-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FyCo6JWNBuxQWLFpBiWzxtrSzOQd0CySd2VLUNMww++JrG7qc2vt49gV3jE36OPE NO+xlU4bUZG+kwLy2uO0Zw== 0000869392-99-000438.txt : 20000211 0000869392-99-000438.hdr.sgml : 20000211 ACCESSION NUMBER: 0000869392-99-000438 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW YORK TAX EXEMPT INCOME TRUST CENTRAL INDEX KEY: 0000719712 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042794490 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 002-83909 FILM NUMBER: 99719589 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM NEW YORK TAX EXEMPT INCOME FUND DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND CENTRAL INDEX KEY: 0000821546 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042980863 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 033-17344 FILM NUMBER: 99719590 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ STREET 2: MAILSTOP A14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921536 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND CENTRAL INDEX KEY: 0000867921 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 043101849 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 033-37001 FILM NUMBER: 99719591 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921536 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM NEW YORK TAX FREE HIGH INCOME FUND DATE OF NAME CHANGE: 19910310 497 1 Prospectus MARCH 30, 1999 , AS REVISED SEPTEMBER 30, 1999 PUTNAM NEW YORK TAX EXEMPT INCOME FUND CLASS A, B , C AND M SHARES PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND CLASS A, B , C AND M SHARES PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND CLASS A SHARES INVESTMENT CATEGORY: TAX-EXEMPT This prospectus explains what you should know about these mutual funds before you invest. Please read it carefully. Putnam Investment Management, Inc. (Putnam Management), which has managed mutual funds since 1937, manages these funds. These securities have not been approved or disapproved by the Securities and Exchange Commission nor has the Commission passed upon the accuracy or adequacy of this prospectus. Any statement to the contrary is a crime. CONTENTS 2 Fund summaries 2 Goals 2 Main investment strategies 2 Main risks 4 Performance information 7 Fees and expenses 9 What are the funds' main investment strategies and related risks? 19 Who manages each fund? 20 How does each fund price its shares? 20 How do I buy fund shares? 25 How do I sell fund shares? 28 How do I exchange fund shares? 29 Fund distributions and taxes 31 Financial highlights sBOSTON ( LONDON ( TOKYO FUND SUMMARIES GOALS PUTNAM NEW YORK TAX EXEMPT INCOME FUND (THE "INCOME FUND"). The fund seeks as high a level of current income exempt from federal income tax and New York State and City personal income tax as Putnam Management believes is consistent with preservation of capital. PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND (THE "OPPORTUNITIES FUND"). The fund seeks high current income exempt from federal income tax and New York State and City personal income tax. PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND (THE "MONEY MARKET FUND"). The fund seeks as high a level of current income exempt from federal income tax and New York State and City personal income tax as Putnam Management believes is consistent with preservation of capital, maintenance of liquidity and stability of principal. MAIN INVESTMENT STRATEGIES - TAX-EXEMPT SECURITIES THE INCOME AND OPPORTUNITIES FUNDS. Most of the funds' investments are * bonds and other debt the interests on which is exempt from federal income tax and New York State and City personal income tax (but which may be subject to the federal alternative minimum tax) * investment grade in quality, and * long-term (with maturities of more than 10 years). THE MONEY MARKET FUND. Most of the fund's investments are * high quality money market instruments the interest on which is exempt from federal income tax and New York State and City personal income tax, and * short-term (with a dollar-weighted average portfolio maturity of 90 days or less). MAIN RISKS THE INCOME AND OPPORTUNITIES FUNDS The main risks that could adversely affect the value of each fund's shares and the total return on your investment include * The risk that movements in the securities markets will adversely affect the value of the funds' investments. This risk includes interest rate risk, which means that the prices of the funds' investments, particularly the debt in which they mainly invest, are likely to fall if interest rates rise. Interest rate risk is generally highest for investments with long maturities. * The risk that the issuers of the funds' investments will not make timely payments of interest and principal. This credit risk is higher for the debt that is below investment grade in quality. THE MONEY MARKET FUND While money market funds are designed to be relatively low risk investments, they are not entirely free of risk. The main risks that could adversely affect the value of the fund's shares and the total return on your investment include * the risk that the value of your investment may be eroded over time by the effects of inflation, and * the risk that, as a result of deterioration in the credit quality of issuers whose securities the fund holds or an increase in interest rates, the fund may be unable to maintain a net asset value of $1.00 per share . The Opportunities Fund and Money Market Fund are "non- diversified," which means that they may invest more of their assets in the securities of fewer companies than a "diversified" fund. The funds may therefore be more exposed to the risk of loss from a few issuers than a fund that invests more broadly. ALL FUNDS In addition to the risks described above, all of the funds may also be subject to the following risks * The risk that some or all of the interest the fund receives might become taxable by law or be determined by the Internal Revenue Service (or New York State or City tax authorities) to be taxable. * The risk of investing mostly in a single state. Investments in a single state, even though representing a number of different issuers , may be affected by common economic forces and other factors. The vulnerability of the fund to factors affecting New York tax-exempt investments will be significantly greater than that of a more geographically diversified fund, which may result in greater losses and volatility. You can lose money by investing in any fund. There is no guarantee that any fund will achieve its goals and no fund is intended as a complete investment program. Investments in a fund are NOT deposits of any bank nor are they insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds generally invest in tax-exempt securities, some of the funds' investments may generate taxable income or income that is subject to the federal alternative minimum tax. Although the Money Market Fund seeks to preserve the value of your investment at $1.00 per share, there is no guarantee that the fund will be able to do so. PERFORMANCE INFORMATION The following information provides some indication of each fund's risks. The charts show year-to-year changes in the performance of each fund's class A shares. The table following each chart compares that fund's performance to that of one or more broad measures of market performance. Of course, a fund's past performance is not an indication of future performance. THE INCOME FUND CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES Plot points 1989 9.42% 1990 3.94% 1991 14.33% 1992 10.01% 1993 13.25% 1994 -7.39% 1995 15.50% 1996 3.40% 1997 8.96% 1998 4.99% Performance figures do not reflect the impact of sales charges. If they did, performance would be less than that shown. During the periods shown in the bar chart, the highest return for a quarter was 7.13% (quarter ending 3/31/95) and the lowest return for a quarter was -6.15% (quarter ending 3/31/94). AVERAGE ANNUAL TOTAL RETURNS (for periods ending 12/31/98) PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS CLASS A 0.01% 3.81% 6.92% CLASS B -0.75% 3.80% 6.60% CLASS C 3.21% 3.98% 6.58% CLASS M 1.31% 3.77% 6.65% LEHMAN BROS. MUNICIPAL BOND INDEX 6.48% 6.23% 8.22% Unlike the bar chart, this performance information reflects the impact of sales charges. Class A and class M share performance reflects the current maximum initial sales charges; class B and class C share performance reflects the maximum applicable deferred sales charge if shares had been redeemed on 12/31/98 and assumes conversion of class B shares only to class A shares after eight years. For periods before the inception of class B shares (1/4/93) , class C shares (7/26/99) and class M shares (4/10/95), performance of those classes shown in the table is based on performance of the Income Fund's class A shares, adjusted to reflect the appropriate sales charge and the higher 12b-1 fees paid by class B , class C and class M shares. The fund's performance is compared to the Lehman Brothers Municipal Bond Index, an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds generally considered representative of the municipal bond market. THE OPPORTUNITIES FUND CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES Plot points 1991 11.62% 1992 8.41% 1993 9.19% 1994 -2.83% 1995 16.49% 1996 3.81% 1997 8.89% 1998 5.29% Performance figures do not reflect the impact of sales charges. If they did, performance would be less than that shown. During the periods shown in the bar chart, the highest return for a quarter was 5.96% (quarter ending 3/31/95) and the lowest return for a quarter was -3.06 (quarter ending 3/31/94). AVERAGE ANNUAL TOTAL RETURNS (for periods ending 12/31/98) PAST PAST SINCE 1 YEAR 5 YEARS INCEPTION (11/7/90) CLASS A 0.26% 5.12% 6.78% CLASS B -0.39% 5.07% 6.65% CLASS C 3.39% 5.28% 6.55% CLASS M 1.53% 5.04% 6.57% LEHMAN BROS. MUNICIPAL BOND INDEX 6.48% 6.23% 8.17% Unlike