Putnam
New York
Tax Exempt
Opportunities Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
9-30-98
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "[T]here is one type of staid, secure bond fund that has been overlooked
amid the global scramble for safety, and that is now emerging as the best
bargain in the bond market: municipal-bond funds."
-- The Wall Street Journal, October 5, 1998
* "The credit situation in New York is currently extremely favorable.
Higher-than-expected tax revenues, largely the result of a strong economy,
and recent affirmation of New York City's investment-grade credit rating
by the major rating agencies are fostering greater confidence in the
state's municipal bond market."
-- David E. Hamlin, manager
Putnam New York Tax Exempt Opportunities Fund
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
12 Portfolio holdings
16 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The Empire State was spared many of the negative effects of the world's
volatile market environment during the fiscal year ended September 30,
1998, as the management team of Putnam New York Tax Exempt Opportunities
Fund can attest. New York's economy was still robust enough to provide
considerable relief for the state government's budget, revenues from busy
state and city transportation facilities continued to pour in, and New
York City's bonds were so favored by investors that they were trading at a
premium.
Continued heavy demand for municipal bonds, however, made the search for
securities that meet the fund's exacting selection criteria more
challenging than ever. A strategy of focusing on intermediate-term bonds
and of retaining the portfolio's credit barbell structure continued to
serve the fund well as the following management report explains.
I am pleased to introduce David E. Hamlin as your fund's new manager.
David was appointed just before the close of the fiscal year, joining
Putnam from the Vanguard Group, where he had been a principal since 1986.
He has 16 years of investment experience.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
November 18, 1998
Report from the Fund Manager
David E. Hamlin
With so much uncertainty in the world's financial markets, municipal bonds
are providing a welcome retreat from the day-to-day volatility in stocks
and taxable bonds. Putnam New York Tax Exempt Opportunities Fund's
performance demonstrates this relative safety during the fiscal year just
concluded. Your fund's focus on intermediate bonds and its barbelled
credit structure helped it deliver a total return of 7.55% at net asset
value (2.48% at public offering price) for class A shares over the 12
months ended September 30, 1998. Performance of other shares and over
longer periods is detailed beginning on page 8.
* MUNICIPAL MARKET OVERVIEW
Throughout the dramatic market shifts of August and September 1998, the
municipal market stood its ground and even rallied slightly. Treasury
yields fell more dramatically than those of municipal bonds over the
period, bringing yields on tax-free securities remarkably close to those
of taxable bonds. At the fiscal year's close, yields on the Lehman
Brothers Treasury Bond Index and the Bond Buyer Municipal Bond Index were
5.08% and 5.04%, respectively. Factoring in the tax advantages of
municipal bonds, the tax-free yield of the Bond Buyer Municipal Bond Index
translates to an after-tax yield of 8.34%, assuming the top 39.6% federal
income tax rate.*
The unusual market volatility was set off by an unprecedented string of
international events: the persisting financial chaos in the Pacific Rim,
currency devaluations and defaults in Russia, and most recently, plunging
stock markets in Latin America. As foreign investors panicked about
plummeting stock markets, they began a flight to quality -- selling hedge
funds and emerging-markets funds in favor of the safety of U.S. Treasury
bonds. This buying drove up the prices of Treasuries and pushed down their
yields.
*Source: The Boston Globe; October 1, 1998.
Since foreign investors do not benefit from the tax advantages of
municipal bonds, prices in this market did not rise as much as they did in
Treasuries. However, municipal yields remain quite high relative to
Treasuries, making them an exceptional investment choice for U.S.
investors.
* INTERMEDIATE BONDS, CREDIT BARBELL BOOST RETURNS
Throughout the year, we found the greatest value to be in the intermediate
part of the yield curve, that is, in bonds with maturities ranging from 8
to 15 years. Intermediate bonds have benefited from a steepening yield
curve, which is the result of falling interest rates on short-term
securities. The Federal Reserve Board's recent adjustments to the federal
funds rate have pushed rates even lower. Over the period, intermediate
bonds offered more attractive income and greater price stability than
would have been obtained from a combination of shorter- and
longer-maturity bonds.
With regard to credit quality, the fund employed a barbell structure,
concentrating holdings at both the higher-quality and higher-yielding ends
of the municipal market. Our goal is to tap the volatility-dampening
effects of certain issues while simultaneously taking advantage of the
income potential of others. Nearly 41% of portfolio holdings are high
quality securities (rated Aaa and Aa), while about one-third of the
holdings are invested in bonds rated in the lowest tier of the
investment-grade sector (Baa), and the upper end of the lower rated sector
(Ba). This translates to an average quality rating of Aa.
[GRAPHIC OMITTED: pie chart of CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
B -- 2.7%
Ba -- 11.0%
Baa -- 17.9%
A -- 25.1%
VMIGI -- 2.5%
Aaa -- 27.9%
Aa -- 12.9%
*As a percentage of market value as of 9/30/98. A bond rated Baa or higher
is considered investment grade. All ratings reflect Moody's descriptions
unless noted otherwise; percentages may include unrated bonds considered
by Putnam Management to be of comparable quality. Ratings will vary over
time.
