Prospectus
March 30, 2000
As revised September 30, 2000
Putnam High Yield Advantage Fund
Class A, B and M shares
Investment Category: Income
This prospectus explains what you should know about this mutual fund
before you invest. Please read it carefully.
Putnam Investment Management, Inc. (Putnam Management), which has managed
mutual funds since 1937, manages the fund.
These securities have not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed upon the accuracy or
adequacy of this prospectus. Any statement to the contrary is a crime.
CONTENTS
2 Fund summary
2 Goal
2 Main investment strategies
2 Main risks
2 Performance information
3 Fees and expenses
4 What are the fund's main investment strategies and related risks?
6 Who manages the fund?
6 How does the fund price its shares?
6 How do I buy fund shares?
8 How do I sell fund shares?
9 How do I exchange fund shares?
10 Fund distributions and taxes
10 Financial highlights
[SCALE LOGO OMITTED]
Fund summary
GOAL
The fund seeks high current income. Capital growth is a secondary goal when
consistent with achieving high current income.
MAIN INVESTMENT STRATEGIES -- LOWER-RATED BONDS
We invest mostly in bonds that
* are obligations of U.S. corporations,
* are below investment-grade in quality (junk bonds), and
* have intermediate- to long-term maturities (three years or longer).
MAIN RISKS
The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include:
* The risk that the issuers of the fund's investments will not make timely
payments of interest and principal. This credit risk is higher for debt
that is below investment grade in quality. Because the fund invests
significantly 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 financial 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 investments are likely to fall
if interest rates rise. Interest rate risk is generally higher for
investments with longer maturities.
You 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 in a bank and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
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 A shares. The table following the chart compares
the fund's performance to that of a broad measure of market performance. Of
course, a fund's past performance is not an indication of future
performance.
[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR CLASS A
SHARES]
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
1990 -8.09%
1991 45.71%
1992 18.61%
1993 21.04%
1994 -5.15%
1995 18.81%
1996 10.59%
1997 13.37%
1998 -9.53%
1999 5.92%
Performance figures in the bar chart do not reflect the impact of sales
charges. If they did, performance would be less than that shown. During the
periods shown in the bar chart, the highest return for a quarter was 17.90%
(quarter ending 3/31/91) and the lowest return for a quarter was -11.97%
(quarter ending 9/30/98).
Average Annual Total Returns (for periods ending 12/31/99)
-------------------------------------------------------------------------------
Past Past Past
1 year 5 years 10 years
-------------------------------------------------------------------------------
Class A 0.86% 6.33% 9.51%
Class B 0.37% 6.28% 9.11%
Class M 2.31% 6.42% 9.39%
First Boston High Yield Index 3.28% 9.08% 11.06%
-------------------------------------------------------------------------------
Unlike the bar chart, this performance information reflects the impact of
sales charges. Both class A and class M share performance reflect the
current maximum initial sales charges; class B share performance reflects
the maximum applicable deferred sales charge if shares had been redeemed on
12/31/99 and assumes conversion to class A shares after eight years. For
periods before the inception of class B shares (5/16/94) and class M shares
(12/1/94), performance shown for these classes in the table is based on the
performance of the fund's class A shares, adjusted to reflect the
appropriate sales charge and the higher 12b-1 fees paid by the class B and
class M shares. The fund's perform ance is compared to the First Boston
High Yield Index, an unmanaged index of lower-rated, higher-yielding U.S.
corporate bonds.
FEES AND EXPENSES
This table summarizes the fees and expenses you may pay if you invest in
the fund. Expenses are based on the fund's last fiscal year.
Shareholder Fees (fees paid directly from your investment)
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Class A Class B Class M
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Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage of
the offering price) 4.75% NONE 3.25%
Maximum Deferred Sales Charge (Load)
(as a percentage of the original
purchase price or redemption
proceeds, whichever is lower) NONE* 5.00% NONE
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Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
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Total Annual
Management Distribution Other Fund Operating
Fees (12b-1) Fees Expenses Expenses
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Class A 0.56% 0.25% 0.14% 0.95%
Class B 0.56% 1.00% 0.14% 1.70%
Class M 0.56% 0.50% 0.14% 1.20%
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* A deferred sales charge of up to 1% may be imposed on certain redemptions
of class A shares bought without an initial sales charge.
EXAMPLE
The example translates the expenses shown in the preceding table into
dollar amounts. By doing this, you can more 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 you invest $10,000 in
the fund for the time periods shown and then, except as shown for class B
shares, redeem all your shares at the end of those periods. It also assumes
a 5% return on your investment each year and that the fund's operating
expenses remain the same. The example is hypothetical; your actual costs
and returns may be higher or lower.
-------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
-------------------------------------------------------------------------------
Class A $567 $763 $ 976 $1,586
Class B $673 $836 $1,123 $1,810*
Class B
(no redemption) $173 $536 $ 923 $1,810*
Class M $443 $694 $ 963 $1,732
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* Reflects the conversion of class B shares to class A shares, which pay
lower 12b-1 fees. Conversion occurs no more than eight years after
purchase.
What are the fund's main investment strategies and related risks?
Any investment carries with it some level of risk that generally reflects
its potential for reward. We pursue the fund's goal by investing mainly in
lower-rated bonds. Under normal market conditions the fund invests at least
80% of its assets in debt securities, convertible securities or preferred
stocks that we believe are consistent with the fund's primary investment
objective of high current income. We will consider, among other things,
credit, interest rate and prepayment risks as well as general market
conditions 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 bonds and other debt usually rise and
fall in response to changes in interest rates. Declining interest rates
generally increase the value of existing debt instruments, and rising
interest rates generally decrease the value of existing debt instruments.