the bar chart, this performance information reflects the impact of sales charges. Class A and class M share performance reflects the current maximum initial sales charges; class B and class C share performance reflects the maximum applicable deferred sales charge if shares had been redeemed on 12/31/98 and assumes conversion of class B shares only to class A shares after eight years. For periods before the inception of class B shares (2/1/94) , class C shares (7/26/99) and class M shares (2/10/95), performance of those classes shown in the table is based on performance of the Opportunities Fund's class A shares, adjusted to reflect the appropriate sales charge and the higher 12b-1 fees paid by class B , class C and class M shares. The fund's performance is compared to the Lehman Brothers Municipal Bond Index, an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds generally considered representative of the municipal bond market. THE MONEY MARKET FUND CALENDAR YEAR TOTAL RETURNS Plot points 1989 5.48% 1990 5.08% 1991 3.94% 1992 2.47% 1993 1.63% 1994 2.03% 1995 3.24% 1996 2.90% 1997 2.73% 1998 2.90% During the periods shown in the bar chart, the highest return for a quarter was 1.41% (quarter ending 6/30/89) and the lowest return for a quarter was 0.39% (quarter ending 3/31/94). AVERAGE ANNUAL TOTAL RETURNS (for periods ending 12/31/98) PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS MONEY MARKET FUND 2.90% 2.80% 3.38% THE MERRILL LYNCH 91-DAY TREASURY BILL INDEX 5.23% 5.22% 5.69% LIPPER NEW YORK TAX EXEMPT MONEY MARKET FUND AVERAGE 2.86% 2.87% 3.30% The fund's performance is compared to the Merrill Lynch 91-Day Treasury Bill Index and the Lipper New York Tax Exempt Money Market Fund Average . The Merrill Lynch 91-Day Treasury Bill Index is an unmanaged index that seeks to measure the performance of treasury bills currently available in the marketplace. The Lipper New York Tax Exempt Money Market Fund Average is an arithmetic average of the total return of all New York tax exempt money market funds tracked by Lipper Analytical Services. FEES AND EXPENSES This table summarizes the fees and expenses you may pay if you invest in a fund. Expenses for the Income Fund and Money Market Fund are based on each fund's last fiscal year. Expenses for the Opportunities Fund are based on the fund's last full fiscal year. SHAREHOLDER FEES (fees paid directly from your investment) INCOME AND OPPORTUNITIES FUNDS CLASS A CLASS B CLASS C CLASS M Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of the offering price) 4.75% NONE* NONE* 3.25%* Maximum Deferred Sales Charge (Load) (as a percentage of the original purchase price or redemption proceeds, whichever is lower) NONE** 5.00% 1.00% NONE MONEY MARKET FUND Maximum Sales Charge (Load) Imposed on purchases (as a percentage of the offering price) NONE Maximum Deferred Sales Charge (Load) (as a percentage of the original purchase price or redemption proceeds, whichever is lower) NONE ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) TOTAL ANNUAL FUND MANAGEMENT DISTRIBUTION OTHER OPERATING FEES (12B-1) FEES EXPENSES EXPENSES INCOME FUND Class A 0.49% 0.20% 0.14% 0.83% Class B 0.49% 0.85% 0.14% 1.48% Class C 0.49% 1.00% 0.14% 1.63% Class M 0.49% 0.50% 0.14% 1.13% OPPORTUNITIES FUND *** Class A 0.50% 0.20% 0.20% 0.90% Class B 0.50% 0.85% 0.20% 1.55% Class C 0.50% 1.00% 0.20% 1.70% Class M 0.50% 0.50% 0.20% 1.20% MONEY MARKET FUND 0.45% NONE 0.34% 0.79% *The higher 12b-1 fees borne by class B , class C and class M shares may cause their long-term shareholders to pay more than the total sales charges paid by class A shareholders. **A deferred sales charge of up to 1% may be imposed on certain redemptions of class A shares bought without an initial sales charge. *** Expenses reflect the fees which would have been paid for the last fiscal year based upon a new management contract for the Opportunities Fund that took effect on 7/1/99. EXAMPLE This example translates the "total annual fund operating expenses" shown in the preceding table into dollar amounts. By doing this, you can more easily compare the cost of investing in the funds to the cost of investing in other mutual funds. The example makes certain assumptions. It assumes that you invest $10,000 in each fund for the time periods shown and then, except as shown for class B and class C shares, redeem all your shares at the end of those periods. It also assumes a 5% return on your investment each year and that the fund's operating expenses remain the same. The example is hypothetical; your actual costs and returns may be higher or lower. INCOME FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A $556 $727 $914 $1,452 Class B $651 $768 $1,008 $1,592* Class B (no redemption) $151 $468 $808 $1,592* Class C $266 $514 $887 $1,933 Class C (no redemption) $166 $514 $887 $1,933 Class M $436 $672 $927 $1,655 OPPORTUNITIES FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A $572 $748 $950 $1,530 Class B $658 $790 $1,045 $1,671 * Class B (no redemption) $158 $490 $845 $1,671* Class C $273 $536 $923 $2,009 Class C (no redemption) $173 $536 $923 $2,009 Class M $443 $694 $963 $1,732 MONEY MARKET FUND $81 $252 $439 $978 *Reflects the conversion of class B shares to class A shares, which pay lower 12b-1fees. Conversion occurs no more than eight years after purchase. What are the funds' main investment strategies and related risks? THE INCOME AND OPPORTUNITIES FUNDS Any investment carries with it some level of risk that generally reflects its potential for reward. The Income Fund pursues its goal by investing in securities that allow at least 90% of the fund's income distributions to be exempt from both federal income tax and New York State and City personal income tax, except during times of adverse market conditions when more than 10% of the Income Fund's income distributions could be subject to these taxes. The Opportunities Fund pursues its goal by investing, under normal circumstances, at least 80% of its assets in New York tax-exempt securities. These investment policies cannot be changed without the approval of the relevant fund's shareholders. For a detailed discussion of tax-exempt investments, see "Tax-exempt investments" below. * INTEREST RATE RISK. The values of bonds and other debt instruments usually rise and fall in response to changes in interest rates. Declining interest rates generally raise the value of existing debt instruments, and rising interest rates generally lower the value of existing debt instruments. Changes in a debt instrument's value usually will not affect the amount of income a fund receives from it, but will affect the value of that fund's shares. Interest rate risk is generally greater for investments with longer maturities. A fund may buy investments that give the issuer the option to "call," or redeem, these investments before their maturity date. If an investment were to be "called" during a time of declining interest rates, the fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore might not benefit from any increase in value as a result of declining interest rates. The funds may invest in so-called "premium" investments, which offer interest rates higher than prevailing market rates. In addition, during times of declining interest rates, many of the funds' investments may offer interest rates that are higher than current market rates, regardless of whether the funds bought them at a premium. When a fund holds premium investments, shareholders are likely to receive higher dividends (but will bear a greater risk that the value of the fund's shares will fall) than they would if that fund held investments that offered current market rates of interest. Premium investments involve a greater risk of loss, because their values tend to decline over time. Investors may find it useful to compare each fund's yield, which factors out the effect of premium securities, with its current dividend rate, which does not factor out that effect. * CREDIT RISK. Investors normally expect to be compensated in proportion to the risk they are assuming. Thus, debt of issuers with poor credit prospects usually offers higher yields than debt of issuers with more secure credit. Higher-rated investments generally offer lower credit risk, but not lower interest rate risk. The values of higher-rated investments still fluctuate in response to changes in interest rates. The Income Fund ' s debt investments are mostly investment grade, which means they are rated at the time of purchase at least BBB (or its equivalent) by a nationally recognized securities rating agency, or are unrated investments that Putnam Management determines are of comparable quality. The Income Fund may invest up to 25% of its assets in New York tax exempt investments that are rated, at the time of purchase, below BBB (or its equivalent) by each agency rating the security, or are unrated investments that Putnam Management determines are of comparable quality, but generally will only invest in securities rated at least BB (or the equivalent) by a nationally recognized securities rating agency and unrated investments that Putnam Management believes are of comparable quality. The Income Fund will not necessarily sell an investment if its rating is reduced. The Opportunities Fund invests most of its assets in investment grade securities. The Opportunities Fund may invest the balance of its assets in high yielding lower-rated securities that at the time of purchase are rated at least B (or the equivalent) by a nationally recognized securities rating agency, or are unrated investments that Putnam Management[/R] determines are of comparable quality. The Opportunities Fund will not necessarily sell an investment if its rating is reduced. * LOWER RATED DEBT INSTRUMENTS. Fixed-income investments rated below BBB (or its equivalent) are known as "junk bonds" and reflect a greater possibility that