[Translation]
SECURITIES REGISTRATION STATEMENT
(for NAV Sale)
SECURITIES REPORT
(the Fourth Term)
From: December 1, 1997
To: November 30, 1998
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: Director of Kanto Local Finance Bureau
Filing Date: April 20, 1999
Name of the Registrant Fund: PUTNAM HIGH YIELD ADVANTAGE FUND
Name of Trustees: George Putnam
John A. Hill
William F. Pounds
Jameson A. Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
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 103 million Class M Shares
Foreign Investment Fund Securities Up to the total amount obtained by
to be Publicly Offered or Sold: aggregating the respective net
asset value per Class M Share in
respect of 103 million Class M Shares.
(The maximum amount expected to be
sold is 835.33 million U.S. dollars
(yen99.86 billion)).
Note 1: U.S.$ amount is translated into Japanese Yen at the
rate of U.S.$l.00=yen119.55 the mean of the exchange rate
quotations by The Bank of Tokyo-Mitsubishi, Ltd. for
buying and selling spot dollars by telegraphic transfer
against yen on February 26, 1999.
Note 2: The maximum amount expected to be sold is an amount
calculated by multiplying the net asset value per Class M
Share as of the end of February, 1999 (U.S.$ 119.55) by
103 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
8 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 5 6
I. DESCRIPTION OF THE FUND 5 6
II. OUTLINE OF THE FUND 5 6
III. OUTLINE OF THE OTHER RELATED COMPANIES 5 6
IV. FINANCIAL CONDITION OF THE FUND 5 6
V. SUMMARY OF INFORMATION CONCERNING
THE EXERCISE OF RIGHTS BY HOLDERS OF
FOREIGN INVESTMENT FUND SECURITIES 5 6
VI. MISCELLANEOUS 5 6
PART III. SPECIAL INFORMATION 6 7
I. OUTLINE OF THE SYSTEM OF INVESTMENT
TRUSTS IN MASSACHUSETTS 6 7
II. FINANCIAL CONDITIONS OF THE INVESTMENT
MANAGEMENT COMPANY 12 14
III. FORM OF FOREIGN INVESTMENT FUND SECURITIES 12 14
PART I. INFORMATION CONCERNING SECURITIES
1. NAME OF FUND: PUTNAM HIGH YIELD ADVANTAGE FUND
(hereinafter referred to as the "Fund")
2. NATURE OF FOREIGN Four classes of shares (Class A shares,
INVESTMENT FUND SECU- Class B shares, Class M shares and Class
RITIES CERTIFICATES: Y shares). Registered shares
without par value. In Japan,
only Class M shares (hereinafter
referred to as the "Shares") are
publicly offered. No rating has
been acquired.
3. NUMBER OF SHARES TO Up to 103 million Shares
BE OFFERED FOR SALE
(IN JAPAN)
4. TOTAL AMOUNT OF Up to the total amount obtained by
OFFERING PRICE: aggregating the respective net
asset value per Share in respect
of 103 million Shares.
(The maximum amount expected to be
sold is 835.33 million U.S.
dollars (yen99.86 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, 1999 ($8.11) by the number of Shares to be
offered (103 million).
Note 2: Dollar amount is translated for convenience at
the rate of $1.00=yen119.55 (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 26,
1999). 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:A "Fund 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 Shares may be purchased in a minimum amount
NUMBER OF SHARES of 100 shares and in integral
FOR SUBSCRIPTION: multiples of 10 shares.
8. PERIOD OF SUBSCRIPTION: From: May 6, 1999 (Thursday)
To: May 2, 2000 (Tuesday)
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" or the "Distributor")
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 13 in the
following 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. 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 purchase orders and repurchase requests for the
Shares received directly or indirectly through other
distributor or Sales Handling Companies (together with
Kokusai, hereinafter referred to as the "Sales Handling
Companies") to the Fund.
Note:The "Sales Handling Company" shall mean an
intermediary securities company or intermediary
registered financial institution which enters into
an agreement concerning the brokerage business of
Fund Shares with the Distributor to engage in the
business of forwarding investor's applications for
subscription and requests for repurchase of Fund
Shares to the Distributor and in the business of
handling the services concerning acceptance of
investors' subscription moneys and the services
concerning payments of the repurchase proceeds to
the investors and other services.
(C) The Fund has appointed Kokusai as the Agent Company in
Japan.
Note: "The Agent Company" shall mean a agent 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
distributor or Sales Handling 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 Distributor or the Sales Handling Company shall
deliver to investors an Agreement of Foreign Securities
Transactions Account and other prescribed agreements
(hereinafter referred to as the "Account Agreement") and
investors shall submit to the Distributor the or Sales
Handling Company an Application for Opening of
Transactions Account opened in accordance with Account
Agreement. The subscription amount shall be paid in yen
in principal, and the exchange rate between Dollars and
Yen shall be determined by the Distributor or the Sales
Handling 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) PERFORMANCE INFORMATION
The following information provides some indication
of the Fund's risks. The chart shows year-to-year
changes in the performance of one of the Fund's classes
of shares, class M shares. The table following the chart
compares the Fund's performance to that of a broad
measure of market performance. Of course, the Fund's
past performance is not an indication of future
performance.
Calendar Year Total Returns
1989 -4.79%
1990 -8.30%
1991 45.24%
1992 18.38%
1993 20.61%
1994 -5.36%
1995 18.58%
1996 10.26%
1997 13.11%
1998 -9.78%
During the periods shown in the chart, the highest return
for a quarter was 17.75% (quarter ending 3/31/91) and the
lowest return for a quarter was -12.04% (quarter ending
9/30/98).
Average Annual Total Returns (for periods ending 12/31/98)
Past 1 Past 5 Past 10
year years years
Class M -12.75% 4.10% 8.26%
First Boston 0.58% 8.16% 10.74%
High Yield Index
Unlike the bar chart, this performance information
reflects the impact of sales charges. Class M share
performance reflects the current maximum initial sales
charge. Performance of Class M shares in the bar chart
and table following the chart, for periods prior to their
inception on December 1, 1994, is derived from the
historical performance of the Fund's class A shares (not
offered in Japan), adjusted to reflect the appropriate
sales charge and the higher 12b-1 fees paid by class M
shares. The Fund's performance is compared to the First
Boston High Yield Index, an unmanaged index of lower-
rated, higher-yielding U.S. corporate bonds.
(C) FEES AND EXPENSES
This table summarizes the fees and expenses
investors may pay if they invest in the fund. Expenses
are based on the fund's last fiscal year.
Shareholder Fees (fees paid directly from investors' investment)
Class M
Shares
Maximum Sales Charge (Load) Imposed on Purchases 3.25%
(as a percentage of the offering price)
Maximum Deferred Sales Charge (Load) (as a NONE
percentage of the original purchase price or
redemption proceeds, whichever is lower)
Annual Operating Expenses (expenses that are deducted from fund assets)
Management Distribution Other Total Annual
Expenses Fund
Operating
Expenses
Class M 0.54% 0.50% 0.13% 1.17%
(D) EXAMPLE
This example translates the "Total Annual Fund
Operating Expenses" shown in the preceding table into
dollar amounts. By doing this, investors can easily
compare the cost of investing in the Fund to the cost of
investing in other mutual funds. The example makes
certain assumptions. It assumes that investors invest
$10,000 in the Fund for the time periods shown and then
redeem all the investors' shares at the end of those
periods. It also assumes a 5% return on investor's
investment each year and that the Fund's operating
expenses remain the same. The example is hypothetical;
actual costs and returns may be higher or lower.
1 year 3 years 5 years 10 years
Class M $440 $685 $948 $1,699
(E) 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 the 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 22)
II. OUTLINE OF THE FUND
The description in this item is the same as the
description in II. OUTLINE OF THE TRUST of the Securities
Report set forth below (Ditto, from page 23 to page 54)
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 55 to
page 56)
IV. FINANCIAL CONDITIONS OF THE FUND
The description in this item is the same as the
description in IV. FINANCIAL CONDITIONS OF THE FUND of
the Securities Report set forth below (Ditto, from page
57 to page 155)
V. SUMMARY OF INFORMATION CONCERNING THE EXERCISE OF RIGHTS
BY HOLDERS OF FOREIGN INVESTMENT FUND SECURITIES
The description in this item is the 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 179)
VI. MISCELLANEOUS
The description in this item is the same as the
description inVII. REFERENCE INFORMATION of the
Securities Report set forth below (Ditto, from page 179
to page 180)
PART III. SPECIAL INFORMATION
I. OUTLINE OF THE SYSTEM OF INVESTMENT TRUSTS IN
MASSACHUSETTS
Below is an outline of certain general information about open-
end U.S. investment companies. This outline is not intended
to provide comprehensive information about such investment
companies or the various laws, rules or regulations applicable
to them, but provides only a brief summary of certain
information which may be of interest to investors. The
discussion below is qualified in its entity by the complete
registration statement of the fund and the full text of any
referenced statutes and regulations.
I. Massachusetts Business Trusts
A. General Information
Many investment companies are organized as
Massachusetts business trusts. A Massachusetts business
trust is organized pursuant to a declaration of trust,
setting out the general rights and obligations of the
shareholders, trustees, and other related parties.
Generally, the trustees of the trust oversee its
business, and its officers and agents manage its day-to-
day affairs.
Chapter 182 of the Massachusetts General Laws
applies to certain "voluntary associations", including
many Massachusetts business trusts. Chapter 182 provides
for, among other things, the filing of the declaration of
trust with the Secretary of State of the Commonwealth of
Massachusetts and the filing by the trust of an annual
statement regarding, among other things, the number of
its shares outstanding and the names and addresses of its
trustees.
B. Shareholder Liability
Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of a trust. Typically, a declaration of
trust disclaims shareholder liability for acts or
obligations of the trust and provides for indemnification
out of trust property for all loss and expense of any
shareholder held personally liable for the obligations of
a trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is
limited to circumstances in which a particular trust
would be unable to meet its obligations.
II. United States Investment Company Laws and Enforcement
A. General
In the United States, pooled investment management
arrangements which offer shares to the public are
governed by a variety of federal statutes and
regulations. Most mutual funds are subject to these
laws. Among the more significant of these statutes are:
1. 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.
2. 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.
3. 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.
4. The Internal Revenue Code
An investment company is an entity subject to
federal income taxation under the Internal Revenue
Code. However, under the Code, an investment
company may be relieved of federal taxes on income
and gains it distributes to shareholders if it
qualifies as a "regulated investment company" under
the Code for federal income tax purposes and meets
all other necessary requirements.
5. 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.
1. 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.
2. State authorities typically have broad authority
to regulate the activities of brokers, dealers, or
other persons directly or indirectly engaged in
activities related to the offering and sale of
securities to their residents or within their
jurisdictions.
C. Offering Shares to the Public
An investment company ("investment company" or fund)
offering its shares to the public must meet a number of
requirements, including, among other things, registration
as an investment company under the 1940 Act; registration
of the sale of its shares under the 1933 Act;
registration of the fund, the sale of its shares, or
both, with state securities regulators; delivery of a
current prospectus to current or prospective investors;
and so forth. Many of these requirements must be met not
only at the time of the original offering of the fund's
shares, but compliance must be maintained or updated from
time to time throughout the life of the fund.
D. Ongoing Requirements
Under U.S. law, a fund that continuously offers its
shares is subject to numerous ongoing requirements,
including, but not limited to;
1. Updating its prospectus if it becomes materially
inaccurate or misleading;
2. Annual update of its registration statement;
3. Filing semi-annual and annual financial reports
with the SEC and distributing them to shareholders;
4. Annual trustee approval of investment advisory
arrangements, distribution plans, underwriting
arrangements, errors and omissions/director and
officer liability insurance, foreign custody
arrangements, and auditors;
5. Maintenance of a code of ethics; and
6. Periodic board review of certain fund
transactions, dividend payments, and payments under
a fund's distribution plan.
III. Management of a Fund
The board of directors or trustees of a fund are
responsible for generally overseeing the conduct of a fund's
business. The officers and agents of a fund are generally
responsible for the day-to-day operations of a fund. The
trustees and officers of a fund may or may not receive a fee
for their services.
The investment adviser to a fund is typically responsible
for implementing the fund's investment program. The adviser
typically receives a fee for its services based on a
percentage of the net assets of a fund. Certain rules govern
the activities of investment advisers and the fees they may
charge. In the United States, investment advisers to
investment companies must be registered under the Investment
Advisers Act of 1940, as amended.
IV. Share Information
A. Valuation
Shares of a fund are generally sold at the net asset
value next determined after an order is received by a
fund, plus any applicable sales charges. A fund normally
calculates its net asset value per share by dividing the
total value of its assets, less liabilities, by the
number of its shares outstanding. Shares are typically
valued as of the close of regular trading on the New York
Stock Exchange (4:00 p.m., New York time) each day the
Exchange is open.
B. Redemption
Shareholders may generally sell shares of a fund to
that fund any day the fund is open for business at the
net asset value next computed after receipt of the
shareholders' order. Under unusual circumstances, a fund
may suspend redemptions, or postpone payment for more
than seven says, if permitted by U.S. securities laws. A
fund may charge redemption fees as described in its
prospectus.
C. Transfer agency
The transfer agent for a fund typically processes
the transfer of shares, redemption of shares, and payment
and/or reinvestment of distributions.
V. Shareholder Information, Rights and Procedures for the
Exercise of Such Rights
A. Voting Rights
Voting rights vary from fund to fund. In the case
of many funds organized as Massachusetts business trusts,
shareholders are entitled to vote on the election of
trustees, approval of investment advisory agreements,
underwriting agreements, and distribution plans (or
amendments thereto), certain mergers or other business
combinations, and certain amendments to the declaration
of trust. Shareholder approval is also required to
modify or eliminate a fundamental investment policy.
