Putnam
California
Tax Exempt
Income Fund
Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
3-31-04
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
We are pleased to report further progress in Putnam's reforms on behalf of
shareholders. The most significant news is the settlement that has been
reached with the Securities and Exchange Commission and with regulatory
authorities in the Commonwealth of Massachusetts regarding market timing in
Putnam funds. Putnam President and Chief Executive Officer Ed Haldeman has
sent a letter to all shareholders describing the terms of the settlement.
Most of the $110 million to be paid by Putnam Investment Management, LLC
will be distributed to the funds as restitution to shareholders, thereby
fulfilling an important element of the initial settlement that Putnam
reached with the SEC in November 2003.
Over the past several months, Putnam has also introduced a number of
voluntary reforms. We would like to call your attention to two of them.
Expense and risk comparisons for this fund can be found following the
Performance Summary of this report. The expense comparison information
enables you to estimate the amount you have actually paid for ongoing
expenses such as management fees and distribution (or 12b-1) fees and to
compare these expenses with the average expenses of funds in the same
Lipper peer group. The risk comparison shows the fund's risk relative to
similar funds as tracked by Morningstar, an independent fund-rating
company. We believe the expense and risk information will provide
valuable tools for you and your financial advisor when you make
decisions about your financial program.
During the six-month period ended March 31, 2004, Putnam California Tax
Exempt Income Fund delivered results that were in line with its benchmark
and only slightly behind its Lipper peer group average, based on returns at
net asset value. The accompanying report from the fund's management team
explains that the fund benefited from an overall increase in investor
interest in lower-rated bonds. Also, it discusses the team's efforts to
avoid undue exposure to California general obligation bonds while
maintaining an attractive level of current income.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
May 19, 2004
Report from Fund Management
Fund highlights
* During the six months ended March 31, 2004, Putnam California Tax
Exempt Income Fund's class A shares generated a 3.11% total return at
net asset value (NAV) and -1.75% at public offering price (POP).
* Results at NAV were in line with those of the fund's benchmark, the
Lehman Municipal Bond Index, which returned 3.12% for the semiannual
period.
* A somewhat defensive duration positioning caused the fund to slightly
lag the average for its Lipper category, California Municipal Debt
Funds, which was 3.26% for the period based on the results at NAV.
* See the Performance Summary beginning on page 7 for complete fund
performance, comparative performance, and Lipper data.
Performance commentary
As interest rates trended irregularly downward during much of the
semiannual period, low yields on Treasuries and high-quality bonds,
coupled with the prospect for an improving economy, encouraged investors
to accept higher risks in pursuit of greater returns. This led to
general outperformance by higher-yielding issues, including several of
your fund's holdings.
However, the fund's defensive position with respect to duration -- a
measure of interest-rate sensitivity -- limited its upside potential during
the period and contributed to its slight underperformance of its Lipper
category. We had positioned the portfolio defensively in an effort to
minimize the negative impact of an anticipated rise in interest rates.
Although rates trended slightly lower during the fund's fiscal year, in
late March they shifted upward and our decision to keep the fund's duration
slightly shorter than its competitive universe appeared prudent.
FUND PROFILE
Putnam California Tax Exempt Income Fund invests typically in intermediate-
to long-maturity municipal bonds issued in the state of California, which
are used to help finance public projects such as schools, roads, water
facilities, and hospitals. The fund may be appropriate for residents of
California who seek income that is free from state and federal income
taxes.
Diversification among issuers and the fact that only a small portion of the
fund's municipal bond holdings is backed by taxpayer receipts have helped
it remain somewhat insulated from California's fiscal crisis. The fund's
tobacco settlement bonds also continued to demonstrate the strength they
had begun to show late in 2003, as the litigation environment for the
tobacco industry improved. See page 4 for a more detailed discussion.
Market overview
Municipal bond yields -- which move in the opposite direction of their
prices -- were volatile between October 1, 2003, and March 31, 2004. Yields
ended the semiannual period about where they had started. The ratio between
yields of 10-year municipal bonds and 10-year Treasuries fluctuated.
Municipals yielded about 80% of comparable Treasury yields at the end of
December, then jumped back to about 90% by the end of March. Overall, the
yield curve -- which shows the difference in yield between shorter- and
longer-maturity bonds -- flattened somewhat, and credit spreads -- the
difference in yields between higher-and lower-rated bonds -- generally
narrowed. The economy continued to improve on nearly all fronts, yet a lack
of job growth continued to cause uncertainty. The Federal Reserve Board
held the federal funds rate steady at 1%. The dollar weakened during the
period. Municipal bond issuance continued to be very strong as states and
municipalities sought to address budget shortfalls that resulted from
decreased tax revenues. California residents approved a plan to issue $15
billion in debt to help with the state's budget crisis. Although ongoing
tobacco litigation continued to make headlines, the municipal bond market
largely discounted the news.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 3/31/04
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Bonds
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Lehman Municipal Bond Index (tax-exempt bonds) 3.12%
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Lehman Aggregate Bond Index (broad bond market) 2.98%
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Lehman Government Bond Index (U.S. Treasury and agency
securities) 2.49%
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Lehman Intermediate Treasury Bond Index
(intermediate-maturity U.S. Treasury bonds) 1.88%
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Equities
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S&P 500 Index (broad stock market) 14.08%
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S&P Utilities Index (utilities stocks) 13.51%
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Russell 2000 Growth Index (small-company growth stocks) 18.97%
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These indexes provide an overview of performance in different market
sectors for the six months ended 3/31/04.
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Strategy overview
We shortened the fund's duration (a measure of a fund's sensitivity to
changes in interest rates) during the period, since in a strengthening
economy, it appears likely that interest rates could rise at some point.
At the start of October, the fund was slightly defensive. In January
2004, we shortened the duration further. This did not help the fund's
performance until later in the period.
We took the opportunity afforded by strong demand for higher-yielding
municipal bonds to take profits where appropriate. We also continued to
take opportunities to diversify the portfolio by adding selectively to
the fund's lower-quality holdings. Compared to the benchmark, the
portfolio remains slightly overweighted in lower-rated, higher yielding
bonds.
The fund remains underweighted in California general obligation bonds.
Voters recently approved Proposition 57, which paved the way for a $15
billion bond issue to provide long-term financing of the state's
accumulated deficit. Although this was good news in the short term because
it removed some uncertainty in the municipal bond market, we remain
concerned that the new issuance will flood the market and cause California
general obligation bonds to underperform. We are also concerned because the
state's structural budget deficit problem is not yet solved.
[GRAPHIC OMITTED: horizontal bar chart THE FUND'S MATURITY AND DURATION
COMPARED]
THE FUND'S MATURITY AND DURATION COMPARED
9/30/03 3/31/04
Average effective
maturity in years 9.2 7.4
Duration in years 7.0 5.9
Footnote reads:
This chart compares changes in the fund's duration (a measure of its
sensitivity to interest-rate changes) and its average effective maturity
(a weighted average of the holdings' maturities).
Average effective maturity also takes into account put and call
features, where applicable, and reflects prepayments for mortgage-backed
securities.
How fund holdings affected performance
Although diversification remains important for this fund, both in terms
of quality and issuer, the portfolio has only a small position in
California General Obligations (GOs), which are backed by receipts from
taxpayers. We believe that, in the near term, the potential demand for
the planned $15 billion deficit financing issue remains untested.
We continued to reduce certain larger positions in lower-rated bonds
that have been in the portfolio for a long time. For example, we sold
part of the fund's exposure to Thousand Oaks California Community
Facilities District for Marketplace Pedestrian Mall, unrated bonds with
a coupon of 6 7/8% that mature in 2024. With all risks considered, we
are comfortable owning this issue, so we sold off portions gradually,
retaining a smaller position.
Similarly, we took the opportunity to reduce the fund's exposure to Valley
Health Systems, Certificates of Participation Refunding Project. These
bonds are rated B+ by Moody's, were issued with a coupon of 6 7/8%, and
mature in 2023. We sold portions of this position as we found interested
buyers at prices that looked attractive. The fund also benefited from the
resolution of a defaulted holding, Corona California Certificates of
Participation for Vista Hospital, which were issued with a coupon of 9 1/2%
and a maturity date in 2020. We sold our position as a result and later
purchased different Corona California Certificates.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa/AAA (64.9%)
Aa/AA (6.9%)
A (2.8%)
Baa/BBB (16.4%)
Ba/BB (5.1%)
B and lower (1.0%)
VMIG1 (2.9%)
Footnote reads:
As a percentage of market value as of 3/31/04. A bond rated Baa/BBB or
higher is considered investment grade. The chart reflects Moody's and
Standard & Poor's ratings; percentages may include unrated bonds
considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
Tobacco settlement bonds also performed well during the period. These
specialized bonds are secured by the income stream from tobacco companies'
settlement obligations to the states and generally offer higher yields than
bonds of comparable quality. We carefully monitored developments in the
tobacco industry, particularly with regard to ongoing litigation and other
factors affecting demand for these bonds. The municipal bond market has
largely ignored recent unfavorable headlines and the downgrading of some
New York tobacco settlement bonds by Moody's rating service. In our view,
the backdrop for the tobacco industry remains fundamentally positive, and
the fund remains overweighted in these types of bonds. When appropriate
from a value standpoint, we have increased the fund's exposure to them.
Recent purchases included California Tobacco Securitization Agency Revenue
Bonds, rated Baa2 by Moody's, with a coupon of 5 1/2% maturing in 2030. We
also added California Statewide Financing Authority Tobacco Settlement
Revenue Bonds, also rated Baa2 by Moody's, with a coupon of 5 5/8% maturing
in 2029.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary
in the future.
The fund's management team
The fund is managed by the Putnam Tax Exempt Fixed-Income Team. The
members of the team are David Hamlin (Portfolio Leader), Paul Drury
(Portfolio Member), Susan McCormack (Portfolio Member), James St. John
(Portfolio Member), Richard Wyke (Portfolio Member), and Kevin Cronin.
