. (11) (Arizona, Florida, and New Jersey funds only) Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate, and securities representing interests in real estate, and it may acquire and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of debt obligations secured by real estate or interests therein. (12) (Massachusetts, Michigan, Minnesota and Ohio funds only) Purchase or sell commodities or commodity contracts, except that a fund may write and purchase options on financial futures contracts and buy and sell financial futures contracts. (13) (Florida, New Jersey and Pennsylvania funds only) Purchase or sell commodities or commodity contracts, except that a Fund may write and purchase financial futures contracts and related options. (14) (Arizona fund only) Purchase or sell commodities or commodity contracts, except that the Arizona fund may purchase and sell financial futures contracts and related options. (15) (All funds except Arizona fund) Make loans, except by purchase of debt obligations in which a fund may invest consistent with its investment policies, or by entering into repurchase agreements with respect to not more than 25% of its total assets (taken at current value). (16) (Arizona fund only) Make loans, except by purchase of debt obligations in which the Arizona fund may invest consistent with its investment policies, or by entering into repurchase agreements with respect to not more than 25% of its total assets (taken at current value) or through the lending of its portfolio securities with respect to not more than 25% of its assets. (17) Invest in securities of any issuer if, to the knowledge of the fund , officers and Trustees of the fund and officers and directors of Putnam Management who beneficially own more than 0.5% of the shares or securities of that issuer together own more than 5%. (18) (Massachusetts, Michigan, Minnesota and Ohio funds only). Invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of a fund (taken at current value) would be invested in the securities of such issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest and principal by the U.S. government, its agencies or instrumentalities or to tax-exempt securities . (19) (Pennsylvania fund only). With respect to 75% of its total assets, invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of the Pennsylvania fund (taken at current value) would be invested in the securities of such issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest and principal by the U.S. government or its agencies or instrumentalities. (20) (Arizona, Florida and New Jersey funds only). With respect to 50% of its total assets, invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of the fund (taken at current value) would be invested in the securities of such issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities. (21) Acquire more than 10% of the voting securities of any issuer. (22) (All funds except Arizona fund) Purchase securities (other than securities of the U.S. government, its agencies or instrumentalities and tax-exempt securities , except obligations backed only by the assets and revenues of nongovernmental issuers) if as a result of such purchase more than 25% of the fund's total assets would be invested in any one industry. (23) (Arizona fund only) Purchase securities (other than securities of the U.S. government, its agencies or instrumentalities or tax-exempt securities, except obligations backed only by the assets and revenues of nongovernmental issuers) if as a result of such purchase, more than 25% of the Arizona fund's total assets would be invested in any one industry. (24) (New Jersey fund only). Invest in the securities of other registered open-end investment companies, except as they may be acquired as part of a merger or consolidation or acquisition of assets. (25) (All funds except Arizona fund) Purchase securities restricted as to resale, if, as a result, such investments would exceed 15% of the value of a fund's net assets, excluding restricted securities that have been determined by the Trustees of the fund (or the person designated by them to make such determinations) to be readily marketable. (26) (Arizona fund only) Purchase securities the disposition of which is restricted under federal securities law, if, as a result, such investments would exceed 15% of the value of the Arizona fund's current net assets, excluding restricted securities that have been determined by the Trustees of the Arizona fund (or the person designated by them to make such determinations) to be readily marketable. (27) (Massachusetts, Michigan, Minnesota, Ohio and Pennslyvania funds only) Buy or sell oil, gas or other mineral leases, rights or royalty contracts. (28) (Florida fund only) Buy or sell oil, gas or other mineral leases, rights or royalty contracts, although it may purchase securities which represent interests in, are secured by interests in, or which are issued by issuers which deal in, such leases, rights, or contracts, and it may acquire or dispose of such leases, rights, or contracts acquired through the exercise of its rights as a holder of debt obligations secured thereby. (29) (New Jersey fund only) Buy or sell oil, gas or other mineral leases, rights or royalty contracts, although it may purchase securities of issuers which deal in, represent interests in, or are secured by interests in such leases, rights, or contracts, and it may acquire or dispose of such leases, rights, or contracts acquired through the exercise of its rights as a holder of debt obligations secured thereby. (30) Make investments for the purpose of gaining control of a company's management. (31) Issue any class of securities which is senior to the fund's shares of beneficial interest. IT IS CONTRARY TO A FUND'S PRESENT POLICY, WHICH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL, TO: (1) (For Massachusetts, Michigan, Minnesota and Ohio funds only) Invest in (a) securities which at the time of such investment are not readily marketable, (b) securities restricted as to resale and (c) repurchase agreements maturing in more than seven days, if, as a result, more than 15% of a fund's net assets (taken at current value) would be invested in securities described in (a), (b) and (c) above. (2) (For Arizona, Florida, New Jersey and Pennsylvania funds only) Invest in (a) securities which at the time of such investment are not readily marketable, (b) securities restricted as to resale (excluding securities determined by the Trustees of a fund to make such determinations) to be readily marketable, and (c) repurchase agreements maturing in more than seven days, if, as a result, more than 15% of a fund's net assets (taken at current value) would be invested in securities described in (a), (b) and (c) above. (3) (All funds except Arizona fund). Invest in warrants (other than warrants acquired by the fund as part of a unit or attached to securities at the time of purchase). (4) (All funds except Arizona and Florida funds) Invest in securities of any issuer if the party responsible for payment, together with any predecessors, has been in operation for less than three consecutive years and, as a result of the investment, the aggregate of such investments would exceed 5% of the value of the fund's net assets; provided, however, that this restriction shall not apply to any obligation of the United States or its agencies or instrumentalities, or to any obligation for the payment of which is pledged the faith, credit and taxing power of any person authorized to issue tax-exempt securities . (5) (Arizona fund only) Invest in securities of any issuer if the party responsible for payment, together with any predecessors, has been in operation for less than three consecutive years and, as a result of the investment, the aggregate of such investments would exceed 5% of the value of the Arizona fund's net assets; provided, however, that this restriction shall not apply to any obligation of the United States or its agencies or instrumentalities, or to any general obligation for the payment of which is pledged the faith, credit and taxing power of any person authorized to issue tax-exempt securities. (6) (Florida fund only) Invest in securities of any issuer if the party responsible for payment, together with any predecessors, has been in operation for less than three consecutive years and, as a result of the investment, the aggregate of such investments would exceed 5% of the value of the Florida fund's net assets; provided, however, that this restriction shall not apply to any obligation of the United States or its agencies or instrumentalities, or to any obligation for the payment of which is pledged the full faith, credit and taxing power of any person authorized to issue tax-exempt securities. (7) (All funds except New Jersey fund). Invest in the securities of other registered open-end investment companies, except as they may be acquired as part of a merger or consolidation or acquisition of assets. Although certain of the funds' fundamental investment restrictions permit a fund to borrow money to a limited extent, none of the funds currently intends to do so and none of the funds did so last year. ------------------ All percentage limitations on investments will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment. ------------------ The Investment Company Act of 1940 provides that a "vote of a majority of the outstanding voting securities" of a fund means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of that fund , or (2) 67% or more of the shares present at a meeting if more than 50% of the outstanding shares of that fund are represented at the meeting in person or by proxy. CHARGES AND EXPENSES MANAGEMENT FEES Under Management Contracts (dated setforth as below), each fund pays a quarterly fee to Putnam Management based on the average net assets of that fund , as determined at the close of each business day during the quarter, at the following rates (expressed as a percentage of each fund's average net assets): FUND NAME CONTRACT DATE RATES Arizona fund 3/5/92 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40% thereafter Florida fund 12/5/91 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40% thereafter Massachusetts fund 7/11/91 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40% thereafter Michigan fund 7/11/91 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40% thereafter Minnesota fund 7/11/91 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40% thereafter New Jersey fund 6/6/91 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40 thereafter Ohio fund 7/11/91 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40% thereafter Pennsylvania fund 7/11/91 0.60% of the first $500 million 0.50% of the next $500 million 0.45% of the next $500 million and 0.40% thereafter For the past three fiscal years, pursuant to its Management Contract, each fund incurred the following fees : REFLECTING A REDUCTION IN THE FOLLOWING AMOUNTS PURSUANT TO AN FISCAL MANAGEMENT EXPENSE YEAR FEE PAID LIMITATION ------ ---------- ---------------- Arizona fund 1995+ $683,508 n/a 1994 $952,641 n/a 1993 $690,438 $5,850 Florida fund 1995++ $1,686,928 n/a 1994 $1,921,362 n/a 1993 $1,440,655 $4,697 Massachusetts fund 1995 $1,638,366 n/a 1994 $1,549,215 n/a 1993 $1,085,405 n/a Michigan fund 1995 $858,323 n/a 1994 $782,934 n/a 1993 $573,363 n/a Minnesota fund 1995 $643,810 n/a 1994 $589,840 n/a 1993 $432,104 n/a New Jersey fund 1995++ $1,588,880 n/a 1994 $1,702,343 n/a 1993 $1,170,593 n/a Ohio fund 1995 $1,286,605 n/a 1994 $1,206,826 n/a 1993 $957,541 n/a Pennsylvania fund 1995+++ $323,968 n/a 1995 $1,155,995 n/a 1994 $990,690 n/a + for fiscal period 9/1/94 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 BROKERAGE COMMISSIONS The following table shows brokerage commissions paid during the fiscal periods indicated. FISCAL BROKERAGE YEAR COMMISSIONS ------ ------------ Arizona fund 1995+ $16,040 1994 $0 1993 $15,099 Florida fund 1995++ $29,166 1994 $34,899 1993 $112,624 Massachusetts fund 1995 $27,290 1994 $9,696 1993 $0 Michigan fund 1995 $5,208 1994 $0 1993 $100 Minnesota fund 1995 $9,645 1994 $1,095 1993 $0 New Jersey fund 1995++ $41,937 1994 $9,708 1993 $17,053 Ohio fund 1995 $13,759 1994 $6,063 1993 $0 Pennsylvania fund 1995+++ $2,119 1995 $2,612 1994 $11,715 + for fiscal period 9/1/94 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 The following table shows transactions placed with brokers and dealers during the most recent fiscal year to recognize research, statistical and quotation services Putnam Management considered to be particularly useful to it and its affiliates. DOLLAR VALUE PERCENT OF OF THESE TOTAL AMOUNT OF TRANSACTIONS TRANSACTIONS COMMISSIONS ------------ ------------ ----------- Arizona fund+ $0 0% $0 Florida fund++ $3,538,966 1.44% $20,750 Massachusetts fund $0 0% $0 Michigan fund $12,44,100 2.96% $8,000 Minnesota fund $0 0% $0 New Jersey fund++ $239,063 0.10% $1,063 Ohio fund $3,431,840 2.97% $26,341 Pennsylvania fund+++ $0 0% 0% + for fiscal period 9/1/94 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 ADMINISTRATIVE EXPENSE REIMBURSEMENT Each fund reimbursed Putnam Management in the following amounts for administrative services during fiscal 1995 , including the following amounts for compensation of certain officers of that fund and contributions to the Putnam Investments, Inc. Profit Sharing Retirement Plan for their benefit: PORTION OF TOTAL REIMBURSEMENT FOR COMPENSATION TOTAL AND REIMBURSEMENT CONTRIBUTIONS ------------- ---------------- Arizona fund+ $6,233 $5,859 Florida fund++ $8,188 $7,697 Massachusetts fund $8,858 $8,326 Michigan fund $11,362 $10,680 Minnesota fund $8,231 $7,737 New Jersey fund++ $5,133 $4,825 Ohio fund $8,635 $8,117 Pennsylvania fund+++ $2,376 $2,233 + for fiscal period 9/1/95 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 TRUSTEE FEES Each Trustee receives a fee for his or her services. Each Trustee also receives fees for serving as Trustee of other Putnam funds. The Trustees periodically review their fees to assure that such fees continue to be appropriate in light of their responsibilities as well as in relation to fees paid to trustees of other mutual fund complexes. The Trustees meet monthly over a two-day period, except in August. The Compensation Committee, which consists solely of Trustees not affiliated with Putnam Management and is responsible for recommending Trustee compensation, estimates that Committee and Trustee meeting time together with the appropriate preparation requires the equivalent of at least three business days per Trustee meeting. The following table shows the year each Trustee was first elected a Trustee of the Putnam funds, the fees paid to each Trustee by each fund for fiscal 1995 and the fees paid to each Trustee by all of the Putnam funds during the calendar year 1994:
COMPENSATION TABLE AGGREGATE COMPENSATION* FROM: ALL PUTNAM TRUSTEE/YEAR AZ+ FL++ MA MI MN NJ++ OH PA+++ FUNDS** Jameson A. Baxter/1994 $583 $813 $865 $772 $754 $808 $826 $198 $135,850 Hans H. Estin/1972 $588 $821 $871 $777 $758 $816 $831 $206 141,850 John A. Hill/1985 $590 $821 $871 $776 $758 $816 $831 $206 143,850 Elizabeth T. Kennan/1992 $581 $812 $871 $770 $758 $816 $831 $206 141,850 Lawrence J. Lasser/1992 $588 $821 $871 $777 $758 $816 $831 $206 141,850 Robert E. Patterson/1984 $594 $831 $880 $783 $765 $826 $837 $206 144,850 Donald S. Perkins/1982 $588 $821 $868 $774 $756 $816 $830 $206 139,850 William F. Pounds/1971 $591 $826 $874 $779 $760 $821 $835 $206 143,850 George Putnam/1957 $588 $821 $871 $777 $758 $816 $831 $206 141,850 George Putnam, III/1984 $588 $821 $871 $777 $758 $816 $831 $206 141,850 Eli Shapiro/1995*** $61 $69 $69 $61 $60 $70 $66 $66 N/A A.J.C. Smith/1986 $585 $812 $871 $770 $758 $816 $831 $206 137,850 W. Nicholas Thorndike/1992 $594 $831 $862 $783 $752 $807 $823 $206 144,850 * Includes an annual retainer and an attendance fee for each meeting attended. ** Reflects total payments received from all Putnam funds in the most recent calendar year. As of December 31, 1994, there were 86 funds in the Putnam family. *** Elected as a Trustee in April 1995. For the calendar year ended December 31, 1994, Dr. Shapiro received $38,577 in retirement benefits from the Putnam funds in respect of his prior service as a Trustee from 1984 to 1989, which benefits terminated at the end of 1994. + For fiscal period 9/1/94 - 5/31/95. ++ For fiscal period 7/1/94 - 5/31/95. +++ For fiscal period 3/1/95 - 5/31/95.
The Trustees have approved Retirement Guidelines for Trustees of the Putnam funds. These Guidelines provide generally that a Trustee who retires after reaching age 72 and who has at least 10 years of continuous service will be eligible to receive a retirement benefit from each Putnam fund for which he or she served as a Trustee. The amount and form of such benefit is subject to determination annually by the Trustees and, unless otherwise determined by the Trustees, will be an annual cash benefit payable for life equal to one-half of the Trustee retainer fees paid by each fund at the time of retirement. Several retired Trustees are currently receiving benefits pursuant to the Guidelines and it is anticipated that the current Trustees will receive similar benefits upon their retirement. A Trustee who retired in calendar 1994 and was eligible to receive benefits under these Guidelines would have received an annual benefit of $60,425, based upon the aggregate retainer fees paid by the Putnam funds for such year. The Trustees reserve the right to amend or terminate such Guidelines and the related payments at any time, and may modify or waive the foregoing eligibility requirements when deemed appropriate. For additional information concerning the Trustees, see "Management" in Part II of this SAI. SHARE OWNERSHIP At August 31, 1995, the officers and Trustees of each fund as a group owned less than 1% of the outstanding shares of each class of each fund, and, except as noted below, to the knowledge of each fund no person owned of record or beneficially 5% or more of the shares of any class of that fund. SHAREHOLDER NAME PERCENTAGE FUND NAME CLASS AND ADDRESS OWNED (%) - ----------- ----- -------------------- -------- Arizona fund A Merrill Lynch 6.30 4800 Dear Lake Dr. East Jacksonville, FL 32246 B Merrill Lynch 5.90 4800 Dear Lake Dr. East Jacksonville, FL 32246 MPutnam Investment, Inc. 51.40 One Post Office Square Boston, MA 02109 MAlex Brown & Sons, Inc. 48.50 P.O. Box 1346 Baltimore, MD 21203 Florida fund A Merrill Lynch 8.90 4800 Dear Lake Dr. East Jacksonville, FL 32246 B Merrill Lynch 7.70 4800 Dear Lake Dr. East Jacksonville, FL 32246 MPutnam Investments, Inc. 100.00 One Post Office Square Boston, MA 02109 Massachusetts M Janice A. Krusen 43.50 fund 88 Pochet Rd. Orleans, MA 02643 MCorelink Financial, Inc. 17.50 1855 Gateway Blvd. Concord, CA 94520 MJoseph R. Gaudet 16.50 165 Linwood St. Lynn, MA 01905 MAngela M. Monti 16.30 43 Pine vale Rd. Waltham, MA 02154 Michigan fund M Frank R. Farkas 60.10 1832 ADA Muskegon, MI 49442 MEdward D. Jones & Co.17.20 P.O. Box 2500 Maryland Heights, MO 63043 MLorain J. Bullis 12.10 2110 N. Williamston Rd. Williamston, MI 48895 MWaldemar E. Klammer 9.90 801 Weaver Ave. Kalamazoo, MI 49006 MRaymond P. Dull 5.30 325 N. Division St. Spring Lake, MI 49456 Minnesota fund M Kermit J. Swenson 99.10 7819 408th St. Kenyon, MN 55946 New Jersey fund A Merrill Lynch 9.70 4800 Dear Lake Dr. East Jacksonville, FL 32246 B Merrill Lynch 9.50 4800 Dear Lake Dr. East Jacksonville, FL 32246 MChristine Vallet 17.60 40 Fieldcrest Way Hazlet, NJ 07430 M Carol Bozzo 8.80 189 Broadway Bayonne, NJ 07002 Ohio fund B Merrill Lynch 11.90 4800 Dear Lake Dr. East Jacksonville, FL 32246 MRaymond E. Duvall 28.90 1113 Heritage Dr. Van Wert, OH 45891 MEdward D. Jones & Co. 8.70 P.O. Box 2500 Maryland Heights, MO 63043 Pennsylvania fund A BHC Securities, Inc. 5.10 100 North 20th St. Philadelphia, PA 19103 B Merrill Lynch 6.80 4800 Dear Lake Dr. East Jacksonville, FL 32246 MArlene L. Diem 22.20 890 E. Kercher Ave. Myerstown, PA 17067 MSamuel J. Bucher 6.50 Rt. 2, Box 212 Myerstown, PA 17067 MFrank G. Gravener 5.00 4404 Sylvan Dr. Reading, PA 19606 DISTRIBUTION FEES During fiscal 1995, the funds paid the following 12b-1 fees to Putnam Mutual Funds: FUND NAME CLASS A CLASS B CLASS M - ----------- ------- ------- ------- Arizona fund+ $199,364 $114,668 n/a Florida fund++ $488,799 $312,328 $0 Massachusetts fund $479,498 $284,736 $5 Michigan fund $256,205 $127,403 $77 Minnesota fund $187,341 $116,155 $0 New Jersey fund++ $431,012 $394,057 $0 Ohio fund $378,971 $212,438 $0 Pennsylvania fund+++ $86,239 $86,431 n/a + for fiscal period 9/1/94 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 CLASS A SALES CHARGES AND CONTINGENT DEFERRED SALES CHARGES Putnam Mutual Funds received sales charges with respect to class A shares in the following amounts during the periods indicated: SALES CHARGES RETAINED BY PUTNAM CONTINGENT MUTUAL FUNDS DEFERRED TOTAL AFTER SALES SALES CHARGESDEALER CONCESSIONS CHARGES ------------------------------- -------- Arizona fund Fiscal year 1995+ $257,469 $15,552 $200 1994 $894,004 $59,472 $1,639 1993 $1,896,011 $89,369 $0 Florida fund Fiscal year 1995++ $501,152 $39,037 $19,781 1994 $1,391,801 $80,999 $584 1993 $2,398,367 $133,344 $9,631 Massachusetts fund Fiscal year 1995 $783,963 $27,221 $680 1994 $1,740,049 $140,316 $10,092 1993 $2,093,315 $155,124 $1,722 Michigan fund Fiscal year 1995 $419,491 $15,212 $0 1994 $935,249 $65,629 $0 1993 $1,116,865 $58,296 $0 Minnesota fund Fiscal year 1995 $312,177 $18,588 $7 1994 $670,795 $41,915 $27 1993 $1,030,088 $47,238 $0 New Jersey fund Fiscal year 1995++ $777,971 $48,327 $2,864 1994 $2,132,078 $123,856 $0 1993 $3,122,792 $169,842 $0 Ohio fund Fiscal year 1995 $466,247 $30,918 $0 1994 $1,129,631 $73,168 $0 1993 $1,399,258 $68,352 $0 Pennsylvania fund Fiscal year 1995+++ $273,245 $18,254 $10,000 1995 $1,113,142 $71,739 $640 1994 $1,283,881 $75,566 $640 + for fiscal period 9/1/94 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 CLASS B CONTINGENT DEFERRED SALES CHARGES Putnam Mutual Funds received contingent deferred sales charges upon redemptions of class B shares in the following amounts during the periods indicated: CONTINGENT DEFERRED SALES CHARGES ------------------- Arizona fund Fiscal year 1995+ $48,101 1994 $309,154 1993 $0 Florida fund Fiscal year 1995++ $153,120 1994 $78,903 1993 $133,344 Massachusetts fund Fiscal year 1995 $35,000 1994 $34,720 Michigan fund Fiscal year 1995 $32,819 1994 $3,489 Minnesota fund Fiscal year 1995 $20,926 1994 $4,372 New Jersey fund Fiscal year 1995++ $150,939 1994 $62,483 1993 $3,539 Ohio fund Fiscal year 1995 $60,907 1994 $9,032 Pennsylvania fund Fiscal year 1995+++ $18,160 1995 $2,473 1994 $69,280 + for fiscal period 9/1/94 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 CLASS M SHARES Putnam Mutual Funds received sales charges with respect to class M shares in the following amounts during the 1995 fiscal year: SALES CHARGES RETAINED BY PUTNAM MUTUAL FUNDS TOTAL AFTER SALES CHARGES DEALER CONCESSIONS ------------- ------------------ Florida fund+ $0 $0 Massachusetts fund $692 $62 Michigan fund $0 $0 Minnesota fund $0 $0 New Jersey fund+ $0 $0 Ohio fund $0 $0 + for fiscal period 7/1/94 - 5/31/95 No class M shares for the Arizona and Pennslyvania funds were outstanding during as of May 31, 1995. INVESTOR SERVICING AND CUSTODY FEES AND EXPENSES During the 1995 fiscal year, each fund incurred the following fees and out-of-pocket expenses for investor servicing and custody services provided by Putnam Fiduciary Trust Company: Arizona fund+ $52,454 Florida fund++ $127,059 Massachusetts fund $127,771 Michigan fund $103,351 Minnesota fund $77,963 New Jersey fund++ $211,127 Ohio fund $173,281 Pennsylvania fund+++ $0 + for fiscal period 9/1/94 - 5/31/95 ++ for fiscal period 7/1/94 - 5/31/95 +++ for fiscal period 3/1/95 - 5/31/95 INVESTMENT PERFORMANCE STANDARD PERFORMANCE MEASURES (for periods ended May 31, 1995) Arizona fund Class A Class B Inception date: 1/30/91 7/15/93 TOTAL RETURN NAV* POP** NAV CDSC - ---------------------------------------------------------------------- 1 year +7.62% +2.53% +6.88% +1.88% Life of class +7.89 +6.70 +2.94 +0.94 Class A Class B Inception date: 1/30/91 7/15/93 YIELD POP NAV 30-day 5.02% 4.62% yield Tax-equivalent 8.80 8.10 yield*** *net asset value **public offering price ***Assumes the maximum combined 42.98% federal and state rate. Results for investors subject to lower tax rates would not be as advantageous. No class M shares were outstanding at May 31, 1995. Florida fund Class A Class B Class M Inception date: 8/24/90 1/4/93 5/1/95 TOTAL RETURN NAV* POP** NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year +9.23% +4.05% +8.52% +3.52% n/a n/a Life of class +8.44 +7.35 +5.18 +3.63 +3.28 -0.10 Class A Class B Class M Inception date: 8/24/90 1/4/93 5/1/95 YIELD POP NAV POP 30-day 4.92% 4.51% 4.76% yield Tax-equivalent 8.15 7.47 7.88 yield*** *net asset value **public offering price ***Assumes the maximum 39.60% federal rate. Results for investors subject to lower tax rates would not be as advantageous. Massachusetts fund Class A Class B Class M Inception date: 10/23/89 7/15/93 5/12/95 TOTAL RETURN NAV* POP** NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year +8.45% +3.31% +7.64% +2.64% n/a n/a 5 years +8.97 +7.93 n/a n/a n/a n/a Life of class +8.75 +7.82 +3.36 +1.38 +1.53 -1.83 Class A Class B Class M Inception date: 10/23/89 7/15/93 5/12/95 YIELD POP NAV POP 30-day 5.31% 4.92% 4.67% yield Tax-equivalent 9.99 9.26 8.79 yield*** *net asset value **public offering price ***Assumes the maximum combined 46.85% federal and state rate. Results for investors subject to lower tax rates would not be as advantageous. Michigan fund Class A Class B Class M Inception date: 10/23/89 7/15/93 4/3/95 TOTAL RETURN NAV* POP** NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year +7.45% +2.38% +6.72% +1.72% n/a n/a 5 years +7.99 +6.94 n/a n/a n/a n/a Life of class +7.69 +6.76 +3.14 +1.15 3.06 -0.33 Class A Class B Class M Inception date: 10/23/89 7/15/93 4/3/95 YIELD POP NAV POP 30-day 5.27% 4.88% 5.06% yield Tax-equivalent 9.13 8.45 8.76 yield*** *net asset value **public offering price ***Assumes the maximum combined 42.26% federal and state rate. Results for investors subject to lower tax rates would not be as advantageous. Minnesota fund Class A Class B Class M Inception date: 10/23/89 7/15/93 4/3/95 TOTAL RETURN NAV* POP** NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year +7.90% +2.75% +7.17% +2.17% n/a n/a 5 years +7.66 +6.62 n/a n/a n/a n/a Life of class +7.40 +6.48 +3.58 +1.55 +2.89 -0.41 Class A Class B Class M Inception date: 10/23/89 7/15/93 4/3/95 YIELD POP NAV POP 30-day 5.14% 4.75% 5.13% yield Tax-equivalent 9.30 8.59 9.28 yield*** *net asset value **public offering price ***Assumes the maximum combined 44.73% federal and state rate. Results for investors subject to lower tax rates would not be as advantageous. New Jersey fund Class A Class B Class M Inception date: 2/20/90 1/4/93 5/1/95 TOTAL RETURN NAV* POP** NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year +7.78% +2.67% +6.98% +1.98% n/a n/a 5 years +8.30 +7.26 n/a n/a n/a n/a Life of class +8.19 +7.21 +5.37 +3.82 +3.21 -0.10 Class A Class B Class M Inception date: 2/20/90 1/4/93 5/1/95 YIELD POP NAV POP 30-day 5.15% 4.75% n/a yield Tax-equivalent 9.13 8.42 n/a yield*** *net asset value **public offering price ***Assumes the maximum combined 43.57% federal and state rate. Results for investors subject to lower tax rates would not be as advantageous. Ohio fund Class A Class B Class M Inception date: 10/23/89 7/15/93 4/3/95 TOTAL RETURN NAV* POP** NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year +8.04% +2.90% +7.39% +2.39% n/a n/a 5 years +8.06 +7.02 n/a n/a n/a n/a Life of class +7.72 +6.80 +3.43 +1.44 +3.05 -0.26 Class A Class B Class M Inception date: 10/23/89 7/15/93 4/3/95 YIELD POP NAV POP 30-day 4.88% 4.48% 4.47% yield Tax-equivalent 8.73 8.02 8.00 yield*** *net asset value **public offering price ***Assumes the maximum combined 44.13% federal and state rate. Results for investors subject to lower tax rates would not be as advantageous. Pennsylvania fund Class A Class B Inception date: 7/21/89 7/15/93 TOTAL RETURN NAV* POP** NAV CDSC - ---------------------------------------------------------------------- 1 year +8.70% +3.55% +8.01% +3.01% 5 years +8.92 +7.85 n/a n/a Life of class +8.32 +7.43 +3.92 +1.90 Class A Class B Inception date: 7/21/89 7/15/93 YIELD POP NAV 30-day 5.21% 4.81% yield Tax-equivalent 8.87 8.19 yield*** *net asset value **public offering price ***Assumes the maximum combined 41.29% federal and state rate. Results for investors subject to lower tax rates would not be as advantageous. No class M shares were outstanding at May 31, 1995. - ---------------------------------------------------------------------- Data represent past performance and are not indicative of future results. Total return and yield at POP for class A and class M shares reflect the deduction of the maximum sales charge of 4.75% and 3.25%, respectively. Total return at CDSC for class B shares reflects the deduction of the applicable contingent deferred sales charge (CDSC). The maximum class B CDSC is 5.00%. See "Standard performance measures" in Part II of this SAI for information on how performance is calculated. Past performance is no guarantee of future results. TAXES The prospectus describes generally the tax treatment of distributions by the funds . This section of the SAI and the section entitled "Taxes" in Part II of this SAI include additional information concerning certain state and federal tax consequences of an investment in a fund , respectively. Prospective investors should be aware that an investment in a state tax-exempt fund may not be suitable for persons who do not receive income subject to income taxes of such state. STATE TAXATION. (MICHIGAN AND MINNESOTA FUNDS ONLY) That percentage of interest on indebtedness incurred or continued to purchase or carry shares of an investment company paying exempt- interest dividends, such as the fund , that is equal to the percentage of the fund's distributions from investment income and short-term capital gains that is exempt from federal income tax, will not be deductible by the investor for Michigan single business tax or Minnesota personal income tax purposes. For Michigan personal income tax and Michigan intangibles tax purposes, such interest deduction is wholly disallowed. To the extent that distributions are derived from interest on Michigan tax-exempt securities , such distributions will be exempt from Michigan personal income tax and the Michigan intangibles tax under the current position of the Michigan Department of Treasury. Such distributions, if received in connection with a shareholder's business activity, may alternatively be subject to the Michigan single business tax. For Michigan personal income tax, intangibles tax and single business tax purposes, exempt-interest dividends attributable to any investment other than Michigan tax-exempt securities will be fully taxable as will dividends arising from any source other than exempt-interest irrespective of the investment to which any such dividend is attributable. More specifically, Michigan law provides an exemption from both the Michigan personal income tax and the Michigan single business tax with respect to interest paid to the owner of tax-exempt securities , and a corresponding exemption is provided under the Michigan intangibles tax with respect to ownership of such bonds. The Michigan Department of Treasury, in a ruling letter dated December 19, 1986 and published in April, 1987, revised a previous administrative position that shareholders of an investment company other than a "unit investment trust" are to be treated as the owners of shares in the investment company and not as the owners of a proportionate share of the company's assets. This revised position was reaffirmed in a ruling published in March, 1989. The Michigan fund is not a unit investment trust, and accordingly shareholders will not , in the view of the Michigan Department of Treasury, be treated as the owners of the fund's assets including the fund's tax-exempt securities . The Department has not addressed the question of whether the distinction between ownership of tax-exempt obligations and mutual fund shares may be accorded significance in connection with application of the single business tax to investment company distributions representing interest on obligations which are exempt from federal income tax and Michigan tax. NEW JERSEY. Income distributions paid from a "qualified investment fund" are exempt from the New Jersey Gross Income Tax to the extent attributable to tax-exempt obligations specified by New Jersey law. A "qualified investment fund" is any investment company or trust, or series of such investment company or trust, registered with the Securities and Exchange Commission which, for the calendar year in which a distribution is paid, (i) has no investments other than interest-bearing obligations, obligations issued at a discount, and cash and cash items (including receivables) and financial options, futures, forward contracts or other similar financial instruments related to interest-bearing obligations, obligations issued at a discount or bond indexes related thereto, and (ii) has at least 80 percent of the aggregate principal amount of all its investments (excluding financial options, futures, forward contracts or other similar financial instruments related to interest-bearing obligations, obligations issued at a discount or bond indexes related thereto to the extent such instruments are authorized under section 851(b) of the Internal Revenue Code, and cash and cash items, which cash items include receivables), invested in obligations issued by New Jersey or obligations that are free from state or local taxation under New Jersey and federal laws, such as obligations issued by the governments of Puerto Rico, Guam or the Virgin Islands. Interest income and gains realized by the Fund and distributed to shareholders are exempt from the New Jersey Gross Income Tax to the extent attributable to tax-exempt obligations. Gains resulting from the redemption or sale of shares of the New Jersey fund would also be exempt from the New Jersey Gross Income Tax. The New Jersey Gross Income Tax is not applicable to corporations. For all corporations subject to the New Jersey Corporation Business Tax, interest on tax-exempt obligations is included in the net income tax base for purposes of computing the corporate business tax. Furthermore, any gain upon the redemption or sale of shares by a corporate shareholder is also included in the net income tax base for purposes of computing the Corporation Business Tax. The New Jersey fund will notify shareholders by February 15 of each calendar year as to the amounts of dividends and distributions made with respect to the preceding calendar year that are exempt from federal income taxes and New Jersey personal income tax and the amounts, if any, which are subject to such taxes. The New Jersey fund will also make appropriate certification of its status to New Jersey tax authorities by that date. Shareholders are, however, urged to consult with their own tax advisors as to the federal, state or local tax consequences in their specific circumstances. PENNSYLVANIA CORPORATE NET INCOME TAX. Distributions paid by the Pennsylvania fund which are excludable as exempt income for federal tax purposes are not subject to the Pennsylvania corporate net income tax. An additional deduction from Pennsylvania taxable income is permitted for the amount of distributions paid by the Pennsylvania fund attributable to interest received by the Pennsylvania fund from its investments in tax-exempt securities and obligations of the United States, its territories and certain of its agencies and instrumentalities to the extent included in federal taxable income, but such a deduction is reduced by any interest on indebtedness incurred to carry the securities and other expenses incurred in the production of such interest income, including expenses deducted on the federal income tax return that would not have been allowed under the Internal Revenue Code if the interest were exempt from federal income tax. Distributions by the Pennsylvania fund attributable to most other sources may be subject to the Pennsylvania corporate net income tax. It is the current position of the Pennsylvania Department of Revenue that fund shares are considered exempt assets (with a pro rata exclusion based on the value of the Pennsylvania fund attributable to its investments in tax-exempt securities and obligations of the United States, its territories and certain of its agencies and instrumentalities) for purposes of determining a corporation's capital stock value subject to the Commonwealth's capital stock or franchise tax. EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES The tables below show the effect of the tax status of each fund's tax-exempt securities on the effective yield received by their holders under the Internal Revenue Code of 1986, as amended (the "Code") and personal and gross income tax laws of the relevant state, (except Florida, which has no personal income tax) in effect for 1995. The tables give the approximate yield a taxable security must earn at various income levels to produce after-tax yields equivalent to those of the relevant tax-exempt securities yielding from 2.0% to 9.0%.
Arizona fund 1995 TAXABLE INCOME* COMBINED ----------------------- ARIZONA AND TAX-EXEMPT YIELD: FEDERAL MARGINAL SINGLE JOINT TAX RATE** 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% - ------------------------------------------------------------------------------------------- --------------------- Equivalent taxable yield $0-10,000 $0-20,000 17.55% 2.43% 3.64% 4.85% 6.06% 7.28% 8.49% 9.70% 10.92% 10,001-23,350 20,001-39,000 17.98% 2.44 3.66 4.88 6.10 7.31 8.53 9.75 10.97 23,351-25,000 39,001-50,000 30.52% 2.88 4.32 5.76 7.20 8.64 10.07 11.51 12.95 25,001-50,000 50,001-94,250 31.02% 2.90 4.35 5.80 7.25 8.70 10.15 11.60 13.05 50,001-56,550 31.74% 2.93 4.40 5.86 7.33 8.79 10.26 11.72 13.19 94,251-100,000 33.90% 3.03 4.54 6.05 7.56 9.08 10.59 12.10 13.62 56,551-117,950 *** 100,001-143,600 *** 34.59% 3.06 4.59 6.12 7.64 9.1710.7012.2313.76 117,951-150,000 *** 143,601-256,500 *** 39.33% 3.30 4.94 6.59 8.24 9.8911.5413.1914.83 150,001-256,500 *** 39.58% 3.31 4.97 6.62 8.28 9.93 11.5913.2414.90 256,501 300,000 *** 42.74% 3.49 5.24 6.99 8.73 10.48 12.23 13.97 15.72 over 256,500 *** over 300,000 *** 42.98% 3.51 5.26 7.02 8.77 10.52 12.28 14.03 15.78 - ----------------- --------------------------------------------------------------------------------------------------- - ---- * This amount represents taxable income as defined in the Code. It is assumed that taxable income under Arizona law is the same as taxable income as defined under the Code. However, Arizona taxable income is likely to differ due to differences in exemptions, itemized deductions, and other items. ** For federal income tax purposes, these combined rates reflect the applicable marginal rates on taxable income in effect for 1995. These rates include the effect of deducting state taxes on your Federal return. *** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions under the Code.