B. Dividends
Shareholders are typically entitled to receive
dividends when and if declared by a fund's trustees. In
declaring dividends, the trustees will normally set a
record date, and all shareholders of record on that date
will be entitled to receive the dividend paid.
C. Dissolution
Shareholders would normally be entitled to receive
the net assets of a fund which were liquidated in
accordance with the proportion of the fund's outstanding
shares he owns.
D. Transferability
Shares of a fund are typically transferable without
restriction.
E. Right to Inspection
Shareholders of a Massachusetts business trust have
the right to inspect the records of the trust as provided
in the declaration of trust or as otherwise provided by
applicable law.
VI. U.S. Tax Matters
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its
tax liability determined under Subchapter M, the Fund will not
be subject to U.S. federal income tax on any of its net
investment income or net realized capital gains that are
distributed to its shareholders. In addition, as a
Massachusetts business trust, the Fund under present
Massachusetts law is not subject to any excise or income taxes
in Massachusetts.
In order to qualify as a "regulated investment company"
and to receive the favorable tax treatment accorded regulated
investment companies and their shareholders, the Fund must,
among other things, (a) derive at least 90% of its gross
income from dividends, interest, payments with respect to
certain securities loans, and gains from the sale of stock,
securities and foreign currencies, or other income (including
but not limited to gains from options, futures, or forward
contracts) derived with respect to its business of investing
in such stock, securities, or currencies; (b) distribute with
respect to each taxable year at least 90% of the sum of its
taxable net investment income, its net tax-exempt income, and
the excess, if any, of its net short-term capital gains over
net long-term capital losses for such year; (c) diversify its
holdings so that, at the close of each quarter of its taxable
year, (i) at least 50% of the value of its total assets
consists of cash, cash items, U.S. Government Securities,
securities of other regulated investment companies and other
securities limited generally with respect to any one issuer to
not more than 5% of the total assets of the Fund and not more
than 10% of the outstanding voting securities of such issuer,
and (ii) not more than 25 % of the value of its assets is
invested in the securities (other than those of the U.S.
Government or other regulated investment companies) of any one
issuer or of two or more issuers which the Fund controls and
which are engaged in the same, similar or related trades or
businesses.
If the Fund qualifies as a regulated investment company
that is accorded special tax treatment, the Fund will not be
subject to federal income tax on income paid to its
shareholders in the form of dividends (including capital gain
dividends).
If the Fund failed to qualify as a regulated investment
company accorded special tax treatment in any taxable year,
the Fund would be subject to tax on its taxable income at
corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income
and net long-term capital gains, would be taxable to
shareholders as ordinary income. In addition, the Fund could
be required to recognize unrealized gains, pay substantial
taxes and interest and make substantial distributions before
requalifying as a regulated investment company that is
accorded special tax treatment.
If the Fund fails to distribute in a calendar year
substantially all of its ordinary income for such year and
substantially all of its capital gain net income for the one-
year period ending October 31 (or later if the Fund is
permitted so to elect and so elects), plus any retained amount
from the prior year, the Fund will be subject to a 4% excise
tax on the undistributed amounts. A dividend paid to
shareholders by the Fund in January of a year generally is
deemed to have been paid by the Fund on December 31 of the
preceding year, if the dividend was declared and payable to
shareholders of record on a date in October, November or
December of that preceding year. The Fund intends generally
to make distributions sufficient to avoid imposition of the 4%
excise tax.
Fund distributions will be taxable to shareholders as
ordinary income, except that any distributions designated by
the Fund as deriving from net gains on securities held for
more than one year will be taxable as such, regardless of how
long a shareholder has held shares in the Fund.
Distributions will be taxable as described above whether
received in cash or in shares through the reinvestment of
distributions. Shareholders who are not subject to U.S.
federal income tax on their income generally will not have to
pay such tax on amounts distributed to them.
Distributions from capital gains are made after applying
any available capital loss carryovers.
The Fund's transactions in non-U.S. currencies, non-U.S.
currency-denominated debt securities and certain non-U.S.
currency options, futures contracts and forward contracts (and
similar instruments) may give rise to ordinary income or loss
to the extent such income or loss results from fluctuations in
the value of the non-U.S. currency concerned.
Investment by the Fund in "passive non-U.S. investment
companies" could subject the Fund to a U.S. federal income tax
or other charge on the proceeds from the sale of its
investment in such a company; however, this tax can be avoided
by making an election to mark such investments to market
annually or to treat the passive non-U.S. investment company
as a "qualified electing fund".
A "passive non-U.S. investment company" is any non-U.S.
corporation: (i) 75 percent or more of the income of which for
the taxable year is passive income, or (ii) the average
percentage of the assets of which (generally by value, but by
adjusted tax basis in certain cases) that produce or are held
for the production of passive income is at least 50 percent.
Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties,
rents, annuities, the excess of gains over losses from certain
property transactions and commodities transactions, and non-
U.S. currency gains. Passive income for this purpose does not
include rents and royalties received by the non-U.S.
corporation from active business and certain income received
from related persons.
The Fund's investment in securities issued at a discount
and certain other obligations will (and investments in
securities purchased at a discount may) require the Fund to
accrue and distribute income not yet received. In order to
generate sufficient cash to make the requisite distributions,
the Fund may be required to sell securities in its portfolio
that it otherwise would have continued to hold.
The sale, exchange or redemption of Fund shares may give
rise to a gain or loss. In general, any gain or loss realized
upon a taxable disposition of shares will be treated as long-
term capital gain or loss if the shares have been held for
more than 12 months, and otherwise as short-term capital gain
or loss. However, any loss realized upon a taxable
disposition of shares held for six months or less will be
treated as long-term, rather than short-term, to the extent of
any long-term capital gain distributions received by the
shareholder with respect to the shares. All or a portion of
any loss realized upon a taxable disposition of Fund shares
will be disallowed if other shares of the Fund are purchased
within 30 days before or after the disposition. In such a
case, the basis of the newly purchased shares will be adjusted
to reflect the disallowed loss.
Special tax rules apply to investments through defined
contribution plans and other tax-qualified plans.
Shareholders should consult their tax adviser to determine the
suitability of shares of the Fund as an investment through
such plans and the precise effect of an investment on their
particular tax situation.
The Fund generally is required to withhold and remit to
the U.S. Treasury 31% of the taxable dividends and other
distributions paid to any individual shareholder who fails to
furnish the Fund with a correct taxpayer identification number
(TIN), who has under-reported dividends or interest income, or
who fails to certify to the fund that he or she is not subject
to such withholding. Shareholders who fail to furnish their
correct TIN are subject to a penalty of $50 for each such
failure unless the failure is due to reasonable cause and not
wilful neglect. An individual's taxpayer identification
number is his or her social security number.
The Internal Revenue Service recently revised its
regulations affecting the application to non-U.S. investors of
the back-up withholding and withholding tax rules described
above. The new regulations generally will be effective for
payment made after December 31, 1999 (although transition
rules will apply). In some circumstances, the new rules will
increase the certification and filing requirements imposed on
non-U.S. investors in order to qualify for exemption from the
31% back-up withholding tax rates under income tax treaties.
Non-U.S. investors in a fund should consult their tax advisors
with respect to the potential application of these new
regulations.
Non-U.S. investors should consult their tax advisers
concerning the tax consequences of ownership of shares of the
fund, including the possibility that distributions may be
subject to a 30% United States withholding tax (or a reduced
rate of withholding provided by treaty), the possibility that
a non-U.S. investor may be subject to U.S. tax on capital gain
distributions and gains realized upon the sale of fund shares
if the investor is present in the United States for more than
182 days during the taxable year (and certain other conditions
apply), or the possibility that a non-U.S. investor may be
subject to U.S. tax on income from the fund that is
"effectively connected" with a U.S. trade or business carried
on by such an investor. Shareholders residing in Japan should
consult "Tax Treatment of Shareholders in Japan" on page 38 of
the Annual Report.
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and related regulations
currently in effect. For the complete provisions, reference
should be made to the pertinent Code sections and regulations.
The Code and regulations are subject to change by legislative
or administrative actions. Dividends and distributions also
may be subject to foreign state or local taxes. Shareholders
are urged to consult their tax advisers regarding specific
questions as to U.S. federal, state or local taxes. The
foregoing discussion relates solely to U.S. federal income tax
law.
VII. Important Participants in Offering of Mutual Fund Shares
A. Investment Company
Certain pooled investment vehicles qualify as
investment companies under the 1940 Act. There are open-
end investment companies (those which offer redeemable
securities) and closed-end investment companies (any
others).
B. Investment Adviser/Administrator
The investment adviser is typically responsible for
the implementation of an investment company's investment
program. It, or another affiliated or unaffiliated
entity, may also perform certain record keeping and
administrative functions.
C. Underwriter
An investment company may appoint one or more
principal underwriters for its shares. The activities of
such a principal underwriter are generally governed by a
number of legal regimes, including, for example, the 1940
Act, the 1933 Act, the 1934 Act, and state laws.
D. Transfer Agent
A transfer agent performs certain bookkeeping, data
processing, and administrative services pertaining to the
maintenance of shareholder accounts. A transfer agent
may also handle the payment of any dividends declared by
the trustees of a fund.
E. Custodian
A custodian's responsibilities may include, among
other things, safeguarding and controlling a fund's cash
and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on a
fund's investments.
II. FINANCIAL CONDITION OF THE INVESTMENT MANAGEMENT COMPANY
The description in this item is same as the description
in II. FINANCIAL CONDITION OF THE INVESTMENT MANAGEMENT
COMPANY of the Securities Report set forth below (Ditto,
from page 156 to page 178)
III. FORM OF FOREIGN INVESTMENT FUND SECURITIES
Main items to be set forth on the share certificate of
the Fund (if issued) are as follows:-
(1) Front
a. Name of the Fund
b. Number of shares represented
c. Signatures of the Chairman and Transfer Agent
d. Description stating that the Declaration of Trust
applies to shareholders and assignees therefrom
(2) Back
a. Space for endorsement
b. Description concerning delegation of transfer agency
SECURITIES REPORT
(the Fourth Term)
From: December 1, 1997
To: November 30, 1998
PUTNAM HIGH YIELD ADVANTAGE FUND
SECURITIES REPORT
(the Fourth Term)
From: December 1, 1997
To: November 30, 1998
To: Director of Kanto Local Finance Bureau
Filing Date : April 20, 1999
Name of the Registrant Fund: PUTNAM HIGH YIELD ADVANTAGE FUND
Name of Trustees: George Putnam
John A. Hill
William F. Pounds
Jameson A. Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
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 92 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 6 7
3. MANAGEMENT STRUCTURE 10 13
4. INFORMATION CONCERNING THE EXERCISE
OF RIGHTS BY SHAREHOLDERS 17 25
5. STATUS OF INVESTMENT PORTFOLIO 20 29
II. OUTLINE OF THE FUND 23 32
III. OUTLINE OF THE OTHER RELATED COMPANIES 55 68
IV. FINANCIAL CONDITIONS OF THE FUND 57 70
V. FINANCIAL CONDITIONS OF THE INVESTMENT 156 76
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 179 76
VII. REFERENCE INFORMATION 179 76
Note 1: The exchange rate of U.S. Dollars
("dollar" or "$") into Japanese Yen is yen119.55 for
one U.S. Dollar, which is the actual middle point
between the selling and buying currency rate by
telegraphic transfer on the February 26, 1999
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 a shareholder owns 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.
Year 2000 issues. The Fund could be adversely affected if the
computer systems used by the Investment Management Company and the
Fund's other service providers do not properly process and
calculate the date-related information relating to the end of this
century and the beginning of the next. While year 2000-related
computer problems could have a negative effect on the Fund, both in
its operations and in its investments, the Investment Management
Company is working to avoid such problems and to obtain assurances
from service providers that they are taking similar steps. No
assurances, though, can be provided that the Fund will not be
adversely impacted by these matters.
(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) Objective and Basic Nature of the Fund:
GOAL
The Fund seeks high current income. Capital growth is a
secondary goal when consistent with achieving high current income.
MAIN INVESTMENT STRATEGY- lower-rated bonds
Under normal market conditions, the Fund invest at least 80%
of its assets in debt securities, convertible securities of
preferred stock that Investment Management Company believes are
consistent with its primary investment objective of high current
income. Typically, the Fund's investments are
- corporate bonds and notes,
- below investment grade in quality ("junk bonds") and,
- intermediate to long-term (with maturities of more than 3 years)
The Fund seeks its secondary goal of capital growth mainly
through investments that may increase in value because of declining
long-term interest rates or improvements in the financial condition
or credit rating of the company that issued them. The Fund often
invests in companies with smaller market capitalizations.
MAIN RISKS
The main risks that could adversely affect the value of this Fund's
shares and the total return on investors' investment include:
- The risk that issuers of debt the Fund purchased will not make
(or will be perceived as unlikely to make) timely payments of
interest and principal. This credit risk is higher for corporate
debt than it is for U.S. government debt, and is higher still for
junk bonds. BECAUSE THE FUND INVESTS MAINLY IN JUNK BONDS, THIS
RISK IS HEIGHTENED FOR THE FUND. INVESTORS SHOULD CAREFULLY
CONSIDER THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND.
- The risk that movements in the securities markets will
adversely affect the value of the Fund's investments. This risk
includes interest rate risk, which means that the prices of the
Fund's investment are likely to fall if interest rates rise.
Interest rate risk is often highest for investments with long
maturities.
Investors can lose money by investing in the Fund. The Fund
may not achieve its goal, and is not intended as a complete
investment program. An investment in the Fund is not a deposit of
a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
(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 Company") engages in forwarding purchase or repurchase
orders for the Shares in Japan and also acts as the agent
company.
Related Companies of the Fund
Fund
Putnam High Yield Advantage Fund
Trustees Investor Servicing
(Agreement and Declaration of Trust) Agreement
Distribution Agreement Custodian Agreement
Principal Underwriter Custodian Investor
Servicing Agent
Putnam Mutual Funds Corp. Putnam Fiduciary Trust Co.
