Putnam
New York
Tax Exempt
Income Fund
Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
5-31-04
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
Over the past several months, Putnam has introduced a number of
voluntary reforms. We would like to call your attention to two of them
that are now being included in these reports to provide shareholders
with more useful information about their investments. Following the
performance tables in the Performance Summary, you will find new expense
and risk comparison information for your fund. The expense comparison
information enables you to estimate the amount you have actually paid
for ongoing expenses such as management fees and distribution (or 12b-1)
fees and to compare these expenses with the average expenses of funds in
your fund's Lipper peer group. The risk comparison shows your fund's
risk relative to similar funds as tracked by Morningstar, an independent
fund-rating company. We believe the expense and risk information can
function as a valuable tool for you and your financial advisor to use
when making decisions about your financial program. These enhancements
to our reports are part of the additional disclosure we are committed to
providing to shareholders.
Despite strong performance from investments in airline-related
industrial development bonds and other lower-rated, economically
sensitive municipal bonds, Putnam New York Tax Exempt Income Fund
delivered slightly negative returns for the six months ended May 31,
2004. The fund's results at net asset value fell shy of results for the
Lehman Municipal Bond Index but were slightly ahead of the average for
its Lipper category. You will find the details on the facing page.
As always, we appreciate your support of Putnam Investments.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
July 21, 2004
Report from Fund Management
Fund highlights
* Putnam New York Tax Exempt Income Fund's class A shares posted a total
return of -0.67% at net asset value (NAV) and -5.43% at public offering
price (POP) for the six months ended May 31, 2004.
* Due to differences in portfolio quality and composition, the fund's
NAV performance fell somewhat short of the Lehman Municipal Bond Index,
a nationally diversified benchmark, which returned -0.22% for the
six-month period.
* The fund's results at NAV were slightly ahead of the -0.75% average
return for its Lipper category, New York Municipal Debt Funds, for the
same period.
* See the Performance Summary beginning on page 7 for complete fund
performance, comparative performance, and Lipper data.
Performance commentary
Although municipal bond prices experienced little overall change during
the six months ended May 31, 2004, the intervening months proved to be
quite eventful for bond investors. During the early months of the
reporting period, interest rates remained low while investors waited for
evidence that the U.S. economy was recovering. By spring, however,
interest rates climbed in response to robust reports of economic growth,
and municipal bond prices fell sharply. These two contrasting
three-month periods, in effect, netted each other out, producing
basically flat performance at NAV for the reporting period. This helps
explain why the fund's results at NAV lagged its nationally diversified
benchmark but edged slightly ahead of the average for its Lipper peer
group. The fund's investments in lower-rated, airline-related industrial
development bonds (IDBs), which responded favorably to the stronger
economic growth, and the various higher-yielding bonds in its portfolio
performed well.
FUND PROFILE
Putnam New York Tax Exempt Income Fund seeks to provide as high a level
of current income free from federal, New York state, and New York City
personal income taxes as we believe to be consistent with the
preservation of capital. It may be suitable for New York investors
seeking tax-free income through a diversified portfolio of municipal
bonds primarily issued in New York.
Market overview
Municipal bond yields -- which move in the opposite direction of their
prices -- were volatile between December 1, 2003, and May 31, 2004.
Yields trended downward for much of the period but corrected sharply in
late March and April in response to stronger economic data. At the end
of the period, yields on 10-year AAA-rated municipal bonds were slightly
higher than they had been at the beginning of the period.
The ratio of municipal bond yields to Treasury yields fell to about 80%
in December, which means the difference between the yields of 10-year
municipal bonds and 10-year Treasuries increased. The ratio edged up to
about 85% by the end of the fiscal period. Overall, the yield curve,
which shows the differences in yields over a range of bond maturities,
flattened somewhat, and credit spreads, which show the difference in
yields between higher- and lower-rated bonds, generally narrowed.
The economy improved on nearly all fronts, including job growth. The
Federal Reserve Board held the federal funds rate steady at 1%, but
hinted at a potential rate hike in the near future. Municipal bond
issuance was very strong as states and municipalities sought to address
budget shortfalls that resulted from decreased tax revenues. In May,
California issued the first portion of its recently approved $15 billion
bond issue to help alleviate the state's budget crisis. Although ongoing
tobacco litigation continued to make headlines, the municipal bond
market largely discounted the news. Airline-related IDBs turned in mixed
results as a period of strength was followed by weakening toward
period-end. In our opinion, the combination of higher fuel costs and
competition from low-cost carriers makes the prospects for major
airlines less certain.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 5/31/04
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Bonds
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Lehman Municipal Bond Index (tax-exempt bonds) -0.22%
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Lehman Aggregate Bond Index (broad bond market) 0.60%
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Lehman Intermediate Government Bond Index
(intermediate-maturity U.S. government bonds) 0.38%
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JP Morgan Global High Yield Index (global high-yield
corporate bonds) 3.29%
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Equities
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S&P 500 Index (broad stock market) 6.79%
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Russell 2000 Index (stocks of small and midsize companies) 4.53%
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MSCI EAFE Index (international stocks) 10.32%
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These indexes provide an overview of performance in different market
sectors for the six months ended 5/31/04.
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Strategy overview
In an increasingly strong economy, it appears likely that interest rates
will rise further. Consequently, we shortened the fund's duration (a
measure of a fund's sensitivity to changes in interest rates) relative
to its peer group during the period.
We took the opportunity afforded by strong demand for higher-yielding
municipal bonds to sell into strength where appropriate. We also
continued to diversify the portfolio by adding selectively to the fund's
lower-quality holdings. These below-investment-grade, higher-yielding
bonds are not a component of the fund's benchmark, but we believe that
careful selection among them can continue to provide the fund with
attractive opportunities for income.
In our view, the backdrop for the tobacco industry remains fundamentally
positive; however, your fund is underweighted in tobacco settlement
bonds sold by New York issuers because they are trading at high levels
in comparison with those of national issuers. Although we like the
sector, we do not see value in these bonds at the present time. As
certain airline-related IDBs continued to rebound during the period, we
took the opportunity to sell the fund's holdings into this strength. As
noted previously, our outlook for the major airlines is not favorable at
this time.
[GRAPHIC OMITTED: horizontal bar chart TOP SECTOR WEIGHTINGS COMPARED]
TOP SECTOR WEIGHTINGS COMPARED
as of 11/30/03 as of 5/31/04
Education 12.8% 13.7%
Utilities and power 13.2% 13.4%
Transportation 11.3% 9.2%
Water and sewer 9.4% 8.6%
Health care 8.6% 7.6%
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 net assets.
Holdings will vary over time.
How fund holdings affected performance
Airline-related industrial development bonds had a significant positive
impact on performance for the semiannual period, although these issues
gave up some of their strong gains in the final months of the period.
IDBs are municipal bonds that are backed only by the credit of the
company benefiting from the financing, not by the issuing municipality.
During the summer of 2003, the airline industry continued to feel the
effects of declining air traffic, high fixed costs, and high-profile
bankruptcies. However, as geopolitical tensions eased and the global
economy began to show signs of increased growth, investors became more
optimistic about prospects for airline-industry fundamentals. This led
to a sharp rise in the price of airline-backed IDBs as many of these
bonds recovered from distressed price levels.
The fund held IDBs backed by American Airlines and British Airways. We
took advantage of price appreciation in this sector to selectively trim
the fund's exposure to American Airlines. Since these bonds had been in
the portfolio for some time, the sale did not result in a profit based
on the acquisition cost, but the fund was able to sell on strength
rather than in distress.
Credit spreads -- the difference in yield between higher- and
lower-rated bonds -- narrowed during the six months ended May 31,
reflecting investors' rising confidence in the economy and fiscal health
of lower-rated issuers. We have been diversifying holdings in this
sector, adding to the fund's credit diversity and sector exposures. The
fund's investments in the Huntington New York Housing Authority bonds
for Gurwin Jewish Senior Residences and New York City Industrial
Development Agency bonds issued for Visy Paper contributed positively to
performance.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa/AAA (49.0%)
Aa/AA (21.0%)
A (12.0%)
Baa/BBB (7.6%)
Ba/BB (4.1%)
B (2.0%)
Caa (0.2%)
VMIG1 (4.1%)
Footnote reads:
As a percentage of market value as of 5/31/04. A bond rated Baa/BBB or
higher is considered investment grade. The chart reflects Moody's and
Standard & Poor's ratings; percentages may include unrated bonds
considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
A bond issued by the New York City Industrial Development Agency to
provide funds for Brooklyn Polytechnic University was a detractor from
performance, due to declining enrollment at the university and an
ensuing credit downgrade to Ba2 by Moody's in January 2004. We reduced
the fund's exposure to this issue, as we do not expect a recovery in the
near term. Another portfolio holding within the education sector issued
by Otsego County Industrial Development Agency for Hartwick College
detracted from results as declining applications and matriculation
triggered operating losses. We eliminated the fund's position in this
issue during the period.
The fund's investment in bonds issued by Westchester County Health Care
Corp. also dampened results for the reporting period. We sold the bonds
while they were still rated investment grade but not before the market's
perception of their increasing risk took some toll on their price. Since
the sale, these bonds have fallen to non-investment-grade status due to
sharply deteriorating financial performance of the hospital and
Westchester County's unwillingness to extend credit support to the
hospital.
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), 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.
Early in 2004, lingering unemployment had been an anomaly in an
otherwise robust economic recovery. However, in early April, employment
data at last showed marked improvement in job creation. We believe the
underlying strength in the economy will foster higher interest rates in
the future. In keeping with our views, the fund's duration is now
relatively short in order to keep the portfolio defensively positioned.
