filed with the Securities and Exchange Commission on
September 30, 1998
Registration No. 2-27664
811-1561
- -----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM N-1A
----
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
----
----
Pre-Effective Amendment No. / /
----
----
Post-Effective Amendment No. 48 / X /
and/or ----
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
----
Amendment No. 30 / X /
(Check appropriate box or boxes) ----
---------------
PUTNAM VISTA FUND
(Exact Name of Registrant as Specified in Charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code
(617) 292-1000
--------------
It is proposed that this filing will become effective
(check appropriate box)
----
/ / immediately upon filing
pursuant to paragraph (b)
- ----
----
/ / on (date) pursuant to
paragraph (b)
- ----
----
/ / 60 days after filing pursuant
to paragraph (a)(1)
- ----
----
/ X / on November 30, 1998 pursuant
to paragraph (a)(1)
- ----
----
/ / 75 days after filing pursuant
to paragraph (a)(2)
- ----
----
/ / on (date) pursuant to
paragraph (a)(2) of Rule 485.
- ----
If appropriate, check the following box:
----
/ / this post-effective amendment
designates a new
- ---- effective date for a
previously filed post-
effective amendment.
-----------------------
JOHN R. VERANI, Vice President
PUTNAM VISTA FUND
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
---------------
Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
Part C
Information required to be included
in Part C is set forth under the
appropriate Item, so numbered, in Part C
of the Registration Statement.
Prospectus
November 30,
1998
Putnam Vista Fund
Class A, B and M shares
Investment Category: Growth
This prospectus explains what you should
know about this mutual fund before you
invest. Please read it carefully.
Putnam Investment Management, Inc.
(Putnam Management), which has managed
mutual funds since 1937, manages the
fund.
As with all mutual funds, the U.S.
Securities and Exchange Commission
(SEC) does not guarantee that
information in this prospectus us
accurate or complete not had it judged
this fund for investment merit.
Any statement to the
contrary is a crime.
CONTENTS
2Fund summary
2Goal
2Main investment
strategies
2Main risks
2Performance
information
4Fees and expenses
5 What are the
fund's main
investment
strategies and
related risks?
7Who manages the
fund?
8 How does the
fund price its
shares?
8How do I buy fund
shares?
11How do I sell fund shares?
12How do I exchange fund shares?
13Fund distributions and taxes
14Financial highlights
s
BOSTON LONDON TOKYO
Fund summary
GOAL
The fund seeks capital appreciation.
MAIN INVESTMENT STRATEGIES
The fund is designed for investors
seeking above-average capital growth
potential, which involves certain risks.
Most of the stocks bought by the fund
are "growth" stocks that Putnam
Management believes have the potential
for above-average capital appreciation.
The fund mainly buys stocks of medium
sized companies, although the fund may
invest in companies of any size.
MAIN RISKS
The main risks that could adversely
affect the value of this fund's shares
and the total return on your investment
include
O The risk that the stock price of
one or more of the companies in the
fund's portfolio will fall, or will fail
to appreciate as anticipated by Putnam
Management. Many factors can adversely
affect a stock's performance. This risk
is greater for small and medium-sized
companies, which tend to be more
vulnerable to adverse developments.
O The risk that movements in the
securities markets will adversely affect
the value of the fund's investments,
regardless of how well the companies in
the fund's portfolio perform.
The fund's shares may rise and fall in
value, and you can lose money by
investing in the fund. The fund may not
achieve its goal, and is not intended as
a complete investment program. An
investment in the fund is not a deposit
of the bank and is not insured or
guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any
other government agency.
PERFORMANCE INFORMATION
The following information provides some
indication of the fund's risks. The
chart shows year-to-year changes in the
performance of one of the fund's classes
of shares, class A shares. The table
following the chart compares the fund's
performance to that of a broad measure
of market performance. Of course, the
fund's past performance is not an
indication of future performance.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A
SHARES
1997 23.23%
1996 22.35%
1995 39.37%
1994 -3.77%
1993 17.45%
1992 17.85%
1991 37.23%
1990 -7.03%
1989 25.72%
1988 14.75%
Performance figures do not reflect the
impact of sales charges. If they did,
performance would be less than that
shown. The year-to-date returns through
June 30, 1998 were __%. During the
period shown, the highest return for a
quarter was 17.86% (quarter ending 6/97)
and the lowest return for a quarter was
- -15.75% (quarter ending 9/90).