(acts as distributor) (acts as custodian and
investor servicing agent of
the Fund)
Japan Dealer Sales Agreement
Agent Company Management Contract
Agreement
Distributor in Japan Investment Management
Agent Company Company
Kokusai Securities Co., Ltd. Putnam Investment Management, Inc.
(forwarding of sales in Japan and (acts as investment management of
renering of service as agent company) the Fund and investment adviser
concerning the Fund's assets)
2. INVESTMENT POLICY
(A) Basic Policy for Investment and Objectives of Investment (including
risk factors):
Any investment carries with it some level of risk that
generally reflects its potential for reward. The Fund pursues its
goals by investing mainly in corporate bonds and notes, and to a
lesser degree, preferred stocks. These investments are commonly
known as fixed-income investments. The Investment Management
Company will consider, among other things, credit and interest rate
risk when deciding whether to buy or sell investments. A
description of the risks associated with the Fund's main investment
strategies follows.
INTEREST RATE RISK.
The values of fixed income investments usually rise and fall
in response to changes in interest rates. Declining interest rates
will generally raise the value of existing fixed-income
investments. Changes in the values of fixed-income investments
usually will not affect the amount of income the Fund receives from
them, but will affect the value of the Fund's shares. Interest
rate risk is often greater for investments with longer maturities.
The Fund may buy investments that give the issuing company the
option to "call" or redeem, these investments before their maturity
date. If an investment were to be "called" by a company during a
time of declining interest rates, the Fund might have to reinvest
the proceeds in an investment offering a lower yield, and might not
benefit from any increase in value as a result of declining
interest rates.
The Fund may invest in so-called "premium" investments, which
offer interest rates higher than prevailing market rates. In
addition, during times of declining interest rates, many of the
Fund's investments may offer interest rates that are higher than
current market rates. When the Fund holds these premium
investments, shareholders are likely to receive higher dividends
(but will bear a greater risk that the value of the Fund's shares
will fall) than they would if the Fund held investments offering
current market rates of interest. Premium investments involve a
greater risk of loss, because other values tend to decline towards
the face value over time. Investors may find it useful to compare
the Fund's yield, which excludes the effect of premium securities,
with its current dividend rate, which does not exclude that effect.
CREDIT RISK AND LOWER-RATED INVESTMENTS.
Investors normally expect to be compensated in proportion to
the risk they are assuming. Fixed-income investments of companies
with poor credit usually offer higher yields than those of
companies with better credit. Higher-rated investments offer lower
credit risk, but not lower interest rate risk. The value of a
higher-rated investment still fluctuates in response to changes in
interest rates.
The Fund's investments are mainly below investment grade in
quality. The Fund may buy investments in any rating category (and
unrated securities of comparable quality), and may invest up to 15%
of its assets in investment rated below CCC (or its equivalent) by
each nationally recognized securities rating agency rating the
security, and in unrated investments that the Investment Management
Company determines are of comparable quality. The Fund will not
necessarily sell an investment if its rating is reduced. A
reduction in an investment's rating will generally cause its value
to decline.
Fixed-income investments rated below BBB (or its equivalent)
and comparable unrated securities are considered below investment
grade and are commonly known as "junk bonds". They are considered
to be of poor standing and mainly speculative, and those in the
lowest rating category may be in default and are generally regarded
by the rating agency as having extremely poor prospects of ever
attaining any real investment standing. The lower ratings of these
instruments reflect a greater possibility that the issuing
companies may be unable to make timely payments of interest and
principal and thus default. If this happens, or is perceived as
likely to happen, the values of those investments will usually be
more volatile. A default or expected default could also make it
difficult for the Fund to sell the investments at prices
approximating the values the Fund had previously placed on them.
Because junk bonds are traded mainly by institutions, they usually
have a limited market, which may at times make it difficult for the
Fund to establish their fair value.
Credit ratings are based largely on the issuing company's
historical financial condition and the rating agencies' investment
analysis at the time of purchase. The rating assigned to any
particular investment does not necessarily reflect the issuing
company's current financial condition and does not reflect an
assessment of an investment's volatility or liquidity.
Although the Investment Management Company considers credit
ratings in making investment decisions, it performs its own
investment analysis and does not rely only on ratings assigned by
the rating agencies. The Investment Management Company seeks to
minimize the risks of fixed-income investment through careful
analysis of such factors as a company's experience, managerial
strength, financial condition, borrowing requirements and debt
maturity schedule. When the Fund buys fixed-income investments of
a company with poor credit, the achievement of the Fund's goals
depends more on the Investment Management Company 's ability to
analyze credit risks than would be the case if the Fund were buying
fixed-income investment of a company with better credit.
Because the likelihood of default is higher for the lower-
rated investments in which the Fund mainly invests, the Fund is
more likely to have to participate in various legal proceedings or
to take possessions of and manage assets that secure the issuing
company's obligation. This could increase the Fund's operating
expenses and decrease its net asset value.
At times the Fund, either by itself or together with other
Funds and accounts managed by the Investment Management Company or
its affiliates, may own all or most of the fixed-income investments
of a particular issuing company. This concentration of ownership
may make it more difficult to sell, or set a fair value on, these
investments.
Although they are generally thought to have the lower credit
risk, the Fund's investment-grade fixed-income investments may
share some of the risks of lower rated investments.
The Fund may at times invest in "zero coupon" bonds and
"payment-in-kind" bonds. Zero coupon bonds are issued at less than
their face value and make payments of interest only at maturity
rather than at intervals during the life of the bond. Payment-in-
kind bonds give the issuing company the option to make interest
payments in additional bonds rather than cash. Both kind of bonds
allow a company to avoid generating cash to make current interest
payments. These bonds therefore involve greater credit risk and
are subject to greater price fluctuations than bonds that pay
current interest in cash.
Participations and assignments.
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 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.
Non-U.S. investments
The Fund may invest without limit in securities of non-U.S.
issuers that are traded in U.S. public markets. While the Fund may
also invest in securities of non-U.S. issuers that are not traded
in U.S. public markets, it does not expect that such investments
will normally represent more than 20% of its assets, although they
may occasionally exceed amount.
Non-U.S. investments involve certain special risks. For
example, their values may drop in response to changes in currency
exchange rates, unfavorable political and legal developments,
unreliable or untimely information, or economic and financial
instability. In addition, the liquidity of these investments may
be more limited than domestic investments, which means the Fund may
at times be unable to sell them at desirable prices. Non-U.S.
settlement procedures may also involve additional risks. These
risks are generally greater in the case of "emerging markets" that
typically have less developed legal and financial systems.
Certain of those risks nay also apply to some extent to
domestic investments that are denominated in non-U.S. currencies or
that are traded in non-U.S. markets, or to investments in U.S.
companies that have significant non-U.S. operations.
Illiquid investments
The Investment Management Company believes that opportunities
to earn high yields may exist in investments that are not liquid
and that may be considered speculative. The sale of many of these
investments is limited by law. The Fund may not be able to sell
them when Putnam Management considers it desirable to do so or may
be able to sell them only at less than their market value. The
Fund may invest up to 15% of its assets in illiquid investments.
Derivatives
The Fund may engage in a variety of transactions involving
derivatives, such as futures, options, warrants and swap contracts.
Derivatives are financial instruments whose value depends upon, or
is derived from, the value of something else, such as one or more
underlying investments, pools of investments, indexes or
currencies. The Fund's return of a derivative typically depends on
the change in the value of the investment, pool of investments,
index or currency specified in the derivative instrument.
The Fund may use derivatives both for hedging and non-hedging
purposes. The decision as to whether and to what extent the Fund
will use derivatives for hedging purposes will depend upon a number
of factors, including market conditions, the Fund's investments and
the availability of suitable derivatives. Derivatives involve
special risks and may result in losses. The Fund will be dependent
on Putnam Management's ability to analyze and manage these
sophisticated instruments. The prices of derivatives may move in
unexpected ways, especially in abnormal market conditions. Some
derivatives are "leveraged" and therefore may magnify or otherwise
increase investment losses to the Fund. The Fund's use of
derivatives may also increase the amount of taxes payable by
shareholders.
Other risks arise from the potential inability to terminate or sell
derivatives positions. A liquid secondary market may not always
exist for the Fund's derivatives positions at any time. In fact,
many over-the-counter instruments (investments not traded on an
exchange) will not be liquid. Over-the-counter instruments also
involve the risk that the other party will not meet its obligations
to the Fund.
Other investments
In addition to the main investment strategies described above,
the Fund may also make other types of investments, such as common
stocks and other equity securities and therefore may be subject to
other risks.
Alternative strategies
At times the Investment Management Company may judge that
market conditions make pursuing the Fund's investment strategies
inconsistent with the best interests of its shareholders. The
Investment Management Company then may temporarily use alternative
strategies mainly designed to limit the Fund's losses. Although
the Investment Management Company has the flexibility to use these
strategies, it may choose not to for a variety of reasons, even in
very volatile market conditions. These strategies may cause the
Fund to miss out on investment opportunities, and may prevent the
Fund from achieving its goals.
Changes in policies
The Fund's Trustees may change the Fund's goals, investments
strategies and other policies without shareholder approval, except
as otherwise indicated.
(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 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:
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 than 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 more than 15% 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.
2. The Fund may not borrow money in excess of 10% of the value of
its total assets.
3. The Fund may not make short sales of securities in excess of
the Fund's net asset value.
4. The Fund may not, together with other mutual funds managed by
Investment Management Company, acquire more than 50% of the
outstanding voting securities of any issuer.
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 listed 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) Distribution Policy:
The Fund distributes any net investment income once a month
and any net capital gains at least once a year. 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, if at all, 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. New York time.
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.
Market quotations are not considered to be readily available
for long-term corporate bonds and notes, certain preferred stocks,
tax-exempt securities, and certain non-U.S. securities. These
investments are valued at fair value on the basis of valuations
furnished by pricing services approved by the Trustees, 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, 1998, the Fund
paid $23,937,532 as a management fee.
(b) Custodian Fee
The Custodian is 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, 1998, a
custodian fee is as follows.
Custodian fee $320,772
Other expenses credit ($913,223)
Total Custodian Fee ($592,451)
(c) Charges of the Investor Servicing Agent
The Fund pays 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, 1998, the Fund
paid $4,348,095 as an investor servicing agent fee.
(d) Fee under 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 maintenance 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 0.25% 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, 1998, the Fund
paid fees under the Fund's distribution plans of $8,659,284,
for the Class M shares.
(e) Other Expenses:
The Fund pays all of its expenses not assumed by
Investment Management Company 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, 1998, the Fund
paid $25,624,055 as other expenses.
C. Sales, Repurchases and Custody:
(1) Sales of Shares:
a. Sales in the United States
Investors can open a Fund account with as little as $500
and make additional investments at any time with as little as
$50. The Fund sells its shares at the offering price, which is
the NAV plus any applicable sales charge. Investor's financial
advisor or Putnam Investor Services generally must receive
investor's completed buy order before the close of regular
trading on the New York Stock Exchange for investor's shares
to be bought at that day's offering price.
Investors can buy shares
- Through a financial advisor. Investor's advisor will be
responsible for furnishing all necessary documents to Putnam
Investor Services, and may charge investor for his or her
services.
- 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 through investor's advisor or
Putnam Investor Services at 1-800-225-1581.
Investors may also complete an order form and write a
check for the amount investors wish to invest, payable to the
Fund. Return the check and completed form to Putnam Mutual
Funds.
The Fund may periodically close to new purchases of
shares or refuse any order to buy shares if the Fund
determines that doing so would be in the best interests of the
Fund and its shareholders. Currently, shares of the Fund may
only be purchased by existing investors.
Class M shares
- Initial sales charge of up to 3.25%
- Lower sales charges for larger investments of $50,000 or more
- No deferred sales charge
- Lower annual expenses, and higher dividends, than class B
shares because of lower 12b-1 fee
- Higher annual expenses, and lower dividends, than class A
shares because of higher 12b-1 fee
- No conversion to class A shares, so future 12b-1 fee does not
decrease
Initial sales charges for class M shares
Class M sales charge
as a percentage of:
-------------------------
Amount of purchase Net amount Offering
at offering price ($) invested price*
___________________________________________________
Under 50,000 3.36% 3.25%
50,000 but under 100,000 2.30 2.25
100,000 but under 250,000 1.52 1.50
250,000 but under 500,000 1.01 1.00
500,000 but under 1,000,000 NONE NONE
1,000,000 and above NONE NONE
____________________________________________________
*Offering price includes sales charge.
b. Sales in Japan
The Fund closed to new record shareholders on December 5,
1997. (Investors in Japan who purchase shares from Kokusai
that are held of record under the name of Kokusai are not
considered new record shareholders.) 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 "Section 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 Distributor or the Sales Handling Company shall deliver to
investors Agreement of Foreign Securities Transactions Account
and other prescribed agreements and investors shall submit to
the Distributor or the Sales Handling Company an Application
for Opening of Transactions Account opened in accordance with
Account 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 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 Distributor or the
Sales Handling Company confirms the execution of the order
(ordinarily the business day in Japan next following the
placement of orders), and payment and delivery shall be made
on the fourth Business Day after and including the Trade Day.
The sales charge shall be 3.25% of the amount of subscription,
all of which will be retained by the KOKUSAI. In addition,
investors must pay a 5% consumption tax on the Sales Charge.
The investors having entrusted the Distributor or the
Sales Handling Company with custody of the Shares will receive
from the Distributor or the Sales Handling 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 Distributor or the Sales Handling 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 Distributor or the Sales
Handling Companies can agree.
In addition, Distributor or Sales Handling Companies 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 yen100,000,000 or the Shares
otherwise cease to comply with the "Standards of Selection of
Foreign Investment Fund Securities" in the "Regulations
Concerning the Transaction of Foreign Securities" established
by the Association.
