Putnam
New York
Investment Grade
Municipal Trust
Item 1. Report to Stockholders:
- -------------------------------
The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
4-30-03
[GRAPHIC OMITTED: WATCH]
[SCALE LOGO OMITTED]
From the Trustees
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM, III]
Dear Fellow Shareholder:
We are pleased to report that despite some unusual challenges, Putnam New
York Investment Grade Municipal Trust delivered positive returns for the
fiscal year ended April 30, 2003. However, it lagged its nationally
diversified benchmark and came in behind its Lipper category average.
Details are on page 7.
During the fiscal year's first half, a number of factors combined to
bolster the municipal-bond market as safety-conscious investors continued
to seek refuge in the fixed-income markets. During the second half,
however, the environment became somewhat more volatile as investor interest
faded in the wake of a significant decline in tax revenues and subsequent
downgrades in credit quality. In the following report, your fund's managers
provide a thorough discussion of how this situation affected the fund's
performance and how they view the fund's prospects in the months ahead.
As we look back on one of the most challenging periods in recent investment
history, we would like you to know how much we appreciate your continued
confidence in Putnam. We believe that those who ride out the current
turbulence will be rewarded for their patience over the long term.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
June 18, 2003
Report from Fund Management
Fund highlights
* For the fiscal year ended April 30, 2003, Putnam New York Investment
Grade Municipal Trust posted a return of 6.41% at net asset value and 4.88%
at market price.
* Due to its higher exposure to certain industrial development bonds, the
fund underperformed its benchmark, the Lehman Municipal Bond Index, which
returned 8.50% for the year.
* For the same reason, the fund's performance lagged that of the average
fund in its Lipper category, Closed-End New York Municipal Debt Funds,
which was 10.19%.
* Index and Lipper results should be compared to fund performance at net
asset value. See the Performance Summary on page 7 for complete fund
performance, comparative performance, and Lipper data.
Performance commentary
In a year marked by extraordinary volatility in the financial markets,
Putnam New York Investment Grade Municipal Trust delivered solid returns at
both net asset value and market price. The fund's results lagged those of
the Lehman Municipal Bond Index and its Lipper peer group, primarily due to
its higher exposure to certain types of industrial development bonds
(IDBs). Although issued by municipalities, IDBs are backed by the credit of
private companies and their prices tend to reflect perceptions of these
companies and the industries in which they operate. Your fund's position in
airline-backed IDBs, although relatively small, was affected by the
industry's struggles and detracted from competitive performance over the
fiscal year. Results were also affected by our conservative use of
leverage, a strategy that can enhance the fund's income but exposes it to
greater interest-rate risk. Funds that made greater use of leverage
generally had stronger returns for the period.
The market price of the fund's shares reflects changes in the demand for
shares, which in part reflects the relative performance of the underlying
portfolio as well as broad market trends. The fund's performance at market
price may be attributable to investor expectations of rising interest
rates, which would have an adverse effect on bond prices.
FUND PROFILE
Putnam New York Investment Grade Municipal Trust seeks to provide high
current income free from federal income tax and New York state and city
personal income taxes, consistent with the preservation of capital. It may
be suitable for New York investors seeking tax-free income through a
diversified portfolio of high-quality bonds.
Market overview
The first half of the fiscal year was generally positive for the
municipal-bond market. In an environment marked by earnings
disappointments, economic weakness, and allegations of corporate
malfeasance, investors sought the relative safety of high-quality bonds.
Increased demand for bonds pushed their prices higher, and many of your
fund's holdings benefited.
In the fiscal second half, however, several factors tempered municipal-bond
performance, including significant declines in tax revenues and subsequent
downgrades in municipalities' credit quality. Like other large, populous
states, the budget situation for New York State and many of its
municipalities is particularly troubling for investors as tax revenue
shortfalls are projected to create a deficit in excess of $10 billion at
the state level.
Difficulties in the performance of industrial development bonds (IDBs),
which are issued by municipalities but backed by the credit of companies,
were another detractor from performance. Airline-backed IDBs suffered as
United Airlines followed US Airways into bankruptcy. In late April,
American Airlines narrowly avoided a similar fate. Lastly, over $320
billion in municipal bonds was issued in 2002 -- an all-time record. New
tobacco settlement bonds further boosted supply. (For a discussion of
tobacco settlement bonds, see page 5). Supply continued to swell in 2003.
These factors had a dampening effect on municipal-bond prices.
- -------------------------------------------------------------------------------
MARKET SECTOR PERFORMANCE 12 MONTHS ENDED 4/30/03
- -------------------------------------------------------------------------------
Bonds
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index 8.50%
- -------------------------------------------------------------------------------
Lehman Aggregate Bond Index (taxable U.S. bonds) 10.47%
- -------------------------------------------------------------------------------
Lehman Government Bond Index (taxable U.S. government bonds) 11.28%
- -------------------------------------------------------------------------------
Credit Suisse First Boston High Yield Index (taxable U.S. below-
investment-grade bonds 11.25%
- -------------------------------------------------------------------------------
Equities
- -------------------------------------------------------------------------------
S&P 500 Index (broad equity market) -13.31%
- -------------------------------------------------------------------------------
Russell 1000 Growth Index (growth stocks) -14.35%
- -------------------------------------------------------------------------------
Russell 1000 Value Index (value stocks) -13.01%
- -------------------------------------------------------------------------------
These indexes provide an overview of performance in different market
sectors for the 12 months ended 4/30/03.
- -------------------------------------------------------------------------------
Strategy overview
Although primarily an investment-grade fund, your fund maintained some
exposure to lower-rated, higher-yielding securities. We positioned the
portfolio defensively in advance of the October sell-off, but later moved
closer to a neutral stance by extending the fund's duration. (Duration is a
measure of a fund's sensitivity to interest-rate changes. A fund with a
longer duration is more sensitive to changes in rates, whether up or down.)
During the period, falling interest rates prompted municipal-bond issuers
to take advantage of lower prevailing market rates to refinance outstanding
debt. As these higher-yielding bonds were called out of the market or
matured, the fund sought to find new holdings that would provide the most
attractive income stream relative to the level of risk. Of course, lower
prevailing rates meant that we could not match the yields of the older
holdings, particularly in light of the fund's investment-grade mandate.
As the fund's management team reinvested the proceeds of called or matured
bonds, one of the primary objectives was to enhance the fund's
diversification by increasing its exposure to the health-care and the
higher education sectors. We also reduced the fund's exposure to tobacco
settlement bonds, discussed further on page 5. Finally, in addition to
selectively reducing the fund's total exposure to IDBs backed by airlines,
we also diversified the fund's exposure by spreading the fund's holdings
among more issuers.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTOR WEIGHTINGS COMPARED]
TOP INDUSTRY SECTOR WEIGHTINGS COMPARED
as of as of
10/31/02 4/30/03
Transportation 21.4% 22.8%
Education 11.6% 16.6%
Utilities 12.6% 14.2%
Health care 9.0% 12.4%
Water and sewer 6.1% 2.3%
Footnote reads:
This chart shows how the fund's top industry sector weightings have changed
over the last six months. Weightings are shown as a percentage of market
value. Holdings will vary over time.