Florida fund TAXABLE INCOME* 1995 TAX-EXEMPT YIELD FEDERAL SINGLE JOINT MARGINAL RATE* * 2% 3% 4% 5% 6% 7% 8% 9% ----------------------------------------------------------------------------------------------------------------- EQUIVALENT TAXABLE YIELD $ 0 - 23,350 $ 0 - 39,000 15.00% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24% 9.41% 10.59% 23,351 - 56,550 39,001 - 94,250 28.00 2.78 4.17 5.56 6.94 8.33 9.72 11.1112.50 56,551 - 117,950 *** 94,251- 143,600 *** 31.00 2.90 4.35 5.80 7.25 8.70 10.14 11.5913.04 117,951- 256,500 *** 143,601-256,500 *** 36.00 3.13 4.69 6.25 7.81 9.38 10.94 12.5014.06 over 256,501***over256,501 *** 39.60 3.31 4.97 6.62 8.28 9.93 11.59 13.2514.90 * This amount represents taxable income as defined in the Code . ** For federal tax purposes, these rates reflect the marginal rates on taxable income in effect for 1995. *** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions under the Code. /TABLE
Massachusetts fund 1995 COMBINED MASSACHUSETTS TAXABLE INCOME* AND FEDERAL TAX-EXEMPT YIELD TAX ---------------------------------------------- SINGLE JOINT RATE* *2% 3% 4% 5% 6% 7% 8% 9% ---------------------------------------------------------------------------------------------------------------- - - EQUIVALENT TAXABLE YIELD C> $ 0 - 23,350 $ 0 - 39,000 25.20% 2.67% 4.01% 5.35% 6.68% 8.02% 9.36% 10.70% 12.03% 23,351 - 56,550 39,001 - 94,250 36.64 3.16 4.73 6.31 7.89 9.47 11.05 12.63 14.20 56,551 - 117,950 *** 94,251- 143,600 *** 39.28 3.29 4.94 6.59 8.23 9.88 11.53 13.1814.82 117,951 - 256,500 *** 143,601-256,500 *** 43.68 3.55 5.33 7.10 8.88 10.65 12.43 14.2015.98 256,501 and over ***256,501 and over *** 46.85 3.76 5.64 7.53 9.41 11.29 13.17 15.0516.93 -------------------------------------------------------------------------------------------------------------------- * This amount represents taxable income as defined in the Code. It is assumed that taxable income as defined in the Code is the same as under the Massachusetts personal income tax law. However, Massachusetts taxable income may differ due to differences in exemptions, itemized deductions, and other items. ** For federal tax purposes, these combined rates reflect the applicable marginal rates on taxable income in effect for 1995. For Massachusetts tax purposes, these rates reflect the 12% Massachusetts rate applied to non- Massachusetts bank interest. (These combined rates include the effect of deducting state taxes on your federal return.) *** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions, based on adjusted gross income, under the Code. /TABLE
Michigan fund 1995 COMBINED MICHIGAN TAX-EXEMPT YIELD TAXABLE INCOME* AND FEDERAL -------------------------------------------------- TAX SINGLE JOINT RATE ** 2% 3% 4% 5% 6% 7% 8% 9% ---------------------------------------------------------------------------------------------------------------- EQUIVALENT TAXABLE YIELD $ 0 - 23,350 $0 - 39,000 18.74% 2.46% 3.69% 4.92% 6.15% 7.38% 8.61%9.84% 11.08% 23,351 - 56,550 39,001 - 94,250 31.17 2.91 4.36 5.81 7.26 8.72 10.1711.62 13.08 56,551-117,950 *** 94,251-143,600 *** 34.04 3.03 4.55 6.06 7.58 9.1010.61 12.1313.64 117,951-256,500 ***143,601-256,500 *** 38.82 3.27 4.90 6.54 8.17 9.8111.44 13.0814.71 over 256,500 *** over 256,500 *** 42.26 3.46 5.20 6.93 8.66 10.39 12.12 13.85 15.59 ---------------------------------------------------------------------------------------------------------------- * This amount represents taxable income as defined in the Code . It is assumed that taxable income as defined in the Code is the same as under the Michigan personal income tax law, however, Michigan taxable income may differ due to differences in exemptions, itemized deductions, and other items. ** For federal tax purposes, these combined rates reflect the applicable marginal rates on taxable income in effect for 1995. (These combined rates include the effect of deducting state taxes on your Federal return.) *** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions, based on adjusted gross income, under the Code. /TABLE
Minnesota fund 1995 COMBINED MINNESOTA AND FEDERAL TAX-EXEMPT YIELD TAXABLE INCOME* TAX ------------------------------------------------------- SINGLE JOINT RATE** 2% 3% 4% 5% 6% 7% 8% 9% --------------------------------------------------------------------------------------------------------------------- EQUIVALENT TAXABLE YIELD $ 0 - 15,620 $0 - 22,840 20.10% 2.50%3.75%5 .01% 6.26% 7.51% 8.76%10.01% 11.26% 15,621 - 23,350 22,841- 39,000 21.80 2.56 3.84 5.126 .39 7.67 8.95 10.23 11.51 23,351 - 51,330 39,001- 90,760 33.76 3.02 4.53 6.047 .55 9.06 10.57 12.08 13.59 51,331 - 56,550 90,761- 94,250 34.12 3.04 4.55 6.077 .59 9.11 10.63 12.14 13.66 56,551 - 117,950*** 94,251-143,600 *** 36.87 3 .17 4.75 6.34 7.92 9.50 11.09 12.67 14.26 117,951 - 256,500*** 143,601-256,500 *** 41.44 3 .42 5.12 6.83 8.54 10.25 11.95 13.66 15.37 256,501 and over*** 256,501 and over *** 44.73 3.62 5.43 7.24 9.05 10.8612 .67 14.47 16.28 -------------------------------------------------------------------------------------------------------------------- * This amount represents taxable income as defined in the Code . It is assumed that taxable income as defined in the Code is the same as under the Minnesota personal income tax law. However, Minnesota taxable income may differ due to differences in exemptions, itemized deductions, and other items. ** For federal tax purposes, these combined rates reflect the applicable marginal rates on taxable income in effect for 1995. (These combined rates include the effect of deducting state taxes on your Federal return.) *** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions, based on adjusted gross income, under the Code. /TABLE
New Jersey fund 1995 COMBINED TAXABLE INCOME* NEW JERSEY TAX EXEMPT YIELD : ----------------------- AND --------------------------------------------- FEDERAL SINGLE JOINT TAX RATE** 2% 3% 4% 5% 6% 7% 8% 9% ------------------------------ ------------------------------------------------------------------------------------- - ----- $ 0 - 20,000 0 - 20,000 16.45% 2.39% 3.59% 4 .79% 5.98% 7.18% 8 .38% 9.57% 10.77% 20,001 - 23,350 20,001 - 39,000 16.81 2.40 3.61 4.81 6.01 7.21 8 .41 9.62 10.82 23,351 - 35,000 39,001 - 50,000 29.53 2.84 4.26 5.68 7.10 8.51 9 .9311.3512.77 50,001 - 70,000 30.14 2.86 4.29 5.73 7.16 8.59 10.02 11 .45 12.88 35,001 - 40,000 70,001 - 80,000 31.06 2.90 4.35 5.80 7.25 8.70 10.15 11 .6013.05 40,001 - 56,550 80,001 - 94,250 32.33 2.96 4.43 5.91 7.39 8.87 10 .3411.8213.30 56,551 - 75,000 94,251 - 143,600 35.15 3.08 4.63 6.17 7.71 9.25 10.79 12 .3413.88 75,001 - 117,950 35.543.10 4 .65 6.21 7.76 9.31 10 .86 12.41 13.96 143,601 - 150,000 39.85 3.32 4.99 6.65 8.31 9.97 11.64 13 .30 14.96 17,951 - 256,500 150,001 - 256,500 40.21 3.35 5.02 6.69 8.36 10.04 11.71 13 .3815.05 over 256,500 over 256,500 43.57 3.54 5.32 7.09 8.86 10.63 12.41 14 .18 15.95 ---------------------------------------------------------------------------------------------------------------- - - * This amount represents taxable income as defined in the Code. It is assumed that taxable income as defined in the Code is the same as under the New Jersey State Gross Income Tax law. However, New Jersey taxable income may differ due to differences in exemptions, itemized deductions, and other items. ** For federal tax purposes, these combined rates reflect the applicable marginal rates on taxable income in effect for 1995. These rates include the effect of deducting state taxes on your Federal return. *** The amount of taxable income of this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions under the Code. /TABLE
Ohio fund 1995 COMBINED OHIO AND FEDERAL TAX-EXEMPT YIELD TAXABLE INCOME* TAX ---------------------------------------------------------- SINGLE JOINT RATE ** 2% 3% 4% 5% 6% 7% 8% 9% ---------------------------------------------------------------------------------------------------------------------- EQUIVALENT TAXABLE YIELD $ 0 - 5,000 0 - 5,000 15 .63% 2 .37% 3 .56% 4 .74% 5 .93% 7 .11% 8 .30% 9 .48% 10 .67% 5,001 - 10,000 5,001 - 10,000 16 .26 2 .39 3 .58 4 .78 5 .97 7 .17 8 .36 9 .55 10 .75 10,001 - 15,000 10,001 - 15,000 17 .53 2 .43 3 .64 4 .85 6 .06 7 .28 8 .49 9 .70 10 .91 15,001 - 20,000 15,001 - 20,000 18 .16 2 .44 3 .67 4 .89 6 .11 7 .33 8 .55 9 .77 11 .00 20,001 - 23,350 20,001 - 39,000 18 .79 2 .46 3 .69 4 .93 6 .16 7 .39 8 .62 9 .85 11 .06 23,351 - 40,000 39,001 - 40,000 31 .21 2 .91 4 .36 5 .81 7 .27 8 .72 10 .18 11 .63 13 .08 40,001 - 56,550 40,001 - 80,000 31 .74 2 .93 4 .40 5 .86 7 .33 8 .79 10 .26 11 .72 13 .19 80,001 - 94,250 32 .28 2 .95 4 .43 5 .91 7 .38 8 .86 10 .34 11 .81 13 .29 56,551 - 80,000 34 .59 3 .06 4 .59 6 .12 7 .64 9 .17 10 .70 12 .23 13 .76 80,001 - 100,000 94,251-100,000 35 .10 3 .08 4 .62 6 .16 7 .70 9 .25 10 .79 12 .33 13 .87 100,001 - 117,950*** 100,001-143,600 *** 35 .76 3 .11 4 .67 6 .23 7 .78 9 .34 10 .90 12 .45 14 .01 117,951 - 200,000*** 143,601-200,000 *** 40 .42 3 .36 5 .03 6 .71 8 .39 10 .07 11 .75 13 .43 15 .10 200,001 - 256,500*** 200,001-256,500 *** 40 .80 3 .38 5 .07 6 .76 8 .45 10 .14 11 .82 13 .51 15 .20 over 256,500*** over 256,500*** 44 .13 3 .58 5 .37 7 .16 8 .95 10 .74 12 .53 14 .32 16 .11 ---------------------------------------------------------------------------------------------------------------------- * This amount represents taxable income as defined in the the Code . It is assumed that taxable income as defined in the Code is the same as under the Ohio personal income tax law, however, Ohio taxable income may differ due to differences in exemptions, itemized deductions, and other items. ** For federal tax purposes, these combined rates reflect the applicable marginal rates on taxable income in effect for 1995. These rates include the effect of deducting state taxes on your Federal return. *** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions, based on adjusted gross income, under the Code. /TABLE
Pennsylvania fund 1995 COMBINED MARGINAL TAXABLE INCOME* PENNSYLVANIA TAX-EXEMPT YIELD: ------------------------ AND ------------------------------------------------------ FEDERAL TAX SINGLE JOINT RATE** 2% 3% 4% 5% 6% 7% 8% 9% ----------------------------------------------------------------------------------------------------------------------- - - EQUIVALENT TAXABLE YIELD IF DOUBLE TAX-EXEMPT: $0-$23,350 $0-39,000 17 .38% 2 .42% 3 .63% 4 .84% 6 .05% 7 .26% 8 .47% 9 .68% 10 .89% $23,351-$56,550 $39,001-$94,250 30 .02 2 .86 4 .29 5 .72 7 .14 8 .57 10 .00 11 .43 12 .86 $56,551-$117,950 *** $94,251-$143,600 *** 32 .93 2 .98 4 .47 5 .96 7 .45 8 .95 10 .44 11 .93 13 .42 $117,951-$256,500*** $143,601-$256,500 *** 37 .79 3 .21 4 .82 6 .43 8 .04 9 .64 11 .25 12 .86 14 .47 over $256,501 *** over $256,501 *** 41 .29 3 .41 5 .11 6 .81 8 .52 10 .22 11 .92 13 .63 15 .33 --------------------------------------------------------------------------------------------------------- ------------- - - * This amount represents "taxable income" as defined in the Code and the Pennsylvania income tax law. Pennsylvania taxable income may differ due to differences in exemptions, itemized deductions, and other items. ** For federal income tax purposes these combined rates reflect the marginal rates on taxable income in effect for 1995. For Pennsylvania personal income tax purposes the combined rates reflect tax rates in effect for 1995. (These combined rates reflect the effect of deducting state taxes on the Federal return.) *** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the limitation on itemized deductions under the Code. /TABLE Of course, there is no assurance that a fund will achieve any specific tax-exempt yield. While it is expected that each fund will invest principally in obligations which pay interest exempt from federal income tax and personal income tax of its respective state, other income received by a fund may be taxable. The tables do not take into account any federal alternative minimum taxes or state or local taxes payable on each fund's distributions except for the personal income tax of its respective state . ADDITIONAL OFFICERS In addition to the persons listed as officers of a fund in Part II of this SAI , the following persons as noted below are also officers of one or more funds and Vice Presidents of certain of the Putnam funds . Officers of Putnam Management hold the same offices in Putnam Management's parent company, Putnam Investments, Inc. GARY N. COBURN, Vice President. Senior Managing Director of Putnam Management. JAMES E. ERICKSON, Vice President. Managing Director of Putnam Management. BLAKE E. ANDERSON, Vice President . Senior Vice President of Putnam Management. TRIET M. NGUYEN, Vice President . Senior Vice President of Putnam Management. HOWARD K. MANNING, Vice President . Senior Vice President of Putnam Management. RICHARD P. WYKE, Vice President. Senior Vice President of Putnam Management. LESLIE J. BURKE, Vice President. Vice President of Putnam Management. Prior to 1992, Ms. Burke was a Research Associate and Municipal Bond Trader at Fidelity Management and Research Company. JAMES M. PRUSKO, Vice President. Assistant Vice President of Putnam Management. Prior to 1992, Mr Prusko was a Sales and Trading Associate at Salomon Brothers. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS Coopers & Lybrand L.L.P. , One Post Office Square, Boston, MA 02109, are the independent accountants for the Arizona fund, Michigan fund, New Jersey fund and Ohio fund, and Price Waterhouse LLP , 160 Federal Street, Boston, MA 02110, are the independent accountants for the Florida fund, Massachusetts fund, Minnesota fund and Pennsylvania fund , each providing audit services, tax return review services and assistance and consultation in connection with the review of various Securities and Exchange Commission filings. The Report of Independent Accountants , financial highlights and financial statements included in each fund's Annual Report for the fiscal year ended May 31, 1995 , filed electronically on the following dates , are incorporated by reference into this SAI: Date filed Fund File No. with SEC _________________________________________________________ Arizona fund 811-6258 7/28/95 Florida fund 811-6129 7/31/95 Massachusetts fund 811- 4518 7/27/95 Michigan fund 811-4529 8/4/95 Minnesota fund 811- 4527 7/27/95 New Jersey fund 811-5977 7/28/95 Ohio fund 811-4528 8/1/95 Pennsylvania fund 811-5802 7/28/95 The financial highlights included in the prospectus and incorporated by reference into this SAI and the financial statements incorporated by reference into the prospectus and this SAI have been so included and incorporated in reliance upon the reports of Coopers & Lybrand, L.L.P. (for the Arizona, Michigan, New Jersey and Ohio funds) and Price Waterhouse LLP (for the Florida, Massachusetts, Minnesota and Pennslyvania funds) , independent accountants, given on the authority of said firms as experts in auditing and accounting. TABLE OF CONTENTS MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-27 DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-36 HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-38 DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . .II-49 INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-49 SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-55 SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-55 SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-55 STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-56 COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-57 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-62 THE PUTNAM FUNDS STATEMENT OF ADDITIONAL INFORMATION ("SAI") PART II The following information applies generally to your Fund and to the other Putnam funds. In certain cases the discussion applies to some but not all of the funds or their shareholders, and you should refer to your Prospectus to determine whether the matter is applicable to you or your Fund. You will also be referred to Part I for certain information applicable to your particular Fund. Shareholders who purchase shares at net asset value through employer-sponsored defined contribution plans should also consult their employer for information about the extent to which the matters described below apply to them. MISCELLANEOUS INVESTMENT PRACTICES YOUR FUND'S PROSPECTUS STATES WHICH OF THE FOLLOWING INVESTMENT PRACTICES ARE AVAILABLE TO YOUR FUND. THE FACT THAT YOUR FUND IS AUTHORIZED TO ENGAGE IN A PARTICULAR PRACTICE DOES NOT NECESSARILY MEAN THAT IT WILL ACTUALLY DO SO. YOU SHOULD DISREGARD ANY PRACTICE DESCRIBED BELOW WHICH IS NOT MENTIONED IN THE PROSPECTUS. SHORT-TERM TRADING In seeking the Fund's objective, Putnam Management will buy or sell portfolio securities whenever Putnam Management believes it appropriate to do so. In deciding whether to sell a portfolio security, Putnam Management does not consider how long the Fund has owned the security. From time to time the Fund will buy securities intending to seek short-term trading profits. A change in the securities held by the Fund is known as "portfolio turnover" and generally involves some expense to the Fund. These expenses may include brokerage commissions or dealer mark-ups and other transaction costs on both the sale of securities and the reinvestment of the proceeds in other securities. If sales of portfolio securities cause the Fund to realize net short-term capital gains, such gains will be taxable as ordinary income. As a result of the Fund's investment policies, under certain market conditions the Fund's portfolio turnover rate may be higher than that of other mutual funds. Portfolio turnover rate for a fiscal year is the ratio of the lesser of purchases or sales of portfolio securities to the monthly average of the value of portfolio securities -- excluding securities whose maturities at acquisition were one year or less. The Fund's portfolio turnover rate is not a limiting factor when Putnam Management considers a change in the Fund's portfolio. LOWER-RATED SECURITIES The Fund may invest in lower-rated fixed-income securities (commonly known as "junk bonds"), to the extent described in the Prospectus. The lower ratings of certain securities held by the Fund reflect a greater possibility that adverse changes in the financial condition of the issuer or in general economic conditions, or both, or an unanticipated rise in interest rates, may impair the ability of the issuer to make payments of interest and principal. The inability (or perceived inability) of issuers to make timely payment of interest and principal would likely make the values of securities held by the Fund more volatile and could limit the Fund's ability to sell its securities at prices approximating the values the Fund had placed on such securities. In the absence of a liquid trading market for securities held by it, the Fund may be unable at times to establish the fair value of such securities. The rating assigned to a security by Moody's Investors Service, Inc. or Standard & Poor's Corporation (or by any other nationally recognized securities rating organization) does not reflect an assessment of the volatility of the security's market value or the liquidity of an investment in the security. See the Prospectus or Part I of this Statement for a description of security ratings. Like those of other fixed-income securities, the values of lower-rated securities fluctuate in response to changes in interest rates. Thus, a decrease in interest rates will generally result in an increase in the value of the Fund's assets. Conversely, during periods of rising interest rates, the value of the Fund's assets will generally decline. In addition, the values of such securities are also affected by changes in general economic conditions and business conditions affecting the specific industries of their issuers. Changes by recognized rating services in their ratings of any fixed-income security and in the ability of an issuer to make payments of interest and principal may also affect the value of these investments. Changes in the value of portfolio securities generally will not affect cash income derived from such securities, but will affect the Fund's net asset value. The Fund will not necessarily dispose of a security when its rating is reduced below its rating at the time of purchase, although Putnam Management will monitor the investment to determine whether its retention will assist in meeting the Fund's investment objective. At times, a substantial portion of the Fund's assets may be invested in securities as to which the Fund, by itself or together with other funds and accounts managed by Putnam Management and its affiliates, holds a major portion or all of such securities. Although Putnam Management generally considers such securities to be liquid because of the availability of an institutional market for such securities, it is possible that, under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, the Fund could find it more difficult to sell such securities when Putnam Management believes it advisable to do so or may be able to sell such securities only at prices lower than if such securities were more widely held. Under such circumstances, it may also be more difficult to determine the fair value of such securities for purposes of computing the Fund's net asset value. In order to enforce its rights in the event of a default under such securities, the Fund may be required to take possession of and manage assets securing the issuer's obligations on such securities, which may increase the Fund's operating expenses and adversely affect the Fund's net asset value. In the case of tax-exempt funds, any income derived from the Fund's ownership or operation of such assets would not be tax-exempt. In addition, the Fund's intention to qualify as a "regulated investment company" under the Internal Revenue Code may limit the extent to which the Fund may exercise its rights by taking possession of such assets. Certain securities held by the Fund may permit the issuer at its option to "call", or redeem, its securities. If an issuer were to redeem securities held by the Fund during a time of declining interest rates, the Fund may not be able to reinvest the proceeds in securities providing the same investment return as the securities redeemed. If the Fund's Prospectus describes so-called "zero-coupon" bonds and "payment-in-kind" bonds as possible investments, the Fund may invest without limit in such bonds unless otherwise specified in the Prospectus. Zero-coupon bonds are issued at a significant discount from their principal amount in lieu of paying interest periodically. Payment-in-kind bonds allow the issuer, at its option, to make current interest payments on the bonds either in cash or in additional bonds. Because zero-coupon bonds do not pay current interest, their value is subject to greater fluctuation in response to changes in market interest rates than bonds which pay interest currently. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid the need to generate cash to meet current interest payments. Accordingly, such bonds may involve greater credit risks than bonds paying interest currently. Even though such bonds do not pay current interest in cash, the Fund is nonetheless required to accrue interest income on such investments and to distribute such amounts at least annually to shareholders. Thus, the Fund could be required at times to liquidate investments in order to satisfy its dividend requirements. The amount of information about the financial condition of an issuer of tax exempt securities may not be as extensive as that which is made available by corporations whose securities are publicly traded. Therefore, to the extent the Fund invests in tax exempt securities in the lower rating categories, the achievement of the Fund's goals is more dependent on Putnam Management's investment analysis than would be the case if the Fund were investing in securities in the higher rating categories. INVESTMENTS IN MISCELLANEOUS FIXED INCOME SECURITIES Unless otherwise specified in the Prospectus or elsewhere in this SAI, if the Fund may invest in inverse floating obligations, premium securities, or interest-only or principal-only classes of mortgage-backed securities, it may do so without limit. The Fund, however, currently does not intend to invest more than 15% of its assets in inverse floating obligations under normal market conditions. SECURITIES LOANS The Fund may make secured loans of its portfolio securities, on either a short-term or long-term basis, amounting to not more than 25% of its total assets, thereby realizing additional income. The risks in lending portfolio securities, as with other extensions of credit, consist of possible delay in recovery of the securities or possible loss of rights in the collateral should the borrower fail financially. As a matter of policy, securities loans are made to broker-dealers pursuant to agreements requiring that loans be continuously secured by collateral consisting of cash or short-term debt obligations at least equal at all times to the value of the securities on loan, "marked-to-market" daily. The borrower pays to the Fund an amount equal to any dividends or interest received on securities lent. The Fund retains all or a portion of the interest received on investment of the cash collateral or receives a fee from the borrower. Although voting rights, or rights to consent, with respect to the loaned securities pass to the borrower, the Fund retains the right to call the loans at any time on reasonable notice, and it will do so to enable the Fund to exercise voting rights on any matters materially affecting the investment. The Fund may also call such loans in order to sell the securities. FORWARD COMMITMENTS The Fund may enter into contracts to purchase securities for a fixed price at a future date beyond customary settlement time ("forward commitments") if the Fund holds, and maintains until the settlement date in a segregated account, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or if the Fund enters into offsetting contracts for the forward sale of other securities it owns. In the case of to-be- announced ("TBA") purchase commitments, the unit price and the estimated principal amount are established when the Fund enters into a contract, with the actual principal amount being within a specified range of the estimate. Forward commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in the value of the Fund's other assets. Where such purchases are made through dealers, the Fund relies on the dealer to consummate the sale. The dealer's failure to do so may result in the loss to the Fund of an advantageous yield or price. Although the Fund will generally enter into forward commitments with the intention of acquiring securities for its portfolio or for delivery pursuant to options contracts it has entered into, the Fund may dispose of a commitment prior to settlement if Putnam Management deems it appropriate to do so. The Fund may realize short-term profits or losses upon the sale of forward commitments. The Fund may enter into TBA sale commitments to hedge its portfolio positions or to sell mortgage-backed securities it owns under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, equivalent deliverable securities, or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as "cover" for the transaction. Unsettled TBA sale commitments are valued at current market value of the underlying securities. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the Fund realizes a gain or loss on the commitment without regard to any unrealized gain or loss on the underlying security. If the Fund delivers securities under the commitment, the Fund realizes a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements up to the limit specified in the Prospectus. A repurchase agreement is a contract under which the Fund acquires a security for a relatively short period (usually not more than one week) subject to the obligation of the seller to repurchase and the Fund to resell such security at a fixed time and price (representing the Fund's cost plus interest). It is the Fund's present intention to enter into repurchase agreements only with commercial banks and registered broker-dealers and only with respect to obligations of the U.S. government or its agencies or instrumentalities. Repurchase agreements may also be viewed as loans made by the Fund which are collateralized by the securities subject to repurchase. Putnam Management will monitor such transactions to ensure that the value of the underlying securities will be at least equal at all times to the total amount of the repurchase obligation, including the interest factor. If the seller defaults, the Fund could realize a loss on the sale of the underlying security to the extent that the proceeds of sale including accrued interest are less than the resale price provided in the agreement including interest. In addition, if the seller should be involved in bankruptcy or insolvency proceedings, the Fund may incur delay and costs in selling the underlying security or may suffer a loss of principal and interest if the Fund is treated as an unsecured creditor and required to return the underlying collateral to the seller's estate. Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund may transfer uninvested cash balances into a joint account, along with cash of other Putnam funds and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. OPTIONS ON SECURITIES WRITING COVERED OPTIONS. The Fund may write covered call options and covered put options on optionable securities held in its portfolio, when in the opinion of Putnam Management such transactions are consistent with the Fund's investment objectives and policies. Call options written by the Fund give the purchaser the right to buy the underlying securities from the Fund at a stated exercise price; put options give the purchaser the right to sell the underlying securities to the Fund at a stated price. The Fund may write only covered options, which means that, so long as the Fund is obligated as the writer of a call option, it will own the underlying securities subject to the option (or comparable securities satisfying the cover requirements of securities exchanges). In the case of put options, the Fund will hold cash and/or high-grade short-term debt obligations equal to the price to be paid if the option is exercised. In addition, the Fund will be considered to have covered a put or call option if and to the extent that it holds an option that offsets some or all of the risk of the option it has written. The Fund may write combinations of covered puts and calls on the same underlying security. The Fund will receive a premium from writing a put or call option, which increases the Fund's return on the underlying security in the event the option expires unexercised or is closed out at a profit. The amount of the premium reflects, among other things, the relationship between the exercise price and the current market value of the underlying security, the volatility of the underlying security, the amount of time remaining until expiration, current interest rates, and the effect of supply and demand in the options market and in the market for the underlying security. By writing a call option, the Fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option but continues to bear the risk of a decline in the value of the underlying security. By writing a put option, the Fund assumes the risk that it may be required to purchase the underlying security for an exercise price higher than its then-current market value, resulting in a potential capital loss unless the security subsequently appreciates in value. The Fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction, in which it purchases an offsetting option. The Fund realizes a profit or loss from a closing transaction if the cost of the transaction (option premium plus transaction costs) is less or more than the premium received from writing the option. Because increases in the market price of a call option generally reflect increases in the market price of the security underlying the option, any loss resulting from a closing purchase transaction may be offset in whole or in part by unrealized appreciation of the underlying security owned by the Fund. If the Fund writes a call option but does not own the underlying security, and when it writes a put option, the Fund may be required to deposit cash or securities with its broker as "margin", or collateral, for its obligation to buy or sell the underlying security. As the value of the underlying security varies, the Fund may have to deposit additional margin with the broker. Margin requirements are complex and are fixed by individual brokers, subject to minimum requirements currently imposed by the Federal Reserve Board and by stock exchanges and other self-regulatory organizations. PURCHASING PUT OPTIONS. The Fund may purchase put options to protect its portfolio holdings in an underlying security against a decline in market value. Such protection is provided during the life of the put option since the Fund, as holder of the option, is able to sell the underlying security at the put exercise price regardless of any decline in the underlying security's market price. In order for a put option to be profitable, the market price of the underlying security must decline sufficiently below the exercise price to cover the premium and transaction costs. By using put options in this manner, the Fund will reduce any profit it might otherwise have realized from appreciation of the underlying security by the premium paid for the put option and by transaction costs. PURCHASING CALL OPTIONS. The Fund may purchase call options to hedge against an increase in the price of securities that the Fund wants ultimately to buy. Such hedge protection is provided during the life of the call option since the Fund, as holder of the call option, is able to buy the underlying security at the exercise price regardless of any increase in the underlying security's market price. In order for a call option to be profitable, the market price of the underlying security must rise sufficiently above the exercise price to cover the premium and transaction costs. RISK FACTORS IN OPTIONS TRANSACTIONS The successful use of the Fund's options strategies depends on the ability of Putnam Management to forecast correctly interest rate and market movements. For example, if the Fund were to write a call option based on Putnam Management's expectation that the price of the underlying security would fall, but the price were to rise instead, the Fund could be required to sell the security upon exercise at a price below the current market price. Similarly, if the Fund were to write a put option based on Putnam Management's expectation that the price of the underlying security would rise, but the price were to fall instead, the Fund could be required to purchase the security upon exercise at a price higher than the current market price. When the Fund purchases an option, it runs the risk that it will lose its entire investment in the option in a relatively short period of time, unless the Fund exercises the option or enters into a closing sale transaction before the option's expiration. If the price of the underlying security does not rise (in the case of a call) or fall (in the case of a put) to an extent sufficient to cover the option premium and transaction costs, the Fund will lose part or all of its investment in the option. This contrasts with an investment by the Fund in the underlying security, since the Fund will not realize a loss if the security's price does not change. The effective use of options also depends on the Fund's ability to terminate option positions at times when Putnam Management deems it desirable to do so. There is no assurance that the Fund will be able to effect closing transactions at any particular time or at an acceptable price. If a secondary market in options were to become unavailable, the Fund could no longer engage in closing transactions. Lack of investor interest might adversely affect the liquidity of the market for particular options or series of options. A market may discontinue trading of a particular option or options generally. In addition, a market could become temporarily unavailable if unusual events -- such as volume in excess of trading or clearing capability -- were to interrupt its normal operations. A market may at times find it necessary to impose restrictions on particular types of options transactions, such as opening transactions. For example, if an underlying security ceases to meet qualifications imposed by the market or the Options Clearing Corporation, new series of options on that security will no longer be opened to replace expiring series, and opening transactions in existing series may be prohibited. If an options market were to become unavailable, the Fund as a holder of an option would be able to realize profits or limit losses only by exercising the option, and the Fund, as option writer, would remain obligated under the option until expiration or exercise. Disruptions in the markets for the securities underlying options purchased or sold by the Fund could result in losses on the options. If trading is interrupted in an underlying security, the trading of options on that security is normally halted as well. As a result, the Fund as purchaser or writer of an option will be unable to close out its positions until options trading resumes, and it may be faced with considerable losses if trading in the security reopens at a substantially different price. In addition, the Options Clearing Corporation or other options markets may impose exercise restrictions. If a prohibition on exercise is imposed at the time when trading in the option has also been halted, the Fund as purchaser or writer of an option will be locked into its position until one of the two restrictions has been lifted. If the Options Clearing Corporation were to determine that the available supply of an underlying security appears insufficient to permit delivery by the writers of all outstanding calls in the event of exercise, it may prohibit indefinitely the exercise of put options. The Fund, as holder of such a put option, could lose its entire investment if the prohibition remained in effect until the put option's expiration. Special risks are presented by internationally-traded options. Because of time differences between the United States and various foreign countries, and because different holidays are observed in different countries, foreign options markets may be open for trading during hours or on days when U.S. markets are closed. As a result, option premiums may not reflect the current prices of the underlying interest in the United States. Over-the-counter ("OTC") options purchased by the Fund and assets held to cover OTC options written by the Fund may, under certain circumstances, be considered illiquid securities for purposes of any limitation on the Fund's ability to invest in illiquid securities. FUTURES CONTRACTS AND RELATED OPTIONS Subject to applicable law, and unless otherwise specified in the Prospectus, the Fund may invest without limit in the types of futures contracts and related options identified in the Prospectus. A financial futures contract sale creates an obligation by the seller to deliver the type of financial instrument called for in the contract in a specified delivery month for a stated price. A financial futures contract purchase creates an obligation by the purchaser to take delivery of the type of financial instrument called for in the contract in a specified delivery month at a stated price. The specific instruments delivered or taken, respectively, at settlement date are not determined until on or near that date. The determination is made in accordance with the rules of the exchange on which the futures contract sale or purchase was made. Futures contracts are traded in the United States only on commodity exchanges or boards of trade -- known as "contract markets" -- approved for such trading by the Commodity Futures Trading Commission (the "CFTC"), and must be executed through a futures commission merchant or brokerage firm which is a member of the relevant contract market. Although futures contracts (other than index futures) by their terms call for actual delivery or acceptance of commodities or securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery. Closing out a futures contract sale is effected by purchasing a futures contract for the same aggregate amount of the specific type of financial instrument or commodity with the same delivery date. If the price of the initial sale of the futures contract exceeds the price of the offsetting purchase, the seller is paid the difference and realizes a gain. Conversely, if the price of the offsetting purchase exceeds the price of the initial sale, the seller realizes a loss. Similarly, the closing out of a futures contract purchase is effected by the purchaser's entering into a futures contract sale. If the offsetting sale price exceeds the purchase price, the purchaser realizes a gain, and if the purchase price exceeds the offsetting sale price, he realizes a loss. In general 40% of the gain or loss arising from the closing out of a futures contract traded on an exchange approved by the CFTC is treated as short-term gain or loss, and 60% is treated as long-term gain or loss. Unlike when the Fund purchases or sells a security, no price is paid or received by the Fund upon the purchase or sale of a futures contract. Upon entering into a contract, the Fund is required to deposit with its custodian in a segregated account in the name of the futures broker an amount of cash and/or U.S. Government Securities. This amount is known as "initial margin." The nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds to finance the transactions. Rather, initial margin is similar to a performance bond or good faith deposit which is returned to the Fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. Futures contracts also involve brokerage costs. Subsequent payments, called "variation margin" or "maintenance margin", to and from the broker (or the custodian) are made on a daily basis as the price of the underlying security or commodity fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." For example, when the Fund has purchased a futures contract on a security and the price of the underlying security has risen, that position will have increased in value and the Fund will receive from the broker a variation margin payment based on that increase in value. Conversely, when the Fund has purchased a security futures contract and the price of the underlying security has declined, the position would be less valuable and the Fund would be required to make a variation margin payment to the broker. The Fund may elect to close some or all of its futures positions at any time prior to their expiration in order to reduce or eliminate a hedge position then currently held by the Fund. The Fund may close its positions by taking opposite positions which will operate to terminate the Fund's position in the futures contracts. Final determinations of variation margin are then made, additional cash is required to be paid by or released to the Fund, and the Fund realizes a loss or a gain. Such closing transactions involve additional commission costs. OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write call and put options on futures contracts it may buy or sell and enter into closing transactions with respect to such options to terminate existing positions. Options on future contracts give the purchaser the right in return for the premium paid to assume a position in a futures contract at the specified option exercise price at any time during the period of the option. The Fund may use options on futures contracts in lieu of writing or buying options directly on the underlying securities or purchasing and selling the underlying futures contracts. For example, to hedge against a possible decrease in the value of its portfolio securities, the Fund may purchase put options or write call options on futures contracts rather than selling futures contracts. Similarly, the Fund may purchase call options or write put options on futures contracts as a substitute for the purchase of futures contracts to hedge against a possible increase in the price of securities which the Fund expects to purchase. Such options generally operate in the same manner as options purchased or written directly on the underlying investments. As with options on securities, the holder or writer of an option may terminate his position by selling or purchasing an offsetting option. There is no guarantee that such closing transactions can be effected. The Fund will be required to deposit initial margin and maintenance margin with respect to put and call options on futures contracts written by it pursuant to brokers' requirements similar to those described above in connection with the discussion of futures contracts. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. Successful use of futures contracts by the Fund is subject to Putnam Management's ability to predict movements in the direction of interest rates and other factors affecting securities markets. For example, if the Fund has hedged against the possibility of decline in the values of its investments and the values of its investments increase instead, the Fund will lose part or all of the benefit of the increase through payments of daily maintenance margin. The Fund may have to sell investments at a time when it may be disadvantageous to do so in order to meet margin requirements. Compared to the purchase or sale of futures contracts, the purchase of call or put options on futures contracts involves less potential risk to the Fund because the maximum amount at risk is the premium paid for the options (plus transaction costs). However, there may be circumstances when the purchase of a call or put option on a futures contract would result in a loss to the Fund when the purchase or sale of a futures contract would not, such as when there is no movement in the prices of the hedged investments. The writing of an option on a futures contract involves risks similar to those risks relating to the sale of futures contracts. There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at times, render certain market clearing facilities inadequate, and thereby result in the institution by exchanges of special procedures which may interfere with the timely execution of customer orders. To reduce or eliminate a hedge position held by the Fund, the Fund may seek to close out a position. The ability to establish and close out positions will be subject to the development and maintenance of a liquid secondary market. It is not certain that this market will develop or continue to exist for a particular futures contract or option. Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain contracts or options; (ii) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of contracts or options, or underlying securities; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or a clearing corporation may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of contracts or options (or a particular class or series of contracts or options), in which event the secondary market on that exchange for such contracts or options (or in the class or series of contracts or options) would cease to exist, although outstanding contracts or options on the exchange that had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms. U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. If the Fund invests in tax-exempt securities issued by a governmental entity, the Fund may purchase and sell futures contracts and related options on U.S. Treasury securities when, in the opinion of Putnam Management, price movements in Treasury security futures and related options will correlate closely with price movements in the tax-exempt securities which are the subject of the hedge. U.S. Treasury security futures contracts require the seller to deliver, or the purchaser to take delivery of, the type of U.S. Treasury security called for in the contract at a specified date and price. Options on U.S. Treasury security futures contracts give the purchaser the right in return for the premium paid to assume a position in a U.S. Treasury security futures contract at the specified option exercise price at any time during the period of the option. Successful use of U.S. Treasury security futures contracts by the Fund is subject to Putnam Management's ability to predict movements in the direction of interest rates and other factors affecting markets for debt securities. For example, if the Fund has sold U.S. Treasury security futures contracts in order to hedge against the possibility of an increase in interest rates which would adversely affect tax-exempt securities held in its portfolio, and the prices of the Fund's tax-exempt securities increase instead as a result of a decline in interest rates, the Fund will lose part or all of the benefit of the increased value of its securities which it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if the Fund has insufficient cash, it may have to sell securities to meet daily maintenance margin requirements at a time when it may be disadvantageous to do so. There is also a risk that price movements in U.S. Treasury security futures contracts and related options will not correlate closely with price movements in markets for tax-exempt securities. For example, if the Fund has hedged against a decline in the values of tax-exempt securities held by it by selling Treasury security futures and the values of Treasury securities subsequently increase while the values of its tax-exempt securities decrease, the Fund would incur losses on both the Treasury security futures contracts written by it and the tax-exempt securities held in its portfolio. Putnam Management will seek to reduce this risk by monitoring movements in markets for U.S. Treasury security futures and options and for tax-exempt securities closely. The Fund will only purchase or sell Treasury security futures or related options when, in the opinion of Putnam Management, price movements in Treasury security futures and related options will correlate closely with price movements in tax-exempt securities in which the Fund invests. INDEX FUTURES CONTRACTS. An index futures contract is a contract to buy or sell units of an index at a specified future date at a price agreed upon when the contract is made. Entering into a contract to buy units of an index is commonly referred to as buying or purchasing a contract or holding a long position in the index. Entering into a contract to sell units of an index is commonly referred to as selling a contract or holding a short position. A unit is the current value of the index. The Fund may enter into stock index futures contracts, debt index futures contracts, or other index futures contracts appropriate to its objective. The Fund may also purchase and sell options on index futures contracts. For example, the Standard & Poor's Composite 500 Stock Price Index ("S&P 500") is composed of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The S&P 500 assigns relative weightings to the common stocks included in the Index, and the value fluctuates with changes in the market values of those common stocks. In the case of the S&P 500, contracts are to buy or sell 500 units. Thus, if the value of the S&P 500 were $150, one contract would be worth $75,000 (500 units x $150). The stock index futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead, settlement in cash must occur upon the termination of the contract, with the settlement being the difference between the contract price and the actual level of the stock index at the expiration of the contract. For example, if the Fund enters into a futures contract to buy 500 units of the S&P 500 at a specified future date at a contract price of $150 and the S&P 500 is at $154 on that future date, the Fund will gain $2,000 (500 units x gain of $4). If the Fund enters into a futures contract to sell 500 units of the stock index at a specified future date at a contract price of $150 and the S&P 500 is at $152 on that future date, the Fund will lose $1,000 (500 units x loss of $2). There are several risks in connection with the use by the Fund of index futures as a hedging device. One risk arises because of the imperfect correlation between movements in the prices of the index futures and movements in the prices of securities which are the subject of the hedge. Putnam Management will, however, attempt to reduce this risk by buying or selling, to the extent possible, futures on indices the movements of which will, in its judgment, have a significant correlation with movements in the prices of the securities sought to be hedged. Successful use of index futures by the Fund for hedging purposes is also subject to Putnam Management's ability to predict movements in the direction of the market. It is possible that, where the Fund has sold futures to hedge its portfolio against a decline in the market, the index on which the futures are written may advance and the value of securities held in the Fund's portfolio may decline. If this occurred, the Fund would lose money on the futures and also experience a decline in value in its portfolio securities. It is also possible that, if the Fund has hedged against the possibility of a decline in the market adversely affecting securities held in its portfolio and securities prices increase instead, the Fund will lose part or all of the benefit of the increased value of those securities it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if the Fund has insufficient cash, it may have to sell securities to meet daily variation margin requirements at a time when it is disadvantageous to do so. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the index futures and the portion of the portfolio being hedged, the prices of index futures may not correlate perfectly with movements in the underlying index due to certain market distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the index and futures markets. Second, margin requirements in the futures market are less onerous than margin requirements in the securities market, and as a result the futures market may attract more speculators than the securities market does. Increased participation by speculators in the futures market may also cause temporary price distortions. Due to the possibility of price distortions in the futures market and also because of the imperfect correlation between movements in the index and movements in the prices of index futures, even a correct forecast of general market trends by Putnam Management may still not result in a successful hedging transaction over a short time period. OPTIONS ON STOCK INDEX FUTURES. Options on index futures are similar to options on securities except that options on index futures give the purchaser the right, in return for the premium paid, to assume a position in an index futures contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's futures margin account which represents the amount by which the market price of the index futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the index future. If an option is exercised on the last trading day prior to its expiration date, the settlement will be made entirely in cash equal to the difference between the exercise price of the option and the closing level of the index on which the future is based on the expiration date. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid. OPTIONS ON INDICES As an alternative to purchasing call and put options on index futures, the Fund may purchase and sell call and put options on the underlying indices themselves. Such options would be used in a manner identical to the use of options on index futures. INDEX WARRANTS The Fund may purchase put warrants and call warrants whose values vary depending on the change in the value of one or more specified securities indices ("index warrants"). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value of the underlying index rises above the exercise price of the index warrant, the holder of a call warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant; if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not be entitled to any payments from the issuer at any time when, in the case of a call warrant, the exercise price is greater than the value of the underlying index, or, in the case of a put warrant, the exercise price is less than the value of the underlying index. If the Fund were not to exercise an index warrant prior to its expiration, then the Fund would lose the amount of the purchase price paid by it for the warrant. The Fund will normally use index warrants in a manner similar to its use of options on securities indices. The risks of the Fund's use of index warrants are generally similar to those relating to its use of index options. Unlike most index options, however, index warrants are issued in limited amounts and are not obligations of a regulated clearing agency, but are backed only by the credit of the bank or other institution which issues the warrant. Also, index warrants generally have longer terms than index options. Although the Fund will normally invest only in exchange-listed warrants, index warrants are not likely to be as liquid as certain index options backed by a recognized clearing agency. In addition, the terms of index warrants may limit the Fund's ability to exercise the warrants at such time, or in such quantities, as the Fund would otherwise wish to do. FOREIGN SECURITIES Under its current policy, which may be changed without shareholder approval, the Fund may invest up to the limit of its total assets specified in its Prospectus in securities principally traded in markets outside the United States. Eurodollar certificates of deposit are excluded for purposes of this limitation. Foreign investments can be affected favorably or unfavorably by changes in currency exchange rates and in exchange control regulations. There may be less publicly available information about a foreign company than about a U.S. company, and foreign companies may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those applicable to U.S. companies. Securities of some foreign companies are less liquid or more volatile than securities of U.S. companies, and foreign brokerage commissions and custodian fees are generally higher than in the United States. Investments in foreign securities can involve other risks different from those affecting U.S. investments, including local political or economic developments, expropriation or nationalization of assets and imposition of withholding taxes on dividend or interest payments. To hedge against possible variations in foreign exchange rates, the Fund may purchase and sell forward foreign currency contracts. These represent agreements to purchase or sell specified currencies at specified dates and prices. The Fund will only purchase and sell forward foreign currency contracts in amounts Putnam Management deems appropriate to hedge existing or anticipated portfolio positions and will not use such forward contracts for speculative purposes. Foreign securities, like other assets of the Fund, will be held by the Fund's custodian or by a subcustodian. FOREIGN CURRENCY TRANSACTIONS Unless otherwise specified in the Prospectus, the Fund may engage without limit in currency exchange transactions, as well as foreign currency forward and futures contracts, to protect against uncertainty in the level of future currency exchange rates. In addition, the Fund may write covered call and put options on foreign currencies for the purpose of increasing its current return. Generally, the Fund may engage in both "transaction hedging" and "position hedging". When it engages in transaction hedging, the Fund enters into foreign currency transactions with respect to specific receivables or payables, generally arising in connection with the purchase or sale of portfolio securities. The Fund will engage in transaction hedging when it desires to "lock in" the U.S. dollar price of a security it has agreed to purchase or sell, or the U.S. dollar equivalent of a dividend or interest payment in a foreign currency. By transaction hedging the Fund will attempt to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the applicable foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is earned, and the date on which such payments are made or received. The Fund may purchase or sell a foreign currency on a spot (or cash) basis at the prevailing spot rate in connection with the settlement of transactions in portfolio securities denominated in that foreign currency. The Fund may also enter into contracts to purchase or sell foreign currencies at a future date ("forward contracts") and purchase and sell foreign currency futures contracts. For transaction hedging purposes the Fund may also purchase exchange-listed and over-the-counter call and put options on foreign currency futures contracts and on foreign currencies. A put option on a futures contract gives the Fund the right to assume a short position in the futures contract until the expiration of the option. A put option on a currency gives the Fund the right to sell the currency at an exercise price until the expiration of the option. A call option on a futures contract gives the Fund the right to assume a long position in the futures contract until the expiration of the option. A call option on a currency gives the Fund the right to purchase the currency at the exercise price until the expiration of the option. When it engages in position hedging, the Fund enters into foreign currency exchange transactions to protect against a decline in the values of the foreign currencies in which its portfolio securities are denominated (or an increase in the value of currency for securities which the Fund expects to purchase, when the Fund holds cash or short-term investments). In connection with position hedging, the Fund may purchase put or call options on foreign currency and on foreign currency futures contracts and buy or sell forward contracts and foreign currency futures contracts. The Fund may also purchase or sell foreign currency on a spot basis. The precise matching of the amounts of foreign currency exchange transactions and the value of the portfolio securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the dates the currency exchange transactions are entered into and the dates they mature. It is impossible to forecast with precision the market value of portfolio securities at the expiration or maturity of a forward or futures contract. Accordingly, it may be necessary for the Fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security or securities being hedged is less than the amount of foreign currency the Fund is obligated to deliver and a decision is made to sell the security or securities and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security or securities if the market value of such security or securities exceeds the amount of foreign currency the Fund is obligated to deliver. Transaction and position hedging do not eliminate fluctuations in the underlying prices of the securities which the Fund owns or intends to purchase or sell. They simply establish a rate of exchange which one can achieve at some future point in time. Additionally, although these techniques tend to minimize the risk of loss due to a decline in the value of the hedged currency, they tend to limit any potential gain which might result from the increase in value of such currency. The Fund may seek to increase its current return or to offset some of the costs of hedging against fluctuations in current exchange rates by writing covered call options and covered put options on foreign currencies. The Fund receives a premium from writing a call or put option, which increases the Fund's current return if the option expires unexercised or is closed out at a net profit. The Fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written. The Fund's currency hedging transactions may call for the delivery of one foreign currency in exchange for another foreign currency and may at times not involve currencies in which its portfolio securities are then denominated. Putnam Management will engage in such "cross hedging" activities when it believes that such transactions provide significant hedging opportunities for the Fund. Cross hedging transactions by the Fund involve the risk of imperfect correlation between changes in the values of the currencies to which such transactions relate and changes in the value of the currency or other asset or liability which is the subject of the hedge. CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract as agreed by the parties, at a price set at the time of the contract. In the case of a cancelable forward contract, the holder has the unilateral right to cancel the contract at maturity by paying a specified fee. The contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. A foreign currency futures contract is a standardized contract for the future delivery of a specified amount of a foreign currency at a future date at a price set at the time of the contract. Foreign currency futures contracts traded in the United States are designed by and traded on exchanges regulated by the CFTC, such as the New York Mercantile Exchange. Forward foreign currency exchange contracts differ from foreign currency futures contracts in certain respects. For example, the maturity date of a forward contract may be any fixed number of days from the date of the contract agreed upon by the parties, rather than a predetermined date in a given month. Forward contracts may be in any amounts agreed upon by the parties rather than predetermined amounts. Also, forward foreign exchange contracts are traded directly between currency traders so that no intermediary is required. A forward contract generally requires no margin or other deposit. At the maturity of a forward or futures contract, the Fund either may accept or make delivery of the currency specified in the contract, or at or prior to maturity enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original forward contract. Closing transactions with respect to futures contracts are effected on a commodities exchange; a clearing corporation associated with the exchange assumes responsibility for closing out such contracts. Positions in the foreign currency futures contracts may be closed out only on an exchange or board of trade which provides a secondary market in such contracts. Although the Fund intends to purchase or sell foreign currency futures contracts only on exchanges or boards of trade where there appears to be an active secondary market, there is no assurance that a secondary market on an exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures position and, in the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin. FOREIGN CURRENCY OPTIONS. In general, options on foreign currencies operate similarly to options on securities and are subject to many similar risks. Foreign currency options are traded primarily in the over-the-counter market, although options on foreign currencies have recently been listed on several exchanges. Options are traded not only on the currencies of individual nations, but also on the European Currency Unit ("ECU"). The ECU is composed of amounts of a number of currencies, and is the official medium of exchange of the European Community's European Monetary System. The Fund will only purchase or write foreign currency options when Putnam Management believes that a liquid secondary market exists for such options. There can be no assurance that a liquid secondary market will exist for a particular option at any specific time. Options on foreign currencies are affected by all of those factors which influence foreign exchange rates and investments generally. The value of any currency, including U.S. dollars and foreign currencies, may be affected by complex political and economic factors applicable to the issuing country. In addition, the exchange rates of foreign currencies (and therefore the values of foreign currency options) may be affected significantly, fixed, or supported directly or indirectly by U.S. and foreign government actions. Government intervention may increase risks involved in purchasing or selling foreign currency options, since exchange rates may not be free to fluctuate in response to other market forces. The value of a foreign currency option reflects the value of an exchange rate, which in turn reflects relative values of two currencies, the U.S. dollar and the foreign currency in question. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the exercise of foreign currency options, investors may be disadvantaged by having to deal in an odd lot market for the underlying foreign currencies in connection with options at prices that are less favorable than for round lots. Foreign governmental restrictions or taxes could result in adverse changes in the cost of acquiring or disposing of foreign currencies. There is no systematic reporting of last sale information for foreign currencies and there is no regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Available quotation information is generally representative of very large round-lot transactions in the interbank market and thus may not reflect exchange rates for smaller odd-lot transactions (less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that options markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that cannot be reflected in the options markets. SETTLEMENT PROCEDURES. Settlement procedures relating to the Fund's investments in foreign securities and to the Fund's foreign currency exchange transactions may be more complex than settlements with respect to investments in debt or equity securities of U.S. issuers, and may involve certain risks not present in the Fund's domestic investments. For example, settlement of transactions involving foreign securities or foreign currency may occur within a foreign country, and the Fund may be required to accept or make delivery of the underlying securities or currency in conformity with any applicable U.S. or foreign restrictions or regulations, and may be required to pay any fees, taxes or charges associated with such delivery. Such investments may also involve the risk that an entity involved in the settlement may not meet its obligations. FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not charge a fee for currency conversion, they do realize a profit based on the difference (the "spread") between prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire to resell that currency to the dealer. RESTRICTED SECURITIES The SEC Staff currently takes the view that any designation by the Trustees of the authority to determine that a restricted security is readily marketable (as described in the investment restrictions of the Funds) must be pursuant to written procedures established by the Trustees. It is the present intention of the Funds' Trustees that, if the Trustees decide to delegate such determinations to Putnam Management or another person, they would do so pursuant to written procedures, consistent with the Staff's position. Should the Staff modify its position in the future, the Trustees would consider what action would be appropriate in light of the Staff's position at that time. TAXES TAXATION OF THE FUND. The Fund intends to qualify each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In order so to qualify and to qualify for the special tax treatment accorded regulated investment companies and their shareholders, the Fund must, among other things: (a) Derive at least 90% of its gross income from dividends, interest, payments with respect to certain securities loans, and gains from the sale of stock, securities and foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies; (b) derive less than 30% of its gross income from the sale or other disposition of certain assets (including stock or securities and certain options, futures contracts, forward contracts and foreign currencies) held for less than three months; (c) distribute with respect to each taxable year at least 90% of the sum of its taxable net investment income, its net tax-exempt income, and the excess, if any, of net short-term capital gains over net long-term capital losses for such year; and (d) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Fund's assets is represented by cash and cash items, U.S. Government securities, securities of other regulated investment companies, and other securities limited in respect of any one issuer to a value not greater than 5% of the value of the Fund's total assets and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its assets is invested in the securities (other than those of the U.S. Government or other regulated investment companies) of any one issuer or of two or more issuers which the Fund controls and which are engaged in the same, similar, or related trades or businesses. If the Fund qualifies as a regulated investment company that is accorded special tax treatment, the Fund will not be subject to federal income tax on income paid to its shareholders in the form of dividends (including capital gain dividends). If the Fund failed to qualify as a regulated investment company accorded special tax treatment in any taxable year, the Fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to shareholders as ordinary income. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a regulated investment company that is accorded special tax treatment. If the Fund fails to distribute in a calendar year substantially all of its ordinary income for such year and substantially all of its capital gain net income for the one-year period ending October 31 (or later if the Fund is permitted so to elect and so elects), plus any retained amount from the prior year, the Fund will be subject to a 4% excise tax on the undistributed amounts. A dividend paid to shareholders by the Fund in January of a year generally is deemed to have been paid by the Fund on December 31 of the preceding year, if the dividend was declared and payable to shareholders of record on a date in October, November or December of that preceding year. The Fund intends generally to make distributions sufficient to avoid imposition of the 4% excise tax. EXEMPT-INTEREST DIVIDENDS. The Fund will be qualified to pay exempt-interest dividends to its shareholders only if, at the close of each quarter of the Fund's taxable year, at least 50% of the total value of the Fund's assets consists of obligations the interest on which is exempt from federal income tax. Distributions that the Fund properly designates as exempt- interest dividends are treated by shareholders as interest excludable from their gross income for federal income tax purposes but may be taxable for federal alternative minimum tax purposes and for state and local purposes. If the Fund intends to be qualified to pay exempt-interest dividends, the Fund may be limited in its ability to enter into taxable transactions involving forward commitments, repurchase agreements, financial futures, and options contracts on financial futures, tax-exempt bond indices, and other assets. Part or all of the interest on indebtedness, if any, incurred or continued by a shareholder to purchase or carry shares of a Fund paying exempt-interest dividends is not deductible. The portion of interest that is not deductible is equal to the total interest paid or accrued on the indebtedness, multiplied by the percentage of the Fund's total distributions (not including distributions from net long-term capital gains) paid to the shareholder that are exempt-interest dividends. Under rules used by the Internal Revenue Service for determining when borrowed funds are considered used for the purpose of purchasing or carrying particular assets, the purchase of shares may be considered to have been made with borrowed funds even though such funds are not directly traceable to the purchase of shares. In general, exempt-interest dividends, if any, attributable to interest received on certain private activity obligations and certain industrial development bonds will not be tax-exempt to any shareholders who are "substantial users" of the facilities financed by such obligations or bonds or who are "related persons" of such substantial users. A Fund which is qualified to pay exempt-interest dividends will inform investors within 60 days of the Fund's fiscal year-end of the percentage of its income distributions designated as tax-exempt. The percentage is applied uniformly to all distributions made during the year. The percentage of income designated as tax-exempt for any particular distribution may be substantially different from the percentage of the Fund's income that was tax-exempt during the period covered by the distribution. HEDGING TRANSACTIONS. If the Fund engages in transactions, including hedging transactions in options, futures contracts, and straddles, or other similar transactions, it will be subject to special tax rules (including mark-to-market, straddle, wash sale, and short sale rules), the effect of which may be to accelerate income to the Fund, defer losses to the Fund, cause adjustments in the holding periods of the Fund's securities, or convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders. The Fund will endeavor to make any available elections pertaining to such transactions in a manner believed to be in the best interests of the Fund. Under the 30% of gross income test described above (see "Taxation of the Fund"), the Fund will be restricted in selling assets held or considered under Code rules to have been held for less than three months, and in engaging in certain hedging transactions (including hedging transactions in options and futures) that in some circumstances could cause certain Fund assets to be treated as held for less than three months. Certain of the Fund's hedging activities (including its transactions, if any, in foreign currencies or foreign currency-denominated instruments) are likely to produce a difference between its book income and its taxable income. If the Fund's book income exceeds its taxable income, the distribution (if any) of such excess will be treated as a dividend to the extent of the Fund's remaining earnings and profits (including earnings and profits arising from tax-exempt income), and thereafter as a return of capital or as gain from the sale or exchange of a capital asset, as the case may be. If the Fund's book income is less than its taxable income, the Fund could be required to make distributions exceeding book income to qualify as a regulated investment company that is accorded special tax treatment. RETURN OF CAPITAL DISTRIBUTIONS. If the Fund makes a distribution to you in excess of its current and accumulated "earnings and profits" in any taxable year, the excess distribution will be treated as a return of capital to the extent of your tax basis in your shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces your tax basis in your shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by you of your shares. SECURITIES ISSUED OR PURCHASED AT A DISCOUNT. The Fund's investment in securities issued at a discount and certain other obligations will (and investments in securities purchased at a discount may) require the Fund to accrue and distribute income not yet received. In order to generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio that it otherwise would have continued to hold. CAPITAL LOSS CARRYOVER. The amounts and expiration dates of any capital loss carryovers available to the Fund are shown in Note 1 (Federal income taxes) to the financial statements included in Part I of this Statement or incorporated by reference into this Statement. FOREIGN CURRENCY-DENOMINATED SECURITIES AND RELATED HEDGING TRANSACTIONS. The Fund's transactions in foreign currencies, foreign currency-denominated debt securities and certain foreign currency options, futures contracts, and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. If more than 50% of the Fund's assets at year end consists of the debt and equity securities of foreign corporations, the Fund may elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portion of qualified taxes paid by the Fund to foreign countries. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes. A shareholder's ability to claim a foreign tax credit or deduction in respect of foreign taxes paid by the Fund may be subject to certain limitations imposed by the Code, as a result of which a shareholder may not get a full credit or deduction for the amount of such taxes. Shareholders who do not itemize on their federal income tax returns may claim a credit (but no deduction) for such foreign taxes. Investment by the Fund in certain "passive foreign investment companies" could subject the Fund to a U.S. federal income tax or other charge on the proceeds from the sale of its investment in such a company; however, this tax can be avoided by making an election to mark such investments to market annually or to treat the passive foreign investment company as a "qualified electing fund." SALE OR REDEMPTION OF SHARES. The sale, exchange or redemption of Fund shares may give rise to a gain or loss. In general, any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months, and otherwise as short-term capital gain or loss. However, if a shareholder sells shares at a loss within six months of purchase, any loss will be disallowed for Federal income tax purposes to the extent of any exempt- interest dividends received on such shares. In addition, any loss (not already disallowed as provided in the preceding sentence) realized upon a taxable disposition of shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any long-term capital gain distributions received by the shareholder with respect to the shares. All or a portion of any loss realized upon a taxable disposition of Fund shares will be disallowed if other Fund shares are purchased within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss. SHARES PURCHASED THROUGH TAX-QUALIFIED PLANS. Special tax rules apply to investments though defined contribution plans and other tax-qualified plans. Shareholders should consult their tax adviser to determine the suitability of shares of a fund as an investment through such plans and the precise effect of an investment on their particular tax situation. BACKUP WITHHOLDING. The Fund generally is required to withhold and remit to the U.S. Treasury 31% of the taxable dividends and other distributions paid to any individual shareholder who fails to furnish the Fund with a correct taxpayer identification number (TIN), who has underreported dividends or interest income, or who fails to certify to the Fund that he or she is not subject to such withholding. Shareholders who fail to furnish their currect TIN are subject to a penalty of $50 for each such failure unless the failure is due to reasonable cause and not wilful neglect. An individual's taxpayer identification number is his or her social security number. MANAGEMENT TRUSTEES *+GEORGE PUTNAM, Chairman and President. Chairman and Director of Putnam Management and Putnam Mutual Funds. Director, The Boston Company, Inc., Boston Safe Deposit and Trust Company, Freeport-McMoRan, Inc., General Mills, Inc., Houghton Mifflin Company, Marsh & McLennan Companies, Inc. and Rockefeller Group, Inc. +WILLIAM F. POUNDS, Vice Chairman. Professor of Management, Alfred P. Sloan School of Management, Massachusetts Institute of Technology. Director of EG&G, Inc., Fisher Price, Inc., IDEXX, M/A-COM, Inc., and Sun Company, Inc. JAMESON A. BAXTER, Trustee. President, Baxter Associates, Inc. (consultants to management). Director of Avondale Federal Savings Bank, ASHTA Chemicals, Inc. and Banta Corporation. Chairman of the Board of Trustees, Mount Holyoke College. +HANS H. ESTIN, Trustee. Vice Chairman, North American Management Corp. (a registered investment adviser). Director of The Boston Company, Inc. and Boston Safe Deposit and Trust Company. ELIZABETH T. KENNAN, Trustee. President Emeritus and Professor, Mount Holyoke College. Director, the Kentucky Home Life Insurance Companies, NYNEX Corporation, Northeast Utilities and Talbots and Trustee of the University of Notre Dame. *LAWRENCE J. LASSER, Trustee and Vice President. President, Chief Executive Officer and Director of Putnam Investments, Inc. and Putnam Investment Management, Inc. Director of Marsh & McLennan Companies, Inc. Vice President of the Putnam funds. JOHN A. HILL, Trustee. Chairman and Managing Director, First Reserve Corporation (a registered investment adviser). Director, Lantana Corporation, Maverick Tube Corporation, Snyder Oil Corporation and various First Reserve Funds. +ROBERT E. PATTERSON, Trustee. Executive Vice President, Cabot Partners Limited Partnership (a registered investment adviser). *DONALD S. PERKINS, Trustee. Director of various corporations, including American Telephone & Telegraph Company, AON Corp., Cummins Engine Company, Inc., Illinois Power Company, Inland Steel Industries, Inc., Kmart Corporation, LaSalle Street Fund, Inc., Springs Industries, Inc., TBG, Inc. and Time Warner Inc. *#GEORGE PUTNAM, III, Trustee. President, New Generation Research, Inc. (publisher of bankruptcy information). Director, World Environment Center. ELI SHAPIRO, Trustee. Alfred P. Sloan Professor of Management, Emeritus, Alfred P. Sloan School of Management, Massachusetts Institute of Technology. Director of Nomura Dividend Fund, Inc. (a privately held registered investment company managed by Putnam Management) and former Trustee of the Putnam funds (1984-1990). *A.J.C. SMITH, Trustee. Chairman, Chief Executive Officer and Director, Marsh & McLennan Companies, Inc. W. NICHOLAS THORNDIKE, Trustee. Director of various corporations and charitable organizations, including Courier Corporation and Providence Journal Co. Also, Trustee and President of Massachusetts General Hospital and Trustee of Bradley Real Estate Trust and Eastern Utilities Associates. OFFICERS CHARLES E. PORTER, Executive Vice President. Managing Director of Putnam Investments, Inc. and Putnam Investment Management, Inc. Executive Vice President of the Putnam funds. PATRICIA C. FLAHERTY, Senior Vice President. Senior Vice President of Putnam Investments, Inc. and Putnam Investment Management, Inc. WILLIAM N. SHIEBLER, Vice President. Director and Senior Managing Director of Putnam Investments, Inc. President, Chief Operating Officer and Director of Putnam Mutual Funds. Vice President of the Putnam funds. GORDON H. SILVER, Vice President. Senior Managing Director of Putnam Investments, Inc. and Putnam Investment Management, Inc. Director, Putnam Investments, Inc. and Putnam Investment Management, Inc. Vice President of the Putnam funds. JOHN R. VERANI, Vice President. Senior Vice President of Putnam Investments, Inc. and Putnam Investment Management, Inc. Vice President of the Putnam funds. PAUL M. O'NEIL, Vice President. Vice President of Putnam Investments, Inc. and Putnam Investment Management, Inc. Vice President of the Putnam funds. JOHN D. HUGHES, Vice President and Treasurer. Vice President and Treasurer of the Putnam funds. KATHERINE HOWARD, Assistant Vice President. Assistant Vice President of the Putnam funds. BEVERLY MARCUS, Clerk and Assistant Treasurer. Clerk and Assistant Treasurer of the Putnam funds. *Trustees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of the Fund, Putnam Management or Putnam Mutual Funds. +Members of the Executive Committee of the Trustees. The Executive Committee meets between regular meetings of the Trustees as may be required to review investment matters and other affairs of the Fund and may exercise all of the powers of the Trustees. #George Putnam, III is the son of George Putnam. ----------------- Certain other officers of Putnam Management are officers of your Fund. SEE "ADDITIONAL OFFICERS OF THE FUND" IN PART I OF THIS STATEMENT. The mailing address of each of the officers and Trustees is One Post Office Square, Boston, Massachusetts 02109. Except as stated below, the principal occupations of the officers and Trustees for the last five years have been with the employers as shown above, although in some cases they have held different positions with such employers. Prior to January, 1992, Ms. Baxter was Vice President and Principal, Regency Group, Inc. and Consultant, The First Boston Corporation. Prior to May, 1991, Dr. Pounds was Senior Advisor to the Rockefeller Family and Associates, Chairman of Rockefeller Trust Company and Director of Rockefeller Group, Inc. During the past five years Dr. Shapiro has provided economic and financial consulting services to various clients. Prior to November, 1990, Mr. Shiebler was President and Chief Operating Officer of the Intercapital Division of Dean Witter Reynolds, Inc., Vice President of the Dean Witter Funds and Director of Dean Witter Trust Company. Each Trustee of the Fund receives an annual fee and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings and for special services rendered in that connection. All of the Trustees are Trustees of all the Putnam funds and each receives fees for his or her services. FOR DETAILS OF TRUSTEES' FEES PAID BY THE FUND, SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT. The Agreement and Declaration of Trust of the Fund provides that the Fund will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Fund, except if it is determined in the manner specified in the Agreement and Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the Fund or that such indemnification would relieve any officer or Trustee of any liability to the Fund or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. The Fund, at its expense, provides liability insurance for the benefit of its Trustees and officers. Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust Company are subsidiaries of Putnam Investments, Inc., a holding company which is in turn wholly owned by Marsh & McLennan Companies, Inc., a publicly owned holding company whose principal operating subsidiaries are international insurance and reinsurance brokers, investment managers and management consultants. Trustees and officers of the Fund who are also officers of Putnam Management or its affiliates or who are stockholders of Marsh & McLennan Companies, Inc. will benefit from the advisory fees, sales commissions, distribution fees (if any), custodian fees and transfer agency fees paid or allowed by the Fund. PUTNAM MANAGEMENT Putnam Management is one of America's oldest and largest money management firms. Putnam Management's staff of experienced portfolio managers and research analysts selects securities and constantly supervises the Fund's portfolio. By pooling an investor's money with that of other investors, a greater variety of securities can be purchased than would be the case individually; the resulting diversification helps reduce investment risk. Putnam Management has been managing mutual funds since 1937. Today, the firm serves as the investment manager for the funds in the Putnam Family, with over $67 billion in assets in over 4.1 million shareholder accounts at December 31, 1994. An affiliate, The Putnam Advisory Company, Inc., manages domestic and foreign institutional accounts and mutual funds, including the accounts of many Fortune 500 companies. Another affiliate, Putnam Fiduciary Trust Company, provides investment advice to institutional clients under its banking and fiduciary powers. At December 31, 1994, Putnam Management and its affiliates managed over $95 billion in assets, including over $15 billion in tax exempt securities and over $36 billion in retirement plan assets. THE MANAGEMENT CONTRACT Under a Management Contract between the Fund and Putnam Management, subject to such policies as the Trustees may determine, Putnam Management, at its expense, furnishes continuously an investment program for the Fund and makes investment decisions on behalf of the Fund. Subject to the control of the Trustees, Putnam Management also manages, supervises and conducts the other affairs and business of the Fund, furnishes office space and equipment, provides bookkeeping and clerical services (including determination of the Fund's net asset value, but excluding shareholder accounting services) and places all orders for the purchase and sale of the Fund's portfolio securities. Putnam Management may place Fund portfolio transactions with broker-dealers which furnish Putnam Management, without cost to it, certain research, statistical and quotation services of value to Putnam Management and its affiliates in advising the Fund and other clients. In so doing, Putnam Management may cause the Fund to pay greater brokerage commissions than it might otherwise pay. FOR DETAILS OF PUTNAM MANAGEMENT'S COMPENSATION UNDER THE MANAGEMENT CONTRACT, SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT. Putnam Management's compensation under the Management Contract may be reduced in any year if the Fund's expenses exceed the limits on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the Fund are qualified for offer or sale. The term "expenses" is defined in the statutes or regulations of such jurisdictions, and generally, excludes brokerage commissions, taxes, interest, extraordinary expenses and, if the Fund has a Distribution Plan, payments made under such Plan. The only such limitation as of the date of this Statement (applicable to any Fund registered for sale in California) was 2.5% of the first $30 million of average net assets, 2% of the next $70 million and 1.5% of any excess over $100 million. Under the Management Contract, Putnam Management may reduce its compensation to the extent that the Fund's expenses exceed such lower expense limitation as Putnam Management may, by notice to the Fund, declare to be effective. The expenses subject to this limitation are exclusive of brokerage commissions, interest, taxes, deferred organizational and extraordinary expenses and, if the Fund has a Distribution Plan, payments required under such Plan. THE TERMS OF ANY EXPENSE LIMITATION FROM TIME TO TIME IN EFFECT ARE DESCRIBED IN EITHER THE PROSPECTUS OR PART I OF THIS STATEMENT. In addition to the fee paid to Putnam Management, the Fund reimburses Putnam Management for the compensation and related expenses of certain officers of the Fund and their assistants who provide certain administrative services for the Fund and the other funds in the Putnam Family, each of which bears an allocated share of the foregoing costs. The aggregate amount of all such payments and reimbursements is determined annually by the Trustees. THE AMOUNT OF THIS REIMBURSEMENT FOR THE FUND'S MOST RECENT FISCAL YEAR IS INCLUDED IN "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT. Putnam Management pays all other salaries of officers of the Fund. The Fund pays all expenses not assumed by Putnam Management including, without limitation, auditing, legal, custodial, investor servicing and shareholder reporting expenses. The Fund pays the cost of typesetting for its Prospectuses and the cost of printing and mailing any Prospectuses sent to its shareholders. Putnam Mutual Funds pays the cost of printing and distributing all other Prospectuses. The Management Contract provides that Putnam Management shall not be subject to any liability to the Fund or to any shareholder of the Fund for any act or omission in the course of or connected with rendering services to the Fund in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its duties on the part of Putnam Management. The Management Contract may be terminated without penalty by vote of the Trustees or the shareholders of the Fund, or by Putnam Management, on 30 days' written notice. It may be amended only by a vote of the shareholders of the Fund. The Management Contract also terminates without payment of any penalty in the event of its assignment. The Management Contract provides that it will continue in effect only so long as such continuance is approved at least annually by vote of either the Trustees or the shareholders, and, in either case, by a majority of the Trustees who are not "interested persons" of Putnam Management or the Fund. In each of the foregoing cases, the vote of the shareholders is the affirmative vote of a "majority of the outstanding voting securities" as defined in the Investment Company Act of 1940. PORTFOLIO TRANSACTIONS INVESTMENT DECISIONS. Investment decisions for the Fund and for the other investment advisory clients of Putnam Management and its affiliates are made with a view to achieving their respective investment objectives. Investment decisions are the product of many factors in addition to basic suitability for the particular client involved. Thus, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling the security. In some instances, one client may sell a particular security to another client. It also sometimes happens that two or more clients simultaneously purchase or sell the same security, in which event each day's transactions in such security are, insofar as possible, averaged as to price and allocated between such clients in a manner which in Putnam Management's opinion is equitable to each and in accordance with the amount being purchased or sold by each. There may be circumstances when purchases or sales of portfolio securities for one or more clients will have an adverse effect on other clients. BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock exchanges, commodities markets and futures markets and other agency transactions involve the payment by the Fund of negotiated brokerage commissions. Such commissions vary among different brokers. A particular broker may charge different commissions according to such factors as the difficulty and size of the transaction. Transactions in foreign investments often involve the payment of fixed brokerage commissions, which may be higher than those in the United States. There is generally no stated commission in the case of securities traded in the over-the-counter markets, but the price paid by the Fund usually includes an undisclosed dealer commission or mark-up. In underwritten offerings, the price paid by the Fund includes a disclosed, fixed commission or discount retained by the underwriter or dealer. It is anticipated that most purchases and sales of securities by funds investing primarily in tax-exempt securities and certain other fixed-income securities will be with the issuer or with underwriters of or dealers in those securities, acting as principal. Accordingly, those funds would not ordinarily pay significant brokerage commissions with respect to securities transactions. SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT FOR INFORMATION CONCERNING COMMISSIONS PAID BY THE FUND. It has for many years been a common practice in the investment advisory business for advisers of investment companies and other institutional investors to receive brokerage and research services (as defined in the Securities Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that execute portfolio transactions for the clients of such advisers and from third parties with which such broker-dealers have arrangements. Consistent with this practice, Putnam Management receives brokerage and research services and other similar services from many broker-dealers with which Putnam Management places the Fund's portfolio transactions and from third parties with which these broker-dealers have arrangements. These services include such matters as general economic and market reviews, industry and company reviews, evaluations of investments, recommendations as to the purchase and sale of investments, newspapers, magazines, pricing services, quotation services, news services and personal computers utilized by Putnam Management's managers and analysts. Where the services referred to above are not used exclusively by Putnam Management for research purposes, Putnam Management, based upon its own allocations of expected use, bears that portion of the cost of these services which directly relates to their non-research use. Some of these services are of value to Putnam Management and its affiliates in advising various of their clients (including the Fund), although not all of these services are necessarily useful and of value in managing the Fund. The management fee paid by the Fund is not reduced because Putnam Management and its affiliates receive these services even though Putnam Management might otherwise be required to purchase some of these services for cash. Putnam Management places all orders for the purchase and sale of portfolio investments for the Fund and buys and sells investments for the Fund through a substantial number of brokers and dealers. In so doing, Putnam Management uses its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent it may be permitted to pay higher brokerage commissions as described below. In seeking the most favorable price and execution, Putnam Management, having in mind the Fund's best interests, considers all factors it deems relevant, including, by way of illustration, price, the size of the transaction, the nature of the market for the security or other investment, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker-dealer involved and the quality of service rendered by the broker-dealer in other transactions. As permitted by Section 28(e) of the 1934 Act, and by the Management Contract, Putnam Management may cause the Fund to pay a broker-dealer which provides "brokerage and research services" (as defined in the 1934 Act) to Putnam Management an amount of disclosed commission for effecting securities transactions on stock exchanges and other transactions for the Fund on an agency basis in excess of the commission which another broker-dealer would have charged for effecting that transaction. Putnam Management's authority to cause the Fund to pay any such greater commissions is also subject to such policies as the Trustees may adopt from time to time. Putnam Management does not currently intend to cause the Fund to make such payments. It is the position of the staff of the Securities and Exchange Commission that Section 28(e) does not apply to the payment of such greater commissions in "principal" transactions. Accordingly Putnam Management will use its best effort to obtain the most favorable price and execution available with respect to such transactions, as described above. The Management Contract provides that commissions, fees, brokerage or similar payments received by Putnam Management or an affiliate in connection with the purchase and sale of portfolio investments of the Fund, less any direct expenses approved by the Trustees, shall be recaptured by the Fund through a reduction of the fee payable by the Fund under the Management Contract. Putnam Management seeks to recapture for the Fund soliciting dealer fees on the tender of the Fund's portfolio securities in tender or exchange offers. Any such fees which may be recaptured are likely to be minor in amount. Consistent with the Rules of Fair Practice of the National Association of Securities Dealers, Inc. and subject to seeking the most favorable price and execution available and such other policies as the Trustees may determine, Putnam Management may consider sales of shares of the Fund (and, if permitted by law, of the other Putnam funds) as a factor in the selection of broker-dealers to execute portfolio transactions for the Fund. PRINCIPAL UNDERWRITER Putnam Mutual Funds is the principal underwriter of shares of the Fund and the other continuously offered Putnam funds. Putnam Mutual Funds is not obligated to sell any specific amount of shares of the Fund and will purchase shares for resale only against orders for shares. SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT FOR INFORMATION ON SALES CHARGES AND OTHER PAYMENTS RECEIVED BY PUTNAM MUTUAL FUNDS. INVESTOR SERVICING AGENT AND CUSTODIAN Putnam Investor Services, a division of Putnam Fiduciary Trust Company ("PFTC"), is the Fund's investor servicing agent (transfer, plan and dividend disbursing agent), for which it receives fees which are paid monthly by the Fund as an expense of all its shareholders. The fee paid to Putnam Investor Services is determined by the Trustees taking into account the number of shareholder accounts and transactions. Putnam Investor Services has won the DALBAR Quality Tested Service Seal every year since the award's 1990 inception. Over 10,000 tests of 38 separate shareholders service components demonstrated that Putnam Investor Services exceeded the industry standard in all categories. PFTC is the custodian of the Fund's assets. In carrying out its duties under its custodian contract, PFTC may employ one or more subcustodians whose responsibilities will include safeguarding and controlling the Fund's cash and securities, handling the receipt and delivery of securities and collecting interest and dividends on the Fund's investments. PFTC and any subcustodians employed by it have a lien on the securities of the Fund (to the extent permitted by the Fund's investment restrictions) to secure charges and any advances made by such subcustodians at the end of any day for the purpose of paying for securities purchased by the Fund. The Fund expects that such advances will exist only in unusual circumstances. Neither PFTC nor any subcustodian determines the investment policies of the Fund or decides which securities the Fund will buy or sell. PFTC pays the fees and other charges of any subcustodians employed by it. The Fund may from time to time pay custodial expenses in full or in part through the placement by Putnam Management of the Fund's portfolio transactions with the subcustodians or with a third- party broker having an agreement with the subcustodians. The Fund pays PFTC an annual fee based on the Fund's assets, securities transactions and securities holdings and reimburses PFTC for certain out-of-pocket expenses incurred by it or any subcustodian employed by it in performing custodial services. SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT FOR INFORMATION ON FEES AND REIMBURSEMENTS FOR INVESTOR SERVICING AND CUSTODY RECEIVED BY PFTC. THE FEES MAY BE REDUCED BY CREDITS ALLOWED BY PFTC. DETERMINATION OF NET ASSET VALUE The Fund determines the net asset value per share of each class of shares once each day the New York Stock Exchange (the "Exchange") is open. Currently, the Exchange is closed Saturdays, Sundays and the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving and Christmas. The Fund determines net asset value as of the close of regular trading on the Exchange, currently 4:00 p.m. However, equity options held by the Fund are priced as of the close of trading at 4:10 p.m., and futures contracts on U.S. Government securities and index options held by the Fund are priced as of their close of trading at 4:15 p.m. Securities for which market quotations are readily available are valued at prices which, in the opinion of the Trustees or Putnam Management, most nearly represent the market values of such securities. Currently, such prices are determined using the last reported sale price or, if no sales are reported (as in the case of some securities traded over-the-counter), the last reported bid price, except that certain U.S. Government securities are stated at the mean between the last reported bid and asked prices. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value. All other securities and assets are valued at their fair value following procedures approved by the Trustees. Liabilities are deducted from the total, and the resulting amount is divided by the number of shares of the class outstanding. Reliable market quotations are not considered to be readily available for long-term corporate bonds and notes, certain preferred stocks, tax-exempt securities, and certain foreign securities. These investments are stated at fair value on the basis of valuations furnished by pricing services approved by the Trustees, which determine valuations for normal, institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders. If any securities held by the Fund are restricted as to resale, Putnam Management determines their fair value following procedures approved by the Trustees. The fair value of such securities is generally determined as the amount which the Fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. The valuation procedures applied in any specific instance are likely to vary from case to case. However, consideration is generally given to the financial position of the issuer and other fundamental analytical data relating to the investment and to the nature of the restrictions on disposition of the securities (including any registration expenses that might be borne by the Fund in connection with such disposition). In addition, specific factors are also generally considered, such as the cost of the investment, the market value of any unrestricted securities of the same class, the size of the holding, the prices of any recent transactions or offers with respect to such securities and any available analysts' reports regarding the issuer. Generally, trading in certain securities (such as foreign securities) is substantially completed each day at various times prior to the close of the Exchange. The values of these securities used in determining the net asset value of the Fund's shares are computed as of such times. Also, because of the amount of time required to collect and process trading information as to large numbers of securities issues, the values of certain securities (such as convertible bonds, U.S. Government securities, and tax-exempt securities) are determined based on market quotations collected earlier in the day at the latest practicable time prior to the close of the Exchange. Occasionally, events affecting the value of such securities may occur between such times and the close of the Exchange which will not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value following procedures approved by the Trustees. Money market funds generally value their portfolio securities at amortized cost according to Rule 2a-7 under the Investment Company Act of 1940. HOW TO BUY SHARES General The Prospectus contains a general description of how investors may buy shares of the Fund and states whether the Fund offers more than one class of shares. This Statement contains additional information which may be of interest to investors. Class A shares and Class M shares are sold with a sales charge payable at the time of purchase (except for Class A shares and Class M shares of money market funds). As used in this Statement and unless the context requires otherwise, the term "Class A shares" includes shares of Funds that offer only one class of shares. The Prospectus contains a table of applicable sales charges. For information about how to purchase Class A shares of a Putnam fund at net asset value through an employer's defined contribution plan, please consult your employer. Certain purchases of Class A shares and Class M shares may be exempt from a sales charge or, in the case of Class A shares, may be subject to a contingent deferred sales charge ("CDSC"). See "General-- Sales without sales charges or contingent deferred sales charges", "Additional Information About Class A and Class M Shares", and "Contingent Deferred Sales Charges--Class A shares". Class B shares and Class C shares are sold subject to a CDSC payable upon redemption within a specified period after purchase. The Prospectus contains a table of applicable CDSCs. Class Y shares, which are available only to employer-sponsored defined contribution plans initially investing at least $250 million in a combination of Putnam funds and other investments managed by Putnam Management or its affiliates, are not subject to sales charges or a CDSC. Certain purchase programs described below are not available to defined contribution plans. Consult your employer for information on how to purchase shares through your plan. The Fund is currently making a continuous offering of its shares. The Fund receives the entire net asset value of shares sold. The Fund will accept unconditional orders for shares to be executed at the public offering price based on the net asset value per share next determined after the order is placed. In the case of Class A shares and Class M shares, the public offering price is the net asset value plus the applicable sales charge, if any. No sales charge is included in the public offering price of other classes of shares. In the case of orders for purchase of shares placed through dealers, the public offering price will be based on the net asset value determined on the day the order is placed, but only if the dealer receives the order before the close of regular trading on the Exchange. If the dealer receives the order after the close of the Exchange, the price will be based on the net asset value next determined. If funds for the purchase of shares are sent directly to Putnam Investor Services, they will be invested at the public offering price based on the net asset value next determined after receipt. Payment for shares of the Fund must be in U.S. dollars; if made by check, the check must be drawn on a U.S. bank. Initial and subsequent purchases must satisfy the minimums stated in the Prospectus, except that (i) individual investments under certain employee benefit plans or Tax Qualified Retirement Plans may be lower, (ii) persons who are already shareholders may make additional purchases of $50 or more by sending funds directly to Putnam Investor Services (see "Your Investing Account" below), and (iii) for investors participating in systematic investment plans and military allotment plans, the initial and subsequent purchases must be $25 or more. Information about these plans is available from investment dealers or from Putnam Mutual Funds. As a convenience to investors, shares may be purchased through a systematic investment plan. Preauthorized monthly bank drafts for a fixed amount (at least $25) are used to purchase Fund shares at the applicable public offering price next determined after Putnam Mutual Funds receives the proceeds from the draft (normally the 20th of each month, or the next business day thereafter). Further information and application forms are available from investment dealers or from Putnam Mutual Funds. Except for Putnam funds that declare a distribution daily, distributions to be reinvested are reinvested without a sales charge in shares of the same class as of the ex-dividend date using the net asset value determined on that date, and are credited to a shareholder's account on the payment date. Dividends for Putnam money market funds are credited to a shareholder's account on the payment date. Distributions for Putnam Tax-Free Income Trust and Putnam Preferred Income Fund are reinvested without a sales charge as of the last day of the period for which distributions are paid using the net asset value determined on that date, and are credited to a shareholder's account on the payment date. Distributions for all other Putnam funds that declare a distribution daily are reinvested without a sales charge as of the next day following the period for which distributions are paid using the net asset value determined on that date, and are credited to a shareholder's account on the payment date. PAYMENT IN SECURITIES. In addition to cash, the Fund may accept securities as payment for Fund shares at the applicable net asset value. Generally, the Fund will only consider accepting securities to increase its holdings in a portfolio security, or if Putnam Management determines that the offered securities are a suitable investment for the Fund and in a sufficient amount for efficient management. While no minimum has been established, it is expected that the Fund would not accept securities with a value of less than $100,000 per issue as payment for shares. The Fund may reject in whole or in part any or all offers to pay for purchases of Fund shares with securities, may require partial payment in cash for such purchases to provide funds for applicable sales charges, and may discontinue accepting securities as payment for Fund shares at any time without notice. The Fund will value accepted securities in the manner described in the section "Determination of Net Asset Value" for valuing shares of the Fund. The Fund will only accept securities which are delivered in proper form. The Fund will not accept options or restricted securities as payment for shares. The acceptance of securities by certain Funds in exchange for Fund shares are subject to additional requirements. In the case of Putnam American Government Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds: Balanced Portfolio, Putnam Asset Allocation Funds: Conservative Portfolio, Putnam Asset Allocation Funds: Growth Portfolio, Putnam Capital Appreciation Fund, Putnam Preferred Income Fund, Putnam Diversified Equity Trust, Putnam Equity Income Fund, Putnam Europe Growth Fund, The Putnam Fund for Growth & Income, Putnam Global Governmental Income Trust, Putnam Growth and Income Fund II, Putnam High Yield Advantage Fund, Putnam Investment Funds, Putnam Intermediate Tax Exempt Fund, Putnam Investment-Grade Bond Fund, Putnam Municipal Income Fund, Putnam Natural Resources Fund, Putnam OTC Emerging Growth Fund, Putnam Overseas Growth Fund, Putnam Tax Exempt Income Fund and Putnam Tax-Free Income Trust, transactions involving the issuance of Fund shares for securities or assets other than cash will be limited to a bona-fide re-organization or statutory merger and to other acquisitions of portfolio securities that meet all the following conditions: (a) such securities meet the investment objectives and policies of the Fund; (b) such securities are acquired for investment and not for resale; (c) such securities are liquid securities which are not restricted as to transfer either by law or liquidity of market; and (d) such securities have a value which is readily ascertainable, as evidenced by a listing on the American Stock Exchange, the New York Stock Exchange or NASDAQ. In addition, Putnam Global Governmental Income Trust may accept only investment grade bonds with prices regularly stated in publications generally accepted by investors, such as the London Financial Times and the Association of International Bond Dealers manual, or securities listed on the New York or American Stock Exchanges or with NASDAQ, and Putnam Diversified Income Trust may accept only bonds with prices regularly stated in publications generally accepted by investors. For federal income tax purposes, a purchase of Fund shares with securities will be treated as a sale or exchange of such securities on which the investor will realize a taxable gain or loss. The processing of a purchase of Fund shares with securities involves certain delays while the Fund considers the suitability of such securities and while other requirements are satisfied. For information regarding procedures for payment in securities, contact Putnam Mutual Funds. Investors should not send securities to the Fund except when authorized to do so and in accordance with specific instructions received from Putnam Mutual Funds. SALES WITHOUT SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES. The Fund may sell shares without a sales charge or CDSC to: (i) current and retired Trustees of the Fund; officers of the Fund; directors and current and retired U.S. full-time employees of Putnam Management, Putnam Mutual Funds, their parent corporations and certain corporate affiliates; family members of and employee benefit plans for the foregoing; and partnerships, trusts or other entities in which any of the foregoing has a substantial interest; (ii) employee benefit plans, for the repurchase of shares in connection with repayment of plan loans made to plan participants (if the sum loaned was obtained by redeeming shares of a Putnam fund sold with a sales charge) (not offered by tax-exempt funds); (iii) clients of administrators of tax-qualified employee benefit plans which have entered into agreements with Putnam Mutual Funds (not offered by tax-exempt funds); (iv) registered representatives and other employees of broker-dealers having sales agreements with Putnam Mutual Funds; employees of financial institutions having sales agreements with Putnam Mutual Funds or otherwise having an arrangement with any such broker-dealer or financial institution with respect to sales of Fund shares; and their spouses and children under age 21 (Putnam Mutual Funds is regarded as the dealer of record for all such accounts); (v) investors meeting certain requirements who sold shares of certain Putnam closed-end funds pursuant to a tender offer by such closed-end fund; (vi) a trust department of any financial institution purchasing shares of the Fund in its capacity as trustee of any trust, if the value of the shares of the Fund and other Putnam funds purchased or held by all such trusts exceeds $1 million in the aggregate; and (vii) "wrap accounts" maintained for clients of broker- dealers, financial institutions or financial planners who have entered into agreements with Putnam Mutual Funds with respect to such accounts. In addition, the Fund may issue its shares at net asset value in connection with the acquisition of substantially all of the securities owned by other investment companies or personal holding companies. PAYMENTS TO DEALERS. Putnam Mutual Funds may, at its expense, pay concessions in addition to the payments disclosed in the Prospectus to dealers which satisfy certain criteria established from time to time by Putnam Mutual Funds relating to increasing net sales of shares of the Putnam funds over prior periods, and certain other factors. ADDITIONAL INFORMATION ABOUT CLASS A AND CLASS M SHARES The underwriter's commission is the sales charge shown in the Prospectus less any applicable dealer discount. Putnam Mutual Funds will give dealers ten days' notice of any changes in the dealer discount. Putnam Mutual Funds retains the entire sales charge on any retail sales made by it. Putnam Mutual Funds offers several plans by which an investor may obtain reduced sales charges on purchases of Class A shares and Class M shares. The variations in sales charges reflect the varying efforts required to sell shares to separate categories of purchasers. These plans may be altered or discontinued at any time. COMBINED PURCHASE PRIVILEGE. The following persons may qualify for the sales charge reductions or eliminations shown in the Prospectus by combining into a single transaction the purchase of Class A shares or Class M shares with other purchases of any class of shares: (i) an individual, or a "company" as defined in Section 2(a)(8) of the Investment Company Act of 1940 (which includes corporations which are corporate affiliates of each other); (ii) an individual, his or her spouse and their children under twenty-one, purchasing for his, her or their own account; (iii) a trustee or other fiduciary purchasing for a single trust estate or single fiduciary account (including a pension, profit-sharing, or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Internal Revenue Code); (iv) tax-exempt organizations qualifying under Section 501(c)(3) of the Internal Revenue Code (not including 403(b) plans); and (v) employee benefit plans of a single employer or of affiliated employers, other than 403(b) plans. A combined purchase currently may also include shares of any class of other continuously offered Putnam funds (other than money market funds) purchased at the same time through a single investment dealer, if the dealer places the order for such shares directly with Putnam Mutual Funds. CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A purchaser of Class A shares or Class M shares may qualify for a cumulative quantity discount by combining a current purchase (or combined purchases as described above) with certain other shares of any class of Putnam funds already owned. The applicable sales charge is based on the total of: (i) the investor's current purchase; and (ii) the maximum public offering price (at the close of business on the previous day) of: (a) all shares held by the investor in all of the Putnam funds (except money market funds); and (b) any shares of money market funds acquired by exchange from other Putnam funds; and (iii) the maximum public offering price of all shares described in paragraph (ii) owned by another shareholder eligible to participate with the investor in a "combined purchase" (see above). To qualify for the combined purchase privilege or to obtain the cumulative quantity discount on a purchase through an investment dealer, when each purchase is made the investor or dealer must provide Putnam Mutual Funds with sufficient information to verify that the purchase qualifies for the privilege or discount. The shareholder must furnish this information to Putnam Investor Services when making direct cash investments. STATEMENT OF INTENTION. Investors may also obtain the reduced sales charges for Class A shares or Class M shares shown in the Prospectus for investments of a particular amount by means of a written Statement of Intention, which expresses the investor's intention to invest that amount (including certain "credits," as described below) within a period of 13 months in shares of any class of the Fund or any other continuously offered Putnam fund (excluding money market funds). Each purchase of Class A shares or Class M shares under a Statement of Intention will be made at the public offering price applicable at the time of such purchase to a single transaction of the total dollar amount indicated in the Statement. A Statement of Intention may include purchases of shares made not more than 90 days prior to the date that an investor signs a Statement; however, the 13-month period during which the Statement is in effect will begin on the date of the earliest purchase to be included. An investor may receive a credit toward the amount indicated in the Statement equal to the maximum public offering price as of the close of business on the previous day of all shares he or she owns on the date of the Statement which are eligible for purchase under a Statement (plus any shares of money market funds acquired by exchange of such eligible shares). Investors do not receive credit for shares purchased by the reinvestment of distributions. Investors qualifying for the "combined purchase privilege" (see above) may purchase shares under a single Statement of Intention. The Statement of Intention is not a binding obligation upon the investor to purchase the full amount indicated. The minimum initial investment under a Statement of Intention is 5% of such amount, and must be invested immediately. Class A shares or Class M shares purchased with the first 5% of such amount will be held in escrow to secure payment of the higher sales charge applicable to the shares actually purchased if the full amount indicated is not purchased. When