-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YxRpO0SrRdUvfUYTpNnIZzK+cRSa+YakhoPWwK8C0UAGg+xvu1WhJAEQBhaaEfHq OMTuatKMRdW1NcW1gvZRTQ== 0000915707-95-000032.txt : 199506290000915707-95-000032.hdr.sgml : 19950629 ACCESSION NUMBER: 0000915707-95-000032 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950628 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST CENTRAL INDEX KEY: 0000892960 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046716832 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07274 FILM NUMBER: 95549920 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 N-30D 1 Putnam NEW YORK INVESTMENT GRADE MUNICIPAL TRUST ANNUAL REPORT April 30, 1995 [LOGO] BOSTON * LONDON * TOKYO PERFORMANCE HIGHLIGHTS "Without a doubt, 1994 was one of the worst bond markets on record. However, all signs now suggest that municipal bonds, like all fixed- income investments, are back on track. Clearly, those investors who sat tight and remained committed to their longer-term goals should be well positioned to benefit from an improving tax-free market." - --David Eurkus, fund manager Performance should always be considered in light of a fund's investment strategy. This fund is designed for investors seeking a high current income exempt from federal and New York State and city personal income tax as Putnam Investment Management believes is consistent with preservation of capital. FISCAL 1995 RESULTS AT A GLANCE
MARKET TOTAL RETURN: NAV PRICE - ---------------------------------------------------------------------- - -- 12 months ended 4/30/95 (change in value during period plus reinvested distributions) 5.28% 9.09% - ---------------------------------------------------------------------- - -- MARKET SHARE VALUE: NAV PRICE - ---------------------------------------------------------------------- - -- 4/30/94 $13.86 $13.500 4/30/95 13.50 13.625 - ---------------------------------------------------------------------- - -- CAPITAL GAINS(1) LONG- SHORT- DISTRIBUTIONS: NO. INCOME TERM TERM TOTAL - ---------------------------------------------------------------------- - -- Common shares 12 $0.941 $0.047 $0.0312 $1.0192 Preferred shares 12 1,774.75 157.15 -- 1,931.90 - ---------------------------------------------------------------------- - -- MARKET Current return NAV price - ---------------------------------------------------------------------- - -- End of period Current dividend rate(2) 6.89% 6.83% Taxable equivalent(3) 12.35 12.24 Taxable equivalent(4) 12.97 12.86 - ---------------------------------------------------------------------- - -- Performance data represent past results. For performance over longer periods, see page 9. (1)Capital gains are taxable for federal and, in most cases, state tax purposes. For some investors, investment income may also be subject to the federal alternative minimum tax. Investment income may be subject to state and local taxes. (2)Income portion of most recent distribution, annualized and divided by NAV or market price at end of period. (3)Assumes New York maximum combined 44.19% federal and New York state tax rate.(4) Assumes maximum combined federal, state, and city rate is 46.88%. Results for investors subject to lower tax rates would not be as advantageous.
FROM THE CHAIRMAN [PHOTO OF GEORGE PUTNAM] (C) KARSH, OTTAWA DEAR SHAREHOLDER: MANY OF THE GATHERING SIGNS OF HOPE THAT SUSTAINED MUNICIPAL BOND INVESTORS DURING THE DARKEST DAYS OF THE 1993-94 MARKET DECLINE BEGAN MANIFESTING THEMSELVES IN REALITY OVER THE EARLY MONTHS OF 1995. AS PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST ENDED ITS FISCAL YEAR ON APRIL 30, 1995, THE MARKET MOOD WAS APPRECIABLY MORE UPBEAT THAN IT HAD BEEN WHEN THE FISCAL YEAR BEGAN. THE ECONOMY CONTINUED TO MARCH AT A BRISK STRIDE, THOUGH THE PACE SINCE JANUARY HAS SLOWED CONSIDERABLY FROM THE LEVELS THAT PREVAILED DURING THE REST OF THE FISCAL YEAR. INVESTORS TOOK THIS MODERATION AS A SIGN THAT THE ECONOMY WAS RESPONDING FAVORABLY TO THE FEDERAL RESERVE BOARD'S STRATEGY OF RAISING SHORT-TERM RATES TO REIN IN GROWTH AND THEREBY HOLD INFLATION IN CHECK. THE CONSENSUS IN THE MARKETS SEEMS TO BE THAT THE FED'S SERIES OF INTEREST-RATE INCREASES MAY BE NEAR AN END. THE SHARP DECLINE IN NEW ISSUES THAT MARKET WATCHERS FORESAW AS A SPUR TO HIGHER PRICES ADDED FUEL TO THE RECENT RALLY. SO DID THE CONTINUED ATTRACTIVENESS OF TAX-FREE YIELDS RELATIVE TO TAXABLE TREASURIES. IN THE FOLLOWING REPORT, FUND MANAGER DAVID EURKUS DISCUSSES THE FUND'S PERFORMANCE IN FISCAL 1995 AND PROSPECTS FOR FISCAL 1996. RESPECTFULLY YOURS, [SIGNATURE] George Putnam Chairman of the Trustees June 21, 1995 REPORT FROM THE FUND MANAGER DAVID J. EURKUS Stabilizing interest rates, low inflation, and positive supply/demand dynamics contributed to a strong turnaround in the tax-free bond market during the last four months of Putnam New York Investment Grade Municipal Trust's fiscal year. Despite the strong ending, events such as the Orange County, California, bankruptcy and the Federal Reserve Board's series of interest-rate increases still had an impact on the fund's performance for the 12 months ended April 30, 1995; total return was 5.28% at net asset value. The fund's yield continues to be attractive relative to that of other funds in the New York tax-free universe. Furthermore, taxable- equivalent yields are now at double-digit levels and represent excellent values -- particularly for investors in such high-tax states as New York. Your fund's 6.89% current dividend rate at net asset value at fiscal year's end translates into