How key holdings and allocations affected performance
The fund's holdings in the health-care sector had a positive impact on
performance. The relatively stable and predictable income of health-care
organizations was a haven for investors amid the stalling economy and
deteriorating fundamentals of other sectors. We expanded the fund's
health-care holdings by purchasing a $700,000 position in bonds issued by
the Dormitory Authority of the State of New York for Winthrop South Nassau
University Health System. The bonds have a coupon of 5.5%, are scheduled to
mature on 7/1/2032, and were rated Baa1 by Moody's. Putnam's outlook for
these bonds is positive based on Winthrop's solid market share, manageable
debt load, and strong management team.
The higher education sector was another area of investment focus during the
period. Colleges and universities have a history of being reliable debtors.
The fund purchased $1.15 million of a bond issued by the Geneva New York
Industrial Development Agency for Hobart and William Smith Colleges to fund
new construction and refinance existing capital leases. The bond has a
coupon of 5.375%, is scheduled to mature on 2/1/2033, and was rated A by
Standard and Poor's. Putnam's analysts have a favorable view of this bond
based on the college's low debt/capital ratio, a long history of positive
operating performance, improving student quality, and a strong network for
fundraising.
As already noted, holdings of airline-backed IDBs detracted from results
during the period as airlines continue to suffer from decreased travel,
given the slower economy and ongoing geopolitical concerns. Several
airlines entered bankruptcy proceedings during the period, negatively
affecting the price of the fund's position in an IDB backed by AMR Corp.
(American Airlines). Fortunately, we had reduced the AMR position.
[GRAPHIC OMITTED pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa/AAA (29.8%)
Aa/AA (26.5%)
A (20.4%)
Baa/BBB (21.1%)
Ba/BB (0.6%)
CCC (1.1%)
VMIG1 (0.5%)
Footnote reads:
As a percentage of market value as of 4/30/03. A bond rated Baa 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.
Finally, we reduced the fund's exposure to New York tobacco settlement
bonds, and used the proceeds to buy comparable bonds issued by Puerto Rico.
This trade was made due to concerns about increasing supply in New York and
the stronger demand for Puerto Rico tobacco settlement bonds because they
are exempt from taxes in all states. Tobacco settlement bonds are secured
by cash payments made to each state in satisfaction of legal judgments
against the tobacco industry. Although these bonds are investment grade,
they generally offer higher yields than other bonds of comparable quality
because they have special risks. Putnam continues to carefully monitor the
risks associated with these bonds, which include the possibility that
interest payments could be affected by further litigation against the
tobacco industry.
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 Susan McCormack (Portfolio Leader), Paul Drury (Portfolio
Member), David Hamlin (Portfolio Member), Richard Wyke (Portfolio Member),
Joyce Dragone, and Jerome Jacobs.
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.
Our current outlook for the municipal-bond market is cautiously optimistic.
Fear of war has subsided. The focus is now on rebuilding Iraq and
addressing economic concerns on the home front. While much remains to be
answered, we believe the level of uncertainty in the world seems to have
eased a bit.
We expect business activity will accelerate slowly and experience continued
volatility. Although the tax-free marketplace is certainly not immune to
the forces that buffet many other markets, it has historically been less
volatile. We believe municipal bonds should perform well relative to other
fixed-income sectors as some measure of calm returns to financial markets.
We believe, however, that municipal budgets will continue to face
significant pressures in the months ahead. Governments will wrangle with
how to implement costly home-front protection measures while at the same
time pushing tax cuts to stimulate economic growth. Historically,
improvement in the credit quality of state and local governments has lagged
a general economic recovery by six to nine months, so we expect municipal
credit quality to remain fragile over the near term, but over the longer
term, we believe your fund is positioned to take advantage of the market's
potential.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice.
This fund concentrates its investment in one state and involves more risk
than a fund that invests more broadly.
Performance summary
This section provides information about your fund's performance during its
fiscal year, which ended April 30, 2003. In accordance with regulatory
requirements, we also include performance for the most current calendar
quarter-end. Performance should always be considered in light of a fund's
investment strategy. Past performance does not indicate future results.
More recent returns may be less or more than those shown. Investment
return, net asset value and market price will fluctuate and you may have a
gain or a loss when you sell your shares. Performance does not reflect
taxes on reinvested distributions. A profile of your fund's strategy
appears on the first page of this report. See page 8 for definitions of
some terms used in this section.
- -------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 4/30/03
- -------------------------------------------------------------------------------
Lipper Closed-End
Lehman New York
Municipal Municipal Debt
Bond Funds category
NAV Market price Index average*
- -------------------------------------------------------------------------------
1 year 6.41% 4.88% 8.50% 10.19%
- -------------------------------------------------------------------------------
5 years 28.85 18.39 35.78 35.10
- -------------------------------------------------------------------------------
Annual average 5.20 3.43 6.31 6.17
- -------------------------------------------------------------------------------
10 years 72.43 50.20 86.12 80.27
- -------------------------------------------------------------------------------
Annual average 5.60 4.15 6.41 6.04
- -------------------------------------------------------------------------------
Annual average
Life of fund
(since 11/27/92) 5.99 4.19 6.73 6.46
- -------------------------------------------------------------------------------
* Over the 1-, 5-, and 10-year periods ended 4/30/03, there were 18, 10,
and 8 funds, respectively, in this Lipper category.
- -------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 3/31/03 (MOST RECENT CALENDAR QUARTER)
- -------------------------------------------------------------------------------
NAV Market price
- -------------------------------------------------------------------------------
1 year 6.49% 4.69%
- -------------------------------------------------------------------------------
5 years 26.43 11.84
- -------------------------------------------------------------------------------
Annual average 4.80 2.26
- -------------------------------------------------------------------------------
10 years 71.88 50.98
- -------------------------------------------------------------------------------
Annual average 5.57 4.21
- -------------------------------------------------------------------------------
Annual average
Life of fund
(since 11/27/92) 5.91 4.14
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 4/30/03
- -------------------------------------------------------------------------------
Putnam New York Investment Grade Municipal Trust
- -------------------------------------------------------------------------------
Distributions from common shares
- -------------------------------------------------------------------------------
Number 12
- -------------------------------------------------------------------------------
Income 1 $0.7212
- -------------------------------------------------------------------------------
Capital gains 1 --
- -------------------------------------------------------------------------------
Total $0.7212
- -------------------------------------------------------------------------------
Preferred shares Series A
(200 shares)
- -------------------------------------------------------------------------------
Income 1 $610.53
- -------------------------------------------------------------------------------
Capital gains 1 --
- -------------------------------------------------------------------------------
Total $610.53
- -------------------------------------------------------------------------------
Share value: NAV Market price
- -------------------------------------------------------------------------------
4/30/02 $13.32 $12.12
- -------------------------------------------------------------------------------
4/30/03 13.37 11.99
- -------------------------------------------------------------------------------
Current return (common shares, end of period)
- -------------------------------------------------------------------------------
Current dividend rate 2 5.34% 5.95%
- -------------------------------------------------------------------------------
Taxable equivalent 3 9.72 10.83
- -------------------------------------------------------------------------------
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 market price at end of period.