Changes in a debt instrument's value usually will not affect the amount of
interest income paid to the fund, but will affect the value of the fund's
shares. Interest rate risk is generally greater for investments with longer
maturities.
Some investments give the issuer the option to call, or redeem, their
securities before their maturity date. If an issuer calls its security
during a time of declining interest rates, we might have to reinvest the
proceeds in an investment offering a lower yield, and therefore might not
benefit from any increase in value as a result of declining interest rates.
"Premium investments" offer interest rates higher than prevailing
market rates. However, they involve a greater risk of loss, because their
values tend to decline over time. You may find it useful to compare the
fund's yield, which factors out the effect of premium investments, with its
current dividend rate, which does not factor out that effect.
* Credit risk. Investors normally expect to be compensated in proportion to
the risk they are assuming. Thus, debt of issuers with poor credit
prospects usually offers higher yields than debt of issuers with more
secure credit. Higher-rated investments generally have lower
credit risk.
We invest mostly in higher-yielding, higher-risk debt investments that are
rated below BBB or its equivalent at the time of purchase by each
nationally recognized securities rating agency rating such investments, or
are unrated investments that we believe are of comparable quality. We may
invest up to 15% of the fund's total assets in debt investments rated below
CCC or its equivalent, at the time of purchase, by each agency rating such
investments, including investments in the lowest rating category of the rating
agency, and unrated investments that we believe are of comparable quality.
We will not necessarily sell an investment if its rating is reduced after we
buy it.
Investments rated below BBB or its equivalent are known as "junk bonds."
This rating reflects a greater possibility that the issuer 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 and are likely to fall. A default
or expected default could also make it difficult for us to sell the
investments at prices approximating the values we had previously placed on
them. Lower-rated debt usually has a more limited market than higher-rated
debt, which may at times make it difficult for us to buy or sell certain
debt instruments or to establish their fair value. Credit risk is generally
greater for investments that are issued at less than their face value and
that are required to make payment of interest only at maturity rather than
at intervals during the life of the investment.
Credit ratings are based largely on the issuer's historical financial
condition and the rating agencies' investment analysis at the time of
rating. The rating assigned to any particular investment does not
necessarily reflect the issuer's current financial condition, and does not
reflect an assessment of an investment's volatility or liquidity. Although
we consider credit ratings in making investment decisions, we perform our
own investment analysis and do not rely only on ratings assigned by the
rating agencies. The fund depends more on our ability in buying lower-rated
debt than it does in buying investment-grade debt. We may have to
participate in legal proceedings or take possession of and manage assets
that secure the issuer's obligations. This could increase the fund's
operating expenses and decrease its net asset value.
Although investment-grade investments generally have lower credit risk,
they may share some of the risks of lower-rated investments.
* Foreign investments. We may invest in securities of foreign issuers.
Foreign 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 we may at times be unable to sell them at
desirable prices. Foreign settlement procedures may also involve additional
risks. These risks are generally greater in the case of developing (also
known as emerging) markets that typically have less developed legal and
financial systems.
Certain of these risks may also apply to some extent to U.S.-traded
investments that are denominated in foreign currencies, investments in U.S.
companies that are traded in foreign markets, or investments in U.S.
companies that have significant foreign operations. Special U.S. tax
considerations may apply to our foreign investments.
* Illiquid investments. We may invest up to 15% of the fund's assets in
illiquid investments, which may be considered speculative. Illiquid
investments are investments that may be difficult to sell. The sale of many
of these investments is limited by law. We may not be able to sell the
fund's illiquid investments when we consider it desirable to do so or we
may be able to sell them only at less than their market value.
* Other investments. In addition to the main investment strategies
described above, we may also make other types of investments, such as
investments in derivatives, including futures, options, warrants and swap
contracts, equity securities, assignments of and participations in fixed
and floating rate loans, which may be subject to other risks, as described
in the fund's statement of additional information (SAI).
* Alternative strategies. At times we may judge that market conditions make
pursuing the fund's usual investment strategies inconsistent with the best
interests of its shareholders. We then may temporarily use alternative
strategies that are mainly designed to limit losses. However, we may choose
not to use these strategies 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 goal.
* Changes in policies. The fund's Trustees may change the fund's goal,
investment strategies and other policies without shareholder approval,
except as otherwise indicated.
Who manages the fund?
The fund's Trustees oversee the general conduct of the fund's business. The
Trustees have retained Putnam Management to be the fund's investment
manager, responsible for making investment decisions for the fund and
managing the fund's other affairs and business. The fund pays Putnam
Management a quarterly management fee for these services based on the
fund's average net assets. The fund paid Putnam Management a management fee
of 0.56% of average net assets for the fund's last fiscal year. Putnam
Management's address is One Post Office Square, Boston, MA 02109.
The following officer and the Credit Team of Putnam Management have primary
responsibility for the day-to-day management of the fund's portfolio. Ms.
Thomsen's length of service to the fund and her experience as a portfolio
manager or investment analyst over at least the last five years are shown.
<TABLE>
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Manager Since Experience
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<S> <C> <C> <C>
Rosemary H. Thomsen 1996 1986 - Present Putnam Management
Senior Vice President
-------------------------------------------------------------------------------
</TABLE>
How does the fund price its shares?
The price of the fund's shares is based on its net asset value (NAV). The
NAV per share of each class equals the total value of its assets, less its
liabilities, divided by the number of its outstanding shares. Shares are
only valued as of the close of regular trading on the New York Stock
Exchange each day the exchange is open.
The fund values its investments for which market quotations are readily
available at market value. It values short-term investments that will
mature within 60 days at amortized cost, which approximates market value.
It values all other investments and assets at their fair value.
The fund translates prices for its investments quoted in foreign currencies
into U.S. dollars at current exchange rates. As a result, changes in the
value of those currencies in relation to the U.S. dollar may affect the
fund's NAV. Because foreign markets may be open at different times than the
New York Stock Exchange, the value of the fund's shares may change on days
when shareholders are not able to buy or sell them. If events materially
affecting the values of the fund's foreign investments occur between the
close of foreign markets and the close of regular trading on the New York
Stock Exchange, these investments will be valued at their fair value.
How do I buy fund shares?
You can open a fund account with as little as $500 and make additional
investments at any time with as little as $50 ($25 through systematic
investing). The fund sells its shares at the offering price, which is the
NAV plus any applicable sales charge. Your financial advisor or Putnam
Investor Services generally must receive your completed buy order before
the close of regular trading on the New York Stock Exchange for your shares
to be bought at that day's offering price.
You can buy shares
* Through a financial advisor. Your advisor will be responsible for
furnishing all necessary documents to Putnam Investor Services, and may
charge you for his or her services.
* Through systematic investing. You can make regular investments of $25 or
more per month through automatic deductions from your bank checking or
savings account. Application forms are available through your advisor or
Putnam Investor Services at 1-800-225-1581.
You may also complete an order form and write a check for the amount you
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.
WHICH CLASS OF SHARES IS BEST FOR ME?
This prospectus offers you a choice of three classes of fund shares:
A, B and M. This allows you to choose among different types of sales
charges and different levels of ongoing operating expenses, as illustrated
in the "Fees and expenses" section. The class of shares that is best for
you depends on a number of factors, including the amount you plan to invest
and how long you plan to hold the shares. Here is a summary of the
differences among the classes of shares:
Class A shares
* Initial sales charge of up to 4.75%
* Lower sales charge for investments of $50,000 or more
* No deferred sales charge (except on certain redemptions of shares bought
without an initial sales charge)
* Lower annual expenses, and higher dividends, than class B or M shares
because of lower 12b-1 fee
Class B shares
* No initial sales charge; your entire investment goes to work for you
* Deferred sales charge of up to 5.00% if you sell shares within 6 years
after purchase
* Higher annual expenses, and lower dividends, than class A or M shares
because of higher 12b-1 fee
* Convert automatically to class A shares after 8 years, reducing the
future 12b-1 fee (may convert sooner in some cases)
* Orders for class B shares for $250,000 or more are treated as orders for
class A shares or refused
Class M shares
* Initial sales charge of up to 3.25%
* Lower sales charge for investments of $50,000 or more
* No deferred sales charge
* Lower annual expenses, and higher dividends, than class B shares because
of lower 12b-1 fee
* Higher annual expenses, and lower dividends, than class A shares because
of higher 12b-1 fee
* No conversion to class A shares, so future 12b-1 fee does not decrease
-------------------------------------------------------------------------------
Initial sales charges for class A and M shares
-------------------------------------------------------------------------------
Class A sales charge Class M sales charge
as a percentage of: as a percentage of:
-------------------------------------------------------------------------------
Amount of purchase Net amount Offering Net amount Offering
at offering price ($) invested price* invested price*
-------------------------------------------------------------------------------
Under 50,000 4.99% 4.75% 3.36% 3.25%
50,000 but under
100,000 4.71 4.50 2.30 2.25
100,000 but under
250,000 3.63 3.50 1.52 1.50
250,000 but under
500,000 2.56 2.50 1.01 1.00
500,000 but under
1,000,000 2.04 2.00 NONE NONE
1,000,000 and above NONE NONE NONE NONE
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* Offering price includes sales charge.
Deferred sales charges for class B and certain class A shares
If you sell (redeem) class B shares within six years after you bought them,
you will generally pay a deferred sales charge according to the following
schedule.
Year after purchase 1 2 3 4 5 6 7+
-------------------------------------------------------------------------------
Charge 5% 4% 3% 3% 2% 1% 0%
A deferred sales charge of up to 1% may apply to class A shares
purchased without an initial sales charge, if redeemed within two years of
purchase.
Deferred sales charges will be based on the lower of the shares' cost and
current NAV. Shares not subject to any charge will be redeemed first,
followed by shares held longest. You may sell shares acquired by
reinvestment of distributions without a charge at any time.
* You may be eligible for reductions and waivers of sales charges. Sales
charges may be reduced or waived under certain circumstances and for
certain groups. Information about reductions and waivers of sales charges
is included in the SAI. You may consult your financial advisor or Putnam
Mutual Funds for assistance.
* Distribution (12b-1) plans. The fund has adopted distribution plans to
pay for the marketing of fund shares and for services provided to
shareholders. The plans provide for payments at annual rates (based on
average net assets) of up to 0.35% on class A shares and 1.00% on class B
and class M shares. The Trustees currently limit payments on class A and
class M shares to 0.25% and 0.50% of average net assets, respectively.
Because these fees are paid out of the fund's assets on an ongoing basis,
they will increase the cost of your investment. The higher fees for class B
and class M shares may cost you more than paying the initial sales charge
for class A shares. Because class M shares, unlike class B shares, do not
convert to class A shares, class M shares may cost you more over time than
class B shares.
How do I sell fund shares?
You can sell your shares back to the fund any day the New York Stock
Exchange is open, either through your financial advisor or directly to the
fund. Payment for redemption 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 your financial advisor. Your advisor must receive
your request in proper form before the close of regular trading on the New
York Stock Exchange for you to receive that day's NAV, less any applicable
deferred sales charge. Your advisor will be responsible for furnishing all
necessary documents to Putnam Investor Services on a timely basis and may
charge you for his or her services.
* Selling shares directly to the fund. Putnam Investor Services must
receive your 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 letter of instruction signed by all registered owners
or their legal representatives to Putnam Investor Services. If you have
certificates for the shares you want to sell, you must include them along
with completed stock power forms.
By telephone. You may use Putnam's telephone redemption privilege to redeem
shares valued at less than $100,000 unless you have notified Putnam
Investor Services of an address change within the preceding 15 days, in
which case other requirements may apply. Unless you indicate otherwise on
the account application, Putnam Investor Services will be authorized to
accept redemption instructions received by telephone.
The telephone redemption privilege is not available if there are
certificates for your shares. The telephone redemption privilege may be
modified or terminated without notice.
* Additional requirements. In certain situations, for example, if you sell
shares with a value of $100,000 or more, the signatures of all
registered owners or their legal representatives must be guaranteed
by a bank, broker-dealer or certain other financial institutions. In
addition, Putnam Investor Services usually requires additional
documents for the sale of shares by a corporation, partnership, agent
or fiduciary, or a surviving joint owner. For more information concerning
Putnam's signature guarantee and documentation requirements, contact Putnam
Investor Services.
* When will the fund pay me? The fund generally sends you payment for your
shares the business day after your request is received. Under unusual
circumstances, the fund may suspend redemptions, or postpone payment for
more than seven days, as permitted by federal securities law.
* Redemption by the fund. If you own fewer shares than the minimum set by
the Trustees (presently 20 shares), the fund may redeem your shares without
your permission and send you the proceeds. The fund may also redeem shares
if you own more than a maximum amount set by the Trustees. There is
presently no maximum, but the Trustees could set a maximum that would apply
to both present and future shareholders.
How do I exchange fund shares?
If you want to switch your investment from one Putnam fund to another, you
can exchange your fund shares for shares of the same class of another
Putnam fund at NAV. Not all Putnam funds offer all classes of shares or are
open to new investors. If you exchange shares subject to a deferred sales
charge, the transaction will not be subject to the deferred sales charge.
When you redeem the shares acquired through the exchange, the redemption
may be subject to the deferred sales charge, depending upon when you
originally purchased the shares. The deferred sales charge will be computed
using the schedule of any fund into or from which you have exchanged your
shares that would result in your paying the highest deferred sales charge
applicable to your class of shares. For purposes of computing the deferred
sales charge, the length of time you have owned your shares will be
measured from the date of original purchase and will not be affected by any
subsequent exchanges among funds.
To exchange your shares, complete an Exchange Authorization Form and send
it to Putnam Investor Services. The form is available from Putnam Investor
Services. A telephone exchange privilege is currently available for amounts
up to $500,000. The telephone exchange privilege is not available if the
fund issued certificates for your shares. Ask your financial advisor or
Putnam Investor Services for prospectuses of other Putnam funds. Some
Putnam funds are not available in all states.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive
exchange activity and otherwise to promote the best interests of the fund,
the fund reserves the right to revise or terminate the exchange privilege,
limit the amount or number of exchanges or reject any exchange. The fund
into which you would like to exchange may also reject your exchange. These
actions may apply to all shareholders or only to those shareholders whose
exchanges Putnam Management determines are likely to have a negative effect
on the fund or other Putnam funds. Consult Putnam Investor Services before
requesting an exchange.
Fund distributions and taxes
The fund normally distributes any net investment income monthly and any net
realized capital gains annually. You may choose to:
* reinvest all distributions in additional shares;
* receive any distributions from net investment income in cash while
reinvesting capital gains distributions in additional shares; or
* receive all distributions in cash.
If you do not select an option when you open your account, all
distributions will be reinvested. If you do not cash a distribution check
within a specified period or notify Putnam Investor Services to issue a new
check, the distribution will be reinvested in the fund. You will not
receive any interest on uncashed distribution or redemption checks.
Similarly, if any correspondence sent by the fund or Putnam Investor
Services is returned as "undeliverable," fund distributions will
automatically be reinvested in the fund or in another Putnam fund.
For federal income tax purposes, distributions of investment income are
taxable as ordinary income. Taxes on distributions of capital gains are
determined by how long the fund owned the investments that generated them,
rather than how long you have owned your shares. Distributions are taxable
to you even if they are paid from income or gains earned by the fund before
your investment (and thus were included in the price you paid).
Distributions of gains from investments that the fund owned for more than
one year will be taxable as capital gains. Distributions of gains from
investments that the fund owned for one year or less will be taxable as
ordinary income. Distributions are taxable whether you received them in
cash or reinvested them in additional shares.
The fund's investments in foreign securities may be subject to foreign
withholding taxes. In that case, the fund's return on those investments
would be decreased. Shareholders generally will not be entitled to claim a
credit or deduction with respect to foreign taxes. In addition, the fund's
investment in foreign securities or foreign currencies may increase the
amount of taxes payable by shareholders.
The fund's investments in certain debt obligations may cause the fund to
recognize taxable income in excess of the cash generated by such
obligations. Thus, the fund could be required at times to liquidate other
investments in order to satisfy its distribution requirements.
Any gain resulting from the sale or exchange of your shares will generally
also be subject to tax. You should consult your tax advisor for more
information on your own tax situation, including possible foreign, state
and local taxes.
Financial highlights
The financial highlights table is intended to help you understand the
fund's recent financial performance. Certain information reflects financial
results for a single fund share. The total returns represent the rate that
an investor would have earned or lost on an investment in the fund,
assuming reinvestment of all dividends and distributions. This information
for the year ended November 30, 1999 has been derived from the fund's
financial statements, which have been audited by KPMG LLP. Its report and
the fund's financial statements are included in the fund's annual report to
shareholders, which is available upon request. The information for all
periods prior to the year ended November 30, 1999 has been derived from the
fund's financial statements which have been audited by the fund's previous
independent accountants.
<TABLE>
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FINANCIAL HIGHLIGHTS
CLASS A
(For a share outstanding throughout the period)
Year ended November 30
------------------------------------------------------------
1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.35 $9.96 $9.65 $9.52 $9.07
-----------------------------------------------------------------------------------------------
Investment operations
Net investment income .80c .95c .90 .89 1.00
Net realized and unrealized
gain (loss) on investments (.57) (1.61) .32 .14 .45
-----------------------------------------------------------------------------------------------
Total from investment operations .23 (.66) 1.22 1.03 1.45
-----------------------------------------------------------------------------------------------
Less distributions:
From net investment income (.80) (.94) (.89) (.90) (1.00)
In excess of net investment income (.03) (.01) (.02) --d --
From return of capital (.03) -- -- -- --
-----------------------------------------------------------------------------------------------
Total distributions (.86) (.95) (.91) (.90) (1.00)
-----------------------------------------------------------------------------------------------
Net asset value,
end of period $7.72 $8.35 $9.96 $9.65 $9.52
-----------------------------------------------------------------------------------------------
Ratios and supplemental data
Total return at
net asset value (%)a 2.89 (7.39) 13.30 11.38 16.81
Net assets, end of period
(in thousands) $956,094 $1,261,785 $1,436,699 $1,071,702 $870,810
-----------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)b .95 .92 .97 1.09 1.12
Ratio of net investment income
to average net assets (%) 9.99 9.81 9.17 9.24 10.35
Portfolio turnover (%) 49.29 89.53 67.62 74.47 89.96
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a Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
b Includes amounts paid through expense offset arrangements.
c Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
d Distributions in excess of net investment income were less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS B
(For a share outstanding throughout the period)
Year ended November 30
------------------------------------------------------------
1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.32 $9.92 $9.61 $9.49 $9.05
-----------------------------------------------------------------------------------------------
Investment operations
Net investment income .74c .87c .83 .82 .92
Net realized and unrealized
gain (loss) on investments (.58) (1.59) .32 .13 .45
-----------------------------------------------------------------------------------------------
Total from investment operations .16 (.72) 1.15 .95 1.37
-----------------------------------------------------------------------------------------------
Less distributions:
From net investment income (.74) (.87) (.82) (.83) (.93)
In excess of net investment income (.03) (.01) (.02) --d --
From return of capital (.03) -- -- -- --
-----------------------------------------------------------------------------------------------
Total distributions (.80) (.88) (.84) (.83) (.93)
-----------------------------------------------------------------------------------------------
Net asset value,
end of period $7.68 $8.32 $9.92 $9.61 $9.49
-----------------------------------------------------------------------------------------------
Ratios and supplemental data
Total return at
net asset value (%)a 1.98 (7.99) 12.52 10.52 15.94
Net assets, end of period
(in thousands) $791,036 $1,052,251 $1,143,329 $623,097 $287,877
-----------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)b 1.70 1.67 1.72 1.84 1.85
Ratio of net investment income
to average net assets (%) 9.24 9.06 8.41 8.50 9.61
Portfolio turnover (%) 49.29 89.53 67.62 74.47 89.96
-----------------------------------------------------------------------------------------------
a Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
b Includes amounts paid through expense offset arrangements.
c Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
d Distributions in excess of net investment income were less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS M
(For a share outstanding throughout the period)
For the
year
Dec. 1,
1994+ to
Year ended November 30 Nov. 30
------------------------------------------------------------
1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.34 $9.95 $9.64 $9.51 $9.05
-----------------------------------------------------------------------------------------------
Investment operations
Net investment income .79c .92c .87 .87 .99
Net realized and unrealized
gain (loss) on investments (.57) (1.61) .33 .14 .45
-----------------------------------------------------------------------------------------------
Total from investment operations .22 (.69) 1.20 1.01 1.44
-----------------------------------------------------------------------------------------------
Less distributions:
From net investment income (.79) (.91) (.87) (.88) (.98)
In excess of net investment income (.03) (.01) (.02) --d --
From return of capital (.03) -- -- -- --
-----------------------------------------------------------------------------------------------
Total distributions (.85) (.92) (.89) (.88) (.98)
-----------------------------------------------------------------------------------------------
Net asset value,
end of period $7.71 $8.34 $9.95 $9.64 $9.51
-----------------------------------------------------------------------------------------------
Ratios and supplemental data
Total return at
net asset value (%)a 2.66 (7.64) 13.05 11.15 16.72
Net assets, end of period
(in thousands) $826,257 $949,346 $2,071,302 $464,506 $20,077
-----------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)b 1.20 1.17 1.22 1.36 1.35
Ratio of net investment income
to average net assets (%) 9.72 9.56 8.93 8.86 10.06
Portfolio turnover (%) 49.29 89.53 67.62 74.47 89.96
-----------------------------------------------------------------------------------------------
+ Commencement of operations.
a Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
b Includes amounts paid through expense offset arrangements.
c Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
d Distributions in excess of net investment income were less than $0.01 per share.
</TABLE>
For more information about
Putnam High Yield
Advantage Fund
The fund's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about
the fund. The SAI, and the independent accountants' reports and financial
statements included in the fund's two most recent annual reports to its
shareholders, are incorporated by reference into this prospectus, which
means they are part of this prospectus for legal purposes. The fund's
annual report discusses the market conditions and investment strategies
that significantly affected the fund's performance during its last fiscal
year. You may get free copies of these materials, request other
information about the fund and other Putnam funds, or make shareholder
inquiries, by contacting your financial advisor, by visiting Putnam's Web
site, or by calling Putnam toll-free at 1-800-225-1581.
You may review and copy information about the fund, including its SAI, at
the Securities and Exchange Commission's public reference room in
Washington, D.C. You may call the Commission at 1-202-942-8090 for
information about the operation of the public reference room. You may also
access reports and other information about the fund on the EDGAR Database
on the Commission's Internet site at http://www.sec.gov. You may get
copies of this information, with payment of a duplication fee, by
electronic request at the following E-mail address: [email protected], or
by writing the Commission's Public Reference Section, Washington, D.C.
20549-0102. You may need to refer to the fund's file number.
P U T N A M I N V E S T M E N T S
One Post Office Square
Boston, Massachusetts 02109
1-800-225-1581
Address correspondence to
Putnam Investor Services
P.O. Box 989
Boston, Massachusetts 02103
www.putnaminv.com
File No. 811-4616 NP032 59654 3/00
PUTNAM HIGH YIELD ADVANTAGE FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
March 30, 2000
as revised September 30, 2000
This SAI is not a prospectus and is only authorized for distribution when
accompanied or preceded by the prospectus of the fund dated March 30, 2000,
as revised from time to time. This SAI contains information that may be
useful to investors but that is not included in the prospectus. If the
fund has more than one form of current prospectus, each reference to the
prospectus in this SAI shall include all of the fund's prospectuses, unless
otherwise noted. The SAI should be read together with the applicable
prospectus. Certain disclosure has been incorporated by reference from the
fund's annual report. For a free copy of the fund's annual report or
prospectus, call Putnam Investor Services at 1-800-225-1581 or write Putnam
Investor Services, Mailing address: P.O. Box 41203, Providence, RI
02940-1203.
Part I of this SAI contains specific information about the fund. Part II
includes information about the fund and the other Putnam funds.
Table of Contents
PART I
FUND ORGANIZATION AND CLASSIFICATION I-3
INVESTMENT RESTRICTIONS I-4
CHARGES AND EXPENSES I-6
INVESTMENT PERFORMANCE I-14
ADDITIONAL OFFICERS I-15
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS I-15
Part II
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS II-1
TAXES II-24
MANAGEMENT II-27
DETERMINATION OF NET ASSET VALUE II-35
HOW TO BUY SHARES II-36
DISTRIBUTION PLANS II-46
INVESTOR SERVICES II-50
SIGNATURE GUARANTEES II-54
SUSPENSION OF REDEMPTIONS II-54
SHAREHOLDER LIABILITY II-55
STANDARD PERFORMANCE MEASURES II-55
COMPARISON OF PORTFOLIO PERFORMANCE II-56
SECURITIES RATINGS II-61
DEFINITIONS II-65
SAI
PART I
FUND ORGANIZATION AND CLASSIFICATION
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 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. The fund offers 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. For more information,
including your eligibility to purchase certain classes of shares, contact
your investment dealer or Putnam Mutual Funds (at 1-800-225-1581).
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.
The fund is a "diversified" investment company under the Investment Company
Act of 1940. This means that with respect to 75% of its total assets, the
fund may not invest more than 5% of its total assets in the securities of
any one issuer (except U.S. government securities). The remaining 25% of
its total assets is not subject to this restriction. To the extent the
fund invests a significant portion of its assets in the securities of a
particular issuer, it will be subject to an increased risk of loss if the
market value of such issuer's securities declines.
INVESTMENT RESTRICTIONS
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.
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 fund shares, or (2)
67% or more of the shares present at a meeting if more than 50% of the
outstanding fund shares are represented at the meeting in person or by
proxy.
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.
All percentage limitations on investments (other than pursuant to the
non-fundamental restriction 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.
---------------------
In connection with the offering of its shares in Japan, the fund has
undertaken to the Japanese Securities Dealers Association that the fund
will not: (1) invest more than 15% of its net assets in securities that are
not traded on an official exchange or other regulated market, including,
without limitation, the National Association of Securities Dealers
Automated Quotation System (this restriction shall not be applicable to
bonds determined by Putnam Management to be liquid and for which a market
price (including a dealer quotation) is generally obtainable or
determinable); (2) borrow money in excess of 10% of the value of its total
assets; (3) make short sales of securities in excess of the fund's net
asset value; and (4) together with other mutual funds managed by Putnam
Management, acquire more than 50% of the outstanding voting securities of
any issuer. If the undertaking is violated, the fund will, promptly after
discovery, 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. This undertaking will remain in effect as
long as shares of the fund are qualified for offer or sale in Japan and
such undertaking is required by the Japanese Securities Dealers Association
as a condition of such qualification.
---------------------
CHARGES AND EXPENSES
Management fees
Under a Management Contract dated March 20, 1997 the fund pays a quarterly
fee to Putnam Management based on the average net assets of the fund, as
determined at the close of each business day during the quarter, at the
annual rate of 0.70% of the first $500 million of average net assets, 0.60%
of the next $500 million, 0.55% of the next $500 million, 0.50% of the next
$5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion,
0.44% of the next $5 billion and 0.43% of any amount thereafter. For the
past three fiscal years, pursuant to the Management Contract (and a
management contract in effect prior to March 20, 1997, under which the
management fee payable to Putnam Management was paid at an annual rate of
0.70% of the first $500 million of average net assets, 0.60% of the next
$500 million, 0.55% of the next $500 million and 0.50% of any amount over
$1.5 billion), the fund incurred the following fees:
Fiscal Management
year fee paid
1999 $16,607,601
1998 $23,937,532
1997 $17,916,237
Brokerage commissions
The following table shows brokerage commissions paid during the fiscal
periods indicated:
Fiscal Brokerage
year commissions
1999 $477,523
1998 $72,056
1997 $49,284
Administrative expense reimbursement
The fund reimbursed Putnam Management for administrative services during
fiscal 1999, including compensation of certain fund officers and
contributions to the Putnam Investments, Inc. Profit Sharing Retirement
Plan for their benefit, as follows:
Portion of total
reimbursement for
Total compensation and
reimbursement contributions
$31,114 $25,241
Trustee responsibilities and fees
The Trustees are responsible for generally overseeing the conduct of fund
business. Subject to such policies as the Trustees may determine, Putnam
Management furnishes a continuing investment program for the fund and makes
investment decisions on its behalf. Subject to the control of the
Trustees, Putnam Management also manages the fund's other affairs and
business.
Each Trustee receives a fee for his or her services. Each Trustee also
receives fees for serving as Trustee of other Putnam funds. The Trustees
periodically review their fees to assure that such fees continue to be
appropriate in light of their responsibilities as well as in relation to
fees paid to trustees of other mutual fund complexes. The Trustees meet
monthly over a two-day period, except in August. The Board Policy
Committee, which consists solely of Trustees not affiliated with Putnam
Management and is responsible for recommending Trustee compensation,
estimates that Committee and Trustee meeting time together with the
appropriate preparation requires the equivalent of at least three business
days per Trustee meeting. The following table shows the year each Trustee
was first elected a Trustee of the Putnam funds, the fees paid to each
Trustee by the fund for fiscal 1999 and the fees paid to each Trustee by
all of the Putnam funds during calendar year 1999:
<TABLE>
<CAPTION>
COMPENSATION TABLE
Pension or Estimated Total
Aggregate retirement annual benefits compensation
compensation benefits accrued from all from all
from the as part of Putnam funds Putnam
Trustees/Year fund(1) fund expenses upon retirement(2) funds(3)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jameson A. Baxter/1994 (4) $2,775 $538 $95,000 $191,000
Hans H. Estin/1972 2,759 1,254 95,000 190,000
John A. Hill/1985 (4)(5) 3,431 607 115,000 239,750
Ronald J. Jackson/1996 (4) 2,795 564 95,000 193,500
Paul L. Joskow/1997 (4) 2,759 174 95,000 191,000
Elizabeth T. Kennan/1992 2,759 766 95,000 190,000
Lawrence J. Lasser/1992 2,742 583 95,000 189,000
John H. Mullin, III/1997 (4) 2,829 262 95,000 196,000
Robert E. Patterson/1984 2,767 413 95,000 190,250
William F. Pounds/1971 (5) 3,348 1,398 115,000 231,000
George Putnam/1957 2,759 1,299 95,000 190,000
George Putnam, III/1984 2,759 280 95,000 190,000
A.J.C. Smith/1986 2,726 889 95,000 188,000
W. Thomas Stephens/1997 (4) 2,726 244 95,000 188,000
W. Nicholas Thorndike/1992 2,748 1,076 95,000 190,000
(1) Includes an annual retainer and an attendance fee for each meeting
attended.
(2) Assumes that each Trustee retires at the normal retirement date.
Estimated benefits for each Trustee are based on Trustee fee rates in
effect during calendar 1999.
(3) As of December 31, 1999, there were 114 funds in the Putnam family.
(4) Includes compensation deferred pursuant to a Trustee Compensation
Deferral Plan. The total amounts of deferred compensation payable by the
fund to Ms. Baxter, Mr. Hill, Mr. Jackson, Mr. Joskow, Mr. Mullin, and Mr.
Stephens as of November 30, 1999 were $3,078, $15,707, $11,939, $5,655,
$6,764 and $7,081, respectively, including income earned on such amounts.
(5) Includes additional compensation for service as Vice Chairman of the
Putnam funds.
</TABLE>
Under a Retirement Plan for Trustees of the Putnam funds (the "Plan"), each
Trustee who retires with at least five years of service as a Trustee of the
funds is entitled to receive an annual retirement benefit equal to one-half
of the average annual compensation paid to such Trustee for the last three
years of service prior to retirement. This retirement benefit is payable
during a Trustee's lifetime, beginning the year following retirement, for a
number of years equal to such Trustee's years of service. A death benefit,
also available under the Plan, assures that the Trustee and his or her
beneficiaries will receive benefit payments for the lesser of an aggregate
period of (i) ten years or (ii) such Trustee's total years of service.
The Plan Administrator (a committee comprised of Trustees that are not
"interested persons" of the fund, as defined in the Investment Company Act
of 1940) may terminate or amend the Plan at any time, but no termination or
amendment will result in a reduction in the amount of benefits (i)
currently being paid to a Trustee at the time of such termination or
amendment, or (ii) to which a current Trustee would have been entitled had
he or she retired immediately prior to such termination or amendment.
For additional information concerning the Trustees, see "Management" in
Part II of this SAI.
Share ownership
At February 29, 2000, the officers and Trustees of the fund as a group
owned less than 1% of the outstanding shares of each class of the fund,
and, except as noted below, to the knowledge of the fund, no person owned
of record or beneficially 5% or more of any class of shares of the fund.
Shareholder name Percentage
Class and address owned
A Edward D. Jones 13.80%
201 Progress Pkwy.
Maryland Heights, MO 63043-3003
B Merrill Lynch 6.20%
4800 Deer Lake Drive E
Jacksonville, FL 32246
M Kokusai Investment Trust 94.20%
Company Ltd.
Shin-Nogizaka, Building
15-14, Minami-Aoyama
1-chome Minato-ku
Tokyo 107 Japan
Y* IT Corp. 69.57%
Y* Illinois Toolworks Inc. 14.72%
Savings and Investment Plan
* The address for the name listed is:
c/o Putnam Fiduciary Trust Company, as trustee or agent,
859 Willard Street, Quincy, MA 02269
Distribution fees
During fiscal 1999, the fund paid the following 12b-1 fees to Putnam Mutual
Funds:
Class A Class B Class M
$2,744,692 $9,233,454 $4,552,917
Class A sales charges and contingent deferred sales charges
Putnam Mutual Funds received sales charges with respect to class A shares
in the following amounts during the periods indicated:
Sales charges
retained by Putnam Contingent
Total Mutual Funds deferred
after sales
Fiscal year sales charges dealer concessions charges
1999 $829,424 $104,568 $25,014
1998 $5,489,568 $635,125 $34,197
1997 $10,109,394 $1,204,210 $37,202
Class B contingent deferred sales charges
Putnam Mutual Funds received contingent deferred sales charges upon
redemptions of class B shares in the following amounts during the periods
indicated:
Contingent deferred
Fiscal year sales charges
1999 $2,661,679
1998 $2,393,379
1997 $1,777,245
Class M sales charges
Putnam Mutual Funds received sales charges with respect to class M shares
in the following amounts during the periods indicated:
Sales charges
retained by Putnam
Total Mutual Funds
front-end after
Fiscal year sales charges dealer concessions
1999 $25,816 $2,746
1998 $191,904 $18,419
1997 $523,076 $52,940
Investor servicing and custody fees and expenses
During the 1999 fiscal year, the fund incurred $2,831,449 in fees and
out-of-pocket expenses for investor servicing and custody services provided
by Putnam Fiduciary Trust Company.
INVESTMENT PERFORMANCE
Standard performance measures
(for periods ended November 30, 1999)
Class A Class B Class M Class Y
Inception Date 3/25/86 5/16/94 12/1/94 12/30/98
Average annual total return
1 year -2.04% -2.64% -0.68% 3.11%
5 years 6.00% 5.96% 6.08% 7.08%
10 years 9.13% 8.73% 9.01% 9.68%
Yield
30-day yield 10.82% 10.55% 10.71% 11.58%
Returns for class A and class M shares reflect the deduction of the current
maximum initial sales charges of 4.75% for class A shares and 3.25% for
class M shares.
Returns for class B shares reflect the deduction of the applicable
contingent deferred sales charge ("CDSC") which is 5% in the first year,
declining to 1% in the sixth year, and is eliminated thereafter.
Returns shown for class B, class M and class Y shares for periods prior to
their inception are derived from the historical performance of class A
shares, adjusted to reflect both the deduction of the initial sales charge
or CDSC, if any, currently applicable to each class and, in the case of
class B and class M shares, the higher operating expenses applicable to
such shares.
Returns shown for class A shares have not been adjusted to reflect payments
under the class A distribution plan prior to its implementation. All
returns assume reinvestment of distributions at net asset value and
represent past performance; they do not guarantee future results.
Investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
See "Standard performance measures" in Part II of this SAI for information
on how performance is calculated.
ADDITIONAL OFFICERS
In addition to the persons listed as fund officers in Part II of this SAI,
each of the following persons is also a Vice President of the fund and
certain of the other Putnam funds, the total number of which is noted
parenthetically. Officers of Putnam Management hold the same offices in
Putnam Management's parent company, Putnam Investments, Inc.
Officer Name (Age) (Number of funds)
Edward H. D'Alelio (age 47) (21 funds). Managing Director of Putnam
Management.
Stephen Oristaglio (age 44) (73 funds). Managing Director of Putnam
Management. Prior to July 1998, Mr. Oristaglio was a Managing Director at
Swiss Bank Corp.
Rosemary H. Thomsen (age 40) (5 funds). Senior Vice President of Putnam
Management.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
KPMG LLP, 99 High Street, Boston, Massachusetts 02110, are the fund's
independent accountants, providing audit services, tax return review and
other tax consulting services and assistance and consultation in connection
with the review of various Securities and Exchange Commission filings. The
Report of Independent Accountants, financial highlights and financial
statements included in the fund's Annual Report for the fiscal year ended
November 30, 1999, filed electronically on January 6, 2000 (File No.
811-4616), are incorporated by reference into this SAI. The financial
highlights included in the prospectuses and incorporated by reference into
this SAI and the financial statements incorporated by reference into the
prospectuses and this SAI have been so included and incorporated in
reliance upon the reports of the independent accountants and, for all
periods prior to the year ended November 30, 1999, the previous independent
accountants, PricewaterhouseCoopers LLP, given on their authority as
experts in auditing and accounting.