the full amount indicated has been purchased, the escrow will be released. If an investor desires to redeem escrowed shares before the full amount has been purchased, the shares will be released from escrow only if the investor pays the sales charge that, without regard to the Statement of Intention, would apply to the total investment made to date. To the extent that an investor purchases more than the dollar amount indicated on the Statement of Intention and qualifies for a further reduced sales charge, the sales charge will be adjusted for the entire amount purchased at the end of the 13-month period, upon recovery from the investor's dealer of its portion of the sales charge adjustment. Once received from the dealer, which may take a period of time or may never occur, the sales charge adjustment will be used to purchase additional shares at the then current offering price applicable to the actual amount of the aggregate purchases. These additional shares will not be considered as part of the total investment for the purpose of determining the applicable sales charge pursuant to the Statement of Intention. No sales charge adjustment will be made unless and until the investor's dealer returns any excess commissions previously received. To the extent that an investor purchases less than the dollar amount indicated on the Statement of Intention within the 13- month period, the sales charge will be adjusted upward for the entire amount purchased at the end of the 13-month period. This adjustment will be made by redeeming shares from the account to cover the additional sales charge, the proceeds of which will be paid to the investor's dealer and Putnam Mutual Funds in accordance with the Prospectus. If the account exceeds an amount that would otherwise qualify for a reduced sales charge, that reduced sales charge will be applied. Statements of Intention are not available for certain employee benefit plans. Statement of Intention forms may be obtained from Putnam Mutual Funds or from investment dealers. Interested investors should read the Statement of Intention carefully. REDUCED SALES CHARGE FOR GROUP PURCHASES OF CLASS A SHARES. Members of qualified groups may purchase Class A shares of the Fund at a group sales charge rate of 4.5% of the public offering price (4.71% of the net amount invested). The dealer discount on such sales is 3.75% of the offering price. To receive the group rate, group members must purchase Class A shares through a single investment dealer designated by the group. The designated dealer must transmit each member's initial purchase to Putnam Mutual Funds, together with payment and completed application forms. After the initial purchase, a member may send funds for the purchase of Class A shares directly to Putnam Investor Services. Purchases of Class A shares are made at the public offering price based on the net asset value next determined after Putnam Mutual Funds or Putnam Investor Services receives payment for the shares. The minimum investment requirements described above apply to purchases by any group member. Only Class A shares are included in calculating the purchased amount. Qualified groups include the employees of a corporation or a sole proprietorship, members and employees of a partnership or association, or other organized groups of persons (the members of which may include other qualified groups) provided that: (i) the group has at least 25 members of which at least 10 members participate in the initial purchase; (ii) the group has been in existence for at least six months; (iii) the group has some purpose in addition to the purchase of investment company shares at a reduced sales charge; (iv) the group's sole organizational nexus or connection is not that the members are credit card holders of a company, policy holders of an insurance company, customers of a bank or broker-dealer, clients of an investment adviser or security holders of a company; (v) the group agrees to provide its designated investment dealer access to the group's membership by means of written communication or direct presentation to the membership at a meeting on not less frequently than an annual basis; (vi) the group or its investment dealer will provide annual certification in form satisfactory to Putnam Investor Services that the group then has at least 25 members and that at least ten members participated in group purchases during the immediately preceding 12 calendar months; and (vii) the group or its investment dealer will provide periodic certification in form satisfactory to Putnam Investor Services as to the eligibility of the purchasing members of the group. Members of a qualified group include: (i) any group which meets the requirements stated above and which is a constituent member of a qualified group; (ii) any individual purchasing for his or her own account who is carried on the records of the group or on the records of any constituent member of the group as being a good standing employee, partner, member or person of like status of the group or constituent member; or (iii) any fiduciary purchasing shares for the account of a member of a qualified group or a member's beneficiary. For example, a qualified group could consist of a trade association which would have as its members individuals, sole proprietors, partnerships and corporations. The members of the group would then consist of the individuals, the sole proprietors and their employees, the members of the partnerships and their employees, and the corporations and their employees, as well as the trustees of employee benefit trusts acquiring Class A shares for the benefit of any of the foregoing. A member of a qualified group may, depending upon the value of Class A shares of the Fund owned or proposed to be purchased by the member, be entitled to purchase Class A shares of the Fund at non-group sales charge rates shown in the Prospectus which may be lower than the group sales charge rate, if the member qualifies as a person entitled to reduced non-group sales charges. Such a group member will be entitled to purchase at the lower rate if, at the time of purchase, the member or his or her investment dealer furnishes sufficient information for Putnam Mutual Funds or Putnam Investor Services to verify that the purchase qualifies for the lower rate. Interested groups should contact their investment dealer or Putnam Mutual Funds. The Fund reserves the right to revise the terms of or to suspend or discontinue group sales at any time. EMPLOYEE BENEFIT PLANS; INDIVIDUAL ACCOUNT PLANS. The term "employee benefit plan" means any plan or arrangement, whether or not tax-qualified, which provides for the purchase of Class A shares. The term "affiliated employer" means employers who are affiliated with each other within the meaning of Section 2(a)(3)(C) of the Investment Company Act of 1940. The term "individual account plan" means any employee benefit plan whereby (i) Class A shares are purchased through payroll deductions or otherwise by a fiduciary or other person for the account of participants who are employees (or their spouses) of an employer, or of affiliated employers, and (ii) a separate Investing Account is maintained in the name of such fiduciary or other person for the account of each participant in the plan. The table of sales charges in the Prospectus applies to sales to employee benefit plans, except that the Fund may sell Class A shares at net asset value to employee benefit plans, including individual account plans, of employers or of affiliated employers which have at least 750 employees to whom such plan is made available, in connection with a payroll deduction system of plan funding (or other system acceptable to Putnam Investor Services) by which contributions or account information for plan participation are transmitted to Putnam Investor Services by methods acceptable to Putnam Investor Services. The Fund may also sell Class A shares at net asset value to employee benefit plans of employers or of affiliated employers which have at least 750 employees, if such plans are qualified under Section 401 of the Internal Revenue Code. Additional information about employee benefit plans and individual account plans is available from investment dealers or from Putnam Mutual Funds. CONTINGENT DEFERRED SALES CHARGES CLASS A SHARES. Class A shares purchased at net asset value by shareholders investing $1 million or more, including purchases pursuant to any Combined Purchase Privilege, Right of Accumulation or Statement of Intention, are subject to a CDSC of 1.00% or 0.50%, respectively, if redeemed within the first or second year after purchase. The Class A CDSC is imposed on the lower of the cost and the current net asset value of the shares redeemed. The CDSC does not apply to shares sold without a sales charge through participant-directed qualified retirement plans and shares purchased by certain investors investing $1 million or more that have made arrangements with Putnam Mutual Funds and whose dealer of record waived the commission described in the next paragraph. Except as stated below, Putnam Mutual Funds pays investment dealers of record commissions on sales of Class A shares of $1 million or more based on an investor's cumulative purchases of such shares, including purchases pursuant to any Combined Purchase Privilege, Right of Accumulation or Statement of Intention, during the one-year period beginning with the date of the initial purchase at net asset value and each subsequent one- year period beginning with the first net asset value purchase following the end of the prior period. Such commissions are paid at the rate of 1.00% of the amount under $3 million, 0.50% of the next $47 million and 0.25% thereafter. On sales at net asset value to a participant-directed qualified retirement plan initially investing less than $20 million in Putnam funds and other investments managed by Putnam Management or its affiliates (including a plan sponsored by an employer with more than 750 employees), Putnam Mutual Funds pays commissions on cumulative purchases during the life of the account at the rate of 1.00% of the amount under $3 million and 0.50% thereafter. On sales at net asset value to all other participant-directed qualified retirement plans, Putnam Mutual Funds pays commissions on the initial investment and on subsequent net quarterly sales (gross sales minus gross redemptions during the quarter) at the rate of 0.15%. Money market fund shares are excluded from all commission calculations, except for determining the amount initially invested by a participant-directed qualified retirement plan. Commissions on sales at net asset value to such plans are subject to Putnam Mutual Funds' right to reclaim such commissions if the shares are redeemed within two years. Different CDSC and commission rates may apply to shares purchased before April 1, 1994. CLASS B AND CLASS C SHARES. Investors who set up an Automatic Cash Withdrawal Plan (ACWP) for a Class B and Class C share account (see "Plans Available To Shareholders -- Automatic Cash Withdrawal Plan") may withdraw through the ACWP up to 12% of the net asset value of the account (calculated as set forth below) each year without incurring any CDSC. Shares not subject to a CDSC (such as shares representing reinvestment of distributions) will be redeemed first and will count toward the 12% limitation. If there are insufficient shares not subject to a CDSC, shares subject to the lowest CDSC liability will be redeemed next until the 12% limit is reached. The 12% figure is calculated on a pro rata basis at the time of the first payment made pursuant to a ACWP and recalculated thereafter on a pro rata basis at the time of each ACWP payment. Therefore, shareholders who have chosen a ACWP based on a percentage of the net asset value of their account of up to 12% will be able to receive ACWP payments without incurring a CDSC. However, shareholders who have chosen a specific dollar amount (for example, $100 per month from a fund that pays income distributions monthly) for their periodic ACWP payment should be aware that the amount of that payment not subject to a CDSC may vary over time depending on the net asset value of their account. For example, if the net asset value of the account is $10,000 at the time of payment, the shareholder will receive $100 free of the CDSC (12% of $10,000 divided by 12 monthly payments). However, if at the time of the next payment the net asset value of the account has fallen to $9,400, the shareholder will receive $94 free of any CDSC (12% of $9,400 divided by 12 monthly payments) and $6 subject to the lowest applicable CDSC. This ACWP privilege may be revised or terminated at any time. ALL SHARES. No CDSC is imposed on shares of any class subject to a CDSC ("CDSC Shares") to the extent that the CDSC Shares redeemed (i) are no longer subject to the holding period therefor, (ii) resulted from reinvestment of distributions on CDSC Shares, or (iii) were exchanged for shares of another Putnam fund, provided that the shares acquired in such exchange or subsequent exchanges (including shares of a Putnam money market fund) will continue to remain subject to the CDSC, if applicable, until the applicable holding period expires. In determining whether the CDSC applies to each redemption of CDSC Shares, CDSC Shares not subject to a CDSC are redeemed first. The Fund will waive any CDSC on redemptions, in the case of individual or Uniform Transfers to Minors Act accounts, in case of death or disability or for the purpose of paying benefits pursuant to tax-qualified retirement plans. Such payments currently include, without limitation, (1) distributions from an IRA due to death or disability, (2) a return of excess contributions to an IRA or 401(k) plan, and (3) distributions from retirement plans qualified under section 401(a) or section 403(b)(7) (a "403(b) plan") of the Internal Revenue Code of 1986, as amended (the "Code"), due to death, disability, retirement or separation from service. The Fund will also waive any CDSC in the case of the death of one joint tenant. These waivers may be changed at any time. Additional waivers may apply to IRA accounts opened prior to February 1, 1994. DISTRIBUTION PLAN If the Fund or a class of shares of the Fund has adopted a Distribution Plan, the Prospectus describes the principal features of the Plan. This Statement contains additional information which may be of interest to investors. Continuance of a Plan is subject to annual approval by a vote of the Trustees, including a majority of the Trustees who are not interested persons of the Fund and who have no direct or indirect interest in the Plan or related arrangements (the "Qualified Trustees"), cast in person at a meeting called for that purpose. All material amendments to a Plan must be likewise approved by the Trustees and the Qualified Trustees. No Plan may be amended in order to increase materially the costs which the Fund may bear for distribution pursuant to such Plan without also being approved by a majority of the outstanding voting securities of the Fund or the relevant class of the Fund, as the case may be. A Plan terminates automatically in the event of its assignment and may be terminated without penalty, at any time, by a vote of a majority of the Qualified Trustees or by a vote of a majority of the outstanding voting securities of the Fund or the relevant class of the Fund, as the case may be. If Plan payments are made to reimburse Putnam Mutual Funds for payments to dealers based on the average net asset value of Fund shares attributable to shareholders for whom the dealers are designated as the dealer of record, "average net asset value" attributable to a shareholder account means the product of (i) the Fund's average daily share balance of the account and (ii) the Fund's average daily net asset value per share (or the average daily net asset value per share of the class, if applicable). For administrative reasons, Putnam Mutual Funds may enter into agreements with certain dealers providing for the calculation of "average net asset value" on the basis of assets of the accounts of the dealer's customers on an established day in each quarter. Financial institutions receiving payments from Putnam Mutual Funds as described above may be required to comply with various state and federal regulatory requirements, including among others those regulating the activities of securities brokers or dealers. INVESTOR SERVICES SHAREHOLDER INFORMATION Each time shareholders buy or sell shares, they will receive a statement confirming the transaction and listing their current share balance. (Under certain investment plans, a statement may only be sent quarterly.) Shareholders will receive a statement confirming reinvestment of distributions in additional Fund shares (or in shares of other Putnam funds for Dividends Plus accounts) promptly following the quarter in which the reinvestment occurs. To help shareholders take full advantage of their Putnam investment, they will receive a Welcome Kit and a periodic publication covering many topics of interest to investors. The Fund also sends annual and semiannual reports that keep shareholders informed about its portfolio and performance, and year-end tax information to simplify their recordkeeping. Easy-to-read, free booklets on special subjects such as the Exchange Privilege and IRAs are available from Putnam Investor Services. Shareholders may call Putnam Investor Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m. and 7:00 p.m. Boston time for more information, including account balances. YOUR INVESTING ACCOUNT The following information provides more detail concerning the operation of a Putnam Investing Account. For further information or assistance, investors should consult Putnam Investor Services. Shareholders who purchase shares through a defined contribution plan should note that not all of the services or features described below may be available to them, and they should contact their employer for details. A shareholder may reinvest a recent cash distribution without a front-end sales charge or without the reinvested shares being subject to a CDSC, as the case may be, by delivering to Putnam Investor Services the uncashed distribution check, endorsed to the order of the Fund. Putnam Investor Services must receive the properly endorsed check within 30 days after the date of the check. Upon written notice to shareholders, the Fund may permit shareholders who receive cash distributions to reinvest amounts representing returns of capital without a sales charge or without being subject to the CDSC. The Investing Account also provides a way to accumulate shares of the Fund. In most cases, after an initial investment of $500, a shareholder may send checks to Putnam Investor Services for $50 or more, made payable to the Fund, to purchase additional shares at the applicable public offering price next determined after Putnam Investor Services receives the check. For Putnam Preferred Income Fund, the minimum initial investment is $25,000 and the minimum subsequent investment is $5,000. Checks must be drawn on a U.S. bank and must be payable in U.S. dollars. Putnam Investor Services acts as the shareholder's agent whenever it receives instructions to carry out a transaction on the shareholder's account. Upon receipt of instructions that shares are to be purchased for a shareholder's account, shares will be purchased through the investment dealer designated by the shareholder. Shareholders may change investment dealers at any time by written notice to Putnam Investor Services, provided the new dealer has a sales agreement with Putnam Mutual Funds. Shares credited to an account are transferable upon written instructions in good order to Putnam Investor Services and may be sold to the Fund as described under "How to buy shares, sell shares and exchange shares" in the Prospectus. Money market funds and certain other funds will not issue share certificates. A shareholder may send any certificates which have been previously issued to Putnam Investor Services for safekeeping at no charge to the shareholder. Putnam Mutual Funds, at its expense, may provide certain additional reports and administrative material to qualifying institutional investors with fiduciary responsibilities to assist these investors in discharging their responsibilities. Institutions seeking further information about this service should contact Putnam Mutual Funds, which may modify or terminate this service at any time. Putnam Investor Services may make special services available to shareholders with investments exceeding $1,000,000. Contact Putnam Investor Services for details. The Fund pays Putnam Investor Services' fees for maintaining Investing Accounts. REINSTATEMENT PRIVILEGE An investor who has redeemed shares to the Fund may reinvest (within 1 year) the proceeds of such sale in shares of the same class of the Fund, or may be able to reinvest (within 1 year) the proceeds in shares of the same class of one of the other continuously offered Putnam funds (through the Exchange Privilege described in the Prospectus), including, in the case of shares subject to a CDSC, the amount of CDSC charged on the redemption. Any such reinvestment would be at the net asset value of the shares of the fund(s) the investor selects, next determined after Putnam Mutual Funds receives a Reinstatement Authorization. The time that the previous investment was held will be included in determining any applicable CDSC due upon redemptions and, in the case of Class B shares, the eight-year period for conversion to Class A shares. Shareholders will receive from Putnam Mutual Funds the amount of any CDSC paid at the time of redemption as part of the reinstated investment, which may be treated as capital gains to the shareholder for tax purposes. Exercise of the Reinstatement Privilege does not alter the federal income tax treatment of any capital gains realized on a sale of Fund shares, but to the extent that any shares are sold at a loss and the proceeds are reinvested in shares of the Fund, some or all of the loss may be disallowed as a deduction. Consult your tax adviser. Investors who desire to exercise this Privilege should contact their investment dealer or Putnam Investor Services. EXCHANGE PRIVILEGE Except as otherwise set forth in this section, by calling Putnam Investor Services, investors may exchange shares valued up to $500,000 between accounts with identical registrations, provided that no certificates are outstanding for such shares and no address change has been made within the preceding 15 days. During periods of unusual market changes and shareholder activity, shareholders may experience delays in contacting Putnam Investor Services by telephone to exercise the Telephone Exchange Privilege. Putnam Investor Services also makes exchanges promptly after receiving a properly completed Exchange Authorization Form and, if issued, share certificates. If the shareholder is a corporation, partnership, agent, or surviving joint owner, Putnam Investor Services will require additional documentation of a customary nature. Because an exchange of shares involves the redemption of Fund shares and reinvestment of the proceeds in shares of another Putnam fund, completion of an exchange may be delayed under unusual circumstances if the Fund were to suspend redemptions or postpone payment for the Fund shares being exchanged, in accordance with federal securities laws. Exchange Authorization Forms and prospectuses of the other Putnam funds are available from Putnam Mutual Funds or investment dealers having sales contracts with Putnam Mutual Funds. The prospectus of each fund describes its investment objective(s) and policies, and shareholders should obtain a prospectus and consider these objectives and policies carefully before requesting an exchange. Shares of certain Putnam funds are not available to residents of all states. The Fund reserves the right to change or suspend the Exchange Privilege at any time. Shareholders would be notified of any change or suspension. Additional information is available from Putnam Investor Services. Shares of the Fund must be held at least 15 days by the shareholder requesting an exchange. There is no holding period if the shareholder acquired the shares to be exchanged through reinvestment of distributions, transfer from another shareholder, prior exchange or certain employer-sponsored defined contribution plans. In all cases, the shares to be exchanged must be registered on the records of the Fund in the name of the shareholder requesting the exchange. Shareholders of other Putnam funds may also exchange their shares at net asset value for shares of the Fund, as set forth in the current prospectus of each fund. For federal income tax purposes, an exchange is a sale on which the investor generally will realize a capital gain or loss depending on whether the net asset value at the time of the exchange is more or less than the investor's basis. The Exchange Privilege may be revised or terminated at any time. Shareholders would be notified of any such change or suspension. DIVIDENDS PLUS Shareholders may invest the Fund's distributions of net investment income or distributions combining net investment income and short-term capital gains in shares of the same class of another continuously offered Putnam fund (the "receiving fund") using the net asset value per share of the receiving fund determined on the date the Fund's distribution is payable. No sales charge or CDSC will apply to the purchased shares unless the Fund is a money market fund. The prospectus of each fund describes its investment objective(s) and policies, and shareholders should obtain a prospectus and consider these objective(s) and policies carefully before investing their distributions in the receiving fund. Shares of certain Putnam funds are not available to residents of all states. The minimum account size requirement for the receiving fund will not apply if the current value of your account in this Fund is more than $5,000. Shareholders of other Putnam funds (except for money market funds, whose shareholders must pay a sales charge or become subject to a CDSC) may also use their distributions to purchase shares of the Fund at net asset value. For federal tax purposes, distributions from the Fund which are reinvested in another fund are treated as paid by the Fund to the shareholder and invested by the shareholder in the receiving fund and thus, to the extent comprised of taxable income and deemed paid to a taxable shareholder, are taxable. The Dividends PLUS program may be revised or terminated at any time. PLANS AVAILABLE TO SHAREHOLDERS The Plans described below are fully voluntary and may be terminated at any time without the imposition by the Fund or Putnam Investor Services of any penalty. All Plans provide for automatic reinvestment of all distributions in additional shares of the Fund at net asset value. The Fund, Putnam Mutual Funds or Putnam Investor Services may modify or cease offering these Plans at any time. AUTOMATIC CASH WITHDRAWAL PLAN. An investor who owns or buys shares of the Fund valued at $10,000 or more at the current public offering price may open a Withdrawal Plan and have a designated sum of money ($50 or more) paid monthly, quarterly, semi-annually or annually to the investor or another person. (Payments from the Fund can be combined with payments from other Putnam funds into a single check through a Designated Payment Plan.) Shares are deposited in a Plan account, and all distributions are reinvested in additional shares of the Fund at net asset value (except where the Plan is utilized in connection with a charitable remainder trust). Shares in a Plan account are then redeemed at net asset value to make each withdrawal payment. Payment will be made to any person the investor designates; however, if shares are registered in the name of a trustee or other fiduciary, payment will be made only to the fiduciary, except in the case of a profit-sharing or pension plan where payment will be made to a designee. As withdrawal payments may include a return of principal, they cannot be considered a guaranteed annuity or actual yield of income to the investor. The redemption of shares in connection with a Withdrawal Plan generally will result in a gain or loss for tax purposes. Some or all of the losses realized upon redemption may be disallowed pursuant to the so-called wash sale rules if shares of the same fund from which shares were redeemed are purchased (including through the reinvestment of fund distributions) within a period beginning 30 days before, and ending 30 days after, such redemption. In such a case, the basis of the replacement shares will be increased to reflect the disallowed loss. Continued withdrawals in excess of income will reduce and possibly exhaust invested principal, especially in the event of a market decline. The maintenance of a Withdrawal Plan concurrently with purchases of additional shares of the Fund would be disadvantageous to the investor because of the sales charge payable on such purchases. For this reason, the minimum investment accepted while a Withdrawal Plan is in effect is $1,000, and an investor may not maintain a Plan for the accumulation of shares of the Fund (other than through reinvestment of distributions) and a Withdrawal Plan at the same time. The cost of administering these Plans for the benefit of those shareholders participating in them is borne by the Fund as an expense of all shareholders. The Fund, Putnam Mutual Funds or Putnam Investor Services may terminate or change the terms of the Withdrawal Plan at any time. A Withdrawal Plan will be terminated if communications mailed to the shareholder are returned as undeliverable. Investors should consider carefully with their own financial advisers whether the Plan and the specified amounts to be withdrawn are appropriate in their circumstances. The Fund and Putnam Investor Services make no recommendations or representations in this regard. TAX QUALIFIED RETIREMENT PLANS; 403(B) AND SEP PLANS. (NOT OFFERED BY FUNDS INVESTING PRIMARILY IN TAX-EXEMPT SECURITIES.) Investors may purchase shares of the Fund through the following Tax Qualified Retirement Plans, available to qualified individuals or organizations: Standard and variable profit-sharing (including 401(k)) and money purchase pension plans; and Individual Retirement Account Plans (IRAs). Each of these Plans has been qualified as a prototype plan by the Internal Revenue Service. Putnam Investor Services will furnish services under each plan at a specified annual cost. Putnam Fiduciary Trust Company serves as trustee under each of these Plans. Forms and further information on these Plans are available from investment dealers or from Putnam Mutual Funds. In addition, specialized professional plan administration services are available on an optional basis; contact Putnam Defined Contribution Plan Services at 1-800-225-2465, extension 8600. A 403(b) Retirement Plan is available for employees of public school systems and organizations which meet the requirements of Section 501(c)(3) of the Internal Revenue Code. Forms and further information on the 403(b) Plan are also available from investment dealers or from Putnam Mutual Funds. Shares of the Fund may also be used in simplified employee pension (SEP) plans. For further information on the Putnam prototype SEP plan, contact an investment dealer or Putnam Mutual Funds. Consultation with a competent financial and tax adviser regarding these Plans and consideration of the suitability of Fund shares as an investment under the Employee Retirement Income Security Act of 1974, or otherwise, is recommended. SIGNATURE GUARANTEES Redemption requests for shares having a net asset value of $100,000 or more must be signed by the registered owners or their legal representatives and must be guaranteed by a bank, broker/dealer, municipal securities dealer or broker, government securities dealer or broker, credit union, national securities exchange, registered securities association, clearing agency, savings association or trust company, provided such institution is acceptable under and conforms with Putnam Fiduciary Trust Company's signature guarantee procedures. A copy of such procedures is available upon request. If you want your redemption proceeds sent to an address other than your address as it appears on Putnam's records, you must provide a signature guarantee. Putnam Investor Services usually requires additional documentation for the sale of shares by a corporation, partnership, agent or fiduciary, or a surviving joint owner. Contact Putnam Investor Services for details. SUSPENSION OF REDEMPTIONS The Fund may not suspend shareholders' right of redemption, or postpone payment for more than seven days, unless the New York Stock Exchange is closed for other than customary weekends or holidays, or if permitted by the rules of the Securities and Exchange Commission during periods when trading on the Exchange is restricted or during any emergency which makes it impracticable for the Fund to dispose of its securities or to determine fairly the value of its net assets, or during any other period permitted by order of the Commission for protection of investors. SHAREHOLDER LIABILITY Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by the Fund or the Trustees. The Agreement and Declaration of Trust provides for indemnification out of Fund property for all loss and expense of any shareholder held personally liable for the obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations. The likelihood of such circumstances is remote. STANDARD PERFORMANCE MEASURES Yield and total return data for the Fund may from time to time be presented in Part I of this Statement and in advertisements. In the case of funds with more than one class of shares, all performance information is calculated separately for each class. The data is calculated as follows. Total return for one-, five- and ten-year periods (or for such shorter periods as the Fund has been in operation or shares of the relevant class have been outstanding) is determined by calculating the actual dollar amount of investment return on a $1,000 investment in the Fund made at the beginning of the period, at the maximum public offering price for Class A shares and Class M shares and net asset value for other classes of shares, and then calculating the annual compounded rate of return which would produce that amount. Total return for a period of one year is equal to the actual return of the Fund during that period. Total return calculations assume deduction of the Fund's maximum sales charge or CDSC, if applicable, and reinvestment of all Fund distributions at net asset value on their respective reinvestment dates. The Fund's yield is presented for a specified thirty-day period (the "base period"). Yield is based on the amount determined by (i) calculating the aggregate amount of dividends and interest earned by the Fund during the base period less expenses accrued for that period, and (ii) dividing that amount by the product of (A) the average daily number of shares of the Fund outstanding during the base period and entitled to receive dividends and (B) the per share maximum public offering price for Class A shares or Class M shares, as appropriate and net asset value for other classes of shares on the last day of the base period. The result is annualized on a compounding basis to determine the yield. For this calculation, interest earned on debt obligations held by the Fund is generally calculated using the yield to maturity (or first expected call date) of such obligations based on their market values (or, in the case of receivables-backed securities such as GNMA's, based on cost). Dividends on equity securities are accrued daily at their stated dividend rates. If the Fund is a money market fund, yield is computed by determining the percentage net change, excluding capital changes, in the value of an investment in one share over the seven-day period for which yield is presented (the "base period"), and multiplying the net change by 365/7 (or approximately 52 weeks). Effective yield represents a compounding of the yield by adding 1 to the number representing the percentage change in value of the investment during the base period, raising that sum to a power equal to 365/7, and subtracting 1 from the result. If the Fund is a tax-exempt fund, the tax-equivalent yield during the base period may be presented for shareholders in one or more stated tax brackets. Tax-equivalent yield is calculated by adjusting the tax-exempt yield by a factor designed to show the approximate yield that a taxable investment would have to earn to produce an after-tax yield equal, for that shareholder, to the tax-exempt yield. The tax-equivalent yield will differ for shareholders in other tax brackets. At times, Putnam Management may reduce its compensation or assume expenses of the Fund in order to reduce the Fund's expenses. The per share amount of any such fee reduction or assumption of expenses during the Fund's past ten fiscal years (or for the life of the Fund, if shorter) is reflected in the table in the section entitled "Financial history" in the Prospectus. Any such fee reduction or assumption of expenses would increase the Fund's yield and total return during the period of the fee reduction or assumption of expenses. All data are based on past performance and do not predict future results. COMPARISON OF PORTFOLIO PERFORMANCE Independent statistical agencies measure the Fund's investment performance and publish comparative information showing how the Fund, and other investment companies, performed in specified time periods. Three agencies whose reports are commonly used for such comparisons are set forth below. From time to time, the Fund may distribute these comparisons to its shareholders or to potential investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED ON THEIR OWN CRITERIA RATHER THAN ON THE STANDARDIZED PERFORMANCE MEASURES DESCRIBED IN THE PRECEDING SECTION. LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund rankings monthly. The rankings are based on total return performance calculated by Lipper, reflecting generally changes in net asset value adjusted for reinvestment of capital gains and income dividends. They do not reflect deduction of any sales charges. Lipper rankings cover a variety of performance periods, for example year-to-date, 1-year, 5-year, and 10-year performance. Lipper classifies mutual funds by investment objective and asset category. MORNINGSTAR, INC. distributes mutual fund ratings twice a month. The ratings are divided into five groups: highest, above average, neutral, below average and lowest. They represent a fund's historical risk/reward ratio relative to other funds with similar objectives. The performance factor is a weighted-average assessment of the Fund's 3-year, 5-year, and 10-year total return performance (if available) reflecting deduction of expenses and sales charges. Performance is adjusted using quantitative techniques to reflect the risk profile of the fund. The ratings are derived from a purely quantitative system that does not utilize the subjective criteria customarily employed by rating agencies such as Standard & Poor's Corporation and Moody's Investor Service, Inc. CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual fund rankings and is distributed monthly. The rankings are based entirely on total return calculated by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year and 10-year. Mutual funds are ranked in general categories (e.g., international bond, international equity, municipal bond, and maximum capital gain). Weisenberger rankings do not reflect deduction of sales charges or fees. Independent publications may also evaluate the Fund's performance. Certain of those publications are listed below, at the request of Putnam Mutual Funds, which bears full responsibility for their use and the descriptions appearing below. From time to time the Fund may distribute evaluations by or excerpts from these publications to its shareholders or to potential investors. The following illustrates the types of information provided by these publications. BUSINESS WEEK publishes mutual fund rankings in its Investment Figures of the Week column. The rankings are based on 4-week and 52-week total return reflecting changes in net asset value and the reinvestment of all distributions. They do not reflect deduction of any sales charges. Funds are not categorized; they compete in a large universe of over 2000 funds. The source for rankings is data generated by Morningstar, Inc. INVESTOR'S BUSINESS DAILY publishes mutual fund rankings on a daily basis. The rankings are depicted as the top 25 funds in a given category. The categories are based loosely on the type of fund, e.g., growth funds, balanced funds, U.S. government funds, GNMA funds, growth and income funds, corporate bond funds, etc. Performance periods for sector equity funds can vary from 4 weeks to 39 weeks; performance periods for other fund groups vary from 1 year to 3 years. Total return performance reflects changes in net asset value and reinvestment of dividends and capital gains. The rankings are based strictly on total return. They do not reflect deduction of any sales charges. Performance grades are conferred from A+ to E. An A+ rating means that the fund has performed within the top 5% of a general universe of over 2000 funds; an A rating denotes the top 10%; an A- is given to the top 15%, etc. BARRON'S periodically publishes mutual fund rankings. The rankings are based on total return performance provided by Lipper Analytical Services. The Lipper total return data reflects changes in net asset value and reinvestment of distributions, but does not reflect deduction of any sales charges. The performance periods vary from short-term intervals (current quarter or year-to-date, for example) to long-term periods (five-year or ten-year performance, for example). Barron's classifies the funds using the Lipper mutual fund categories, such as Capital Appreciation Funds, Growth Funds, U.S. Government Funds, Equity Income Funds, Global Funds, etc. Occasionally, Barron's modifies the Lipper information by ranking the funds in asset classes. "Large funds" may be those with assets in excess of $25 million; "small funds" may be those with less than $25 million in assets. THE WALL STREET JOURNAL publishes its Mutual Fund Scorecard on a daily basis. Each Scorecard is a ranking of the top-15 funds in a given Lipper Analytical Services category. Lipper provides the rankings based on its total return data reflecting changes in net asset value and reinvestment of distributions and not reflecting any sales charges. The Scorecard portrays 4-week, year-to-date, one-year and 5-year performance; however, the ranking is based on the one-year results. The rankings for any given category appear approximately once per month. FORTUNE magazine periodically publishes mutual fund rankings that have been compiled for the magazine by Morningstar, Inc. Funds are placed in stock or bond fund categories (for example, aggressive growth stock funds, growth stock funds, small company stock funds, junk bond funds, Treasury bond funds, etc.), with the top-10 stock funds and the top-5 bond funds appearing in the rankings. The rankings are based on 3-year annualized total return reflecting changes in net asset value and reinvestment of distributions and not reflecting sales charges. Performance is adjusted using quantitative techniques to reflect the risk profile of the fund. MONEY magazine periodically publishes mutual fund rankings on a database of funds tracked for performance by Lipper Analytical Services. The funds are placed in 23 stock or bond fund categories and analyzed for five-year risk adjusted return. Total return reflects changes in net asset value and reinvestment of all dividends and capital gains distributions and does not reflect deduction of any sales charges. Grades are conferred (from A to E): the top 20% in each category receive an A, the next 20% a B, etc. To be ranked, a fund must be at least one year old, accept a minimum investment of $25,000 or less and have had assets of at least $25 million as of a given date. FINANCIAL WORLD publishes its monthly Independent Appraisals of Mutual Funds, a survey of approximately 1000 mutual funds. Funds are categorized as to type, e.g., balanced funds, corporate bond funds, global bond funds, growth and income funds, U.S. government bond funds, etc. To compete, funds must be over one year old, have over $1 million in assets, require a maximum of $10,000 initial investment, and should be available in at least 10 states in the United States. The funds receive a composite past performance rating, which weighs the intermediate- and long-term past performance of each fund versus its category, as well as taking into account its risk, reward to risk, and fees. An A+ rated fund is one of the best, while a D-rated fund is one of the worst. The source for Financial World rating is Schabacker investment management in Rockville, MD. FORBES magazine periodically publishes mutual fund ratings based on performance over at least two bull and bear market cycles. The funds are categorized by type, including stock and balanced funds, taxable bond funds, municipal bond funds, etc. Data sources include Lipper Analytical Services and CDA Investment Technologies. The ratings are based strictly on performance at net asset value over the given cycles. Funds performing in the top 5% receive an A+ rating; the top 15% receive an A rating; and so on until the bottom 5% receive an F rating. Each fund exhibits two ratings, one for performance in "up" markets and another for performance in "down" markets. KIPLINGER'S PERSONAL FINANCE MAGAZINE (formerly Changing Times), periodically publishes rankings of mutual funds based on one-, three- and five-year total return performance reflecting changes in net asset value and reinvestment of dividends and capital gains and not reflecting deduction of any sales charges. Funds are ranked by tenths: a rank of 1 means that a fund was among the highest 10% in total return for the period; a rank of 10 denotes the bottom 10%. Funds compete in categories of similar funds--aggressive growth funds, growth and income funds, sector funds, corporate bond funds, global governmental bond funds, mortgage-backed securities funds, etc. Kiplinger's also provides a risk-adjusted grade in both rising and falling markets. Funds are graded against others with the same objective. The average weekly total return over two years is calculated. Performance is adjusted using quantitative techniques to reflect the risk profile of the fund. U.S. NEWS AND WORLD REPORT periodically publishes mutual fund rankings based on an overall performance index (OPI) devised by Kanon Bloch Carre & Co., a Boston research firm. Over 2000 funds are tracked and divided into 10 equity, taxable bond and tax-free bond categories. Funds compete within the 10 groups and three broad categories. The OPI is a number from 0-100 that measures the relative performance of funds at least three years old over the last 1, 3, 5 and 10 years and the last six bear markets. Total return reflects changes in net asset value and the reinvestment of any dividends and capital gains distributions and does not reflect deduction of any sales charges. Results for the longer periods receive the most weight. THE 100 BEST MUTUAL FUNDS YOU CAN BUY (1992), authored by Gordon K. Williamson. The author's list of funds is divided into 12 equity and bond fund categories, and the 100 funds are determined by applying four criteria. First, equity funds whose current management teams have been in place for less than five years are eliminated. (The standard for bond funds is three years.) Second, the author excludes any fund that ranks in the bottom 20 percent of its category's risk level. Risk is determined by analyzing how many months over the past three years the fund has underperformed a bank CD or a U.S. Treasury bill. Third, a fund must have demonstrated strong results for current three-year and five-year performance. Fourth, the fund must either possess, in Mr. Williamson's judgment, "excellent" risk-adjusted return or "superior" return with low levels of risk. Each of the 100 funds is ranked in five categories: total return, risk/volatility, management, current income and expenses. The rankings follow a five-point system: zero designates "poor"; one point means "fair"; two points denote "good"; three points qualify as a "very good"; four points rank as "superior"; and five points mean "excellent." In addition, Putnam Mutual Funds may distribute to shareholders or prospective investors illustrations of the benefits of reinvesting tax-exempt or tax-deferred distributions over specified time periods, which may include comparisons to fully taxable distributions. These illustrations use hypothetical rates of tax-advantaged and taxable returns and are not intended to indicate the past or future performance of any fund. DEFINITIONS "Putnam Management" -- Putnam Investment Management, Inc., the Fund's investment manager. "Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the Fund's principal underwriter. "Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company, Company" the Fund's custodian. "Putnam Investor Services" -- Putnam Investor Services, a division of Putnam Fiduciary Trust Company, the Fund's investor servicing agent. PUTNAM ARIZONA TAX EXEMPT INCOME FUND ("ARIZONA") PUTNAM FLORIDA TAX EXEMPT INCOME FUND ("FLORIDA") PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND ("MASSACHSUETTS") PUTNAM MICHIGAN TAX EXEMPT INCOME FUND ("MICHIGAN") PUTNAM MINNESOTA TAX EXEMPT INCOME FUND ("MINNESOTA") PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND ("NEW JERSEY") PUTNAM OHIO TAX EXEMPT INCOME FUND ("OHIO") PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND ("PENNSYLVANIA") (collectively, the "funds") FORM N-1A PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) Index to Financial Statements and Supporting Schedule: (1) Financial Statements for the funds: Statement of assets and liabilities -- May 31, 1995 (a). Statement of operations -- year ended May 31, 1995 (a). Statement of changes in net assets -- years ended May 31, 1995 and May 31, 1994 for Massachusetts, Michigan, Minnesota and Ohio (a). Statement of changes in net assets -- period ended May 31, 1995 and year ended June 30, 1994 for Florida and New Jersey (a). Statement of changes in net assets -- period ended May 31, 1995 and year ended August 31, 1994 for Arizona (a). Statement of changes in net assets -- period ended May 31, 1995 and year ended February 28, 1995 for Pennsylvania (a). Financial highlights (a)(b). Notes to financial statements (a). (2) Supporting Schedules for the Funds: Schedule I -- Portfolio of investments owned -- May 31, 1995 (a) . Schedules through IX omitted because the required matter is not present. (a) Incorporated by reference into Parts A and B. (b) Included in Part A. ----------------------- (b) Exhibits: 1. Agreement and Declaration of Trust for Arizona --Incorporated by reference to the Registrant's Initial Registration Statement. Agreement and Declaration of Trust, dated June 27, 1990 for Florida -- Incorporated by reference to the Registrant's Initial Registration Statement. Agreement and Declaration of Trust, as amended September 15, 1995 for Massachusetts -- Exhibit 1. Agreements and Declarations of Trust, as amended September 15, 1995 for Michigan, Minnesota and Ohio -- Exhibit 2. Agreement and Declaration of Trust for New Jersey --Incorporated by reference to the Registrant's Initial Registration Statement. Agreement and Declaration of Trust dated April 1, 1989 for Pennsylvania -- Incorporated by reference to the Registrant's Initial Registration Statement. By-Laws as amended through February 1, 1994 for Arizona -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. By-Laws as amended through February 1, 1994 for Florida -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. By-Laws as amended through February 1, 1994 for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. By-Laws as amended through February 1, 1994 for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. 2. By-Laws as amended through February 1, 1994 for Massachusetts , Michigan , Minnesota and Ohio -- Incorporated by reference to Post- Effective Amendment No. 14 to the Registrants' Registration Statement. 3. Not applicable. 4a. Class A Specimen share certificate for Arizona -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Class A Specimen share certificate for Florida -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Class A Specimen share certificate for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Class A Specimen share certificate for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. Class A Specimen share certificates for Massachusetts, Michigan, Minnesota and Ohio - - Incorporated by reference to Post-Effective Amendment No. 13 to the Registrants' Registration Statement. 4b. Class B Specimen share certificate for Arizona --Incorporated by reference to Post- Effective Amendment No. 4 to the Registrant's Registration Statement. Class B Specimen share certificate for Florida --Incorporated by reference to Post- Effective Amendment No. 3 to the Registrant's Registration Statement. Class B Specimen share certificate for New Jersey --Incorporated by reference to Post- Effective Amendment No. 3 to the Registrant's Registration Statement. Class B Specimen share certificate for Pennsylvania --Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. 4c. Class B Specimen share certificates for Massachusetts , Michigan, Minnesota and Ohio --Incorporated by reference to Post- Effective Amendment No. 13 to the Registrants' Registration Statement. 4d. Class M Specimen share certificates for Florida, Massachusetts, Michigan , Minnesota, New Jersey, and Ohio funds -- Exhibit 3. 4e . Portions of Agreement and Declaration of Trust relating to shareholder rights for Arizona -- Incorporated by reference to Post- Effective Amendment No. 4 to the Registrant's Registration Statement. Portions of Agreement and Declaration of Trust relating to shareholder rights for Florida -- Incorporated by reference to Post- Effective Amendment No. 4 to the Registrant's Registration Statement. Portions of Agreement and Declaration of Trust relating to shareholder rights for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Portions of Agreement and Declaration of Trust relating to shareholder rights for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. Portions of Agreements and Declarations of Trust relating to shareholder rights for Massachusetts , Michigan , Minnesota and Ohio -- Incorporated by reference to Post- Effective Amendment No. 13 to the Registrants' Registration Statement. 4f. Portions of Bylaws relating to shareholder rights for Arizona -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. Portions of Bylaws relating to shareholder rights for Florida -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. Portions of Bylaws relating to shareholder rights for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. Portions of Bylaws relating to shareholder rights for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. Portions of Bylaws relating to shareholder rights for Massachusetts , Michigan , Minnesota and Ohio -- Incorporated by reference to Post-Effective Amendment No. 14 to the Registrants' Registration Statement. 5. Management Contract for Arizona dated March 5, 1992 -- Incorporated by reference to Post- Effective Amendment No. 3 to the Registrant's Registration Statement. Management Contract for Florida dated December 5, 1991 -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Management Contract for New Jersey dated June 6, 1991 -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement. Management Contract for Pennsylvania dated June 6, 1991 -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrants' Registration Statement. Management Contracts dated July 11, 1991 with respect to Massachusetts, Michigan, Minnesota and Ohio -- Incorporated by reference to Post-Effective Amendment No. 10 to the Registrants' Registration Statement. 6a. Distributor's Contract for dated May 6, 1994 for Arizona -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. Distributor's Contract for dated May 6, 1994 for Florida -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. Distributor's Contract for dated May 6, 1994 for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. Distributor's Contract for dated May 6, 1994 for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement. Distributor's Contracts for dated May 6, 1994 for Massachusetts, Michigan, Minnesota and Ohio -- Incorporated by reference to Post- Effective Amendment No. 14 to the Registrants' Registration Statement. 6b. Form of Specimen Dealer Sales Contract for Arizona -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Form of Specimen Dealer Sales Contract for Florida -- Incorporated by reference to Post- Effective Amendment No. 2 to the Registrant's Registration Statement. Form of Specimen Dealer Sales Contract for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement. Form of Specimen Dealer Sales Contract for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. Form of Specimen Dealer Sales Contract for Massachusetts, Michigan, Minnesota and Ohio -- Incorporated by reference to Post- Effective Amendment No. 13 to the Registrants' Registration Statement. 6c. Form of Specimen Financial Institution Sales Contract for Arizona -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Form of Specimen Financial Institution Sales Contract for Florida -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement. Form of Specimen Financial Institution Sales Contract for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement. Form of Specimen Financial Institution Sales Contract for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. Form of Specimen Financial Institution Sales Contract for Massachusetts, Michigan, Minnesota and Ohio -- Incorporated by reference to Post-Effective Amendment No. 13 to the Registrants' Registration Statement. 7. Not applicable. 8. Custodian Agreement dated May 3, 1991 as amended July 13, 1992 for Arizona --Incorporated by reference to Post- Effective Amendment No. 4 to the Registrant's Registration Statement. Custodian Agreement dated May 3, 1991, as amended July 13, 1992 for Florida -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement. Custodian Agreement dated May 3, 1991 as amended July 13, 1992 for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Custodian Agreement dated May 3, 1991 as amended July 13, 1992 for Penssylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. Custodian Agreement dated May 3, 1991 as amended July 13, 1992 for Massachusetts, Michigan, Minnesota and Ohio --Incorporated by reference to Post-Effective Amendment No. 14 to the Registrants' Registration Statement. 9. Investor Servicing Agreement dated June 3, 1991 for Arizona -- Incorporated by reference to Post-Effective Amendment No. 1 to the Registrant's Registration Statement. Investor Servicing Agreement dated June 3, 1991 for Florida -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement. Investor Servicing Agreement dated June 3, 1991 for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement. Investor Servicing Agreement dated June 3, 1991 for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Investor Servicing Agreement dated June 3, 1991 for Massachusetts , Michigan , Minnesota and Ohio -- Incorporated by reference to Post-Effective Amendment No. 10 to the Registrants' Registration Statement. 10. Opinion of Ropes & Gray, including consent for Arizona -- Exhibit 4. Opinion of Ropes & Gray, including consent for Florida -- Exhibit 5. Opinion of Ropes & Gray, including consent for New Jersey -- Exhibit 6. Opinion of Ropes & Gray, including consent for Pennsylvania -- Incorporated by reference to Pre -Effective Amendment No. 1 to the Registrants' Registration Statement. Opinions of Ropes & Gray, including consents for Massachusetts and Ohio -- Incorporated by reference to Post-Effective Amendment 10 to the Registrants' Registration Statement. Opinions of Ropes & Gray, including consents for Michigan and Minnesota -- Incorporated by reference to the Registrants' Initial Registration Statement. 11. Not applicable. 12. Not applicable. 13. Investment Letters from Putnam Investments, Inc. dated March 31, 1995 to Massachusetts , Michigan, Minnesota and Ohio for Class M shares -- Exhibit 7. Investment Letters from Putnam Investments, Inc. dated April 30, 1995 to Florida and New Jersey for Class M shares -- Exhibit 8. 14. Not applicable. 15a. Class A Distribution Plan and Agreement dated March 5 , 1992, as amended July 15, 1993 for Arizona -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Class A Distribution Plan and Agreement dated July 8, 1993 for Florida -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Class A Distribution Plan and Agreement dated July 9, 1993, as amended July 15, 1993 for Massachusetts -- Incorporated by reference to Post-Effective Amendment No. 13 to the Registrant's Registration Statement. Class A Distribution Plans dated May 7, 1992, as amended July 15, 1993 for Michigan , Minnesota and Ohio -- Incorporated by reference to Post-Effective Amendment No. 13 to the Registrants' Registration Statement. Class A Distribution Plan and Agreement dated September 10 , 1992, as amended January 1, 1993 for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Class A Distribution Plan and Agreement dated July 8, 1993 for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. 15b. Class B Distribution Plan and Agreement dated July 15, 1993 for Arizona -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Class B Distribution Plan dated July 8, 1993 for Florida -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Class B Distribution Plan dated Janaury 1, 1993 for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement. Class B Distribution Plan and Agreement dated July 15, 1993 for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement. Class B Distribution Plans and Agreements dated July 14, 1993 for Massachusetts, Michigan Minnesota and Ohio -- Incorporated by reference to Post-Effective Amendment No. 13 to the Registrants' Registration Statement. 15c. Class M Distribution Plan dated April 28, 1995 for Florida -- Exhibit 9. Class M Distribution Plan and Agreement dated April 28, 1995 for New Jersey -- Exhibit 10. Class M Distribution Plan and Agreement dated March 31, 1995 for Massachusetts -- Exhibit 11. Class M Distribution Plan and Agreement dated March 31, 1995 for Michigan -- Exhibit 12. Class M Distribution Plan and Agreement dated March 31, 1995 for Minnesota -- Exhibit 13. Class M Distribution Plan and Agreement dated March 31, 1995 for Ohio -- Exhibit 14. 15d. Form of Specimen Dealer Service Agreement for Arizona -- Incorporated by reference to Post- Effective Amendment No. 5 to the Registrant's Registration Statement. Form of Specimen Dealer Service Agreement for Florida -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Form of Specimen Dealer Service Agreement for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Form of Specimen Dealer Service Agreement for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement. Form of Specimen Dealer Service Agreement for Massachusetts, Michigan, Minnesota and Ohio -- Incorporated by reference to Post- Effective Amendment No. 13 to the Registrants' Registration Statement. 