the issuers may be unable to make timely payments of interest and principal and thus default. If this happens, or is perceived as likely to happen, the values of those investments will usually decline and be more volatile. A default or expected default could also make it difficult for a fund to sell investments at prices approximating the values that fund had previously placed on them. Tax-exempt debt, particularly lower-rated tax-exempt debt, usually has a more limited market than taxable debt, which may at times make it difficult for the funds to buy or sell certain bonds or to establish their fair value. Credit ratings are based largely on the issuer's historical financial condition and the rating agencies' investment analysis at the time of rating. The rating assigned to any particular investment does not necessarily reflect the issuer's current financial condition, and does not reflect an assessment of an investment's volatility or liquidity. Although Putnam Management considers credit ratings in making investment decisions, it performs its own investment analysis and does not rely only on ratings assigned by the rating agencies. However, the amount of information about the financial condition of issuers of tax-exempt debt may not be as extensive as that which is made available by companies whose stock or debt is publicly traded. When the funds buy lower rated debt, the achievement of their goals depends more on Putnam Management's ability than would be the case if the funds were buying investment grade debt. The funds may have to participate in various legal proceedings or take possession of and manage assets that secure the issuer's obligations. The funds' ability to enforce their rights in bankruptcy proceedings may be more limited than would be the case with private issuers. This could increase the funds' operating expenses and decrease their net asset values. Any income that arises from ownership or operation of assets would be taxable. Although they are generally thought to have lower credit risk, investments that are considered investment-grade may share some of the risks of lower rated investments. ZERO COUPON BONDS. Each fund may at times invest in "zero coupon" bonds. Zero coupon bonds are issued at less than their face value and make payments of interest only at maturity rather than at intervals during the life of the bond. These bonds allow an issuer to avoid generating cash to make current interest payments. They therefore involve greater credit risk and are subject to greater price fluctuations than bonds that pay current interest in cash. * FUTURES AND OPTIONS. The funds may buy and sell financial futures contracts and options, which are commonly known as "derivatives." Futures and options involve special risks and costs, and may result in losses. The funds may profit or lose money depending on the change in the value of the underlying index or investment over the life of the futures contract or option. Futures and options can also produce taxable income or capital gains for a fund. In particular, the funds may buy and sell * futures contracts on the Municipal Bond Index, which is intended to reflect the market performance of long-term tax-exempt bonds, * futures contracts on U.S. Treasury debt, * put and call options on such futures contracts and U.S. Treasury debt, and * put and call options on, or warrants to buy, tax-exempt investments. The funds may engage in these transactions for "hedging" or protective purposes, such as to protect against changes in interest rates. Although Putnam Management has the flexibility to use these strategies, it may choose not to for a variety of reasons, even in very volatile market conditions. It may also do so for non-hedging purposes, such as to manage the effective duration of a fund's portfolio. Duration is a measure of sensitivity to changes in interest rates. The prices of futures and options, of the underlying indexes or investments, and of any investments that are the subject of a hedge, may change in unexpected or unrelated ways. The successful use of futures and options also depends on Putnam Management's ability to forecast market movements correctly. Other risks arise from the potential inability to terminate futures and options positions. A liquid secondary market may not exist for these positions at any particular time. The funds' ability to terminate positions traded in the over-the-counter market may be more limited than for those traded on exchanges. The funds' use of futures and options may increase the amount of taxes payable by shareholders. * INVERSE FLOATERS AND RESIDUAL INTEREST BONDS. The funds may buy interests in tax-exempt debt commonly known as inverse floating obligations or residual interest bonds. These bonds pay interest at rates that vary inversely with short-term tax-exempt interest rates. The interest rates on these bonds typically fall as short- term market interest rates rise and typically rise as short-term market rates fall. The interest rates on these bonds typically change twice as much as market interest rates, and they are therefore generally more volatile. * DERIVATIVES. The funds may engage in a variety of transactions involving derivatives, such as futures, options, warrants and swap contracts. Derivatives are financial instruments whose value depends upon, or is derived from, the value of something else, such as one or more underlying investments, pools of investments, indexes or currencies. The fund's return on a derivative typically depends on the change in the value of investment, pool of investments, index or currency specified in the derivative instrument. The fund may use derivatives both for hedging and non-hedging purposes. The decision as to whether and to what extent the fund will use derivatives for hedging purposes will depend on a number of factors, including market conditions, the fund's investments and the availability of suitable derivatives. Derivatives involve special risks and may result in losses. The fund will be dependent on Putnam Management's ability to analyze and manage these sophisticated instruments. The prices of derivatives may move in unexpected ways, especially in abnormal market conditions. Some derivatives are "leveraged" and therefore may magnify or otherwise increase investment losses to the fund. The fund's use of derivatives may also increase the amount of taxes payable by shareholders. Other risks arise from the potential inability to terminate or sell derivatives positions. A liquid secondary market may not always exist for the fund's derivatives positions at any given time. In fact, many over-the-counter instruments (investments not traded on any exchange) will not be liquid. Over-the-counter instruments also involve the risk that the other party will not meet its obligations to the funds. For further information about the risks of derivatives, see the statement of additional information (SAI). THE MONEY MARKET FUND Any investment carries with it some level of risk that generally reflects its potential for reward. The fund pursues its goal by investing in securities that normally allow at least 90% of the fund's income distributions to be exempt from both federal income tax and New York State and City personal income tax. This investment policy cannot be changed without the approval of the fund's shareholders. For a detailed discussion of tax-exempt investments, see "Tax-exempt investments" below. * CREDIT QUALITY. The fund buys only high quality New York tax- exempt investments that Putnam Management believes present minimal credit risk at the time of purchase. High quality investments are * rated in one of the two highest categories by at least two nationally recognized rating services, or * rated by one rating service in one of its two highest categories (if only one rating service has provided a rating) or * unrated investments that Putnam Management determines are of equivalent quality. To maintain liquidity and preserve capital, the fund may decide not to buy investments that pay the highest available yields at any particular time. Investors normally expect to be compensated in proportion to the risk they are assuming. Thus, debt of issuers with good credit prospects usually offer lower yields than those of issuers with less secure credit prospects. Higher-rated investments generally offer lower credit risk, but not lower interest rate risk. The value of a high quality investment is still subject to a credit risk, and can still fluctuate in response to changes in interest rates. The amount of information about the financial condition of issuers of tax-exempt debt may not be as extensive as that which is made available by companies whose stock or debt is publicly traded. The fund's ability to enforce its rights against issuers of tax- exempt investments in bankruptcy proceedings may be more limited than would be the case with private issuers. * LETTERS OF CREDIT & OTHER CREDIT ENHANCEMENTS. The fund may buy investments backed by credit enhancements such as letters of credit, which are designed to give additional protection to investors. For example, if an issuer of a note does not have the credit rating usually required by the fund, another company may use its higher credit rating to back up the credit of the issuer of the note by selling the issuer a letter of credit. The main risk in investments backed by a letter of credit is that the entity issuing the letter of credit will not be able, or is thought to be unlikely to be able, to fulfill its obligations to the fund. * VARIABLE RATE & FLOATING RATE DEMAND NOTES. The fund expects to invest significantly in floating rate and variable rate demand notes and bonds. These investments may have maturities of more than one year, but generally allow the holder to demand payment of principal plus accrued interest within a relatively short period. Because the interest