Putnam
New York
Tax Exempt
Opportunities Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
11-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
Putnam New York Tax Exempt Opportunities Fund's recently concluded
fiscal year coincided with one of the more anxiety-driven times in
recent memory. Uncertainties generated by the Federal Reserve Board's
interest-rate policy, the slowing pace of the economy, and the dramatic
aftermath of the presidential election have all contributed to the
general sense of unease that has gripped the securities markets in
recent months.
Typically, in such an environment, investors are drawn to the relative
security of fixed-income investments. In this case, they have also been
increasingly drawn to the tax advantages of municipal bonds, helping to
boost demand in the face of a diminishing supply. Consequently, your
fund, under some pressure during the first half of its fiscal year,
completed the year with solid performance.
Seasoned investors realize that uncertainties such as we have recently
experienced are usually transitory. Your fund's manager, David Hamlin,
successfully positioned the fund to benefit as the market transitioned
into a more favorable climate. We are confident that his strategies will
enable it to take full advantages of the opportunities available in
fiscal 2001.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
January 16, 2001
REPORT FROM FUND MANAGEMENT
David E. Hamlin
Putnam New York Tax Exempt Opportunities Fund's fiscal year ended
November 30, 2000, proved to be a watershed period for fixed-income
securities. The stock market's powerful rally, which ended abruptly last
spring, reawakened investors to the wisdom of asset diversification. As
the year wore on, questions about the direction of interest rates and
the presidential election added to the uncertainty. Encouraged by the
relative safety and predictability of fixed-income investments,
investors increasingly turned to bonds, pushing prices higher. The
tax-exempt market enjoyed an additional benefit: the strength of the
U.S. economy has been generating greater personal wealth, which
investors are eager to shelter from taxes.
Total return for 12 months ended 11/30/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
-----------------------------------------------------------------------
6.86% 1.85% 6.17% 1.17% 6.14% 5.14% 6.54% 3.04%
-----------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 6.
* MUNICIPAL BONDS RALLIED; CREDIT YIELD SPREAD WIDENED
We had been positioning your fund for an eventual turnaround in the
fixed-income markets for some time and its improved performance shows
the effect of this timely shift. However, investments in lower-rated
higher-yielding bonds, which make up a considerable portion of the
fund's portfolio, limited its participation in the rally. A dwindling
supply of bonds coming to market helped soften this countervailing
pressure.
For most of the second half of your fund's fiscal year, we saw positive
total returns as interest rates in the municipal market peaked and fell.
Reflecting declining interest rates and strong demand for high quality
bonds, the AAA/Aaa sector of the municipal market performed particularly
well. With approximately one third of its total assets invested in these
top-rated bonds or in insured New York municipal securities at fiscal
year's end, your fund benefited from this trend.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Education 21.2%
Transportation 16.6%
Health care 12.1%
Utilities 11.9%
Water and sewer 7.8%
Footnote reads:
*Based on net assets as of 11/30/00. Holdings will vary over time.
However, as investors moved into the highest-quality municipal bonds,
pushing up their prices, the prices of lower-rated bonds lagged. As a
result, we witnessed a dramatic difference in yield (known as credit
yield spread) between the highest-rated and lowest-rated municipal
bonds. With its sizable position in higher-yielding lower-quality bonds,
the fund encountered some headwind. Nevertheless, our outlook for this
sector remains quite optimistic. This price drop created an opportunity
for us to invest in a number of lower-rated bonds at especially
attractive prices.
* HOSPITAL AND ESSENTIAL SERVICE SECTORS OFFER OPPORTUNITIES
Given recent evidence that the economy may be slowing a bit, we are
optimistic about prospects for several holdings in the
noninvestment-grade sector of the municipal market. We have sought to
improve the diversification of the fund's assets across the essential
service sectors, since we expect these industries to weather a potential
recession or soft landing better than the retail or real estate
sectors, which are more dependent on strong economic growth.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
Aaa/AAA -- 34.2%
Aa/AA -- 4.8%
A -- 28.4%
Baa/BBB -- 12.7%
Ba/BB -- 6.0%
B -- 13.9%
Footnote reads:
*As a percentage of market value as of 11/30/00. A bond rated BBB/Baa or
higher is considered investment grade. Percentages may include unrated
bonds considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
After more than four years of underperformance, the hospital sector
appears poised for a turnaround. Following the Balanced Budget Act of
1997, which mandated lower Medicare reimbursements, the industry endured
massive restructurings and cost-cutting programs, a move that helped
strengthen hospitals in the long run. Today, hospitals are benefiting
from larger reimbursements from Congress just as they are becoming more
profitable.
"We believe lower-rated securities offer tremendous value at this time.
However, we're not putting all our eggs in one basket. Instead, we're
differentiating and diversifying wisely -- selecting municipal bonds in
the essential service sectors that meet our high credit standards."
-- David E. Hamlin, portfolio manager
The fund's recent investment in Westchester County New York Healthcare
Corporation is well positioned to benefit from improving fundamentals.
These bonds are rated A3 by Moody's (lower quality but still investment
grade). Affluent Westchester County's government is not directly
responsible for this hospital, but its commitment to quality health care
provides additional benefits for this facility. While this holding, as
well as others discussed in this report, were viewed favorably at the
end of the period, they are subject to review and adjustment in
accordance with the fund's investment strategy, and may vary in the
future.
Education-related securities also offer attractive opportunities. We
purchased bonds issued by the New York City Industrial Development
Authority for Brooklyn Polytechnic University. Proceeds from sale of the
securities are being used to finance campus improvements. This strong
regional technical university has a sizable endowment, resulting in a
Baa3 and BBB rating by Moody's and Standard and Poor's, respectively. In
Puerto Rico, we invested in MBIA-insured bonds issued by the University
of Puerto Rico.
* HISTORIC BUDGET SURPLUS TRANSLATED INTO SHRINKING BOND SUPPLY
As with much of the rest of the nation, the Empire State is enjoying
strong economic growth, which in turn, is producing sizable budget
surpluses. In fact, despite a heavy debt burden, New York City just
recorded its 20th consecutive year of operating surpluses. The size of
the surplus for the city's fiscal 2000 was larger than any time in its
recorded history. At the state level, Governor Pataki and the state
legislature approved the Debt Reform Act of 2000 after broad bipartisan
efforts. The passage of this bill, which places restrictions on Albany's
ability to issue new debt, boosts the state's political credibility,
because it preserves the status quo debt burden level and thoroughly
minimizes the risk of any increase in the state's debt.
Given these positive developments, both New York City and New York state
bonds received favorable reviews from the rating agencies. Moody's and
Standard & Poor's recently upgraded New York City bond ratings from A3
and A- to A2 and A, respectively. Moody's also changed its outlook for
New York state from stable to positive, a step that typically presages a
credit upgrade. These credit developments, in turn, have had a positive
impact on the prices of the bonds held in your fund's portfolio.
In contrast to 1999 volume, the level of new issuance in New York has
been quite light this year. Higher interest rates, particularly in the
first half of 2000, effectively curtailed the number of refinancings by
municipalities. However, with the distribution of proceeds from the
tobacco industry's settlement has come a whole new class of municipal
securities that enable counties to securitize their prospective
receipts. These "tobacco bonds" have received investment grade ratings
from the major rating agencies, typically A to AA/Aa.
We chose not to participate in the initial offering of these bonds for
two reasons. First, we do not believe the current ratings of these
tobacco bonds accurately reflect their credit risk and we have assigned
a lower rating internally. A large part of the bonds' credit ratings are
predicated on the future growth of demand for cigarettes, and we were
not comfortable with this outlook at the time of the initial offering.
Second, issuance in this sector was heavy, and we did not believe there
was enough market interest to support the initial offering prices. Our
reservations have proved valid, since these bonds have underperformed.
* FUND POSITIONED NEUTRALLY UNTIL TRENDS EMERGE
The Federal Reserve Board did not raise interest rates in October or
November and moved to a neutral bias in December. And in a surprise move
on January 3, it lowered short-term interest rates from 6.5% to 6%.
However, much uncertainty remains about economic growth, and we are not
willing to take on incremental risk at this time. Hence, our
decision-making will reflect a neutral bias until more visible trends
present themselves. Should the Fed's long-standing prediction of a soft
landing for the economy come to pass, our investment focus would likely
move further out on the yield curve. Meanwhile, we will continue to look
for opportunities in lower-rated securities with qualities that perform
well in both bull or bear markets.
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 11/30/00, 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
a high level of current income free from federal, New York state, and
New York City personal income tax as we believe to be consistent with
capital preservation.
TOTAL RETURN FOR PERIODS ENDED 11/30/00
Class A Class B Class C Class M
(inception dates) (11/7/90) (2/1/94) (7/26/99) (2/10/95)
NAV POP NAV CDSC NAV CDSC NAV POP
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1 year 6.86% 1.85% 6.17% 1.17% 6.14% 5.14% 6.54% 3.04%
------------------------------------------------------------------------------
5 years 25.05 19.10 21.01 19.10 20.12 20.12 23.16 19.20
Annual average 4.57 3.56 3.89 3.56 3.73 3.73 4.25 3.57
------------------------------------------------------------------------------
10 years 85.45 76.74 72.79 72.79 71.11 71.11 78.85 73.04
Annual average 6.37 5.86 5.62 5.62 5.52 5.52 5.99 5.64
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Annual average
(life of fund) 6.38 5.87 5.63 5.63 5.53 5.53 5.99 5.65
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 11/30/00
Lehman Brothers Municipal Consumer
Bond Index price index
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1 year 8.18% 3.44%
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5 years 30.88 13.26
Annual average 5.53 2.52
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10 years 98.76 30.19
Annual average 7.11 2.67
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Annual average
(life of fund) 7.26 2.67
------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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-year, 5- and
10-year, if 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. For
class C shares, returns for periods prior to their inception are derived
from the historical performance of class A shares, adjusted to reflect
both the CDSC currently applicable to class C shares, which is 1% for
the first year and is eliminated thereafter, and the higher operating
expenses applicable to class C 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. Performance data reflects an expense
limitation currently or previously in effect, without which returns
would have been lower.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 11/30/90
Lehman Bros.
Fund's class A Municipal Bond Consumer price
Date shares at POP Index index
11/30/90 9,425 10,000 10,000
11/30/92 11,486 12,132 10,613
11/30/94 12,163 12,772 11,188
11/30/96 14,723 16,080 11,861
11/30/98 16,933 18,573 12,272
11/30/00 $17,674 $19,876 $13,019
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 and class C
shares would have been valued at $17,279 and $17,111, respectively and
no contingent deferred sales charges would apply; a $10,000 investment
in the fund's class M shares would have been valued at $17,885 ($17,304
at public offering price). See first page of performance section for
performance calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 11/30/00
Class A Class B Class C Class M
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Distributions
(number) 12 12 12 12
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Income 1 $0.46321 $0.40756 $0.39562 $0.43701
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Capital gains 1 -- -- -- --
------------------------------------------------------------------------------
Total $0.46321 $0.40756 $0.39562 $0.43701
------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
------------------------------------------------------------------------------
11/30/99 $8.52 $8.94 $8.51 $8.52 $8.51 $8.80
------------------------------------------------------------------------------
11/30/00 8.62 9.05 8.61 8.63 8.61 8.90
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Current return (end of period)
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Current dividend
rate 2 5.27% 5.02% 4.62% 4.47% 4.97% 4.81%
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Taxable equivalent (a) 3 9.37 8.92 8.21 7.95 8.83 8.55
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Taxable equivalent (b) 3 9.76 9.30 8.56 8.28 9.21 8.91
------------------------------------------------------------------------------
Current 30-day SEC
yield 4 4.98 4.74 4.33 4.16 4.68 4.52
------------------------------------------------------------------------------
Taxable equivalent (a) 3 8.85 8.43 7.70 7.39 8.32 8.03
------------------------------------------------------------------------------
Taxable equivalent (b) 3 9.23 8.78 8.02 7.71 8.67 8.37
------------------------------------------------------------------------------
1 Capital 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.
2 Income portion of most recent distribution, excluding capital gains,
annualized and divided by NAV or POP at end of period.
3 Assumes (a) maximum 43.74% combined federal income tax and New York
state personal income tax rates or (b) maximum 46.02% combined federal,
New York state, and New York City tax rates. Results for investors
subject to lower tax rates would not be as advantageous.
4 Based on investment income, calculated using SEC guidelines.
TOTAL RETURN FOR PERIODS ENDED 12/31/00 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (11/7/90) (2/1/94) (7/26/99) (2/10/95)
NAV POP NAV CDSC NAV CDSC NAV POP
------------------------------------------------------------------------------
1 year 11.02% 5.71% 10.30% 5.30% 10.26% 9.26% 10.69% 7.10%
------------------------------------------------------------------------------
5 years 26.76 20.77 22.82 20.88 21.84 21.84 24.84 20.86
Annual average 4.86 3.85 4.20 3.86 4.03 4.03 4.54 3.86
------------------------------------------------------------------------------
10 years 89.60 80.64 76.94 76.94 74.96 74.96 82.99 77.01
Annual average 6.61 6.09 5.87 5.87 5.75 5.75 6.23 5.88
------------------------------------------------------------------------------
Annual average
(life of fund) 6.57 6.07 5.84 5.84 5.72 5.72 6.19 5.84
------------------------------------------------------------------------------
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 C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
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 or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
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 assumes reinvestment of all
distributions and interest payments and does not take into account
brokerage fees or taxes. 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.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report, preceded by the Report of independent
accountants, constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
New York Tax Exempt Opportunities Fund:
We have audited the accompanying statement of assets and liabilities,
including the fund's portfolio, as of November 30, 2000, and the related
statement of operations, statement of changes in net assets and
financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The
statement of changes in net assets for the year ended November 30, 1999
and financial highlights for each of the years or periods in the
four-year period ended November 30, 1999 were audited by other auditors
whose report dated January 6, 2000, expressed an unqualified opinion on
that financial statement and those financial highlights.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform our audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as
of November 30, 2000 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of New York Tax Exempt Opportunities Fund as of
November 30, 2000, the results of its operations, changes in its net
assets and financial highlights for the year then ended in conformity
with accounting principles generally accepted in the United States of
America.
KPMG LLP
Boston, Massachusetts
January 2, 2001
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
November 30, 2000
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration Insured
FRB -- Floating Rate Bonds
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
U.S. Govt. Coll. -- U.S. Government Collateralized
MUNICIPAL BONDS AND NOTES (100.0%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C> <C>
New York (95.4%)
-------------------------------------------------------------------------------------------------------------------
$ 1,460,000 Albany, Indl. Dev. Agcy. Fac. Rev. Bonds
(Albany Med. Ctr.), 6s, 5/1/29 (SEG) BB/P $ 1,222,750
3,400,000 Battery Park, City Auth. Rev. Bonds, Ser. A,
AMBAC, 5 1/2s, 11/1/16 Aaa 3,459,500
2,000,000 Chautauqua Cnty., Indl. Dev. Agcy. Rev. Bonds
(Womans Christian Assn.), Ser. A, 6.4s, 11/15/29 B+/P 1,665,000
5,000,000 Erie Cnty., Indl. Dev. Life Care Cmnty. Rev. Bonds
(Episcopal Church Home), Ser. A, 6s, 2/1/28 B+/P 4,087,500
2,250,000 Essex Cnty., Indl. Dev. Agcy. Rev. Bonds
(Intl. Paper Co.), Ser. A, 6.15s, 4/1/21 Baa 2,235,938
2,000,000 Huntington, Hsg. Auth. Sr. Hsg. Fac. Rev. Bonds
(Gurwin Jewish Sr. Residences), Ser. A, 6s, 5/1/29 B+/P 1,710,000
2,410,000 Ithaca, Hsg. Corp. Mtge. Rev. Bonds
(Eddygate Park Apts.), 9s, 6/1/06 BBB+/P 2,446,150
2,650,000 Jefferson Cnty., Indl. Dev. Agcy. Solid Waste Disp.
Rev. Bonds (Champion Intl. Corp.), 7.2s, 12/1/20 Baa1 2,736,125
1,360,000 Lockport, Hsg. Dev. Corp. Rev. Bonds
(Urban Pk. Towers), Ser. A, 6s, 10/1/18 Baa2 1,373,600
5,000,000 Long Island, Pwr. Auth. NY Elec. Syst. Rev. Bonds
IFB, 6.55s, 12/1/24 (acquired 5/19/98,
cost 5,435,000) (RES) A-/P 5,037,500
5,000,000 Long Island, Pwr. Auth. NY Elec. Syst. Rev. Bonds
FRB, Ser. 65, MBIA, 5.74s, 4/1/12
(acquired 11/3/98, cost 5,422,100) (RES) Aaa 5,068,750
2,500,000 Metropolitan Trans. Auth. Dedicated Tax Fund
Rev. Bonds, Ser. A, MBIA, 6 1/4s, 4/1/11 Aaa 2,787,500
1,000,000 Mount Vernon, Indl. Dev. Agcy. Fac. Rev. Bonds
(Wartburg Senior Hsg., Inc.-Meadowview),
6.2s, 6/1/29 B+/P 856,250
Nassau Cnty., G.O. Bonds, Ser. A
1,000,000 FGIC, 6s, 7/1/13 Aaa 1,090,000
2,300,000 FGIC, 6s, 7/1/11 Aaa 2,504,125
5,000,000 Niagara Falls NY City Schl. Dist.
COP, 5 7/8s, 6/15/19 Baa2 5,031,250
NY City, G.O. Bonds
300,000 Ser. B, 8 1/4s, 6/1/05 A 343,125
95,000 Ser. E, U.S. Govt. Coll., 7.6s, 2/1/05 A 99,631
3,360,000 Ser. E, U.S. Govt. Coll., 7.6s, 2/1/05, Prerefunded AAA 3,528,000
45,000 Ser. F, 7.6s, 2/1/05 A 47,194
1,800,000 Ser. H, 6s, 8/1/17 A 1,881,000
2,750,000 Ser. J, 6s, 8/1/17 A 2,873,750
2,000,000 Ser. I, 5 7/8s, 3/15/14 A 2,082,500
1,000,000 NY City, G.O. Bonds IFB, AMBAC, 7.42s, 9/1/11 Aaa 1,071,250
NY City, Indl. Dev. Agcy. Civic Fac. Rev. Bonds
7,905,000 (Parking Corp.), 8 1/2s, 12/30/22 B+/P 8,487,994
1,750,000 (The Lighthouse Inc.), 6 1/2s, 7/1/22 Aa2 1,841,875
NY City, Indl. Dev. Agcy. Rev. Bonds
5,000,000 (Visy Paper Inc.), 7.95s, 1/1/28 B/P 5,181,250
5,000,000 (Brooklyn Navy Yard Cogen. Partners),
6.2s, 10/1/22 Baa3 4,981,250
2,575,000 (Polytech U. Project), 6 1/8s, 11/1/30 BBB- 2,578,219
1,250,000 (Field Hotel Assoc.), 6s, 11/1/28 B/P 1,093,750
1,440,000 (Brooklyn Navy Yard Cogen. Partners),
5.65s, 10/1/28 Baa3 1,326,600
1,250,000 NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds
(British Airways), 5 1/4s, 12/1/32 A2 1,085,938
NY City, Muni. Wtr. & Swr. Fin. Auth. Rev. Bonds
5,000,000 MBIA, 6.82s, 6/15/13 Aaa 5,068,750
5,000,000 FGIC, Ser. A, 4 3/4s, 6/15/31 Aaa 4,343,750
1,000,000 NY City, Transitional Fin. Auth. Rev. Bonds,
Ser. C, 5s, 5/1/26 Aa 923,750
NY State Dorm. Auth. Rev. Bonds
170,000 (City U.), Ser. D, 8 3/4s, 7/1/03 A- 186,788
835,000 (NY Dept of Ed.), 7 3/4s, 7/1/21 Baa1 867,565
5,000,000 (State U. Edl. Fac.), Ser. A, 7 1/2s, 5/15/13 A 6,118,750
470,000 (Wildwood School), 7.3s, 7/1/15 AAA/P 487,146
2,050,000 (Our Lady Of Mercy) FHA Insd., 6.3s, 8/1/32 Aaa 2,121,750
1,340,000 (Schools PG - Issue 2), Ser. E, AMBAC,
5 3/4s, 7/1/19 AAA 1,388,575
2,650,000 (City U. Syst.), Ser. A, FGIC, 5 3/4s, 7/1/09 AAA 2,835,500
1,310,000 (Mental Hlth. Svcs. Fac.), Ser. B, MBIA,
5 3/4s, 7/1/09 Aaa 1,406,613
5,000,000 (Hlth. Facs.), Ser. l, 4 3/4s, 1/15/29 Aaa 4,387,500
4,000,000 (St. John's U.), MBIA, 4 3/4s, 7/1/28 AAA 3,490,000
725,000 (State U. Edl. Fac.), Ser. B, zero %, 5/15/09 A 473,969
NY State Energy Res. & Dev. Auth. Elec. Fac.
Rev. Bonds (Long Island Ltg. Co.)
530,000 Ser. A, 7.15s, 12/1/20 A- 555,175
1,185,000 Ser. A, 7.15s, 6/1/20 A 1,241,288
420,000 Ser. A, 7.15s, 6/1/20, Prerefunded A 443,625
160,000 Ser. B, 7.15s, 9/1/19 A 167,600
70,000 Ser. B, 7.15s, 9/1/19, Prerefunded A 73,938
NY State Energy Res. & Dev. Auth. Gas Fac. IFB
(Brooklyn Union Gas Co.)
2,000,000 Ser. B, 9.057s, 7/1/26 A 2,330,000
3,500,000 7.808s, 4/1/20 A 3,955,000
NY State Energy Res. & Dev. Auth. Poll. Control
Rev. Bonds
1,750,000 (Niagra Mohawk Pwr. Corp.),
Ser. A, FGIC, 7.2s, 7/1/29 Aaa 1,922,813
1,000,000 (Lilco Project), Ser. B, 5.15s, 3/1/16 A- 948,750
NY State Env. Fac. Corp. Poll. Control Rev. Bonds
1,000,000 Ser. B, 7 1/2s, 3/15/11 Aa1 1,008,730
210,000 7s, 6/15/12 AAA 217,031
2,720,000 (State Wtr. Revolving Fund), 5 7/8s, 6/15/14 Aa1 2,828,800
NY State Hsg. Fin. Agcy. Rev. Bonds, Ser. A
50,000 7 1/4s, 9/15/12 Baa1 52,563
450,000 7 1/4s, 9/15/12, Prerefunded Aaa 474,750
NY State Med. Care Fac. Fin. Agcy. Rev. Bonds
120,000 (Mental Hlth. Svcs. Fac.), Ser. B, 7 7/8s, 8/15/08 A3 123,160
40,000 (Mental Hlth. Svcs. Fac.), Ser. A, 7.8s, 2/15/19 A3 40,218
85,000 (Mental Hlth. Svcs. Fac.), Ser. A, 7 1/2s, 2/15/21 A3 87,094
145,000 (Mental Hlth. Svcs. Fac.), Ser. A, 7 1/2s, 2/15/21,
Prerefunded Aaa 148,770
205,000 (Mental Hlth. Svcs. Fac.), Ser. D, 7.4s, 2/15/18 A 214,994
510,000 (Mental Hlth. Svcs. Fac.), Ser. D, 7.4s, 2/15/18,
Prerefunded A 537,413
700,000 Ser. D, FHA Insd., 6.6s, 2/15/31 AAA 745,500
4,300,000 NY State Thruway Auth. Hwy. & Bridge Trust Fund
Rev. Bonds, Ser. B, FGIC, 6s, 4/1/14 Aaa 4,584,875
NY State Urban Dev. Corp. Rev. Bonds
1,685,000 (Clarkson Ctr.), 5 1/2s, 1/1/20 A 1,697,638
3,345,000 (Clarkson Ctr.), 5 1/2s, 1/1/15 A 3,441,169
2,000,000 (Syracuse U.), 5 1/2s, 1/1/15 A 2,057,500
5,000,000 (Ctr. for Indl. Innovation), 5 1/2s, 1/1/13 A 5,175,000
1,000,000 (Correctional Fac. - SVC. Contracts),
Ser. A, 5s, 1/1/28 A 902,500
1,000,000 Oneida Cnty, Indl. Dev. Agcy. Rev. Bonds
(St. Elizabeth Med.), Ser. A, 5 7/8s, 12/1/29 B+/P 783,750
1,000,000 Onondaga Cnty., Indl. Dev. Agcy. Rev. Bonds
(Solvay Paperboard LLC), 7s, 11/1/30 B+/P 987,500
Port Auth. NY & NJ Rev. Bonds
1,100,000 (Kennedy Intl. Arpt.), 6 3/4s, 10/1/19 BB/P 1,127,500
1,000,000 (Kennedy Intl. Arpt.), 6 3/4s, 10/1/11 BB/P 1,028,750
2,000,000 Cons., Ser. 83, 6 3/8s, 10/15/17 AA- 2,075,000
175,000 Cons., Ser. 78, 6 1/2s, 10/15/08 AA- 181,344
Triborough Brdg. & Tunl. Auth. Rev. Bonds, Ser. A
4,000,000 FGIC, 5 1/4s, 1/1/14 Aaa 4,035,000
3,350,000 MBIA, 4 3/4s, 1/1/24 Aaa 2,968,938
5,755,000 Port Auth. NY & NJ Special Oblig. Rev. Bonds
(Continental/Eastern Laguardia), 9 1/8s, 12/1/15 Ba2 5,975,647
Suffolk Cnty., Indl. Dev. Agcy. Rev. Bonds
500,000 (Southampton Hosp.), Ser. A, 7 1/4s, 1/1/30 B-/P 455,625
2,000,000 (Nissequogue Cogen Partners Fac.),
5 1/2s, 1/1/23 BB+/P 1,787,500
500,000 Suffolk Cnty., Indl. Dev. Agcy. Fac. Civic Fac.
Rev. Bonds (Southampton Hosp. Assn.),
Ser. B, 7 5/8s, 1/1/30 B-/P 476,875
1,405,000 Valley Hlth. Dev. Corp. Mtge. Rev. Bonds,
FHA, Insd. 11.3s, 2/1/23 A 1,556,227
2,000,000 Westchester Cnty., Hlth. Care Corp. Rev. Bonds,
Ser. A, 5 7/8s, 11/1/25 A3 1,977,500
-------------
177,308,720
Puerto Rico (4.6%)
-------------------------------------------------------------------------------------------------------------------
4,700,000 Cmnwlth. of PR, Hwy. & Trans. Auth. IFB,
Ser. W, 5.843s, 7/1/08 A 4,976,125
2,000,000 Cmnwlth. of PR, Infrastructure Fin. Auth.
Special Oblig. Rev. Bonds, Ser. A, 5 1/2s, 10/1/40 AAA 2,010,000
1,500,000 U. of PR Rev. Bonds, Ser. O, MBIA, 5 3/8s, 6/1/30 AAA 1,490,625
-------------
8,476,750
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $188,378,839) (b) $ 185,785,470
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $185,846,580.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at November 30, 2000 for the
securities listed. Ratings are generally ascribed to securities at the
time of issuance. While the agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings do not
necessarily represent what the agencies would ascribe to these
securities at November 30, 2000. 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 $188,378,839,
resulting in gross unrealized appreciation and depreciation of
$4,374,671 and $6,968,040, respectively, or net unrealized depreciation
of $2,593,369.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at November 30, 2000
was $10,106,250 or 5.4% of net assets.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at November
30, 2000.
The rates shown on FRB and IFB are the current interest rates
shown at November 30, 2000, which are subject to change based on the
terms of the security.
The fund had the following industry group concentrations greater
than 10% at November 30, 2000 (as a percentage of net assets):
(Unaudited)
Education 21.2%
Transportation 16.6
Health care 12.1
Utilities 11.9
The fund had the following insurance concentrations greater than
10% at November 30, 2000 (as a percentage of net assets):
MBIA 12.0%
FGIC 11.5
------------------------------------------------------------------------------
Futures Contracts Outstanding at November 30, 2000
Aggregate Face Expiration Unrealized
Total Market Value Value Date Depreciation
------------------------------------------------------------------------------
Muni Index (Short) $7,278,750 $7,147,057 Dec-00 $(131,693)
Muni Index (Short) 703,937 698,667 Mar-01 (5,270)
------------------------------------------------------------------------------
$(136,963)
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2000
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $188,378,839) (Note 1) $185,785,470
-------------------------------------------------------------------------------------------
Interest and other receivables 3,813,578
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 68,008
-------------------------------------------------------------------------------------------
Total assets 189,667,056
Liabilities
-------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 132,484
-------------------------------------------------------------------------------------------
Payable for securities purchased 2,558,296
-------------------------------------------------------------------------------------------
Payable for variation margin 46,661
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 231,948
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 436,998
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 231,565
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 45,296
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 13,959
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,438
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 81,834
-------------------------------------------------------------------------------------------
Other accrued expenses 38,997
-------------------------------------------------------------------------------------------
Total liabilities 3,820,476
-------------------------------------------------------------------------------------------
Net assets $185,846,580
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $191,716,720
-------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 320,702
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (3,460,510)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (2,730,332)
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $185,846,580
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($129,534,688 divided by 15,030,766 shares) $8.62
-------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $8.62)* $9.05
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($53,894,336 divided by 6,259,757 shares)*** $8.61
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($349,676 divided by 40,535 shares)*** $8.63
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($2,067,880 divided by 240,277 shares) $8.61
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.61)** $8.90
-------------------------------------------------------------------------------------------
* 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 November 30, 2000
<S> <C>
Tax exempt interest income: $12,046,889
-------------------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 955,899
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 204,771
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 10,984
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 5,828
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 260,173
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 498,553
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 1,814
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 11,247
-------------------------------------------------------------------------------------------
Other 78,237
-------------------------------------------------------------------------------------------
Total expenses 2,027,506
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (75,887)
-------------------------------------------------------------------------------------------
Net expenses 1,951,619
-------------------------------------------------------------------------------------------
Net investment income 10,095,270
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (1,527,294)
-------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (565,113)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the year 3,896,632
-------------------------------------------------------------------------------------------
Net gain on investments 1,804,225
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $11,899,495
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended November 30
---------------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 10,095,270 $ 11,189,794
--------------------------------------------------------------------------------------------------
Net realized loss on investments (2,092,407) (103,728)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 3,896,632 (16,900,497)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 11,899,495 (5,814,431)
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income
Class A (7,143,393) (7,664,985)
--------------------------------------------------------------------------------------------------
Class B (2,829,695) (2,901,984)
--------------------------------------------------------------------------------------------------
Class C (7,564) (1,637)
--------------------------------------------------------------------------------------------------
Class M (116,610) (112,531)
--------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A -- (345,787)
--------------------------------------------------------------------------------------------------
Class B -- (148,896)
--------------------------------------------------------------------------------------------------
Class M -- (5,390)
--------------------------------------------------------------------------------------------------
In excess of net realized gain on investments
Class A -- (99,254)
--------------------------------------------------------------------------------------------------
Class B -- (42,739)
--------------------------------------------------------------------------------------------------
Class M -- (1,548)
--------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (26,115,871) (10,586,921)
--------------------------------------------------------------------------------------------------
Total decrease in net assets (24,313,638) (27,726,103)
Net assets
--------------------------------------------------------------------------------------------------
Beginning of year 210,160,218 237,886,321
--------------------------------------------------------------------------------------------------
End of year (including undistributed
net investment income of $320,702,
and $322,694, respectively) $185,846,580 $210,160,218
--------------------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------------------------------
Two months
Per-share ended
operating performance Year ended November 30 Nov. 30+ Year ended Sept. 30
--------------------------------------------------------------------------------------------------------------
2000 1999 1998 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.52 $9.19 $9.27 $9.10 $8.87 $8.80
--------------------------------------------------------------------------------------------------------------
Investment operations
--------------------------------------------------------------------------------------------------------------
Net investment income .47 .46 .07 .46 .49 .49
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .09 (.66) (.08) .21 .23 .07
--------------------------------------------------------------------------------------------------------------
Total from
investment operations .56 (.20) (.01) .67 .72 .56
--------------------------------------------------------------------------------------------------------------
Less distributions:
--------------------------------------------------------------------------------------------------------------
From net
investment income (.46) (.44) (.07) (.47) (.49) (.49)
--------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.02) -- (.03) -- --
--------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- (.01) -- -- -- --
--------------------------------------------------------------------------------------------------------------
Total distributions (.46) (.47) (.07) (.50) (.49) (.49)
--------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.62 $8.52 $9.19 $9.27 $9.10 $8.87
--------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 6.86 (2.33) (.07)* 7.55 8.33 6.48
--------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
--------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $129,535 $142,299 $166,816 $168,032 $165,993 $172,170
--------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .86 .93 .17* 1.00 .96 1.00
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.48 5.13 .79* 5.00 5.42 5.53
--------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 6.00 9.36 9.22* 42.76 117.00 270.34
--------------------------------------------------------------------------------------------------------------
+ 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) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B
--------------------------------------------------------------------------------------------------------------
Two months
Per-share ended
operating performance Year ended November 30 Nov. 30+ Year ended Sept. 30
--------------------------------------------------------------------------------------------------------------
2000 1999 1998 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.51 $9.19 $9.26 $9.09 $8.86 $8.79
--------------------------------------------------------------------------------------------------------------
Investment operations
--------------------------------------------------------------------------------------------------------------
Net investment income .41 .40 .06 .40 .43 .43
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .10 (.67) (.07) .21 .23 .07
--------------------------------------------------------------------------------------------------------------
Total from
investment operations .51 (.27) (.01) .61 .66 .50
--------------------------------------------------------------------------------------------------------------
Less distributions:
--------------------------------------------------------------------------------------------------------------
From net
investment income (.41) (.38) (.06) (.41) (.43) (.43)
--------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.02) -- (.03) -- --
--------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- (.01) -- -- -- --
--------------------------------------------------------------------------------------------------------------
Total distributions (.41) (.41) (.06) (.44) (.43) (.43)
--------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.61 $8.51 $9.19 $9.26 $9.09 $8.86
--------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 6.17 (3.08) (.07)* 6.86 7.63 5.78
--------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
--------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $53,894 $65,168 $68,513 $68,547 $56,244 $41,795
--------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.51 1.58 .28* 1.65 1.61 1.66
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.84 4.48 .68* 4.36 4.76 4.83
--------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 6.00 9.36 9.22* 42.76 117.00 270.34
--------------------------------------------------------------------------------------------------------------
+ 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) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS C
--------------------------------------------------------------
For the period
Per-share Year ended July 26, 1999++
operating performance Nov. 30 to Nov. 30
--------------------------------------------------------------
2000 1999
--------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $8.52 $8.87
--------------------------------------------------------------
Investment operations
--------------------------------------------------------------
Net investment income .40 .14
--------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .11 (.35)
--------------------------------------------------------------
Total from
investment operations .51 (.21)
--------------------------------------------------------------
Less distributions:
--------------------------------------------------------------
From net
investment income (.40) (.14)
--------------------------------------------------------------
From net realized gain
on investments -- --
--------------------------------------------------------------
In excess of net realized
gain on investments -- --
--------------------------------------------------------------
Total distributions (.40) (.14)
--------------------------------------------------------------
Net asset value,
end of period $8.63 $8.52
--------------------------------------------------------------
Total return at
net asset value (%)(a) 6.14 (2.39)*
--------------------------------------------------------------
Ratios and supplemental data
--------------------------------------------------------------
Net assets, end of period
(in thousands) $350 $247
--------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.66 .61*
--------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.60 1.64*
--------------------------------------------------------------
Portfolio turnover (%) 6.00 9.36
--------------------------------------------------------------
+ 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) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
--------------------------------------------------------------------------------------------------------------
Two months
Per-share ended
operating performance Year ended November 30 Nov. 30+ Year ended Sept. 30
--------------------------------------------------------------------------------------------------------------
2000 1999 1998 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.51 $9.18 $9.25 $9.08 $8.86 $8.79
--------------------------------------------------------------------------------------------------------------
Investment operations
--------------------------------------------------------------------------------------------------------------
Net investment income .44 .43 .07 .43 .46 .47
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .10 (.66) (.07) .21 .22 .06
--------------------------------------------------------------------------------------------------------------
Total from
investment operations .54 (.23) -- .64 .68 .53
--------------------------------------------------------------------------------------------------------------
Less distributions:
--------------------------------------------------------------------------------------------------------------
From net
investment income (.44) (.41) (.07) (.44) (.46) (.46)
--------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.02) -- (.03) -- --
--------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- (.01) -- -- -- --
--------------------------------------------------------------------------------------------------------------
Total distributions (.44) (.44) (.07) (.47) (.46) (.46)
--------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.61 $8.51 $9.18 $9.25 $9.08 $8.86
--------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 6.54 (2.64) (.01)* 7.23 7.89 6.15
--------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
--------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,068 $2,447 $2,558 $2,433 $2,365 $1,492
--------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.16 1.23 .22* 1.30 1.26 1.30
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.18 4.84 .74* 4.71 5.09 5.03
--------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 6.00 9.36 9.22* 42.76 117.00 270.34
--------------------------------------------------------------------------------------------------------------
+ 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) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
November 30, 2000
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, LLC
("Putnam Management"), the fund's manager, a wholly-owned subsidiary of
Putnam Investments, Inc. believes is consistent with preservation of
capital.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 4.75%. 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 C shares have a higher ongoing distribution fee than
class B shares and have a one-year 1.00% contingent deferred sales
charge and do not convert to Class A shares. Class M shares are sold
with a maximum front end sales charge of 3.25% and pay an ongoing
distribution fee that is higher than class A shares but lower than class
B and class C shares.
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 that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are stated on the basis
of valuations provided by an independent 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. Restricted securities are stated at fair value following
procedures approved by the Trustees. Such valuations and procedures
are reviewed periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis.
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
November 30, 2000, 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.
At November 30, 2000, the fund had a capital loss carryover of
approximately $2,817,000 available to offset future net capital gain, if
any, which will expire November 30, 2008.
F) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
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 post-October loss deferrals, dividends payable,
unrealized gains and losses on certain futures contracts, straddle
loss deferrals, and book accretion/amortization adjustment.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital
loss carryovers) under income tax regulations. For the year ended
November 30, 2000, the fund reclassified $12,349 to decrease
paid-in-capital, with an increase to accumulated net realized losses of
$12.349. 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, original issue discount, stepped-coupon bonds and payment
in kind bonds 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 lesser of (i) an annual rate of 0.50%
of the average net assets of the fund or (ii) the following annual
rates: 0.60% of the first $500 million of average net assets, 0.50% of
the next $500 million, 0.45% of the next $500 million, 0.40% of the next
$5 billion, 0.375% of the next $5 billion, 0.355% of the next $5
billion, 0.34% of the next $5 billion, and 0.33% thereafter.
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.
Under the subcustodian contract between the subcustodian bank and PFTC,
the subcustodian bank has a lien on the securities of the fund to the
extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At November 30, 2000, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the year ended November 30, 2000,
the fund's expenses were reduced by $75,887 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $572 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan. The fund has adopted an unfunded noncontributory
defined benefit pension plan (the "Pension Plan") covering all Trustees
of the fund who have served as a Trustee for at least five years.
Benefits under the Pension Plan are equal to 50% of the Trustee's
average total retainer and meeting fees for the three years preceding
retirement. Pension expense for the fund is included in 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, class C and class M shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, Inc., a wholly-owned subsidiary of
Putnam Investments LLC, for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Retail Management, Inc. at an annual rate up to
0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to
class A, class B, class C and class M shares, respectively. The Trustees
have approved payment by the fund at an annual rate of 0.20%, 0.85%,
1.00% and 0.50% of the average net assets attributable to class A, class
B, class C and class M shares, respectively.
For the year ended November 30, 2000, Putnam Retail Management, Inc.,
acting as underwriter received net commissions of $6,162 and $160 from
the sale of class A and class M shares, respectively, and received
$189,840 and $186 in contingent deferred sales charges from redemptions
of class B and class C shares, respectively. A deferred sales charge of
up to 1% is assessed on certain redemptions of class A shares that were
purchased without an initial sales charge as part of an investment of $1
million or more. For the year ended November 30, 2000, Putnam Retail
Management, Inc., acting as underwriter received $2,413 on class A
redemptions.
Note 3
Purchases and sales of securities
During the year ended November 30, 2000, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $11,306,763 and $32,608,678, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Capital shares
At November 30, 2000, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended November 30, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 1,654,161 $ 14,218,897
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 434,903 3,458,529
---------------------------------------------------------------------------
2,089,064 17,677,426
Shares
repurchased (3,762,755) (31,667,824)
---------------------------------------------------------------------------
Net decrease (1,673,691) $(13,990,398)
---------------------------------------------------------------------------
Year ended November 30, 1999
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 2,013,661 $ 17,941,676
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 395,646 3,525,717
---------------------------------------------------------------------------
2,409,307 21,467,393
Shares
repurchased (3,849,127) (34,234,400)
---------------------------------------------------------------------------
Net decrease (1,439,820) $(12,767,007)
---------------------------------------------------------------------------
Year ended November 30, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 811,194 $ 6,844,597
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 197,596 1,667,336
---------------------------------------------------------------------------
1,008,790 8,511,933
Shares
repurchased (2,405,448) (20,331,890)
---------------------------------------------------------------------------
Net decrease (1,396,658) $(11,819,957)
---------------------------------------------------------------------------
Year ended November 30, 1999
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 1,328,071 $ 11,869,134
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 207,323 1,842,898
---------------------------------------------------------------------------
1,535,394 13,712,032
Shares
repurchased (1,337,573) (11,857,962)
---------------------------------------------------------------------------
Net increase 197,821 $ 1,854,070
---------------------------------------------------------------------------
Year ended November 30, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 37,774 $ 320,905
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 509 4,003
---------------------------------------------------------------------------
38,283 324,908
Shares
repurchased (26,707) (228,894)
---------------------------------------------------------------------------
Net increase 11,576 $ 96,014
---------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations)
to November 30, 1999
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 28,934 $248,242
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 25 213
---------------------------------------------------------------------------
28,959 248,455
Shares
repurchased -- --
---------------------------------------------------------------------------
Net increase 28,959 $248,455
---------------------------------------------------------------------------
Year ended November 30, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 251,748 $ 2,148,554
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,383 72,726
---------------------------------------------------------------------------
260,131 2,221,280
Shares
repurchased (307,542) (2,622,810)
---------------------------------------------------------------------------
Net decrease (47,411) $ (401,530)
---------------------------------------------------------------------------
Year ended November 30, 1999
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 81,851 $ 711,159
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 10,249 91,346
---------------------------------------------------------------------------
92,100 802,505
Shares
repurchased (83,097) (724,944)
---------------------------------------------------------------------------
Net increase 9,003 $ 77,561
---------------------------------------------------------------------------
Note 5
Change in independent accountants
(unaudited)
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP as this funds' independent accountants and voted to appoint KPMG LLP
for the fund's fiscal year ended November 30, 2000. During the two
previous fiscal years, PricewaterhouseCoopers LLP audit reports
contained no adverse opinion or disclaimer of opinion; nor were its
reports qualified or modified as to uncertainty, audit scope, or
accounting principle. Further, in connection with its audits for the two
previous fiscal years and through July 24, 2000, there were no
disagreements between the fund and PricewaterhouseCoopers LLP on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which if not resolved to the
satisfaction of PricewaterhouseCoopers LLP would have caused it to make
reference to the disagreements in its report on the financial statements
for such years.
Note 6
New accounting pronouncement
In November 2000, a revised AICPA Audit and Accounting Guide, Audits of
Investment Companies, was issued, and is effective for fiscal years
beginning after December 15, 2000. The revised Guide will require the
fund to amortize premium and discount on all fixed-income securities,
and classify gains and losses realized on paydowns on mortgage-backed
securities presently included in realized gain/loss, as part of interest
income. Adopting these accounting principles will not affect the fund's
net asset value, but will change the classification of certain amounts
between interest income and realized and unrealized gain/loss in the
Statement of operations. The fund has not at this time quantified the
impact, if any, resulting from the adoption of this principle on the
financial statements.
FEDERAL TAX INFORMATION
(Unaudited)
The fund has designated 100% of dividends paid from net investment
income during the fiscal year as tax exempt for Federal income tax
purposes.
The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management LLC
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
KPMG LLP
TRUSTEES
John A. Hill, 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
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
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
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
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 and Putnam's Quarterly Ranking Summary. For more information or
to request a prospectus, call toll free: 1-800-225-1581.
You can also learn more at Putnam Investments' Web site:
www.putnaminvestments.com.
NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
AN052-67720 854/228/759 1/01