a current dividend rate of 12.35% for a fully taxable investment, assuming the maximum combined 44.19% federal and state tax rate. Most investors in lower brackets would also enjoy tax advantages, though not necessarily to the same extent. TAX-LOSS SELLING AND ANXIETY OVER ORANGE COUNTY DEPRESS PRICES As the end of a tax year approaches, individual and institutional investors typically employ several strategies to reduce the impact of taxes. So, beginning in October and November 1994, many investors sold municipal bonds to establish capital losses with which to offset taxable profits in other sectors. This tax- loss selling helped extinguish a fledgling rally in early October and led to further pressures on municipal bond prices. Orange County's financial woes shook the market in early December, just as municipal bonds were starting to enjoy another rally. The immediate plunge in value of county-related bonds was only the beginning. The fallout from the $2 billion in losses sustained by the county's investment fund ultimately extended across the entire municipal-bond market and once again extinguished a rally in the tax- free market. Early in calendar 1995, the rally finally began in earnest. The municipal bond market's increasingly positive outlook was supported by a growing belief that, after nudging short-term interest rates higher for almost a year, the Federal Reserve Board was unlikely to push them much further. In addition, the long-anticipated supply/demand imbalance had become quite pronounced. Following the 44% drop in municipal bonds issuance to $162 billion in 1994, analysts had predicted at least an additional drop this year to $120 billion.* According to the April 17, 1995, edition of The Wall Street Journal, long-term issuance in New York was down more than 50% from the same period last year. POSITIONING FOR AN IMPROVING MUNICIPAL MARKET With all signs suggesting that the municipal bond market was oversold and poised to recover in the last quarter of 1994, we took several steps to ensure that the fund would be an active participant in a rally. The re-evaluation -- and possible repositioning -- of current holdings in light of our market forecasts is part of our daily management of the fund. If the right circumstances present themselves, we may swap bonds; that is, sell one holding while simultaneously buying another issue in order to take advantage of differences in such factors as coupon rates, maturity, and marketability. * Despite a favorable supply and demand situation, municipal bonds can be affected by many factors, including changes in interest rates. [BAR CHART] A DECLINE IN SUPPLY - ---------------------------------------------------------------------- - -- [PLOT POINTS] Date 1/94 977 2/94 961 3/94 1,056 4/94 782 5/94 986 6/94 1,008 7/94 751 8/94 865 9/94 774 10/94 867 11/94 870 12/94 868 1/95 584 2/95 573 3/95 687 4/95 690 Chart shows monthly volume of new municipal bond issues. Source: Securities Data Co. Used by permission. The wave of tax-loss selling we saw in late 1994 prompted us to begin repositioning the portfolio. We noted a pool of bonds whose low prices did not reflect what we perceived as their fair investment value. So, in October and November, we sold selected lower-coupon investment- grade bonds and redeployed the proceeds into higher-yielding bonds of similar quality. We believe the addition of these higher-coupon bonds may help the fund maintain a more competitive yield, and that they may also appreciate in value over time. At the end of the period, the fund had an average maturity of 25.31 years and average duration of 6.05 years. The fund's assets remain invested across a wide spectrum of industries. With minor modifications, medical facilities, utilities, and transportation were the fund's top industry sectors throughout the period. POLITICAL ATMOSPHERE INCREASINGLY PROMISING The New York state legislature missed its April 1, 1995, deadline for passing a budget for fiscal 1996. However, the legislature has taken the extraordinary step of committing to meeting debt-service payments on state bonds through the end of the new fiscal year, regardless of the status of the budget. In addition, we believe the Pataki administration's theme of fiscal prudence offers the potential for more cost-efficient municipal services. This could have a positive effect on state-appropriated debt, that is, the bonds used to finance public programs. Your fund holds a large amount of these bonds, particularly those issued to finance hospitals and dormitories in the state university system. The legislature is also considering a constitutional amendment that would cap state borrowing and significantly curtail New York's bond issuance. With a significant number of bonds being refunded or called during the year, an expected decrease in new issues of high-coupon bonds could push the prices of existing New York debt higher. POSITIVE ECONOMIC AND MARKET FUNDAMENTALS SEEN FOR 1995 Among the myriad tax-reform proposals before Congress, one that has generated a great deal of attention in the media is [BAR CHART] CREDIT QUALITY PROFILE* - ---------------------------------------------------------------------- - -- [PLOT POINTS] AAA 29.0% AA 28.5% A 10.6% BBB/Baa 25.1% VMIG1 5.0% *Based on net assets of 4/30/95, percentages will vary over time. the flat tax. Although its passage is far from certain, its perceived effects on the tax status of municipal bonds has already contributed to a short-term downturn in the market. Much like the fallout from the Orange County