The outlook for your fund
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
team's plans for responding to them.
Lingering unemployment had been an anomaly in an otherwise robust economic
recovery. However, in early April 2004, after the fiscal period ended,
employment data at last showed marked improvement. We believe the
underlying strength in the economy will foster higher interest rates in the
future. In keeping with our views, the fund's duration is now relatively
short to keep the portfolio defensively positioned. We expect that the
credit quality of general obligation municipal bonds will remain under
pressure, partly because tax revenues cannot be expected to grow
significantly until taxpayers begin to report improved earnings. Although
yield spreads between high- and low-quality municipal bonds have narrowed
somewhat, we believe they could narrow further. As a result, we may see
more opportunity for potential gain in this area. We are looking to
maintain a moderate amount of credit risk while maintaining a diversified
portfolio. We will continue to monitor market conditions as we pursue a
high level of tax-free income and manage the fund's risk exposures.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. This fund concentrates
its investments in one state and involves more risk than a fund that
invests more broadly. Capital gains, if any, are taxable for federal and,
in most cases, state purposes. For some investors, investment income may be
subject to the federal alternative minimum tax. Income from federally
exempt funds may be subject to state and local taxes.
Performance summary
This section shows your fund's performance during the first half of its
fiscal year, which ended March 31, 2004. Performance should always be
considered in light of a fund's investment strategy. Data represents past
performance. Past performance does not guarantee future results. More
recent returns may be less or more than those shown. Investment return and
principal value will fluctuate and you may have a gain or a loss when you
sell your shares. For the most recent month-end performance, please visit
www.putnaminvestments.com.
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TOTAL RETURN FOR PERIODS ENDED 3/31/04
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Class A Class B Class C Class M
(inception dates) (4/29/83) (1/4/93) (7/26/99) (2/14/95)
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NAV POP NAV CDSC NAV CDSC NAV POP
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6 months 3.11% -1.75% 2.78% -2.22% 2.85% 1.85% 2.96% -0.37%
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1 year 5.51 0.45 4.94 -0.06 4.75 3.75 5.31 1.84
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5 years 27.80 21.66 23.86 21.88 22.91 22.91 26.01 21.98
Annual average 5.03 4.00 4.37 4.04 4.21 4.21 4.73 4.05
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10 years 80.27 71.72 69.10 69.10 66.51 66.51 74.58 68.87
Annual average 6.07 5.56 5.39 5.39 5.23 5.23 5.73 5.38
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Annual average
(life of fund) 7.69 7.44 6.88 6.88 6.84 6.84 7.26 7.09
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Performance assumes reinvestment of distributions and does not account for
taxes. Returns at public offering price (POP) for class A and M shares
reflect a sales charge of 4.75% and 3.25%, respectively (which for class A
shares does not reflect a reduction in sales charges that went into effect
on January 28, 2004; if this reduction had been in place for all periods
indicated, returns would have been higher). Class B share returns reflect
the applicable contingent deferred sales charge (CDSC), which is 5% in the
first year, declining to 1% in the sixth year, and is eliminated
thereafter. Class C shares reflect a 1% CDSC for the first year and is
eliminated thereafter. Performance for class B, C, and M shares before
their inception is derived from the historical performance of class A
shares, adjusted for the applicable sales charge (or CDSC) and higher
operating expenses for such shares.
A 2% redemption fee will be applied to shares exchanged or sold within 5
days of purchase.
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/04
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Lehman Lipper California
Municipal Municipal Debt
Bond Funds category
Index average*
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6 months 3.12% 3.26%
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1 year 5.86 5.25
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5 years 33.85 26.24
Annual average 6.01 4.77
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10 years 93.24 79.52
Annual average 6.81 6.02
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Annual average
(life of fund) 8.20 7.64
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Index and Lipper results should be compared to fund performance at net
asset value.
* Over the 6-month and 1-, 5-, and 10-year periods ended 3/31/04, there
were 128, 128, 92, and 54 funds, respectively, in this Lipper category.
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PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 3/31/04
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Class A Class B Class C Class M
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Distributions (number) 6 6 6 6
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Income 1 $0.208802 $0.180727 $0.174891 $0.195654
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Capital gains 1
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Long-term $0.023700 $0.023700 $0.023700 $0.023700
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Short-term $0.013200 $0.013200 $0.013200 $0.013200
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Total $0.245702 $0.217627 $0.211791 $0.232554
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Share value: NAV POP NAV NAV NAV POP
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9/30/03 $8.62 $9.05 $8.62 $8.65 $8.61 $8.90
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3/31/04 8.64 9.05* 8.64 8.68 8.63 8.92
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Current return
(end of period)
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Current dividend rate 2 4.43% 4.23% 3.77% 3.61% 4.12% 3.98%
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Taxable equivalent 3 7.51 7.18 6.40 6.12 6.99 6.75
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Current 30-day
SEC yield 4 3.17 3.02 2.51 2.36 2.86 2.77
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Taxable equivalent 3 5.38 5.12 4.26 4.00 4.85 4.70
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* Reflects a reduction in sales charges that took effect on January 28,
2004.
1 Capital gains, if any, are taxable for federal and, in most cases,
state purposes. For some investors, investment income may be subject to
the federal alternative minimum tax. Income from federally exempt funds
may be subject to state and local taxes.
2 Most recent distribution, excluding capital gains, annualized and
divided by NAV or POP at end of period.
3 Assumes maximum 41.05% federal and state combined tax rate for 2003.
Results for investors subject to lower tax rates would not be as
advantageous.
4 Based only on investment income, calculated using SEC guidelines.
Understanding your fund's expenses
As a mutual fund investor, you pay ongoing expenses, such as management
fees, distribution fees (12b-1 fees), and other expenses. Using the
information below, you can estimate how these expenses affect your
investment and compare them with the expenses of other funds. You may
also pay one-time transaction expenses, including sales charges (loads),
and redemption fees, which are not shown in this section and would have
resulted in higher total expenses. For more information, see your fund's
prospectus or talk to your financial advisor.
Review your fund's expenses
The table below shows the expenses you would have paid on a $1,000
investment in Putnam California Tax Exempt Income Fund from September
30, 2003, to March 31, 2004. It also shows how much a $1,000 investment
would be worth at the close of the period, assuming actual returns and
expenses.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 3/31/04
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Class A Class B Class C Class M
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Expenses paid per $1,000* $4 $7 $8 $5
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Ending value (after expenses) $1,031 $1,028 $1,029 $1,030
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* Expenses for each share class are calculated using the fund's annualized
expense ratio for each class, which represents the ongoing expenses as a
percentage of net assets for the six months ended 3/31/04. The expense
ratio may differ for each share class (see the table at the bottom of the
next page). Expenses are calculated by multiplying the expense ratio by the
average account value for the period; then multiplying the result by the
number of days in the reporting period; and then dividing that result by
365 (or 366, for leap years).
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended March
31, 2004, use the calculation method below. See your September 30, 2003,
Putnam statement or call Putnam at 1-800-225-1581 to find the value of
your investment in the fund on September 30, 2003.
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HOW TO CALCULATE THE EXPENSES YOU PAID
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Total
Value of your Expenses paid expenses
investment on 9/30/03 [DIV] $1,000 X per $1,000 = paid
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Example Based on a $10,000 investment in class A shares of your fund.
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$10,000 [DIV] $1,000 X $4 (see table above) = $40
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Comparing your fund's expenses with those of other funds
Using the SEC's method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines
to help investors assess fund expenses. Per these guidelines, the table
below shows your fund's expenses based on a $1,000 investment, assuming
a hypothetical 5% annualized return. You can use this information to
compare the ongoing expenses (but not transaction expenses or total
costs) of investing in the fund with those of other funds. All mutual
fund shareholder reports will provide this information to help you make
this comparison. Please note that you cannot use this information to
estimate your actual ending account balance and expenses paid during the
period.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended 3/31/04
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Class A Class B Class C Class M
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Expenses paid per $1,000* $4 $7 $8 $6
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Ending value (after expenses) $1,042 $1,036 $1,034 $1,039
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* Expenses for each share class are calculated using the fund's annualized
expense ratio for each class, which represents the ongoing expenses as a
percentage of net assets for the six months ended 3/31/04. The expense
ratio may differ for each share class (see the table at the bottom of this
page). Expenses are calculated by multiplying the expense ratio by the
average account value for the period; then multiplying the result by the
number of days in the reporting period; and then dividing that result by
365 (or 366, for leap years).
Using industry averages to compare expenses
You can also compare your fund's expenses with industry averages, as
determined by Lipper, an independent fund-rating agency that ranks funds
relative to others that Lipper considers to have similar investment
styles or objectives. The expense ratio for each share class shown below
indicates how much of your fund's net assets have been used to pay
ongoing expenses during the period.
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EXPENSE RATIO COMPARISONS USING ANNUALIZED DATA
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Class A Class B Class C Class M
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Your fund's annualized
expense ratio 0.78% 1.43% 1.58% 1.08%
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Average annualized expense
ratio for Lipper peer group+ 0.83% 1.48% 1.63% 1.13%
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+ For class A shares, expenses shown represent the average of the expenses
of front-end load funds viewed by Lipper as having the same investment
classification or objective as the fund, calculated in accordance with
Lipper's standard reporting methodology for comparing expenses within a
given universe. All Lipper data are for the most recent fiscal periods
available as of March 31, 2004. For class B, C, and M shares, Putnam has
adjusted the Lipper total expense average to reflect higher 12b-1 fees
incurred by these classes of shares. The peer group may include funds that
are significantly larger or smaller than the fund, which may limit the
comparability of the fund's expenses to the Lipper average.
Risk comparison
As part of new initiatives to enhance disclosure, we are including a
risk comparison to help you understand how your fund compares with other
funds. The comparison utilizes a risk measure developed by Morningstar,
an independent fund-rating agency. This risk measure is referred to as
the fund's Overall Morningstar Risk.
