[Translation]
SECURITIES REGISTRATION STATEMENT
(for NAV Sale)
SECURITIES REPORT
(the Third Term)
From: December 1, 1996
To: November 30, 1997
AMENDMENT TO SECURITIES REGISTRATION STATEMENT
(for NAV Sale)
PUTNAM HIGH YIELD ADVANTAGE FUND
SECURITIES REGISTRATION STATEMENT
(for NAV Sale)
PUTNAM HIGH YIELD ADVANTAGE FUND
SECURITIES REGISTRATION STATEMENT
To: Minister of Finance
Filing
Date: April 15, 1998
Name of the Registrant Fund: PUTNAM HIGH YIELD ADVANTAGE
FUND
Name of Trustees: George Putnam
William
F. Pounds
Jameson
A. Baxter
Hans H.
Estin
Ronald
J. Jackson
Paul L.
Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John A.
Hill
John H.
Mullin, III
Robert
E. Patterson
Donald
S. Perkins
George
Putnam, III
A.J.C.
Smith
W.
Thomas Stephens
W.
Nicholas Thorndike
Address of Principal Office: One Post Office Square
Boston,
Massachusetts 02109
U. S.
A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]
(Seal)
Ken
Miura
Attorney-at-Law
Signature [Ken Miura]
(Seal)
Address or Place of Business: Kasumigaseki Building,
25th Floor
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken
Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building, 25th
Floor
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Public Offering or Sale for Registration
Name of the Fund Making Public PUTNAM HIGH YIELD
Offering or Sale of Foreign ADVANTAGE FUND
Investment Fund Securities:
Type and Aggregate Amount of Up to 78 million Class M
Shares
Foreign Investment Fund Securities Up to the total
amount aggregating the
to be Publicly Offered or Sold: amounts calculated by
multiplying the respective net
asset value per Class M Share by
the respective number of Class M
Shares in respect of 78 million
Class M Shares
(The
maximum amount expected to be
sold is 785.46 million U.S.
dollars (Yen99.9 billion).
Note 1: U.S.$ amount is translated into Japanese Yen at the
rate of U.S.$l.00=Yen127.15 the mean of the exchange rate
quotations by The Bank of Tokyo-Mitsubishi, Ltd. for
buying and selling spot dollars by telegraphic transfer
against yen on February 27, 1998.
Note 2: The maximum amount expected to be sold is an amount
calculated by multiplying the net asset value per Class M
Share as of the end of February, 1998 (U.S.$10.07) by 78
million Class M Shares for convenience.
Places where a copy of this Securities Registration
Statement is available for Public Inspection
Not applicable.
(Total number of sheets of this Securities Registration
Statement in Japanese is
7 including front and back pages.)
C O N T E N T S
Japanese This
OriginalEnglish
Translation
PART I. INFORMATION CONCERNING SECURITIES 1 1
PART II. INFORMATION CONCERNING ISSUER 3 5
I. DESCRIPTION OF THE FUND 3 5
1. GENERAL INFORMATION 3 5
2. INVESTMENT POLICY 7 10
3. MANAGEMENT STRUCTURE 14 20
4. INFORMATION CONCERNING THE EXERCISE
OF RIGHTS BY SHAREHOLDERS, ETC. 20 30
5. STATUS OF INVESTMENT PORTFOLIO 23 34
II. OUTLINE OF THE FUND 3 5
III. OUTLINE OF THE OTHER RELATED COMPANIES 3 5
IV. FINANCIAL CONDITION OF THE FUND 3 5
V. SUMMARY OF INFORMATION CONCERNING
THE EXERCISE OF RIGHTS BY HOLDERS OF
FOREIGN INVESTMENT FUND SECURITIES 3 5
VI. MISCELLANEOUS 3 5
PART III. SPECIAL INFORMATION 4 6
I. OUTLINE OF THE SYSTEM OF INVESTMENT
TRUSTS IN MASSACHUSETTS 4 6
II. FINANCIAL CONDITIONS OF THE INVESTMENT
MANAGEMENT COMPANY 10 13
III. FORM OF FOREIGN INVESTMENT FUND SECURITIES 10 13
PART I. INFORMATION CONCERNING
SECURITIES
1. NAME OF FUND: PUTNAM
HIGH YIELD ADVANTAGE FUND
(hereinafter referred to as the
"Fund")
2. NATURE OF FOREIGN Three
classes of shares (Class A
shares,
INVESTMENT FUND SECU- Class B
shares and Class M Shares)
RITIES CERTIFICATES:
Registered shares without par
value. In Japan, Class M Shares
(hereinafter referred to as the
"Shares") are for public
offering. No rating has been
acquired.
3. NUMBER OF SHARES TO Up to
78 million Shares
BE OFFERED FOR SALE
(IN JAPAN)
4. TOTAL AMOUNT OF Up to
the total amount aggregating
OFFERING PRICE:
the amounts calculated by
multiplying the respective net
asset value per Share by the
respective number of Shares in
respect of 78 million Shares
(The
maximum amount expected to be
sold is 785.46 million U.S.
dollars (Yen99.9 billion).
Note 1: The maximum amount expected to be sold is the
amount calculated, for convenience, by multiplying
the net asset value per Share as of the end of
February, 1998 ($10.07) by the number of Shares to
be offered (78 million).
Note 2: Dollar amount is translated for convenience at
the rate of $1.00=Yen127.15 (the mean of the
exchange rate quotations by The Bank of Tokyo-
Mitsubishi, Ltd. for buying and selling spot dollars
by telegraphic transfer against yen as of February
27, 1998). The same applies hereinafter.
Note 3: In this document, money amounts and percentages
have been rounded. Therefore, there are cases in
which the amount of the "total column" is not equal
to the aggregate amount. Also, translation into yen
is made simply by multiplying the corresponding
amount by the conversion rate specified and rounded
up when necessary. As a result, in this document,
there are cases in which Japanese yen figures for
the same information differ from each other.
5. ISSUE PRICE: The Net
Asset Value per Share next
calculated on a Fund Business
Day after the application for
purchase is received by the
Fund.
Note:"Business Day" means a day on which the New York
Stock Exchange is open for business.
6. SALES CHARGE: Sales
charge (in Japan) is 3.25% of
the Subscription Amount
7. MINIMUM AMOUNT OR The
minimum amount for purchase of
NUMBER OF SHARES Shares
is 100 shares and in integral
FOR SUBSCRIPTION:
multiples of 10 shares.
8. PERIOD OF SUBSCRIPTION: From:
May 1, 1998 (Friday)
To:
October 30, 1998 (Friday)
Provided that the subscription
is handled only on a Fund
Business Day and a business day
when securities companies are
open for business in Japan.
9. DEPOSIT FOR SUBSCRIPTION:
None.
10. PLACE OF SUBSCRIPTION: KOKUSAI
Securities Co., Ltd.
(hereinafter referred to as
"KOKUSAI")
Tokyo-
Sumitomo Twin Bldg. East
27-1,
Shinkawa 2-chome, Chuo-ku, Tokyo
Note:The subscription is handled at the head office and
the branch offices in Japan of the above-mentioned
securities company.
11. DATE AND PLACE
Investors shall pay the Issue
Price and
OF PAYMENT: Sales
Charge to KOKUSAI within 4
business days in Japan from the
day when KOKUSAI confirms the
execution of the order (the
"Trade Day") (see page 15 of the
Securities Report).
The
total issue price for each
Application Day will be
transferred by KOKUSAI to the
account of the Fund at Putnam
Fiduciary Trust Company, the
transfer agent, within 4 Fund
Business Days (hereinafter
referred to as "Payment Date")
from (and including) the
Application Day.
12. OUTLINE OF UNDERWRITING, ETC.:
(A) KOKUSAI has entered into an agreement dated 6th
September, 1996 with Putnam Mutual Funds Corp.
(hereinafter referred to as the "Fund") in connection
with the sale and repurchase of the Shares in Japan, and
has undertaken to make a public offering of Shares.
(B) During the offering period, KOKUSAI will execute or
forward the purchase orders and repurchase requests of
the Shares received directly or indirectly through other
Handling Securities Companies to the Fund.
(C) The Fund has appointed KOKUSAI as the Agent Securities
Company in Japan.
Note: "The Agent Securities Company" shall mean a
securities company which, under a contract made with
a foreign issuer of investment securities, makes
public the net asset value per Share and submits or
forwards the financial reports or other documents to
the Japan Securities Dealers Association ("JSDA")
and other handling securities companies (the
"Handling Securities Companies") rendering such
other services.
13. MISCELLANEOUS:
(A) Method of Subscription:
Investors who subscribe for Shares shall enter with
the Handling Securities Company an agreement concerning
the foreign securities transactions. For this purpose,
the Handling Securities Company shall deliver to
investors an Agreement of Foreign Securities Transactions
Account and investors shall submit to the Handling
Securities Company an Application for Opening of
Transactions Account opened in accordance with such
Agreement. The subscription amount shall be paid in yen
in principle, and the exchange rate between Dollars and
Yen shall be determined by the Handling Securities
Company based upon the foreign exchange rate on the Tokyo
foreign exchange market as of the Trade Day for each
application.
The subscription amount shall be paid in dollars to
the account of the Fund with Putnam Fiduciary Trust
Company as transfer agent for the Fund by Kokusai on the
Payment Date.
(B) Expenses summary:
Expenses are one of several factors to consider when
investing. The following table summarizes investor's
maximum transaction costs from investing in the Shares
and expenses based on the most recent fiscal year. The
example shows the cumulative expenses attributable to a
hypothetical $1,000 investment over the specified
periods.
Shareholder transaction expenses
Maximum sales charge imposed on purchases
(as a percentage of public offering price) 3.25%
Deferred sales charge None
Annual Fund operating expenses
(as a percentage of average net assets)
Management fees 0.55%
12b-1 fees 0.50%
Other expenses 0.17%
Total Fund operating expenses 1.22%
The table is provided to help you understand the
expenses of investing in the Shares and your share of the
operating expenses the Fund incurs. The expenses shown
in the table do not reflect the application of credits
that reduce fund expenses.
Example
An investment of $1,000 would incur the following
expenses, assuming 5% annual return and redemption at the
end of each period.
One year $45
3 years $70
5 years $97
10 years $175
The example does not represent past or future
expense levels. Actual expenses may be greater or less
than those shown. Federal regulations require the
example to assume a 5% annual return, but actual annual
return varies.
(C) Offerings other than in Japan:
Shares are simultaneously offered in the United
States of America.
PART II. INFORMATION CONCERNING ISSUER
I. DESCRIPTION OF THE FUND
The description in this item is same as the description
in I. DESCRIPTION OF THE FUND of the Securities Report
set forth below (the Securities Report mentioned below,
from page 1 to page 24)
II. OUTLINE OF THE FUND
The description in this item is same as the description
in II. OUTLINE OF THE TRUST of the Securities Report set
forth below (Ditto, from page 25 to page 59)
III. OUTLINE OF THE OTHER RELATED COMPANIES
The description in this item is same as the description
in III. OUTLINE OF THE OTHER RELATED COMPANIES of the
Securities Report set forth below (Ditto, from page 60 to
page 61)
IV. FINANCIAL CONDITIONS OF THE FUND
The description in this item is same as the description
in IV. FINANCIAL CONDITIONS OF THE FUND of the Securities
Report set forth below (Ditto, from page 62 to page 165)
V. SUMMARY OF INFORMATION CONCERNING THE EXERCISE OF RIGHTS
BY HOLDERS OF FOREIGN INVESTMENT FUND SECURITIES
The description in this item is same as the description
in VI. SUMMARY OF INFORMATION CONCERNING THE EXERCISE OF
RIGHTS BY HOLDERS OF FOREIGN INVESTMENT FUND SECURITIES
of the Securities Report set forth below (Ditto, page
189)
VI. MISCELLANEOUS
The description in this item is same as the description
inVII. REFERENCE INFORMATION of the Securities Report set
forth below (Ditto, from page 189 to page 190)
SECURITIES REPORT
(the Third Term)
From: December 1, 1996
To: November 30, 1997
PUTNAM HIGH YIELD ADVANTAGE FUND
SECURITIES REPORT
(the Third Term)
From: December 1, 1996
To: November 30, 1997
To: Minister of Finance
Filing Date : April 15, 1998
Name of the Registrant Fund: PUTNAM HIGH YIELD ADVANTAGE
FUND
Name of Trustees: George Putnam
William
F. Pounds
Jameson
A. Baxter
Hans H.
Estin
Ronald
J. Jackson
Paul L.
Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John A.
Hill
John H.
Mullin, III
Robert
E. Patterson
Donald
S. Perkins
George
Putnam, III
A.J.C.
Smith
W.
Thomas Stephens
W.
Nicholas Thorndike
Address of Principal Office: One Post Office Square
Boston,
Massachusetts 02109
U. S.
A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]
(Seal)
Ken
Miura
Attorney-at-Law
Signature [Ken Miura]
(Seal)
Address or Place of Business Kasumigaseki Building,
25th Floor
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken
Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building, 25th
Floor
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Places where a copy of this Securities Report is available for
Public Inspection
Not applicable.
(Total number of pages of this Securities Report in Japanese
is 97 including the front page)
C O N T E N T S
Japanese This
OriginalEnglish
Translation
I. DESCRIPTION OF THE FUND 1 1
1. GENERAL INFORMATION 1 1
2. INVESTMENT POLICY 5 6
3. MANAGEMENT STRUCTURE 12 16
4. INFORMATION CONCERNING THE EXERCISE
OF RIGHTS BY SHAREHOLDERS 19 27
5. STATUS OF INVESTMENT PORTFOLIO 22 31
II. OUTLINE OF THE FUND 25 35
III. OUTLINE OF THE OTHER RELATED COMPANIES 60 66
IV. FINANCIAL CONDITIONS OF THE FUND 62 68
V. FINANCIAL CONDITIONS OF THE INVESTMENT 166
71
MANAGEMENT COMPANY (translated from the English
source:
omitted in English Translation
VI. SUMMARY OF INFORMATION CONCERNING THE
EXERCISE OF RIGHTS BY HOLDERS OF
FOREIGN INVESTMENT FUND SECURITIES 189 71
VII. REFERENCE INFORMATION 189 71
Note 1: The exchange rate of U.S. Dollars
("dollar" or "$") into Japanese Yen is Yen127.15 for
one U.S. Dollar, which is the actual middle point
between the selling and buying currency rate by
telegraphic transfer on the February 27, 1998
quoted by The Bank of Tokyo-Mitsubishi, Ltd. The
same applies hereinafter.
Note 2: In this report, money amounts and
percentages have been rounded. Therefore, there
are cases in which the amount for the "total"
column is not equal to the aggregate amount. Also,
conversion into other currencies is done simply by
multiplying the corresponding amount by the
conversion rate specified and rounded up when
necessary. As a result, in this report, there are
cases in which figures for the same information
differ from each other.
Note 3: In this report, "fiscal year" refers to a
year from December 1 to November 30 of the
following year.
I. DESCRIPTION OF THE FUND
1. GENERAL INFORMATION
(A) Outline of Laws Regulating the Fund in the Jurisdiction
Where Established:
(1) Name of the Fund: Putnam High Yield Advantage Fund
(the "Fund")
(2) Form of the Fund
Putnam High Yield Advantage Fund is a Massachusetts
business trust organized on January 13, 1986. A copy of
the Agreement and Declaration of Trust, which is governed
by Massachusetts law, is on file with the Secretary of
State of The Commonwealth of Massachusetts.
The Fund is an open-end, diversified management
investment company with an unlimited number of authorized
shares of beneficial interest. The Trustees may, without
shareholder approval, create two or more series of shares
representing separate investment portfolios.
Any such series of shares may be divided without
shareholder approval into two or more classes of shares
having such preferences and special or relative rights
and privileges as the Trustees determine. The Fund's
shares are not currently divided into series. Only the
Fund's class M shares are currently offered in Japan.
The Fund may also offer other classes of shares with
different sales charges and expenses. Because of these
different sales charges and expenses, the investment
performance of the classes will vary.
Each share has one vote, with fractional shares
voting proportionally. Shares of all classes will vote
together as a single class except when otherwise required
by law or as determined by the Trustees. Shares are
freely transferable, are entitled to dividends as
declared by the Trustees, and, if the Fund were
liquidated, would receive the net assets of the Fund.
The Fund may suspend the sale of shares at any time and
may refuse any order to purchase shares. Although the
Fund is not required to hold annual meetings of its
shareholders, shareholders holding at least 10% of the
outstanding shares entitled to vote have the right to
call a meeting to elect or remove Trustees, or to take
other actions as provided in the Agreement and
Declaration of Trust.
If shareholders own fewer shares than a minimum
amount set by the Trustees (presently 20 shares), the
Fund may choose to redeem shareholders' shares.
Shareholders will receive at least 30 days' written
notice before the Fund redeems shareholders' shares, and
shareholders may purchase additional shares at any time
to avoid a redemption. The Fund may also redeem shares
if shareholders own shares above a maximum amount set by
the Trustees. There is presently no maximum, but the
Trustees may establish one at any time, which could apply
to both present and future shareholders.
(3) Governing Laws
The Fund was created under, and is subject to, the
laws of the Commonwealth of Massachusetts. The sale of
the Fund's shares is subject to, among other things, the
Securities Act of 1933, as amended, and certain state
securities laws. The Fund also attempts to qualify each
year and elect to be taxed as a regulated investment
company under the United States Internal Revenue Code of
1986, as amended.
The following is a broad outline of certain of the
principal statutes regulating the operations of the Fund
in the U.S.:
a. Massachusetts General Laws, Chapter 182 -
Voluntary Associations and Certain Trusts
Chapter 182 provides in part as follows:
A copy of the declaration of trust must be filed
with the Secretary of State of the Commonwealth of
Massachusetts and with the Clerk of the City of
Boston. Any amendment of the declaration of trust
must be filed with the Secretary and the Clerk
within thirty days after the adoption of such
amendment.
A trust must annually file with the Secretary of
State on or before June 1 a report providing the
name of the trust, its address, number of shares
outstanding and the names and addresses of its
trustees.