(2) Repurchase of Shares:
a. Repurchase of Shares in the United States
Investors can sell investors' shares back to the Fund any
day the New York Stock Exchange is open, either through
investors' financial advisor or directly to the Fund. Payment
for redemptions may be delayed until the Fund collects the
purchase price of shares, which may take up to 15 calendar
days after the purchase date.
Selling Shares through investors' financial advisor
Investors' advisor must receive investors' request in
proper form before the close of regular trading on the New
York Stock Exchange to receive that day's NAV, less any
applicable deferred sales charge. Investors' advisor will be
responsible for furnishing all necessary documents to
PutnamPutnam Investor Services on a timely basis and may
charge investors for his or her services.
Selling Shares directly to the Fund
Putnam Investor Services must receive investors' request
in proper form before the close of regular trading on the New
York Stock Exchange in order to receive that day's NAV, less
any applicable sales charge.
By mail
Send a signed letter of instruction to Putnam Investor
Services. If investors have certificates for the Shares
investors want to sell, investors must include them along with
completed stock power forms.
By telephone
Investors may use Putnam's Telephone Redemption Privilege
to redeem Shares valued at less than $100,000 unless investors
have notified Putnam Investor Services of an address change
within the preceding 15 days. Unless investors indicate
otherwise on the account application. Putnam Investor Service
will authorized to accept redemption and transfer instructions
received by telephone.
The Telephone Redemption Privilege is not available if
there are certificates for investors' Shares. The Telephone
Redemption Privilege may be modified or terminated without
notice.
ADDITIONAL DOCUMENTS.
If investors
sell Shares with a value of $100,000 or more
want investor's redemption proceeds sent to an address other
than investor's address as it appears on Putnam's records, or
have notified Putnam of a change in address within the
preceding 15 days,
the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. Stock power forms are
available from investor's financial advisor, Putnam Investor
Services and many commercial banks.
Putnam Investor Services usually requires additional
documents for the sale of Shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
WHEN WILL THE FUND PAY INVESTORS?
The Fund generally sends investors payment for investor's
Shares the business day after investor's request is received.
Under unusual circumstances, the Fund may suspend redemptions,
or postpone payment for seven days or more as permitted by
federal securities law.
Redemption by the Fund
If investors own fewer Shares than the minimum set by the
Trustees (presently 20 shares), the Fund may redeem investors'
Shares without investors' permission and send investors the
proceeds. The Fund may also redeem Shares if investors own
Shares more than a maximum amount set by the Trustees. There
is presently no maximum, but the Trustees could set a maximum
that applies to both present and future shareholders.
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 Distributor or the Sales
and Handling 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. The price shall be paid in
yen through the Distributor or the Sales Handling Companies
pursuant to the Account Agreement or,if the Distributor or the
Sales Handling 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 Distributors
or the Sales Handling 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 therein shall not require
authorization by Shareholder vote.
In Japan, material changes in the Agreement and
Declaration of Trust shall be published and 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, or other similar rights.
(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.
"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:
(i) Disclosure Required under the Securities and Exchange Law:
When the Fund intends to offer Shares amounting to more
than 100 million yen in Japan, it shall submit to the Director
of Kanto Local Finance Bureau 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 Kanto Local Finance Bureau of the
Ministry of Finance.
The Distributors or the Sales Handling Companies in Japan
of the Shares shall deliver to the investors prospectuses 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 Director of Kanto Local Finance
Bureau 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 Kanto Local
Finance Bureau of the Ministry of Finance.
(ii)Disclosure Required under the Law Concerning Securities
Investment Trust Fund and Securities Investment Company:
When the Investment Management Company handles offering
or selling of Fund Shares in Japan, the Investment Management
Company must file with the Director of Finance Supervisory
Agency a prior notification concerning certain matters of the
Fund in accordance with the Law Concerning Securities
Investment Trust Fund and Securities Investment Company (the
"Investment Fund Law"). Also, when the Investment Management
Company makes changes to the Agreement and Declaration of
Trust, the Investment Management Company must file with the
Director of Finance Supervisory Agency a prior notification
thereof, including contents of such changes. Further, in
accordance with the Investment Fund Law, the Investment
Management Company must prepare an investment management
report with regard to certain matters relating to the Fund's
assets immediately after the end of each fiscal period of the
Fund and must immediately file the above report with the
Director of Finance Supervisory Agency.
b. Disclosure to Japanese Shareholders:
When the Investment Management Company makes change to
the Agreement and Declaration of Trust, if the contents of
such changes are material, the Investment Management Company
must give 30 day prior public notice thereof, including the
contents of such changes, before such changes are made, and
its written notice summarizing such changes must be given to
Japanese Shareholders known to the Distributor or the Sales
Handling Companies; provided, however, that if such written
notice is delivered to each of all Japanese Shareholders, no
public notice is required.
The Japanese Shareholders will be notified of the
material facts which would change their position and of
notices from the Trustees, through the Distributor or the
Sales Handling Companies in Japan.
The investment management report mentioned in sub-
paragraph (a), (ii) above will be delivered to Japanese
Shareholders known to the Distributor or the Sales Handling
Companies.
(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:
Shareholders must register their shares in their own name in
order to exercise directly the rights of their Shares. Therefore,
the Shareholders in Japan who entrust the custody of their Shares
to the Distributor or the Sales Handling Company in Japan cannot
exercise directly their rights, because they are not registered.
Shareholders in Japan may have the Distributor or the Sales
Handling Companies in Japan exercise their rights on their behalf
in accordance with the Account Agreement with the Distributor or
the Sales Handling Companies in Japan.
The Shareholders in Japan who do not entrust the custody of
their Shares to the Distributor or the Sales Handling Companies in
Japan 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 monthly and any net capital gains are
currently declared and paid at least annually.
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 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
Paying Handling 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.
(C) Foreign Exchange Control in the United States:
In the United States, 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 Director of Kanto
Local Finance Bureau 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
STATUS OF INVESTMENT FUND
(1) Diversification of investment Fund
(as of February 28, 1999)
Total Investment
Ratio
Types fo Assets Name of U.S. Dollars (%)
Country
Corporate Bonds Agrentina 5,096,000 0.16
Australia 2,111,981 0.07
Bermuda 3,271,750 0.11
Brazil 8,948,300 0.29
Canada 84,801,263 2.74
Cayman Islands 8,827,400 0.29
China 15,303,350 0.49
Columbia 20,344,500 0.65
India 4,118,000 0.13
Indonesia 13,511,175 0.44
Israel 6,183,000 0.20
Japan 4,609,080 0.15
Luxembourg 17,149,500 0.55
Mexico 32,629,700 1.05
Norway 2,025,360 0.07
Philippines 830,832 0.03
Poland 4,134,800 0.13
United Kingdom 27,237,338 0.88
United States 2,370,673,009 76.54
Sub-total 2,631,806,338 84.97
Preferred Stocks Canada 14,414,835 0.47
Cayman Islands 13,654,430 0.44
Germany 29,438,988 0.95
United States 182,693,947 5.90
Sub-total 240,202,200 7.76
Convertible Bonds United States 43,582,145 1.41
Units Australia 147,600 0
United States 38,254,444 1.24
Sub-total 38,402,044 1.24
Warrants Equador 52,009 0.00
Ireland 307,785 0.01
Mexico 7,660 0.00
United States 35,394,726 1.14
Sub-total 35,762,180 1.15
Common Stock Brazil 43 0.00
Canada 828,338 0.03
United States 18,719,598 0.60
Sub-total 19,547,979 0.63
Convertible United States 13,665,791 0.44
Preferred Stocks
Brady Bonds France 2,381,400 0.08
Commercial Paper United States 1,872,596 0.06
Cash, Deposit and Other
Assets (After deduction of
liabilities) 69,991,736 2.26
Total
(Net Asset Value) 3,097,214,409 100.00
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.
(B) Results 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, 1999 is as follows:
Total Net Asset Value Net Asset Value per Share
Dollar Yen
(thousands) (millions) Dollar Yen
1st Fiscal Year 20,077 2,400 9.51 1,137
(November 30, 1995)
2nd Fiscal Year 464,506 55,532 9.64 1,152
(November 30, 1996)
3rd Fiscal Year 2,071,302 247,624 9.95 1,190
(November 30, 1997)
4th Fiscal Year 949,346 113,494 8.34 997
(November 30, 1998)
1998 End of March 2,189,945 261,808 10.15 1,213
April 2,168,339 259,225 10.09 1,206
May 1,952,990 233,480 9.97 1,192
June 1,665,208 199,076 9.89 1,182
July 1,520,237 181,744 9.87 1,180
August 1,113,165 133,079 8.75 1,046
September 997,508 119,252 8.49 1,015
October 899,414 107,525 7.97 953
November 949,346 113,494 8.34 997
December 924,651 110,542 8.17 977
January 926,037 110,708 8.23 984
February 946,321 113,133 8.11 970
(Note) Operations of Class M Shares were commenced on December 1, 1994.
(2) Record of Distributions Paid (Class M Shares)
Record of distribution paid from November 1997 up to and including January 1999
is as follows:
Period Amount of Dividend paid per Share
1st Fiscal Year (12/1/94 - 11/30/95) $0.98 (yen117)
2nd Fiscal Year (12/1/95 - 11/30/96) $0.88 (yen105)
3rd Fiscal Year (12/1/96 - 11/30/97) $0.89 (yen106)
4th Fiscal Year (12/1/97 - 11/30/98) $0.92 (yen110)
Record of distribution paid from December 1998 to February 1999
are as follows:
Dividend
Month Dollar Yen
1998 End of December 0.075 8.966
1999 End of January 0.075 8.966
February 0.072 8.608
(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
1st Fiscal 2,370,932 259,901 2,111,031
Year (0) (0) (0)
(12/1/94 -
11/30/95)
2nd Fiscal 47,178,747 1,092,778 48,197,000
Year (42,967,350) (252,350) (42,715,000)
(12/1/95 -
11/30/96)
3rd Fiscal 202,989,234 42,956,933 208,229,301
Year (195,241,280) (38,341,875) (199,614,405)
(12/1/96 -
11/30/97)
4th Fiscal
Year 42,331,572 136,787,356 113,773,517)
(12/1/97 -
11/30/98) (38,771,320) (132,486,947) 93,715,627)
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, diversified 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
shall 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 vote 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 and present: Chairman and 81,708
President Director of .040
Putnam Management
and Putnam Mutual
Funds Corp.
Director, Marsh &
McLennan
Companies, Inc.
John A. Hill Vice present: Chairman and
Chairman Managing 213.279
Trustee Director, First
Reserve
Corporation
William F. Vice present: Professor of 10,865
Pounds Chairman Management, .817
Alfred P. Sloan
School of
Management,
Massachusetts
Institute of
Technology
Jameson Adkins Trustee present: President,
Baxter Baxter 3,132.198
Associates, Inc.
Hans H. Estin Trustee present: Vice Chairman,
North American 215.431
Management Corp.
Ronald J. Trustee present: Former
Jackson Chairman, 137.455
President and
Chief Executive
Officer of Fisher-
Price, Inc.,
Trustee of Salem
Hospital and the
Peabody Essex
Museum
Paul L. Joskow Trustee present: Professor of
Economics and 445.155
Management and
former Head of
the Department of
Economics at the
Massachusetts
Institute of
Technology
Director, New
England Electric
System, State
Farm Indemnity
Company and
Whitehead
Institute for
Biomedical
Research
Elizabeth T. Trustee present: President
Kennan Emeritus of Mount 247.575
Holyoke College
Lawrence J. Trustee and present: President, 0
Lasser Vice Chief Executive
President Officer and
Director of
Putnam
Investments, Inc.
and Putnam
Management
Director, Marsh &
McLennan
Companies, Inc.
John H. Trustee present: Chairman and
Mullin, III Chief Executive 571.308
Officer of
Ridgeway Farm,
Director of ACX
Technologies,
Inc., Alex. Brown
Realty, Inc. and
The Liberty
Corporation
Robert E. Trustee present: President and 19,665
Patterson Trustee of Cabot .737
Industrial Trust
and Chairman of
the Joselin
Diabetes Center
and Trustee of
SEA Education
Association
Donald S. Trustee present: Director of
Perkins various 4,540.154
corporations,
including Cummins
Engine Company,
Lucent
Technologies,
Inc., Nanophase
Technologies,
Inc. and Springs
Industries, Inc.
George Putnam, Trustee present: President, New
III Generation 3,384.724
Research, Inc.
A.J.C. Smith Trustee present: Chairman and
Chief Executive 359.401
Officer, Marsh &
McLennan
Companies, Inc.
W. Thomas Trustee present: President and
Stephens Chief Executive 114.378
Officer of
Macmillan
Bloedel, Ltd.
Director of Qwest
Communications
and New Century
Energies
W. Nicholas Trustee present: Director of
Thorndike various 172.752
corporations 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 0
Porter Vice Director of
President Putnam
Investments, Inc.
and Putnam
Management
Patricia C. Senior Vice present: Senior Vice 0
Flaherty President President of
Putnam
Investments, Inc.
and Putnam
Management
Richard Vice present: Managing 0
Monaghan President Director of
Putnam
Investments, Inc.
and Putnam Mutual
Funds
Gordon H. Vice present: Director and
Silver President Senior Managing 3,222.224
Director of
Putnam
Investments, Inc.
and Putnam
Management
John D. Hughes Vice present: Senior Vice 0
President President of
and Putnam Management
Treasurer
Beverly Marcus Clerk and present: N/A 0
Assistant
Treasurer
Ian C. Vice present: Senior 0
Ferguson President Managing Director
of Putnam
Management
John R. Verani Vice present: Senior Vice 0
President President of
Putnam
Investments, Inc.
and Putnam
Management
Stephen Vice present: Managing 0
Oristaglio President Director of
Putnam Management
Edward H. Vice present: Managing 0
D'Aleilo President Director of
Putnam Management
Jennifer E. Vice present Managing 0
Leichter President Director of
Putnam Management
Jeffrey A. Vice present: SeniorVice 0
Kaufman President President of
Putnam Management
Robert M. Vice present: SeniorVice 0
Paine President President of
Putnam Management
Rosemary Vice present: Senior Vice 0
Thomsen President President of
Putnam Management
Paul G. Assistant present: N/A 0
Bucuvalas Treasurer
Mary A. Eaton Associate present: N/A
Treasurer 3,396.449
and
Assistant
Clerk
Judith Cohen Associate present: N/A 0
Treasurer
and
Assistant
Clerk
Katharine Senior present: N/A 0
Howard Associate
Treasurer
Wanda M. Assistant present: N/A 0
McManus Clerk
Joanne M. Assistant present: N/A 0
Neary 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
No litigation which has or which would have a material
adverse effect on the Fund has occurred which is required to
be disclosed and 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.