[GRAPHIC OMITTED: chart MORNINGSTAR [REGISTRATION MARK] RISK]
MORNINGSTAR [REGISTRATION MARK] RISK
Fund's Overall
Morningstar Risk 0.27
Municipal bond
fund average 0.21
0% INCREASING RISK 100%
Your fund's Overall Morningstar Risk is shown alongside that of the average
fund in its broad asset class, as determined by Morningstar. The risk bar
broadens the comparison by translating the fund's Overall Morningstar Risk
into a percentile, which is based on the fund's ranking among all funds
rated by Morningstar as of 3/31/04. A higher Overall Morningstar Risk
generally indicates that a fund's monthly returns have varied more widely.
Morningstar determines a fund's Overall Morningstar Risk by assessing
variations in the fund's monthly returns -- with an emphasis on downside
variations -- over 3-, 5-, and 10-year periods, if available. Those
measures are weighted and averaged to produce the fund's Overall
Morningstar Risk. The information shown is provided for the fund's class A
shares only; information for other classes may vary. Overall Morningstar
Risk is based on historical data and does not indicate future results.
Morningstar does not purport to measure the risk associated with a current
investment in a fund, either on an absolute basis or on a relative basis.
Low Overall Morningstar Risk does not mean that you cannot lose money on an
investment in a fund. Copyright 2004 Morningstar, Inc. All Rights Reserved.
The information contained herein (1) is proprietary to Morningstar and/or
its content providers; (2) may not be copied or distributed; and (3) is not
warranted to be accurate, complete, or timely. Neither Morningstar nor its
content providers are responsible for any damages or losses arising from
any use of this information.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. The
NAV is calculated by dividing the net value of all the fund's assets by
the number of outstanding shares.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 4.75% maximum sales charge for class A
shares (since reduced to 4.50%) and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
Comparative indexes
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Government Bond Index is an unmanaged index of U.S. Treasury and
agency securities.
Lehman Intermediate Treasury Bond Index is an unmanaged index of
Treasury bonds with maturities between 1 and 10 years.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Russell 2000 Growth Index is an unmanaged index of those companies in
the Russell 2000 Index chosen for their growth orientation.
S&P 500 Index is an unmanaged index of common stock performance.
S&P Utilities Index is an unmanaged index of common stock issued by
utilities companies.
Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Lipper is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Putnam is committed to managing our mutual funds in the best interests of
our shareholders. Our proxy voting guidelines and policies are available on
the Putnam Individual Investor Web site, www.putnaminvestments.com, by
calling Putnam's Shareholder Services at 1-800-225-1581, or on the SEC's
Web site, www.sec.gov.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or loss
the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios, and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate table
is provided for each share class.
The fund's portfolio
March 31, 2004 (Unaudited)
Key to Abbreviations
- -------------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FRB Floating Rate Bonds
FSA Financial Security Assurance
G.O. Bonds General Obligation Bonds
IFB Inverse Floating Rate Bonds
IF COP Inverse Floating Rate Certificate of Participation
MBIA MBIA Insurance Company
TAN Tax Anticipation Notes
U.S. Govt. Coll. U.S. Government Collateralized
VRDN Variable Rate Demand Notes
Municipal bonds and notes (99.5%) (a)
Principal amount Rating (RAT) Value
California (90.6%)
- -------------------------------------------------------------------------------
$9,500,000 Alameda, Corridor Trans. Auth.
Rev. Bonds, Ser. A, 5 1/4s, 10/1/21 Aaa $10,343,125
16,000,000 Anaheim, IF COP (Convention Ctr.),
MBIA, 11.17s, 7/16/23 (acquired
12/1/97, cost $16,000,000) (RES) Aaa 20,080,000
24,000,000 Anaheim, Pub. Fin. Auth. Tax Alloc.
IFB, MBIA, 11.72s, 12/28/18
(acquired 11/24/97, cost
$23,514,220) (RES) Aaa 32,640,000
975,000 Association of Bay Area Governments
(ABAG) Fin. Auth. for Nonprofit
Corps. Rev. Bonds (San Diego Hosp.
Assn.), Ser. C, 5 3/8s, 3/1/21 Baa1 985,969
3,390,000 Burbank, Pub. Fin. Auth. Rev. Bonds
(West Olive Redev.), AMBAC, 5s,
12/1/26 Aaa 3,500,175
11,180,000 CA Edl. Fac. Auth. IFB (PA 839),
9.043s, 12/1/32 (acquired 5/14/01,
cost $11,230,310) (RES) AAA/P 12,465,700
CA Edl. Fac. Auth. Rev. Bonds
20,000,000 (U. of Southern CA), Ser. C, 5 1/8s,
10/1/28 Aa1 20,925,000
4,000,000 (CA Institute of Technology),
Ser. A, 5s, 10/1/32 Aaa 4,150,000
CA Hlth. Fac. Fin. Auth. Rev. Bonds
3,500,000 (Adventist Hlth. Syst.), Ser. A, 5s,
3/1/33 A 3,508,750
6,390,000 (Lucile Salter Packard Hosp.),
Ser. C, AMBAC, 5s, 8/15/24 Aaa 6,653,332
2,500,000 (Stanford Hosp. & Clinics), Ser. A,
5s, 11/15/23 A3 2,543,750
19,340,000 Ser. B, AMBAC, 5s, 7/1/21 AAA 19,810,155
1,660,000 Ser. B, AMBAC, 5s, 7/1/21
(Prerefunded) AAA 1,709,302
35,385,000 Ser. 5, MBIA, 5s, 7/1/14 Aaa 36,383,211
CA Infrastructure & Econ. Dev. Bank
Rev. Bonds (Bay Area Toll Bridges)
12,000,000 AMBAC, 5s, 7/1/33 Aaa 12,480,000
5,000,000 Ser. A, FGIC, 5s, 7/1/29 Aaa 5,218,750
CA Poll. Control Fin. Auth.
Mandatory Put Bonds
6,500,000 2s, 3/1/08 Baa2 6,491,875
6,000,000 2s, 2/28/08 Baa2 5,992,500
7,000,000 CA Poll. Control Fin. Auth. Solid
Waste Disp. FRB (Waste Mgmt., Inc.),
Ser. B, 4.45s, 7/1/27 BBB 7,183,750
10,290,000 CA Poll. Control Fin. Auth. Solid
Waste Disp. Rev. Bonds (Keller
Canyon Landfill Co.), 6 7/8s,
11/1/27 BB- 10,308,316
24,200,000 CA State Dept. of Wtr. Resources
IFB (Central Valley), 12.649s,
12/1/12 (acquired 10/23/97, cost
$25,632,450) (RES) Aa2 37,752,000
CA State Dept. of Wtr. Resources
Rev. Bonds
8,500,000 Ser. A, AMBAC, 5 1/2s, 5/1/16 Aaa 9,583,750
100,000,000 Ser. A, AMBAC, 5 1/2s, 5/1/15 Aaa 113,500,000
26,000,000 Ser. A, AMBAC, 5 1/2s, 5/1/14 Aaa 29,672,500
4,000,000 Ser. A, 5 1/4s, 5/1/20 A3 4,245,000
5,000,000 Ser. W, FSA, 5 1/8s, 12/1/29 Aaa 5,243,750
25,000,000 Ser. A, 5 1/8s, 5/1/19 A3 26,125,000
20,000,000 Ser. A, 5 1/8s, 5/1/18 A3 21,050,000
23,000,000 Ser. O, MBIA, 4 3/4s, 12/1/29 Aaa 23,057,500
CA State G.O. Bonds
20,400,000 FGIC, 8s, 11/1/07 AAA 22,848,000
16,540,000 AMBAC, 6s, 2/1/18 Aaa 19,930,700
16,545,000 AMBAC, 5 1/2s, 4/1/11 Aaa 19,006,069
10,000,000 5 1/4s, 2/1/20 Baa1 10,750,000
21,000,000 5 1/4s, 2/1/18 Baa1 22,706,250
5,500,000 5.1s, 2/1/34 Baa1 5,513,750
20,800,000 Ser. 33, MBIA, zero %, 10/1/11 AAA 16,016,000
60,000,000 MBIA, zero %, 9/1/11 AAA 46,350,000
CA State Pub. Wks. Board Lease
Rev. Bonds
28,000,000 Ser. A, MBIA, 6 1/2s, 9/1/17 Aaa 35,175,000
33,500,000 (Dept. of Corrections-State
Prisons), Ser. A, AMBAC, 5s, 12/1/19 Aaa 36,556,875
14,315,000 (Dept. of Corrections), Ser. D,
MBIA, 5s, 12/1/18 Aaa 15,478,094
1,340,000 CA State U. Foundation
Rev. Bonds (Sacramento Auxiliary),
Ser. A, MBIA, 5 1/2s, 10/1/37 Aaa 1,452,225
CA Statewide Cmnty. Dev. Auth. Apt.
Dev. Rev. Bonds (Irvine Apt. Cmntys.)
12,500,000 Ser. A-4, 5 1/4s, 5/15/25 Baa2 13,031,250
11,000,000 Ser. A-3, 5.1s, 5/15/25 Baa2 11,591,250
15,300,000 CA Statewide Cmnty. Dev. Auth. COP
(The Internext Group), 5 3/8s,
4/1/30 BBB- 14,974,875
CA Statewide Cmnty. Dev. Auth.
Multi-Fam. Rev. Bonds
6,000,000 (Archstone Communities), 5.3s,
6/1/29 Baa1 6,382,500
5,000,000 (Hsg. Equity Res.), Ser. B, 5.2s,
12/1/29 Baa1 5,350,000
3,500,000 CA statewide Cmnty. Dev. Auth. Solid
Waste Fac. Rev. Bonds (Waste Mgt.,
Inc.), 4.95s, 4/1/11 BBB 3,500,000
4,000,000 CA Statewide Cmnty. Dev. Auth.