The call structure of the fund's bonds plays an important role in a
falling interest-rate environment. To minimize the fund's exposure to call
risk and to protect the higher-coupon bonds in your portfolio, we have
been extending call protection by swapping out of bonds approaching their
call dates and purchasing bonds with a minimum of 10 years before their
call dates.
* STRONG ECONOMY ENHANCES CREDITWORTHINESS
Strong economic growth, which helped push the U.S. stock market to record
highs during the period, is contributing to rising city and state tax
revenues. This, in turn, is helping ease budget problems and improve
investors' perception of New York's creditworthiness. All three major
rating agencies -- Moody's, Fitch's, and Standard & Poor's -- acknowledged
New York City's healthier prospects by upgrading its credit rating in
July.
With so much good news factored into prices, New York City's bonds are
trading at a premium. We expect the credit ratings to remain stable for
the foreseeable future but believe that investors are likely to take
profits at these price levels. In anticipation of this selling, we will be
searching for better-valued opportunities in essential-service bonds.
Essential-service issues are attractive because they are self-funding.
User fees paid for the services become the source of the bonds' payment to
investors.
Economic growth is also affecting several of the industry sectors in which
your fund invests. Enrollments and alumni gifts are up at universities and
colleges around the Empire State. The strength of the economy and weak
petroleum prices are having a positive impact on the transportation
sector. Having priced themselves effectively in their respective hub
markets, airline-backed industrial revenue bonds represent some of the
best opportunities in the lower-rated end of the municipal bond market.
With increased passenger capacity has come increased fees and cash flow
from airport operations and associated facilities such as restaurants,
parking, hotels, and retail outlets. The fund's current airline-related
holdings have carriers that are diversified and operate outside the
Pacific Rim.
Health-care holdings, representing 14.5% of the fund's total assets,
performed well. Years of cost cutting, industry consolidation, and
Medicare reform are changing the landscape, and stringent credit research
is required to determine the likely winners. When evaluating performance
potential, the location, level, and quality of services offered by a
health-care facility are important.
[GRAPHIC OMITTED: horizontal bar chart of TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Hospitals
and health care 14.5%
Transportation 14.2%
Education 12.8%
Utilities 8.6%
Pollution control 5.4%
Footnote reads:
*Based on net assets as of 9/30/98. Holdings will vary over time.
* OUTLOOK REMAINS CAUTIONARY
In this unusual bond market, the concern is more about what the equity
market will do than about what interest rates will do. We believe that the
bond market's positive performance depends upon stability in stocks and
global economies. New ground is being broken every day, and given the
uncertain environment, we have opted to maintain a conservative outlook.
Our emphasis has been providing the best tax-free return while minimizing
downside performance if bond prices should fall. Consequently, we have
given up some income potential to help protect the value of the fund's
portfolio and, in turn, your share price. In such an environment, we do
not believe that the fund's shareholders want to take on the risk that a
higher-income bias would add. We reiterate our belief that this is not a
good time to invest in bonds with longer maturities and higher risk.
Rather, we'll continue to emphasize intermediate maturities (8 to 15
years) with solid yields, which offer more protection in a volatile
market.
The views expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of 9/30/98, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
New York Tax Exempt Opportunities Fund is designed for investors seeking
high current income free from federal, New York state, and New York City
income taxes, consistent with capital preservation.
TOTAL RETURN FOR PERIODS ENDED 9/30/98
Class A Class B Class M
(inception date) (11/7/90) (2/1/94) (2/10/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
1 year 7.55% 2.48% 6.86% 1.86% 7.23% 3.69%
- ------------------------------------------------------------------------------
5 years 35.58 29.19 30.96 28.96 32.99 28.66
Annual average 6.28 5.26 5.54 5.22 5.87 5.17
- ------------------------------------------------------------------------------
Life of fund 78.57 70.17 68.78 68.78 73.16 67.55
Annual average 7.62 6.96 6.85 6.85 7.20 6.75
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 9/30/98
Lehman Bros.
Municipal Consumer
Bond Index Price Index
- ------------------------------------------------------------------------------
1 year 8.72% 1.36%
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5 years 36.38 12.61
Annual average 6.40 2.40
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Life of fund 88.80 22.40
Annual average 8.36 2.59
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. Returns for class A
and class M shares reflect the current maximum initial sales charges of
4.75% and 3.25% respectively. Class B share returns for the 1-, 5-year
(where available), and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their inception
are derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and in the case of class B and class M shares,
the higher operating expenses applicable to such shares. All returns
assume reinvestment of distributions at NAV. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost.
This performance information does not reflect any market volatility that
may have occurred since the date of the information. As a result, more
recent returns may be more or less than those shown.
[GRAPHIC OMMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of
a $10,000 investment since
11/7/90
Lehman Brothers
Fund's class A Municipal Bond Consumer Price
Date shares at POP Index Index
11/7/90 9,525 10,000 10,000
9/30/91 10,402 11,117 10,277
9/30/92 11,431 12,279 10,584
9/30/93 12,552 13,843 10,869
9/30/94 12,439 13,508 11,191
9/30/95 13,717 15,020 11,475
9/30/96 14,606 15,927 11,819
9/30/97 15,822 17,365 12,073
9/30/98 $17,017 $18,880 $12,240
Footnote reads:
Past performance is no assurance of future results. At the end of the same
time period, a $10,000 investment in the fund's class B shares would have
been valued at $16,878 and no contingent deferred sales charges would
apply; a $10,000 investment in the fund's class M shares would have been
valued at $17,316 ($16,755 at public offering price). See first page of
performance section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 9/30/98
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 12 12 12
- ------------------------------------------------------------------------------
Income $0.465603 $0.405357 $0.437271
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Capital gains1
- ------------------------------------------------------------------------------
Long-term 0.010000 0.010000 0.010000
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Short-term 0.023000 0.023000 0.023000
- ------------------------------------------------------------------------------
Total $0.498603 $0.438357 $0.470271
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
9/30/97 $9.10 $9.55 $9.09 $9.08 $9.39
- ------------------------------------------------------------------------------
9/30/98 9.27 9.73 9.26 9.25 9.56
- ------------------------------------------------------------------------------
Current return (end of period)
- ------------------------------------------------------------------------------
Current dividend rate2 4.84% 4.61% 4.19% 4.54% 4.39%
- ------------------------------------------------------------------------------
Taxable equivalent3 8.60 8.19 7.45 8.07 7.81
- ------------------------------------------------------------------------------
Taxable equivalent4 8.97 8.55 7.77 8.42 8.15
- ------------------------------------------------------------------------------
Current 30-day SEC yield5 3.89 3.70 3.25 3.60 3.48
- ------------------------------------------------------------------------------
Taxable equivalent3 6.91 6.58 5.78 6.40 6.19
- ------------------------------------------------------------------------------
Taxable equivalent4 7.21 6.86 6.03 6.68 6.45
- ------------------------------------------------------------------------------
1Capital gains, if any, are taxable for federal and, in most cases, state
tax purposes. For some investors, investment income may also be subject to
the federal alternative minimum tax. Investment income may be subject to
state and local taxes.
2Income portion of most recent distribution, annualized and divided by NAV
or POP at end of period.
3Assumes maximum 43.74% combined federal and state tax rate. Results for
investors subject to lower tax rates would not be as advantageous.
4Assumes maximum 46.08% combined federal, state and New York City tax
rate. Results for investors subject to lower tax rates would not be as
advantageous.
5Based only on investment income, calculated using SEC guidelines.
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.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
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.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
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 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 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.
COMPARATIVE BENCHMARKS
Lehman Brothers Municipal Bond Index is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the
municipal bond market. The index does not take into account brokerage
commissions or other costs, may include bonds different from those in the
fund, and may pose different risks than the fund. Securities in the fund
do not match those in the indexes and performance of the fund will differ.
It is not possible to invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Report of independent accountants
For the fiscal year ended September 30, 1998
To the Trustees and Shareholders of
Putnam New York Tax Exempt Opportunities Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned (except for bond ratings),
and the related statements of operations and of changes in net assets and
the financial highlights present fairly, in all material respects, the
financial position of Putnam New York Tax Exempt Opportunities Fund (the
"fund") at September 30, 1998, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of investments owned at
September 30, 1998 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 12, 1998
<TABLE>
<CAPTION>
Portfolio of investments owned
September 30, 1998
Key to Abbreviations
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Financial Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration Insured
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
U.S. Govt. Coll. -- U.S. Government Collateralized
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (99.1%) (a)
PRINCIPAL AMOUNT RATINGS (RAT) VALUE
<S> <C> <C> <C>
New York (95.9%)
- --------------------------------------------------------------------------------------------------------------------------
$ 3,400,000 Battery Park, City Auth. Rev. Bonds, Ser. A,
AMBAC, 5 1/2s, 11/1/16 Aaa $ 3,642,250
835,000 Chemung Ctny., Indl. Dev. Agcy. Civic Fac. VRDN
(Arnot Ogden Med. Ctr.), Ser. A, 3.85s, 3/1/19 VMIG1 835,000
5,000,000 Erie Cnty., Indl. Dev. Life Care Cmnty. Rev. Bonds
(Episcopal Church Home), Ser. A, 6s, 2/1/28 B+/P 5,075,000
2,250,000 Essex Cnty., Indl. Dev. Agcy. Rev. Bonds
(Intl. Paper Co.), Ser. A, 6.15s, 4/1/21 A3 2,458,125
2,530,000 Ithaca, Hsg. Corp. Mtge. Rev. Bonds
(Eddygate Park Apts.), 9s, 6/1/06 BBB+/P 2,633,570
2,650,000 Jefferson Cnty., Indl. Dev. Agcy. Solid Waste Disp.
Rev. Bonds (Champion Intl. Corp.), 7.2s, 12/1/20 Baa1 2,968,000
1,360,000 Lockport, Hsg. Dev. Corp. Rev. Bonds
(Urban Park Towers), Ser. A, 6s, 10/1/18 Baa2 1,441,600
5,000,000 Long Island, Pwr. Auth. NY Elec. Syst. IFB, 7 1/4s,
12/1/24 (acquired 5/19/98, cost $5,433,000) (RES) A-/P 5,800,000
2,500,000 Metropolitan Trans. Auth. Dedicated Tax Fund
Rev. Bonds, Ser. A, MBIA, 6 1/4s, 4/1/11 Aaa 2,953,125
5,000,000 Metropolitan Trans. Auth. Rev. Bond
MBIA, 5s, 7/1/20 Aaa 5,031,250
Nassau Cnty. G.O. Bonds, Ser. A, FGIC
1,000,000 6s, 7/1/13 Aaa 1,160,000
2,300,000 6s, 7/1/11 Aaa 2,668,000
5,000,000 Niagara Falls NY City Schl. Dist., 5 7/8s, 6/15/19 Baa3 5,368,750
NY City G.O. Bonds.
1,470,000 Ser. D, 8 1/4s, 8/1/11 (Prerefunded) Aaa 1,666,613
210,000 Ser. D, 8 1/4s, 8/1/11 A3 235,988
300,000 Ser. B, 8 1/4s, 6/1/05 A3 369,375
1,000,000 IFB, AMBAC, 7.92s, 9/1/11 Aaa 1,171,250
335,000 Ser. E, 7.6s, 2/1/05 A3 376,456
3,120,000 Ser. E, U.S. Govt. Coll. 7.6s, 2/1/05 (Prerefunded) A3 3,529,500
4,400,000 Ser. F, U.S. Govt. Coll. 7.6s, 2/1/05 (Prerefunded) A3 4,977,500
330,000 Ser. F, 7.6s, 2/1/05 A3 370,838
1,800,000 Ser. H, 6s, 8/1/17 A3 1,975,500
2,750,000 Ser. J, 6s, 8/1/17 A3 3,018,125
NY City G.O. Bonds.
2,000,000 Ser. I, 5 7/8s, 3/15/14 A3 2,165,000
1,500,000 Ser. B, 5 1/4s, 8/1/20 A3 1,522,500
NY City, Indl. Dev. Agcy. Civic Fac. Rev. Bonds
8,125,000 (Parking Corp.), 8 1/2s, 12/30/22 BB+/P 9,435,156
1,750,000 (The Lighthouse Inc.), 6 1/2s, 7/1/22 Aa2 1,881,250
NY City, Indl. Dev. Agcy. Rev. Bonds
5,000,000 (Visy Paper Inc.), 7.95s, 1/1/28 BB-/P 5,731,250
4,000,000 (Paper Inc.), 7.8s, 1/1/16 BB-/P 4,575,000
5,000,000 (Brooklyn Navy Yard Cogen. Partners),
6.2s, 10/1/22 Baa3 5,687,500
2,940,000 (Brooklyn Navy Yard Cogen. Partners),
5.65s, 10/1/28 Baa3 3,020,850
4,000,000 NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds
(American Airlines, Inc.), 6.9s, 8/1/24 Baa2 4,485,000
NY City, Indl. Dev. Agcy. VRDN
240,000 (Heavenly Rest Day Church), 3.85s, 7/1/21
(Barclays Bank PLC (LOC)) VMIG1 240,000
400,000 (Columbia Grammar School), 3.75s, 6/30/14
(Chase Manhattan Bank (LOC)) A-1 400,000
NY City Indl. Dev. Fac. Rev. Bonds
1,900,000 VRDN, 3.85s, 6/1/12 VMIG1 1,900,000
1,250,000 6s, 11/1/28 B-/P 1,260,938
5,000,000 NY City, Muni. Wtr. & Swr. Fin. Auth. Rev. Bonds,
MBIA, 6.82s, 6/15/13 Aaa 5,575,000
11,300,000 NY City, Transitional Fin. Auth. Rev. Bonds, Ser. C,
5s, 5/1/26 AA 11,314,125
NY State Dorm. Auth. Rev. Bonds
170,000 (City U.), Ser. D, 8 3/4s, 7/1/03 Baa1 204,638
835,000 (NY Dept of Ed.), 7 3/4s, 7/1/21 Baa1 936,244
5,000,000 (State U. Edl. Fac.), Ser. A, 7 1/2s, 5/15/13 A3 6,631,250
1,605,000 (Cornell U.), Ser. A, 7 3/8s, 7/1/30 Aa2 1,735,406
6,000,000 (Cornell U.), Ser. A, 7 3/8s, 7/1/20 Aa2 6,487,500
500,000 (Wildwood School), 7.3s, 7/1/15 AAA/P 555,000
2,050,000 (Our Lady Of Mercy), 6.3s, 8/1/32 Aaa 2,211,438
2,650,000 (City U. Syst.), Ser. A, FGIC, 5 3/4s, 7/1/09 AAA 2,991,188
1,310,000 (Mental Hlth. Svcs. Fac.), Ser. B, MBIA, 5 3/4s, 7/1/09 Aaa 1,483,575
3,300,000 (Mental Hlth. Svcs. Fac.), 5s, 2/15/18 A3 3,287,625
4,000,000 (St Johns U.), 4 3/4s, 7/1/28 Aaa 3,880,000
725,000 (State U. Edl. Fac.), Ser. B, zero %, 5/15/09 A3 454,938
NY State Energy Res. & Dev. Auth. Elec. Fac.
