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:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-03
[GRAPHIC OMITTED: WATCH]
[SCALE LOGO OMITTED]
From the Trustees
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM, III]
John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
You may have read recent press coverage regarding investigations
involving Putnam Investments. Last month all Putnam shareholders were
sent a letter detailing the steps being taken by Putnam to address the
issues raised by federal and state regulators. Since then, a number of
remedial actions, some of which were discussed in last month's letter,
are being instituted under the terms of an order from the Securities and
Exchange Commission (SEC). These include stringent employee trading
restrictions, enhanced compliance standards and systems, new redemption
fees for certain fund shares held less than three months, and a process
for making full monetary restitution for any losses to fund
shareholders. This process will be directed by an independent third
party approved by the SEC and by Putnam's Board of Trustees.
The Board is also continuing its own independent investigation of these
issues and when complete a report will be issued detailing the
additional steps being taken to make sure that nothing like this happens
at Putnam again. We believe that the new senior management team at
Putnam is fully committed to re-establishing the firm as a model for the
highest ethical standards in the mutual fund industry. Our Board is
committed to working with Putnam's management to ensure that everything
possible is done to restore your full confidence in the Putnam
organization.
In terms of Putnam New York Investment Grade Municipal Trust's
performance, we are pleased to report positive results for the six
months ended October 31, 2003. In addition, your fund outperformed both
its benchmark and its Lipper competitive category average at net asset
value. The details are shown on the facing page. In their report, your
fund's managers cite the portfolio's small allocation to higher-yielding
lower-rated issues and defensive positioning as positive factors during
the period. They also offer their views on prospects for the fiscal
year's second half.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
December 17, 2003
Report from Fund Management
Fund highlights
* For the six months ended October 31, 2003, Putnam New York Investment
Grade Municipal Trust returned 2.70% at net asset value (NAV) and 0.26%
at market price.
* Based on results at NAV, the fund outperformed its benchmark, the
Lehman Municipal Bond Index, which returned 1.47% for the period. We
attribute this to defensive positioning and differences in portfolio
composition.
* At NAV, the fund also slightly outperformed the average for its Lipper
category, Closed-End New York Municipal Debt Funds, which was 2.18%.
* 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
At the beginning of your fund's fiscal year, lower-rated,
higher-yielding municipal bonds began to deliver strong performance for
the first time in over a year. Although your fund is primarily an
investment-grade fund, it does allocate some of the portfolio to these
bonds -- and consequently, this positive change in investor sentiment
translated into stronger performance for the fund. The top-performing
holdings during the period were airline-related industrial development
bonds (IDBs) -- positions that had dampened fund performance in the
past, but whose prices rebounded in response to signs of renewed
economic growth.
Shifts we made in the fund's duration -- a measure of its sensitivity to
changes in interest rates -- also aided results. We shortened duration,
diminishing the fund's sensitivity to the negative effects of rising
rates on bond prices. While this positioning reduced the fund's ability
to profit from the price rally when interest rates fell early in the
period, it offered protection when rates rose again dramatically, and
ultimately, made a positive contribution to performance.
Return at market price reflects investor demand as well as investment
performance. We believe the fund's lower return at market price reflects
reduced demand for fixed-income investments over the period.
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
Municipal bond yields -- which move in the opposite direction of their
prices -- were unusually volatile between May 1 and October 31, 2003.
Concern about deflation led to falling yields and higher bond prices
through mid June. After rising through August, yields receded again in
September, on unfavorable housing and unemployment data. October's
positive economic surprises sent yields back up. Overall, yields ended
the semiannual period higher than at the beginning of the period.
The spread, or difference between yields of 10-year municipal bonds and
10-year Treasuries, widened, with municipals yielding close to their
long-term average of 85% of comparable Treasury yields at the end of
October, after yielding nearly 100% of Treasury yields earlier in the
year.
As the economy improved, investor demand for higher-yielding municipals
increased. In particular, airline-related industrial development bonds
outperformed other municipal bonds. California general obligation bonds
were downgraded and underperformed as the state's budget crisis
worsened. Tobacco settlement bonds outperformed following the Illinois
Supreme Court's favorable ruling in one of the industry's ongoing
litigation matters.