Average annual total returns (for
periods ending 12/31/97)
Past Past Past Since Inception
1 year 5 years 10 years inception Date
Class A 16.12% 17.47% 17.12% 11.21% 06/03/68
Class B 17.26% 17.80% 16.86% 10.38% 03/01/93
Class M 18.16% 17.46% 16.73% 10.53% 12/08/94
Russell Midcap Index
29.01% 18.23% 17.67% NA NA
Russell Midcap Growth
Index 22.54% 15.98% 16.79% NA NA
Unlike the bar chart, this performance
information reflects the impact of sales
charges, as required by SEC rules. Class
A and class M share performance reflects
the current maximum initial sales
charges; class B performance reflects
the applicable deferred sales charge if
shares had been redeemed on 12/31/97.
The fund's performance is compared to
the Russell Midcap Index and the Russell
Midcap Growth Index. The Russell Midcap
Index is composed of the 800 smallest
companies in the Russell 1000 Index,
representing approximately 35% of the
Russell 1000 total market
capitalization. The Russell Midcap
Growth Index is composed of securities
with greater-than-average growth
orientation within the Russell Midcap
Index. Each security's growth
orientation is determined by a composite
score of the security's price-to-book
ratio and forecasted growth rate.
Growth stocks tend to have a higher
price-to-book ratios and forecasted
growth rates than value stocks. This
index is composed of approximately 450
companies from the Russell 1000 Growth
Index, representing 20% of the total
market capitalization of the Russell
1000 Growth Index.
FEES AND EXPENSES
This table summarizes the fees and
expenses you may pay if you invest in
the fund. Except as noted, expenses are
based on the fund's last fiscal year.
Shareholder fees
Class AClass BClass M
Maximum sales charge (Load) imposed
on Purchases (as a percentage of
the offering price)5.75% NONE* 3.50%
Maximum Deferred Sales Charge (Load)
(as a percentage of the original
purchase price or redemption
proceeds, whichever is lower) NONE**
5.00% NONE
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Total
Annual
Fund Management Distribution
Other Operating Fees (12b-1) Fees Expenses
Expenses
Class A 0.49% 0.25% 0.24% 0.98%
Class B 0.49% 1.00%*** 0.24% 1.73%
Class M 0.49% 0.75% 0.24% 1.48%
* The higher 12b-1 fees borne by class
B and class M shares may cause long-term
shareholders to pay more that the
economic equivalent of the maximum
permitted front-end sales charge on
class A shares.
** A deferred sales charge of up to 1%
may be imposed on certain redemptions of
class A shares bought without an initial
sales charge.
*** Distribution fees for class B shares
have been restated to reflect the amount
currently approved by the fund's
Trustees.
EXAMPLE
This example translates the "total
annual fund operating expenses" shown in
the preceding table into dollar amounts.
By doing this, you can more easily
compare the cost of investing in the
fund to the cost of investing in other
mutual funds. The example makes certain
assumptions. It assumes that you invest
$10,000 in the fund for the time periods
shown and then, except as shown for
class B shares, redeem all your shares
at the end of those periods. It also
assumes a 5% return on your investment
each year and that the fund's operating
expenses remain the same. The example
is hypothetical; your actual costs and
returns may be higher or lower.
1 year 3 years 5 years
10 years
Class A $669 $869 $1,086 $1,707
Class B $676 $845 $1,139 $1,842*
Class B (no redemption) $176 $545 $939 $1,842*
Class M $495 $802 $1,130 $2,057
* Reflects the conversion of class B
shares to class A shares, which pay
lower 12b-1 fees. Conversion occurs no more than
eight years after purchase.
What are the fund's main investment
strategies and related risks?
Any investment carries with it some
level of risk that generally reflects
its potential for reward. The fund
pursues its goal of seeking above
average capital growth by investing
mainly in common stocks, which represent
ownership interests in companies. The
fund generally invests in growth stocks
with above average potential for capital
appreciation. In selecting investments,
Putnam Management will consider
projected future earnings potential,
competitive position in industry,
relative valuation vs. industry peers
and financial strength. Putnam
Management seeks to construct a
portfolio of securities that manages the
level and magnitude of risk assumed by
the fund. The fund may sell securities
in the portfolio when Putnam Management
believes that the conditions underlying
the decision to purchase the security
have changed.
O Common stocks. The value of a
company's stock may fall as a result of
factors which directly relate to that
company, such as decisions made by its
management or lower demand for the
company's products or services. In
addition, a stock's value may fall as a
result of factors which affect the
stocks industry as a whole. A stock's
value may also fall because of factors
affecting not just the company, but
companies in a number of different
industries, such as increases in
production costs. The value of a
company's stock may also be affected by
changes in financial market conditions
that are relatively unrelated to the
company or its industry, such as changes
in interest rates or currency exchange
rates. In addition, a company's stock
generally pays dividends only after the
company makes required payments to
holders of its bonds and other debt. For
this reason, the value of the stock will
usually react more strongly than the
bonds and other debt to actual or
perceived changes in the company's
financial condition or prospects.
O Growth stocks. The fund may invest
in stocks of companies that Putnam
Management believes have higher
consistency of earnings and/or better
than average potential for future
earnings growth. These growth stocks
typically trade at prices that, when
compared to the earnings of the company,
represent a higher price to earning
ratio than other companies. Therefore,
the values of growth stocks may be more
sensitive to changes in current or
expected earnings than the values of
other stocks.
O Smaller companies. The fund can
invest in small and relatively less well-
known companies, including companies
with market capitalizations of less than
$1 billion. These companies are more
likely than larger companies to have
limited product lines, markets or
financial resources, or to depend on a
small or medium sized less-experienced
management group. Stocks of smaller
companies may trade less frequently and
in limited volume, and their prices may
fluctuate more than stocks of other
companies. Stocks of smaller companies
may therefore be more vulnerable to
adverse developments than those of
larger companies.
O Foreign investments. The fund may
invest without limit in securities of
foreign issuers that are traded in U.S.
public markets. While the fund may also
invest in securities of foreign issuers
that are not traded in U.S. public
markets, it does not expect that such
investments will normally represent more
than 20% of its assets, although they
may occasionally exceed this amount.
Foreign investments involve certain
special risks. For example, their values
may drop in response to changes in
currency exchange rates, unfavorable
political and legal developments,
unreliable or untimely information, and
economic and financial instability. In
addition, the liquidity of these
investments may be more limited than
domestic investments, which means the
fund may at times be unable to sell them
at desirable prices. Foreign settlement
procedures may also involve additional
risks. These risks are generally greater
in the case of "emerging markets" that
typically have less developed legal and
financial systems.
Certain of these risks may also apply to
some extent to domestic investments that
are denominated in foreign currencies or
that are traded in foreign markets, or
to securities of U.S. companies that
have significant foreign operations.
O Derivatives. The fund may engage in
a variety of transactions involving
derivatives, such as futures, options,
warrants and swaps. Derivatives are
financial instruments whose value
depends upon, or is derived from, the
value of an underlying investment, pool
of investments, index or currency. The
fund's return on a derivative typically
depends on the change in the value of
the security, index or currency
specified in the derivative instrument.
The fund may use derivatives for hedging
purposes. Derivatives involve special
risks and may result in losses. The
fund will be dependent on Putnam
Management's ability to analyze and
manage these sophisticated instruments.
For further information about the risks
of derivatives see the Statement of
Additional Information.
O Frequent trading. The fund may buy
and sell investments relatively often,
which involves higher expenses,
including brokerage commissions, and may
increase the amount of taxes payable by
shareholders.
O Other investments. In addition to
the main investment strategies described
above, the fund may also make other
types of investments, such as
investments in preferred stocks,
convertible securities, derivative
instruments or fixed income securities,
and, therefor may be subject to other
risks.
O Alternative strategies. At times
Putnam Management may judge that market
conditions make pursuing the fund's
investment strategies inconsistent with
the best interests of its shareholders.
Putnam Management then may temporarily
use alternative strategies that are
mainly designed to limit the fund's
losses. These strategies may cause the
fund to miss out on investment
opportunities, and may prevent the fund
from achieving its goal.
Changes in policies. The fund's Trustees
also may change the fund's goal,
investment strategies and other policies
that are described above without
shareholder approval, except as
otherwise noted.
Who manages the fund?
The fund's Trustees oversee the general
conduct of the fund's business. The
Trustees have retained Putnam Management
to be the fund's investment manager,
responsible for making investment
decisions for the fund and managing the
fund's other affairs and business. The
fund pays Putnam Management a quarterly
management fee for these services based
on the fund's average net assets. The
fund paid Putnam Management a management
fee of 0.49% of average net assets for
the fund's last fiscal year. Putnam
Management's address is One Post Office
Square, Boston, MA 02109.
The following officers of Putnam
Management have had primary
responsibility for the day-to-day
management of the fund's portfolio since
the years shown below. Their recent
professional experience is also shown.
Manager Since
Experience
Eric M. Wetlaufer1997 Employed as an
investment
professional by
Managing Director Putnam Management
since November,
1997.Prior to
November, 1997, Mr.
Wetlaufer was a
Managing Director and
Portfolio Manager at
Cadence Capital
Management.
Margery C. Parker1998 Employed as an
investment professional by
Senior Vice President Putnam
Management since
December, 1997. Prior
to December, 1997, Ms.
Parker was a Vice
President and
Portfolio Manager at
Keystone Investments.
David J. Santos 1996 Employed as an
investment
professional by
Senior Vice President Putnam
Management since 1986.
Anthony C. Santosus 1994 Employed as
an investment
professional Putnam
Senior Vice President Management
since 1985.
Year 2000 issues
The fund could be adversely affected if
the computer systems used by Putnam
Management and the fund's other service
providers do not properly process and
calculate date-related information
relating to the end of this century and
the beginning of the next. While year
2000 related computer problems could
have a negative effect on the fund, both
in its operations and in its investors,
Putnam Management is working to avoid
such problems and to obtain assurances
from service providers that they are
taking similar steps. No assurances,
though, can be provided that the fund
will not be adversely impacted by these
matters.
How does the fund price its shares?
The NAV per share of each class equals
the total value of its assets, less its
liabilities, divided by the number of
its outstanding shares. Shares are only
valued as of the close of regular
trading on the New York Stock Exchange
each day the exchange is open.
The fund values its investments for
which market quotations are readily
available at market value. It values
short-term investments that will mature
within 60 days at amortized cost, which
approximates market value. It values all
other investments and assets at what it
believes is the current value. This is
sometimes called "fair value."
The fund translates prices for its
investments quoted in foreign currencies
into U.S. dollars at current exchange
rates. As a result, changes in the value
of those currencies in relation to the
U.S. dollar may affect the fund's NAV.
Because foreign markets may be open at
different times than the New York Stock
Exchange, the value of the fund's shares
may change on days when shareholders are
not able to buy or sell them. If events
materially affecting the values of the
fund's foreign investments occur between
the close of foreign markets and the
close of regular trading on the New York
Stock Exchange, these investments will
be valued at their fair value.
How do I buy fund shares?
You can open a fund account with as
little as $500 and make additional
investments at any time with as little
as $50. The fund sells its shares at the
offering price, which is the NAV plus
any applicable sales charge. Your
financial advisor or Putnam Investor
Services generally must receive your
completed buy order before the close of
regular trading on the exchange for your
shares to be bought at that day's
offering price.
You can buy shares
O Through a financial advisor. Your
advisor will be responsible for
furnishing all necessary documents to
Putnam Investor Services, and may charge
you for his or her services.
O Through systematic investing. You
can make regular investments of $25 or
more per month through automatic
deductions from your bank checking or
savings account. Application forms are
available through your advisor or Putnam
Investor Services at 1-800-225-1581.
You may also complete an order form and
write a check for the amount you wish to
invest, payable to the fund. Return the
check and completed form to Putnam
Mutual Funds.
The fund may periodically close to new
purchases of shares or refuse any order
to buy shares if the fund determines
that doing so would be in the best
interests of the fund and its
shareholders.
WHICH CLASS OF SHARES IS BEST FOR ME?
This prospectus offers you a choice of
three classes of fund shares:
A, B, and M. This allows you to choose
among different types of sales charges and
different levels of on going operating
expenses, as illustrated in the " Fees
and expenses " section. The class of
shares that is best for you depends on a number
of factors, including the amount you plan
to invest and how long you plan to hold
the shares. Here is a summary of the
differences among the classes of
shares:
Class A shares
O Initial sales charge of up to 5.75%
O Lower sales charge for investments
of $50,000 or more
O No deferred sales charge (except on
certain redemptions of shares bought
without an initial sales charge)
O Lower annual expenses, and higher
dividends, than class B or M shares
because of lower 12b-1 fee
Class B shares
O No initial sales charge
O Deferred sales charge of up to 5%
if you sell shares within 6 years after
you bought them
O Higher annual expenses, and lower
dividends, than class A or M shares
because of higher 12b-1 fee
O Convert automatically to class A
shares after about 8 years, reducing the
future 12b-1 fee (and convert sooner in
some cases)
O Orders for class B shares for more
than $250,000 are treated as orders for
class A shares or refused
Class M shares
O Initial sales charge of up to 3.50%
O Lower sales charges for larger
investments of $50,000 or more
O No deferred sales charge
O Lower annual expenses, and higher
dividends, than class B shares because
of lower 12b-1 fee
O Higher annual expenses, and lower
dividends, than class A shares because
of higher 12b-1 fee
O No conversion to class A shares, so
future 12b-1 fee does not decrease
Initial sales charges for class A and M
shares
Class A sales chargeClass M
sales charge
as a percentage of:as a p
ercentage of:
-----------------------------------
- ------------------------------------
Amount of purchaseNet amountOffering
Net amount Offering
at offering price ($)investedprice*in
vested price*
- ----------------------------------------
- ----------------------------------------
- -----------------------------Under
50,000 6.10% 5.75% 3.63% 3.50%
50,000 but under
100,000 4.71 4.50 2.56 2.50
100,000 but under
250,000 3.63 3.50 1.52 1.50
250,000 but under
500,000 2.56 2.50 1.01 1.00
500,000 but under
1,000,000 2.04 2.00 NONE NONE
1,000,000 and above NONE NONE NONE
NONE
* Offering price includes sales charge
Deferred sales charges for class B and
certain class A shares
If you sell (redeem) class B shares
within six years after you bought them,
you will generally pay a deferred sales
charge according to the following
schedule.
Year after
purchase 1 2 3 4 5 6
7+
- ----------------------------------------
- ----------------------------------------
- -----------------------------Charge 5%
4% 3% 3% 2% 1% 0%
A deferred sales charge of up to 1% may
apply to class A shares purchased
without an initial sales charge, if
redeemed within two years after
purchase.
Deferred sales charges will be based on
the lower of the shares' cost and
current NAV. Shares not subject to any
charge will be redeemed first, followed
by shares held longest. You may sell
shares acquired by reinvestment of
distributions without a charge at any
time.
O You may be eligible for reductions
and waivers of sales charges. Sales
charges may be reduced or waived under
certain circumstances and for certain
groups. Information about reductions and
waivers of sales charges is included in
the SAI. You may consult your financial
advisor of Putnam Mutual Funds for
assistance.
O Distribution (12b-1) plans. The
fund has adopted distribution plans to
pay for the marketing of fund shares and
for services provided to shareholders.
The plans provide for payments at annual
rates (based on average net assets) of
up to 0.35% on class A shares and 1.00%
on class B and class M shares. The
Trustees currently limit payments on
class A and class M shares to 0.25% and
0.75% of average net assets,
respectively. Because these fees are
paid out of the fund's assets on an
ongoing basis, they will increase the
cost of your investment. The higher
fees for class B and class M shares may
cost you more than paying the initial
sales charge for class A shares. Because
class M shares, unlike class B shares,
do not convert to class A shares, class
M shares may cost you more over time
than class B shares.
How do I sell fund shares?
You can sell your shares back to the
fund any day the New York Stock Exchange
is open, either through your financial
advisor or directly to the fund.
Redemptions may be delayed until the
fund collects the purchase price of
shares which may take up to 15 calendar
days after the purchase date.
O Selling shares through your
financial advisor. Your advisor must
receive your request in proper form
before the close of regular trading on
the New York Stock Exchange to receive
that day's NAV, less any applicable
deferred sales charge. Your advisor will
be responsible for furnishing all
necessary documents to Putnam Investor
Services on a timely basis and may
charge you for his or her services.
O Selling shares directly to the
fund. Putnam Investor Services must
receive your request in proper form
before the close of regular trading on
the New York Stock Exchange in order to
receive that day's NAV, less any
applicable sales charge.
By mail. Send a signed letter of
instruction to Putnam Investor Services.
If you have certificates for the shares
you want to sell, you must include them
along with completed stock power forms.
By telephone. You may use Putnam's
Telephone Redemption Privilege to redeem
shares valued at less than $100,000
unless you have notified Putnam Investor
Services of an address change within the
preceding 15 days. Unless you indicate
otherwise on the account application,
Putnam Investor Services will be
authorized to accept redemption and
transfer instructions received by
telephone.
The Telephone Redemption Privilege is
not available if there are certificates
for your shares. The Telephone
Redemption Privilege may be modified or
terminated without notice.
O Additional documents. If you
sell shares with a value of
$100,000 or more, want your redemption proceeds sent
to an address other than your address as
it appears on Putnam's records, or
you have notified Putnam of a
change in address within the preceding
15 days, the signatures of registered owners or
their legal representatives must be
guaranteed by a bank, broker-dealer or
certain other financial institutions.
Stock power forms are available from
you financial advisor, Putnam Investor
Services and may commercial banks. a
signature guarantee is required.
Putnam Investor Services usually
requires additional documents for the
sale of shares by a corporation,
partnership, agent or fiduciary, or a
surviving joint owner. Contact Putnam
Investor Services for details.
O When will the fund pay me? The fund
generally sends you payment for your
shares the business day after your
request is received. Under unusual
circumstances, the fund may suspend
redemptions, or postpone payment for
more than seven days as permitted by
federal securities laws.
O Redemption by the fund. If you own
fewer shares than the minimum set by the
Trustees (presently 20 shares), the fund
may redeem your shares without your
permission and send you the proceeds.
The fund may also redeem shares if you
own shares more than a maximum amount
set by the Trustees. There is presently
no maximum, but the Trustees could set a
maximum that applies to both present and
future shareholders.
How do I exchange fund shares?
If you want to switch your investment
from one Putnam fund to another, you can
exchange your fund shares for shares of
the same class of another Putnam fund at
NAV. Not all Putnam funds offer all
classes of shares. If you exchange
shares subject to a deferred sales
charge, the transaction will not be
subject to the deferred sales charge.
However, when you redeem the shares
acquired through the exchange, the
redemption may be subject to the
deferred sales charge, depending upon
when you originally purchased the
shares. The deferred sales charge will
be computed using the schedule of any
fund into or from which you have
exchanged your shares that would result
in your paying the highest deferred
sales charge applicable to your class of
shares. For purposes of computing the
deferred sales charge, the length of
time you have owned your shares will be
measured from the date of original
purchase and will not be affected by any
exchange.
To exchange your shares, complete an
Exchange Authorization Form and send it
to Putnam Investor Services. The form is
available from Putnam Investor Services.
A Telephone Exchange Privilege is
currently available for amounts up to
$500,000. The Telephone Exchange
Privilege is not available if the fund
issued certificates for your shares. Ask
your financial advisor or Putnam
Investor Services for prospectuses of
other Putnam funds. Some Putnam funds
are not available in all states.
The exchange privilege is not intended
as a vehicle for short-term trading.
Excessive exchange activity may
interfere with portfolio management and
have an adverse effect on all
shareholders. In order to limit
excessive exchange activity and
otherwise promote the best interests of
the fund, the fund reserves the right to
revise or terminate the exchange
privilege, limit the amount or number of
exchanges or reject any exchange. These
actions may apply to all shareholders or
only to those shareholders whose
exchanges Putnam Management determines
are likely to have a negative effect on
the fund. Consult Putnam Investor
Services before requesting an exchange.
Fund distributions and taxes
The fund distributes any net investment
income and any net realized capital
gains at least once a year. You may
choose to:
O reinvest all distributions in
additional shares;
O receive any distributions from net
investment income in cash while
reinvesting capital gains distributions
in additional shares; or
O receive all distributions in cash.
If you do not select an option when you
open your account, all distributions
will be reinvested. If you do not cash a
distribution check within a specified
period or notify Putnam Investor
Services to issue a new check, the
distribution will be reinvested in the
fund. You will not receive any interest
on uncashed distributions or redemption
checks. Similarly, if any correspondence
sent by the fund or Putnam Investor
Services is returned as "undeliverable,"
fund distributions will automatically be
reinvested in the fund or in another
Putnam fund.
For federal income tax purposes,
distributions of investment income are
taxable as ordinary income. Taxes on
distributions of capital gains are
determined by how long the fund owned
the investments that generated them,
rather than how long you have owned your
shares. Distributions are taxable to you
even if they are paid from income or
gains earned by the fund before your
investment (and thus were included in
the price you paid). Distributions of
gains from investments that the fund
owned for more than 12 months will be
taxable as capital gains. Distributions
of gains from investments that the fund
owned for 12 months or less will be
taxable as ordinary income.
Distributions are taxable whether you
received them in cash or reinvested them
in additional shares.
Securities quoted in foreign currencies
are translated into U.S. dollars at
current exchange rated or at such other
rates as the Trustees may determine in
computing net asset value. As a result,
fluctuations in the value of such
currencies in relation to the U.S.
dollar may affect the fund's net asset
value even though there had not been any
change in the values of its portfolio
securities as quoted in such foreign
currencies.
Any gain resulting from the sale or
exchange of your shares will generally
also be subject to tax. You should
consult your tax advisor for more
information on your own tax situation,
including possible state and local
taxes.
Financial highlights
The financial highlights table is
intended to help you understand the
fund's recent financial performance.
Certain information reflects financial
results for a single fund share. The
total returns represent the rate that an
investor would have earned or lost on an
investment in the fund, assuming
reinvestment of all dividends and
distributions. This information has been
audited by PricewaterhouseCoopers LLP.
Its report and the fund's financial
statements are included in the fund's
annual report to shareholders, which is
available upon request.
FINANCIAL HIGHLIGHTS
CLASS A
Year ended July 31
1998 1997 1996 1995 1994
Net Asset Value,
Beginning of Period$12.52 $9.79$9.23$7.09 $7.47
Income from Investment Operations
Net Investment Income(loss)(.05)(c) (.03)(c) (.03) .02 .01
Net Gains or Losses on Securities (both
realized and unrealized) on investments1.98 3.43 1.45 2.18 .21
Total From Investment Operations 1.93 3.40 1.42 2.20 .22
Less Distributions:
Dividends (from net investment income) _ _ _ _ (.03)
Distributions (from(.96)(.67)(.86)(.06)(.55)
capital gains)
In Excess of Capital Gains _ _ _ _ (.01)
Total Distributions(.96)(.67)(.86)(.06)(.60)
Net Asset Value
End of Period $13.49$12.52$9.79$9.23$7.09
Ratios/Supplemental Data(a) 16.9036.2516.64 31.22 2.75
Net Assets, End of Period $3,279,628$2,626,464 $1,220,639
$859,403
$646,811
Ratio of Expenses to Average
Net Assets (%)(b) .98 1.04 1.10 1.07 1.09
Ratio of Income
to Average Net Assets (%) (.38)(.25)(.29) .26 .29
Portfolio Turnover Rate (%) 110.6082.91106.58 114.51 93.86
(a) Total return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b)The ratio of expenses to average net assets for the year ended
July 31, 1996 and thereafter, includes amounts paid through expense offset and
brokerage service arrangements. Prior period ratios exclude these amounts.
(c) Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding during the period.
FINANCIAL HIGHLIGHTS
CLASS B
Year ended July 31
1998 1997 1996 1995 1994
Net Asset Value,
Beginning of Period$12.09 $9.55$9.08$7.03 $7.46
Income from Investment Operations
Net Investment Income (loss)(.14)(c) (.11)(c) (.10)(c) (.03)
.01
Net Gain or Losses on Securities 1.90 3.32 1.43 2.14 .15
(both realized and unrealized) on
investments
Total From Investment Operations 1.76 3.21 1.33 2.11 .16
Less Distributions:
Dividends (from net investment income) _ _ _ _ (.02)
Distributions (from capital gains)(.96)(.67) (.86) (.06)
(.55)
In Excess of Capital Gains _ _ _ _ .01
Total Distributions(.96)(67)(.86)(.06)(.59)
Net Asset Value , End of Period $12.89$12.09 $9.55 $9.08
$7.03
Ratios/Supplemental Data(a) 16.0535.1415.88 30.19 1.89
Net Assets, End of Period
(in thousands) $1,585,961 $1,212,589 $488,085 $258,522
$132,596
Ratio of Expenses to Average
Net Assets (%)(b) 1.73 1.79 1.81 1.82 1.87
Ratio of Net Income
to Average Net Assets (%) (1.13)(.99)(1.03) (.51) (.53)
Portfolio Turnover Rate (%) 110.6082.91106.58 114.51 93.86
(a) Total return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b)The ratio of expenses to average net assets for the year ended
July 31, 1996 and thereafter, includes amounts paid through expense offset and
brokerage service arrangements. Prior period ratios exclude these amounts.
(c) Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding during the period.
FINANCIAL HIGHLIGHTS
CLASS M
Year ended July 31
1998 1997 1996 1995+
Net Asset Value,
Beginning of Period$12.34 $9.72$9.19 $6.73
Income From Investment Operations
Net Investment Income (loss)(.11)(c) (.08)(c) (.08)(c)
(.01)
Net Gain or Losses on Securities
(both realized and unrealized)
on investments 1.95 3.37 1.47 2.53
Total From Investment Operations 1.84 3.29 1.39 2.52
Less Distributions:
Dividends (from net investment income) _ _ _ _
Distributions (from capital gains)(.96)(.67) (.86) (.06)
In Excess of Capital Gains _ _ _ _
Total Distributions(.96)(.67)(.86) (.06)
Net Asset Value (NAV),
End of period $13.22$12.34$9.72 $9.19
Ratios/Supplemental Data(a) 16.3835.3516.37 37.63*
Net Assets, End of Period $128,529 $90,788 $22,232 $3,148
Ratio of Expenses to Average
Net Assets (%)(b) 1.48 1.54 1.54 1.06*
Ratio of Net Income
to Average Net Assets (%) (.88)(.73)(.82) (.31)*
Portfolio Turnover Rate (%) 110.6082.91106.58 114.51
+For the period from the commencement of operations on December 8,
1994 through July 31.