15e.Form of Specimen Financial Institution Service Agreement for Arizona --Incorporated by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement. Form of Specimen Financial Institution Service Agreement for Florida -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Form of Specimen Financial Institution Service Agreement for New Jersey -- Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement. Form of Specimen Financial Institution Service Agreement for Pennsylvania -- Incorporated by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement. Form of Specimen Financial Institution Service Agreement for Massachusetts, Michigan, Minnesota and Ohio -- Incorporated by reference to Post-Effective Amendment No. 13 to the Registrant's Registration Statement. 16. Schedules for computation of performance quotations for Arizona -- Exhibit 15 . Schedules for computation of performance quotations for Florida -- Exhibit 16 . Schedules for computation of performance quotations for Massachusetts -- Exhibit 17 . Schedules for computation of performance quotations for Michigan -- Exhibit 18. Schedules for computation of performance quotations for Minnesota -- Exhibit 19. Schedules for computation of performance quotations for New Jersey -- Exhibit 20. Schedules for computation of performance quotations for Ohio -- Exhibit 21. Schedules for computation of performance quotations for Pennsylvania -- Exhibit 22. 17a. Financial Data Schedules for Class A shares for Arizona -- Exhibit 23 . Financial Data Schedules for Class A shares for Florida -- Exhibit 24 . Financial Data Schedules for Class A shares for Massachusetts -- Exhibit 25 . Financial Data Schedules for Class A shares for Michigan --Exhibit 26 . Financial Data Schedules for Class A shares for Minnesota -- Exhibit 27 . Financial Data Schedules for Class A shares for New Jersey -- Exhibit 28 . Financial Data Schedules for Class A shares for Ohio -- Exhibit 29 . Financial Data Schedules for Class A shares for Pennsylvania -- Exhibit 30. 17b. Financial Data Schedules for Class B shares for Arizona -- Exhibit 31. Financial Data Schedules for Class B shares for Florida -- Exhibit 32. Financial Data Schedules for Class B shares for Massachusetts -- Exhibit 33. Financial Data Schedules for Class B shares for Michigan --Exhibit 34. Financial Data Schedules for Class B shares for Minnesota -- Exhibit 35. Financial Data Schedules for Class B shares for New Jersey -- Exhibit 36. Financial Data Schedules for Class B shares for Ohio -- Exhibit 37. Financial Data Schedules for Class B shares for Pennslyvania --Exhibit 38. 17c. Financial Data Schedules for Class M shares for Florida -- Exhibit 39. Financial Data Schedules for Class M shares for Massachusetts -- Exhibit 40. Financial Data Schedules for Class M shares for Michigan -- Exhibit 41. Financial Data Schedules for Class M shares for Minnesota --Exhibit 42. 17e. Financial Data Schedules for Class M shares for New Jersey -- Exhibit 43. Financial Data Schedules for Class M shares for Ohio -- Exhibit 44. 18. Rule 18f-3 Plan -- Exhibit 45 . ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANTS None. ITEM 26. NUMBER OF HOLDERS OF SECURITIES As of August 31, 1995 the number of shareholders of each Registrant's shares of beneficial interest were as follows: FUND NAME CLASS A CLASS B CLASS M Arizona 3,236 615 2 Florida 5,126 1,178 1 Massachusetts 6,535 1,588 8 Michigan 4,344 850 5 Minnesota 3,743 1,185 2 New Jersey 6,715 1,921 5 Ohio 6,197 1,206 4 Pennsylvania 5,313 1,964 6 ITEM 27. INDEMNIFICATION The information required by this item is incorporated by reference to each Registrant's initial Registration Statement on Form N-1A under the Investment Company Act of 1940 File No. 811-4531, 811-6129, 811-4518, 811-4529, 811-4527 , 811-5977, 811-4528 and 811-5802 for the Arizona, Florida, Massachusetts, Michigan, Minnesota , New Jersey, Ohio and Pennslyvania Funds, respectively. Item 28. Business and Other Connections of Investment Adviser Except as set forth below, the directors and officers of the Registrant's investment adviser have been engaged during the past two fiscal years in no business, vocation or employment of a substantial nature other than as directors or officers of the investment adviser or certain of its corporate affiliates. Certain officers of the investment adviser serve as officers of some or all of the Putnam funds. The address of the investment adviser, its corporate affiliates and the Putnam Funds is One Post Office Square, Boston, Massachusetts 02109. NAME NON-PUTNAM BUSINESS AND OTHER CONNECTIONS Gail S. Attridge Prior to November, 1993, International Vice President Analyst, Keystone Custodian Funds, 200 Berkeley Street, Boston, MA 02116 James D. Babcock Prior to June, 1994, Interest Assistant Vice President Supervisor, Salomon Brothers, Inc. 7 World Trade Center, New York, NY 10048 Robert K. Baumbach Prior to August, 1994, Vice President Vice President and Analyst, Keystone Custodian Funds, 200 Berkeley St., Boston, MA 02110 Janet S. Becker Prior to July, 1995, National Account Assistant Vice President Manager for Booz-Allen & Hamilton, American Express Travel Management Services, 100 Cambridge Park Drive, 02140; Prior to August, 1994, Account Manager, Hilton at Dedham Place, Dedham, MA 02026 Sharon A. Berka Prior to January, 1994, Vice Vice President President - Compensation Manager, BayBanks, Inc., 175 Federal Street, Boston, MA 02110 Matthew G. Bevin Prior to February, 1995, Consultant, Assistant Vice President SEI Corporation, 680 East Swedesford Road, Wayne, PA 19807 Thomas Bogan Prior to November, 1994, Analyst Senior Vice President Lord, Abbett & Co., 767 Fifth Avenue, New York, NY 10153 Michael F. Bouscaren Prior to May, 1994, President and Senior Vice President Chairman of the Board of Directors at Salomon Series Funds, Inc. and a Director of Salomon Brothers Asset Management, 7 World Trade Center, New York, NY 10048 Brett Browchuk Prior to April, 1994, Managing Managing Director Director, Fidelity Investments, 82 Devonshire St., Boston, MA 02109 Andrea Burke Prior to August, 1994, Vice President Vice President and Portfolio Manager, Back Bay Advisors, 399 Boylston St., Boston, MA 02116 Susan Chapman Prior to June, 1995, Vice President, Senior Vice President Forbes, Walsh, Kelly & Company, Inc., 17 Battery Place, New York, NY 10004 Steven Cheshire Prior to January, 1994, Assistant Vice President Vice President, Wellington Management, 75 State Street, Boston, MA 02109 Louis F. Chrostowski Prior to August, 1995, Manager of Vice President Compensation and Benefits, Itek Optical Systems, 10 MacGuire Rd., Lexington, MA 02173 Judith S. Deming Prior to May, 1995, Asset Manager, Assistant Vice President Fidelity Management & Research Company, 82 Devonshire St., Boston, MA 02109 John A. DeTore Prior to January, 1994, Director of Managing Director Quantitative Portfolio Management, Wellington Management, 75 State Street, Boston, MA 02109 Theodore J. Deutz Prior to January, 1995, Senior Vice Vice President President, Metropolitan West Securities, Inc. 10880 Wilshire Blvd., Suite 200, Los Angeles, CA 90024 Michael G. Dolan Prior to February, 1994, Senior Assistant Vice President Financial Analyst, General Electric Company, 1000 Western Ave., Lynn, MA 01905 Joseph J. Eagleeye Prior to August, 1994, Associate, Assistant Vice President David Taussig & Associates, 424 University Ave., Sacramento, CA 95813 Michael T. Fitzgerald Prior to September, 1994, Senior Senior Vice President Vice President, Vantage Global Advisers, 1201 Morningside Dr., Manhattan Beach, CA 90266 Roland Gillis Prior to March, 1995, Vice President Senior Vice President and Senior Portfolio Manager, Keystone Group, Inc., 200 Berkeley St., Boston, MA 02116 Mark D. Goodwin Prior to May, 1994, Manager, Audit & Assistant Vice President Operations Analysis, Mitre Corporation, 202 Burlington Rd., Bedford, MA 01730 Stephen A. Gorman Prior to July, 1994, Financial Assistant Vice President Analyst, Boston Harbor Trust Company, 100 Federal St., Boston, MA 02110 Jill Grossberg Prior to March, 1995, Associate Assistant Vice President Counsel, 440 Financial Group of and Associate Counsel Worcester, Inc., 440 Lincoln St., Worcester, MA 01653; Prior to November, 1993, Counsel, Berman DeValerio & Pease, One Liberty Square, Boston, MA 02109 Deborah R. Healey Prior to June, 1994, Senior Equity Senior Vice President Trader, Fidelity Management & Research Company, 82 Devonshire St., Boston, MA 02109 Lisa A. Heitman Prior to July, 1994, Securities Senior Vice President Analyst, Lord, Abbett & Company, 767 Fifth Ave., New York, NY 10153 Pamela Holding Prior to May, 1995, Senior Securities Vice President Analyst, Kemper Financial Services, Inc., 120 South LaSalle St., Chicago, IL 60603 Michael F. Hotchkiss Prior to May, 1994, Vice President, Vice President Massachusetts Financial Services, 500 Boylston St., Boston, MA 02116 Walter Hunnewell, Jr. Prior to April, 1994, Managing Vice President Director, Veronis, Suhler & Associates, 350 Park Avenue, New York, NY 10022 Joseph Joseph Prior to October, 1994, Managing Vice President Director, Vert Independent Capital Research, 53 Wall St., New York, NY 10052 Mary E. Kearney Prior to February, 1995, Partner, Managing Director Price Waterhouse, 160 Federal St., Boston, MA 02110 D. William Kohli Prior to September, 1994, Executive Managing Director Vice President and Co-Director of Global Bond Management, Franklin Advisors/Templeton Investment Counsel, 777 Mariners Island Blvd., San Mateo, CA 94404 Karen R. Korn Prior to June, 1994, Vice President, Vice President Assistant to the President, Designs, Inc. 1244 Boylston St., Chestnut Hill, MA 02167 Peter B. Krug Prior to January, 1995, Owner and Vice President Director, Griswold Special Care, 42 Ethan Allen Drive, Acton, MA 01720 Catherine A. Latham Prior to August, 1995, Director of Vice President Human Resources, Electronic Data Systems, 1601 Trapello Rd., Waltham, MA 02154 Kevin Lemire Prior to March, 1995, Corporate Assistant Vice President Facilities Manager, Bose Corporation, The Mountain, Framingham, MA 01701; Prior to June, 1994, Facilities Manager, The Pioneer Group, 60 State St., Boston, MA 02109 Lawrence J. Lasser Director, Marsh & McLennan Companies, President, Director Inc., 1221 Avenue of the Americas, and Chief Executive New York, NY 10020; Director, Officer INROADS/Central New England, Inc., 99 Bedford St., Boston,MA 02111 Jeffrey R. Lindsey Prior to April, 1994, Vice President Vice President and Board Member, Strategic Portfolio Management, 900 Ashwood Parkway, Suite 290, Atlanta, GA 30338 James W. Lukens Prior to February, 1995, Vice Senior Vice President President of Institutional Marketing, Keystone Group, Inc., 200 Berkeley St., Boston, MA 02116 Michael Martino Prior to January, 1994, Executive Managing Director Vice President and Chief Investment Officer until 1992 Helen Mazareas Prior to May, 1995, Librarian, Assistant Vice President Scudder, Stevens & Clark, 2 International Place, Boston, MA 02110; Prior to January, 1994, Systems Librarian, Goodwin, Procter & Hoar, Exchange Place, Boston, MA 02109 Alexander J. McAuley Prior to June, 1995, Vice President, Senior Vice President Deutsche Bank Securities Corp. - Deutsche Asset Management, 1290 Avenue of the Americas, New York, NY 10019 Susan A. McCormack Prior to May, 1994, Associate Vice President Investment Banker, Merrill Lynch & Co., 350 South Grand Ave., Suite 2830, Los Angeles, CA 90071 Carol McMullen Prior to June, 1995, Senior Vice, Managing Director President and Senior Portfolio Manager, Baring Asset Management, 125 High Street, Boston, MA 02110 Darryl Mikami Prior to June, 1995, Vice President, Senior Vice President Fidelity Management & Research Company, 82 Devonshire St., Boston, MA 02109 Carol H. Miller Prior to July, 1995, Business Assistant Vice President Development Officer, Bank of Boston - Connecticut, 100 Pearl St., Hartford, CT 06101 Seung H. Minn Prior to June, 1995, Vice President Vice President in Portfolio Management and Research, Templeton Quantitative Advisors, Inc., Maziar Minovi Prior to January, 1995, Associate Vice President Privatization Specialist, The International Bank for Reconstruction and Development, 1818 H St. N.W., Washington, DC 20433 Kenneth Mongtomery Prior to July, 1995, Senior Vice Managing Director President and Director of World Wide Sales, Chemcial Banking Corporation, Paul G. Murphy Prior to January, 1995, Section Assistant Vice President Manager, First Data Corp., 53 State Street, Boston, MA 02109 C. Patrick O'Donnell, Jr. Prior to May, 1994, President, Managing Director Exeter Research, Inc., 163 Water Street, Exeter, New Hampshire, 03833 Brian O'Keefe Prior to December, 1993, Vice Vice President President - Foreign Exchange Trader, Bank of Boston, 100 Federal Street, Boston, MA 02109 Margaret Pietropaolo Prior to January, 1994, Data Base/ Assistant Vice President Production Analyst, Wellington Management, 75 State Street, Boston, MA 02109 Jane E. Price Prior to February, 1995, Associate Assistant Vice President ERISA Attorney, Hale & Dorr, 60 State St., Boston, MA 02109 Keith Quinton Prior to July, 1995, Vice President, Senior Vice President Falconwood Securities Corporation., Paul T. Quistberg Prior to July, 1995, Assistant Assistant Vice President Investment Officer, The Travelers Insurance Group., George Putnam Chairman and Director, Putnam Mutual Chairman and Director Funds Corp.; Director, The Boston Company, Inc., One Boston Place, Boston, MA 02108; Director, Boston Safe Deposit and Trust Company, One Boston Place, Boston, MA 02108; Director, Freeport-McMoRan, Inc., 200 Park Avenue, New York, NY 10166; Director, General Mills, Inc., 9200 Wayzata Boulevard, Minneapolis, MN 55440; Director, Houghton Mifflin Company, One Beacon Street, Boston, MA 02108; Director, Marsh & McLennan Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020; Director, Rockefeller Group, Inc., 1230 Avenue of the Americas, New York, NY 10020 Thomas Rosalanko Prior to February, 1995, Senior Senior Vice President Account Manager, SEI Corporation, 680 East Swedesford Road, Wayne, PA 19807 Michael Scanlon Prior to February, 1995, Senior Assistant Vice President Financial Analyst, Massachusetts Financial Services, 500 Boylston St., Boston, MA 02116 Robert M. Shafto Prior to January, 1995, Account Assistant Vice President Manager, IBM Corporation, 404 Wyman St., Waltham, MA 02254 Karen F. Smith Prior to May, 1994, Consultant and Assistant Vice President Portfolio Manager, Wyatt Asset Services, Inc., 1211 W.W. 5th Ave., Portland, OR 97204 Margaret Smith Prior to September, 1995, Vice Senior Vice President President, State Street Research, One Financial Center, Boston, MA 02111 Steven Spiegel Prior to December, 1994, Managing Senior Managing Director Director/Retirement, Lehman Brothers, Inc., 200 Vesey St., World Financial Center, New York, NY 10285 George W. Stairs Prior to July, 1994, Equity Research Vice President Analyst, ValueQuest Limited, Roundy's Hill, Marblehead, MA 01945 James H. Steggall Prior to May, 1995, Senior Municipal Assistant Vice President Analyst, Colonial Management Associates, Inc., One Financial Center, Boston, MA 02111; Prior to May, 1994, Controller, Wheelabrator Environmental Systems, Libery Lane, Hampton, NH 03842 Karen Stewart Prior to May, 1995, Equity Research Assistant Vice President Analyst, Chancellor Capital Management, 1166 Avenue of the Americas, New York, NY 10036 Roger Sullivan Prior to December, 1994, Vice Senior Vice President President, State Street Research & Management Co., One Financial Center, Boston, MA 02111 Robert Swift Prior to August, 1995, Far East Team Senior Vice President Leader and Portfolio Manager, IAI International/Hill Samuel Investment Advisors, 10 Fleet Place, London, England Jerry H. Tempelman Prior to May, 1994, Senior Money Assistant Vice President Market Trader, State Street Bank & Trust Co., 225 Franklin, Street, Boston, MA 02110 Michael Temple Prior to June, 1995, Vice President, Vice President Duff & Phelps, 55 East Monroe, Chicago, IL 60613 Hillary F. Till Prior to May, 1994, Fixed-Income Vice President Derivative Trader, Bank of Boston, 100 Federal Street, Boston, MA 02109; Prior to December, 1993, Equity Analyst, Harvard Management Company, 600 Atlantic St., Boston, MA 02109 Lisa L. Trubiano Prior to July, 1995, Senior Marketing Vice President Consultant, John Hancock Mutual Life Insurance Company, Elizabeth A. Underhill Prior to August, 1994, Vice President Senior Vice President and Senior Equity Analyst, State Street Bank and Trust Company, 225 Franklin St., Boston, MA 02110 Charles C. Van Vleet Prior to August, 1994, Vice President Senior Vice President and Fixed-Income Manager, Alliance Capital Management, 1345 Avenue of the Americas, New York, NY 10105 Francis P. Walsh Prior to November, 1994, Research Vice President Analyst, Furman, Selz, Inc. 230 Park Avenue, New York, NY 10169; Prior to December, 1993, Strategic Marketing Analyst, Lotus Development, Corporation 55 Cambridge Parkway, Cambridge, MA 02142 Michael R. Weinstein Prior to March, 1994, Management Vice President Consultant, Arthur D. Little, Acorn Park, Cambridge, MA 02140 Item 29. Principal Underwriter (a) Putnam Mutual Funds Corp. is the principal underwriter for each of the following investment companies, including the Registrant: Putnam Adjustable Rate U.S. Government Fund, Putnam American Government Income Fund, Putnam American Renaissance Fund, Putnam Arizona Tax Exempt Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds, Putnam Balanced Retirement Fund, Putnam California Tax Exempt Income Trust, Putnam California Tax Exempt Money Market Fund, Putnam Capital Appreciation Fund, Putnam Capital Manager Trust, Putnam Convertible Income-Growth Trust, Putnam Diversified Equity Trust, Putnam Diversified Income Trust, Putnam Equity Income Fund, Putnam Europe Growth Fund, Putnam Federal Income Trust, Putnam Florida Tax Exempt Income Fund, The Putnam Fund for Growth and Income, The George Putnam Fund of Boston, Putnam Global Governmental Income Trust, Putnam Global Growth Fund, Putnam Growth Fund, Putnam Growth and Income Fund, Putnam Health Sciences Trust, Putnam High Yield Trust, Putnam High Yield Advantage Fund, Putnam Income Fund, Putnam Intermediate Tax Exempt Income Fund, Putnam Intermediate U.S. Government Income Fund, Putnam Investment Funds, Putnam Investment-Grade Bond Fund, Putnam Investors Fund, Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund, Putnam Money Market Fund, Putnam Municipal Income Fund, Putnam Natural Resources Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam New Opportunities Fund, Putnam New York Tax Exempt Income Trust, Putnam New York Tax Exempt Money Market Fund, Putnam New York Tax Exempt Opportunities Fund, Putnam Ohio Tax Exempt Income Fund, Putnam OTC Emerging Growth Fund, Putnam Overseas Growth Fund, Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred Income Fund, Putnam Research Fund, Putnam Tax Exempt Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free Income Trust, Putnam U.S. Government Income Trust, Putnam Utilities Growth and Income Fund, Putnam Vista Fund, Putnam Voyager Fund
(b) The directors and officers of the Registrant's principal underwriter are: Positions and Offices Positions and Offices Name with Underwriter with Registrant John V. Adduci Assistant Vice President None Christopher S. Alpaugh Vice President None Paulette C. Amisano Vice President None Ronald J. Anwar Vice President None Steven E. Asher Senior Vice President None Scott A. Avery Vice President None Hallie L. Baron Assistant Vice President None Ira G. Baron Senior Vice President None John L. Bartlett Senior Vice President None Dale Beardon Senior Vice President None Steven M. Beatty Vice President None Matthew F. Beaudry Vice President None Janet S. Becker Assistant Vice President None John J. Bent Vice President None Thomas A. Beringer Vice President None Sharon A. Berka Vice President None Maureen L. Boisvert Vice President None John F. Boneparth Managing Director None Keith R. Bouchard Vice President None Linda M. Brady Assistant Vice President None Leslee R. Bresnahan Senior Vice President None James D. Brockelman Senior Vice President None Scott C. Brown Vice President None Gail D. Buckner Senior Vice President None Robert W. Burke Senior Managing Director None Ellen S. Callahan Vice President None Thomas C. Callahan Assistant Vice President None Peter J. Campagna Vice President None Robert Capone Vice President None Charles A. Carey Vice President None Patricia A. Cartwright Assistant Vice President None Janet Casale-Sweeney Vice President None Stephen J. Chaput Assistant Vice President None Louis F. Chrostowski Vice President None Daniel J. Church Vice President None James E. Clinton Assistant Vice President None Kathleen M. Collman Managing Director None Mark L. Coneeny Vice President None Donald A. Connelly Senior Vice President None Karen E. Connolly Assistant Vice President None Anna Coppola Vice President None F. Nicholas Corvinus Senior Vice President None Thomas A. Cosmer Vice President None Chad H. Cristo Assistant Vice President None Lisa M. D'Allesandro Assistant vice President None Jessica E. Dahill Vice President None Kenneth L. Daly Senior Vice President None Edward H. Dane Vice President None Nancy M. Days Assistant Vice President None Pamela De Oliveira-Smith Assistant Vice President None Richard D. DeSalvo Vice President None Joseph C. DeSimone Assistant Vice President None Daniel J. Delianedis Vice President None Judith S. Deming Assistant Vice President None Teresa F. Dennehy Assistant Vice President None J. Thomas Despres Senior Vice President None Michael G. Dolan Assistant Vice President None Scott M. Donaldson Vice President None Emily J. Durbin Vice President None Dwyer Cabana, Susan Vice President None David B. Edlin Senior Vice President None James M. English Senior Vice President None Vincent Esposito Managing Director None Mary K. Farrell Assistant Vice President None Michael J. Fechter Vice President None Susan H. Feldman Vice President None Paul F. Fichera Senior Vice President None C. Nancy Fisher Senior Vice President None Mitchell B. Fishman Senior Vice President None Joseph C. Fiumara Vice President None Patricia C. Flaherty Senior Vice President None Samuel F. Gagliardi Vice President None Karen M. Gardner Assistant Vice President None Judy S. Gates Vice President None Richard W. Gauger Assistant Vice President None Joseph P. Gennaco Vice President None Stephen E. Gibson Managing Director None Mark P. Goodfellow Assistant Vice President None Robert Goodman Managing Director None Mark D. Goodwin Assistant Vice President None Anthony J. Grace Assistant Vice President None Linda K. Grace Assistant Vice President None Robert G. Greenly Vice President None Jill Grossberg Assistant Vice President None Jeffrey P. Gubala Vice President None James E. Halloran Vice President None Thomas W. Halloran Vice President None Meghan C. Hannigan Assistant Vice President None Bruce D. Harrington Assistant Vice President None Marilyn M. Hausammann Senior Vice President None Howard W. Hawkins, III Vice President None Deanna R. Hayes-Castro Vice President None Paul P. Heffernan Vice President None Susan M. Heimanson Vice President None Joanne Heyman Assistant Vice President None Bess J.M. Hochstein Vice President None Maureen A. Holmes Assistant Vice President None Paula J. Hoyt Assistant Vice President None William J. Hurley Senior Vice President None Gregory E. Hyde Senior Vice President None Dwight D. Jacobsen Senior Vice President None Douglas B. Jamieson Senior Managing Director, Director None Jay M. Johnson Vice President None Kevin M. Joyce Senior Vice President None Karen R. Kay Senior Vice President None Mary E. Kearney Managing Director None John P. Keating Vice President None A. Siobahn Kelly Assistant Vice President None Brian J. Kelly Vice President None Anne Kinsman Assistnat Vice President None Deborah H. Kirk Senior Vice President None Jill A. Koontz Assistant Vice President None Linda G. Kraunelis Assistant Vice President None Howard H. Kreutzberg Senior Vice President None Marjorie B. Krieger Assistant Vice President None Charles Lacasia Assistant Vice President None Arthur B. Laffer, Jr. Vice President None Catherine A. Lathan Vice President None James D. Lathrop Vice President None Charles C. Ledbetter Vice President None Kevin Lemire Assistant Vice President None Eric S. Levy Vice President None Edward V. Lewandowski Senior Vice President None Edward V. Lewandowski, Jr. Vice President None Samuel L. Lieberman Vice President None David M. Lifsitz Assistant Vice President None Ann Marie Linehan Assistant Vice President None Maura A. Lockwood Vice President None Rufino R. Lomba Vice President None Peter V. Lucas Senior Vice President None Robert F. Lucey Senior Managing Director, Director None Kathryn A. Lucier Assistant Vice President None Alana Madden Vice President None Ann Malatos Assistant Vice President None Bonnie Mallin Vice President None Renee L. Maloof Assistant Vice President None Frederick S. Marius Assistant Vice President None Karen E. Marotta Vice President None Kathleen M. McAnulty Assistant Vice President None Anne B. McCarthy Assistant Vice President None Paul McConville Vice President None Marla J. McDougall Assistant Vice President None Walter S. McFarland Vice President None Mark J. McKenna Senior Vice President None Gregory J. McMillan Vice President None Claye A. Metelmann Vice President None J. Chris Meyer Senior Vice President None Bart D. Miller Vice President None Douglas W. Miller Vice President None Jeffery M. Miller Senior Vice President None Ronald K. Mills Vice President None Peter M. Moore Assistant Vice President None Mitchell Moret Senior Vice President None Donald E. Mullen Vice President None Paul G. Murphy Assistant Vice President None Brendan R. Murray Vice President None Robert Nadherny Vice President None Alexander L. Nelson Managing Director None John P. Nickodemus Vice President None Michael C. Noonis Assistant Vice President None Kristen P. O'Brien Vice President None Kevin L. O'Shea Senior Vice President None Nathan D. O'Steen Assistant Vice President None Joseph R. Palombo Managing Director None Scott A. Papes Vice President None Cynthia O. Parr Vice President None John D. Pataccoli Vice President None John G. Phoenix Vice President None Joseph Phoenix Senior Vice President None Jeffrey E. Place Senior Vice President None Keith Plapinger Vice President None Jane E. Price Assistant Vice President None Douglas H. Powell Vice President None Susannah Psomas Vice President None Scott M. Pulkrabek Vice President None George Putnam Director Chairman & President George A. Rio Senior Vice President None Debra V. Rothman Vice President None Robert B. Rowe Vice President None Kevin A. Rowell Senior Vice President None Thomas C. Rowley Vice President None Charles A. Ruys de Perez Senior Vice President None Deborah A. Ryan Assistant Vice President None Robert M. Santosuosso Assistant Vice President None Debra J. Sarkisian Assistant Vice President None Catherine A. Saunders Senior Vice President None Robbin L. Saunders Assistant Vice President None Karl W. Saur Vice President None Michael Scanlon Assistant Vice President None Shannon D. Schofield Vice President None Christine A. Scordato Vice President None Joseph W. Scott Assistant Vice President None John B. Shamburg Vice President None Kathleen G. Sharpless Managing Director None John F. Sharry Managing Director None Stuart D. Sheppard Assistant Vice President None William N. Shiebler Director and President Vice President Daniel S. Shore Vice President None Mark J. Siebold Assistant Vice President None Gordon H. Silver Senior Managing Director Vice President John Skistimas, Jr. Assistant Vice President None Steven Spiegel Senior Managing Director None Nicholas T. Stanojev Senior Vice President None Paul R. Stickney Vice President None Brian L. Sullivan Vice President None Guy Sullivan Seniior Vice President None Kevin J. Sullivan Vice President None Moira Sullivan Vice President None James S. Tambone Managing Director None B. Iris Tanner Assistant Vice President None Louis Tasiopoulos Managing Director None David S. Taylor Vice President None John R. Telling Vice President None Richard B. Tibbetts Senior Vice President None Patrice M. Tirado Vice President None Janet E. Tosi Assistant Vice President None John C. Tredinnick Vice President None Bonnie L. Troped Vice President None Christine M. Twigg Assistant Vice Presient None Larry R. Unger Vice President None Douglas J. Vander Linde Senior Vice President None Edward F. Whalen Vice President None Robert J. Wheeler Senior Vice President None John B. White Vice President None Kirk E. Williamson Senior Vice President None Leigh T. Williamson Vice President None Jane Wolfson Vice President None Benjamin I. Woloshin Vice President None William H. Woolverton Senior Vice President None Timothy R. Young Vice President None SooHee L. Zebedee Vice President None Laura J. Zografos Vice President None
The principal business address of each person listed above is One Post Office Square, Boston, MA 02109, except for: Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303 Mr. Anwar, 131 Crystal Road, Colmar, PA 18915 Mr. Avery, 7031 Spring Ridge Rd., Cary NC 27511 Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667 Mr. Bartlett, 7 Fairfield St., Boston, MA 02116 Mr. Beatty, 200 High St., Winchester, MA 01890 Mr. Beringer, 4915 Dupont Avenue South, Minneapolis, MN 55409 Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610 Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401 Mr. Brockelman, 94 Middleton Rd., Boxford, MA 01921 Mr. Brown, 2012 West Grove Drive, Gibson, PA 15044 Ms. Buckner, 21012 West Grove Drive, Gibsonia, PA 15044 Mr. Campagna, 2091-B Lake Park Drive, Smyrna, GA 30080 Ms. Castro, 26 Gould Road, Andover, MA 01810 Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211 Mr. Cristo, 11 Schenck Ave., Great Neck, NY 11021 Mr. Coneeny, 10 Amherst St., Arlington, MA 02174 Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238 Mr. Corvinus, 208 Water St., Newburyport, MA 01950 Ms. Dahill, 270-1 C Iven Ave., St. David's, PA 19087 Mr. Deliandis, 206 Promontory Drive, Newport Beach, CA 92660 Mr. DeSalvo, 54 Morriss Place, Maddison, NJ 07940 Mr. DeSimone, Pheasant Run Apartments, Inlet Ridge Drive, Maryland Heights, MO 63043 Ms. Dwyer-Cabana, 7730 Herrick Park, Hudson, OH 44236 Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807 Mr. English, 1184 Pintail Circle, Boulder, CO 80303 Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807 Mr. Gubala, 4308 Rickover Drive, Dallas, TX 75244 Mr. J. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362 Mr. T. Halloran, 19449 Misty Lake Dr., Strongsville, OH 44136 Mr. Hyde, 3305 Sulky, Marietta, GA 30067 Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017 Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923 Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206 Mr. Kelley, 3356 North Lakeharbor Lane, Boise, ID 83703 Ms. Kelly, 31 Jeffrey's Neck Road, Ipswich, MA 01938 Ms. Kinsman, 9599 Brookview Circle, Woodbury, MN 55125 Ms. Kirk, 124 Rivermist Dr., Buffalo, NY 14202 Ms. Kraunelis, 584 East Eighth St., South Boston, MA 02127 Mr. Lathrop, 14814 Straub Hill Lane, Chesterfield, MO 63017 Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010 Mr. Lewandowski, Jr., 1 Kara East, Irvine, CA 92720 Mr. Lieberman, 200 Roy St., Seattle, WA 98109 Ms. Madden, 8649 North Himes Avenue, Tampa, FL 33614 Mr. McConville, 515 S. Arlington Heights Rd., Arlington Heights, IL 6005 Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421 Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063 Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223 Mr. B. Miller, 24815 Acropolis Drive, Mission Viejo, CA 92691 Mr. D. Miller, 70 Williams St., Greenwich, CT 06380 Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558 Mr. Murray, 710 Cheyenne Drive, Franklin Lakes, NJ 07417 Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117 Mr. Nickodemus, 463 Village Oaks Court, Ann Arbor, MI 48103 Mr. O'Steen, 2091-B Lake Park Drive, Smyrna, GA 30080 Mr. Papes, 3102 Wood View Bridge Drive, Kansas City, KS 66103 Mr. Pataccoli, 333 39th St., Manhattan Beach, CA 90266 Mr. Joe Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093 Mr. John Phoenix, 709 South Rome Avenue, Tampa, FL 33606 Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075 Mr. Pulkrabek, 190 Jefferson Lane, Streamwood, IL 60107 Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660 Mr. Rowe, 109 Shore Drive, Longwood, FL 32779 Mr. Rowell, 2240 Union St., San Francisco, CA 94123 Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122 Ms. Sarkisian, 1 Goodridge Ct., Boston, MA 02113 Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538 Ms. Schofield, 618 Rimington Lane, Decatur, GA 30030 Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260 Mr. Shore, 2870 Pharr Court South, N.W., Atlanta, GA 30305 Mr. Stickney, 1314 Log Cabin Lane, St. Louis, MO 63124 Mr. B. Sullivan, 777 Pinoake Road, Pittsburgh, PA 15243 Mr. G. Sullivan, 35 Marlborough St., Boston, MA 02116 Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574 Ms. Sweeney, 31 Heritage Way, Marblehead, MA 01945 Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110 Mr. Tasiopolous, 5 Homestead Farms Drive, Norwell, MA 02061 Mr. Tredinnick, 2995 Glenwood Drive, Boulder, CO 80301 Mr. Telling, 5 Spindriff Court, Williamsville, NY 14221 Mr. Unger, 212 E. Broadway, New York, NY 10002 Mr. Williamson, 111 Maple Ridge Way, Covington, LA 70433 Mr. White, 10 Mannion Place, Littleton, MA 01460 Mr. Woloshin, 100 West 89th St., New York, NY 10024 Ms. Zografos, 12712 Coeur de Monde Ct., St. Louis, MO 63146 ITEM 30. LOCATION OF ACCOUNTS AND RECORDS Persons maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are Registrants' Clerk, Beverly Marcus; Registrants' investment adviser, Putnam Investment Management, Inc.; Registrants' principal underwriter, Putnam Mutual Funds Corp.; Registrants' custodian, Putnam Fiduciary Trust Company ("PFTC"); and Registrant's transfer and dividend disbursing agent, Putnam Investor Services, a division of PFTC. The address of the Clerk, investment adviser, principal underwriter, and custodian and transfer and dividend disbursing agent is One Post Office Square, Boston, Massachusetts 02109. ITEM 31. MANAGEMENT SERVICES None. ITEM 32. UNDERTAKINGS Each Registrant undertakes to furnish to each person to whom a prospectus of that Registrant is delivered a copy of that Registrant's latest annual report to shareholders, upon request and without charge. CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the the following Post-Effective Amendments, of our reports (as dated below) on our audits of the financial statements and "Financial highlights" of Putnam Arizona Tax Exempt Income Fund, Putnam Michigan Tax Exempt Income Fund , Putnam New Jersey Tax Exempt Income Fund and Putnam Ohio Tax Exempt Income Fund , which reports are included in the Annual Reports for each Fund for the year ended May 31, 1994, which is incorporated by reference in the Registration Statement : Fund PEA # File # Date of Report Arizona 6 33-37992 July 17, 1995 Michigan 15 33-8923 July 17, 1995 New Jersey 6 33-32550 July 14, 1995 Ohio 15 33-8924 July 17, 1995 We also consent to the references to our Firm under the caption "Independent Accountants and Financial Statements" in the Statement of Additional Information. Coopers & Lybrand L.L.P. Boston, Massachusetts September 26, 1995 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus and Statement of Additional Information constituting parts of the following Post-Effective Amendments (the "Registration Statements") of our reports relating to the financial statements and financial highlights appearing in the May 31, 1995 Annual Reports of Putnam Florida Tax Exempt Income Fund (dated July 17, 1995), Putnam Massachusetts Tax Exempt Income Fund (dated July 13, 1995), Putnam Minnesota Tax Exempt Income Fund (dated July 12, 1995) and Putnam Pennsylvania Tax Exempt Income Fund (dated July 13, 1995) , which financial statements and financial highlights are also incorporated by reference into the Registration Statement : Fund PEA# File # Arizona 6 33-37992 Florida 6 33-35677 Massachusetts 15 33-5416 Michigan 15 33-8923 Minnesota 15 33-8916 New Jersey 6 33-32550 Ohio 15 33-8924 Pennsylvania 8 33-28321 We also consent to the references to us under the heading "Independent Accountants and Financial Statements" in such Statement of Additional Information and under the heading "Financial highlights" in such Prospectus. Price Waterhouse LLP Boston, Massachusetts September 27, 1995 NOTICE A copy of each Agreement and Declaration of Trust of Putnam Arizona Tax Exempt Income Fund, Putnam Florida Tax Exempt Income Fund, Putnam Massachusetts Tax Exempt Income Fund , Putnam Michigan Tax Exempt Income Fund , Putnam Minnesota Tax Exempt Income Fund , Putnam New Jersey Tax Exempt Income Fund, Putnam Ohio Tax Exempt Income Fund and Putnam Pennsylvania Tax Exempt Income Fund are on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of each Registrant by an officer of each Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Registrants. POWER OF ATTORNEY I, the undersigned Trustee of Putnam Arizona Tax Exempt Income Fund , hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Arizona Tax Exempt Income Fund and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro ELI SHAPIRO Trustee April 19, 1995 POWER OF ATTORNEY I, the undersigned Trustee of Putnam Florida Tax Exempt Income Fund , hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Florida Tax Exempt Income Fund and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro ELI SHAPIRO Trustee April 19, 1995 POWER OF ATTORNEY I, the undersigned Trustee of Putnam Massachusetts Tax Exempt Income Fund , hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Massachusetts Tax Exempt Income Fund and any and all amendments (including post- effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro ELI SHAPIRO Trustee April 19, 1995 POWER OF ATTORNEY I, the undersigned Trustee of Putnam Minnesota Tax Exempt Income Fund , hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Minnesota Tax Exempt Income Fund and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro Eli Shapiro Trustee April 19, 1995 POWER OF ATTORNEY I, the undersigned Trustee of Putnam Michigan Tax Exempt Income Fund, hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Michigan Tax Exempt Income Fund and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro ELI SHAPIRO Trustee April 19, 1995 POWER OF ATTORNEY I, the undersigned Trustee of Putnam New Jersey Tax Exempt Income Fund, hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam New Jersey Tax Exempt Income Fund and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro ELI SHAPIRO Trustee April 19, 1995 POWER OF ATTORNEY I, the undersigned Trustee of Putnam Ohio Tax Exempt Income Fund, hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Ohio Tax Exempt Income Fund and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro ELI SHAPIRO Trustee April 19, 1995 POWER OF ATTORNEY I, the undersigned Trustee of Putnam Pennsylvania Tax Exempt Income Fund, hereby severally constitute and appoint George Putnam, Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statement on Form N-1A of Putnam Pennsylvania Tax Exempt Income Fund and any and all amendments (including post-effective amendments) to said Registration Statement and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof. WITNESS my hand and seal on the date set forth below. Signature Title Date /s/ Eli Shapiro Eli Shapiro Trustee April 19, 1995 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrants certify that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, and The Commonwealth of Massachusetts, on the 27th day of September, 1995 . PUTNAM ARIZONA TAX EXEMPT INCOME FUND PUTNAM FLORIDA TAX EXEMPT INCOME FUND PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND PUTNAM MICHIGAN TAX EXEMPT INCOME FUND PUTNAM MINNESOTA TAX EXEMPT INCOME FUND PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND PUTNAM OHIO TAX EXEMPT INCOME FUND PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND By: Gordon H. Silver, Vice President Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statements of Putnam Arizona Tax Exempt Income Fund, Putnam Florida Tax Exempt Income Fund, Putnam Massachusetts Tax Exempt Income Fund , Putnam Michigan Tax Exempt Income Fund , Putnam Minnesota Tax Exempt Income Fund , Putnam New Jersey Tax Exempt Income Fund, Putnam Ohio Tax Exempt Income Fund and Putnam Pennsylvania Tax Exempt Income Fund have been signed below by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE George Putnam President and Chairman of the Board; Principal Executive Officer; Trustee William F. Pounds Vice Chairman and Trustee John D. Hughes Vice President, Treasurer and Principal Financial Officer Paul G. Bucuvalas Assistant Treasurer and Principal Accounting Officer Jameson A. Baxter Trustee Hans H. Estin Trustee John A. Hill Trustee Elizabeth T. Kennan Trustee Lawrence J. Lasser Trustee Robert E. Patterson Trustee Donald S. Perkins Trustee George Putnam, III Trustee Eli Shapiro Trustee A.J.C. Smith Trustee W. Nicholas Thorndike Trustee By: Gordon H. Silver, as Attorney-in-Fact September 27, 1995 EX-99.B1 2 CHARTER PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this 15th day of September, 1995, hereby amends and restates in its entirety the Agreement and Declaration of Trust dated March 7, 1986, as heretofore amended, by the Trustees hereunder and by the holders of shares of beneficial interest issued or to be issued hereunder as hereinafter provided. This Amended and Restated Agreement and Declaration of Trust shall be effective upon filing with the Secretary of State of The Commonwealth of Massachusetts. WITNESSETH that WHEREAS, this Trust has been formed to carry on the business of an investment company; and WHEREAS, the Trustees have agreed to manage all property coming into their hands as trustees of a Massachusetts voluntary association with transferable shares in accordance with the provisions hereinafter set forth. NOW, THEREFORE, the Trustees hereby declare that they will hold all cash, securities and other assets, which they may from time to time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the following terms and conditions for the pro rata benefit of the holders from time to time of Shares in this Trust as hereinafter set forth. ARTICLE I Name and Definitions Name Section 1. This Trust shall be known as "Putnam Massachusetts Tax Exempt Income Fund", and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine. Definitions Section 2. Whenever used herein, unless otherwise required by the context or specifically provided: (a) The "Trust" refers to the Massachusetts business trust established by this Agreement and Declaration of Trust, as amended from time to time; (b) "Trustees" refers to the Trustees of the Trust named herein or elected in accordance with Article IV; (c) "Shares" means the equal proportionate transferable units of interest into which the beneficial interest in the Trust shall be divided from time to time or, if more than one series or class of Shares is authorized by the Trustees, the equal proportionate transferable units into which each series or class of Shares shall be divided from time to time; (d) "Shareholder" means a record owner of Shares; (e) The "1940 Act" refers to the Investment Company Act of 1940 and the Rules and Regulations thereunder, all as amended from time to time; (f) The terms "Affiliated Person", "Assignment", "Commission", "Interested Person", "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) shall have the meanings given them in the 1940 Act; (g) "Declaration of Trust" shall mean this Amended and Restated Agreement and Declaration of Trust as amended or restated from time to time; and (h) "Bylaws" shall mean the Bylaws of the Trust as amended from time to time; (i) The term "series" or "series of Shares" refers to the one or more separate investment portfolios of the Trust into which the assets and liabilities of the Trust may be divided and the Shares of the Trust representing the beneficial interest of Shareholders in such respective portfolios; and (j) The term "class" or "class of Shares" refers to the division of Shares into two or more classes as provided in Article III, Section 1 hereof. ARTICLE II Purpose of Trust The purpose of the Trust is to provide investors a managed investment primarily in securities, debt instruments and other instruments and rights of a financial character. ARTICLE III Shares Division of Beneficial Interest Section 1. The Shares of the Trust shall be issued in one or more series as the Trustees may, without shareholder approval, authorize. Each series shall be preferred over all other series in respect of the assets allocated to that series. The beneficial interest in each series shall at all times be divided into Shares, without par value, each of which shall, except as provided in the following sentence represent an equal proportionate interest in the series with each other Share of the same series, none having priority or preference over another. The Trustees may, without shareholder approval, divide the Shares of any series into two or more classes, Shares of each such class having such preferences and special or relative rights and privileges (including conversion rights, if any) as the Trustees may determine and as shall be set forth in the Bylaws. The number of Shares authorized shall be unlimited. The Trustees may from time to time divide or combine the Shares of any series or class into a greater or lesser number without thereby changing the proportionate beneficial interest in the series or class. Ownership of Shares Section 2. The ownership of Shares shall be recorded on the books of the Trust or a transfer or similar agent. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the transfer of Shares and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to who are the Shareholders of each series and class and as to the number of Shares of each series and class held from time to time by each Shareholder. Investment in the Trust Section 3. The Trustees shall accept investments in the Trust from such persons and on such terms and for such consideration, which may consist of cash or tangible or intangible property or a combination thereof, as they or the Bylaws from time to time authorize. All consideration received by the Trust for the issue or sale of Shares of each series, together with all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation thereof, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to the series of Shares with respect to which the same were received by the Trust for all purposes, subject only to the rights of creditors, and shall be so handled upon the books of account of the Trust and are herein referred to as "assets of" such series. No Preemptive Rights Section 4. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Status of Shares and Limitation of Personal Liability Section 5. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust or the Bylaws. Every Shareholder by virtue of having become a Shareholder shall be held to have expressly assented and agreed to the terms of this Declaration of Trust and the Bylaws and to have become a party hereto. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the same nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but only to the rights of said decedent under this Trust. Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders partners. Neither the Trust nor the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind personally any Shareholder, nor except as specifically provided herein to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay. ARTICLE IV The Trustees Election Section 1. A Trustee may be elected either by the Trustees or by the Shareholders. There shall be not less than three Trustees. The number of Trustees shall be fixed by the Trustees. Each Trustee elected by the Trustees or the Shareholders shall serve until he or she retires, resigns, is removed or dies or until the next meeting of Shareholders called for the purpose of electing Trustees and until the election and qualification of his or her successor. At any meeting called for the purpose, a Trustee may be removed by vote of two-thirds of the outstanding shares. The initial Trustees, each of whom shall serve until the first meeting of Shareholders at which Trustees are elected and until his successor is elected and qualified, or until he sooner dies, resigns or is removed shall be George Putnam, Richard M. Cutler and Alla O'Brien and such other persons as the Trustee or Trustees then in office shall, prior to any sale of Shares pursuant to public offering, appoint. Effect of Death, Resignation, etc. of a Trustee Section 2. The death, declination, resignation, retirement, removal or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Powers Section 3. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees, and they shall have all powers necessary or convenient to carry out that responsibility. Without limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust and may amend and repeal them to the extent that such Bylaws do not reserve that right to the Shareholders; they may fill vacancies in or add to their number, and may elect and remove such officers and appoint and terminate such agents as they consider appropriate; they may appoint from their own number, and terminate, any one or more committees consisting of two or more Trustees, including an executive committee which may, when the Trustees are not in session, exercise some or all of the power and authority of the Trustees as the Trustees may determine; they may employ one or more custodians of the assets of the Trust and may authorize such custodians to employ subcustodians and to deposit all or any part of such assets in a system or systems for the central handling of securities, retain a transfer agent or a Shareholder servicing agent, or both, provide for the distribution of Shares by the Trust, through one or more principal underwriters or otherwise, set record dates for the determination of Shareholders with respect to various matters, and in general delegate such authority as they consider desirable to any officer of the Trust, to any committee of the Trustees and to any agent or employee of the Trust or to any such custodian or underwriter. Without limiting the foregoing, the Trustees shall have power and authority: (a) To invest and reinvest cash, and to hold cash uninvested; (b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust; (c) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper; (d) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities; (e) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or in the name of a custodian, subcustodian or other depositary or a nominee or nominees or otherwise; (f) Subject to the provisions of Article III, Section 3, to allocate assets, liabilities, income and expenses of the Trust to a particular series of Shares or to apportion the same among two or more series, provided that any liabilities or expenses incurred by or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series; and to the extent necessary or appropriate to give effect to the preferences and special or relative rights and privileges of any classes of Shares, to allocate assets, liabilities, income and expenses of a series to a particular class of Shares of that series or to apportion the same among two or more classes of Shares of that series; (g) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust; (h) To join with other security holders in acting through a committee, depositary, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depositary or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depositary or trustee as the Trustees shall deem proper; (i) To compromise, arbitrate or otherwise adjust claims in favor of or against the Trust or any matter in controversy, including but not limited to claims for taxes; (j) To enter into joint ventures, general or limited partnerships and any other combinations or associations; (k) To borrow funds; (l) To endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property or any part thereof to secure any of or all such obligations; (m) To purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the business, including without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers or managers, principal underwriters, or independent contractors of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person as Shareholder, Trustee, officer, employee, agent, investment adviser or manager, principal underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability; and (n) To pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust. The Trustees shall not in any way be bound or limited by any present or future law or custom in regard to investments by trustees. Except as otherwise provided herein or from time to time in the Bylaws, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum being present), within or without Massachusetts, including any meeting held by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting, or by written consents of a majority of the Trustees then in office. Payment of Expenses by Trust Section 4. The Trustees are authorized to pay or to cause to be paid out of the assets of the Trust all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust, or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, investment adviser or manager, principal underwriter, auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur, provided, however, that all expenses, fees, charges, taxes and liabilities incurred or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series. Ownership of Assets of the Trust Section 5. Title to all of the assets of each series of Shares and of the Trust shall at all times be considered as vested in the Trustees. Advisory, Management and Distribution Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees may, at any time and from time to time, contract for exclusive or nonexclusive advisory and/or management services with any corporation, trust, association or other organization (the "Manager"), every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine, including, without limitation, authority to determine from time to time what investments shall be purchased, held, sold or exchanged and what portion, if any, of the assets of the Trust shall be held uninvested and to make changes in the Trust's investments. The Trustees may also, at any time and from time to time, contract with the Manager or any other corporation, trust, association or other organization, appointing it exclusive or nonexclusive distributor or principal underwriter for the Shares, every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine. The fact that: (i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any corporation, trust, association, or other organization, or of or for any parent or affiliate of any organization, with which an advisory or management contract, or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made, or that any such organization, or any parent or affiliate thereof, is a Shareholder or has an interest in the Trust, or that (ii) any corporation, trust, association or other organization with which an advisory or management contract or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made also has an advisory or management contract, or transfer, Shareholder servicing or other agency contract with one or more other corporations, trusts, associations, or other organizations, or has other business or interests, shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or its Shareholders. ARTICLE V Shareholders' Voting Powers and Meetings Voting Powers Section 1. Subject to the voting powers of one or more classes of shares as set forth elsewhere in this Declaration of Trust or in the Bylaws, the Shareholders shall have power to vote only (i) for the election of Trustees as provided in Article IV, Section 1, (ii) for the removal of Trustees as provided in Article IV, Section 1, (iii) with respect to any Manager as provided in Article IV, Section 6, (iv) with respect to any termination of this Trust to the extent and as provided in Article IX, Section 4, (v) with respect to any amendment of this Declaration of Trust to the extent and as provided in Article IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (vii) with respect to such additional matters relating to the Trust as may be required by this Declaration of Trust, the Bylaws or any registration of the Trust with the Securities and Exchange Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote. Notwithstanding any other provision of this Declaration of Trust, on any matter submitted to a vote of Shareholders, all Shares of the Trust then entitled to vote shall be voted in the aggregate as a single class without regard to series or classes of shares, except (1) when required by the 1940 Act or when the Trustees shall have determined that the matter affects one or more series or classes of Shares materially differently, Shares shall be voted by individual series or class; and (2) when the Trustees have determined that the matter affects only the interests of one or more series or classes, then only Shareholders of such series or classes shall be entitled to vote thereon. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares of any series or class are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders as to such series or class. Voting Power and Meetings Section 2. Meetings of Shareholders of any or all series or classes may be called by the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders of such series or classes as herein provided or upon any other matter deemed by the Trustees to be necessary or desirable. Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing such notice at least seven days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder entitled to vote at such meeting at the Shareholder's address as it appears on the records of the Trust. If the Trustees shall fail to call or give notice of any meeting of Shareholders for a period of 30 days after written application by Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting requesting that a meeting be called for a purpose requiring action by the Shareholders as provided herein or in the Bylaws, then Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting or of all series if all series are entitled to vote at such meeting may call and give notice of such meeting, and thereupon the meeting shall be held in the manner provided for herein in case of call thereof by the Trustees. Notice of a meeting need not be given to any Shareholder if a written waiver of notice, executed by him or her before or after the meeting, is filed with the records of the meeting, or to any Shareholder who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. Quorum and Required Vote Section 3. Thirty percent of Shares entitled to vote on a particular matter shall be a quorum for the transaction of business on that matter at a Shareholders' meeting, except that where any provision of law or of this Declaration of Trust permits or requires that holders of any series or class shall vote as an individual series or class, then thirty percent of the aggregate number of Shares of that series or class entitled to vote shall be necessary to constitute a quorum for the transaction of business by that series or class. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by any provision of this Declaration of Trust or the Bylaws, or by the 1940 Act, a majority of the Shares voted shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Declaration of Trust permits or requires that the holders of any series or class shall vote as an individual series or class, then a majority of the Shares of that series or class voted on the matter (or a plurality with respect to the election of a Trustee) shall decide that matter insofar as that series or class is concerned. Action by Written Consent Section 4. Any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of this Declaration of Trust or the Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. Additional Provisions Section 5. The Bylaws may include further provisions not inconsistent with this Declaration of Trust, regarding Shareholders' voting powers, the conduct of meetings and related matters. ARTICLE VI Distributions, Redemptions and Repurchases Distributions Section 1. The Trustees may each year, or more frequently if they so determine, distribute to the Shareholders of each series out of the assets of such series such amounts as the Trustees may determine. Any such distribution to the Shareholders of a particular series shall be made to said Shareholders pro rata in proportion to the number of Shares of such series held by each of them, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of Shares of that series, and any distribution to the Shareholders of a particular class of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Such distributions shall be made in cash or Shares or a combination thereof as determined by the Trustees. Any such distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with the Bylaws. Redemptions and Repurchases Section 2. The Trust shall purchase such Shares as are offered by any Shareholder for redemption, upon the presentation of any certificate for the Shares to be purchased, a proper instrument of transfer and a request directed to the Trust or a person designated by the Trust that the Trust purchase such Shares, or in accordance with such other procedures for redemption as the Trustees may from time to time authorize; and the Trust will pay therefor the net asset value thereof, as next determined in accordance with the Bylaws. Payment for said Shares shall be made by the Trust to the Shareholder within seven days after the date on which the request is made. The obligation set forth in this Section 2 is subject to the provision that in the event that any time the New York Stock Exchange is closed for other than customary weekends or holidays, or, if permitted by rules of the Securities and Exchange Commission, during periods when trading on the Exchange is restricted or during any emergency which makes it impractical for the Trust to dispose of its investments or to determine fairly the value of its net assets, or during any other period permitted by order of the Securities and Exchange Commission for the protection of investors, such obligation may be suspended or postponed by the Trustees. The Trust may also purchase or repurchase Shares at a price not exceeding the net asset value of such Shares in effect when the purchase or repurchase or any contract to purchase or repurchase is made. Redemptions at the Option of the Trust Section 3. The Trust shall have the right at its option and at any time to redeem Shares of any Shareholder at the net asset value thereof as determined in accordance with the Bylaws: (i) if at such time such Shareholder owns fewer Shares than, or Shares having an aggregate net asset value of less than, an amount determined from time to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares of a particular series or class of Shares equal to or in excess of a percentage of the outstanding Shares of that series or class determined from time to time by the Trustees; or (iii) to the extent that such Shareholder owns Shares of the Trust representing a percentage equal to or in excess of such percentage of the aggregate number of outstanding Shares of the Trust or the aggregate net asset value of the Trust determined from time to time by the Trustees. ARTICLE VII Compensation and Limitation of Liability of Trustees Compensation Section 1. The Trustees as such shall be entitled to reasonable compensation from the Trust; they may fix the amount of their compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, legal, accounting, investment banking or other services and payment for the same by the Trust. Limitation of Liability Section 2. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, manager or principal underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, but nothing herein contained shall protect any Trustee against any liability to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any of them in connection with the Trust shall be conclusively deemed to have been executed or done only in or with respect to their or his or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be personally liable thereon. ARTICLE VIII Indemnification Trustees, Officers, etc. Section 1. The Trust shall indemnify each of its Trustees and officers (including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered Person") against all liabilities and expenses, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such Covered Person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Covered Person except with respect to any matter as to which such Covered Person shall have been finally adjudicated in any such action, suit or other proceeding (a) not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or (b) to be liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Expenses, including counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), shall be paid from time to time by the Trust in advance of the final disposition of any such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Covered Person to repay amounts so paid to the Trust if it is ultimately determined that indemnification of such expenses is not authorized under this Article, provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust shall be insured against losses arising from any such advance payments or (c) either a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter), or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial type inquiry) that there is reason to believe that such Covered Person will be found entitled to indemnification under this Article. Compromise Payment Section 2. As to any matter disposed of (whether by a compromise payment, pursuant to a consent decree or otherwise) without an adjudication by a court, or by any other body before which the proceeding was brought, that such Covered Person either (a) did not act in good faith in the reasonable belief that his or her action was in the best interests of the Trust or (b) is liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, indemnification shall be provided if (a) approved as in the best interests of the Trust, after notice that it involves such indemnification, by at least a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter) upon a determination, based upon a review of readily available facts (as opposed to a full trial type inquiry) that such Covered Person acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and is not liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, or (b) there has been obtained an opinion in writing of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial type inquiry) to the effect that such Covered Person appears to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and that such indemnification would not protect such Covered Person against any liability to the Trust to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Any approval pursuant to this Section shall not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with this Section as indemnification if such Covered Person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or to have been liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Indemnification Not Exclusive Section 3. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which such Covered Person may be entitled. As used in this Article VIII, the term "Covered Person" shall include such person's heirs, executors and administrators and a "disinterested Trustee" is a Trustee who is not an "interested person" of the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been exempted from being an "interested person" by any rule, regulation or order of the Commission) and against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending. Nothing contained in this Article shall affect any rights to indemnification to which personnel of the Trust, other than Trustees or officers, and other persons may be entitled by contract or otherwise under law, nor the power of the Trust to purchase and maintain liability insurance on behalf of any such person. Shareholders Section 4. In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his or her being or having been a Shareholder and not because of his or her acts or omissions or for some other reason, the Shareholder or former Shareholder (or his or her heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled to be held harmless from and indemnified against all loss and expense arising from such liability, but only out of the assets of the particular series of Shares of which he or she is or was a Shareholder. ARTICLE IX Miscellaneous Trustees, Shareholders, etc. Not Personally Liable; Notice Section 1. All persons extending credit to, contracting with or having any claim against the Trust or a particular series of Shares shall look only to the assets of the Trust or the assets of that particular series of Shares for payment under such credit, contract or claim, and neither the Shareholders nor the Trustees, nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Nothing in this Declaration of Trust shall protect any Trustee against any liability to which such Trustee would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee. Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officer or officers shall give notice that this Declaration of Trust is on file with the Secretary of The Commonwealth of Massachusetts and shall recite that the same was executed or made by or on behalf of the Trust or by them as Trustee or Trustees or as officer or officers and not individually and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust, and may contain such further recital as he or she or they may deem appropriate, but the omission thereof shall not operate to bind any Trustee or Trustees or officer or officers or Shareholder or Shareholders individually. Trustee's Good Faith Action, Expert Advice, No Bond or Surety Section 2. The exercise by the Trustees of their powers and discretions hereunder shall be binding upon everyone interested. A Trustee shall be liable for his or her own wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. Liability of Third Persons Dealing with Trustee Section 3. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order. Duration and Termination of Trust Section 4. Unless terminated as provided herein, the Trust shall continue without limitation of time. The Trust may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares entitled to vote or by the Trustees by written notice to the Shareholders. Any series of Shares may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares of such series entitled to vote or by the Trustees by written notice to the Shareholders of such series. Upon termination of the Trust or of any one or more series of Shares, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, of the Trust or of the particular series as may be determined by the Trustees, the Trust shall in accordance with such procedures as the Trustees consider appropriate reduce the remaining assets to distributable form in cash or shares or other securities, or any combination thereof, and distribute the proceeds to the Shareholders of the series involved, ratably according to the number of Shares of such series held by the several Shareholders of such series on the date of termination, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of any series of Shares of the Trust, provided that any distribution to the Shareholders of a particular class of any series of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Filing of Copies, References, Headings Section 5. The original or a copy of this instrument and of each amendment hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each amendment hereto shall be filed by the Trust with the Secretary of State of The Commonwealth of Massachusetts and with the Boston City Clerk, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this instrument or of any such amendments. In this instrument and in any such amendment, references to this instrument and all expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to this instrument as amended or affected by any such amendments. Headings are placed herein for convenience of reference only and shall not be taken as a part hereof or control or affect the meaning, construction or effect of this instrument. This instrument may be executed in any number of counterparts each of which shall be deemed an original. Applicable Law Section 6. This Declaration of Trust is made in The Commonwealth of Massachusetts, and it is created under and is to be governed by and construed and administered according to the laws of said Commonwealth. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust. Amendments Section 7. This Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the then Trustees when authorized to do so by vote of Shareholders holding a majority of the Shares entitled to vote, except that an amendment shall affect the holders of one or more series or classes of Shares but not the holders of all outstanding series and classes shall be authorized by vote of the Shareholders holding a majority of the Shares entitled to vote of each series and class affected and no vote of Shareholders of a series and class not affected shall be required. Amendments having the purpose of changing the name of the Trust or of supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein shall not require authorization by Shareholder vote. IN WITNESS WHEREOF, the undersigned, being a majority of the Trustees of the Trust, hereunto set their hands and seals in the City of Boston, Massachusetts, for themselves and their assigns, as of the day and year first above written. /s/ George Putnam /s/ Donald S. Perkins - ------------------------ --------------------------- George Putnam Donald S. Perkins /s/ Jameson A. Baxter /s/ William F. Pounds - ------------------------ --------------------------- Jameson A. Baxter William F. Pounds /s/ Hans H. Estin /s/ George Putnam, III - ------------------------ --------------------------- Hans H. Estin George Putnam, III /s/ John A. Hill Eli Shapiro - ------------------------ --------------------------- John A. Hill Eli Shapiro /s/ Elizabeth T. Kennan /s/ A.J.C. Smith - ------------------------ --------------------------- Elizabeth T. Kennan A.J.C. Smith /s/ Lawrence J. Lasser /s/ W. Nicholas Thorndike - ------------------------ --------------------------- Lawrence J. Lasser W. Nicholas Thorndike - ------------------------ Robert E. Patterson THE COMMONWEALTH OF MASSACHUSETTS Boston, September 15, 1995 Suffolk, ss. Then personally appeared each of the above named Trustees of Putnam Massachusetts Tax Exempt Income Fund and acknowledged the foregoing instrument to be their free act and deed, before me, /s/ Beth F. Marino ---------------------------- Notary Public My commission expires: 4/6/2001 The address of the Trust is One Post Office Square, Boston, Massachusetts 02109 EX-99.B1 3 CHARTER PUTNAM MICHIGAN TAX EXEMPT INCOME FUND AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this 15th day of September, 1995, hereby amends and restates in its entirety the Agreement and Declaration of Trust dated September 2, 1986, as heretofore amended, by the Trustees hereunder and by the holders of shares of beneficial interest issued or to be issued hereunder as hereinafter provided. This Amended and Restated Agreement and Declaration of Trust shall be effective upon filing with the Secretary of State of The Commonwealth of Massachusetts. WITNESSETH that WHEREAS, this Trust has been formed to carry on the business of an investment company; and WHEREAS, the Trustees have agreed to manage all property coming into their hands as trustees of a Massachusetts voluntary association with transferable shares in accordance with the provisions hereinafter set forth. NOW, THEREFORE, the Trustees hereby declare that they will hold all cash, securities and other assets, which they may from time to time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the following terms and conditions for the pro rata benefit of the holders from time to time of Shares in this Trust as hereinafter set forth. ARTICLE I Name and Definitions Name Section 1. This Trust shall be known as "Putnam Michigan Tax Exempt Income Fund", and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine. Definitions Section 2. Whenever used herein, unless otherwise required by the context or specifically provided: (a) The "Trust" refers to the Massachusetts business trust established by this Agreement and Declaration of Trust, as amended from time to time; (b) "Trustees" refers to the Trustees of the Trust named herein or elected in accordance with Article IV; (c) "Shares" means the equal proportionate transferable units of interest into which the beneficial interest in the Trust shall be divided from time to time or, if more than one series or class of Shares is authorized by the Trustees, the equal proportionate transferable units into which each series or class of Shares shall be divided from time to time; (d) "Shareholder" means a record owner of Shares; (e) The "1940 Act" refers to the Investment Company Act of 1940 and the Rules and Regulations thereunder, all as amended from time to time; (f) The terms "Affiliated Person", "Assignment", "Commission", "Interested Person", "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) shall have the meanings given them in the 1940 Act; (g) "Declaration of Trust" shall mean this Amended and Restated Agreement and Declaration of Trust as amended or restated from time to time; and (h) "Bylaws" shall mean the Bylaws of the Trust as amended from time to time; (i) The term "series" or "series of Shares" refers to the one or more separate investment portfolios of the Trust into which the assets and liabilities of the Trust may be divided and the Shares of the Trust representing the beneficial interest of Shareholders in such respective portfolios; and (j) The term "class" or "class of Shares" refers to the division of Shares into two or more classes as provided in Article III, Section 1 hereof. ARTICLE II Purpose of Trust The purpose of the Trust is to provide investors a managed investment primarily in securities, debt instruments and other instruments and rights of a financial character. ARTICLE III Shares Division of Beneficial Interest Section 1. The Shares of the Trust shall be issued in one or more series as the Trustees may, without shareholder approval, authorize. Each series shall be preferred over all other series in respect of the assets allocated to that series. The beneficial interest in each series shall at all times be divided into Shares, without par value, each of which shall, except as provided in the following sentence represent an equal proportionate interest in the series with each other Share of the same series, none having priority or preference over another. The Trustees may, without shareholder approval, divide the Shares of any series into two or more classes, Shares of each such class having such preferences and special or relative rights and privileges (including conversion rights, if any) as the Trustees may determine and as shall be set forth in the Bylaws. The number of Shares authorized shall be unlimited. The Trustees may from time to time divide or combine the Shares of any series or class into a greater or lesser number without thereby changing the proportionate beneficial interest in the series or class. Ownership of Shares Section 2. The ownership of Shares shall be recorded on the books of the Trust or a transfer or similar agent. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the transfer of Shares and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to who are the Shareholders of each series and class and as to the number of Shares of each series and class held from time to time by each Shareholder. Investment in the Trust Section 3. The Trustees shall accept investments in the Trust from such persons and on such terms and for such consideration, which may consist of cash or tangible or intangible property or a combination thereof, as they or the Bylaws from time to time authorize. All consideration received by the Trust for the issue or sale of Shares of each series, together with all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation thereof, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to the series of Shares with respect to which the same were received by the Trust for all purposes, subject only to the rights of creditors, and shall be so handled upon the books of account of the Trust and are herein referred to as "assets of" such series. No Preemptive Rights Section 4. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Status of Shares and Limitation of Personal Liability Section 5. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust or the Bylaws. Every Shareholder by virtue of having become a Shareholder shall be held to have expressly assented and agreed to the terms of this Declaration of Trust and the Bylaws and to have become a party hereto. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the same nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but only to the rights of said decedent under this Trust. Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders partners. Neither the Trust nor the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind personally any Shareholder, nor except as specifically provided herein to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay. ARTICLE IV The Trustees Election Section 1. A Trustee may be elected either by the Trustees or by the Shareholders. There shall be not less than three Trustees. The number of Trustees shall be fixed by the Trustees. Each Trustee elected by the Trustees or the Shareholders shall serve until he or she retires, resigns, is removed or dies or until the next meeting of Shareholders called for the purpose of electing Trustees and until the election and qualification of his or her successor. At any meeting called for the purpose, a Trustee may be removed by vote of two-thirds of the outstanding shares. The initial Trustees, each of whom shall serve until the first meeting of Shareholders at which Trustees are elected and until his successor is elected and qualified, or until he sooner dies, resigns or is removed shall be George Putnam, Richard M. Cutler and Alla O'Brien and such other persons as the Trustee or Trustees then in office shall, prior to any sale of Shares pursuant to public offering, appoint. Effect of Death, Resignation, etc. of a Trustee Section 2. The death, declination, resignation, retirement, removal or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Powers Section 3. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees, and they shall have all powers necessary or convenient to carry out that responsibility. Without limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust and may amend and repeal them to the extent that such Bylaws do not reserve that right to the Shareholders; they may fill vacancies in or add to their number, and may elect and remove such officers and appoint and terminate such agents as they consider appropriate; they may appoint from their own number, and terminate, any one or more committees consisting of two or more Trustees, including an executive committee which may, when the Trustees are not in session, exercise some or all of the power and authority of the Trustees as the Trustees may determine; they may employ one or more custodians of the assets of the Trust and may authorize such custodians to employ subcustodians and to deposit all or any part of such assets in a system or systems for the central handling of securities, retain a transfer agent or a Shareholder servicing agent, or both, provide for the distribution of Shares by the Trust, through one or more principal underwriters or otherwise, set record dates for the determination of Shareholders with respect to various matters, and in general delegate such authority as they consider desirable to any officer of the Trust, to any committee of the Trustees and to any agent or employee of the Trust or to any such custodian or underwriter. Without limiting the foregoing, the Trustees shall have power and authority: (a) To invest and reinvest cash, and to hold cash uninvested; (b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust; (c) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper; (d) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities; (e) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or in the name of a custodian, subcustodian or other depositary or a nominee or nominees or otherwise; (f) Subject to the provisions of Article III, Section 3, to allocate assets, liabilities, income and expenses of the Trust to a particular series of Shares or to apportion the same among two or more series, provided that any liabilities or expenses incurred by or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series; and to the extent necessary or appropriate to give effect to the preferences and special or relative rights and privileges of any classes of Shares, to allocate assets, liabilities, income and expenses of a series to a particular class of Shares of that series or to apportion the same among two or more classes of Shares of that series; (g) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust; (h) To join with other security holders in acting through a committee, depositary, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depositary or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depositary or trustee as the Trustees shall deem proper; (i) To compromise, arbitrate or otherwise adjust claims in favor of or against the Trust or any matter in controversy, including but not limited to claims for taxes; (j) To enter into joint ventures, general or limited partnerships and any other combinations or associations; (k) To borrow funds; (l) To endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property or any part thereof to secure any of or all such obligations; (m) To purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the business, including without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers or managers, principal underwriters, or independent contractors of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person as Shareholder, Trustee, officer, employee, agent, investment adviser or manager, principal underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability; and (n) To pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust. The Trustees shall not in any way be bound or limited by any present or future law or custom in regard to investments by trustees. Except as otherwise provided herein or from time to time in the Bylaws, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum being present), within or without Massachusetts, including any meeting held by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting, or by written consents of a majority of the Trustees then in office. Payment of Expenses by Trust Section 4. The Trustees are authorized to pay or to cause to be paid out of the assets of the Trust all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust, or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, investment adviser or manager, principal underwriter, auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur, provided, however, that all expenses, fees, charges, taxes and liabilities incurred or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series. Ownership of Assets of the Trust Section 5. Title to all of the assets of each series of Shares and of the Trust shall at all times be considered as vested in the Trustees. Advisory, Management and Distribution Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees may, at any time and from time to time, contract for exclusive or nonexclusive advisory and/or management services with any corporation, trust, association or other organization (the "Manager"), every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine, including, without limitation, authority to determine from time to time what investments shall be purchased, held, sold or exchanged and what portion, if any, of the assets of the Trust shall be held uninvested and to make changes in the Trust's investments. The Trustees may also, at any time and from time to time, contract with the Manager or any other corporation, trust, association or other organization, appointing it exclusive or nonexclusive distributor or principal underwriter for the Shares, every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine. The fact that: (i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any corporation, trust, association, or other organization, or of or for any parent or affiliate of any organization, with which an advisory or management contract, or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made, or that any such organization, or any parent or affiliate thereof, is a Shareholder or has an interest in the Trust, or that (ii) any corporation, trust, association or other organization with which an advisory or management contract or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made also has an advisory or management contract, or transfer, Shareholder servicing or other agency contract with one or more other corporations, trusts, associations, or other organizations, or has other business or interests, shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or its Shareholders. ARTICLE V Shareholders' Voting Powers and Meetings Voting Powers Section 1. Subject to the voting powers of one or more classes of shares as set forth elsewhere in this Declaration of Trust or in the Bylaws, the Shareholders shall have power to vote only (i) for the election of Trustees as provided in Article IV, Section 1, (ii) for the removal of Trustees as provided in Article IV, Section 1, (iii) with respect to any Manager as provided in Article IV, Section 6, (iv) with respect to any termination of this Trust to the extent and as provided in Article IX, Section 4, (v) with respect to any amendment of this Declaration of Trust to the extent and as provided in Article IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (vii) with respect to such additional matters relating to the Trust as may be required by this Declaration of Trust, the Bylaws or any registration of the Trust with the Securities and Exchange Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote. Notwithstanding any other provision of this Declaration of Trust, on any matter submitted to a vote of Shareholders, all Shares of the Trust then entitled to vote shall be voted in the aggregate as a single class without regard to series or classes of shares, except (1) when required by the 1940 Act or when the Trustees shall have determined that the matter affects one or more series or classes of Shares materially differently, Shares shall be voted by individual series or class; and (2) when the Trustees have determined that the matter affects only the interests of one or more series or classes, then only Shareholders of such series or classes shall be entitled to vote thereon. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares of any series or class are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders as to such series or class. Voting Power and Meetings Section 2. Meetings of Shareholders of any or all series or classes may be called by the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders of such series or classes as herein provided or upon any other matter deemed by the Trustees to be necessary or desirable. Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing such notice at least seven days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder entitled to vote at such meeting at the Shareholder's address as it appears on the records of the Trust. If the Trustees shall fail to call or give notice of any meeting of Shareholders for a period of 30 days after written application by Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting requesting that a meeting be called for a purpose requiring action by the Shareholders as provided herein or in the Bylaws, then Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting or of all series if all series are entitled to vote at such meeting may call and give notice of such meeting, and thereupon the meeting shall be held in the manner provided for herein in case of call thereof by the Trustees. Notice of a meeting need not be given to any Shareholder if a written waiver of notice, executed by him or her before or after the meeting, is filed with the records of the meeting, or to any Shareholder who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. Quorum and Required Vote Section 3. Thirty percent of Shares entitled to vote on a particular matter shall be a quorum for the transaction of business on that matter at a Shareholders' meeting, except that where any provision of law or of this Declaration of Trust permits or requires that holders of any series or class shall vote as an individual series or class, then thirty percent of the aggregate number of Shares of that series or class entitled to vote shall be necessary to constitute a quorum for the transaction of business by that series or class. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by any provision of this Declaration of Trust or the Bylaws, or by the 1940 Act, a majority of the Shares voted shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Declaration of Trust permits or requires that the holders of any series or class shall vote as an individual series or class, then a majority of the Shares of that series or class voted on the matter (or a plurality with respect to the election of a Trustee) shall decide that matter insofar as that series or class is concerned. Action by Written Consent Section 4. Any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of this Declaration of Trust or the Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. Additional Provisions Section 5. The Bylaws may include further provisions not inconsistent with this Declaration of Trust, regarding Shareholders' voting powers, the conduct of meetings and related matters. ARTICLE VI Distributions, Redemptions and Repurchases Distributions Section 1. The Trustees may each year, or more frequently if they so determine, distribute to the Shareholders of each series out of the assets of such series such amounts as the Trustees may determine. Any such distribution to the Shareholders of a particular series shall be made to said Shareholders pro rata in proportion to the number of Shares of such series held by each of them, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of Shares of that series, and any distribution to the Shareholders of a particular class of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Such distributions shall be made in cash or Shares or a combination thereof as determined by the Trustees. Any such distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with the Bylaws. Redemptions and Repurchases Section 2. The Trust shall purchase such Shares as are offered by any Shareholder for redemption, upon the presentation of any certificate for the Shares to be purchased, a proper instrument of transfer and a request directed to the Trust or a person designated by the Trust that the Trust purchase such Shares, or in accordance with such other procedures for redemption as the Trustees may from time to time authorize; and the Trust will pay therefor the net asset value thereof, as next determined in accordance with the Bylaws. Payment for said Shares shall be made by the Trust to the Shareholder within seven days after the date on which the request is made. The obligation set forth in this Section 2 is subject to the provision that in the event that any time the New York Stock Exchange is closed for other than customary weekends or holidays, or, if permitted by rules of the Securities and Exchange Commission, during periods when trading on the Exchange is restricted or during any emergency which makes it impractical for the Trust to dispose of its investments or to determine fairly the value of its net assets, or during any other period permitted by order of the Securities and Exchange Commission for the protection of investors, such obligation may be suspended or postponed by the Trustees. The Trust may also purchase or repurchase Shares at a price not exceeding the net asset value of such Shares in effect when the purchase or repurchase or any contract to purchase or repurchase is made. Redemptions at the Option of the Trust Section 3. The Trust shall have the right at its option and at any time to redeem Shares of any Shareholder at the net asset value thereof as determined in accordance with the Bylaws: (i) if at such time such Shareholder owns fewer Shares than, or Shares having an aggregate net asset value of less than, an amount determined from time to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares of a particular series or class of Shares equal to or in excess of a percentage of the outstanding Shares of that series or class determined from time to time by the Trustees; or (iii) to the extent that such Shareholder owns Shares of the Trust representing a percentage equal to or in excess of such percentage of the aggregate number of outstanding Shares of the Trust or the aggregate net asset value of the Trust determined from time to time by the Trustees. ARTICLE VII Compensation and Limitation of Liability of Trustees Compensation Section 1. The Trustees as such shall be entitled to reasonable compensation from the Trust; they may fix the amount of their compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, legal, accounting, investment banking or other services and payment for the same by the Trust. Limitation of Liability Section 2. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, manager or principal underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, but nothing herein contained shall protect any Trustee against any liability to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any of them in connection with the Trust shall be conclusively deemed to have been executed or done only in or with respect to their or his or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be personally liable thereon. ARTICLE VIII Indemnification Trustees, Officers, etc. Section 1. The Trust shall indemnify each of its Trustees and officers (including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered Person") against all liabilities and expenses, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such Covered Person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Covered Person except with respect to any matter as to which such Covered Person shall have been finally adjudicated in any such action, suit or other proceeding (a) not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or (b) to be liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Expenses, including counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), shall be paid from time to time by the Trust in advance of the final disposition of any such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Covered Person to repay amounts so paid to the Trust if it is ultimately determined that indemnification of such expenses is not authorized under this Article, provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust shall be insured against losses arising from any such advance payments or (c) either a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter), or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial type inquiry) that there is reason to believe that such Covered Person will be found entitled to indemnification under this Article. Compromise Payment Section 2. As to any matter disposed of (whether by a compromise payment, pursuant to a consent decree or otherwise) without an adjudication by a court, or by any other body before which the proceeding was brought, that such Covered Person either (a) did not act in good faith in the reasonable belief that his or her action was in the best interests of the Trust or (b) is liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, indemnification shall be provided if (a) approved as in the best interests of the Trust, after notice that it involves such indemnification, by at least a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter) upon a determination, based upon a review of readily available facts (as opposed to a full trial type inquiry) that such Covered Person acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and is not liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, or (b) there has been obtained an opinion in writing of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial type inquiry) to the effect that such Covered Person appears to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and that such indemnification would not protect such Covered Person against any liability to the Trust to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Any approval pursuant to this Section shall not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with this Section as indemnification if such Covered Person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or to have been liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Indemnification Not Exclusive Section 3. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which such Covered Person may be entitled. As used in this Article VIII, the term "Covered Person" shall include such person's heirs, executors and administrators and a "disinterested Trustee" is a Trustee who is not an "interested person" of the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been exempted from being an "interested person" by any rule, regulation or order of the Commission) and against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending. Nothing contained in this Article shall affect any rights to indemnification to which personnel of the Trust, other than Trustees or officers, and other persons may be entitled by contract or otherwise under law, nor the power of the Trust to purchase and maintain liability insurance on behalf of any such person. Shareholders Section 4. In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his or her being or having been a Shareholder and not because of his or her acts or omissions or for some other reason, the Shareholder or former Shareholder (or his or her heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled to be held harmless from and indemnified against all loss and expense arising from such liability, but only out of the assets of the particular series of Shares of which he or she is or was a Shareholder. ARTICLE IX Miscellaneous Trustees, Shareholders, etc. Not Personally Liable; Notice Section 1. All persons extending credit to, contracting with or having any claim against the Trust or a particular series of Shares shall look only to the assets of the Trust or the assets of that particular series of Shares for payment under such credit, contract or claim, and neither the Shareholders nor the Trustees, nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Nothing in this Declaration of Trust shall protect any Trustee against any liability to which such Trustee would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee. Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officer or officers shall give notice that this Declaration of Trust is on file with the Secretary of The Commonwealth of Massachusetts and shall recite that the same was executed or made by or on behalf of the Trust or by them as Trustee or Trustees or as officer or officers and not individually and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust, and may contain such further recital as he or she or they may deem appropriate, but the omission thereof shall not operate to bind any Trustee or Trustees or officer or officers or Shareholder or Shareholders individually. Trustee's Good Faith Action, Expert Advice, No Bond or Surety Section 2. The exercise by the Trustees of their powers and discretions hereunder shall be binding upon everyone interested. A Trustee shall be liable for his or her own wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. Liability of Third Persons Dealing with Trustee Section 3. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order. Duration and Termination of Trust Section 4. Unless terminated as provided herein, the Trust shall continue without limitation of time. The Trust may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares entitled to vote or by the Trustees by written notice to the Shareholders. Any series of Shares may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares of such series entitled to vote or by the Trustees by written notice to the Shareholders of such series. Upon termination of the Trust or of any one or more series of Shares, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, of the Trust or of the particular series as may be determined by the Trustees, the Trust shall in accordance with such procedures as the Trustees consider appropriate reduce the remaining assets to distributable form in cash or shares or other securities, or any combination thereof, and distribute the proceeds to the Shareholders of the series involved, ratably according to the number of Shares of such series held by the several Shareholders of such series on the date of termination, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of any series of Shares of the Trust, provided that any distribution to the Shareholders of a particular class of any series of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Filing of Copies, References, Headings Section 5. The original or a copy of this instrument and of each amendment hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each amendment hereto shall be filed by the Trust with the Secretary of State of The Commonwealth of Massachusetts and with the Boston City Clerk, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this instrument or of any such amendments. In this instrument and in any such amendment, references to this instrument and all expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to this instrument as amended or affected by any such amendments. Headings are placed herein for convenience of reference only and shall not be taken as a part hereof or control or affect the meaning, construction or effect of this instrument. This instrument may be executed in any number of counterparts each of which shall be deemed an original. Applicable Law Section 6. This Declaration of Trust is made in The Commonwealth of Massachusetts, and it is created under and is to be governed by and construed and administered according to the laws of said Commonwealth. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust. Amendments Section 7. This Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the then Trustees when authorized to do so by vote of Shareholders holding a majority of the Shares entitled to vote, except that an amendment shall affect the holders of one or more series or classes of Shares but not the holders of all outstanding series and classes shall be authorized by vote of the Shareholders holding a majority of the Shares entitled to vote of each series and class affected and no vote of Shareholders of a series and class not affected shall be required. Amendments having the purpose of changing the name of the Trust or of supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein shall not require authorization by Shareholder vote. IN WITNESS WHEREOF, the undersigned, being a majority of the Trustees of the Trust, hereunto set their hands and seals in the City of Boston, Massachusetts, for themselves and their assigns, as of the day and year first above written. /s/ George Putnam /s/ Donald S. Perkins - ------------------------ --------------------------- George Putnam Donald S. Perkins /s/ Jameson A. Baxter /s/ William F. Pounds - ------------------------ --------------------------- Jameson A. Baxter William F. Pounds /s/ Hans H. Estin /s/ George Putnam, III - ------------------------ --------------------------- Hans H. Estin George Putnam, III /s/ John A. Hill Eli Shapiro - ------------------------ --------------------------- John A. Hill Eli Shapiro /s/ Elizabeth T. Kennan /s/ A.J.C. Smith - ------------------------ --------------------------- Elizabeth T. Kennan A.J.C. Smith /s/ Lawrence J. Lasser /s/ W. Nicholas Thorndike - ------------------------ --------------------------- Lawrence J. Lasser W. Nicholas Thorndike - ------------------------ Robert E. Patterson THE COMMONWEALTH OF MASSACHUSETTS Boston, September 15, 1995 Suffolk, ss. Then personally appeared each of the above named Trustees of Putnam Michigan Tax Exempt Income Fund and acknowledged the foregoing instrument to be their free act and deed, before me, /s/ Beth F. Marino ---------------------------- Notary Public My commission expires: 4/6/2001 The address of the Trust is One Post Office Square, Boston, Massachusetts 02109 PUTNAM MINNESOTA TAX EXEMPT INCOME FUND AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this 15th day of September, 1995, hereby amends and restates in its entirety the Agreement and Declaration of Trust dated September 2, 1986, as heretofore amended, by the Trustees hereunder and by the holders of shares of beneficial interest issued or to be issued hereunder as hereinafter provided. This Amended and Restated Agreement and Declaration of Trust shall be effective upon filing with the Secretary of State of The Commonwealth of Massachusetts. WITNESSETH that WHEREAS, this Trust has been formed to carry on the business of an investment company; and WHEREAS, the Trustees have agreed to manage all property coming into their hands as trustees of a Massachusetts voluntary association with transferable shares in accordance with the provisions hereinafter set forth. NOW, THEREFORE, the Trustees hereby declare that they will hold all cash, securities and other assets, which they may from time to time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the following terms and conditions for the pro rata benefit of the holders from time to time of Shares in this Trust as hereinafter set forth. ARTICLE I Name and Definitions Name Section 1. This Trust shall be known as "Putnam Minnesota Tax Exempt Income Fund", and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine. Definitions Section 2. Whenever used herein, unless otherwise required by the context or specifically provided: (a) The "Trust" refers to the Massachusetts business trust established by this Agreement and Declaration of Trust, as amended from time to time; (b) "Trustees" refers to the Trustees of the Trust named herein or elected in accordance with Article IV; (c) "Shares" means the equal proportionate transferable units of interest into which the beneficial interest in the Trust shall be divided from time to time or, if more than one series or class of Shares is authorized by the Trustees, the equal proportionate transferable units into which each series or class of Shares shall be divided from time to time; (d) "Shareholder" means a record owner of Shares; (e) The "1940 Act" refers to the Investment Company Act of 1940 and the Rules and Regulations thereunder, all as amended from time to time; (f) The terms "Affiliated Person", "Assignment", "Commission", "Interested Person", "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) shall have the meanings given them in the 1940 Act; (g) "Declaration of Trust" shall mean this Amended and Restated Agreement and Declaration of Trust as amended or restated from time to time; and (h) "Bylaws" shall mean the Bylaws of the Trust as amended from time to time; (i) The term "series" or "series of Shares" refers to the one or more separate investment portfolios of the Trust into which the assets and liabilities of the Trust may be divided and the Shares of the Trust representing the beneficial interest of Shareholders in such respective portfolios; and (j) The term "class" or "class of Shares" refers to the division of Shares into two or more classes as provided in Article III, Section 1 hereof. ARTICLE II Purpose of Trust The purpose of the Trust is to provide investors a managed investment primarily in securities, debt instruments and other instruments and rights of a financial character. ARTICLE III Shares Division of Beneficial Interest Section 1. The Shares of the Trust shall be issued in one or more series as the Trustees may, without shareholder approval, authorize. Each series shall be preferred over all other series in respect of the assets allocated to that series. The beneficial interest in each series shall at all times be divided into Shares, without par value, each of which shall, except as provided in the following sentence represent an equal proportionate interest in the series with each other Share of the same series, none having priority or preference over another. The Trustees may, without shareholder approval, divide the Shares of any series into two or more classes, Shares of each such class having such preferences and special or relative rights and privileges (including conversion rights, if any) as the Trustees may determine and as shall be set forth in the Bylaws. The number of Shares authorized shall be unlimited. The Trustees may from time to time divide or combine the Shares of any series or class into a greater or lesser number without thereby changing the proportionate beneficial interest in the series or class. Ownership of Shares Section 2. The ownership of Shares shall be recorded on the books of the Trust or a transfer or similar agent. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the transfer of Shares and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to who are the Shareholders of each series and class and as to the number of Shares of each series and class held from time to time by each Shareholder. Investment in the Trust Section 3. The Trustees shall accept investments in the Trust from such persons and on such terms and for such consideration, which may consist of cash or tangible or intangible property or a combination thereof, as they or the Bylaws from time to time authorize. All consideration received by the Trust for the issue or sale of Shares of each series, together with all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation thereof, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to the series of Shares with respect to which the same were received by the Trust for all purposes, subject only to the rights of creditors, and shall be so handled upon the books of account of the Trust and are herein referred to as "assets of" such series. No Preemptive Rights Section 4. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Status of Shares and Limitation of Personal Liability Section 5. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust or the Bylaws. Every Shareholder by virtue of having become a Shareholder shall be held to have expressly assented and agreed to the terms of this Declaration of Trust and the Bylaws and to have become a party hereto. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the same nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but only to the rights of said decedent under this Trust. Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders partners. Neither the Trust nor the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind personally any Shareholder, nor except as specifically provided herein to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay. ARTICLE IV The Trustees Election Section 1. A Trustee may be elected either by the Trustees or by the Shareholders. There shall be not less than three Trustees. The number of Trustees shall be fixed by the Trustees. Each Trustee elected by the Trustees or the Shareholders shall serve until he or she retires, resigns, is removed or dies or until the next meeting of Shareholders called for the purpose of electing Trustees and until the election and qualification of his or her successor. At any meeting called for the purpose, a Trustee may be removed by vote of two-thirds of the outstanding shares. The initial Trustees, each of whom shall serve until the first meeting of Shareholders at which Trustees are elected and until his successor is elected and qualified, or until he sooner dies, resigns or is removed shall be George Putnam, Richard M. Cutler and Alla O'Brien and such other persons as the Trustee or Trustees then in office shall, prior to any sale of Shares pursuant to public offering, appoint. Effect of Death, Resignation, etc. of a Trustee Section 2. The death, declination, resignation, retirement, removal or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Powers Section 3. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees, and they shall have all powers necessary or convenient to carry out that responsibility. Without limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust and may amend and repeal them to the extent that such Bylaws do not reserve that right to the Shareholders; they may fill vacancies in or add to their number, and may elect and remove such officers and appoint and terminate such agents as they consider appropriate; they may appoint from their own number, and terminate, any one or more committees consisting of two or more Trustees, including an executive committee which may, when the Trustees are not in session, exercise some or all of the power and authority of the Trustees as the Trustees may determine; they may employ one or more custodians of the assets of the Trust and may authorize such custodians to employ subcustodians and to deposit all or any part of such assets in a system or systems for the central handling of securities, retain a transfer agent or a Shareholder servicing agent, or both, provide for the distribution of Shares by the Trust, through one or more principal underwriters or otherwise, set record dates for the determination of Shareholders with respect to various matters, and in general delegate such authority as they consider desirable to any officer of the Trust, to any committee of the Trustees and to any agent or employee of the Trust or to any such custodian or underwriter. Without limiting the foregoing, the Trustees shall have power and authority: (a) To invest and reinvest cash, and to hold cash uninvested; (b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust; (c) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper; (d) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities; (e) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or in the name of a custodian, subcustodian or other depositary or a nominee or nominees or otherwise; (f) Subject to the provisions of Article III, Section 3, to allocate assets, liabilities, income and expenses of the Trust to a particular series of Shares or to apportion the same among two or more series, provided that any liabilities or expenses incurred by or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series; and to the extent necessary or appropriate to give effect to the preferences and special or relative rights and privileges of any classes of Shares, to allocate assets, liabilities, income and expenses of a series to a particular class of Shares of that series or to apportion the same among two or more classes of Shares of that series; (g) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust; (h) To join with other security holders in acting through a committee, depositary, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depositary or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depositary or trustee as the Trustees shall deem proper; (i) To compromise, arbitrate or otherwise adjust claims in favor of or against the Trust or any matter in controversy, including but not limited to claims for taxes; (j) To enter into joint ventures, general or limited partnerships and any other combinations or associations; (k) To borrow funds; (l) To endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property or any part thereof to secure any of or all such obligations; (m) To purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the business, including without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers or managers, principal underwriters, or independent contractors of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person as Shareholder, Trustee, officer, employee, agent, investment adviser or manager, principal underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability; and (n) To pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust. The Trustees shall not in any way be bound or limited by any present or future law or custom in regard to investments by trustees. Except as otherwise provided herein or from time to time in the Bylaws, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum being present), within or without Massachusetts, including any meeting held by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting, or by written consents of a majority of the Trustees then in office. Payment of Expenses by Trust Section 4. The Trustees are authorized to pay or to cause to be paid out of the assets of the Trust all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust, or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, investment adviser or manager, principal underwriter, auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur, provided, however, that all expenses, fees, charges, taxes and liabilities incurred or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series. Ownership of Assets of the Trust Section 5. Title to all of the assets of each series of Shares and of the Trust shall at all times be considered as vested in the Trustees. Advisory, Management and Distribution Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees may, at any time and from time to time, contract for exclusive or nonexclusive advisory and/or management services with any corporation, trust, association or other organization (the "Manager"), every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine, including, without limitation, authority to determine from time to time what investments shall be purchased, held, sold or exchanged and what portion, if any, of the assets of the Trust shall be held uninvested and to make changes in the Trust's investments. The Trustees may also, at any time and from time to time, contract with the Manager or any other corporation, trust, association or other organization, appointing it exclusive or nonexclusive distributor or principal underwriter for the Shares, every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine. The fact that: (i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any corporation, trust, association, or other organization, or of or for any parent or affiliate of any organization, with which an advisory or management contract, or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made, or that any such organization, or any parent or affiliate thereof, is a Shareholder or has an interest in the Trust, or that (ii) any corporation, trust, association or other organization with which an advisory or management contract or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made also has an advisory or management contract, or transfer, Shareholder servicing or other agency contract with one or more other corporations, trusts, associations, or other organizations, or has other business or interests, shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or its Shareholders. ARTICLE V Shareholders' Voting Powers and Meetings Voting Powers Section 1. Subject to the voting powers of one or more classes of shares as set forth elsewhere in this Declaration of Trust or in the Bylaws, the Shareholders shall have power to vote only (i) for the election of Trustees as provided in Article IV, Section 1, (ii) for the removal of Trustees as provided in Article IV, Section 1, (iii) with respect to any Manager as provided in Article IV, Section 6, (iv) with respect to any termination of this Trust to the extent and as provided in Article IX, Section 4, (v) with respect to any amendment of this Declaration of Trust to the extent and as provided in Article IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (vii) with respect to such additional matters relating to the Trust as may be required by this Declaration of Trust, the Bylaws or any registration of the Trust with the Securities and Exchange Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote. Notwithstanding any other provision of this Declaration of Trust, on any matter submitted to a vote of Shareholders, all Shares of the Trust then entitled to vote shall be voted in the aggregate as a single class without regard to series or classes of shares, except (1) when required by the 1940 Act or when the Trustees shall have determined that the matter affects one or more series or classes of Shares materially differently, Shares shall be voted by individual series or class; and (2) when the Trustees have determined that the matter affects only the interests of one or more series or classes, then only Shareholders of such series or classes shall be entitled to vote thereon. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares of any series or class are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders as to such series or class. Voting Power and Meetings Section 2. Meetings of Shareholders of any or all series or classes may be called by the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders of such series or classes as herein provided or upon any other matter deemed by the Trustees to be necessary or desirable. Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing such notice at least seven days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder entitled to vote at such meeting at the Shareholder's address as it appears on the records of the Trust. If the Trustees shall fail to call or give notice of any meeting of Shareholders for a period of 30 days after written application by Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting requesting that a meeting be called for a purpose requiring action by the Shareholders as provided herein or in the Bylaws, then Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting or of all series if all series are entitled to vote at such meeting may call and give notice of such meeting, and thereupon the meeting shall be held in the manner provided for herein in case of call thereof by the Trustees. Notice of a meeting need not be given to any Shareholder if a written waiver of notice, executed by him or her before or after the meeting, is filed with the records of the meeting, or to any Shareholder who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. Quorum and Required Vote Section 3. Thirty percent of Shares entitled to vote on a particular matter shall be a quorum for the transaction of business on that matter at a Shareholders' meeting, except that where any provision of law or of this Declaration of Trust permits or requires that holders of any series or class shall vote as an individual series or class, then thirty percent of the aggregate number of Shares of that series or class entitled to vote shall be necessary to constitute a quorum for the transaction of business by that series or class. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by any provision of this Declaration of Trust or the Bylaws, or by the 1940 Act, a majority of the Shares voted shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Declaration of Trust permits or requires that the holders of any series or class shall vote as an individual series or class, then a majority of the Shares of that series or class voted on the matter (or a plurality with respect to the election of a Trustee) shall decide that matter insofar as that series or class is concerned. Action by Written Consent Section 4. Any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of this Declaration of Trust or the Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. Additional Provisions Section 5. The Bylaws may include further provisions not inconsistent with this Declaration of Trust, regarding Shareholders' voting powers, the conduct of meetings and related matters. ARTICLE VI Distributions, Redemptions and Repurchases Distributions Section 1. The Trustees may each year, or more frequently if they so determine, distribute to the Shareholders of each series out of the assets of such series such amounts as the Trustees may determine. Any such distribution to the Shareholders of a particular series shall be made to said Shareholders pro rata in proportion to the number of Shares of such series held by each of them, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of Shares of that series, and any distribution to the Shareholders of a particular class of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Such distributions shall be made in cash or Shares or a combination thereof as determined by the Trustees. Any such distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with the Bylaws. Redemptions and Repurchases Section 2. The Trust shall purchase such Shares as are offered by any Shareholder for redemption, upon the presentation of any certificate for the Shares to be purchased, a proper instrument of transfer and a request directed to the Trust or a person designated by the Trust that the Trust purchase such Shares, or in accordance with such other procedures for redemption as the Trustees may from time to time authorize; and the Trust will pay therefor the net asset value thereof, as next determined in accordance with the Bylaws. Payment for said Shares shall be made by the Trust to the Shareholder within seven days after the date on which the request is made. The obligation set forth in this Section 2 is subject to the provision that in the event that any time the New York Stock Exchange is closed for other than customary weekends or holidays, or, if permitted by rules of the Securities and Exchange Commission, during periods when trading on the Exchange is restricted or during any emergency which makes it impractical for the Trust to dispose of its investments or to determine fairly the value of its net assets, or during any other period permitted by order of the Securities and Exchange Commission for the protection of investors, such obligation may be suspended or postponed by the Trustees. The Trust may also purchase or repurchase Shares at a price not exceeding the net asset value of such Shares in effect when the purchase or repurchase or any contract to purchase or repurchase is made. Redemptions at the Option of the Trust Section 3. The Trust shall have the right at its option and at any time to redeem Shares of any Shareholder at the net asset value thereof as determined in accordance with the Bylaws: (i) if at such time such Shareholder owns fewer Shares than, or Shares having an aggregate net asset value of less than, an amount determined from time to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares of a particular series or class of Shares equal to or in excess of a percentage of the outstanding Shares of that series or class determined from time to time by the Trustees; or (iii) to the extent that such Shareholder owns Shares of the Trust representing a percentage equal to or in excess of such percentage of the aggregate number of outstanding Shares of the Trust or the aggregate net asset value of the Trust determined from time to time by the Trustees. ARTICLE VII Compensation and Limitation of Liability of Trustees Compensation Section 1. The Trustees as such shall be entitled to reasonable compensation from the Trust; they may fix the amount of their compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, legal, accounting, investment banking or other services and payment for the same by the Trust. Limitation of Liability Section 2. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, manager or principal underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, but nothing herein contained shall protect any Trustee against any liability to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any of them in connection with the Trust shall be conclusively deemed to have been executed or done only in or with respect to their or his or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be personally liable thereon. ARTICLE VIII Indemnification Trustees, Officers, etc. Section 1. The Trust shall indemnify each of its Trustees and officers (including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered Person") against all liabilities and expenses, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such Covered Person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Covered Person except with respect to any matter as to which such Covered Person shall have been finally adjudicated in any such action, suit or other proceeding (a) not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or (b) to be liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Expenses, including counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), shall be paid from time to time by the Trust in advance of the final disposition of any such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Covered Person to repay amounts so paid to the Trust if it is ultimately determined that indemnification of such expenses is not authorized under this Article, provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust shall be insured against losses arising from any such advance payments or (c) either a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter), or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial type inquiry) that there is reason to believe that such Covered Person will be found entitled to indemnification under this Article. Compromise Payment Section 2. As to any matter disposed of (whether by a compromise payment, pursuant to a consent decree or otherwise) without an adjudication by a court, or by any other body before which the proceeding was brought, that such Covered Person either (a) did not act in good faith in the reasonable belief that his or her action was in the best interests of the Trust or (b) is liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, indemnification shall be provided if (a) approved as in the best interests of the Trust, after notice that it involves such indemnification, by at least a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter) upon a determination, based upon a review of readily available facts (as opposed to a full trial type inquiry) that such Covered Person acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and is not liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, or (b) there has been obtained an opinion in writing of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial type inquiry) to the effect that such Covered Person appears to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and that such indemnification would not protect such Covered Person against any liability to the Trust to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Any approval pursuant to this Section shall not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with this Section as indemnification if such Covered Person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or to have been liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Indemnification Not Exclusive Section 3. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which such Covered Person may be entitled. As used in this Article VIII, the term "Covered Person" shall include such person's heirs, executors and administrators and a "disinterested Trustee" is a Trustee who is not an "interested person" of the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been exempted from being an "interested person" by any rule, regulation or order of the Commission) and against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending. Nothing contained in this Article shall affect any rights to indemnification to which personnel of the Trust, other than Trustees or officers, and other persons may be entitled by contract or otherwise under law, nor the power of the Trust to purchase and maintain liability insurance on behalf of any such person. Shareholders Section 4. In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his or her being or having been a Shareholder and not because of his or her acts or omissions or for some other reason, the Shareholder or former Shareholder (or his or her heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled to be held harmless from and indemnified against all loss and expense arising from such liability, but only out of the assets of the particular series of Shares of which he or she is or was a Shareholder. ARTICLE IX Miscellaneous Trustees, Shareholders, etc. Not Personally Liable; Notice Section 1. All persons extending credit to, contracting with or having any claim against the Trust or a particular series of Shares shall look only to the assets of the Trust or the assets of that particular series of Shares for payment under such credit, contract or claim, and neither the Shareholders nor the Trustees, nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Nothing in this Declaration of Trust shall protect any Trustee against any liability to which such Trustee would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee. Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officer or officers shall give notice that this Declaration of Trust is on file with the Secretary of The Commonwealth of Massachusetts and shall recite that the same was executed or made by or on behalf of the Trust or by them as Trustee or Trustees or as officer or officers and not individually and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust, and may contain such further recital as he or she or they may deem appropriate, but the omission thereof shall not operate to bind any Trustee or Trustees or officer or officers or Shareholder or Shareholders individually. Trustee's Good Faith Action, Expert Advice, No Bond or Surety Section 2. The exercise by the Trustees of their powers and discretions hereunder shall be binding upon everyone interested. A Trustee shall be liable for his or her own wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. Liability of Third Persons Dealing with Trustee Section 3. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order. Duration and Termination of Trust Section 4. Unless terminated as provided herein, the Trust shall continue without limitation of time. The Trust may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares entitled to vote or by the Trustees by written notice to the Shareholders. Any series of Shares may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares of such series entitled to vote or by the Trustees by written notice to the Shareholders of such series. Upon termination of the Trust or of any one or more series of Shares, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, of the Trust or of the particular series as may be determined by the Trustees, the Trust shall in accordance with such procedures as the Trustees consider appropriate reduce the remaining assets to distributable form in cash or shares or other securities, or any combination thereof, and distribute the proceeds to the Shareholders of the series involved, ratably according to the number of Shares of such series held by the several Shareholders of such series on the date of termination, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of any series of Shares of the Trust, provided that any distribution to the Shareholders of a particular class of any series of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Filing of Copies, References, Headings Section 5. The original or a copy of this instrument and of each amendment hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each amendment hereto shall be filed by the Trust with the Secretary of State of The Commonwealth of Massachusetts and with the Boston City Clerk, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this instrument or of any such amendments. In this instrument and in any such amendment, references to this instrument and all expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to this instrument as amended or affected by any such amendments. Headings are placed herein for convenience of reference only and shall not be taken as a part hereof or control or affect the meaning, construction or effect of this instrument. This instrument may be executed in any number of counterparts each of which shall be deemed an original. Applicable Law Section 6. This Declaration of Trust is made in The Commonwealth of Massachusetts, and it is created under and is to be governed by and construed and administered according to the laws of said Commonwealth. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust. Amendments Section 7. This Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the then Trustees when authorized to do so by vote of Shareholders holding a majority of the Shares entitled to vote, except that an amendment shall affect the holders of one or more series or classes of Shares but not the holders of all outstanding series and classes shall be authorized by vote of the Shareholders holding a majority of the Shares entitled to vote of each series and class affected and no vote of Shareholders of a series and class not affected shall be required. Amendments having the purpose of changing the name of the Trust or of supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein shall not require authorization by Shareholder vote. IN WITNESS WHEREOF, the undersigned, being a majority of the Trustees of the Trust, hereunto set their hands and seals in the City of Boston, Massachusetts, for themselves and their assigns, as of the day and year first above written. /s/ George Putnam /s/ Donald S. Perkins - ------------------------ --------------------------- George Putnam Donald S. Perkins /s/ Jameson A. Baxter /s/ William F. Pounds - ------------------------ --------------------------- Jameson A. Baxter William F. Pounds /s/ Hans H. Estin /s/ George Putnam, III - ------------------------ --------------------------- Hans H. Estin George Putnam, III /s/ John A. Hill Eli Shapiro - ------------------------ --------------------------- John A. Hill Eli Shapiro /s/ Elizabeth T. Kennan /s/ A.J.C. Smith - ------------------------ --------------------------- Elizabeth T. Kennan A.J.C. Smith /s/ Lawrence J. Lasser /s/ W. Nicholas Thorndike - ------------------------ --------------------------- Lawrence J. Lasser W. Nicholas Thorndike - ------------------------ Robert E. Patterson THE COMMONWEALTH OF MASSACHUSETTS Boston, September 15, 1995 Suffolk, ss. Then personally appeared each of the above named Trustees of Putnam Minnesota Tax Exempt Income Fund and acknowledged the foregoing instrument to be their free act and deed, before me, /s/ Beth F. Marino ---------------------------- Notary Public My commission expires: 4/6/2001 The address of the Trust is One Post Office Square, Boston, Massachusetts 02109 PUTNAM OHIO TAX EXEMPT INCOME FUND AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this 15th day of September, 1995, hereby amends and restates in its entirety the Agreement and Declaration of Trust dated September 2, 1986, as heretofore amended, by the Trustees hereunder and by the holders of shares of beneficial interest issued or to be issued hereunder as hereinafter provided. This Amended and Restated Agreement and Declaration of Trust shall be effective upon filing with the Secretary of State of The Commonwealth of Massachusetts. WITNESSETH that WHEREAS, this Trust has been formed to carry on the business of an investment company; and WHEREAS, the Trustees have agreed to manage all property coming into their hands as trustees of a Massachusetts voluntary association with transferable shares in accordance with the provisions hereinafter set forth. NOW, THEREFORE, the Trustees hereby declare that they will hold all cash, securities and other assets, which they may from time to time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the following terms and conditions for the pro rata benefit of the holders from time to time of Shares in this Trust as hereinafter set forth. ARTICLE I Name and Definitions Name Section 1. This Trust shall be known as "Putnam Ohio Tax Exempt Income Fund", and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine. Definitions Section 2. Whenever used herein, unless otherwise required by the context or specifically provided: (a) The "Trust" refers to the Massachusetts business trust established by this Agreement and Declaration of Trust, as amended from time to time; (b) "Trustees" refers to the Trustees of the Trust named herein or elected in accordance with Article IV; (c) "Shares" means the equal proportionate transferable units of interest into which the beneficial interest in the Trust shall be divided from time to time or, if more than one series or class of Shares is authorized by the Trustees, the equal proportionate transferable units into which each series or class of Shares shall be divided from time to time; (d) "Shareholder" means a record owner of Shares; (e) The "1940 Act" refers to the Investment Company Act of 1940 and the Rules and Regulations thereunder, all as amended from time to time; (f) The terms "Affiliated Person", "Assignment", "Commission", "Interested Person", "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) shall have the meanings given them in the 1940 Act; (g) "Declaration of Trust" shall mean this Amended and Restated Agreement and Declaration of Trust as amended or restated from time to time; and (h) "Bylaws" shall mean the Bylaws of the Trust as amended from time to time; (i) The term "series" or "series of Shares" refers to the one or more separate investment portfolios of the Trust into which the assets and liabilities of the Trust may be divided and the Shares of the Trust representing the beneficial interest of Shareholders in such respective portfolios; and (j) The term "class" or "class of Shares" refers to the division of Shares into two or more classes as provided in Article III, Section 1 hereof. ARTICLE II Purpose of Trust The purpose of the Trust is to provide investors a managed investment primarily in securities, debt instruments and other instruments and rights of a financial character. ARTICLE III Shares Division of Beneficial Interest Section 1. The Shares of the Trust shall be issued in one or more series as the Trustees may, without shareholder approval, authorize. Each series shall be preferred over all other series in respect of the assets allocated to that series. The beneficial interest in each series shall at all times be divided into Shares, without par value, each of which shall, except as provided in the following sentence represent an equal proportionate interest in the series with each other Share of the same series, none having priority or preference over another. The Trustees may, without shareholder approval, divide the Shares of any series into two or more classes, Shares of each such class having such preferences and special or relative rights and privileges (including conversion rights, if any) as the Trustees may determine and as shall be set forth in the Bylaws. The number of Shares authorized shall be unlimited. The Trustees may from time to time divide or combine the Shares of any series or class into a greater or lesser number without thereby changing the proportionate beneficial interest in the series or class. Ownership of Shares Section 2. The ownership of Shares shall be recorded on the books of the Trust or a transfer or similar agent. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the transfer of Shares and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to who are the Shareholders of each series and class and as to the number of Shares of each series and class held from time to time by each Shareholder. Investment in the Trust Section 3. The Trustees shall accept investments in the Trust from such persons and on such terms and for such consideration, which may consist of cash or tangible or intangible property or a combination thereof, as they or the Bylaws from time to time authorize. All consideration received by the Trust for the issue or sale of Shares of each series, together with all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation thereof, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to the series of Shares with respect to which the same were received by the Trust for all purposes, subject only to the rights of creditors, and shall be so handled upon the books of account of the Trust and are herein referred to as "assets of" such series. No Preemptive Rights Section 4. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Status of Shares and Limitation of Personal Liability Section 5. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust or the Bylaws. Every Shareholder by virtue of having become a Shareholder shall be held to have expressly assented and agreed to the terms of this Declaration of Trust and the Bylaws and to have become a party hereto. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the same nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but only to the rights of said decedent under this Trust. Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders partners. Neither the Trust nor the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind personally any Shareholder, nor except as specifically provided herein to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay. ARTICLE IV The Trustees Election Section 1. A Trustee may be elected either by the Trustees or by the Shareholders. There shall be not less than three Trustees. The number of Trustees shall be fixed by the Trustees. Each Trustee elected by the Trustees or the Shareholders shall serve until he or she retires, resigns, is removed or dies or until the next meeting of Shareholders called for the purpose of electing Trustees and until the election and qualification of his or her successor. At any meeting called for the purpose, a Trustee may be removed by vote of two-thirds of the outstanding shares. The initial Trustees, each of whom shall serve until the first meeting of Shareholders at which Trustees are elected and until his successor is elected and qualified, or until he sooner dies, resigns or is removed shall be George Putnam, Richard M. Cutler and Alla O'Brien and such other persons as the Trustee or Trustees then in office shall, prior to any sale of Shares pursuant to public offering, appoint. Effect of Death, Resignation, etc. of a Trustee Section 2. The death, declination, resignation, retirement, removal or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Powers Section 3. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees, and they shall have all powers necessary or convenient to carry out that responsibility. Without limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust and may amend and repeal them to the extent that such Bylaws do not reserve that right to the Shareholders; they may fill vacancies in or add to their number, and may elect and remove such officers and appoint and terminate such agents as they consider appropriate; they may appoint from their own number, and terminate, any one or more committees consisting of two or more Trustees, including an executive committee which may, when the Trustees are not in session, exercise some or all of the power and authority of the Trustees as the Trustees may determine; they may employ one or more custodians of the assets of the Trust and may authorize such custodians to employ subcustodians and to deposit all or any part of such assets in a system or systems for the central handling of securities, retain a transfer agent or a Shareholder servicing agent, or both, provide for the distribution of Shares by the Trust, through one or more principal underwriters or otherwise, set record dates for the determination of Shareholders with respect to various matters, and in general delegate such authority as they consider desirable to any officer of the Trust, to any committee of the Trustees and to any agent or employee of the Trust or to any such custodian or underwriter. Without limiting the foregoing, the Trustees shall have power and authority: (a) To invest and reinvest cash, and to hold cash uninvested; (b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust; (c) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper; (d) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities; (e) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or in the name of a custodian, subcustodian or other depositary or a nominee or nominees or otherwise; (f) Subject to the provisions of Article III, Section 3, to allocate assets, liabilities, income and expenses of the Trust to a particular series of Shares or to apportion the same among two or more series, provided that any liabilities or expenses incurred by or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series; and to the extent necessary or appropriate to give effect to the preferences and special or relative rights and privileges of any classes of Shares, to allocate assets, liabilities, income and expenses of a series to a particular class of Shares of that series or to apportion the same among two or more classes of Shares of that series; (g) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust; (h) To join with other security holders in acting through a committee, depositary, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depositary or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depositary or trustee as the Trustees shall deem proper; (i) To compromise, arbitrate or otherwise adjust claims in favor of or against the Trust or any matter in controversy, including but not limited to claims for taxes; (j) To enter into joint ventures, general or limited partnerships and any other combinations or associations; (k) To borrow funds; (l) To endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property or any part thereof to secure any of or all such obligations; (m) To purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the business, including without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers or managers, principal underwriters, or independent contractors of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person as Shareholder, Trustee, officer, employee, agent, investment adviser or manager, principal underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability; and (n) To pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust. The Trustees shall not in any way be bound or limited by any present or future law or custom in regard to investments by trustees. Except as otherwise provided herein or from time to time in the Bylaws, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum being present), within or without Massachusetts, including any meeting held by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting, or by written consents of a majority of the Trustees then in office. Payment of Expenses by Trust Section 4. The Trustees are authorized to pay or to cause to be paid out of the assets of the Trust all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust, or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, investment adviser or manager, principal underwriter, auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur, provided, however, that all expenses, fees, charges, taxes and liabilities incurred or arising in connection with a particular series of Shares shall be payable solely out of the assets of that series. Ownership of Assets of the Trust Section 5. Title to all of the assets of each series of Shares and of the Trust shall at all times be considered as vested in the Trustees. Advisory, Management and Distribution Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees may, at any time and from time to time, contract for exclusive or nonexclusive advisory and/or management services with any corporation, trust, association or other organization (the "Manager"), every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine, including, without limitation, authority to determine from time to time what investments shall be purchased, held, sold or exchanged and what portion, if any, of the assets of the Trust shall be held uninvested and to make changes in the Trust's investments. The Trustees may also, at any time and from time to time, contract with the Manager or any other corporation, trust, association or other organization, appointing it exclusive or nonexclusive distributor or principal underwriter for the Shares, every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine. The fact that: (i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any corporation, trust, association, or other organization, or of or for any parent or affiliate of any organization, with which an advisory or management contract, or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made, or that any such organization, or any parent or affiliate thereof, is a Shareholder or has an interest in the Trust, or that (ii) any corporation, trust, association or other organization with which an advisory or management contract or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made also has an advisory or management contract, or transfer, Shareholder servicing or other agency contract with one or more other corporations, trusts, associations, or other organizations, or has other business or interests, shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or its Shareholders. ARTICLE V Shareholders' Voting Powers and Meetings Voting Powers Section 1. Subject to the voting powers of one or more classes of shares as set forth elsewhere in this Declaration of Trust or in the Bylaws, the Shareholders shall have power to vote only (i) for the election of Trustees as provided in Article IV, Section 1, (ii) for the removal of Trustees as provided in Article IV, Section 1, (iii) with respect to any Manager as provided in Article IV, Section 6, (iv) with respect to any termination of this Trust to the extent and as provided in Article IX, Section 4, (v) with respect to any amendment of this Declaration of Trust to the extent and as provided in Article IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (vii) with respect to such additional matters relating to the Trust as may be required by this Declaration of Trust, the Bylaws or any registration of the Trust with the Securities and Exchange Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote. Notwithstanding any other provision of this Declaration of Trust, on any matter submitted to a vote of Shareholders, all Shares of the Trust then entitled to vote shall be voted in the aggregate as a single class without regard to series or classes of shares, except (1) when required by the 1940 Act or when the Trustees shall have determined that the matter affects one or more series or classes of Shares materially differently, Shares shall be voted by individual series or class; and (2) when the Trustees have determined that the matter affects only the interests of one or more series or classes, then only Shareholders of such series or classes shall be entitled to vote thereon. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares of any series or class are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders as to such series or class. Voting Power and Meetings Section 2. Meetings of Shareholders of any or all series or classes may be called by the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders of such series or classes as herein provided or upon any other matter deemed by the Trustees to be necessary or desirable. Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing such notice at least seven days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder entitled to vote at such meeting at the Shareholder's address as it appears on the records of the Trust. If the Trustees shall fail to call or give notice of any meeting of Shareholders for a period of 30 days after written application by Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting requesting that a meeting be called for a purpose requiring action by the Shareholders as provided herein or in the Bylaws, then Shareholders holding at least 10% of the then outstanding Shares of all series and classes entitled to vote at such meeting or of all series if all series are entitled to vote at such meeting may call and give notice of such meeting, and thereupon the meeting shall be held in the manner provided for herein in case of call thereof by the Trustees. Notice of a meeting need not be given to any Shareholder if a written waiver of notice, executed by him or her before or after the meeting, is filed with the records of the meeting, or to any Shareholder who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. Quorum and Required Vote Section 3. Thirty percent of Shares entitled to vote on a particular matter shall be a quorum for the transaction of business on that matter at a Shareholders' meeting, except that where any provision of law or of this Declaration of Trust permits or requires that holders of any series or class shall vote as an individual series or class, then thirty percent of the aggregate number of Shares of that series or class entitled to vote shall be necessary to constitute a quorum for the transaction of business by that series or class. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by any provision of this Declaration of Trust or the Bylaws, or by the 1940 Act, a majority of the Shares voted shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Declaration of Trust permits or requires that the holders of any series or class shall vote as an individual series or class, then a majority of the Shares of that series or class voted on the matter (or a plurality with respect to the election of a Trustee) shall decide that matter insofar as that series or class is concerned. Action by Written Consent Section 4. Any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of this Declaration of Trust or the Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. Additional Provisions Section 5. The Bylaws may include further provisions not inconsistent with this Declaration of Trust, regarding Shareholders' voting powers, the conduct of meetings and related matters. ARTICLE VI Distributions, Redemptions and Repurchases Distributions Section 1. The Trustees may each year, or more frequently if they so determine, distribute to the Shareholders of each series out of the assets of such series such amounts as the Trustees may determine. Any such distribution to the Shareholders of a particular series shall be made to said Shareholders pro rata in proportion to the number of Shares of such series held by each of them, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of Shares of that series, and any distribution to the Shareholders of a particular class of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Such distributions shall be made in cash or Shares or a combination thereof as determined by the Trustees. Any such distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with the Bylaws. Redemptions and Repurchases Section 2. The Trust shall purchase such Shares as are offered by any Shareholder for redemption, upon the presentation of any certificate for the Shares to be purchased, a proper instrument of transfer and a request directed to the Trust or a person designated by the Trust that the Trust purchase such Shares, or in accordance with such other procedures for redemption as the Trustees may from time to time authorize; and the Trust will pay therefor the net asset value thereof, as next determined in accordance with the Bylaws. Payment for said Shares shall be made by the Trust to the Shareholder within seven days after the date on which the request is made. The obligation set forth in this Section 2 is subject to the provision that in the event that any time the New York Stock Exchange is closed for other than customary weekends or holidays, or, if permitted by rules of the Securities and Exchange Commission, during periods when trading on the Exchange is restricted or during any emergency which makes it impractical for the Trust to dispose of its investments or to determine fairly the value of its net assets, or during any other period permitted by order of the Securities and Exchange Commission for the protection of investors, such obligation may be suspended or postponed by the Trustees. The Trust may also purchase or repurchase Shares at a price not exceeding the net asset value of such Shares in effect when the purchase or repurchase or any contract to purchase or repurchase is made. Redemptions at the Option of the Trust Section 3. The Trust shall have the right at its option and at any time to redeem Shares of any Shareholder at the net asset value thereof as determined in accordance with the Bylaws: (i) if at such time such Shareholder owns fewer Shares than, or Shares having an aggregate net asset value of less than, an amount determined from time to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares of a particular series or class of Shares equal to or in excess of a percentage of the outstanding Shares of that series or class determined from time to time by the Trustees; or (iii) to the extent that such Shareholder owns Shares of the Trust representing a percentage equal to or in excess of such percentage of the aggregate number of outstanding Shares of the Trust or the aggregate net asset value of the Trust determined from time to time by the Trustees. ARTICLE VII Compensation and Limitation of Liability of Trustees Compensation Section 1. The Trustees as such shall be entitled to reasonable compensation from the Trust; they may fix the amount of their compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, legal, accounting, investment banking or other services and payment for the same by the Trust. Limitation of Liability Section 2. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, manager or principal underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, but nothing herein contained shall protect any Trustee against any liability to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any of them in connection with the Trust shall be conclusively deemed to have been executed or done only in or with respect to their or his or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be personally liable thereon. ARTICLE VIII Indemnification Trustees, Officers, etc. Section 1. The Trust shall indemnify each of its Trustees and officers (including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered Person") against all liabilities and expenses, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such Covered Person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Covered Person except with respect to any matter as to which such Covered Person shall have been finally adjudicated in any such action, suit or other proceeding (a) not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or (b) to be liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Expenses, including counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), shall be paid from time to time by the Trust in advance of the final disposition of any such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Covered Person to repay amounts so paid to the Trust if it is ultimately determined that indemnification of such expenses is not authorized under this Article, provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust shall be insured against losses arising from any such advance payments or (c) either a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter), or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial type inquiry) that there is reason to believe that such Covered Person will be found entitled to indemnification under this Article. Compromise Payment Section 2. As to any matter disposed of (whether by a compromise payment, pursuant to a consent decree or otherwise) without an adjudication by a court, or by any other body before which the proceeding was brought, that such Covered Person either (a) did not act in good faith in the reasonable belief that his or her action was in the best interests of the Trust or (b) is liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, indemnification shall be provided if (a) approved as in the best interests of the Trust, after notice that it involves such indemnification, by at least a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter) upon a determination, based upon a review of readily available facts (as opposed to a full trial type inquiry) that such Covered Person acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and is not liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, or (b) there has been obtained an opinion in writing of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial type inquiry) to the effect that such Covered Person appears to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust and that such indemnification would not protect such Covered Person against any liability to the Trust to which he or she would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Any approval pursuant to this Section shall not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with this Section as indemnification if such Covered Person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or to have been liable to the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Indemnification Not Exclusive Section 3. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which such Covered Person may be entitled. As used in this Article VIII, the term "Covered Person" shall include such person's heirs, executors and administrators and a "disinterested Trustee" is a Trustee who is not an "interested person" of the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been exempted from being an "interested person" by any rule, regulation or order of the Commission) and against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending. Nothing contained in this Article shall affect any rights to indemnification to which personnel of the Trust, other than Trustees or officers, and other persons may be entitled by contract or otherwise under law, nor the power of the Trust to purchase and maintain liability insurance on behalf of any such person. Shareholders Section 4. In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his or her being or having been a Shareholder and not because of his or her acts or omissions or for some other reason, the Shareholder or former Shareholder (or his or her heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled to be held harmless from and indemnified against all loss and expense arising from such liability, but only out of the assets of the particular series of Shares of which he or she is or was a Shareholder. ARTICLE IX Miscellaneous Trustees, Shareholders, etc. Not Personally Liable; Notice Section 1. All persons extending credit to, contracting with or having any claim against the Trust or a particular series of Shares shall look only to the assets of the Trust or the assets of that particular series of Shares for payment under such credit, contract or claim, and neither the Shareholders nor the Trustees, nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Nothing in this Declaration of Trust shall protect any Trustee against any liability to which such Trustee would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee. Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officer or officers shall give notice that this Declaration of Trust is on file with the Secretary of The Commonwealth of Massachusetts and shall recite that the same was executed or made by or on behalf of the Trust or by them as Trustee or Trustees or as officer or officers and not individually and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust, and may contain such further recital as he or she or they may deem appropriate, but the omission thereof shall not operate to bind any Trustee or Trustees or officer or officers or Shareholder or Shareholders individually. Trustee's Good Faith Action, Expert Advice, No Bond or Surety Section 2. The exercise by the Trustees of their powers and discretions hereunder shall be binding upon everyone interested. A Trustee shall be liable for his or her own wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. Liability of Third Persons Dealing with Trustee Section 3. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order. Duration and Termination of Trust Section 4. Unless terminated as provided herein, the Trust shall continue without limitation of time. The Trust may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares entitled to vote or by the Trustees by written notice to the Shareholders. Any series of Shares may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares of such series entitled to vote or by the Trustees by written notice to the Shareholders of such series. Upon termination of the Trust or of any one or more series of Shares, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, of the Trust or of the particular series as may be determined by the Trustees, the Trust shall in accordance with such procedures as the Trustees consider appropriate reduce the remaining assets to distributable form in cash or shares or other securities, or any combination thereof, and distribute the proceeds to the Shareholders of the series involved, ratably according to the number of Shares of such series held by the several Shareholders of such series on the date of termination, except to the extent otherwise required or permitted by the preferences and special or relative rights and privileges of any classes of any series of Shares of the Trust, provided that any distribution to the Shareholders of a particular class of any series of Shares shall be made to such Shareholders pro rata in proportion to the number of Shares of such class held by each of them. Filing of Copies, References, Headings Section 5. The original or a copy of this instrument and of each amendment hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each amendment hereto shall be filed by the Trust with the Secretary of State of The Commonwealth of Massachusetts and with the Boston City Clerk, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this instrument or of any such amendments. In this instrument and in any such amendment, references to this instrument and all expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to this instrument as amended or affected by any such amendments. Headings are placed herein for convenience of reference only and shall not be taken as a part hereof or control or affect the meaning, construction or effect of this instrument. This instrument may be executed in any number of counterparts each of which shall be deemed an original. Applicable Law Section 6. This Declaration of Trust is made in The Commonwealth of Massachusetts, and it is created under and is to be governed by and construed and administered according to the laws of said Commonwealth. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust. Amendments Section 7. This Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the then Trustees when authorized to do so by vote of Shareholders holding a majority of the Shares entitled to vote, except that an amendment shall affect the holders of one or more series or classes of Shares but not the holders of all outstanding series and classes shall be authorized by vote of the Shareholders holding a majority of the Shares entitled to vote of each series and class affected and no vote of Shareholders of a series and class not affected shall be required. Amendments having the purpose of changing the name of the Trust or of supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein shall not require authorization by Shareholder vote. IN WITNESS WHEREOF, the undersigned, being a majority of the Trustees of the Trust, hereunto set their hands and seals in the City of Boston, Massachusetts, for themselves and their assigns, as of the day and year first above written. /s/ George Putnam /s/ Donald S. Perkins - ------------------------ --------------------------- George Putnam Donald S. Perkins /s/ Jameson A. Baxter /s/ William F. Pounds - ------------------------ --------------------------- Jameson A. Baxter William F. Pounds /s/ Hans H. Estin /s/ George Putnam, III - ------------------------ --------------------------- Hans H. Estin George Putnam, III /s/ John A. Hill Eli Shapiro - ------------------------ --------------------------- John A. Hill Eli Shapiro /s/ Elizabeth T. Kennan /s/ A.J.C. Smith - ------------------------ --------------------------- Elizabeth T. Kennan A.J.C. Smith /s/ Lawrence J. Lasser /s/ W. Nicholas Thorndike - ------------------------ --------------------------- Lawrence J. Lasser W. Nicholas Thorndike - ------------------------ Robert E. Patterson THE COMMONWEALTH OF MASSACHUSETTS Boston, September 15, 1995 Suffolk, ss. Then personally appeared each of the above named Trustees of Putnam Ohio Tax Exempt Income Fund and acknowledged the foregoing instrument to be their free act and deed, before me, /s/ Beth F. Marino ---------------------------- Notary Public My commission expires: 4/6/2001 The address of the Trust is One Post Office Square, Boston, Massachusetts 02109 EX-99.B4 4 HOLDERS RTS PUTNAM INVESTMENTS (Logo) PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND A Massachusetts Business Trust Class M Shares Trust Certificate Account No. Certificate No. Shares CUSIP 74683H 20 0 THIS CERTIFIES THAT is the owner of Class M shares of beneficial interest in Putnam Massachusetts Tax Exempt Income Fund, fully paid and nonassessable, the said shares being issued, received and held under and subject to the terms and provisions of the Agreement and Declaration of Trust dated as of March 7, 1986, establishing the Trust, and all amendments thereto, copies of which are on file with the Secretary of State of The Commonwealth of Massachusetts. The said owner by accepting this certificate agrees to and is bound by all of the said terms and provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Trustees properly endorsed for transfer. This certificate is executed on behalf of the Trustees as Trustees and not individually and the obligations hereof are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Putnam Massachusetts Tax Exempt Income Fund. This certificate is not valid unless countersigned by the Investor Servicing Agent. In Witness Whereof the Trustees of Putnam Massachusetts Tax Exempt Income Fund have caused the following facsimile signatures to be affixed to this certificate. Dated: COUNTERSIGNED: PUTNAM INVESTOR SERVICES a division of Putnam Fiduciary Trust Company INVESTOR SERVICING AGENT BY FOR THE TRUSTEES AUTHORIZED SIGNATURE PUTNAM INVESTMENTS (Logo) PUTNAM MICHIGAN TAX EXEMPT INCOME FUND A Massachusetts Business Trust Class M Shares Trust Certificate Account No. Certificate No. Shares CUSIP 74683L 20 1 THIS CERTIFIES THAT is the owner of Class M shares of beneficial interest in Putnam Michigan Tax Exempt Income Fund, fully paid and nonassessable, the said shares being issued, received and held under and subject to the terms and provisions of the Agreement and Declaration of Trust dated as of September 2, 1986, establishing the Trust, and all amendments thereto, copies of which are on file with the Secretary of State of The Commonwealth of Massachusetts. The said owner by accepting this certificate agrees to and is bound by all of the said terms and provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Trustees properly endorsed for transfer. This certificate is executed on behalf of the Trustees as Trustees and not individually and the obligations hereof are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Putnam Michigan Tax Exempt Income Fund. This certificate is not valid unless countersigned by the Investor Servicing Agent. In Witness Whereof the Trustees of Putnam Michigan Tax Exempt Income Fund have caused the following facsimile signatures to be affixed to this certificate. Dated: COUNTERSIGNED: PUTNAM INVESTOR SERVICES a division of Putnam Fiduciary Trust Company INVESTOR SERVICING AGENT BY FOR THE TRUSTEES AUTHORIZED SIGNATURE PUTNAM INVESTMENTS (Logo) PUTNAM MINNESOTA TAX EXEMPT INCOME FUND A Massachusetts Business Trust Class M Shares Trust Certificate Account No. Certificate No. Shares CUSIP 74683M 20 9 THIS CERTIFIES THAT is the owner of Class M shares of beneficial interest in Putnam Minnesota Tax Exempt Income Fund, fully paid and nonassessable, the said shares being issued, received and held under and subject to the terms and provisions of the Agreement and Declaration of Trust dated as of September 2, 1986, establishing the Trust, and all amendments thereto, copies of which are on file with the Secretary of State of The Commonwealth of Massachusetts. The said owner by accepting this certificate agrees to and is bound by all of the said terms and provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Trustees properly endorsed for transfer. This certificate is executed on behalf of the Trustees as Trustees and not individually and the obligations hereof are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Putnam Minnesota Tax Exempt Income Fund. This certificate is not valid unless countersigned by the Investor Servicing Agent. In Witness Whereof the Trustees of Putnam Minnesota Tax Exempt Income Fund have caused the following facsimile signatures to be affixed to this certificate. Dated: COUNTERSIGNED: PUTNAM INVESTOR SERVICES a division of Putnam Fiduciary Trust Company INVESTOR SERVICING AGENT BY FOR THE TRUSTEES AUTHORIZED SIGNATURE PUTNAM INVESTMENTS (Logo) PUTNAM OHIO TAX EXEMPT INCOME FUND A Massachusetts Business Trust Class M Shares Trust Certificate Account No. Certificate No. Shares CUSIP 746849 20 9 THIS CERTIFIES THAT is the owner of Class M shares of beneficial interest in Putnam Ohio Tax Exempt Income Fund, fully paid and nonassessable, the said shares being issued, received and held under and subject to the terms and provisions of the Agreement and Declaration of Trust dated as of March 7, 1986, establishing the Trust, and all amendments thereto, copies of which are on file with the Secretary of State of The Commonwealth of Massachusetts. The said owner by accepting this certificate agrees to and is bound by all of the said terms and provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Trustees properly endorsed for transfer. This certificate is executed on behalf of the Trustees as Trustees and not individually and the obligations hereof are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Putnam Ohio Tax Exempt Income Fund. This certificate is not valid unless countersigned by the Investor Servicing Agent. In Witness Whereof the Trustees of Putnam Ohio Tax Exempt Income Fund have caused the following facsimile signatures to be affixed to this certificate. Dated: COUNTERSIGNED: PUTNAM INVESTOR SERVICES a division of Putnam Fiduciary Trust Company INVESTOR SERVICING AGENT BY FOR THE TRUSTEES AUTHORIZED SIGNATURE PUTNAM INVESTMENTS (Logo) PUTNAM FLORIDA TAX EXEMPT INCOME FUND A Massachusetts Business Trust Class M Shares Trust Certificate Account No. Certificate No. Shares CUSIP 746752 30 2 THIS CERTIFIES THAT is the owner of Class M shares of beneficial interest in Putnam Florida Tax Exempt Income Fund, fully paid and nonassessable, the said shares being issued, received and held under and subject to the terms and provisions of the Agreement and Declaration of Trust dated as of June 27, 1990, establishing the Trust, and all amendments thereto, copies of which are on file with the Secretary of State of The Commonwealth of Massachusetts. The said owner by accepting this certificate agrees to and is bound by all of the said terms and provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Trustees properly endorsed for transfer. This certificate is executed on behalf of the Trustees as Trustees and not individually and the obligations hereof are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Putnam Florida Tax Exempt Income Fund. This certificate is not valid unless countersigned by the Investor Servicing Agent. In Witness Whereof the Trustees of Putnam Florida Tax Exempt Income Fund have caused the following facsimile signatures to be affixed to this certificate. Dated: COUNTERSIGNED: PUTNAM INVESTOR SERVICES a division of Putnam Fiduciary Trust Company INVESTOR SERVICING AGENT BY FOR THE TRUSTEES AUTHORIZED SIGNATURE PUTNAM INVESTMENTS (Logo) PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND A Massachusetts Business Trust Class M Shares Trust Certificate Account No. Certificate No. Shares CUSIP 746915 30 5 THIS CERTIFIES THAT is the owner of Class M shares of beneficial interest in Putnam New Jersey Tax Exempt Income Fund, fully paid and nonassessable, the said shares being issued, received and held under and subject to the terms and provisions of the Agreement and Declaration of Trust dated as of November 17, 1989, establishing the Trust, and all amendments thereto, copies of which are on file with the Secretary of State of The Commonwealth of Massachusetts. The said owner by accepting this certificate agrees to and is bound by all of the said terms and provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Trustees properly endorsed for transfer. This certificate is executed on behalf of the Trustees as Trustees and not individually and the obligations hereof are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Putnam New Jersey Tax Exempt Income Fund. This certificate is not valid unless countersigned by the Investor Servicing Agent. In Witness Whereof the Trustees of Putnam New Jersey Tax Exempt Income Fund have caused the following facsimile signatures to be affixed to this certificate. Dated: COUNTERSIGNED: PUTNAM INVESTOR SERVICES a division of Putnam Fiduciary Trust Company INVESTOR SERVICING AGENT BY FOR THE TRUSTEES AUTHORIZED SIGNATURE EX-99.B10 5 OPIN COUNS ROPES & GRAY One International Place Boston, Massachusetts 02110-2624 (617) 951-7000 September 26, 1995 PUTNAM ARIZONA TAX EXEMPT INCOME FUND (the "Fund") One Post Office Square Boston, Massachusetts 02109 Gentlemen: You have informed us that you propose to offer and sell from time to time 778,568 of your shares of beneficial interest (the "Shares"), for cash or securities at the net asset value per share, determined in accordance with your Bylaws, which Shares are in addition to your shares of beneficial interest which you have previously offered and sold or which you are currently offering. We have examined copies of (i) your Agreement and Declaration of Trust as on file at the office of the Secretary of State of The Commonwealth of Massachusetts, which provides for an unlimited number of authorized shares of beneficial interest, and (ii) your Bylaws, which provide for the issue and sale by the Fund of such Shares. We assume that appropriate action will be taken to register or qualify the sale of the Shares under any applicable state and federal laws regulating offerings and sales of securities. Based upon the foregoing, we are of the opinion that: 1. The Fund is a legally organized and validly existing voluntary association with transferable shares of beneficial interest under the laws of The Commonwealth of Massachusetts and is authorized to issue an unlimited number of shares of beneficial interest. 2. Upon the issue of any of the Shares referred to in the first paragraph hereof for cash or securities at net asset value, and the receipt of the appropriate consideration therefor as provided in your Bylaws, such Shares so issued will be validly issued, fully paid and nonassessable by the Fund. ROPES & GRAY Putnam Arizona Tax Exempt Income Fund -2- September 26, 1995 The Fund is an entity of the type commonly known as a "Massachusetts business trust". Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Fund or its Trustees. The Agreement and Declaration of Trust provides for indemnification out of the property of the Fund for all loss and expense of any shareholder of the Fund held personally liable for the obligations of the Fund solely by reason of his being or having been a shareholder. Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations. We understand that this opinion is to be used in connection with the registration of the Shares for offering and sale pursuant to the Securities Act of 1933, as amended, and the provisions of Rule 24e-2 under the Investment Company Act of 1940, as amended. We consent to the filing of this opinion with and as a part of Post-Effective Amendment No. 6 to your Registration Statement No. 33-37992. Very truly yours, Ropes & Gray EX-99.B10 6 OPIN COUNS ROPES & GRAY One International Place Boston, Massachusetts 02110-2624 (617) 951-7000 September 26, 1995 PUTNAM FLORIDA TAX EXEMPT INCOME FUND (the "Fund") One Post Office Square Boston, Massachusetts 02109 Gentlemen: You have informed us that you propose to offer and sell from time to time 1,854,662 of your shares of beneficial interest (the "Shares"), for cash or securities at the net asset value per share, determined in accordance with your Bylaws, which Shares are in addition to your shares of beneficial interest which you have previously offered and sold or which you are currently offering. We have examined copies of (i) your Agreement and Declaration of Trust as on file at the office of the Secretary of State of The Commonwealth of Massachusetts, which provides for an unlimited number of authorized shares of beneficial interest, and (ii) your Bylaws, which provide for the issue and sale by the Fund of such Shares. We assume that appropriate action will be taken to register or qualify the sale of the Shares under any applicable state and federal laws regulating offerings and sales of securities. Based upon the foregoing, we are of the opinion that: 1. The Fund is a legally organized and validly existing voluntary association with transferable shares of beneficial interest under the laws of The Commonwealth of Massachusetts and is authorized to issue an unlimited number of shares of beneficial interest. 