Special Tax FRB (Hsg. Equity Res. -
C), 5.2s, 12/1/29 Baa1 4,310,000
CA Statewide Cmnty. Dev. Auth.
Special Tax Rev. Bonds
1,695,000 (Cmnty. Fac. Dist. No. 1-Zone 1A),
7 1/2s, 9/1/30 BB-/P 1,756,444
2,270,000 (Cmnty. Fac. Dist. No. 1-Zone 1C),
7 1/4s, 9/1/30 BB-/P 2,374,988
1,630,000 (Citrus Garden Apt. Project - D1),
5 1/4s, 7/1/22 A 1,676,863
1,750,000 (Cmnty. Fac. Dist. No. 1-Zone 1B),
zero %, 9/1/20 BB-/P 562,188
1,500,000 CA Statewide Cmnty. Dev. Auth. VRDN
(Concordia U. Irvine), Ser. A,
1.03s, 10/1/31 VMIG1 1,500,000
3,990,000 CA Statewide Fin. Auth. Tobacco
Settlement Rev. Bonds, Class B,
5 5/8s, 5/1/29 Baa2 3,675,788
CA Tobacco Securitization Agcy.
Rev. Bonds
1,000,000 (Gold Cnty. Funding Corp.), 5 3/4s,
6/1/27 Baa2 945,000
5,000,000 (Sonoma Cnty. Corp.) Ser. B, 5 1/2s,
6/1/30 Baa2 4,443,750
8,000,000 Capistrano, Unified School Dist.
Cmnty. Fac. Special Tax Bonds
(Ladera), Ser. 98-2, 5 3/4s, 9/1/29 BB/P 8,230,000
10,800,000 Central CA Joint Pwr. Hlth. Fin.
Auth. COP (Cmnty. Hosp. of Central
CA), 6s, 2/1/30 Baa2 11,124,000
32,000,000 Chino Basin, Regl. Fin. Auth.
Rev. Bonds, AMBAC, 5 3/4s, 8/1/22 Aaa 32,948,800
Chula Vista, Cmnty. Fac. Dist.
Special Tax Rev. Bonds
3,750,000 (No. 06-1 Eastlake Woods Area) 6.2s,
9/1/33 BB/P 3,843,750
2,000,000 (No. 06-1 Eastlake Woods Area)
6.15s, 9/1/26 BB/P 2,042,500
4,420,000 (Cmnty. Fac. Dist. No. 97-3), 6.05s,
9/1/29 BB-/P 4,530,500
66,780,000 Commerce, Redev. Agcy. Rev. Bonds
(Project 1, Tax Alloc.), zero %,
8/1/21 BBB 24,040,800
35,000,000 Contra Costa, Home Mtge. Fin. Auth.
Rev. Bonds, Ser. G, MBIA, zero %,
9/1/17 Aaa 19,293,750
Contra Costa, Wtr. Dist. Rev. Bonds,
Ser. G, MBIA
36,915,000 5s, 10/1/26 Aaa 37,607,156
41,500,000 5s, 10/1/24 Aaa 42,381,875
10,000,000 Corona, COP (Vista Hosp. Syst.),
zero %, 7/1/29 (In default) (NON) D/P 200,000
19,250,000 Delano, COP (Delano Regl. Med.
Ctr.), 5.6s, 1/1/26 BBB- 19,105,625
Duarte, COP, Ser. A
15,200,000 5 1/4s, 4/1/31 Baa2 15,105,000
7,500,000 5 1/4s, 4/1/24 Baa2 7,528,125
10,725,000 El Camino, Hosp. Dist. Rev. Bonds,
Ser. A, AMBAC, 6 1/4s, 8/15/17 Aaa 12,937,031
1,150,000 Folsom, Special Tax (Cmnty. Facs.
Dist. No. 10), 5 7/8s, 9/1/28 BB/P 1,162,938
Foothill/Eastern Corridor Agcy. Toll
Roads Rev. Bonds
34,150,000 (Sr. Lien), Ser. A, U.S. Govt.
Coll., 6 1/2s, 1/1/32 Aaa 38,717,563
38,875,000 (Sr. Lien), Ser. A, U.S. Govt.
Coll., 6s, 1/1/34 Aaa 43,540,000
19,000,000 5 3/4s, 1/15/40 Baa3 19,665,000
5,000,000 MBIA, 5 3/8s, 1/15/14 Aaa 5,637,500
Golden State Tobacco Securitization
Corp. Rev. Bonds
6,075,000 Ser. A-4, 7.8s, 6/1/42 Baa2 6,659,719
14,000,000 Ser. 2003 A-1, 6 1/4s, 6/1/33 Baa2 13,720,000
36,000,000 Ser. B, 5 1/2s, 6/1/33 Baa2 36,675,000
Huntington Beach, Cmnty. Fac. Dist.
Special Tax (No. 2003-1 Huntington
Ctr.)
2,845,000 5.85s, 9/1/33 BB-/P 2,845,000
1,000,000 5.8s, 9/1/23 BB-/P 1,000,000
Irvine, Impt. Board Act of 1915
Special Assmt. Bonds
5,000,000 (Assmt. Dist. No. 00-18-GRP 2),
5.6s, 9/2/22 BB+/P 5,056,250
1,830,000 (Assmt. Dist. No. 00-18-GRP 3),
5.55s, 9/2/26 BB+/P 1,852,875
Irvine, Impt. Board Act of 1915 VRDN
8,516,000 (Assmt. Dist. No. 94-13), 2 1/4s,
9/2/22 VMIG1 8,516,000
24,200,000 (Assmt. Dist. No. 97-17), 1.06s,
9/2/23 VMIG1 24,200,000
3,124,000 (Assmt. Dist. No. 97-16), 1.06s,
9/2/22 VMIG1 3,124,000
10,696,000 (Assmt. Dist. No. 94-15), 1.06s,
9/2/20 VMIG1 10,696,000
Irvine Ranch, Wtr. Dist. VRDN
12,100,000 1.10s, 4/1/33 VMIG1 12,100,000
9,250,000 (Cons. Bonds), Ser. B, 1.10s,
10/1/10 A-1+ 9,250,000
3,085,000 Kern, Cmnty. College Dist. G.O.
Bonds (Safety Repair & Impt.),
Ser. A, FGIC, 5s, 11/1/19 AAA 3,324,088
10,510,000 Kern, High School Dist. IFB, Ser.
14, MBIA, 11.63s, 2/1/13 (acquired
6/29/98, cost $14,124,599) (RES) Aaa 14,661,450
1,950,000 La Quinta, Redev. Agcy. Tax Alloc.
(Area No. 1), AMBAC, 5s, 9/1/21 Aaa 2,055,261
14,180,000 Lake Elsinore, Pub. Fin. Auth. Tax
Alloc. Rev. Bonds, Ser. C, 6.7s,
10/1/33 BB+/P 15,101,700
4,035,000 Long Beach, Bond Fin. Auth.
Rev. Bonds (Indl. Redev. Project),
Ser. B , AMBAC, 5 1/2s, 11/1/22 Aaa 4,615,031
37,465,000 Los Angeles, Convention & Exhibition
Ctr. Auth. Lease COP, 9s, 12/1/20 Aaa 42,288,619
25,000,000 Los Angeles, Harbor Dept.
Rev. Bonds, 7.6s, 10/1/18 AAA 32,468,750
26,235,000 Los Angeles, Pension Auth. COP,
Ser. A, MBIA, 6.9s, 6/30/08 Aaa 31,318,031
Los Angeles, Sanitation Equip.
Rev. Bonds, Ser. A, AMBAC
4,725,000 5s, 2/1/20 Aaa 5,067,563
4,500,000 5s, 2/1/19 Aaa 4,854,375
Los Angeles, Unified School Dist.
G.O. Bonds, MBIA
6,880,000 5 3/4s, 7/1/15 Aaa 8,213,000
5,000,000 Ser. A, 5 1/2s, 7/1/15 Aaa 5,781,250
6,830,000 Ser. E, 5 1/8s, 1/1/27 Aaa 7,171,500
10,000,000 Los Angeles, Wtr. & Pwr. Rev. Bonds,
Ser. B, FSA, 5s, 7/1/35 Aaa 10,362,500
12,150,000 Los Angeles Cnty., Metropolitan
Trans. Auth. Sales Tax Rev. Bonds
(2nd Ser.), Ser. A, AMBAC, 5s,
7/1/25 Aaa 12,757,500
Los Angeles Cnty., Pub. Wks. Fin.
Auth. Rev. Bonds, Ser. A
15,235,000 MBIA, 5 3/4s, 9/1/07 Aaa 17,044,156
7,000,000 AMBAC, 5 1/2s, 10/1/10 Aaa 7,918,750
8,000,000 AMBAC, 5 1/2s, 10/1/09 Aaa 9,030,000
20,000,000 Metropolitan Wtr. Dist. IFB
(Southern CA Waterworks), 10.171s,
8/10/18 (acquired 10/30/97, cost
$18,346,924) (RES) Aa2 27,725,000
Metropolitan Wtr. Dist. Rev. Bonds
10,000,000 Ser. A, 5 1/2s, 7/1/10 Aa2 11,400,000
6,330,000 Ser. C, 5s, 7/1/27 Aa2 6,923,438
19,925,000 Ser. C, 5s, 7/1/27 (Prerefunded) Aa2 21,718,250
14,090,000 Ser. A, 5s, 7/1/26 Aa2 15,816,025
7,180,000 Ser. 2004-A, 5s, 7/1/26 Aa2 7,449,250
12,175,000 Ser. 2004-A, 5s, 7/1/26
(Prerefunded) Aa2 13,666,438
16,600,000 Mount Diablo, Hosp. Rev. Bonds,
Ser. A, AMBAC, 5s, 12/1/13 Aaa 16,991,262
1,000,000 Mountain View-Whisman, School Dist.
G.O. Bonds (Election of 1998),
Ser. D, MBIA, 5 3/8s, 6/1/22 AAA 1,093,750
6,260,000 North Natomas, Cmnty. Fac. Dist.
Special Tax Rev. Bonds, Ser. B,
6 3/8s, 9/1/31 BB+/P 6,518,225
4,000,000 North Orange Cnty., Cmnty. College
G.O. Bonds, Ser. A, MBIA, 5s, 2/1/27 Aaa 4,150,000
5,780,000 Northern CA Pwr. Agcy. Pub. Pwr.
Rev. Bonds (Hydroelectric Project
No. One), Ser. A, MBIA, 5 1/4s,
7/1/12 Aaa 6,473,600
1,800,000 Northridge, Wtr. Dist. COP (1993 &
2001), AMBAC, 5 1/4s, 2/1/22 AAA 1,939,500
Oakland, Bldg. Auth. Rev. Bonds,
AMBAC
6,540,000 5 1/2s, 4/1/13 Aaa 7,406,550
6,295,000 5 1/2s, 4/1/12 Aaa 7,136,956
Orange Cnty., Cmnty. Fac. Dist.
Special Tax Rev. Bonds, Ser. A
3,000,000 (Ladera Ranch - No. 1) 6 1/4s,
8/15/30 BB+/P 3,108,750
1,800,000 (Ladera Ranch - No. 1) 6.2s, 8/15/23 BB+/P 1,838,250
1,290,000 (Ladera Ranch - No. 1) 6.2s, 8/15/20 BB+/P 1,322,250
2,400,000 (Ladera Ranch - No. 01-1), 6s,
8/15/32 BB/P 2,469,000
3,725,000 (Ladera Ranch - No. 02-1), Ser. A,
5.55s, 8/15/33 BB+/P 3,743,625
8,315,000 Orange Cnty., CA Sanitation Dist.
VRDN, 1.10s, 8/1/16 VMIG1 8,315,000
12,840,000 Oxnard, Redev. Agcy. Tax Alloc.
Rev. Bonds (Century City
Revitalization), Ser. A, 6 1/2s,
9/1/16 BBB 13,163,568
2,470,000 Paramount, Redev. Agcy. Tax Alloc.
(Area No. 1), MBIA, 5s, 8/1/20 Aaa 2,630,550
24,855,000 Pasadena, Cap. Impt. IF COP, AMBAC,
5.35s, 2/1/14 Aaa 28,956,075
2,500,000 Placentia, Redev. Auth. Tax Alloc.
Rev. Bonds, Ser. B, 5 3/4s, 8/1/32 BBB+ 2,618,750
Pleasanton, Joint Pwr. Fin. Auth.
Rev. Bonds, Ser. B
5,395,000 6 3/4s, 9/2/17 BBB+/P 5,524,426
8,315,000 6.6s, 9/2/08 BBB+/P 8,513,812
1,795,000 6 1/2s, 9/2/04 BBB+/P 1,835,100
3,640,000 Poway, Redev. Agcy. Tax Alloc.
(Paguay Redev.), Ser. A, MBIA,
5 1/4s, 6/15/21 Aaa 3,935,750
9,000,000 Rancho Cucamonga, Redev. Agcy. TAN
(Rancho Redev. Project), MBIA,
5 1/8s, 9/1/30 Aaa 9,393,750
10,400,000 Redding, Elec. Syst. IFB, MBIA,
11.539s, 7/1/22 Aaa 15,249,000
4,250,000 Riverside Cnty., Pub. Fin. Auth.
COP, 5.8s, 5/15/29 BBB- 4,340,313
Riverside Cnty., Pub. Fin. Auth.
Impt. Special Assmt. Bonds (Rancho
Village)
700,000 6 3/4s, 9/2/14 BB/P 735,000
3,610,000 Ser. B, 6 1/4s, 9/2/13 BB/P 3,831,113
Roseville, Cmnty. Fac. Special Tax
Bonds (Dist. 1)
1,750,000 6s, 9/1/33 BB/P 1,767,500
11,200,000 5 3/4s, 9/1/23 BB+/P 11,256,000
Sacramento, Muni. Util. Dist. Elec.
Rev. Bonds
12,000,000 Ser. A, MBIA, 6 1/4s, 8/15/10 Aaa 14,355,000
3,000,000 Ser. K, AMBAC, 5.7s, 7/1/17 Aaa 3,562,500
11,500,000 Ser. K, AMBAC, 5 1/4s, 7/1/24 Aaa 12,822,500
Sacramento, Special Tax Rev. Bonds
(North Natomas Cmnty. Fac.)
1,500,000 6s, 9/1/28 BB/P 1,550,625
4,905,000 Ser. 4-A, 5.7s, 9/1/23 BB+/P 4,929,525
7,500,000 Sacramento Cnty., Sanitation Dist.
Rev. Bonds, Ser. A, 5 7/8s, 12/1/27 AA 8,100,000
1,845,000 San Bernardino, Cmnty. College Dist.
G.O. Bonds (Election of 2002),
Ser. B, MBIA, 5 1/4s, 8/1/22 Aaa 2,001,825
6,000,000 San Diego, ABAG Fin. Auth. For
Nonprofit Corps. Rev. Bonds (San
Diego Hosp.), Ser. A, 6 1/8s,
8/15/20 Baa1 6,420,000
15,350,000 San Diego, Pub. Fac. Fin. Auth. Swr.
Rev. Bonds, FGIC, 5s, 5/15/25 Aaa 15,752,938
San Diego, School Dist. G.O. Bonds
(Election of 1998), Ser. B, MBIA
2,500,000 zero %, 7/1/13 Aaa 1,746,875
1,340,000 zero %, 7/1/12 Aaa 986,575
20,500,000 San Diego, Wtr. Util. Rev. Bonds,
FGIC, 4 3/4s, 8/1/28 Aaa 20,602,500
San Diego Cnty., COP
4,000,000 (Burnham Institute), 6 1/4s, 9/1/29 Baa3 4,230,000
15,800,000 AMBAC, 5 1/4s, 9/1/06 AAA/P 16,846,750
San Diego Cnty., Wtr. Auth. COP,
Ser. A
5,000,000 5 3/4s, 5/1/11 AA 5,843,750
12,000,000 FGIC, 5s, 5/1/14 Aaa 13,020,000
San Diego Cnty., Wtr. Auth. IF COP,
Ser. B, MBIA
20,000,000 11.37s, 4/8/21 Aaa 24,725,000
28,350,000 11.37s, 4/21/11 Aaa 40,540,500
7,225,000 San Francisco, City & Cnty. Redev.
Fin. Auth. Rev. Bonds (Redev.
Project), Ser. B, FGIC, 5 1/4s,
8/1/18 Aaa 7,965,563
10,000,000 San Francisco, State Bldg. Auth.
Lease Rev. Bonds (San Francisco
Civic Ctr. Complex), Ser. A,
AMBAC, 5 1/4s, 12/1/21 Aaa 10,687,500
San Joaquin Hills, Trans. Corridor
Agcy. Rev. Bonds (Toll Road)
34,125,000 5s, 1/1/33 Baa3 31,608,281
25,000,000 Ser. A, MBIA, zero %, 1/15/32 Aaa 5,812,500
21,625,000 Ser. A, MBIA, zero %, 1/15/23 Aaa 8,352,656
San Marcos, Pub. Fac. Auth.
Rev. Bonds
3,000,000 5.8s, 9/1/27 Baa3 3,172,500
1,635,000 5.8s, 9/1/18 Baa3 1,755,581
2,295,000 5 1/2s, 9/1/10 Baa3 2,501,550
40,000,000 San Mateo Cnty., Joint Pwr. Fin.
Auth. Rev. Bonds, FSA, 5 3/4s,
7/15/29 Aaa 41,324,000
600,000 Santa Ana, Hlth. Fac. VRDN
(Multi-Modal Town & Country), 1.12s,
10/1/20 A-1+ 600,000
4,590,000 Santa Barbara Cnty., COP, AMBAC, 5s,
10/1/27 Aaa 4,767,863
Santaluz Cmnty., Facs. Dist. No. 2
Special Tax Rev. Bonds, Ser. B
18,750,000 (Impt. Area No. 1), 6 3/8s, 9/1/30 BB/P 19,242,188
500,000 (Impt. Area No. 3), 6.2s, 9/1/30 BB+/P 510,625
500,000 (Impt. Area No. 3), 6.1s, 9/1/21 BB+/P 509,375
7,525,000 Sierra View, Hlth. Care Dist.
Rev. Bonds, 5.4s, 7/1/22 BBB+ 7,318,063
45,200,000 South Orange Cnty., Pub. Fin. Auth.
Rev. Bonds, FGIC, 5 1/2s, 8/15/15 Aaa 46,674,424
Southern CA Pub. Pwr. Auth.
Rev. Bonds, Ser. A
3,750,000 (Southern Transmission), FSA,
5 1/4s, 7/1/18 Aaa 4,125,000
42,690,000 (Mead Adelanto), AMBAC, 4 7/8s,
7/1/20 Aaa 43,490,438
3,000,000 Stockton, Cmnty. Fac. Dist. Special
Tax Rev. Bonds (Mello Roos-Weston
Ranch), Ser. A, 5.8s, 9/1/14 Baa1 3,131,250
5,700,000 Stockton, Hlth. Facs. VRDN (Dameron
Hosp. Assn.), Ser. A, 1.10s, 12/1/32 VMIG1 5,700,000
6,545,000 Sunnyvale, Cmnty. Fac. Dist. Special
Tax Rev. Bonds, 7.65s, 8/1/21 BB-/P 6,610,450
Thousand Oaks, Cmnty. Fac. Dist.
Special Tax Rev. Bonds (Marketplace
94-1)
5,000,000 6 7/8s, 9/1/24 B/P 5,337,500
25,905,000 zero %, 9/1/14 B/P 11,689,631
5,000,000 Tobacco Securitization Auth. of
Southern CA Rev. Bonds, Ser. A,
5 5/8s, 6/1/43 Baa2 4,287,500
Torrance, Memorial Med. Ctr.