scare, the flat-tax debate is providing ample buying opportunities as the proverbial dust settles. Despite the souring effect of the flat-tax discussion, we continue to see potential in the municipal market. By most accounts, the most dramatic rise in interest rates is behind us. With interest rates stabilizing, the fund will remain fully invested to best capitalize on market rallies. Furthermore, low inflation and moderate economic growth foster a generally benign environment for bonds. Finally, moderately strong demand chasing a diminishing supply of tax-free securities can create a natural price support. This June and July, there are a large number of issues scheduled to mature or become callable, which should further bolster prices. As of this writing, New York City is facing a $3.1 billion projected revenue shortfall in its fiscal 1996 budget. Mayor Giuliani has proposed about $500 million in additional spending cuts from existing programs and services to help cover part of the shortfall. With the legislators in Albany struggling to balance the state budget, it remains unclear at this time if they will come through with additional funds -- as requested by the mayor -- to close the city's budget gap. All this uncertainty has contributed to discussions of a modest downgrade of the city's general obligation debt. By most accounts, municipal bond investors have already factored in the likelihood of such an event. Should it occur, we believe the fund's well-diversified portfolio has played, and we believe should continue to play, a significant role in limiting price fluctuation. Without a doubt, 1994 was one of the worst bond markets on record. However, all signs now suggest that municipal bonds, like all fixed- income investments, are back on track. Those investors who remained committed to their longer-term goals should be well positioned to benefit from the potential of an improving tax-free market. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 4/30/95, there is no guarantee the fund will continue to hold these securities in the future. PERFORMANCE SUMMARY This section provides, at a glance, information about your fund's performance. 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 back into the fund. We show total return in two ways: on a cumulative long-term basis and on average how the fund might have grown each year over varying periods. TOTAL RETURN FOR PERIODS ENDED 4/30/95
LEHMAN BROS. MARKET MUNICIPAL NAV PRICE BOND INDEX CPI - ---------------------------------------------------------------------- - -- 1 year 5.28% 9.09% 6.65% 3.05% - ---------------------------------------------------------------------- - -- Life of fund (since 11/27/92) 14.47 7.75 15.31 6.97 - ---------------------------------------------------------------------- - -- Annual average 5.72 3.12 6.04 2.81 - ---------------------------------------------------------------------- - --
TOTAL RETURN FOR PERIODS ENDED 3/31/95 (most current calendar quarter)
LEHMAN BROS. MARKET MUNICIPAL NAV PRICE BOND INDEX CPI - ---------------------------------------------------------------------- - -- 1 year 5.07% 1.34% 7.43% 2.85% - ---------------------------------------------------------------------- - -- Life of fund (since 11/27/92) 14.16 3.21 15.17 6.62 - ---------------------------------------------------------------------- - -- Annual average 5.82 1.36 6.22 2.78 - ---------------------------------------------------------------------- - -- Performance data represent past results and should not be taken as indicative of future performance. Investment returns, net asset value, and market value will fluctuate so an investor's shares, when sold, may be worth more or less than their original cost. Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions.
TERMS AND DEFINITIONS NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any liabilities, the liquidation preference and cumulative undeclared dividends paid on the remarketed preferred shares, divided by the number of outstanding common shares. MARKET PRICE is the current trading price of one share of the fund. Market prices are set by transactions between buyers and sellers on the New York Stock Exchange. COMPARATIVE BENCHMARKS LEHMAN BROTHERS MUNICIPAL BOND INDEX is an unmanaged list of long-term fixed-rate investment-grade tax-exempt bonds representative of the municipal bond market. The index does not take into account brokerage commissions or other costs, may include bonds different from those in the fund, and may pose different risks than the fund. CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it does not represent an investment return. REPORT OF INDEPENDENT ACCOUNTANTS For the year ended April 30, 1995 To the Trustees and Shareholders of Putnam New York Investment Grade Municipal Trust In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments owned (except for bond ratings), and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam New York Investment Grade Municipal Trust (the "fund") at April 30, 1995, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the fund's management, our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at April 30, 1995 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Boston, Massachusetts June 12, 1995 PORTFOLIO OF INVESTMENTS OWNED April 30, 1995 KEY TO ABBREVIATIONS G.O. BONDS--General Obligation Bonds IFB:--Inverse Floating Rate Bonds VRDN:--Variable Rate Demand Notes FGIC:--Financial Guaranty Insurance Co. FHA:--Federal Housing Authority MBIA:--Municipal Bond Investor's Assurance Corp.