We expect that the credit quality of general obligation municipal bonds
will improve gradually as the economy improves and tax revenues
increase. Although yield spreads between high- and low-quality municipal
bonds have narrowed somewhat, we believe they remain attractive and
could narrow further. As a result, we believe credit risk is worth
taking in moderate amounts, while we continue to seek diversification by
sector and issuer. We will closely monitor market conditions as we
pursue a high level of tax-free income and seek to 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 investments in one state and involves more risk than a
fund that invests more broadly. Capital gains, if any, are taxable for
federal and, in most cases, state purposes. For some investors,
investment income may be subject to the federal alternative minimum tax.
Income from federally exempt funds may be subject to state and local
taxes. Tax-free funds may not be suitable for IRAs and other non-taxable
accounts.
Performance summary
This section shows your fund's performance during the first half of its
fiscal year, which ended May 31, 2004. 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. Data represents past performance. Past
performance does not guarantee future results. More recent returns may
be less or more than those shown. Investment return and principal value
will fluctuate and you may have a gain or a loss when you sell your
shares. For the most recent month-end performance, please visit
www.putnaminvestments.com.
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TOTAL RETURN FOR PERIODS ENDED 5/31/04
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Class A Class B Class C Class M
(inception dates) (9/2/83) (1/4/93) (7/26/99) (4/10/95)
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NAV POP NAV CDSC NAV CDSC NAV POP
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6 months -0.67% -5.43% -1.01% -5.87% -1.18% -2.15% -0.93% -4.15%
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1 year -0.26 -5.05 -0.92 -5.68 -1.18 -2.13 -0.66 -3.93
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5 years 26.73 20.67 22.67 20.69 21.16 21.16 24.83 20.82
Annual average 4.85 3.83 4.17 3.83 3.91 3.91 4.54 3.86
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10 years 68.40 60.36 57.78 57.78 54.70 54.70 63.01 57.63
Annual average 5.35 4.84 4.67 4.67 4.46 4.46 5.01 4.66
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Annual average (life
of fund) 7.83 7.57 7.00 7.00 6.94 6.94 7.39 7.22
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Performance assumes reinvestment of distributions and does not account
for taxes. Returns at public offering price (POP) for class A and M
shares reflect a sales charge of 4.75% and 3.25%, respectively (which
for class A shares does not reflect a reduction in sales charges that
went into effect on January 28, 2004; if this reduction had been in
place for all periods indicated, returns would have been higher). Class
B share returns reflect the applicable contingent deferred sales charge
(CDSC), which is 5% in the first year, declining to 1% in the sixth
year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the
first year that is eliminated thereafter. Performance for class B, C,
and M shares before their inception is derived from the historical
performance of class A shares, adjusted for the applicable sales charge
(or CDSC) and higher operating expenses for such shares.
A 2% short-term trading fee will be applied to shares exchanged or sold
within 5 days of purchase.
For a portion of the period, the fund had limited expenses, without
which returns would have been lower.
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 5/31/04
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Lipper New York
Lehman Municipal Municipal Debt Funds
Bond Index category average*
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6 months -0.22% -0.75%
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1 year -0.03 -0.59
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5 years 30.64 24.14
Annual average 5.49 4.41
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10 years 84.79 70.44
Annual average 6.33 5.47
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Annual average
(life of fund) 8.30 7.60
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Index and Lipper results should be compared to fund performance at net
asset value.
* Over the 6-month and 1-, 5-, and 10-year periods ended 5/31/04, there
were 108, 106, 84, and 46 funds, respectively, in this Lipper category.
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PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 5/31/04
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Class A Class B Class C Class M
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Distributions (number) 6 6 6 6
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Income 1 $0.182751 $0.153336 $0.146799 $0.169391
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Capital gains 1 -- -- -- --
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Total $0.182751 $0.153336 $0.146799 $0.169391
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Share value: NAV POP NAV NAV NAV POP
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11/30/03 $8.93 $9.38 $8.91 $8.93 $8.94 $9.24
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5/31/04 8.69 9.10* 8.67 8.68 8.69 8.98
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Current return (end of period)
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Current dividend rate 2 4.22% 4.03% 3.58% 3.43% 3.92% 3.80%
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Taxable equivalent 3(a) 7.03 6.72 5.97 5.72 6.53 6.33
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Taxable equivalent 3(b) 7.39 7.06 6.27 6.01 6.87 6.65
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Current 30-day SEC yield
(with expense limitation) 4 3.25 3.11 2.61 2.46 2.96 2.86
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Taxable equivalent 3(a), 4 5.42 5.18 4.35 4.10 4.93 4.77
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Taxable equivalent 3(b), 4 5.69 5.45 4.57 4.31 5.18 5.01
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Current 30-day SEC yield
(without expense limitation) 3.24 3.09 2.59 2.45 2.94 2.84
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* Reflects a reduction in sales charge which took effect on January 28,
2004.
1 Capital gains, if any, are taxable for federal and, in most cases,
state purposes. For some investors, investment income may be subject to
the federal alternative minimum tax. Income from federally exempt funds
may be subject to state and local taxes.
2 Most recent distribution, excluding capital gains, annualized and
divided by NAV or POP at end of period.
3 Assumes (a) maximum 40.01% combined federal income tax and New York
state 2004 personal income tax rates or (b) maximum 42.90% combined
federal, New York state, and New York City 2004 tax rates. Results for
investors subject to lower tax rates would not be as advantageous.
4 For a portion of the period, this fund had limited expenses, without
which returns would have been lower. Based only on investment income,
calculated using SEC guidelines.
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TOTAL RETURN FOR PERIODS ENDED 6/30/04 (MOST RECENT CALENDAR QUARTER)
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Class A Class B Class C Class M
(inception dates) (9/2/83) (1/4/93) (7/26/99) (4/10/95)
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NAV POP NAV CDSC NAV CDSC NAV POP
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6 months -1.13% -5.85% -1.35% -6.20% -1.52% -2.49% -1.28% -4.46%
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1 year 0.40 -4.37 -0.26 -5.05 -0.42 -1.38 0.11 -3.21
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5 years 29.44 23.25 25.44 23.44 23.97 23.97 27.66 23.46
Annual average 5.30 4.27 4.64 4.30 4.39 4.39 5.01 4.31
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10 years 69.92 61.90 59.38 59.38 56.29 56.29 64.57 59.28
Annual average 5.44 4.94 4.77 4.77 4.57 4.57 5.11 4.76
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Annual average (life
of fund) 7.81 7.56 6.99 6.99 6.93 6.93 7.38 7.21
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Understanding your
fund's expenses
As a mutual fund investor, you pay ongoing expenses, such as management
fees, distribution fees (12b-1 fees), and other expenses. In the most
recent six-month period, your fund limited these expenses; had it not
done so, expenses may have been higher. Using the information below, you
can estimate how these expenses affect your investment and compare them
with the expenses of other funds. You may also pay one-time transaction
expenses, including sales charges (loads) and redemption fees, which are
not shown in this section and would have resulted in higher total
expenses. For more information, see your fund's prospectus or talk to
your financial advisor.
Review your fund's expenses
The table below shows the expenses you would have paid on a $1,000
investment in Putnam New York Tax Exempt Income Fund from December 1,
2003, to May 31, 2004. It also shows how much a $1,000 investment would
be worth at the close of the period, assuming actual returns and
expenses.
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 5/31/04
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Class A Class B Class C Class M
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Expenses paid per $1,000* $4 $7 $8 $6
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Ending value (after expenses) $993 $990 $988 $991
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* Expenses for each share class are calculated using the fund's
annualized expense ratio for each class, which represents the ongoing
expenses as a percentage of net assets for the six months ended 5/31/04.
The expense ratio may differ for each share class (see the table at the
bottom of the next page). Expenses are calculated by multiplying the
expense ratio by the average account value for the period; then
multiplying the result by the number of days in the period;and then
dividing that result by the number of days in the year.
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended May
31, 2004, use the calculation method below. To find the value of your
investment on December 1, 2003, go to www.putnaminvestments.com and log
on to your account. Click on the "Transaction History" tab in your Daily
Statement and enter 12/01/2003 in both the "from" and "to" fields.
Alternatively, call Putnam at 1-800-225-1581.
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HOW TO CALCULATE THE EXPENSES YOU PAID
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Total
Value of your Expenses paid expenses
investment on 12/1/03 [DIV] $1,000 X per $1,000 = paid
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Example Based on a $10,000 investment in class A shares of your fund.
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$10,000 [DIV] $1,000 X $4 (see table above) = $40
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Comparing your fund's expenses with those of other funds
Using the SEC's method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines
to help investors assess fund expenses. Per these guidelines, the table
below shows your fund's expenses based on a $1,000 investment, assuming
a hypothetical 5% annualized return. You can use this information to
compare the ongoing expenses (but not transaction expenses or total
costs) of investing in the fund with those of other funds. All mutual
fund shareholder reports will provide this information to help you make
this comparison. Please note that you cannot use this information to
estimate your actual ending account balance and expenses paid during the
period.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended 5/31/04
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Class A Class B Class C Class M
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Expenses paid per $1,000* $4 $7 $8 $6
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Ending value (after
expenses) $1,021 $1,018 $1,017 $1,019
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* Expenses for each share class are calculated using the fund's
annualized expense ratio for each class, which represents the ongoing
expenses as a percentage of net assets for the six months ended 5/31/04.
The expense ratio may differ for each share class (see the table at the
bottom of this page). Expenses are calculated by multiplying the expense
ratio by the average account value for the period; then multiplying the
result by the number of days in the period;and then dividing that result
by the number of days in the year.
Using industry averages to compare expenses
You can also compare your fund's expenses with industry averages, as
determined by Lipper, an independent fund-rating agency that ranks funds
relative to others that Lipper considers to have similar investment
styles or objectives. The expense ratio for each share class shown below
indicates how much of your fund's net assets have been used to pay
ongoing expenses during the period.