Penalties may be assessed against the trust for
failure to comply with certain of the provisions of
Chapter 182.
b. Investment Company Act of 1940
The Investment Company Act of 1940, as amended
(the "1940 Act"), in general, requires investment
companies to register as such with the U.S.
Securities and Exchange Commission (the "SEC"), and
to comply with a number of substantive regulations
of their operations. The 1940 Act requires an
investment company, among other things, to provide
periodic reports to its shareholders.
c. Securities Act of 1933
The Securities Act of 1933, as amended (the
"1933 Act"), regulates many sales of securities. The
Act, among other things, imposes various
registration requirements upon sellers of securities
and provides for various liabilities for failures to
comply with its provisions or in respect of other
specified matters.
d. Securities Exchange Act of 1934
The Securities Exchange Act of 1934, as amended
(the "1934 Act"), regulates a variety of matters
involving, among other things, the secondary trading
of securities, periodic reporting by the issuers of
securities, and certain of the activities of
transfer agents and brokers and dealers.
e. The Internal Revenue Code
The Fund intends to qualify as a "regulated
investment company" for federal income tax purposes
and to meet all other requirements necessary for it
to be relieved of federal taxes on income and gains
it distributes to shareholders.
f. Other laws
The Fund is subject to the provisions of other
laws, rules, and regulations applicable to the Fund
or its operations, such as, for example, various
state laws regarding the sale of the Fund's shares.
(B) Outline of the Supervisory Authorities
Among the regulatory authorities having jurisdiction
over the Fund or certain of its operations are the SEC
and state regulatory agencies or authorities.
a. The SEC has broad authority to oversee the
application and enforcement of the federal
securities laws, including the 1940 Act, the 1933
Act, and the 1934 Act, among others, to the Fund.
The 1940 Act provides the SEC broad authority to
inspect the records of investment companies, to
exempt investment companies or certain practices
from the provisions of the Act, and otherwise to
enforce the provisions of the Act.
b. State authorities typically have broad authority
to regulate the offering and sale of securities to
their residents or within their jurisdictions and
the activities of brokers, dealers, or other persons
directly or indirectly engaged in related
activities.
(C) Objects and Basic Nature of the Fund:
The Fund seeks high current income. Capital growth
is a secondary objective when consistent with the
objective of high current income. The Fund is not
intended to be a complete investment program, and there
is no assurance it will achieve its objectives.
(D) History of the Fund:
January 13, 1986:
Organization of the Fund as a
Massachusetts business trust.
Adoption of the Agreement and
Declaration of Trust.
May 5, 1994:
Adoption of the Amended and
Restated Agreement and
Declaration of Trust.
(E) Affiliated Companies of the Fund:
Names and related business of the affiliated
companies of the Fund are as follows:
(1) Putnam Investment Management, Inc. ("Investment
Management Company") renders investment management
services to the Fund.
(2) Putnam Fiduciary Trust Company (the "Custodian"
and "Investor Servicing Agent") acts as Custodian
and Investor Servicing Agent.
(3) Putnam Mutual Funds Corp. ("Principal
Underwriter") engages in providing marketing
services to the Fund.
(4) KOKUSAI Securities Co., Ltd. ("Distributor in
Japan" and "Agent Securities Company") engages in
forwarding the purchase or repurchase orders for the
Shares in Japan and also acts as the agent
securities company.
2. INVESTMENT POLICY
(A) Basic Policy for Investment and Objects of Investment:
The Fund seeks high current income. Capital growth
is a secondary objective when consistent with the
objective of high current income. The Fund is not
intended to be a complete investment program, and there
is no assurance it will achieve its objectives.
Basic investment strategy
The Fund seeks high current income by investing
primarily in high-yield, lower-rated fixed-income
securities, constituting a diversified portfolio which
Putnam Investment Management, Inc., the Fund's investment
management company (the "Investment Management Company"),
believes does not involve undue risk to income or
principal. Normally, at least 80% of the Fund's assets
will be invested in debt securities, convertible
securities or preferred stocks that Investment Management
Company believes are consistent with its primary
investment objective of high current income. The Fund's
remaining assets may be held in cash or money market
instruments, or invested in common stocks and other
equity securities when Investment Management Company
believes these types of investments are consistent with
the objective of high current income.
The Fund seeks its secondary objective of capital
growth, when consistent with its primary objective of
high current income, by investing in securities that
Investment Management Company expects to appreciate in
value as a result of declines in long-term interest rates
or favorable developments affecting the business or
prospects of the issuer which may improve the issuer's
financial condition and credit rating. Investment
Management Company believes that such opportunities for
capital appreciation often exist in the securities of
smaller capitalization companies. Although these smaller
companies may present greater opportunities for capital
appreciation, they may also include greater risks than
larger, more established issuers.
Differing yields on fixed-income securities of the
same maturity are a function of several factors,
including the relative financial strength of the issuers
of such securities. Higher yields are generally
available from lower-rated fixed income securities.
Lower-rated fixed income securities are generally
regarded as those rated below Baa or BBB by nationally
recognized securities rating agencies, such as Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's
("S&P"), or unrated securities of comparable quality.
Securities rated below Baa or BBB are considered to be of
poor standing and predominantly speculative. The Fund
may invest up to 15% of its assets in securities rated,
by each of the rating agencies rating the security, below
Caa or CCC, including securities in the lowest rating
category of each rating agency, or in unrated securities
determined by Investment Management Company to be of
comparable quality. Such securities may be in default
and are generally regarded by the rating agencies as
having extremely poor prospects of ever attaining any
real investment standing.
Securities ratings are based largely on the issuer's
historical financial condition and the rating agencies'
investment analysis at the time of rating. Consequently,
the rating assigned to any particular security is not
necessarily a reflection of the issuer's current
financial condition, which may be better or worse than
the rating would indicate. Although Investment
Management Company considers securities ratings when
making investment decisions, it performs its own
investment analysis and does not rely principally on the
ratings assigned by the rating services. Investment
Management Company's analysis may include consideration
of the issuer's experience and managerial strength,
changing financial condition, borrowing requirements or
debt maturity schedules, and its responsiveness to
changes in business conditions and interest rates. It
also considers relative values based on anticipated cash
flow, interest or dividend coverage, asset coverage and
earnings prospects. Because of the greater number of
investment considerations involved in investing in lower-
rated securities, the achievement of the Fund's
objectives depends more on Investment Management
Company's analytical abilities than would be the case if
the Fund were investing primarily in securities in the
higher rating categories.
The Fund may invest in participations and
assignments of fixed and floating rate loans made by
financial institutions to governmental or corporate
borrowers. In addition to other risks associated with
investments in debt securities, participations and
assignments involve the additional risk that the
institution's insolvency could delay or prevent the flow
of payments on the underlying loan to the Fund. The Fund
may have limited rights to enforce the terms of the
underlying loan, and the liquidity of loan participations
and assignments may be limited.
Defensive Strategies
At times Investment Management Company may judge
that conditions in the securities markets make pursuing
the Fund's basic investment strategy inconsistent with
the best interests of its shareholders. At such times,
Investment Management Company may temporarily use
alternative strategies that are primarily designed to
reduce fluctuations in the value of Fund assets.
In implementing these defensive strategies, the Fund
may invest without limit in money market instruments,
higher-rated fixed-income securities, or in any other
securities Investment Management Company considers
consistent with such defensive strategies. The yield on
these securities would generally be lower than the yield
on lower-rated fixed income securities. It is impossible
to predict when, or for how long, the Fund would use
these alternative strategies.
Non-U.S. Investments
The Fund may invest in securities of non-U.S.
issuers that are not actively traded in U.S. markets.
These non-U.S. investments involve certain special risks
described below.
Non-U.S. securities are normally denominated and
traded in foreign currencies. As a result, the value of
the Fund's non-U.S. investments and the value of its
shares may be affected favorably or unfavorably by
changes in currency exchange rates relative to the U.S.
dollar. The Fund may engage in a variety of non-U.S.
currency exchange transactions in connection with its non-
U.S. investments, including transactions involving
futures contracts, forward contracts and options.
Investments in non-U.S. securities may subject the
Fund to other risks as well. For example, there may be
less information publicly available about a non-U.S.
issuer than about a U.S. issuer, and non-U.S. issuers are
not generally subject to accounting, auditing and
financial reporting standards and practices comparable to
those in the United States. The securities of some non-
U.S. issuers are less liquid and at times more volatile
than securities of comparable U.S. issuers. Non-U.S.
brokerage commissions and other fees are also generally
higher than in the United States. Non-U.S. settlement
procedures and trade regulations may involve certain
risks (such as delay in payment or delivery of securities
or in the recovery of the Fund's assets held abroad) and
expenses not present in the settlement of investments in
U.S. markets.
In, addition, the Fund's investments in non-U.S.
securities may be subject to the risk of nationalization
or expororiation of assets, imposition of currency
exchange controls or restrictions on the repatriation of
non-U.S. currency, confiscatory taxation, political or
financial instability and diplomatic developments which
could affect the value of the Fund's investments in
certain non-U.S. countries. Dividends or interest on, or
proceeds from the sale of, non-U.S. securities may be
subject to foreign withholding taxes, and special U.S.
tax considerations may apply.
Legal remedies available to investors in certain non-
U.S. countries may be more limited than those available
with respect to investments in the United States or in
other non-U.S. countries. The laws of some non-U.S.
countries may limit the Fund's ability to invest in
securities of certain issuers organized under the laws of
those non-U.S. countries.
The risks described above are typically increased in
connection with investments in less developed and
developing nations, which are sometimes referred to as
"emerging markets." For example, political and economic
structures in these countries may be in their infancy and
developing rapidly, causing instability. High rates of
inflation or currency devaluations may adversely affect
the economies and securities markets of such countries.
Investments in emerging markets may be considered
speculative.
The Fund expects that its investments in non-U.S.
securities generally will not exceed 20% of its total
assets, although the Fund's investments in non-U.S.
securities may exceed this amount from time to time.
Certain of the foregoing risks may also apply to some
extent to securities of U.S. issuers that are denominated
in non-U.S. currencies or that are traded in non-U.S.
markets, or securities of U.S. issuers having significant
foreign operations.
Investments in premium securities
At times, the Fund may invest in securities bearing
coupon rates higher than prevailing market rates. Such
"premium" securities are typically purchased at prices
greater than the principal amounts payable on maturity.
The Fund does not amortize the premium paid for
these securities in calculating its net investment
income. As a result, the purchase of premium securities
provides a higher level of investment income
distributable to shareholders on a current basis than if
the Fund purchased securities bearing current market
rates of interest. Because the value of premium
securities tends to approach the principal amount as they
approach maturity (or call price in the case of
securities approaching their first call date), the
purchase of such securities may increase the risk of
capital loss if such securities are held to maturity (or
first call date).
During a period of declining interest rates, many of
the Fund's portfolio investments will likely bear coupon
rates that are higher than the current market rates,
regardless of whether the securities were originally
purchased at a premium. These securities would generally
carry premium market values that would be reflected in
the net asset value of the Fund's shares. As a result,
an investor who purchases shares of the Fund during such
periods would initially receive higher taxable monthly
distributions (derived from the higher coupon rates
payable on the Fund's investments) than might be
available from alternative investments bearing current
market interest rates, but the investor may face an
increased risk of capital loss as these higher coupon
securities approach maturity (or first call date). In
evaluating the potential performance of an investment in
the Fund, investors may find it useful to compare the
Fund's current dividend rate with its "yield," which is
computed on a yield-to-maturity basis in accordance with
SEC regulations and which reflects amortization of market
premiums.
Illiquid securities
The Fund may invest up to 15% of its assets in
illiquid securities. Investment Management Company
believes that opportunities to earn high yields may exist
from time to time in securities which are illiquid and
which may be considered speculative. The sale of these
securities is usually restricted under federal securities
laws. As a result of illliquidity, the Fund may not be
able to sell these securities when Investment Management
Company considers it desirable to do so or may have to
sell them at less than fair market value.
Portfolio turnover
The length of time the Fund has held a particular
security is not generally a consideration in investment
decisions. A change in the securities held by the Fund
is known as "portfolio turnover." As a result of the
Fund's investment policies, under certain market
conditions its portfolio turnover rate may be higher than
that of other mutual funds.
Portfolio turnover generally involves some expense,
including brokerage commissions or dealer markups and
other transaction costs in connection with the sale of
securities and reinvestment in other securities. These
transactions may result in realization of taxable capital
gains.
Options and futures portfolio strategies
The Fund may engage in a variety of transactions
involving the use of options and futures contracts. The
Fund may purchase and sell futures contracts in order to
hedge against changes in the values of securities the
Fund owns or expects to purchase or to hedge against
interest rate changes. For example, if Investment
Management Company expected interest rates to increase,
the Fund might sell futures contracts on U.S. government
securities. If rates were to increase, the value of the
Fund's fixed-income securities would decline, but this
decline might be offset in whole or in part by an
increase in the value of the futures contracts. The Fund
may purchase and sell call and put options on futures
contracts or on securities the Fund is permitted to
purchase directly in addition to or as an alternative to
purchasing and selling futures contracts. The Fund will
not purchase put and call options with respect to such
securities if as a result more than 5% of its assets
would at the time be invested in such options. The Fund
may also buy and sell combinations of put and call
options on the same underlying security. The Fund may
also engage in futures and options transactions for
nonhedging purposes, such as to substitute for direct
investment or to manage its effective duration. Duration
is a commonly used measure of the longevity of the Fund's
debt instruments.
Options and futures transactions involve costs and
may result in losses. The effective use of options and
futures strategies depends on the Fund's ability to
terminate options and futures positions at times when
Investment Management Company deems it desirable to do
so. Options on certain U.S. government securities are
traded in significant volume on securities exchanges.
However, other options which the Fund may purchase or
sell may be traded in the "over-the-counter" market
rather than on an exchange. This means that the Fund
would enter into such option contracts with particular
securities dealers who make markets in these options.
The Fund's ability to terminate options positions in the
over-the-counter market may be more limited than for
exchange-traded options and may also involve the risk
that securities dealers participating in such
transactions might fail to meet their obligations to the
Fund.
The use of options and futures strategies also
involves the risk of imperfect correlation among
movements in the prices of the securities underlying the
futures and options purchased and sold by the Fund, of
the option and futures contracts themselves, and, in the
case of hedging transactions, of the securities which are
the subject of a hedge.
The Fund's ability to engage in options and futures
transactions and to sell related securities may be
limited by tax considerations and by certain regulatory
requirements.
Other investment practices.
The Fund may also engage in the following investment
practices, each of which involves certain special risks.
Securities loans, repurchase agreements and forward
commitments.
The Fund may lend portfolio securities amounting to
not more than 25% of its assets to broker-dealers and may
enter into repurchase agreements on up to 25% of its
assets. These transactions must be fully collateralized
at all times. The Fund may also purchase securities for
future delivery, which may increase its overall
investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement
date. These transactions involve some risk if the other
party should default on its obligation and the Fund is
delayed or prevented from recovering the collateral or
completing the transaction.
Diversification
The Fund is a "diversified" investment company under
the 1940 Act. This means that with respect to 75% of its
total assets, the Fund may not invest more than 5% of its
total assets in the securities of any one issuer (except
U.S. government securities). The remaining 25% of its
total assets is not subject to this restriction. To the
extent the Fund invests a significant portion of its
assets in the securities of a particular issuer, it will
be subject to an increased risk of loss if the market
value of such issuer's securities declines.
Derivatives
Certain of the instruments in which the Fund may
invest, such as options, futures contracts and forward
contracts are considered to be "derivatives."
Derivatives are financial instruments whose value depends
upon, or is derived from, the value of an underlying
asset, such as a security or an index.
(B) Restrictions of Investment:
Except for the policies designated as fundamental
below, the investment policies described in this document
are not fundamental policies. The Trustees may not
change any non-fundamental policy without shareholders'
approval. As fundamental investment restrictions, which
may not be changed without a vote of a majority of the
outstanding voting securities, the Fund may not and will
not:
(1) Borrow money in excess of 10% of the value (taken at
the lower of cost or current value) of its total assets
(not including the amount borrowed) at the time the
borrowing is made, and then only from banks as a
temporary measure to facilitate the meeting of redemption
requests (not for leverage) which might otherwise require
the untimely disposition of portfolio investments or for
extraordinary or emergency purposes. Such borrowings
will be repaid before any additional investments are
purchased.
(2) Underwrite securities issued by other persons except
to the extent that, in connection with the disposition of
its portfolio investments, it may be deemed to be an
underwriter under federal securities laws.
(3) Purchase or sell real estate, although it may
purchase securities of issuers which deal in real estate,
securities which are secured by interests in real estate,
and securities which represent interests in real estate,
and it may acquire and dispose of real estate or
interests in real estate acquired through the exercise of
its rights as a holder of debt obligations secured by
real estate or interests therein.
(4) Purchase or sell commodities or commodity contracts,
except that the fund may purchase and sell financial
futures contracts and options and may enter into foreign
exchange contracts and other financial transactions not
involving physical commodities.
(5) Make loans, except by purchase of debt obligations
in which the fund may invest consistent with its
investment policies, by entering into repurchase
agreements, or by lending its portfolio securities.
(6) With respect to 75% of its total assets, invest in
the securities of any issuer if, immediately after such
investment, more than 5% of the total assets of the fund
(taken at current value) would be invested in the
securities of such issuer; provided that this limitation
does not apply to obligations issued or guaranteed as to
interest or principal by the U.S. government or its
agencies or instrumentalities.
(7) With respect to 75% of its total assets, acquire
more than 10% of the outstanding voting securities of any
issuer.
(8) Purchase securities (other than securities of the
U.S. government, its agencies or instrumentalities) if,
as a result of such purchase, more than 25% of the fund's
total assets would be invested in any one industry.
(9) Issue any class of securities which is senior to the
fund's shares of beneficial interest, except for
permitted borrowings.
It is contrary to the Fund's present policy, which
may be changed without shareholder approval, to:
(1) Invest in (a) securities which are not readily
marketable, (b) securities restricted as to resale
(excluding securities determined by the Trustees of the
Fund (or the person designated by the Trustees of the
Fund to make such determinations) to be readily
marketable), and (c) repurchase agreements maturing in
more than seven days, if, as a result, more 15% of the
Fund's net assets (taken at current value) would then be
invested in securities described in (a), (b) and (c)
above.