Rev. Bonds, Ser. A
1,000,000 6s, 6/1/22 A1 1,091,250
2,000,000 5 1/2s, 6/1/31 A1 2,072,500
4,000,000 Tustin, Unified School Dist. Bonds
(Cmnty. Fac. Dist. No. 97-1), U.S.
Govt. Coll., 6 3/8s, 9/1/35 AAA 4,825,000
10,195,000 U. of CA Rev. Bonds (Med. Ctr.),
AMBAC, 5.7s, 7/1/11 Aaa 11,278,219
Vallejo, COP (Marine World
Foundation)
10,000,000 7.2s, 2/1/26 BBB-/P 9,950,000
4,000,000 7s, 2/1/17 BBB-/P 3,990,000
11,185,000 Valley Hlth. Syst. COP, 6 7/8s,
5/15/23 B+ 9,129,756
--------------
2,349,335,152
Puerto Rico (8.9%)
- -------------------------------------------------------------------------------
14,000,000 Children's Trust Fund Tobacco
Settlement Rev. Bonds, 5 1/2s,
5/15/39 Baa2 13,685,000
Cmnwlth. of PR, G.O. Bonds
11,110,000 FSA, 6 1/2s, 7/1/12 Aaa 13,776,400
3,960,000 (Pub. Impt.), Ser. A, FGIC, 5 1/2s,
7/1/22 Aaa 4,643,100
25,000,000 (Pub. Impt.), Ser. A, MBIA, 5 1/2s,
7/1/20 Aaa 29,343,742
8,200,000 (Pub. Impt.), Ser. A, FGIC, 5 1/2s,
7/1/17 Aaa 9,624,750
3,695,000 (Pub. Impt.), FSA, 5 1/2s, 7/1/16 Aaa 4,341,625
4,485,000 (Pub. Impt.), Ser. A, MBIA, 5 1/2s,
7/1/16 Aaa 5,269,875
14,000,000 (Pub. Impt.), FSA, 5 1/4s, 7/1/20 Aaa 16,012,500
6,075,000 (Pub. Impt.), FSA, 5 1/4s, 7/1/16 Aaa 6,986,250
Cmnwlth. of PR, Hwy. & Trans. Auth.
Rev. Bonds
5,515,000 Ser. B, MBIA, 5 7/8s, 7/1/35 AAA 6,466,338
2,985,000 Ser. B, MBIA, 5 7/8s, 7/1/35
(Prerefunded) AAA 3,555,881
9,000,000 Ser. E, FSA, 5 1/2s, 7/1/23 Aaa 10,518,750
5,000,000 Ser. E, FSA, 5 1/2s, 7/1/21 Aaa 5,887,500
Cmnwlth. of PR, Muni. Fin. Agcy.
Rev. Bonds, Ser. A, FSA
2,000,000 5 1/4s, 8/1/20 Aaa 2,200,000
3,000,000 5 1/4s, 8/1/18 Aaa 3,311,250
PR Elec. Pwr. Auth. Rev. Bonds, MBIA
9,565,000 Ser. KK, 5 1/2s, 7/1/15 Aaa 11,238,875
25,000,000 Ser. NN, 4 3/4s, 7/1/33 Aaa 25,437,500
14,800,000 PR Indl. Tourist Edl. Med. & Env.
Control Fac. Rev. Bonds (Cogen.
Fac.-AES), 6 5/8s, 6/1/26 Baa3 15,688,000
30,000,000 PR Infrastructure Fin. Auth. Special
Rev. Bonds, Ser. A, 5 1/2s, 10/1/40 Aaa 33,412,500
10,000,000 U. of PR Rev. Bonds, Ser. O, MBIA,
5 3/8s, 6/1/30 Aaa 10,512,500
--------------
231,912,336
- -------------------------------------------------------------------------------
Total Investments
(cost $2,315,218,384) $2,581,247,488
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $2,594,181,668.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at March 31, 2004 for the
securities listed. Ratings are generally ascribed to securities at the
time of issuance. While the agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these
securities at March 31, 2004. Securities rated by Putnam are indicated
by "/P" and are not publicly rated.
(NON) Non-income-producing security.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at March 31, 2004 was
$145,324,150 or 5.6% of net assets.
The rates shown on VRDN, mandatory put bonds and FRB are the current
interest rates shown at March 31, 2004.
The rates shown on IFB and IF COP, which are securities paying interest
rates that vary inversely to changes in the market interest rates, are
the current interest rates at March 31, 2004.
The fund had the following industry group concentrations greater than
10% at March 31, 2004 (as a percentage of net assets):
Water and sewer 16.2%
Utilities 13.8
The fund had the following insurance concentrations greater than 10% at
March 31, 2004 (as a percentage of net assets):
MBIA 25.0%
AMBAC 20.4
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
March 31, 2004 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$2,315,218,384) (Note 1) $2,581,247,488
- -------------------------------------------------------------------------------
Cash 29,493,898
- -------------------------------------------------------------------------------
Interest and other receivables 34,238,243
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 878,157
- -------------------------------------------------------------------------------
Receivable for securities sold 335,265
- -------------------------------------------------------------------------------
Total assets 2,646,193,051
Liabilities
- -------------------------------------------------------------------------------
Distributions payable to shareholders 4,664,982
- -------------------------------------------------------------------------------
Payable for securities purchased 39,541,877
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 2,521,259
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,055,962
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 538,527
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 197,644
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 10,515
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,382,507
- -------------------------------------------------------------------------------
Other accrued expenses 98,110
- -------------------------------------------------------------------------------
Total liabilities 52,011,383
- -------------------------------------------------------------------------------
Net assets $2,594,181,668
Represented by
- -------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $2,340,272,416
- -------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (547,965)
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (11,571,887)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 266,029,104
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $2,594,181,668
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,269,023,640 divided by 262,506,267 shares) $8.64
- -------------------------------------------------------------------------------
Offering price per class A share (100/95.50 of $8.64)* $9.05
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($290,440,838 divided by 33,630,171 shares)** $8.64
- -------------------------------------------------------------------------------
Net asset value and offering price per class C share
($27,085,141 divided by 3,121,992 shares)** $8.68
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($7,632,049 divided by 884,769 shares) $8.63
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.63)*** $8.92
- -------------------------------------------------------------------------------
* On single retail sales of less than $25,000. On sales of $25,000 or
more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
*** On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales, the offering price is reduced.
The accompanying notes are an integral part of these financial
statements.
Statement of operations
Six months ended March 31, 2004 (Unaudited)
Interest income: $70,892,498
- -------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 6,282,228
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,315,282
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 34,746
- -------------------------------------------------------------------------------
Administrative services (Note 2) 18,264
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,352,531
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,351,378
- -------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 144,505
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 20,153
- -------------------------------------------------------------------------------
Other 153,432
- -------------------------------------------------------------------------------
Non-recurring costs (Note 5) 27,774
- -------------------------------------------------------------------------------
Costs assumed by Manager (Note 5) (27,774)
- -------------------------------------------------------------------------------
Total expenses 11,672,519
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (74,226)
- -------------------------------------------------------------------------------
Net expenses 11,598,293
- -------------------------------------------------------------------------------
Net investment income 59,294,205
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 23,263,390
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (2,256,300)
- -------------------------------------------------------------------------------
Net gain on investments 21,007,090
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $80,301,295
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Six months ended Year ended
March 31 September 30
Decrease in net assets 2004* 2003
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $59,294,205 $135,198,421
- -------------------------------------------------------------------------------
Net realized gain on investments 23,263,390 4,252,296
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments (2,256,300) (63,940,090)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 80,301,295 75,510,627
- -------------------------------------------------------------------------------
Distributions to shareholders: (Note 1)
- -------------------------------------------------------------------------------
From ordinary income
Class A (4,315,552) --
- -------------------------------------------------------------------------------
Class B (592,897) --
- -------------------------------------------------------------------------------
Class C (52,243) --
- -------------------------------------------------------------------------------
Class M (15,095) --
- -------------------------------------------------------------------------------
From tax-exempt income
Class A (52,552,787) (118,558,523)
- -------------------------------------------------------------------------------
Class B (6,074,554) (15,129,044)
- -------------------------------------------------------------------------------
Class C (530,111) (1,167,251)
- -------------------------------------------------------------------------------
Class M (168,211) (491,817)
- -------------------------------------------------------------------------------
From net realized short-term gain on investments
Class A (3,560,481) (122,586)
- -------------------------------------------------------------------------------
Class B (488,974) (18,857)
- -------------------------------------------------------------------------------
Class C (43,101) (1,423)
- -------------------------------------------------------------------------------
Class M (12,453) (565)
- -------------------------------------------------------------------------------
From net realized long-term gain on investments
Class A (6,392,682) (15,936,174)
- -------------------------------------------------------------------------------
Class B (877,930) (2,451,452)
- -------------------------------------------------------------------------------
Class C (77,385) (185,018)
- -------------------------------------------------------------------------------
Class M (22,359) (73,446)
- -------------------------------------------------------------------------------
Decrease from capital share transactions
(Note 4) (344,606,930) (194,347,359)
- -------------------------------------------------------------------------------
Total decrease in net assets (340,082,450) (272,972,888)
Net assets
- -------------------------------------------------------------------------------
Beginning of period 2,934,264,118 3,207,237,006
- -------------------------------------------------------------------------------
End of period (including distributions in
excess of net investment income of $547,965
and undistributed net investment income of
$4,459,280, respectively) $2,594,181,668 $2,934,264,118
- -------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS A
- -------------------------------------------------------------------------------------------------------------
Six months
ended
March 31
Per-share (Unaudited) Year ended September 30
operating performance 2004 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.62 $8.84 $8.71 $8.35 $8.25 $8.89
- -------------------------------------------------------------------------------------------------------------
Investment operations:
- -------------------------------------------------------------------------------------------------------------
Net investment income .19 .39 .41 .42 .43 .42 (d)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .08 (.17) .15 .36 .10 (.59)
- -------------------------------------------------------------------------------------------------------------
Total from
investment operations .27 .22 .56 .78 .53 (.17)
- -------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------
From net
investment income (.21) (.39) (.41) (.42) (.43) (.42)
- -------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.04) (.05) (.02) -- (c) -- (.05)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.25) (.44) (.43) (.42) (.43) (.47)
- -------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.64 $8.62 $8.84 $8.71 $8.35 $8.25
- -------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 3.11* 2.64 6.69 9.57 6.71 (2.01)
- -------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,269,024 $2,540,224 $2,739,618 $2,631,430 $2,514,181 $2,754,624
- -------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .39* .76 .75 .75 .74 .77
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets (%) 2.24* 4.52 4.82 4.91 5.29 4.85
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.32* 22.39 6.50 9.53 13.44 13.91
- -------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Amount represents less than $0.01 per share.
(d) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS B
- -------------------------------------------------------------------------------------------------------------
Six months
ended
March 31
Per-share (Unaudited) Year ended September 30
operating performance 2004 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.62 $8.83 $8.70 $8.34 $8.24 $8.88
- -------------------------------------------------------------------------------------------------------------
Investment operations:
- -------------------------------------------------------------------------------------------------------------
Net investment income .17 .33 .36 .36 .38 .36 (d)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .07 (.16) .15 .37 .10 (.58)
- -------------------------------------------------------------------------------------------------------------
Total from
investment operations .24 .17 .51 .73 .48 (.22)
- -------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------
From net
investment income (.18) (.33) (.36) (.37) (.38) (.37)
- -------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.04) (.05) (.02) -- (c) -- (.05)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.22) (.38) (.38) (.37) (.38) (.42)
- -------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.64 $8.62 $8.83 $8.70 $8.34 $8.24
- -------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.78* 2.09 6.00 8.87 6.02 (2.65)
- -------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $290,441 $352,861 $420,977 $497,335 $535,160 $616,446
- -------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .71* 1.41 1.40 1.40 1.39 1.42
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.91* 3.87 4.17 4.25 4.64 4.21
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.32* 22.39 6.50 9.53 13.44 13.91
- -------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Amount represents less than $0.01 per share.
(d) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS C
- -------------------------------------------------------------------------------------------------------------
Six months For the
ended period
March 31 Year ended July 26, 1999+
Per-share (Unaudited) September 30 to Sept. 30
operating performance 2004 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.65 $8.87 $8.74 $8.37 $8.26 $8.47
- -------------------------------------------------------------------------------------------------------------
Investment operations:
- -------------------------------------------------------------------------------------------------------------
Net investment income .16 .32 .35 .35 .37 .04 (d)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .08 (.17) .15 .37 .11 (.18)
- -------------------------------------------------------------------------------------------------------------
Total from
investment operations .24 .15 .50 .72 .48 (.14)
- -------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------
From net
investment income (.17) (.32) (.35) (.35) (.37) (.07)
- -------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.04) (.05) (.02) -- (c) -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions (.21) (.37) (.37) (.35) (.37) (.07)
- -------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.68 $8.65 $8.87 $8.74 $8.37 $8.26
- -------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.85* 1.83 5.83 8.81 5.97 (1.70)*
- -------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $27,085 $32,171 $30,974 $14,913 $5,510 $1,018
- -------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .79* 1.56 1.55 1.55 1.54 .29*
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.84* 3.72 4.00 4.16 4.43 .81*
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.32* 22.39 6.50 9.53 13.44 13.91
- -------------------------------------------------------------------------------------------------------------
* Not annualized.
+ Commencement of operations.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Amount represents less than $0.01 per share.
(d) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS M
- -------------------------------------------------------------------------------------------------------------
Six months
ended
March 31
Per-share (Unaudited) Year ended September 30
operating performance 2004 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.61 $8.82 $8.69 $8.33 $8.24 $8.88
- -------------------------------------------------------------------------------------------------------------
Investment operations:
- -------------------------------------------------------------------------------------------------------------
Net investment income .18 .36 .39 .39 .41 .38 (d)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .08 (.16) .15 .37 .09 (.57)
- -------------------------------------------------------------------------------------------------------------
Total from
investment operations .26 .20 .54 .76 .50 (.19)
- -------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------
From net
investment income (.20) (.36) (.39) (.40) (.41) (.40)
- -------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.04) (.05) (.02) -- (c) -- (.05)
- -------------------------------------------------------------------------------------------------------------
Total distributions (.24) (.41) (.41) (.40) (.41) (.45)
- -------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.63 $8.61 $8.82 $8.69 $8.33 $8.24
- -------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.96* 2.45 6.38 9.25 6.25 (2.31)
- -------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $7,632 $9,009 $15,668 $13,069 $11,895 $15,318
- -------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .54* 1.06 1.05 1.05 1.04 1.07
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.09* 4.21 4.51 4.60 4.98 4.56
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.32* 22.39 6.50 9.53 13.44 13.91
- -------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Amount represents less than $0.01 per share.
(d) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
The accompanying notes are an integral part of these financial
statements.
Notes to financial statements
March 31, 2004 (Unaudited)
Note 1
Significant accounting policies
Putnam California Tax Exempt Income Fund (the "fund"), is registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The fund seeks as high a level
of current income exempt from federal and California personal income tax
as Putnam Investment Management, LLC ("Putnam Management"), the fund's
manager, an indirect wholly-owned subsidiary of Putnam, LLC, believes is
consistent with preservation of capital by investing in a diversified
portfolio of longer-term California tax-exempt securities. The fund may
by affected by economic and political developments in the state of
California.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 4.50%. Prior to
January 28, 2004, the maximum front-end sales charge for class A shares was
4.75%. Class B shares, which convert to class A shares after approximately
eight years, do not pay a front-end sales charge but pay a higher ongoing
distribution fee than class A and class M shares, and are subject to a
contingent deferred sales charge, if those shares are redeemed within six
years of purchase. Class C shares have a higher ongoing distribution fee
than class B shares and have a one-year 1.00% contingent deferred sales
charge and do not convert to class A shares. Class M shares are sold with a
maximum front-end sales charge of 3.25% and pay an ongoing distribution fee
that is higher than class A shares but lower than class B and class C
shares.
Effective April 19, 2004 (May 3, 2004 for defined contribution plans
administered by Putnam), a 2.00% redemption fee may apply to any shares
that are redeemed (either by selling or exchanging into another fund)
within 5 days of purchase.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with accounting
principles generally accepted in the United States of America and requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities in the financial statements and the
reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
A) Security valuation Tax-exempt bonds and notes are valued at fair
value on the basis of valuations provided by an independent pricing
service, approved by the Trustees. Such services use information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Other investments, including restricted
securities, are valued at fair value following procedures approved by
the Trustees. Such valuations and procedures are reviewed periodically
by the Trustees.
B) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. All premiums/discounts
are amortized/accreted on a yield-to-maturity basis. The premium in
excess of the call price, if any, is amortized to the call date;
thereafter, any remaining premium is amortized to maturity.
C) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986 (the "Code"), as amended.
Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
Pursuant to federal income tax regulations applicable to regulated
investment companies, the fund has elected to defer to its fiscal year
ending September 30, 2004 $596,802 of losses recognized during the
period November 1, 2002 to September 30, 2003.
The aggregate identified cost on a tax basis is $2,316,996,419,
resulting in gross unrealized appreciation and depreciation of
$267,586,962 and $3,335,893, respectively, or net unrealized
appreciation of $264,251,069.
D) Distributions to shareholders Income dividends are recorded daily by
the fund and are paid monthly. Distributions from capital gains, if any,
are recorded on the ex-dividend date and paid at least annually. The
amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. Reclassifications are
made to the fund's capital accounts to reflect income and gains
available for distribution (or available capital loss carryovers) under
income tax regulations.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the lesser of (i) an annual rate of 0.50% of the average net
assets of the fund or (ii) the following annual rates expressed as a
percentage of the fund's average net assets: 0.60% of the first $500
million, 0.50% of the next $500 million, 0.45% of the next $500 million,
0.40% of the next $5 billion, 0.375% of the next $5 billion, 0.355% of
the next $5 billion, 0.34% of the next $5 billion and 0.33% thereafter.
Effective January 28, 2004, Putnam Management has agreed to limit its
compensation (and, to the extent necessary, bear other expenses) through
December 31, 2004, to the extent that the fund's net expenses as a
percentage of average net assets exceed the average expense ratio for
the fund's Lipper peer group of front-end load funds.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam, LLC. Putnam
Investor Services, a division of PFTC, provides investor serving agent
functions to the fund. During the six months ended March 31, 2004, the
fund paid PFTC $1,096,414 for these services.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended March 31, 2004,
the fund's expenses were reduced by $74,226 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $3,168, as a quarterly retainer, has been allocated to the fund,
and an additional fee for each Trustees meeting attended. Trustees
receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees
remain invested in certain Putnam funds until distribution in accordance
with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have served
as a Trustee for at least five years. Benefits under the Pension Plan are
equal to 50% of the Trustee's average total retainer and meeting fees for
the three years preceding retirement. Pension expense for the fund is
included in Trustee compensation and expenses in the statement of
operations. Accrued pension liability is included in Payable for Trustee
compensation and expenses in the statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B, class C and class M shares pursuant to rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, a wholly-owned subsidiary of Putnam,
LLC and Putnam Retail Management GP, Inc., for services provided and
expenses incurred in distributing shares of the fund. The Plans provide for
payments by the fund to Putnam Retail Management at an annual rate of up to
0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to
class A, class B, class C and class M shares, respectively. The Trustees
have approved payment by the fund at the annual rates of 0.20%, 0.85%,
1.00% and 0.50% of the average net assets attributable to class A, class B,
class C and class M shares, respectively.
For the six months ended March 31, 2004, Putnam Retail Management,
acting as underwriter, received net commissions of $28,888 and $136 from
the sale of class A and class M shares, respectively, and received
$333,913 and $1,638 in contingent deferred sales charges from
redemptions of class B and class C shares, respectively.
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. For the six
months ended March 31, 2004, Putnam Retail Management, acting as
underwriter, received $8,065 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended March 31, 2004, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $85,882,012 and $482,791,382, respectively. There
were no purchases or sales of U.S. government securities.
Note 4
Capital shares
At March 31, 2004, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended March 31, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 6,313,953 $54,512,858
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 4,534,625 39,024,076
- ----------------------------------------------------------------
10,848,578 93,536,934
Shares repurchased (42,918,336) (368,568,509)
- ----------------------------------------------------------------
Net decrease (32,069,758) $(275,031,575)
- ----------------------------------------------------------------
Year ended September 30, 2003
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 20,954,048 $180,266,726
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 9,082,533 78,083,235
- ----------------------------------------------------------------
30,036,581 258,349,961
Shares repurchased (45,495,576) (390,953,686)
- ----------------------------------------------------------------
Net decrease (15,458,995) $(132,603,725)
- ----------------------------------------------------------------
Six months ended March 31, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 514,845 $4,427,400
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 576,514 4,955,975
- ----------------------------------------------------------------
1,091,359 9,383,375
Shares repurchased (8,415,964) (72,426,739)
- ----------------------------------------------------------------
Net decrease (7,324,605) $(63,043,364)
- ----------------------------------------------------------------
Year ended September 30, 2003
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 3,267,849 $28,207,477
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 1,276,387 10,964,367
- ----------------------------------------------------------------
4,544,236 39,171,844
Shares repurchased (11,271,918) (96,708,897)
- ----------------------------------------------------------------
Net decrease (6,727,682) $(57,537,053)
- ----------------------------------------------------------------
Six months ended March 31, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 169,039 $1,466,634
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 53,884 465,314
- ----------------------------------------------------------------
222,923 1,931,948
Shares repurchased (818,134) (7,070,259)
- ----------------------------------------------------------------
Net decrease (595,211) $(5,138,311)
- ----------------------------------------------------------------
Year ended September 30, 2003
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 1,432,319 $12,424,074
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 109,164 941,687
- ----------------------------------------------------------------
1,541,483 13,365,761
Shares repurchased (1,317,298) (11,349,397)
- ----------------------------------------------------------------
Net increase 224,185 $2,016,364
- ----------------------------------------------------------------
Six months ended March 31, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 17,554 $151,318
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 18,015 154,717
- ----------------------------------------------------------------
35,569 306,035
Shares repurchased (197,602) (1,699,715)
- ----------------------------------------------------------------
Net decrease (162,033) $(1,393,680)
- ----------------------------------------------------------------
Year ended September 30, 2003
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 322,139 $2,779,480
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 49,226 422,551
- ----------------------------------------------------------------
371,365 3,202,031
Shares repurchased (1,100,842) (9,424,976)
- ----------------------------------------------------------------
Net decrease (729,477) $(6,222,945)
- ----------------------------------------------------------------
Note 5
Regulatory matters and litigation
On April 8, 2004, Putnam Management entered into agreements with the
Securities and Exchange Commission and the Massachusetts Securities
Division representing a final settlement of all charges brought against
Putnam Management by those agencies on October 28, 2003 in connection with
excessive short-term trading by Putnam employees and, in the case of the
charges brought by the Massachusetts Securities Division, by participants
in some Putnam-administered 401(k) plans. The settlement with the SEC
requires Putnam Management to pay $5 million in disgorgement plus a civil
monetary penalty of $50 million, and the settlement with the Massachusetts
Securities Division requires Putnam Management to pay $5 million in
restitution and an administrative fine of $50 million. The settlements
also leave intact the process established under an earlier partial
settlement with the SEC under which Putnam Management agreed to pay the
amount of restitution determined by an independent consultant, which may
exceed the disgorgement and restitution amounts specified above, pursuant
to a plan to be developed by the independent consultant.
Putnam Management, and not the investors in any Putnam fund, will bear all
costs, including restitution, civil penalties and associated legal fees
stemming from both of these proceedings. The SEC's and Massachusetts
Securities Division's allegations and related matters also serve as the
general basis for numerous lawsuits, including purported class action
lawsuits filed against Putnam Management and certain related parties,
including certain Putnam funds. Putnam Management has agreed to bear any
costs incurred by Putnam funds in connection with these lawsuits. Based on
currently available information, Putnam Management believes that the
likelihood that the pending private lawsuits and purported class action
lawsuits will have a material adverse financial impact on the fund is
remote, and the pending actions are not likely to materially affect its
ability to provide investment management services to its clients, including
the Putnam funds.
For the period ended March 31, 2004, Putnam Management has assumed
$27,774 of legal, shareholder servicing and communication, audit, and
Trustee fees incurred by the fund in connection with these matters.
Review of these matters by counsel for Putnam Management and by separate
independent counsel for the Putnam funds and their independent Trustees
is continuing. The fund may experience increased redemptions as a result
of these matters, which could result in increased transaction costs and
operating expenses.
Putnam puts your interests first
In January, Putnam announced a number of voluntary initiatives designed
to reduce fund expenses, provide investors with more useful information,
and help safeguard the interests of all Putnam investors. For details,
visit www.putnaminvestments.com.
Cost-cutting initiatives
Reduced sales charges
Effective immediately, the maximum sales charge for class A shares has been
reduced to 5.25% for equity funds (formerly 5.75%) and 4.50% for most
income funds (formerly 4.75%).*
Lower class B purchase limit
To help ensure that investors are in the most cost-effective share class,
the maximum amount that can be invested in class B shares has been reduced
to $100,000. (Larger trades or accumulated amounts will be directed to
class A shares.)
Ongoing expenses will be limited
During calendar 2004, total ongoing expenses, including management fees for
all funds, will be maintained at or below the average of each fund's
industry peers in its Lipper load-fund universe. For more information,
please see the Statement of Additional information.
Additional measures are being taken to reduce expenses for shareholders
in the six global and international funds that had short-term trading
issues.
Improved disclosure
Putnam fund prospectuses and shareholder reports are being revised to
disclose additional information that will help shareholders compare
funds and weigh their costs and risks along with their potential
benefits. Shareholders will find easy-to-understand information about
fund expense ratios, portfolio manager compensation, risk comparisons,
brokerage commissions, and employee and trustee ownership of Putnam
funds. Disclosure of breakpoint discounts is also being enhanced to
alert investors to potential cost savings.
Protecting investors' interests
New short-term trading fee introduced
To discourage short-term trading, which can interfere with a fund's
long-term strategy, a 2% short-term trading fee will be imposed on any
Putnam fund shares redeemed or exchanged within five calendar days of
purchase.
* The maximum sales charge for class A shares of Putnam U.S.
Intermediate Government Income Fund remains 3.25%.
Fund information
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary
Trust Company
Legal Counsel
Ropes & Gray LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President,
Treasurer and Principal
Executive Officer
Patricia C. Flaherty
Senior Vice President
Steven D. Krichmar
Vice President and
Principal Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Beth S. Mazor
Vice President
James P. Pappas
Vice President
Richard S. Robie, III
Vice President
Mark C. Trenchard
Vice President and
BSA Compliance Officer
Francis J. McNamara, III
Vice President and
Chief Legal Officer
Judith Cohen
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam California
Tax Exempt Income Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, the most recent copy
of Putnam's Quarterly Performance Summary, and Putnam's Quarterly
Ranking Summary. For more recent performance, please visit
www.putnaminvestments.com. Investors should carefully consider the
investment objective, risks, charges, and expenses of a fund, which are
described in its prospectus. For this and other information or to
request a prospectus, call 1-800-225-1581 toll free. Please read the
prospectus carefully before investing. The fund's Statement of
Additional Information contains additional information about the fund's
Trustees and is available without charge upon request by calling
1-800-225-1581.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
Call 1-800-225-1581 or visit our Web site www.putnaminvestments.com.
SA045-213219 027/337/2MX/677 5/04
Not FDIC Insured May Lose Value No Bank Guarantee
Item 2. Code of Ethics:
- -----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Items 5-6. [Reserved]
- ---------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. [Reserved]
- ------------------
Item 9. Submission of Matters to a Vote of Security Holders:
- ------------------------------------------------------------
Not applicable
Item 10. Controls and Procedures:
- ---------------------------------
(a) The registrant's principal executive officer and principal
financial officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report on Form N-CSR, that the design and
operation of such procedures are generally effective to provide
reasonable assurance that information required to be disclosed by
the investment company in the reports that it files or submits under
the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
Commission's rules and forms.
Although such officers reached the conclusion expressed in the
preceding paragraph, they are aware of matters that raise concerns
with respect to controls, each of which arose in connection with the
administration of 401(k) plans by Putnam Fiduciary Trust Company.
The first matter, which occurred in early 2001, involved the willful
circumvention of controls by certain Putnam employees in connection
with the correction of operational errors with respect to a 401(k)
client's investment in certain Putnam Funds, which led to losses in
five Putnam Funds (not including the registrant). Such officers
became aware of this matter in February 2004. The second matter,
which occurred in 2002, involved the willful circumvention by
certain Putnam employees of policies and procedures in connection
with the payment of Putnam corporate expenses. Such officers did
not learn that this matter involved a Putnam Fund until January
2004. Putnam has made restitution to the affected Funds,
implemented a number of personnel changes, including senior
personnel, begun to implement changes in procedures to address these
items and informed the SEC, the Funds' Trustees and independent
auditors. An internal investigation and review of procedures and
controls are currently ongoing.
In reaching the conclusion expressed herein, the registrant's
principal executive officer and principal financial officer
considered a number of factors, including the nature of the matters
described above, when the matters occurred, the individuals
involved, personnel changes that have occurred since these matters
occurred, the results to date of the current ongoing investigation
and the overall quality of controls at Putnam at this time.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: May 27, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: May 27, 2004
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: May 27, 2004