PROSPECTUS
DECEMBER 1, 1993 , AS
REVISED JUNE 1, 1994
PUTNAM VISTA FUND
CLASS A AND B SHARES
INVESTMENT STRATEGY: GROWTH
This Prospectus explains concisely what you should know before
investing in Class A or B shares of the Fund. Please read it
carefully and keep it for future reference. You can find more
detailed information about the Fund in the December 1, 1993
Statement of Additional Information, as amended from time to
time. For a free copy of the Statement, call Putnam Investor
Services at 1-800-225-1581. The Statement has been filed with
the Securities and Exchange Commission and is incorporated into
this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY , AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL .
BOSTON*LONDON*TOKYO
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PUTNAM VISTA FUND (THE "FUND") SEEKS CAPITAL APPRECIATION. IT IS
DESIGNED FOR INVESTORS SEEKING ABOVE-AVERAGE CAPITAL GROWTH
POTENTIAL THROUGH INVESTMENT IN A DIVERSIFIED PORTFOLIO OF COMMON
STOCKS. THE FUND MAY ALSO TRADE SECURITIES FOR SHORT-TERM
PROFITS. FOR A DESCRIPTION OF THESE SPECULATIVE STRATEGIES, AND
THE RELATED RISKS AND EXPENSES, SEE THE SECTION "HOW OBJECTIVE IS
PURSUED," ON PAGE 6 .
THIS PROSPECTUS OFFERS TWO CLASSES OF SHARES: CLASS A AND CLASS
B. EACH CLASS IS SOLD PURSUANT TO DIFFERENT SALES ARRANGEMENTS
AND BEARS DIFFERENT EXPENSES. FOR MORE INFORMATION ABOUT THE
DIFFERENT SALES ARRANGEMENTS, SEE "ALTERNATIVE SALES
ARRANGEMENTS ." FOR INFORMATION ABOUT VARIOUS EXPENSES
BORNE BY EACH CLASS, SEE "EXPENSES SUMMARY."
ABOUT THE FUND
Expenses summary
.........................................................3
Financial highlights
.........................................................4
Objective
........................................................
. 6 How objective is pursued
.........................................................6
How performance is shown
.........................................................10
How the Fund is managed
.........................................................11
Organization and history 12
ABOUT YOUR INVESTMENT
Alternative sales arrangements
........................................................13
How to buy shares
.......................................................14
Distribution Plans
.......................................................18
How to sell shares
.......................................................20
How to exchange shares
.......................................................21
How the Fund values its shares
.......................................................22
How distributions are made; tax information 22
ABOUT PUTNAM INVESTMENTS, INC.
24
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ABOUT THE FUND
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
the Fund. The following table summarizes your maximum
transaction costs from investing in the Fund and expenses
incurred by the Fund based on its most recent fiscal year. The
Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in Class A or Class B shares of
the Fund over specified periods.
CLASS A SHARES CLASS B
SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price) 5.75% NONE*
Deferred Sales Charge (as a 5.0% in the
percentage of the lower first year,
of the original purchase NONE** declining to price or
redemption 1.0% in the
proceeds) sixth year,
and
eliminated
thereafter
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.65% 0.65%
12b-1 Fees 0.25% 1.00%
Other Expenses 0.26% 0.26%
Total Fund Operating Expenses 1.16% 1.91%
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EXAMPLES
Your investment of $1,000 would incur the following expenses, assuming 5% annual return
and redemption at the end of each period:
1 3 5 10
YEAR YEARS YEARS YEARS
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Class A $69 $92 $118 $190
Class B $69 $90 $123 $204** *
Your investment of $1,000 would incur the following expenses, assuming 5% annual return
but no redemption:
Class A $69 $92 $118 $190
Class B $19 $60 $103 $203***
/TABLE
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The table is provided to help you understand the expenses of
investing in the Fund and your share of the operating expenses
which the Fund incurs. The management fees shown in the table
reflect an increase in the management fees payable to Putnam
Investment Management, Inc., the Fund's investment manager
("Putnam Management") and the 12b-1 fees shown in the table
for Class A shares reflect the amount to which the Trustees
currently limit payments under the Class A Distribution Plan .
Actual management fees, 12b-1 fees and total operating
expenses for Class A shares for fiscal 1993 were 0.49% ,
0.21% and 0.96%, respectively and actual, annualized
management fees and total operating expenses for Class B shares
for fiscal 1993 were 0.54% and 1.72%, respectively. The 12b-1
fees shown in the table for Class B shares reflect the maximum
amount permitted under the Class B Distribution Plan. For
Class B shares, management fees and "Other expenses" are based on
the operating expenses for the Fund's Class A shares shown in the
table. The Examples do not represent past or future expense
levels. Actual expenses may be greater or less than those shown.
Federal regulations require the Examples to assume a 5% annual
return, but actual annual return has varied.
* Class B shares are sold without a front-end sales charge, but
their 12b-1 fees may cause long-term shareholders to pay more
than the economic equivalent of the maximum permitted front-end
sales charge.
** A deferred sales charge of up to 1.00% is assessed on certain
redemptions of Class A shares that were purchased without an
initial sales charge as part of an investment of $1 million or
more. See "How to buy shares--Class A shares."
*** Reflects conversion of Class B shares to Class A shares
(which pay lower ongoing expenses) approximately eight years
after purchase. See "How to buy shares- -Class B shares--
Conversion of Class B shares."
FINANCIAL HIGHLIGHTS
The table on the following pages present per share financial
information for the Fund's ten most recent fiscal years. This
information has been audited and reported on by the Fund's
independent accountants. The Report of Independent Accountants
and financial statements included in the Fund's Annual Report to
shareholders for the 1993 fiscal year are incorporated by
reference into this Prospectus. The Fund's Annual Report, which
contains additional unaudited performance information, will be
made available without charge upon request.
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)*
<PAGE>
(THE TABLE IS INCORPORATED BY REFERENCE FROM POST-EFFECTIVE
AMENDMENT NO. 43 TO THE FUND'S REGISTRATION STATEMENT, FILE NO.
2-27664.)
<PAGE>
OBJECTIVE
PUTNAM VISTA FUND SEEKS CAPITAL APPRECIATION. CURRENT INCOME IS
ONLY AN INCIDENTAL CONSIDERATION IN SELECTING INVESTMENTS FOR THE
FUND. THE FUND IS DESIGNED FOR INVESTORS SEEKING ABOVE-AVERAGE
CAPITAL GROWTH POTENTIAL, WHICH INVOLVES CERTAIN RISKS. The Fund
is not intended to be a complete investment program, and there is
no assurance it will achieve its objective.
HOW OBJECTIVE IS PURSUED
BASIC INVESTMENT STRATEGY
THE FUND INVESTS IN A DIVERSIFIED PORTFOLIO OF COMMON STOCKS
WHICH PUTNAM MANAGEMENT BELIEVES HAVE THE POTENTIAL FOR ABOVE-
AVERAGE CAPITAL APPRECIATION. THESE MAY INCLUDE WIDELY-TRADED
COMMON STOCKS OF LARGER COMPANIES AS WELL AS COMMON STOCKS OF
SMALLER, LESS WELL KNOWN COMPANIES. In selecting common stocks
for the Fund, Putnam Management will consider, among other
things, an issuer's financial strength, competitive position,
projected future earnings and dividends, and other investment
criteria. Current income will be only an incidental
consideration in the selection of investments.
Investment opportunities may be sought among securities of large,
widely traded companies as well as securities of smaller, less
well known companies. Smaller companies may present greater
opportunities for capital appreciation, but may also involve
greater risks. They may have limited product lines, markets or
financial resources, or may depend on a limited management group.
Their securities may trade less frequently and in limited volume.
As a result, the prices of these securities may fluctuate more
than prices of securities of larger, more established companies.
The Fund may at times invest a portion of its assets in common
stocks Putnam Management believes are significantly undervalued.
In selecting such common stocks, Putnam Management will focus on
industries and issuers it considers to have particular
possibilities for long-term capital appreciation due to potential
growth of earnings which, in the judgment of Putnam Management,
is not fully reflected in current market prices. In selecting
undervalued securities, Putnam Management may consider investment
judgments contrary to those of most investors.
Common stocks are normally the Fund's main investments. However,
the Fund may purchase preferred stocks, debt securities,
convertible securities (both bonds and preferred stocks) and
warrants if Putnam Management believes they would help achieve
the Fund's objective of capital appreciation. The Fund may
purchase debt securities rated at least C by Standard & Poor's
Corporation or Moody's Investor Service, Inc., or unrated
securities determined by Putnam Management to be of comparable
quality. Securities in the lower-rated categories are considered
to be primarily speculative and may be in default. The Fund may
also hold a portion of its assets in cash or money market
instruments.
At times Putnam Management may judge that conditions in the
securities markets make pursuing the Fund's basic investment
strategy inconsistent with the best interests of its
shareholders. At such times Putnam Management may temporarily
use alternative strategies, primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing
these "defensive" strategies, the Fund may increase the portion
of its assets invested in debt securities or preferred stocks, or
invest in any other securities Putnam Management considers
consistent with such defensive strategies. It is impossible to
predict when, or for how long, the Fund will use these
alternative strategies.