The Fund will, so long as shares of the Fund are
being offered for sale by the Fund in Japan, comply with
the following:
1. The Fund may not invest in the securities of other
registered open-end investment funds or companies, except
as they may be acquired as part of a merger,
consolidation or acquisition of assets.
2. The Fund may not invest more than 10% of the net
assets of the Fund in securities which are not traded on
an official stock exchange or other regulated market,
operating regularly and being recognized and open to the
public (which shall include, without limitation, the
National Association of Securities Dealers Quotation
System). This restriction shall not be applicable to
bonds determined by Putnam Investment Management, Inc. to
be liquid and for which a market price (including a
dealer quotation) is generally obtainable or
determinable.
3. The Fund may not invest in securities of any issuer
if, immediately after such investment, more than 5% of
the total assets of the Fund (taken at current value)
would be invested in the securities of such issuer,
provided that this limitation does not apply to
obligations issued or guaranteed as to interest and
principal by the U.S. government or its agencies or
instrumentalities.
4. The Fund may not acquire more than 10% of the voting
securities of any issuer and may not acquire more than
15% of the voting securities of any issuer together with
other registered investment companies managed by Putnam
Investment Management, Inc.
If any violation of the foregoing four standards
occurs, the Fund will, promptly after discovery of the
violation, take such action as may be necessary to cause
the violation to cease, which shall be the only
obligation of the Fund and the only remedy in respect of
the violation.
Although certain of the Fund's fundamental
investment restrictions permit the Fund to borrow money
to a limited extent, the fund does not currently intend
to do so and did not do so last year.
The Fund may invest without limitation in "premium
securities" as referred to in 2.(A) above.
All percentage limitations on investments other than
non-fundamental limitation (1) above, will apply at the
time of the making of an investment and shall not be
considered violated unless an excess or deficiency occurs
or exists immediately after and as a result of such
investment.
The Investment Company Act of 1940 provides that a
"vote of a majority of the outstanding voting securities"
of the Fund means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of the Fund,
or (2) 67% or more of the shares present at a meeting if
more than 50% of the outstanding shares are represented
at the meeting in person or by proxy.
(C) Risk Factors
The values of fixed-income securities fluctuate in
response to changes in interest rates. A decrease in
interest rates will generally result in an increase in
the value of Fund assets. Conversely, during periods of
rising interest rates, the value of Fund assets will
generally decline. The magnitude of these fluctuations
generally is greater for securities with longer
maturities. However, the yields on such securities are
also generally higher. In addition, the values of fixed-
income securities are affected by changes in general
economic and business conditions affecting the specific
industries of their issuers.
Changes by nationally recognized securities rating
agencies in their ratings of a fixed-income security and
changes in the ability of an issuer to make payments of
interest and principal may also affect the value of these
investments. Changes in the value of portfolio
securities generally will not affect income derived from
these securities, but will affect the Fund's net asset
value.
Investors should carefully consider their ability to
assume the risks of owning shares of a mutual fund that
invests in lower-rated securities before making an
investment.
The lower ratings of certain securities held by the
Fund reflect a greater possibility that adverse changes
in the financial condition of the issuer or in general
economic conditions, or both, or an unanticipated rise in
interest rates, may impair the ability of the issuer to
make payments of interest and principal.
The inability (or perceived inability) of issuers to
make timely payments of interest and principal would
likely make the values of securities held by the Fund
more volatile and could limit the Fund's ability to sell
its securities at prices approximating the values placed
on such securities. In the absence of a liquid trading
market for its portfolio securities the Fund at times may
be unable to establish the fair value of such securities.
The rating assigned to a security by a rating agency
does not reflect an assessment of the volatility of the
security's market value or of the liquidity of an
investment in the security.
The table below shows the percentages of the Fund
assets invested during fiscal 1997 in securities assigned
to the various rating categories by S&P, or, if unrated
by S&P, assigned to comparable rating categories by
another rating agency, and in unrated securities
determined by Investment Management Company to be of
comparable quality:
______________________________________________________________
___________
Rated securities, Unrated securities of
as percentage of comparable quality, as
Rating net assets percentage of net assets
"AAA" 0.05% -
"AA" - -
"A" - -
"BBB" 1.80% -
"BB" 19.60% 0.23%
"B" 55.04% 9.98%
"CCC" 6.81% 0.21%
"CC" 0.54% -
"C" - -
"D" 0.29% -
_______________________________________________________________________
__
Total 84.13% 10.42%
Investment Management Company seeks to minimize the
risks of investing in lower-rated securities through
careful investment analysis. When the Fund invests in
securities in the lower rating categories, the
achievement of the Fund's goals is more dependent on
Investment Management Company's ability than would be the
case if the Fund were investing in securities in the
higher rating categories.
The Fund will not necessarily dispose of a security
when its rating is reduced below its rating at the time
of purchase. However, Investment Management Company will
monitor the investment to determine whether continued
investment in the security will assist in meeting the
Fund's investment objectives.
At times, a substantial portion of Fund assets may
be invested in securities of which the Fund, by itself or
together with other funds and accounts managed by
Investment Management Company or its affiliates, holds
all or a major portion. Under adverse market or economic
conditions or in the event of adverse changes in the
financial condition of the issuer, it may be more
difficult to sell these securities when Investment
Management Company believes it advisable to do so or the
Fund may be able to sell the securities only at prices
lower than if they were more widely held. Under these
circumstances, it may also be more difficult to determine
the fair value of such securities for purposes of
computing the Fund's net asset value.
In order to enforce its rights in the event of a
default of these securities, the Fund may be required to
participate in various legal proceedings or take
possession of and manage assets securing the issuer's
obligations on the securities. This could increase Fund
operating expenses and adversely affect the Fund's net
asset value.
Certain securities held by the Fund may permit the
issuer at its option to "call," or redeem, its
securities. If an issuer were to redeem securities held
by the Fund during a time of declining interest rates,
the Fund may not be able to reinvest the proceeds in
securities providing the same investment return as the
securities redeemed.
Certain of the lower-rated securities in which the
Fund invests are issued to raise funds in connection with
the acquisition of a company in so-called "leveraged buy-
out" transactions. The highly leveraged capital
structure of such issuers may make them especially
vulnerable to adverse changes in economic conditions.
The Fund at times may invest in so-called "zero-
coupon" bonds and "payment-in-kind" bonds. Zero-coupon
bonds are issued at a significant discount from their
principal amount and pay interest only at maturity rather
than at intervals during the life of the security.
Payment-in-kind bonds allow the issuer, at its option, to
make current interest payments on the bonds either in
cash or in additional bonds. Both zero-coupon bonds and
payment-in-kind bonds allow an issuer to avoid the need
to generate cash to meet current interest payments.
Accordingly, such bonds may involve greater credit risks
than bonds paying interest in cash currently. The values
of zero-coupon bonds and payment-in-kind bonds are also
subject to greater fluctuation in response to changes in
market interest rates than bonds that pay interest in
cash currently.
Even though such bonds do not pay current interest
in cash, the Fund nonetheless is required to accrue
interest income on these investments and to distribute
the interest income on a current basis. Thus, the Fund
could be required at times to liquidate other investments
in order to satisfy its distribution requirements.
Certain investment grade securities in which the
Fund may invest share some of the risk factors discussed
above with respect to lower-rated securities.
(D) Distribution Policy:
The Fund distributes any net investment income at
least monthly and any net capital gains at least
annually. Distributions from net capital gains are made
after applying any available capital loss carryovers. A
capital loss carryover is currently available. The Fund
normally pays a distribution to Japanese investors who
hold shares as of 15th day of each month at the end of
each month, provided, however, the distribution may be
paid at the beginning of the next month.
3. MANAGEMENT STRUCTURE
(A) Outline of Management of Assets, etc.:
A. Valuation of assets:
The Fund determines the net asset value per share of
each class of shares once each day the New York Stock
Exchange (the "Exchange") is open. Currently, the
Exchange is closed Saturdays, Sundays and the following
U.S. holidays: New Year's Day, Rev. Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, the
Fourth of July, Labor Day, Thanksgiving and Christmas.
The Fund determines net asset value as of the close of
regular trading on the Exchange, currently 4:00 p.m.
However, equity options held by the Fund are priced as of
the close of trading at 4:10 p.m., and futures contracts
on U.S. government and other fixed-income securities and
index options held by the Fund are priced as of their
close of trading at 4:15 p.m.
Portfolio securities for which market quotations are
readily available are valued at market value. Long-term
corporate bonds and notes for which market quotations are
not considered readily available are valued at fair value
on the basis of valuations furnished by a pricing service
approved by the Trustees which determines valuations for
normal, institutional-size trading units of such
securities using methods based on market transactions for
comparable securities and various relationships between
securities which are generally recognized by
institutional traders. Short-term investments that will
mature on 60 days or less are valued at amortized cost,
which approximates market value. All other securities
and assets are valued at their fair value following
procedures approved by the Trustees.
Reliable market quotations are not considered to be
readily available for long-term corporate bonds and
notes, certain preferred stocks, tax-exempt securities,
and certain foreign securities. These investments are
valued at fair value on the basis of valuations furnished
by pricing services, which determine valuations for
normal, institutional-size trading units of such
securities using methods based on market transactions for
comparable securities and various relationships between
securities which are generally recognized by
institutional traders.
If any securities held by the Fund are restricted as
to resale, Investment Management Company determines their
fair value pursuant to procedures approved by the
Trustees. The fair value of such securities is generally
determined as the amount which the Fund could reasonably
expect to realize from an orderly disposition of such
securities over a reasonable period of time. The
valuation procedures applied in any specific instance are
likely to vary from case to case. However, consideration
is generally given to the financial position of the
issuer and other fundamental analytical data relating to
the investment and to the nature of the restrictions on
disposition of the securities (including any registration
expenses that might be borne by the Fund in connection
with such disposition). In addition, specific factors
are also generally considered, such as the cost of the
investment, the market value of any unrestricted
securities of the same class, the size of the holding,
the prices of any recent transactions or offers with
respect to such securities and any available analysts'
reports regarding the issuer.
Generally, trading in certain securities (such as
non-U.S. securities) is substantially completed each day
at various times prior to the close of the Exchange. The
values of these securities used in determining the net
asset value of the Fund's shares are computed as of such
times. Also, because of the amount of time required to
collect and process trading information as to large
numbers of securities issues, the values of certain
securities (such as convertible bonds, U.S. government
securities, and tax-exempt securities) are determined
based on market quotations collected earlier in the day
at the latest practicable time prior to the close of the
Exchange. Occasionally, events affecting the value of
such securities may occur between such times and the
close of the Exchange which will not be reflected in the
computation of the Fund's net asset value. If events
materially affecting the value of such securities occur
during such period, then these securities will be valued
at their fair value following procedures approved by the
Trustees.
B. Management Fee, etc.:
(1) Management Fee:
(a) Management and Agent Securities Company Fees
Under a Management Contract dated March 20,
1997, the Fund pays a following quarterly fee to
Investment Management Company based on the average
net assets of the Fund, as determined at the close
of each business day during the quarter.
Fee amount as a
percentage of
Average net assets of the Fund the average
net assets of the Fund
$500 million or less 0.70%
more than $500 million up to and including $1
billion 0.60%
more than $1 billion up to and including $1.5
billion 0.55%
more than $1.5 billion up to and including $6.5
billion 0.50%
more than $6.5 billion up to and including $11.5
billion 0.475%
more than $11.5 billion up to and including $16.5
billion 0.455%
more than $16.5 billion up to and including $21.5
billion 0.44%
more than $21.5 0.43%
For the fiscal year ending on November 30, 1997,
the Fund paid $17,916,237 as a management fee.
(b) Custodian Fee
The Custodian shall be entitled to receive, out
of the assets of the Fund reasonable compensation
for its services and expenses as Custodian, as
agreed from time to time between the Fund and the
Custodian.
For the fiscal year ending on November 30, 1997,
a custodian fee is as follows.
Custodian fee $335,580.91
Other expenses credit ($771,482.29)
Total Custodian Fee($435,901.38)
(c) Charges of the Investor Servicing Agent
The Fund will pay to the Investor Servicing
Agent such fee, out of the assets of the Fund, as
mutually agreed upon in writing from time to time,
in the amount, the time and manner of payment.
For the fiscal year ending on November 30, 1997,
the Fund paid $3,101,584 as an investor servicing
agent fee.
(d) Fee on Class M Distribution Plan
The Class M distribution plan provides for
payments by the Fund to Putnam Mutual Funds at the
annual rate of up to 1.00% of average net assets
attributable to Class M shares. The Trustees
currently limit payments under the Class M plan to
the annual rate of 0.50% of such assets.
Payments under the plan are intended to
compensate Putnam Mutual Funds Corp. for services
provided and expenses incurred by it as principal
underwriter of Fund shares, including the payments
to dealers mentioned below.
To compensate Kokusai and other dealers further
for services provided in connection with the sale of
Class M shares and the mainteneance of shareholder
accounts, Putnam Mutual Funds Corp. makes quarterly
payments to Kokusai and such other dealers.
The payments are based on the average net asset
value of Class M shares attributable to shareholders
for whom Kokusai and other dealers are designated as
the dealer of record. Putnam Mutual Funds Corp.
makes the payments at an annual rate of 0.40% of
such average net asset value of Class M shares.
Putnam Mutual Funds Corp. also pays to Kokusai
and other dealers, as additional compensation with
respect to the sale of Class M shares, 0.15% of such
average net asset value of Class M shares. For
Class M shares, the total annual payment to Kokusai
and other dealers equals 0.40% of such average net
asset value. Putnam Mutual Funds Corp. makes
quarterly payments to qualifying dealers.
For the fiscal year ending on November 30, 1997,
the Fund paid fees under the Fund's distribution
plans of $3,070,987, $8,591,350 and $5,746,875 for
the Class A Shares, Class B Shares and Class M
shares, respectively.
(e) Other Expenses:
The Fund pays all of its expenses not assumed by
Putnam Investment Management, Inc. with respect to
its management services. In addition to the
investment management, distribution plan fees,
shareholder servicing agent expenses and custodian
expenses discussed herein, the principal expenses
that the Fund is expected to pay include, but are
not limited to, fees and expenses of certain of its
Trustees; fees of its independent auditors and legal
counsel; fees payable to government agencies,
including registration and qualification fees
attributable to the Fund and its shares under
federal and state securities laws; and certain
extraordinary expenses. In addition, each class
will pay all of the expenses attributable to it.
The Fund also pays its brokerage commissions,
interest charges and taxes.
For the fiscal year ending on November 30, 1997,
the Fund paid $1,412,186 as other expenses.
C. Sales, Repurchases and Custody:
(1) Sales of Shares:
a. Sales in the United States
The Fund has closed to new investors on January
31, 1998 and, accordingly, new investors who do not
hold any shares of the Fund may not purchase shares
of the Fund.
Investors residing outside Japan can open a fund
account with as little as $500 and make additional
investments at any time with as little as $50. They
can buy fund shares three ways - through most
investment dealers, through Putnam Mutual Funds
Corp. or through a systematic investment plan.
Buying shares through Putnam Mutual Funds Corp.
Complete an order form and write a check for the
amount investors wish to invest, payable to the
Fund. Return the completed form and check to Putnam
Mutual Funds Corp., which will act as investor's
agent in purchasing shares.
Buying shares through systematic investing.
Investors can make regular investments of $25 or
more per month through automatic deductions from
investor's bank checking or savings account.
Application forms are available from investor's
investment dealer or through Investor Servicing
Agent.
Shares are sold at the public offering price
based on the net asset value next determined after
Investor Servicing Agent receives investors' order.
In most cases, in order to receive that day's public
offering price, Investor Servicing Agent must
receive investors'order before the close of regular
trading on the New York Stock Exchange. If investors
buy shares through investors' investment dealer, the
dealer must receive investors'order before the close
of regular trading on the New York Stock Exchange to
receive that day's public offering price.
Class M Shares
The public offering price of class M shares is
the net asset value plus a sales charge that varies
depending on the size of investor's purchase. The
Fund receives the net asset value. The sales charge
is allocated between investor's investment dealer
and Putnam Mutual Funds Corp. as shown in the
following table, except when Putnam Mutual Funds
Corp., at its discretion, allocates the entire
amount to investor's investment dealer.
Sales charge as
Amount of sales
a percentage of:
charge reallowed
Net to dealers as
a
Amount of transactionamount Offering percentage
of
at offering price ($) invested price
offering price
Under 50,000 3.36 % 3.25 %
3.00 %
50,000 but under 100,000 2.30 % 2.25 %
2.00 %
100,000 but under 250,000 1.52 % 1.50 %
1.25 %
250,000 but under 500,000 1.01 % 1.00 %
1.00 %
500,000 and above None None None
Class M qualified benefit plans (retirement
plans for which the Investor Servicing Agent or its
affiliates provide recordkeeping or other services
in connection with the purchase of Class M Shares)
and members of qualified groups may purchase class M
shares without a sales charge.
b. Sales in Japan
The Fund closed to new record shareholders on
December 5, 1997. (Shareholders who purchase the
Shares from KOKUSAI do not fall within the new
record shareholders above mentioned as they are on
record under the name of KOKUSAI.) Accordingly, the
number of Class M Shares available for purchase in
Japan is limited.
In Japan, Shares of the Fund are offered on any
Valuation Date during the Subscription Period
mentioned in "8. Period of Subscription, Part I
Information concerning Securities" of a securities
registration statement pursuant to the terms set
forth in "Part I. Information concerning Securities"
of the relevant securities registration statement.
The Handling Securities Company shall deliver to
investors Agreement of Foreign Securities
Transactions Account and investors shall submit to
the Handling Securities Company an Application for
Opening of Transactions Account opened in accordance
with such Agreement. The purchase shall be made in
the minimum investment amount of 100 shares and in
integral multiples of 10 shares.