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EXPENSE RATIO COMPARISONS USING ANNUALIZED DATA
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Class A Class B Class C Class M
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Your fund's annualized
expense ratio 0.82% 1.47% 1.62% 1.12%
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Average annualized expense
ratio for Lipper peer
group+ 0.82% 1.47% 1.62% 1.12%
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+ For class A shares, expenses shown represent the average of the
expenses of front-end load funds viewed by Lipper as having the same
investment classification or objective as the fund, calculated in
accordance with Lipper's standard reporting methodology for comparing
expenses within a given universe. All Lipper data is for the most recent
fiscal periods available as of 3/31/04. For class B, C and M shares,
Putnam has adjusted the Lipper total expense average to reflect higher
12b-1 fees incurred by these classes of shares. The peer group may
include funds that are significantly larger or smaller than the fund,
which may limit the comparability of the fund's expenses to the Lipper
average.
Risk comparison
As part of new initiatives to enhance disclosure, we are including a
risk comparison to help you understand how your fund compares with other
funds. The comparison utilizes a risk measure developed by Morningstar,
an independent fund-rating agency. This risk measure is referred to as
the fund's Overall Morningstar Risk.
[GRAPHIC OMITTED: chart MORNINGSTAR [REGISTRATION MARK] RISK]
MORNINGSTAR [REGISTRATION MARK] RISK
Fund's Overall
Morningstar Risk 0.25
Municipal bond
fund average 0.22
0% Increasing Risk 100%
Your fund's Overall Morningstar Risk is shown alongside that of the
average fund in its broad asset class, as determined by Morningstar. The
risk bar broadens the comparison by translating the fund's Overall
Morningstar Risk into a percentile, which is based on the fund's ranking
among all funds rated by Morningstar as of 6/30/04. A higher Overall
Morningstar Risk generally indicates that a fund's monthly returns have
varied more widely.
Morningstar determines a fund's Overall Morningstar Risk by assessing
variations in the fund's monthly returns -- with an emphasis on downside
variations -- over 3-, 5-, and 10-year periods, if available. Those
measures are weighted and averaged to produce the fund's Overall
Morningstar Risk. The information shown is provided for the fund's class
A shares only; information for other classes may vary. Overall
Morningstar Risk is based on historical data and does not indicate
future results. Morningstar does not purport to measure the risk
associated with a current investment in a fund, either on an absolute
basis or on a relative basis. Low Overall Morningstar Risk does not mean
that you cannot lose money on an investment in a fund. Copyright 2004
Morningstar, Inc. All Rights Reserved. The information contained herein
(1) is proprietary to Morningstar and/or its content providers; (2) may
not be copied or distributed; and (3) is not warranted to be accurate,
complete, or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this
information.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. The
NAV is calculated by dividing the net value of all the fund's assets by
the number of outstanding shares.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 4.75% maximum sales charge for class A
shares (since reduced to 4.50%) and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B shares and assumes redemption at the end of
the period. Your fund's class B CDSC declines from a 5% maximum during
the first year to 1% during the sixth year. After the sixth year, the
CDSC no longer applies.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
Comparative indexes
JP Morgan Global High Yield Index is an unmanaged index used to mirror
the investable universe of the U.S. dollar global high-yield corporate
debt market of both developed and emerging markets.
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Intermediate Government Bond Index is an unmanaged index of
government bonds with maturities between 1 and 10 years.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of international stocks from Europe, Australasia, and the Far
East.
Russell 2000 Index is an unmanaged index of common stocks that generally
measure performance of small to midsize companies within the Russell
3000 Index.
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 is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. Our proxy voting guidelines and policies are
available on the Putnam Individual Investor Web site,
www.putnaminvestments.com, by calling Putnam's Shareholder Services at
1-800-225-1581, or on the SEC's Web site, www.sec.gov.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or loss
the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment
income ratios, and portfolio turnover in one summary table, reflecting
the five most recent reporting periods. In a semiannual report, the
highlight table also includes the current reporting period. For open-end
funds, a separate table is provided for each share class.
The fund's portfolio
May 31, 2004 (Unaudited)
Key to Abbreviations
- -------------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FHA Insd. Federal Housing Administration Insured
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 (96.1%) (a)
Principal amount Rating (RAT) Value
New York (86.8%)
- -------------------------------------------------------------------------------
Albany, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds
$1,460,000 (Albany Med. Ctr.), 6s, 5/1/29 BBB-/P $1,355,975
2,750,000 (Charitable Leadership), Ser. A ,
6s, 7/1/19 Baa3 2,884,063
3,400,000 Battery Park, City Auth. Rev. Bonds,
Ser. A, AMBAC, 5 1/2s, 11/1/16 Aaa 3,731,500
2,000,000 Chautauqua Cnty., Indl. Dev. Agcy.
Rev. Bonds (Women's Christian
Assn.), Ser. A, 6.4s, 11/15/29 B+/P 1,850,000
800,000 Chemung Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Arnot Ogden
Med. Ctr.), 5s, 11/1/34 A3 751,000
13,500,000 Dutchess Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Bard
College), 5 3/4s, 8/1/30 A3 14,107,500
16,000,000 Dutchess Cnty., Indl. Dev. Agcy.
Rev. Bonds (Vassar College), 5.35s,
9/1/40 Aa2 16,200,000
Erie Cnty., G.O. Bonds
2,470,000 Ser. C, AMBAC, 5 1/2s, 7/1/29 Aaa 2,547,188
4,160,000 Ser. B, AMBAC, 5 3/8s, 7/1/20 Aaa 4,414,800
2,250,000 Essex Cnty., Indl. Dev. Agcy.
Rev. Bonds (Intl. Paper Co.),
Ser. A, 6.15s, 4/1/21 Baa2 2,295,000
2,650,000 Geneva, Indl. Dev. Agcy. Rev. Bonds
(Hobart & William Smith Project),
Ser. A, 5 3/8s, 2/1/33 A 2,663,250
2,200,000 Hempstead, Indl. Dev. Agcy. Civic
Fac. Rev. Bonds (Hofstra U.),
5 1/4s, 7/1/16 A 2,279,750
1,250,000 Huntington, Hsg. Auth. Sr. Hsg. Fac.
Rev. Bonds (Gurwin Jewish Sr.
Residence), Ser. A, 6s, 5/1/29 B+/P 1,139,063
1,360,000 Lockport, Hsg. Dev. Corp. Rev. Bonds
(Urban Pk.Towers), Ser. A, 6s,
10/1/18 Baa2 1,383,800
28,350,000 Long Island, Pwr. Auth. VRDN, Ser.
2, 1.07s, 5/1/33 VMIG1 28,350,000
Long Island, Pwr. Auth. NY Elec.
Syst. IFB
16,250,000 9.479s, 12/1/24 (acquired
5/19/98, cost $17,663,750) (RES) BBB+/P 17,489,063
5,000,000 MBIA, 8.87s, 4/1/12 (acquired
11/3/98, cost $5,422,100) (RES) AAA 5,700,000
5,000,000 Long Island, Pwr. Auth. NY Elec.
Syst. Rev. Bonds, Ser. A, 5 1/8s,
9/1/29 A- 4,850,000
2,700,000 Long Island, Pwr. Auth. NY Elec.
Syst. VRDN, Ser. 2, 1.06s, 5/1/33 VMIG1 2,700,000
4,090,000 Madison Cnty., Indl. Dev. Agcy.
Rev. Bonds (Colgate U.), Ser. A, 5s,
7/1/23 Aa3 4,120,675
5,550,000 Metro. Trans. Auth. Commuter Fac.
Rev. Bonds, Ser. A, U.S. Govt.
Coll., 6s, 7/1/24 AAA 6,299,250
7,000,000 Metro. Trans. Auth. Fac. IFB, FGIC,
10.432s, 10/1/17 (acquired 2/11/00,
cost $6,684,500) (RES) AAA/P 8,890,000
Metro. Trans. Auth. Fac. Rev. Bonds
15,400,000 Ser. A, MBIA, 6 1/4s, 4/1/14 Aaa 18,268,250
4,245,000 Ser. A, MBIA, 6 1/4s, 4/1/13 Aaa 5,014,406
2,500,000 (Dedicated Tax Fund), Ser. A, MBIA,
6 1/4s, 4/1/11 Aaa 2,918,750
11,020,000 (Trans. Fac.), Ser. A, 6s, 7/1/24 AAA 12,507,700
14,000,000 (Dedicated Tax Fund), Ser. A, FGIC,
4 3/4s, 4/1/28 Aaa 14,857,500
Metro. Trans. Auth. Rev. Bonds
13,000,000 Ser. A, AMBAC, 5 1/2s, 11/15/19 Aaa 14,088,750
1,500,000 Ser. A, FGIC, 5 1/2s, 11/15/19 Aaa 1,661,250
Metro. Trans. Auth. Svc. Contract
Rev. Bonds
3,230,000 (Trans. Fac.), Ser. 3, U.S. Govt.
Coll., 7 3/8s, 7/1/08 AAA 3,577,225
15,820,000 (Trans. Fac.), Ser. O, U.S. Govt.
Coll., 5 3/4s, 7/1/13 AAA 17,718,400
12,500,000 (Commuter Fac.), Ser. O, U.S. Govt.
Coll., 5 1/2s, 7/1/17 AAA 13,921,875
24,345,000 (Trans. Fac.), Ser. O, U.S. Govt.
Coll., 5 1/2s, 7/1/17 AAA 27,114,244
1,000,000 Mount Vernon, Indl. Dev. Agcy. Fac.