3 Assumes maximum 45.05% combined federal, state, and city tax rate for
2003. Results for investors subject to lower tax rates would not be as
advantageous.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to remarketed preferred shares,
divided by the number of outstanding common shares.
Market price is the current trading price of one share of the fund. Market
prices are set by transactions between buyers and sellers on the American
Stock Exchange.
Comparative indexes
Lehman Municipal Bond Index is an unmanaged index of long-term, fixed-rate,
investment-grade tax-exempt bonds.
Lehman Aggregate Bond Index is an unmanaged index of taxable U.S.
fixed-income securities.
Lehman Government Bond Index is an unmanaged index of U.S.Treasury and
agency securities.
Credit Suisse First Boston (CSFB) High Yield Index is an unmanaged index of
high-yield debt securities.
S&P 500 Index is an unmanaged index of common stock performance.
Russell 1000 Growth Index is an unmanaged index of those companies in the
Russell 1000 Index chosen for their growth orientation.
Russell 1000 Value Index is an unmanaged index of those companies in the
Russell 1000 Index chosen for their value orientation.
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 Inc. 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 within a category and are based on results at net asset
value.
Putnam's policy on confidentiality
In order to conduct business with our shareholders, we must obtain certain
personal information such as account holders' addresses, telephone numbers,
Social Security numbers, and the names of their financial advisors. We use
this information to assign an account number and to help us maintain
accurate records of transactions and account balances.
It is our policy to protect the confidentiality of your information,
whether or not you currently own shares of our funds, and in particular,
not to sell information about you or your accounts to outside marketing
firms. We have safeguards in place designed to prevent unauthorized access
to our computer systems and procedures to protect personal information from
unauthorized use.
Under certain circumstances, we share this information with outside vendors
who provide services to us, such as mailing and proxy solicitation. In
those cases, the service providers enter into confidentiality agreements
with us, and we provide only the information necessary to process
transactions and perform other services related to your account. We may
also share this information with our Putnam affiliates to service your
account or provide you with information about other Putnam products or
services. It is also our policy to share account information with your
financial advisor, if you've listed one on your Putnam account.
If you would like clarification about our confidentiality policies or have
any questions or concerns, please don't hesitate to contact us at
1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays
from 9:00 a.m. to 5:00 p.m. Eastern Time.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes, preceded
by the Report of independent accountants, constitute the fund's financial
statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to determine
the net asset value per share, which is calculated separately for each
class of shares. (For funds with preferred shares, the amount subtracted
from total assets includes the net assets allocated to remarketed preferred
shares.)
Statement of operations shows the fund's net investment gain or loss.
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 year.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net investment
income or realized capital gains) over the current reporting period and the
most recent fiscal year-end. The distributions listed here may not match
the sources listed in the Statement of operations because the distributions
are determined on a tax basis and may be paid in a different period from
the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios, and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate table
is provided for each share class.
Report of independent accountants
To the Trustees and Shareholders of
Putnam New York Investment Grade
Municipal Trust In our opinion, the accompanying statement of assets and
liabilities, including the fund's portfolio (except for bond ratings), and
the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the
financial position of Putnam New York Investment Grade Municipal Trust (the
"fund") at April 30, 2003, and the results of its operations, the changes
in its net assets and the financial highlights for the periods indicated,
in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility
of the fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at April 30,
2003 by correspondence with the custodian, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 6, 2003
The fund's portfolio
April 30, 2003
Key to Abbreviations
AMBAC AMBAC Indemnity Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FHA Insd. Federal Housing Administration Insured
FRB Floating Rate Bonds
FSA Financial Security Assurance
G.O. Bonds General Obligation Bonds
IFB Inverse Floating Rate Bonds
MBIA MBIA Insurance Company
U.S. Govt. Coll. U.S. Government Collateralized
VRDN Variable Rate Demand Notes
Municipal bonds and notes (100.0%) (a)
Principal Amount Rating (RAT) Value
New York (96.0%)
- -------------------------------------------------------------------------------
$250,000 Albany, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds (Charitable Leadership),
Ser. A , 6s, 7/1/19 Baa3 $265,934
1,000,000 Dutchess Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Bard
College), 5 3/4s, 8/1/30 A3 1,085,000
250,000 Essex Cnty. Indl. Dev. Agcy.
Rev. Bonds (Intl. Paper Co.),
Ser. A, 5 1/2s, 10/1/26 Baa2 238,125
1,150,000 Geneva, Indl. Dev. Agcy. Rev. Bonds
(Hobart & William Smith Project),
Ser. A, 5 3/8s, 2/1/33 A 1,207,500
1,000,000 Long Island, Pwr. Auth. NY Elec.
Syst. Rev. Bonds, Ser. A, 5 1/4s,
12/1/26 A- 1,012,500
1,000,000 Madison Cnty., Indl. Dev. Agcy.
Rev. Bonds (Colgate U.), Ser. A,
5s, 7/1/23 Aa3 1,040,000
1,000,000 Metropolitan Trans. Auth.
Rev. Bonds, Ser. A, FSA, 5s,
11/15/30 Aaa 1,026,250
500,000 Metropolitan Trans. Auth. Svc.
Contract Rev. Bonds (Trans. Fac.),
Ser. O, U.S. Govt. Coll., 5 3/4s,
7/1/13 AAA 583,750
1,000,000 Niagara Cnty., Indl. Dev. Agcy.
Rev. Bonds, Ser. C, 5 5/8s,
11/15/24 Baa1 1,061,250
1,000,000 Niagara Falls, City School Dist.
COP, 5 7/8s, 6/15/19 Baa2 1,077,500
250,000 NY City, Cultural Res. VRDN, Ser. A,
MBIA, 1 1/4s, 4/1/21 VMIG1 250,000
NY City, G.O. Bonds
185,000 Ser. I, U.S. Govt. Coll., 6 1/4s,
4/15/17 Aaa 216,450
35,000 Ser. D, 6s, 2/15/25 A2 36,925
30,000 Ser. D, U.S. Govt. Coll., 6s,
2/15/25 (Prerefunded) Aaa 32,775
1,000,000 Ser. B, 5 3/4s, 8/1/16 A2 1,087,500
1,000,000 Ser. B, 5 1/2s, 12/1/31 A2 1,041,250
300,000 NY City, Hlth. & Hosp. Corp.
