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:
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
11-30-04
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
During the past several months, Putnam has introduced a number of
reforms for the benefit of shareholders, including increasing the amount
of disclosure for our funds. For example, in the spring of 2004 we began
showing expense and risk comparisons in shareholder reports. We are now
including in this report portfolio turnover information for your fund,
which explains how the rate at which a fund buys and sells portfolio
securities might affect its return and its taxable distributions to
shareholders. We are also including additional disclosure about your
fund's management team. Following the Outlook for Your Fund, we list any
changes in your fund's Portfolio Leader and Portfolio Members during the
prior year period, as well as the current Portfolio Leader's and
Portfolio Members' other fund management responsibilities at Putnam. We
also show how much these individuals have invested in the fund (in
dollar ranges). Furthermore, fund ownership (in dollar ranges) is now
being shown for the members of Putnam's Executive Board.
We are also pleased to announce that three new Trustees have joined your
fund's Board of Trustees. Nominated by your fund's independent Trustees,
these individuals have had outstanding careers as leaders in the
investment management industry. Myra R. Drucker is a Vice Chair of the
Board of Trustees of Sarah Lawrence College and serves as Chair of the
New York Stock Exchange (NYSE) Pension Managers Advisory Committee and
as a Trustee of Commonfund, a not-for-profit asset management firm.
Richard B. Worley is Managing Partner of Permit Capital LLC, an
investment management firm. Both Ms. Drucker and Mr. Worley are
independent Trustees (i.e., Trustees who are not "interested persons" of
your fund or its investment advisor). Charles E. Haldeman, Jr., the
third new Trustee, is President and Chief Executive Officer of Putnam
Investments.
During the period covered by the following report, Putnam New York Tax
Exempt Income Fund delivered respectable results. In the following
pages, the fund managers discuss fund performance, strategy, and their
outlook for fiscal 2005.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
January 19, 2005
Report from Fund Management
Fund highlights
* For the 12 months ended November 30, 2004, Putnam New York Tax Exempt
Income Fund's class A shares posted a total return of 3.08% without
sales charge and -1.85% with maximum sales charges reflected.
* The fund's benchmark, the Lehman Municipal Bond Index, returned 4.07%.
* The average return for the fund's Lipper category, New York Municipal
Debt Funds, was 2.97%.
* See the Performance Summary beginning on page 10 for additional fund
performance, comparative performance, and Lipper data.
Performance commentary
With the economic outlook improving during the course of the fiscal
year, lower-rated, high-yield bonds generally outperformed
lower-yielding, higher-quality bonds during the 12 months ended November
30, 2004. The fund benefited from its exposure to this sector of the
municipal bond market, with approximately 45% of its rated holdings
carrying ratings of A or below as of the end of the period. However,
with its single-state focus, the fund underperformed its benchmark, a
nationally diversified index that reflects stronger performance by bond
markets elsewhere in the country. Also, our efforts to keep the fund's
interest-rate sensitivity relatively low held performance back a bit
when rates did not rise as sharply as we had anticipated. The fund's
performance at net asset value (NAV) was in line with the average for
its Lipper peer group. We attribute this, in part, to price recovery of
some of the fund's lower-quality securities.
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TOTAL RETURN FOR
PERIODS ENDED 11/30/04
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Class A
(inception 9/2/83) NAV POP
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1 year 3.08% -1.85%
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5 years 35.06 28.75
Annual average 6.19 5.18
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10 years 85.26 76.50
Annual average 6.36 5.85
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Annual average
(life of fund) 7.83 7.58
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Data is historical. 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. Performance assumes reinvestment of
distributions and does not account for taxes. Returns at NAV do not
reflect a sales charge of 4.75%. For the most recent month-end
performance, visit www.putnaminvestments.com. For a portion of the
period, this fund limited expenses, without which returns would have
been lower. A 2% short-term trading fee may be applied to shares
exchanged or sold within 5 days of purchase.
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
The bond market experienced volatility during the fund's fiscal year as
yields reflected conflicting signals on the direction of the economy.
During the first few months of the fiscal year, yields fell and bond
prices, which move in the opposite direction of yields, rose. This trend
reversed in mid-March, as bond investors began to anticipate a change in
monetary policy. Signs of strengthening economic growth and rising
corporate profitability had increased the likelihood that the Federal
Reserve Board would raise short-term interest rates. Treasury bonds sold
off sharply, pushing yields upward. Interestingly, after the Fed
announced what had been a widely anticipated 25-basis-point (one quarter
of a percentage point) increase at its June 30 meeting, the bond market
reversed course again, and yields trended downward, despite three
subsequent rate increases of 25 basis points each during the fiscal
year. Over the one-year period, long-term bond yields have fallen while
short-term rates have risen. This resulted in a flattening of the yield
curve -- that is, shorter- and longer-term interest rates began to
converge.
Among uninsured bonds and bonds rated A and below, yield spreads
generally tightened, and bond prices rose. These higher-yielding
securities provided attractive income streams that contributed to the
fund's total return during the period. Municipal bonds issued by the
State of California were generally strong performers, as the economy
improved and rating agencies upgraded the state's credit rating. Yields
on tobacco settlement bonds varied with the results of ongoing legal
battles, but declined overall for the year, and their prices rose
accordingly. Airline-related IDBs performed poorly, in general, as the
industry continued to face financial difficulties exacerbated by record
high oil prices.
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MARKET SECTOR PERFORMANCE 12 MONTHS ENDED 11/30/04
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Bonds
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Lehman Municipal Bond Index (tax-exempt bonds) 4.07%
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Lehman Aggregate Bond Index (broad bond market) 4.44%
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Lehman Intermediate Government Bond Index
(intermediate-maturity U.S. government bonds) 2.57%
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JP Morgan Global High Yield Index (global high-yield
corporate bonds) 12.61%
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Equities
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S&P 500 Index (broad stock market) 12.86%
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Russell 2000 Index (stocks of small and midsize companies) 17.26%
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MSCI EAFE Index (international stocks) 24.19%
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These indexes provide an overview of performance in different market
sectors for the 12 months ended 11/30/04.
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Strategy overview
Because we believe that interest rates will rise, we are positioning the
portfolio more defensively. This involves shortening the fund's
duration, which means reducing its sensitivity to changes in interest
rates. Because we believe the yield curve will continue to flatten, we
have concentrated our bond sales in shorter and intermediate maturities,
which we believe will underperform. We also used interest-rate swaps to
manage the fund's duration and yield curve position. Meanwhile, we
continued to trim and diversify the fund's positions in uninsured bonds,
which have performed strongly. We closely monitored developments
involving tobacco settlement bonds and remained modestly underweight in
the sector versus the universe. The fund had less exposure to
airline-related IDBs during the period than did its peers, a positive
amid continued difficulty in this sector. We trimmed the fund's exposure
to this sector during the period, because we believe the airline
industry still faces significant challenges over the near term.
Prior to the beginning of the fund's fiscal year, the fund emphasized
non-callable bonds -- bonds that the issuer is not permitted to redeem
(or call) before the maturity date. These issues performed well as rates
fell through March 2004, but during the spring, we began to moderate
this position, selling non-callable bonds and purchasing longer callable
issues. We believe these callable bonds may perform better than
non-callable bonds if interest rates rise and the yield curve flattens
further.
[GRAPHIC OMITTED: horizontal bar chart THE FUND'S MATURITY AND DURATION
COMPARED]
THE FUND'S MATURITY AND DURATION COMPARED
11/30/03 5/31/04 11/30/04
Average effective
maturity in years 8.1 8.2 7.1
Duration in years 6.0 5.9 5.2
Footnotes read:
This chart compares changes in the fund's duration (a measure of its
sensitivity to interest-rate changes) and its average effective maturity
(a weighted average of the holdings' maturities).
Average effective maturity also takes into account put and call
features, where applicable, and reflects prepayments for mortgage-backed
securities.
How fund holdings affected performance
As noted earlier, the fund's investments in lower-rated bonds helped
performance. The more credit-sensitive pockets of the market performed
very well due to increased demand from investors who were hungry for
yield in a low-interest-rate environment. Several of the fund's holdings
in the health-care sector proved especially rewarding, including Suffolk
County Industrial Development Agency Revenue bonds for Peconic Landing,
a life-care facility in Greenport, New York. Given the rally among the
fund's higher-yielding investments and the strong appreciation that
resulted, we've been trimming positions to lock in gains.
Tobacco settlement bonds also enjoyed strong performance during the
fiscal year. However, we've continued to underweight the sector, because
we don't believe that the tobacco bonds issued in New York are priced
appropriately to reflect their inherent risk. These bonds are secured by
the income stream from tobacco companies' settlement obligations to the
states and generally offer higher yields than bonds of comparable
quality. This income could be jeopardized as a result of
multibillion-dollar judgments against the tobacco companies, and prices
in this sector have shifted as concerns about litigation overshadowed
optimism. Our analyst believes that, despite several highly visible
lawsuits against the tobacco industry, litigation risk is receding from
where it was in 1999.
One sector of the lower-rated municipal bond market in which the fund
invests generally did not perform particularly well. Airline-related
industrial development bonds (IDBs) underperformed during the fiscal
year, due to, among other factors, rising fuel costs. However, the
airline IDBs that the fund owned, which are backed by American Airlines
and British Airways, did perform better than others. Late in the fiscal
year, falling oil prices and Delta Airline's ability to avert bankruptcy
also helped these holdings to recover. We'll continue to underweight the
sector until market conditions and potential rewards improve.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa (41.1%)
Aa (10.5%)
A (25.7%)
Baa (13.2%)
Ba (4.5%)
B (1.8%)
Caa (0.1%)
VMIG1 (3.1%)
Footnote reads:
As a percentage of market value as of 11/30/04. A bond rated Baa or
higher is considered investment grade. The chart reflects Moody's
ratings; percentages may include bonds not rated by Moody's but
considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
With the Federal Reserve Board's tighter monetary policy and the return
of higher interest rates, we've been taking steps to reduce the fund's
exposure to non-callable bonds and increase its investments in callable
bonds. Non-callable bonds performed very well for the fund early in the
year as rates fell to 40-year lows, when demand for these bonds was high
and prices rose. But now that interest rates have begun to reverse
course, the demand is beginning to wane. We think it is a good time to
start paring back the portfolio's investments in non-callable bonds,
while investors still find these bonds attractive. An example of the
type of bond we trimmed is non-callable Triboro Bridge and Tunnel
Authority revenue bonds, and an example of the type of bond we purchased
is Sales Tax Asset Receivable (STAR) Corpora tion Bonds Fiscal 2005
Series, which have a call date in 2014. Issued by the State of New York
and insured by MBIA, the STAR Corp. bonds are backed by a portion of the
state's 4.25% sales tax receipts. If the sales tax revenues fall short
of the bond obligations, the state is required to pay the balance of the
obligation. In addition to being callable, the STAR bonds are attractive
because they help diversify the fund's portfolio. 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 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.
In November 2004, Moody's upgraded the State of New York's credit rating
to A1 and assigned its debt rating a positive outlook. This upgrade
reflected the state's improved economy, as well as its ability to close
out-year budget gaps. Yet we maintain a cautiously stable outlook for
the state, given its imminent budgetary and political challenges. New
York City's key credit fundamentals have stabilized in this changed,
post-September 11, environment. The city's unemployment rate has
declined, the private sector has added jobs, and Wall Street has
increased its profitability. We believe that the city's main credit
drivers will continue to gradually improve over the near-term.
Judging from the flattened yield curve, the bond market appears to have
largely shrugged off the recent Fed rate hikes. However, we believe that
interest rates all along the yield curve are more likely to rise than
fall. The Fed has raised the federal funds rate four times in
25-basis-point increments since June 2004, bringing it to two percent at
the end of the period. We believe the Fed will continue to raise
short-term rates incrementally through mid-2005, which is likely to
cause rising yields among bonds with shorter maturities. This also
suggests further flattening of the yield curve. The fund is positioned
defensively in terms of duration, and we will continue to monitor and
adjust the fund's duration as seems appropriate. We believe inflation
will remain low, despite the threat posed by high oil prices. We also
anticipate that the rate of GDP growth will slow during the next two
quarters, as the effects of the Fed's tightening policy are felt.
