Prospectus
MARCH 30, 1999 ,
AS REVISED SEPTEMBER 30, 1999
PUTNAM NEW YORK TAX
EXEMPT INCOME FUND
CLASS A, B , C AND M SHARES
PUTNAM NEW YORK TAX
EXEMPT OPPORTUNITIES FUND
CLASS A, B , C AND M SHARES
PUTNAM NEW YORK TAX EXEMPT
MONEY MARKET FUND
CLASS A SHARES
INVESTMENT CATEGORY: TAX-EXEMPT
This prospectus explains what you should know about these mutual
funds before you invest. Please read it carefully.
Putnam Investment Management, Inc. (Putnam Management), which has
managed mutual funds since 1937, manages these funds.
These securities have not been approved or disapproved by the
Securities and Exchange Commission nor has the Commission passed
upon the accuracy or adequacy of this prospectus. Any statement
to the contrary is a crime.
CONTENTS
2 Fund summaries
2 Goals
2 Main investment strategies
2 Main risks
4 Performance information
7 Fees and expenses
9 What are the funds' main investment strategies and related risks?
19 Who manages each fund?
20 How does each fund price its shares?
20 How do I buy fund shares?
25 How do I sell fund shares?
28 How do I exchange fund shares?
29 Fund distributions and taxes
31 Financial highlights
sBOSTON ( LONDON ( TOKYO
FUND SUMMARIES
GOALS
PUTNAM NEW YORK TAX EXEMPT INCOME FUND (THE "INCOME FUND").
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 Management believes is consistent with preservation of
capital.
PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND (THE "OPPORTUNITIES FUND").
The fund seeks high current income exempt from federal income tax
and New York State and City personal income tax.
PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND (THE "MONEY MARKET FUND").
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 Management believes is consistent with preservation of
capital, maintenance of liquidity and stability of principal.
MAIN INVESTMENT STRATEGIES - TAX-EXEMPT SECURITIES
THE INCOME AND OPPORTUNITIES FUNDS. Most of the funds'
investments are
* bonds and other debt the interests on which is exempt from
federal income tax and New York State and City personal income tax
(but which may be subject to the federal alternative minimum tax)
* investment grade in quality, and
* long-term (with maturities of more than 10 years).
THE MONEY MARKET FUND. Most of the fund's investments are
* high quality money market instruments the interest on which is
exempt from federal income tax and New York State and City
personal income tax, and
* short-term (with a dollar-weighted average portfolio maturity of
90 days or less).
MAIN RISKS
THE INCOME AND OPPORTUNITIES FUNDS
The main risks that could adversely affect the value of each
fund's shares and the total return on your investment include
* The risk that movements in the securities markets will adversely
affect the value of the funds' investments. This risk includes
interest rate risk, which means that the prices of the funds'
investments, particularly the debt in which they mainly invest,
are likely to fall if interest rates rise. Interest rate risk is
generally highest for investments with long maturities.
* The risk that the issuers of the funds' investments will not
make timely payments of interest and principal. This credit risk
is higher for the debt that is below investment grade in quality.
THE MONEY MARKET FUND
While money market funds are designed to be relatively low risk
investments, they are not entirely free of risk. The main risks
that could adversely affect the value of the fund's shares and the
total return on your investment include
* the risk that the value of your investment may be eroded over
time by the effects of inflation, and
* the risk that, as a result of deterioration in the credit
quality of issuers whose securities the fund holds or an increase
in interest rates, the fund may be unable to maintain a net asset
value of $1.00 per share .
The Opportunities Fund and Money Market Fund are "non-
diversified," which means that they may invest more of their
assets in the securities of fewer companies than a "diversified"
fund. The funds may therefore be more exposed to the risk of loss
from a few issuers than a fund that invests more broadly.
ALL FUNDS
In addition to the risks described above, all of the funds may
also be subject to the following risks
* The risk that some or all of the interest the fund receives
might become taxable by law or be determined by the Internal
Revenue Service (or New York State or City tax authorities) to be
taxable.
* The risk of investing mostly in a single state. Investments in
a single state, even though representing a number of different
issuers , may be affected by common economic forces and
other factors. The vulnerability of the fund to factors affecting
New York tax-exempt investments will be significantly greater than
that of a more geographically diversified fund, which may result
in greater losses and volatility.
You can lose money by investing in any fund. There is no
guarantee that any fund will achieve its goals and no fund is
intended as a complete investment program. Investments in a fund
are NOT deposits of any bank nor are they insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government
agency. Although the funds generally invest in tax-exempt
securities, some of the funds' investments may generate taxable
income or income that is subject to the federal alternative
minimum tax. Although the Money Market Fund seeks to preserve the
value of your investment at $1.00 per share, there is no guarantee
that the fund will be able to do so.
PERFORMANCE INFORMATION
The following information provides some indication of each fund's
risks. The charts show year-to-year changes in the performance of
each fund's class A shares. The table following each chart
compares that fund's performance to that of one or more broad
measures of market performance. Of course, a fund's past
performance is not an indication of future performance.
THE INCOME FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
Plot points
1989 9.42%
1990 3.94%
1991 14.33%
1992 10.01%
1993 13.25%
1994 -7.39%
1995 15.50%
1996 3.40%
1997 8.96%
1998 4.99%
Performance figures do not reflect the impact of sales charges.
If they did, performance would be less than that shown. During
the periods shown in the bar chart, the highest return for a
quarter was 7.13% (quarter ending 3/31/95) and the lowest return
for a quarter was -6.15% (quarter ending 3/31/94).
AVERAGE ANNUAL TOTAL RETURNS (for periods ending 12/31/98)
PAST PAST PAST
1 YEAR 5 YEARS 10 YEARS
CLASS A 0.01% 3.81% 6.92%
CLASS B -0.75% 3.80% 6.60%
CLASS C 3.21% 3.98% 6.58%
CLASS M 1.31% 3.77% 6.65%
LEHMAN BROS.
MUNICIPAL
BOND INDEX 6.48% 6.23% 8.22%
Unlike the bar chart, this performance information reflects the
impact of sales charges. Class A and class M share performance
reflects the current maximum initial sales charges; class B and
class C share performance reflects the maximum applicable
deferred sales charge if shares had been redeemed on 12/31/98 and
assumes conversion of class B shares only to class A shares
after eight years. For periods before the inception of class B
shares (1/4/93) , class C shares (7/26/99) and class M
shares (4/10/95), performance of those classes shown in the table
is based on performance of the Income Fund's class A shares,
adjusted to reflect the appropriate sales charge and the higher
12b-1 fees paid by class B , class C and class M shares.
The fund's performance is compared to the Lehman Brothers
Municipal Bond Index, an unmanaged index of long-term fixed-rate
investment-grade tax-exempt bonds generally considered
representative of the municipal bond market.
THE OPPORTUNITIES FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
Plot points
1991 11.62%
1992 8.41%
1993 9.19%
1994 -2.83%
1995 16.49%
1996 3.81%
1997 8.89%
1998 5.29%
Performance figures do not reflect the impact of sales charges.
If they did, performance would be less than that shown. During
the periods shown in the bar chart, the highest return for a
quarter was 5.96% (quarter ending 3/31/95) and the lowest return
for a quarter was -3.06 (quarter ending 3/31/94).
AVERAGE ANNUAL TOTAL RETURNS (for periods ending 12/31/98)
PAST PAST SINCE
1 YEAR 5 YEARS INCEPTION
(11/7/90)
CLASS A 0.26% 5.12% 6.78%
CLASS B -0.39% 5.07% 6.65%
CLASS C 3.39% 5.28% 6.55%
CLASS M 1.53% 5.04% 6.57%
LEHMAN BROS.
MUNICIPAL
BOND INDEX 6.48% 6.23% 8.17%
Unlike the bar chart, this performance information reflects the
impact of sales charges. Class A and class M share performance
reflects the current maximum initial sales charges; class B and
class C share performance reflects the maximum applicable
deferred sales charge if shares had been redeemed on 12/31/98 and
assumes conversion of class B shares only to class A shares
after eight years. For periods before the inception of class B
shares (2/1/94) , class C shares (7/26/99) and class M
shares (2/10/95), performance of those classes shown in the table
is based on performance of the Opportunities Fund's class A
shares, adjusted to reflect the appropriate sales charge and the
higher 12b-1 fees paid by class B , class C and class M
shares. The fund's performance is compared to the Lehman Brothers
Municipal Bond Index, an unmanaged index of long-term fixed-rate
investment-grade tax-exempt bonds generally considered
representative of the municipal bond market.
THE MONEY MARKET FUND
CALENDAR YEAR TOTAL RETURNS
Plot points
1989 5.48%
1990 5.08%
1991 3.94%
1992 2.47%
1993 1.63%
1994 2.03%
1995 3.24%
1996 2.90%
1997 2.73%
1998 2.90%
During the periods shown in the bar chart, the highest return for
a quarter was 1.41% (quarter ending 6/30/89) and the lowest return
for a quarter was 0.39% (quarter ending 3/31/94).
AVERAGE ANNUAL TOTAL RETURNS (for periods ending 12/31/98)
PAST PAST PAST
1 YEAR 5 YEARS 10 YEARS
MONEY MARKET
FUND 2.90% 2.80% 3.38%
THE MERRILL LYNCH 91-DAY
TREASURY BILL INDEX 5.23% 5.22% 5.69%
LIPPER NEW YORK
TAX EXEMPT MONEY
MARKET FUND AVERAGE 2.86% 2.87% 3.30%
The fund's performance is compared to the Merrill Lynch 91-Day
Treasury Bill Index and the Lipper New York Tax Exempt Money
Market Fund Average . The Merrill Lynch 91-Day Treasury Bill
Index is an unmanaged index that seeks to measure the performance
of treasury bills currently available in the marketplace. The
Lipper New York Tax Exempt Money Market Fund Average is an
arithmetic average of the total return of all New York tax exempt
money market funds tracked by Lipper Analytical Services.
FEES AND EXPENSES
This table summarizes the fees and expenses you may pay if you
invest in a fund. Expenses for the Income Fund and Money Market
Fund are based on each fund's last fiscal year. Expenses for the
Opportunities Fund are based on the fund's last full fiscal year.
SHAREHOLDER FEES (fees paid directly from your investment)
INCOME AND OPPORTUNITIES FUNDS
CLASS A CLASS B CLASS C CLASS M
Maximum Sales Charge
(Load) Imposed on
Purchases (as a percentage
of the offering price) 4.75% NONE* NONE* 3.25%*
Maximum Deferred Sales Charge
(Load) (as a percentage of
the original purchase price
or redemption proceeds,
whichever is lower) NONE** 5.00% 1.00% NONE
MONEY MARKET FUND
Maximum Sales Charge (Load) Imposed
on purchases (as a percentage of
the offering price) NONE
Maximum Deferred Sales Charge (Load)
(as a percentage of the original
purchase price or redemption
proceeds, whichever is lower) NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from fund assets)
TOTAL
ANNUAL FUND
MANAGEMENT DISTRIBUTION OTHER OPERATING
FEES (12B-1) FEES EXPENSES EXPENSES
INCOME FUND
Class A 0.49% 0.20% 0.14% 0.83%
Class B 0.49% 0.85% 0.14% 1.48%
Class C 0.49% 1.00% 0.14% 1.63%
Class M 0.49% 0.50% 0.14% 1.13%
OPPORTUNITIES FUND ***
Class A 0.50% 0.20% 0.20% 0.90%
Class B 0.50% 0.85% 0.20% 1.55%
Class C 0.50% 1.00% 0.20% 1.70%
Class M 0.50% 0.50% 0.20% 1.20%
MONEY MARKET FUND 0.45% NONE 0.34% 0.79%
*The higher 12b-1 fees borne by class B , class C and class
M shares may cause their long-term shareholders to pay more than
the total sales charges paid by class A shareholders.
**A deferred sales charge of up to 1% may be imposed on certain
redemptions of class A shares bought without an initial sales
charge.
*** Expenses reflect the fees which would have been paid for
the last fiscal year based upon a new management contract for the
Opportunities Fund that took effect on 7/1/99.
EXAMPLE
This example translates the "total annual fund operating expenses"
shown in the preceding table into dollar amounts. By doing this,
you can more easily compare the cost of investing in the funds to
the cost of investing in other mutual funds. The example makes
certain assumptions. It assumes that you invest $10,000 in each
fund for the time periods shown and then, except as shown for
class B and class C shares, redeem all your shares at the
end of those periods. It also assumes a 5% return on your
investment each year and that the fund's operating expenses remain
the same. The example is hypothetical; your actual costs and
returns may be higher or lower.
INCOME FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A $556 $727 $914 $1,452
Class B $651 $768 $1,008 $1,592*
Class B (no redemption) $151 $468 $808 $1,592*
Class C $266 $514 $887 $1,933
Class C (no redemption) $166 $514 $887 $1,933
Class M $436 $672 $927 $1,655
OPPORTUNITIES FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A $572 $748 $950 $1,530
Class B $658 $790 $1,045 $1,671 *
Class B (no redemption) $158 $490 $845 $1,671*
Class C $273 $536 $923 $2,009
Class C (no redemption) $173 $536 $923 $2,009
Class M $443 $694 $963 $1,732
MONEY MARKET FUND $81 $252 $439 $978
*Reflects the conversion of class B shares to class A shares,
which pay lower 12b-1fees. Conversion occurs no more than eight
years after purchase.
What are the funds' main investment strategies and related risks?
THE INCOME AND OPPORTUNITIES FUNDS
Any investment carries with it some level of risk that generally
reflects its potential for reward. The Income Fund pursues its
goal by investing in securities that allow at least 90% of the
fund's income distributions to be exempt from both federal
income tax and New York State and City personal income tax, except
during times of adverse market conditions when more than 10% of
the Income Fund's income distributions could be subject to these
taxes. The Opportunities Fund pursues its goal by investing,
under normal circumstances, at least 80% of its assets in New York
tax-exempt securities. These investment policies cannot be changed
without the approval of the relevant fund's shareholders. For a
detailed discussion of tax-exempt investments, see "Tax-exempt
investments" below.
* INTEREST RATE RISK. The values of bonds and other debt
instruments usually rise and fall in response to changes in
interest rates. Declining interest rates generally raise the value
of existing debt instruments, and rising interest rates generally
lower the value of existing debt instruments. Changes in a debt
instrument's value usually will not affect the amount of income a
fund receives from it, but will affect the value of that fund's
shares. Interest rate risk is generally greater for investments
with longer maturities.
A fund may buy investments that give the issuer the option to
"call," or redeem, these investments before their maturity date.
If an investment were to be "called" during a time of declining
interest rates, the fund might have to reinvest the proceeds in an
investment offering a lower yield, and therefore might not benefit
from any increase in value as a result of declining interest
rates.
The funds may invest in so-called "premium" investments, which
offer interest rates higher than prevailing market rates. In
addition, during times of declining interest rates, many of the
funds' investments may offer interest rates that are higher than
current market rates, regardless of whether the funds bought them
at a premium. When a fund holds premium investments, shareholders
are likely to receive higher dividends (but will bear a greater
risk that the value of the fund's shares will fall) than they
would if that fund held investments that offered current market
rates of interest. Premium investments involve a greater risk of
loss, because their values tend to decline over time.
Investors may find it useful to compare each fund's yield, which
factors out the effect of premium securities, with its current
dividend rate, which does not factor out that effect.
* CREDIT RISK. Investors normally expect to be compensated in
proportion to the risk they are assuming. Thus, debt of issuers
with poor credit prospects usually offers higher yields than debt
of issuers with more secure credit. Higher-rated investments
generally offer lower credit risk, but not lower interest rate
risk. The values of higher-rated investments still fluctuate in
response to changes in interest rates.
The Income Fund ' s debt investments are mostly investment
grade, which means they are rated at the time of purchase at least
BBB (or its equivalent) by a nationally recognized securities
rating agency, or are unrated investments that Putnam Management
determines are of comparable quality. The Income Fund may invest
up to 25% of its assets in New York tax exempt investments that
are rated, at the time of purchase, below BBB (or its equivalent)
by each agency rating the security, or are unrated investments
that Putnam Management determines are of comparable quality, but
generally will only invest in securities rated at least BB (or the
equivalent) by a nationally recognized securities rating agency
and unrated investments that Putnam Management believes are of
comparable quality. The Income Fund will not necessarily sell an
investment if its rating is reduced.
The Opportunities Fund invests most of its assets in investment
grade securities. The Opportunities Fund may invest the balance
of its assets in high yielding lower-rated securities that at the
time of purchase are rated at least B (or the equivalent) by a
nationally recognized securities rating agency, or are unrated
investments that Putnam
Management[/R] determines are of
comparable quality. The Opportunities Fund will not necessarily
sell an investment if its rating is reduced.
* LOWER RATED DEBT INSTRUMENTS. Fixed-income investments rated
below BBB (or its equivalent) are known as "junk bonds" and
reflect a greater possibility that the issuers may be unable to
make timely payments of interest and principal and thus default.
If this happens, or is perceived as likely to happen, the values
of those investments will usually decline and be more volatile. A
default or expected default could also make it difficult for a
fund to sell investments at prices approximating the values that
fund had previously placed on them. Tax-exempt debt, particularly
lower-rated tax-exempt debt, usually has a more limited market
than taxable debt, which may at times make it difficult for the
funds to buy or sell certain bonds or to establish their fair
value.
Credit ratings are based largely on the issuer's historical
financial condition and the rating agencies' investment analysis
at the time of rating. The rating assigned to any particular
investment does not necessarily reflect the issuer's current
financial condition, and does not reflect an assessment of an
investment's volatility or liquidity.
Although Putnam Management considers credit ratings in making
investment decisions, it performs its own investment analysis and
does not rely only on ratings assigned by the rating agencies.
However, the amount of information about the financial condition
of issuers of tax-exempt debt may not be as extensive as that
which is made available by companies whose stock or debt is
publicly traded. When the funds buy lower rated debt, the
achievement of their goals depends more on Putnam Management's
ability than would be the case if the funds were buying investment
grade debt.
The funds may have to participate in various legal proceedings or
take possession of and manage assets that secure the issuer's
obligations. The funds' ability to enforce their rights in
bankruptcy proceedings may be more limited than would be the case
with private issuers. This could increase the funds' operating
expenses and decrease their net asset values. Any income that
arises from ownership or operation of assets would be taxable.
Although they are generally thought to have lower credit risk,
investments that are considered investment-grade may share some of
the risks of lower rated investments.
ZERO COUPON BONDS. Each fund may at times invest in "zero coupon"
bonds. Zero coupon bonds are issued at less than their face value
and make payments of interest only at maturity rather than at
intervals during the life of the bond. These bonds allow an issuer
to avoid generating cash to make current interest payments. They
therefore involve greater credit risk and are subject to greater
price fluctuations than bonds that pay current interest in cash.
* FUTURES AND OPTIONS. The funds may buy and sell financial
futures contracts and options, which are commonly known as
"derivatives." Futures and options involve special risks and
costs, and may result in losses. The funds may profit or lose
money depending on the change in the value of the underlying index
or investment over the life of the futures contract or option.
Futures and options can also produce taxable income or capital
gains for a fund.
In particular, the funds may buy and sell
* futures contracts on the Municipal Bond Index, which is intended
to reflect the market performance of long-term tax-exempt bonds,
* futures contracts on U.S. Treasury debt,
* put and call options on such futures contracts and U.S. Treasury
debt, and
* put and call options on, or warrants to buy, tax-exempt
investments.
The funds may engage in these transactions for "hedging" or
protective purposes, such as to protect against changes in
interest rates. Although Putnam Management has the flexibility to
use these strategies, it may choose not to for a variety of
reasons, even in very volatile market conditions. It may also do
so for non-hedging purposes, such as to manage the effective
duration of a fund's portfolio. Duration is a measure of
sensitivity to changes in interest rates.
The prices of futures and options, of the underlying indexes or
investments, and of any investments that are the subject of a
hedge, may change in unexpected or unrelated ways. The successful
use of futures and options also depends on Putnam Management's
ability to forecast market movements correctly.
Other risks arise from the potential inability to terminate
futures and options positions. A liquid secondary market may not
exist for these positions at any particular time. The funds'
ability to terminate positions traded in the over-the-counter
market may be more limited than for those traded on exchanges.
The funds' use of futures and options may increase the amount of
taxes payable by shareholders.
* INVERSE FLOATERS AND RESIDUAL INTEREST BONDS. The funds may buy
interests in tax-exempt debt commonly known as inverse floating
obligations or residual interest bonds. These bonds pay interest
at rates that vary inversely with short-term tax-exempt interest
rates. The interest rates on these bonds typically fall as short-
term market interest rates rise and typically rise as short-term
market rates fall. The interest rates on these bonds typically
change twice as much as market interest rates, and they are
therefore generally more volatile.
* DERIVATIVES. The funds may engage in a variety of transactions
involving derivatives, such as futures, options, warrants and swap
contracts. Derivatives are financial instruments whose value
depends upon, or is derived from, the value of something else,
such as one or more underlying investments, pools of investments,
indexes or currencies. The fund's return on a derivative
typically depends on the change in the value of investment, pool
of investments, index or currency specified in the derivative
instrument.
The fund may use derivatives both for hedging and non-hedging
purposes. The decision as to whether and to what extent the fund
will use derivatives for hedging purposes will depend on a number
of factors, including market conditions, the fund's investments
and the availability of suitable derivatives. Derivatives involve
special risks and may result in losses. The fund will be
dependent on Putnam Management's ability to analyze and manage
these sophisticated instruments. The prices of derivatives may
move in unexpected ways, especially in abnormal market conditions.
Some derivatives are "leveraged" and therefore may magnify or
otherwise increase investment losses to the fund. The fund's use
of derivatives may also increase the amount of taxes payable by
shareholders.
Other risks arise from the potential inability to terminate or
sell derivatives positions. A liquid secondary market may not
always exist for the fund's derivatives positions at any given
time. In fact, many over-the-counter instruments (investments not
traded on any exchange) will not be liquid. Over-the-counter
instruments also involve the risk that the other party will not
meet its obligations to the funds. For further information about
the risks of derivatives, see the statement of additional
information (SAI).
THE MONEY MARKET FUND
Any investment carries with it some level of risk that generally
reflects its potential for reward. The fund pursues its goal by
investing in securities that normally allow at least 90% of the
fund's income distributions to be exempt from both federal income
tax and New York State and City personal income tax. This
investment policy cannot be changed without the approval of the
fund's shareholders. For a detailed discussion of tax-exempt
investments, see "Tax-exempt investments" below.
* CREDIT QUALITY. The fund buys only high quality New York tax-
exempt investments that Putnam Management believes present minimal
credit risk at the time of purchase. High quality investments are
* rated in one of the two highest categories by at least two
nationally recognized rating services, or
* rated by one rating service in one of its two highest categories
(if only one rating service has provided a rating) or
* unrated investments that Putnam Management determines are of
equivalent quality.
To maintain liquidity and preserve capital, the fund may decide
not to buy investments that pay the highest available yields at
any particular time.
Investors normally expect to be compensated in proportion to the
risk they are assuming. Thus, debt of issuers with good credit
prospects usually offer lower yields than those of issuers with
less secure credit prospects. Higher-rated investments generally
offer lower credit risk, but not lower interest rate risk. The
value of a high quality investment is still subject to a credit
risk, and can still fluctuate in response to changes in interest
rates.
The amount of information about the financial condition of issuers
of tax-exempt debt may not be as extensive as that which is made
available by companies whose stock or debt is publicly traded.
The fund's ability to enforce its rights against issuers of tax-
exempt investments in bankruptcy proceedings may be more limited
than would be the case with private issuers.
* LETTERS OF CREDIT & OTHER CREDIT ENHANCEMENTS. The fund may buy
investments backed by credit enhancements such as letters of
credit, which are designed to give additional protection to
investors. For example, if an issuer of a note does not have the
credit rating usually required by the fund, another company may
use its higher credit rating to back up the credit of the issuer
of the note by selling the issuer a letter of credit. The main
risk in investments backed by a letter of credit is that the
entity issuing the letter of credit will not be able, or is
thought to be unlikely to be able, to fulfill its obligations to
the fund.
* VARIABLE RATE & FLOATING RATE DEMAND NOTES. The fund expects to
invest significantly in floating rate and variable rate demand
notes and bonds. These investments may have maturities of more
than one year, but generally allow the holder to demand payment of
principal plus accrued interest within a relatively short period.
Because the interest rate on variable rate and floating rate
demand notes can change as market interest rates change, these
investments are unlikely to be able to lock in favorable longer
term interest rates. The interest rate of a floating rate
instrument is generally based on a known lending rate, such as a
bank's prime rate, and is reset whenever the underlying rate is
adjusted. The interest rate on a variable rate demand note is
reset at specified intervals at a market rate.
* INSURANCE. The fund has bought liability insurance that insures
it against a decrease in the value of its investments arising from
the issuer's default or bankruptcy. The insurance covers most of
the fund's investments, other than U.S. government securities.
Although the insurance may provide the fund with some protection
against certain credit risks, it does not guarantee or insure that
the fund will be able to maintain a stable net asset value of
$1.00 per share. The maximum total coverage for the fund is $30
million, with a deductible for each loss of $1 million or 0.30% of
the fund's net assets, whichever is less. The $30 million
maximum coverage is shared with four other Putnam money market
funds. Recovery under the insurance is subject to certain
conditions, including the condition that the other Putnam money
market funds have not previously exhausted the insurance coverage,
and the insurance might not be renewed when it expires.
* INTEREST RATE RISK. The values of money market investments
usually rise and fall in response to changes in interest rates.
Declining interest rates will generally raise the value of
existing money market investments, and rising interest rates will
generally lower the value of existing money market investments.
Interest rate risk is generally lower for investments with short
maturities, and the short-term nature of money market investments
is designed to reduce this risk.
ALL FUNDS
* TAX-EXEMPT SECURITIES. New York tax-exempt securities are
typically debt instruments issued by the State of New York, its
municipalities, and their agencies, instrumentalities or other
governmental units the interest on which, in the opinion of bond
counsel, is exempt from federal income tax and New York State and
City personal income tax. These securities are commonly issued to
raise money for various public purposes, such as loans for the
construction of housing, schools or hospitals, or to provide
temporary financing in anticipation of the receipt of taxes and
other revenue. They may also include special revenue obligations,
(described below), industrial development bonds, private activity
bonds and notes of public authorities to finance privately owned
or operated facilities. The tax-exempt securities that the funds
may buy include municipal notes and bonds, municipal securities
backed by the U.S. government, tax-exempt commercial paper (also
known as short-term discount notes) or so-called participation
interests in any of the above. Private activity bonds may be
subject to federal alternative minimum tax.
* GENERAL OBLIGATIONS. Some tax-exempt investments are backed by
the issuer's authority to levy taxes and are considered an
obligation of the issuer. They are known as general obligation
securities and are payable from the issuer's general unrestricted
revenues, although payment may depend upon government
appropriation or aid from other governments. These investments may
be vulnerable to legal limits on a government's power to raise
revenue or increase taxes, as well as economic or other
developments that can reduce revenues.
>SPECIAL REVENUE OBLIGATIONS. Other tax-exempt investments (known
as special revenue obligations) are payable from revenues earned
by a particular project or other revenue source. They include
investments such as municipal leases. They also include
industrial development bonds and private activity bonds, which are
paid only from the revenues of the private owners or operators of
the facilities. For these types of bonds, investors can look only
to the revenue generated by the project or the private company
operating the project rather than the credit of the state or local
government authority issuing the bonds. Special revenue
obligations are typically subject to greater credit risk than
general obligations because of the relatively limited source of
revenue.
* ALTERNATIVE MINIMUM TAX. Interest income distributed by a fund
from certain tax-exempt investments may be subject to the federal
alternative minimum tax (AMT) for individuals. As a policy that
may not be changed without the approval of shareholders, the funds
do not count such investments for the purpose of complying with
the 90%, for the Income and Money Market Funds, and 80%, for the
Opportunities Fund, investment policies described above.
Corporations will be required to include all tax-exempt interest
dividends in determining their federal (but not New York)
alternative minimum tax. For more information, consult your tax
advisor.
* CONCENTRATION OF INVESTMENTS. None of the funds will invest
more than 25% of its total assets in any one industry.
Governmental issuers of New York tax-exempt investments are not
considered a part of any industry. This concentration test may
apply, however, to New York tax-exempt investments that are backed
only by the assets and revenues of privately owned or operated
issuers (who may be deemed to be the issuers of such securities).
Each fund does, however, reserve the right to invest more than 25%
of its assets in industrial revenue bonds and private activity
securities.
Each fund may also invest more than 25% of its assets in a broad
segment of the tax-exempt debt market, such as revenue bonds for
hospitals and other health care facilities, housing or airports,
if Putnam Management believes the yields from these bonds justify
the additional risks of such concentration.
The value of the Income and Opportunities funds shares may change
more than the values of shares of funds investing in a greater
number of different kinds of issuers. Legislation, voter
initiatives or court decisions (or concerns about the potential
results of such legislation, voter initiatives or court cases)
affecting financing for projects such as those described above or
lower demand for the services or products provided by a particular
market segment are examples of such potentially adverse events.
Since the funds invest primarily in New York tax-exempt
investments, they are more vulnerable than more geographically
diversified tax-exempt funds to the New York economy and issues
encountered by tax exempt issuers in New York such as
* the inability or perceived inability of the state or local
municipality (or their agencies or instrumentalities) to collect
sufficient tax or other revenues to meet their payment
obligations,
* the placement of constitutional or statutory limits on a tax-
exempt issuer's ability to raise revenues or increase taxes, and
* economic or demographic factors that may cause a decrease in tax
or other revenues for the state or local municipality (or their
agencies or instrumentalities), or for the private quarters of
publicly financed facilities.
These factors, among others, may affect tax-exempt issuers'
ability to pay their obligations when due and may adversely impact
the funds and their shareholders.
In addition, because there are a relatively small number of
issuers of New York tax-exempt investments, the funds are more
likely to invest a higher percentage of assets in the debt of a
single issuer than a fund that invests in a wider range of tax-
exempt investments. To the extent a fund invests a significant
part of its assets in the securities of a particular issuer, it
will be subject to an increased risk of loss if the market value
of the issuer's debt declines.
At times, the funds, either alone or together with other funds and
accounts managed by Putnam Management or its affiliates, may own
all or most of the debt of a particular public issuer. This
concentration of ownership may make it more difficult to sell, or
to determine the fair value of these investments.
* ALTERNATIVE STRATEGIES. At times Putnam Management may judge
that market conditions make pursuing a fund's investment
strategies inconsistent with the best interests of its
shareholders. Putnam Management then may temporarily use
alternative strategies that are mainly designed to limit the
fund's losses. Although Putnam Management has the flexibility to
use these strategies, it may choose not to for a variety of
reasons, even in very volatile market conditions. These strategies
may cause the fund to miss out on investment opportunities, may
produce taxable income, and may prevent the fund from achieving
its goal.
* OTHER INVESTMENTS. In addition to the main investment
strategies described above, a fund may also make other types of
investments, including investments that may produce taxable income
or capital gains, and may be subject to other risks, as described
in the funds' statement of additional information (SAI).
* CHANGES IN POLICIES. The funds' Trustees may change a fund's
goal, investment strategies and other policies without shareholder
approval, except as otherwise indicated.
Who manages each fund?
The funds' Trustees oversee the general conduct of fund business.
The Trustees have retained Putnam Management to be each fund's
investment manager, responsible for making investment decisions
for each fund and managing each fund's other affairs and business.
Each fund pays Putnam Management a quarterly management fee for
these services based on the fund's average net assets. The Income
Fund paid Putnam Management a management fee of 0.49% of average
net assets for the funds' last fiscal year. The Opportunities Fund
paid Putnam Management a management fee of 0.60% of average net
assets for the fund's last full fiscal year, ended September 30,
1998. Under a new management contract approved by the funds'
Trustees, effective July1, 1999, the Opportunities Fund would have
paid 0.50% during the prior fiscal year. The Money Market fund
paid Putnam Management a management fee of 0.45% of the average
net assets for the fund's last fiscal year. Putnam Management's
address is One Post Office Square, Boston, MA 02109.
The following officer of Putnam Management has had primary
responsibility for the day-to-day management of each fund's
portfolio since the year shown below. His experience as a
portfolio manager or investment analyst over at least the last
five years is also shown.
MANAGER SINCE EXPERIENCE
INCOME FUND AND OPPORTUNITIES FUND
David E. Hamlin 1998 Employed by Putnam Management
Senior Vice President since August 1998. Prior to
August 1998, Mr. Hamlin was
employed at The Vanguard Group.
>YEAR 2000 ISSUES. The funds could be adversely affected if the
computer systems used by Putnam Management and the funds' other
service providers do not properly process and calculate date-
related information relating to the end of this century and the
beginning of the next. While year 2000-related computer problems
could have a negative effect on the funds, both in their
operations and in their investments, Putnam Management is working
to avoid such problems and to obtain assurances from service
providers that they are taking similar steps. No assurances,
though, can be provided that the funds will not be adversely
impacted by these matters.
HOW DOES EACH FUND PRICE ITS SHARES?
THE INCOME AND OPPORTUNITIES FUNDS. The price of each fund's
shares is based on its net asset value (NAV). The NAV per share
of each class equals the total value of its assets, less its
liabilities, divided by the number of its outstanding shares.
Shares are only valued as of the close of regular trading on the
New York Stock Exchange each day the exchange is open.
The Income and Opportunities Funds value their investments for
which market quotations are readily available at market value.
Each values short-term investments that will mature within 60 days
at amortized cost, which approximates market value. Each fund
values all other investments and assets at their fair value.
THE MONEY MARKET FUND. The Money Market Fund values its
investments at amortized cost, which approximates market value.
HOW DO I BUY FUND SHARES?
THE INCOME AND OPPORTUNITIES FUNDS
You can open a fund account with as little as $500 and make
additional investments at any time with as little as $50. The
Income and Opportunities Funds sell their shares at the offering
price, which is the NAV plus any applicable sales charge. Your
financial advisor or Putnam Investor Services generally must
receive your completed buy order before the close of regular
trading on the New York Stock Exchange for your shares to be
bought at that day's offering price.
You can buy shares
* THROUGH A FINANCIAL ADVISOR. Your advisor will be responsible
for furnishing all necessary documents to Putnam Investor
Services, and may charge you for his or her services.
* THROUGH SYSTEMATIC INVESTING. You can make regular investments
of $25 or more per month through automatic deductions from your
bank checking or savings account. Application forms are available
through your advisor or Putnam Investor Services at 1-800-225-
1581.
You may also complete an order form and write a check for the
amount you wish to invest, payable to the appropriate fund. Return
the check and completed form to Putnam Mutual Funds.
The funds may periodically close to new purchases of shares or
refuse any order to buy shares if the fund determines that doing
so would be in the best interests of the fund and its
shareholders.
WHICH CLASS OF SHARES IS BEST FOR ME?
This prospectus offers you a choice of four classes of fund
shares: A, B, C and M. This allows you to choose among
different types of sales charges and different levels of ongoing
operating expenses, as illustrated in the "Fees and expenses"
section. The class of shares that is best for you depends on a
number of factors, including the amount you plan to invest and how
long you plan to hold the shares. Here is a summary of the
differences among the classes of shares:
Class A shares
* Initial sales charge of up to 4.75%
* Lower sales charge for investments of $25,000 or more
* No deferred sales charge (except on certain redemptions of
shares bought without an initial sales charge)
* Lower annual expenses, and higher dividends, than class B ,
C or M shares because of lower 12b-1 fee
Class B shares
* No initial sales charge; your entire investment goes to work for
you
* Deferred sales charge of up to 5% if you sell shares within 6
years after you bought them
* Higher annual expenses, and lower dividends, than class A or M
shares because of higher 12b-1 fee
* Convert automatically to class A shares after 8 years, reducing
the future 12b-1 fee (may convert sooner in some cases)
* Orders for class B shares for more than $250,000 are treated as
orders for class A shares or refused
Class C shares
* No initial sales charge; your entire investment goes to work for
you
* Deferred sales charge of up to 1.00% if you sell shares within 1
year after you bought them
* Higher annual expenses, and lower dividends, than class A or M
shares because of higher 12b-1 fee
* No conversion to class A shares, so future 12b-1 fee does not
decrease
* Orders of $1,000,000 or more and orders which, because of a
right of accumulation or statement of intent would qualify for the
purchase of class A shares without an initial sales charge will be
treated as orders for class A shares or refused
*
Class M shares
* Initial sales charge of up to 3.25%
* Lower sales charges for larger investments of $50,000 or more
* No deferred sales charge
* Lower annual expenses, and higher dividends, than class B shares
because of lower 12b-1 fee
* Higher annual expenses, and lower dividends, than class A shares
because of higher 12b-1 fee
* No conversion to class A shares, so future 12b-1 fee does not
decrease
INITIAL SALES CHARGES FOR CLASS A AND M SHARES
CLASS A SALES CHARGE CLASS M SALES CHARGE
AS A PERCENTAGE OF: AS A PERCENTAGE OF:
----------------------------------- --------------------------
AMOUNT OF PURCHASE NET AMOUNT OFFERING NET AMOUNT OFFERING
AT OFFERING PRICE ($) INVESTED PRICE* INVESTED PRICE*
Under 25,000 4.99% 4.75% 3.36% 3.25%
25,000 but under
50,000 4.71% 4.50% 3.36% 3.25%
50,000 but under
100,000 4.71 4.50 2.30 2.25
100,000 but under
250,000 3.90 3.75 1.52 1.50
250,000 but under
500,000 3.09 3.00 1.01 1.00
500,000 but under
1,000,000 2.04 2.00 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- -------------------------------------------------------------------------------
*Offering price includes sales charge.
DEFERRED SALES CHARGES FOR CLASS B, CLASS C AND CERTAIN
CLASS A SHARES
If you sell (redeem) class B shares within six years after you
bought them, you will generally pay a deferred sales charge
according to the following schedule.
YEAR AFTER
PURCHASE 1 2 3 4 5 6 7+
- --------------------------------------------
CHARGE 5% 4% 3% 3% 2% 1% 0%
A deferred sales charge of 1% will apply to class C shares if
redeemed within one year of purchase. A deferred sales charge
of up to 1% may apply to class A shares purchased without an
initial sales charge, if redeemed within two years after purchase.
Deferred sales charges will be based on the lower of the shares'
cost and current NAV. Shares not subject to any charge will be
redeemed first, followed by shares held longest. You may sell
shares acquired by reinvestment of distributions without a charge
at any time.
THE MONEY MARKET FUND
You can open a fund account with as little as $1,000 and make
additional investments at any time with as little as $100. Shares
are sold at a price of $1.00 per share, without any initial sales
charge .
Because the fund seeks to be fully invested at all times, it only
sells shares to you when it receives "same-day funds," which are
monies that are credited to the fund's designated bank account by
the Federal Reserve Bank of Boston. If the fund receives same-day
funds before the close of trading on the New York Stock Exchange,
it will accept the order to buy shares that day.
You can buy shares
* THROUGH A FINANCIAL ADVISOR. Your advisor will be responsible
for furnishing all necessary documents to Putnam Investor
Services, and may charge you for his or her services.
* BY MAIL. Complete an order form and send it to Putnam Investor
Services with your check, Federal Reserve Draft or other
negotiable bank draft drawn on a U.S. bank and payable in U.S.
dollars to the order of Putnam New York Tax Exempt Money Market
Fund. If you pay by Federal Reserve Draft, the fund will accept
your order on the day it is received if the order is received
before the close of regular trading on the New York Stock
Exchange. If you pay by check or other draft, the fund's
designated bank will make same-day funds available to the fund on
the first business day after receipt of your check or draft, and
the fund will then accept your order.
* BY WIRE TRANSFER. You may buy fund shares by bank wire transfer
of same-day funds. See the order form for wiring instructions. Any
commercial bank can transfer same-day funds by wire. The fund will
normally accept wired funds for investment on the day received if
they are received by the fund's designated bank by 3 p.m. Boston
time. Your bank may charge you for wiring same-day funds. Although
the fund's designated bank does not currently charge you for
receiving same-day funds, it reserves the right to charge for this
service. You cannot buy shares for tax-qualified retirement plans
by wire transfer.
ALL FUNDS
* YOU MAY BE ELIGIBLE FOR REDUCTIONS AND WAIVERS OF DEFERRED SALES
CHARGES. Deferred sales charges may be reduced or waived under
certain circumstances and for certain groups. Information about
reductions and waivers of deferred sales charges is included in
the SAI. You may consult your financial advisor or Putnam
Mutual Funds for assistance.
* DISTRIBUTION (12B-1) PLANS.
THE INCOME AND OPPORTUNITIES FUNDS. The Income and Opportunities
Funds have adopted distribution plans to pay for the marketing of
fund shares and for services provided to shareholders. The plans
provide for payments at annual rates (based on average net assets)
of up to 0.35% on class A shares and 1.00% on class B , class
C and class M shares. The Trustees currently limit payments
on class A, class B and class M shares to 0.20%, 0.85% and 0.50%
of average net assets, respectively. Because these fees are paid
out of each fund's assets on an ongoing basis, they will increase
the cost of your investment. The higher fees for class B , class
C and class M shares may cost you more than paying the
initial sales charge for class A shares. Because class C and
class M shares, unlike class B shares, do not convert to class
A shares, class C and class M shares may cost you more over
time than class B shares.
THE MONEY MARKET FUND. The Money Market Fund has adopted a
distribution plan to pay for the marketing of its shares and for
services provided to shareholders. The plan provides for payments
at an annual rate (based on average net assets) of up to 0.35%,
although the fund is not currently making payments under the plan.
How do I sell fund shares?
THE INCOME AND OPPORTUNITIES FUNDS
You can sell your shares back to the appropriate fund any day the
New York Stock Exchange is open, either through your financial
advisor or directly to the fund. Payment for redemptions may be
delayed until the fund collects the purchase price of shares,
which may take up to 15 calendar days after the purchase date.
* SELLING SHARES THROUGH YOUR FINANCIAL ADVISOR. Your advisor must
receive your request in proper form before the close of regular
trading on the New York Stock Exchange to receive that day's NAV,
less any applicable deferred sales charge. Your advisor will be
responsible for furnishing all necessary documents to Putnam
Investor Services on a timely basis and may charge you for his or
her services.
* SELLING SHARES DIRECTLY TO THE FUND. Putnam Investor Services
must receive your request in proper form before the close of
regular trading on the New York Stock Exchange in order to receive
that day's NAV, less any applicable sales charge.
BY MAIL. Send a signed letter of instruction to Putnam Investor
Services. If you have certificates for the shares you want to
sell, you must include them along with completed stock power
forms.
BY TELEPHONE. You may use Putnam's Telephone Redemption Privilege
to redeem shares valued at less than $100,000 unless you have
notified Putnam Investor Services of an address change within the
preceding 15 days. Unless you indicate otherwise on the account
application, Putnam Investor Services will be authorized to accept
redemption and transfer instructions received by telephone. The
Telephone Redemption Privilege is not available if there are
certificates for your shares. The Telephone Redemption Privilege
may be modified or terminated without notice.
* ADDITIONAL DOCUMENTS. If you
* sell shares with a value of $100,000 or more,
* want your redemption proceeds sent to an address other than your
address as it appears on Putnam's records, or
* have notified Putnam of a change in address within the preceding
15 days,
the signatures of registered owners or their legal representatives
must be guaranteed by a bank, broker-dealer or certain other
financial institutions. Stock power forms are available from your
financial advisor, Putnam Investor Services and many commercial
banks.
Putnam Investor Services usually requires additional documents for
the sale of shares by a corporation, partnership, agent or
fiduciary, or a surviving joint owner. Contact Putnam Investor
Services for details.
* WHEN WILL THE FUND PAY ME? The fund generally sends you payment
for your shares the business day after your request is received.
Under unusual circumstances, the fund may suspend redemptions, or
postpone payment for more than seven days as permitted by federal
securities laws.
* REDEMPTION BY THE FUNDS. If you own fewer shares than the
minimum set by the Trustees (presently 20 shares), the funds may
redeem your shares without your permission and send you the
proceeds. The funds may also redeem shares if you own shares more
than a maximum amount set by the Trustees. There is presently no
maximum, but the Trustees could set a maximum that applies to both
present and future shareholders.
THE MONEY MARKET FUND
You can sell your shares back to the fund any day the New York
Stock Exchange is open, either through your financial advisor or
directly to the Money Market Fund by check, telephone or mail.
Redemptions may be delayed until the fund collects the purchase
price of shares which may take up to 15 calendar days after the
purchase date.
* SELLING SHARES THROUGH YOUR FINANCIAL ADVISOR. Your advisor must
receive your request in proper form before the close of regular
trading on the New York Stock Exchange to receive that day's
value, less any applicable deferred sales charge. Your advisor
will be responsible for furnishing all necessary documents to
Putnam Investor Services on a timely basis and may charge you for
his or her services.
* SELLING SHARES DIRECTLY TO THE FUND. Putnam Investor Services
must receive your request in proper form before the close of
regular trading on the New York Stock Exchange in order to receive
that day's value, less any applicable deferred sales charge.
* BY MAIL. Send a signed letter of instruction to Putnam Investor
Services.
* BY TELEPHONE. You may use the telephone to redeem shares valued
at less than $100,000 unless you have notified Putnam Investor
Services of an address change within the preceding 15 days. Unless
you indicate otherwise on the account application, Putnam Investor
Services will be authorized to accept redemption and transfer
instructions received by telephone. Telephone redemption is not
available if there are certificates for your shares. The fund may
change or end telephone redemption privileges at any time without
notice.
On the business day after you sell shares by telephone, the
proceeds will either be:
* mailed by check, or
* wired in same-day funds (for amounts of at least $1,000) to the
bank account designated by you on your application. The fund will
only wire proceeds to commercial banks within the United States.
* BY CHECK. If you would like to use the fund's check-writing
service, mark the proper box on the application or authorization
form and complete the signature card (and, if applicable, the
resolution). The fund will send you checks when it receives these
properly completed documents. You can then make the checks payable
to the order of anyone in the amount of $500 or more. When the
check is presented for payment, the fund will redeem a sufficient
number of full and fractional shares in your account at that day's
value to cover the amount of the check and any applicable deferred
sales charge.
The use of checks is subject to the rules of the fund's designated
bank for its checking accounts. If you do not have a sufficient
number of shares in your account to cover the amount of the check
and any applicable deferred sales charge, the check will be
returned and no shares will be redeemed. Because it is not
possible to determine your account's value in advance, you should
not write a check for the entire value of your account or try to
close your account by writing a check. The fund may change or end
check-writing privileges at any time without notice.
* ADDITIONAL DOCUMENTS. If you
* sell shares with a value of $100,000 or more,
* want your redemption proceeds sent to an address or bank other
than your address or bank as it appears on Putnam's records, or
* you have notified Putnam of a change in address within the
preceding 15 days,
the signatures of registered owners or their legal representatives
must be guaranteed by a bank, broker-dealer or certain other
financial institutions.
Putnam Investor Services usually requires additional documents for
the sale of shares by a corporation, partnership, agent or
fiduciary, or a surviving joint owner. Contact Putnam Investor
Services for details.
* WHEN WILL THE FUND PAY ME? The fund generally sends you payment
for your shares the business day after your request is received.
Under unusual circumstances, the fund may suspend redemptions, or
postpone payment for more than seven days as permitted by federal
securities law.
* REDEMPTION BY THE FUND. If you own fewer shares than the minimum
set by the Trustees (presently 500 shares), the fund may redeem
your shares without your permission and send you the proceeds. The
fund may also redeem shares if you own shares more than a maximum
amount set by the Trustees. There is presently no maximum, but the
Trustees could set a maximum that applies to both present and
future shareholders.
HOW DO I EXCHANGE FUND SHARES?
Shareholders of the Money Market Fund exchanging into funds with
more than one class of shares may exchange their shares only for
class A shares of the other fund. Shareholders of the Income and
Opportunities Funds may exchange their shares only for shares of
the same class. If you want to switch your investment from one
Putnam fund to another, you can exchange your fund shares for
shares of the same class of another Putnam fund at NAV.
Shareholders of the Money Market fund may be required to pay a
sales charge, which varies depending on the fund to which they
exchange shares and the amount exchanged. Not all Putnam funds
offer all classes of shares or are open to new investors. If you
exchange shares subject to a deferred sales charge, the
transaction will not be subject to the deferred sales charge. When
you redeem the shares acquired through the exchange, the
redemption may be subject to the deferred sales charge, depending
upon when you originally purchased the shares. The deferred sales
charge will be computed using the schedule of any fund into or
from which you have exchanged your shares that would result in
your paying the highest deferred sales charge applicable to your
class of shares. For purposes of computing the deferred sales
charge, the length of time you have owned your shares will be
measured from the date of original purchase and will not be
affected by any exchange.
To exchange your shares, complete an Exchange Authorization Form
and send it to Putnam Investor Services. The form is available
from Putnam Investor Services. A Telephone Exchange Privilege is
currently available for amounts up to $500,000. The Telephone
Exchange Privilege is not available if a fund issued certificates
for your shares. Ask your financial advisor or Putnam Investor
Services for prospectuses of other Putnam funds. Some Putnam funds
are not available in all states.
The exchange privilege is not intended as a vehicle for short-term
trading. Excessive exchange activity may interfere with portfolio
management and have an adverse effect on all shareholders. In
order to limit excessive exchange activity and otherwise to
promote the best interests of the funds, the funds reserve the
right to revise or terminate the exchange privilege, limit the
amount or number of exchanges or reject any exchange. The fund
into which you would like to exchange may also reject your
exchange. These actions may apply to all shareholders or only to
those shareholders whose exchanges Putnam Management determines
are likely to have a negative effect on the funds or other Putnam
funds. Consult Putnam Investor Services before requesting an
exchange.
Fund distributions and taxes
THE INCOME AND OPPORTUNITIES FUNDS. Each of the Income and
Opportunities Funds distributes any net investment income once a
month and any net realized capital gains at least once a year.
You begin earning distributions on the business day Putnam Mutual
Funds receives payment for your shares.
THE MONEY MARKET FUND. The fund declares its net income as a
dividend to its shareholders as of the close of each day it is
open for business. The fund normally pays dividends monthly.
You may choose to:
* (All funds) reinvest all distributions in additional shares;
* (Income and Opportunities Funds only) receive any distributions
from net investment income in cash while reinvesting capital gains
distributions in additional shares; or
* (All funds) receive all distributions in cash.
If you do not select an option when you open your account, all
distributions will be reinvested. If you do not cash a
distribution check within a specified period or notify Putnam
Investor Services to issue a new check, the distribution will be
reinvested in the fund. You will not receive any interest on
uncashed distribution or redemption checks. Similarly, if any
correspondence sent by the funds or Putnam Investor Services is
returned as "undeliverable," fund distributions will automatically
be reinvested in the fund or in another Putnam fund.
For federal income tax purposes, distributions of investment
income other than "tax-exempt dividends" (as described below) are
taxable as ordinary income. Generally, gains realized by a fund
on the sale or exchange of investments, the income from which is
tax-exempt, will be taxable to you. Taxes on distributions of
capital gains are determined by how long a fund owned the
investments that generated them, rather than how long you have
owned your shares. Distributions are taxable to you even if they
are paid from income or gains earned by the funds before your
investment (and thus were included in the price you paid).
Distributions of gains from investments that the funds owned for
more than one year will be taxable as capital gains. Distributions
of gains from investments that the fund owned for one year or less
will be taxable as ordinary income. Distributions are taxable
whether you received them in cash or reinvested them in additional
shares.
Fund distributions designated as "tax-exempt dividends" are not
generally subject to federal income tax. In addition, to the
extent that distributions are derived from interest on New York
tax-exempt investments, such distributions will be exempt from New
York personal income tax (but not from New York franchise and
corporate income tax). However, if you receive social security or
railroad retirement benefits, you should consult your tax advisor
to determine what effect, if any, an investment in the fund may
have on the federal taxation of your benefits. New York does not
tax any portion of social security or railroad retirement
benefits. In addition, an investment in the fund may result in
liability for federal alternative minimum tax, both for individual
and corporate shareholders.
The Income and Opportunities Funds may at times buy New York tax-
exempt investments at a discount from the price at which they were
originally issued, especially during periods of rising interest
rates. For federal income tax and New York personal income tax
purposes, some or all of this market discount will be included in
the fund's ordinary income and will be taxable to you as such when
it is distributed to you.
The funds' investments in certain debt obligations may cause the
funds to recognize taxable income in excess of the cash generated
by such obligations. Thus, the funds could be required at times
to liquidate other investments in order to satisfy its
distribution requirements.
For New York personal income tax purposes, distributions derived
from sources other than interest on (i) New York tax-exempt
investments and (ii) obligations of the United States (or other
obligations) which pay interest exempt from New York personal
income taxation under the Constitution or laws of the United
States will be taxable as ordinary income or as long-term capital
gain, whether paid in cash or reinvested in additional shares.
Any gain resulting from the sale or exchange of your shares will
generally also be subject to tax. You should consult your tax
advisor for more information on your own tax situation, including
possible state and local taxes.
Financial highlightS
The financial highlights table is intended to help you understand
each fund's recent financial performance. No class C shares
were outstanding during these periods. Certain information
reflects financial results for a single fund share. The total
returns represent the rate that an investor would have earned or
lost on an investment in the fund, assuming reinvestment of all
dividends and distributions. This information has been derived
from each fund's financial statements, which have been audited by
PricewaterhouseCoopers LLP. Its report and each fund's financial
statements are included in the respective fund's annual report to
shareholders, which is available upon request.
THE INCOME FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS A
PER-SHARE YEAR ENDED NOVEMBER 30
OPERATING PERFORMANCE 1998 1997 1996 1995 1994
NET ASSET VALUE,
BEGINNING OF PERIOD $9.02 $8.91 $8.97 $8.05 $9.38
INVESTMENT OPERATIONS
Net investment income .43 .46 .48 .49 .53
Net realized and unrealized
gain (loss) on investments .13 .12 (.06) .92 (1.24)
TOTAL FROM INVESTMENT OPERATIONS .56 .58 .42 1.41 (.71)
LESS DISTRIBUTIONS:
From net investment income (.43) (.47) (.48) (.49) (.51)
From net realized gain on investments (.10) - - - (.05)
In excess of net realized gain on
investments - - - - (.06)
TOTAL DISTRIBUTIONS (.53) (.47) (.48) (.49) (.62)
Net asset value,
end of period $9.05 $9.02 $8.91 $8.97 $8.05
RATIOS AND SUPPLEMENTAL DATA
TOTAL RETURN AT
NET ASSET VALUE (%) (A) 6.47 6.69 4.92 17.95 (8.02)
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $1,620,108 $1,725,773 $1,873,649 $2,013,022 $1,901,901
Ratio of expenses to average
net assets (%) (b) .83 .79 .81 .78 .75
Ratio of net investment income
to average net assets (%) 4.79 5.19 5.47 5.63 5.82
Portfolio turnover (%) 31.55 81.95 59.60 73.85 47.56
(a)Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b)The ratio of expenses to average net assets for periods ended
November 30, 1995, and thereafter, includes amounts paid through
brokerage service and expense offset arrangements. Prior period
ratios exclude these amounts.
THE INCOME FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B
PER-SHARE YEAR ENDED NOVEMBER30
OPERATING PERFORMANCE 1998 1997 1996 1995 1994
NET ASSET VALUE,
BEGINNING OF PERIOD $9.00 $8.90 $8.95 $8.02 $9.37
INVESTMENT OPERATIONS
Net investment income .37 .40 .42 .43 .46
Net realized and unrealized
gain (loss) on investments .14 .11 (.05) .93 (1.24)
TOTAL FROM INVESTMENT OPERATIONS .51 .51 .37 1.36 (.78)
LESS DISTRIBUTIONS:
From net investment income (.37) (.41) (.42) (.43) (.46)
From net realized gain on investments (.10) - - - (.05)
In excess of net realized gain on
investments - - - - (.06)
TOTAL DISTRIBUTIONS (.47) (.41) (.42) (.43) (.57)
Net asset value,
end of period $9.04 $9.00 $8.90 $8.95 $8.02
RATIOS AND SUPPLEMENTAL DATA
TOTAL RETURN AT
NET ASSET VALUE (%) (A) 5.91 5.89 4.35 17.26 (8.75)
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $231,057 $227,747 $227,405 $215,614 $173,213
Ratio of expenses to average
net assets (%) (b) 1.48 1.44 1.46 1.43 1.39
Ratio of net investment income
to average net assets (%) 4.12 4.53 4.81 4.95 5.16
Portfolio turnover (%) 31.55 81.95 59.60 73.85 47.56
(a)Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b)The ratio of expenses to average net assets for periods ended
September 30, 1995, and thereafter, includes amounts paid through
brokerage service and expense offset arrangements. Prior period
ratios exclude these amounts.
THE INCOME FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
FOR THE PERIOD
APR. 10, 1995+
TO NOV. 30
PER-SHARE YEAR ENDED NOVEMBER 30
OPERATING PERFORMANCE 1998 1997 1996 1995
NET ASSET VALUE,
BEGINNING OF PERIOD $9.02 $8.91 $8.97 $8.79
INVESTMENT OPERATIONS
Net investment income .41 .43 .45 .26(a)
Net realized and unrealized
gain (loss) on investments .13 .12 (.06) .21
TOTAL FROM INVESTMENT OPERATIONS .54 .55 .39 .47
LESS DISTRIBUTIONS:
From net investment income (.41) (.44) (.45) (.29)
From net realized gain on investments (.10) - - -
TOTAL DISTRIBUTIONS (.51) (.44) (.45) (.29)
Net asset value,
end of period $9.05 $9.02 $8.91 $8.97
RATIOS AND SUPPLEMENTAL DATA
TOTAL RETURN AT
NET ASSET VALUE (%) (B) 6.15 6.37 4.59 5.44*
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $2,394 $1,865 $1,266 $588
Ratio of expenses to average
net assets (%) (c) 1.13 1.09 1.11 .65*
Ratio of net investment income
to average net assets (%) 4.47 4.87 5.17 3.30*
Portfolio turnover (%) 31.55 81.95 59.60 73.85
+ Commencement of operations.
* Not annualized.
(a)Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding during
the period.
(b)Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c)The ratio of expenses to average net assets for periods ended
November 30, 1995, and thereafter, includes amounts paid through
brokerage service and expense offset arrangements. Prior period
ratios exclude these amounts.
THE OPPORTUNITIES FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS A TWO MONTHS
ENDED
PER-SHARE NOV. 30+ YEAR ENDED SEPTEMBER 30
OPERATING PERFORMANCE 1998 1998 1997 1996 1995 1994
NET ASSET VALUE,
BEGINNING OF PERIOD $9.27 $9.10 $8.87 $8.80 $8.48 $9.12
INVESTMENT OPERATIONS
Net investment income .07 .46 .49 .49 .52 .54
Net realized and unrealized
gain (loss) on investments (.08) .21 .23 .07 .32 (.62)
TOTAL FROM INVESTMENT OPERATIONS (.01) .67 .72 .56 .84 (.08)
LESS DISTRIBUTIONS:
From net investment income (.07) (.47) (.49) (.49) (.52) (.54)
From net realized gain
on investments - (.03) - - - (.02)
TOTAL DISTRIBUTIONS (.07) (.50) (.49) (.49) (.52) (.56)
Net asset value,
end of period $9.19 $9.27 $9.10 $8.87 $8.80 $8.48
RATIOS AND SUPPLEMENTAL DATA
TOTAL RETURN AT
NET ASSET VALUE (%) (A) (0.07)* 7.55 8.33 6.48 10.27 (.89)
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $166.816 $168,032 $165,993 $172,170 $175,210 $175,741
Ratio of expenses to average
net assets (%) (b) .17* 1.00 .96 1.00 1.01 .98
Ratio of net investment income
to average net assets (%) .79* 5.00 5.42 5.53 6.12 6.22
Portfolio turnover (%) 9.22* 42.76 117.00 270.34 120.38 13.85
+ The fiscal year end has advanced from September 30 to November 30.
* Not annualized.
(a)Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b)The ratio of expenses to average net assets for periods ended
September 30, 1995, and thereafter, includes amounts paid through
brokerage service and expense offset arrangements. Prior period
ratios exclude these amounts.
THE OPPORTUNITIES FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B TWO MONTHS FOR THE PERIOD
ENDED FEB 1, 1994++
PER-SHARE NOV. 30+ YEAR ENDED SEPTEMBER 30 TO SEPT. 30
OPERATING PERFORMANCE 1998 1998 1997 1996 1995 1994
NET ASSET VALUE,
BEGINNING OF PERIOD $9.26 $9.09 $8.86 $8.79 $8.48 $9.07
INVESTMENT OPERATIONS
Net investment income .06 .40 .43 .43 .47 .32
Net realized and unrealized
gain (loss) on investments (.07) .21 .23 .07 .31 (.60)
TOTAL FROM INVESTMENT OPERATIONS (.01) .61 .66 .50 .78 (.28)
LESS DISTRIBUTIONS:
From net investment income (.06) (.41) (.43) (.43) (.47) (.31)
From net realized gain
on investments - (.03) - - - -
TOTAL DISTRIBUTIONS (.06) (.44) (.43) (.43) (.47) (.31)
Net asset value,
end of period $9.19 $9.26 $9.09 $8.86 $8.79 $8.48
RATIOS AND SUPPLEMENTAL DATA
TOTAL RETURN AT
NET ASSET VALUE (%) (A) (0.07)* 6.86 7.63 5.78 9.46 (3.06)*
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $68,513 $68,547 $56,244 $41,795 $24,259 $8,622
Ratio of expenses to average
net assets (%) (b) .28* 1.65 1.61 1.66 1.65 1.05*
Ratio of net investment income
to average net assets (%) .68* 4.36 4.76 4.83 5.28 3.39*
Portfolio turnover (%) 9.22* 42.76 117.00 270.34 120.38 13.85
+ The fiscal year end has advanced from September 30 to November
30.
* Commencement of operations.
* Not annualized.
(a)Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b)The ratio of expenses to average net assets for periods ended
September 30, 1995, and thereafter, includes amounts paid through
brokerage service and expense offset arrangements. Prior period
ratios exclude these amounts.
.
THE OPPORTUNITIES FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
FOR THE PERIOD
TWO MONTHS FEB. 10, 1995++
ENDED TO SEPT.
PER-SHARE NOV. 30+ YEAR ENDED SEPTEMBER 30 30
OPERATING PERFORMANCE 1998 1998 1997 1996 1995
NET ASSET VALUE,
BEGINNING OF PERIOD $9.25 $9.08 $8.86 $8.79 $8.51
INVESTMENT OPERATIONS
Net investment income .07 .43 .46 .47 .31
Net realized and unrealized
gain (loss) on investments (.07) .21 .22 .06 .29
TOTAL FROM INVESTMENT OPERATIONS - .64 .68 .53 .60
LESS DISTRIBUTIONS:
From net investment income (.07) (.44) (.46) (.46) (.32)
From net realized gain on investments - (.03) - - -
TOTAL DISTRIBUTIONS (.07) (.47) (.46) (.46) (.32)
Net asset value,
end of period $9.18 $9.25 $9.08 $8.86 $8.79
RATIOS AND SUPPLEMENTAL DATA
TOTAL RETURN AT
NET ASSET VALUE (%) (A) (0.01)* 7.23 7.89 6.15 7.11*
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $2,558 $2,433 $2,365 $1,492 $299
Ratio of expenses to average
net assets (%) (b) .22* 1.30 1.26 1.30 .83 *
Ratio of net investment income
to average net assets (%) .74* 4.71 5.09 5.03 3.21*
Portfolio turnover (%) 9.22* 42.76 117.00 270.34 120.38
+ The fiscal year end has advanced from September 30 to November
30.
++ Commencement of operations.
* Not annualized.
(a)Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b)The ratio of expenses to average net assets for periods ended
September 30, 1995, and thereafter, includes amounts paid through
brokerage service and expense offset arrangements. Prior period
ratios exclude these amounts.
THE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
PER-SHARE YEAR ENDED NOVEMBER 30
OPERATING PERFORMANCE 1998 1997 1996 1995 1994
NET ASSET VALUE,
BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
INVESTMENT OPERATIONS
Net investment income $.0288 $.0287 $.0289 $.0318 $.0188
Net realized and unrealized
gain on investments - - - - -
TOTAL FROM INVESTMENT OPERATIONS .0288 .0287 .0289 .0318 .0188
LESS DISTRIBUTIONS:
From net
investment income (.0288) (.0287) (.0289) (.0318) (.0188)
From net realized gain
on investments - - - - -
TOTAL DISTRIBUTIONS (.0288) (.0287) (.0289) (.0318) (.0188)
NET ASSETS VALUE,
END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
RATIOS AND SUPPLEMENTAL DATA
TOTAL RETURN AT
NET ASSET VALUE (%) (A) 2.91 2.91 2.93 3.23 1.90
NET ASSETS, END OF YEAR
(in thousands) $38,986 $44,101 $39,456 $38,873 $44,815
Ratio of expenses to average
net assets (%) (b) .79 .83 .88 .91 .77
Ratio of net income to average
net assets (%) 2.88 2.92 2.75 3.18 1.86
(a)Total return assumes dividend reinvestments.
(b)The ratio of expenses to average net assets for the period
ended November 30, 1995, and thereafter, includes amounts paid
through expense offset arrangements. Prior period ratios exclude
these amounts.
Make the most of your Putnam privileges
The following services are available to you as a Putnam
mutual fund shareholder.
> SYSTEMATIC INVESTMENT PLAN Invest as much as you wish ($25
or more) on any business day of the month except for the 29th,
30th, or 31st. The amount you choose will be automatically
transferred each month from your checking or savings account.
> SYSTEMATIC WITHDRAWAL Make regular withdrawals of $50 or
more monthly, quarterly, or semiannually from your Putnam mutual
fund account valued at $10,000 or more. Your automatic
withdrawal may be made on any business day of the month except for
the 29th, 30th, or 31st.
> SYSTEMATIC EXCHANGE Transfer assets automatically from one
Putnam account to another on a regular, prearranged basis. There
is no additional charge for this service.
> FREE EXCHANGE PRIVILEGE Exchange money between Putnam funds
in the same class of shares without charge. The exchange privilege
allows you to adjust your investments as your objectives change. A
signature guarantee is required for exchanges of more than
$500,000 and shares of all Putnam funds may not be available to
all investors.
Investors may not maintain, within the same fund,
simultaneous plans for systematic investment or exchange (into the
fund) and systematic withdrawal or exchange (out of the fund).
These privileges are subject to change or termination.
For more information about any of these services and
privileges, call your investment advisor or a Putnam customer
service representative toll free at 1-800-225-1581.
FOR MORE INFORMATION ABOUT PUTNAM NEW YORK TAX EXEMPT INCOME FUND,
PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND AND PUTNAM NEW YORK
TAX EXEMPT MONEY MARKET FUND
Each fund's statement of additional information (SAI) and annual
and semi-annual reports to shareholders include additional
information about the funds. The SAI, and the auditor's report and
financial statements included in each fund's most recent annual
report to its shareholders, are incorporated by reference into
this prospectus, which means they are part of this prospectus for
legal purposes. Each fund's annual report discusses the market
conditions and investment strategies that significantly affected
the fund's performance during its last fiscal year. You may get
free copies of these materials, request other information about
the funds, or make shareholder inquiries, by contacting your
financial advisor or by calling Putnam toll-free at 1-800-225-
1581.
You may review and copy information about each fund, including its
SAI, at the Securities and Exchange Commission's public reference
room in Washington, D.C. You may call the Commission at 1-800-SEC-
0330 for information about the operation of the public reference
room. You may also access reports and other information about the
fund on the Commission's Internet site at http://www.sec.gov. You
may get copies of this information, with payment of a duplication
fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the funds'
file numbers .
PUTNAM INVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
1-800-225-1581
ADDRESS CORRESPONDENCE TO
Putnam Investor Services
P.O. Box 989
Boston MA 02103
WWW.PUTNAMINV.COM
File Nos :
Putnam New York Tax Exempt Income Fund 811-3741
Putnam New York Tax Exempt Opportunities Fund 811-6176
Putnam New York Tax Exempt Money Market Fund 811-5335
NP051 549139/99