rate on variable rate and floating rate demand notes can change as market interest rates change, these investments are unlikely to be able to lock in favorable longer term interest rates. The interest rate of a floating rate instrument is generally based on a known lending rate, such as a bank's prime rate, and is reset whenever the underlying rate is adjusted. The interest rate on a variable rate demand note is reset at specified intervals at a market rate. * INSURANCE. The fund has bought liability insurance that insures it against a decrease in the value of its investments arising from the issuer's default or bankruptcy. The insurance covers most of the fund's investments, other than U.S. government securities. Although the insurance may provide the fund with some protection against certain credit risks, it does not guarantee or insure that the fund will be able to maintain a stable net asset value of $1.00 per share. The maximum total coverage for the fund is $30 million, with a deductible for each loss of $1 million or 0.30% of the fund's net assets, whichever is less. The $30 million maximum coverage is shared with four other Putnam money market funds. Recovery under the insurance is subject to certain conditions, including the condition that the other Putnam money market funds have not previously exhausted the insurance coverage, and the insurance might not be renewed when it expires. * INTEREST RATE RISK. The values of money market investments usually rise and fall in response to changes in interest rates. Declining interest rates will generally raise the value of existing money market investments, and rising interest rates will generally lower the value of existing money market investments. Interest rate risk is generally lower for investments with short maturities, and the short-term nature of money market investments is designed to reduce this risk. ALL FUNDS * TAX-EXEMPT SECURITIES. New York tax-exempt securities are typically debt instruments issued by the State of New York, its municipalities, and their agencies, instrumentalities or other governmental units the interest on which, in the opinion of bond counsel, is exempt from federal income tax and New York State and City personal income tax. These securities are commonly issued to raise money for various public purposes, such as loans for the construction of housing, schools or hospitals, or to provide temporary financing in anticipation of the receipt of taxes and other revenue. They may also include special revenue obligations, (described below), industrial development bonds, private activity bonds and notes of public authorities to finance privately owned or operated facilities. The tax-exempt securities that the funds may buy include municipal notes and bonds, municipal securities backed by the U.S. government, tax-exempt commercial paper (also known as short-term discount notes) or so-called participation interests in any of the above. Private activity bonds may be subject to federal alternative minimum tax. * GENERAL OBLIGATIONS. Some tax-exempt investments are backed by the issuer's authority to levy taxes and are considered an obligation of the issuer. They are known as general obligation securities and are payable from the issuer's general unrestricted revenues, although payment may depend upon government appropriation or aid from other governments. These investments may be vulnerable to legal limits on a government's power to raise revenue or increase taxes, as well as economic or other developments that can reduce revenues. >SPECIAL REVENUE OBLIGATIONS. Other tax-exempt investments (known as special revenue obligations) are payable from revenues earned by a particular project or other revenue source. They include investments such as municipal leases. They also include industrial development bonds and private activity bonds, which are paid only from the revenues of the private owners or operators of the facilities. For these types of bonds, investors can look only to the revenue generated by the project or the private company operating the project rather than the credit of the state or local government authority issuing the bonds. Special revenue obligations are typically subject to greater credit risk than general obligations because of the relatively limited source of revenue. * ALTERNATIVE MINIMUM TAX. Interest income distributed by a fund from certain tax-exempt investments may be subject to the federal alternative minimum tax (AMT) for individuals. As a policy that may not be changed without the approval of shareholders, the funds do not count such investments for the purpose of complying with the 90%, for the Income and Money Market Funds, and 80%, for the Opportunities Fund, investment policies described above. Corporations will be required to include all tax-exempt interest dividends in determining their federal (but not New York) alternative minimum tax. For more information, consult your tax advisor. * CONCENTRATION OF INVESTMENTS. None of the funds will invest more than 25% of its total assets in any one industry. Governmental issuers of New York tax-exempt investments are not considered a part of any industry. This concentration test may apply, however, to New York tax-exempt investments that are backed only by the assets and revenues of privately owned or operated issuers (who may be deemed to be the issuers of such securities). Each fund does, however, reserve the right to invest more than 25% of its assets in industrial revenue bonds and private activity securities. Each fund may also invest more than 25% of its assets in a broad segment of the tax-exempt debt market, such as revenue bonds for hospitals and other health care facilities, housing or airports, if Putnam Management believes the yields from these bonds justify the additional risks of such concentration. The value of the Income and Opportunities funds shares may change more than the values of shares of funds investing in a greater number of different kinds of issuers. Legislation, voter initiatives or court decisions (or concerns about the potential results of such legislation, voter initiatives or court cases) affecting financing for projects such as those described above or lower demand for the services or products provided by a particular market segment are examples of such potentially adverse events. Since the funds invest primarily in New York tax-exempt investments, they are more vulnerable than more geographically diversified tax-exempt funds to the New York economy and issues encountered by tax exempt issuers in New York such as * the inability or perceived inability of the state or local municipality (or their agencies or instrumentalities) to collect sufficient tax or other revenues to meet their payment obligations, * the placement of constitutional or statutory limits on a tax- exempt issuer's ability to raise revenues or increase taxes, and * economic or demographic factors that may cause a decrease in tax or other revenues for the state or local municipality (or their agencies or instrumentalities), or for the private quarters of publicly financed facilities. These factors, among others, may affect tax-exempt issuers' ability to pay their obligations when due and may adversely impact the funds and their shareholders. In addition, because there are a relatively small number of issuers of New York tax-exempt investments, the funds are more likely to invest a higher percentage of assets in the debt of a single issuer than a fund that invests in a wider range of tax- exempt investments. To the extent a fund invests a significant part of its assets in the securities of a particular issuer, it will be subject to an increased risk of loss if the market value of the issuer's debt declines. At times, the funds, either alone or together with other funds and accounts managed by Putnam Management or its affiliates, may own all or most of the debt of a particular public issuer. This concentration of ownership may make it more difficult to sell, or to determine the fair value of these investments. * ALTERNATIVE STRATEGIES. At times Putnam Management may judge that market conditions make pursuing a fund's investment strategies inconsistent with the best interests of its shareholders. Putnam Management then may temporarily use alternative strategies that are mainly designed to limit the fund's losses. Although Putnam Management has the flexibility to use these strategies, it may choose not to for a variety of reasons, even in very volatile market conditions. These strategies may cause the fund to miss out on investment opportunities, may produce taxable income, and may prevent the fund from achieving its goal. * OTHER INVESTMENTS. In addition to the main investment strategies described above, a fund may also make other types of investments, including investments that may produce taxable income or capital gains, and may be subject to other risks, as described in the funds' statement of additional information (SAI). * CHANGES IN POLICIES. The funds' Trustees may change a fund's goal, investment strategies and other policies without shareholder approval, except as otherwise indicated. Who manages each fund? The funds' Trustees oversee the general conduct of fund business. The Trustees have retained Putnam Management to be each fund's investment manager, responsible for making investment decisions for each fund and managing each fund's other affairs and business. Each fund pays Putnam Management a quarterly management fee for these services based on the fund's average net assets. The Income Fund paid Putnam Management a management fee of 0.49% of average net assets for the funds' last fiscal year. The Opportunities Fund paid Putnam Management a management fee of 0.60% of average net assets for the fund's last full fiscal year, ended September 30, 1998. Under a new management contract approved by the