Rev. Bonds (Long Island Ltg. Co.), Ser. A
2,000,000 7.15s, 12/1/20 A- 2,200,000
1,605,000 7.15s, 6/1/20 A- 1,765,500
3,500,000 NY State Energy Res. & Dev. Auth. Gas IFB
(Brooklyn Union Gas Co.), 8.954s, 4/1/20 A1 4,580,625
NY State Energy Res. & Dev. Auth. Poll. Control
Rev. Bonds (Hudson Gas)
1,000,000 Ser. A, FGIC, 7 3/8s, 10/1/14 Aaa 1,065,200
1,700,000 Ser. B, FGIC, 7 3/8s, 10/1/14 (SEG) Aaa 1,810,840
NY State Energy Res. & Dev. Auth. Rev. Bonds
1,250,000 (Cons. Edison Co. of NY, Inc.), Ser. C,
7 1/4s, 11/1/24 A1 1,265,538
230,000 Ser. B, 7.15s, 9/1/19 A- 253,000
1,750,000 NY State Energy Research & Dev. Auth. Poll. Control
Rev. Bonds (Niagara Mohawk Pwr. Corp.), Ser. A,
FGIC, 7.2s, 7/1/29 Aaa 2,038,750
2,000,000 NY State Energy Research & Dev. Auth. Gas Fac. IFB
(Brooklyn Union Gas Co.), Ser. B, 10 3/8s, 7/1/26 A1 2,667,500
NY State Env. Fac. Corp. Poll. Control Rev. Bonds
1,000,000 Ser. B, 7 1/2s, 3/15/11 Aa2 1,037,960
2,720,000 (State Wtr. Revolving Fund), Ser. A, 5 7/8s, 6/15/14 Aa 2,947,800
NY State Env. Facs. Poll. Ctrl. Rev. Bonds
210,000 7s, 6/15/12 Aaa 230,213
6,975,000 7s, 6/15/12 (Prerefunded) Aaa 7,698,656
NY State Hsg. Fin. Agcy. Rev Bonds
50,000 Ser. A, 7 1/4s, 9/15/12 Baa1 55,875
450,000 Ser. A, 7 1/4s, 9/15/12 (Prerefunded) Aaa 508,500
1,200,000 NY State Hsg. Fin. Agcy. VRDN
(Special Surgery Hosp. Staff), Ser. A, 3.65s, 11/1/10 VMIG1 1,200,000
NY State Med. Care Fac. Fin. Agcy. Rev. Bonds
595,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. B,
FHA Insd., 8 7/8s, 8/15/27 Aa 608,977
275,000 (Mental Hlth. Svcs. Fac.), Ser. B, 7 7/8s, 8/15/08
(Prerefunded) Aaa 301,125
120,000 (Mental Hlth. Svcs. Fac.), Ser. B, 7 7/8s, 8/15/08 A3 130,650
40,000 (Mental Hlth. Svcs. Fac.), Ser. A, 7.8s, 2/15/19 A3 41,358
30,000 (Mental Hlth. Svcs. Fac.), Ser. A, 7.8s, 2/15/19
(Prerefunded) Aaa 31,082
145,000 (Mental Hlth. Svcs. Fac.), Ser. A, 7 1/2s, 2/15/21
(Prerefunded) Aaa 160,225
85,000 (Mental Hlth. Svcs. Fac.), Ser. A, 7 1/2s, 2/15/21 A3 92,863
205,000 (Mental Hlth. Svcs. Fac.), Ser. D, 7.4s, 2/15/18 A3 228,575
5,750,000 (North Shore U. Hosp.), MBIA, 7.2s, 11/1/20 Aaa 6,267,500
700,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. D,
FHA Insd., 6.6s, 2/15/31 AAA 766,500
510,000 NY State Med. Care Fac. Fin. Agcy. Rev. Bonds,
Prerefunded (Mental Hlth.), Ser. D, 7.4s, 2/15/18 A- 576,300
1,700,000 NY State Med. Care Fac. Fin. Agcy. VRDN
(Lenox Hill Hosp.), Ser. A, 3.85s, 11/1/08
(Chase Manhattan Bank (LOC)) VMIG1 1,700,000
NY State Med Care Fin Auth. MBIA
965,000 7.6s, 2/15/29 Aa2 997,434
1,035,000 7.6s, 2/15/29 (Prerefunded) Aa2 1,071,598
4,300,000 NY State Thruway Auth. Hwy. & Bridge Trust Fund
Rev. Bonds, Ser. B, FGIC, 6s, 4/1/14 Aaa 4,821,375
NY State Urban Dev. Corp. Rev. Bonds
1,685,000 (Clarkson Ctr.), 5 1/2s, 1/1/20 Baa1 1,828,225
3,345,000 (Clarkson Ctr.), 5 1/2s, 1/1/15 Baa1 3,637,688
2,000,000 (Syracuse U.), 5 1/2s, 1/1/15 Baa1 2,175,000
5,000,000 (Ctr. for Indl. Innovation), 5 1/2s, 1/1/13 Baa1 5,487,500
2,600,000 (Correctl Fac.), 5s, 1/1/28 Baa1 2,567,500
Port Auth NY & NJ Rev. Bonds
5,755,000 Special Oblig. (Continental/Eastern Laguardia),
9 1/8s, 12/1/15 Ba2 6,373,663
175,000 Cons. Ser. 78, 6 1/2s, 10/15/08 AA- 189,875
2,000,000 Ser. 83, 6 3/8s, 10/15/17 AA- 2,167,500
4,000,000 Triborough Brdg. & Tunl. Auth., 5 1/4s, 1/1/14 Aaa 4,210,000
1,430,000 Valley Hlth. Dev. Corp. Mtge. Rev. Bonds, FHA,
11.3s, 2/1/23 A 1,707,063
--------------
229,243,719
Puerto Rico (3.2%)
- --------------------------------------------------------------------------------------------------------------------------
Cmnwlth. of PR, Hwy. & Trans. Auth.