FOREIGN INVESTMENTS
The Fund may invest up to 20% of its assets in securities
principally traded in foreign markets. The Fund may also
purchase Eurodollar certificates of deposit without regard to the
20% limit. Since foreign securities are normally denominated and
traded in foreign currencies, the values of the Fund's assets may
be affected favorably or unfavorably by currency exchange rates
and exchange control regulations. There may be less information
publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to
accounting, auditing and financial reporting standards and
practices comparable to those in the United States. The
securities of some foreign companies are less liquid and at times
more volatile than securities of comparable U.S. companies.
Foreign brokerage commissions and other fees are also generally
higher than in the United States. Foreign settlement procedures
and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the
Fund's assets held abroad) and expenses not present in the
settlement of domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments which could affect the
value of the Fund's investments in certain foreign countries.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the
Fund's ability to invest in securities of certain issuers located
in those foreign countries. Special tax considerations apply to
foreign securities.
The Fund may buy or sell foreign currencies, foreign currency
forward contracts and call options on foreign currencies for
hedging purposes in connection with its foreign investments.
A MORE DETAILED EXPLANATION OF FOREIGN INVESTMENTS, AND THE RISKS
AND SPECIAL TAX CONSIDERATIONS ASSOCIATED WITH THEM, IS INCLUDED
IN THE STATEMENT OF ADDITIONAL INFORMATION.
SHORT-TERM TRADING
UNDER CERTAIN MARKET CONDITIONS, THE FUND MAY SEEK PROFITS BY
SHORT-TERM TRADING. The length of time the Fund has held a
particular security is not generally a consideration in
investment decisions. A change in the securities owned by the
Fund is known as "portfolio turnover." To the extent short-term
trading strategies are used, the Fund's portfolio turnover rate
may be higher than that of other mutual funds. Portfolio
turnover generally involves some expense to the Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other
securities. Such transactions may result in realization of
taxable capital gains. Portfolio turnover rates for the ten most
recent fiscal years are shown in the section "Financial
highlights."
STOCK INDEX FUTURES AND OPTIONS
THE FUND MAY BUY AND SELL STOCK INDEX FUTURES CONTRACTS FOR
HEDGING PURPOSES. An "index future" is a contract to buy or
sell units of a particular stock index at an agreed price on a
specified future date. Depending on the change in value of the
index between the time when the Fund enters into and terminates
an index future transaction, the Fund realizes a gain or loss.
The Fund may buy and sell call and put options on index futures
or on stock indices in addition to or as an alternative to
purchasing or selling index futures or, to the extent permitted
by applicable law, to earn additional income.
THE USE OF INDEX FUTURES AND OPTIONS INVOLVES CERTAIN SPECIAL
RISKS. FUTURES AND OPTIONS TRANSACTIONS INVOLVE COSTS AND MAY
RESULT IN LOSSES. Certain risks arise because of the possibility
of imperfect correlations between movements in the prices of
index futures and options and movements in the prices of the
underlying stock index or of the common stocks in the Fund's
portfolio that are the subject of a hedge. The successful use of
the strategies described above further depends on Putnam
Management's ability to forecast market movements correctly.
Other risks arise from the Fund's potential inability to close
out its index futures or options positions, and there can be no
assurance that a liquid secondary market will exist for any index
future or option at any particular time. Certain provisions of
the Internal Revenue Code and certain regulatory requirements may
limit the Fund's ability to engage in index futures and options
transactions.
A MORE DETAILED EXPLANATION OF INDEX FUTURES AND OPTIONS
TRANSACTIONS, INCLUDING THE RISKS ASSOCIATED WITH THEM, IS
INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
OTHER INVESTMENT PRACTICES
THE FUND MAY ALSO ENGAGE TO A LIMITED EXTENT IN THE FOLLOWING
INVESTMENT PRACTICES, EACH OF WHICH MAY INVOLVE CERTAIN SPECIAL
RISKS. THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE
DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING LIMITATIONS
DESIGNED TO REDUCE THESE RISKS.
OPTIONS. The Fund may seek to increase its current return by
writing covered call and put options on securities it owns or in
which it may invest. The Fund receives a premium from writing a
call or put option, which increases the Fund's return if the
option expires unexercised or is closed out at a net profit.
When the Fund writes a call option, it gives up the opportunity
to profit from any increase in the price of a security above the
exercise price of the option; when it writes a put option, the
Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current
market price of the security. The Fund may terminate an option
that it has written prior to its expiration by entering into a
closing purchase transaction in which it purchases an option
having the same terms as the option written. The Fund may also
buy and sell put and call options for hedging purposes. The Fund
may also from time to time buy and sell combinations of put and
call options on the same underlying security to earn additional
income. The aggregate value of the securities underlying the
options may not exceed 25% of the Fund's assets. The Fund's use
of these strategies may be limited by applicable law.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS.
The Fund may lend portfolio securities amounting to not more than
25% of its assets to broker-dealers and may enter into repurchase
agreements on up to 25% of its total assets. These transactions
must be fully collateralized at all times. The Fund may also
purchase securities for future delivery, which may increase its
overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.
All of these transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is
delayed or prevented from recovering the collateral or completing
the transaction.
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUND LIMIT INVESTMENT
RISKS FOR ITS SHAREHOLDERS. THESE RESTRICTIONS PROHIBIT THE FUND
FROM: acquiring more than 10% of the voting securities of any one
issuer or more than 10% of any one class of securities of any one
issuer* and investing more than: (a) 5% of its total assets in
securities of any one issuer (other than the U.S. government);*
(b) 5% of its net assets in companies that, together with any
predecessors, have been in operation less than three years and in
equity securities (other than securities restricted as to resale)
that do not have readily available market quotations;* (c) 15% of
its net assets in securities restricted as to resale, excluding
securities determined by the Fund's Trustees (or the person
designated by the Fund's Trustees to make such determinations) to
be readily marketable;* (d) 25% of its total assets in any one
industry;* or (e) 15% of its net assets in any combination of
securities that are not readily marketable, in securities
restricted as to resale (excluding securities determined by the
Fund's Trustees (or the person designated by the Fund's Trustees
to make such determinations) to be readily marketable), and in
repurchase agreements maturing in more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental policies. See the Statement of Additional
Information for the full text of these policies and the Fund's
other fundamental policies. Except for investment policies
designated as fundamental in this Prospectus or the Statement,
the investment policies described in this Prospectus and in the
Statement are not fundamental policies. The Trustees may change
any non-fundamental investment policies without shareholder
approval. As a matter of policy, the Trustees would not
materially change the Fund's investment objective without
shareholder approval.
HOW PERFORMANCE IS SHOWN
TOTAL RETURN DATA MAY FROM TIME TO TIME BE INCLUDED IN
ADVERTISEMENTS ABOUT THE FUND. "Total return" for the one-,
five- and ten-year periods (or since the commencement of the
public offering of the shares of a class, 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
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
total return not reflecting the maximum initial sales charge or
contingent deferred sales charge would be reduced if such sales
charges were used. Quotations of total return for any period
when an expense limitation was in effect will be greater than if
the limitation had not been in effect. The Fund's performance
may be compared to various indices. See the Statement of
Additional Information.
ALL DATA IS BASED ON THE FUND'S PAST INVESTMENT RESULTS AND DOES
NOT PREDICT FUTURE PERFORMANCE. Investment performance, which
will vary, is based on many factors, including market conditions,
the composition of the Fund's portfolio, the Fund's operating
expenses and which class of shares you purchase. Investment
performance also often reflects the risks associated with the
Fund's investment objective and policies. These factors should
be considered when comparing the Fund's investment results to
those of other mutual funds and other investment vehicles.
HOW THE FUND IS MANAGED
THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR GENERALLY OVERSEEING
THE CONDUCT OF THE FUND'S 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. Jennifer K. Silver, Senior Vice President of Putnam
Management , Michael J. Mufson, Vice President of Putnam
Management, and Anthony C. Santosus, Vice President of
Putnam Management, each of whom is a Vice President of the
Fund, are primarily responsible for the day-to-day
management of the Fund's portfolio . Ms. Silver has had
this responsibility since December, 1991 and Messrs. Mufson and
Santosus have had this responsibility since April, 1994. Ms.
Silver and Mr. Santosus have been employed by Putnam
Management for the past five years. Mr. Mufson has been
employed by Putnam Management since June, 1993. Prior to June,
1993, Mr. Mufson was Senior Equity Analyst at Stein Roe &
Farnham.
The Fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses, and payments under
its Distribution Plans (which are in turn allocated to the
relevant class of shares). The Fund also reimburses Putnam
Management for the compensation and related expenses of certain
officers of the Fund and their staff who provide administrative
services to the Fund. The total reimbursement is determined
annually by the Trustees.
Putnam Management places all orders for purchases and sales of
the Fund's securities. In selecting broker-dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of shares of the Fund (and, if permitted by law, of the
other Putnam funds) as a factor in the selection of
broker-dealers.
ORGANIZATION AND HISTORY
Putnam Vista Fund is a Massachusetts business trust organized on
August 13, 1982 as the successor to Putnam Vista Fund, Inc., a
Massachusetts corporation organized on October 25, 1967. From
October 3, 1985 to November 3, 1989 the Fund was known as Putnam
Vista Basic Value Fund. 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. Shares of the Fund may, without shareholder
approval, be divided into two or more series of shares
representing separate investment portfolios. Any such series of
shares may be further divided, without shareholder approval, into
two or more classes of shares having such preferences and special
or relative rights and privileges as the Trustees may determine.
The Fund's shares are currently divided into three classes, two
of which - Class A shares and Class B shares - are currently
being offered. Each share has one vote, with fractional shares
voting proportionally. Shares of each class will vote together as
a single class except when 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 Declaration of Trust.
If you own fewer shares than a minimum amount set by the Trustees
(presently 20 shares), the Fund may choose to redeem your shares
and pay you for them. You will receive at least 30 days' written
notice before the Fund redeems your shares, and you may purchase
additional shares at any time to avoid a redemption. The Fund
may also redeem shares if you 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.
<PAGE>
THE FUND'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, M.I.T. ; JAMESON ADKINS BAXTER, President, Baxter
Associates, Inc. ; HANS H. ESTIN, Vice Chairman, North
American Management; JOHN A. HILL, Principal and Managing
Director, First Reserve Corporation; ELIZABETH T. KENNAN,
President, Mount Holyoke College; LAWRENCE J. LASSER,* Vice
President of the Putnam funds. President, Chief Executive
Officer and Director of Putnam Investments, Inc. and Putnam
Management. Director, Marsh & McLennan Companies, Inc.; ROBERT
E. PATTERSON, Executive Vice President, Cabot Partners Limited
Partnership; DONALD S. PERKINS, Director of various
corporations, including AT&T, K mart Corporation and Time Warner
Inc.; GEORGE PUTNAM, III,* President, New Generation Research,
Inc.; A.J.C. SMITH,* Chairman, Chief Executive Officer and
Director, Marsh & McLennan Companies, Inc.; and W. NICHOLAS
THORNDIKE, Director of various corporations and charitable
organizations, including Providence Journal Co. Also, Trustee
and President, Massachusetts General Hospital, and Trustee of
Eastern Utilities Associates. The Fund's Trustees are also
Trustees of the other Putnam funds. Those marked with an
asterisk (*) are "interested persons" of the Fund, Putnam
Management or Putnam Mutual Funds.
ABOUT YOUR INVESTMENT
ALTERNATIVE SALES ARRANGEMENTS
The Fund offers two classes of shares which bear sales charges in
different forms and amounts and which bear different levels of
expenses:
CLASS A SHARES. An investor who purchases Class A shares pays a
sales charge at the time of purchase. As a result, Class A shares
are not subject to any charges when they are redeemed (except for
sales at net asset value in excess of $1 million which are
subject to a contingent deferred sales charge). Certain
purchases of Class A shares qualify for reduced sales charges.
Class A shares currently bear a 12b-1 fee at the annual rate of
0.25% of the Fund's average net assets attributable to Class A
shares. See "How to buy shares - Class A shares."
CLASS B SHARES. Class B shares are sold without an initial sales
charge, but are subject to a contingent deferred sales charge of
up to 5% if redeemed within six years. Class B shares also bear
a higher 12b-1 fee than Class A shares, currently at the annual
rate of 1.00% of the Fund's average net assets attributable to
Class B shares. Class B shares will automatically convert into
Class A shares, based on relative net asset value, approximately
eight years after purchase. Class B shares provide an investor
the benefit of putting all of the investor's dollars to work from
the time the investment is made, but (until conversion) will have
a higher expense ration and pay lower dividends than Class A
shares due to the higher 12b-1 fee. See "How to buy shares -
Class B shares."
WHICH ARRANGEMENT IS BETTER FOR YOU? The decision as to which
class of shares provide a more suitable investment for an
investor depends on a number of factors, including the amount and
intended length of the investment. Investors making investments
that qualify for reduced sales charges might consider Class A
shares. Investors who prefer not to pay an initial sales charge
might consider Class B shares. Orders for Class B shares for
$250,000 or more will be treated as orders for Class A shares or
declined. For more information about these sales arrangements,
consult your investment dealer or Putnam Investor Services.
Sales personnel may receive different compensation depending on
which class of shares they sell. Shares may only be exchanged for
shares of the same class of another Putnam fund. See "How to
exchange shares".
HOW TO BUY SHARES
You can open a Fund account with as little as $500 and make
additional investments at any time with as little as $50. You
can buy Fund shares three ways - through most investment dealers,
through Putnam Mutual Funds (at 1-800-225-1581), or through a
systematic investment plan. If you do not have a dealer, Putnam
Mutual Funds can refer you to one.
BUYING SHARES THROUGH PUTNAM MUTUAL FUNDS. Complete an
order form and return it with a check payable to the Fund to
Putnam Mutual Funds, which will act as your agent in purchasing
shares through your designated investment dealer.
BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make
regular investments of $25 or more per month through automatic
deductions from your bank checking account. Application forms
are available from your investment dealer or through Putnam
Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive that
day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the New
York Stock Exchange. If you buy shares through your investment
dealer, the dealer must receive your order before the close of
regular trading on the New York Stock Exchange to receive that
day's public offering price.<PAGE>
<TABLE>
<CAPTION>
CLASS A SHARES
The public offering price of Class A shares is the net asset value plus a sales charge.
The Fund receives the net asset value. The sales charge varies depending on the size of
your purchase and is allocated between your investment dealer and Putnam Mutual Funds.
The current sales charges are:
SALES CHARGE AMOUNT OF
AS A PERCENTAGE OF: SALES CHARGE
------------------ REALLOWED
NET TO DEALERS
AMOUNT OF TRANSACTION AMOUNT OFFERING AS A PERCENTAGE
AT OFFERING PRICE INVESTED PRICE OF OFFERING PRICE*
- -------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Less than $ 50,000 6.10% 5.75% 5.00%
- -------------------------------------------------------------------------------------
$ 50,000 but less than 100,000 4.71 4.50 3.75
- -------------------------------------------------------------------------------------
100,000 but less than 250,000 3.63 3.50 2.75
- -------------------------------------------------------------------------------------
250,000 but less than 500,000 2.56 2.50 2.00
- -------------------------------------------------------------------------------------
500,000 but less than 1,000,000 2.04 2.00 1.75
- -------------------------------------------------------------------------------------
/TABLE
<PAGE>
*At the discretion of Putnam Mutual Funds, however, the entire
sales charge may at times be reallowed to dealers. The Staff of
the Securities and Exchange Commission has indicated that dealers
who receive more than 90% of the sales charge may be considered
underwriters.
There is no initial sales charge on purchases of Class A shares
of $1 million or more. However, a contingent
deferred sales charge ("CDSC") of 1.00% or 0.50%,
respectively, is imposed on redemptions of such shares
within the first or second year after purchase ,
based on the lower of the shares' cost and
current net asset value . Any shares acquired by
reinvestment of distributions will be redeemed without a CDSC.
In addition, shares purchased by certain investors investing
$1 million or more that have made arrangements with Putnam Mutual
Funds and whose dealer of record waived the commission described
in the next paragraph are not subject to the CDSC. In
determining whether a CDSC is payable, the Fund will first redeem
shares not subject to any charge. Putnam Mutual Funds
receives the entire amount of any CDSC you pay. See the
Statement of Additional Information for more information about
the CDSC.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of Class A shares of $1
million or more based on an investor's cumulative purchases
during the one-year period beginning with the date of the initial
purchase at net asset value and each subsequent one-year period
beginning with the first purchase at net asset value following
the end of the prior period. Such commissions are paid at the
rate of 1.00% of the amount under $3 million, 0.50% of the next
$47 million and 0.25% thereafter. On sales at net asset value to
a participant-directed qualified retirement plan initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 250
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rate of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
initial investment and on subsequent net quarterly sales at the
rate of 0.15%.
YOU MAY BE ELIGIBLE TO BUY CLASS A SHARES AT REDUCED SALES
CHARGES. Consult your investment dealer or Putnam Mutual Funds
for details about Putnam's Combined Purchase Privilege,
Cumulative Quantity Discount, Statement of Intention, Group Sales
Plan, Employee Benefit Plans and other plans. Descriptions are
also included in the order form and in the Statement of
Additional Information. Shares may be sold at net asset
value to certain categories of investors , and the CDSC may be
waived under certain circumstances . See "How to buy
shares -- General" below.