In general, these signs indicate that we are headed into a potentially
more challenging environment for bond investing. Our task will be to
continue to search for the most attractive opportunities among
tax-exempt securities, and to balance the pursuit of attractive current
income with prudent risk management.
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. Mutual funds that invest in bonds are subject to certain risks,
including interest-rate risk, credit risk, and inflation risk. As
interest rates rise, the prices of bonds fall. Long-term bonds are more
exposed to interest-rate risk than short-term bonds. Unlike bonds, bond
funds have ongoing fees and expenses. Tax-free funds may not be suitable
for IRAs and other non-taxable accounts.
Your fund's management
Your fund is managed by the members of the Putnam Tax Exempt
Fixed-Income Team. David Hamlin is the Portfolio Leader, and Paul Drury,
Susan McCormack, and James St. John are Portfolio Members of your fund.
The Portfolio Leader and Portfolio Members coordinate the team's
management of the fund.
For a complete listing of the members of the Putnam Tax Exempt
Fixed-Income Team, including those who are not Portfolio Leaders or
Portfolio Members of your fund, visit Putnam's Individual Investor Web
site at www.putnaminvestments.com.
Fund ownership
The table below shows how much the fund's current Portfolio Leader and
Portfolio Members have invested in the fund (in dollar ranges).
Information shown is for the current and prior year ended November 30.
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FUND PORTFOLIO LEADER AND PORTFOLIO MEMBERS
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$1 - $10,001 - $50,001- $100,001 - $500,001 - $1,000,001
Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over
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David Hamlin 2004 *
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Portfolio Leader 2003 *
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Paul Drury 2004 *
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Portfolio Member 2003 *
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Susan McCormack 2004 *
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Portfolio Member 2003 *
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James St. John 2004 *
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Portfolio Member 2003 *
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Other funds managed by the Portfolio Leader and Portfolio Members
David Hamlin is the Portfolio Leader and Paul Drury, Susan McCormack,
and James St. John are Portfolio Members for Putnam's tax-exempt funds
for the following states: Arizona, California, Florida, Massachusetts,
Michigan, Minnesota, New Jersey, Ohio, and Pennsylvania. The same group
also manages Putnam AMT-Free Insured Municipal Fund*, Putnam California
Investment Grade Municipal Trust, Putnam High Yield Municipal Trust,
Putnam Investment Grade Municipal Trust, Putnam Managed Municipal Income
Trust, Putnam Municipal Bond Fund, Putnam Municipal Income Fund, Putnam
Municipal Opportunities Trust, Putnam New York Investment Grade
Municipal Trust, Putnam Tax Exempt Income Fund, Putnam Tax-Free Health
Care Fund, and Putnam Tax-Free High Yield Fund.
David Hamlin, Paul Drury, Susan McCormack, and James St. John may also
manage other accounts advised by Putnam Management or an affiliate.
Changes in your fund's Portfolio Leader and Portfolio Members
During the year ended November 30, 2004, Portfolio Member Richard Wyke
left your fund's management team.
* Formerly Putnam Tax-Free Insured Fund.
Fund ownership
The table below shows how much the members of Putnam's Executive Board
have invested in the fund (in dollar ranges). Information shown is for
the current and prior year ended December 31.
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PUTNAM EXECUTIVE BOARD
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$1 - $10,001 - $50,001- $100,001
Year $0 $10,000 $50,000 $100,000 and over
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Philippe Bibi 2004 *
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Chief Technology Officer 2003 *
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John Boneparth 2004 *
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Head of Global Institutional Mgmt 2003 *
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Kevin Cronin 2004 *
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Deputy Head of Investments N/A
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Charles Haldeman, Jr. 2004 *
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President and CEO 2003 *
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Amrit Kanwal 2004 *
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Chief Financial Officer N/A
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Steven Krichmar 2004 *
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Chief of Operations N/A
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Francis McNamara, III 2004 *
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General Counsel N/A
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Richard Monaghan 2004 *
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Head of Retail Management 2003 *
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Stephen Oristaglio 2004 *
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Head of Investments 2003 *
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Richard Robie, III 2004 *
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Chief Administrative Officer N/A
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N/A indicates the individual was not a member of Putnam's Executive
Board as of 12/31/03.
Performance summary
This section shows your fund's performance during its fiscal year, which
ended November 30, 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 11/30/04
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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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1 year 3.08% -1.85% 2.50% -2.45% 2.27% 1.28% 2.77% -0.58%
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5 years 35.06 28.75 30.74 28.74 29.78 29.78 33.06 28.72
Annual average 6.19 5.18 5.51 5.18 5.35 5.35 5.88 5.18
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10 years 85.26 76.50 73.94 73.94 70.30 70.30 79.63 73.81
Annual average 6.36 5.85 5.69 5.69 5.47 5.47 6.03 5.68
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Annual average
(life of fund) 7.83 7.58 7.01 7.01 6.94 6.94 7.40 7.23
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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.
For a portion of the period, this fund limited expenses, without which
returns would have been lower.
A 2% short-term trading fee may be applied to shares exchanged or sold
within 5 days of purchase.
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 11/30/04
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Lehman Lipper New York
Municipal Municipal Debt Funds
Bond Index category average*
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1 year 4.07% 2.97%
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5 years 38.84 33.98
Annual average 6.78 6.02
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10 years 99.68 86.35
Annual average 7.16 6.41
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Annual average
(life of fund) 8.32 7.61
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Index and Lipper results should be compared to fund performance at net
asset value.
* Over the 1-, 5-, and 10-year periods ended 11/30/04, there were 109,
87, and 56 funds, respectively, in this Lipper category.
[GRAPHIC OMITTED: worm chart CHANGE IN THE VALUE OF A $10,000 INVESTMENT]
CHANGE IN THE VALUE OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment, 11/30/94 to 11/30/04
Fund's class A Lehman Municipal
Date shares at POP Bond Index
11/30/94 9,525 10,000
11/30/95 11,298 11,890
11/30/96 11,683 12,589
11/30/97 12,591 13,491
11/30/98 13,450 14,538
11/30/99 12,894 14,382
11/30/00 14,503 15,559
11/30/01 15,024 16,920
11/30/02 16,334 17,990
11/30/03 17,123 19,188
11/30/04 $17,650 $19,968
Footnote reads:
Past performance does not indicate future results. At the end of the
same time period, a $10,000 investment in the fund's class B and class C
shares would have been valued at $17,394 and $17,030, respectively, and
no contingent deferred sales charges would apply. A $10,000 investment
in the fund's class M shares would have been valued at $17,963 ($17,381
at public offering price). See first page of performance section for
performance calculation method.
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PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 11/30/04
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Class A Class B Class C Class M
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Distributions (number) 12 12 12 12
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Income 1 $0.358584 $0.300136 $0.287247 $0.332079
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Capital gains 1 -- -- -- --
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Total $0.358584 $0.300136 $0.287247 $0.332079
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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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11/30/04 8.84 9.26* 8.83 8.84 8.85 9.15
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Current return (end of period)
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Current dividend rate 2 3.91% 3.73% 3.25% 3.10% 3.61% 3.49%
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Taxable equivalent 3(a) 6.52 6.22 5.42 5.17 6.02 5.82
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Taxable equivalent 3(b) 6.85 6.53 5.69 5.43 6.32 6.11
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Current 30-day SEC yield 4 3.01 2.87 2.36 2.21 2.71 2.62
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Taxable equivalent 3(a) 5.02 4.78 3.93 3.68 4.52 4.37
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Taxable equivalent 3(b) 5.27 5.03 4.13 3.87 4.75 4.59
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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 Based only on investment income, calculated using SEC guidelines.
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TOTAL RETURN FOR PERIODS ENDED 12/31/04 (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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1 year 3.48% -1.43% 2.80% -2.12% 2.57% 1.59% 3.06% -0.26%
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5 years 37.76 31.22 33.21 31.21 32.21 32.21 35.70 31.25
Annual average 6.62 5.58 5.90 5.58 5.74 5.74 6.30 5.59
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10 years 81.60 73.02 70.07 70.07 66.73 66.73 75.81 70.05
Annual average 6.15 5.64 5.45 5.45 5.24 5.24 5.80 5.45
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Annual average
(life of fund) 7.85 7.60 7.03 7.03 6.96 6.96 7.42 7.25
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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 would 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 June 1, 2004,
to November 30, 2004. It also shows how much a $1,000 investment would
be worth at the close of the period, assuming actual returns and
expenses.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 11/30/04
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Class A Class B Class C Class M
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Expenses paid per
$1,000* $4.19 $7.51 $8.27 $5.73
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Ending value (after
expenses) $1,045.00 $1,043.40 $1,042.60 $1,044.80
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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
11/30/04. 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
November 30, 2004, use the calculation method below. To find the value
of your investment on June 1, 2004, go to www.putnaminvestments.com and
log on to your account. Click on the "Transaction History" tab in your
Daily Statement and enter 06/01/2004 in both the "from" and "to" fields.
Alternatively, call Putnam at 1-800-225-1581.
- -----------------------------------------------------------------------------
HOW TO CALCULATE THE EXPENSES YOU PAID
- -----------------------------------------------------------------------------
Total
Value of your Expenses paid expenses
investment on 6/1/04 [DIV] $1,000 X per $1,000 = paid
- -----------------------------------------------------------------------------
Example Based on a $10,000 investment in class A shares of your fund.
- -----------------------------------------------------------------------------
$10,000 [DIV] $1,000 X $4.19 (see table above) = $41.90
- -----------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended
11/30/04
- -------------------------------------------------------------------------
Class A Class B Class C Class M
- -------------------------------------------------------------------------
Expenses paid per
$1,000* $4.14 $7.41 $8.17 $5.65
- -------------------------------------------------------------------------
Ending value (after
expenses) $1,020.90 $1,017.65 $1,016.90 $1,019.40
- -------------------------------------------------------------------------
* 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
11/30/04. 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.
- --------------------------------------------------------------------------
EXPENSE RATIO COMPARISONS USING ANNUALIZED DATA
- --------------------------------------------------------------------------
Class A Class B Class C Class M
- --------------------------------------------------------------------------
Your fund's annualized
expense ratio+ 0.82% 1.47% 1.62% 1.12%
- --------------------------------------------------------------------------
Average annualized expense
ratio for Lipper peer
group++ 0.83% 1.48% 1.63% 1.13%
- --------------------------------------------------------------------------
+ For the fund's most recent fiscal half year; may differ from expense
ratios based on one-year data in the financial highlights.
++ Average of the expenses of front-end load funds viewed by Lipper as having
the same investment classification or objective as the fund, as of 9/30/04,
calculated in accordance with Lipper's standard reporting methodology for
comparing expenses within a given universe (excluding 12b-1 fees and without
giving effect to any expense offset and brokerage service arrangements that
may reduce fund expenses). To facilitate comparison, Putnam has adjusted
this average to reflect the 12b-1 fees carried by each class 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.
Understanding your fund's
portfolio turnover
Putnam funds are actively managed by teams of experts who buy and sell
securities based on intensive analysis of companies, industries,
economies, and markets. Portfolio turnover is a measure of how often a
fund's managers buy and sell securities for your fund. A portfolio
turnover of 100%, for example, means that the managers sold and replaced
securities valued at 100% of a fund's assets within a one-year period.
Funds with high turnover may be more likely to generate capital gains
and dividends that must be distributed to shareholders as taxable
income. High turnover may also cause a fund to pay more brokerage
commissions and other transaction costs, which may detract from
performance.
Funds that invest in bonds may have higher turnover than funds that
invest only in stocks. Short-term bond funds tend to have higher
turnover than longer-term bond funds, because shorter-term bonds will
mature or be sold more frequently than longer-term bonds. You can use
the table below to compare your fund's turnover with the average
turnover for funds in its Lipper category.
- ------------------------------------------------------------------------------
TURNOVER COMPARISONS
percentage of holdings that change every year
- ------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------
Putnam New York
Tax Exempt Income
Fund 23% 8% 18% 19% 15%
- ------------------------------------------------------------------------------
Lipper New York Municipal
Debt Funds category
average 35% 38% 34% 57% 41%
- ------------------------------------------------------------------------------
Turnover data for the fund is calculated based on the fund's fiscal-year
period, which ends on November 30. Turnover data for the fund's Lipper
category is calculated based on the average of the turnover of each fund
in the category for its fiscal year ended during the indicated calendar
year. Fiscal years vary across funds in the Lipper category, which may
limit the comparability of the fund's portfolio turnover rate to the
Lipper category. Comparative data for 2004 is based on information
available as of 9/30/04.
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 0.23
Municipal bond
fund average 0.21
0% INCREASING RISK 100%
Your fund's Overall Morningstar Risk is shown alongside that of the
average fund in its broad asset class, as determined by Morningstar. The
risk bar broadens the comparison by translating the fund's Overall
Morningstar Risk into a percentile, which is based on the fund's ranking
among all funds rated by Morningstar as of December 31, 2004. 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. NAV
is calculated by dividing the net assets of each class of shares by the
number of outstanding shares in the class.
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. The CDSC for class C shares is 1% for one year
after purchase.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
Comparative indexes
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.
Putnam's policy on confidentiality
In order to conduct business with our shareholders, we must obtain
certain personal information such as account holders' addresses,
telephone numbers, Social Security numbers, and the names of their
financial advisors. We use this information to assign an account number
and to help us maintain accurate records of transactions and account
balances.
It is our policy to protect the confidentiality of your information,
whether or not you currently own shares of our funds, and in particular,
not to sell information about you or your accounts to outside marketing
firms. We have safeguards in place designed to prevent unauthorized
access to our computer systems and procedures to protect personal
information from unauthorized use.
Under certain circumstances, we share this information with outside
vendors who provide services to us, such as mailing and proxy
solicitation. In those cases, the service providers enter into
confidentiality agreements with us, and we provide only the information
necessary to process transactions and perform other services related to
your account. We may also share this information with our Putnam
affiliates to service your account or provide you with information about
other Putnam products or services. It is also our policy to share
account information with your financial advisor, if you've listed one on
your Putnam account.
If you would like clarification about our confidentiality policies or
have any questions or concerns, please don't hesitate to contact us at
1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or
Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time.
Proxy voting
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. The Putnam funds' proxy voting guidelines and
procedures, as well as information regarding how your fund voted proxies
relating to portfolio securities during the 12-month period ended June
30, 2004, are available on the Putnam Individual Investor Web site,
www.putnaminvestments.com/individual, and on the SEC's Web site,
www.sec.gov. If you have questions about finding forms on the SEC's Web
site, you may call the SEC at 1-800-SEC-0330. You may also obtain the
Putnam funds' proxy voting guidelines and procedures at no charge by
calling Putnam's Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
For periods ending on or after July 9, 2004, the fund will file a
complete schedule of its portfolio holdings with the SEC for the first
and third quarters of each fiscal year on Form N-Q. Shareholders may
obtain the fund's Forms N-Q on the SEC's Web site at www.sec.gov. In
addition, the fund's Forms N-Q may be reviewed and copied at the SEC's
public reference room in Washington, D.C. You may call the SEC at
1-800-SEC-0330 for information about the SEC's Web site or the operation
of the public reference room.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
preceded by the Report of Independent Registered Public Accounting Firm,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or
loss the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal year.
Statement of changes in net assets shows how the fund's net assets were
affected by the fund's net investment gain or loss, by distributions to
shareholders, and by changes in the number of the fund's shares. It
lists distributions and their sources (net investment income or realized
capital gains) over the current reporting period and the most recent
fiscal year-end. The distributions listed here may not match the sources
listed in the Statement of operations because the distributions are
determined on a tax basis and may be paid in a different period from the
one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment
income ratios, and portfolio turnover in one summary table, reflecting
the five most recent reporting periods. In a semiannual report, the
highlight table also includes the current reporting period. For open-end
funds, a separate table is provided for each share class.
Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders
Putnam New York Tax Exempt Income Fund:
We have audited the accompanying statement of assets and liabilities of
Putnam New York Tax Exempt Income Fund, including the fund's portfolio,
as of November 30, 2004, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each
of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 2004, by
correspondence with the custodian and brokers or by other appropriate
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Putnam New York Tax Exempt Income Fund as of
November 30, 2004, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five
years in the period then ended in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Boston, Massachusetts
January 7, 2005
The fund's portfolio
November 30, 2004
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 (98.7%) (a)
Principal amount Rating (RAT) Value
New York (91.6%)
- -------------------------------------------------------------------------------
$1,000,000 Albany Cnty., Indl. Dev. Agcy.
Rev. Bonds (Albany College of
Pharmacy), Ser. A, 5 3/8s, 12/1/24 BBB- $1,019,750
Albany, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds
1,460,000 (Albany Med. Ctr.), 6s, 5/1/29 BBB-/P 1,414,506
2,750,000 (Charitable Leadership), Ser. A,
6s, 7/1/19 Baa3 2,941,785
3,400,000 Battery Park, City Auth. Rev. Bonds,
Ser. A, AMBAC, 5 1/2s, 11/1/16 Aaa 3,680,704
2,000,000 Chautauqua Cnty., Indl. Dev. Agcy.
Rev. Bonds (Women's Christian
Assn.), Ser. A, 6.4s, 11/15/29 B+/P 1,888,440
800,000 Chemung Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Arnot Ogden
Med. Ctr.), 5s, 11/1/34 A3 787,752
13,500,000 Dutchess Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds (Bard
College), 5 3/4s, 8/1/30 A3 14,348,610
16,000,000 Dutchess Cnty., Indl. Dev. Agcy.
Rev. Bonds (Vassar College), 5.35s,
9/1/40 Aa2 16,766,400
Erie Cnty., G.O. Bonds (Pub. Impt.)
2,470,000 Ser. C, AMBAC, 5 1/2s, 7/1/29 Aaa 2,631,217
4,160,000 Ser. B, AMBAC, 5 3/8s, 7/1/20 Aaa 4,511,395
3,240,000 Ser. B, MBIA, 5 1/4s, 4/1/13 Aaa 3,611,693
3,175,000 Ser. B, MBIA, 5s, 4/1/11 Aaa 3,473,228
2,250,000 Essex Cnty., Indl. Dev. Agcy.
Rev. Bonds (Intl. Paper Co.),
Ser. A, 6.15s, 4/1/21 Baa2 2,332,575
2,650,000 Geneva, Indl. Dev. Agcy. Rev. Bonds
(Hobart & William Smith), Ser. A,
5 3/8s, 2/1/33 A 2,742,671
2,200,000 Hempstead, Indl. Dev. Agcy. Civic
Fac. Rev. Bonds (Hofstra U.),
5 1/4s, 7/1/16 A 2,332,330
1,250,000 Huntington, Hsg. Auth. Sr. Hsg. Fac.
Rev. Bonds (Gurwin Jewish Sr.
Residence), Ser. A, 6s, 5/1/29 B+/P 1,175,388
1,360,000 Lockport, Hsg. Dev. Corp. Rev. Bonds
(Urban Pk. Towers), Ser. A, 6s,
10/1/18 Baa2 1,395,890
Long Island, Pwr. Auth. NY Elec.
Syst. Rev. Bonds, Ser. A
32,500,000 5 3/4s, 12/1/24 A- 35,544,270
5,000,000 5 1/8s, 9/1/29 A- 5,046,400
5,500,000 AMBAC, 5s, 9/1/29 Aaa 5,571,610
4,090,000 Madison Cnty., Indl. Dev. Agcy.
Rev. Bonds (Colgate U.), Ser. A, 5s,
7/1/23 Aa3 4,248,815
5,550,000 Metro. Trans. Auth. Commuter Fac.
Rev. Bonds, Ser. A, U.S. Govt.
Coll., 6s, 7/1/24 AAA 6,336,158
10,000,000 Metro. Trans. Auth. Dedicated Tax
Rev. Bonds, Ser. A, FSA, 5 1/4s,
11/15/24 Aaa 10,613,000
Metro. Trans. Auth. Fac. Rev. Bonds
15,400,000 Ser. A, MBIA, 6 1/4s, 4/1/14 Aaa 18,635,386
4,245,000 Ser. A, MBIA, 6 1/4s, 4/1/13 Aaa 5,095,358
2,500,000 (Dedicated Tax Fund), Ser. A, MBIA,
6 1/4s, 4/1/11 Aaa 2,935,075
11,020,000 (Trans. Fac.), Ser. A, 6s, 7/1/24 AAA 12,580,983
14,000,000 (Dedicated Tax Fund), Ser. A, FGIC,
4 3/4s, 4/1/28 Aaa 15,314,180
13,000,000 Metro. Trans. Auth. Rev. Bonds,
Ser. A, AMBAC, 5 1/2s, 11/15/19 Aaa 14,551,160
Metro. Trans. Auth. Svc. Contract
Rev. Bonds (Trans. Fac.)
2,675,000 Ser. 3, U.S. Govt. Coll., 7 3/8s,
7/1/08 AAA 2,939,290
15,820,000 Ser. O, U.S. Govt. Coll., 5 3/4s,
7/1/13 AAA 17,996,199
24,345,000 Ser. O, U.S. Govt. Coll., 5 1/2s,
7/1/17 AAA 28,304,471
1,000,000 Mount Vernon, Indl. Dev. Agcy. Fac.
Rev. Bonds (Wartburg Senior Hsg.,
Inc.-Meadowview), 6.2s, 6/1/29 B+/P 1,007,100
Nassau Cnty., G.O. Bonds
1,125,000 Ser. E, FSA, 6s, 3/1/20 Aaa 1,292,299
2,790,000 Ser. E, FSA, 6s, 3/1/19 Aaa 3,204,901
2,735,000 Ser. E, FSA, 6s, 3/1/18 Aaa 3,141,722
3,465,000 Ser. E, FSA, 6s, 3/1/16 Aaa 3,980,280
1,000,000 Ser. A, FGIC, 6s, 7/1/13 Aaa 1,168,500
2,300,000 Ser. A, FGIC, 6s, 7/1/11 Aaa 2,651,210
2,580,000 Ser. E, FSA, 5.9s, 3/1/15 Aaa 2,951,210
Nassau Cnty., Indl. Dev. Agcy.
Rev. Bonds (North Shore Hlth.
Syst.)
410,000 Ser. A, 6 1/4s, 11/1/21 A3 438,626
1,140,000 Ser. B, 5 7/8s, 11/1/11 A3 1,254,182
825,000 Ser. D, 5 5/8s, 11/1/09 A3 892,229
1,615,000 Ser. D, 4 7/8s, 11/1/05 A3 1,648,576
3,000,000 Niagara Cnty., Indl. Dev. Agcy.
Rev. Bonds, Ser. D, 5.55s, 11/15/24 Baa1 3,147,180
6,000,000 Niagara Falls, City School Dist.
COP, 5 7/8s, 6/15/19 Baa3 6,244,080
NY City, G.O. Bonds
7,265,000 Ser. B, 8 1/4s, 6/1/05 A2 7,486,510
5,360,000 Ser. B, U.S. Govt. Coll., 8 1/4s,
6/1/05 (Prerefunded) AAA/P 5,522,086
45,000 Ser. F, 7.6s, 2/1/05 A2 45,200
18,675,000 Ser. B, MBIA, 6 1/2s, 8/15/11 Aaa 22,006,247
21,495,000 Ser. D, MBIA, 6 1/2s, 11/1/10 Aaa 25,148,075
945,000 Ser. I, U.S. Govt. Coll., 6 1/4s,
4/15/27 Aaa 1,041,730
1,845,000 Ser. I, U.S. Govt. Coll., 6 1/4s,
4/15/17 Aaa 2,033,854
2,000,000 Ser. I, 5 7/8s, 3/15/14 A2 2,124,240
23,525,000 Ser. B, 5 1/2s, 12/1/11 A2 26,205,674
3,000,000 Ser. C, 5 1/4s, 8/1/11 A2 3,283,260
NY City, City Transitional Fin.
Auth. Rev. Bonds
6,500,000 Ser. A, 5 3/4s, 8/15/24 AAA 7,429,695
2,000,000 AMBAC, 5 1/4s, 8/1/15 Aaa 2,188,300
3,600,000 Ser. B, 5 1/4s, 11/15/05 AA+ 3,710,196
80,000 Ser. C, U.S. Govt. Coll., 5s, 5/1/26 AA+ 87,537
NY City, City Transitional Fin.
Auth. VRDN
25,100,000 Ser. A-1, 1.67s, 11/15/28 VMIG1 25,100,000
5,000,000 Ser. B-3, 1.67s, 11/1/28 AA+ 5,000,000
14,170,000 (NYC Recovery), Ser. 3, 1.74s,
11/1/22 AA+ 14,170,000
50,000 NY City, IFB, AMBAC, 10.07s, 9/1/11 Aaa 50,644
NY City, Indl. Dev. Agcy. Rev. Bonds
5,800,000 (Visy Paper, Inc.), 7.95s, 1/1/28 B-/P 6,096,844
5,000,000 (Brooklyn Navy Yard Cogen.
Partners), 6.2s, 10/1/22 BBB- 5,031,700
1,440,000 (Brooklyn Navy Yard Cogen.
Partners), 5.65s, 10/1/28 BBB- 1,338,566
2,000,000 (Empowerment Zone-Harlem Mall),
5 1/8s, 12/30/23 Baa2 1,955,880
NY City, Indl. Dev. Agcy. Civic Fac.
Rev. Bonds
7,330,000 (Parking Corp.), 8 1/2s, 12/30/22 B-/P 6,272,428
3,285,000 (Staten Island U. Hosp.), Ser. A,
6 3/8s, 7/1/31 Ba3 3,125,776
5,500,000 (Brooklyn Polytech. U. Project J),
6 1/8s, 11/1/30 BB+ 5,125,890
2,545,000 (United Jewish Appeal), Ser. A,
5 1/4s, 7/1/23 Aa2 2,733,076
750,000 (St. Francis College), 5s, 10/1/34 A- 749,948
7,000,000 (Horace Mann School), MBIA, 5s,
7/1/28 Aaa 7,109,620
NY City, Indl. Dev. Agcy. Special
Arpt. Fac. Rev. Bonds (Airis JFK I
LLC), Ser. A
9,500,000 6s, 7/1/27 Baa3 9,540,850
7,000,000 5 1/2s, 7/1/28 Baa3 6,929,440
NY City, Indl. Dev. Agcy. Special
Fac. Rev. Bonds
2,000,000 (American Airlines, Inc.), 6.9s,
8/1/24 Caa2 1,398,840
11,465,000 (Terminal One Group Assn.), 6 1/8s,
1/1/24 A3 11,883,816
4,250,000 (British Airways), 5 1/4s, 12/1/32 BB+ 3,268,208
5,000,000 NY City, Metro. Trans. Auth.
Rev. Bonds, Ser. A, AMBAC, 5 1/4s,
1/1/29 Aaa 5,589,150
NY City, Muni. Assistance Corp.
Rev. Bonds
10,000,000 Ser. P, 5s, 7/1/08 AAA 10,868,200
4,550,000 Ser. O, 5s, 7/1/05 AAA 4,628,761
200,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. IFB, 12.889s, 6/15/11
(acquired 8/9/91, cost $207,493)
(RES) Aaa 286,340
NY City, Muni. Wtr. & Swr. Fin.
Auth. Rev. Bonds
25,600,000 AMBAC, 7 1/2s, 6/15/11 Aaa 31,072,000
5,000,000 Ser. B, AMBAC, 5s, 6/15/28 Aaa 5,098,750
16,700,000 NY City, Muni. Wtr. & Swr. Fin.
Auth. VRDN, Ser. A, FGIC, 1.67s,
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 6,031,704
3,000,000 (Westchester Cnty.), 5 1/4s, 8/1/18 Aa1 3,227,490
1,300,000 NY City, Transitional Fin. Auth.
VRDN, Ser. A, 1.67s, 2/15/30 AA+ 1,300,000
NY Cntys., Tobacco Trust III
Rev. Bonds
1,000,000 6s, 6/1/43 BBB 970,810
3,500,000 (Tobacco Settlement), 5 3/4s, 6/1/33 BBB 3,330,880
6,000,000 NY Cntys., Trust II
Rev. Bonds (Tobacco Settlement),
5 3/4s, 6/1/43 BBB 5,516,220
NY State Dorm. Auth. Rev. Bonds
5,000,000 (State U. Edl. Fac.), Ser. A,
7 1/2s, 5/15/13 AA- 6,309,750
18,800,000 (City U. Syst.), Ser. C, 7 1/2s,
7/1/10 A3 21,313,936
1,500,000 (Mount Sinai Hlth.), Ser. A, 6.6s,
7/1/26 Ba1 1,527,915
2,500,000 (Mount Sinai Hlth.), Ser. A, 6 1/2s,
7/1/25 Ba1 2,558,800
1,000,000 (Mount Sinai Hlth.), Ser. C, 6s,
7/1/26 Ba1 1,009,560
8,950,000 (State U. Edl. Fac.), Ser. A, FSA,
5 7/8s, 5/15/17 Aaa 10,631,347
11,200,000 (State U. Edl. Fac.), Ser. A,
5 7/8s, 5/15/11 AA- 12,730,592
5,250,000 (Winthrop Nassau U.), 5 3/4s, 7/1/28 Baa1 5,454,908
6,000,000 (NY Dept. of Ed.), Ser. A , MBIA,
5 3/4s, 7/1/20 Aaa 7,077,900
1,340,000 (Schools PG - Issue 2), Ser. E,
AMBAC, 5 3/4s, 7/1/19 Aaa 1,499,018
35,385,000 (U. Syst. Construction), Ser. A,
5 3/4s, 7/1/18 AA- 40,619,149
26,500,000 (City U.), Ser. A, MBIA, 5 3/4s,
7/1/13 AAA 30,587,095
1,905,000 (Lenox Hill Hosp.), 5 3/4s, 7/1/13 Baa2 2,067,001
10,000,000 (Columbia U.), Ser. A, 5 3/4s,
7/1/10 Aaa 11,369,500
2,650,000 (City U. Syst.), Ser. A, FGIC,
5 3/4s, 7/1/09 Aaa 2,920,830
15,600,000 (U. Syst. Construction), Ser. A,
5 5/8s, 7/1/16 AA- 17,774,952
8,500,000 (NYU), Ser. 1, AMBAC, 5 1/2s, 7/1/40 Aaa 9,605,085
2,000,000 (North Shore Long Island Jewish
Group), 5 1/2s, 5/1/33 A3 2,073,440
900,000 (Winthrop-U. Hosp. Assn.), Ser. A,
5 1/2s, 7/1/32 Baa1 919,080
3,500,000 (NYU), Ser. 1, AMBAC, 5 1/2s, 7/1/31 Aaa 3,910,865
2,750,000 (Winthrop Nassau U.), 5 1/2s, 7/1/23 Baa1 2,815,945
17,810,000 (Mental Hlth. Svcs.), Ser. D, FSA,
5 1/4s, 8/15/30 (Prerefunded) Aaa 19,884,509
2,150,000 (Mental Hlth. Svcs.), Ser. D, FSA,
5 1/4s, 8/15/30 Aaa 2,207,298
750,000 (NY Methodist Hosp.), 5 1/4s, 7/1/18 A3 791,558
1,865,000 (NY Methodist Hosp.), 5 1/4s, 7/1/17 A3 1,986,244
6,405,000 (Rochester U.), Ser. A, 5 1/8s,
7/1/39 A1 6,489,418
13,500,000 (Memorial Sloan-Kettering Ctr.),
Ser. 1, 5s, 7/1/34 Aa2 13,659,030
5,500,000 (Rochester U.), Ser. A, 5s, 7/1/34 A1 5,520,570
3,000,000 (Yeshiva U.), AMBAC, 5s, 7/1/30 Aaa 3,031,710
5,000,000 (FHA Insd. Mtg.-Montefiore Hosp.),
FGIC, FHA Insd., 5s, 8/1/29 Aaa 5,047,300
5,705,000 (NYU), Ser. A, FGIC, 5s, 7/1/29 Aaa 5,809,116
NY State Dorm. Auth. Rev. Bonds
3,000,000 (U. of Rochester), Ser. A, MBIA, 5s,
7/1/27 Aaa 3,040,650
2,700,000 (Yeshiva U.), AMBAC, 5s, 7/1/26 Aaa 2,759,076
1,500,000 (FHA Insd. Mtg.-Albany), Ser. A-1,
FSA, FHA Insd., 5s, 8/15/25 Aaa 1,540,515
2,000,000 (Columbia U.), Ser. B, 5s, 7/1/24 Aaa 2,087,020
2,000,000 (Columbia U.), Ser. B, 5s, 7/1/23 Aaa 2,096,240
7,500,000 (Columbia U.), 5s, 7/1/22 Aaa 7,856,025
3,000,000 (Columbia U.), Ser. B, 5s, 7/1/22 Aaa 3,158,280
2,000,000 (Columbia U.), Ser. B, 5s, 7/1/21 Aaa 2,114,840
1,700,000 Ser. A, MBIA, 5s, 3/15/19 AAA 1,800,878
2,505,000 (Lutheran Med.), MBIA, 5s, 8/1/12 Aaa 2,739,618
1,130,000 (Lenox Hill Hosp. Oblig. Group), 5s,
7/1/07 Baa2 1,179,347
10,000,000 (Colgate U.), MBIA, 4 3/4s, 7/1/28 Aaa 9,999,600
725,000 (State U. Edl. Fac.), Ser. B, zero %,
5/15/09 AA- 622,906
11,740,000 NY State Dorm. Auth. Lease
Rev. Bonds (State U. Dorm Fac.),
Ser. A, MBIA, 5s, 7/1/29 AAA 11,952,024
7,000,000 NY State Energy Research & Dev.
Auth. Rev. Bonds, 6.368s, 4/1/20 A+ 7,746,340
24,000,000 NY State Energy Research & Dev.
Auth. Gas Fac. Rev. Bonds (Brooklyn
Union Gas), 6.952s, 7/1/26 A+ 25,922,400
2,000,000 NY State Energy Research & Dev.
Auth. Poll. Control Rev. Bonds
(Lilco), Ser. B, 5.15s, 3/1/16 A1 2,044,000
NY State Env. Fac. Corp. Poll.
Control Rev. Bonds
3,425,000 (State Wtr. Revolving Fund), Ser. B,
6.65s, 9/15/13 Aaa 3,474,765
1,735,000 (State Wtr. Revolving Fund), Ser. A,
6.55s, 9/15/10 Aaa 1,741,211
270,000 5 7/8s, 6/15/14 Aaa 275,875
13,590,000 NY State Env. Fac. Corp. State Clean
Wtr. & Drinking Rev. Bonds (NYC
Muni. Wtr. Fin.), 5s, 6/15/29 Aaa 13,816,545
4,305,000 NY State Hsg. Fin. Agcy. Rev. Bonds
(Multi-Fam. Hsg. Insd. Mtge.
Program), Ser. A, FHA Insd., 7s,
8/15/22 Aaa 4,313,868
NY State Hwy. & Bridge Auth.
Rev. Bonds
1,000,000 Ser. A, FSA, 6s, 4/1/16 Aaa 1,159,470
2,000,000 Ser. A, FSA, 5.8s, 4/1/18 Aaa 2,244,560
2,000,000 Ser. A, FSA, 5 3/4s, 4/1/17 Aaa 2,240,760
11,740,000 Ser. B, MBIA, 5s, 4/1/05 Aaa 11,857,165
12,325,000 NY State Med. Care Fac. Fin. Agcy.
Rev. Bonds (NY Hosp.), Ser. A,
AMBAC, 6 1/2s, 8/15/29 Aaa 12,684,397
NY State Pwr. Auth. Rev. Bonds
4,250,000 5s, 11/15/20 Aa2 4,480,648
31,135,000 5s, 11/15/06 Aa2 32,814,111
NY State Thruway Auth. Rev. Bonds
4,300,000 Ser. A, MBIA, 5 1/4s, 4/1/22 Aaa 4,620,522
2,000,000 (Gen. Hwy. & Bridge Trust Fund),
Ser. A, MBIA, 5s, 4/1/21 Aaa 2,111,240
NY State Urban Dev. Corp. Rev. Bonds
5,830,000 (Correctional Fac.), Ser. 7, 5.7s,
1/1/16 AA- 6,353,534
1,685,000 (Clarkson Ctr.), 5 1/2s, 1/1/20 AA- 1,899,568
4,000,000 (Personal Income Tax), Ser. C-1,
FGIC, 5 1/2s, 3/15/19 Aaa 4,464,040
3,345,000 (Clarkson Ctr.), 5 1/2s, 1/1/15 AA- 3,760,650
2,000,000 (Syracuse U. ), 5 1/2s, 1/1/15 AA- 2,248,520
7,710,000 (Correctional Fac.), Ser. A, 5 1/2s,
1/1/09 AA- 8,469,281
355,000 (Correctional Fac.), Ser. A, 5s,
1/1/28 AA- 388,927
1,000,000 Oneida Cnty., Indl. Dev. Agcy.
Rev. Bonds (St. Elizabeth Med.),
Ser. A, 5 7/8s, 12/1/29 BB-/P 897,240
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 1,055,220
Orange Cnty., Indl. Dev. Agcy.
Rev. Bonds (Arden Hill Care Ctr.
Newburgh), Ser. C
3,200,000 7s, 8/1/31 BB-/P 3,232,640
2,300,000 7s, 8/1/21 BB-/P 2,342,987
Port Auth. NY & NJ Rev. Bonds
3,900,000 (Kennedy Intl. Arpt. - 5th
Installment), 6 3/4s, 10/1/19 BB+/P 4,042,155
1,000,000 (Kennedy Intl. Arpt. - 4th
Installment), 6 3/4s, 10/1/11 BB+/P 1,049,470
Sales Tax Asset Receivable Corp.
Rev. Bonds, Ser. A, MBIA
20,000,000 5s, 10/15/26 Aaa 20,675,800
15,000,000 5s, 10/15/25 Aaa 15,579,300
7,750,000 St. Lawrence Cnty., Indl. Dev.
Rev. Bonds (St. Lawrence U.),
Ser. A, MBIA, 5s, 7/1/28 Aaa 7,843,698
Suffolk Cnty., Indl. Dev. Agcy.
Rev. Bonds
6,200,000 (Peconic Landing), Ser. A, 8s,
10/1/30 B+/P 6,560,220
2,000,000 (Nissequogue Cogen. Partners Fac.),
5 1/2s, 1/1/23 BB+/P 1,909,560
Suffolk Cnty., Indl. Dev. Agcy.
Civic Fac. Rev. Bonds
500,000 (Southampton Hosp. Assn.), Ser. B,
7 5/8s, 1/1/30 B-/P 506,065
500,000 (Southampton Hosp. Assn.), Ser. A,
7 1/4s, 1/1/30 B-/P 491,460
2,200,000 (Huntington Hosp.), Ser. B, 5 7/8s,
11/1/32 Baa1 2,270,730
Suffolk Cnty., Indl. Dev. Agcy.
Cont. Care Retirement Rev. Bonds
(Jefferson's Ferry), Ser. A
4,000,000 7 1/4s, 11/1/28 BB-/P 4,264,240
4,000,000 7.2s, 11/1/19 BB-/P 4,289,400
4,220,000 Suffolk Cnty., Judicial Fac. Agcy.
Rev. Bonds (John P. Cohalan
Complex), AMBAC, 5s, 4/15/16 Aaa 4,466,448
Syracuse, Indl. Dev. Agcy.
Rev. Bonds (1st Mtge. - Jewish
Home), Ser. A
2,800,000 7 3/8s, 3/1/31 BB-/P 2,919,616
800,000 7 3/8s, 3/1/21 BB-/P 838,304
4,250,000 Tobacco Settlement Rev. Bonds (Asset
Backed Bonds), Ser. 1, 5 3/4s,
7/15/32 BBB 3,982,378
34,280,000 Triborough Bridge & Tunnel Auth.
Gen. Purpose Rev. Bonds (Convention
Ctr.), Ser. E, 7 1/4s, 1/1/10 AA- 38,146,441
20,715,000 Triborough Bridge & Tunnel Auth.
Rev. Bonds, Ser. SR, 5 1/2s, 1/1/12 Aa3 22,776,764
800,000 Westchester Cnty., Indl Dev. Agcy.
Civic Fac. Rev. Bonds (Guiding Eyes
for The Blind), 5 3/8s, 8/1/24 BBB 831,952
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 4,102,161
--------------
1,233,960,305
Puerto Rico (7.1%)
- -------------------------------------------------------------------------------
9,250,000 Children's Trust Fund Tobacco
Settlement Rev. Bonds, 5 1/2s,
5/15/39 BBB 8,381,148
Cmnwlth. of PR, G.O. Bonds
3,915,000 FSA, 6 1/2s, 7/1/13 Aaa 4,759,231
4,750,000 (Pub. Impt.), MBIA, 5 1/4s, 7/1/18 AAA 5,383,270
Cmnwlth. of PR, Hwy. & Trans. Auth.
Rev. Bonds, Ser. B
5,000,000 6s, 7/1/26 A 5,163,050
2,275,000 MBIA, 5 7/8s, 7/1/35 AAA 2,554,234
PR Elec. Pwr. Auth. Rev. Bonds
20,000,000 (PA 205), 6.98s, 7/1/07 AAA/P 22,280,600
10,000,000 Ser. AA, MBIA, 5 3/8s, 7/1/27 Aaa 10,438,600
6,000,000 PR Indl. Tourist Edl. Med. & Env.
Control Fac. Rev. Bonds (Cogen.
Fac.-AES), 6 5/8s, 6/1/26 Baa3 6,473,160
22,000,000 PR Infrastructure Fin. Auth. Special
Rev. Bonds, Ser. A, 5 1/2s, 10/1/40 Aaa 23,814,120
7,000,000 U. of PR Rev. Bonds, Ser. O, MBIA,
5 3/8s, 6/1/30 Aaa 7,179,340
--------------
96,426,753
- -------------------------------------------------------------------------------
Total Investments
(cost $1,244,594,952) $1,330,387,058
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,347,495,248.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at November 30, 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 November 30, 2004. Securities rated by Putnam are
indicated by "/P". Ratings are not covered by the Report of Independent
Registered Public Accounting Firm. Security ratings are defined in the
Statement of Additional Information.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at November 30, 2004,
was $1,341,560 or 0.1% of net assets.
The rates shown on VRDN are the current interest rates at November 30,
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 November 30, 2004.
The fund had the following industry group concentrations greater than
10% at November 30, 2004.
(as a percentage of net assets):
Education 16.9%
Utilities and power 10.3
The fund had the following insurance concentration greater than 10% at
November 30, 2004.
(as a percentage of net assets):
MBIA 18.1%
Interest rate swap contracts outstanding at November 30, 2004
Unrealized
Notional Termination appreciation/
amount date (depreciation)
- ----------------------------------------------------------------------
Agreement with JP Morgan Chase
Bank dated November 4, 2004 to
receive quarterly the
notional amount multiplied by
2.946% and pay quarterly the
notional amount multiplied by
the Bond Market Association
Municipal Swap Index. $30,000,00 2/8/10 $358,701
Agreement with Citibank, N.A.
dated November 4, 2004 to
receive quarterly the notional
multiplied by 4.067% and pay
quarterly the notional
multiplied by the Bond Market
Association Municipal
Swap Index. 15,000,000 2/8/25 (360,103)
Agreement with JP Morgan
Chase Bank dated September 24,
2004 to pay quarterly the
notional multiplied by 3.513%
and receive quarterly the
notional multiplied by the
Bond Market Association
Municipal Swap Index. 18,000,000 12/19/14 293,731
- ----------------------------------------------------------------------
$292,329
- ----------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
November 30, 2004
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$1,244,594,952) (Note 1) $1,330,387,058
- -------------------------------------------------------------------------------
Cash 750,975
- -------------------------------------------------------------------------------
Interest and other receivables 21,073,094
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 310,522
- -------------------------------------------------------------------------------
Receivable for securities sold 11,317,944
- -------------------------------------------------------------------------------
Receivable for open swap contracts (Note 1) 652,432
- -------------------------------------------------------------------------------
Total assets 1,364,492,025
Liabilities
- -------------------------------------------------------------------------------
Distributions payable to shareholders 1,695,203
- -------------------------------------------------------------------------------
Payable for securities purchased 11,247,910
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 970,443
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,694,804
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 209,014
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 168,514
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 4,364
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 499,305
- -------------------------------------------------------------------------------
Payable for open swap contracts (Note 1) 360,103
- -------------------------------------------------------------------------------
Other accrued expenses 147,117
- -------------------------------------------------------------------------------
Total liabilities 16,996,777
- -------------------------------------------------------------------------------
Net assets $1,347,495,248
Represented by
- -------------------------------------------------------------------------------
Paid-in capital (unlimited shares authorized) (Notes 1 and
4) $1,260,305,980
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 2,816,731
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (1,711,898)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 86,084,435
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $1,347,495,248
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,222,953,319 divided by 138,285,869 shares) $8.84
- -------------------------------------------------------------------------------
Offering price per class A share (100/95.50 of $8.84)* $9.26
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($110,813,051 divided by 12,550,097 shares)** $8.83
- -------------------------------------------------------------------------------
Net asset value and offering price per class C share
($10,410,526 divided by 1,177,440 shares)** $8.84
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($3,318,352 divided by 374,985 shares) $8.85
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.85)*** $9.15
- -------------------------------------------------------------------------------
* 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
Year ended November 30, 2004
Interest income: $69,825,542
- -------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 7,057,638
- -------------------------------------------------------------------------------
Investor servicing (Note 2) 1,428,098
- -------------------------------------------------------------------------------
Custodian fees (Note 2) 158,870
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 44,162
- -------------------------------------------------------------------------------
Administrative services (Note 2) 25,506
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,530,294
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,126,521
- -------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 102,637
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 17,328
- -------------------------------------------------------------------------------
Other 339,602
- -------------------------------------------------------------------------------
Non-recurring costs (Notes 2 and 6) 43,522
- -------------------------------------------------------------------------------
Cost assumed by Manager (Notes 2 and 6) (43,522)
- -------------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 2) (237,447)
- -------------------------------------------------------------------------------
Total expenses 12,593,209
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (249,639)
- -------------------------------------------------------------------------------
Net expenses 12,343,570
- -------------------------------------------------------------------------------
Net investment income 57,481,972
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 21,037,464
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments during the year (36,665,195)
- -------------------------------------------------------------------------------
Net loss on investments (15,627,731)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $41,854,241
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Year ended November 30
Increase (decrease) in net assets 2004 2003
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $57,481,972 $59,792,371
- -------------------------------------------------------------------------------
Net realized gain on investments 21,037,464 7,015,857
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments (36,665,195) 19,462,367
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 41,854,241 86,270,595
- -------------------------------------------------------------------------------
Distributions to shareholders: (Note 1)
- -------------------------------------------------------------------------------
From tax-exempt income
Class A (51,080,604) (57,217,245)
- -------------------------------------------------------------------------------
Class B (4,499,875) (4,439,474)
- -------------------------------------------------------------------------------
Class C (331,858) (249,666)
- -------------------------------------------------------------------------------
Class M (129,582) (93,421)
- -------------------------------------------------------------------------------
From ordinary income
Class A -- (245,076)
- -------------------------------------------------------------------------------
Class B -- (21,561)
- -------------------------------------------------------------------------------
Class C -- (1,373)
- -------------------------------------------------------------------------------
Class M -- (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)
- -------------------------------------------------------------------------------
Redemption fees (Note 1) 1,011 --
- -------------------------------------------------------------------------------
Increase (decrease) from capital share
transactions (Notes 4 and 5) (148,119,865) 49,700,584
- -------------------------------------------------------------------------------
Total increase (decrease) in net assets (162,306,532) 59,782,028
Net assets
- -------------------------------------------------------------------------------
Beginning of year 1,509,801,780 1,450,019,752
- -------------------------------------------------------------------------------
End of year (including undistributed net
investment income of $2,816,731 and
$1,262,522, respectively) $1,347,495,248 $1,509,801,780
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS A
- ----------------------------------------------------------------------------------------------------------------------
Per-share Year ended November 30
operating performance 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.93 $8.87 $8.79 $8.52 $8.32
- ----------------------------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income .37 (c) .38 .40 .42 .45
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.10) .16 .07 .27 .20
- ----------------------------------------------------------------------------------------------------------------------
Total from
investment operations .27 .54 .47 .69 .65
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------
From net
investment income (.36) (.39) (.39) (.42) (.45)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.36) (.48) (.39) (.42) (.45)
- ----------------------------------------------------------------------------------------------------------------------
Redemption fees -- (d) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.84 $8.93 $8.87 $8.79 $8.52
- ----------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 3.08 6.25 5.44 8.24 8.07
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,222,953 $1,336,936 $1,322,541 $1,362,488 $1,276,566
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .82 (c) .82 .82 .81 .82
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.14 (c) 4.23 4.50 4.80 5.40
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 22.57 8.08 (e) 17.90 18.63 14.86
- ----------------------------------------------------------------------------------------------------------------------
(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 involuntary expense limitation during the period. As a
result of such limitation, the expenses of the fund for the period ended
November 30, 2004 reflect a reduction of 0.02% of average net assets for
class A shares (Note 2).
(d) Amount represents less than $0.01 per share.
(e) 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
- ----------------------------------------------------------------------------------------------------------------------
Per-share Year ended November 30
operating performance 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.91 $8.85 $8.77 $8.51 $8.31
- ----------------------------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income .31 (c) .32 .34 .37 .39
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.09) .17 .07 .25 .20
- ----------------------------------------------------------------------------------------------------------------------
Total from
investment operations .22 .49 .41 .62 .59
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------
From net
investment income (.30) (.34) (.33) (.36) (.39)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.30) (.43) (.33) (.36) (.39)
- ----------------------------------------------------------------------------------------------------------------------
Redemption fees -- (d) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.83 $8.91 $8.85 $8.77 $8.51
- ----------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.50 5.57 4.75 7.41 7.37
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $110,813 $158,081 $119,251 $117,722 $163,839
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.47 (c) 1.47 1.47 1.46 1.47
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 3.50 (c) 3.59 3.84 4.18 4.75
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 22.57 8.08 (e) 17.90 18.63 14.86
- ----------------------------------------------------------------------------------------------------------------------
(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 involuntary expense limitation during the period. As a
result of such limitation, the expenses of the fund for the period ended
November 30, 2004 reflect a reduction of 0.02% of average net assets for
class B shares (Note 2).
(d) Amount represents less than $0.01 per share.
(e) 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
- ----------------------------------------------------------------------------------------------------------------------
Per-share Year ended November 30
operating performance 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.93 $8.86 $8.79 $8.53 $8.32
- ----------------------------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income .30 (c) .31 .33 .35 .38
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.10) .17 .06 .26 .21
- ----------------------------------------------------------------------------------------------------------------------
Total from
investment operations .20 .48 .39 .61 .59
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------
From net
investment income (.29) (.32) (.32) (.35) (.38)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.29) (.41) (.32) (.35) (.38)
- ----------------------------------------------------------------------------------------------------------------------
Redemption fees -- (d) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.84 $8.93 $8.86 $8.79 $8.53
- ----------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.27 5.54 4.48 7.25 7.33
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $10,411 $10,909 $5,885 $5,145 $574
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.62 (c) 1.62 1.62 1.61 1.62
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 3.34 (c) 3.43 3.69 3.93 4.57
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 22.57 8.08 (e) 17.90 18.63 14.86
- ----------------------------------------------------------------------------------------------------------------------
(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 involuntary expense limitation during the period. As a
result of such limitation, the expenses of the fund for the period ended
November 30, 2004 reflect a reduction of 0.02% of average net assets for
class C shares (Note 2).
(d) Amount represents less than $0.01 per share.
(e) 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
- ----------------------------------------------------------------------------------------------------------------------
Per-share Year ended November 30
operating performance 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.94 $8.87 $8.79 $8.53 $8.33
- ----------------------------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income .34 (c) .35 .37 .40 .42
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.10) .18 .07 .26 .20
- ----------------------------------------------------------------------------------------------------------------------
Total from
investment operations .24 .53 .44 .66 .62
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------
From net
investment income (.33) (.37) (.36) (.40) (.42)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.09) -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.33) (.46) (.36) (.40) (.42)
- ----------------------------------------------------------------------------------------------------------------------
Redemption fees -- (d) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.85 $8.94 $8.87 $8.79 $8.53
- ----------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.77 6.06 5.12 7.78 7.74
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,318 $3,876 $2,343 $1,793 $1,531
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.12 (c) 1.12 1.12 1.11 1.12
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 3.84 (c) 3.94 4.17 4.51 5.11
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 22.57 8.08 (e) 17.90 18.63 14.86
- ----------------------------------------------------------------------------------------------------------------------
(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 involuntary expense limitation during the period. As a
result of such limitation, the expenses of the fund for the period ended
November 30, 2004 reflect a reduction of 0.02% of average net assets for
class M shares (Note 2).
(d) Amount represents less than $0.01 per share.
(e) 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
November 30, 2004
Note 1
Significant accounting policies
Putnam New York Tax Exempt Income Fund (the "fund"), a Massachusetts
business trust, 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 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. The redemption fee is accounted for as an
addition to paid-in-capital.
Investment income, realized and unrealized gains and losses and expenses
of the fund are borne pro-rata based on the relative net assets of each
class to the total net assets of the fund, except that each class bears
expenses unique to that class (including the distribution fees
applicable to such classes). 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 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) Interest rate swap contracts The fund may enter into interest rate
swap contracts, which are arrangements between two parties to exchange
cash flows based on a notional principal amount, to manage the fund's
exposure to interest rates. Interest rate swap contracts are marked to
market daily based upon quotations from market makers and the change, if
any, is recorded as unrealized gain or loss. Payments received or made
are recorded as realized gains or loss. The fund could be exposed to
credit or market risk due to unfavorable changes in the fluctuation of
interest rates or if the counterparty defaults on its obligation to
perform. Risk of loss may exceed amounts recognized on the statement of
assets and liabilities. Interest rate swap contracts outstanding at
period end, if any, are listed after the fund's portfolio.
D) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code of 1986 (the "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 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.
E) 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. These differences include temporary and
permanent differences of losses on wash sale transactions, dividends
payable, market discount and straddle loss deferrals. 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. For the year ended November 30, 2004, the fund
reclassified $114,156 to increase undistributed net investment income
with an increase to accumulated net realized loss of $114,156.
The tax basis components of distributable earnings and the federal tax
cost as of period end were as follows:
Unrealized appreciation $90,201,621
Unrealized depreciation (5,510,198)
------------
Net unrealized appreciation 84,691,423
Undistributed tax-exempt
income 4,188,283
Undistributed ordinary income 195,006
Undistributed long-term gain 12,981,751
Cost for federal income
tax purposes $1,245,695,635
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 waive fees
and reimburse expenses of the fund through November 30, 2005, to the
extent necessary to ensure that the fund's expenses do not exceed the
average expenses of the front-end load funds viewed by Lipper Inc. as
having the same investment classification or objective as the fund. The
expense reimbursement is based on a comparison of the fund's expenses
with the average annualized operating expenses of the funds in its
Lipper peer group for each calendar quarter during the fund's last
fiscal year, excluding 12b-1 fees and without giving effect to any
expense offset and brokerage service arrangements that may reduce fund
expenses. For the year ended November 30, 2004, Putnam Management waived
$237,447 of its management fee from the fund.
For the period ended November 30, 2004, Putnam Management has assumed
$43,522 of legal, shareholder servicing and communication, audit and
Trustee fees incurred by the fund in connection with certain legal and
regulatory matters (including those described in Note 6).
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 year ended November 30, 2004, the fund
paid PFTC $1,446,492 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 year ended November 30, 2004,
the fund's expenses were reduced by $249,639 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $1,951, 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 Trustees have terminated the Pension Plan with
respect to any Trustee first elected after 2003.
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 year ended November 30, 2004, Putnam Retail Management, acting
as underwriter, received net commissions of $17,370 and $84 from the
sale of class A and class M shares, respectively, and received $196,234
and $601 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 year ended November 30, 2004, Putnam Retail
Management, acting as underwriter, received $162 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended November 30, 2004, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $292,479,824 and $428,737,716, respectively. There were no
purchases or sales of U.S. government securities.
Note 4
Capital shares
At November 30, 2004, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended November 30, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 5,814,447 $51,632,175
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 3,749,175 33,239,376
- ----------------------------------------------------------------
9,563,622 84,871,551
Shares repurchased (21,002,883) (186,170,642)
- ----------------------------------------------------------------
Net decrease (11,439,261) $(101,299,091)
- ----------------------------------------------------------------
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
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 470,081 $4,167,315
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 340,837 3,018,902
- ----------------------------------------------------------------
810,918 7,186,217
Shares repurchased (5,994,815) (53,080,020)
- ----------------------------------------------------------------
Net decrease (5,183,897) $(45,893,803)
- ----------------------------------------------------------------
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
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 238,076 $2,099,793
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 27,732 245,898
- ----------------------------------------------------------------
265,808 2,345,691
Shares repurchased (310,273) (2,751,050)
- ----------------------------------------------------------------
Net decrease (44,465) $(405,359)
- ----------------------------------------------------------------
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
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 16,798 $156,321
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 11,390 93,184
- ----------------------------------------------------------------
28,188 249,505
Shares repurchased (86,815) (771,117)
- ----------------------------------------------------------------
Net decrease (58,627) $(521,612)
- ----------------------------------------------------------------
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.
The fund may experience increased redemptions as a result of these
matters, which could result in increased transaction costs and operating
expenses.
Results of November 11, 2004 shareholder meeting
(Unaudited)
A special meeting of shareholders of the fund was held on November 11,
2004. At the meeting, each of the nominees for Trustees was elected, as
follows:
Votes Votes
for withheld
- -----------------------------------------------------------------
Jameson A. Baxter 80,826,001 3,784,082
Charles B. Curtis 80,829,895 3,780,188
Myra R. Drucker 80,924,694 3,685,389
Charles E. Haldeman, Jr. 80,909,005 3,701,078
John A. Hill 80,960,364 3,649,719
Ronald J. Jackson 80,843,451 3,766,632
Paul L. Joskow 80,856,198 3,753,885
Elizabeth T. Kennan 80,737,279 3,872,804
John H. Mullin, III 80,812,102 3,797,981
Robert E. Patterson 80,823,909 3,786,174
George Putnam, III 80,916,746 3,693,337
A.J.C. Smith 80,600,971 4,009,112
W. Thomas Stephens 80,800,087 3,809,996
Richard B. Worley 80,780,230 3,829,853
A proposal to amend the fund's fundamental investment restriction with
respect to borrowing to allow the fund the investment flexibility permitted
by the Investment Company Act was approved as follows:
Votes Votes
for against Abstentions
- -----------------------------------------------------------------
58,031,277 5,525,395 21,053,411
A proposal to amend the fund's fundamental investment restriction with
respect to making loans to enhance the fund's ability to participate in an
interfund borrowing and lending program was approved as follows:
Votes Votes
for against Abstentions
- -----------------------------------------------------------------
58,089,761 5,365,831 21,154,491
A proposal to amend the fund's fundamental investment restriction with
respect to diversification of investments to enhance the fund's ability to
invest in registered investment companies such as Putnam Prime Money Market
Fund was approved as follows:
Votes Votes
for against Abstentions
- -----------------------------------------------------------------
60,019,925 3,546,298 21,043,860
A proposal to amend the fund's fundamental investment restriction with
respect to senior securities to clarify that permitted securities borrowings
are not prohibited was approved as follows:
Votes Votes
for against Abstentions
- -----------------------------------------------------------------
58,852,549 4,570,189 21,187,345
A proposal to amend the fund's Agreement and Declaration of Trust to permit
the fund to satisfy redemption requests other than in cash was adjourned.*
* Since the sufficient votes in favor of this proposal were not received as
of November 11, 2004, the shareholder meeting with respect to this proposal
has been adjourned until no later than January 10, 2005 to permit further
solicitation in the Trustees' discretion.
All tabulations are rounded to nearest whole number.
Federal tax information
(Unaudited)
The fund has designated 100% of dividends paid from net investment
income during the fiscal year as tax exempt for Federal income tax
purposes.
The Form 1099 you receive in January 2005 will show the tax status of
all distributions paid to your account in calendar 2004.
About the Trustees
Jameson A. Baxter (9/6/43), Trustee since 1994
Ms. Baxter is the President of Baxter Associates, Inc., a private
investment firm that she founded in 1986.
Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta
Corporation (a printing and digital imaging firm), Ryerson Tull, Inc. (a
steel service corporation), Advocate Health Care and BoardSource,
formerly the National Center for Nonprofit Boards. She is Chairman
Emeritus of the Board of Trustees, Mount Holyoke College, having served
as Chairman for five years and as a board member for thirteen years.
Until 2002, Ms. Baxter was a Director of Intermatic Corporation (a
manufacturer of energy control products).
Ms. Baxter has held various positions in investment banking and
corporate finance, including Vice President and Principal of the Regency
Group, and Vice President of and Consultant to First Boston Corporation.
She is a graduate of Mount Holyoke College.
Charles B. Curtis (4/27/40), Trustee since 2001
Mr. Curtis is President and Chief Operating Officer of the Nuclear
Threat Initiative (a private foundation dealing with national security
issues) and serves as Senior Advisor to the United Nations Foundation.
Mr. Curtis is a member of the Council on Foreign Relations and the
Trustee Advisory Council of the Applied Physics Laboratory, Johns
Hopkins University. Until 2003, Mr. Curtis was a member of the Electric
Power Research Institute Advisory Council and the University of Chicago
Board of Governors for Argonne National Laboratory. Prior to 2002, Mr.
Curtis was a Member of the Board of Directors of the Gas Technology
Institute and the Board of Directors of the Environment and Natural
Resources Program Steering Committee, John F. Kennedy School of
Government, Harvard University. Until 2001, Mr. Curtis was a member of
the Department of Defense Policy Board and Director of EG&G Technical
Services, Inc. (a fossil energy research and development support
company).
From August 1997 to December 1999, Mr. Curtis was a Partner at Hogan &
Hartson L.L.P., a Washington, D.C. law firm. Prior to May 1997, Mr.
Curtis was Deputy Secretary of Energy. He served as Chairman of the
Federal Energy Regulatory Commission from 1977 to 1981 and has held
positions on the staff of the U.S. House of Representatives, the U.S.
Treasury Department, and the SEC.
Myra R. Drucker (1/16/48), Trustee since 2004
Ms. Drucker is a Vice Chair of the Board of Trustees of Sarah Lawrence
College, a Trustee of Commonfund (a not-for-profit firm specializing in
asset management for educational endowments and foundations) and a
member of the Investment Committee of the Kresge Foundation (a
charitable trust). She is also Chair of the New York Stock Exchange
(NYSE) Pension Managers Advisory Committee and a member of the Executive
Committee of the Committee on Investment of Employee Benefit Assets.
Until August 31, 2004, Ms. Drucker was Managing Director and a member of
the Board of Directors of General Motors Asset Management and Chief
Investment Officer of General Motors Trust Bank. Ms. Drucker also served
as a member of the NYSE Corporate Accountability and Listing Standards
Committee and the NYSE/NASD IPO Advisory Committee.
Prior to joining General Motors Asset Management in 2001, Ms. Drucker
held various executive positions in the investment management industry.
Ms. Drucker served as Chief Investment Officer of Xerox Corporation (a
technology and service company in the document industry), where she was
responsible for the investment of the company's pension assets. Ms.
Drucker was also Staff Vice President and Director of Trust Investments
for International Paper (a paper, paper distribution, packaging and
forest products company) and previously served as Manager of Trust
Investments for Xerox Corporation. Ms. Drucker received a B.A. degree in
Literature and Psychology from Sarah Lawrence College and pursued
graduate studies in economics, statistics and portfolio theory at Temple
University.
John A. Hill (1/31/42), Trustee since 1985 and Chairman since 2000
Mr. Hill is Vice Chairman of First Reserve Corporation, a private equity
buyout firm that specializes in energy investments in the diversified
worldwide energy industry.
Mr. Hill is a Director of Devon Energy Corporation, TransMontaigne Oil
Company, Continuum Health Partners of New York and various private
companies controlled by First Reserve Corporation, as well as a Trustee
of TH Lee, Putnam Investment Trust (a closed-end investment company
advised by an affiliate of Putnam Management). He is also a Trustee of
Sarah Lawrence College.
Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held
executive positions in investment banking and investment management with
several firms and with the federal government, including Deputy
Associate Director of the Office of Management and Budget and Deputy
Director of the Federal Energy Administration. He is active in various
business associations, including the Economic Club of New York, and
lectures on energy issues in the United States and Europe. Mr. Hill
holds a B.A. degree in Economics from Southern Methodist University and
pursued graduate studies there as a Woodrow Wilson Fellow.
Ronald J. Jackson (12/17/43), Trustee since 1996
Mr. Jackson is a private investor.
Mr. Jackson is President of the Kathleen and Ronald J. Jackson
Foundation (a charitable trust). He is also a member of the Board of
Overseers of WGBH (a public television and radio station) and was,
through 2004, a member of the Board of Overseers of the Peabody Essex
Museum.
Mr. Jackson is the former Chairman, President and Chief Executive
Officer of Fisher-Price, Inc. (a major toy manufacturer), from which he
retired in 1993. He previously served as President and Chief Executive
Officer of Stride-Rite, Inc. (a manufacturer and distributor of
footwear) and of Kenner Parker Toys, Inc. (a major toy and game
manufacturer). Mr. Jackson was President of Talbots, Inc. (a distributor
of women's apparel) and has held financial and marketing positions with
General Mills, Inc. and Parker Brothers (a toy and game company). Mr.
Jackson is a graduate of Michigan State University Business School.
Paul L. Joskow (6/30/47), Trustee since 1997
Dr. Joskow is the Elizabeth and James Killian Professor of Economics and
Management, and Director of the Center for Energy and Environmental
Policy Research at the Massachusetts Institute of Technology.
Dr. Joskow serves as a Director of National Grid Transco (a UK-based
holding company with interests in electric and gas transmission and
distribution and telecommunications infrastructure) and TransCanada
Corporation (an energy company focused on natural gas transmission and
power services). He also serves on the board of the Whitehead Institute
for Biomedical Research (a non-profit research institution) and has been
President of the Yale University Council since 1993. Prior to February
2002, he was a Director of State Farm Indemnity Company (an automobile
insurance company), and, prior to March 2000, he was a Director of New
England Electric System (a public utility holding company).
Dr. Joskow has published five books and numerous articles on topics in
industrial organization, government regulation of industry, and
competition policy. He is active in industry restructuring,
environmental, energy, competition and privatization policies -- serving
as an advisor to governments and corporations worldwide. Dr. Joskow
holds a Ph.D. and M. Phil from Yale University and B.A. from Cornell
University.
Elizabeth T. Kennan (2/25/38), Trustee since 1992
Dr. Kennan is a Partner of Cambus-Kenneth Farm (thoroughbred horse and
cattle breeding). She is President Emeritus of Mount Holyoke College.
Dr. Kennan served as Chairman and is now Lead Director of Northeast
Utilities and is a Director of Talbots, Inc. She has served as Director
on a number of other boards, including Bell Atlantic, Chastain Real
Estate, Shawmut Bank, Berkshire Life Insurance and Kentucky Home Life
Insurance. She is a Trustee of the National Trust for Historic
Preservation, of Centre College and of Midway College in Midway,
Kentucky. She is also a member of The Trustees of Reservations. Dr.
Kennan has served on the oversight committee of the Folger Shakespeare
Library, as President of Five Colleges Incorporated, as a Trustee of
Notre Dame University and is active in various educational and civic
associations.
As a member of the faculty of Catholic University for twelve years,
until 1978, Dr. Kennan directed the post-doctoral program in Patristic
and Medieval Studies, taught history and published numerous articles.
Dr. Kennan holds a Ph.D. from the University of Washington in Seattle,
an M.S. from St. Hilda's College at Oxford University and an A.B. from
Mount Holyoke College. She holds several honorary doctorates.
John H. Mullin, III (6/15/41), Trustee since 1997
Mr. Mullin is the Chairman and CEO of Ridgeway Farm (a limited liability
company engaged in timber and farming).
Mr. Mullin serves as a Director of The Liberty Corporation (a
broadcasting company), Progress Energy, Inc. (a utility company,
formerly known as Carolina Power & Light) and Sonoco Products, Inc. (a
packaging company). Mr. Mullin is Trustee Emeritus of The National
Humanities Center and Washington & Lee University, where he served as
Chairman of the Investment Committee. Prior to May 2001, he was a
Director of Graphic Packaging International Corp. Prior to February
2004, he was a Director of Alex Brown Realty, Inc.
Mr. Mullin is also a past Director of Adolph Coors Company; ACX
Technologies, Inc.; Crystal Brands, Inc.; Dillon, Read & Co., Inc.;
Fisher-Price, Inc.; and The Ryland Group, Inc. Mr. Mullin is a graduate
of Washington & Lee University and The Wharton Graduate School,
University of Pennsylvania.
Robert E. Patterson (3/15/45), Trustee since 1984
Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman
of Cabot Properties, Inc. (a private equity firm investing in commercial
real estate).
Mr. Patterson serves as Chairman of the Joslin Diabetes Center and as a
Director of Brandywine Trust Company. Prior to June 2003, he was a
Trustee of Sea Education Association. Prior to December 2001, he was
President and Trustee of Cabot Industrial Trust (a publicly traded real
estate investment trust). Prior to February 1998, he was Executive Vice
President and Director of Acquisitions of Cabot Partners Limited
Partnership (a registered investment adviser involved in institutional
real estate investments). Prior to 1990, he served as Executive Vice
President of Cabot, Cabot & Forbes Realty Advisors, Inc. (the
predecessor company of Cabot Partners) and as a Senior Vice President of
the Beal Companies (a real estate management, investment and development
firm).
Mr. Patterson practiced law and held various positions in state
government and was the founding Executive Director of the Massachusetts
Industrial Finance Agency. Mr. Patterson is a graduate of Harvard
College and Harvard Law School.
W. Thomas Stephens (9/2/42), Trustee since 1997
Mr. Stephens serves on a number of corporate boards.
Mr. Stephens is Chairman and Chief Executive Officer of Boise Cascade,
L.L.C. (a paper, forest products and timberland assets company). Mr.
Stephens serves as a Director of TransCanada Pipelines Limited. Until
2004, Mr. Stephens was a Director of Xcel Energy Incorporated (a public
utility company), Qwest Communications, and Norske Canada, Inc. (a paper
manufacturer). Until 2003, Mr. Stephens was a Director of Mail-Well,
Inc. (a diversified printing company). He served as Chairman of
Mail-Well until 2001 and as CEO of MacMillan-Bloedel, Ltd. (a forest
products company) until 1999.
Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of
Johns Manville Corporation. He holds B.S. and M.S. degrees from the
University of Arkansas.
Richard B. Worley (11/15/45), Trustee since 2004
Mr. Worley is Managing Partner of Permit Capital, LLC, an investment
management firm.
Mr. Worley serves on the Executive Committee of the University of
Pennsylvania Medical Center, is a Trustee of The Robert Wood Johnson
Foundation (a philanthropic organization devoted to health care issues)
and is a Director of The Colonial Williamsburg Foundation (a historical
preservation organization). Mr. Worley also serves on the investment
committees of Mount Holyoke College and World Wildlife Fund (a wildlife
conservation organization).
Prior to joining Permit Capital LLC in 2002, Mr. Worley served as Chief
Strategic Officer of Morgan Stanley Investment Management. He previously
served as President, Chief Executive Officer and Chief Investment
Officer of Morgan Stanley Dean Witter Investment Management and as a
Managing Director of Morgan Stanley, a financial services firm. Mr.
Worley also was the Chairman of Miller Anderson & Sherrerd, an
investment management firm.
Mr. Worley holds a B.S. degree from University of Tennessee and pursued
graduate studies in economics at the University of Texas.
Charles E. Haldeman, Jr.* (10/29/48), Trustee since 2004
Mr. Haldeman is President and Chief Executive Officer of Putnam, LLC
("Putnam Investments"). He is a member of Putnam Investments' Executive
Board of Directors and Advisory Council. Prior to November 2003, Mr.
Haldeman served as Co-Head of Putnam Investments' Investment Division.
Prior to joining Putnam Investments in 2002, Mr. Haldeman held executive
positions in the investment management industry. He previously served as
Chief Executive Officer of Delaware Investments and President & Chief
Operating Officer of United Asset Management. Mr. Haldeman was also a
partner and director of Cooke & Bieler, Inc. (an investment management
firm).
Mr. Haldeman currently serves as a Trustee of Dartmouth College and as
Emeritus Trustee of Abington Memorial Hospital. He is a graduate of
Dartmouth College, Harvard Law School and Harvard Business School. Mr.
Haldeman is also a Chartered Financial Analyst (CFA) charterholder.
George Putnam, III* (8/10/51), Trustee since 1984 and President
since 2000
Mr. Putnam is President of New Generation Research, Inc. (a publisher of
financial advisory and other research services), and of New Generation
Advisers, Inc. (a registered investment advisor to private funds). Mr.
Putnam founded the New Generation companies in 1986.
Mr. Putnam is a Director of The Boston Family Office, LLC (a registered
investment adviser). He is a Trustee of St. Mark's School, Shore Country
Day School, and until 2002 was a Trustee of the Sea Education
Association.
Mr. Putnam previously worked as an attorney with the law firm of Dechert
LLP (formerly known as Dechert Price & Rhoads) in Philadelphia. He is a
graduate of Harvard College, Harvard Business School and Harvard Law
School.
A.J.C. Smith* (4/13/34), Trustee since 1986
Mr. Smith is the Chairman of Putnam Investments and Consultant to Marsh
& McLennan Companies, Inc.
Mr. Smith is also a Director of Trident Corp. (a limited partnership
with over thirty institutional investors). He is also a Trustee of the
Carnegie Hall Society, the Educational Broadcasting Corporation, and the
National Museums of Scotland. He is Chairman of the Central Park
Conservancy and a Member of the Board of Overseers of the Joan and
Sanford I. Weill Graduate School of Medical Sciences of Cornell
University. Prior to November 2004, Mr. Smith was a Director of Marsh &
McLennan Companies, Inc. Prior to May 2000 and November 1999, Mr. Smith
was Chairman and CEO, respectively, of Marsh & McLennan Companies, Inc.
The address of each Trustee is One Post Office Square, Boston, MA 02109.
As of November 30, 2004, there were 110 Putnam Funds. All Trustees serve
as Trustees of all Putnam funds.
Each Trustee serves for an indefinite term, until his or her
resignation, retirement at age 72, death, or removal.
* Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund, Putnam
Management, Putnam Retail Management, or Marsh & McLennan Companies,
Inc., the parent company of Putnam, LLC and its affiliated companies.
Messrs. Haldeman, Putnam, III, and Smith are deemed "interested persons"
by virtue of their positions as officers of the fund, Putnam Management,
Putnam Retail Management or Marsh & McLennan Companies, Inc. and as
shareholders of Marsh & McLennan Companies, Inc. Mr. Putnam, III is the
President of your fund and each of the other Putnam funds. Mr. Haldeman
is President and Chief Executive Officer of Putnam Investments. Mr.
Smith serves as a Consultant to Marsh & McLennan Companies, Inc. and as
Chairman of Putnam Investments.
Officers
In addition to George Putnam, III, the other officers of the
fund are shown below:
Charles E. Porter (7/26/38)
Executive Vice President, Associate Treasurer and Principal
Executive Officer
Since 1989
Managing Director, Putnam Investments
and Putnam Management
Jonathan S. Horwitz (6/4/55)
Senior Vice President and Treasurer
Since 2004
Managing Director, Putnam Investments
Steven D. Krichmar (6/27/58)
Vice President and Principal Financial Officer
Since 2002
Senior Managing Director, Putnam Investments. Prior to July
2001, Partner, PricewaterhouseCoopers LLP
Michael T. Healy (1/24/58)
Assistant Treasurer and Principal
Accounting Officer
Since 2000
Managing Director, Putnam Investments
Beth S. Mazor (4/6/58)
Vice President
Since 2002
Senior Vice President, Putnam Investments
Daniel T. Gallagher (2/27/62)
Vice President and Legal and Compliance Liaison Officer
Since 2004
Vice President, Putnam Investments. Prior to 2004,
Associate, Ropes & Gray LLP; prior to 2000, Law Clerk,
Massachusetts Supreme Judicial Court
Francis J. McNamara, III (8/19/55)
Vice President and Chief Legal Officer
Since 2004
Senior Managing Director, Putnam
Investments, Putnam Management and
Putnam Retail Management. Prior to 2004, General Counsel,
State Street Research & Management Company
James P. Pappas (2/24/53)
Vice President
Since 2004
Managing Director, Putnam Investments and Putnam Management.
During 2002, Chief Operating Officer, Atalanta/Sosnoff
Management Corporation; prior to 2001, President and Chief
Executive Officer, UAM Investment Services, Inc.
Richard S. Robie, III (3/30/60)
Vice President
Since 2004
Senior Managing Director, Putnam
Investments, Putnam Management and
Putnam Retail Management. Prior to 2003, Senior Vice
President, United Asset Management Corporation
Charles A. Ruys de Perez (10/17/57)
Vice President and Chief Compliance Officer
Since 2004
Managing Director, Putnam Investments
Mark C. Trenchard (6/5/62)
Vice President and BSA Compliance Officer
Since 2002
Senior Vice President, Putnam Investments
Judith Cohen (6/7/45)
Clerk and Assistant Treasurer
Since 1993
Clerk and Assistant Treasurer, The Putnam Funds
The address of each Officer is One Post Office Square,
Boston, MA 02109.
Putnam puts your interests first
In January 2004, 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.
Visit www.putnaminvestments.com for details.
Cost-cutting initiatives
Reduced sales charges
The maximum sales charge for class A shares has been reduced to 5.25%
for equity funds (formerly 5.75%) and 4.50% for most income funds
(formerly 4.75%).*
Lower class B purchase limit
To help ensure that investors are in the most cost-effective share
class, the maximum amount that can be invested in class B shares has
been reduced to $100,000. (Larger trades or accumulated amounts will be
directed to class A shares.)
Ongoing expenses will be limited
During calendar 2004, total ongoing expenses, including management fees
for all funds, will be maintained at or below the average of each fund's
industry peers in its Lipper load-fund universe. For more information,
please see the Statement of Additional information.
Additional measures are being taken to reduce expenses for shareholders
in the six global and international funds that had short-term trading
issues.
Improved disclosure
Putnam fund prospectuses and shareholder reports are being revised to
disclose additional information that will help shareholders compare
funds and weigh their costs and risks along with their potential
benefits. Shareholders will find easy-to-understand information about
fund expense ratios, portfolio manager compensation, risk comparisons,
brokerage commissions, and employee and trustee ownership of Putnam
funds. Disclosure of breakpoint discounts is also being enhanced to
alert investors to potential cost savings.
Protecting investors' interests
New short-term trading fee introduced
To discourage short-term trading, which can interfere with a fund's
long-term strategy, a 2% short-term trading fee will be imposed on any
Putnam fund shares redeemed or exchanged within five calendar days of
purchase.
* The maximum sales charge for class A shares of Putnam Limited Duration
Government Income Fund (formerly Putnam Intermediate U.S. Government
Income Fund) and Putnam Floating Rate 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
Independent Registered Public Accounting Firm
KPMG LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
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
Richard B. Worley
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
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
Charles A. Ruys de Perez
Vice President and Chief Compliance 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.
AN051-216565 1/05
Not FDIC Insured May Lose Value No Bank Guarantee
Item 2. Code of Ethics:
- -----------------------
All officers of the Fund, including its principal executive, financial and
accounting officers, are employees of Putnam Investment Management, LLC,
the Fund's investment manager. As such they are subject to a comprehensive
Code of Ethics adopted and administered by Putnam Investments which is
designed to protect the interests of the firm and its clients. The Fund
has adopted a Code of Ethics which incorporates the Code of Ethics of
Putnam Investments with respect to all of its officers and Trustees who are
employees of Putnam Investment Management, LLC. For this reason, the Fund
has not adopted a separate code of ethics governing its principal
executive, financial and accounting officers.
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
The Funds' Audit and Pricing Committee is comprised solely of Trustees
who are "independent" (as such term has been defined by the Securities
and Exchange Commission ("SEC") in regulations implementing Section 407
of the Sarbanes-Oxley Act (the "Regulations")). The Trustees believe
that each of the members of the Audit and Pricing Committee also possess
a combination of knowledge and experience with respect to financial
accounting matters, as well as other attributes, that qualify them for
service on the Committee. In addition, the Trustees have determined
that all members of the Funds' Audit and Pricing Committee meet the
financial literacy requirements of the New York Stock Exchange's rules
and that Mr. Patterson, Mr. Stephens and Mr. Worley qualify as "audit
committee financial experts" (as such term has been defined by the
Regulations) based on their review of their pertinent experience and
education. Certain other Trustees, although not on the Audit and Pricing
Committee, would also qualify as "audit committee financial experts."
The SEC has stated that the designation or identification of a person as
an audit committee financial expert pursuant to this Item 3 of Form N-CSR
does not impose on such person any duties, obligations or liability that
are greater than the duties, obligations and liability imposed on such
person as a member of the Audit and Pricing Committee and the Board of
Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
The following table presents fees billed in each of the last two
fiscal years for services rendered to the fund by the fund's
independent auditors:
Audit Audit-Related Tax All Other
Fiscal year ended Fees Fees Fees Fees
- ----------------- ---------- ------------- ------- ---------
November 30, 2004 $37,681* $-- $4,150 $257
November 30, 2003 $32,300 $-- $3,600 $--
*Includes fees of $531 billed by the fund's independent auditor to
the fund for audit procedures necessitated by regulatory and
litigation matters. These fees were reimbursed to the fund by
Putnam.
For the fiscal years ended November 30, 2004 and November 30, 2003,
the fund's independent auditors billed aggregate non-audit fees in
the amounts of $4,407 and $3,600, respectively, to the fund,
Putnam Management and any entity controlling, controlled by or
under common control with Putnam Management that provides ongoing
services to the fund.
Audit Fees represents fees billed for the fund's last two fiscal
years.
Audit-Related Fees represents fees billed in the fund's last two
fiscal years for services traditionally performed by the fund's
auditor, including accounting consultation for proposed transactions
or concerning financial accounting and reporting standards and other
audit or attest services not required by statute or regulation.
Tax Fees represent fees billed in the fund's last two fiscal years
for tax compliance, tax planning and tax advice services. Tax
planning and tax advice services include assistance with tax audits,
employee benefit plans and requests for rulings or technical advice
from taxing authorities.
All Other Fees Fees represent fees billed for services relating
relating interfund trading .
Pre-Approval Policies of the Audit and Pricing Committee. The Audit
and Pricing Committee of the Putnam funds has determined that, as a
matter of policy, all work performed for the funds by the funds'
independent auditors will be pre-approved by the Committee and will
generally not be subject to pre-approval procedures.
Under certain circumstances, the Audit and Pricing Committee
believes that it may be appropriate for Putnam Investment
Management, LLC ("Putnam Management") and certain of its affiliates
to engage the services of the funds' independent auditors, but only
after prior approval by the Committee. Such requests are required
to be submitted in writing to the Committee and explain, among other
things, the nature of the proposed engagement, the estimated fees,
and why this work must be performed by that particular audit firm.
The Committee will review the proposed engagement at its next
meeting.
Since May 6, 2003, all work performed by the independent auditors
for the funds, Putnam Management and any entity controlling,
controlled by or under common control with Putnam Management that
provides ongoing services to the fund was pre-approved by the
Committee or a member of the Committee pursuant to the pre-approval
policies discussed above. Prior to that date, the Committee had a
general policy to pre-approve the independent auditor's engagements
for non-audit services with the funds, Putnam Management and any
entity controlling, controlled by or under common control with
Putnam Management that provides ongoing services to the fund.
The following table presents fees billed by the fund's principal
auditor for services required to be approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X.
Audit-Related Tax All Other Total Non-
Fiscal year ended Fees Fees Fees Audit Fees
- ----------------- ------------- ---- --------- ----------
November 30, 2004 $-- $-- $-- $--
November 30, 2003 $-- $-- $-- $--
Item 5. Audit Committee: Not applicable
- -------------------------
Item 6. Schedule of Investments: Not applicable
- --------------------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. Purchases of Equity Securities by Closed-End Management Investment
- --------------------------------------------------------------------------
Companies and Affiliated Purchasers: Not applicable
------------------------------------
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.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) The Code of Ethics of The Putnam Funds, which incorporates the
Code of Ethics of Putnam Investments, is filed herewith.
(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: January 28, 2005
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: January 28, 2005
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: January 28, 2005