MUNICIPAL BONDS AND NOTES (98.2%)* PRINCIPAL AMOUNT RATINGS** VALUE NEW YORK (95.0%) - ---------------------------------------------------------------------- -- $1,610,000 Albany, Parking Auth. Rev. Bonds, Ser. A, 6.85s, 11/1/12 Baa $1,658,300 3,000,000 Babylon, Indl. Dev. Agcy. Resource Recvy. Rev. Bonds (Ogden Martin Syst.), Ser. A, 8 1/2s, 1/1/19 Baa 3,262,500 960,000 Ithaca, Hsg. Corp. Mtge. Rev. Bonds (Eddygate Park Apts. Project), 9s, 6/1/06 BBB/P 973,200 1,500,000 Metro. Trans. Auth. Transit Fac. Rev. Bonds, Ser. F, 8 3/8s, 7/1/16 AAA 1,595,625 500,000 NY City, Cultural Res. VRDN (American Museum of Natural History), Ser. B, MBIA, 4.3s, 4/1/21 VMIG1 500,000 NY City, G.O. Bonds 1,385,000 Ser. A, 8s, 8/15/19 A 1,611,794 1,700,000 Ser. B, 7s, 10/1/13 A 1,727,625 400,000 NY City, G.O. VRDN, Sub. Ser. B4, 5 1/4s, 8/15/23 VMIG1 400,000 500,000 NY City, Muni. Wtr. & Fin. Auth. Wtr. & Swr. Syst. VRDN, Ser. G, FGIC, 4.8s, 6/15/24 VMIG1 500,000 1,000,000 NY City, VRDN, Sub. Ser. B-4, 2.35s, 8/15/21 VMIG1 1,000,000 1,300,000 NY State Dorm. Auth. IFB (Cornell U.), 10.114s, 7/1/30 (acquired 1/6/93, cost $1,533,675)++ AA 1,499,875 NY State Dorm. Auth. Rev. Bonds 1,500,000 (City U.), Ser. T, 10 1/4s, 7/1/12 Baa 1,543,125 1,800,000 (State U. Edl. Facs.), Ser. A, 6 3/4s, 5/15/21 AAA 2,004,750 3,500,000 NY State Energy Research & Dev. Auth. Elec. Fac. Rev. Bonds (Cons. Edison Co. of NY, Inc. Project), 9s, 8/15/20 Aa 3,609,375 1,600,000 NY State Energy Research & Dev. Auth. Poll. Control Rev. Bonds (Niagara Mohawk Pwr. Corp.), Ser. I, 8 7/8s, 11/1/25 Baa 1,662,000 1,600,000 NY State Environmental Fac. Corp. Poll. Control Rev. Bonds (State Wtr. Revolving Fund), Ser A, 7 1/2s, 6/15/12 Aa 1,750,000 1,800,000 NY State Local Govt. Asst. Corp. Rev. Bonds, Ser. B, 6 1/4s, 4/1/21 A 1,795,500 MUNICIPAL BONDS AND NOTES PRINCIPAL AMOUNT RATINGS** VALUE NEW YORK (continued) - ---------------------------------------------------------------------- - -- NY State Med. Care Fac. Fin. Agcy. Rev. Bonds $2,000,000 (Nursing Home Insd. Mtge.), Ser. B, FHA Insd., 10 1/2s, 1/15/24 AAA $2,022,500 1,600,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. A, FHA Insd., 8s, 2/15/27 AAA 1,742,000 1,310,000 (Mental Hlth. Svcs. Fac.), Ser. D, 7.4s, 2/15/18 Baa 1,401,700 1,600,000 Ser. A, 7.35s, 8/15/11 Baa 1,662,000 1,800,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. C, 6.65s, 8/15/32 Aa 1,833,750 1,800,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. D, FHA Insd., 6.6s, 2/15/31 AAA 1,838,250 1,800,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. C, FHA Insd., 6 3/8s, 8/15/29 AAA 1,809,000 2,000,000 NY State Pwr. Auth. IFB, 4.201s, 1/1/14 (acquired 12/8/93, cost $1,860,000)++ AA 1,525,000 1,450,000 NY State Urban Dev. Corp. Rev. Bonds (Correctional Fac.), 8s, 1/1/15 Aaa 1,511,625 1,400,000 Port Auth. NY & NJ Cons. IFB, 8.576s, 8/1/26 (acquired 7/19/93, cost $1,687,700)++ AA 1,512,000 2,000,000 Port Auth. of NY & NJ Cons. Bonds 53rd Ser., 8.7s, 7/15/20 AA 2,075,000 - ---------------------------------------------------------------------- - -- 46,026,494 - ---------------------------------------------------------------------- - -- PUERTO RICO (3.2%) - ---------------------------------------------------------------------- - -- $1,365,000 Puerto Rico, Pub. Bldg. Auth. Gtd. Edl. & Hlth. Fac. Rev. Bonds, Ser. L, 6 7/8s, 7/1/21 AAA 1,535,625 - ---------------------------------------------------------------------- - -- TOTAL INVESTMENTS (cost $48,436,348)*** $47,562,119 - ---------------------------------------------------------------------- - -- * Percentages indicated are based on total net assets of $48,443,107. Net assets available to common shareholders are $38,422,642 which corresponds to a net asset value per common share of $13.50. ** The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at April 30, 1995 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 April 30, 1995. Securities rated by Putnam are indicated by "/P" and are not publicly rated. These ratings are not covered by the Report of Independent Accountants. *** The aggregate identified cost for federal income tax purposes is $48,436,648, resulting in gross unrealized appreciation and depreciation of $648,338 and $1,522,867, respectively, or net unrealized depreciation of $874,529. ++ Restricted as to public resale. At the date of acquisition, these securities were valued at cost. There were no outstanding unrestricted securities of the same class as those held. Total market value of the restricted securities owned at April 30, 1995 was $4,536,875 or 9.4% of net assets. The rates shown on IFBS which are securities paying variable interest rates that vary inversely to changes in market interest rates and VRDNS are the current interest rates at April 30, 1995, which are subject to change based on the terms of the security. The Fund had the following industry group concentrations greater than 10% on April 30, 1995 (as a percentage of net assets): Hospitals/Health Care 25.4% Utilities 25.4% Transportation 14.1 Education 10.4 The Fund had the following insurance concentration greater than 10% on April 30, 1995 (as a percentage of net assets): FHA 15.3%
STATEMENT OF ASSETS AND LIABILITIES April 30, 1995
ASSETS - ---------------------------------------------------------------------- - -- Investments in securities, at value (identified cost $48,436,348) (Note 1) $47,562,119 - ---------------------------------------------------------------------- - -- Cash 289,889 - ---------------------------------------------------------------------- - -- Interest receivable 988,152 - ---------------------------------------------------------------------- - -- Unamortized organization expenses (Note 1) 5,936 - ---------------------------------------------------------------------- - -- Total assets 48,846,096 - ---------------------------------------------------------------------- - -- LIABILITIES - ---------------------------------------------------------------------- - -- Distributions payable to shareholders 220,639 - ---------------------------------------------------------------------- - -- Payable for compensation of Manager (Note 3) 81,793 - ---------------------------------------------------------------------- - -- Payable for investor servicing and custodian fees (Note 3) 8,740 - ---------------------------------------------------------------------- - -- Payable for compensation of Trustees (Note 3) 286 - ---------------------------------------------------------------------- - -- Payable for administrative services (Note 3) 1,466 - ---------------------------------------------------------------------- - -- Other accrued expenses 90,065 - ---------------------------------------------------------------------- - -- Total liabilities 402,989 - ---------------------------------------------------------------------- - -- Net assets $48,443,107 - ---------------------------------------------------------------------- - -- REPRESENTED BY - ---------------------------------------------------------------------- - -- Remarketed preferred shares, without par value; 200 shares authorized (200 shares issued at $50,000 per share liquidation preference) (Note 2) $10,000,000 - ---------------------------------------------------------------------- - -- Common shares, without par value; unlimited shares authorized; 2,847,092 shares outstanding 39,508,682 - ---------------------------------------------------------------------- - -- Undistributed net investment income 109,410 - ---------------------------------------------------------------------- - -- Accumulated net realized loss on investment transactions (300,756) - ---------------------------------------------------------------------- - -- Net unrealized depreciation of investments (874,229) - ---------------------------------------------------------------------- - -- NET ASSETS $48,443,107 - ---------------------------------------------------------------------- - -- Remarketed preferred shares at liquidation preference $10,000,000 - ---------------------------------------------------------------------- - -- Cumulative undeclared dividends on remarketed preferred shares 20,465 - ---------------------------------------------------------------------- - -- Net assets allocated to remarketed preferred shares at liquidation preference 10,020,465 - ---------------------------------------------------------------------- - -- Net assets available to common shares: Net asset value per share $13.50 ($38,422,642 divided by 2,847,092 shares) 38,422,642 - ---------------------------------------------------------------------- - -- NET ASSETS $48,443,107 - ---------------------------------------------------------------------- - --
STATEMENT OF OPERATIONS For the year ended April 30, 1995
TAX EXEMPT INTEREST INCOME $3,526,025 - ---------------------------------------------------------------------- - -- EXPENSES: - ---------------------------------------------------------------------- - -- Compensation of Manager (Note 3) 338,080 - ---------------------------------------------------------------------- - -- Investor servicing and custodian fees (Note 3) 43,542 - ---------------------------------------------------------------------- - -- Compensation of Trustees (Note 3) 8,678 - ---------------------------------------------------------------------- - -- Reports to shareholders 18,581 - ---------------------------------------------------------------------- - -- Auditing 43,073 - ---------------------------------------------------------------------- - -- Legal 2,541 - ---------------------------------------------------------------------- - -- Postage 7,232 - ---------------------------------------------------------------------- - -- Administrative services (Note 3) 5,864 - ---------------------------------------------------------------------- - -- Amortization of organization expenses (Note 1) 2,292 - ---------------------------------------------------------------------- - -- Registration fees 605 - ---------------------------------------------------------------------- - -- Exchange listing fees 7,500 - ---------------------------------------------------------------------- - -- Preferred share remarketing agent fees 37,550 - ---------------------------------------------------------------------- - -- Other 1,759 - ---------------------------------------------------------------------- - -- TOTAL EXPENSES 517,297 - ---------------------------------------------------------------------- - -- NET INVESTMENT INCOME 3,008,728 - ---------------------------------------------------------------------- - -- Net realized loss on investments (Notes 1 and 3) (300,792) - ---------------------------------------------------------------------- - -- Net unrealized depreciation of investments during the period (455,878) - ---------------------------------------------------------------------- - -- NET LOSS ON INVESTMENTS (756,670) - ---------------------------------------------------------------------- - -- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,252,058 - ---------------------------------------------------------------------- - --
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED APRIL 30 APRIL 30 - ---------------------------------------------------------------------- - -- 1995 1994 - ---------------------------------------------------------------------- - -- DECREASE IN NET ASSETS - ---------------------------------------------------------------------- - -- Operations: - ---------------------------------------------------------------------- - -- Net investment income $3,008,728 $2,996,101 - ---------------------------------------------------------------------- - -- Net realized gain (loss) on investments (300,792) 507,759 - ---------------------------------------------------------------------- - -- Net unrealized depreciation of investments (455,878) (2,004,082) - ---------------------------------------------------------------------- - -- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,252,058 1,499,778 - ---------------------------------------------------------------------- - -- Distributions to remarketed preferred shareholders from: - ---------------------------------------------------------------------- - -- Net investment income (354,950) (371,438) - ---------------------------------------------------------------------- - -- Net realized gain on investments (31,431) (44,341) - ---------------------------------------------------------------------- - -- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS APPLICABLE TO COMMON SHAREHOLDERS (EXCLUDING CUMULATIVE UNDECLARED DIVIDENDS ON REMARKETED PREFERRED SHARES OF $20,465 AND $14,179, RESPECTIVELY) 1,865,677 1,083,999 - ---------------------------------------------------------------------- - -- Distributions to common shareholders from - ---------------------------------------------------------------------- - -- Net investment income (2,679,970) (2,647,978) - ---------------------------------------------------------------------- - -- Net realized gains (222,304) (438,443) - ---------------------------------------------------------------------- - -- Underwriting commissions and offering costs on remarketed preferred shares -- (8,855) - ---------------------------------------------------------------------- - -- TOTAL DECREASE IN NET ASSETS (1,036,597) (2,011,277) - ---------------------------------------------------------------------- - -- NET ASSETS - ---------------------------------------------------------------------- - -- Beginning of year 49,479,704 51,490,981 - ---------------------------------------------------------------------- - -- END OF YEAR (including undistributed net investment income of $109,410 and $135,602, respectively) $48,443,107 $49,479,704 - ---------------------------------------------------------------------- - -- COMMON SHARES OUTSTANDING AT BEGINNING AND END OF YEAR 2,847,092 2,847,092 - ---------------------------------------------------------------------- - -- REMARKETED PREFERRED SHARES OUTSTANDING AT BEGINNING AND END OF YEAR 200 200 - ---------------------------------------------------------------------- - --
FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
FOR THE PERIOD NOVEMBER 27, 1992 (COMMENCEMENT OF OPERATIONS) TO YEAR ENDED APRIL 30 APRIL 30 - ---------------------------------------------------------------------- - -- 1995 1994 1993 - ---------------------------------------------------------------------- - -- NET ASSET VALUE, BEGINNING OF PERIOD (common shares) $13.86 $14.57 $13.99* - ---------------------------------------------------------------------- - -- Investment operations: - ---------------------------------------------------------------------- - -- Net investment income 1.06 1.05 .40(a) Net realized and unrealized (loss) gain on investments (.26) (.53) .64 - ---------------------------------------------------------------------- - -- Total from investment operations .80 .52 1.04 - ---------------------------------------------------------------------- - -- LESS DISTRIBUTIONS FROM: - ---------------------------------------------------------------------- - -- Net investment income: - ---------------------------------------------------------------------- - -- to preferred shareholders (.13) (.13) (.03)** - ---------------------------------------------------------------------- - -- to common shareholders (.94) (.93) (.31) - ---------------------------------------------------------------------- - -- Net realized gain on investments - ---------------------------------------------------------------------- - -- to preferred shareholders (.01) (.02) -- - ---------------------------------------------------------------------- - -- to common shareholders (.08) (.15) -- - ---------------------------------------------------------------------- - -- TOTAL DISTRIBUTIONS (1.16) (1.23) (.34) - ---------------------------------------------------------------------- - -- Preferred share offering costs -- -- (.12) - ---------------------------------------------------------------------- - -- NET ASSET VALUE, END OF PERIOD (common shares) $13.50 $13.86 $14.57 - ---------------------------------------------------------------------- - -- MARKET VALUE, END OF PERIOD (common shares) $13.625 $13.50 $15.00 - ---------------------------------------------------------------------- - -- TOTAL INVESTMENT RETURN AT MARKET VALUE (common shares) (%)(c) 9.09 (3.25) 2.09(d) - ---------------------------------------------------------------------- - -- NET ASSETS, END OF PERIOD (total fund) (in thousands) $48,443 $49,480 $51,491 - ---------------------------------------------------------------------- - -- Ratio of expenses to average net assets (%) (b) 1.35 1.23 .35(a)(d) - ---------------------------------------------------------------------- - -- Ratio of net investment income to average net assets (%) (b) 6.87 6.23 2.60(a)(d) - ---------------------------------------------------------------------- - -- Portfolio turnover rate (%) 8.55 15.18 32.27(d) - ---------------------------------------------------------------------- - -- * Represents initial net asset value of $14.10 less offering expenses of approximately $0.11. ** Preferred shares were issued on February 18, 1993 (a) Reflects a waiver of the management fee for the period November 27, 1992 to February 19, 1993. As a result of such waiver, expenses of the fund for the period ended April 30, 1993 reflect a reduction of approximately $0.02 per share. (b) Ratios reflect net assets available to common shares only; net investment income ratio also reflects reduction for distributions to preferred shareholders. (c) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (d) Not annualized.
NOTES TO FINANCIAL STATEMENTS April 30, 1995 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES The fund is registered under the Investment Company Act of 1940, as amended, as a non-diversified, closed- end management investment company. The fund's investment objective is to seek a high current income exempt from federal income tax and New York State and City personal income tax. The fund intends to achieve its objective by investing in investment grade municipal securities constituting a portfolio that Putnam Investment Management, Inc., a wholly-owned subsidiary of Putnam Investment, Inc., the fund's Manager, believes to be consistent with preservation of capital. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A SECURITY VALUATION Tax-exempt bonds and notes are stated on the basis of valuations provided by a pricing service, approved by the Trustees, which uses information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. The fair value of restricted securities is determined by the Manager following procedures approved by the Trustees, and such valuations and procedures are reviewed periodically by the Trustees. B SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis. C DETERMINATION OF NET ASSET VALUE Net asset value of the common shares is determined by dividing the value of all assets of the fund (including accrued interest), less all liabilities (including accrued expenses) and the liquidation value of any outstanding remarketed preferred shares, by the total number of common shares outstanding. D 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. Therefore, no provision has been made for federal taxes or income or capital gains or unrealized appreciation of securities held and excise tax on income and capital gains. At April 30, 1995, the fund had a capital loss carryover which will expire April 30, 2003, of approximately $21,000 which may be available to offset realized capital gains. E DISTRIBUTIONS TO SHAREHOLDERS Distributions to common and preferred shareholders are recorded by the fund on the ex-dividend date. Dividends on remarketed preferred shares become payable when, as and if declared by the Trustees. Each dividend period for the remarketed preferred shares was generally a 30- day period until January 20, 1995 with a fixed dividend rate of 3.95% per annum. Each subsequent dividend period will generally be a 28-day period and the applicable dividend rate will be determined by the remarketing agent. The applicable dividend rates for the remarketed preferred shares on April 30, 1995 was 4.15 % per annum. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include post October losses and wash sales. Reclassifications, if any, are made to the fund's capital accounts at the close of the fund's fiscal year to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. F AMORTIZATION OF BOND PREMIUM AND DISCOUNT Any premium resulting from the purchase of securities in excess of maturity value is amortized on a yield-to-maturity basis. Discount on zero-coupon bonds, stepped-coupon bonds and original issue discount bonds is accreted according to the effective yield method. G UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the fund in connection with its organization aggregated $11,494. These expenses are being amortized on a straight-line basis over a five-year period. NOTE 2 REMARKETED PREFERRED SHARES The Series A remarketed preferred shares are redeemable at the option of the fund on any remarketing date at a redemption price of $50,000 per share, plus an amount equal to any dividends accumulated on a daily basis but unpaid through the redemption date (whether or not such dividends have been declared) and, in certain circumstances, a call premium. It is anticipated that dividends paid to holders of remarketed preferred shares will be considered tax-exempt dividends under the Internal Revenue Code of 1986, as amended. To the extent that the fund earns taxable income and capital gains by the conclusion of a fiscal year, it will be required to apportion to the holders of the remarketed preferred shares throughout that year additional dividends as necessary to result in an after-tax yield equivalent to the applicable dividend rate for the period. During the year ended April 30, 1995 the fund incurred additional dividends of $14,735. Under the Investment Company Act of 1940, the fund is required to maintain asset coverage of at least 200% with respect to the remarketed preferred shares as of the last business day of each month in which any such shares are outstanding. Additionally, the fund is required to meet more stringent asset coverage requirements under the terms of the remarketed preferred shares and the shares' rating agencies. Should these requirements not be met, or should dividends accrued on the remarketed preferred shares not be paid, the fund may be restricted in its ability to declare dividends to common shareholders or may be required to redeem certain of the remarketed preferred shares. At April 30, 1995 there were no such restrictions on the fund. NOTE 3 MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS Compensation of the fund's Manager for management and investment advisory services is paid quarterly based on the average net assets of the fund, including net assets attributable to remarketed preferred shares. Such fee in the aggregate is based on the annual rate of 0.70% of the first $500 million of the average net asset value of the fund, 0.60% of the next $500 million, 0.55% of the next $500 million, and 0.50% of any excess over $1.5 billion of such average net asset value. If dividends payable on remarketed preferred shares during any dividend payment period plus any expenses attributable to remarketed preferred shares for the period exceed the fund's net income attributable to the proceeds of the remarketed preferred shares during that period, then the fee payable to the fund's Manager for that period will be reduced by the amount of the excess (but not more than .70% of the liquidation preference of the remarketed preferred outstanding during the period). The fund also reimburses the Manager 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. Trustees of the fund receive an annual Trustee's fee of $510 and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of the Manager and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. Investor servicing and custodian fees reported in the Statement of operations for the year ended April 30, 1995 have been reduced by credits allowed by PFTC. NOTE 4 PURCHASES AND SALES OF SECURITIES During the year ended April 30, 1995, purchases and sales of investment securities other than short-term investments aggregated $3,962,949 and $5,523,162 respectively. Purchases and sales of short- term municipal obligations aggregated $2,300,000 and $1,000,000, respectively. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. SELECTED QUARTERLY DATA (Unaudited)
THREE MONTHS ENDED ---------------------------------------- APRIL 30 JANUARY 31 OCTOBER 31 1995 1995 1994 - ---------------------------------------------------------------------- - -- Total investment income Total $874,620 $876,850 $882,892 Per share+ $.31 $.31 $.31 - ---------------------------------------------------------------------- - -- Net investment income available to common shareholders Total $644,473 $687,134 $638,855 Per share+ $.23 $.24 $.23 - ---------------------------------------------------------------------- - -- Net realized and unrealized gain (loss) on investments Total $702,296 $445,389 $(1,859,549) Per share+ $.23 $.16 $(.64) - ---------------------------------------------------------------------- - -- Net increase (decrease) in net assets available to common shareholders resulting from operations Total $1,346,769 $1,132,523 $(1,220,694) Per share+ $.46 $.40 $(.41) - ---------------------------------------------------------------------- - -- Net assets available to common shareholders at end of period Total $38,422,642 $37,738,335 $37,538,492 Per share+ $13.50 $13.26 $13.19
SELECTED QUARTERLY DATA (continued)
Three months ended - ---------------------------------------------------------------------- - -- July 31 April 30 January 31 October 31 July 31 1994 1994 1994 1993 1993 - ---------------------------------------------------------------------- - -- $891,663 $878,124 $882,072 $892,116 $861,870 $.31 $.30 $.31 $.32 $.30 - ---------------------------------------------------------------------- - -- $662,851 $622,094 $685,489 $661,473 $655,607 $.23 $.22 $.24 $.23 $.23 - ---------------------------------------------------------------------- - -- $(44,806) $(3,221,304) $(25,853) $914,702 $836,132 $(.02) $(1.15) $(.01) $.34 $.29 - ---------------------------------------------------------------------- - -- $618,045 $(2,643,551) $659,636 $1,576,175 $1,491,739 $.21 $(.95) $.23 $.57 $.52 - ---------------------------------------------------------------------- - -- $39,421,581 $39,465,525 $42,785,170 $43,214,505 $42,320,607 $13.85 $13.86 $15.03 $15.18 $14.86 - ---------------------------------------------------------------------- - -- + Per common share.
FEDERAL INCOME TAX INFORMATION (Unaudited) The fund has designated all dividends paid from net investment income during the fiscal year as exempt-interest dividends. Thus, 100% of these distributions are exempt from federal income tax. For residents of the state of New York, 100% of the fund's distributions are also exempt from New York personal income tax. During the fiscal year the fund distributed $0.03 per common share from short-term capital gains and $0.06 per share from long-term capital gains. The Form 1099 you will receive in January 1996 will show the tax status of all distributions paid to your account in calendar 1995. FUND INFORMATION INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Price Waterhouse LLP TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III Eli Shapiro A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Gary N. Coburn Vice President James E. Erickson Vice President Blake E. Anderson Vice President David J. Eurkus Vice President and Fund Manager William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President John D. Hughes Vice President and Treasurer Beverly Marcus Clerk and Assistant Treasurer Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time for up- to-date information about the fund's NAV or to request Putnam's quarterly Closed-End Fund Commentary. PUTNAM INVESTMENTS THE PUTNAM FUNDS One Post Office Square Boston, Massachusetts 02109 Bulk Rate U.S. Postage PAID Putnam Investments 185-18298 APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS. (1) Rule lines for tables are omitted. (2) Italic typefaces is displayed in normal type. (3) Boldface type is displayed in capital letters. (4) Headers (e.g. the names of the fund) and footers (e.g. page numbers and OThe accompanying notes are an integral part of these financial statementsO) are omitted. (5) Because the printed page breaks are not reflected, certain tabular and columnar headings and symbols are displayed differently in this filing. (6) Bullet points and similar graphic symbols are omitted. (7) Page numbering is different. -----END PRIVACY-ENHANCED MESSAGE-----