PUTNAM VISTA FUND
ONE POST OFFICE SQUARE, BOSTON, MA 02109
CLASS Y SHARES
INVESTMENT STRATEGY : GROWTH
PROSPECTUS - DECEMBER 1, 1994 , AS REVISED MARCH 1, 1995
This Prospectus explains concisely what you should know before
investing in Class Y shares of Putnam Vista Fund (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, 1994 Statement of Additional
Information, as amended from time to time. For a free copy of
the Statement or other information, including a Prospectus
regarding any other class of Fund shares , 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.
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
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ABOUT THE FUND
Expenses summary. ............................
Objective. ...................................
How objective is pursued. ....................
How performance is shown. ....................
How the Fund is managed. .....................
Organization and history. ....................
ABOUT YOUR INVESTMENT
How to buy shares. ...........................
How to sell shares. ..........................
How to exchange shares. ......................
How the Fund values its shares. ..............
How distributions are made; tax information. .
ABOUT PUTNAM INVESTMENTS, INC...............
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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 expenses which
the Fund expects to incur in its most recent fiscal year.
The Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in Class Y shares of the
Fund over specified periods.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.63%
Other Expenses
0.24%
Total Fund Operating Expenses 0.87%
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. "Management fees" and "Other expenses"
are based on the operating expenses for the Fund's Class B
shares.
EXAMPLE
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
$9 $28 $48
$107
The Example does not represent past or future expense levels .
Actual expenses may be greater or less than those shown.
Federal regulations require the Example to assume a 5% annual
return, but actual annual return has varied. The Example does
not reflect any charges or expenses related to your employer's
plan.
See "Organization and history" for information about any other
class of shares offered by the Fund.<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 INVESTMENT MANAGEMENT, INC., THE FUND'S INVESTMENT
MANAGER ("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 risks described above are typically increased to the extent
that the Fund invests in securities traded in under-developed and
developing nations, which are sometimes referred to as "emerging
markets."
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.
PORTFOLIO TURNOVER
The length of time the Fund has held a particular security is not
generally a consideration in investment decisions. A change in
the securitiesheld by the Fund is known as "portfolio
turnover." As a result of the Fund's investment policies, under
certain market conditions 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.
The portfolio turnover rates for fiscal 1994 and 1993
were 93.86% and 120.57%, respectively.
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.
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 investment policies. See the Statement of
Additional Information for the full text of these policies and
the Fund's other fundamental investment 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
investment 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
The Fund's investment performance may from time to time be
included in advertisements about Class Y shares . "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
Total return may also be presented for other periods .
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. Quotations of investment performance for
any period when an expense limitation was in effect will be
greater than if the limitation had not been in effect. 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.
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 since 1981 and 1985,
respectively. 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 Plan. 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 divided, without shareholder
approval into two or more classes of shares having such
preferences and special or relative rights and privileges as the
Trustees determine. The Fund's shares are currently
divided into four classes--Class A, Class B, Class
M and Class Y . Only the Fund's Class Y shares are
offered by this Prospectus. The Fund also offers Class A,
Class B and Class M shares through participating dealers pursuant
to a separate prospectus. Class A, Class B and Class M shares
bear the same expenses as Class Y shares and, in addition, are
subject to 12b-1 fees. Class A shares and Class M shares are
subject to a front-end sales charge and Class B shares are
subject to a contingent deferred sales charge. Due to 12b-1 fees
and sales charges, the investment performance of Class A, Class B
and Class M shares will be lower than the investment
performance of Class Y 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 Agreement and 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 Corp.; 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, Chairman of the Board and Director of Kmart
Corporation and Director of various corporations, including
AT&T 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 Data General Corporation,
Bradley Real Estate, Inc. and Providence Journal Co. Also,
Trustee of Massachusetts General Hospital and
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
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 Mutual
Funds . 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 Class Y shares ,
defined contribution plans must initially invest at least $250
million in a combination of Putnam funds and other investments
managed by Putnam Management or its affiliates . 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. 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.
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,
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.
THE FUND GENERALLY PROVIDES PAYMENT FOR REDEEMED SHARES THE
BUSINESS DAY AFTER THE REQUEST IS RECEIVED. Under unusual
circumstances, the Fund may suspend redemptions, or postpone
payment for more than seven days, as permitted by federal
securities law. The Fund will only redeem 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. 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 Putnam Management or the Trustees
believe 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.
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 by you 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.
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).
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 Plans
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 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
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