funds' Trustees, effective July1, 1999, the Opportunities Fund would have paid 0.50% during the prior fiscal year. The Money Market fund paid Putnam Management a management fee of 0.45% of the average net assets for the fund's last fiscal year. Putnam Management's address is One Post Office Square, Boston, MA 02109. The following officer of Putnam Management has had primary responsibility for the day-to-day management of each fund's portfolio since the year shown below. His experience as a portfolio manager or investment analyst over at least the last five years is also shown. MANAGER SINCE EXPERIENCE INCOME FUND AND OPPORTUNITIES FUND David E. Hamlin 1998 Employed by Putnam Management Senior Vice President since August 1998. Prior to August 1998, Mr. Hamlin was employed at The Vanguard Group. >YEAR 2000 ISSUES. The funds could be adversely affected if the computer systems used by Putnam Management and the funds' other service providers do not properly process and calculate date- related information relating to the end of this century and the beginning of the next. While year 2000-related computer problems could have a negative effect on the funds, both in their operations and in their investments, Putnam Management is working to avoid such problems and to obtain assurances from service providers that they are taking similar steps. No assurances, though, can be provided that the funds will not be adversely impacted by these matters. HOW DOES EACH FUND PRICE ITS SHARES? THE INCOME AND OPPORTUNITIES FUNDS. The price of each fund's shares is based on its net asset value (NAV). The NAV per share of each class equals the total value of its assets, less its liabilities, divided by the number of its outstanding shares. Shares are only valued as of the close of regular trading on the New York Stock Exchange each day the exchange is open. The Income and Opportunities Funds value their investments for which market quotations are readily available at market value. Each values short-term investments that will mature within 60 days at amortized cost, which approximates market value. Each fund values all other investments and assets at their fair value. THE MONEY MARKET FUND. The Money Market Fund values its investments at amortized cost, which approximates market value. HOW DO I BUY FUND SHARES? THE INCOME AND OPPORTUNITIES FUNDS You can open a fund account with as little as $500 and make additional investments at any time with as little as $50. The Income and Opportunities Funds sell their shares at the offering price, which is the NAV plus any applicable sales charge. Your financial advisor or Putnam Investor Services generally must receive your completed buy order before the close of regular trading on the New York Stock Exchange for your shares to be bought at that day's offering price. You can buy shares * THROUGH A FINANCIAL ADVISOR. Your advisor will be responsible for furnishing all necessary documents to Putnam Investor Services, and may charge you for his or her services. * THROUGH SYSTEMATIC INVESTING. You can make regular investments of $25 or more per month through automatic deductions from your bank checking or savings account. Application forms are available through your advisor or Putnam Investor Services at 1-800-225- 1581. You may also complete an order form and write a check for the amount you wish to invest, payable to the appropriate fund. Return the check and completed form to Putnam Mutual Funds. The funds may periodically close to new purchases of shares or refuse any order to buy shares if the fund determines that doing so would be in the best interests of the fund and its shareholders. WHICH CLASS OF SHARES IS BEST FOR ME? This prospectus offers you a choice of four classes of fund shares: A, B, C and M. This allows you to choose among different types of sales charges and different levels of ongoing operating expenses, as illustrated in the "Fees and expenses" section. The class of shares that is best for you depends on a number of factors, including the amount you plan to invest and how long you plan to hold the shares. Here is a summary of the differences among the classes of shares: Class A shares * Initial sales charge of up to 4.75% * Lower sales charge for investments of $25,000 or more * No deferred sales charge (except on certain redemptions of shares bought without an initial sales charge) * Lower annual expenses, and higher dividends, than class B , C or M shares because of lower 12b-1 fee Class B shares * No initial sales charge; your entire investment goes to work for you * Deferred sales charge of up to 5% if you sell shares within 6 years after you bought them * Higher annual expenses, and lower dividends, than class A or M shares because of higher 12b-1 fee * Convert automatically to class A shares after 8 years, reducing the future 12b-1 fee (may convert sooner in some cases) * Orders for class B shares for more than $250,000 are treated as orders for class A shares or refused Class C shares * No initial sales charge; your entire investment goes to work for you * Deferred sales charge of up to 1.00% if you sell shares within 1 year after you bought them * Higher annual expenses, and lower dividends, than class A or M shares because of higher 12b-1 fee * No conversion to class A shares, so future 12b-1 fee does not decrease * Orders of $1,000,000 or more and orders which, because of a right of accumulation or statement of intent would qualify for the purchase of class A shares without an initial sales charge will be treated as orders for class A shares or refused * Class M shares * Initial sales charge of up to 3.25% * Lower sales charges for larger investments of $50,000 or more * No deferred sales charge * Lower annual expenses, and higher dividends, than class B shares because of lower 12b-1 fee * Higher annual expenses, and lower dividends, than class A shares because of higher 12b-1 fee * No conversion to class A shares, so future 12b-1 fee does not decrease INITIAL SALES CHARGES FOR CLASS A AND M SHARES CLASS A SALES CHARGE CLASS M SALES CHARGE AS A PERCENTAGE OF: AS A PERCENTAGE OF: ----------------------------------- -------------------------- AMOUNT OF PURCHASE NET AMOUNT OFFERING NET AMOUNT OFFERING AT OFFERING PRICE ($) INVESTED PRICE* INVESTED PRICE* Under 25,000 4.99% 4.75% 3.36% 3.25% 25,000 but under 50,000 4.71% 4.50% 3.36% 3.25% 50,000 but under 100,000 4.71 4.50 2.30 2.25 100,000 but under 250,000 3.90 3.75 1.52 1.50 250,000 but under 500,000 3.09 3.00 1.01 1.00 500,000 but under 1,000,000 2.04 2.00 NONE NONE 1,000,000 and above NONE NONE NONE NONE - ------------------------------------------------------------------------------- *Offering price includes sales charge. DEFERRED SALES CHARGES FOR CLASS B, CLASS C AND CERTAIN CLASS A SHARES If you sell (redeem) class B shares within six years after you bought them, you will generally pay a deferred sales charge according to the following schedule. YEAR AFTER PURCHASE 1 2 3 4 5 6 7+ - -------------------------------------------- CHARGE 5% 4% 3% 3% 2% 1% 0% A deferred sales charge of 1% will apply to class C shares if redeemed within one year of purchase. A deferred sales charge of up to 1% may apply to class A shares purchased without an initial sales charge, if redeemed within two years after purchase. Deferred sales charges will be based on the lower of the shares' cost and current NAV. Shares not subject to any charge will be redeemed first, followed by shares held longest. You may sell shares acquired by reinvestment of distributions without a charge at any time. THE MONEY MARKET FUND You can open a fund account with as little as $1,000 and make additional investments at any time with as little as $100. Shares are sold at a price of $1.00 per share, without any initial sales charge . Because the fund seeks to be fully invested at all times, it only sells shares to you when it receives "same-day funds," which are monies that are credited to the fund's designated bank account by the Federal Reserve Bank of Boston. If the fund receives same-day funds before the close of trading on the New York Stock Exchange, it will accept the order to buy shares that day. You can buy shares * THROUGH A FINANCIAL ADVISOR. Your advisor will be responsible for furnishing all necessary documents to Putnam Investor Services, and may charge you for his or her services. * BY MAIL. Complete an order form and send it to Putnam Investor Services with your check, Federal Reserve Draft or other negotiable bank draft drawn on a U.S. bank and payable in U.S. dollars to the order of Putnam New York Tax Exempt Money Market Fund. If you pay by Federal Reserve Draft, the fund will accept your order on the day it is received if the order is received before the close of regular trading on the New York Stock Exchange. If you pay by check or other draft, the fund's designated bank will make same-day funds available to the fund on the first business day after receipt of your check or draft, and the fund will then accept your order. * BY WIRE TRANSFER. You may buy fund shares by bank wire transfer of same-day funds. See the order form for wiring instructions. Any commercial bank can transfer same-day funds by wire. The fund will normally accept wired funds for investment on the day received if they are received by the fund's designated bank by 3 p.m. Boston time. Your bank may charge you for wiring same-day funds. Although the fund's designated bank does not currently charge you for receiving same-day funds, it reserves the right to charge for this service. You cannot buy shares for tax-qualified retirement plans by wire transfer. ALL FUNDS * YOU MAY BE ELIGIBLE FOR REDUCTIONS AND WAIVERS OF DEFERRED SALES CHARGES. Deferred sales charges may be reduced or waived under certain circumstances and for certain groups. Information about reductions and waivers of deferred sales charges is included in the SAI. You may consult your financial advisor or Putnam Mutual Funds for assistance. * DISTRIBUTION (12B-1) PLANS. THE INCOME AND OPPORTUNITIES FUNDS. The Income and Opportunities Funds have adopted distribution plans to pay for the marketing of fund shares and for services provided to shareholders. The plans provide for payments at annual rates (based on average net assets) of up to 0.35% on class A shares and 1.00% on class B , class C and class M shares. The Trustees currently limit payments on class A, class B and class M shares to 0.20%, 0.85% and 0.50% of average net assets, respectively. Because these fees are paid out of each fund's assets on an ongoing basis, they will increase the cost of your investment. The higher fees for class B , class C and class M shares may cost you more than paying the initial sales charge for class A shares. Because class C and class M shares, unlike class B shares, do not convert to class A shares, class C and class M shares may cost you more over time than class B shares. THE MONEY MARKET FUND. The Money Market Fund has adopted a distribution plan to pay for the marketing of its shares and for services provided to shareholders. The plan provides for payments at an annual rate (based on average net assets) of up to 0.35%, although the fund is not currently making payments under the plan. How do I sell fund shares? THE INCOME AND OPPORTUNITIES FUNDS You can sell your shares back to the appropriate fund any day the New York Stock Exchange is open, either through your financial advisor or directly to the fund. Payment for redemptions may be delayed until the fund collects the purchase price of shares, which may take up to 15 calendar days after the purchase date. * SELLING SHARES THROUGH YOUR FINANCIAL ADVISOR. Your advisor must receive your request in proper form before the close of regular trading on the New York Stock Exchange to receive that day's NAV, less any applicable deferred sales charge. Your advisor will be responsible for furnishing all necessary documents to Putnam Investor Services on a timely basis and may charge you for his or her services. * SELLING SHARES DIRECTLY TO THE FUND. Putnam Investor Services must receive your request in proper form before the close of regular trading on the New York Stock Exchange in order to receive that day's NAV, less any applicable sales charge. BY MAIL. Send a signed letter of instruction to Putnam Investor Services. If you have certificates for the shares you want to sell, you must include them along with completed stock power forms. BY TELEPHONE. You may use Putnam's Telephone Redemption Privilege to redeem shares valued at less than $100,000 unless you have notified Putnam Investor Services of an address change within the preceding 15 days. Unless you indicate otherwise on the account application, Putnam Investor Services will be authorized to accept redemption and transfer instructions received by telephone. The Telephone Redemption Privilege is not available if there are certificates for your shares. The Telephone Redemption Privilege may be modified or terminated without notice. * ADDITIONAL DOCUMENTS. If you * sell shares with a value of $100,000 or more, * want your redemption proceeds sent to an address other than your address as it appears on Putnam's records, or * have notified Putnam of a change in address within the preceding 15 days, the signatures of registered owners or their legal representatives must be guaranteed by a bank, broker-dealer or certain other financial institutions. Stock power forms are available from your financial advisor, Putnam Investor Services and many commercial banks. Putnam Investor Services usually requires additional documents for the sale of shares by a corporation, partnership, agent or fiduciary, or a surviving joint owner. Contact Putnam Investor Services for details. * WHEN WILL THE FUND PAY ME? The fund generally sends you payment for your shares the business day after your request is received. Under unusual circumstances, the fund may suspend redemptions, or postpone payment for more than seven days as permitted by federal securities laws. * REDEMPTION BY THE FUNDS. If you own fewer shares than the minimum set by the Trustees (presently 20 shares), the funds may redeem your shares without your permission and send you the proceeds. The funds may also redeem shares if you own shares more than a maximum amount set by the Trustees. There is presently no maximum, but the Trustees could set a maximum that applies to both present and future shareholders. THE MONEY MARKET FUND You can sell your shares back to the fund any day the New York Stock Exchange is open, either through your financial advisor or directly to the Money Market Fund by check, telephone or mail. Redemptions may be delayed until the fund collects the purchase price of shares which may take up to 15 calendar days after the purchase date. * SELLING SHARES THROUGH YOUR FINANCIAL ADVISOR. Your advisor must receive your request in proper form before the close of regular trading on the New York Stock Exchange to receive that day's value, less any applicable deferred sales charge. Your advisor will be responsible for furnishing all necessary documents to Putnam Investor Services on a timely basis and may charge you for his or her services. * SELLING SHARES DIRECTLY TO THE FUND. Putnam Investor Services must receive your request in proper form before the close of regular trading on the New York Stock Exchange in order to receive that day's value, less any applicable deferred sales charge. * BY MAIL. Send a signed letter of instruction to Putnam Investor Services. * BY TELEPHONE. You may use the telephone to redeem shares valued at less than $100,000 unless you have notified Putnam Investor Services of an address change within the preceding 15 days. Unless you indicate otherwise on the account application, Putnam Investor Services will be authorized to accept redemption and transfer instructions received by telephone. Telephone redemption is not available if there are certificates for your shares. The fund may change or end telephone redemption privileges at any time without notice. On the business day after you sell shares by telephone, the proceeds will either be: * mailed by check, or * wired in same-day funds (for amounts of at least $1,000) to the bank account designated by you on your application. The fund will only wire proceeds to commercial banks within the United States. * BY CHECK. If you would like to use the fund's check-writing service, mark the proper box on the application or authorization form and complete the signature card (and, if applicable, the resolution). The fund will send you checks when it receives these properly completed documents. You can then make the checks payable to the order of anyone in the amount of $500 or more. When the check is presented for payment, the fund will redeem a sufficient number of full and fractional shares in your account at that day's value to cover the amount of the check and any applicable deferred sales charge. The use of checks is subject to the rules of the fund's designated bank for its checking accounts. If you do not have a sufficient number of shares in your account to cover the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it is not possible to determine your account's value in advance, you should not write a check for the entire value of your account or try to close your account by writing a check. The fund may change or end check-writing privileges at any time without notice. * ADDITIONAL DOCUMENTS. If you * sell shares with a value of $100,000 or more, * want your redemption proceeds sent to an address or bank other than your address or bank as it appears on Putnam's records, or * you have notified Putnam of a change in address within the preceding 15 days, the signatures of registered owners or their legal representatives must be guaranteed by a bank, broker-dealer or certain other financial institutions. Putnam Investor Services usually requires additional documents for the sale of shares by a corporation, partnership, agent or fiduciary, or a surviving joint owner. Contact Putnam Investor Services for details. * WHEN WILL THE FUND PAY ME? The fund generally sends you payment for your shares the business day after your request is received. Under unusual circumstances, the fund may suspend redemptions, or postpone payment for more than seven days as permitted by federal securities law. * REDEMPTION BY THE FUND. If you own fewer shares than the minimum set by the Trustees (presently 500 shares), the fund may redeem your shares without your permission and send you the proceeds. The fund may also redeem shares if you own shares more than a maximum amount set by the Trustees. There is presently no maximum, but the Trustees could set a maximum that applies to both present and future shareholders. HOW DO I EXCHANGE FUND SHARES? Shareholders of the Money Market Fund exchanging into funds with more than one class of shares may exchange their shares only for class A shares of the other fund. Shareholders of the Income and Opportunities Funds may exchange their shares only for shares of the same class. If you want to switch your investment from one Putnam fund to another, you can exchange your fund shares for shares of the same class of another Putnam fund at NAV. Shareholders of the Money Market fund may be required to pay a sales charge, which varies depending on the fund to which they exchange shares and the amount exchanged. Not all Putnam funds offer all classes of shares or are open to new investors. If you exchange shares subject to a deferred sales charge, the transaction will not be subject to the deferred sales charge. When you redeem the shares acquired through the exchange, the redemption may be subject to the deferred sales charge, depending upon when you originally purchased the shares. The deferred sales charge will be computed using the schedule of any fund into or from which you have exchanged your shares that would result in your paying the highest deferred sales charge applicable to your class of shares. For purposes of computing the deferred sales charge, the length of time you have owned your shares will be measured from the date of original purchase and will not be affected by any exchange. To exchange your shares, complete an Exchange Authorization Form and send it to Putnam Investor Services. The form is available from Putnam Investor Services. A Telephone Exchange Privilege is currently available for amounts up to $500,000. The Telephone Exchange Privilege is not available if a fund issued certificates for your shares. Ask your financial advisor or Putnam Investor Services for prospectuses of other Putnam funds. Some Putnam funds are not available in all states. The exchange privilege is not intended as a vehicle for short-term trading. Excessive exchange activity may interfere with portfolio management and have an adverse effect on all shareholders. In order to limit excessive exchange activity and otherwise to promote the best interests of the funds, the funds reserve the right to revise or terminate the exchange privilege, limit the amount or number of exchanges or reject any exchange. The fund into which you would like to exchange may also reject your exchange. These actions may apply to all shareholders or only to those shareholders whose exchanges Putnam Management determines are likely to have a negative effect on the funds or other Putnam funds. Consult Putnam Investor Services before requesting an exchange. Fund distributions and taxes THE INCOME AND OPPORTUNITIES FUNDS. Each of the Income and Opportunities Funds distributes any net investment income once a month and any net realized capital gains at least once a year. You begin earning distributions on the business day Putnam Mutual Funds receives payment for your shares. THE MONEY MARKET FUND. The fund declares its net income as a dividend to its shareholders as of the close of each day it is open for business. The fund normally pays dividends monthly. You may choose to: * (All funds) reinvest all distributions in additional shares; * (Income and Opportunities Funds only) receive any distributions from net investment income in cash while reinvesting capital gains distributions in additional shares; or * (All funds) receive all distributions in cash. If you do not select an option when you open your account, all distributions will be reinvested. If you do not cash a distribution check within a specified period or notify Putnam Investor Services to issue a new check, the distribution will be reinvested in the fund. You will not receive any interest on uncashed distribution or redemption checks. Similarly, if any correspondence sent by the funds or Putnam Investor Services is returned as "undeliverable," fund distributions will automatically be reinvested in the fund or in another Putnam fund. For federal income tax purposes, distributions of investment income other than "tax-exempt dividends" (as described below) are taxable as ordinary income. Generally, gains realized by a fund on the sale or exchange of investments, the income from which is tax-exempt, will be taxable to you. Taxes on distributions of capital gains are determined by how long a fund owned the investments that generated them, rather than how long you have owned your shares. Distributions are taxable to you even if they are paid from income or gains earned by the funds before your investment (and thus were included in the price you paid). Distributions of gains from investments that the funds owned for more than one year will be taxable as capital gains. Distributions of gains from investments that the fund owned for one year or less will be taxable as ordinary income. Distributions are taxable whether you received them in cash or reinvested them in additional shares. Fund distributions designated as "tax-exempt dividends" are not generally subject to federal income tax. In addition, to the extent that distributions are derived from interest on New York tax-exempt investments, such distributions will be exempt from New York personal income tax (but not from New York franchise and corporate income tax). However, if you receive social security or railroad retirement benefits, you should consult your tax advisor to determine what effect, if any, an investment in the fund may have on the federal taxation of your benefits. New York does not tax any portion of social security or railroad retirement benefits. In addition, an investment in the fund may result in liability for federal alternative minimum tax, both for individual and corporate shareholders. The Income and Opportunities Funds may at times buy New York tax- exempt investments at a discount from the price at which they were originally issued, especially during periods of rising interest rates. For federal income tax and New York personal income tax purposes, some or all of this market discount will be included in the fund's ordinary income and will be taxable to you as such when it is distributed to you. The funds' investments in certain debt obligations may cause the funds to recognize taxable income in excess of the cash generated by such obligations. Thus, the funds could be required at times to liquidate other investments in order to satisfy its distribution requirements. For New York personal income tax purposes, distributions derived from sources other than interest on (i) New York tax-exempt investments and (ii) obligations of the United States (or other obligations) which pay interest exempt from New York personal income taxation under the Constitution or laws of the United States will be taxable as ordinary income or as long-term capital gain, whether paid in cash or reinvested in additional shares. Any gain resulting from the sale or exchange of your shares will generally also be subject to tax. You should consult your tax advisor for more information on your own tax situation, including possible state and local taxes. Financial highlightS The financial highlights table is intended to help you understand each fund's recent financial performance. No class C shares were outstanding during these periods. Certain information reflects financial results for a single fund share. The total returns represent the rate that an investor would have earned or lost on an investment in the fund, assuming reinvestment of all dividends and distributions. This information has been derived from each fund's financial statements, which have been audited by PricewaterhouseCoopers LLP. Its report and each fund's financial statements are included in the respective fund's annual report to shareholders, which is available upon request. THE INCOME FUND FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period) CLASS A PER-SHARE YEAR ENDED NOVEMBER 30 OPERATING PERFORMANCE 1998 1997 1996 1995 1994 NET ASSET VALUE, BEGINNING OF PERIOD $9.02 $8.91 $8.97 $8.05 $9.38 INVESTMENT OPERATIONS Net investment income .43 .46 .48 .49 .53 Net realized and unrealized gain (loss) on investments .13 .12 (.06) .92 (1.24) TOTAL FROM INVESTMENT OPERATIONS .56 .58 .42 1.41 (.71) LESS DISTRIBUTIONS: From net investment income (.43) (.47) (.48) (.49) (.51) From net realized gain on investments (.10) - - - (.05) In excess of net realized gain on investments - - - - (.06) TOTAL DISTRIBUTIONS (.53) (.47) (.48) (.49) (.62) Net asset value, end of period $9.05 $9.02 $8.91 $8.97 $8.05 RATIOS AND SUPPLEMENTAL DATA TOTAL RETURN AT NET ASSET VALUE (%) (A) 6.47 6.69 4.92 17.95 (8.02) NET ASSETS, END OF PERIOD (IN THOUSANDS) $1,620,108 $1,725,773 $1,873,649 $2,013,022 $1,901,901 Ratio of expenses to average net assets (%) (b) .83 .79 .81 .78 .75 Ratio of net investment income to average net assets (%) 4.79 5.19 5.47 5.63 5.82 Portfolio turnover (%) 31.55 81.95 59.60 73.85 47.56 (a)Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b)The ratio of expenses to average net assets for periods ended November 30, 1995, and thereafter, includes amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. THE INCOME FUND FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period) CLASS B PER-SHARE YEAR ENDED NOVEMBER30 OPERATING PERFORMANCE 1998 1997 1996 1995 1994 NET ASSET VALUE, BEGINNING OF PERIOD $9.00 $8.90 $8.95 $8.02 $9.37 INVESTMENT OPERATIONS Net investment income .37 .40 .42 .43 .46 Net realized and unrealized gain (loss) on investments .14 .11 (.05) .93 (1.24) TOTAL FROM INVESTMENT OPERATIONS .51 .51 .37 1.36 (.78) LESS DISTRIBUTIONS: From net investment income (.37) (.41) (.42) (.43) (.46) From net realized gain on investments (.10) - - - (.05) In excess of net realized gain on investments - - - - (.06) TOTAL DISTRIBUTIONS (.47) (.41) (.42) (.43) (.57) Net asset value, end of period $9.04 $9.00 $8.90 $8.95 $8.02 RATIOS AND SUPPLEMENTAL DATA TOTAL RETURN AT NET ASSET VALUE (%) (A) 5.91 5.89 4.35 17.26 (8.75) NET ASSETS, END OF PERIOD (IN THOUSANDS) $231,057 $227,747 $227,405 $215,614 $173,213 Ratio of expenses to average net assets (%) (b) 1.48 1.44 1.46 1.43 1.39 Ratio of net investment income to average net assets (%) 4.12 4.53 4.81 4.95 5.16 Portfolio turnover (%) 31.55 81.95 59.60 73.85 47.56 (a)Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b)The ratio of expenses to average net assets for periods ended September 30, 1995, and thereafter, includes amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. THE INCOME FUND FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period) CLASS M FOR THE PERIOD APR. 10, 1995+ TO NOV. 30 PER-SHARE YEAR ENDED NOVEMBER 30 OPERATING PERFORMANCE 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $9.02 $8.91 $8.97 $8.79 INVESTMENT OPERATIONS Net investment income .41 .43 .45 .26(a) Net realized and unrealized gain (loss) on investments .13 .12 (.06) .21 TOTAL FROM INVESTMENT OPERATIONS .54 .55 .39 .47 LESS DISTRIBUTIONS: From net investment income (.41) (.44) (.45) (.29) From net realized gain on investments (.10) - - - TOTAL DISTRIBUTIONS (.51) (.44) (.45) (.29) Net asset value, end of period $9.05 $9.02 $8.91 $8.97 RATIOS AND SUPPLEMENTAL DATA TOTAL RETURN AT NET ASSET VALUE (%) (B) 6.15 6.37 4.59 5.44* NET ASSETS, END OF PERIOD (IN THOUSANDS) $2,394 $1,865 $1,266 $588 Ratio of expenses to average net assets (%) (c) 1.13 1.09 1.11 .65* Ratio of net investment income to average net assets (%) 4.47 4.87 5.17 3.30* Portfolio turnover (%) 31.55 81.95 59.60 73.85 + Commencement of operations. * Not annualized. (a)Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. (b)Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c)The ratio of expenses to average net assets for periods ended November 30, 1995, and thereafter, includes amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. THE OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period) CLASS A TWO MONTHS ENDED PER-SHARE NOV. 30+ YEAR ENDED SEPTEMBER 30 OPERATING PERFORMANCE 1998 1998 1997 1996 1995 1994 NET ASSET VALUE, BEGINNING OF PERIOD $9.27 $9.10 $8.87 $8.80 $8.48 $9.12 INVESTMENT OPERATIONS Net investment income .07 .46 .49 .49 .52 .54 Net realized and unrealized gain (loss) on investments (.08) .21 .23 .07 .32 (.62) TOTAL FROM INVESTMENT OPERATIONS (.01) .67 .72 .56 .84 (.08) LESS DISTRIBUTIONS: From net investment income (.07) (.47) (.49) (.49) (.52) (.54) From net realized gain on investments - (.03) - - - (.02) TOTAL DISTRIBUTIONS (.07) (.50) (.49) (.49) (.52) (.56) Net asset value, end of period $9.19 $9.27 $9.10 $8.87 $8.80 $8.48 RATIOS AND SUPPLEMENTAL DATA TOTAL RETURN AT NET ASSET VALUE (%) (A) (0.07)* 7.55 8.33 6.48 10.27 (.89) NET ASSETS, END OF PERIOD (IN THOUSANDS) $166.816 $168,032 $165,993 $172,170 $175,210 $175,741 Ratio of expenses to average net assets (%) (b) .17* 1.00 .96 1.00 1.01 .98 Ratio of net investment income to average net assets (%) .79* 5.00 5.42 5.53 6.12 6.22 Portfolio turnover (%) 9.22* 42.76 117.00 270.34 120.38 13.85 + The fiscal year end has advanced from September 30 to November 30. * Not annualized. (a)Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b)The ratio of expenses to average net assets for periods ended September 30, 1995, and thereafter, includes amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. THE OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period) CLASS B TWO MONTHS FOR THE PERIOD ENDED FEB 1, 1994++ PER-SHARE NOV. 30+ YEAR ENDED SEPTEMBER 30 TO SEPT. 30 OPERATING PERFORMANCE 1998 1998 1997 1996 1995 1994 NET ASSET VALUE, BEGINNING OF PERIOD $9.26 $9.09 $8.86 $8.79 $8.48 $9.07 INVESTMENT OPERATIONS Net investment income .06 .40 .43 .43 .47 .32 Net realized and unrealized gain (loss) on investments (.07) .21 .23 .07 .31 (.60) TOTAL FROM INVESTMENT OPERATIONS (.01) .61 .66 .50 .78 (.28) LESS DISTRIBUTIONS: From net investment income (.06) (.41) (.43) (.43) (.47) (.31) From net realized gain on investments - (.03) - - - - TOTAL DISTRIBUTIONS (.06) (.44) (.43) (.43) (.47) (.31) Net asset value, end of period $9.19 $9.26 $9.09 $8.86 $8.79 $8.48 RATIOS AND SUPPLEMENTAL DATA TOTAL RETURN AT NET ASSET VALUE (%) (A) (0.07)* 6.86 7.63 5.78 9.46 (3.06)* NET ASSETS, END OF PERIOD (IN THOUSANDS) $68,513 $68,547 $56,244 $41,795 $24,259 $8,622 Ratio of expenses to average net assets (%) (b) .28* 1.65 1.61 1.66 1.65 1.05* Ratio of net investment income to average net assets (%) .68* 4.36 4.76 4.83 5.28 3.39* Portfolio turnover (%) 9.22* 42.76 117.00 270.34 120.38 13.85 + The fiscal year end has advanced from September 30 to November 30. * Commencement of operations. * Not annualized. (a)Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b)The ratio of expenses to average net assets for periods ended September 30, 1995, and thereafter, includes amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. . THE OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period) CLASS M FOR THE PERIOD TWO MONTHS FEB. 10, 1995++ ENDED TO SEPT. PER-SHARE NOV. 30+ YEAR ENDED SEPTEMBER 30 30 OPERATING PERFORMANCE 1998 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $9.25 $9.08 $8.86 $8.79 $8.51 INVESTMENT OPERATIONS Net investment income .07 .43 .46 .47 .31 Net realized and unrealized gain (loss) on investments (.07) .21 .22 .06 .29 TOTAL FROM INVESTMENT OPERATIONS - .64 .68 .53 .60 LESS DISTRIBUTIONS: From net investment income (.07) (.44) (.46) (.46) (.32) From net realized gain on investments - (.03) - - - TOTAL DISTRIBUTIONS (.07) (.47) (.46) (.46) (.32) Net asset value, end of period $9.18 $9.25 $9.08 $8.86 $8.79 RATIOS AND SUPPLEMENTAL DATA TOTAL RETURN AT NET ASSET VALUE (%) (A) (0.01)* 7.23 7.89 6.15 7.11* NET ASSETS, END OF PERIOD (IN THOUSANDS) $2,558 $2,433 $2,365 $1,492 $299 Ratio of expenses to average net assets (%) (b) .22* 1.30 1.26 1.30 .83 * Ratio of net investment income to average net assets (%) .74* 4.71 5.09 5.03 3.21* Portfolio turnover (%) 9.22* 42.76 117.00 270.34 120.38 + The fiscal year end has advanced from September 30 to November 30. ++ Commencement of operations. * Not annualized. (a)Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b)The ratio of expenses to average net assets for periods ended September 30, 1995, and thereafter, includes amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. THE MONEY MARKET FUND FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period) PER-SHARE YEAR ENDED NOVEMBER 30 OPERATING PERFORMANCE 1998 1997 1996 1995 1994 NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 INVESTMENT OPERATIONS Net investment income $.0288 $.0287 $.0289 $.0318 $.0188 Net realized and unrealized gain on investments - - - - - TOTAL FROM INVESTMENT OPERATIONS .0288 .0287 .0289 .0318 .0188 LESS DISTRIBUTIONS: From net investment income (.0288) (.0287) (.0289) (.0318) (.0188) From net realized gain on investments - - - - - TOTAL DISTRIBUTIONS (.0288) (.0287) (.0289) (.0318) (.0188) NET ASSETS VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 RATIOS AND SUPPLEMENTAL DATA TOTAL RETURN AT NET ASSET VALUE (%) (A) 2.91 2.91 2.93 3.23 1.90 NET ASSETS, END OF YEAR (in thousands) $38,986 $44,101 $39,456 $38,873 $44,815 Ratio of expenses to average net assets (%) (b) .79 .83 .88 .91 .77 Ratio of net income to average net assets (%) 2.88 2.92 2.75 3.18 1.86 (a)Total return assumes dividend reinvestments. (b)The ratio of expenses to average net assets for the period ended November 30, 1995, and thereafter, includes amounts paid through expense offset arrangements. Prior period ratios exclude these amounts. Make the most of your Putnam privileges The following services are available to you as a Putnam mutual fund shareholder. > SYSTEMATIC INVESTMENT PLAN Invest as much as you wish ($25 or more) on any business day of the month except for the 29th, 30th, or 31st. The amount you choose will be automatically transferred each month from your checking or savings account. > SYSTEMATIC WITHDRAWAL Make regular withdrawals of $50 or more monthly, quarterly, or semiannually from your Putnam mutual fund account valued at $10,000 or more. Your automatic withdrawal may be made on any business day of the month except for the 29th, 30th, or 31st. > SYSTEMATIC EXCHANGE Transfer assets automatically from one Putnam account to another on a regular, prearranged basis. There is no additional charge for this service. > FREE EXCHANGE PRIVILEGE Exchange money between Putnam funds in the same class of shares without charge. The exchange privilege allows you to adjust your investments as your objectives change. A signature guarantee is required for exchanges of more than $500,000 and shares of all Putnam funds may not be available to all investors. Investors may not maintain, within the same fund, simultaneous plans for systematic investment or exchange (into the fund) and systematic withdrawal or exchange (out of the fund). These privileges are subject to change or termination. For more information about any of these services and privileges, call your investment advisor or a Putnam customer service representative toll free at 1-800-225-1581. FOR MORE INFORMATION ABOUT PUTNAM NEW YORK TAX EXEMPT INCOME FUND, PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND AND PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND Each fund's statement of additional information (SAI) and annual and semi-annual reports to shareholders include additional information about the funds. The SAI, and the auditor's report and financial statements included in each fund's most recent annual report to its shareholders, are incorporated by reference into this prospectus, which means they are part of this prospectus for legal purposes. Each fund's annual report discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. You may get free copies of these materials, request other information about the funds, or make shareholder inquiries, by contacting your financial advisor or by calling Putnam toll-free at 1-800-225- 1581. You may review and copy information about each fund, including its SAI, at the Securities and Exchange Commission's public reference room in Washington, D.C. You may call the Commission at 1-800-SEC- 0330 for information about the operation of the public reference room. You may also access reports and other information about the fund on the Commission's Internet site at http://www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-6009. You may need to refer to the funds' file numbers . PUTNAM INVESTMENTS One Post Office Square Boston, Massachusetts 02109 1-800-225-1581 ADDRESS CORRESPONDENCE TO Putnam Investor Services P.O. Box 989 Boston MA 02103 WWW.PUTNAMINV.COM File Nos : Putnam New York Tax Exempt Income Fund 811-3741 Putnam New York Tax Exempt Opportunities Fund 811-6176 Putnam New York Tax Exempt Money Market Fund 811-5335 NP051 549139/99 -----END PRIVACY-ENHANCED MESSAGE-----