Rev. Bonds (Hlth. Syst.), Ser. A ,
5 3/8s, 2/15/26 A3 305,625
1,650,000 NY City, IFB, AMBAC, 10.67s, 9/1/11 Aaa 1,709,813
1,500,000 NY City, Indl. Dev. Agcy. Rev. Bonds
(Brooklyn Navy Yard Cogen.
Partners), 5.65s, 10/1/28 Baa3 1,398,750
NY City, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds
600,000 (Staten Island U. Hosp. Project),
Ser. A, 6 3/8s, 7/1/31 Baa3 618,000
1,000,000 (Brooklyn Polytech U. Project J),
6 1/8s, 11/1/30 Baa3 932,500
1,000,000 NY City, Indl. Dev. Agcy. Special
Arpt. Fac. Rev. Bonds (Airis JFK I
LLC), Ser. A, 5 1/2s, 7/1/28 Baa3 991,250
NY City, Indl. Dev. Agcy. Special
Fac. Rev. Bonds
1,000,000 (Terminal One Group Assn.), 6s,
1/1/15 A3 1,031,780
1,500,000 (American Airlines, Inc.), 5.4s,
7/1/20 Caa2 532,500
750,000 (British Airways), 5 1/4s, 12/1/32 BBB- 465,000
500,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. Rev. Bonds, Ser. G, FSA, 5s,
6/15/34 Aaa 511,250
1,000,000 NY Cntys. Tobacco Trust II
Rev. Bonds (Tobacco Settlement),
5 3/4s, 6/1/43 A3 795,000
NY State Dormitory Auth. Rev. Bonds
1,000,000 (State U. Edl. Fac.), Ser. A,
7 1/2s, 5/15/13 AA- 1,300,000
1,000,000 (Mount Sinai Hlth.), Ser. A, 6 1/2s,
7/1/25 Baa3 1,011,250
2,000,000 (Mental Hlth. Svcs. Fac.), Ser. A,
5 3/4s, 2/15/27 AA- 2,120,000
700,000 (Winthrop-U. Hosp. Assn.), Ser. A,
5 1/2s, 7/1/32 Baa1 693,875
1,500,000 (Dept. of Hlth.), 5 1/2s, 7/1/25 AA- 1,565,625
1,190,000 (City U. Syst. Construction), Ser.
1, 5 1/4s, 7/1/17 AA- 1,268,838
1,000,000 (School Dist. Fin. Project), Ser. A,
MBIA, 5 1/4s, 4/1/11 AAA 1,130,000
1,500,000 (NY U.), Ser. 2, AMBAC, 5s, 7/1/41 Aaa 1,530,000
500,000 NY State Energy Res. & Dev. Auth.
Mandatory Put, 4.7s, 6/1/36 A1 502,500
1,000,000 NY State Energy Res. & Dev. Auth.
Poll. Control Rev. Bonds (Niagara
Mohawk Pwr. Corp.), Ser. A, FGIC,
7.2s, 7/1/29 Aaa 1,083,750
155,000 NY State Env. Fac. Corp. Poll.
Control Rev. Bonds (State Wtr.
Revolving Fund), Ser. A, 7 1/2s,
6/15/12 Aaa 155,956
NY State Med. Care Fac. Fin. Agcy.
Rev. Bonds
60,000 (Mental Hlth. Svcs. Fac.), Ser. D,
7.4s, 2/15/18 AA- 60,950
340,000 (Hosp. & Nursing Home Insd. Mtge.),
Ser. C, 6.65s, 8/15/32 Aa2 345,896
1,315,000 (Hosp. & Nursing Home Insd. Mtge.),
Ser. C, FHA Insd., 6 3/8s, 8/15/29 AAA 1,403,763
750,000 NY State Pwr. Auth. Rev. Bonds, 5s,
11/15/20 Aa2 788,438
NY State Thruway Auth. Rev. Bonds,
Ser. A, MBIA
1,000,000 5 1/4s, 4/1/13 AAA 1,132,500
1,000,000 5 1/4s, 4/1/12 AAA 1,133,750
1,000,000 NY State Urban Dev. Corp. Rev. Bonds
(Personal Income Tax), Ser. C-1,
5s, 3/15/33 AA 1,013,750
1,000,000 Onondaga Cnty., Indl. Dev. Agcy.
Rev. Bonds (Bristol-Meyers Squibb
Co.), 5 3/4s, 3/1/24 AA 1,092,500
500,000 Otsego Cnty., Indl. Dev. Agcy.
Rev. Bonds (Hartwick College),
5.9s, 7/1/22 Baa2 520,625
1,000,000 Port Auth. NY & NJ Cons. Rev. Bonds,
Ser. 124, 5s, 8/1/31 AA- 1,005,000
1,000,000 Port Auth. NY & NJ Special
Obligation FRB, Ser. N18, MBIA,
8.64s, 12/1/17 (acquired 7/19/00,
cost $1,046,890)(RES) Aaa 1,362,500
500,000 Suffolk Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Huntington
Hosp. Project), Ser. B, 5 7/8s,
11/1/32 Baa1 514,375
Triborough Bridge & Tunnel Auth.
Rev. Bonds
1,000,000 Ser. A, 5s, 1/1/32 Aa3 1,020,000
1,000,000 AMBAC, 5s, 11/15/12 Aaa 1,121,250
250,000 Yonkers, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds (St. John's Riverside
Hosp.), Ser. A, 7 1/8s, 7/1/31 BB 256,875
------------
45,688,143
Puerto Rico (4.0%)
- -------------------------------------------------------------------------------
750,000 Children's Trust Fund Tobacco
Settlement Rev. Bonds, 5 1/2s,
5/15/39 A3 602,813
1,000,000 PR Elec. Pwr. Auth. Rev. Bonds,
Ser. II, 5 1/4s, 7/1/31 A- 1,025,000
250,000 PR Indl. Tourist Edl. Med. & Env.
Control Fac. Rev. Bonds (Cogen.
Fac.-AES Project), 6 5/8s, 6/1/26 Baa2 258,438
------------
1,886,251
- -------------------------------------------------------------------------------
Total Investments (cost $47,004,688) $47,574,394
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on portfolio market value.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to be
the most recent ratings available at April 30, 2003 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 April 30, 2003. Securities rated by
Putnam are indicated by "/P" and are not publicly rated. Ratings
are not covered by the Report of independent accountants.
(RES) Restricted, excluding 144A securities, as to public resale. The total
market value of restricted securities held at April 30, 2003 was
$1,362,500 or 2.9% of portfolio market value.
The rates shown on IFB, which are securities paying interest rates
that vary inversely to changes in the market interest rates, and
VRDN, mandatory puts, and Floating Rate Bonds (FRB) are the
current interest rates at April 30, 2003.