The issue price for Shares during the
Subscription period shall be, in principle, the Net
Asset Value per Share next calculated on the day on
which the Fund has received such application. The
Trade Day in Japan is the day when the Handling
Securities Company confirms the execution of the
order (ordinarily the business day in Japan next
following the placement of orders), and the payment
and delivery shall be made on the fourth Business
Day after and including the Trade Day. Sales charge
shall be 3.25% of the amount of subscription all of
which may be retained by the selling dealer. 5%
consumption tax on the Sales charge will be added.
The investors having entrusted the Handling
Securities Company with custody of the Shares will
receive from the Handling Securities Company a
certificate of safekeeping in exchange for the
purchase price. In such case payment shall be made
in yen in principle and the exchange into dollars
shall be made at the exchange rate to be determined
by the Handling Securities Company based upon the
foreign exchange rate on the Tokyo foreign Exchange
market as of the Trade Day. The payment may be made
in dollars to the extent that the Handling
Securities Companies can agree.
In addition, Handling Securities Companies in
Japan who are members of the Japan Securities
Dealers' Association cannot continue sales of the
Shares in Japan when the net assets of the Fund are
less than Yen500,000,000 or the Shares otherwise cease
to comply with the "Standards of Selection of
Foreign Investment Fund Securities" established by
the Association.
(2) Repurchase of Shares:
a. Repurchase in overseas markets
A shareholder can sell his shares to the Fund
any day the New York Stock Exchange is open, either
directly to the Fund or through his investment
dealer. The Fund will only redeem shares for which
it has received payment.
Selling shares directly to the Fund. A
shareholder must send a signed letter of instruction
or stock power form to Investor Servicing Agent,
along with any certificates that represent shares a
shareholder wants to sell. The price a shareholder
will receive is the next net asset value calculated
after the Fund receives a shareholder's request in
proper form less any applicable CDSC. In order to
receive that day's net asset value, Investor
Servicing Agent must receive a shareholder's request
before the close of regular trading on the New York
Stock Exchange.
If a shareholder sells shares having a net asset
value of $100,000 or more, the signatures of
registered owners or their legal representatives
must be guaranteed by a bank, broker-dealer or
certain other financial institutions. Stock power
forms are available from a shareholder's investment
dealer, Investor Servicing Agent and many commercial
banks.
If a shareholder wants his redemption proceeds
sent to an address other than his address as it
appears on records of the Investor Servicing Agent,
a signature guarantee is required. Investor
Servicing Agent usually requires additional
documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a
surviving joint owner.
The Fund generally sends shareholders payment
for shareholders' shares the business day after
shareholders' request is received. Under unusual
circumstances, the Fund may suspend redemptions, or
postpone payment for more than seven days, as
permitted by federal securities law.
A shareholder may use Investor Servicing Agent's
Telephone Redemption Privilege to redeem shares
valued up to $100,000 unless he has notified
Investor Servicing Agent of an address change within
the preceding 15 days. Unless an investor indicates
otherwise on the account application, Investor
Servicing Agent will be authorized to act upon
redemption and transfer instructions received by
telephone from a shareholder, or any person claiming
to act as his representative, who can provide
Investor Servicing Agent with his account
registration and address as it appears on Investor
Servicing Agent's records.
Investor Servicing Agent will employ these and
other reasonable procedures to confirm that
instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures,
Investor Servicing Agent may be liable for any
losses due to unauthorized or fraudulent
instructions.
During periods of unusual market changes and
shareholder activity, a shareholder may experience
delays in contacting Investor Servicing Agent by
telephone. In this event, the shareholder may wish
to submit a written redemption request, as described
above, or contact shareholders' investment dealer,
as described below. The Telephone Redemption
Privilege is not available if the shareholder was
issued certificates for shares that remain
outstanding. The Telephone Redemption Privilege may
be modified or terminated without notice.
Selling shares through investment dealers. A
shareholder's dealer must receive shareholders'
request before the close of regular trading on the
New York Stock Exchange to receive that day's net
asset value. A shareholder's dealer will be
responsible for furnishing all necessary
documentation to Investor Servicing Agent, and may
charge a shareholder for its services.
b. Repurchase in Japan
Shareholders in Japan may at any time request
repurchase of their Shares. Repurchase requests in
Japan may be made to Investor Servicing Agent
through the Handling Securities Company on a Fund
Business Day and the business day of securities
companies in Japan without a contingent deferred
sales charge.
The price a shareholder in Japan will receive is
the next net asset value calculated after the Fund
receives the repurchase request from Kokusai,
provided the request is received before the close of
regular trading on the Exchange. The payment of the
price shall be made in yen through the Handling
Securities Companies pursuant to the Agreement of
Foreign Securities Transactions Account or, in case
the Handling Securities Companies agree, in dollars.
(3) Suspension of Repurchase:
The Fund may suspend shareholders' right of
redemption, or postpone payment for more than seven
days, if the New York Stock Exchange is closed for
other than customary weekends or holidays, or if
permitted by the rules of the Securities and
Exchange Commission during periods when trading on
the Exchange is restricted or during any emergency
which makes it impracticable for the Fund to dispose
of its securities or to determine fairly the value
of its net assets, or during any other period
permitted by order of the Commission for protection
of investors.
(4) Custody of Shares:
In overseas markets where the Shares are
offered, the Share certificates shall be held by the
Shareholders at their own risk.
The custody of the Share certificates (if
issued) sold to Japanese Shareholders shall be held,
in the name of the custodian, by the custodian of
KOKUSAI. Certificates of custody for the Shares
shall be delivered by the Handling Securities
Companies to the Japanese Shareholders.
The foregoing does not apply to the cases in
which Japanese Shareholders keep the Shares in
custody at their own risk.
D. Miscellaneous:
(1) Duration and Liquidation:
Unless terminated, the Fund shall continue
without limitation of time. The Fund may be
terminated at any time by vote of Shareholders
holding at least 66 2/3% of the Shares entitled to
vote or by the Trustees of the Fund by written
notice to the Shareholders.
(2) Accounting Year:
The accounts of the Fund will be closed each
year on 30th November.
(3) Authorized Shares:
There is no prescribed authorized number of
Shares, and Shares may be issued from time to time.
(4) Agreement and Declaration of Trust:
Originals or copies of the Agreement and
Declaration of Trust, as amended, are on file with
the Secretary of State of the Commonwealth of
Massachusetts and with the Clerk of the City of
Boston.
The Agreement and Declaration of Trust may be
amended at any time by an instrument in writing
signed by a majority of the then Trustees when
authorized to do so by vote of Shareholders holding
a majority of the Shares entitled to vote, except
that an amendment which shall affect the holders of
one or more series or classes of Shares but not the
holders of all outstanding series and classes shall
be authorized by vote of the Shareholders holding a
majority of the Shares entitled to vote of each
series and class affected and no vote of
Shareholders of a series or class not affected shall
be required. Amendments having the purpose of
changing the name of the Trust or of supplying any
omission, curing any ambiguity or curing, correcting
or supplementing any defective or inconsistent
provision contained herein shall not require
authorization by Shareholder vote.
In Japan, material changes in the Agreement and
Declaration of Trust shall be published or the
notice thereof shall be sent to the Japanese
Shareholders.
(5) Issue of Warrants, Subscription Rights, etc.:
The Fund may not grant privileges to purchase
shares of the Fund to shareholders or investors by
issuing warrants, subscription rights or options,
etc.
(6) How Performance is Shown:
Fund advertisements may, from time to time,
include performance information. "Yield" for each
class of shares is calculated by dividing the
annualized net investment income per share during a
recent 30-day period by the maximum public offering
price per share of the class on the last day of that
period.
For purposes of calculating yield, net
investment income is calculated in accordance with
SEC regulations and may differ from net investment
income as determined for tax purposes. SEC
regulations require that net investment income be
calculated on a "yield-to-maturity" basis, which has
the effect of amortizing any premiums or discounts
in the current market value of fixed-income
securities. The current dividend rate is based on
net investment income as determined for tax
purposes, which may not reflect amortization in the
same manner.
Yield is based on the price of the shares,
including the maximum initial sales charge in the
case of class A and class M shares, but does not
reflect any contingent deferred sales charge in the
case of class B shares.
"Total return" for the one-, five- and ten-year
periods (or for the life of the Fund, if shorter)
through the most recent calendar quarter represents
the average annual compounded rate of return on an
investment of $1,000 in the Fund at the maximum
public offering price (in the case of class A and
class M shares) or reflecting the deduction of any
applicable contingent deferred sales charge (in the
case of class B shares). Total return may also be
presented for other periods or based on investment
at reduced sales charge levels. Any quotation of
investment performance not reflecting the maximum
initial sales charge or contingent deferred sales
charge would be reduced if the sales charge were
used.
All data are based on past investment results
and do not predict future performance. Investment
performance, which will vary, is based on many
factors, including market conditions, portfolio
composition, Fund operating expenses and the class
of shares the investor purchases. Investment
performance also often reflects the risks associated
with the Fund's investment objectives and policies.
These factors should be considered when comparing
the Fund's investment results with those of other
mutual funds and other investment vehicles.
Quotations of investment performance for any
period when an expense limitation was in effect will
be greater than if the limitation had not been in
effect. Fund performance may be compared to that of
various indexes.
(B) Outline of Disclosure System:
(1) Disclosure in U.S.A.:
(i) Disclosure to shareholders
In accordance with the Investment Company Act of
1940, the Fund is required to send to its
shareholders annual and semi-annual reports
containing financial information.
(ii)Disclosure to the SEC
The Fund has filed a registration statement with
the SEC on Form N-1A; the Fund updates that
registration statement periodically in accordance
with applicable law.
(2) Disclosure in Japan:
a. Disclosure to the Supervisory Authority:
When the Fund intends to offer Shares amounting
to more than 500 million yen in Japan, it shall
submit to the Minister of Finance of Japan
securities registration statements together with the
copies of the Agreement and Declaration of Trust and
the agreements with major related companies as
attachments thereto. The said documents are made
available for public inspection for the investors
and any other persons who desire at the Ministry of
Finance.
The Handling Securities Companies of the Shares
shall deliver to the investors prospectuses or
explanatory brochures the contents of which are
substantially identical with Part I and Part II of
the securities registration statements. For the
purpose of disclosure of the financial conditions,
etc., the Fund shall submit to the Minister of
Finance of Japan securities reports within 6 months
of the end of each fiscal year, semi-annual reports
within 3 months of the end of each semi-annual year
and extraordinary reports from time to time when
changes occur as to material subjects of the Fund.
These documents are available for public inspection
for the investors and any other persons who desire
at the Ministry of Finance.
b. Disclosure to Japanese Shareholders:
The Japanese Shareholders will be notified of
the material facts which would change their
position, including material amendments to the
Agreement and Declaration of Trust of the Fund, and
of notices from the Trustees, through the Handling
Securities Companies.
The financial statements shall be sent to the
Japanese Shareholders through the Handling
Securities Companies or the summary thereof shall be
carried in daily newspapers.
(C) Restrictions on Transactions with Interested Parties:
Portfolio securities of the Fund may not be
purchased from or sold or loaned to any Trustee of the
Fund, Putnam Investment Management, Inc., acting as
investment adviser of the Fund, or any affiliate thereof
or any of their directors, officers, or employees unless
the transaction is made within the investment
restrictions set forth in the Fund's prospectus and
statement of additional information and either (i) at a
price determined by current publicly available quotations
(including a dealer quotation) or (ii) at competitive
prices or interest rates prevailing from time to time on
internationally recognized securities markets or
internationally recognized money markets (including a
dealer quotation).
4. INFORMATION CONCERNING THE EXERCISE OF RIGHTS BY
SHAREHOLDERS, ETC.
(A) Rights of Shareholders and Procedures for Their Exercise:
The Shareholders shall be registered in order to
exercise directly the rights of their Shares. Therefore,
the Shareholders in Japan who entrust the custody of
their Shares to the Handling Securities Company cannot
exercise directly their rights, because they are not
registered. Shareholders in Japan may have the Handling
Securities Companies exercise their rights on their
behalf in accordance with the Agreement of Foreign
Securities Transactions Account with the Handling
Securities Companies.
The Shareholders in Japan who do not entrust the
custody of their Shares to the Handling Securities
Companies may exercise their rights in accordance with
their own arrangement under their own responsibility.
The major rights enjoyed by the investors are as
follows:
(i) Voting rights
Each share has one vote, with fractional shares
voting proportionally. Shares of each class will
vote together as a single class except when
otherwise required by law or as determined by the
Trustees. Although the Fund is not required to hold
annual meetings of its shareholders, shareholders
holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to
elect or remove Trustees, or to take other actions
as provided in the Agreement and Declaration of
Trust.
(ii)Repurchase rights
Shareholders are entitled to request repurchase
of Shares at their Net Asset Value at any time.
(iii) Rights to receive dividends
Distributions from net investment income are
currently declared and paid at least monthly and any
net capital gains at least annually. Distributions
from net capital gains are made after applying any
available capital loss carryovers. A capital loss
carryover is currently available. Distributions
paid on class A shares will generally be greater
than those paid on class B and class M shares
because expenses attributable to class B and class M
shares will generally be higher.
Shareholders may choose three distribution
options, though investors in Japan may only choose
the last alternative.
- Reinvest all distributions in additional
shares without a sales charge;
- Receive distributions from net investment
income in cash while reinvesting capital gains
distributions in additional shares without a sales
charge; or
- Receive all distributions in cash.
(iv)Right to receive distributions upon dissolution
Shareholders of a fund are entitled to receive
distributions upon dissolution in proportion to the
number of shares then held by them, except as
otherwise required.
(v) Right to inspect accounting books and the like
Shareholders may inspect the Agreement and
Declaration of Trust as on file at the offices of
the Secretary of State of the Commonwealth of
Massachusetts.
(vi)Right to transfer shares
Shares are transferable without restriction except
as limited by applicable law.
(vii) Rights with respect to the U.S.
registration statement
The 1933 Act provides for the liability of the
Fund and certain other persons, subject to various
limitations and exceptions, in respect of materially
misleading disclosures made in the Fund's U.S.
registration statement.
(B) Tax Treatment of Shareholders in Japan:
The tax treatment of Shareholders in Japan shall be
as follows:
(1) The distributions to be made by the Fund will be
treated as distributions made by a domestic investment
trust.
a. The distributions to be made by the Fund to
Japanese individual shareholders will be subject to
separate taxation from other income (i.e.
withholding of income tax at the rate of 15% and
withholding of local taxes at the rate of 5%) in
Japan. In this case, no report concerning
distributions will be filed with the Japanese tax
authorities.
b. The distributions to be made by the Fund to
Japanese corporate shareholders will be subject to
withholding of income tax at the rate of 15% and to
withholding of local taxes at the rate of 5% in
Japan. In certain cases, the Handling Securities
Companies will prepare a report concerning
distributions and file such report with the Japanese
tax authorities.
c. Net investment returns such as dividends, etc.
and distributions of short-term net realized capital
gain, among distributions on Shares of the Fund,
will be, in principle, subject to withholding of U.
S. federal income tax at the rate of 15% and the
amount obtained after such deduction will be paid in
Japan.
Distributions of long-term net realized capital
gain will not be subject to withholding of U. S.
federal income tax and the full amount thereof will
be paid in Japan. The amount subject to withholding
of U. S. federal income tax may be deducted from the
tax levied on a foreign entity in Japan.
d. The Japanese withholding tax imposed on
distributions as referred to in a. and b. above will
be collected by way of so-called "difference
collecting method." In this method only the
difference between the amount equivalent to 20% of
the distributions before U.S. withholding tax and
the amount of U.S. withholding tax withheld in the
U.S. will be collected in Japan.
(2) The provisions of Japanese tax laws giving the
privilege of a certain deduction from taxable income to
corporations, which may apply to dividends paid by a
domestic corporation, shall not apply.
(3) Capital gains and losses arising from purchase and
repurchase of the Shares shall be treated in the same way
as those arising from purchase and sale of a domestic
investment trust. The distribution of the net
liquidation assets shall be also treated in the same way
as those arising from liquidation of a domestic
investment trust.
(4) The Japanese securities transaction tax will not be
imposed so far as the transactions concerned are
conducted outside Japan. Such tax, however, is
applicable to dealers' transactions for their own account
and to privately negotiated transactions conducted in
Japan.
(C) Foreign Exchange Control in U.S.A.:
In U.S.A., there are no foreign exchange control
restrictions on remittance of dividends, repurchase
money, etc. of the Shares to Japanese Shareholders.
(D) Agent in Japan:
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
The foregoing law firm is the true and lawful agent
of the Fund to represent and act for the Fund in Japan
for the purpose of;
(1) the receipt of any and all communications, claims,
actions, proceedings and processes as to matters
involving problems under the laws and the rules and
regulations of the JSDA and
(2) representation in and out of court in connection
with any and all disputes, controversies or differences
regarding the transactions relating to the public
offering, sale and repurchase in Japan of the Shares of
the Fund.
The agent for the registration with the Japanese
Minister of Finance of the public offering concerned as
well as for the continuous disclosure is each of the
following persons:
Harume Nakano
Ken Miura
Attorneys-at-law
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki, 3-chome
Chiyoda-ku, Tokyo
(E) Jurisdiction:
Limited only to litigation brought by Japanese
investors regarding transactions relating to (D)(2)
above, the Fund has agreed that the following court has
jurisdiction over such litigation:
Tokyo District Court
1-4, Kasumigaseki 1-chome
Chiyoda-ku, Tokyo
5. STATUS OF INVESTMENT FUND
(A) Diversification of Investment Portfolio:
(As of the end of February, 1998
Types of Assets Name of TotalU.S. Investme
Country Dollars nt Ratio
(%)
Corporate Bonds United 3,842,118,5 74.33
States 33
Canada 97,889,026 1.89
Mexico 81,725,925 1.58
United 71,248,375 1.38
Kingdom
Indonesia 39,596,275 0.77
Bermuda 36,875,438 0.71
Luxembourg 28,460,269 0.55
India 23,267,550 0.45
Brazil 22,550,438 0.44
Korea 14,829,505 0.29
Japan 13,940,000 0.27
Germany 13,273,300 0.26
Switzerlan 12,631,563 0.24
d
Australia 12,628,737 0.24
Columbia 10,546,406 0.20
Greece 8,798,775 0.17
China 8,051,588 0.16
Israel 6,726,875 0.13
Philippine 4,784,000 0.09
s
Poland 4,603,400 0.09
Ireland 3,966,400 0.08
Argentina 3,794,131 0.07
Ecuador 2,568,800 0.05
Netherland 198,000 0.00
s
Sub-total 4,365,073,3 84.45
09
0.00
Preferred Stock United 347,507,440 6.72
Stated
Germany 16,445,900 0.32
Canada 7,016,790 0.14
Sub-total 370,970,130 7.18
0.00
Units United 142,394,974 2.75
States
Australia 4,920,000 0.10
United 4,383,600 0.08
Kingdom
Sub-total 151,698,574 2.93
Convertible United 76,647,229 1.48
Bonds States
United 17,562,800 0.34
Kingdom
Sub-total 94,210,029 1.82
0.00
Common Stock United 69,211,354 1.34
States
Canada 1,723,838 0.03
Sub-total 70,935,192 1.37
Warrants United 14,513,263 0.28
States
Ireland 151,725 0.00
Sub-total 14,664,988 0.28
0.00
Foreign France 3,128,314 0.06
Government Bonds
Convertible United 625,000 0.01
Preferred Stock States
0.00
0.00
Cash, Deposit 97,663,345 1.89
and Other Assets
(After deduction
of liabilities)
Total 5,168,968,8 100.00
81
(Net Asset (\657,234
Value) million)
Note: Investment
ratio is
calculated by
dividing each
asset at its
market value by
the
total
Net Asset Value
of the Fund.
The same applies
hereinafter.
Ressults of Past Operations
(1) Record of Changes in Net Assets (Class M Shares)
Record of changes in net assets at the end of the
following fiscal years and at the end of each month
within one year prior to the end of February, 1998 is as
follows:
(Note) Operations of Class M Shares were commenced on
December 1, 1994.
(2) Record of Distributions Paid
Period Amount of Dividend
paid per Share
1st Fiscal Year (12/1/94 - 11/30/95) $0.98
(Yen124.61)
2nd Fiscal Year (12/1/95 - 11/30/96) $0.88
(Yen111.89)
3rd Fiscal Year (12/1/96 - 11/30/97) $0.87
(Yen110.62)
Record of distribution paid from December 1997 to
February, 1998 are as follows:
(C) Record of Sales and Repurchases
Record of sales and repurchases during the following
fiscal years and number of outstanding Shares of the Fund
as of the end of each Fiscal Year are as follows:
Number of Number of Number of
Shares Sold Shares Outstanding
Repurchased Shares
2,370,932 259,901 2,111,031
1st Fiscal (0) (0) (0)
Year
47,178,747 1,098,778 48,197,000
2nd Fiscal (42,967,350) (252,350) (42,715,000)
Year
202,989,234 42,956,933 208,229,301
3rd Fiscal (195,241,2 (38,341,87 (199,614,4
Year 80) 5) 05)
Note: The number of Shares sold, repurchased and
outstanding in the parentheses represents those
sold, repurchased and outstanding in Japan.
II. OUTLINE OF THE FUND
1. Fund
(A) Law of Place of Incorporation
The Fund is a Massachusetts business trust organized
in Massachusetts, U.S.A. on January 13, 1996.
Chapter 182 of the Massachusetts General Laws
prescribes the fundamental matters in regard to the
operations of certain business trusts constituting
voluntary associations under that chapter.
The Fund is an open-end, deversified management
company under the 1940 Act.
(B) Outline of the Supervisory Authority
Refer to I - l (B) Outline of the Supervisory
Authority.
(C) Purpose of the Fund
The purpose of the Fund is to provide investors a
managed investment primarily in securities, debt
instruments and other instruments and rights of a
financial character.
(D) History of the Fund
January 13, 1986:
Date of initial Agreement and
Declaration of Trust
May 5, 1994:
Date of Amended and Restated
Agreement and Declaration of
Trust
(E) Amount of Capital Stock
Not applicable.
(F) Structure of the management of the Fund
The Trustees are responsible for generally
overseeing the conduct of the Fund's business. The
Agreement and Declaration of Trust provides that they
shall have all powers necessary or convenient to carry
out that responsibility. The number of Trustees is fixed
by the Trustees and may not be less than three. A
Trustee may be elected either by the Trustees or by the
shareholders. At any meeting called for the purpose, a
Trustee may be removed by vote of two-thirds of the
outstanding shares of the Fund. Each Trustee elected by
the Trustees or the shareholders shall serve until he or
she retires, resigns, is removed, or dies or until the
next meeting of shareholders called for the purpose of
electing Trustees and until the election and
qualification of his or her successor.
The Trustees of the Fund are authorized by the
Agreement and Declaration of Trust to issue shares of the
Fund in one or more series, each series being preferred
over all other series in respect of the assets allocated
to that series. The Trustees may, without shareholder
approval, divide the shares of any series into two or
more classes, with such preferences and special or
relative rights and privileges as the Trustees may
determine.
Under the Agreement and Declaration of Trust the
shareholders shall have power, as and to the extent
provided therein, to vote only (i) for the election of
Trustees, to the extent provided therein (ii) for the
removal of Trustees, to the extent provided therein (iii)
with respect to any investment adviser, to the extent
provided therein (iv) with respect to any termination of
the Fund, to the extent provided therein (v) with respect
to certain amendments of the Agreement and Declaration of
Trust, (vi) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a
court action, proceeding, or claim should or should not
be brought or maintained derivatively or as a class
action on behalf of the Fund or the shareholders, and
(vii) with respect to such additional matters relating to
the Fund as may be required by the Agreement and
Declaration of Trust, the Bylaws of the Fund, or any
registration of the Fund with the Securities and Exchange
Commission (or any successor agency) or any state, or as
the Trustees may consider necessary or desirable.
Certain of the foregoing actions may, in addition, be
taken by the Trustees without vote of the shareholders of
the Fund.
On any matter submitted to a vote of shareholders,
all shares of the Fund then entitled to vote are voted in
the aggregate as a single class without regard to series
or classes of shares, except (1) when required by the
1940 Act, as amended, or when the Trustees hall have
determined that the matter affects one or more series or
classes of shares materially differently, share are voted
by individual series or class; and (2) when the Trustees
have determined that the matter affects on the interests
of one or more series or classes, then only shareholders
of such series or classes are entitled to vote thereon.
There is no cumulative voting.
Meetings of shareholders may be called by the Clerk
whenever ordered by the Trustees, the Chairman of the
Trustees, or requested in writing by the holder or
holders of at least one-tenth of the outstanding shares
entitled to vote at the meeting. Written notice of any
meeting of shareholders must be given by mailing the
notice at least seven days before the meeting. Thirty
percent of shares entitled to veto on a particular matter
is a quorum for the transaction of business on that
matter at a shareholders' meeting, except that, where any
provision of law or of the Agreement and Declaration of
Trust permits or requires that holders of any series or
class vote as an individual series or class, then thirty
percent of the aggregate number of shares of that series
or class entitled to vote are necessary to constitute a
quorum for the transaction of business by that series or
class. For the purpose of determining the shareholders
of any class or series of shares who are entitled to vote
or act at any meeting, or who are entitled to receive
payment of any dividend or other distribution, the
Trustees are authorized to fix record dates, which may
not be more then 90 days before the date of any meeting
of shareholders or more than 60 days before the date of
payment of any dividend or other distribution.
The Trustees are authorized by the Agreement and
Declaration of Trust to adopt Bylaws not inconsistent
with the Agreement and Declaration of Trust providing for
the conduct of the business of the Fund. The Bylaws
contemplate that the Trustees shall elect a Chairman of
the Trustees, the President, the Treasurer, and the Clerk
of the Fund, and that other officers, if any, may be
elected or appointed by the Trustees at any time. The
Bylaws may be amended or repealed, in whole or in part,
by a majority of the Trustees then in office at any
meeting of the Trustees, or by one or more writings
signed by such a majority.
Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the
Trustees may from time to time determine. It shall be
sufficient notice to a Trustee of a special meeting to
send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting or
to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting.
At any meeting of Trustees, a majority of the
Trustees then in office shall constitute a quorum.
Except as otherwise provided in the Agreement and
Declaration of Trust or Bylaws, any action to be taken by
the Trustees may be taken by a majority of the Trustees
present at a meeting (a quorum being present), or by
written consents of a majority of the Trustees then in
office.
Subject to a favorable majority shareholder vote (as
defined in the Agreement and Declaration of Trust), the
Trustees may contract for exclusive or nonexclusive
advisory and/or management services with any corporation,
trust, association, or other organization.
The Agreement and Declaration of Trust contains
provisions for the indemnification of Trustees, officers,
and shareholders of the Fund under the circumstances and
on the terms specified therein.
The Fund may be terminated at any time by vote of
shareholders holding at least two-thirds of the shares
entitled to vote or by the trustees by written notice to
the shareholders. Any series of shares may be terminated
at any time by vote of shareholders holding at least two-
thirds of the shares of such series entitled to vote or
by the Trustees by written notice to the shareholders of
such series.
The foregoing is a general summary of certain
provisions of the Agreement and Declaration of Trust and
Bylaws of the Fund, and is qualified in its entirety by
reference to each of those documents.
(G) Information Concerning Major Shareholders
Not applicable.
(H) Information Concerning Directors, Officers and Employees
(1) Trustees and Officers of the Fund
Shares
Name Office and Resume Owned
Title
George Putnam Chairman present: Chairman and Class A
and Director of Putnam 73,720.90
President Management and 6
Putnam Mutual Funds
Corp.
Director, Marsh &
McLennan Companies,
Inc.
William F. Vice present: Professor of Class A
Pounds Chairman Management, Alfred 18,791.01
P. Sloan School of 9
Management,
Massachusetts
Institute of
Technology
Jameson Adkins Trustee present: President, Baxter Class A
Baxter Associates, Inc. 3,034.752
Hans H. Estin Trustee present: Vice Chairman, Class A
North American 194.373
Management Corp.
Elizabeth T. Trustee present: President Class A
Kennan Emeritus and 282.782
Professor, Mount
Holyoke College
Lawrence J. Trustee present: President, Chief 0
Lasser and Vice Executive Officer
President and Director of
Putnam Investments,
Inc. and Putnam
Director, Marsh &
McLennan Companies,
Inc.
John A. Hill Trustee present: Chairman and 0
Managing Director,
First Reserve
Corporation
Ronald J. Trustee present: Former Chairman, Class A
Jackson President and Chief 124.021
Executive Officer of
Fisher-Price, Inc.,
Trustee of Salem
Hospital and the
Peabody Essex Museum
Robert E. Trustee present: President and Class A
Patterson Trustee of Cabot 17,743.36
Industrial Trust 9
Donald S. Trustee present: Director of Class A
Perkins various 4,096.340
corporations,
including Cummins
Engine Company,
Lucent Technologies,
Inc., Springs
Industries, Inc. and
Time Warner Inc.
George Putnam, Trustee present: President, New Class A
III Generation Research, 3,053.860
Inc.
A.J.C. Smith Trustee present: Chairman and Class A
Chief Executive 324.270
Officer, Marsh &
McLennan Companies,
Inc.
William Thomas Trustee present: President and Class A
Stephens Chief Executive 103.196
Officer of MacMillan
Bloedel Ltd.
Director of Mail-
Well Inc. Qwest
Communications, The
Eagle Picher Trust
and
New Century Energies
W. Nicholas Trustee present: Director of Class A
Thorndike various corporations 155.886
and charitable
organizations,
including Data
General Corporation,
Bradley Real Estate,
Inc. and Providence
Journal Co. Trustee
of Cabot Industrial
Trust Massachusetts
General Hospital and
Eastern Utilities
Associations
Charles E. Executive present: Managing Director 0
Porter Vice of Putnam
President Investments, Inc.
and Putnam
Management
Patricia C. Senior present: Senior Vice Class A
Flaherty Vice President of Putnam 4,795.37
President Investments, Inc.
and Putnam
Management
William N. Vice present: Director and 0
Shiebler President Senior Managing
Director of Putnam
Investments, Inc.
President and
Director of Putnam
Mutual Funds
Gordon H. Vice present: Director and Class A
Silver President Senior Managing 2,907.248
Director of Putnam
Investments, Inc.
and Putnam
Management
John D. Hughes Vice present Senior Vice Class A
President President of Putnam 49.956
and Management
Treasurer
Beverly Marcus Clerk and N/A Class A
Assistant 1,115.922
Treasurer
Paul L. Joskow Trustee present: Professor of Class A
Economics and 401.641
Management,
Massachusetts
Institute of
Technology,
Director, New
England Electric
System, State Fram
Indemnity Company
and Whitehead
Institute for
Biomedical Research
John H. Trustee present: Chairman and Class A
Mullin, III Chief Executive 515.462
Officer of Ridgeway
Farm, Director of
ACX Technologies,
Inc., Alex. Brown
Realty, Inc., and
The Liberty
Corporation
John R. Verani Vice present: Senior Vice 0
President President of Putnam
Management, Inc. and
the Investment
Management Company
William J. Vice present: Managing Director Class A
Curtin President of Putnam 2,342.805
Investments, Inc.
and the Investment
Management Company
Ian C. Vice present: Senior Managing 0
Ferguson President Director of
Investment
Management Company
Edward H. Vice present: Managing Director Class A
D'Alelio President of Investment 12,369.79
Management Company 6
Rosemary H. Vice present: Senior Vice 0
Thomsen President President of
Investment
Management Company
Senior Vice
President Putnam
Fiduciary Trust
Company
Mary A. Eaton Associate N/A Class A
Treasurer 3,064.43
and 7
Assistant
Clerk
(2) Employees of the Fund
The Fund does not have any employees.
(I) Description of Business and Outline of Operation
The Fund may carry out any administrative and
managerial act, including the purchase, sale,
subscription and exchange of any securities, and the
exercise of all rights directly or indirectly pertaining
to the Fund's assets. The Fund has retained Putnam
Investment Management, Inc., the Fund's investment
management company, to render investment management
services and Putnam Fiduciary Trust Company, to keep the
assets of the Fund in custody and to act as the Investor
Servicing Agent.
(J) Miscellaneous
(1) Changes of Trustees and Officers
Trustees may be removed or replaced by, among
other things, a resolution adopted by a vote of two-
thirds of the outstanding shares at a meeting called
for the purpose. In the event of vacancy, the
remaining Trustees may fill such vacancy by
appointing for the remaining term of the predecessor
Trustee such other person as they in their
discretion shall see fit. The Trustees may add to
their number as they consider appropriate. The
Trustees may elect and remove officers as they
consider appropriate.
(2) Amendment to the Agreement and Declaration of Trust
Generally, approval of shareholders is required
to amend the Agreement and Declaration of Trust,
except for certain matters such as change of name,
curing any ambiguity or curing any defective or
inconsistent provision.
(3) Litigation and Other Significant Events
Nothing which has or which would have a material
adverse effect on the Fund has occurred which has
not been disclosed. The fiscal year end of the Fund
is November 30. The Fund is established for an
indefinite period and may be dissolved at any time
by vote of the shareholders holding at least two-
thirds of the shares entitled to vote or by the
Trustees by written notice to shareholders.
2. Putnam Investment Management, Inc. (Investment Management
Company)
(A) Law of Place of Incorporation
Putnam is incorporated under the General Corporation Law
of The Commonwealth of Massachusetts, U.S.A. Its
investment advisory business is regulated under the
Investment Advisers Act of 1940.
Under the Investment Advisers Act of 1940, an investment
adviser means, with certain exceptions, any person who,
for compensation, engages in the business of advising
others, either directly or through publications or
writings, as to the value of securities or as to the
advisability of investing in, purchasing or selling
securities, or who, for compensation and as part of a
regular business, issues analyses or reports concerning
securities. Investment advisers under the Act may not
conduct their business unless they are registered with
the SEC.
(B) Outline of the Supervisory Authority
Investment Management Company is registered as an
investment adviser under the Investment Advisers Act of
1940. Putnam is regulated under the Investment Advisers
Act.
(C) Purpose of the Company
Investment Management Company's sole business is
investment management, which includes the buying,
selling, exchanging and trading of securities of all
descriptions on behalf of mutual funds in any part of the
world.
(D) History of the Company
Investment Management Company is one of America's oldest
and largest money management firms. Investment
Management Company's staff of experienced portfolio
managers and research analysts selects securities and
constantly supervises the fund's portfolio. By pooling
an investor's money with that of other investors, a
greater variety of securities can be purchased than would
be the case individually: the resulting diversification
helps reduce investment risk Investment Management
Company has been managing mutual funds since 1937.
Today, the firm serves as the Investment Management
Company for the funds in the Putnam Family, with over
$195.43 billion in assets in over 9 million shareholder
accounts at the end of February, 1998. An affiliate, The
Putnam Advisory Company, Inc., manages domestic and
foreign institutional accounts and mutual funds,
including the accounts of many Fortune 500 companies.
Another affiliate, Putnam Fiduciary Trust Company,
provides investment advice to institutional clients under
its banking and fiduciary powers as well as shareholder
and custody services to the Putnam Funds.
Putnam Investment Management Inc., Putnam Mutual Funds
and Putnam Fiduciary Trust Company are subsidiaries of
Putnam Investments, Inc., which is a subsidiary of Marsh
& McLennan Companies, Inc., a publicly-owned holding
company whose principal businesses are international
insurance and reinsurance brokerage, employee benefit
consulting and investment management.
(E) Amount of Capital Stock (as of the end of February,
1998)
1. Amount of Capital (issued capital stock at par
value):
Common Stock 1,000 shares at $1 par value
2. Number of authorized shares of capital stock:
Common Stock 1,000 shares
3. Number of outstanding shares of capital stock:
Common Stock 1,000 shares
4. Amount of capital (for the purposes of this Item,
"Amount of Capital" means total stockholders' equity
for the past five years):
Amount of Capital
Year (Total Stockholders' Equity in
Thousands)
End of 1993 $49,847,760
End of 1994 $48,149,491
End of 1995 $45,521,351
End of 1996 $45,817,658
End of 1997 $48,617,160
(F) Structure of the Management of the Company
Investment Management Company is ultimately managed by
its Board of Directors, which is elected by its
shareholders.
Each Fund of Investment Management Company managed by one
or more portfolio managers. These managers, in
coordination with analysts who research specific
securities and other members of the relevant investment
group (in the case of the Fund, Investment Management
Company's High Yield Securities Group), provide a
continuous investment program for the Fund and place all
orders for the purchase and sale of portfolio securities.
The investment performance and portfolio of each Fund is
overseen by its Board of Trustees, a majority of whom are
not affiliated with Investment Management Company. The
Trustees meet 11 times a year and review the performance
of each fund with its manager at least quarterly.
In selecting portfolio securities for the Fund,
Investment Management Company looks for high yield bonds
that represent attractive values based on careful issue-
by-issue credit analysis and hundreds of onsite visits
and other contacts with issuers every year. Investment
Management Company is one of the largest managers of high
yield debt securities in the United States. The High
Yield Bond Group comprises 17 investment professionals.
(G) Information Concerning Major Shareholders
As of the end of February, 1998, all the outstanding
shares of capital stock of Investment Management Company
were owned by Putnam Investments, Inc. See subsection D
above.
(H) Information Concerning Officers and Employees
The following table lists the names of various officers
and directors of Investment Management Company and their
respective positions with Investment Management Company.
For each named individual, the table lists: (i) any other
organizations (excluding other Investment Management
Company's funds) with which the officer and/or director
has recently had or has substantial involvement; and (ii)
positions held with such organization:
List of Officers and Directors of Putnam Investment
Management, Inc.
(as of the end of
February, 1998)
Position
with Putnam
Name Investment Other Business Affiliation
Management,
Inc.
Putnam, Chairman Chairman of Putnam Mutual
George Funds Corp.
Lasser, President
Lawrence J. and Director
Silver, Director and Putnam Fiduciary Trust
Gordon H. Senior Company
Managing Senior Administrative
Director Officer and Director of
Putnam Mutual Funds Corp.
Burke, Director and Senior Managing Director of
Robert W. Senior Putnam Mutual Funds Corp.
Managing
Director
Coburn, Senior
Gary N. Managing
Director
Ferguson, Senior
Ian C. Managing
Director
Spiegel, Director and Senior Managing Director of
Steven Senior Putnam Mutual Funds Corp.
Managing
Director
Anderson, Managing
Blake E. Director
Bankart, Managing
Alan J. Director
Bogan, Managing
Thomas Director
Browchuk, Managing
Brett Director
Collman, Managing Managing Director of Putnam
Kathleen M. Director Mutual Funds Corp.
Curtin, Managing
William J. Director
D'Alelio, Managing
Edward H. Director
DeTore, Managing Managing Director of Putnam
John A. Director Fiduciary Trust Company
Durgarian, Managing Director and Managing
Karnig H. Director Director of Putnam Fiduciary
Trust Company
Erickson, Managing
James E. Director
Esteves, Senior
Irene M. Managing
Director
Hurley, Managing Managing Director of Putnam
William J. Director Mutual Funds Corp.
Jacobs, Managing
Jerome J. Director
Kearney, Managing Managing Director of Putnam
Mary E. Director Mutual Funds Corp.
Kohli, D. Managing
William Director
Kreisel, Managing
Anthony I. Director
Landes, Managing
William J. Director
Maloney, Managing
Kevin J. Director
Martino, Managing
Michael Director
Maxwell, Managing
Scott M. Director
McGue, Managing
William F. Director
McMullen, Managing
Carol C. Director
Miller, Managing
Daniel L. Director
Morgan Jr., Managing Managing Director of Putnam
John J. Director Fiduciary Trust Company
O'Donnell Managing
Jr., C. Director
Patrick
Peacher, Managing
Stephen C. Director
Porter, Managing
Charles E. Director
Reilly, Managing
Thomas V. Director
Scott, Managing Managing Director of Putnam
Justin M. Director Fiduciary Trust Company
Schultz, Managing
Mitchell D. Director
Talanian, Managing Managing Director of Putnam
John C. Director Mutual Funds Corp.
Woolverton, Managing Managing Director of Putnam
William H. Director Mutual Funds Corp.
Asher, Senior Vice Senior Vice President of
Steven E. President Putnam Mutual Funds Corp.
Baumback, Senior Vice
Robert K. President
Beck, Senior Vice
Robert R. President
Bousa, Senior Vice
Edward P. President
Bresnahan, Senior Vice Senior Vice President of
Leslee R. President Putnam Mutual Funds Corp.
Burns, Senior Vice
Cheryl A. President
Cassaro, Managing
Joseph A. Director
Chapman, Senior Vice
Susan President
Cotner, Senior Vice
Beth C. President
Curran, J. Senior Vice Senior Vice President of
Peter President Putnam Mutual Funds Corp.
Dalferro, Senior Vice
John R. President
Daly, Senior Vice Senior Vice President of
Kenneth L. President Putnam Mutual Funds Corp.
Derbyshire, Senior Vice Senior Vice President of
Ralph C. President Putnam Mutual Funds Corp.
England, Senior Vice
Richard B. President
Fitzgerald, Senior Vice
Michael T. President
Flaherty, Senior Vice Senior Vice President of
Patricia C. President Putnam Mutual Funds Corp.
Francis, Senior Vice
Jonathan H. President
Frucci, Senior Vice Senior Vice President of
Richard M. President Putnam Fiduciary Trust
Company
Fullerton, Senior Vice Senior Vice President of
Brian J. President Putnam Mutual Funds Corp.
Gillis, Managing
Roland Director
Grant, J. Senior Vice Senior Vice President of
Peter President Putnam Fiduciary Trust
Company
Grim, Senior Vice
Daniel J. President
Haagensen, Senior Vice
Paul E. President
Halperin, Senior Vice
Matthew C. President
Healey, Senior Vice
Deborah R. President
Joseph, Senior Vice
Joseph P. President
Joyce, Senior Vice Senior Vice President of
Kevin M. President Putnam Mutual Funds Corp.
Kamshad, Senior Vice
Omid President
Kay, Karen Senior Vice Clerk, Director and Senior
R. President Vice President of Putnam
Fiduciary Trust Company
King, David Managing
L. Director
Kirson, Senior Vice
Steven L. President
Leichter, Senior Vice
Jennifer E. President
Lindsey, Senior Vice
Jeffrey R. President
Lukens, Senior Vice
James W. President
Matteis, Senior Vice
Andrew S. President
McAuley, Senior Vice
Alexander President
J.
McDonald, Senior Vice
Richard E. President
Meehan, Senior Vice
Thalia President
Mikami, Senior Vice
Darryl President
Mockard, Senior Vice
Jeanne L. President
Morgan, Senior Vice
Kelly A. President
Mufson, Senior Vice
Michael J. President
Mullin, Senior Vice
Hugh H. President
Netols, Senior Vice Senior Vice President of
Jeffrey W. President Putnam Fiduciary Trust
Company
Paine, Senior Vice
Robert M. President
Pohl, Senior Vice
Charles G. President
Pollard, Senior Vice
Mark D. President
Quinton, Senior Vice
Keith P. President
Ray, Senior Vice
Christopher President
A.
Reeves, Senior Vice
William H. President
Regan, Senior
Anthony W. Managing
Director
Rosalanko, Senior Vice
Thomas J. President
Ruys de Senior Vice Senior Vice President of
Perez, President Putnam Fiduciary Trust
Charles A. Company
Schwister, Senior Vice Senior Vice President of
Jay E. President Putnam Fiduciary Trust
Company
Simon, Senior Vice
Sheldon N. President
Smith Jr., Senior Vice
Leo J. President
Smith, Senior Vice
Margaret D. President
Storkerson, Senior Vice Senior Vice President of
John K. President Putnam Fiduciary Trust
Company
Strumpf, Senior Vice
Casey President
Sullivan, Senior Vice
Roger R. President
Swanberg, Senior Vice
Charles H. President
Swift, Senior Vice
Robert President
Thomas, Senior Vice
David K. President
Thomsen, Managing Managing Director of Putnam
Rosemary H. Director Fiduciary Trust Company
Tibbetts, Senior Vice Senior Vice President of
Richard B. President Putnam Mutual Funds Corp.
Till, Senior Vice
Hilary F. President
Verani, Senior Vice Senior Vice President of
John R. President Putnam Fiduciary Trust
Company
Weinstein, Senior Vice
Michael R. President
Weiss, Senior Vice
Manuel President
Schultz, Senior Vice
Mitchell D. President
Wheeler, Senior Vice
Diane D.F. President
Wyke, Senior Vice
Richard P. President
Zukowski, Senior Vice
Gerald S. President
Haslett, Managing
Thomas R. Director
Zieff, Managing
William Director
Svensson, Senior Vice
Lisa A. President
Waldman, Managing
David L. Director
Atkin, Senior Vice
Michael J. President
Bakshi, Senior Vice
Manjit S. President
Bamford, Senior Vice
Dolores President
Snyder
Cronin, Senior Vice Senior Vice President of
Kevin M. President Putnam Fiduciary Trust
Company
Holding, Senior Vice
Pamela President
Kobylarz, Senior Vice
Jeffrey, J. President
Koontz, Senior Vice Senior Vice President of
Jill A. President Putnam Mutual Funds Corp.
Korn, Karen Senior Vice
A. President
Kuenstner, Senior Vice
Deborah F. President
Madore, Senior Vice Senior Vice President of
Robert A. President Putnam Fiduciary Trust
Company
Malloy, Senior Vice
Julie M. President
Minn, Senior Vice
Seung, H. President
Oler, Senior Vice
Stephen S. President
Perry, Senior Vice
William President
Peters, Senior Vice
Carmel President
Santos, Senior Vice Senior Vice President of
David J. President Putnam Fiduciary Trust
Company
Scordato, Senior Vice Senior Vice President of
Christine President Putnam Mutual Funds Corp.
A.
Silk, David Senior Vice
M. President
Stairs, Senior Vice
George W. President
Troped, Senior Vice Senior Vice President of
Bonnie L. President Putnam Mutual Funds Corp.
Whalen, Senior Vice Senior Vice President of
Edward F. President Putnam Mutual Funds Corp.
Yogg, Senior Vice
Michael R. President
Officers and Directors List
(I) Summary of Business Lines and Business Operation
Investment Management Company is engaged in the business
of providing investment management and investment
advisory services to mutual funds. As of the end of
February, 1998, Investment Management Company managed,
advised, and/or administered the following 101 funds and
fund portfolios (having an aggregate net asset value of
approximately $195.43 billion):
(As of
the
end of
Februa
ry,
1998)
Name Month/Date Principal Total Net
/Year Character Net Asset
Establishe istics Asset Value
d Value per
($ share
million ($)
)
The George Putnam Fund of 11/5/37 Open/Equi 3,194.3 18.58
Boston; A ty
The George Putnam Fund of 4/24/92 Open/Equi 1,131.4 18.46
Boston; B ty
The George Putnam Fund of 12/1/94 Open/Equi 255.1 18.45
Boston; M ty
The George Putnam Fund of 1/1/94 Open/Equi 450.0 18.60
Boston; Y ty
Putnam Arizona Tax Exempt 1/30/91 Open/Bond 123.7 9.34
Income Fund; A
Putnam Arizona Tax Exempt 7/15/93 Open/Bond 30.8 9.33
Income Fund; B
Putnam Arizona Tax Exempt 7/3/95 Open/Bond 0.6 9.36
Income Fund; M
Putnam American Government 3/1/85 Open/Bond 1,506.8 8.81
Income Fund; A
Putnam American Government 5/20/94 Open/Bond 35.4 8.77
Income Fund; B
Putnam American Government 2/14/95 Open/Bond 1.7 8.82
Income Fund; M
Putnam Asia Pacific Growth 2/20/91 Open/Equi 417.6 11.50
Fund; A ty
Putnam Asia Pacific Growth 6/1/93 Open/Equi 153.3 11.35
Fund; B ty
Putnam Asia Pacific Growth 2/1/95 Open/Equi 8.1 11.46
Fund; M ty
Putnam Asset Allocation: 2/7/94 Open/Bala 856.8 11.73
Balanced Portfolio; A nced
Putnam Asset Allocation: 2/11/94 Open/Bala 486.7 11.66
Balanced Portfolio; B nced
Putnam Asset Allocation: 9/1/94 Open/Bala 84.5 11.61
Balanced Portfolio; C nced
Putnam Asset Allocation: 2/6/95 Open/Bala 53.0 11.71
Balanced Portfolio; M nced
Putnam Asset Allocation: 7/14/94 Open/Bala 237.8 11.74
Balanced Portfolio; Y nced
Putnam Asset Allocation: 2/7/94 Open/Bala 362.9 10.34
Conservative Portfolio; A nced
Putnam Asset Allocation: 2/18/94 Open/Bala 152.1 10.29
Conservative Portfolio; B nced
Putnam Asset Allocation: 9/1/94 Open/Bala 34.3 10.27
Conservative Portfolio; C nced
Putnam Asset Allocation: 2/7/95 Open/Bala 15.0 10.31
Conservative Portfolio; M nced
Putnam Asset Allocation: 7/14/94 Open/Bala 20.4 10.35
Conservative Portfolio; Y nced
Putnam Asset Allocation: 2/8/94 Open/Bala 596.9 13.10
Growth Portfolio; A nced
Putnam Asset Allocation: 2/16/94 Open/Bala 400.1 12.97
Growth Portfolio; B nced
Putnam Asset Allocation: 9/1/94 Open/Bala 84.8 12.87
Growth Portfolio; C nced
Putnam Asset Allocation: 2/1/95 Open/Bala 45.9 12.97
Growth Portfolio; M nced
Putnam Asset Allocation: 7/14/94 Open/Bala 234.1 13.18
Growth Portfolio; Y nced
Putnam Balanced Retirement 4/19/85 Open/Bala 632.6 11.17
Fund; A nced
Putnam Balanced Retirement 2/1/94 Open/Bala 107.0 11.09
Fund; B nced
Putnam Balanced Retirement 3/17/95 Open/Bala 9.7 11.13
Fund; M nced
Putnam California Tax 4/29/83 Open/Bond 3,075.4 8.79
Exempt Income Fund; A
Putnam California Tax 1/4/93 Open/Bond 603.0 8.78
Exempt Income Fund; B
Putnam California Tax 2/14/95 Open/Bond 13.3 8.78
Exempt Income Fund; M
Putnam VT Asia Pacific 5/1/95 Open/Equi 108.5 9.51
Growth Fund ty
Putnam VT Diversified 9/15/93 Open/Bond 602.7 11.50
Income Fund
Putnam VT Global Growth 5/1/90 Open/Equi 1,688.9 20.04
Fund ty
Putnam VT Global Asset 2/1/88 Open/Bala 987.7 19.90
Allocation Fund nced
Putnam VT Growth and Income 2/1/88 Open/Bala 8,684.1 29.99
Fund nced
Putnam VT High Yield Fund 2/1/88 Open/Bond 1,072.5 13.98
Putnam VT Money Market Fund 2/1/88 Open/Bond 356.9 1.00
Putnam VT New Opportunities 5/2/94 Open/Equi 2,273.5 23.07
Fund ty
Putnam VT U.S. Government 2/1/88 Open/Bond 775.3 13.58
and High Quality Bond Fund
Putnam VT Utilities Growth 5/1/92 Open/Bala 814.3 17.16
and Income Fund nced
Putnam VT Voyager Fund 2/1/88 Open/Equi 4,718.4 42.37
ty
Putnam Capital Appreciation 8/5/93 Open/Equi 1,272.1 22.67
Fund; A ty
Putnam Capital Appreciation 11/2/94 Open/Equi 1,374.7 22.43
Fund; B ty
Putnam Capital Appreciation 1/22/96 Open/Equi 103.8 22.46
Fund; M ty
Putnam Convertible Income- 6/29/72 Open/Bala 1,165.7 22.23
Growth Trust; A nced
Putnam Convertible Income- 7/15/93 Open/Bala 290.6 22.00
Growth Trust; B nced
Putnam Convertible Income- 3/13/95 Open/Bala 18.8 22.08
Growth Trust; M nced
Putnam Diversified Equity 7/1/94 Open/Equi 270.6 13.18
Trust; A ty
Putnam Diversified Equity 7/2/94 Open/Equi 333.6 13.07
Trust; B ty
Putnam Diversified Equity 7/3/95 Open/Equi 25.2 13.11
Trust; M ty
Putnam Diversified Income 10/3/88 Open/Bond 2,096.5 12.65
Trust; A
Putnam Diversified Income 3/1/93 Open/Bond 2,364.6 12.60
Trust; B
Putnam Diversified Income 12/1/94 Open/Bond 929.8 12.61
Trust; M
Putnam Diversified Income 7/11/96 Open/Bond 20.9 12.65
Trust ; Y
Putnam Equity Income Fund; 6/15/77 Open/Bala 970.9 16.30
A nced
Putnam Equity Income Fund; 9/13/93 Open/Bala 541.0 16.20
B nced
Putnam Equity Income Fund; 12/2/94 Open/Bala 56.8 16.21
M nced
Putnam Europe Growth Fund; 9/7/90 Open/Equi 496.5 20.64
A ty
Putnam Europe Growth Fund; 2/1/94 Open/Equi 394.7 20.19
B ty
Putnam Europe Growth Fund; 12/1/94 Open/Equi 23.4 20.52
M ty
Putnam Florida Tax Exempt 8/24/90 Open/Bond 241.0 9.47
Income Fund; A
Putnam Florida Tax Exempt 1/4/93 Open/Bond 70.1 9.47
Income Fund; B
Putnam Florida Tax Exempt 5/1/95 Open/Bond 1.6 9.46
Income Fund; M
Putnam High Quality Bond 6/2/86 Open/Bond 336.8 10.14
Fund; A
Putnam High Quality Bond 6/6/94 Open/Bond 14.0 10.11
Fund; B
Putnam High Quality Bond 4/12/95 Open/Bond 1.1 10.15
Fund; M
Putnam Global Governmental 6/1/87 Open/Bond 285.1 13.32
Income Trust; A
Putnam Global Governmental 2/1/94 Open/Bond 39.5 13.29
Income Trust; B
Putnam Global Governmental 3/17/95 Open/Bond 263.6 13.26
Income Trust; M
Putnam Global Growth Fund; 9/1/67 Open/Equi 2,839.7 10.87
A ty
Putnam Global Growth Fund; 4/27/92 Open/Equi 1,810.6 10.51
B ty
Putnam Global Growth Fund; 3/1/95 Open/Equi 49.1 10.80
M ty
Putnam Global Growth Fund; 6/15/94 Open/Equi 54.0 11.03
Y ty
Putnam Growth and Income 1/5/95 Open/Bala 1,164.9 14.53
Fund II; A nced
Putnam Growth and Income 1/5/95 Open/Bala 1,390.0 14.42
Fund II; B nced
Putnam Growth and Income 1/5/95 Open/Bala 164.9 14.46
Fund II; M nced
The Putnam Fund for Growth 11/6/57 Open/Bala 18,631. 20.69
and Income; A nced 5
The Putnam Fund for Growth 4/27/92 Open/Bala 15,531. 20.43
and Income; B nced 8
The Putnam Fund for Growth 5/1/95 Open/Bala 406.0 20.57
and Income; M nced
The Putnam Fund for Growth 6/15/94 Open/Bala 790.3 20.73
and Income; Y nced
Putnam High Yield Advantage 3/25/86 Open/Bond 1,602.8 10.08
Fund; A
Putnam High Yield Advantage 5/16/94 Open/Bond 1,355.3 10.03
Fund; B
Putnam High Yield Advantage 12/1/94 Open/Bond 2,205.0 10.07
Fund; M
Putnam High Yield Trust; A 2/14/78 Open/Bond 3,328.9 13.15
Putnam High Yield Trust; B 3/1/93 Open/Bond 1,240.2 13.09
Putnam High Yield Trust; M 7/3/95 Open/Bond 23.7 13.14
Putnam Health Sciences 5/28/82 Open/Equi 2,168.6 60.07
Trust; A ty
Putnam Health Sciences 3/1/93 Open/Equi 932.6 58.32
Trust; B ty
Putnam Health Sciences 7/3/95 Open/Equi 42.5 59.52
Trust; M ty
Putnam Income Fund; A 11/1/54 Open/Bond 1,388.4 7.11
Putnam Income Fund; B 3/1/93 Open/Bond 430.7 7.07
Putnam Income Fund; M 12/14/94 Open/Bond 1,249.0 7.07
Putnam Income Fund; Y 2/12/94 Open/Bond 215.0 7.12
Putnam Intermediate U.S. 2/16/93 Open/Bond 140.0 4.93
Government Income Fund; A
Putnam Intermediate U.S. 2/16/93 Open/Bond 70.5 4.93
Government Income Fund; B
Putnam Intermediate U.S. 4/3/95 Open/Bond 7.2 4.94
Government Income Fund; M
Putnam International New 1/3/95 Open/Equi 762.2 12.00
Opportunities Fund; A ty
Putnam International New 7/21/95 Open/Equi 966.3 11.82
Opportunities Fund; B ty
Putnam International New 7/21/95 Open/Equi 79.3 11.90
Opportunities Fund; M ty
Putnam Investors Fund; A 12/1/25 Open/Equi 2,356.8 12.29
ty
Putnam Investors Fund; B 3/1/93 Open/Equi 500.5 11.87
ty
Putnam Investors Fund; M 12/2/94 Open/Equi 53.2 12.13
ty
Putnam Investors Fund; Y 11/30/96 Open/Equi 121.1 12.29
ty
Putnam Massachusetts Tax 10/23/89 Open/Bond 293.1 9.64
Exempt Income Fund; A
Putnam Massachusetts Tax 7/15/93 Open/Bond 101.5 9.64
Exempt Income Fund; B
Putnam Massachusetts Tax 5/12/95 Open/Bond 2.5 9.64
Exempt Income Fund; M
Putnam Michigan Tax Exempt 10/23/89 Open/Bond 145.4 9.39
Income Fund; A
Putnam Michigan Tax Exempt 7/15/93 Open/Bond 39.9 9.38
Income Fund; B
Putnam Michigan Tax Exempt 4/17/95 Open/Bond 1.5 9.39
Income Fund; M
Putnam Minnesota Tax Exempt 10/23/89 Open/Bond 104.6 9.21
Income Fund; A
Putnam Minnesota Tax Exempt 7/15/93 Open/Bond 41.4 9.18
Income Fund; B
Putnam Minnesota Tax Exempt 4/3/95 Open/Bond 1.7 9.20
Income Fund; M
Putnam Money Market Fund; A 10/1/76 Open/Bond 2,052.4 1.00
Putnam Money Market Fund; B 4/27/92 Open/Bond 383.3 1.00
Putnam Money Market Fund; M 12/8/94 Open/Bond 56.7 1.00
Putnam Municipal Income 5/22/89 Open/Bond 824.3 9.33
Fund; A
Putnam Municipal Income 1/4/93 Open/Bond 502.1 9.32
Fund; B
Putnam Municipal Income 12/1/94 Open/Bond 15.2 9.32
Fund; M
Putnam New Jersey Tax 2/20/90 Open/Bond 225.1 9.36
Exempt Income Fund; A
Putnam New Jersey Tax 1/4/93 Open/Bond 93.9 9.35
Exempt Income Fund; B
Putnam New Jersey Tax 5/1/95 Open/Bond 0.6 9.36
Exempt Income Fund; M
Putnam New York Tax Exempt 9/2/83 Open/Bond 1,716.6 9.03
Income Fund; A
Putnam New York Tax Exempt 1/4/93 Open/Bond 230.0 9.01
Income Fund; B
Putnam New York Tax Exempt 4/10/95 Open/Bond 2.2 9.02
Income Fund; M
Putnam New York Tax Exempt 11/7/90 Open/Bond 167.0 9.18
Opportunities Fund; A
Putnam New York Tax Exempt 2/1/94 Open/Bond 61.9 9.17
Opportunities Fund; B
Putnam New York Tax Exempt 2/10/95 Open/Bond 2.4 9.16
Opportunities Fund; M
Putnam Global Natural 7/24/80 Open/Equi 221.6 20.35
Resources Fund; A ty
Putnam Global Natural 2/1/94 Open/Equi 140.1 20.06
Resources Fund; B ty
Putnam Global Natural 7/3/95 Open/Equi 8.1 20.24
Resources Fund; M ty
Putnam New Opportunities 8/31/90 Open/Equi 9,210.3 52.92
Fund; A ty
Putnam New Opportunities 3/1/93 Open/Equi 7,432.1 50.97
Fund; B ty
Putnam New Opportunities 12/1/94 Open/Equi 412.0 52.07
Fund; M ty
Putnam New Opportunities 7/19/94 Open/Equi 364.6 53.43
Fund; Y ty
Putnam Ohio Tax Exempt 10/23/89 Open/Bond 185.0 9.29
Income Fund; A
Putnam Ohio Tax Exempt 7/15/93 Open/Bond 52.5 9.28
Income Fund; B
Putnam Ohio Tax Exempt 4/3/95 Open/Bond 2.0 9.29
Income Fund; M
Putnam OTC & Emerging 11/1/82 Open/Equi 2,483.9 17.62
Growth Fund; A ty
Putnam OTC & Emerging 7/15/93 Open/Equi 1,260.4 16.92
Growth Fund; B ty
Putnam OTC & Emerging 12/2/94 Open/Equi 218.8 17.30
Growth Fund; M ty
Putnam OTC & Emerging 7/12/96 Open/Equi 106.1 17.71
Growth Fund; Y ty
Putnam International Growth 2/28/91 Open/Equi 1,358.7 18.25
Fund; A ty
Putnam International Growth 6/1/94 Open/Equi 911.5 17.96
Fund; B ty
Putnam International Growth 12/1/94 Open/Equi 107.7 18.14
Fund; M ty
Putnam International Growth 7/12/96 Open/Equi 114.2 18.28
Fund; Y ty
Putnam Pennsylvania Tax 7/21/89 Open/Bond 188.5 9.51
Exempt Income Fund; A
Putnam Pennsylvania Tax 7/15/93 Open/Bond 87.4 9.50
Exempt Income Fund; B
Putnam Pennsylvania Tax 7/3/95 Open/Bond 1.4 9.52
Exempt Income Fund; M
Putnam Preferred Income 1/4/84 Open/Bond 120.1 9.12
Fund; A
Putnam Preferred Income 4/20/95 Open/Bond 9.3 9.09
Fund; M
Putnam Tax - Free Income 9/20/93 Open/Bond 643.3 14.70
Trust
Tax - Free High Yield Fund;
A
Putnam Tax - Free Income 9/9/85 Open/Bond 1,382.4 14.72
Trust
Tax - Free High Yield Fund
B
Putnam Tax - Free Income 12/29/94 Open/Bond 18.4 14.70
Trust
Tax - Free High Yield Fund
M
Putnam Tax - Free Income 9/30/93 Open/Bond 228.7 15.51
Trust
Tax - Free Insured Fund; A
Putnam Tax - Free Income 9/9/85 Open/Bond 336.5 15.52
Trust
Tax - Free Insured Fund; B
Putnam Tax - Free Income 6/1/95 Open/Bond 1.7 15.50
Trust
Tax - Free Insured Fund; M
Putnam Tax Exempt Income 12/31/76 Open/Bond 2,034.9 9.24
Fund; A
Putnam Tax Exempt Income 1/4/93 Open/Bond 253.1 9.24
Fund; B
Putnam Tax Exempt Income 2/16/95 Open/Bond 10.0 9.26
Fund; M
Putnam Tax Exempt Money 10/26/87 Open/Bond 83.9 1.00
Market Fund
Putnam U.S. Government 2/8/84 Open/Bond 2,149.0 13.08
Income Trust; A
Putnam U.S. Government 4/27/92 Open/Bond 1,266.4 13.03
Income Trust; B
Putnam U.S. Government 2/6/95 Open/Bond 178.5 13.05
Income Trust; M
Putnam U.S. Government 4/11/94 Open/Bond 5.0 13.08
Income Trust; Y
Putnam Utilities Growth and 11/19/90 Open/Bala 703.2 12.96
Income Fund; A nced
Putnam Utilities Growth and 4/27/92 Open/Bala 736.2 12.88
Income Fund; B nced
Putnam Utilities Growth and 3/1/95 Open/Bala 10.3 12.94
Income Fund; M nced
Putnam Vista Fund; A 6/3/68 Open/Equi 3,031.8 12.79
ty
Putnam Vista Fund; B 3/1/93 Open/Equi 1,459.5 12.26
ty
Putnam Vista Fund; M 12/1/94 Open/Equi 117.5 12.56
ty
Putnam Vista Fund; Y 3/28/95 Open/Equi 270.0 12.91
ty
Putnam Voyager Fund II; A 4/14/93 Open/Equi 585.3 20.58
ty
Putnam Voyager Fund II; B 10/2/95 Open/Equi 547.3 20.21
ty
Putnam Voyager Fund II; M 10/2/95 Open/Equi 65.7 20.35
ty
Putnam Voyager Fund; A 4/1/96 Open/Equi 12,880. 20.62
ty 3
Putnam Voyager Fund; B 4/27/92 Open/Equi 6,790.2 19.50
ty
Putnam Voyager Fund; M 12/1/94 Open/Equi 297,537 20.25
ty .8
Putnam Voyager Fund; Y 4/1/94 Open/Equi 1,364.2 20.89
ty
Putnam California 11/27/92 Closed/Bo 88.2 15.66
Investment Grade Municipal nd
Trust
Putnam Convertible 6/29/95 Closed/Bo 102.1 27.57
Opportunities and Income nd
Trust
Putnam Dividend Income Fund 9/28/89 Closed/Bo 127.7 11.80
nd
Putnam High Income 7/9/87 Closed/Bo 134.7 10.00
Convertible and Bond Fund nd
Putnam Intermediate 6/27/88 Closed/Bo N/A N/A
Government Income Trust nd
Putnam Investment Grade 10/26/89 Closed/Bo 391.0 12.13
Municipal Trust nd
Putnam Investment Grade 11/27/92 Closed/Bo 255.5 14.41
Municipal Trust II nd
Putnam Investment Grade 11/29/93 Closed/Bo 64.1 13.49
Municipal Trust III nd
Putnam Managed High Yield 6/25/93 Closed/Bo 112.1 14.94
Trust nd
Putnam Managed Municipal 2/24/89 Closed/Bo 633.8 9.97
Income Trust nd
Putnam Master Income Trust 12/28/87 Closed/Bo 492.5 9.28
nd
Putnam Master Intermediate 4/29/88 Closed/Bo 864.0 8.64
Income Trust nd
Putnam Municipal 5/28/93 Closed/Bo 351.1 14.24
Opportunities Trust nd
Putnam New York Investment 11/27/92 Closed/Bo 50.3 14.15
Grade Municipal Trust nd
Putnam Premier Income Trust 2/29/88 Closed/Bo 1,244.3 8.87
nd
Putnam Tax - Free Heath 6/29/92 Closed/Bo 207.5 15.03
Care Fund nd
Putnam Growth Opportunities 10/2/95 Open/Equi 278.7 14.55
Fund; A ty
Putnam Growth Opportunities 8/1/97 Open/Equi 135.9 14.49
Fund; B ty
Putnam Growth Opportunities 8/1/97 Open/Equi 12.20 14.51
Fund; M ty
Putnam Strategic Income 2/19/95 Open/Bond 54.8 8.66
Fund; A
Putnam Strategic Income 2/19/96 Open/Bond 81.7 8.66
Fund; B
Putnam Strategic Income 2/19/96 Open/Bond 8.9 8.66
Fund; M
Putnam High Yield Total 1/1/97 Open/Bond 19.6 8.95
Return Fund; A
Putnam High Yield Total 1/1/97 Open/Bond 24.2 8.85
Return Fund; B
Putnam High Yield Total 1/1/97 Open/Bond 2.2 8.86
Return Fund; M
Putnam VT International 1/1/97 Open/Bala 231.8 12.47
Growth and Income nced
Putnam VT International New 1/1/97 Open/Equi 115.7 10.68
Opportunities Fund ty
Putnam VT International 1/1/97 Open/Equi 157.2 12.53
Growth Fund ty
Putnam Balanced Fund 10/2/95 Open/Bala 3.1 11.50
nced
Putnam Emerging Markets 10/2/95 Open/Equi 46.9 9.64
Fund; A ty
Putnam Emerging Markets 10/2/95 Open/Equi 36.7 9.55
Fund; B ty
Putnam Emerging Markets 10/2/95 Open/Equi 3.8 9.58
Fund; M ty
Putnam California Tax 10/26/87 Open/Bond 43.3 1.00
Exempt Money Market Fund
Putnam High Yield Municipal 5/25/89 Closed/Bo 248.2 9.29
Trust nd
Putnam New York Tax Exempt 10/26/87 Open/Bond 38.6 1.00
Money Market Fund
Putnam International Growth 8/1/96 Open/Equi 326.2 11.48
and Income Fund; A ty
Putnam International Growth 8/1/96 Open/Equi 333.5 11.41
and Income Fund; B ty
Putnam International Growth 8/1/96 Open/Equi 33.1 11.44
and Income Fund; M ty
Putnam Research Fund 10/2/95 Open/Equi 11.8 12.68
ty
Putnam New Value Fund; A 1/3/95 Open/Equi 489.4 14.45
ty
Putnam New Value Fund; B 2/26/96 Open/Equi 470.1 14.34
ty
Putnam New Value Fund; M 2/26/96 Open/Equi 51.6 14.38
ty
Putnam Global Growth and 1/3/95 Open/Equi 15.4 12.72
Income Fund; A ty
Putnam Global Growth and 10/31/97 Open/Equi 9.8 12.69
Income Fund; B ty
Putnam Global Growth and 10/31/97 Open/Equi 0.9 12.70
Income Fund; M ty
Putnam Equity '98 12/30/97 Open/Equi 2.8 9.72
ty
Putnam High Yield II Fund; 12/31/97 Open/Bond 42.4 8.96
A
Putnam High Yield II Fund; 12/31/97 Open/Bond 56.9 8.95
B
Putnam High Yield II Fund; 12/31/97 Open/Bond 2.7 8.95
M
Putnam International Fund 12/28/95 Open/Equi 4.0 10.42
ty
Putnam Japan Fund 12/28/95 Open/Equi 2.3 5.38
ty
Putnam International 12/28/95 Open/Equi 63.0 12.34
Voyager Fund; A ty
Putnam International 10/30/96 Open/Equi 52.1 12.27
Voyager Fund; B ty
Putnam International 10/30/96 Open/Equi 5.7 12.30
Voyager Fund; M ty
Putnam VT New Value Fund 1/2/97 Open/Equi 216.6 11.99
ty
Putnam VT Vista Fund 1/2/97 Open/Equi 193.6 13.27
ty
Fund List (J) Miscellaneous
1. Election and Removal of Directors
Directors of Investment Management Company are
elected to office or removed from office by vote of
either stockholders or directors, in accordance with
Articles of Organization and By-Laws of Investment
Management Company.
2. Results of operations
Officers are elected by the Board of Directors.
The Board of Directors may remove any officer
without cause.
3. Supervision by SEC of Changes in Directors and
Certain Officers
Putnam files certain reports with the SEC in
accordance with Sections 203 and 204 of the
Investment Advisers Act of 1940, which reports list
and provide certain information relating to
directors and officers of Investment Management
Company.
Under Section 9 (b) of the 1940 Act, SEC may
prohibit the directors and officers from remaining
in office, if SEC will judge that such directors and
officers have willfully violated any provision of
the federal securities law.
4. Amendment to the Articles of Organization, Transfer
of Business and Other Important Matters.
a. Articles of Organization of Investment
Management Company may be amended, under the
General Corporation Law of The Commonwealth of
Massachusetts, by appropriate shareholders'
vote.
b. Under the General Corporation Law of The
Commonwealth of Massachusetts, transfer of
business requires a vote of 2/3 of the
stockholders entitled to vote thereon.
c. Investment Management Company has no direct
subsidiaries.
5. Litigation, etc.
There are no known facts, such as legal
proceedings, which are expected to materially affect
the Fund and/or Investment Management Company within
the past one-year period preceding the filing of
this document.
III. OUTLINE OF THE OTHER RELATED COMPANIES
(A) Putnam Fiduciary Trust Company (the Transfer Agent,
Shareholder Service Agent and Custodian)
(1) Amount of Capital
U.S.$32,211,698 (approximately 4.1 billion Yen) as
of the end of February, 1998
(2) Description of Business
Putnam Fiduciary Trust Company is a Massachusetts
trust company and is a wholly-owned subsidiary of
Putnam Investments, Inc., parent of Putnam. Putnam
Fiduciary Trust Company has been providing paying
agent and shareholder service agent services to
mutual funds, including the Fund, since its
inception and custody services since 1990.
(3) Outline of Business Relationship with the Fund
Putnam Fiduciary Trust Company provides transfer
agent services, shareholder services and custody
services to the Fund.
(B) Putnam Mutual Funds Corp. (the Principal Underwriter)
(1) Amount of Capital
U.S.$125,548,933 (approximately 16 billion Yen) as
of the end of February, 1998
(2) Description of Business
Putnam Mutual Funds Corp. is the Principal
Underwriter of the shares of Putnam Funds indluding
the Fund.
(3) Outline of Business Relationship with the Fund
Putnam Mutual Funds Corp. engages in providing
marketing services to the Fund.
(C) Kokusai Securities Co., Ltd. (Distributor in Japan and
Agent Securities Company)
(1) Amount of Capital
Yen55.5 billion as of the end of February, 1998
(2) Description of Business
KOKUSAI Securities Co., Ltd. is a diversified
securities company in Japan. Also, it engages in
handling the sales and repurchase of the Fund Units
as the Designated Securities Company for the
investment trust funds of Kokusai Asset Management
Co., Ltd., and as the Underwriting Company and the
Agent Securities Company for International Bond
Index Fund, Fidelity Special Growth Fund, ACM
International Healthcare Fund, ACM Global
Investments, European and Asian Fund, Ever Green
Small Company Growth Fund, Asia Network Growth Fund,
Korea Sunrise Fund, Keystone Bond Fund I ? IV '95,
Ever Green Global Opportunities Fund, Putnam High
Yield Advantage Fund, Putnam U.S. Government Income
Trust, Super Phenix Fund and Fresh Korea Fund and as
the Underwriting Company for AGF Growth Equity Fund,
G.T. Investment Fund, Sci/Tech S.A. and Morgan
Stanley Money Market Family.
(3) The Company acts as a Distributor in Japan and Agent
Securities Company for the Fund in connection with
the offering of shares in Japan.
(D) Capital Relationships
100% of the shares of Putnam Investment Management,
Inc. are held by Putnam Investments. Inc.
(E) Interlocking Directors and Auditors
Names and functions of officers of the Fund who also
are officers of the related companies are as follows:
(as of the filing
date)
Investment Transfer
Name of Officer Fund Management Agent and
or Trustee Company Shareholder
Service Agent
George Putnam Chairman Chairman and None
and Director
Trustee
Charles E. Executive Managing None
Porter Vice Director
President
Patricia C. Senior Senior Vice None
Flaherty Vice President
President
Lawrence J. Trustee President and None
Lasser and Vice CEO
President
Gordon H. Vice Senior Director
Silver President Managing
Director
Gary N. Coburn Vice Senior None
President Managing
Director
Edward H. Vice Managing None
D'Alelio President Director
William J. Vice Managing None
Curtin President Director
Rosemary H. Vice Senior Vice None
Thonsen President President
IV. FINANCIAL CONDITION OF THE FUND
1. FINANCIAL STATEMENTS
[The financial highlights and financial statements of the
Fund and Japanese translations thereof are incorporated
here.]
2. CONDITION OF THE FUND
(a) Statement of Net Assets
5, b. Names of Major
16 Portfolio Securities
8, (Top 30 Holdings)
96
8,
88
1
Objects of
Investment by Putnam
High Yield Advantage
Fund are mainly
securities other than
shares, except for
certain preferred
stock.
(As of the end of February,
<TABLE> <CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1998)
U.S.$ Investm
ent
Name of Intere Maturi Par Acquisiti Current Ratio
st ty Value on
Name of Issue Country Kind of Rate Date ($1000 Curr Cost Value (%)
Issue ) ency
1. Transmerican Energy United Corporate 0 2002 113,20 US$ 88,009,48 95,088,0 1.8
144A States Bond 0 7 00
2. Midland Funding Corp. United Corporate 11 _% 2005 35,765 US$ 38,841,51 43,085,0 0.8
States Bond 6 23
3. Diamond Cable United Corporate 0 2005 51,775 US$ 34,689,59 39,607,8 0.8
Communication Co. States Bond 1 75
4. Nextel Communications United Preferred $11.12 _ 36,015 * US$ 36,015,00 37,185,4 0.7
Inc. 144A States Stock 5 0 88
5. Transamerican Energy United Corporate 11 one half% 2002 35,935 US$ 36,073,18 36,429,1 0.7
144A States Bond 8 06
6. Cencall Communications United Corporate 0 2004 35,865 US$ 15,793,27 34,609,7 0.7
Corp. States Bond 7 25
7. Winstar Communications United Corporate 0 2007 24,135 US$ 27,567,85 32,340,9 0.6
Corp. 144A States Bond 0 00
8. Nextel Communications United Corporate 0 2007 48,985 US$ 29,353,69 31,595,3 0.6
Inc. States Bond 4 25
9. Cablevision Systems United Preferred $11.12 _ 265,65 * US$ 26,428,96 30,616,3 0.6
Corp. States Stock 5 2 7 93
10 Fox Kids Worldwide Inc. United Corporate 9 one forth% 2007 29,750 US$ 29,575,00 29,378,1 0.6
. 144A States Bond 0 25
11 ICG Holdings, Inc. United Corporate 0 2005 34,500 US$ 18,807,74 28,635,0 0.6
. States Bond 9 00
12 Adelphia Communications United Corporate 9 7/8% 2007 24,445 US$ 24,299,93 26,583,9 0.5
. Corp. 144A States Bond 7 04
13 Paragon Health Networks United Corporate 9 one half% 2007 25,735 US$ 25,616,34 26,507,0 0.5
. Inc. 144A States Bond 7 50
14 Sun Healthcare Group United Corporate 9 one half% 2007 25,130 US$ 25,474,04 26,260,8 0.5
. Inc. 144A States Bond 4 50
15 Iridium LLC/Capital United Corporate 14% 2005 22,645 US$ 21,746,31 25,758,6 0.5
. Corp. 144A States Bond 7 88
* shares
U.S.$ Invest-
Name of Intere Maturi Par Acquisiti Current ment
st ty Value on Ratio
Name of Issue Country Kind of Rate Date (US$10 Curr Cost Value (%)
Issue (%) 00) ency
16 California Federal United Preferred $2.281 _ 903,70 * U.S. 23,746,50 24,964,7 0.5
. Bankcorp. Inc. States Stock 0 $ 0 13
17 First Nationwide United Corporate 10 2003 20,875 U.S. 22,315,47 23,380,0 0.5
. Holdings States Bond 5/8% $ 5 00
18 Teligent, Inc. United Corporate 11 one half% 2007 22,695 U.S. 22,695,00 23,319,1 0.5
. States Bond $ 0 13
19 Tenet Healthcare Corp. United Corporate 8 5/8% 2007 22,170 U.S. 22,932,35 23,056,8 0.4
. States Bond $ 7 00
20 GST Telecommunications, United Corporate 0 2005 28,548 U.S. 16,246,02 22,981,1 0.4
. Inc. States Bond $ 8 40
21 Kitty Hawk, Inc. 144A United Corporate 9.95% 2004 21,750 U.S. 22,000,62 22,728,7 0.4
. States Bond $ 5 50
22 Nextel Communications, United Preferred $13 _ 19,493 * U.S. 19,654,08 22,611,8 0.4
. Inc. States Stock $ 9 80
23 Nextel Communications United Corporate 0 2007 36,000 U.S. 22,318,56 22,500,0 0.4
. States Bond $ 0 00
24 Flag Limited 144A Bermuda Corporate 8 one forth% 2008 21,975 U.S. 22,192,15 22,359,5 0.4
. Bond $ 0 63
25 Celcaribe S.A. United Corporate 0 2004 21,400 U.S. 21,447,80 22,095,5 0.4
. States Bond $ 0 00
26 Allbritton United Corporate 9 _% 2007 19,445 U.S. 20,039,59 20,465,8 0.4
. Communications States Bond $ 4 63
27 Time Warner, Inc. United Corporate 7 one forth% 2017 20,000 U.S. 19,509,60 20,287,2 0.4
. States Bond $ 0 00
28 Advanta Corp. Company United Corporate 8.99% 2026 21,850 U.S. 24,078,26 19,863,1 0.4
. Guaranty States Bond $ 3 80
29 Fitzgeralds Gaming United Corporate 12 one forth% 2004 19,620 U.S. 19,393,58 19,816,2 0.4
. Corp. 144A States Bond $ 5 00
30 International Cabletel, United Corporate 0 2006 24,750 U.S. 14,709,23 19,800,0 0.4
. Inc. States Bond $ 8 00
* shares
</TABLE>
V. FINANCIAL CONDITION OF THE INVESTMENT MANAGEMENT COMPANY
[Omitted, in Japanese version, financial statements of
the Fund and Japanese translations thereof are
incorporated here]
VI. SUMMARY OF INFORMATION CONCERNING FOREIGN INVESTMENT
TRUST SECURITIES
1. Transfer of the Shares
The transfer agent for the registered share
certificates is Putnam Fiduciary Trust Company, P.O.Box
41203, Providence, RI 02940-1203, U. S. A.
The Japanese investors who entrust the custody of
their shares to a Handling Securities Company shall have
their shares transferred under the responsibility of such
company, and the other investors shall make their own
arrangements.
No fee is chargeable for the transfer of shares.
2. The Closing Period of the Shareholders' Book
No provision is made.
3. There are no annual shareholders' meetings. Special
shareholders' meeting may be held from time to time as
required by the Agreement and Declaration of Trust and
the 1940 Act.
4. No special privilege is granted to Shareholders.
The acquisition of Shares by any person may be
restricted.
VII. REFERENCE INFORMATION
VI. MISCELLANEOUS
1. The following documents concerning the Fund have
been filed with the Ministry of Finance of Japan.
December 16, 1996 Amendment to Securities
Regiatration Statement April 15, 1997 Securities
Registration Statement/Securities Report (the 2nd term)/Amendment to
Securities Registration Statement August 29, 1997 Semi-annual
Report (during the 3rd
term)/Amendment to Securities
Registration Statement
October 15, 1997 Securities
Registration Statement
2. (1) The ornamental design is used in cover page of
the Japanese Prospectus.
(2) The following must be set forth in the Prospectus.
- Outline of the Prospectus will be included at the
beginning of the Prospectus, summarizing the content of
Part I., Information on the securities, "I. Descriptions
of the Fund" and "III. Outline of Other Related
Companies" in Part II, Information on the Issuer, of the
SRS and Agreement of Foreign Securities Transactions
Account, and the internal rules of the distributor (i.e.:
subscription is accepted until 3:00 p.m. of the day;
etc.) in respect of the subscription and payment.
- With respect to PART II. INFORMATION CONCERNING
ISSUER, I. DESCRIPTION OF THE FUND, 5. STATUS OF
INVESTMENT PORTFOLIO ((A) Diversification of Investment
Fund, (B) Results of Past Operations) and the entire part
of IV. FINANCIAL CONDITIONS OF THE FUND of the SRS, the
Prospectus may present the relevant information shown in
the graphs in addition to the text and tables of the said
information acquired any time after the SRS is filed.
The Prospectus may also set forth the exchange rates
relevant to the Fund.
(3) Summarized Preliminary Prospectus will be used.
- Attached document (Summarized Preliminary
Prospectus) will be used pursuant to the below, as the
document (Summarized Preliminary Prospectus) as set forth
at Item 1.(1)(b), of Article 12 of the Ordinance
Concerning the Disclosure of the Content, etc. of the
Specified Securities.
(a) The content of the summarized Preliminary
Prospectus may be publicized by leaflets, pamphlets,
direct mails (post cards and mails in envelopes) or at
newspapers, magazines and other books.
(b) The layout, quality of papers, priting colour,
design etc. of the Summarized Preliminary Prospectus
may varyetc. of the Summarized Preliminary Prospectus
may vary depending on manner of usage. Photos and
illustrations set forth in the attached may be used.
(c) For information of the Fund's achievements, the
changes of the net asset value per share and
thefluctuation rates since the establishment of the
Fund or for the latest 3 months, 6 months, one year,
two years, three years or five years may be set out in
the figures or graphs. Such information regarding the
Fund's achievement may be converted into and presented
in yen.
AMENDMENT TO SECURITIES REGISTRATION STATEMENT
(NAV Sale)
PUTNAM HIGH YIELD ADVANTAGE FUND
AMENDMENT TO SECURITIES REGISTRATION STATEMENT
To: Minister of Finance
Filing Date : April 15, 1998
Name of the Registrant Fund: PUTNAM HIGH YIELD ADVANTAGE
FUND
Name of Trustees: George Putnam
William
F. Pounds
Jameson
A. Baxter
Hans H.
Estin
Ronald
J. Jackson
Paul L.
Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John A.
Hill
John H.
Mullin, III
Robert
E. Patterson
Donald
S. Perkins
George
Putnam, III
A.J.C.
Smith
W.
Thomas Stephens
W.
Nicholas Thorndike
Address of Principal Office: One Post Office Square
Boston,
Massachusetts 02109
U. S.
A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]
(Seal)
Ken
Miura
Attorney-at-Law
Signature [Ken Miura]
(Seal)
Address or Place of Business Kasumigaseki Building
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken
Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building.
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Public Offering or Sale for Registration
Name of the Fund Making Public PUTNAM HIGH YIELD ADVANTAGE
FUND
Offering or Sale of Foreign Investment
Fund Securities:
Type and Aggregate Amount of Up to 250 million Class M
Shares
Foreign Investment Fund Securities Up to the total
amount aggregating the
to be Publicly Offered or Sold: amounts calculated by
multiplying the respective net
asset value per Class M Share by
the respective number of Class M
Shares in respect of 250
million Class M Shares
(The
Maximum amount expected to be
sold is 2 billion 517.5 million
U.S. dollars (Yen320.1 billion).
Note 1: U.S.$ amount is translated into Japanese Yen at the
rate of U.S.$l=Yen127.15, the mean of the exchange rate
quotations by The Bank of Tokyo-Mitsubishi, Ltd. for
buying and selling spot U.S. Dollar by telegraphic
transfer against yen on February 27, l998.
Note 2: The maximum amount expected to be sold is the amount
calculated, for convenience, by multiplying the net asset
value per Share as of the end of February, 1998 ($10.07)
by the number of Shares to be offered (250 million).
Places where a copy of this Amendment to Securities
Registration
Statement is available for Public Inspection
Not applicable.
(Total number of sheets of this Amendment to Securities
Registration
Statement [in Japanese] is 2 including Front Page)
I. REASON FOR FILING THIS AMENDMENT TO SECURITIES
REGISTRATION STATEMENT:
This statement purports to amend and update the relevant
information of the Securities Registration Statement
("SRS") filed on October 15, 1997 due to the fact that
the aforementioned Securities Report was filed today.
The exchange rates used in this statement to translate
the amended amounts of foreign currencies are different
from those used before these amendments, as the latest
exchange rates are used in this statement.
II. CONTENTS OF THE AMENDMENTS (the page numbers refer to
those of the Japanese original)
Part II. INFORMATION CONCERNING ISSUER
(page 3 of the original Japanese SRS)
The following matters in the original Japanese SRS are
amended to have the same contents as those provided in
the following items of the aforementioned Securities
Report:
Before amendment After amendment
[Original Japanese SRS] [Aforementioned Annual
Securities Report]
I. DESCRIPTION OF THE
FUNDI. DESCRIPTION OF
THE FUND (the
aforementioned Japanese
Annual Securities Report,
from page 1 to page 24)
II. OUTLINE OF THE FUND
II. OUTLINE OF THE FUND
(Ditto, from page 25 to
page 59)
III.OUTLINE OF THE OTHER
III.OUTLINE OF THE OTHER
RELATED COMPANIES
RELATED COMPANIES (Ditto,
from page 60 to page 61)
IV. FINANCIAL CONDITIONS
OF IV. FINANCIAL
CONDITIONS OF
THE FUND THE
FUND (Ditto, from page 62
to page 165)
V. SUMMARY OF INFORMATION
VI. SUMMARY OF INFORMATION
CONCERNING THE
EXERCISE OF
CONCERNING THE EXERCISE OF
RIGHTS BY HOLDERS OF
FOREIGN RIGHTS BY
HOLDERS OF FOREIGN
INVESTMENT FUND
SECURITIES
INVESTMENT FUND SECURITIES
(Ditto, page
189)
VI. MISCELLANEOUS VII. REFERENCE INFORMATION
(Ditto, page 189 to page
190)
Note 1: U.S.$ amount is translated into Japanese
Yen at the rate of U.S.$1 = Yen127.15, the mean of the
exchange rate quotations at The Bank of Tokyo-
Mitsubishi, Ltd. for buying and selling spot dollars
by telegraphic transfer against yen on February 27,
1998, for convenience.
Note 2: In this document, money amounts and
percentages have been rounded. Therefore, there are
cases in which the amount of the "total column" is not
equal to the aggregate amount. Also, translation into
yen is made simply by multiplying the corresponding
amount by the conversion rate specified and rounded up
when necessary. As a result, in this document, there
are cases in which Japanese yen figures for the same
information differ from each other.
Note 3:In this Report, "fiscal year" refers to a year
from December 1 to November 30 of the following year.
Part III. SPECIAL INFORMATION
(page 180 of the original Securities Registration
Statement)
II. FINANCIAL CONDITIONS OF THE INVESTMENT MANAGEMENT
COMPANY of the Original SRS is ammended to to have the
same contents as those provided in V. FINANCIAL
CONDITIONS OF THE INVESTMENT MANAGEMENT COMPANY of the
aforementioned Securities Report:
