425 1 nyt.txt PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND 811-6176 SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK 5-31-03 [GRAPHIC OMITTED: WOOD BLOCKS] [SCALE LOGO OMITTED] FROM THE TRUSTEES [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III] Dear Fellow Shareholder: While we are pleased to report positive results for Putnam New York Tax Exempt Opportunities Fund for the six months ended May 31, 2003, your fund also underperformed both its benchmark and its Lipper peer group average during the period. Details of these results can be found on page 9. In the following report, your fund's management team discusses the reasons for the underperformance, in particular with regard to its standing among its peers. An overweighting in higher-yielding, lower-rated issues dampened fund results now but positions it for what the managers believe are potentially greater returns down the road. Meanwhile, significant declines in state and local tax revenues, accompanied by credit rating downgrades of both municipalities and the corporate beneficiaries of industrial development bonds, continued to plague the municipal bond market. The market was further tested as it faced the challenge of digesting a record level of new issuance during the period. In bringing you this news of your fund's performance, we would also like to take the opportunity to tell you how much we appreciate your confidence in Putnam. We will continue to do our utmost to deliver the best possible results for your fund. Respectfully yours, /S/ JOHN A. HILL /S/ GEORGE PUTNAM, III John A. Hill George Putnam, III Chairman of the Trustees President of the Funds July 16, 2003 REPORT FROM FUND MANAGEMENT FUND HIGHLIGHTS * Putnam New York Tax Exempt Opportunities Fund's total return for the six months ended May 31, 2003, was 5.86% at net asset value and 0.87% at public offering price. * The fund's performance lagged that of its benchmark, Lehman Municipal Bond Index, which returned 6.46%. The index has a higher overall credit quality than the fund. * The fund also trailed its Lipper category, New York Municipal Debt Funds, which returned an average of 6.15%, primarily reflecting the fund's greater concentration in higher-yielding securities. * In June 2003, Putnam's Trustees approved in principle the merger of your fund into Putnam New York Tax Exempt Income Fund, pending shareholder approval. See page 7 for more information. * See the Performance Summary on page 9 for complete fund performance, comparative performance, and Lipper data. * PERFORMANCE COMMENTARY In absolute terms, the first half of fiscal 2003 was a positive period for your fund. We attribute the fund's relative underperformance to its position in lower-rated, higher-yielding bonds. Over the long term, we believe these issues can have a positive effect on your fund's performance. The fund's benchmark index is composed entirely of investment-grade bonds and is nationally diversified. Fund Profile Putnam New York Tax Exempt Opportunities Fund seeks to provide high current income free from federal, New York state, and New York City income taxes, consistent with the preservation of capital. It may be suitable for New York investors seeking tax-free income through a diversified portfolio of municipal bonds issued in New York. Differences in credit quality also affected the fund's performance relative to its Lipper peer group, as did disappointing results from a few portfolio holdings. The fund's small position in tobacco settlement bonds was also a negative, even though we reduced the fund's exposure to about 1% of assets. Specific holdings that hurt performance are discussed on pages 4 and 5. * MARKET OVERVIEW From December through April of the semiannual period, bond yields trended downward. After May 6, when the Federal Reserve Board changed its bias from "neutral" to "weakness," yields plummeted. During the period, municipal bonds slightly outperformed Treasuries and achieved positive returns overall. Several factors contributed to a challenging investment environment. As the war with Iraq ended, investors focused more on the sluggish economy. State and local municipalities struggled with significant declines in tax revenues and subsequent downgrades in credit quality. The airline industry, which is linked to the municipal bond market because individual airlines often provide the credit backing for certain types of municipal issues, has struggled with higher costs and reduced passenger counts. This put some of the weaker carriers into bankruptcy, affecting prices of the municipal bonds they had backed. Other airlines appeared to bounce back late in the period. Lastly, the burgeoning supply of municipal bonds nationwide -- over $357 billion in municipal debt was issued in 2002 -- broke the all-time record. Supply has continued to swell in 2003 and is on track to exceed the previous year's record. This has had a dampening effect on municipal bond prices. Tobacco settlement bonds, which had come under severe pressure from an unfavorable legal ruling in Illinois in March, recovered modestly in May. Despite the turnaround, we maintained our cautious stance toward these bonds. For a more detailed discussion about tobacco settlement bonds, see page 4. MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 5/31/03 Bonds Lehman Municipal Bond Index 6.46% ----------------------------------------------------------------------- Lehman Aggregate Bond Index (taxable bonds) 6.29% ----------------------------------------------------------------------- Lehman Intermediate Government Bond Index (intermediate-maturity government bonds) 4.70% ----------------------------------------------------------------------- Citigroup World Government Bond Index 14.34% ----------------------------------------------------------------------- Equities S&P 500 Index (broad stock market) 3.87% ----------------------------------------------------------------------- Russell 2000 Index (small- and midsize-company stocks) 9.34% ----------------------------------------------------------------------- MSCI EAFE Index (international stocks) 3.30% ----------------------------------------------------------------------- These indexes provide an overview of performance in different market sectors for the six months ended 5/31/03. * STRATEGY OVERVIEW Throughout the first half of the fiscal year the fund has maintained its exposure to high-yielding securities, seeking opportunities for higher returns through the income and appreciation potential we believe they offer. To the extent possible in a single-state fund, we strive to spread risks out over different industries and regions, and diversify by attributes such as coupon rate, credit quality, and maturity. For example, we increased holdings in the transportation sector but diversified them by issuer. Early in 2003, tax-exempt municipal bonds offered investors almost the same yield as comparable Treasury bonds. To take advantage of this opportunity, we established a cross-market arbitrage position, in which we bought intermediate-term municipal bonds and shorted 10-year Treasury futures contracts. We believed that when the relationship between yields returned to more normal levels, the fund would benefit. Our thesis was that if interest rates rise (causing bond prices to fall), the fund could have a loss on the municipal bonds, and yet, potential gains on the Treasury futures contracts could more than compensate for the loss. On the other hand, if rates fall (causing bond prices to rise), a loss on the Treasury futures contracts would be mitigated by an even greater gain on the municipal bonds. We have seen the latter scenario begin to develop as municipal bonds appreciated in price during the second half of the period. [GRAPHIC OMITTED: horizontal bar chart TOP SECTOR WEIGHTINGS COMPARED] TOP SECTOR WEIGHTINGS COMPARED* as of 11/30/02 as of 5/31/03 Transportation 12.4% 20.6% Utilities and power 13.3% 12.2% Health care 10.8% 9.4% Education 5.6% 9.0% Water and sewer 8.6% 7.2% Footnote reads: *This chart shows how the fund's top weightings have changed over the last six months. Weightings are shown as a percentage of net assets. Holdings will vary over time. * HOW KEY HOLDINGS AND ALLOCATIONS AFFECTED PERFORMANCE We continue to have a constructive outlook for the recuperative powers of both New York City and the state, and we expect improving long-term results from the fund's lower-rated bonds. However, the road to recovery is unlikely to be smooth. Tax receipts are down across the state and weaker investor demand is keeping bond prices depressed. Prices of some general obligation bonds (GOs), which are backed by taxing authorities, have been affected by perceived credit weakness. These included New York City GOs, which made up over 4% of assets at the end of the period. Although New York City and New York State are very different entities, Moody's gives them both the same rating of A2, with a negative outlook for the City. Standard & Poor's rates the City A and the state AA. While it recently placed the state's debt on negative outlook, it recently removed its negative outlook on the City. A few of the fund's industrial development bonds (IDBs) -- bonds issued by municipalities but backed by the credit of companies -- hurt performance during the first half of fiscal 2003. These included New York City Industrial Development Agency Revenue Bonds for Field Hotel Association, which is backed by a hotel near John F. Kennedy airport that has been hurt by the decline in international air travel. We trimmed the position and we are analyzing the situation further. Another disappointment was New York City Industrial Development Agency for Brooklyn Polytechnic University -- bonds issued to fund the construction of dormitory facilities to help attract new students for this primarily commuter school. Declining job prospects in the technology industry and a reduced number of student applications undermined the project. However, we decided to hold the position because the school's new CEO is already making some positive changes that we believe will help lead to a turnaround. We sold another weak performer, Cicero Local Development Corporation revenue bonds, issued to fund a community recreation project. Concerned about the project's progress, we eliminated the position. Tobacco settlement bonds were the worst-performing sector during the period. These bonds are issued by municipalities and secured by cash payments made in satisfaction of legal judgments against the tobacco industry. Although they carry investment grade ratings, they are subject to special risks, and generally offer higher yields than other bonds of comparable quality. Among the special risks of investing in tobacco settlement bonds is the possibility that interest payments could be affected by further litigation against the tobacco industry. Furthermore, if the supply of bonds exceeds the demand, the value of the bonds could drop. We have always approached tobacco settlement bonds with caution. While we continue to be concerned about various factors that may influence the price performance of these issues, we chose not to completely eliminate the fund's exposure. We sold the New York Tobacco Settlement Corporation bonds in January but retained Children's Trust Fund of Puerto Rico Tobacco Settlement bonds (5 1/2 coupon, maturing in 2039). Although the overall sell-off in tobacco settlement bonds in March depressed the prices of the fund's Puerto Rico tobacco settlement bonds, they are relatively sought after in the marketplace and have retained more of their value than similar bonds issued by other municipalities. Moreover, these bonds are well suited to our overall diversification strategy. The interest paid by Puerto Rico municipal bonds is tax exempt for all U.S. residents, which makes them attractive to managers of many single-state municipal bond portfolios and sometimes helps support prices. [GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW] CREDIT QUALITY OVERVIEW* Aaa/AAA/VMIG1 -- 44.9% Aa/AA -- 11.7% A -- 14.4% Baa/BBB -- 13.4% Ba/BB -- 6.8% B -- 8.0% Other (Caa/CCC) -- 0.8% Footnote reads: * As a percentage of market value as of 5/31/03. A bond rated Baa or higher is considered investment grade. The chart reflects Moody's and Standard & Poor's ratings; percentages may include unrated bonds considered by Putnam Management to be of comparable quality. Ratings will vary over time. IDBs backed by airlines have hurt the fund's performance during much of the past two years, but they rebounded in the latter part of the period. We sold the fund's high-yielding holdings in Port Authority of New York and New Jersey bonds for Continental/Eastern Airlines at Laguardia in January because we felt that those bonds had recovered to what we considered a fair value. Other airline-related holdings remain in the portfolio, including some British Airways IDBs. Our purchases during the past six months have been geared to further expand the fund's diversification to the extent possible in a single-state fund. For example, in addition to retaining the Puerto Rico tobacco settlement bonds, we added some noncallable Puerto Rico GOs, (5 1/4 coupon, maturing in 2018), as well as Puerto Rico Electric Power Authority bonds (5% coupon, maturing in 2019), both insured. These bonds provide geographical diversification as well as relative safety, since insured bonds are rated AAA. Their noncallable feature helps ensure steady income and marketability. Another recent purchase was Geneva, New York, Industrial Development bonds issued for Hobart and William Smith Colleges. Although these bonds are not rated by Moody's, Standard & Poor's gives them an A rating; they have a coupon of 5 3/8s, maturing in 2033. Hobart (an all-male college founded in 1822) and William Smith (a women's school) joined forces in 1943. The colleges' endowment has grown steadily, their approach to debt is conservative, and they have a strong enrollment record. We have continued to diversify holdings across the education sector. Please note that all holdings discussed in this report are subject to review in accordance with the fund's investment strategy and may vary in the future. -------------------------------------------------------------------------- OF SPECIAL INTEREST * Putnam Management has proposed, and the Trustees approved in principle, the merger of Putnam New York Tax Exempt Opportunities Fund into Putnam New York Tax Exempt Income Fund. Both funds invest in New York tax-exempt securities, have similar objectives and investment strategies, and are managed by the same team of investment professionals. A prospectus/proxy statement with more information is expected to be mailed to shareholders in August 2003. * This report is not an offer to sell, nor a solicitation of an offer to buy, shares of any fund, nor is it a solicitation of any proxy. To receive a free copy of the prospectus/proxy statement relating to the merger (and containing important information about fees, expenses, and risk considerations) once a registration statement relating to the merger has been filed with the SEC and becomes effective, please call 1-800-225-1581. The prospectus/proxy statement will also be available at no charge on the SEC's website (http://www.sec.gov.) Read the prospectus/proxy statement carefully before making any investment decisions. -------------------------------------------------------------------------- * THE FUND'S MANAGEMENT TEAM The fund is managed by the Putnam Tax Exempt Fixed-Income Team. The members of the team are David Hamlin (Portfolio Leader), Paul Drury (Portfolio Member), Susan McCormack (Portfolio Member), Richard Wyke (Portfolio Member), Joyce Dragone, and Jerome Jacobs. THE OUTLOOK FOR YOUR FUND The following commentary reflects anticipated developments that could affect your fund over the next six months, as well as your management team's plans for responding to them. Our current outlook for the municipal bond market is cautiously optimistic. The conflict with Iraq is largely over, and investors are focused on economic concerns on the home front. While serious issues remain, the level of uncertainty in the world seems to have eased, although we expect continued volatility. Further, we believe market yields will move higher in the near term as a weakening dollar, Federal Reserve Board policy, the recently enacted tax cut package, and growing federal budget deficits take effect. Municipal budgets will continue to face significant pressures in the months ahead as governments wrangle with how to implement costly home-front protection measures while pushing tax cuts to stimulate economic growth. Historically, improvement in the credit quality of state and local governments has lagged a general economic recovery, so we expect municipal credit quality to remain fragile for some time to come. Over the next few months, the ratio of municipal bond yields to comparable Treasury yields is likely to return to more normal levels. Accordingly, we will look for opportunities to reduce our cross-market arbitrage position (by selling municipal bonds to cover the Treasury futures contracts) and we expect the fund to profit from the transactions. In our opinion, the market continues to offer attractive value and compelling risk/reward characteristics. With credit spreads remaining very generous, we believe credit risk is worth taking in moderate amounts. We believe municipal bonds could perform well relative to other fixed-income sectors, because demand for the bonds is firm and supply should moderate as rates move higher. We believe we have positioned your fund to take advantage of the market's potential. The views expressed in this report are exclusively those of Putnam Management. They are not meant as investment advice. This fund concentrates its investments in one state and involves more risk than a fund that invests more broadly. PERFORMANCE SUMMARY This section provides information about your fund's performance during its semiannual period, which ended May 31, 2003. In accordance with regulatory requirements, we also include performance for the most current calendar quarter-end. Performance should always be considered in light of a fund's investment strategy. Past performance does not indicate future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate and you may have a gain or a loss when you sell your shares. A profile of your fund's strategy appears on the first page of this report. See page 11 for definitions of some terms used in this section.
TOTAL RETURN FOR PERIODS ENDED 5/31/03 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 ------------------------------------------------------------------------------------------- 6 months 5.86% 0.87% 5.40% 0.40% 5.43% 4.43% 5.71% 2.25% ------------------------------------------------------------------------------------------- 1 year 8.75 3.62 7.93 2.93 7.87 6.87 8.43 4.88 ------------------------------------------------------------------------------------------- 5 years 29.63 23.45 25.47 23.47 24.71 24.71 27.83 23.65 Annual average 5.33 4.30 4.64 4.31 4.51 4.51 5.03 4.34 ------------------------------------------------------------------------------------------- 10 years 77.74 69.26 66.19 66.19 64.20 64.20 71.95 66.42 Annual average 5.92 5.40 5.21 5.21 5.08 5.08 5.57 5.23 ------------------------------------------------------------------------------------------- Annual average (life of fund) 6.70 6.29 5.96 5.96 5.86 5.86 6.32 6.05 ------------------------------------------------------------------------------------------- Performance assumes reinvestment of distributions and does not account for taxes. Returns at public offering price (POP) for class A and M shares reflect a sales charge of 4.75% and 3.25%, respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, and M shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and higher operating expenses for such shares.
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 5/31/03 Lipper New York Lehman Municipal Municipal Debt Funds Bond Index category average* ------------------------------------------------------------------------------- 6 months 6.46% 6.15% ------------------------------------------------------------------------------- 1 year 10.36 9.19 ------------------------------------------------------------------------------- 5 years 36.79 29.38 Annual average 6.47 5.28 ------------------------------------------------------------------------------- 10 years 89.42 73.49 Annual average 6.60 5.65 ------------------------------------------------------------------------------- Annual average (life of fund) 7.54 6.88 ------------------------------------------------------------------------------- * Lipper and index results should be compared with fund performance at net asset value. Over the 6-month and 1-, 5-, and 10-year periods ended 5/31/03, there were 110, 100, 82 and 41 funds, respectively, in this Lipper category. PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 5/31/03 Class A Class B Class C Class M ------------------------------------------------------------------------------- Distributions (number) 6 6 6 6 ------------------------------------------------------------------------------- Income 1 $0.223145 $0.193961 $0.187784 $0.209489 ------------------------------------------------------------------------------- Capital gains 1 -- -- -- -- ------------------------------------------------------------------------------- Total $0.223145 $0.193961 $0.187784 $0.209489 ------------------------------------------------------------------------------- Share value: NAV POP NAV NAV NAV POP ------------------------------------------------------------------------------- 11/30/02 $8.89 $9.33 $8.89 $8.91 $8.88 $9.18 ------------------------------------------------------------------------------- 5/31/03 9.18 9.64 9.17 9.20 9.17 9.48 ------------------------------------------------------------------------------- Current return (end of period) ------------------------------------------------------------------------------- Current dividend rate 2 4.75% 4.53% 4.12% 3.96% 4.46% 4.31% ------------------------------------------------------------------------------- Taxable equivalent (a) 3 7.84 7.48 6.80 6.54 7.37 7.12 ------------------------------------------------------------------------------- Taxable equivalent (b) 3 8.16 7.79 7.08 6.81 7.67 7.41 ------------------------------------------------------------------------------- Current 30-day SEC yield 4 3.68 3.51 3.04 2.89 3.39 3.27 ------------------------------------------------------------------------------- Taxable equivalent (a) 3 6.08 5.80 5.02 4.77 5.60 5.40 ------------------------------------------------------------------------------- Taxable equivalent (b) 3 6.33 6.03 5.23 4.97 5.83 5.62 ------------------------------------------------------------------------------- 1 Capital gains, if any, are taxable for federal and, in most cases, state purposes. For some investors, investment income may be subject to the federal alternative minimum tax. Income from federally exempt funds may be subject to state and local taxes. 2 Most recent distribution, excluding capital gains, annualized and divided by NAV or POP at end of period. 3 Assumes (a) maximum 39.45% federal income tax and New York state personal income tax rates or (b) maximum 41.82% federal, New York state, and New York City tax rates for 2003. Results for investors subject to lower tax rates would not be as advantageous. 4 Based only on investment income, calculated using SEC guidelines.
TOTAL RETURN FOR PERIODS ENDED 6/30/03 (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 ------------------------------------------------------------------------------------------- 6 months 3.60% -1.33% 3.27% -1.74% 3.19% 2.19% 3.45% 0.11% ------------------------------------------------------------------------------------------- 1 year 7.27 2.12 6.57 1.57 6.41 5.41 6.95 3.47 ------------------------------------------------------------------------------------------- 5 years 28.74 22.60 24.75 22.76 23.92 23.92 26.96 22.80 Annual average 5.18 4.16 4.52 4.19 4.38 4.38 4.89 4.19 ------------------------------------------------------------------------------------------- 10 years 74.79 66.51 63.50 63.50 61.60 61.60 69.23 63.65 Annual average 5.74 5.23 5.04 5.04 4.92 4.92 5.40 5.05 ------------------------------------------------------------------------------------------- Annual average (life of fund) 6.62 6.21 5.89 5.89 5.78 5.78 6.25 5.97 -------------------------------------------------------------------------------------------
TERMS AND DEFINITIONS Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. The NAV is calculated by dividing the net value of all the fund's assets by the number of outstanding shares. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the 4.75% maximum sales charge for class A shares 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. Class A shares are generally subject to an initial sales charge and no sales charge on redemption (except on certain redemptions of shares bought without an initial sales charge). Class B shares may be subject to a sales charge upon redemption. Class C shares are not subject to an initial sales charge and are subject to a contingent deferred sales charge only if the shares are redeemed during the first year. Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption (except on certain redemptions of shares bought without an initial sales charge). COMPARATIVE INDEXES Lehman Municipal Bond Index is an unmanaged index of long-term, fixed-rate, investment-grade tax-exempt bonds. Lehman Aggregate Bond Index is an unmanaged index of U.S. fixed-income securities. Lehman Intermediate Government Bond Index is an unmanaged index of government bonds with maturities between 1 and up to 10 years. Citigroup World Government Bond Index is an unmanaged index of government bonds from 14 countries. S&P 500 Index is an unmanaged index of common stock performance. Russell 2000 Index is an unmanaged index of common stocks that generally measure performance of small to midsize companies within the Russell 3000 Index. Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged index of international stocks from Europe, Australasia, and the Far East. Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index. Lipper Inc. is a third-party industry ranking entity that ranks funds (without sales charges) with similar current investment styles or objectives as determined by Lipper. Lipper category averages reflect performance trends for funds within a category and are based on results at net asset value. A NOTE ABOUT DUPLICATE MAILINGS In response to investors' requests, the SEC has modified mailing regulations for proxy statements, semiannual and annual reports, and prospectuses. Putnam is now able to send a single copy of these materials to customers who share the same address. This change will automatically apply to all shareholders except those who notify us. If you would prefer to receive your own copy, please call Putnam at 1-800-225-1581. A GUIDE TO THE FINANCIAL STATEMENTS These sections of the report, as well as the accompanying Notes, constitute the fund's financial statements. The fund's portfolio lists all the fund's investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification. Statement of assets and liabilities shows how the fund's net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the net assets allocated to remarketed preferred shares.) Statement of operations shows the fund's net investment gain or loss. This is done by first adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings -- as well as any unrealized gains or losses over the period -- is added to or subtracted from the net investment result to determine the fund's net gain or loss for the fiscal period. Statement of changes in net assets shows how the fund's net assets were affected by distributions to shareholders and by changes in the number of the fund's shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Financial highlights provide an overview of the fund's investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period. For open-end funds, a separate table is provided for each share class.
THE FUND'S PORTFOLIO May 31, 2003 (Unaudited) KEY TO ABBREVIATIONS AMBAC -- AMBAC Indemnity Corporation COP -- Certificate of Participation FGIC -- Financial Guaranty Insurance Company FHA Insd. -- Federal Housing Administration Insured G.O. Bonds -- General Obligation Bonds IFB -- Inverse Floating Rate Bonds MBIA -- MBIA Insurance Company U.S. Govt. Coll. -- U.S. Government Collateralized VRDN -- Variable Rate Demand Notes MUNICIPAL BONDS AND NOTES (98.4%) (a) PRINCIPAL AMOUNT RATING(RAT) VALUE New York (88.0%) ------------------------------------------------------------------------------------------------------------------- Albany, Indl. Dev. Agcy. Civic Fac. Rev. Bonds $1,460,000 (Albany Med. Ctr.), 6s, 5/1/29 (SEG) BB+/P $1,401,600 500,000 (Charitable Leadership), Ser. A , 6s, 7/1/19 Baa3 543,125 3,400,000 Battery Park, City Auth. Rev. Bonds, Ser. A, AMBAC, 5 1/2s, 11/1/16 Aaa 3,854,750 2,000,000 Chautauqua Cnty., Indl. Dev. Agcy. Rev. Bonds (Women's Christian Assn.), Ser. A, 6.4s, 11/15/29 A/P 2,005,000 1,000,000 Dutchess Cnty., Indl. Dev. Agcy. Rev. Bonds (Vassar College), 5.35s, 9/1/40 Aa2 1,078,750 1,250,000 Erie Cnty., Indl. Dev. Life Care Cmnty. Rev. Bonds (Episcopal Church Home), Ser. A, 6s, 2/1/28 B/P 1,245,313 2,250,000 Essex Cnty., Indl. Dev. Agcy. Rev. Bonds (Intl. Paper Co.), Ser. A, 6.15s, 4/1/21 Baa2 2,334,375 2,000,000 Geneva, Indl. Dev. Agcy. Rev. Bonds (Hobart & William Smith Project), Ser. A, 5 3/8s, 2/1/33 A 2,160,000 1,250,000 Huntington, Hsg. Auth. Sr. Hsg. Fac. Rev. Bonds (Gurwin Jewish Sr. Residence), Ser. A, 6s, 5/1/29 B+/P 1,109,375 2,650,000 Jefferson Cnty., Indl. Dev. Agcy. Solid Waste Disp. Rev. Bonds (Champion Intl. Corp.), 7.2s, 12/1/20 Baa2 2,762,069 1,360,000 Lockport, Hsg. Dev. Corp. Rev. Bonds (Urban Pk. Towers), Ser. A, 6s, 10/1/18 Baa2 1,426,300 Long Island, Pwr. Auth. NY Elec. Syst. IFB 5,000,000 9.114s, 12/1/24 (acquired 5/19/98, cost $5,435,000) (RES) BBB+/P 5,856,250 5,000,000 MBIA, 8 3/4s, 4/1/12 (acquired 11/3/98, cost $5,422,000) (RES) AAA 6,100,000 1,000,000 Madison Cnty., Indl. Dev. Agcy. Rev. Bonds (Colgate U.), Ser. A, 5s, 7/1/23 Aa3 1,073,750 2,500,000 Metropolitan Trans. Auth. Fac. Rev. Bonds (Dedicated Tax Fund), Ser. A, MBIA, 6 1/4s, 4/1/11 Aaa 3,109,375 Metropolitan Trans. Auth. Rev. Bonds, Ser. A 3,500,000 FGIC, 5 1/2s, 11/15/19 Aaa 4,248,125 1,000,000 AMBAC, 5 1/2s, 11/15/19 Aaa 1,158,750 2,000,000 Metropolitan Trans. Auth. Svc. Contract Rev. Bonds, Ser. A , MBIA, 5 1/2s, 1/1/20 AAA 2,287,500 1,000,000 Mount Vernon, Indl. Dev. Agcy. Fac. Rev. Bonds (Wartburg Senior Hsg., Inc.- Meadowview), 6.2s, 6/1/29 B+/P 872,500 Nassau Cnty., G.O. Bonds, Ser. A, FGIC 1,000,000 6s, 7/1/13 Aaa 1,227,500 2,300,000 6s, 7/1/11 Aaa 2,774,375 825,000 Nassau Cnty., Indl. Dev. Agcy. Rev. Bonds (North Shore Hlth. Syst.), Ser. D, 5 5/8s, 11/1/09 BB+/P 863,156 5,000,000 Niagara Falls, City School Dist. COP, 5 7/8s, 6/15/19 Baa3 5,506,250 80,000 NY City, City Transitional Fin. Auth. Rev. Bonds, Ser. C, U.S. Govt. Coll., 5s, 5/1/26 AA+ 92,000 NY City, G.O. Bonds 300,000 Ser. B, 8 1/4s, 6/1/05 AAA 337,500 45,000 Ser. F, 7.6s, 2/1/05 A2 45,695 2,000,000 Ser. I, 5 7/8s, 3/15/14 A 2,165,000 3,525,000 Ser. B, 5 1/2s, 12/1/11 A2 4,005,281 3,000,000 Ser. C, 5 1/4s, 8/1/11 A2 3,341,250 800,000 NY City, IFB, AMBAC, 10.67s, 9/1/11 Aaa 829,000 NY City, Indl. Dev. Agcy. Civic Fac. Rev. Bonds 7,490,000 (Parking Corp.), 8 1/2s, 12/30/22 B-/P 6,375,863 1,300,000 (Staten Island U. Hosp. Project), Ser. A, 6 3/8s, 7/1/31 Baa3 1,373,125 2,575,000 (Brooklyn Polytech. U. Project J), 6 1/8s, 11/1/30 Ba1 2,349,688 NY City, Indl. Dev. Agcy. Rev. Bonds 5,000,000 (Visy Paper Inc.), 7.95s, 1/1/28 B+/P 5,106,250 2,500,000 (Brooklyn Navy Yard Cogen. Partners), 6.2s, 10/1/22 BBB- 2,587,500 1,440,000 (Brooklyn Navy Yard Cogen. Partners), 5.65s, 10/1/28 BBB- 1,351,800 1,000,000 (Field Hotel Assoc.), 3s, 11/1/28 CCC/P 600,000 500,000 NY City, Indl. Dev. Agcy. Special Arpt. Fac. Rev. Bonds (Airis JFK I LLC), Ser. A, 5 1/2s, 7/1/28 Baa3 502,500 NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds 2,025,000 (American Airlines, Inc.), 6.9s, 8/1/24 Caa2 916,313 1,250,000 (British Airways), 5 1/4s, 12/1/32 BBB- 862,500 5,000,000 NY City, Muni. Wtr. & Swr. Fin. Auth. IFB, MBIA, 9.3s, 6/15/13 Aaa 5,360,550 500,000 NY City, Muni. Wtr. & Swr. Fin. Auth. VRDN, Ser. A, FGIC, 1.3s, 6/15/25 VMIG1 500,000 2,000,000 NY City, Transitional Fin. Auth. Rev. Bonds (Future Tax), AMBAC, 5 1/4s, 8/1/15 Aaa 2,300,000 NY State Dorm. Auth. Rev. Bonds 170,000 (City U. Syst.), Ser. D, 8 3/4s, 7/1/03 AA- 170,952 5,000,000 (State U. Edl. Fac.), Ser. A, 7 1/2s, 5/15/13 AA- 6,718,750 1,950,000 (Our Lady of Mercy), FHA Insd., 6.3s, 8/1/32 AAA 1,985,588 1,000,000 (Mount Sinai Hlth.), Ser. C, 6s, 7/1/26 Ba1 1,038,750 1,340,000 (Schools PG - Issue 2), Ser. E, AMBAC, 5 3/4s, 7/1/19 Aaa 1,551,050 2,650,000 (City U. Syst.), Ser. A, FGIC, 5 3/4s, 7/1/09 AAA 3,117,063 1,310,000 (Mental Hlth. Svcs. Fac.), Ser. B, MBIA, 5 3/4s, 7/1/09 Aaa 1,555,625 1,000,000 (NYU), Ser. 1, AMBAC, 5 1/2s, 7/1/40 Aaa 1,227,500 3,465,000 (School Dist. Fin. Project), Ser. A, MBIA, 5 1/4s, 10/1/11 AAA 4,049,719 2,000,000 (Columbia U.), Ser. B, 5s, 7/1/21 Aaa 2,172,500 725,000 (State U. Edl. Fac.), Ser. B, zero %, 5/15/09 AA- 608,094 750,000 NY State Dorm. Auth. VRDN (Oxford U. Press Inc.), 1.3s, 7/1/23 VMIG1 750,000 NY State Energy Research & Dev. Auth. Gas Fac. IFB (Brooklyn Union Gas Co.) 2,000,000 Ser. B, 12.251s, 7/1/26 A+ 2,475,000 3,500,000 11.216s, 4/1/20 A+ 4,554,375 NY State Energy Research & Dev. Auth. Poll. Control Rev. Bonds 1,750,000 (Niagara Mohawk Pwr. Corp.), Ser. A, FGIC, 7.2s, 7/1/29 Aaa 1,890,385 1,000,000 (Lilco Project), Ser. B, 5.15s, 3/1/16 A- 1,030,810 NY State Env. Fac. Corp. Poll. Control Rev. Bonds 70,000 Ser. B, 7 1/2s, 3/15/11 Aa2 70,353 270,000 5 7/8s, 6/15/14 Aaa 286,916 1,740,000 5 7/8s, 6/15/14, Prerefunded Aaa 1,862,131 710,000 Ser. A, 5 7/8s, 6/15/14 Aaa 759,835 4,300,000 NY State Hwy. & Bridge Auth. Rev. Bonds, Ser. B, FGIC, 6s, 4/1/14 Aaa 4,563,289 35,000 NY State Med. Care Fac. Fin. Agcy. Rev. Bonds (Mental Hlth. Svcs. Fac.), Ser. D, 7.4s, 2/15/18 AA- 35,568 3,000,000 NY State Thruway Auth. Rev. Bonds, Ser. A, MBIA, 5 1/4s, 4/1/12 AAA 3,502,500 NY State Urban Dev. Corp. Rev. Bonds 1,685,000 (Clarkson Ctr.), 5 1/2s, 1/1/20 AA- 1,994,619 3,345,000 (Clarkson Ctr.), 5 1/2s, 1/1/15 AA- 3,963,825 2,000,000 (Syracuse U. ), 5 1/2s, 1/1/15 AA- 2,370,000 5,000,000 (Ctr. for Indl. Innovation), Ser. A, 5 1/2s, 1/1/13 AA- 5,875,000 355,000 (Correctional Fac.), Ser. A, 5s, 1/1/28 AA- 408,250 1,000,000 Oneida Cnty., Indl. Dev. Agcy. Rev. Bonds (St. Elizabeth Med.), Ser. A, 5 7/8s, 12/1/29 BB-/P 915,000 1,000,000 Onondaga Cnty., Indl. Dev. Agcy. Rev. Bonds (Solvay Paperboard, LLC), 7s, 11/1/30 BB-/P 1,062,500 750,000 Orange Cnty., Indl. Dev. Agcy. Rev. Bonds (Arden Hill Care Ctr. Newburgh), Ser. C, 7s, 8/1/31 BB-/P 772,500 750,000 Otsego Cnty., Indl. Dev. Agcy. Rev. Bonds (Hartwick College), 5.9s, 7/1/22 Baa3 805,313 Port Auth. NY & NJ Rev. Bonds 1,100,000 (Kennedy Intl. Arpt. - 5th Installment), 6 3/4s, 10/1/19 BB+/P 1,163,250 1,000,000 (Kennedy Intl. Arpt. - 4th Installment), 6 3/4s, 10/1/11 BB+/P 1,073,750 Suffolk Cnty., Indl. Dev. Agcy. Civic Fac. Rev. Bonds 500,000 (Southampton Hosp. Assn.), Ser. B, 7 5/8s, 1/1/30 B-/P 510,000 500,000 (Southampton Hosp. Assn.), Ser. A, 7 1/4s, 1/1/30 B-/P 499,375 1,000,000 (Huntington Hosp. Project), Ser. B, 5 7/8s, 11/1/32 Baa1 1,050,000 Suffolk Cnty., Indl. Dev. Agcy. Rev. Bonds 1,000,000 (Peconic Landing), Ser. A, 8s, 10/1/30 B+/P 1,022,500 2,000,000 (Nissequogue Cogen. Partners Fac.), 5 1/2s, 1/1/23 BB+/P 1,887,500 800,000 Syracuse, Indl. Dev. Agcy. Rev. Bonds (1st Mtge. - Jewish Home), Ser. A, 7 3/8s, 3/1/21 BB-/P 853,000 Triborough Bridge & Tunnel Auth. Rev. Bonds 1,870,000 MBIA, 5 1/2s, 11/15/21 Aaa 2,251,013 2,000,000 MBIA, 5 1/2s, 11/15/18 AAA 2,435,000 4,000,000 Ser. B, MBIA, 5 1/4s, 11/15/15 Aaa 4,765,000 4,000,000 FGIC, 5 1/4s, 1/1/14 Aaa 4,515,000 1,270,000 AMBAC, 5s, 11/15/12 Aaa 1,470,025 2,000,000 Westchester Cnty., Hlth. Care Corp. Rev. Bonds, Ser. A, 5 7/8s, 11/1/25 A 2,152,500 720,000 Yonkers, Indl. Dev. Agcy. Civic Fac. Rev. Bonds (St. John's Riverside Hosp.), Ser. A, 7 1/8s, 7/1/31 BB 753,300 ------------- 186,544,976 Puerto Rico (10.4%) ------------------------------------------------------------------------------------------------------------------- 1,500,000 Children's Trust Fund Tobacco Settlement Rev. Bonds, 5 1/2s, 5/15/39 A- 1,275,000 Cmnwlth. of PR, G.O. Bonds 1,500,000 FGIC, 5 1/2s, 7/1/13 Aaa 1,803,750 1,250,000 (Pub. Impt.), MBIA, 5 1/4s, 7/1/18 AAA 1,476,563 4,700,000 Cmnwlth. of PR, Hwy. & Trans. Auth. IFB, Ser. W, 9.353s, 7/1/08 A 4,872,584 3,000,000 Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds, Ser. AA, MBIA, 5 1/2s, 7/1/19 Aaa 3,641,250 3,500,000 PR Elec. Pwr. Auth. Rev. Bonds, MBIA, 5s, 7/1/19 AAA 4,046,875 1,000,000 PR Indl. Tourist Edl. Med. & Env. Control Fac. Rev. Bonds (Cogen. Fac.- AES Project), 6 5/8s, 6/1/26 Baa2 1,052,500 2,000,000 PR Infrastructure Fin. Auth. Special Rev. Bonds, Ser. A, 5 1/2s, 10/1/40 Aaa 2,255,000 1,500,000 U. of PR Rev. Bonds, Ser. O, MBIA, 5 3/8s, 6/1/30 Aaa 1,580,618 ------------- 22,004,140 ------------------------------------------------------------------------------------------------------------------- Total Investments (cost $196,213,544) $208,549,116 ------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $212,038,362. (RAT) The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at May 31, 2003 for the securities listed. Ratings are generally ascribed to securities at the time of issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to do so, and the ratings do not necessarily represent what the agencies would ascribe to these securities at May 31, 2003. Securities rated by Putnam are indicated by "/P" and are not publicly rated. (RES) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at May 31, 2003 was $11,956,250 or 5.6% of net assets. (SEG) A portion of this security was pledged and segregated with the custodian to cover margin requirements for futures contracts at May 31, 2003. The rates shown on IFB, which are securities paying interest rates that vary inversely to changes in the market interest rates, and VRDN are the current interest rates at May 31, 2003. The fund had the following industry group concentrations greater than 10% at May 31, 2003 (as a percentage of net assets): Transportation 20.6% Utilities & power 12.2 The fund had the following insurance concentrations greater than 10% at May 31, 2003 (as a percentage of net assets): MBIA 21.8% FGIC 11.6 ------------------------------------------------------------------------------ Futures Contracts Outstanding at May 31, 2003 (Unaudited) Market Aggregate Face Expiration Unrealized Value Value Date Depreciation ------------------------------------------------------------------------------ U.S. Treasury Note 10 yr. (Short) $19,186,858 $19,084,081 Sep-03 $(102,777) ------------------------------------------------------------------------------ The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES May 31, 2003 (Unaudited) Assets ------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $196,213,544) (Note 1) $208,549,116 ------------------------------------------------------------------------------------------- Interest and other receivables 3,604,173 ------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 474,183 ------------------------------------------------------------------------------------------- Receivable for securities sold 500,250 ------------------------------------------------------------------------------------------- Receivable for variation margin (Note 1) 10,125 ------------------------------------------------------------------------------------------- Total assets 213,137,847 Liabilities ------------------------------------------------------------------------------------------- Payable to subcustodian (Note 2) 13,356 ------------------------------------------------------------------------------------------- Distributions payable to shareholders 261,646 ------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 386,943 ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 261,793 ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 24,719 ------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 24,405 ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 770 ------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 96,741 ------------------------------------------------------------------------------------------- Other accrued expenses 29,112 ------------------------------------------------------------------------------------------- Total liabilities 1,099,485 ------------------------------------------------------------------------------------------- Net assets $212,038,362 Represented by ------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $205,486,024 ------------------------------------------------------------------------------------------- Undistributed net investment income (Note 1) 56,231 ------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (Note 1) (5,736,688) ------------------------------------------------------------------------------------------- Net unrealized appreciation of investments 12,232,795 ------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $212,038,362 Computation of net asset value and offering price ------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($142,028,715 divided by 15,475,132 shares) $9.18 ------------------------------------------------------------------------------------------- Offering price per class A share (100/95.25 of $9.18)* $9.64 ------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($62,913,813 divided by 6,857,970 shares)** $9.17 ------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($5,010,776 divided by 544,689 shares)** $9.20 ------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($2,085,058 divided by 227,437 shares) $9.17 ------------------------------------------------------------------------------------------- Offering price per class M share (100/96.75 of $9.17)*** $9.48 ------------------------------------------------------------------------------------------- * On single retail sales of less than $25,000. On sales of $25,000 or more and on group sales, the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. *** On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales, the offering price is reduced. The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS Six months ended May 31, 2003 (Unaudited) Interest income: $6,041,698 ------------------------------------------------------------------------------------------- Expenses: ------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 518,115 ------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 119,584 ------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 7,534 ------------------------------------------------------------------------------------------- Administrative services (Note 2) 4,690 ------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 138,420 ------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 262,944 ------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 24,748 ------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 5,037 ------------------------------------------------------------------------------------------- Other 60,432 ------------------------------------------------------------------------------------------- Total expenses 1,141,504 ------------------------------------------------------------------------------------------- Expense reduction (Note 2) (6,036) ------------------------------------------------------------------------------------------- Net expenses 1,135,468 ------------------------------------------------------------------------------------------- Net investment income 4,906,230 ------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (141,728) ------------------------------------------------------------------------------------------- Net realized loss on futures contracts (Note 1) (1,279,805) ------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and futures contracts during the period 8,104,359 ------------------------------------------------------------------------------------------- Net gain on investments 6,682,826 ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $11,589,056 ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS Six months ended Year ended May 31 November 30 2003* 2002 ------------------------------------------------------------------------------------------------------- Increase in net assets ------------------------------------------------------------------------------------------------------- Operations: ------------------------------------------------------------------------------------------------------- Net investment income $4,906,230 $10,087,909 ------------------------------------------------------------------------------------------------------- Net realized loss on investments (1,421,533) (789,826) ------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments 8,104,359 410,530 ------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 11,589,056 9,708,613 ------------------------------------------------------------------------------------------------------- Distributions to shareholders: (Note 1) ------------------------------------------------------------------------------------------------------- From tax-exempt income Class A (3,451,470) (7,180,627) ------------------------------------------------------------------------------------------------------- Class B (1,342,167) (2,776,283) ------------------------------------------------------------------------------------------------------- Class C (103,787) (169,226) ------------------------------------------------------------------------------------------------------- Class M (47,198) (98,124) ------------------------------------------------------------------------------------------------------- Increase (decrease) from capital share transactions (Note 4) (1,752,003) 8,800,470 ------------------------------------------------------------------------------------------------------- Total increase in net assets 4,892,431 8,284,823 Net assets ------------------------------------------------------------------------------------------------------- Beginning of period 207,145,931 198,861,108 ------------------------------------------------------------------------------------------------------- End of period (including undistributed net investment income of $56,231 and $94,623, respectively) $212,038,362 $207,145,931 ------------------------------------------------------------------------------------------------------- * Unaudited The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS A ------------------------------------------------------------------------------------------------------------------ Six months ended Two months Per-share May 31 ended operating performance (Unaudited) Year ended November 30 Nov. 30+ ------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $8.89 $8.91 $8.62 $8.52 $9.19 $9.27 ------------------------------------------------------------------------------------------------------------------ Investment operations: ------------------------------------------------------------------------------------------------------------------ Net investment income .22 .46 .46 .47 .46 .07 ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments .29 (.01) .29 .09 (.66) (.08) ------------------------------------------------------------------------------------------------------------------ Total from investment operations .51 .45 .75 .56 (.20) (.01) ------------------------------------------------------------------------------------------------------------------ Less distributions: ------------------------------------------------------------------------------------------------------------------ From net investment income (.22) (.47) (.46) (.46) (.44) (.07) ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- -- (.03) -- ------------------------------------------------------------------------------------------------------------------ Total distributions (.22) (.47) (.46) (.46) (.47) (.07) ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $9.18 $8.89 $8.91 $8.62 $8.52 $9.19 ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 5.86* 5.15 8.89 6.86 (2.33) (.07)* ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $142,029 $137,270 $135,791 $129,535 $142,299 $166,816 ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .44* .87 .87 .86 .93 .17* ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 2.47* 5.18 5.16 5.48 5.13 .79* ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 16.57* 12.00 5.10 6.00 9.36 9.22* ------------------------------------------------------------------------------------------------------------------ + The fiscal year end was advanced from September 30 to November 30. * Not annualized. (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS A (continued) --------------------------------------------------------- Per-share Year ended operating performance September 30 --------------------------------------------------------- 1998 --------------------------------------------------------- Net asset value, beginning of period $9.10 --------------------------------------------------------- Investment operations: --------------------------------------------------------- Net investment income .46 --------------------------------------------------------- Net realized and unrealized gain (loss) on investments .21 --------------------------------------------------------- Total from investment operations .67 --------------------------------------------------------- Less distributions: --------------------------------------------------------- From net investment income (.47) --------------------------------------------------------- From net realized gain on investments (.03) --------------------------------------------------------- Total distributions (.50) --------------------------------------------------------- Net asset value, end of period $9.27 --------------------------------------------------------- Total return at net asset value (%)(a) 7.55 --------------------------------------------------------- Ratios and supplemental data --------------------------------------------------------- Net assets, end of period (in thousands) $168,032 --------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.00 --------------------------------------------------------- Ratio of net investment income to average net assets (%) 5.00 --------------------------------------------------------- Portfolio turnover (%) 42.76 --------------------------------------------------------- (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). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS B ------------------------------------------------------------------------------------------------------------------ Six months ended Two months Per-share May 31 ended operating performance (Unaudited) Year ended November 30 Nov. 30+ ------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $8.89 $8.90 $8.61 $8.51 $9.19 $9.26 ------------------------------------------------------------------------------------------------------------------ Investment operations: ------------------------------------------------------------------------------------------------------------------ Net investment income .19 .40 .40 .41 .40 .06 ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments .28 --(c) .29 .10 (.67) (.07) ------------------------------------------------------------------------------------------------------------------ Total from investment operations .47 .40 .69 .51 (.27) (.01) ------------------------------------------------------------------------------------------------------------------ Less distributions: ------------------------------------------------------------------------------------------------------------------ From net investment income (.19) (.41) (.40) (.41) (.38) (.06) ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- -- (.03) -- ------------------------------------------------------------------------------------------------------------------ Total distributions (.19) (.41) (.40) (.41) (.41) (.06) ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $9.17 $8.89 $8.90 $8.61 $8.51 $9.19 ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 5.40* 4.59 8.19 6.17 (3.08) (.07)* ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $62,914 $62,850 $58,190 $53,894 $65,168 $68,513 ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .77* 1.52 1.52 1.51 1.58 .28* ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 2.14* 4.52 4.51 4.84 4.48 .68* ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 16.57* 12.00 5.10 6.00 9.36 9.22* ------------------------------------------------------------------------------------------------------------------ + The fiscal year end was advanced from September 30 to November 30. * Not annualized. (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). (c) Amount represents less than $0.01 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS B (continued) --------------------------------------------------------- Per-share Year ended operating performance September 30 --------------------------------------------------------- 1998 --------------------------------------------------------- Net asset value, beginning of period $9.09 --------------------------------------------------------- Investment operations: --------------------------------------------------------- Net investment income .40 --------------------------------------------------------- Net realized and unrealized gain (loss) on investments .21 --------------------------------------------------------- Total from investment operations .61 --------------------------------------------------------- Less distributions: --------------------------------------------------------- From net investment income (.41) --------------------------------------------------------- From net realized gain on investments (.03) --------------------------------------------------------- Total distributions (.44) --------------------------------------------------------- Net asset value, end of period $9.26 --------------------------------------------------------- Total return at net asset value (%)(a) 6.86 --------------------------------------------------------- Ratios and supplemental data --------------------------------------------------------- Net assets, end of period (in thousands) $68,547 --------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.65 --------------------------------------------------------- Ratio of net investment income to average net assets (%) 4.36 --------------------------------------------------------- Portfolio turnover (%) 42.76 --------------------------------------------------------- (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). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS C ----------------------------------------------------------------------------------------------------- Six months ended For the period Per-share May 31 July 26, 1999++ operating performance (Unaudited) Year ended November 30 to Nov. 30 ----------------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $8.91 $8.93 $8.63 $8.52 $8.87 ----------------------------------------------------------------------------------------------------- Investment operations: ----------------------------------------------------------------------------------------------------- Net investment income .19 .39 .39 .40 .14 ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .29 (.01) .30 .11 (.35) ----------------------------------------------------------------------------------------------------- Total from investment operations .48 .38 .69 .51 (.21) ----------------------------------------------------------------------------------------------------- Less distributions: ----------------------------------------------------------------------------------------------------- From net investment income (.19) (.40) (.39) (.40) (.14) ----------------------------------------------------------------------------------------------------- Total distributions (.19) (.40) (.39) (.40) (.14) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $9.20 $8.91 $8.93 $8.63 $8.52 ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 5.43* 4.31 8.15 6.14 (2.39)* ----------------------------------------------------------------------------------------------------- Ratios and supplemental data ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $5,011 $5,067 $2,880 $350 $247 ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) .84* 1.67 1.67 1.66 .61* ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 2.07* 4.34 4.31 4.60 1.64* ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 16.57* 12.00 5.10 6.00 9.36 ----------------------------------------------------------------------------------------------------- ++ 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). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS M ------------------------------------------------------------------------------------------------------------------ Six months ended Two months Per-share May 31 ended operating performance (Unaudited) Year ended November 30 Nov. 30+ ------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $8.88 $8.90 $8.61 $8.51 $9.18 $9.25 ------------------------------------------------------------------------------------------------------------------ Investment operations: ------------------------------------------------------------------------------------------------------------------ Net investment income .21 .44 .43 .44 .43 .07 ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments .29 (.02) .29 .10 (.66) (.07) ------------------------------------------------------------------------------------------------------------------ Total from investment operations .50 .42 .72 .54 (.23) -- ------------------------------------------------------------------------------------------------------------------ Less distributions: ------------------------------------------------------------------------------------------------------------------ From net investment income (.21) (.44) (.43) (.44) (.41) (.07) ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- -- -- (.03) -- ------------------------------------------------------------------------------------------------------------------ Total distributions (.21) (.44) (.43) (.44) (.44) (.07) ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $9.17 $8.88 $8.90 $8.61 $8.51 $9.18 ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 5.71* 4.84 8.57 6.54 (2.64) (.01)* ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $2,085 $1,959 $2,000 $2,068 $2,447 $2,558 ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .59* 1.17 1.17 1.16 1.23 .22* ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 2.32* 4.88 4.86 5.18 4.84 .74* ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 16.57* 12.00 5.10 6.00 9.36 9.22* ------------------------------------------------------------------------------------------------------------------ + The fiscal year end was advanced from September 30 to November 30. * Not annualized. (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS M (continued) ---------------------------------------------------------- Per-share Year ended operating performance September 30 ---------------------------------------------------------- 1998 ---------------------------------------------------------- Net asset value, beginning of period $9.08 ---------------------------------------------------------- Investment operations: ---------------------------------------------------------- Net investment income .43 ---------------------------------------------------------- Net realized and unrealized gain (loss) on investments .21 ---------------------------------------------------------- Total from investment operations .64 ---------------------------------------------------------- Less distributions: ---------------------------------------------------------- From net investment income (.44) ---------------------------------------------------------- From net realized gain on investments (.03) ---------------------------------------------------------- Total distributions (.47) ---------------------------------------------------------- Net asset value, end of period $9.25 ---------------------------------------------------------- Total return at net asset value (%)(a) 7.23 ---------------------------------------------------------- Ratios and supplemental data ---------------------------------------------------------- Net assets, end of period (in thousands) $2,433 ---------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.30 ---------------------------------------------------------- Ratio of net investment income to average net assets (%) 4.71 ---------------------------------------------------------- Portfolio turnover (%) 42.76 ---------------------------------------------------------- (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). The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS May 31, 2003 (Unaudited) 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 indirect wholly-owned subsidiary of Putnam, LLC, believes does not involve undue risk to income or principal. 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 and class M 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 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 fund may be affected by economic and political developments in the state of New York. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. A) Security valuation Tax-exempt bonds and notes are valued on the basis of valuations provided by an independent pricing service, approved by the Trustees. Such services use information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. Restricted securities are valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. B) Security transactions and related investment income Security transactions are recorded on the trade date (date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. Interest income is recorded on the accrual basis. All premiums/discounts are amortized/accreted on a yield-to-maturity basis. The premium in excess of the call price, if any, is amortized to the call date; thereafter, any remaining premium is amortized to maturity. C) 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. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as "variation margin." 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. Futures and written option contracts outstanding at period end are listed after The fund's portfolio. 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 that borrowings not exceed prospectus limitations. For the six months ended May 31, 2003, 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, 2002, the fund had a capital loss carryover of approximately $3,188,000 available to the extent allowed by tax law to offset future capital gains, if any. The amount of the carryover and the expiration dates are: Loss Carryover Expiration -------------- ------------------ $2,817,000 November 30, 2008 94,000 November 30, 2009 277,000 November 30, 2010 Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer to its fiscal year ending November 30, 2003 approximately $189,000 of losses recognized during the period November 1, 2002 to November 30, 2002. The aggregate identified cost on a tax basis is $196,213,544, resulting in gross unrealized appreciation and depreciation of $15,817,530 and $3,481,958, respectively, or net unrealized appreciation of $12,335,572. F) Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. Note 2 Management fee, administrative services and other transactions Putnam Management is paid for management and investment advisory services quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 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, LLC. 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 May 31, 2003, the payable to the subcustodian bank represents the amount due for cash advanced 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 six months ended May 31, 2003, the fund's expenses were reduced by $6,036 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $701 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, a wholly-owned subsidiary of Putnam, LLC and Putnam Retail Management GP, 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 Retail Management at an annual rate of up to 0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C and class M shares, respectively. The Trustees have approved payment by the fund at the annual rates of 0.20%, 0.85%, 1.00% and 0.50% of the average net assets attributable to class A, class B, class C and class M shares, respectively. For the six months ended May 31, 2003, Putnam Retail Management, acting as underwriter, received net commissions of $10,282 and $165 from the sale of class A and class M shares, respectively, and received $61,779 and $2,505 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares that were purchased without an initial sales charge as part of an investment of $1 million or more. For the six months ended May 31, 2003, Putnam Retail Management, acting as underwriter, received $242 on class A redemptions. Note 3 Purchases and sales of securities During the six months ended May 31, 2003, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $33,358,054 and $36,468,675, respectively. There were no purchases and sales of U.S. government obligations. Note 4 Capital shares At May 31, 2003, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Six months ended May 31, 2003 --------------------------------------------------------------------------- Class A Shares Amount --------------------------------------------------------------------------- Shares sold 947,871 $8,531,311 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 222,606 1,996,578 --------------------------------------------------------------------------- 1,170,477 10,527,889 Shares repurchased (1,136,243) (10,197,328) --------------------------------------------------------------------------- Net increase 34,234 $330,561 --------------------------------------------------------------------------- Year ended November 30, 2002 --------------------------------------------------------------------------- Class A Shares Amount --------------------------------------------------------------------------- Shares sold 1,927,893 $17,244,552 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 439,224 3,924,584 --------------------------------------------------------------------------- 2,367,117 21,169,136 Shares repurchased (2,171,364) (19,381,618) --------------------------------------------------------------------------- Net increase 195,753 $1,787,518 --------------------------------------------------------------------------- Six months ended May 31, 2003 --------------------------------------------------------------------------- Class B Shares Amount --------------------------------------------------------------------------- Shares sold 390,757 $3,506,498 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 98,236 875,511 --------------------------------------------------------------------------- 488,993 4,382,009 Shares repurchased (703,852) (6,313,848) --------------------------------------------------------------------------- Net decrease (214,859) $(1,931,839) --------------------------------------------------------------------------- Year ended November 30, 2002 --------------------------------------------------------------------------- Class B Shares Amount --------------------------------------------------------------------------- Shares sold 1,389,780 $12,444,674 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 182,740 1,632,843 --------------------------------------------------------------------------- 1,572,520 14,077,517 Shares repurchased (1,034,510) (9,245,273) --------------------------------------------------------------------------- Net increase 538,010 $4,832,244 --------------------------------------------------------------------------- Six months ended May 31, 2003 --------------------------------------------------------------------------- Class C Shares Amount --------------------------------------------------------------------------- Shares sold 70,657 $638,801 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 8,308 74,685 --------------------------------------------------------------------------- 78,965 713,486 Shares repurchased (102,774) (924,295) --------------------------------------------------------------------------- Net decrease (23,809) $(210,809) --------------------------------------------------------------------------- Year ended November 30, 2002 --------------------------------------------------------------------------- Class C Shares Amount --------------------------------------------------------------------------- Shares sold 651,976 $5,865,567 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 12,821 114,954 --------------------------------------------------------------------------- 664,797 5,980,521 Shares repurchased (418,879) (3,764,214) --------------------------------------------------------------------------- Net increase 245,918 $2,216,307 --------------------------------------------------------------------------- Six months ended May 31, 2003 --------------------------------------------------------------------------- Class M Shares Amount --------------------------------------------------------------------------- Shares sold 8,353 $74,687 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,319 29,736 --------------------------------------------------------------------------- 11,672 104,423 Shares repurchased (4,942) (44,339) --------------------------------------------------------------------------- Net increase 6,730 $60,084 --------------------------------------------------------------------------- Year ended November 30, 2002 --------------------------------------------------------------------------- Class M Shares Amount --------------------------------------------------------------------------- Shares sold 8,465 $75,708 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 6,918 61,717 --------------------------------------------------------------------------- 15,383 137,425 Shares repurchased (19,549) (173,024) --------------------------------------------------------------------------- Net decrease (4,166) $(35,599) --------------------------------------------------------------------------- Note 5 Actions by Trustees On June 13, 2003 the Trustees approved in principle the merger of Putnam New York Tax Exempt Opportunities Fund into Putnam New York Tax Exempt Income Fund. The transaction is scheduled to occur in November 2003. It is subject to a number of conditions, including approval by the shareholders of the Putnam New York Tax Exempt Opportunities Fund, and there is no guarantee it will occur. FUND INFORMATION ABOUT PUTNAM INVESTMENTS One of the largest mutual fund families in the United States, Putnam Investments has a heritage of investment leadership dating back to Judge Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and practice since 1830. Founded over 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We presently manage over 100 mutual funds in growth, value, blend, fixed income, and international. INVESTMENT MANAGER Putnam Investment Management, LLC One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Retail Management One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray LLP TRUSTEES John A. Hill, Chairman Jameson Adkins Baxter Charles B. Curtis Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan 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, Treasurer and Principal Financial Officer Patricia C. Flaherty Senior Vice President Karnig H. Durgarian Vice President and Principal Executive Officer Steven D. Krichmar Vice President and Principal Financial Officer Michael T. Healy Assistant Treasurer and Principal Accounting Officer Brett C. Browchuk Vice President Charles E. Haldeman, Jr. Vice President Lawrence J. Lasser Vice President Beth S. Mazor Vice President Richard A. Monaghan Vice President Stephen M. Oristaglio Vice President Gordon H. Silver Vice President Mark C. Trenchard Vice President Jerome J. Jacobs Vice President Judith Cohen 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 and Putnam's Quarterly Ranking Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. The fund's Statement of Additional Information contains additional information about the fund's Trustees and is available without charge upon request by calling 1-800-225-1581. Visit www.putnaminvestments.com or call a representative at 1-800-225-1581. NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 --------------------- PRSRT STD U.S. POSTAGE PAID PUTNAM INVESTMENTS --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminvestments.com SA052-88671 854/228/759 7/03