The fund had the following industry group concentrations greater than 10%
at April 30, 2003
(as a percentage of portfolio market value):
Transportation 22.8%
Education 16.6
Utilities 14.2
Health care 12.4
The fund had the following insurance concentration greater than 10% at
April 30, 2003
(as a percentage of portfolio market value):
MBIA 10.5%
The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities
April 30, 2003
Assets
- -----------------------------------------------------------------------------
Investments in securities, at value (identified cost
$47,004,688) (Note 1) $47,574,394
- -----------------------------------------------------------------------------
Cash 421,710
- -----------------------------------------------------------------------------
Interest and other receivables 810,433
- -----------------------------------------------------------------------------
Receivable for securities sold 260,902
- -----------------------------------------------------------------------------
Total assets 49,067,439
Liabilities
- -----------------------------------------------------------------------------
Distributions payable to common shareholders 169,373
- -----------------------------------------------------------------------------
Accrued preferred shares distribution payable (Note 1) 7,766
- -----------------------------------------------------------------------------
Payable for securities purchased 671,321
- -----------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 75,519
- -----------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 4,282
- -----------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 18,020
- -----------------------------------------------------------------------------
Payable for administrative services (Note 2) 496
- -----------------------------------------------------------------------------
Other accrued expenses 57,581
- -----------------------------------------------------------------------------
Total liabilities 1,004,358
- -----------------------------------------------------------------------------
Series A remarketed preferred shares: (200 shares
authorized and outstanding at $50,000 per share (Note 4) 10,000,000
- -----------------------------------------------------------------------------
Net assets $38,063,081
Represented by
- -----------------------------------------------------------------------------
Paid-in capital -- common shares (unlimited shares
authorized) (Note 1) $39,492,317
- -----------------------------------------------------------------------------
Undistributed net investment income (Note 1) 269,363
- -----------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (2,268,305)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investments 569,706
- -----------------------------------------------------------------------------
Total -- Representing net assets applicable to common shares
outstanding $38,063,081
Computation of net asset value
- -----------------------------------------------------------------------------
Net asset value per common share ($38,063,081 divided by
2,847,092 shares) $13.37
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of operations
Year ended April 30, 2003
Interest income: $2,854,453
- -----------------------------------------------------------------------------
Expenses:
- -----------------------------------------------------------------------------
Compensation of Manager (Note 2) 329,453
- -----------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 44,818
- -----------------------------------------------------------------------------
Compensation of Trustees (Note 2) 9,148
- -----------------------------------------------------------------------------
Administrative services (Note 2) 5,522
- -----------------------------------------------------------------------------
Auditing 55,075
- -----------------------------------------------------------------------------
Preferred share remarketing agent fees 43,861
- -----------------------------------------------------------------------------
Other 29,624
- -----------------------------------------------------------------------------
Total expenses 517,501
- -----------------------------------------------------------------------------
Expense reduction (Note 2) (12,315)
- -----------------------------------------------------------------------------
Net expenses 505,186
- -----------------------------------------------------------------------------
Net investment income 2,349,267
- -----------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (391,292)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 363,397
- -----------------------------------------------------------------------------
Net loss on investments (27,895)
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,321,372
- -----------------------------------------------------------------------------
Distributions to Series A remarketed preferred shareholders: (Note 1)
- -----------------------------------------------------------------------------
From tax exempt income (120,956)
- -----------------------------------------------------------------------------
From ordinary income (1,150)
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations
applicable to common shareholders $2,199,266
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets
Year ended April 30
Increase (decrease) in net assets 2003 2002
- -----------------------------------------------------------------------------
Operations:
- -----------------------------------------------------------------------------
Net investment income $2,349,267 $2,492,496
- -----------------------------------------------------------------------------
Net realized loss on investments (391,292) (90,582)
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 363,397 (543,094)
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 2,321,372 1,858,820
Distributions to Series A remarketed preferred shareholders: (Note 1)
- -----------------------------------------------------------------------------
From tax exempt income (120,956) (197,867)
- -----------------------------------------------------------------------------
From ordinary income (1,150) --
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations applicable to common
shareholders 2,199,266 1,660,953
- -----------------------------------------------------------------------------
Distributions to common shareholders: (Note 1)
- -----------------------------------------------------------------------------
From tax exempt income (2,032,488) (2,032,509)
- -----------------------------------------------------------------------------
From ordinary income (20,496) --
- -----------------------------------------------------------------------------
Total increase (decrease) in net assets 146,282 (371,556)
Net assets
- -----------------------------------------------------------------------------
Beginning of year 37,916,799 38,288,355
- -----------------------------------------------------------------------------
End of year (including undistributed net
investment income of $269,363 and $68,770,
respectively) $38,063,081 $37,916,799
- -----------------------------------------------------------------------------
Number of fund shares
- -----------------------------------------------------------------------------
Common shares outstanding at beginning and
end of year 2,847,092 2,847,092
- -----------------------------------------------------------------------------
Remarketed preferred shares outstanding at
beginning and end of year 200 200
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
Per-share Year ended April 30
operating performance 2003 2002 2001
- --------------------------------------------------------------------------------
Net asset value, beginning of
period (common shares) $13.32 $13.45 $12.81
- --------------------------------------------------------------------------------
Investment operations:
- --------------------------------------------------------------------------------
Net investment income (a) .83 .88 .83
- --------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.02) (.23) .72
- --------------------------------------------------------------------------------
Total from investment
operations: .81 .65 1.55
- --------------------------------------------------------------------------------
Distributions to preferred shareholders:
- --------------------------------------------------------------------------------
From net investment income (.04) (.07) (.13)
- --------------------------------------------------------------------------------
Total from investment
operations: applicable to
common shareholders .77 .58 1.42
- --------------------------------------------------------------------------------
Distributions to common shareholders:
- --------------------------------------------------------------------------------
From net investment income (.72) (.71) (.78)
- --------------------------------------------------------------------------------
Total distributions (.72) (.71) (.78)
- --------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $13.37 $13.32 $13.45
- --------------------------------------------------------------------------------
Market price, end of period
(common shares) $11.99 $12.12 $12.46
- --------------------------------------------------------------------------------
Total return at market price
(common shares) (%)(b) 4.88 2.96 10.28
- --------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------
Net assets, end of period
(common shares) (in
thousands $38,063 $37,917 $38,288
- --------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c)(d) 1.36 1.35 1.41
- --------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) 5.84 5.96 5.25
- --------------------------------------------------------------------------------
Portfolio turnover rate (%) 35.93 25.16 15.65
- --------------------------------------------------------------------------------
Financial highlights (continued)
(For a common share outstanding throughout the period)
Per-share Year ended April 30
operating performance 2000 1999
- --------------------------------------------------------------------------------
Net asset value, beginning of
period (common shares) $14.03 $13.96
- --------------------------------------------------------------------------------
Investment operations:
- --------------------------------------------------------------------------------
Net investment income (a) .90 .91
- --------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (1.19) .08
- --------------------------------------------------------------------------------
Total from investment
operations: (.29) .99
- --------------------------------------------------------------------------------
Distributions to preferred shareholders:
- --------------------------------------------------------------------------------
From net investment income (.12) (.11)
- --------------------------------------------------------------------------------
Total from investment
operations: applicable to
common shareholders (.41) .88
- --------------------------------------------------------------------------------
Distributions to common shareholders:
- --------------------------------------------------------------------------------
From net investment income (.81) (.81)
- --------------------------------------------------------------------------------
Total distributions (.81) (.81)
- --------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $12.81 $14.03
- --------------------------------------------------------------------------------
Market price, end of period
(common shares) $12.00 $13.88
- --------------------------------------------------------------------------------
Total return at market price
(common shares) (%)(b) (7.75) 7.82
- --------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------
Net assets, end of period
(common shares) (in
thousands $36,479 $39,952
- --------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c)(d) 1.44 1.32
- --------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) 5.96 5.66
- --------------------------------------------------------------------------------
Portfolio turnover rate (%) 3.32 24.04
- --------------------------------------------------------------------------------
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment.