(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
$300 billion in assets in over 9 million shareholder accounts at
the end of February, 1999. 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 located at One Post Office Square, Boston,
Massachusetts 02109 and except for a minority stake owned by
employees, is owned by 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, 1999)
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 1994 $48,149,491
End of 1995 $45,521,351
End of 1996 $45,817,658
End of 1997 $48,617,160
End of 1998 $425,782,008
(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, 1999, 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, 1999)
Position
with Putnam
Name Investment Other Business Affiliation
Management,
Inc.
1 Putnam, George Chairman Director of Putnam Mutual
Funds Corp.
2 Lasser, Lawrence President
J. and
Director,
CEO
3 Silver, Gordon Director Director of Putnam
H. and Senior Fiduciary Trust Company and
Managing Senior Managing Director of
Director Putnam Mutual Funds Corp.
4 Burke, Robert W. Senior Senior Managing Director of
Managing Putnam Mutual Funds Corp.
Director
5 Coburn, Gary N. Senior
Managing
Director
6 Collman, Senior Senior Managing Director of
Kathleen M. Managing Putnam Mutual Funds Corp.
Director
7 Ferguson, Ian C. Senior
Managing
Director
8 Regan, Anthony Senior
W. Managing
Director
9 Spiegel, Steven Senior Senior Managing Director of
Managing Putnam Mutual Funds Corp.
Director
10 Anderson, Blake Managing
E. Director
11 Antill, Jennifer Managing
Director
12 Beck, Robert R. Managing
Director
13 Browchuk, Brett Managing
Director
14 Cassaro, Joseph Managing
A. Director
15 Cotner, C. Beth Managing
Director
16 Cronin, Kevin M. Managing Managing Director of Putnam
Director Fiduciary Trust Company
17 D'Alelio, Edward Managing
H. Director
18 Daly, Kenneth L. Managing Managing Director of Putnam
Director Mutual Funds Corp.
19 DeTore, John A. Managing Managing Director of Putnam
Director Fiduciary Trust Company
20 Durgarian, Managing Director and Managing
Karnig H. Director Director of Putnam
and Chief Fiduciary Trust Company
Financial
Officer
21 Esteves, Irene Managing Treasurer of Putnam
M. Director Fiduciary Trust Company
and Chief
Financial
Officer
22 Gillis, Roland Managing
Director
23 Haslett, Thomas Managing
R. Director
24 Hurley, William Managing Managing Director and CFO
J. Director of Putnam Mutual Funds
Corp.
25 Jacobs, Jerome Managing
J. Director
26 Joseph, Joseph Managing
P. Director
27 Kamshad, Omid Managing
Director
28 King, David L. Managing Managing Director of Putnam
Director Mutual Funds Corp.
29 Kohli, D. Managing
William Director
30 Kreisel, Anthony Managing
I. Director
31 Kuenstner, Managing
Deborah F. Director
32 Landes, William Managing
J. Director
33 Leibovitch, Managing
Richard Director
34 Leichter, Managing
Jennifer E. Director
35 Maloney, Kevin Managing
J. Director
36 Martino, Michael Managing Managing Director of Putnam
Director Fiduciary Trust Company
37 Maxwell, Scott Managing
M. Director
38 McGue, William Managing
F. Director
39 McMullen, Carol Managing
C. Director
40 Memani, Krisha Managing
K. Director
41 Miller, Daniel Managing
L. Director
42 Morgan Jr., John Managing Managing Director of Putnam
J. Director Fiduciary Trust Company
43 Oristaglio, Managing
Stephen Director
44 Peacher, Stephen Managing
C. Director
45 Porter, Charles Managing
E. Director
46 Price, Quintin Managing
Director
47 Reilly, Thomas Managing
V. Director
48 Schultz, Managing Managing Director of Putnam
Mitchell D. Director Mutual Funds Corp.
49 Scott, Justin M. Managing Managing Director of Putnam
Director Fiduciary Trust Company
50 Shadek Jr., Managing
Edward T. Director
51 Starr, Loren Managing Managing Director of Putnam
Director Mutual Funds Corp.
52 Swift, Robert Managing
Director
53 Talanian, John Managing Managing Director of Putnam
C. Director Mutual Funds Corp.
54 Tibbetts, Managing Managing Director of Putnam
Richard B. Director Mutual Funds Corp.
55 Waldman, David Managing
L. Director
56 Wetlaufer, Eric Managing
Director
57 Woolverton, Managing Managing Director of Putnam
William H. Director Mutual Funds Corp.
58 Arends, Michael Senior Vice Senior Vice President of
K. President Putnam Mutual Funds Corp.
59 Asher, Steven E. Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
and Senior Vice President
of Putnam Fiduciary Trust
Company
60 Atkin, Michael Senior Vice
J. President
61 Augustine, Senior Vice
Jeffrey B. President
62 Bakshi, Manjit Senior Vice
S. President
63 Bamford, Dolores Senior Vice
Snyder President
64 Baumbach, Robert Senior Vice
K. President
65 Berka, Sharon A. Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
66 Block, Richard Senior Vice
L. President
67 Boselli, John A. Senior Vice
President
68 Bousa, Edward P. Senior Vice
President
69 Bresnahan, Senior Vice Senior Vice President of
Leslee R. President Putnam Mutual Funds Corp.
70 Burke, Andrea Senior Vice
President
71 Burns, Cheryl A. Senior Vice
President
72 Byrne, Joshua L. Senior Vice
President
73 Callahan, Ellen Senior Vice
S. President
74 Carlson, David Senior Vice
G. President
75 Chrostowski, Senior Vice Senior Vice President of
Louis F. President Putnam Mutual Funds Corp.
76 Curran, Peter J. Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
77 Dalferro, John Senior Vice
R. President
78 Derbyshire, Senior Vice Senior Vice President of
Ralph C. President Putnam Mutual Funds Corp.
79 England, Richard Senior Vice
B. President
80 Farrell, Deborah Senior Vice Senior Vice President of
S. President Putnam Mutual Funds Corp.
81 Finch, Edward R. Senior Vice
President
82 Flaherty, Senior Vice Senior Vice President of
Patricia C. President Putnam Mutual Funds Corp.
83 Fontana, Forrest Senior Vice
N. President
84 Francis, Senior Vice
Jonathan H. President
85 Frost, Karen T. Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
86 Frucci, Richard Senior Vice Senior Vice President of
M. President Putnam Fiduciary Trust
Company
87 Fullerton, Brian Senior Vice Senior Vice President of
J. President Putnam Mutual Funds Corp.
88 Grant, Peter J. Senior Vice Senior Vice President of
President Putnam Fiduciary Trust
Company
89 Graviere, Senior Vice
Patrice President
90 Grim, Daniel J. Senior Vice
President
91 Haagensen, Paul Senior Vice
E. President
92 Hadden, Peter J. Senior Vice
President
93 Halperin, Senior Vice
Matthew C. President
94 Healey, Deborah Senior Vice
R. President
95 Holding, Pamela Senior Vice
President
96 Hotchkiss, Senior Vice
Michael F. President
97 Kaufman, Jeffrey Senior Vice
President
98 Kay, Karen R. Senior Vice Clerk, Director and Senior
President Vice President of Putnam
Fiduciary Trust Company and
Senior Vice President of
Putnam Mutual Funds Corp.
99 Kirson, Steven Senior Vice
L. President
100 Knight, Jeffrey Senior Vice
L. President
101 Kobylarz, Senior Vice
Jeffrey J. President
102 Koontz, Jill A. Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
103 Korn, Karen R. Senior Vice
President
104 Lannum III, Senior Vice
Coleman N. President
105 Lindsey, Jeffrey Senior Vice
R. President
106 Lomba, Rufino R. Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
107 MacElwee, Jones, Senior Vice
Elizabeth M. President
108 Madore, Robert Senior Vice Senior Vice President of
A. President Putnam Fiduciary Trust
Company
109 Malloy, Julie M. Senior Vice
President
110 Marrkand, Paul Senior Vice
E. President
111 Matteis, Andrew Senior Vice
S. President
112 McDonald, Senior Vice
Richard E. President
113 Meehan, Thalia Senior Vice
President
114 Mehta, Sandeep Senior Vice
President
115 Miller, William Senior Vice
H. President
116 Mockard, Jeanne Senior Vice
L. President
117 Morgan, Kelly A. Senior Vice
President
118 Mufson, Michael Senior Vice
J. President
119 Mullen, Donald Senior Vice Senior Vice President of
E. President Putnam Mutual Funds Corp.
120 Mullin, Hugh H. Senior Vice
President
121 Netols, Jeffrey Senior Vice Senior Vice President of
W. President Putnam Fiduciary Trust
Company
122 Oler, Stephen S. Senior Vice
President
123 Paine, Robert M. Senior Vice
President
124 Parker, Margery Senior Vice
C. President
125 Perry, William Senior Vice
President
126 Peters, Carmel Senior Vice
President
127 Petralia, Senior Vice Senior Vice President of
Randolph S. President Putnam Mutual Funds Corp.
128 Plapinger, Keith Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
129 Pohl, Charles G. Senior Vice
President
130 Pollard, Mark D. Senior Vice
President
131 Prusko, James M. Senior Vice Senior Vice President of
President Putnam Fiduciary Trust
Company
132 Quistberg, Paul Senior Vice
T. President
133 Ray, Christopher Senior Vice
A. President
134 Rogers, Kevin J. Senior Vice
President
135 Ruys de Perez, Senior Vice Senior Vice President of
Charles A. President Putnam Fiduciary Trust
Company and Senior Vice
President of Putnam Mutual
Funds Corp.
136 Santos, David J. Senior Vice Senior Vice President of
President Putnam Fiduciary Trust
Company
137 Santosus, Senior Vice
Anthony C. President
138 Schwister, Jay Senior Vice Senior Vice President of
E. President Putnam Fiduciary Trust
Company
139 Scordato, Senior Vice Senior Vice President of
Christine A. President Putnam Mutual Funds Corp.
140 Sievert, Jean I. Senior Vice
President
141 Simon, Sheldon Senior Vice
N. President
142 Simozar, Saied Senior Vice
President
143 Smith Jr., Leo Senior Vice
J. President
144 Smith, Margaret Senior Vice
D. President
145 Spatz, Erin J. Senior Vice
President
146 Stack, Michael Senior Vice Senior Vice President of
P. President Putnam Mutual Funds Corp.
147 Stairs, George Senior Vice
W. President
148 Strumpf, Casey Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
149 Sugimoto, Senior Vice Senior Vice President of
Toshifumi President Putnam Mutual Funds Corp.
150 Sullivan, Roger Senior Vice
R. President
151 Svensson, Lisa Senior Vice
H. President
152 Swanberg, Senior Vice
Charles H. President
153 Thomsen, Senior Vice Senior Vice President of
Rosemary H. President Putnam Fiduciary Trust
Company
154 Troped, Bonnie Senior Vice Senior Vice President of
L. President Putnam Mutual Funds Corp.
155 Verani, John R. Senior Vice Senior Vice President of
President Putnam Mutual Funds Corp.
