PUTNAM TAX-FREE HIGH YIELD FUND
Prospectus Supplement dated January 10, 1994 to
Prospectus dated December 1, 1993
On January 7, 1994, the Trustees approved a proposal to increase
the fees payable to Putnam Management under the Fund's Management
Contract. The proposed increase is subject to shareholder
approval and will be submitted to shareholders at a meeting
scheduled for May 5, 1994. If approved at that meeting,
management fees would thereafter be paid at the annual rate of
0.65% of the first $500 million of average net assets, 0.55% of
the next $500 million, 0.50% of the next $500 million and 0.45%
of any amount over $1.5 billion. If the proposed increase is not
approved by shareholders, this supplement will be revised.
As a result of the proposed change, the table and Examples on
page 3 of the Prospectus, as well as the paragraph following the
Example, are replaced by the following:
SHAREHOLDER TRANSACTION EXPENSES
CLASS A CLASS B
SHARES SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 4.75% NONE*
5.0% in the
first year,
Deferred Sales Charge (as a declining to 1.0%
percentage of the lower of in the sixth year
original purchase price or and eliminated
redemption proceeds) NONE** thereafter
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees 0.58% 0.58%
12b-1 Fees 0.20% 0.85%
Other Expenses 0.14% 0.14%
Total Fund Operating Expenses 0.92% 1.57%
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EXAMPLES
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the end of each
period:
1 3 5 10
year years years years
CLASS A $56 $75 $96 $155
CLASS B $66 $80 $106 $169***
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return but no redemption:
1 3 5 10
year years years years
CLASS A $56 $75 $96 $155
CLASS B $16 $50 $86 $169***
The table is provided to help you understand the expenses of
investing in the Fund and your share of the operating expenses
which the Fund incurs. The annual management fees shown in the
table have been restated to reflect a proposed increase in the
management fees payable to Putnam Management. The 12b-1 fees for
Class B shares have been restated to reflect the amount to which
the Trustees currently limit payments under the Class B
Distribution Plan. Actual management fees, 12b-1 fees and total
Fund operating expenses for Class B shares for the Fund's last
fiscal year were 0.49%, 0.75 and 1.38%, respectively. For Class
A shares, management fees and "Other expenses" are based on the
operating expenses for the fund's Class B shares, and 12b-1 fees
reflect the amount to which the Trustees currently limit payments
under the Class A Distribution Plan. The Examples do not
represent past or future expense levels. Actual Fund expenses
may be greater or less than those shown. Federal regulations
require the Examples to assume a 5% annual return, but actual
annual return has varied.