(c) Ratios reflect net assets available to common shares only; net
investment income ratio also reflects reduction for distributions
to preferred shareholders.
(d) Includes amounts paid through expense offset arrangements (Note 2).
The accompanying notes are an integral part of these financial statements.
Notes to financial statements
April 30, 2003
Note 1
Significant accounting policies
Putnam New York Investment Grade Municipal Trust (the "fund") is registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
closed-end management investment company. The fund's investment objective
is to seek high a current income exempt from federal income tax and New
York State and City personal income tax. The fund intends to achieve its
objective by investing in investment grade municipal securities
constituting a portfolio that Putnam Investment Management, LLC ("Putnam
Management"), the fund's Manager, an indirect wholly-owned subsidiary of
Putnam, LLC, believes to be consistent with preservation of capital.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
fund may be affected by economic and political developments in the state of
New York. 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 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. 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, as amended. Therefore, no provision has been made for
federal taxes on income, capital gains or unrealized appreciation on
securities held nor for excise tax on income and capital gains.
At April 30, 2003, the fund had a capital loss carryover of approximately
$1,857,000 available to offset future capital gains, if any. The amount of
the carryover and the expiration dates are:
Loss Carryover Expiration
- --------------------------------
$619,000 April 30, 2004
492,000 April 30, 2005
434,000 April 30, 2008
312,000 April 30, 2011
Pursuant to federal income tax regulations applicable to regulated
investment companies, the fund has elected to defer to its fiscal year
ending April 30, 2004 $314,679 of losses recognized during the period
November 1, 2002 to April 30, 2003.
D) Distributions to shareholders Distributions to common and preferred
shareholders from net investment income are recorded by the fund on the
ex-dividend date. Distributions from capital gains, if any, are recorded on
the ex-dividend date and paid at least annually. Dividends on remarketed
preferred shares become payable when, as and if declared by the Trustees.
Each dividend period for the remarketed preferred shares is generally a
28-day period. The applicable dividend rate for the remarketed preferred
shares on April 30, 2003 was 1.05%. 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 These differences include
temporary and permanent differences of losses on wash sale transactions,
post-October loss deferrals, dividends payable, market discount and
straddle loss deferrals. For the year ended April 30, 2003, the fund
reclassified $26,416 to increase undistributed net investment income with
an increase to accumulated net realized losses of $26,416.
The tax basis components of distributable earnings and the federal tax cost
as of period end were as follows:
Unrealized appreciation $2,127,751
Unrealized depreciation (1,631,035)
------------
Net unrealized appreciation 496,716
Undistributed tax exempt
income 446,438
Capital loss carryforward (1,856,611)
Post October loss (314,679)
Cost for federal income
tax purposes $47,077,678
E) Determination of net asset value Net asset value of the common shares is
determined by dividing the value of all assets of the fund, less all
liabilities and the liquidation preference of any outstanding remarketed
preferred shares, by the total number of common shares outstanding as of
period end.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund. On
January 1, 2003, fees payable to Putnam Management under the fund's
management contract were changed to 0.65% of the weekly average net assets
of the fund.
Prior to January 1, 2003, the fee was based on the following annual rates:
0.70% of the first $500 million of weekly average net assets, 0.60% of the
next $500 million, 0.55% of the next $500 million, and 0.50% thereafter.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred
shares for that period exceed the fund's gross income attributable to the
proceeds of the remarketed preferred shares during that period, then the
fee payable to Putnam Management for that period will be reduced by the
amount of the excess (but not more than 0.65% of the liquidation preference
of the remarketed preferred shares outstanding during the period).
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 wholly-owned subsidiary of Putnam, LLC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
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 year ended April 30, 2003, the fund's expenses
were reduced by $12,315 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $470 has been allocated to the fund, and an additional fee for each
Trustees meeting attended. Trustees receive additional fees for attendance
at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have served
as a Trustee for at least five years. Benefits under the Pension Plan are
equal to 50% of the Trustee's average total retainer and meeting fees for
the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
Note 3
Purchases and sales of securities
During the year ended April 30, 2003, cost of purchases and proceeds from
sales of investment securities other than short-term investments aggregated
$17,858,819 and $16,730,057, respectively. There were no purchases and
sales of U.S. government obligations.
Note 4
Preferred shares
The Series A shares are redeemable at the option of the fund on any
dividend payment date at a redemption price of $50,000 per share, plus an
amount equal to any dividends accumulated on a daily basis but unpaid
through the redemption date (whether or not such dividends have been
declared) and, in certain circumstances, a call premium.
It is anticipated that dividends paid to holders of remarketed preferred
shares will be considered tax-exempt dividends under the Internal Revenue
Code of 1986. To the extent that the fund earns taxable income and capital
gains by the conclusion of a fiscal year, it may be required to apportion
to the holders of the remarketed preferred shares throughout that year
additional dividends as necessary to result in an after-tax equivalent to
the applicable dividend rate for the period.
Under the Investment Company Act of 1940, the fund is required to maintain
asset coverage of at least 200% with respect to the remarketed preferred
shares as of the last business day of each month in which any such shares
are outstanding. Additionally, the fund is required to meet more stringent
asset coverage requirements under terms of the remarketed preferred shares
and the shares' rating agencies. Should these requirements not be met, or
should dividends accrued on the remarketed preferred shares not be paid,
the fund may be restricted in its ability to declare dividends to common
shareholders or may be required to redeem certain of the remarketed
preferred shares. At April 30, 2003, no such restrictions have been placed
on the fund.
Federal tax information
(Unaudited)
The fund has designated 99% of dividends paid from net investment income
during the fiscal year as tax exempt for Federal income tax purposes.
The Form 1099 you receive in January 2004 will show the tax status of all
distributions paid to your account in calendar 2003.
About the Trustees
Jameson A. Baxter (9/6/43),
Trustee since 1994
President, Baxter Associates, Inc. (a consulting and private investments
firm)
Director of ASHTA Chemicals, Inc., Banta Corporation (a printing and
digital imaging firm), Ryerson Tull, Inc. (a steel service corporation),
Advocate Health Care, and the National Center for Nonprofit Boards.
Chairman Emeritus of the Board of Trustees, Mount Holyoke College. Until
2002, Mrs. Baxter was a director of Intermatic Corporation, a manufacturer
of energy control products. Also held various positions in investment
banking and corporate finance, including Vice President and principal of
the Regency Group and Vice President and consultant to First Boston Corp.
Charles B. Curtis (4/27/40),
Trustee since 2001
President and Chief Operating Officer, Nuclear Threat Initiative (a private
foundation dealing with national security issues), also serves as Senior
Advisor to the United Nations Foundation
Member of the Council on Foreign Relations and the Trustee Advisory
Council of the Applied Physics Laboratory at Johns Hopkins University.
Until 2003, Mr. Curtis was a member of the Electric Power Research
Institute Advisory Council, and the University of Chicago Board of
Governors for Argonne National Laboratory. Prior to 2002, Mr. Curtis was
a member of the Board of Directors of the Gas Technology Institute and
the Board of Directors of the Environment and Natural Resources Program
Steering Committee, John F. Kennedy School of Government, Harvard
University. Until 2001, Mr. Curtis was a Member of the Department of
Defense's Policy Board and Director of EG&G Technical Services, Inc.
(fossil energy research and development support). Prior to May 1997, Mr.
Curtis was Deputy Secretary of Energy. He served as Chairman of the
Federal Energy Regulatory Commission from 1977 to 1987 and has held
positions on the staff of the U.S. House of Representatives, the U.S.
Treasury Department, and the Securities and Exchange Commission. Mr.
Curtis is also a lawyer with over 15 years of experience.
John A. Hill (1/31/42),
Trustee since 1985 and Chairman since 2000
Vice-Chairman and Managing Director, First Reserve Corporation (a
registered investment advisor investing in companies in the world-wide
energy industry on behalf of institutional investors)
Director of Devon Energy Corporation (formerly known as Snyder Oil
Corporation), TransMontaigne Oil Company, Continuum Health Partners of
New York, Sarah Lawrence College, and various private companies owned by
First Reserve Corporation. Trustee of TH Lee, Putnam Investment Trust (a
closed-end investment company). Prior to acquiring First Reserve in
1983, Mr. Hill held executive positions with several advisory firms and
various positions with the federal government, including Associate
Director of the Office of Manage ment and Budget and Deputy Director of
the Federal Energy Administration.
Ronald J. Jackson (12/17/43),
Trustee since 1996
Private investor
Former Chairman, President, and Chief Executive Officer of Fisher-Price,
Inc. (a toy manufacturer). Previously served as President and Chief
Executive Officer of Stride-Rite, Inc. and Kenner Parker Toys. Also held
financial and marketing positions with General Mills, Parker Brothers, and
Talbots. President of the Kathleen and Ronald J. Jackson Foundation
(charitable trust). Member of the Board of Overseers of WGBH (public
television and radio). Member of the Board of Overseers of the Peabody
Essex Museum.
Paul L. Joskow (6/30/47),
Trustee since 1997
Elizabeth and James Killian Professor of Economics and Management and
Director of the Center for Energy and Environmental Policy Research,
Massachusetts Institute of Technology
Director, National Grid Transco (formerly National Grid Group, a
UK-based holding company with interests in electric and gas transmission
and distribution and telecommunications infrastructure), and the
Whitehead Institute for Biomedical Research (a non-profit research
institution). President of the Yale University Council. Prior to
February 2002, March 2000, and September 1998, Dr. Joskow was a Director
of State Farm Indemnity Company (an automobile insurance company),
Director of New England Electric System (a public utility holding
company) and a consultant to National Economic Research Associates,
respectively.
Elizabeth T. Kennan (2/25/38),
Trustee since 1992
Chairman, Cambus-Kenneth Bloodstock (a limited liability company involved
in thoroughbred horse breeding and farming), President Emeritus of Mount
Holyoke College
Director, Northeast Utilities, and Talbots (a distributor of women's
apparel). Trustee of Centre College. Prior to 2001, Dr. Kennan was a
member of the Oversight Committee of Folger Shakespeare Library. Prior
to September 2000, June 2000, and November 1999, Dr. Kennan was a
Director of Chastain Real Estate, Bell Atlantic, and Kentucky Home Life
Insurance, respectively. Prior to 1995, Dr. Kennan was a Trustee of
Notre Dame University. For 12 years, she was on the faculty of Catholic
University.
John H. Mullin, III (6/15/41),
Trustee since 1997
Chairman and CEO of Ridgeway Farm (a limited liability company engaged in
timber and farming)
Director Alex. Brown Realty, Inc., Sonoco Products, Inc. (a packaging
company), The Liberty Corporation (a company engaged in the broadcasting
industry), and Progress Energy, Inc. (a utility company, formerly known
as Carolina Power & Light). Trustee Emeritus of Washington & Lee
University. Prior to October 1997, January 1998, and May 2001, Mr.
Mullin was a Director of Dillon, Read & Co. Inc., The Ryland Group,
Inc., and Graphic Packaging International Corp., respectively.
Robert E. Patterson (3/15/45),
Trustee since 1984
Senior Partner of Cabot Properties, L.P.
and Chairman of Cabot Properties, Inc.
Chairman of the Joslin Diabetes Center, Trustee of SEA Education
Association, and Director of Brandywine Trust Company (a trust company).
Prior to February 1998, Mr. Patterson was Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership. Prior to
December 2001, Mr. Patterson was President and Trustee of Cabot Industrial
Trust (publicly traded real estate investment trust). Prior to 1990, Mr.
Patterson was Executive Vice President of Cabot, Cabot & Forbes Realty
Advisors, the predecessor of Cabot Partners, and prior to that was Senior
Vice President of the Beal Companies.
W. Thomas Stephens (9/2/42),
Trustee since 1997
Corporate Director
Director of Xcel Energy Incorporated (public utility company), TransCanada
Pipelines, Norske Canada, Inc. (paper manufacturer), and Qwest
Communications (communications company). Until 2003, Mr. Stephens was a
Director of Mail-Well, a printing and envelope company. Prior to July 2001
and October 1999, Mr. Stephens was Chairman of Mail-Well and
MacMillan-Bloedel (forest products company). Prior to 1996, Mr. Stephens
was Chairman and Chief Executive Officer of Johns Manville.
W. Nicholas Thorndike (3/28/33),
Trustee since 1992
Director of various corporations and charitable organizations, including
Courier Corporation (a book manufacturer and publisher) and Providence
Journal Co. (a newspaper publisher)
Trustee of Northeastern University and Honorary Trustee of Massachusetts
General Hospital. Prior to September 2000, April 2000, and December
2001, Mr. Thorndike was a Director of Bradley Real Estate, Inc., a
Trustee of Eastern Utilities Associates, and a Trustee of Cabot
Industrial Trust, respectively. Previously served as Chairman of the
Board and managing partner of Wellington Management/Thorndike Doran
Paine & Lewis, and Chairman and Director of Ivest Fund.