2. Upon the issue of any of the Shares referred to in the first paragraph hereof for cash or securities at net asset value, and the receipt of the appropriate consideration therefor as provided in your Bylaws, such Shares so issued will be validly issued, fully paid and nonassessable by the Fund. ROPES & GRAY Putnam Florida Tax Exempt Income Fund -2- September 26, 1995 The Fund is an entity of the type commonly known as a "Massachusetts business trust". Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Fund or its Trustees. The Agreement and Declaration of Trust provides for indemnification out of the property of the Fund for all loss and expense of any shareholder of the Fund held personally liable for the obligations of the Fund solely by reason of his being or having been a shareholder. Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations. We understand that this opinion is to be used in connection with the registration of the Shares for offering and sale pursuant to the Securities Act of 1933, as amended, and the provisions of Rule 24e-2 under the Investment Company Act of 1940, as amended. We consent to the filing of this opinion with and as a part of Post-Effective Amendment No. 6 to your Registration Statement No. 33-35677. Very truly yours, Ropes & Gray EX-99.B10 7 OPIN COUNS ROPES & GRAY One International Place Boston, Massachusetts 02110-2624 (617) 951-7000 September 26, 1995 PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND (the "Fund") One Post Office Square Boston, Massachusetts 02109 Gentlemen: You have informed us that you propose to offer and sell from time to time 619,559 of your shares of beneficial interest (the "Shares"), for cash or securities at the net asset value per share, determined in accordance with your Bylaws, which Shares are in addition to your shares of beneficial interest which you have previously offered and sold or which you are currently offering. We have examined copies of (i) your Agreement and Declaration of Trust as on file at the office of the Secretary of State of The Commonwealth of Massachusetts, which provides for an unlimited number of authorized shares of beneficial interest, and (ii) your Bylaws, which provide for the issue and sale by the Fund of such Shares. We assume that appropriate action will be taken to register or qualify the sale of the Shares under any applicable state and federal laws regulating offerings and sales of securities. Based upon the foregoing, we are of the opinion that: 1. The Fund is a legally organized and validly existing voluntary association with transferable shares of beneficial interest under the laws of The Commonwealth of Massachusetts and is authorized to issue an unlimited number of shares of beneficial interest. 2. Upon the issue of any of the Shares referred to in the first paragraph hereof for cash or securities at net asset value, and the receipt of the appropriate consideration therefor as provided in your Bylaws, such Shares so issued will be validly issued, fully paid and nonassessable by the Fund. ROPES & GRAY Putnam New Jersey Tax Exempt Income Fund -2- September 26, 1995 The Fund is an entity of the type commonly known as a "Massachusetts business trust". Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Fund or its Trustees. The Agreement and Declaration of Trust provides for indemnification out of the property of the Fund for all loss and expense of any shareholder of the Fund held personally liable for the obligations of the Fund solely by reason of his being or having been a shareholder. Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations. We understand that this opinion is to be used in connection with the registration of the Shares for offering and sale pursuant to the Securities Act of 1933, as amended, and the provisions of Rule 24e-2 under the Investment Company Act of 1940, as amended. We consent to the filing of this opinion with and as a part of Post-Effective Amendment No. 6 to your Registration Statement No. 33-32550. Very truly yours, Ropes & Gray EX-99.B13 8 STOCK LTR March 31, 1995 Putnam Massachusetts Tax Exempt Income Fund II One Post Office Square Boston, MA 02109 Gentlemen: In connection with your sale to us today of 110.865 Class M shares of beneficial interest (the "Shares") in Putnam Massachusetts Tax Exempt Income Fund II (the "Fund"), we understand that: (i) the Shares have not been registered under the Securities Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on the sale's being exempt under Section 4(2) of the Act as not involving any public offering; and (iii) in part, your reliance on such exemption is predicated on our representation, which we hereby confirm, that we are acquiring the Shares for investment and for our own account as the sole beneficial owner hereof, and not with a view to or in connection with any resale or distribution of any or all of the Shares or of any interest therein. We hereby agree that we will not sell, assign or transfer the Shares or any interest therein except upon repurchase or redemption by the Fund unless and until the Shares have been registered under the Securities Act of 1933, as amended, or you have received an opinion of your counsel indicating to your satisfaction that such sale, assignment or transfer will not violate the provisions of the Securities Act of 1933, as amended, or any rules and regulations promulgated thereunder. We further agree, pursuant to the requirements of the Staff of the Securities and Exchange Commission, that if any of the Shares are redeemed during the first five years of the Fund's operations by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organizational expenses in the same ratio as the number of Shares redeemed bears to the number of Shares held at the time of redemption. This letter is intended to take effect as an instrument under seal, shall be construed under the laws of Massachusetts, and is delivered at Boston, Massachusetts, as of the date written above. Very truly yours, PUTNAM INVESTMENTS, INC. By: ----------------------------- Steven E. Asher Senior Vice President March 31, 1995 Putnam Michigan Tax Exempt Income Fund II One Post Office Square Boston, MA 02109 Gentlemen: In connection with your sale to us today of 113.379 Class M shares of beneficial interest (the "Shares") in Putnam Michigan Tax Exempt Income Fund II (the "Fund"), we understand that: (i) the Shares have not been registered under the Securities Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on the sale's being exempt under Section 4(2) of the Act as not involving any public offering; and (iii) in part, your reliance on such exemption is predicated on our representation, which we hereby confirm, that we are acquiring the Shares for investment and for our own account as the sole beneficial owner hereof, and not with a view to or in connection with any resale or distribution of any or all of the Shares or of any interest therein. We hereby agree that we will not sell, assign or transfer the Shares or any interest therein except upon repurchase or redemption by the Fund unless and until the Shares have been registered under the Securities Act of 1933, as amended, or you have received an opinion of your counsel indicating to your satisfaction that such sale, assignment or transfer will not violate the provisions of the Securities Act of 1933, as amended, or any rules and regulations promulgated thereunder. We further agree, pursuant to the requirements of the Staff of the Securities and Exchange Commission, that if any of the Shares are redeemed during the first five years of the Fund's operations by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organizational expenses in the same ratio as the number of Shares redeemed bears to the number of Shares held at the time of redemption. This letter is intended to take effect as an instrument under seal, shall be construed under the laws of Massachusetts, and is delivered at Boston, Massachusetts, as of the date written above. Very truly yours, PUTNAM INVESTMENTS, INC. By: ----------------------------- Steven E. Asher Senior Vice President March 31, 1995 Putnam Minnesota Tax Exempt Income Fund II One Post Office Square Boston, MA 02109 Gentlemen: In connection with your sale to us today of 114.025 Class M shares of beneficial interest (the "Shares") in Putnam Minnesota Tax Exempt Income Fund II (the "Fund"), we understand that: (i) the Shares have not been registered under the Securities Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on the sale's being exempt under Section 4(2) of the Act as not involving any public offering; and (iii) in part, your reliance on such exemption is predicated on our representation, which we hereby confirm, that we are acquiring the Shares for investment and for our own account as the sole beneficial owner hereof, and not with a view to or in connection with any resale or distribution of any or all of the Shares or of any interest therein. We hereby agree that we will not sell, assign or transfer the Shares or any interest therein except upon repurchase or redemption by the Fund unless and until the Shares have been registered under the Securities Act of 1933, as amended, or you have received an opinion of your counsel indicating to your satisfaction that such sale, assignment or transfer will not violate the provisions of the Securities Act of 1933, as amended, or any rules and regulations promulgated thereunder. We further agree, pursuant to the requirements of the Staff of the Securities and Exchange Commission, that if any of the Shares are redeemed during the first five years of the Fund's operations by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organizational expenses in the same ratio as the number of Shares redeemed bears to the number of Shares held at the time of redemption. This letter is intended to take effect as an instrument under seal, shall be construed under the laws of Massachusetts, and is delivered at Boston, Massachusetts, as of the date written above. Very truly yours, PUTNAM INVESTMENTS, INC. By: ----------------------------- Steven E. Asher Senior Vice President March 31, 1995 Putnam Ohio Tax Exempt Income Fund II One Post Office Square Boston, MA 02109 Gentlemen: In connection with your sale to us today of 114.155 Class M shares of beneficial interest (the "Shares") in Putnam Ohio Tax Exempt Income Fund II (the "Fund"), we understand that: (i) the Shares have not been registered under the Securities Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on the sale's being exempt under Section 4(2) of the Act as not involving any public offering; and (iii) in part, your reliance on such exemption is predicated on our representation, which we hereby confirm, that we are acquiring the Shares for investment and for our own account as the sole beneficial owner hereof, and not with a view to or in connection with any resale or distribution of any or all of the Shares or of any interest therein. We hereby agree that we will not sell, assign or transfer the Shares or any interest therein except upon repurchase or redemption by the Fund unless and until the Shares have been registered under the Securities Act of 1933, as amended, or you have received an opinion of your counsel indicating to your satisfaction that such sale, assignment or transfer will not violate the provisions of the Securities Act of 1933, as amended, or any rules and regulations promulgated thereunder. We further agree, pursuant to the requirements of the Staff of the Securities and Exchange Commission, that if any of the Shares are redeemed during the first five years of the Fund's operations by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organizational expenses in the same ratio as the number of Shares redeemed bears to the number of Shares held at the time of redemption. This letter is intended to take effect as an instrument under seal, shall be construed under the laws of Massachusetts, and is delivered at Boston, Massachusetts, as of the date written above. Very truly yours, PUTNAM INVESTMENTS, INC. By: ----------------------------- Steven E. Asher Senior Vice President EX-99.B13 9 STOCK LTR April 28, 1995 Putnam New Jersey Tax Exempt Income Fund One Post Office Square Boston, MA 02109 Gentlemen: In connection with your sale to us today of 114.416 Class M shares of beneficial interest (the "Shares") in Putnam New Jersey Tax Exempt Income Fund (the "Fund"), we understand that: (i) the Shares have not been registered under the Securities Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on the sale's being exempt under Section 4(2) of the Act as not involving any public offering; and (iii) in part, your reliance on such exemption is predicated on our representation, which we hereby confirm, that we are acquiring the Shares for investment and for our own account as the sole beneficial owner hereof, and not with a view to or in connection with any resale or distribution of any or all of the Shares or of any interest therein. We hereby agree that we will not sell, assign or transfer the Shares or any interest therein except upon repurchase or redemption by the Fund unless and until the Shares have been registered under the Securities Act of 1933, as amended, or you have received an opinion of your counsel indicating to your satisfaction that such sale, assignment or transfer will not violate the provisions of the Securities Act of 1933, as amended, or any rules and regulations promulgated thereunder. We further agree, pursuant to the requirements of the Staff of the Securities and Exchange Commission, that if any of the Shares are redeemed during the first five years of the Fund's operations by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organizational expenses in the same ratio as the number of Shares redeemed bears to the number of Shares held at the time of redemption. This letter is intended to take effect as an instrument under seal, shall be construed under the laws of Massachusetts, and is delivered at Boston, Massachusetts, as of the date written above. Very truly yours, PUTNAM INVESTMENTS, INC. By: ----------------------------- Steven E. Asher Senior Vice President April 28, 1995 Putnam Florida Tax Exempt Income Fund One Post Office Square Boston, MA 02109 Gentlemen: In connection with your sale to us today of 112.740 Class M shares of beneficial interest (the "Shares") in Putnam Florida Tax Exempt Income Fund (the "Fund"), we understand that: (i) the Shares have not been registered under the Securities Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on the sale's being exempt under Section 4(2) of the Act as not involving any public offering; and (iii) in part, your reliance on such exemption is predicated on our representation, which we hereby confirm, that we are acquiring the Shares for investment and for our own account as the sole beneficial owner hereof, and not with a view to or in connection with any resale or distribution of any or all of the Shares or of any interest therein. We hereby agree that we will not sell, assign or transfer the Shares or any interest therein except upon repurchase or redemption by the Fund unless and until the Shares have been registered under the Securities Act of 1933, as amended, or you have received an opinion of your counsel indicating to your satisfaction that such sale, assignment or transfer will not violate the provisions of the Securities Act of 1933, as amended, or any rules and regulations promulgated thereunder. We further agree, pursuant to the requirements of the Staff of the Securities and Exchange Commission, that if any of the Shares are redeemed during the first five years of the Fund's operations by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organizational expenses in the same ratio as the number of Shares redeemed bears to the number of Shares held at the time of redemption. This letter is intended to take effect as an instrument under seal, shall be construed under the laws of Massachusetts, and is delivered at Boston, Massachusetts, as of the date written above. Very truly yours, PUTNAM INVESTMENTS, INC. By: ----------------------------- Steven E. Asher Senior Vice President EX-99.B15 10 12B1 PLAN PUTNAM FLORIDA TAX EXEMPT INCOME FUND CLASS M DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of Putnam Florida Tax Exempt Income Fund, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth: Section 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Trust, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of the Trust's Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. Section 2. This Plan shall not take effect until: (a) it has been approved by a vote of a majority of the outstanding Class M shares of the Trust; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Trust has received the proceeds of the initial public offering of its Class M shares. Section 3. This Plan shall continue in effect for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). Section 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. Section 5. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Trust. Section 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Trust, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. Section 7. This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Trust and all material amendments to this Plan shall be approved in the manner provided for approval of this Plan in Section 2(b). Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Trust" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the Trust, (i) of the holders of 67% or more of the Class M shares of the Trust present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Trust. Executed as of April 28, 1995. PUTNAM MUTUAL FUNDS CORP. PUTNAM FLORIDA TAX EXEMPT INCOME FUND By: ---------------------- By: -------------------------- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B15 11 12B1 PLAN PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND CLASS M DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of Putnam New Jersey Tax Exempt Income Fund, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth: Section 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Trust, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of the Trust's Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. Section 2. This Plan shall not take effect until: (a) it has been approved by a vote of a majority of the outstanding Class M shares of the Trust; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Trust has received the proceeds of the initial public offering of its Class M shares. Section 3. This Plan shall continue in effect for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). Section 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. Section 5. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Trust. Section 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Trust, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. Section 7. This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Trust and all material amendments to this Plan shall be approved in the manner provided for approval of this Plan in Section 2(b). Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Trust" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the Trust, (i) of the holders of 67% or more of the Class M shares of the Trust present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Trust. Executed as of April 28, 1995. PUTNAM MUTUAL FUNDS CORP. PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND By: ---------------------- By: -------------------------- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B15 12 12B1 PLAN PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II CLASS M DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of Putnam Massachusetts Tax Exempt Income Fund II, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth: Section 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Trust, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of the Trust's Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. Section 2. This Plan shall not take effect until: (a) it has been approved by a vote of a majority of the outstanding Class M shares of the Trust; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Trust has received the proceeds of the initial public offering of its Class M shares. Section 3. This Plan shall continue in effect for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). Section 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. Section 5. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Trust. Section 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Trust, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. Section 7. This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Trust and all material amendments to this Plan shall be approved in the manner provided for approval of this Plan in Section 2(b). Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Trust" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the Trust, (i) of the holders of 67% or more of the Class M shares of the Trust present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Trust. Executed as of March 31, 1995. PUTNAM MUTUAL FUNDS CORP. PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II By: ---------------------- By: -------------------------- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B15 13 12B1 PLAN PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II CLASS M DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of Putnam Michigan Tax Exempt Income Fund II, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth: Section 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Trust, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of the Trust's Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. Section 2. This Plan shall not take effect until: (a) it has been approved by a vote of a majority of the outstanding Class M shares of the Trust; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Trust has received the proceeds of the initial public offering of its Class M shares. Section 3. This Plan shall continue in effect for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). Section 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. Section 5. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Trust. Section 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Trust, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. Section 7. This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Trust and all material amendments to this Plan shall be approved in the manner provided for approval of this Plan in Section 2(b). Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Trust" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the Trust, (i) of the holders of 67% or more of the Class M shares of the Trust present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Trust. Executed as of March 31, 1995. PUTNAM MUTUAL FUNDS CORP. PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II By: ---------------------- By: -------------------------- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B15 14 12B1 PLAN PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II CLASS M DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of Putnam Minnesota Tax Exempt Income Fund II, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth: Section 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Trust, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of the Trust's Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. Section 2. This Plan shall not take effect until: (a) it has been approved by a vote of a majority of the outstanding Class M shares of the Trust; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Trust has received the proceeds of the initial public offering of its Class M shares. Section 3. This Plan shall continue in effect for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). Section 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. Section 5. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Trust. Section 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Trust, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. Section 7. This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Trust and all material amendments to this Plan shall be approved in the manner provided for approval of this Plan in Section 2(b). Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Trust" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the Trust, (i) of the holders of 67% or more of the Class M shares of the Trust present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Trust. Executed as of March 31, 1995. PUTNAM MUTUAL FUNDS CORP. PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II By: ---------------------- By: -------------------------- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B15 15 12B1 PLAN PUTNAM OHIO TAX EXEMPT INCOME FUND II CLASS M DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of Putnam Ohio Tax Exempt Income Fund II, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth: Section 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Trust, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of the Trust's Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. Section 2. This Plan shall not take effect until: (a) it has been approved by a vote of a majority of the outstanding Class M shares of the Trust; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Trust has received the proceeds of the initial public offering of its Class M shares. Section 3. This Plan shall continue in effect for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). Section 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. Section 5. This Plan may be terminated at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Trust. Section 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Trust, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. Section 7. This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Trust and all material amendments to this Plan shall be approved in the manner provided for approval of this Plan in Section 2(b). Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Trust" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the Trust, (i) of the holders of 67% or more of the Class M shares of the Trust present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of the Trust entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Trust. Executed as of March 31, 1995. PUTNAM MUTUAL FUNDS CORP. PUTNAM OHIO TAX EXEMPT INCOME FUND II By: ---------------------- By: -------------------------- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B16 16 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Arizona Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 1/30/91 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,025 n/a $1,391 T = Average Annual Total Return +2.53% n/a +7.89%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $692,100 Expenses $98,600 Reimbursement $0 Average shares 15,165,592 NAV $9.00 Sales Charge 4.75% POP $9.45 Yield at POP 5.02% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.02% 5.02% - ------ = ------ = 8.80% 1-42.98% 57.02% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Arizona Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 7/15/93 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,019 n/a $1,018 $ T = Average Annual Total Return +1.88% % +0.94%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $107,162 Expenses $26,489 Reimbursement $0 Average shares 2,351,451 NAV $8.99 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.62% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.62% 4.62% - ------ = ------ = 8.10% 1-42.98% 57.02% EX-99.B16 17 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Florida Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 8/24/90 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a 1,000 ERV = Ending Redeemable Value $1,040 n/a $1,402 T = Average Annual Total Return +4.05% n/a 7.35%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $1,325,642 Expenses $170,460 Reimbursement $0 Average shares 29,740,842 NAV $9.12 Sales Charge 4.75% POP $9.57 Yield at POP 4.92% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.92% 4.92% - ------ = ------ = 8.15% 1-39.6% 60.4% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Florida Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 1/4/93 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,035 n/a $1,090 T = Average Annual Total Return +3.52% n/a +3.63%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $214,567 Expenses $50,914 Reimbursement $0 Average shares 4,817,238 NAV $9.12 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.51% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.51% 4.51% - ------ = ------ = 7.47% 1-39.6% 60.40% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Florida Tax Exempt Income Fund -- Class M Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 5/1/95 TOTAL RETURN Formula -- Cumulative Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value n/a n/a $999 $ T = Cumulative Total Return n/a n/a -0.10%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $5 Expenses $1 Reimbursement $0 Average shares 113 NAV $9.12 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.93% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.76% 4.76% - ------ = ------ = 7.88% 1-39.6% 60.40% EX-99.B16 18 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Massachusetts Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 10/23/89 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 $1,000 $1,000 ERV = Ending Redeemable Value $1,033 $1,465 $1,525 T = Average Annual Total Return +3.31% +7.93% +7.82%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $1,314,271 Expenses $164,523 Reimbursement $0 Average shares 27,172,788 NAV $9.21 Sales Charge 4.75% POP $9.67 Yield at POP 5.31% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.31% 5.31% - ------ = ------ = 9.99% 1-46.85% 53.15% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Massachusetts Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 7/15/93 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,026 n/a $1,026 T = Average Annual Total Return +2.64% n/a +1.38%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $240,120 Expenses $54,332 Reimbursement $0 Average shares 4,972,779 NAV $9.20 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.92% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.92% 4.92% - ------ = ------ = 9.26% 1-46.85% 53.15% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Massachusetts Tax Exempt Income Fund -- Class M Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 4/1/95 TOTAL RETURN Formula -- Cumulative Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment n/a n/a $1,000 ERV = Ending Redeemable Value n/a n/a $982 T = Cumulative Total Return n/a n/a -1.83%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $66 Expenses $11 Reimbursement $0 Average shares 1,511 NAV $9.21 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.84% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.67% 4.67% - ------ = ------ = 8.79% 1-46.85% 53.15% EX-99.B16 19 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Michigan Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 10/23/89 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 $1,000 $1,000 ERV = Ending Redeemable Value $1,024 $1,399 $1,444 T = Average Annual Total Return +2.38% +6.94% +6.76%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $719,600 Expenses $102,582 Reimbursement $0 Average shares 15,005,992 NAV $9.01 Sales Charge 4.75% POP $9.46 Yield at POP 5.27% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.27% 5.27% - ------ = ------ = 9.13% 1-42.26% 57.74% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Michigan Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 7/15/93 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,017 n/a $1,022 T = Average Annual Total Return +1.72% n/a +1.15%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $109,678 Expenses $26,594 Reimbursement $0 Average shares 2,292,773 NAV $9.00 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.88% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.88% 4.88% - ------ = ------ = 8.45% 1-42.26% 57.74% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Michigan Tax Exempt Income Fund -- Class M Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 4/1/95 TOTAL RETURN Formula -- Cumulative Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment n/a n/a $1,000 ERV = Ending Redeemable Value n/a n/a $997 T = Cumulative Total Return n/a n/a -0.33%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $634 Expenses $119 Reimbursement $0 Average shares 13,234 NAV $9.00 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 5.25% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.06% 5.06% - ------ = ------ = 8.76% 1-42.26% 57.74% EX-99.B16 20 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Minnesota Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 10/23/89 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 $1,000 $1,000 ERV = Ending Redeemable Value $1,028 $1,378 $1,422 T = Average Annual Total Return +2.75% +6.62% +6.48%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $507,012 Expenses $70,932 Reimbursement $0 Average shares 10,957,882 NAV $8.95 Sales Charge 4.75% POP $9.40 Yield at POP 5.14% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.14% 5.14% - ------ = ------ = 9.30% 1-44.73% 55.27% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Minnesota Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 7/15/93 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,022 n/a $1,029 T = Average Annual Total Return +2.17% n/a +1.55%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $98,501 Expenses $23,839 Reimbursement $0 Average shares 2,136,239 NAV $8.92 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.75% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.75% 4.75% - ------ = ------ = 8.59% 1-44.73% 55.27% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Minnesota Tax Exempt Income Fund -- Class M Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 4/1/95 TOTAL RETURN Formula -- Cumulative Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment n/a n/a $1,000 ERV = Ending Redeemable Value n/a n/a $996 T = Cumulative Total Return n/a n/a -0.41%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $5 Expenses $1 Reimbursement $0 Average shares 114 NAV $8.95 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 5.32% Class M TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.13% 5.13% - ------ = ------ = 9.28% 1-44.73% 55.27% EX-99.B16 21 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam New Jersey Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 2/20/90 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 $1,000 $1,000 ERV = Ending Redeemable Value $1,027 $1,420 $1,444 T = Average Annual Total Return +2.67% +7.26% +7.21%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $1,249,588 Expenses $170,150 Reimbursement $0 Average shares 26,982,842 NAV $8.98 Sales Charge 4.75% POP $9.43 Yield at POP 5.15% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.15% 5.15% - ------ = ------ = 9.13% 1-43.57% 56.43% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam New Jersey Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 1/4/93 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,020 n/a $1,095 T = Average Annual Total Return +1.98% n/a +3.82%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $296,362 Expenses $70,856 Reimbursement $0 Average shares 6,411,647 NAV $8.97 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.75% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.75% 4.75% - ------ = ------ = 8.42% 1-43.57% 56.43% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam New Jersey Tax Exempt Income Fund -- Class M Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 5/1/95 TOTAL RETURN Formula -- Cumulative Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment n/a n/a 1,000 ERV = Ending Redeemable Value n/a n/a $999 T = Cumulative Total Return n/a n/a -0.10%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $5 Expenses $1 Reimbursement $0 Average shares 113 NAV $9.12 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.93% EX-99.B16 22 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Ohio Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 10/23/89 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 $1,000 $1,000 ERV = Ending Redeemable Value $1,029 $1,404 $1,446 T = Average Annual Total Return +2.90% +7.02% +6.80%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $946,318 Expenses $127,506 Reimbursement $0 Average shares 21,645,396 NAV $8.95 Sales Charge 4.75% POP $9.40 Yield at POP 4.88% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.88% 4.88% - ------ = ------ = 8.73% 1-44.13% 55.87% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Ohio Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 7/15/93 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,024 n/a $1,027 $ T = Average Annual Total Return +2.39% n/a +1.44%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $157,902 Expenses $38,388 Reimbursement $0 Average shares 3,614,932 NAV $8.94 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.48% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.48% 4.48% - ------ = ------ = 8.02% 1-44.13% 55.87% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Ohio Tax Exempt Income Fund -- Class M Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 4/1/95 TOTAL RETURN Formula -- Cumulative Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment n/a n/a $1,000 ERV = Ending Redeemable Value n/a n/a $997 T = Cumulative Total Return n/a n/a -0.26%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $5 Expenses $1 Reimbursement $0 Average shares 115 NAV $8.95 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.63% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.47% 4.47% - ------ = ------ = 8.00% 1-44.13% 55.87% EX-99.B16 23 PERF QUOT SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Pennsylvania Tax Exempt Income Fund -- Class A Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 7/21/89 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 $1,000 $1,000 ERV = Ending Redeemable Value $1,035 $1,459 $1,522 T = Average Annual Total Return +3.55% +7.85% +7.43%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $927,079 Expenses $125,634 Reimbursement $0 Average shares 19,220,935 NAV $9.24 Sales Charge 4.75% POP $9.70 Yield at POP 5.21% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 5.21% 5.21% - ------ = ------ = 8.87% 1-41.29% 58.71% SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS Fund name: Putnam Pennsylvania Tax Exempt Income Fund -- Class B Fiscal period ending: 5/31/95 Inception date (if less than 10 years of performance): 7/15/95 TOTAL RETURN Formula -- Average Annual Total Return: ERV = P(1+T)^n n = Number of Time Periods 1 Year 5 Years 10 Years* P = Initial Investment $1,000 n/a $1,000 ERV = Ending Redeemable Value $1,030 n/a $1,036 T = Average Annual Total Return 3.01% n/a 1.90%* *Life of fund, if less than 10 years YIELD Formula: Interest + Dividends - Expenses 2 (-------------------------------------------------- +1)(6) -1 POP x Average shares Interest and Dividends $222,624 Expenses $52,942 Reimbursement $0 Average shares 4,629,547 NAV $9.23 Maximum Contingent Deferred Sales Charge 5.0% Yield at NAV 4.81% TAX-EXEMPT EQUIVALENT YIELD Formula: 30 day yield --------------- = TAX EQUIVALENT YIELD 1-(Highest Individual Tax Rate) 4.81% 4.81% - ------ = ------ = 8.19% 1-41.29% 58.71% EX-27.CLASSA 24 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Arizona Tax Exempt Income Fund Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000869392 PUTNAM ARIZONA TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 145,934,549 153,038,043 8,879,392 109,586 0 162,027,021 2,922,125 0 968,213 3,890,338 0 157,268,516 15,166,568 16,171,783 106,796 0 0 (6,342,123) 7,103,494 158,136,683 0 7,790,831 0 1,155,747 6,635,084 (3,979,037) 6,447,029 9,103,076 0 (5,840,450) 0 0 1,316,331 (2,631,078) 309,532 (1,060,463) 0 0 5,215 2,352,754 683,508 0 1,155,747 134,221,124 8.84 .38 .17 0 (.38) 0 9.01 .70 0 0
EX-27.CLASSA 25 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Florida Tax Exempt Income Fund Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000864488 PUTNAM FLORIDA TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 290,638,746 304,544,678 18,342,046 441,879 0 323,328,603 5,988,106 0 1,449,438 7,437,544 0 310,995,854 29,753,721 31,499,499 0 365,028 0 8,645,699 13,905,932 315,891,059 0 18,579,265 0 2,776,358 15,802,907 (5,408,850) 17,688,731 28,082,788 0 (13,983,260) 0 0 5,779,235 8,212,455 687,442 2,716,092 56,157 0 0 3,202,112 1,686,928 0 2,776,358 266,318,937 8.77 .46 .35 (.46) 0 0 9.12 .83 0 0
EX-27.CLASSA 26 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Massachusetts Tax Exempt Income Fund II Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000792288 PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II YEAR MAY-31-1994 MAY-31-1995 277,523,012 291,551,663 13,055,592 163,377 0 304,770,632 3,505,146 0 2,439,097 5,944,243 0 293,641,031 27,274,597 27,006,382 0 (98,234) (8,348,121) 0 13,631,713 298,826,389 0 19,277,296 0 2,658,701 16,618,595 (7,682,592) 13,419,888 22,355,891 0 (14,766,465) (449,070) 0 5,201,533 (5,929,229) 995,911 31,290,325 0 0 (118,519) (147,427) 1,638,366 0 2,658,701 239,657,573 9.05 .55 .18 0 (.57) 0 9.21 .89 0 0
EX-27.CLASSA 27 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Michigan Tax Exempt Income Fund II Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794611 PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 144,924,512 151,397,181 6,90,6173 0 0 158,303,354 0 0 1,102,739 1,102,739 0 153,658,479 15,089,622 14,487,549 96,048 0 (3,026,581) 0 6,472,669 157,200,615 0 9,985,388 0 1,460,950 8,524,438 (2,253,536) 4,230,455 10,501,357 0 (7,601,592) (9,763) 0 1,755,569 (1,683,464) 529,968 18,028,744 0 (735,622) (52,244) 0 858,323 0 1,460,950 128,083,335 8.90 .52 .11 0 (.52) 0 9.01 .95 0 0
EX-27.CLASSA 28 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Minnesota Tax Exempt Income Fund II Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794612 PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 112,649,991 118,080,556 3,339,345 245,406 0 121,665,307 2,963,468 0 584,465 3,547,933 0 115,954,754 10,999,904 10,871,939 0 (17,447) (3,250,498) 0 5,430,565 118,117,374 0 7,328,445 0 1,146,848 6,181,597 (2,755,350) 4,773,882 8,200,129 0 (5,435,247) 0 0 1,196,795 (1,492,954) 424,124 13,656,997 0 (309,428) 0 (64,452) 643,810 0 1,146,848 93,671,269 8.79 .51 .15 0 (.50) 0 8.95 .99 0 0
EX-27.CLASSA 29 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam New Jersey Tax Exempt Income Fund Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000857463 PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 282,179,370 294,024,150 8,499,180 229,821 0 302,753,051 0 0 1,592,499 1,592,499 0 300,090,590 27,009,966 28,154,702 0 18,267 0 10,120,082 11,208,311 301,160,552 0 17,853,607 0 2,805,062 15,048,545 (8,453,743) 15,717,027 22,311,829 0 (12,600,443) 0 0 3,583,766 (5,543,768) 815,266 9,907,840 0 0 21,796 1,654,257 1,588,880 0 2,805,062 236,161,075 8.75 .46 .23 0 (.46) 0 8.98 .87 0 0
EX-27.CLASSA 30 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Ohio Tax Exempt Income Fund II Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794616 PUTNAM OHIO TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 218,443,481 228,668,328 4,721,580 470,796 0 233,860,704 6,255,766 0 1,581,371 7,837,137 0 220,259,333 21,585,186 22,067,955 4,919 0 (4,381,157) 0 10,140,472 226,023,567 0 14,784,644 0 2,164,439 12,620,205 (3,996,686) 8,118,467 16,741,986 0 (11,195,160) (258,158) 0 1,641,894 (2,976,624) 851,961 13,935,154 (115,422) (89,382) 0 0 1,286,605 0 2,164,439 189,500,422 8.80 .52 .15 (.51) (.01) 0 8.95 .93 0 0
EX-27.CLASSA 31 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Pennsylvania Tax Exempt Income Class A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794615 PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 212,601,017 223,237,981 4,851,162 278,469 0 228,367,612 4,067,885 0 1,263,050 5,330,935 0 213,375,603 19,352,957 19,101,804 76,798 0 (1,052,688) 0 10,636,964 223,036,677 0 3,542,788 0 531,958 3,010,830 (192,151) 6,309,302 9,127,981 0 (2,522,292) 0 0 1,088,734 (996,648) 159,067 14,798,918 90,838 0 0 (848,055) 323,968 0 531,958 173,828,860 8.98 .13 .26 (.13) 0 0 9.24 .21 0 0
EX-27.CLASSB 32
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Arizona Tax Exempt Income Fund Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000869392 PUTNAM ARIZONA TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 145,934,549 153,038,043 8,879,392 109,586 0 162,027,021 2,922,125 0 968,213 3,890,338 0 157,268,516 2,394,416 1,839,263 106,796 0 0 (6,342,123) 7,103,494 158,136,683 0 7,790,831 0 1,155,747 6,635,084 (3,979,037) 6,447,029 9,103,076 0 (700,347) 0 0 733,286 (219,915) 41,782 (1,060,463) 0 0 5,215 2,352,754 683,508 0 1,155,747 18,018,143 8.83 .34 .17 0 (.34) 0 9.00 1.19 0 0
EX-27.CLASSB 33 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Florida Tax Exempt Income Fund Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000864488 PUTNAM FLORIDA TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 290,638,746 304,544,678 18,342,046 441,879 0 323,328,603 5,988,106 0 1,449,438 7,437,544 0 310,995,854 4,890,302 4,214,021 0 365,028 0 8,645,699 13,905,932 315,891,059 0 18,579,265 0 2,776,358 15,802,907 (5,408,850) 17,688,731 28,082,788 0 (1,853,733) 0 0 1,642,091 1,047,931 82,121 2,716,092 56,157 0 0 3,202,112 1,686,928 0 2,776,358 40,036,844 8.76 .40 .36 (.40) (.40) 0 9.12 1.42 0 0
EX-27.CLASSB 34 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Massachusetts Tax Exempt Income Fund II Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000792288 PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II YEAR MAY-31-1994 MAY-31-1995 277,523,012 291,551,663 13,055,592 163,377 0 304,770,632 3,505,146 0 2,439,097 5,944,243 0 293,641,031 5,169,525 2,542,905 0 (98,234) (8,348,121) 0 13,631,713 298,826,389 0 19,277,296 0 2,658,701 16,618,595 (7,682,592) 13,419,888 22,355,891 0 (1,834,523) (65,122) 0 3,031,023 (535,729) 131,326 31,290,325 0 0 (118,519) (147,427) 1,638,366 0 2,658,701 33,420,179 9.05 .49 .17 0 (.51) 0 9.20 1.53 0 0
EX-27.CLASSB 35 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Michigan Tax Exempt Income Fund II Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794611 PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 144,924,512 151,397,181 6,906,173 0 0 158,303,354 0 0 1,102,739 1,102,739 0 153,658,479 2,341,519 1,152,226 96,048 0 (3,026,581) 0 6,472,669 157,200,615 0 9,985,388 0 1,460,950 8,524,438 (2,253,536) 4,230,455 10,501,357 0 (798,353) (1,025) 0 1,289,625 (162,158) 61,826 18,028,744 0 (735,622) (52,244) 0 858,323 0 1,460,950 14,972,033 8.90 .47 .10 0 (.47) 0 9.00 1.59 0 0
EX-27.CLASSB 36 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Minnesota Tax Exempt Income Fund II Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794612 PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 112,649,991 118,080,556 3,339,345 245,406 0 121,665,307 2,963,468 0 584,465 3,547,933 0 115,954,754 2,208,418 1,011,320 0 (17,447) (3,250,498) 0 5,430,565 118,117,374 0 7,328,445 0 1,146,848 6,181,597 (2,755,350) 4,773,882 8,200,129 0 (711,465) 0 0 1,302,085 (156,444) 51,457 13,656,997 0 (309,428) (64,452) 0 643,810 0 1,146,848 13,644,936 8.77 .45 .15 0 (.45) 0 8.92 1.63 0 0
EX-27.CLASSB 37 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam New Jersey Tax Exempt Income Fund Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000857463 PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 282,179,370 294,024,150 8,499,180 229,821 0 302,753,051 0 0 1,592,499 1,592,499 0 300,090,590 6,530,449 5,135,694 0 0 0 10,120,082 11,208,311 301,160,552 0 17,853,607 0 2,805,062 15,048,545 (8,453,743) 15,717,027 22,311,829 0 (2,404,816) 0 0 2,071,094 (839,933) 163,594 9,907,840 0 0 21,796 1,654,257 1,588,880 0 2,805,062 0 8.75 .41 (.22) 0 (.41) 0 8.97 1.46 0 0
EX-27.CLASSB 38 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Ohio Tax Exempt Income Fund II Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794616 PUTNAM OHIO TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 218,443,481 228,668,328 4,721,580 470,796 0 233,860,704 6,255,766 0 1,581,371 7,837,137 0 220,259,333 3,674,021 2,042,303 4,919 0 (4,381,157) 0 10,140,472 226,023,567 0 14,784,644 0 2,164,439 12,620,205 (3,996,686) 8,118,467 16,741,986 0 (1,307,862) (33,773) 0 1,872,645 (335,544) 94,617 13,935,154 (115,422) (89,382) 0 0 1,286,605 0 2,164,439 24,963,134 8.79 .46 .16 (.46) (.01) 0 8.94 1.58 0 0
EX-27.CLASSB 39
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Pennsylvania Tax Exempt Income Class B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794615 PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 212,601,017 223,237,981 4,851,162 278,469 0 228,367,612 4,067,885 0 1,263,050 5,330,935 0 213,375,603 4,795,664 4,086,943 76,798 0 (1,052,688) 0 10,636,964 223,036,677 0 3,542,788 0 531,958 3,010,830 (192,151) 6,309,302 9,127,981 0 (515060) 0 0 767,770 (92,606) 33,557 14,798,918 90,838 0 0 (848,055) 323,968 0 531,958 40,061,532 8.97 .11 .27 (.12) 0 0 9.23 .38 0 0
EX-27.CLASSM 40
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Florida Tax Exempt Income Fund Class M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000864488 PUTNAM FLORIDA TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 290,638,746 304,544,678 18,342,046 441,879 0 323,328,603 5,988,106 0 1,449,438 7,437,544 0 310,995,854 113 0 0 365,028 0 8,645,699 13,905,932 315,891,059 0 18,579,265 0 2,776,358 15,802,907 (5,408,850) 17,688,731 28,082,788 0 0 0 0 0 0 0 2,716,092 0 0 0 0 1,686,928 0 2,776,358 1,016 8.87 .04 .25 (.04) (.04) 0 9.12 .10 0 0
EX-27.CLASSM 41
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Massachusetts Tax Exempt Income Fund II Class M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000792288 PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II YEAR MAY-31-1994 MAY-31-1995 277,523,012 291,551,663 13,055,592 163,377 0 304,770,632 3,505,146 0 2,439,097 5,944,243 0 293,641,031 2,345 0 0 (98,243) (8,348,121) 0 13,631,713 298,826,389 0 19,277,296 0 2,658,701 16,618,595 (7,682,592) 13,419,888 22,355,891 0 (73) 0 0 2,342 0 3 31,290,325 0 0 (118,519) (147,427) 1,638,366 0 2,658,701 12,119 9.10 .03 .11 0 (.03) 0 9.21 .06 0 0
EX-27.CLASSM 42
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Michigan Tax Exempt Income Fund II Class M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794611 PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 144,924,512 151,397,181 6,90,6173 0 0 158,303,354 0 0 1,102,739 1,102,739 0 153,658,479 13,253 0 96,048 0 (3,026,581) 0 6,472,669 157,200,615 0 9,985,388 0 1,460,950 8,524,438 (2,253,536) 4,230,455 10,501,357 0 (915) (2) 0 13,191 0 62 18,028,744 0 (735,622) (52,244) 0 858,323 0 1,460,950 91,915 8.80 .05 .21 0 (.06) 0 9.00 .20 0 0
EX-27.CLASSM 43
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Minnesota Tax Exempt Income Fund II Class M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794612 PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 112,649,991 118,080,556 3,339,345 245,406 0 121,665,307 2,963,468 0 584,465 3,547,933 0 115,954,754 115 0 0 (17,447) (3,250,498) 0 5,430,565 118,117,374 0 7,328,445 0 1,146,848 6,181,597 (2,755,350) 4,773,882 8,200,129 0 0 0 0 115 0 0 13,656,997 0 (309,428) (64,452) 0 643,810 0 1,146,848 1,008 8.77 .08 .17 (.07) 0 0 8.95 .16 0 0
EX-27.CLASSM 44
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam New Jersey Tax Exempt Income Fund Class M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000857463 PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND YEAR MAY-31-1995 MAY-31-1995 282,179,370 294,024,150 8,499,080 229,821 0 302,753,051 0 0 1,592,499 1,592,499 0 300,090,590 115 0 0 0 0 10,120,082 11,208,311 301,160,552 0 17,853,607 0 2,805,062 15,048,545 (8,453,743) 15,717,027 22,311,829 0 0 0 0 115 0 0 9,907,840 0 0 0 0 1,588,880 0 2,805,062 22,353 8.74 .04 .28 0 (.08) 0 8.98 .09 0 0
EX-27.CLASSM 45
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Putnam Ohio Tax Exempt Income Fund II Class M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000794616 PUTNAM OHIO TAX EXEMPT INCOME FUND II YEAR MAY-31-1995 MAY-31-1995 218,443,481 228,668,328 4,721,580 470,796 0 233,860,704 6,255,766 0 1,581,371 7,837,137 0 220,259,333 115 0 4,919 0 (4,381,157) 0 10,140,472 226,023,567 0 14,784,644 0 2,164,439 12,620,205 (3,996,686) 8,118,467 16,741,986 0 0 0 0 115 0 0 13,935,154 (115,422) (89,382) 0 0 1,286,605 0 2,164,439 1,010 8.76 .08 .19 (.08) 0 0 8.95 .20 0 0
EX-99.B18 46 PUTNAM FUNDS Plan pursuant to Rule 18f-3(D) under the Investment Company act of 1940 Effective July 1, 1995* Each of the open-end investment companies managed by Putnam Investment Management, Inc. (each a "Fund" and, together, the "Funds") may from time to time issue one or more of the following classes of shares: Class A shares, Class B shares, Class C shares, Class M shares and Class Y shares. Each class is subject to such investment minimums and other conditions of eligibility as are set forth in the Funds' registration statements as from time to time in effect. The differences in expenses among these classes of shares, and the conversion and exchange features of each class of shares, are set forth below in this Plan. Except as noted below, expenses are allocated among the classes of shares of each Fund based upon the net assets of each Fund attributable to shares of each class. This Plan is subject to change, to the extent permitted by law and by the Agreement and Declaration of Trust and By-laws of each Fund, by action of the Trustees of each Fund. - --------------------------- *The Funds have been offering multiple classes of shares, prior to the effectiveness of this Plan, pursuant to an exemptive order of the Securities and Exchange Commission. This Plan is intended to permit the Funds to offer multiple classes of shares pursuant to Rule 18f-3 under the Investment Company Act of 1940, without any change in the arrangements and expense allocations that have previously been approved by the Trustees of each Fund under such order of exemption. CLASS A SHARES DISTRIBUTION AND SERVICE FEES Class A shares pay distribution and service fees pursuant to plans (the "Class A Plans") adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"). Class A shares also bear any costs associated with obtaining shareholder approval of the Class A Plans (or an amendment to a Class A Plan). Pursuant to the Class A Plans, Class A shares may pay up to 0.35% of the relevant Fund's average net assets attributable to the Class A shares* (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class A Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect. CONVERSION FEATURES Class A shares do not convert to any other class of shares. EXCHANGE FEATURES Class A shares of any Fund may be exchanged, at the holder's option, for Class A shares of any other Fund that offers Class A shares without the payment of a sales charge beginning 15 days after purchase, provided that Class A shares of such other Fund are available to residents of the relevant state. The holding period for determining any contingent deferred sales charge (a "CDSC") will include the holding period of the shares exchanged, and will be calculated using the schedule of any Fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such Class A shares. - --------------------------- *Class A shares of Putnam Diversified Equity Trust may pay up to 0.65% of average net assets attributable to Class A shares. INITIAL SALES CHARGE Class A shares are offered at a public offering price that is equal to their net asset value ("NAV") plus a sales charge of up to 5.75% of the public offering price (which maximum may be less for certain Funds, as described in each Fund's registration statement as from time to time in effect). The sales charges on Class A shares are subject to reduction or waiver as permitted by Rule 22d-1 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect. CONTINGENT DEFERRED SALES CHARGE Purchases of Class A shares of $1 million or more that are redeemed within one or two years of purchase are subject to a CDSC of 1.00% and 0.50%, respectively, of either the purchase price or the NAV of the shares redeemed, whichever is less. Class A shares are not otherwise subject to a CDSC. The CDSC on Class A shares is subject to reduction or waiver in certain circumstances, as permitted by Rule 6c-10 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect. CLASS B SHARES DISTRIBUTION AND SERVICE FEES Class B shares pay distribution and service fees pursuant to plans adopted pursuant to Rule 12b-1 under the 1940 Act (the "Class B Plans"). Class B shares also bear any costs associated with obtaining shareholder approval of the Class B Plans (or an amendment to a Class B Plan). Pursuant to the Class B Plans, Class B shares may pay up to 1.00% of the relevant Fund's average net assets attributable to Class B shares (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class B Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect. CONVERSION FEATURES Class B shares automatically convert to Class A shares of the same Fund at the end of the month eight years after purchase (or such earlier date as the Trustees of a Fund may authorize), except that Class B shares purchased through the reinvestment of dividends and other distributions on Class B shares convert to Class A shares at the same time as the shares with respect to which they were purchased are converted and Class B shares acquired by the exchange of Class B shares of another Fund will convert to Class A shares based on the time of the initial purchase. EXCHANGE FEATURES Class B shares of any Fund may be exchanged, at the holder's option, for Class B shares of any other Fund that offers Class B shares without the payment of a sales charge beginning 15 days after purchase, provided that Class B shares of such other Fund are available to residents of the relevant state. The holding period for determining any CDSC will include the holding period of the shares exchanged, and will be calculated using the schedule of any Fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such Class B shares. INITIAL SALES CHARGE Class B shares are offered at their NAV, without an initial sales charge. CONTINGENT DEFERRED SALES CHARGE Class B shares that are redeemed within 6 years of purchase are subject to a CDSC of up to 5.00% of either the purchase price or the NAV of the shares redeemed, whichever is less (which period may be shorter and which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect); such percentage declines the longer the shares are held, as described in the Funds' registration statements as from time to time in effect. Class B shares purchased with reinvested dividends or capital gains are not subject to a CDSC. The CDSC on Class B shares is subject to reduction or waiver in certain circumstances, as permitted by Rule 6c-10 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect. CLASS C SHARES DISTRIBUTION AND SERVICE FEES Class C shares pay distribution and service fees pursuant to plans adopted pursuant to Rule 12b-1 under the 1940 Act (the "Class C Plans"). Class C shares also bear any costs associated with obtaining shareholder approval of the Class C Plans (or an amendment to a Class C Plan). Pursuant to the Class C Plans, Class C shares may pay up to 1.00% of the relevant Fund's average net assets attributable to the Class C shares (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class C Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect. CONVERSION FEATURES Class C shares do not convert to any other class of shares. EXCHANGE FEATURES Class C shares of any Fund may be exchanged, at the holder's option, for Class C shares of any other Fund that offers Class C shares without the payment of a sales charge beginning 15 days after purchase, provided that Class C shares of such other Fund are available to residents of the relevant state. The holding period for determining any CDSC will include the holding period of the shares exchanged, and will be calculated using the schedule of any Fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such Class C shares. INITIAL SALES CHARGE Class C shares are offered at their NAV, without an initial sales charge. CONTINGENT DEFERRED SALES CHARGE Class C shares are subject to a 1.00% CDSC if the shares are redeemed within one year of purchase. The CDSC on Class C shares is subject to reduction or waiver in certain circumstances, as permitted by Rule 6c-10 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect. CLASS M SHARES DISTRIBUTION AND SERVICE FEES Class M shares pay distribution and service fees pursuant to plans adopted pursuant to Rule 12b-1 under the 1940 Act (the "Class M Plans"). Class M shares also bear any costs associated with obtaining shareholder approval of the Class M Plans (or an amendment to a Class M Plan). Pursuant to the Class M Plans, Class M shares may pay up to 1.00% of the relevant Fund's average net assets attributable to Class M shares (which percentage may be less for certain Funds, as described in the Funds' registration statements as from time to time in effect). Amounts payable under the Class M Plans are subject to such further limitations as the Trustees may from time to time determine and as set forth in the registration statement of each Fund as from time to time in effect. CONVERSION FEATURES Class M shares do not convert to any other class of shares. EXCHANGE FEATURES Class M shares of any Fund may be exchanged, at the holder's option, for Class M shares of any other Fund that offers Class M shares without the payment of a sales charge beginning 15 days after purchase, provided that Class M shares of such other Fund are available to residents of the relevant state. INITIAL SALES CHARGE Class M shares are offered at a public offering price that is equal to their NAV plus a sales charge of up to 3.50% of the public offering price (which maximum may be less for certain Funds, as described in each Fund's registration statement as from time to time in effect). The sales charges on Class M shares are subject to reduction or waiver as permitted by Rule 22d-1 under the 1940 Act and as described in the Funds' registration statements as from time to time in effect. CONTINGENT DEFERRED SALES CHARGE Class M shares are not subject to any CDSC. CLASS Y SHARES DISTRIBUTION AND SERVICE FEES Class Y shares do not pay a distribution fee. CONVERSION FEATURES Class Y shares do not convert to any other class of shares. EXCHANGE FEATURES Class Y shares of any Fund may be exchanged, at the holder's option, for Class Y shares of any other Fund that offers Class Y shares without the payment of a sales charge beginning 15 days after purchase, provided that Class Y shares of such other Fund are available to residents of the relevant state, and further provided that shares of such other Fund are available through the relevant employer's plan. INITIAL SALES CHARGE Class Y shares are offered at their NAV, without an initial sales charge. CONTINGENT DEFERRED SALES CHARGE Class Y shares are not subject to any CDSC. s:\shared\boiler\newfunds\nf-69 -----END PRIVACY-ENHANCED MESSAGE-----