156 Walsh, Francis Senior Vice
P. President
157 Warren, Paul C. Senior Vice
President
158 Weinstein, Senior Vice
Michael R. President
159 Weiss, Manuel Senior Vice
President
160 Whalen, Edward Senior Vice Senior Vice President of
F. President Putnam Mutual Funds Corp.
161 Wheeler, Diane Senior Vice
D.F. President
162 Wyke, Richard P. Senior Vice
President
163 Yogg, Michael R. Senior Vice
President
164 Zukowski, Gerald Senior Vice
S. President
(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, 1999, Investment
Management Company managed, advised, and/or administered the
following 113 funds and fund portfolios (having an aggregate net
asset value of approximately $228.45 billion):
(As of
Februa
ry 28,
1999)
Name Month/Da Principal Total Net
te/Year Characteris Net Asset
Establis tics Asset Value
hed Value per
($ share
million ($)
)
1 The George Putnam Fund of 11/5/37 Open/Equity 3,766.1 17.76
Boston; A 5
2 The George Putnam Fund of 4/24/92 Open/Equity 1,481.5 17.63
Boston; B 8
3 The George Putnam Fund of 12/1/94 Open/Equity 279.71 17.62
Boston; M
4 The George Putnam Fund of 1/1/94 Open/Equity 541.94 17.79
Boston; Y
5 Putnam American Government 3/1/85 Open/Bond 1,414.9 8.74
Income Fund; A 1
6 Putnam American Government 5/20/94 Open/Bond 106.23 8.71
Income Fund; B
7 Putnam American Government 2/14/95 Open/Bond 4.17 8.76
Income Fund; M
8 Putnam Asia Pacific Growth 2/20/91 Open/Equity 115.56 8.92
Fund; A
9 Putnam Asia Pacific Growth 6/1/93 Open/Equity 108.87 8.76
Fund; B
10 Putnam Asia Pacific Growth 2/1/95 Open/Equity 6.15 8.85
Fund; M
11 Putnam Asia Pacific Fund 3/23/98 Open/Equity 1.85 7.10
II
12 Putnam Asset Allocation: 2/7/94 Open/Balanc 990.80 11.84
Balanced Portfolio; A ed
13 Putnam Asset Allocation: 2/11/94 Open/Balanc 544.72 11.77
Balanced Portfolio; B ed
14 Putnam Asset Allocation: 9/1/94 Open/Balanc 110.05 11.70
Balanced Portfolio; C ed
15 Putnam Asset Allocation: 2/6/95 Open/Balanc 66.59 11.82
Balanced Portfolio; M ed
16 Putnam Asset Allocation: 7/14/94 Open/Balanc 292.04 11.85
Balanced Portfolio; Y ed
17 Putnam Asset Allocation : 2/7/94 Open/Balanc 411.55 10.35
Conservative Portfolio; A ed
18 Putnam Asset Allocation : 2/18/94 Open/Balanc 180.61 10.30
Conservative Portfolio; B ed
19 Putnam Asset Allocation : 9/1/94 Open/Balanc 53.84 10.28
Conservative Portfolio; C ed
20 Putnam Asset Allocation : 2/7/95 Open/Balanc 21.98 10.30
Conservative Portfolio; M ed
21 Putnam Asset Allocation : 7/14/94 Open/Balanc 51.47 10.36
Conservative Portfolio; Y ed
22 Putnam Asset Allocation: 2/8/94 Open/Balanc 749.80 13.45
Growth Portfolio; A ed
23 Putnam Asset Allocation: 2/16/94 Open/Balanc 453.82 13.29
Growth Portfolio; B ed
24 Putnam Asset Allocation: 9/1/94 Open/Balanc 100.69 13.19
Growth Portfolio; C ed
25 Putnam Asset Allocation: 2/1/95 Open/Balanc 61.92 13.31
Growth Portfolio; M ed
26 Putnam Asset Allocation: 7/14/94 Open/Balanc 262.99 13.52
Growth Portfolio; Y ed
27 Putnam Arizona Tax Exempt 1/30/91 Open/Bond 112.94 9.34
Income Fund; A
28 Putnam Arizona Tax Exempt 7/15/93 Open/Bond 33.97 9.32
Income Fund; B
29 Putnam Arizona Tax Exempt 7/3/95 Open/Bond 0.51 9.37
Income Fund; M
30 Putnam Balanced Fund 10/2/95 Open/Balanc 3.67 11.98
ed
31 Putnam Balanced Retirement 4/19/85 Open/Balanc 656.05 10.59
Fund; A ed
32 Putnam Balanced Retirement 2/1/94 Open/Balanc 170.83 10.51
Fund; B ed
33 Putnam Balanced Retirement 3/17/95 Open/Balanc 13.84 10.54
Fund; M ed
34 Putnam California 11/27/92 Closed/Bond 71.84 15.59
Investment Grade Municipal
Trust
35 Putnam California Tax 4/29/83 Open/Bond 3,013.0 8.77
Exempt Income Fund; A 8
36 Putnam California Tax 1/4/93 Open/Bond 659.58 8.76
Exempt Income Fund; B
37 Putnam California Tax 2/14/95 Open/Bond 16.27 8.76
Exempt Income Fund; M
38 Putnam California Tax 10/26/87 Open/Bond 47.05 1.00
Exempt Money Market Fund
39 Putnam Capital 8/5/93 Open/Equity 51.51 7.28
Opportunities Fund; A
40 Putnam Capital 11/2/94 Open/Equity 74.33 7.26
Opportunities Fund; B
41 Putnam Capital 1/22/96 Open/Equity 4.31 7.27
Opportunities Fund; M
42 Putnam Capital 8/5/93 Open/Equity 1,413.6 21.90
Appreciation Fund; A 7
43 Putnam Capital 11/2/94 Open/Equity 1,566.5 21.66
Appreciation Fund; B 6
44 Putnam Capital 1/22/96 Open/Equity 104.19 21.69
Appreciation Fund; M
45 Putnam Convertible 6/29/95 Closed/Bond 85.12 22.93
Opportunity and Income
Trust
46 Putnam Convertible Income- 6/29/72 Open/Balanc 1,014.5 19.28
Growth Trust; A ed 7
47 Putnam Convertible Income- 7/15/93 Open/Balanc 288.05 19.06
Growth Trust; B ed
48 Putnam Convertible Income- 3/13/95 Open/Balanc 17.54 19.16
Growth Trust; M ed
49 Putnam Diversified Equity 7/1/94 Open/Equity 302.55 13.61
Trust; A
50 Putnam Diversified Equity 7/2/94 Open/Equity 377.08 13.40
Trust; B
51 Putnam Diversified Equity 2/1/99 Open/Equity 0.16 13.62
Trust; C
52 Putnam Diversified Equity 7/3/95 Open/Equity 29.38 13.47
Trust; M
53 Putnam Dividend Income 9/28/89 Closed/Bond 123.50 11.41
Fund
54 Putnam Diversified Income 10/3/88 Open/Bond 1,752.5 11.28
Trust; A 4
55 Putnam Diversified Income 3/1/93 Open/Bond 2,010.3 11.23
Trust; B 5
56 Putnam Diversified Income 2/1/99 Open/Bond 0.45 11.27
Trust; C
57 Putnam Diversified Income 12/1/94 Open/Bond 958.54 11.24
Trust; M
58 Putnam Diversified Income 7/11/96 Open/Bond 14.88 11.29
Trust ; Y
59 Putnam Emerging Markets 10/2/95 Open/Equity 34.58 6.97
Fund; A
60 Putnam Emerging Markets 10/2/95 Open/Equity 24.34 6.93
Fund; B
61 Putnam Emerging Markets 10/2/95 Open/Equity 2.03 6.94
Fund; M
62 Putnam Equity Fund 98 12/30/97 Open/Equity 5.74 10.49
63 Putnam Equity Income Fund; 6/15/77 Open/Balanc 1,114.5 15.54
A ed 1
64 Putnam Equity Income Fund; 9/13/93 Open/Balanc 649.44 15.42
B ed
65 Putnam Equity Income Fund; 2/1/99 Open/Balanc 1.27 15.54
C ed
66 Putnam Equity Income Fund; 12/2/94 Open/Balanc 60.75 15.44
M ed
67 Putnam Europe Growth Fund; 9/7/90 Open/Equity 906.36 21.64
A
68 Putnam Europe Growth Fund; 2/1/94 Open/Equity 814.45 21.11
B
69 Putnam Europe Growth Fund; 12/1/94 Open/Equity 171.21 21.43
M
70 Putnam Florida Tax Exempt 8/24/90 Open/Bond 241.54 9.47
Income Fund; A
71 Putnam Florida Tax Exempt 1/4/93 Open/Bond 81.67 9.46
Income Fund; B
72 Putnam Florida Tax Exempt 5/1/95 Open/Bond 1.84 9.46
Income Fund; M
73 Putnam Global Natural 7/24/80 Open/Equity 153.10 15.14
Resources Fund; A
74 Putnam Global Natural 2/1/94 Open/Equity 107.57 14.92
Resources Fund; B
75 Putnam Global Natural 7/3/95 Open/Equity 5.34 15.06
Resources Fund; M
76 Putnam Global Equity Fund 5/6/98 Open/Equity 3.21 11.86
77 Putnam Global Growth and 1/3/95 Open/Equity 26.79 12.87
Income Fund; A
78 Putnam Global Growth and 1/3/95 Open/Equity 20.88 12.79
Income Fund; B
79 Putnam Global Growth and 1/3/95 Open/Equity 2.15 12.82
Income Fund; M
80 Putnam Global Governmental 6/1/87 Open/Bond 240.38 12.64
Income Trust; A
81 Putnam Global Governmental 2/1/94 Open/Bond 35.05 12.60
Income Trust; B
82 Putnam Global Governmental 3/17/95 Open/Bond 230.26 12.58
Income Trust; M
83 Putnam Global Growth Fund; 9/1/67 Open/Equity 3,316.9 12.41
A 9
84 Putnam Global Growth Fund; 4/27/92 Open/Equity 1,943.7 11.94
B 1
85 Putnam Global Growth Fund; 2/1/99 Open/Equity 1.11 12.40
C
86 Putnam Global Growth Fund; 3/1/95 Open/Equity 60.30 12.31
M
87 Putnam Global Growth Fund; 6/15/94 Open/Equity 113.97 12.60
Y
88 Putnam Growth and Income 1/5/95 Open/Balanc 1,259.8 13.96
Fund II; A ed 4
89 Putnam Growth and Income 1/5/95 Open/Balanc 1,492.6 13.83
Fund II; B ed 6
90 Putnam Growth and Income 2/1/99 Open/Balanc 3.53 13.96
Fund II; C ed
91 Putnam Growth and Income 1/5/95 Open/Balanc 169.63 13.88
Fund II; M ed
92 The Putnam Fund for Growth 11/6/57 Open/Balanc 20,615. 20.39
and Income; A ed 29
93 The Putnam Fund for Growth 4/27/92 Open/Balanc 15,810. 20.11
and Income; B ed 88
94 The Putnam Fund for Growth 5/1/95 Open/Balanc 455.79 20.25
and Income; M ed
95 The Putnam Fund for Growth 6/15/94 Open/Balanc 1,021.9 20.43
and Income; Y ed 7
96 Putnam Growth Fund 5/1/98 Open/Equity 2.41 9.83
97 Putnam Growth 10/2/95 Open/Equity 774.92 20.46
Opportunities; A
98 Putnam Growth 8/1/97 Open/Equity 863.43 20.23
Opportunities; B
99 Putnam Growth 2/1/99 Open/Equity 8.46 20.47
Opportunities; C
100 Putnam Growth 8/1/97 Open/Equity 60.12 20.31
Opportunities; M
101 Putnam High Income 7/9/87 Closed/Bond 112.97 8.31
Convertible and Bond Fund
102 Putnam High Yield 3/25/86 Open/Bond 1,162.7 8.12
Advantage Fund; A 6
103 Putnam High Yield 5/16/94 Open/Bond 978.30 8.08
Advantage Fund; B
104 Putnam High Yield 12/1/94 Open/Bond 946.32 8.11
Advantage Fund; M
105 Putnam High Yield Total 1/1/97 Open/Bond 50.92 7.44
Return Fund; A
106 Putnam High Yield Total 1/1/97 Open/Bond 58.33 7.37
Return Fund; B
107 Putnam High Yield Total 1/1/97 Open/Bond 3.69 7.38
Return Fund; M
108 Putnam High Quality Bond 6/2/86 Open/Bond 330.75 9.91
Fund; A
109 Putnam High Quality Bond 6/6/94 Open/Bond 44.01 9.87
Fund; B
110 Putnam High Quality Bond 4/12/95 Open/Bond 2.97 9.92
Fund; M
111 Putnam High Yield Fund II; 12/31/97 Open/Bond 461.20 7.78
A
112 Putnam High Yield Fund II; 12/31/97 Open/Bond 673.92 7.78
B
113 Putnam High Yield Fund II; 12/31/97 Open/Bond 37.86 7.78
M
114 Putnam High Yield Trust; A 2/14/78 Open/Bond 2,602.5 10.74
6
115 Putnam High Yield Trust; B 3/1/93 Open/Bond 878.52 10.70
116 Putnam High Yield Trust; M 7/3/95 Open/Bond 17.91 10.74
117 Putnam Health Sciences 5/28/82 Open/Equity 2,938.6 61.65
Trust; A 2
118 Putnam Health Sciences 3/1/93 Open/Equity 2,076.6 59.22
Trust; B 2
119 Putnam Health Sciences 7/3/95 Open/Equity 90.55 60.71
Trust; M
120 Putnam High Yield 5/25/89 Closed/Bond 202.22 9.17
Municipal Trust
121 Putnam Income Fund; A 11/1/54 Open/Bond 1,389.1 6.75
2
122 Putnam Income Fund; B 3/1/93 Open/Bond 503.10 6.72
123 Putnam Income Fund; M 12/14/94 Open/Bond 1,600.7 6.72
6
124 Putnam Income Fund; Y 2/12/94 Open/Bond 252.00 6.76
125 Putnam Intermediate U.S. 2/16/93 Open/Bond 232.07 4.92
Government Income Fund; A
126 Putnam Intermediate U.S. 2/16/93 Open/Bond 148.04 4.92
Government Income Fund; B
127 Putnam Intermediate U.S. 4/3/95 Open/Bond 10.84 4.93
Government Income Fund; M
128 Putnam Intermediate U.S. 10/1/97 Open/Bond 115.72 4.91
Government Income Fund; Y
129 Putnam International Fund 12/28/95 Open/Equity 4.45 10.70
130 Putnam International 8/1/96 Open/Equity 397.63 10.96
Growth and Income Fund; A
131 Putnam International 8/1/96 Open/Equity 393.04 10.87
Growth and Income Fund; B
132 Putnam International 2/1/99 Open/Equity 1.25 10.95
Growth and Income Fund; C
133 Putnam International 8/1/96 Open/Equity 33.26 10.92
Growth and Income Fund; M
134 Putnam International 2/28/91 Open/Equity 2,304.4 19.54
Growth Fund; A 9
135 Putnam International 6/1/94 Open/Equity 1,520.3 19.19
Growth Fund; B 6
136 Putnam International 12/1/94 Open/Equity 169.20 19.40
Growth Fund; M
137 Putnam International 7/12/96 Open/Equity 181.61 19.60
Growth Fund; Y
138 Putnam International New 1/3/95 Open/Equity 722.94 13.42
Opportunities Fund; A
139 Putnam International New 7/21/95 Open/Equity 915.68 13.12
Opportunities Fund; B
140 Putnam International New 2/1/99 Open/Equity 0.63 13.42
Opportunities Fund; C
141 Putnam International New 7/21/95 Open/Equity 72.20 13.24
Opportunities Fund; M
142 Putnam International 12/28/95 Open/Equity 126.15 13.88
Voyager Fund; A
143 Putnam International 10/30/96 Open/Equity 98.88 13.77
Voyager Fund; B
144 Putnam International 10/30/96 Open/Equity 11.35 13.82
Voyager Fund; M
145 Putnam Investment Grade 10/26/89 Closed/Bond 248.09 11.88
Municipal Trust
146 Putnam Investment Grade 11/27/92 Closed/Bond 187.66 14.05
Municipal Trust II
147 Putnam Investment Grade 11/29/93 Closed/Bond 53.65 13.39
Municipal Trust III
148 Putnam Investors Fund; A 12/1/25 Open/Equity 4,770.8 14.97
1
149 Putnam Investors Fund; B 3/1/93 Open/Equity 2,084.9 14.33
2
150 Putnam Investors Fund; M 12/2/94 Open/Equity 152.83 14.70
151 Putnam Investors Fund; Y 1/7/97 Open/Equity 361.07 15.02
152 Putnam Latin America Fund 3/23/98 Open/Equity 1.25 4.74
153 Putnam Massachusetts Tax 10/23/89 Open/Bond 302.06 9.60
Exempt Income Fund; A
154 Putnam Massachusetts Tax 7/15/93 Open/Bond 120.26 9.59
Exempt Income Fund; B
155 Putnam Massachusetts Tax 5/12/95 Open/Bond 3.36 9.59
Exempt Income Fund; M
156 Putnam Master Income Trust 4/29/88 Closed/Bond 434.89 8.19
157 Putnam Managed High Yield 6/25/93 Closed/Bond 92.03 12.26
Trust
158 Putnam Michigan Tax Exempt 10/23/89 Open/Bond 147.32 9.28
Income Fund; A
159 Putnam Michigan Tax Exempt 7/15/93 Open/Bond 46.12 9.27
Income Fund; B
160 Putnam Michigan Tax Exempt 4/17/95 Open/Bond 1.71 9.28
Income Fund; M
161 Putnam Minnesota Tax 10/23/89 Open/Bond 104.52 9.19
Exempt Income Fund; A
162 Putnam Minnesota Tax 7/15/93 Open/Bond 50.09 9.16
Exempt Income Fund; B
163 Putnam Minnesota Tax 4/3/95 Open/Bond 1.40 9.18
Exempt Income Fund; M
164 Putnam Managed Municipal 2/24/89 Closed/Bond 449.55 9.70
Income Trust
165 Putnam Money Market Fund; 10/1/76 Open/Bond 3,146.5 1.00
A 5
166 Putnam Money Market Fund; 4/27/92 Open/Bond 825.06 1.00
B
167 Putnam Money Market Fund; 2/1/99 Open/Bond 0.23 1.00
C
168 Putnam Money Market Fund; 12/8/94 Open/Bond 106.81 1.00
M
169 Putnam Master Intermediate 4/29/88 Closed/Bond 791.74 7.92
Income Trust
170 Putnam Municipal Income 5/22/89 Open/Bond 826.67 9.30
Fund; A
171 Putnam Municipal Income 1/4/93 Open/Bond 506.95 9.29
Fund; B
172 Putnam Municipal Income 2/1/99 Open/Bond 1.24 9.30
Fund; C
173 Putnam Municipal Income 12/1/94 Open/Bond 15.88 9.29
Fund; M
174 Putnam Municipal 5/28/93 Closed/Bond 228.70 14.15
Opportunities Trust
175 Putnam New Opportunities 8/31/90 Open/Equity 10,419. 57.68
Fund; A 84
176 Putnam New Opportunities 3/1/93 Open/Equity 7,654.9 55.07
Fund; B 9
177 Putnam New Opportunities 12/1/94 Open/Equity 441.99 56.42
Fund; M
178 Putnam New Opportunities 7/19/94 Open/Equity 767.70 58.41
Fund; Y
179 Putnam New Value Fund; A 1/3/96 Open/Equity 379.19 13.59
180 Putnam New Value Fund; B 2/26/96 Open/Equity 385.21 13.48
181 Putnam New Value Fund; M 2/26/96 Open/Equity 38.07 13.54
182 Putnam New Jersey Tax 2/20/90 Open/Bond 215.68 9.32
Exempt Income Fund; A
183 Putnam New Jersey Tax 1/4/93 Open/Bond 100.88 9.31
Exempt Income Fund; B
184 Putnam New Jersey Tax 5/1/95 Open/Bond 1.20 9.32
Exempt Income Fund; M
185 Putnam New York Investment 11/27/92 Closed/Bond 40.27 14.14
Grade Municipal Trust
186 Putnam New York Tax Exempt 9/2/83 Open/Bond 1,592.8 8.94
Income Fund; A 0
187 Putnam New York Tax Exempt 1/4/93 Open/Bond 229.45 8.92
Income Fund; B
188 Putnam New York Tax Exempt 4/10/95 Open/Bond 2.27 8.94
Income Fund; M
189 Putnam New York Tax Exempt 10/26/87 Open/Bond 39.59 1.00
Money Market Fund
190 Putnam New York Tax Exempt 11/7/90 Open/Bond 163.15 9.17
Opportunities Fund; A
191 Putnam New York Tax Exempt 2/1/94 Open/Bond 69.67 9.17
Opportunities Fund; B
192 Putnam New York Tax Exempt 2/10/95 Open/Bond 2.52 9.16
Opportunities Fund; M
193 Putnam Ohio Tax Exempt 10/23/89 Open/Bond 187.89 9.14
Income Fund; A
194 Putnam Ohio Tax Exempt 7/15/93 Open/Bond 57.49 9.12
Income Fund; B
195 Putnam Ohio Tax Exempt 4/3/95 Open/Bond 2.03 9.14
Income Fund; M
196 Putnam OTC & Emerging 11/1/82 Open/Equity 2,346.4 16.57
Growth Fund; A 8
197 Putnam OTC & Emerging 7/15/93 Open/Equity 1,156.2 15.77
Growth Fund; B 2
198 Putnam OTC & Emerging 12/2/94 Open/Equity 243.48 16.17
Growth Fund; M
199 Putnam OTC & Emerging 7/12/96 Open/Equity 97.10 16.70
Growth Fund; Y
200 Putnam Pennsylvania Tax 7/21/89 Open/Bond 184.52 9.27
Exempt Income Fund; A
201 Putnam Pennsylvania Tax 7/15/93 Open/Bond 98.18 9.26
Exempt Income Fund; B
202 Putnam Pennsylvania Tax 7/3/95 Open/Bond 2.67 9.27
Exempt Income Fund; M
203 Putnam Preferred Income 1/4/84 Open/Bond 118.01 8.79
Fund; A
204 Putnam Preferred Income 4/20/95 Open/Bond 12.04 8.76
Fund; M
205 Putnam Premier Income 2/29/95 Closed/Bond 1,106.0 7.86
Trust 1
206 Putnam Research Fund; A 10/2/95 Open/Equity 296.75 15.48
207 Putnam Research Fund; B 6/15/98 Open/Equity 305.88 15.40
208 Putnam Research Fund; C 2/1/99 Open/Equity 4.92 15.49
209 Putnam Research Fund; M 6/15/98 Open/Equity 28.06 15.43
210 Putnam Strategic Income 2/19/95 Open/Bond 75.45 7.63
Fund; A
211 Putnam Strategic Income 2/19/96 Open/Bond 120.98 7.64
Fund; B
212 Putnam Strategic Income 2/1/99 Open/Bond 0.65 7.64
Fund; C
213 Putnam Strategic Income 2/19/96 Open/Bond 8.93 7.63
Fund; M
214 Putnam Tax Exempt Income 12/31/76 Open/Bond 1,925.9 9.16
Fund; A 9
215 Putnam Tax Exempt Income 1/4/93 Open/Bond 244.21 9.16
Fund; B
216 Putnam Tax Exempt Income 2/16/95 Open/Bond 10.38 9.18
Fund; M
217 Putnam Tax Exempt Money 10/26/87 Open/Bond 80.00 1.00
Market Fund
218 Putnam Tax - Free Health 6/29/92 Closed/Bond 230.62 14.75
Care Fund
219 Putnam Tax - Free Income 9/20/93 Open/Bond 1,093.2 14.61
Trust 5
Tax - Free High Yield
Fund; A
220 Putnam Tax - Free Income 9/9/85 Open/Bond 902.31 14.63
Trust
Tax - Free High Yield Fund
B
221 Putnam Tax - Free Income 2/1/99 Open/Bond 0.57 14.61
Trust
Tax - Free High Yield Fund
C
222 Putnam Tax - Free Income 12/29/94 Open/Bond 22.02 14.61
Trust
Tax - Free High Yield Fund
M
223 Putnam Tax - Free Income 9/30/93 Open/Bond 246.88 15.37
Trust
Tax - Free Insured Fund; A
224 Putnam Tax - Free Income 9/9/85 Open/Bond 354.59 15.39
Trust
Tax - Free Insured Fund; B
225 Putnam Tax - Free Income 6/1/95 Open/Bond 2.33 15.39
Trust
Tax - Free Insured Fund; M
226 Putnam U.S. Core Fund 5/1/98 Open/Equity 2.52 9.83
227 Putnam U.S. Government 2/8/84 Open/Bond 2,060.1 12.94
Income Trust; A 2
228 Putnam U.S. Government 4/27/92 Open/Bond 1,265.4 12.88
Income Trust; B 7
229 Putnam U.S. Government 2/6/95 Open/Bond 152.42 12.91
Income Trust; M
230 Putnam U.S. Government 4/11/94 Open/Bond 21.17 12.93
Income Trust; Y
231 Putnam Utilities Growth 11/19/90 Open/Balanc 860.32 13.19
and Income Fund; A ed
232 Putnam Utilities Growth 4/27/92 Open/Balanc 667.68 13.10
and Income Fund; B ed
233 Putnam Utilities Growth 3/1/95 Open/Balanc 13.38 13.16
and Income Fund; M ed
234 Putnam Value Fund 5/1/98 Open/Balanc 2.04 8.36
ed
235 Putnam Vista Fund; A 6/3/68 Open/Equity 3,343.2 12.77
5
236 Putnam Vista Fund; B 3/1/93 Open/Equity 1,602.7 12.09
0
237 Putnam Vista Fund; M 12/1/94 Open/Equity 131.27 12.45
238 Putnam Vista Fund; Y 3/28/95 Open/Equity 354.40 12.94
239 Putnam Voyager Fund II; A 4/14/93 Open/Equity 754.79 22.42
240 Putnam Voyager Fund II; B 10/2/95 Open/Equity 695.62 21.83
241 Putnam Voyager Fund II; C 2/1/99 Open/Equity 3.18 22.43
242 Putnam Voyager Fund II; M 10/2/95 Open/Equity 81.55 22.05
243 Putnam Voyager Fund; A 4/1/96 Open/Equity 15,463. 21.95
86
244 Putnam Voyager Fund; B 4/27/92 Open/Equity 7,786.6 20.49
6
245 Putnam Voyager Fund; M 12/1/94 Open/Equity 339.71 21.41
246 Putnam Voyager Fund; Y 4/1/94 Open/Equity 1,805.4 22.31
5
247 Putnam VT Asia Pacific 5/1/95 Open/Equity 85.07 8.06
Growth Fund; IA
248 Putnam VT Asia Pacific 4/30/98 Open/Equity 0.11 8.06
Growth Fund; IB
249 Putnam VT Diversified 9/15/93 Open/Bond 655.84 10.40
Income Fund; IA
250 Putnam VT Diversified 4/6/98 Open/Bond 2.75 10.38
Income Fund; IB
251 Putnam VT Global Asset 2/1/88 Open/Balanc 991.17 18.72
Allocation Fund; IA ed
252 Putnam VT Global Asset 4/30/98 Open/Balanc 1.77 18.72
Allocation Fund; IB ed
253 Putnam VT George Putnam 4/30/98 Open/Equity 141.96 10.19
Fund; IA
254 Putnam VT George Putnam 4/30/98 Open/Equity 3.72 10.19
Fund; IB
255 Putnam VT Global Growth 5/1/90 Open/Equity 1,967.7 20.23
Fund; IA 4
256 Putnam VT Global Growth 4/30/98 Open/Equity 1.53 20.22
Fund; IB
257 Putnam VT Growth and 2/1/88 Open/Balanc 9,860.8 28.65
Income Fund; IA ed 4
258 Putnam VT Growth and 4/6/98 Open/Balanc 12.40 28.62
Income Fund; IB ed
259 Putnam VT U.S. Government 2/1/88 Open/Bond 1,007.8 13.55
and High Quality Bond 4
Fund; IA
260 Putnam VT U.S. Government 4/30/98 Open/Bond 3.31 13.55
and High Quality Bond
Fund; IB
261 Putnam VT High Yield Fund; 2/1/88 Open/Bond 1,022.4 11.81
IA 4
262 Putnam VT High Yield Fund; 4/30/98 Open/Bond 3.00 11.81
IB
263 Putnam VT Health and 4/30/98 Open/Equity 162.44 10.56
Sciences Fund; IA
264 Putnam VT Health and 4/30/98 Open/Equity 2.69 10.55
Sciences Fund; IB
265 Putnam VT International 1/1/97 Open/Balanc 296.56 12.07
Growth and Income; IA ed
266 Putnam VT International 4/6/98 Open/Balanc 1.12 12.06
Growth and Income; IB ed
267 Putnam VT International 1/1/97 Open/Equity 139.20 11.94
New Opportunities Fund; IA
268 Putnam VT International 4/30/98 Open/Equity 0.11 11.93
New Opportunities Fund; IB
269 Putnam VT International 1/1/97 Open/Equity 330.57 13.71
Growth Fund; IA
270 Putnam VT International 4/30/98 Open/Equity 1.92 13.70
Growth Fund; IB
271 Putnam VT Investors Fund; 4/30/98 Open/Equity 324.13 11.76
IA
272 Putnam VT Investors Fund; 4/30/98 Open/Equity 4.76 11.76
IB
273 Putnam VT Money Market 2/1/88 Open/Bond 652.50 1.00
Fund; IA
274 Putnam VT Money Market 4/30/98 Open/Bond 7.02 1.00
Fund; IB
275 Putnam VT New 5/2/94 Open/Equity 3,565.3 25.75
Opportunities Fund; IA 4
276 Putnam VT New 4/30/98 Open/Equity 2.26 25.73
Opportunities Fund; IB
277 Putnam VT New Value Fund; 1/2/97 Open/Equity 249.35 12.15
IA
278 Putnam VT New Value Fund; 4/30/98 Open/Equity 0.75 12.14
IB
279 Putnam VT OTC & Emerging 4/30/98 Open/Equity 31.51 9.86
Growth Fund; IA
280 Putnam VT OTC & Emerging 4/30/98 Open/Equity 0.77 9.86
Growth Fund; IB
281 Putnam VT Research; IA 10/1/98 Open/Equity 35.79 12.20
282 Putnam VT Research; IB 10/1/98 Open/Equity 0.51 12.19
283 Putnam VT Utilities Growth 5/1/92 Open/Balanc 966.61 17.15
and Income Fund; IA ed
284 Putnam VT Utilities Growth 4/30/98 Open/Balanc 2.23 17.15
and Income Fund; IB ed
285 Putnam VT Vista Fund; IA 1/2/97 Open/Equity 316.27 14.40
286 Putnam VT Vista Fund; IB 4/30/98 Open/Equity 1.27 14.40
287 Putnam VT Voyager Fund; IA 2/1/88 Open/Equity 5,797.5 45.94
2
288 Putnam VT Voyager Fund; IB 4/30/98 Open/Equity 6.47 45.89
(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, the SEC may prohibit
the directors and officers from remaining in office, if the
SEC judges 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.$34,838,831 (approximately 4.16 billion Yen) as of the end
of February, 1999
(2) Description of Business
Putnam Fiduciary Trust Company is a Massachusetts trust
company and is a wholly-owned subsidiary of Putnam
Investments, Inc., parent of Putnam. Putnam Fiduciary Trust
Company has been providing paying agent and shareholder
service agent services to mutual funds, including the Fund,
since its inception and custody services since 1990.