CLASS B SHARES
Class B shares are sold without an initial sales charge, although
a CDSC will be imposed if you redeem shares within six years of
purchase. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment
of distributions and (ii) shares otherwise exempt from the CDSC,
as described below. Subject to the foregoing exclusions, the
amount of the charge is determined as a percentage of the lesser
of the current market value or the cost of the shares being
redeemed. Therefore when a share is redeemed, any increase in
its value above the initial purchase price is not subject to any
CDSC. The amount of the CDSC will depend on the number of
years since you invested and the dollar amount being redeemed,
according to the following table:
CONTINGENT
DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
YEARS SINCE PURCHASE DOLLAR AMOUNT
PAYMENT MADE SUBJECT
TO CHARGE
- -----------------------------------------------------------------
0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
6 and thereafter None
<PAGE>
In determining whether a CDSC is payable on any redemption, the
Fund will first redeem shares not subject to any charge, and then
shares held longest during the six-year period. For
information on how sales charges are calculated if you exchange
your shares, see "How to exchange shares." Putnam Mutual
Funds receives the entire amount of any CDSC you pay.
CONVERSION OF CLASS B SHARES. Class B shares will automatically
convert to Class A shares at the end of the month eight years
after the purchase date, except as noted below. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the time of the initial
purchase. Class B shares acquired through investment of
distributions will convert into Class A shares based on the date
of the initial purchase to which such shares relate. For this
purpose, Class B shares acquired through reinvestment of
distributions will be attributed to particular purchases of Class
B shares in accordance with such procedures as the Trustees may
determine from time to time. The conversion of Class B shares to
Class A shares is subject to the continuing availability of a
ruling from the Internal Revenue Service or an opinion of counsel
that such conversions will not constitute taxable events for
federal tax purposes. There can be no assurance that such ruling
or opinion will be available, and the conversion of Class B
shares to Class A shares will not occur if such ruling or opinion
is not available. In such event, Class B shares would continue to
be subject to higher expenses than Class A shares for an
indefinite period.
GENERAL
The Fund may sell Class A shares and Class B shares at net asset
value without an initial sales charge or CDSC to the Fund's
current and retired Trustees (and their families), current and
retired employees (and their families) of Putnam Management and
affiliates, registered representatives and other employees (and
their families) of broker-dealers having sales agreements with
Putnam Mutual Funds, employees (and their families) of financial
institutions having sales agreements with Putnam Mutual Funds (or
otherwise having an arrangement with a broker-dealer or financial
institution with respect to sales of Fund shares), financial
institution trust departments investing an aggregate of $1
million or more in Putnam funds, clients of certain
administrators of tax-qualified plans, employee benefit plans of
companies with more than 750 employees, tax-qualified plans when
proceeds from repayments of loans to participants are invested
(or reinvested) in Putnam funds, "wrap accounts" for the benefit
of clients of broker-dealers, financial institutions or financial
planners adhering to certain standards established by Putnam
Mutual Funds, and investors meeting certain requirements who sold
shares of certain Putnam closed-end funds pursuant to a tender
offer by the closed-end fund. In addition, the Fund may sell
shares at net asset value without an initial sales charge or a
CDSC in connection with the acquisition by the Fund of assets of
an investment company or personal holding company, and the CDSC
will be waived on redemptions of shares arising out of
death or disability or in connection with certain withdrawals
from IRA or other retirement plans. Up to 12% of the value of
shares subject to a Systematic Withdrawal Plan may also be
redeemed each year without a CDSC. See the Statement of
Additional Information.
Shareholders of other Putnam funds may be entitled to exchange
their shares for, or reinvest distributions from their funds in,
shares of the Fund at net asset value.
If you are considering redeeming or exchanging shares or
transferring shares to another person shortly after purchase, you
should pay for those shares with a certified check to avoid any
delay in redemption, exchange or transfer. Otherwise the Fund
may delay payment until the purchase price of those shares has
been collected or, if you redeem by telephone, until 15 calendar
days after the purchase date.
To eliminate the need for safekeeping, the Fund will not issue
certificates for your shares unless you request them. Putnam
Mutual Funds may, at its expense, provide additional promotional
incentives or payments to dealers that sell shares of the Putnam
funds. In some instances, these incentives or payments may be
offered only to certain dealers who have sold or may sell
significant amounts of shares. Certain dealers may not sell all
classes of shares.
DISTRIBUTION PLANS
CLASS A DISTRIBUTION PLAN. The purpose of the Class A Plan is to
permit the Fund to compensate Putnam Mutual Funds for services
provided and expenses incurred by it in promoting the sale of
Class A shares of the Fund, reducing redemptions, or maintaining
or improving services provided to shareholders by Putnam Mutual
Funds or dealers. The Class A Plan provides for payments by the
Fund to Putnam Mutual Funds at the annual rate of up to 0.35% of
the Fund's average net assets attributable to Class A shares,
subject to the authority of the Fund's Trustees to reduce the
amount of payments or to suspend the Class A Plan for such
periods as they may determine. Subject to these limitations, the
amount of such payments and the specific purposes for which they
are made shall be determined by the Trustees. At present, the
Trustees have approved payments under the Class A Plan at the
annual rate of 0.25% of the Fund's average net assets
attributable to Class A shares for the purpose of compensating
Putnam Mutual Funds for services provided and expenses incurred
by it as principal underwriter of the Fund's Class A shares,
including payments made by it to dealers under the Service
Agreements referred to below. Should the Trustees decide in the
future to approve payments in excess of this amount, shareholders
will be notified and this Prospectus will be revised.
In order to compensate investment dealers (including, for this
purpose, certain financial institutions) for services provided in
connection with sales of Class A shares and the maintenance of
shareholder accounts, Putnam Mutual Funds makes quarterly
payments to qualifying dealers based on the average net asset
value of Class A shares of the Fund which are attributable to
shareholders for whom the dealers are designated as the dealer of
record. This calculation excludes until one year after
purchase shares purchased at net asset value after March 31, 1994
by shareholders investing $1 million or more and by participant-
directed qualified retirement plans sponsored by employers with
more than 750 employees ("NAV Shares"), except for shares owned
by certain investors investing $1 million or more that have made
arrangements with Putnam Mutual Funds and whose dealer of record
waived the sales commission. Except as stated below, Putnam
Mutual Funds makes such payments at the annual rate of 0.20% of
such average net asset value for shares outstanding as of
December 31, 1989 and 0.25% of such average net asset value of
shares acquired after that date (including shares acquired
through reinvestment of distributions). For participant-
directed qualified retirement plans initially investing less than
$20 million in Putnam funds and other investments managed by
Putnam Management or its affiliates, Putnam Mutual Funds'
payments to qualifying dealers on NAV Shares are 100% of the rate
stated above if average plan assets in Putnam funds (excluding
money market funds) during the quarter are less than $20 million,
60% of the stated rate if average plan assets are at least $20
million but less than $30 million, and 40% of the stated rate if
average plan assets are $30 million or more. For all other
participant-directed qualified retirement plans purchasing NAV
Shares, Putnam Mutual Funds makes quarterly payments to
qualifying dealers at the annual rate of 0.10% of the average net
asset value of such shares.
CLASS B DISTRIBUTION PLAN. The Class B Plan provides for
payments by the Fund to Putnam Mutual Funds at the annual rate of
up to 1.00% of the Fund's average net assets attributable to
Class B shares, subject to the authority of the Trustees to
reduce the amount of payments or to suspend the Plan for such
periods as they may determine. Putnam Mutual Funds also receives
the proceeds of any CDSC imposed on redemptions of such shares.
Although Class B shares are sold without an initial sales charge,
Putnam Mutual Funds pays a sales commission equal to 4.00% of the
amount invested to dealers who sell Class B shares. These
commissions are not paid on exchanges from other Putnam funds and
sales to investors exempt from the CDSC. In addition, in order to
further compensate dealers (including, for this purpose, certain
financial institutions) for services provided in connection with
sales of Class B shares and the maintenance of shareholder
accounts, Putnam Mutual Funds makes quarterly payments to
qualifying dealers based on the average net asset value of Class
B shares which are attributable to shareholders for whom the
dealers are designated as the dealer of record. Putnam Mutual
Funds makes such payments at an annual rate of 0.25% of such
average net asset value of Class B shares.
GENERAL. Putnam Mutual Funds may suspend or modify the payments
made to dealers described above, and such payments are subject to
the continuation of the Fund's relevant Plan described above ,
the terms of Service Agreements between dealers and Putnam Mutual
Funds, and any applicable limits imposed by the National
Association of Securities Dealers, Inc.
HOW TO SELL SHARES
You can sell your Class A or B shares to the Fund any day the New
York Stock Exchange is open, either directly to the Fund or
through your investment dealer. The Fund will only repurchase
shares for which it has received payment.
SELLING SHARES DIRECTLY TO THE FUND. Send a signed
letter of instruction or stock power form to Putnam Investor
Services, along with any certificates that represent shares you
want to sell. The price you will receive is the next net asset
value calculated after the Fund receives your request in proper
form less any applicable CDSC. In order to receive that day's net
asset value, Putnam Investor Services must receive your request
before the close of regular trading on the New York Stock
Exchange. If you sell shares having a net asset value of $100,000
or more, the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. See the Statement of
Additional Information for more information about where to obtain
a signature guarantee. Stock power forms are available from your
investment dealer, Putnam Investor Services and many commercial
banks. If you want your redemption proceeds sent to an address
other than your address as it appears on Putnam's records, a
signature guarantee is required. Putnam Investor Services
usually requires additional documentation for the sale of shares
by a corporation, partnership, agent or fiduciary, or a surviving
joint owner. Contact Putnam Investor Services for details.
THE FUND GENERALLY SENDS YOU PAYMENT FOR YOUR SHARES THE BUSINESS
DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual circumstances,
the Fund may suspend repurchases, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Putnam's Telephone Redemption Privilege to redeem
shares valued up to $100,000 from your account, unless you have
notified Putnam Investor Services of an address change within the
preceding 15 days. Unless an investor indicates otherwise on the
Account Application, Putnam Investor Services will be authorized
to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as
his or her representative, who can provide Putnam Investor
Services with his or her account registration and address as it
appears on Putnam Investor Services' records. Putnam Investor
Services will employ these and other reasonable procedures to
confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, Putnam Investor
Services may be liable for any losses due to unauthorized or
fraudulent instructions. For information, consult Putnam Investor
Services. During periods of unusual market changes and
shareholder activity, you may experience delays in contacting
Putnam Investor Services by telephone in which case you may wish
to submit a written redemption request, as described above, or
contact your investment dealer, as described below. The
Telephone Redemption Privilege is not available if you were
issued certificates for your shares which remain outstanding.
The Telephone Redemption Privilege may be modified or terminated
without notice.
SELLING SHARES THROUGH YOUR INVESTMENT DEALER. Your
dealer must receive your request before the close of regular
trading on the New York Stock Exchange and transmit it to Putnam
Mutual Funds before 5 p.m. Boston time to receive that day's net
asset value. Your dealer will be responsible for furnishing all
necessary documentation to Putnam Investor Services, and may
charge for its services.
HOW TO EXCHANGE SHARES
You can exchange your shares for shares of the same class
of certain other Putnam funds at net asset value beginning 15
days after purchase. If you exchange shares subject to a
CDSC , the transaction will not be subject to the CDSC.
However, when you redeem the shares acquired through the
exchange, the redemption may be subject to the CDSC, depending
upon when you originally purchased the shares and using
the schedule of any fund into or from which you have exchanged
your shares that would result in your paying the highest CDSC
applicable to your class of shares. For purposes of computing
the CDSC, 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 exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services.
Exchange Authorization Forms are available by calling or writing
Putnam Investor Services. For federal income tax purposes, an
exchange is treated as a sale of shares and generally results in
a capital gain or loss. A Telephone Exchange Privilege is
currently available for amounts up to $500,000. Putnam Investor
Services' procedures for telephonic transactions are described
above under "How to sell Class A and B shares." The Telephone
Exchange Privilege is not available if you were issued
certificates for shares which remain outstanding. Ask your
investment dealer or Putnam Investor Services for prospectuses of
other Putnam funds. Shares of certain Putnam funds are not
available to residents of 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
in other circumstances where the Trustees or Putnam Management
believes doing so would be in 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. Shareholders would be notified of any such action to
the extent required by law. Consult Putnam Investor Services
before requesting an exchange. See the Statement of Additional
Information to find out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
THE FUND CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH CLASS
BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS LIABILITIES, BY
THE NUMBER OF ITS SHARES OUTSTANDING. SHARES ARE VALUED AS OF
THE CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK EXCHANGE EACH
DAY THE EXCHANGE IS OPEN. Portfolio securities for which market
quotations are readily available are stated at market value.
Short-term investments that will mature in 60 days or less are
stated at amortized cost, which approximates market value. All
other securities and assets are valued at their fair value
following procedures approved by the Trustees.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income and any
net realized capital gains at least annually. Distributions from
net investment income, if any, are expected to be small.
Distributions from capital gains are made after applying any
available capital loss carryovers. Distributions paid by the Fund
with respect to Class A shares will generally be greater than
those paid with respect to Class B shares because expenses
attributable to Class B shares will generally be higher.
YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS: (1) reinvest all
distributions in additional Fund shares without a sales charge;
(2) receive distributions from net investment income in cash
while reinvesting capital gains distributions in additional
shares without a sales charge; or (3) receive all distributions
in cash. You can change your distribution option by notifying
Putnam Investor Services in writing. If you do not select an
option when you open your account, all distributions will be
reinvested. All distributions not paid in cash will be reinvested
in shares of the class on which the distribution is paid. You
will receive a statement confirming reinvestment of distributions
in additional Fund shares (or in shares of other Putnam funds for
Dividends Plus accounts) promptly following the quarter in which
the reinvestment occurs.
If a check representing a Fund distribution is not cashed within
a specified period, Putnam Investor Services will notify you that
you have the option of requesting another check or reinvesting
the distribution in the Fund or in another Putnam fund. If
Putnam Investor Services does not receive your election, the
distribution will be reinvested in the Fund . Similarly,
if 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.
The Fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
taxes on income and gains it distributes to shareholders. The
Fund will distribute substantially all of its ordinary income and
capital gain net income on a current basis.
All Fund distributions will be taxable to you as ordinary income,
except that any distributions of net long-term capital gains will
be taxed as such, regardless of how long you have held the
shares. Distributions will be taxable as described above whether
received in cash or in shares through the reinvestment of
distributions.
Early in each year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding
year.
The foregoing is a summary of certain federal income tax
consequences of investing in the Fund. You should consult your
tax adviser to determine the precise effect of an investment in
the Fund on your particular tax situation (including possible
liability for state and local taxes).
<PAGE>
ABOUT PUTNAM INVESTMENTS, INC.
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the Fund and
of other Putnam funds. Putnam Fiduciary Trust Company is the
Fund's custodian. Putnam Investor Services, a division of Putnam
Fiduciary Trust Company, is the Fund's investor servicing and
transfer agent.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., which is
wholly-owned by Marsh & McLennan Companies, Inc., a publicly
owned holding company whose principal businesses are
international insurance and reinsurance brokerage, employee
benefit consulting and investment management.
<PAGE>
PUTNAM VISTA FUND
One Post Office Square
Boston, MA 02109
FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management,Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
INVESTOR SERVICING AGENT
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
CUSTODIAN
Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Price Waterhouse
160 Federal Street
Boston, MA 02110
PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581<PAGE>
PUTNAM VISTA FUND
ONE POST OFFICE SQUARE , BOSTON, MA 02109
INVESTMENT STRATEGY: GROWTH
PROSPECTUS- DECEMBER 1, 1993, AS REVISED JUNE 1, 1994
This Prospectus explains concisely what you should know before
investing in Class A shares of the Fund offered without a
sales charge through eligible employer-sponsored defined
contribution plans ("defined contribution plans").
Please read it carefully and keep it for future reference. You
can find more detailed information about the Fund in the December
1, 1993 Statement of Additional Information, as amended from time
to time. For a free copy of the Statement, call Putnam
Investor Services at 1-800-752-9894. The Statement has been
filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference.
PUTNAM VISTA FUND (THE "FUND") SEEKS CAPITAL APPRECIATION. IT IS
DESIGNED FOR INVESTORS SEEKING ABOVE-AVERAGE CAPITAL GROWTH
POTENTIAL THROUGH INVESTMENT IN A DIVERSIFIED PORTFOLIO OF COMMON
STOCKS. THE FUND MAY ALSO TRADE SECURITIES FOR SHORT-TERM
PROFITS. FOR A DESCRIPTION OF THESE SPECULATIVE STRATEGIES, AND
THE RELATED RISKS AND EXPENSES, SEE THE SECTION "HOW OBJECTIVE IS
PURSUED," ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PUTNAMINVESTMENTS
PUTNAM DEFINED
CONTRIBUTION PLANS
<PAGE>
ABOUT THE FUND...............................2
Expenses summary.............................2
Financial highlights.........................3
Objective....................................5
How objective is pursued.....................5
How performance is shown.....................9
How the Fund is managed......................9
Organization and history.....................10
ABOUT YOUR INVESTMENT........................11
How to buy shares............................11
Distribution Plan............................12
How to sell shares. ..........................13
How to exchange shares.......................13
How the Fund values its shares. ..............14
How distributions are made; tax information. .14
ABOUT PUTNAM INVESTMENTS, INC. ..............15
<PAGE>
ABOUT THE FUND
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
the Fund. The following table summarizes your maximum
transaction costs from investing in the Fund and expenses
incurred by the Fund based on its most recent fiscal year. The
Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in the Fund over specified
periods.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.65%
12b-1 Fees 0.25%
Other Expenses 0.26%
Total Fund Operating Expenses 1.16%
EXAMPLE 1 3 5 10
YEAR YEARS YEARS YEARS YEARS
Your investment of
$1,000 would incur
the following expenses, assuming
5% annual return and
redemption at the
end of each period: $12 $37 $64
$141
The table is provided to help you understand the expenses of
investing in the Fund and your share of the operating expenses
which the Fund incurs. The management fees shown in the
table reflect an increase in the fees payable to Putnam
Investment Management, Inc., the Fund's investment manager
("Putnam Management"). The 12b-1 fees shown in the table
reflect the amount to which the Trustees currently limit payments
under the Distribution Plan. The Example does not represent past
or future expense levels. Actual management fees, 12b-
1 fees and total operating expenses for fiscal 1993 were
0.49% , 0.21% and 0.96%, respectively. Actual expenses may
be greater or less than those shown. Federal regulations require
the Example to assume a 5% annual return, but actual annual
return has varied. The Example does not reflect any charges or
expenses related to your employer's plan.
<PAGE>
FINANCIAL HIGHLIGHTS
The table on the following page presents per share financial
information for the Fund's ten most recent fiscal years. This
information has been derived from the Fund's financial statements
for the year ended July 31, 1993. The Report of Independent
Accountants and financial statements included in the Fund's
Annual Report to shareholders for the 1993 fiscal year are
incorporated by reference into this Prospectus. The Fund's
Annual Report, which contains additional unaudited performance
information, will be made available without charge upon request.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)*
(THE TABLE IS INCORPORATED BY REFERENCE FROM POST-EFFECTIVE
AMENDMENT NO.43 TO THE FUND'S REGISTRATION STATEMENT, FILE NO.
2-27664.) <PAGE>
OBJECTIVE
PUTNAM VISTA FUND SEEKS CAPITAL APPRECIATION. CURRENT INCOME IS
ONLY AN INCIDENTAL CONSIDERATION IN SELECTING INVESTMENTS FOR THE
FUND. THE FUND IS DESIGNED FOR INVESTORS SEEKING ABOVE-AVERAGE
CAPITAL GROWTH POTENTIAL, WHICH INVOLVES CERTAIN RISKS. The Fund
is not intended to be a complete investment program, and there is
no assurance it will achieve its objective.
HOW OBJECTIVE IS PURSUED
BASIC INVESTMENT STRATEGY
THE FUND INVESTS IN A DIVERSIFIED PORTFOLIO OF COMMON STOCKS
WHICH PUTNAM MANAGEMENT BELIEVES HAVE THE POTENTIAL FOR ABOVE-
AVERAGE CAPITAL APPRECIATION. THESE MAY INCLUDE WIDELY-TRADED
COMMON STOCKS OF LARGER COMPANIES AS WELL AS COMMON STOCKS OF
SMALLER, LESS WELL KNOWN COMPANIES. In selecting common stocks
for the Fund, Putnam Management will consider, among other
things, an issuer's financial strength, competitive position,
projected future earnings and dividends, and other investment
criteria. Current income will be only an incidental
consideration in the selection of investments.
Investment opportunities may be sought among securities of large,
widely traded companies as well as securities of smaller, less
well known companies. Smaller companies may present greater
opportunities for capital appreciation, but may also involve
greater risks. They may have limited product lines, markets or
financial resources, or may depend on a limited management group.
Their securities may trade less frequently and in limited volume.
As a result, the prices of these securities may fluctuate more
than prices of securities of larger, more established companies.
The Fund may at times invest a portion of its assets in common
stocks Putnam Management believes are significantly undervalued.
In selecting such common stocks, Putnam Management will focus on
industries and issuers it considers to have particular
possibilities for long-term capital appreciation due to potential
growth of earnings which, in the judgment of Putnam Management,
is not fully reflected in current market prices. In selecting
undervalued securities, Putnam Management may consider investment
judgments contrary to those of most investors.
Common stocks are normally the Fund's main investments. However,
the Fund may purchase preferred stocks, debt securities,
convertible securities (both bonds and preferred stocks) and
warrants if Putnam Management believes they would help achieve
the Fund's objective of capital appreciation. The Fund may
purchase debt securities rated at least C by Standard & Poor's
Corporation or Moody's Investor Service, Inc., or unrated
securities determined by Putnam Management to be of comparable
quality. Securities in the lower-rated categories are considered
to be primarily speculative and may be in default. The Fund may
also hold a portion of its assets in cash or money market
instruments.
At times Putnam Management may judge that conditions in the
securities markets make pursuing the Fund's basic investment
strategy inconsistent with the best interests of its
shareholders. At such times Putnam Management may temporarily
use alternative strategies, primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing
these "defensive" strategies, the Fund may increase the portion
of its assets invested in debt securities or preferred stocks, or
invest in any other securities Putnam Management considers
consistent with such defensive strategies. It is impossible to
predict when, or for how long, the Fund will use these
alternative strategies.
FOREIGN INVESTMENTS
The Fund may invest up to 20% of its assets in securities
principally traded in foreign markets. The Fund may also
purchase Eurodollar certificates of deposit without regard to the
20% limit. Since foreign securities are normally denominated and
traded in foreign currencies, the values of the Fund's assets may
be affected favorably or unfavorably by currency exchange rates
and exchange control regulations. There may be less information
publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to
accounting, auditing and financial reporting standards and
practices comparable to those in the United States. The
securities of some foreign companies are less liquid and at times
more volatile than securities of comparable U.S. companies.
Foreign brokerage commissions and other fees are also generally
higher than in the United States. Foreign settlement procedures
and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the
Fund's assets held abroad) and expenses not present in the
settlement of domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments which could affect the
value of the Fund's investments in certain foreign countries.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the
Fund's ability to invest in securities of certain issuers located
in those foreign countries. Special tax considerations apply to
foreign securities.
The Fund may buy or sell foreign currencies, foreign currency
forward contracts and call options on foreign currencies for
hedging purposes in connection with its foreign investments.
A MORE DETAILED EXPLANATION OF FOREIGN INVESTMENTS, AND THE RISKS
AND SPECIAL TAX CONSIDERATIONS ASSOCIATED WITH THEM, IS INCLUDED
IN THE STATEMENT OF ADDITIONAL INFORMATION.
SHORT-TERM TRADING
UNDER CERTAIN MARKET CONDITIONS, THE FUND MAY SEEK PROFITS BY
SHORT-TERM TRADING. The length of time the Fund has held a
particular security is not generally a consideration in
investment decisions. A change in the securities owned by the
Fund is known as "portfolio turnover." To the extent short-term
trading strategies are used, the Fund's portfolio turnover rate
may be higher than that of other mutual funds. Portfolio
turnover generally involves some expense to the Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other
securities. Such transactions may result in realization of
taxable capital gains. Portfolio turnover rates for the ten most
recent fiscal years are shown in the section "Financial
highlights."
STOCK INDEX FUTURES AND OPTIONS
THE FUND MAY BUY AND SELL STOCK INDEX FUTURES CONTRACTS FOR
HEDGING PURPOSES. An "index future" is a contract to buy or
sell units of a particular stock index at an agreed price on a
specified future date. Depending on the change in value of the
index between the time when the Fund enters into and terminates
an index future transaction, the Fund realizes a gain or loss.
The Fund may buy and sell call and put options on index futures
or on stock indices in addition to or as an alternative to
purchasing or selling index futures or, to the extent permitted
by applicable law, to earn additional income.
THE USE OF INDEX FUTURES AND OPTIONS INVOLVES CERTAIN SPECIAL
RISKS. FUTURES AND OPTIONS TRANSACTIONS INVOLVE COSTS AND MAY
RESULT IN LOSSES. Certain risks arise because of the possibility
of imperfect correlations between movements in the prices of
index futures and options and movements in the prices of the
underlying stock index or of the common stocks in the Fund's
portfolio that are the subject of a hedge. The successful use of
the strategies described above further depends on Putnam
Management's ability to forecast market movements correctly.
Other risks arise from the Fund's potential inability to close
out its index futures or options positions, and there can be no
assurance that a liquid secondary market will exist for any index
future or option at any particular time. Certain provisions of
the Internal Revenue Code and certain regulatory requirements may
limit the Fund's ability to engage in index futures and options
transactions.
A MORE DETAILED EXPLANATION OF INDEX FUTURES AND OPTIONS
TRANSACTIONS, INCLUDING THE RISKS ASSOCIATED WITH THEM, IS
INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
OTHER INVESTMENT PRACTICES
THE FUND MAY ALSO ENGAGE TO A LIMITED EXTENT IN THE FOLLOWING
INVESTMENT PRACTICES, EACH OF WHICH MAY INVOLVE CERTAIN SPECIAL
RISKS. THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE
DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING LIMITATIONS
DESIGNED TO REDUCE THESE RISKS.
OPTIONS. The Fund may seek to increase its current return by
writing covered call and put options on securities it owns or in
which it may invest. The Fund receives a premium from writing a
call or put option, which increases the Fund's return if the
option expires unexercised or is closed out at a net profit.
When the Fund writes a call option, it gives up the opportunity
to profit from any increase in the price of a security above the
exercise price of the option; when it writes a put option, the
Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current
market price of the security. The Fund may terminate an option
that it has written prior to its expiration by entering into a
closing purchase transaction in which it purchases an option
having the same terms as the option written. The Fund may also
buy and sell put and call options for hedging purposes. The Fund
may also from time to time buy and sell combinations of put and
call options on the same underlying security to earn additional
income. The aggregate value of the securities underlying the
options may not exceed 25% of the Fund's assets. The Fund's use
of these strategies may be limited by applicable law.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS.
The Fund may lend portfolio securities amounting to not more than
25% of its assets to broker-dealers and may enter into repurchase
agreements on up to 25% of its total assets. These transactions
must be fully collateralized at all times. The Fund may also
purchase securities for future delivery, which may increase its
overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.
All of these transactions involve some risk to the Fund if the
other party should default on its obligation and the Fund is
delayed or prevented from recovering the collateral or completing
the transaction.
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUND LIMIT INVESTMENT
RISKS FOR ITS SHAREHOLDERS. THESE RESTRICTIONS PROHIBIT THE FUND
FROM: acquiring more than 10% of the voting securities of any one
issuer or more than 10% of any one class of securities of any one
issuer* and investing more than: (a) 5% of its total assets in
securities of any one issuer (other than the U.S. government);*
(b) 5% of its net assets in companies that, together with any
predecessors, have been in operation less than three years and in
equity securities (other than securities restricted as to resale)
that do not have readily available market quotations;* (c) 15% of
its net assets in securities restricted as to resale, excluding
securities determined by the Fund's Trustees (or the person
designated by the Fund's Trustees to make such determinations) to
be readily marketable;* (d) 25% of its total assets in any one
industry;* or (e) 15% of its net assets in any combination of
securities that are not readily marketable, in securities
restricted as to resale (excluding securities determined by the
Fund's Trustees (or the person designated by the Fund's Trustees
to make such determinations) to be readily marketable), and in
repurchase agreements maturing in more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental policies. See the Statement of Additional
Information for the full text of these policies and the Fund's
other fundamental policies. Except for investment policies
designated as fundamental in this Prospectus or the Statement,<PAGE>
the investment policies described in this Prospectus and in
the Statement are not fundamental policies. The Trustees may
change any non-fundamental investment policies without
shareholder approval. As a matter of policy, the Trustees would
not materially change the Fund's investment objective without
shareholder approval.
HOW PERFORMANCE IS SHOWN
TOTAL RETURN DATA MAY FROM TIME TO TIME BE INCLUDED IN
ADVERTISEMENTS ABOUT THE FUND. "Total return" for the one-,
five- and ten-year periods 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. Total return may also be presented for other
periods or based on investment at reduced sales charge levels.Any
quotation of total return not reflecting the maximum initial
sales charge would be reduced if the maximum sales charge were
used. Quotations of total return for any period when an expense
limitation was in effect will be greater than if the limitation
had not been in effect. The Fund's performance may be compared
to various indices. See the Statement of Additional Information.
Because shares sold through eligible defined contribution plans
are sold without a sales charge, quotations of total return
reflecting the deduction of a sales charge will be lower than the
actual total return on shares purchased through such plans.
ALL DATA IS BASED ON THE FUND'S PAST INVESTMENT RESULTS AND DOES
NOT PREDICT FUTURE PERFORMANCE. Investment performance, which
will vary, is based on many factors, including market conditions,
the composition of the Fund's portfolio, and the Fund's operating
expenses. Investment performance also often reflects the risks
associated with the Fund's investment objective and policies.
These factors should be considered when comparing the Fund's
investment results to those of other mutual funds and other
investment vehicles.
HOW THE FUND IS MANAGED
THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR GENERALLY OVERSEEING
THE CONDUCT OF THE FUND'S 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. Jennifer K. Silver, Senior Vice President of Putnam
Management , Michael J. Mufson, Vice President of Putnam
Management, and Anthony C. Santosus, Vice President of
Putnam Management, each of whom is a Vice President of the
Fund, are primarily responsible for the day-to-day
management of the Fund's portfolio . Ms. Silver has had
this responsibility since December, 1991 and Messrs. Mufson and
Santosus have had this responsibility since April, 1994. Ms.
Silver and Mr. Santosus have been employed by Putnam
Management for the past five years. Mr. Mufson has been
employed by Putnam Management since June, 1993. Prior to June,
1993, Mr. Mufson was Senior Equity Analyst at Stein Roe &
Farnham.
The Fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses, and payments under
its Distribution Plans (which are in turn allocated to the
relevant class of shares). The Fund also reimburses Putnam
Management for the compensation and related expenses of certain
officers of the Fund and their staff who provide administrative
services to the Fund. The total reimbursement is determined
annually by the Trustees.
Putnam Management places all orders for purchases and sales of
the Fund's securities. In selecting broker-dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of shares of the Fund (and, if permitted by law, of the
other Putnam funds) as a factor in the selection of broker-
dealers.
ORGANIZATION AND HISTORY
Putnam Vista Fund is a Massachusetts business trust organized on
August 13, 1982 as the successor to Putnam Vista Fund, Inc., a
Massachusetts corporation organized on October 25, 1967. From
October 3, 1985 to November 3, 1989 the Fund was known as Putnam
Vista Basic Value Fund. 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. Shares of the Fund may, without shareholder
approval, be divided into two or more series of shares
representing separate investment portfolios. Any such series of
shares may be further divided, without shareholder approval, into
two or more classes of shares having such preferences and special
or relative rights and privileges as the Trustees may determine.
The Fund's shares are currently divided into three classes, two
of which are currently being offered. Only the Fund's Class A
shares are offered by this Prospectus. Class B shares are subject
to a contingent deferred sales charge, and are subject to a
higher 12b-1 fee than Class A shares. Because Class B shares
generally bear greater expenses than Class A shares, the
investment return of Class B shares will be
lower than that of Class A shares. Each share has
one vote, with fractional shares voting proportionally. Shares of
each class will vote together as a single class except when
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 Declaration of Trust.
If you own fewer shares than a minimum amount set by the Trustees
(presently 20 shares), the Fund may choose to redeem your shares
and pay you for them. You will receive at least 30 days' written
notice before the Fund redeems your shares, and you may purchase
additional shares at any time to avoid a redemption. The Fund
may also redeem shares if you 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.
THE FUND'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, M.I.T. ; JAMESON ADKINS BAXTER, President, Baxter
Associates, Inc. ;Hans H. Estin, Vice Chairman, North American
Management ; JOHN A. HILL, Principal and Managing Director, First
Reserve Corporation; ELIZABETH T. KENNAN, President, Mount
Holyoke College; LAWRENCE J. LASSER,* Vice President of the
Putnam funds. President, Chief Executive Officer and Director of
Putnam Investments, Inc. and Putnam Management. Director, Marsh
& McLennan Companies, Inc.; ROBERT E. PATTERSON, Executive Vice
President, Cabot Partners Limited Partnership; DONALD S.
PERKINS, Director of various corporations, including AT&T, K mart
Corporation and Time Warner Inc.; GEORGE PUTNAM, III,* President,
New Generation Research, Inc.; A.J.C. SMITH,* Chairman, Chief
Executive Officer and Director, Marsh & McLennan Companies, Inc.;
and W. NICHOLAS THORNDIKE, Director of various corporations and
charitable organizations, including Providence Journal Co. Also,
Trustee and President, Massachusetts General Hospital, and
Trustee of Eastern Utilities Associates. The Fund's Trustees are
also Trustees of the other Putnam funds. Those marked with an
asterisk (*) are "interested persons" of the Fund, Putnam
Management or Putnam Mutual Funds.
<PAGE>
ABOUT YOUR INVESTMENT
HOW TO BUY SHARES
ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
EMPLOYER'S DEFINED CONTRIBUTION PLAN. FOR MORE INFORMATION ABOUT
HOW TO PURCHASE SHARES OF THE FUND THROUGH YOUR EMPLOYER'S PLAN
OR LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT YOUR EMPLOYER. Shares are sold to eligible defined
contribution plans at the net asset value per share next
determined after receipt of an order by Putnam Investor Services.
Orders must be received by Putnam Investor Services before the
close of regular trading on the New York Stock Exchange in order
to receive that day's net asset value. In order to be eligible
to purchase shares at net asset value, defined contribution plans
must initially invest at least $1,000,000 or be sponsored by
companies with more than 750 employees. Eligible plans may make
additional investments of any amount at any time. To eliminate
the need for safekeeping, the Fund will not issue certificates
for your shares. On sales at net asset value to a
participant-directed qualified retirement plan initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 750
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rate of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
inital investment and on subsequent net quarterly sales at the
rate of 0.15% . Putnam Mutual Funds may, at its expense,
provide additional promotional incentives or payments to dealers
that sell shares of the Putnam funds. In some instances, these
incentives or payments may be offered only to certain dealers who
have sold or may sell significant amounts of shares.
DISTRIBUTION PLAN
The purpose of the Plan is to permit the Fund to compensate
Putnam Mutual Funds for services provided and expenses incurred
by it in promoting the sale of shares of the Fund, reducing
redemptions, or maintaining or improving services provided to
shareholders by Putnam Mutual Funds or dealers. The Plan
provides for payments by the Fund to Putnam Mutual Funds at the
annual rate of up to 0.35% of the Fund's average net assets
attributable to Class A shares, subject to the authority of the
Fund's Trustees to reduce the amount of payments or to suspend
the Plan for such periods as they may determine. Subject to
these limitations, the amount of such payments and the specific
purposes for which they are made shall be determined by the
Trustees. At present, the Trustees have approved payments under
the Plan at the annual rate of 0.25% of the Fund's average net
assets attributable to Class A shares for the purpose of
compensating Putnam Mutual Funds for services provided and
expenses incurred by it as principal underwriter of the Fund's
Class A shares, including payments made by it to dealers under
the Service Agreements referred to below. Should the Trustees
decide in the future to approve payments in excess of this
amount, shareholders will be notified and this Prospectus will be
revised.
When Putnam Mutual Funds is not the dealer of record, Putnam
Mutual Funds makes quarterly payments to qualifying dealers
based on the average net asset value of shares of the Fund which
are attributable to shareholders for whom the dealers are
designated as the dealer of record, in order to compensate such
dealers (including for this purpose, such financial institutions)
for services provided in connection with sales of Fund shares and
the maintenance of shareholder accounts. This calculation
excludes until one year after purchase shares purchased at net
asset value after March 31, 1994 by shareholders investing $1
million or more and by participant-directed qualified retirement
plans sponsored by employers with more than 750 employees ("NAV
Shares"), except for shares owned by certain investors investing
$1 million or more that have made arrangements with Putnam Mutual
Funds and whose dealer of record waived the sales commission.
Except as stated below, Putnam Mutual Funds makes such
payments at the annual rate of 0.20% of such average net asset
value for shares outstanding as of December 31, 1989 and 0.25% of
the average net asset value of shares acquired after that date
(including shares acquired through reinvestment of
distributions). For participant-directed qualified retirement
plans initially investing less than $20 million in Putnam funds
and other investments managed by Putnam Management or its
affiliates, Putnam Mutual Funds' payments to qualifying dealers
on NAV Shares are 100% of the rate stated above if average plan
assets in Putnam funds (excluding money market funds) during the
quarter are less than $20 million, 60% of the stated rate if
average plan assets are at least $20 million but less than $30
million, and 40% of the stated rate if average plan assets are
$30 million or more. For all other participant-directed
qualified retirement plans purchasing NAV Shares, Putnam Mutual
Funds makes quarterly payments to qualifying dealers at the
annual rate of 0.10% of the average net asset value of such
shares. Putnam Mutual Funds may suspend or modify these
payments at any time, and payments are subject to the
continuation of the Fund's Distribution Plan described above and
the terms of Service Agreements between dealers and Putnam Mutual
Funds and any applicable limits imposed by the National
Association of Securities Dealers, Inc.
<PAGE>
HOW TO SELL SHARES
SUBJECT TO ANY RESTRICTIONS IMPOSED BY YOUR EMPLOYER'S PLAN, YOU
CAN SELL YOUR SHARES THROUGH THE PLAN TO THE FUND ANY DAY THE NEW
YORK STOCK EXCHANGE IS OPEN. For more information about how to
sell shares of the Fund through your employer's plan, including
any charges that may be imposed by the plan, please consult with
your employer.
Your plan administrator must send a signed letter of instruction
to Putnam Investor Services. The price you will receive is the
next net asset value calculated after the Fund receives your
request in proper form. All requests must be received by the
Fund prior to the close of regular trading on the New York Stock
Exchange in order to receive that day's net asset value. If you
sell shares having a net asset value of $100,000 or more,
signatures of registered owners or their legal representatives
must be guaranteed by a bank, broker-dealer or certain other
financial institutions. See the Statement of Additional
Information for more information about where to obtain a
signature guarantee.
THE FUND GENERALLY PROVIDES PAYMENT FOR YOUR SHARES THE BUSINESS
DAY AFTER THE REQUEST IS RECEIVED. Under unusual circumstances,
the Fund may suspend repurchases, or postpone payment for more
than seven days, as permitted by federal securities law. The
Fund will only repurchase shares for which it has received
payment.
HOW TO EXCHANGE SHARES
Subject to any restrictions contained in your plan, you can
exchange your shares for shares of other Putnam funds available
through your plan at net asset value. If the Fund into which you
wish to exchange has more than one class of shares outstanding,
you may only exchange your shares for Class A shares of that
Fund. Contact your plan administrator or Putnam Investor Services
on how to exchange your shares or how to obtain prospectuses of
other Putnam funds in which you may invest. Shares of certain
Putnam funds are not available to residents of 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
in other circumstances where the Trustees or Putnam Management
believes doing so would be in 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. Shareholders would be notified of any such action to
the extent required by law. Consult Putnam Investor Services
before requesting an exchange. See the Statement of Additional
Information to find out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
THE FUND CALCULATES THE NET ASSET VALUE OF A SHARE BY DIVIDING
THE TOTAL VALUE OF ITS ASSETS, LESS LIABILITIES, BY THE NUMBER OF
SHARES OUTSTANDING. SHARES ARE VALUED AS OF THE CLOSE OF REGULAR
TRADING ON THE NEW YORK STOCK EXCHANGE EACH DAY THE EXCHANGE IS
OPEN. Portfolio securities for which market quotations are
readily available are stated at market value. Short-term
investments that will mature in 60 days or less are stated at
amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following
procedures approved by the Trustees.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund distributes any net investment income and any
net realized capital gains at least annually. Distributions from
net investment income, if any, are expected to be small.
Distributions from capital gains are made after applying any
available capital loss carryovers.
The terms of your plan will govern how your plan may receive
distributions from the Fund. Generally, periodic distributions
from the Fund to your plan are reinvested in additional Fund
shares, although your plan may permit Fund distributions from net
investment income to be received in cash while reinvesting
capital gains distributions in additional shares or all Fund
distributions to be received in cash. If another option is not
selected, all distributions will be reinvested in additional Fund
shares.
The Fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
income taxes on income and gains it distributes. The Fund will
distribute substantially all of its ordinary income and capital
gain net income on a current basis. Generally, Fund
distributions are taxable as ordinary income, except that any
distributions of net long-term capital gains will be taxed as
such. However, distributions by the Fund to employer-sponsored
defined contribution plans that qualify for tax-exempt treatment
under federal income tax laws will not be taxable. Special tax
rules apply to investments through such plans. You should
consult your tax adviser to determine the suitability of the Fund
as an investment through such a plan and the tax treatment of
distributions (including distributions of amounts attributable to
an investment in the Fund) from such a plan.
<PAGE>
The foregoing is a summary of certain federal income tax
consequences of investing in the Fund. You should consult your
tax adviser to determine the precise effect of an investment in
the Fund on your particular tax situation(including possible
liability for state and local taxes).
<PAGE>
ABOUT PUTNAM INVESTMENTS, INC.
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the Fund and
of other Putnam funds. Putnam Defined Contribution Plan Services
is a division of Putnam Mutual Funds. Putnam Fiduciary Trust
Company is the Fund's custodian. Putnam Investor Services, a
division of Putnam Fiduciary Trust Company, is the Fund's
investor servicing and transfer agent.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are located at One Post Office Square, Boston,
Massachusetts, 02109 and are subsidiaries of Putnam
Investments, Inc., which is wholly-owned by Marsh & McLennan
Companies, Inc., a publicly owned holding company whose principal
businesses are international insurance and reinsurance brokerage,
employee benefit consulting and investment management.
<PAGE>
Differences between the typeset (printed) prospectus and the
EDGAR filing version.
1.Each interior page of the prospectus includes the word
"prospectus" at the bottom of the page.
2.Pagination is different in printed prospectus.
3.Section headings and subheadings in the printed prospectus are
printed in boldface type with colored ink.
4.The first page of the printed prospectus contains an
illustration of balanced scales, Putnam's logo.
5.The last page of the printed prospectus contains a graphic
recyclable logo.
<PAGE>
DIFFERENCES BETWEEN THE TYPESET DEFINED CONTRIBUTION AND CLASS Y
(PRINTED)
PROSPECTUS AND THE EDGAR FILING VERSION.
1. PAGINATION IS DIFFERENT IN PRINTED PROSPECTUS
2. SECTION HEADINGS AND SUBHEADINGS IN THE PRINTED PROSPECTUS
ARE PRINTED IN BOLDFACE TYPE
3. THE FIRST FEW DESCRIPTIVE LINES OF CERTAIN PARAGRAPHS, AND
CERTAIN OTHER EMPHASIZED PHRASES, ARE PRINTED IN BOLDFACE
TYPE
4. IN THE PRINTED PROSPECTUS, THE DASHES AT THE BEGINNING OF
CERTAIN SENTENCES ARE REPLACED BY A SOLID BOX
5. THE FIRST PAGE OF THE PRINTED PROSPECTUS CONTAINS A BOX
WITH AN ILLUSTRATION OF THE BALANCE SCALES, THE PUTNAM
LOGO
<PAGE>