Lawrence J. Lasser* (11/1/42), Trustee since 1992 and Vice President since
1981 President and Chief Executive Officer of Putnam Investments and Putnam
Management
Director of Marsh & McLennan Companies, Inc. and the United Way of
Massachusetts Bay. Member of the Board of Governors of the Investment
Company Institute, Trustee of the Museum of Fine Arts, Boston, a Trustee
and Member of the Finance and Executive Committees of Beth Israel Deaconess
Medical Center, Boston, and a Member of the CareGroup Board of Managers
Investment Committee, the Council on Foreign Relations, and the Commercial
Club of Boston.
George Putnam, III* (8/10/51),
Trustee since 1984 and President since 2000
President, New Generation Research, Inc. (a publisher of financial advisory
and other research services relating to bankrupt and distressed companies)
and New Generation Advisers, Inc. (a registered investment adviser)
Director of The Boston Family Office, L.L.C. (registered investment
advisor), Trustee of St. Mark's School, and Trustee of Shore Country Day
School. Until 2002, Mr. Putnam was a Trustee of the SEA Education
Association. Previously, Mr. Putnam was an attorney with the firm of
Dechert Price & Rhoads.
A.J.C. Smith* (4/13/34),
Trustee since 1986
Director of Marsh & McLennan Companies, Inc.
Director of Trident Corp. (a limited partnership with over 30 institutional
investors). Trustee of the Carnegie Hall Society, the Educational
Broadcasting Corporation and the National Museums of Scotland. Chairman of
the Central Park Conservancy. Member of the Board of Overseers of the Joan
and Sanford I. Weill Graduate School of Medical Sciences of Cornell
University. Fellow of the Faculty of Actuaries in Edinburgh, the Canadian
Institute of Actuaries, and the Conference of Actuaries. Associate of the
Society of Actuaries. Member of the American Actuaries, the International
Actuarial Association and the International Association of Consulting
Actuaries. Prior to May 2000 and November 1999, Mr. Smith was Chairman and
CEO, respectively, of Marsh & McLennan Companies, Inc.
The address of each Trustee is One Post Office Square, Boston, MA 02109.
As of April 30, 2003, there were 104 Putnam Funds.
Each Trustee serves for an indefinite term, until his or her resignation,
death, or removal.
* Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940)of the fund, Putnam
Management, Putnam Retail Management or Marsh & McLennan Companies,
Inc., the parent company of Putnam LLC and its affiliated companies.
Messrs. Putnam, III, Lasser and Smith are deemed "interested persons"
by virtue of their positions as officers or shareholders of the fund or
Putnam Management, Putnam Retail Management or Marsh & McLennan
Companies, Inc. George Putnam, III is the President of your fund and
each of the other Putnam funds. Lawrence J. Lasser is the President and
Chief Executive Officer of Putnam Investments and Putnam Management.
Mr. Lasser and Mr. Smith serve as Directors of Marsh & McLennan
Companies, Inc.
Officers
In addition to George Putnam, III and Lawrence J. Lasser, the other
officers of the fund are shown below:
Charles E. Porter (7/26/38)
Executive Vice President, Treasurer and
Principal Financial Officer Since 1989
Managing Director, Putnam Investments and Putnam Management
Patricia C. Flaherty (12/1/46)
Senior Vice President
Since 1993
Senior Vice President, Putnam Investments and Putnam Management
Karnig H. Durgarian (1/13/56)
Vice President and Principal Executive
Officer Since 2002
Senior Managing Director, Putnam Investments
Steven D. Krichmar (6/27/58)
Vice President and Principal Financial Officer
Since 2002
Managing Director, Putnam Investments. Prior to July 2001, Partner,
PricewaterhouseCoopers LLP
Michael T. Healy (1/24/58)
Assistant Treasurer
and Principal Accounting Officer
Since 2000
Managing Director, Putnam Investments
Brett C. Browchuk (2/27/63)
Vice President
Since 1994
Managing Director, Putnam Investments and Putnam Management
Charles E. Haldeman Jr. (10/29/48)
Vice President
Since 2002
Senior Managing Director, Putnam Investments and Putnam Management. Prior
to October 2002, Chief Executive Officer, Lincoln National Investment
Companies; prior to January 2000, President and Chief Operating Officer,
United Asset Management.
Beth S. Mazor (4/6/58)
Vice President
Since 2002
Senior Vice President, Putnam Investments
Richard A. Monaghan (8/25/54)
Vice President
Since 1998
Senior Managing Director, Putnam Investments and Putnam Retail Management.
Prior to November 1998, Managing Director, Merrill Lynch
Stephen M. Oristaglio (8/21/55)
Vice President
Since 1998
Senior Managing Director, Putnam Investments and Putnam Management. Prior
to July 1998, Managing Director, Swiss Bank Corp.
Gordon H. Silver (7/3/47)
Vice President
Since 1990
Senior Managing Director, Putnam Investments, Putnam Management and Putnam
Retail Management
Mark C. Trenchard (6/5/62)
Vice President
Since 2002
Senior Vice President, Putnam Investments
Judith Cohen (6/7/45)
Clerk and Assistant Treasurer
Since 1993
Clerk and Assistant Treasurer, The Putnam Funds
Jerome J. Jacobs (8/20/58)
Vice President
Since 1996
Managing Director of Putnam Management
The address of each Officer is One Post Office Square, Boston, MA 02109.
Fund information
About Putnam Investments
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
Independent Accountants
PricewaterhouseCoopers LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President, Treasurer and Principal Financial Officer
Patricia C. Flaherty
Senior Vice President
Karnig H. Durgarian
Vice President and Principal Executive Officer
Steven D. Krichmar
Vice President and Principal Financial Officer
Michael T. Healy
Assistant Treasurer and Principal Accounting Officer
Brett C. Browchuk
Vice President
Charles E. Haldeman, Jr.
Vice President
Lawrence J. Lasser
Vice President
Beth S. Mazor
Vice President
Richard A. Monaghan
Vice President
Stephen M. Oristaglio
Vice President
Gordon H. Silver
Vice President
Mark C. Trenchard
Vice President
Jerome J. Jacobs
Vice President
Judith Cohen
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or visit
our Web site (www.putnaminvestments.com) any time for up-to-date
information about the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ----------------------
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ----------------------
Do you want to save paper and receive this document faster?
Shareholders can sign up for email delivery of shareholder reports on
www.putnaminvestments.com.
88653 185 6/03
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. Controls and Procedures:
- --------------------------------
The registrant's principal executive officer and principal financial
officers 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
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.
There have been no significant changes in the registrant's internal
controls subsequent to the date of their evaluation.
Item 10. 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: June 24, 2003
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/Karnig H. Durgarian
---------------------------
Karnig H. Durgarian
Principal Executive Officer
Date: June 24, 2003
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Financial Officer
Date: June 24, 2003
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: June 24, 2003