Rev. Bonds (Wartburg Senior Hsg.,
Inc.-Meadowview), 6.2s, 6/1/29 B+/P 922,500
Nassau Cnty., G.O. Bonds
1,125,000 Ser. E, FSA, 6s, 3/1/20 Aaa 1,282,500
2,790,000 Ser. E, FSA, 6s, 3/1/19 Aaa 3,180,600
2,735,000 Ser. E, FSA, 6s, 3/1/18 Aaa 3,117,900
3,465,000 Ser. E, FSA, 6s, 3/1/16 Aaa 3,950,100
1,000,000 Ser. A, FGIC, 6s, 7/1/13 Aaa 1,148,750
2,300,000 Ser. A, FGIC, 6s, 7/1/11 Aaa 2,627,750
2,580,000 Ser. E, FSA, 5.9s, 3/1/15 Aaa 2,928,300
Nassau Cnty., Indl. Dev. Agcy.
Rev. Bonds (North Shore Hlth.
Syst.)
410,000 Ser. A, 6 1/4s, 11/1/21 A3 432,038
1,270,000 Ser. B, 5 7/8s, 11/1/11 A3 1,376,363
825,000 Ser. D, 5 5/8s, 11/1/09 A3 884,813
1,615,000 Ser. D, 4 7/8s, 11/1/05 A3 1,673,544
3,000,000 Niagara Cnty., Indl. Dev. Agcy.
Rev. Bonds, Ser. D, 5.55s, 11/15/24 Baa1 3,063,750
6,000,000 Niagara Falls, City School Dist.
COP, 5 7/8s, 6/15/19 Baa3 6,127,500
NY City, G.O. Bonds
7,265,000 Ser. B, 8 1/4s, 6/1/05 A2 7,735,263
5,360,000 Ser. B, U.S. Govt. Coll., 8 1/4s,
6/1/05 (Prerefunded) AAA/P 5,711,938
45,000 Ser. F, 7.6s, 2/1/05 A2 45,185
18,675,000 Ser. B, MBIA, 6 1/2s, 8/15/11 Aaa 21,919,781
21,495,000 Ser. D, MBIA, 6 1/2s, 11/1/10 Aaa 25,068,544
945,000 Ser. I, U.S. Govt. Coll., 6 1/4s,
4/15/27 Aaa 1,053,675
1,845,000 Ser. I, U.S. Govt. Coll., 6 1/4s,
4/15/17 Aaa 2,057,175
2,000,000 Ser. I, 5 7/8s, 3/15/14 A2 2,162,500
23,525,000 Ser. B, 5 1/2s, 12/1/11 A2 25,701,063
3,000,000 Ser. C, 5 1/4s, 8/1/11 A2 3,221,250
50,000 NY City, IFB, AMBAC, 10.67s, 9/1/11 Aaa 50,647
7,000,000 NY City, City Transitional Fin.
Auth. IFB, 10.672s, 11/15/29
(acquired 2/4/00, cost $6,788,320)
(RES) AA/P 9,135,000
NY City, City Transitional Fin.
Auth. Rev. Bonds
6,500,000 Ser. A, 5 3/4s, 8/15/24 AA+ 7,369,375
2,000,000 AMBAC, 5 1/4s, 8/1/15 Aaa 2,142,500
2,500,000 Ser. C, FSA, 5 1/4s, 8/1/12 Aaa 2,753,125
3,600,000 Ser. B, 5 1/4s, 11/15/05 AA+ 3,771,000
80,000 Ser. C, U.S. Govt. Coll., 5s, 5/1/26 AA+ 86,900
NY City, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds
7,330,000 (Parking Corp.), 8 1/2s, 12/30/22 B-/P 6,120,550
3,295,000 (Staten Island U. Hosp.), Ser. A,
6 3/8s, 7/1/31 Baa3 3,023,163
13,825,000 (Brooklyn Polytech. U. Project J),
6 1/8s, 11/1/30 BB+ 11,733,969
7,000,000 (Horace Mann School), MBIA, 5s,
7/1/28 Aaa 6,938,750
NY City, Indl. Dev. Agcy. Rev. Bonds
7,300,000 (Visy Paper, Inc.), 7.95s, 1/1/28 B+/P 7,628,500
2,100,000 (British Airways), 7 5/8s, 12/1/32 BB+ 2,047,500
5,000,000 (Brooklyn Navy Yard Cogen.
Partners), 6.2s, 10/1/22 BBB- 4,887,500
1,440,000 (Brooklyn Navy Yard Cogen.
Partners), 5.65s, 10/1/28 BBB- 1,296,000
2,000,000 (Empowerment Zone-Harlem Mall),
5 1/8s, 12/30/23 Baa1 1,877,500
NY City, Indl. Dev. Agcy. Special
Arpt. Fac. Rev. Bonds (Airis JFK I,
LLC)
9,500,000 Ser. A, 6s, 7/1/27 Baa3 9,250,625
9,000,000 Ser. A, 5 1/2s, 7/1/28 Baa3 8,505,000
NY City, Indl. Dev. Agcy. Special
Fac. Rev. Bonds
3,000,000 (American Airlines, Inc.), 6.9s,
8/1/24 Caa2 2,058,750
14,465,000 (Terminal One Group Assn.), 6 1/8s,
1/1/24 A3 14,771,803
5,150,000 (British Airways), 5 1/4s, 12/1/32 BB+ 3,720,875
5,000,000 NY City, Metro. Trans. Auth.
Rev. Bonds, Ser. A, AMBAC, 5 1/4s,
1/1/29 Aaa 5,062,500
NY City, Muni. Assistance Corp.
Rev. Bonds
5,150,000 Ser. E, 6s, 7/1/04 Aa1 5,169,364
10,000,000 Ser. P, 5s, 7/1/08 Aa1 10,775,000
4,550,000 Ser. O, 5s, 7/1/05 Aa1 4,717,076
NY City, Muni. Wtr. & Swr. Fin.
Auth. IFB
200,000 13.661s, 6/15/11 (acquired
8/9/91, cost $207,493) (RES) Aaa 286,750
5,000,000 MBIA, 9.37s, 6/15/13 Aaa 5,113,050
NY City, Muni. Wtr. & Swr. Fin.
Auth. Rev. Bonds
25,600,000 AMBAC, 7 1/2s, 6/15/11 Aaa 31,424,000
17,500,000 MBIA, 5.2s, 6/15/08 Aaa 17,696,875
16,700,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. VRDN, Ser. A, FGIC, 1.08s,
6/15/25 VMIG1 16,700,000
NY City, State Dorm. Auth. Lease
Rev. Bonds
5,600,000 (Court Fac.), 6s, 5/15/39 A 5,943,000
3,000,000 (Westchester Cnty.), 5 1/4s, 8/1/18 Aa1 3,187,500
NY Cntys., Tobacco Trust III
Rev. Bonds
1,000,000 6s, 6/1/43 Baa2 863,750
3,500,000 (Tobacco Settlement), 5 3/4s, 6/1/33 Baa2 3,049,375
6,000,000 NY Cntys., Trust II
Rev. Bonds (Tobacco Settlement),
5 3/4s, 6/1/43 BBB 5,002,500
13,250,000 NY State Dorm. Auth. IFB, MBIA,
8.161s, 1/1/09 (acquired 10/22/97,
cost $15,237,500) (RES) AAA/P 16,893,750
NY State Dorm. Auth. Rev. Bonds
5,000,000 (State U. Edl. Fac.), Ser. A,
7 1/2s, 5/15/13 AA- 6,243,750
18,800,000 (City U. Syst.), Ser. C, 7 1/2s,
7/1/10 A3 21,526,000
2,500,000 (Mount Sinai Hlth.), Ser. A, 6.6s,
7/1/26 Ba1 2,471,875
3,000,000 (Mount Sinai Hlth.), Ser. A, 6 1/2s,
7/1/25 Ba1 3,000,000
1,000,000 (Mount Sinai Hlth.), Ser. C, 6s,
7/1/26 Ba1 976,250
8,950,000 (State U. Edl. Fac.), Ser. A, FSA,
5 7/8s, 5/15/17 Aaa 10,303,688
11,200,000 (State U. Edl. Fac.), Ser. A,
5 7/8s, 5/15/11 AA- 12,614,000
5,250,000 (Winthrop Nassau U.), 5 3/4s, 7/1/28 Baa1 5,348,438
6,000,000 (NY Dept. of Ed.), Ser. A , MBIA,
5 3/4s, 7/1/20 Aaa 6,787,500
1,340,000 (Schools PG - Issue 2), Ser. E,
AMBAC, 5 3/4s, 7/1/19 Aaa 1,474,000
35,385,000 (U. Syst. Construction), Ser. A,
5 3/4s, 7/1/18 AA- 39,144,643
1,905,000 (Lenox Hill Hosp.), 5 3/4s, 7/1/13 A3 2,066,925
10,000,000 (Columbia U.), Ser. A, 5 3/4s,
7/1/10 Aaa 11,287,500
2,650,000 (City U. Syst.), Ser. A, FGIC,
5 3/4s, 7/1/09 Aaa 2,924,938
1,310,000 (Mental Hlth. Svcs. Fac.), Ser. B,
MBIA, 5 3/4s, 7/1/09 Aaa 1,467,200
15,600,000 (U. Syst. Construction), Ser. A,
5 5/8s, 7/1/16 AA- 17,238,000
8,500,000 (NYU), Ser. 1, AMBAC, 5 1/2s, 7/1/40 Aaa 9,222,500
2,000,000 (North Shore Long Island Jewish
Group), 5 1/2s, 5/1/33 A3 2,000,000
3,500,000 (NYU), Ser. 1, AMBAC, 5 1/2s, 7/1/31 Aaa 3,766,875
2,750,000 (Winthrop Nassau U.), 5 1/2s, 7/1/23 Baa1 2,753,438
17,810,000 (Mental Hlth. Svcs.), Ser. D, FSA,
5 1/4s, 8/15/30 (prerefunded) Aaa 19,724,575
2,150,000 (Mental Hlth. Svcs.), Ser. D, FSA,
5 1/4s, 8/15/30 Aaa 2,158,063
750,000 (NY Methodist Hosp.), 5 1/4s, 7/1/18 A3 768,750
NY State Dorm. Auth. Rev. Bonds
1,865,000 (NY Methodist Hosp.), 5 1/4s, 7/1/17 A3 1,923,281
3,465,000 (School Dist. Fin. Project), Ser. A,
MBIA, 5 1/4s, 10/1/11 Aaa 3,815,831
10,000,000 (Memorial Sloan-Kettering Ctr.),
Ser. 1, 5s, 7/1/34 Aa2 9,787,500
3,000,000 (Yeshiva U.), AMBAC, 5s, 7/1/30 Aaa 2,970,000
3,000,000 (U. of Rochester), Ser. A, MBIA, 5s,
7/1/27 Aaa 2,958,750
2,700,000 (Yeshiva U.), AMBAC, 5s, 7/1/26 Aaa 2,689,875
2,000,000 (Columbia U.), Ser. B, 5s, 7/1/24 Aaa 2,025,000
2,000,000 (Columbia U.), Ser. B, 5s, 7/1/23 Aaa 2,032,500
7,500,000 (Columbia U.), 5s, 7/1/22 Aaa 7,621,875
3,000,000 (Columbia U.), Ser. B, 5s, 7/1/22 Aaa 3,063,750
2,000,000 (Columbia U.), Ser. B, 5s, 7/1/21 Aaa 2,052,500
1,700,000 Ser. A, MBIA, 5s, 3/15/19 AAA 1,740,375
2,505,000 (Lutheran Med.), MBIA, 5s, 8/1/12 Aaa 2,696,006
1,130,000 (Lenox Hill Hosp. Oblig. Group), 5s,
7/1/07 A3 1,196,388
10,000,000 (Colgate U.), MBIA, 4 3/4s, 7/1/28 Aaa 9,500,000
725,000 (State U. Edl. Fac.), Ser. B,
zero %, 5/15/09 AA- 604,469
NY State Energy Research & Dev.
Auth. Gas Fac. IFB (Brooklyn Union
Gas Co.)
2,000,000 Ser. B, 12.231s, 7/1/26 A+ 2,357,500
3,500,000 11.346s, 4/1/20 A+ 4,178,125
20,000,000 NY State Energy Research & Dev.
Auth. Gas Fac. Rev. Bonds (Brooklyn
Union Gas), 6.952s, 7/1/26 A+ 21,775,000
NY State Energy Research & Dev.
Auth. Poll. Control Rev. Bonds
11,750,000 (Niagara Mohawk Pwr. Corp.), Ser. A,
FGIC, 7.2s, 7/1/29 Aaa 12,037,288
7,000,000 (Lilco), Ser. B, 5.15s, 3/1/16 A1 7,087,500
9,640,000 NY State Env. Fac. Corp. Rev. Bonds
(NY City Wtr.), Ser. K, 5 1/2s,
6/15/14 Aaa 10,820,900
NY State Env. Fac. Corp. Poll.
Control Rev. Bonds
3,425,000 (State Wtr. Revolving Fund), Ser. B,
6.65s, 9/15/13 Aaa 3,472,745
1,735,000 (State Wtr. Revolving Fund), Ser. A,
6.55s, 9/15/10 Aaa 1,746,833
270,000 5 7/8s, 6/15/14 Aaa 276,413
1,740,000 5 7/8s, 6/15/14 (Prerefunded) Aaa 1,777,567
710,000 Ser. A, 5 7/8s, 6/15/14 Aaa 725,329
5,620,000 NY State Hsg. Fin. Agcy. Rev. Bonds
(Multi-Fam. Hsg. Insd. Mtge.
Program), Ser. A, FHA Insd.,
7s, 8/15/22 Aaa 5,629,104
NY State Hwy. & Bridge Auth.
Rev. Bonds
1,000,000 Ser. A, FSA, 6s, 4/1/16 Aaa 1,150,000
2,000,000 Ser. A, FSA, 5.8s, 4/1/18 Aaa 2,207,500
2,000,000 Ser. A, FSA, 5 3/4s, 4/1/17 Aaa 2,200,000
11,740,000 Ser. B, MBIA, 5s, 4/1/05 Aaa 12,084,452
12,325,000 NY State Med. Care Fac. Fin. Agcy.
Rev. Bonds (NY Hosp.), Ser. A,
AMBAC, 6 1/2s, 8/15/29 Aaa 13,012,365
NY State Pwr. Auth. Rev. Bonds
4,250,000 5s, 11/15/20 Aa2 4,361,563
31,135,000 5s, 11/15/06 Aa2 33,197,694
NY State Thruway Auth. Rev. Bonds,
Ser. A, MBIA
4,300,000 5 1/4s, 4/1/22 Aaa 4,455,875
3,000,000 5 1/4s, 4/1/12 Aaa 3,303,750
2,000,000 (Gen. Hwy. & Bridge Trust Fund),
Ser. A, MBIA, 5s, 4/1/21 Aaa 2,047,500
NY State Urban Dev. Corp. Rev. Bonds
5,830,000 (Correctional Fac.), Ser. 7, 5.7s,
1/1/16 AA- 6,413,000
1,685,000 (Clarkson Ctr.), 5 1/2s, 1/1/20 AA- 1,821,906
4,000,000 (Personal Income Tax), Ser. C-1,
FGIC, 5 1/2s, 3/15/19 Aaa 4,325,000
3,345,000 (Clarkson Ctr.), 5 1/2s, 1/1/15 AA- 3,662,775
2,000,000 (Syracuse U. ), 5 1/2s, 1/1/15 AA- 2,190,000
7,710,000 (Correctional Fac.), Ser. A, 5 1/2s,
1/1/09 AA- 8,384,625
355,000 (Correctional Fac.), Ser. A, 5s,
1/1/28 AA- 387,838
1,000,000 Oneida Cnty., Indl. Dev. Agcy.
Rev. Bonds (St. Elizabeth Med.),
Ser. A, 5 7/8s, 12/1/29 BB-/P 860,000
1,000,000 Onondaga Cnty., Indl. Dev. Agcy.
Rev. Bonds (Solvay Paperboard, LLC),
7s, 11/1/30 (acquired 12/9/98, cost
$1,000,000) (RES) BB-/P 1,037,500
Orange Cnty., Indl. Dev. Agcy.
Rev. Bonds (Arden Hill Care Ctr.
Newburgh), Ser. C
3,200,000 7s, 8/1/31 BB-/P 3,124,000
2,300,000 7s, 8/1/21 BB-/P 2,282,750
Port Auth. NY & NJ Rev. Bonds
3,900,000 (Kennedy Intl. Arpt. - 5th
Installment), 6 3/4s, 10/1/19 BB+/P 3,948,750
1,000,000 (Kennedy Intl. Arpt. - 4th
Installment), 6 3/4s, 10/1/11 BB+/P 1,030,000
7,750,000 St. Lawrence Cnty., Indl. Dev.
Rev. Bonds (St. Lawrence U.),
Ser. A, MBIA, 5s, 7/1/28 Aaa 7,633,750
Suffolk Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds
500,000 (Southampton Hosp. Assn.), Ser. B,
7 5/8s, 1/1/30 B-/P 493,750
500,000 (Southampton Hosp. Assn.), Ser. A,
7 1/4s, 1/1/30 B-/P 473,125
2,200,000 (Huntington Hosp.), Ser. B, 5 7/8s,
11/1/32 Baa1 2,224,750
Suffolk Cnty., Indl. Dev. Agcy.
Cont. Care Retirement Rev. Bonds
(Jefferson's Ferry)
4,000,000 Ser. A, 7.2s, 11/1/19 BB-/P 4,170,000
4,000,000 Ser. A, 7 1/4s, 11/1/28 BB-/P 4,135,000
Suffolk Cnty., Indl. Dev. Agcy.
Rev. Bonds
6,200,000 (Peconic Landing), Ser. A, 8s,
10/1/30 B+/P 6,254,250
2,250,000 (Peconic Landing), Ser. B, 7s,
10/1/30 B+/P 2,247,188
2,000,000 (Nissequogue Cogen. Partners Fac.),
5 1/2s, 1/1/23 BB+/P 1,832,500
4,220,000 Suffolk Cnty., Judicial Fac. Agcy.
Rev. Bonds (John P. Cohalan
Complex), AMBAC, 5s, 4/15/16 Aaa 4,404,625
Syracuse, Indl. Dev. Agcy.
Rev. Bonds (1st Mtge. - Jewish
Home), Ser. A
2,800,000 7 3/8s, 3/1/31 BB-/P 2,859,500
800,000 7 3/8s, 3/1/21 BB-/P 821,000
4,250,000 Tobacco Settlement Rev. Bonds (Asset
Backed Bonds), Ser. 1, 5 3/4s,
7/15/32 BBB 3,745,313
34,280,000 Triborough Bridge & Tunnel Auth.
Gen. Purpose Rev. Bonds (Convention
Ctr.), Ser. E, 7 1/4s, 1/1/10 AA- 38,693,550
10,360,000 Triborough Bridge & Tunnel Auth.
IFB, 9.603s, 1/1/12 (acquired
10/24/97, cost $11,292,564) (RES) AA-/P 12,341,350
Triborough Bridge & Tunnel Auth.
Rev. Bonds
14,000,000 (Convention Ctr.), Ser. E, 6s,
1/1/11 AA- 15,820,000
5,000,000 MBIA, 5 1/2s, 11/15/20 Aaa 5,518,750
5,050,000 AMBAC, 5 1/4s, 11/15/16 Aaa 5,510,813
4,000,000 FGIC, 5 1/4s, 1/1/14 Aaa 4,285,000
4,005,000 Yonkers, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds (St. John's Riverside
Hosp.), Ser. A, 7 1/8s, 7/1/31 BB 4,025,025
--------------
1,194,905,925
Puerto Rico (9.3%)
- -------------------------------------------------------------------------------
9,250,000 Children's Trust Fund Tobacco
Settlement Rev. Bonds, 5 1/2s,
5/15/39 BBB 7,492,500
Cmnwlth. of PR, G.O. Bonds
3,915,000 FSA, 6 1/2s, 7/1/13 Aaa 4,673,531
4,750,000 (Pub. Impt.), MBIA, 5 1/4s, 7/1/18 AAA 5,183,438
Cmnwlth. of PR, Hwy. & Trans. Auth.
Rev. Bonds
5,000,000 Ser. B, 6s, 7/1/26 A 5,287,650
2,275,000 Ser. B, MBIA, 5 7/8s, 7/1/35 AAA/P 2,493,969
3,000,000 Ser. AA, MBIA, 5 1/2s, 7/1/19 Aaa 3,345,000
7,035,000 Ser. AA, MBIA, 5 1/2s, 7/1/18 Aaa 7,852,819
7,000,000 Cmnwlth. of PR, Hwy. & Trans. Auth.
VRDN, Ser. A, AMBAC, 1.06s, 7/1/28 VMIG1 7,000,000
PR Elec. Pwr. Auth. Rev. Bonds
20,000,000 (PA 205), 6.98s, 7/1/07 AAA/P 22,575,000
10,000,000 Ser. LL, MBIA, 5 1/2s, 7/1/17 Aaa 11,150,000
10,000,000 Ser. AA, MBIA, 5 3/8s, 7/1/27 Aaa 10,325,000
3,500,000 MBIA, 5s, 7/1/19 Aaa 3,710,000
6,000,000 PR Indl. Tourist Edl. Med. & Env.
Control Fac. Rev. Bonds (Cogen.
Fac.-AES), 6 5/8s, 6/1/26 Baa3 6,202,500
22,000,000 PR Infrastructure Fin. Auth. Special
Rev. Bonds, Ser. A, 5 1/2s, 10/1/40 Aaa 23,155,000
7,000,000 U. of PR Rev. Bonds, Ser. O, MBIA,
5 3/8s, 6/1/30 Aaa 7,244,720
--------------
127,691,127
- -------------------------------------------------------------------------------
Total Investments
(cost $1,242,065,787) $1,322,597,052
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,375,980,708.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at May 31, 2004 for the securities
listed. Ratings are generally ascribed to securities at the time of
issuance. While the agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these
securities at May 31, 2004. Securities rated by Putnam are indicated by
"/P".
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at May 31, 2004 was
$71,773,413 or 5.2% of net assets.
The rates shown on VRDN are the current interest rates at May 31, 2004.
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 May 31, 2004.
The fund had the following industry group concentrations greater than
10% at May 31, 2004 (as a percentage of
net assets):
Education 13.7%
Utilities and power 13.4
The fund had the following insurance concentrations greater than 10% at
May 31, 2004 (as a percentage of net assets):
MBIA 17.5%
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
May 31, 2004 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$1,242,065,787) (Note 1) $1,322,597,052
- -------------------------------------------------------------------------------
Cash 16,376,490
- -------------------------------------------------------------------------------
Interest and other receivables 23,817,345
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 447,212
- -------------------------------------------------------------------------------
Receivable for securities sold 18,791,404
- -------------------------------------------------------------------------------
Total assets 1,382,029,503
Liabilities
- -------------------------------------------------------------------------------
Distributions payable to shareholders 2,189,543
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,139,741
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,695,883
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 244,440
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 152,670
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,183
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 523,532
- -------------------------------------------------------------------------------
Other accrued expenses 100,803
- -------------------------------------------------------------------------------
Total liabilities 6,048,795
- -------------------------------------------------------------------------------
Net assets $1,375,980,708
Represented by
- -------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,313,505,558
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,890,413
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (19,946,528)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 80,531,265
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $1,375,980,708
- -------------------------------------------------------------------------------
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,235,921,017 divided by 142,299,155 shares) $8.69
- -------------------------------------------------------------------------------
Offering price per class A share (100/95.50 of $8.69)* $9.10
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($127,246,249 divided by 14,674,452 shares)** $8.67
- -------------------------------------------------------------------------------
Net asset value and offering price per class C share
($9,528,801 divided by 1,097,380 shares)** $8.68
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($3,284,641 divided by 377,939 shares) $8.69
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.69)*** $8.98
- -------------------------------------------------------------------------------
* On single retail sales of less than $25,000. On sales of $25,000 or
more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
*** On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales, the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
Statement of operations
Six months ended May 31, 2004 (Unaudited)
Interest income: $36,421,143
- -------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 3,651,466
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 829,233
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 22,809
- -------------------------------------------------------------------------------
Administrative services (Note 2) 12,499
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 1,299,830
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 620,099
- -------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 51,817
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 9,070
- -------------------------------------------------------------------------------
Other 189,904
- -------------------------------------------------------------------------------
Non-recurring costs (Note 5) 23,657
- -------------------------------------------------------------------------------
Costs assumed by Manager (Note 5) (23,657)
- -------------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 2) (151,300)
- -------------------------------------------------------------------------------
Total expenses 6,535,427
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (47,501)
- -------------------------------------------------------------------------------
Net expenses 6,487,926
- -------------------------------------------------------------------------------
Net investment income 29,933,217
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 2,688,678
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (42,218,365)
- -------------------------------------------------------------------------------
Net loss on investments (39,529,687)
- -------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(9,596,470)
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Six months ended Year ended
May 31 November 30
Increase (decrease) in net assets 2004* 2003
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $29,933,217 $59,792,371
- -------------------------------------------------------------------------------
Net realized gain on investments 2,688,678 7,015,857
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments (42,218,365) 19,462,367
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (9,596,470) 86,270,595
- -------------------------------------------------------------------------------
Distributions to shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax-exempt income
Class A (26,311,811) (57,217,245)
- -------------------------------------------------------------------------------
Class B (2,487,772) (4,439,474)
- -------------------------------------------------------------------------------
Class C (169,011) (249,666)
- -------------------------------------------------------------------------------
Class M (68,293) (93,421)
- -------------------------------------------------------------------------------
From ordinary income
Class A (245,020) (245,076)
- -------------------------------------------------------------------------------
Class B (21,572) (21,561)
- -------------------------------------------------------------------------------
Class C (1,390) (1,373)
- -------------------------------------------------------------------------------
Class M (457) (462)
- -------------------------------------------------------------------------------
From net realized long-term gain on investments
Class A -- (10,790,681)
- -------------------------------------------------------------------------------
Class B -- (971,353)
- -------------------------------------------------------------------------------
Class C -- (52,685)
- -------------------------------------------------------------------------------
Class M -- (18,043)
- -------------------------------------------------------------------------------
From net realized short-term gain on investments
Class A -- (1,906,145)
- -------------------------------------------------------------------------------
Class B -- (167,699)
- -------------------------------------------------------------------------------
Class C -- (10,676)
- -------------------------------------------------------------------------------
Class M -- (3,591)
- -------------------------------------------------------------------------------
Increase (decrease) from capital share
transactions (Notes 4 and 5) (94,919,276) 49,700,584
- -------------------------------------------------------------------------------
Total increase (decrease) in net assets (133,821,072) 59,782,028
Net assets
- -------------------------------------------------------------------------------
Beginning of period 1,509,801,780 1,450,019,752
- -------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $1,890,413 and
$1,262,522, respectively) $1,375,980,708 $1,509,801,780
- -------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.93 $8.87 $8.79 $8.52 $8.32 $9.05
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .19 (c) .38 .40 .42 .45 .44
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.25) .16 .07 .27 .20 (.65)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.06) .54 .47 .69 .65 (.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.18) (.39) (.39) (.42) (.45) (.44)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- -- (.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.18) (.48) (.39) (.42) (.45) (.52)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.69 $8.93 $8.87 $8.79 $8.52 $8.32
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (.67)* 6.25 5.44 8.24 8.07 (2.42)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,235,921 $1,336,936 $1,322,541 $1,362,488 $1,276,566 $1,374,040
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .41* (c) .82 .82 .81 .82 .83
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.09* (c) 4.23 4.50 4.80 5.40 5.02
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 1.37* 8.08 (d) 17.90 18.63 14.86 13.24
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Reflects an expense limitation in effect during the period. As a
result of such limitation, expenses of the fund for the period ended May
31, 2004 reflect a reduction of 0.01% based on average net assets for
class A shares (Note 2).
(d) Portfolio turnover excludes the impact of assets received from the
acquisition of Putnam New York Tax Exempt Opportunities Fund.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.91 $8.85 $8.77 $8.51 $8.31 $9.04
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .16 (c) .32 .34 .37 .39 .38
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.25) .17 .07 .25 .20 (.65)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.09) .49 .41 .62 .59 (.27)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.15) (.34) (.33) (.36) (.39) (.38)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- -- (.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.15) (.43) (.33) (.36) (.39) (.46)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.67 $8.91 $8.85 $8.77 $8.51 $8.31
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (1.01)* 5.57 4.75 7.41 7.37 (3.06)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $127,246 $158,081 $119,251 $117,722 $163,839 $195,618
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .74* (c) 1.47 1.47 1.46 1.47 1.48
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.76* (c) 3.59 3.84 4.18 4.75 4.37
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 1.37* 8.08 (d) 17.90 18.63 14.86 13.24
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Reflects an expense limitation in effect during the period. As a
result of such limitation, expenses of the fund for the period ended May
31, 2004 reflect a reduction of 0.01% based on average net assets for
class B shares (Note 2).
(d) Portfolio turnover excludes the impact of assets received from the
acquisition of Putnam New York Tax Exempt Opportunities Fund.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------------
For the
Six months period
ended July 26,
May 31 1999+ to
Per-share (Unaudited) Year ended November 30 Nov. 30
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.93 $8.86 $8.79 $8.53 $8.32 $8.61
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .15 (c) .31 .33 .35 .38 .13
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.25) .17 .06 .26 .21 (.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.10) .48 .39 .61 .59 (.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.15) (.32) (.32) (.35) (.38) (.13)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.15) (.41) (.32) (.35) (.38) (.13)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.68 $8.93 $8.86 $8.79 $8.53 $8.32
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (1.18)* 5.54 4.48 7.25 7.33 (1.87)*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $9,529 $10,909 $5,885 $5,145 $574 $356
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .81* (c) 1.62 1.62 1.61 1.62 .58*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.69* (c) 3.43 3.69 3.93 4.57 1.59*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 1.37* 8.08 (d) 17.90 18.63 14.86 13.24
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Reflects an expense limitation in effect during the period. As a
result of such limitation, expenses of the fund for the period ended May
31, 2004 reflect a reduction of 0.01% based on average net assets for
class C shares (Note 2).
(d) Portfolio turnover excludes the impact of assets received from the
acquisition of Putnam New York Tax Exempt Opportunities Fund.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS M
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.94 $8.87 $8.79 $8.53 $8.33 $9.05
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .17 (c) .35 .37 .40 .42 .41
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.25) .18 .07 .26 .20 (.64)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.08) .53 .44 .66 .62 (.23)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.17) (.37) (.36) (.40) (.42) (.41)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- -- (.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.17) (.46) (.36) (.40) (.42) (.49)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.69 $8.94 $8.87 $8.79 $8.53 $8.33
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (.93)* 6.06 5.12 7.78 7.74 (2.60)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,285 $3,876 $2,343 $1,793 $1,531 $1,837
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .56* (c) 1.12 1.12 1.11 1.12 1.13
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.94* (c) 3.94 4.17 4.51 5.11 4.72
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 1.37* 8.08 (d) 17.90 18.63 14.86 13.24
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Reflects an expense limitation in effect during the period. As a
result of such limitation, expenses of the fund for the period ended May
31, 2004 reflect a reduction of 0.01% based on average net assets for
class M shares (Note 2).
(d) Portfolio turnover excludes the impact of assets received from the
acquisition of Putnam New York Tax Exempt Opportunities Fund.
The accompanying notes are an integral part of these financial
statements.
Notes to financial statements
May 31, 2004 (Unaudited)
Note 1
Significant accounting policies
Putnam New York Tax Exempt Income Fund (the "fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The fund seeks as high a level
of current income exempt from federal income tax and New York state and
City personal income tax as Putnam Investment Management, LLC ("Putnam
Management"), the fund's manager, an indirect wholly-owned subsidiary of
Putnam, LLC, believes is consistent with preservation of capital by
investing primarily in a portfolio of longer-term New York tax-exempt
securities. The fund may be affected by economic and political
developments in the state of New York.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 4.50%. Prior to
January 28, 2004, the maximum front-end sales charge for class A shares
was 4.75%. Class B shares, which convert to class A shares after
approximately eight years, do not pay a front-end sales charge but pay a
higher ongoing distribution fee than class A and class M shares but
lower than class C shares, and are subject to a contingent deferred
sales charge, if those shares are redeemed within six years of purchase.
Class C shares have a higher ongoing distribution fee than class A,
class B and class M shares, do not pay a front-end sales charge but have
a one-year 1.00% contingent deferred sales charge and do not convert to
Class A shares. Class M shares are sold with a maximum front-end sales
charge of 3.25% and pay an ongoing distribution fee that is higher than
class A shares but lower than class B and class C shares.
Effective April 19, 2004 (May 3, 2004 for defined contribution plans
administered by Putnam) a 2.00% redemption fee may apply to any shares
that are redeemed (either by selling or exchanging into another fund)
within 5 days of purchase.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are valued at fair
value on the basis of valuations provided by an independent pricing
service, approved by the Trustees. Such services use information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Other investments, including restricted
securities, are valued at fair value following procedures approved by
the Trustees. Such valuations and procedures are reviewed periodically
by the Trustees.
B) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. All premiums/discounts
are amortized/accreted on a yield-to-maturity basis. The premium in
excess of the call price, if any, is amortized to the call date;
thereafter, any remaining premium is amortized to maturity.
C) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986 (the "Code"), as amended.
Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
At November 30, 2003, the fund had a capital loss carryover of
$3,848,009 available to the extent allowed by the Code to offset future
net capital gain, if any. This capital loss carryover was acquired as a
result of the November 21, 2003 acquisition of Putnam New York Tax
Exempt Opportunities Fund and is subject to limitations imposed by the
Code. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
- ----------------------------------
$2,816,598 November 30, 2007
94,422 November 30, 2008
276,677 November 30, 2009
660,312 November 30, 2010
The aggregate identified cost on a tax basis is $1,243,166,470,
resulting in gross unrealized appreciation and depreciation of
$91,185,257 and $11,754,675, respectively, or net unrealized
appreciation of $79,430,582.
D) Distributions to shareholders Income dividends are recorded daily by
the fund and are paid monthly. Distributions from capital gains, if any,
are recorded on the ex-dividend date and paid at least annually. The
amount and character of income and gains to be distributed are
determined in accordance with income tax regulations, which may differ
from generally accepted accounting principles. Reclassifications are
made to the fund's capital accounts to reflect income and gains
available for distribution (or available capital loss carryovers) under
income tax regulations.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the annual rate equal to the lesser of (i) 0.50% of the
average net assets of the fund or (ii) the following annual rates: 0.60%
of the first $500 million of average net assets, 0.50% of the next $500
million, 0.45% of the next $500 million, 0.40% of the next $5 billion,
0.375% of the next $5 billion, 0.355% of the next $5 billion, 0.34% of
the next $5 billion and 0.33% thereafter.
Effective January 28, 2004, Putnam Management has agreed to limit its
compensation (and, to the extent necessary, bear other expenses) through
December 31, 2004, to the extent that the fund's net expenses as a
percentage of average net assets exceed the average expense ratio for
the fund's Lipper peer group of front-end load funds.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company ("PFTC"), a subsidiary of Putnam, LLC. Putnam
Investor Services, a division of PFTC, provides investor servicing agent
functions to the fund. During the six months ended May 31, 2004, the
fund paid PFTC $710,568 for these services.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended May 31, 2004,
the fund's expenses were reduced by $47,501 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $1,947, as a quarterly retainer, has been allocated to the fund,
and an additional fee for each Trustees meeting attended. Trustees
receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan"),
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Trustee compensation and expenses in the
statement of operations. Accrued pension liability is included in
Payable for Trustee compensation and expenses in the statement of assets
and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C and class M shares pursuant to rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, a wholly-owned subsidiary of
Putnam, LLC and Putnam Retail Management GP, Inc., for services provided
and expenses incurred in distributing shares of the fund. The Plans
provide for payments by the fund to Putnam Retail Management at an
annual rate of up to 0.35%, 1.00%, 1.00% and 1.00% of the average net
assets attributable to class A, class B, class C and class M shares,
respectively. The Trustees have approved payment by the fund at the
annual rates of 0.20%, 0.85%, 1.00% and 0.50% of the average net assets
attributable to class A, class B, class C and class M shares,
respectively.
For the six months ended May 31, 2004, Putnam Retail Management, acting
as underwriter, received net commissions of $6,736 and $28 from the sale
of class A and class M shares, respectively, and received $120,099 and
$575 in contingent deferred sales charges from redemptions of class B
and class C shares, respectively. A deferred sales charge of up to 1.00%
is assessed on certain redemptions of class A shares that were purchased
without an initial sales charge as part of an investment of $1 million
or more. For the six months ended May 31, 2004, Putnam Retail
Management, acting as underwriter, received $162 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended May 31, 2004, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $18,171,315 and $133,044,418, respectively. There were no
purchases or sales of U.S. government securities.
Note 4
Capital shares
At May 31, 2004, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended May 31, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 3,163,968 $28,254,513
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 1,911,817 17,027,571
- ----------------------------------------------------------------
5,075,785 45,282,084
Shares repurchased (12,501,760) (111,384,298)
- ----------------------------------------------------------------
Net decrease (7,425,975) $(66,102,214)
- ----------------------------------------------------------------
Year ended November 30, 2003
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 5,241,341 $46,852,406
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 5,117,025 45,737,617
- ----------------------------------------------------------------
Shares issued in
connection with the
merger of Putnam
New York Tax Exempt
Opportunities Fund 14,358,340 128,503,277
- ----------------------------------------------------------------
24,716,706 221,093,300
Shares repurchased (24,177,690) (215,970,529)
- ----------------------------------------------------------------
Net increase 539,016 $5,122,771
- ----------------------------------------------------------------
Six months ended May 31, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 260,012 $2,323,205
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 188,253 1,674,670
- ----------------------------------------------------------------
448,265 3,997,875
Shares repurchased (3,507,807) (31,211,653)
- ----------------------------------------------------------------
Net decrease (3,059,542) $(27,213,778)
- ----------------------------------------------------------------
Year ended November 30, 2003
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 1,423,059 $12,706,895
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 441,596 3,941,100
- ----------------------------------------------------------------
Shares issued in
connection with the
merger of Putnam
New York Tax Exempt
Opportunities Fund 5,979,191 53,429,074
- ----------------------------------------------------------------
7,843,846 70,077,069
Shares repurchased (3,590,457) (32,030,071)
- ----------------------------------------------------------------
Net increase 4,253,389 $38,046,998
- ----------------------------------------------------------------
Six months ended May 31, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 78,750 $707,040
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 14,056 125,198
- ----------------------------------------------------------------
92,806 832,238
Shares repurchased (217,331) (1,938,655)
- ----------------------------------------------------------------
Net decrease (124,525) $(1,106,417)
- ----------------------------------------------------------------
Year ended November 30, 2003
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 415,490 $3,723,182
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 25,080 224,188
- ----------------------------------------------------------------
Shares issued in
connection with the
merger of Putnam
New York Tax Exempt
Opportunities Fund 423,630 3,792,208
- ----------------------------------------------------------------
864,200 7,739,578
Shares repurchased (306,174) (2,730,493)
- ----------------------------------------------------------------
Net increase 558,026 $5,009,085
- ----------------------------------------------------------------
Six months ended May 31, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 1,247 $19,095
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 5,998 45,550
- ----------------------------------------------------------------
7,245 64,645
Shares repurchased (62,918) (561,512)
- ----------------------------------------------------------------
Net decrease (55,673) $(496,867)
- ----------------------------------------------------------------
Year ended November 30, 2003
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 100,659 $897,631
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 10,503 93,967
- ----------------------------------------------------------------
Shares issued in
connection with the
merger of Putnam
New York Tax Exempt
Opportunities Fund 182,073 1,631,404
- ----------------------------------------------------------------
293,235 2,623,002
Shares repurchased (123,841) (1,101,272)
- ----------------------------------------------------------------
Net increase 169,394 $1,521,730
- ----------------------------------------------------------------
Note 5
Acquisition of Putnam New York Tax
Exempt Opportunities Fund
On November 21, 2003, the fund issued 14,358,340, 5,979,191, 423,630 and
182,073 of class A, class B, class C and class M shares, respectively,
in exchange for 14,235,381, 5,921,665, 419,127 and 180,937 of class A,
class B, class C and class M shares of Putnam New York Tax Exempt
Opportunities Fund to acquire that fund's net assets in a tax-free
exchange approved by the shareholders. The net assets of the fund and
Putnam New York Tax Exempt Opportunities Fund on November 21, 2003 were
$1,333,168,581 and $187,355,963, respectively. On November 21, 2003,
Putnam New York Tax Exempt Opportunities Fund had unrealized
appreciation of $8,039,251.
The aggregate net assets of the fund immediately following the
acquisition were $1,520,524,544.
Note 6
Regulatory matters and litigation
On April 8, 2004, Putnam Management entered into agreements with the
Securities and Exchange Commission and the Massachusetts Securities
Division representing a final settlement of all charges brought against
Putnam Management by those agencies on October 28, 2003 in connection
with excessive short-term trading by Putnam employees and, in the case
of the charges brought by the Massachusetts Securities Division, by
participants in some Putnam-administered 401(k) plans. The settlement
with the SEC requires Putnam Management to pay $5 million in
disgorgement plus a civil monetary penalty of $50 million, and the
settlement with the Massachusetts Securities Division requires Putnam
Management to pay $5 million in restitution and an administrative fine
of $50 million. The settlements also leave intact the process
established under an earlier partial settlement with the SEC under which
Putnam Management agreed to pay the amount of restitution determined by
an independent consultant, which may exceed the disgorgement and
restitution amounts specified above, pursuant to a plan to be developed
by the independent consultant.
Putnam Management, and not the investors in any Putnam fund, will bear
all costs, including restitution, civil penalties and associated legal
fees stemming from both of these proceedings. The SEC's and
Massachusetts Securities Division's allegations and related matters also
serve as the general basis for numerous lawsuits, including purported
class action lawsuits filed against Putnam Management and certain
related parties, including certain Putnam funds. Putnam Management has
agreed to bear any costs incurred by Putnam funds in connection with
these lawsuits. Based on currently available information, Putnam
Management believes that the likelihood that the pending private
lawsuits and purported class action lawsuits will have a material
adverse financial impact on the fund is remote, and the pending actions
are not likely to materially affect its ability to provide investment
management services to its clients, including the Putnam funds.
For the period ended May 31, 2004, Putnam Management has assumed $23,657
of legal, shareholder servicing and communication, audit, and Trustee
fees incurred by the fund in connection with these matters.
Review of these matters by counsel for Putnam Management and by separate
independent counsel for the Putnam funds and their independent Trustees
is continuing. The fund may experience increased redemptions as a result
of these matters, which could result in increased transaction costs and
operating expenses.
Putnam puts your interests first
In January, Putnam announced a number of voluntary initiatives designed
to reduce fund expenses, provide investors with more useful information,
and help safeguard the interests of all Putnam investors. For details,
visit www.putnaminvestments.com.
Cost-cutting initiatives
Reduced sales charges
Effective immediately, the maximum sales charge for class A shares has
been reduced to 5.25% for equity funds (formerly 5.75%) and 4.50% for
most income funds (formerly 4.75%).*
Lower class B purchase limit
To help ensure that investors are in the most cost-effective share
class, the maximum amount that can be invested in class B shares has
been reduced to $100,000. (Larger trades or accumulated amounts will be
directed to class A shares.)
Ongoing expenses will be limited
During calendar 2004, total ongoing expenses, including management fees
for all funds, will be maintained at or below the average of each fund's
industry peers in its Lipper load-fund universe. information, please see
the Statement of Additional information.
Additional measures are being taken to reduce expenses for shareholders
in the six global and international funds that had short-term trading
issues.
Improved disclosure
Putnam fund prospectuses and shareholder reports are being revised to
disclose additional information that will help shareholders compare funds
and weigh their costs and risks along with their potential benefits.
Shareholders will find easy-to-understand information about fund expense
ratios, portfolio manager compensation, risk comparisons, brokerage
commissions, and employee and trustee ownership of Putnam funds. Disclosure
of breakpoint discounts is also being enhanced to alert investors to
potential cost savings.
Protecting investors' interests
New short-term trading fee introduced
To discourage short-term trading, which can interfere with a fund's
long-term strategy, a 2% short-term trading fee will be imposed on any
Putnam fund shares redeemed or exchanged within five calendar days of
purchase.
* The maximum sales charge for class A shares of Putnam U.S. Intermediate
Government Income Fund remains 3.25%.
Fund information
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary Trust Company
Legal Counsel
Ropes & Gray LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President,
Associate Treasurer and Principal Executive
Officer
Jonathan S. Horwitz
Senior Vice President and Treasurer
Patricia C. Flaherty
Senior Vice President
Steven D. Krichmar
Vice President and
Principal Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Beth S. Mazor
Vice President
Daniel T. Gallagher
Vice President and
Legal and Compliance Liaison Officer
James P. Pappas
Vice President
Richard S. Robie, III
Vice President
Mark C. Trenchard
Vice President and BSA Compliance Officer
Francis J. McNamara, III
Vice President and Chief Legal Officer
Judith Cohen
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New York
Tax Exempt Income Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, the most recent copy
of Putnam's Quarterly Performance Summary, and Putnam's Quarterly
Ranking Summary. For more recent performance, please visit
www.putnaminvestments.com. Investors should carefully consider the
investment objective, risks, charges, and expenses of a fund, which are
described in its prospectus. For this and other information or to
request a prospectus, call 1-800-225-1581 toll free. Please read the
prospectus carefully before investing. The fund's Statement of
Additional Information contains additional information about the fund's
Trustees and is available without charge upon request by calling
1-800-225-1581.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
Call 1-800-225-1581 or visit our Web site
www.putnaminvestments.com.
SA051-215040 030/345/681 7/04
Not FDIC Insured May Lose Value No Bank Guarantee
Item 2. Code of Ethics:
- -----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Items 5-6. [Reserved]
- ---------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. [Reserved]
- ------------------
Item 9. Submission of Matters to a Vote of Security Holders:
- ------------------------------------------------------------
Not applicable
Item 10. Controls and Procedures:
- ---------------------------------
(a) The registrant's principal executive officer and principal financial
officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report on Form N-CSR, that the design and
operation of such procedures are generally effective to provide
reasonable assurance that information required to be disclosed by
the investment company in the reports that it files or submits under
the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
Commission's rules and forms.
Although such officers reached the conclusion expressed in the
preceding paragraph, they are aware of matters that raise concerns
with respect to controls, each of which arose in connection with the
administration of 401(k) plans by Putnam Fiduciary Trust Company.
The first matter, which occurred in early 2001, involved the willful
circumvention of controls by certain Putnam employees in connection
with the correction of operational errors with respect to a 401(k)
client's investment in certain Putnam Funds, which led to losses in
five Putnam Funds (not including the registrant). Such officers
became aware of this matter in February 2004. The second matter,
which occurred in 2002, involved the willful circumvention by
certain Putnam employees of policies and procedures in connection
with the payment of Putnam corporate expenses. Such officers did
not learn that this matter involved a Putnam Fund until January
2004. Putnam has made restitution to the affected Funds,
implemented a number of personnel changes, including senior
personnel, begun to implement changes in procedures to address these
items and informed the SEC, the Funds' Trustees and independent
auditors. An internal investigation and review of procedures and
controls are currently ongoing.
In reaching the conclusion expressed herein, the registrant's
principal executive officer and principal financial officer
considered a number of factors, including the nature of the matters
described above, when the matters occurred, the individuals
involved, personnel changes that have occurred since these matters
occurred, the results to date of the current ongoing investigation
and the overall quality of controls at Putnam at this time.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: July 27, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: July 27, 2004
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: July 27, 2004