4,700,000 IFB, Ser. W, 7.823s, 7/1/08 A 5,375,625
1,000,000 Rev. Bonds, Ser. Y, MBIA, 6 1/4s, 7/1/13 AAA 1,195,000
1,000,000 PR Indl. & Env. Poll. Control Fac. Fin. Auth. Rev. Bonds,
7.6s, 5/1/14 A1 1,051,930
--------------
7,622,555
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $223,600,873) (b) $ 236,866,274
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $239,011,634.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at
September 30, 1998 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 September 30, 1998, Securities
rated by Putnam are indicated by "/P" and are not publicly rated. Ratings are not covered by the Report of
independent accountants.
(b) The aggregate identified cost on a tax basis is $223,600,873, resulting in gross unrealized appreciation and
depreciation of $14,342,419 and $1,077,018, respectively, or net unrealized appreciation of $13,265,401.
(SEG) A portion of this security was pledged and segregated with the custodian to cover margin requirements for
futures contracts at September 30, 1998.
(RES) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities
held at September 30, 1998 was $5,800,000 or 2.4% of net assets.
The rates shown on IFB, which are securities paying interest rates that vary inversely to changes in the
market interest rates, and VRDN's are the current interest rates at September 30, 1998.
The fund had the following industry group concentrations greater than 10% at September 30, 1998 (as a percent
of net assets):
Hospitals/Healthcare 14.5%
Transportation 14.2
Education 12.8
The fund had the following insurance concentration greater than 10% at September 30, 1998 (as a percentage of
net assets):
MBIA 10.3%
- -------------------------------------------------------------------------------
Futures Contracts Outstanding at September 30, 1998
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
- -------------------------------------------------------------------------------
US. Treasury Bond
(Short) $20,903,531 $20,061,306 Dec-98 $(842,225)
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
September 30, 1998
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $223,600,873) (Note 1) $236,866,274
- -----------------------------------------------------------------------------------------------
Cash 207,825
- -----------------------------------------------------------------------------------------------
Interest and other receivables 3,933,314
- -----------------------------------------------------------------------------------------------
Receivables for securities sold 4,103,000
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 293,476
- -----------------------------------------------------------------------------------------------
Total assets 245,403,889
Liabilities
- -----------------------------------------------------------------------------------------------
Distributions payable to shareholders 240,495
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 5,126,201
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 216,126
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 355,900
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 34,558
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 10,640
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,613
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 134,260
- -----------------------------------------------------------------------------------------------
Payable for variation margin 223,594
- -----------------------------------------------------------------------------------------------
Other accrued expenses 48,868
- -----------------------------------------------------------------------------------------------
Total liabilities 6,392,255
- -----------------------------------------------------------------------------------------------
Net assets $239,011,634
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $227,593,424
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (67,872)
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investment (Note 1) (937,094)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 12,423,176
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $239,011,634
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($168,031,527 divided by 18,133,165 shares) $9.27
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $9.27)* $9.73
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($68,546,944 divided by 7,403,805 shares)*** $9.26
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($2,433,163 divided by 263,038 shares) $9.25
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $9.25)** $9.56
- -----------------------------------------------------------------------------------------------
* 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.
** 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.
*** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended September 30, 1998
<S> <C>
Tax exempt interest income: $13,787,911
- -----------------------------------------------------------------------------------------------
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,386,191
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 329,116
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 11,501
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 6,443
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 332,410
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 530,607
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 11,987
- -----------------------------------------------------------------------------------------------
Reports to shareholders 15,801
- -----------------------------------------------------------------------------------------------
Registration fees 2,487
- -----------------------------------------------------------------------------------------------
Auditing 35,357
- -----------------------------------------------------------------------------------------------
Legal 14,850
- -----------------------------------------------------------------------------------------------
Postage 17,062
- -----------------------------------------------------------------------------------------------
Other 20,540
- -----------------------------------------------------------------------------------------------
Total expenses 2,714,352
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (70,547)
- -----------------------------------------------------------------------------------------------
Net expenses 2,643,805
- -----------------------------------------------------------------------------------------------
Net investment income 11,144,106
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (167,027)
- -----------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (649,372)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the year 5,970,419
- -----------------------------------------------------------------------------------------------
Net gain on investments 5,154,020
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $16,298,126
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended September 30
-------------------------------
1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 11,144,106 $ 11,292,366
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (816,399) 1,415,869
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 5,970,419 4,286,563
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 16,298,126 16,994,798
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (8,443,590) (8,947,477)
- ---------------------------------------------------------------------------------------------------------------
Class B (2,752,969) (2,314,259)
- ---------------------------------------------------------------------------------------------------------------
Class M (114,274) (91,884)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (596,654) --
- ---------------------------------------------------------------------------------------------------------------
Class B (211,900) --
- ---------------------------------------------------------------------------------------------------------------
Class M (8,554) --
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 10,240,092 3,502,893
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 14,410,277 9,144,071
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of year 224,601,357 215,457,286
- ---------------------------------------------------------------------------------------------------------------
End of year (including distributions in excess and
undistributed net investment income of
$67,872 and $130,474, respectively) $239,011,634 $224,601,357
- ---------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended September 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.10 $8.87 $8.80 $8.48 $9.12
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .46 .49 .49 .52 .54
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .21 .23 .07 .32 (.62)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .67 .72 .56 .84 (.08)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.47) (.49) (.49) (.52) (.54)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.03) -- -- -- (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.50) (.49) (.49) (.52) (.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.27 $9.10 $8.87 $8.80 $8.48
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 7.55 8.33 6.48 10.27 (.89)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $168,032 $165,993 $172,170 $175,210 $175,741
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.00 .96 1.00 1.01 .98
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.00 5.42 5.53 6.12 6.22
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 42.76 117.00 270.34 120.38 13.85
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods ended September 30, 1995 and
thereafter, includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share February 1, 1994+
operating performance Year ended September 30 to September 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.09 $8.86 $8.79 $8.48 $9.07
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .40 .43 .43 .47 .32
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .21 .23 .07 .31 (.60)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .61 .66 .50 .78 (.28)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.41) (.43) (.43) (.47) (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.03) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.44) (.43) (.43) (.47) (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.26 $9.09 $8.86 $8.79 $8.48
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 6.86 7.63 5.78 9.46 (3.06)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $68,547 $56,244 $41,795 $24,259 $8,622
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.65 1.61 1.66 1.65 1.05*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.36 4.76 4.83 5.28 3.39*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 42.76 117.00 270.34 120.38 13.85
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods ended September 30, 1995 and
thereafter, includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share February 10, 1995+
operating performance Year ended September 30 to September 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $9.08 $8.86 $8.79 $8.51
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .43 .46 .47 .31
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .21 .22 .06 .29
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .64 .68 .53 .60
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.44) (.46) (.46) (.32)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.03) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.47) (.46) (.46) (.32)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.25 $9.08 $8.86 $8.79
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 7.23 7.89 6.15 7.11*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,433 $2,365 $1,492 $299
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.30 1.26 1.30 .83*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.71 5.09 5.03 3.21*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 42.76 117.00 270.34 120.38
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods ended September 30, 1995 and
thereafter, includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
</TABLE>
Notes to financial statements
September 30, 1998
Note 1
Significant accounting policies
Putnam New York Tax Exempt Opportunities Fund (the "fund") is registered
under the Investment Company Act of 1940, as amended, as a
non-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 taxes by investing in a portfolio of New
York tax-exempt securities which Putnam Investment Management, Inc.
("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of
Putnam Investments, Inc. believes does not involve undue risk to income or
principal.
The fund offers class A, class B and class M shares. Class A shares are
sold with a maximum front-end sales charge of 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 shares, and are subject to a contingent deferred sales charge, if
those shares are redeemed within six years of purchase. Class M shares are
sold with a maximum front-end sales charge of 3.25% and pay an ongoing
distribution fee that is lower than class B shares and higher than class A
shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are stated on the basis
of valuations provided by a pricing service, approved by the Trustees,
which uses information with respect to transactions in bonds, quotations
from bond dealers, market transactions in comparable securities and
various relationships between securities in determining value.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Interest income is recorded on the accrual basis.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on securities
it owns or in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of
the underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparty to the contract is unable to
perform. When the contract is closed, the fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices supplied
by dealers.
D) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the year ended
September 30, 1998, the fund had no borrowings against the line of credit.
E) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
It is also the intention of the fund to distribute an amount sufficient to
avoid imposition of any excise tax under Section 4982 of the Internal
Revenue Code of 1986, as amended. Therefore, no provision has been made
for federal taxes on income, capital gains or unrealized appreciation on
securities held nor for excise tax on income and capital gains.
F) Distributions to shareholders Income dividends are recorded daily by
the fund and are distributed monthly. Capital gain distributions, 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. These differences include temporary and
permanent differences of foreign currency gains and losses, post October
loss deferrals, 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 September 30, 1998, the fund reclassified
$31,619 to increase distributions in excess of net investment income and
$8,660 to increase paid-in-capital, with a decrease to accumulated net
realized losses of $22,959. The calculation of net investment income per
share in the financial highlights table excludes these adjustments.
G) Amortization of bond premium and accretion of bond discount Any premium
resulting from the purchase of securities in excess of maturity value is
amortized on a yield-to-maturity basis. The premium in excess of the call
price, if any, is amortized to the call date; thereafter, the remaining
excess premium is amortized to maturity. Discounts on zero coupon bonds
and original issue discount are accreted according to the
yield-to-maturity basis.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on 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.
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 Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the year ended September 30, 1998, fund expenses were reduced by
$70,547 under expense offset arrangements with PFTC. Investor servicing
and custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested a portion of the assets utilized in
connection with the expense offset arrangements in an income producing
asset if it had not entered into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $500 has
been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the 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
in the fund and are 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 Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B 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 Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments
Inc., for services provided and expenses incurred by it in distributing
shares of the fund. The Plans provide for payments by the fund to Putnam
Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the
average net assets attributable to class A, class B and class M shares,
respectively. The Trustees currently limit payment by the fund to an
annual rate of 0.20%, 0.85% and 0.50% of the average net assets
attributable to class A, class B and class M shares, respectively.
For the year ended September 30, 1998, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $28,426 and $651 from the sale
of class A and class M shares, respectively and $165,456 in contingent
deferred sales charges from redemptions of class B shares. A deferred
sales charge of up to 1% is assessed on certain redemptions of class A
shares. For the year ended September 30, 1998, Putnam Mutual Funds Corp.,
acting as underwriter received no monies on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended September 30, 1998, purchases and sales of
investment securities other than short-term investments aggregated
$101,263,329 and $96,880,177, respectively. Purchases and sales of
short-term municipal obligations aggregated $101,860,000 and $95,690,000,
respectively. In determining the net gain or loss on securities sold, the
cost of securities has been determined on the identified cost basis.
Note 4
Capital shares
At September 30, 1998, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended
September 30, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,468,511 $ 22,614,893
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 515,561 4,727,728
- -----------------------------------------------------------------------------
2,984,072 27,342,621
Shares
repurchased (3,088,923) (28,287,931)
- -----------------------------------------------------------------------------
Net decrease (104,851) $ (945,310)
- -----------------------------------------------------------------------------
Year ended
September 30, 1997
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,620,335 $32,317,239
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 503,552 4,502,230
- -----------------------------------------------------------------------------
4,123,887 36,819,469
Shares
repurchased (5,295,872) (47,255,173)
- -----------------------------------------------------------------------------
Net decrease (1,171,985) $(10,435,704)
- -----------------------------------------------------------------------------
Year ended
September 30, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,125,903 $19,476,818
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 197,745 1,812,031
- -----------------------------------------------------------------------------
2,323,648 21,288,849
Shares
repurchased (1,105,098) (10,128,591)
- -----------------------------------------------------------------------------
Net increase 1,218,550 $11,160,258
- -----------------------------------------------------------------------------
Year ended
September 30, 1997
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,266,604 $20,236,321
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 153,804 1,375,031
- -----------------------------------------------------------------------------
2,420,408 21,611,352
Shares
repurchased (951,628) (8,500,966)
- -----------------------------------------------------------------------------
Net increase 1,468,780 $13,110,386
- -----------------------------------------------------------------------------
Year ended
September 30, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 43,991 $ 402,844
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 9,902 90,644
- -----------------------------------------------------------------------------
53,893 493,488
Shares
repurchased (51,170) (468,344)
- -----------------------------------------------------------------------------
Net increase 2,723 $ 25,144
- -----------------------------------------------------------------------------
Year ended
September 30, 1997
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 126,540 $ 1,138,814
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,506 58,176
- -----------------------------------------------------------------------------
133,046 1,196,990
Shares
repurchased (41,167) (368,779)
- -----------------------------------------------------------------------------
Net increase 91,879 $ 828,211
- -----------------------------------------------------------------------------
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, the fund hereby
designates $64,108 as a capital gain for its taxable year ended September
30, 1998.
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 1999 will show the tax status of all
distributions paid to your account in calendar 1998.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT
ACCOUNTANTS
PricewaterhouseCoopers LLP
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Jerome J. Jacobs
Vice President
David E. Hamlin
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New York Tax
Exempt Opportunities Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives details of
sales charges, investment objectives, and operating policies of the fund,
and the most recent copy of Putnam's Quarterly Performance Summary. For
more information or to request a prospectus, call toll free:
1-800-225-1581. You can also learn more at Putnam Investments' website:
http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
www.putnaminv.com
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
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AN052 47012 854/228/759 11/98