(3) Outline of Business Relationship with the Fund
Putnam Fiduciary Trust Company provides transfer agent
services, shareholder services and custody services to the
Fund.
(B) Putnam Mutual Funds Corp. (the Principal Underwriter)
(1) Amount of Capital
U.S.$ 136,108,013 (approximately 16.27 billion Yen) as of the
end of February, 1999
(2) Description of Business
Putnam Mutual Funds Corp. is the Principal Underwriter of the
shares of Putnam Funds indulging 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
Company)
(1) Amount of Capital
yen 58.1 billion as of the end of February, 1999
(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 Company for Fresh Korea Fund, Loomis Sayles Managed Bond
Fund, ACM International Healthcare Fund, European and Asian
Fund, Putnam High Yield Advantage Fund, ACM American Growth
Portfolio, ACM Global Growth Trend portfolio, Ever Green Small
Company Growth Fund, Asia Network Growth Fund, Ever Green
Global Opportunities Fund, Super Phenix Fund, Salomon Euro
Bond Fund, Putnam U.S. Government Income Trust, and as the
Underwriting Company for AGF Canadian 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 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)
Name of Investment Transfer Agent
Officer Management and
or Fund Company Shareholder
Trustee Service Agent
George Chairman and Chairman and None
Putnam Trustee Director
Charles Executive Vice Managing None
E. Porter President Director
Patricia Senior Vice Senior Vice None
C. President President
Flaherty
Lawrence Trustee and President and None
J. Lasser Vice President CEO
Gordon H. Vice President Senior Director
Silver Managing
Director
Ian C. Vice President Senior None
Ferguson Managing
Director
John R. Vice President Senior Vice None
Verani President
Steven Vice President Managing None
Oristagli Director
o
Jennifer Vice President Managing None
E. Director
Leichter
Jeffrey Vice President Senior Vice None
A. President
Kaufman
Robert M. Vice President Senior Vice None
Paine President
Rosemary Vice President Senior Vice None
Thomsen President
IV. FINANCIAL CONDITION OF THE FUND
1. FINANCIAL STATEMENTS
Financial highlights
The following table presents per share financial information
for class M shares. This information has been audited and reported
on by the Fund's independent accountants. Financial statements
included in the Fund's annual report to shareholders for the 1998
fiscal year are presented in their entirety in this SRS. The
Fund's annual report is available without charge upon request.
Effective July 1, 1998, Coopers & Lybrand L.L.P. and Price
Waterhouse LLP combined their businesses and practices and began
doing business as PricewaterhouseCoopers LLP.
Financial highlights (For a share outstanding throughout the period)
For the year Dec. 1, 1994+ to Nov. 30
Year ended November 30
1998 1997 1996 1995
Class M
Net asset value, $9.95 $9.64 $9.51 $9.05
beginning of period
Investment operations
Net investment income .92(d) .87 .87 .99
Net realized and unrealized(1.61) (.33) .14 .45
gain (loss) on investments
Total from investment operations (.69) 1.20 1. 01 1.44
Less distributions:
From net investment income (.91) (.87) (.88) (.98)
In excess of net investment income (.01) (.02) -(c) -
Total distributions (.92) (.89) (.88) (.98)
Net asset value, end of period$8.34 $9.95 $9.64 $9.51
Ratios and supplemental data
Total investment return (7.64) 13.05 11.15 16.72
at net asset value (%) (a)
Net assets, end of period$949,346$2,071,302$464,506 $20,077
(in thousands)
Ratio of expenses to average1.17 1.22 1.36 1.35
net assets (%) (b)
Ratio of net investment income9.56 8.93 8.86 10.06
to average net assets (%)
Portfolio turnover (%) 89.53 67.62 74.47 89.96
+ Commencement of operations
(a) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended
November 30, 1995, and thereafter, includes amounts paid through
expense offset arrangements. Prior period ratios exclude these
amounts.
(c) Distribution in excess of net investment income were less than
$0.01 per share.
(d) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the
period.
[The following financial documents are omitted here.]
Financial statements of the Fund for the years 1996 and 1997 (audited)
together with the auditors' reports.
Financial statements of the Fund for the semi-annual periods ended on
April 30, 1995 and April 30, 1996 (unaudited)
Financial Highlights
2. CONDITION OF THE FUND
(a) Statement of Net Assets
(As of the end of February, 1999)
$ Yen
(in thousands)
a. Total Assets 3,134,736,699 374,757,772
b. Total Liabilities 37,522,290 4,485,790
c. Total Net Assets (a-b) 3,097,214,409 370,271,983
d. Total Number of Shares
Outstanding Class A 143,188,803 Shares
Class B 121,025,303 Shares
Class M 116,648,096 Shares
Class Y 1,210,785 Shares
e. Net Asset Value
per Share (c/d) Class A 8.12 yen970.75
Class B 8.08 yen965.96
Class M 8.11 yen969.55
Class Y 8.12 yen970.75
Putnam High Yield Advantage Fund
February 28, 1999
Top 30 Holdings
<TABLE><CAPTION>
Net Assets: $3,097,214,409 (As of the end of February 28, 1999)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maturity Interest Par Value Current Interest
Name of Issue Kind of Issue Date Rate (%) (1000's) Currency Cost Value Ratio (%)
1. Midland Funding Corp. Ser. A Corporate Bond 2005 11 3/4s 35,705 USD 40,932,212 41,665,950 1.35
2. Chancellor Media Corp. 144A Corporate Bond 2008 8s 24,000 USD 24,564,725 25,080,000 0.81
3. Cal. Fed. Bancorp Inc. Ser. A Preferred Stock $2.281 882 USD 23,277,745 22,932,650 0.74
4. Echostar DBS Corp. 144A Corporate Stock 2009 9 3/8s 21,260 USD 21,260,000 21,366,300 0.69
5. Global Crossing Holdings, Ltd. Corporate bond 2008 9 5/8s 20,035 USD 21,390,955 21,036,750 0.68
6. Allbritton Communications Ser. B Corporate Bond 2007 9 3/4s 19,370 USD 20,532,200 20,725,900 0.67
7. Covad Communications Group 144A Warrant 2008 32 USD 1,278,160 18,253,200 0.59
8. Intermedia Comm. Inc. Ser. B Corporate Bond 2008 8 1/2s 19,490 USD 19,550,000 18,223,150 0.59
9. Adelphia Comm. Corp. 144A Corporate Bond 2008 8 3/8 16,380 USD 17,980,326 18,222,750 0.59
10.Trump Castle Funding 144A Corporate Bond 2003 10 1/4 17,975 USD 17,975,000 18,154,000 0.59
11.Cencall Communications Corp. Corporate Bond 2004 0 17,815 USD 17,977,933 18,082,225 0.58
12.GST Telecommunications, Inc. Corporate Bond 2005 0 25,188 USD 20,487,490 17,820,510 0.58
13.ICG Services, Inc. Corporate Bond 2008 0 30,415 USD 20,343,803 17,488,625 0.56
14.International Cabletel, Inc. Corporate Bond 2006 0 19,750 USD 16,713,046 17,380,000 0.56
15.Millicom International Cellular Corporate Bond 2006 0 23,175 USD 17,930,199 17,149,500 0.55
16.Unisys Corp. Corporate Bond 2004 11 3/4 14,885 USD 17,167,075 17,117,750 0.55
17.Coinmach Corp. Corporate Bond 2005 11 3/4 15,402 USD 16,896,175 16,942,200 0.55
18.Allied Waste Industries, Inc. Corporate Bond 2009 7 7/8 16,450 USD 16,421,377 16,861,250 0.54
19.MCII Holdings Corporate Bonds 2002 0 19,580 USD 19,440,501 16,643 000 0.54
20.Celcaribe S.A. (Columbia) Corporate Bonds 2004 13 1/2 21,400 USD 21,874,292 16,478,000 0.53
21.Doane Products Co. 144A Corporate Bonds 2007 9 3/4 15,340 USD 15,692,262 16,183,700 0.52
22.Tenet Healthcare Corp. 144A Corporate Bonds 2008 8 1/8 16,503 USD 17,023,189 16,090,425 0.52
23.Fresenius Med. Capital Trust I Preferred Stock 2006 $9.00 15,370 USD 16,068,319 15,965,319 0.52
24.NBTY Inc. 144A Corporate Bonds 2007 8 5/8 16,460 USD 16,493,190 15,801,600 0.51
25.BTI Telecom Corp. Corporate Bonds 2007 10 1/2 18,965 USD 18,675,996 15,172,000 0.49
26.Guess Jeans, Inc. Corporate Bonds 2003 9 1/2 15,000 USD 15,190,328 14,850,000 0.48
27.Argosy Gaming Co. Corporate Bonds 2004 13 1/4 12,989 USD 14,550,180 14,645,098 0.47
28.Aurora Foods, Inc. Ser. B Corporate Bonds 2007 9 7/8 13,395 USD 14,667,525 14,600,550 0.47
29.NEXTEL Comm. Inc. 144A Corporate Bonds 2008 12 12,620 USD 13,945,100 14,229,050 0.46
30.Intermedia Communications Ser. B Preferred Stock 2009 $13.50 14 USD 15,975,490 14,221,535 0.46
TOTALS 552,554,793 549,384,006
</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
V. 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 the Distributor or a Sales Handling 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 (on and after August 31,
1998, with the Director of Kanto Local Finance Bureau) .
April 15, 1998: Securities Registration
Statement/Securities Report (the 3rd
term)/Amendment to Securities Registration Statement
August 31, 1998: Semi-annual Report (during
the 4th term)/Amendment to Securities
Registration Statement
October 15, 1998: Securities Registration Statement
December 1, 1998: Amendment to 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 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 the fluctuation 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: Director of Kanto Local Finance Bureau
Filing Date : April 20, 1999
Name of the Registrant Fund: PUTNAM HIGH YIELD ADVANTAGE FUND
Name of Trustees: George Putnam
John A. Hill
William F. Pounds
Jameson A. Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
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 8,000 million Class M Shares
Foreign Investment Fund Securities Up to the total amount obtained by
to be Publicly Offered or Sold: aggregating the respective net
asset value per Class M Share in
respect of 8,000 million Class M Shares
(The Maximum amount expected to be
sold is 700 million U.S. dollars
(yen83.7billion).
Note 1: U.S.$ amount is translated into Japanese Yen at the
rate of U.S.$l=yen119.55, 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 26, l999.
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, 1999 ($8.75)
by the number of Shares to be offered (8,000 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, 1998 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 FUND I. DESCRIPTION OF THE FUND (the
aforementioned Japanese
Annual Securities Report,
from page 1 to page 22)
II. OUTLINE OF THE FUND II. OUTLINE OF THE FUND
(Ditto, from page 23 to page 54)
III.OUTLINE OF THE OTHER III.OUTLINE OF THE OTHER
RELATED COMPANIES RELATED COMPANIES (Ditto,
from page 55 to page 56)
IV. FINANCIAL CONDITIONS OF IV. FINANCIAL CONDITIONS OF THE FUND
THE FUND (Ditto, from page 57 to page 155)
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 179)
VI. MISCELLANEOUS VII. REFERENCE INFORMATION
(Ditto, page 179 to page 180)
Note 1: U.S.$ amount is translated into Japanese
Yen at the rate of U.S.$1 = yen119.55, 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 26,
1999, 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 202 of the original Securities Registration Statement)
II. FINANCIAL CONDITIONS OF THE INVESTMENT MANAGEMENT
COMPANY of the Original SRS is amended to have the same
contents as those provided in V. FINANCIAL CONDITIONS OF
THE INVESTMENT MANAGEMENT COMPANY of the aforementioned
Securities Report:
