N-30D 1 nyi1.txt PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST Putnam New York Investment Grade Municipal Trust ANNUAL REPORT ON PERFORMANCE AND OUTLOOK 4-30-02 [SCALE LOGO OMITTED] FROM THE TRUSTEES [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III] Dear Fellow Shareholder: We are pleased to report that Putnam New York Investment Grade Municipal Trust gave a favorable account of itself in the uncertain economic and market environment that prevailed throughout the fiscal year ended April 30, 2002. On the following pages, the report from your fund's management team will provide a full discussion of what has been driving the fund's performance as well as a view of prospects for fiscal 2003. As economic fundamentals continue to improve, tax revenues should rise and bring an improved outlook for municipal bonds. However, this improvement is likely to be gradual, so we counsel patience as you view your fund's progress in the months ahead. You may notice as you read this report that we are now listing the team that manages your fund. We do this to reflect more accurately how your fund is managed as well as Putnam's firm belief in the value of team management. The names of the individuals who comprise the management team are shown at the end of Management's discussion of performance. We know that Putnam Investments values its relationship with you and its other shareholders and appreciates your loyalty during these times of restructuring of staff and products in the pursuit of superior investment performance in the future. Respectfully yours, /S/ JOHN A. HILL /S/ GEORGE PUTNAM, III John A. Hill George Putnam, III Chairman of the Trustees President of the Funds June 19, 2002 REPORT FROM FUND MANAGEMENT This fund is managed by the Putnam Tax Exempt Fixed-Income Team In the aftermath of the high-flying stock market in the late 1990s, municipal bonds have come into their own, as risk-weary investors increasingly turn their attention to this overlooked asset class. Putnam New York Investment Grade Municipal Trust benefited from this increased interest, which contributed positively to performance during the 12 months ended April 30, 2002. In addition, the fund's leveraging strategy profited from the Federal Reserve Board's aggressive easing during 2002. The fund's performance, while favorable, did fall short of the return for the Lehman Municipal Bond Index for the year ended April 30. The fund's larger exposure to airline bonds (10.7% of the fund's portfolio market value), which suffered steep price declines in the aftermath of September 11, accounts for its underperformance relative to this benchmark and the average for its Lipper category. (Please see page 7 for complete performance information.) Total return for 12 months ended 4/30/02 NAV Market price ----------------------------------------------------------------------- 4.82% 2.96% ----------------------------------------------------------------------- Past performance does not indicate future results. Performance based on market prices for the shares will vary from performance based on the portfolio's net asset value. Performance information for longer periods begins on page 7. * SIGNS OF RECOVERY HAD FED ON GUARD FOR INFLATIONARY PRESSURES By now, the dramatic drop in interest rates during 2001 may seem relegated to the record books, especially as observers begin to contemplate the possibility of an economic recovery in 2002 and an accompanying rise in interest rates. However, the Federal Reserve Board's reduction in the federal funds rate from 6.5% at the beginning of 2001 to 1.75% at the start of 2002 contributed to constantly changing market conditions. Ever since September 11, in particular, municipal bonds have rallied and sold off several times in response to investors' perceptions of the future direction of economic growth. [GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS] TOP INDUSTRY SECTORS* Health care 24.8% Transportation 18.5% Education 15.2% Utilities 7.6% Housing 6.3% Footnote reads: *Based on net assets as of 4/30/02. Holdings will vary over time. The economy showed signs of improvement in the first three months of 2002, but conflicting data in April caused concern that the recovery would be much slower than previously anticipated. In particular, the unemployment rate rose to 6% by the end of April, which was higher than expected. The strong growth in the first quarter (GDP grew at an annual rate of 5.8%) was driven in significant part by the restocking of inventories, which is viewed as a one-time event. Fund Profile Putnam New York Investment Grade Municipal Trust seeks to provide high current income free from federal income tax and New York state and city personal income taxes, consistent with the preservation of capital. It is suitable for New York investors seeking tax-free income through a diversified portfolio of high-quality bonds. Of course, inflation remains quite tame -- thanks in large part to low interest rates -- and this situation is very favorable for bondholders. When inflation is low, bondholders are able to keep more of their investment returns. Low interest rates are also benefiting your fund's leveraging strategy. Leveraging involves issuing preferred shares that pay dividends at prevailing short-term rates and then selling these shares to corporate and institutional investors. The resulting proceeds are then invested in longer-term bonds with higher yields to augment the flow of income to holders of the fund's common shares. When the difference between the dividends paid to the holders of the preferred shares and the income earned by the fund from its longer-term investments is relatively wide, as it is today, shareholders benefit substantially. [GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW] CREDIT QUALITY OVERVIEW* AAA/Aaa -- 29.9% AA/Aa -- 30.8% A/A -- 13.4% BBB/Baa -- 20.6% BB/Ba -- 5.3% Footnote reads: *As a percentage of market value as of 4/30/02. A bond rated BBB/Baa or higher is considered investment grade. All ratings reflect Moody's and Standard and Poor's descriptions unless noted otherwise; percentages may include unrated bonds considered by Putnam Management to be of comparable quality. Ratings will vary over time. While leveraging is a powerful tool for enhancing the fund's dividend, it does force the fund to carry a longer duration than otherwise might have been the case. (Duration, measured in years, indicates a fund's price sensitivity to interest-rate movements.) Nevertheless, this fund remains one of the least leveraged New York closed-end funds on the market, and therefore the fund's net asset value will fluctuate less dramatically than other municipal bond funds that carry more leverage and even longer durations -- thus protecting its value in declining markets. A shorter duration, by contrast, can limit the fund's upside total return potential in rallying markets. During the past year, we've endeavored to offset this effect by adding longer-term bonds selectively to the portfolio during periods of market volatility to extend duration when appropriate. * AGENCIES' CREDIT RATINGS HELD AS MUNICIPALITIES GRAPPLE WITH RECESSION Confronted with falling tax revenues, municipalities across New York state are making tough choices to ease their budget deficits. The two-year stock market correction and slower economic growth were particularly challenging for New York City, which had to absorb the additional shock and tragedy of September 11. While we believed the risk of default by New York City was very remote, we took the cautious step of downgrading our internal rating of the city's bonds to BBB on September 12. This outlook change prompted us to sell the fund's New York City general obligation (GO) bonds immediately, thereby limiting downward market pressures on performance. Since his election on November 6, Mayor Bloomberg and his administration have received high marks for their stewardship, thanks to their strong fiscal management and effective accounting system. As of November 30, the most recent review, the major rating agencies had affirmed their investment-grade ratings of New York City GO bonds. We don't expect the rating agencies to downgrade this rating, unless overwhelming evidence of credit deterioration emerges. By the close of the fund's fiscal year on April 30, we had brought the GO weighting back in line with that of its benchmark, the Lehman Municipal Bond Index -- adding new holdings during periods of pricing weakness. * SUPPLY CONSTRAINTS EASE IN 2002 New issuance was relatively light across New York's municipal bond market until calendar 2002 began. Much of the higher volume is the result of offerings delayed in response to September 11. We chose to not participate in many of the new offerings, because we believed the pricing structure, credit quality, or security features were either unattractive or inappropriate for your fund. However, in the months ahead, the Transitional Finance Authority, which is underwriting recovery bonds for September 11, and the Metropolitan Transit Authority are expected to be active issuers. We are more receptive to these issuers and may take advantage of their offerings if appropriate. As credit spreads widened across the investment-grade spectrum during recent sell-offs, we were presented with some unique buying opportunities, particularly in the health-care sector. We bought Staten Island University Hospital bonds, which are being used to construct a 12,000 square foot, two-story addition to the main hospital facility and acquire radiology equipment. This hospital is the largest provider of health-care services on Staten Island and has substantial pricing leverage with commercial and managed-care payers. Since September 11, our airline sector holdings have detracted from performance. Declining passenger travel, large increases in operating costs from tougher new security measures, and rising oil prices have depressed prospects for the sector in the near term. The airlines have responded by reducing capacity and running planes with high passenger rates to ease these pressures. The federal aid package for the industry was a positive development, and we believe that the larger companies will be able to meet their debt obligations for the foreseeable future. We are currently waiting out the storm in the belief that the fund's two airline holdings -- British Airways and American Airlines -- will be among the survivors once fundamentals improve. * WEAK GROWTH EASES OUTLOOK FOR HIGHER RATES We believe the U.S. economy will continue to struggle in its recovery, which should keep the Federal Reserve Board from tightening until it sees a credible threat of inflation. Right now there is no such threat, and for the first four months of 2002, the Fed appeared more concerned about the recovery than about inflation. Since the capital markets have contracted, with significant declines in capital spending and corporate investment, the lack of funding is acting as a restraint on the economy. As a result, we believe the Fed may hold off in tightening even if growth begins to pick up. In a lower-rate environment, your fund's ability to leverage -- and thereby enhance distributions to common shareholders -- remains a valuable benefit. During this transitional period, we believe our efforts to slightly extend the portfolio's duration will be advantageous. The anticipated increase in supply across the New York market will be timely, as we scour our universe for attractively priced, investment-grade municipal bonds. 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 4/30/02, there is no guarantee the fund will continue to hold these securities in the future. This fund is managed by the Putnam Tax Exempt Fixed-Income Team. The members of the team are Jerome Jacobs, Blake Anderson, Joyce Dragone, David Hamlin, Susan McCormack, and Richard Wyke. PUTNAM'S POLICY ON CONFIDENTIALITY In order to conduct business with our shareholders, we must obtain certain personal information such as account holders' addresses, telephone numbers, Social Security numbers, and the names of their financial advisors. We use this information to assign an account number and to help us maintain accurate records of transactions and account balances. It is our policy to protect the confidentiality of your information, whether or not you currently own shares of our funds, and in particular, not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use. Under certain circumstances, we share this information with outside vendors who provide services to us, such as mailing and proxy solicitation. In those cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. We may also share this information with our Putnam affiliates to service your account or provide you with information about other Putnam products or services. It is also our policy to share account information with your financial advisor, if you've listed one on your Putnam account. If you would like clarification about our confidentiality policies or have any questions or concerns, please don't hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time. PERFORMANCE SUMMARY This section provides information about your fund's performance, which should always be considered in light of its investment strategy. TOTAL RETURN FOR PERIODS ENDED 4/30/02 Lehman Municipal Bond Consumer (common shares) NAV Market price Index price index ------------------------------------------------------------------------------- 1 year 4.82% 2.96% 7.00% 1.53% ------------------------------------------------------------------------------- 5 years 32.75 26.56 36.79 12.12 Annual average 5.83 4.82 6.47 2.31 ------------------------------------------------------------------------------- Life of fund (since 11/27/92) 72.28 46.21 81.64 26.41 Annual average 5.94 4.11 6.55 2.52 ------------------------------------------------------------------------------- Footnote reads: Past performance does not indicate future results. More recent returns may be less or more than those shown. Investment return, net asset value, and market price will fluctuate and you may have a gain or a loss when you sell your shares. Performance does not reflect taxes on reinvested distributions. PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 4/30/02 ------------------------------------------------------------------------------- Distributions to common shares ------------------------------------------------------------------------------- Number 12 ------------------------------------------------------------------------------- Income $0.714 ------------------------------------------------------------------------------- Total $0.714 ------------------------------------------------------------------------------- Distribution to preferred shares Series A (200 shares) ------------------------------------------------------------------------------- Income $989.335 ------------------------------------------------------------------------------- Total $989.335 ------------------------------------------------------------------------------- Share value (common shares): NAV Market price ------------------------------------------------------------------------------- 4/30/01 $13.45 $12.460 ------------------------------------------------------------------------------- 4/30/02 13.32 12.120 ------------------------------------------------------------------------------- Current return (end of period) ------------------------------------------------------------------------------- Current dividend rate 1 5.36% 5.89% ------------------------------------------------------------------------------- Taxable equivalent 2 9.75 10.72 ------------------------------------------------------------------------------- 1 Most recent distribution, excluding capital gains, annualized and divided by NAV or market price at end of period. 2 Assumes maximum 45.05% combined federal, New York state, and New York City tax rate. Results for investors subject to lower tax rates would not be as advantageous. TOTAL RETURN FOR PERIODS ENDED 3/31/02(most recent calendar quarter) (common shares) NAV Market price ------------------------------------------------------------------------------- 1 year 2.35% -0.18% ------------------------------------------------------------------------------- 5 years 32.09 26.40 Annual average 5.72 4.80 ------------------------------------------------------------------------------- Life of fund (since 11/27/92) 70.04 45.26 Annual average 5.85 4.08 ------------------------------------------------------------------------------- Past performance does not indicate future results. More recent returns may be more or less than those shown. They do not take into account any adjustment for taxes payable on reinvested distributions. Investment returns, net asset value, and market price will fluctuate so that an investor's shares when sold may be worth more or less than their original cost. TERMS AND DEFINITIONS Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities and the net assets allocated to 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 American Stock Exchange. COMPARATIVE BENCHMARKS Lehman Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds. It assumes reinvestment of all distributions and interest payments and does not take into account brokerage fees or taxes. Securities in the fund do not match those in the index and performance of the fund will differ. It is not possible to invest directly in an index. Consumer price index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Lipper Inc. is a third-party industry ranking entity that ranks funds (without sales charges) with similar current investment styles or objectives as determined by Lipper. A GUIDE TO THE FINANCIAL STATEMENTS These sections of the report, as well as the accompanying Notes, preceded by the Report of independent accountants, constitute the fund's financial statements. The fund's portfolio lists all the fund's investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification. Statement of assets and liabilities shows how the fund's net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the net assets allocated to remarketed preferred shares.) Statement of operations shows the fund's net investment gain or loss. This is done by first adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings -- as well as any unrealized gains or losses over the period -- is added to or subtracted from the net investment result to determine the fund's net gain or loss for the fiscal year. Statement of changes in net assets shows how the fund's net assets were affected by distributions to shareholders and by changes in the number of the fund's shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Financial highlights provide an overview of the fund's investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period. For open-end funds, a separate table is provided for each share class. REPORT OF INDEPENDENT ACCOUNTANTS 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 fund's portfolio, 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, 2002, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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, 2002 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts June 10, 2002
THE FUND'S PORTFOLIO April 30, 2002 KEY TO ABBREVIATIONS AMBAC -- AMBAC Indemnity Corporation COP -- Certificate of Participation FGIC -- Financial Guaranty Insurance Company FHA Insd. -- Federal Housing Administration Insured FRB -- Floating Rate Bonds FSA -- Financial Security Assurance G.O. Bonds -- General Obligation Bonds IFB -- Inverse Floating Rate Bonds MBIA -- Municipal Bond Investors Assurance Corporation MUNICIPAL BONDS AND NOTES (100%) (a) PRINCIPAL AMOUNT RATING (RAT) VALUE New York (94.5%) ------------------------------------------------------------------------------------------------------------------- $ 500,000 Cicero Local Dev., Corp. Rev. Bonds (Cicero Cmnty. Recreation), Ser. A, 6 5/8s, 5/1/21 Baa2 $ 527,500 1,000,000 Dutchess Cnty., Indl. Dev. Agcy. Rev. Bonds (Bard College Civic Fac.), 5 3/4s, 8/1/30 A3 1,037,500 810,000 Ithaca, Hsg. Corp. Mtge. Rev. Bonds (Eddygate Park Apts.), 9s, 6/1/06 BBB+/P 829,238 1,000,000 Long Island, Pwr. Auth. NY Elec. Syst. Rev. Bonds, Ser. A, 5 1/4s, 12/1/26 A- 976,250 500,000 Metropolitan Trans. Auth. Svcs. Contract Fac. Rev. Bonds (Trans. Fac.), Ser. O, 5 3/4s, 7/1/13 AA- 556,875 1,000,000 Niagara Cnty., Indl. Dev. Agcy. Rev. Bonds, Ser. C, 5 5/8s, 11/15/24 Baa1 1,016,250 1,000,000 Niagara Falls NY City School Dist. COP, 5 7/8s, 6/15/19 Baa2 1,032,500 NY City, G.O. Bonds 185,000 Ser. I, 6 1/4s, 4/15/17 Aaa 212,519 65,000 Ser. D, 6s, 2/15/25 A2 68,494 1,000,000 Ser. B, 5 1/2s, 12/1/31 A2 1,006,250 2,000,000 NY City, G.O. IFB, AMBAC, 9.32s, 9/1/11 Aaa 2,085,500 NY City, Indl. Dev. Agcy. Rev. Bonds 600,000 (Staten Island U. Hosp. Project), Ser. A, 6 3/8s, 7/1/31 Baa3 594,750 1,000,000 (Brooklyn Polytech U. Project J), 6 1/8s, 11/1/30 BBB/P 1,035,000 1,500,000 (Brooklyn Navy Yard Cogen. Partners), 5.65s, 10/1/28 Baa3 1,449,375 NY City, Indl. Dev. Agcy. Special Arpt. Fac. Rev. Bonds 1,525,000 (American Airlines, Inc.), 6.9s, 8/1/24 BB 1,334,375 1,000,000 (Terminal One Group), 6s, 1/1/15 A/P 1,025,000 1,500,000 (American Airlines, Inc.), 5.4s, 7/1/20 BB 1,126,875 1,000,000 (JFK I LLC Project), Ser. A, 5 1/2s, 7/1/28 Baa3 927,500 750,000 (British Airways), 5 1/4s, 12/1/32 BBB- 555,938 NY City, Muni. Wtr. & Swr. Fin. Auth. Rev. Bonds 500,000 Ser. G, FSA, 5s, 6/15/34 Aaa 481,250 1,250,000 Ser. A, FGIC, 4 3/4s, 6/15/31 Aaa 1,146,875 1,000,000 NY Cnty. Trust II Rev. Bonds (Tobacco Settlement), 5 3/4s, 6/1/43 A1 976,250 NY State Dorm. Auth. Rev. Bonds 1,000,000 (State U. Edl. Fac.), Ser. A, 7 1/2s, 5/15/13 AA- 1,265,000 1,000,000 (Mount. Sinai Hlth.), Ser. A, 6 1/2s, 7/1/25 BBB+/P 1,048,750 2,000,000 (Mental Hlth. Svcs. Fac.), Ser. A, 5 3/4s, 2/15/27 AA- 2,062,500 1,500,000 (Dept. of Hlth.), 5 1/2s, 7/1/25 AA- 1,518,750 1,190,000 (City U. Syst. Construction), Ser. 1, 5 1/4s, 7/1/17 AA- 1,216,775 1,500,000 (NY U.), Ser. 2, AMBAC, 5s, 7/1/41 Aaa 1,428,750 1,000,000 NY State Energy Res. & Dev. Auth. Poll. Control Rev. Bonds (Niagara Mohawk Pwr. Corp.), Ser. A, FGIC, 7.2s, 7/1/29 Aaa 1,106,250 1,600,000 NY State Env. Fac. Corp. Poll. Control Rev. Bonds (State Wtr. Revolving Fund), Ser. A, 7 1/2s, 6/15/12 Aaa 1,610,622 2,000,000 NY State Hsg. Fin. Agcy. Svcs. Contract Oblig. Rev. Bonds, Ser. A, 5 7/8s, 9/15/14 AA- 2,088,580 NY State Med. Care Fac. Fin. Agcy. Rev. Bonds 110,000 (Mental Hlth. Svcs. Fac.), Ser. D, 7.4s, 2/15/18 A 112,338 1,720,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. C, 6.65s, 8/15/32 Aa2 1,765,804 80,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. C, 6.65s, 8/15/32 Prerefunded AAA/P 82,798 1,800,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. D, FHA Insd., 6.6s, 2/15/31 AA/P 1,903,662 1,800,000 (Hosp. & Nursing Home Insd. Mtge.), Ser. C, FHA Insd., 6 3/8s, 8/15/29 AAA 1,859,274 1,000,000 Onondaga Cnty., Indl. Dev. Agcy. Rev. Bonds (Bristol-Meyers Squibb Co.), 5 3/4s, 3/1/24 AAA 1,061,250 1,000,000 Port Auth. NY & NJ Rev. Cons. Bonds, Ser. 124th, 5s, 8/1/31 AA- 928,750 1,000,000 Port Auth. NY & NJ Special Obligation FRB, Ser. N18, MBIA, 8 3/4s, 12/1/17 (acquired 7/19/00, cost $1,046,890) (RES) Aaa 1,165,000 1,000,000 Triborough Bridge & Tunnel Auth. Rev. Bonds, Ser. A, 5s, 1/1/32 Aa3 948,750 500,000 Yonkers Indl. Dev. Agcy. Rev. Bonds (St. John's Riverside Hosp.), Ser. A, 7 1/8s, 7/1/31 BBB- 523,750 ------------- 43,699,417 Puerto Rico (5.5%) ------------------------------------------------------------------------------------------------------------------- 1,500,000 PR Elec. Pwr. Auth. IFB, FSA, 8.018s, 7/1/23 Aaa 1,565,100 1,000,000 PR Elec. Pwr. Auth. Rev. Bonds, Ser. II, 5 1/4s, 7/1/31 A- 993,750 ------------- 2,558,850 ------------------------------------------------------------------------------------------------------------------- Total Investments (cost $46,051,989) (b) $ 46,258,267 ------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on market value of $46,258,267. (RAT) The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at April 30, 2002 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, 2002. Securities rated by Putnam are indicated by "/P" and are not publicly rated. Ratings are not covered by the Report of independent accountants. (b) The aggregate identified cost on a tax basis is $46,125,248, resulting in gross unrealized appreciation and depreciation of $1,433,122 and $1,300,103, respectively, or net unrealized appreciation of $133,019. (RES) Restricted, excluding 144A securities, as to public resale. The market value of restricted securities held at April 30, 2002 was $1,165,000 or 2.5% of total market value. The rates shown on IFB, which are securities paying interest rates that vary inversely to changes in the market interest rates, and FRB are the current interest rates at April 30, 2002. The fund had the following industry group concentrations greater than 10% at April 30, 2002 (as a percentage of market value): Health care 24.8% Transportation 18.5 Education 15.2 The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES April 30, 2002 Assets ------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $46,051,958) (Note 1) $46,258,267 ------------------------------------------------------------------------------------------- Cash 1,144,724 ------------------------------------------------------------------------------------------- Interest and other receivable 823,051 ------------------------------------------------------------------------------------------- Total assets 48,226,042 Liabilities ------------------------------------------------------------------------------------------- Distributions payable to shareholders 169,375 ------------------------------------------------------------------------------------------- Accrued preferred shares distribution payable (Note 1) 10,116 ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 81,296 ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 5,739 ------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 15,054 ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 1,811 ------------------------------------------------------------------------------------------- Other accrued expenses 25,852 ------------------------------------------------------------------------------------------- Total liabilities 309,243 ------------------------------------------------------------------------------------------- Series A remarketed preferred shares (200 shares issued and outstanding at $50,000 per share) (Note 4) $10,000,000 ------------------------------------------------------------------------------------------- Net assets $37,916,799 Represented by ------------------------------------------------------------------------------------------- Paid-in capital -- common shares (unlimited shares authorized) (Note 1) 39,492,317 ------------------------------------------------------------------------------------------- Undistributed net investment income (Note 1) 68,770 ------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (Note 1) (1,850,597) ------------------------------------------------------------------------------------------- Net unrealized appreciation of investments 206,309 ------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to common shares outstanding $37,916,799 Computation of net asset value ------------------------------------------------------------------------------------------- Net asset value per common share ($37,916,799 divided by 2,847,092 shares) $13.32 ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS Year ended April 30, 2002 Tax exempt interest income: $2,991,517 ------------------------------------------------------------------------------------------- Expenses: ------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 339,550 ------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 44,586 ------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 8,511 ------------------------------------------------------------------------------------------- Administrative services (Note 2) 5,984 ------------------------------------------------------------------------------------------- Auditing 49,350 ------------------------------------------------------------------------------------------- Preferred share remarketing agent fees 39,181 ------------------------------------------------------------------------------------------- Other 31,080 ------------------------------------------------------------------------------------------- Total expenses 518,242 ------------------------------------------------------------------------------------------- Expense reduction (Note 2) (19,221) ------------------------------------------------------------------------------------------- Net expenses 499,021 ------------------------------------------------------------------------------------------- Net investment income 2,492,496 ------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (455,811) ------------------------------------------------------------------------------------------- Net realized gain on futures contracts (Note 1) 365,229 ------------------------------------------------------------------------------------------- Net unrealized depreciation of investments and futures contracts during the year (543,094) ------------------------------------------------------------------------------------------- Net loss on investments (633,676) ------------------------------------------------------------------------------------------- Distributions to Series A remarketed preferred shareholders: (Note 1) ------------------------------------------------------------------------------------------- From tax exempt income (197,867) ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations applicable to common shares $1,660,953 ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS Year ended April 30 ----------------------------- 2002 2001 ------------------------------------------------------------------------------------------------------- Increase in net assets ------------------------------------------------------------------------------------------------------- Operations: ------------------------------------------------------------------------------------------------------- Net investment income $ 2,492,496 $ 2,364,628 ------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (90,582) 259,408 ------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments (543,094) 1,779,601 ------------------------------------------------------------------------------------------------------- Distributions to Series A remarketed preferred shareholders: (Note 1) ------------------------------------------------------------------------------------------------------- From tax exempt income (197,867) (379,172) ------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations applicable to common shares 1,660,953 4,024,465 Distributions to common shareholders: (Note 1) ------------------------------------------------------------------------------------------------------- From tax exempt income (2,032,509) (2,214,987) ------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (371,556) 1,809,478 Net assets ------------------------------------------------------------------------------------------------------- Beginning of year 38,288,355 36,478,877 ------------------------------------------------------------------------------------------------------- End of year (including distributions in excess of net investment income of $68,770 and $193,350, respectively) $37,916,799 $38,288,355 ------------------------------------------------------------------------------------------------------- Number of fund shares ------------------------------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) ------------------------------------------------------------------------------------------------------------------- Per-share operating performance Year ended April 30 ------------------------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period (common shares) $13.45 $12.81 $14.03 $13.96 $13.49 ------------------------------------------------------------------------------------------------------------------- Investment operations: ------------------------------------------------------------------------------------------------------------------- Net investment income (a) .88 .83 .90 .91 .95 ------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (.23) .72 (1.19) .08 .45 ------------------------------------------------------------------------------------------------------------------- Distributions to preferred shareholders: ------------------------------------------------------------------------------------------------------------------- From net investment income (.07) (.13) (.12) (.11) (.12) ------------------------------------------------------------------------------------------------------------------- Total from investment operations applicable to common shares .58 1.42 (.41) .88 1.28 ------------------------------------------------------------------------------------------------------------------- Distributions to common shareholders: ------------------------------------------------------------------------------------------------------------------- From net investment income (.71) (.78) (.81) (.81) (.81) ------------------------------------------------------------------------------------------------------------------- Total distributions (.71) (.78) (.81) (.81) (.81) ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period (common shares) $13.32 $13.45 $12.81 $14.03 $13.96 ------------------------------------------------------------------------------------------------------------------- Market value, end of period (common shares) $12.12 $12.46 $12.00 $13.88 $13.63 ------------------------------------------------------------------------------------------------------------------- Total return at market value (common shares)(%)(b) 2.96 10.28 (7.75) 7.82 12.12 ------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (common shares)(in thousands) $37,917 $38,288 $36,479 $39,952 $39,747 ------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c)(d) 1.35 1.41 1.44 1.32 1.31 ------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%)(c) 5.96 5.25 5.96 5.66 5.90 ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (%) 25.16 15.65 3.32 24.04 18.22 ------------------------------------------------------------------------------------------------------------------- (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. (c) Ratios reflect net assets available to common shares only; net investment income ratio also reflects reduction for distributions to preferred shareholders. (d) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS April 30, 2002 Note 1 Significant accounting policies Putnam New York Investment Grade Municipal Trust (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 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, LLC ("Putnam Management"), the fund's Manager, an indirect wholly-owned subsidiary of Putnam, LLC, 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 preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. A) Security valuation Tax-exempt bonds and notes are stated on the basis of valuations provided by an independent pricing service, approved by the Trustees, which uses information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. Restricted securities are stated at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. B) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. Interest income is recorded on the accrual basis. All premiums/discounts are amortized/accreted on a yield-to-maturity basis. The premium in excess of the call price, if any, is amortized to the call date; thereafter, the remaining excess premium is amortized to maturity. C) Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns or expects to purchase. The fund may also write options on securities it owns or in which it may invest to increase its current returns. The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparty to the contract is unable to perform. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as "variation margin". Exchange traded options are valued at the last sale price, or if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. 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, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. At April 30, 2002, the fund had a capital loss carryover of approximately $1,545,000 available to offset future capital gains, if any. The amount of the carryover and the expiration dates are: Loss Carryover Expiration -------------- ------------------ $619,000 April 30, 2004 492,000 April 30, 2005 434,000 April 30, 2008 E) Distributions to shareholders Distributions to common and preferred shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. Dividends on remarketed preferred shares become payable when, as and if declared by the Trustees. Each dividend period for the remarketed preferred shares is generally a 28-day period. The applicable dividend rate for the remarketed preferred shares on April 30, 2002 was 1.42%. 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 a temporary difference of post-October loss deferrals, dividends payable, and straddle loss deferrals. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended April 30, 2002, the fund required no such reclassifications. As of April 30, 2002, the undistributed tax exempt income on a tax basis was $248,260. F) Determination of net asset value Net asset value of the common shares is determined by dividing the value of all assets of the fund, less all liabilities and the liquidation preference of any outstanding remarketed preferred shares, by the total number of common shares outstanding. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.70% of the first $500 million of weekly average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, and 0.50% thereafter. If dividends payable on remarketed preferred shares during any dividend payment period plus any expenses attributable to remarketed preferred shares for that period exceed the fund's gross income attributable to the proceeds of the remarketed preferred shares during that period, then the fee payable to Putnam Management for that period will be reduced by the amount of the excess (but not more than 0.70% of the liquidation preference of the remarketed preferred shares outstanding during the period). The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam, LLC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. The fund has entered into an arrangement with PFTC whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's expenses. For the year ended April 30, 2002, the fund's expenses were reduced by $19,221 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $411 has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as a Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. Note 3 Purchases and sales of securities During the year ended April 30, 2002, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $12,698,638 and $11,886,324, respectively. There were no purchases and sales of U.S. government obligations. Note 4 Remarketed preferred shares The Series A shares are redeemable at the option of the fund on any dividend payment date at a redemption price of $50,000 per share, plus an amount equal to any dividends accrued 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. 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 equivalent to the applicable dividend rate for the period. 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 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, 2002, no such restrictions have been placed on the fund. Under Emerging Issues Task Force (EITF) promulgation Topic D-98, Classification and Measurement of Redeemable Securities, which was issued on July 19, 2001, preferred securities that are redeemable for cash or other assets are to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer. Subject to the guidance of the EITF, the Trust's preferred stock, which was previously classified as a component of net assets, has been reclassified outside of permanent equity (net assets) in the accompanying financial statements. Prior year amounts have also been reclassified to conform with this presentation. The impact of this reclassification creates no change to the net assets available to common shareholders. Note 5 New accounting pronouncement As required, the fund has adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies. This Guide requires that the fund amortize premium and accrete discount on all fixed-income securities, and classify as interest income gains and losses realized on paydowns on mortgage-backed securities. Prior to May 1, 2001, the fund did not accrete discounts for certain fixed income securities. Adopting these accounting principles did not affect the fund's net asset value, but did change the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of operations. The adoption of this principle was not material to the financial statements. FEDERAL TAX INFORMATION (Unaudited) The fund has designated 100% of dividends paid from net investment income during the fiscal year as tax exempt for Federal income tax purposes. The Form 1099 you receive in January 2003 will show the tax status of all distributions paid to your account in calendar 2002. RESULTS OF OCTOBER 11, 2001 SHAREHOLDER MEETING (Unaudited) An annual meeting of shareholders of the fund was held on October 11, 2001. At the meeting, each of the nominees for Trustees was elected, as follows: Common and Preferred Shares Votes Votes for withheld Jameson A. Baxter 2,573,335 48,271 Charles B. Curtis 2,570,595 51,011 Ronald J. Jackson 2,577,225 44,381 Paul L. Joskow 2,575,075 46,531 Elizabeth T. Kennan 2,573,335 48,271 Lawrence J. Lasser 2,575,075 46,531 John H. Mullin III 2,577,225 44,381 George Putnam, III 2,576,225 45,381 A.J.C. Smith 2,577,225 44,381 W. Thomas Stephens 2,576,225 45,381 W. Nicholas Thorndike 2,575,330 46,276 Preferred Shares Votes Votes for withheld John A. Hill 185 -- Robert E. Patterson 185 --
TRUSTEES Name, Address, 1 Date of Birth, Position(s) Held with Fund and Length of Service Principal Occupation(s) as a Putnam Fund Trustee 2 During Past 5 Years Other Directorships Held by Trustee ------------------------------------------------------------------------------------------------------- Jameson A. Baxter (9/6/43), President, Baxter Director of ASHTA Chemicals, Inc., Trustee since 1994 Associates, Inc. Banta Corporation (a printing and (a management digital imaging firm), Intermatic consulting and private Corporation (manufacturer of energy investments firm) control products), Ryerson Tull, Inc. (a steel service corporation), Advocate Health Care, and the National Center for Nonprofit Boards. Chairman Emeritus of the Board of Trustees, Mount Holyoke College. Charles B. Curtis (4/27/40), President and Chief Member of the Council on Foreign Trustee since 2001 Operating Officer, Relations, the Electric Power Nuclear Threat Research Institute Advisory Council, Initiative (a private the Board of Directors of the Gas foundation dedicated Technology Institute, the University to reducing the threat of Chicago Board of Governors for of weapons of mass Argonne National Laboratory, the destruction) Board of Directors of the Environment and Natural Resources Program Steering Committee, John F. Kennedy School of Government, Harvard University. Until 2001, Mr. Curtis was a Member of the Department of Defense's Policy Board and Director of EG&G Technical Services, Inc. (fossil energy research and development support) and prior to May 1997, Mr. Curtis was Deputy Secretary of Energy. John A. Hill (1/31/42), Vice-Chairman and Director of Devon Energy Trustee since 1985 and Managing Director, Corporation (formerly known as Chairman since 2000 First Reserve Snyder Oil Corporation), Corporation TransMontaigne Oil Company, (a registered investment Continuum Health Partners of advisor investing in New York, Sarah Lawrence College, companies in the and various private companies owned world-wide energy by First Reserve Corporation. industry on behalf of Trustee of TH Lee, Putnam institutional investors) Investment Trust (a closed-end investment company). Ronald J. Jackson Private investor Former Chairman, President, and (12/17/43), Chief Executive Officer of Fisher- Trustee since 1996 Price, Inc. (a toy manufacturer). President of the Kathleen and Ronald J. Jackson Foundation (charitable trust). Member of the Board of Overseers of WGBH (public television and radio). Member of the Board of Overseers of the Peabody Essex Museum. Paul L. Joskow (6/30/47), Elizabeth and James Director, National Grid Group (a Trustee since 1997 Killian Professor of UK-based holding company with Economics and interests in electric power and Management and telecommunications networks), and Director of the Center the Whitehead Institute for for Energy and Biomedical Research (a non-profit Environmental Policy research institution). President of the Research, Massachusetts Yale University Council. Prior to Institute of Technology February 2002, March 2000, and September 1998, Dr. Joskow was a Director of State Farm Indemnity Company (an automobile insurance company), Director of New England Electric System (a public utility holding company) and a consultant to National Economic Research Associates, respectively. Elizabeth T. Kennan President Emeritus of Chairman, Cambus-Kenneth (2/25/38), Mount Holyoke College Bloodstock (a limited liability Trustee since 1992 company involved in thoroughbred horse breeding and farming), Director, Northeast Utilities, and Talbots (a distributor of women's apparel). Trustee of Centre College, Trustee of Notre Dame University, and Member of the Oversight Committee of Folger Shakespeare Library. Prior to September 2000, June 2000, and November 1999, Dr. Kennan was a Director of Chastain Real Estate, Bell Atlantic, and Kentucky Home Life Insurance, respectively. John H. Mullin, III Chairman and CEO Director Alex. Brown Realty, Inc., (6/15/41), of Ridgeway Farm The Liberty Corporation (a company Trustee since 1997 (a limited liability engaged in the broadcasting company engaged in industry), and Progress Energy, Inc. timber and farming) (a utility company, formerly known as Carolina Power & Light). Prior to October 1997, January 1998, and May 2001, Mr. Mullin was a Director of Dillon, Read and Co. Inc., The Ryland Group, Inc., and Graphic Packaging International Corp., respectively. Robert E. Patterson Senior Partner of Cabot Chairman of the Joslin Diabetes (3/15/45), Properties, LLP and Center, Trustee of SEA Education Trustee since 1984 Chairman of Cabot Association, and Director of Properties, Inc. Brandywine Trust Company (a trust company). Prior to February 1998, Mr. Patterson was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership. Prior to December 2001, Mr. Patterson was President and Trustee of Cabot Industrial Trust (publicly traded real estate investment trust). W. Thomas Stephens Corporate Director Director of Qwest Communications (9/2/42), (communications company), Xcel Trustee since 1997 Energy Incorporated (public utility company), TransCanada Pipelines, and Norske Canada, Inc. (paper manufacturer). Prior to July 2001 and October 1999, Mr. Stephens was Chairman of Mail-Well (printing and envelope company) and MacMillan-Bloedel (forest products company), respectively. W. Nicholas Thorndike Director of various Trustee of Northeastern University and (3/28/33), corporations and Honorary Trustee of Massachusetts Trustee since 1992 charitable General Hospital. Prior to organizations, September 2000, April 2000, and including Courier December 2001, Mr. Thorndike was Corporation (a book a Director of Bradley Real Estate, manufacturer) and Inc., a Trustee of Eastern Utilities Providence Journal Co. Associates, and a Trustee of Cabot (a newspaper publisher) Industrial Trust, respectively. Lawrence J. Lasser* President and Chief Director of Marsh & McLennan (11/1/42), Executive Officer Companies, Inc. and the United Way Trustee since 1992 of Putnam of Massachusetts Bay. Member of the Investments, LLC, Board of Governors of the Investment and Putnam Investment Company Institute, Trustee of the Management, LLC Museum of Fine Arts, Boston, a Trustee and Member of the Finance and Executive Committees of Beth Israel Deaconess Medical Center, Boston, and a Member of the CareGroup Board of Managers Investment Committee, the Council on Foreign Relations, and the Commercial Club of Boston. George Putnam, III* President, New Director of The Boston Family (8/10/51), Generation Research, Office, L.L.C. (registered investment Trustee since 1984 and Inc. (a publisher of advisor), Trustee of the SEA President since 2000 financial advisory and Education Association, Trustee of other research services St. Mark's School, and Trustee of relating to bankrupt and Shore Country Day School. distressed companies) and New Generation Advisers, Inc. (a registered investment adviser) A.J.C. Smith (4/13/34),* Director of Marsh & Director of Trident Corp. (a limited Trustee since 1986 McLennan partnership with over 30 institutional Companies, Inc. investors). Trustee of the Carnegie Hall Society, the Educational Broadcasting Corporation and the National Museums of Scotland. Chairman of the Central Park Conservancy. Member of the Board of Overseers of the Joan and Sanford I. Weill Graduate School of Medical Sciences of Cornell University. Prior to May 2000 and November 1999, Mr. Smith was Chairman and CEO, respectively, of Marsh & McLennan Companies, Inc. 1 The address of each Trustee is One Post Office Square, Boston, MA 02109. As of December 31, 2001, there were 124 Putnam Funds. 2 Each Trustee serves for an indefinite term, until his or her resignation, death, or removal. * Trustees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of the fund, Putnam Management or Putnam Retail Management. Messrs. Putnam, III, Lasser, and Smith are deemed "interested persons" by virtue of their positions as officers or shareholders of the fund, or officers of Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent company of Putnam Management and Putnam Retail Management. George Putnam, III, is the President of your Fund and each of the other Putnam Funds. Lawrence J. Lasser has been the President, Chief Executive Officer, and a Director of Putnam Investments, LLC, and Putnam Management since 1985, having begun his career there in 1969. Mr. Lasser currently also serves as a Director of Marsh & McClennan Companies, Inc., the parent company of Putnam Management. A.J.C. Smith is a Director of Marsh & McClennan Companies, Inc.
OFFICERS Name, Address, 1 Date of Birth, Inception of Service Position(s) Held with Fund with the Putnam Funds Principal Occupation(s) During Past 5 Years --------------------------------------------------------------------------------------------------------------- Charles E. Porter (7/26/38), Since 1989 Managing Director, Putnam Investments, Executive Vice President, LLC and Putnam Management Treasurer & Principal Financial Officer Patricia C. Flaherty Since 1993 Senior Vice President, Putnam (12/1/46), Investments, LLC and Putnam Management Senior Vice President Michael T. Healy (1/24/58), Since 2000 Managing Director, Putnam Senior Vice President, Investments, LLC Assistant Treasurer and Principal Accounting Officer Gordon H. Silver (7/3/47), Since 1990 Senior Managing Director, Putnam Vice President Investments, LLC and Putnam Management Brett C. Browchuk Since 1994 Managing Director, Putnam Investments, (2/27/63), Vice President LLC and Putnam Management Ian Ferguson (7/3/57), Since 1997 Senior Managing Director, Putnam Vice President Investments, LLC and Putnam Management Richard G. Leibovitch Since 1999 Managing Director of Putnam Investments, (10/31/63), Vice President LLC and Putnam Management. Prior to February 1999, Managing Director at J.P. Morgan. Richard A. Monaghan Since 1998 Managing Director, Putnam Investments, (8/25/54), LLC, Putnam Management and Putnam Vice President Retail Management John R. Verani Since 1988 Senior Vice President, Putnam (6/11/39), Investments, LLC and Putnam Vice President Management Jerome J. Jacobs Since 1996 Managing Director, Putnam Management (8/20/58), Vice President Stephen M. Oristaglio Since 1998 Senior Managing Director of Putnam (8/21/55), Management. Prior to July 1998, Managing Vice President Director, Swiss Bank Corp. 1 The address of each Officer is One Post Office Square, Boston, MA 02109.
FUND INFORMATION ABOUT PUTNAM INVESTMENTS One of the largest mutual fund families in the United States, Putnam Investments has a heritage of investment leadership dating back to Judge Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and practice since 1830. Founded 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We presently manage over 100 mutual funds in growth, value, blend, fixed income, and international. INVESTMENT MANAGER Putnam Investment Management, LLC One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Retail Management One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP TRUSTEES John A. Hill, Chairman Jameson Adkins Baxter Charles B. Curtis Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam, III President Charles E. Porter Executive Vice President and Treasurer Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Stephen Oristaglio Vice President Jerome J. Jacobs Vice President Richard G. Leibovitch Vice President Richard A. Monaghan Vice President Michael T. Healy Vice President John R. Verani Vice President Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or visit our Web site (www.putnaminvestments.com) any time for up-to-date information about the fund's NAV. NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 --------------------- PRSRT STD U.S. POSTAGE PAID PUTNAM INVESTMENTS --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminvestments.com 79303 185 6/02