- -------------------------------------------------------------------------------
MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 10/31/03
- -------------------------------------------------------------------------------
Bonds
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index (tax-exempt bonds) 1.47%
- -------------------------------------------------------------------------------
Lehman Aggregate Bond Index (broad bond market) 0.57%
- -------------------------------------------------------------------------------
Lehman Government Bond Index (U.S. Treasury and agency
securities) -0.19%
- -------------------------------------------------------------------------------
JP Morgan Global High Yield Index (global high-yield
corporate bonds) 9.61%
- -------------------------------------------------------------------------------
Equities
- -------------------------------------------------------------------------------
S&P 500 Index (broad stock market) 15.62%
- -------------------------------------------------------------------------------
Russell 1000 Growth Index (large-company growth stocks) 16.81%
- -------------------------------------------------------------------------------
Russell 1000 Value Index (large-company value stocks) 16.74%
- -------------------------------------------------------------------------------
These indexes provide an overview of performance in different market
sectors for the six months ended 10/31/03.
- -------------------------------------------------------------------------------
Strategy overview
We shortened duration (a measure of a fund's sensitivity to changes in
interest rates) in May because interest rates were at historically low
levels and were more likely, in our opinion, to rise than to fall. This
defensive strategy helped protect portfolio assets when rates rose
sharply between mid June and the end of July. We resumed a neutral
duration in August and September, as we believed rates were unlikely to
rise further. In September, rates fell again, so we shortened duration
somewhat. This was beneficial when rates rose in October. At the end of
the period, the portfolio's duration remained slightly defensive.
We continued to diversify the fund's holdings. We took the opportunity
afforded by strong demand for higher-yielding municipal bonds to take
profits and reduce positions in some of the fund's lower-quality
holdings, particularly airline-related industrial development bonds
(IDBs).
Although we had previously reduced the fund's holdings in tobacco
settlement bonds -- bonds secured by the income stream from tobacco
companies' settlement obligations to the states -- Putnam's bond analyst
for this sector has offered support for a more positive view of the
industry. Recently, numerous court cases have been decided in the
industry's favor and we believe these decisions have reduced, somewhat,
the perceived risk of unfavorable rulings that could affect the
stability of the bonds' income stream. Accordingly, the fund has
purchased more tobacco settlement bonds, and brought the weighting to
neutral, relative to the benchmark. The fund may move toward an
overweight position in tobacco settlement bonds if attractive investment
opportunities arise.
[GRAPHIC OMITTED: horizontal bar chart TOP SECTOR WEIGHTINGS COMPARED]
TOP SECTOR WEIGHTINGS COMPARED
as of as of
4/30/03 10/31/03
Transportation 22.8% 21.4%
Utilities 14.2% 17.8%
Health care 12.4% 16.5%
Education 16.6% 11.1%
Waste management 2.2% 1.5%
Footnote reads:
This chart shows how the fund's top weightings have changed over the
last six months. Weightings are shown as a percentage of portfolio
market value. Holdings will vary over time.
How fund holdings affected performance
Many of the fund's top performers during the period were airline-related
IDBs. This type of municipal bond is usually issued to nance local
expansion by various businesses, and is backed by the credit of the
company benefiting from the financing. As a result, IDB prices are
affected by investor perceptions of the health of the backing company or
of the industry group. Especially since the terrorist attacks of
September 11, 2001, airline-backed IDBs (generally issued to nance
airport facility expansion) have been severely affected by declining air
traffic, high fixed costs, and high-prole bankruptcies. As the
prospects for economic recovery improved, the airline companies
strengthened and concerns about bankruptcies diminished. This led to a
sharp price recovery for these bonds and we used this opportunity to
trim the fund's airline-related holdings. These included airport
facility improvement bonds issued for American Airlines and British
Airways. Since these bonds have been in the portfolio for some time,
none of the sales resulted in a prot based on their acquisition cost,
but the fund was able to sell on strength rather than in distress.
Other bonds that performed well were two tobacco settlement bonds, one
issued by New York Counties Tobacco Trust, offering a 5.75% coupon and
maturing in 2043, and the other issued by Children's Trust Fund of
Puerto Rico, with a 5.5% coupon, maturing in 2039. This sector recovered
during the past six months, primarily due to a series of more positive
legal judgments. Until recently, our view on the sector had been less
favorable because of the multibillion-dollar litigation pending against
the tobacco companies. This litigation, if successful, could have
affected the ability of tobacco companies to meet their settlement
payment obligations to the states. Ultimately, such a scenario would
have had a negative effect on tobacco settlement bonds, which are
secured by this promised income stream. During the reporting
period, the litigation environment shifted in favor of tobacco
companies, and in several cases, higher courts reversed severe lower
court judgments and outlined higher hurdles and stricter rules for
litigants against tobacco companies. This change prompted our reversion
to a more positive stance on the sector.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
A (18.4%)
Aa/AA (22.6%)
Aaa/AAA (37.4%)
Other (0.6%)
VMIG1 (5.0%)
Ba/BB (2.3%)
Baa/BBB (13.7%)
Footnote reads:
As a percentage of market value as of 10/31/03. 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.
While the past several months have been positive ones for the bond
market, including municipals, some bonds encountered difficulties and
suffered from price declines. One fund holding that struggled was a bond
issued by the New York City Industrial Development Agency to provide
funds for Brooklyn Polytechnic University. These bonds were issued with
a 6.125% coupon and mature in 2030. Brooklyn Polytechnic University is
primarily a commuter school that offers technical education. The debt
was issued to help the school build dormitories. Unfortunately, the tech
downturn of the past few years led to decreasing enrollment at the
school. The debt's credit rating was downgraded, and the bond price
declined as a result. Since we did not anticipate any recovery over the
near term, we reduced the position. Similarly, bonds issued by the
Otsego County Industrial Development Agency on the behalf of Hartwick
College stumbled. These were bonds carrying a coupon of 5.90% maturing
in 2022. The college sought to remake itself as a more selective
institution, but the weak economy led to declining applications and
matriculation, which in turn triggered operating losses. We also cut
back on this position.
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.
We anticipate continued volatility in the coming six months, and we
believe the Federal Reserve Board will hold the federal funds rate
steady at 1%. Our 12- to 18-month outlook is less certain. If economic
policy succeeds, we may experience a classic bear market for bonds that
may push yields higher. However, it is also possible that the economy
may not respond satisfactorily to fiscal and monetary policy, and the
yield on 10-year Treasuries could fall. Given this degree of
uncertainty, we have, at this time, positioned the fund's duration
somewhat defensively, and we believe rates may rise in the short term.
Currently, we no longer see much opportunity to capitalize on yield
spreads between municipal bonds and Treasuries, as the relationship
between them is now near the long-term average. We expect that the
credit quality of general obligation municipal bonds will remain under
pressure, 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. In keeping with the
fund's objective, we will continue to monitor market conditions as we
pursue a high level of tax-free income and manage the fund's risk
exposure.
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
the first half of its fiscal year, which ended October 31, 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. 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 10/31/03
- ------------------------------------------------------------------------
Lipper
Closed-End
Lehman New York
Municipal Municipal
Market Bond Debt Funds
NAV price Index category average*
- ------------------------------------------------------------------------
6 months 2.70% 0.26% 1.47% 2.18%
- ------------------------------------------------------------------------
1 year 6.63 1.37 5.12 6.12
- ------------------------------------------------------------------------
5 years 26.02 7.49 31.08 30.04
Annual average 4.73 1.46 5.56 5.37
- ------------------------------------------------------------------------
10 years 64.85 43.66 78.34 73.97
Annual average 5.13 3.69 5.96 5.67
- ------------------------------------------------------------------------
Annual average
Life of fund
(since 11/27/92) 5.96 4.01 6.55 6.31
- ------------------------------------------------------------------------
Performance does not reflect taxes on reinvested distributions.
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 10/31/03, there
were 22, 22, 10, and 10 funds, respectively, in this Lipper category.
- ------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/03 (MOST RECENT CALENDAR QUARTER)
- ------------------------------------------------------------------------
NAV Market price
- ------------------------------------------------------------------------
6 months 4.08% 1.01%
- ------------------------------------------------------------------------
1 year 3.36 -1.67
- ------------------------------------------------------------------------
5 years 25.83 8.83
Annual average 4.70 1.71
- ------------------------------------------------------------------------
10 years 66.06 44.28
Annual average 5.20 3.73
- ------------------------------------------------------------------------
Annual average
Life of fund (since
11/27/92) 6.02 4.04
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 10/31/03
- ------------------------------------------------------------------------
Putnam New York Investment Grade Municipal Trust
- ------------------------------------------------------------------------
Distributions from common shares
- ------------------------------------------------------------------------
Number 6
- ------------------------------------------------------------------------
Income 1 $0.357
- ------------------------------------------------------------------------
Capital gains 1 --
- ------------------------------------------------------------------------
Total $0.357
- ------------------------------------------------------------------------
Series A
Distributions from preferred shares (200 shares)
- ------------------------------------------------------------------------
Income 1 $235.60
- ------------------------------------------------------------------------
Capital gains 1 --
- ------------------------------------------------------------------------
Total $235.60
- ------------------------------------------------------------------------
Share value (common shares) NAV Market price
- ------------------------------------------------------------------------
4/30/03 $13.37 $11.99
- ------------------------------------------------------------------------
10/31/03 13.33 11.67
- ------------------------------------------------------------------------
Current return (common shares,
end of period)
- ------------------------------------------------------------------------
Current dividend rate 2 5.36% 6.12%
- ------------------------------------------------------------------------
Taxable equivalent 3 9.21 10.52
- ------------------------------------------------------------------------
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 41.82% 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
JP Morgan Global High Yield Index is an unmanaged index that is designed
to mirror the investable universe of the U.S. dollar global corporate
debt market, including domestic and international issues.
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 Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
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.
S&P 500 Index is an unmanaged index of common stock performance.
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 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.
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
October 31, 2003 (Unaudited)
Key to Abbreviations
- -------------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corporation
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 (95.9%)
- -------------------------------------------------------------------------------
$250,000 Albany, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds (Charitable Leadership),
Ser. A , 6s, 7/1/19 Baa3 $265,938
1,000,000 Dutchess Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Bard
College), 5 3/4s, 8/1/30 A3 1,070,000
250,000 Essex Cnty., Indl. Dev. Agcy.
Rev. Bonds (Intl. Paper Co.),
Ser. A, 5 1/2s, 10/1/26 Baa2 240,000
1,150,000 Geneva, Indl. Dev. Agcy. Rev. Bonds
(Hobart & William Smith Project),
Ser. A, 5 3/8s, 2/1/33 A 1,180,188
750,000 Long Island, Pwr. Auth. NY Elec.
Syst. Rev. Bonds, Ser. A, 5 1/4s,
12/1/26 A- 760,313
1,000,000 Madison Cnty., Indl. Dev. Agcy.
Rev. Bonds (Colgate U.), Ser. A, 5s,
7/1/23 Aa3 1,016,250
Metropolitan Trans. Auth. Svc.
Contract Rev. Bonds
500,000 (Trans. Fac.), Ser. O, U.S. Govt.
Coll., 5 3/4s, 7/1/13 AAA 576,875
1,000,000 Ser. A , MBIA, 5 1/2s, 1/1/20 Aaa 1,086,250
1,000,000 Metropolitan Trans. Auth.
Rev. Bonds, Ser. A, FSA, 5s,
11/15/30 Aaa 1,007,500
650,000 Niagara Cnty., Indl. Dev. Agcy.
Rev. Bonds, Ser. C, 5 5/8s, 11/15/24 Baa1 679,250
NY City, G.O. Bonds
185,000 Ser. I, U.S. Govt. Coll., 6 1/4s,
4/15/17 Aaa 213,675
45,000 Ser. D, 6s, 2/15/25 (Prerefunded) Aaa 48,206
20,000 Ser. D, 6s, 2/15/25 A2 21,425
1,000,000 Ser. B, 5 3/4s, 8/1/16 A2 1,090,000
1,000,000 Ser. B, 5 1/2s, 12/1/31 A2 1,033,750
1,650,000 NY City, IFB, AMBAC, 10.87s,
9/1/11(SEG) Aaa 1,709,268
300,000 NY City, Hlth. & Hosp. Corp.
Rev. Bonds (Hlth. Syst.), Ser. A ,
5 3/8s, 2/15/26 A3 302,625
750,000 NY City, Indl. Dev. Agcy. Rev. Bonds
(Brooklyn Navy Yard Cogen.
Partners), 5.65s, 10/1/28 BBB- 670,313
NY City, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds
600,000 (Staten Island U. Hosp.), Ser. A,
6 3/8s, 7/1/31 Baa3 623,250
300,000 (Brooklyn Polytech. U. Project J),
6 1/8s, 11/1/30 Ba1 238,875
700,000 NY City, Indl. Dev. Agcy. Special
Arpt. Fac. Rev. Bonds (Airis JFK I
LLC), Ser. A, 5 1/2s, 7/1/28 Baa3 679,000
NY City, Indl. Dev. Agcy. Special
Fac. Rev. Bonds
1,000,000 (Terminal One Group Assn.), 6s,
1/1/15 A3 1,024,670
400,000 (American Airlines, Inc.), 5.4s,
7/1/20 Caa2 265,500
500,000 (British Airways), 5 1/4s, 12/1/32 BB+ 353,125
500,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. Rev. Bonds, Ser. G, FSA, 5s,
6/15/34 Aaa 502,500
2,350,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. VRDN, Ser. G, FGIC, 1.15s,
6/15/24 VMIG1 2,350,000
1,000,000 NY Cntys., Trust II
Rev. Bonds (Tobacco Settlement),
5 3/4s, 6/1/43 Baa2 906,250
NY State Dorm. Auth. Rev. Bonds
1,000,000 (State U. Edl. Fac.), Ser. A,
7 1/2s, 5/15/13 AA- 1,277,500
250,000 (Mount Sinai Hlth.), Ser. A, 6 1/2s,
7/1/25 Ba1 250,625
1,930,000 (Mental Hlth. Svcs.), Ser. A,
5 3/4s, 2/15/27 (Prerefunded) AAA 2,202,609
70,000 (Mental Hlth. Svcs.), Ser. A,
5 3/4s, 2/15/27 AA- 74,725
700,000 (Winthrop-U. Hosp. Assn.), Ser. A,
5 1/2s, 7/1/32 Baa1 713,125
1,500,000 (Dept. of Hlth.), 5 1/2s, 7/1/25 AA- 1,545,000
600,000 (North Shore Long Island Jewish
Group), 5 3/8s, 5/1/23 A3 606,750
1,190,000 (City U. Syst. Construction), Ser.
1, 5 1/4s, 7/1/17 AA- 1,261,400
1,000,000 (School Dist. Fin. Project), Ser. A,
MBIA, 5 1/4s, 4/1/11 Aaa 1,118,750
1,500,000 (NY U.), Ser. 2, AMBAC, 5s, 7/1/41 Aaa 1,503,750
500,000 NY State Energy Res. & Dev. Auth.
Fac. Rev. Bonds, 4.7s, 6/1/36 A1 502,500
1,000,000 NY State Energy Research & Dev.
Auth. Poll. Control Rev. Bonds
(Niagara Mohawk Pwr. Corp.), Ser. A,
FGIC, 7.2s, 7/1/29 Aaa 1,055,450
250,000 NY State Env. Fac. Corp. Rev. Bonds,
5s, 6/15/32 Aaa 252,500
155,000 NY State Env. Fac. Corp. Poll.
Control Rev. Bonds (State Wtr.
Revolving Fund), Ser. A,
7 1/2s, 6/15/12 Aaa 155,915
1,315,000 NY State Med. Care Fac. Fin. Agcy.
Rev. Bonds (Hosp. & Nursing Home
Insd. Mtge.), Ser. C, FHA Insd.,
6 3/8s, 8/15/29 AAA 1,369,809
750,000 NY State Pwr. Auth. Rev. Bonds, 5s,
11/15/20 Aa2 780,000
NY State Thruway Auth. Rev. Bonds,
Ser. A, MBIA
1,000,000 5 1/4s, 4/1/13 Aaa 1,117,500
1,000,000 5 1/4s, 4/1/12 Aaa 1,116,250
1,000,000 NY State Urban Dev. Corp. Rev. Bonds
(Personal Income Tax), Ser. C-1,
5s, 3/15/33 AA 1,000,000
500,000 Onondaga Cnty., Indl. Dev. Agcy.
Rev. Bonds (Bristol-Meyers Squibb
Co.), 5 3/4s, 3/1/24 AA- 540,000
200,000 Otsego Cnty., Indl. Dev. Agcy.
Rev. Bonds (Hartwick College), 5.9s,
7/1/22 Baa3 198,500
1,000,000 Port Auth. NY & NJ Cons. Rev. Bonds,
Ser. 124, 5s, 8/1/31 AA- 983,750
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 1,326,250
500,000 Suffolk Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Huntington
Hosp.), Ser. B, 5 7/8s, 11/1/32 Baa1 508,750
1,000,000 Tobacco Settlement Fin. Auth.
Rev. Bonds, Ser. A-1, 5 1/2s, 6/1/18 AA- 1,055,000
Triborough Bridge & Tunnel Auth.
Rev. Bonds
1,000,000 Ser. A, 5s, 1/1/32 Aa3 1,002,500
1,000,000 AMBAC, 5s, 11/15/12 Aaa 1,108,750
250,000 Yonkers, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds (St. John's Riverside
Hosp.), Ser. A, 7 1/8s, 7/1/31 BB 257,500
--------------
44,800,154
Puerto Rico (4.1%)
- -------------------------------------------------------------------------------
750,000 Children's Trust Fund Tobacco
Settlement Rev. Bonds, 5 1/2s,
5/15/39 Baa2 655,313
1,000,000 PR Elec. Pwr. Auth. Rev. Bonds,
Ser. II, 5 1/4s, 7/1/31 A- 1,013,750
250,000 PR Indl. Tourist Edl. Med. & Env.
Control Fac. Rev. Bonds (Cogen.
Fac.-AES PR Project), 6 5/8s, 6/1/26 Baa2 261,563
--------------
1,930,626
- -------------------------------------------------------------------------------
Total Investments (cost $45,384,713) $46,730,780
- -------------------------------------------------------------------------------
(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 October 31, 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 October 31, 2003. Securities rated by Putnam are
indicated by "/P" and are not publicly rated.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at October 31, 2003 was
$1,326,250 or 2.8% of portfolio market value.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at October
31, 2003.
The rates shown on VRDN and Floating Rate Bonds (FRB) are the current
interest rates shown at October 31, 2003.
The rates shown on IFB, which are securities paying interest rates that
vary inversely to changes in the market interest rates, are the current
interest rates at October 31, 2003.
The fund had the following industry group concentrations greater than
10% at October 31, 2003 (as a percentage of portfolio market value):
Transportation 21.4%
Utilities 17.8
Health care 16.5
Education 11.1
The fund had the following insurance concentration greater than 10% at
October 31, 2003 (as a percentage of portfolio market value):
MBIA 12.3%
Futures contracts outstanding at October 31, 2003 (Unaudited)
Market Aggregate Expiration Unrealized
value face value date appreciation
- ----------------------------------------------------------------------------
U.S. Treasury Note
10 yr (Long) $3,368,906 $3,354,033 Dec-03 $14,873
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
October 31, 2003 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$45,384,713) (Note 1) $46,730,780
- -------------------------------------------------------------------------------
Cash 383,979
- -------------------------------------------------------------------------------
Interest and other receivables 767,081
- -------------------------------------------------------------------------------
Receivable for securities sold 396,750
- -------------------------------------------------------------------------------
Receivable for variation margin (Note 1) 10,313
- -------------------------------------------------------------------------------
Total assets 48,288,903
Liabilities
- -------------------------------------------------------------------------------
Distributions payable to common shareholders 169,373
- -------------------------------------------------------------------------------
Accrued preferred shares distribution payable (Note 1) 3,493
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 79,252
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 6,343
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 20,699
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 335
- -------------------------------------------------------------------------------
Other accrued expenses 53,037
- -------------------------------------------------------------------------------
Total liabilities 332,532
- -------------------------------------------------------------------------------
Series A remarketed preferred shares: (200 shares
authorized) and outstanding at $50,000 per share (Note 4) 10,000,000
- -------------------------------------------------------------------------------
Net assets $37,956,371
Represented by
- -------------------------------------------------------------------------------
Paid-in capital -- common shares (unlimited shares
authorized) (Note 1) $39,492,317
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 229,431
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (3,126,317)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,360,940
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to common shares
outstanding $37,956,371
Computation of net asset value
- -------------------------------------------------------------------------------
Net asset value per common share ($37,956,371 divided by
2,847,092 shares) $13.33
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of operations
Six months ended October 31, 2003 (Unaudited)
Interest income: $1,274,799
- -------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 159,412
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 22,132
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 4,752
- -------------------------------------------------------------------------------
Administrative services (Note 2) 2,013
- -------------------------------------------------------------------------------
Preferred share remarketing agent fees 12,415
- -------------------------------------------------------------------------------
Other 54,065
- -------------------------------------------------------------------------------
Total expenses 254,789
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (3,415)
- -------------------------------------------------------------------------------
Net expenses 251,374
- -------------------------------------------------------------------------------
Net investment income 1,023,425
- -------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (858,012)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures
contracts during the period 791,234
- -------------------------------------------------------------------------------
Net loss on investments (66,778)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $956,647
- -------------------------------------------------------------------------------
Distributions to Series A remarketed preferred shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax exempt income (47,120)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations
applicable to common shareholders $909,527
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Six months ended Year ended
October 31 April 30
Increase (decrease) in net assets 2003* 2003
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $1,023,425 $2,349,267
- -------------------------------------------------------------------------------
Net realized loss on investments (858,012) (391,292)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 791,234 363,397
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 956,647 2,321,372
- -------------------------------------------------------------------------------
Distributions to Series A remarketed preferred shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax exempt income (47,120) (120,956)
- -------------------------------------------------------------------------------
From ordinary income -- (1,150)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations applicable to common shareholders 909,527 2,199,266
- -------------------------------------------------------------------------------
Distributions to common shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax exempt income (1,016,237) (2,032,488)
- -------------------------------------------------------------------------------
From ordinary income -- (20,496)
- -------------------------------------------------------------------------------
Total increase (decrease) in net assets (106,710) 146,282
Net assets
- -------------------------------------------------------------------------------
Beginning of period 38,063,081 37,916,799
- -------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $229,431 and $269,363,
respectively) $37,956,371 $38,063,081
- -------------------------------------------------------------------------------
Number of fund shares
- -------------------------------------------------------------------------------
Common shares outstanding at beginning and
end of period 2,847,092 2,847,092
- -------------------------------------------------------------------------------
Remarketed preferred shares outstanding at
beginning and end of period 200 200
- -------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
Six months
ended
October 31
Per-share (Unaudited) Year ended April 30
operating performance 2003 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period
(common shares) $13.37 $13.32 $13.45 $12.81 $14.03 $13.96
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .36 .83 .88 .83 .90 .91
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.02) (.02) (.23) .72 (1.19) .08
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations: .34 .81 .65 1.55 (.29) .99
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to preferred shareholders:
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.02) (.04) (.07) (.13) (.12) (.11)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations: applicable to
common shareholders .32 .77 .58 1.42 (.41) .88
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.36) (.72) (.71) (.78) (.81) (.81)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.36) (.72) (.71) (.78) (.81) (.81)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $13.33 $13.37 $13.32 $13.45 $12.81 $14.03
- ---------------------------------------------------------------------------------------------------------------------------------
Market price, end of period
(common shares) $11.67 $11.99 $12.12 $12.46 $12.00 $13.88
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at market price
(common shares) (%)(b) 0.26* 4.88 2.96 10.28 (7.75) 7.82
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(common shares)
(in thousands) $37,956 $38,063 $37,917 $38,288 $36,479 $39,952
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .67* 1.36 1.35 1.41 1.44 1.32
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) 2.56* 5.84 5.96 5.25 5.96 5.66
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 6.39* 35.93 25.16 15.65 3.32 24.04
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized
(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
October 31, 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 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) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The fund and the broker
agree to exchange an amount of cash equal to the daily fluctuation in
the value of the futures contract. Such receipts or payments are known
as "variation margin." Exchange traded options are valued at the last
sale price, or if no sales are reported, the last bid price for
purchased options and the last ask price for written options. Options
traded over-the-counter are valued using prices supplied by dealers.
Futures and written option contracts outstanding at period end are listed
after The fund's portfolio.
D) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At April 30, 2003, the fund had a capital loss carryover of $1,856,611
available to the extent allowed by tax law to offset future net capital
gain, if any. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
- --------------------------------------
$619,079 April 30, 2004
491,807 April 30, 2005
433,833 April 30, 2008
311,892 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.
The aggregate identified cost on a tax basis is $45,457,703, resulting
in gross unrealized appreciation and depreciation of $1,883,253 and
$610,176, respectively, or net unrealized appreciation of $1,273,077.
E) 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 October 31, 2003 was 0.85%. The amount
and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
F) 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. Such fee is based on 0.65% of the fund's weekly average net
assets.
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 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 six months ended October 31,
2003, the fund's expenses were reduced by $3,415 under these
arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $466 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.
Note 3
Purchases and sales of securities
During the six months ended October 31, 2003, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $2,969,987 and $5,797,325, 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 October 31, 2003, no such
restrictions have been placed on the fund.
Note 5
Regulatory matters and litigation
On November 13, 2003, Putnam Management agreed to entry of an order
by the Securities and Exchange Commission (SEC) in partial
resolution of administrative and cease-and-desist proceedings
initiated by the SEC on October 28, 2003 in connection with alleged
excessive short-term trading by at least six Putnam Management
investment professionals. The SEC's findings reflect that four of
those employees engaged in such trading in funds over which they had
investment decision-making responsibility and had access to
non-public information regarding, among other things, current
portfolio holdings, and valuations. The six individuals no longer
have investment responsibilities with Putnam Management. Under the
order, Putnam Management will make restitution for losses
attributable to excessive short-term trading by Putnam employees,
institute new employee trading restrictions and enhanced employee
trading compliance, retain an independent compliance consultant, and
take other remedial actions. Putnam Management neither admitted nor
denied the order's findings, which included findings that Putnam
Management willfully violated provisions of the federal securities
laws. A civil monetary penalty and other monetary relief, if any,
will be determined at a later date. If a hearing is necessary to
determine the amounts of such penalty or other relief, Putnam
Management will be precluded from arguing that it did not violate
the federal securities laws in the manner described in the SEC
order, the findings set forth in the SEC order will be accepted as
true by the hearing officer and additional evidence may be
presented. Putnam Management, and not the investors in any Putnam
fund, will bear all costs, including restitution, civil penalties
and associated legal fees. Administrative proceedings instituted by
the Commonwealth of Massachusetts on October 28, 2003 against Putnam
Management in connection with alleged market timing activities by
Putnam employees and by participants in some Putnam-administered
401(k) plans are pending. Putnam Management has committed to make
complete restitution for any losses suffered by Putnam shareholders
as a result of any improper market-timing activities by Putnam
employees or within Putnam-administered 401(k) plans.
The SEC's and Commonwealth'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.
Review of these matters by counsel for Putnam Management and by
separate independent counsel for the Putnam funds and their
independent Trustees is continuing. In addition, Marsh & McLennan
Companies, Inc., Putnam Management's parent company, has engaged
counsel to conduct a separate review of Putnam Management's policies
and controls related to short-term trading.
Results of October 7, 2003 shareholder meeting
(Unaudited)
An annual meeting of shareholders of the fund was held on October 7,
2003 At the meeting, each of the nominees for Trustees was elected, as
follows:
Common shares
Votes
Votes for withheld
- ----------------------------------------------------------------
Jameson Adkins Baxter 2,580,008 37,726
Charles B. Curtis 2,580,698 37,036
Ronald J. Jackson 2,580,698 37,036
Paul L. Joskow 2,580,698 37,036
Elizabeth T. Kennan 2,580,008 37,726
Lawrence J. Lasser* 2,579,698 38,036
John H. Mullin III 2,580,698 37,036
George Putnam, III 2,576,987 40,747
A.J.C. Smith 2,579,698 38,036
W. Thomas Stephens 2,580,298 37,436
W. Nicholas Thorndike 2,580,698 37,036
Preferred Shares
Votes
Votes for withheld
- ----------------------------------------------------------------
Jameson Adkins Baxter 199 --
Charles B. Curtis 199 --
John A. Hill 199 --
Ronald J. Jackson 199 --
Paul L. Joskow 199 --
Elizabeth T. Kennan 199 --
Lawrence J. Lasser* 199 --
John H. Mullin III 199 --
Robert E. Patterson 199 --
George Putnam, III 199 --
A.J.C. Smith 199 --
W. Thomas Stephens 199 --
W. Nicholas Thorndike 199 --
All tabulations are rounded to nearest whole number.
* Mr. Lasser resigned from the Board of Trustees of the Putnam funds
on November 3, 2003.
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 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 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
Beth S. Mazor
Vice President
Gordon H. Silver
Vice President
Mark C. Trenchard
Vice President and
BSA Compliance Officer
William H. Woolverton
Vice President and
Chief Legal Officer
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.
203413 185 12/03
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:
- --------------------------------
(a) 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.
(b) Changes in internal control over financial reporting:
Not applicable
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: December 23, 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: December 23, 2003
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Financial Officer
Date: December 23, 2003
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: December 23, 2003