*Not annualized.
(a) Total return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b)The ratio of expenses to average net assets for the year ended
July 31, 1996 and thereafter, includes amounts paid through expense offset and
brokerage service arrangements. Prior period ratios exclude these amounts.
(c) Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding during the period.
For More Information About Putnam
Vista Fund
The fund's statement of additional
information (SAI) and annual and semi-
annual reports to shareholders
include additional information about
the fund. The SAI, and the auditor's
report and financial statements
included in the fund's most recent
annual report to its shareholders,
are incorporated by reference into
this prospectus, which means they are
part of this prospectus for legal
purposes. The fund's annual report
discusses the market conditions and
investment strategies that
significantly affected the fund's
performance during its last fiscal
year. You may get free copies of
these materials, request other
information about the fund and other
Putnam Funds, or make shareholder
inquiries, by contacting your
financial advisor or Putnam's Web
site or by calling Putnam toll-free
at 1-800-225-1581.
You may review and copy information
about the fund, including its SAI, at
the Securities and Exchange
Commission's public reference room in
Washington, D.C. You may call the
Commission at 1-800-SEC-0330 for
information about the operation of
the public reference room. You may
also access reports and other
information about the fund on the
Commission's Internet site at
http://www.sec.gov. You may get
copies of this information, with
payment of a duplication fee, by
writing the Public Reference Section
of the Commission, Washington, D.C.
20549-6009. You may need to refer to
the fund's file number.
PUTNAM INVESTMENTS
One Post Office Square
Boston, Massachusetts
02109
Toll-free 1-800-225-1581
Address correspondence to
Putnam Investor Services
P.O.
Box 989
Boston MA 02103
File No. 811-1561
www.putnaminv.com
Prospectus
November 30, 1998
Putnam Vista Fund
Class A shares - for eligible
retirement plans
Investment Category: Growth
This prospectus explains what you
should know about this mutual fund
before you invest. Please read it
carefully. This prospectus only
offers class A shares of the fund
without a sales charge to eligible
retirement plans.
Putnam Investment Management, Inc.
(Putnam Management), which has
managed mutual funds since 1937,
manages the fund. The fund may not
achieve its goals, and is not
intended as a complete investment
program.
As with all mutual funds, the U.S.
Securities and Exchange Commission
(SEC) does not guarantee that
information in this prospectus us
accurate or complete not had it
judged this fund for investment
merit. Any statement to the contrary
is a crime.
CONTENTS
2 Fund summary
2 Goal
2Main investment strategies
2 Main risks
2Performance information
3 Fees and expenses
4What are the fund's main
investment strategies
and related risks?
6Who manages the fund?
7How does the fund price its
shares?
7How do I buy fund shares?
8How do I sell fund shares?
9How do I exchange fund
shares?
9Fund distributions and
taxes
10Financial highlights
PUTNAM INVESTMENTS
Putnam
Defined
Contribution Plans
Fund summary
GOAL
The fund seeks capital appreciation.
MAIN INVESTMENT STRATEGIES
The fund is designed for investors
seeking above-average capital growth
potential, which involves certain
risks. Most of the stocks bought by
the fund are "growth" stocks that
Putnam Management believes have the
potential for above-average capital
appreciation. The fund mainly buys
stocks of medium sized companies,
although the fund may invest in
companies of any size.
MAIN RISKS
The main risks that could adversely
affect the value of this fund's
shares and the total return on your
investment include
O The risk that the stock price of
one or more of the companies in the
fund's portfolio will fall, or will
fail to appreciate as anticipated by
Putnam Management. Many factors can
adversely affect a stock's
performance. This risk is greater for
small and medium-sized companies,
which tend to be more vulnerable to
adverse developments.
O The risk that movements in the
securities markets will adversely
affect the value of the fund's
investments, regardless of how well
the companies in the fund's portfolio
perform.
The fund's shares may rise and fall
in value, and you can lose money by
investing in the fund. The fund may
not achieve its goal, and is not
intended as a complete investment
program. An investment in the fund is
not a deposit of the bank and is not
insured or guaranteed by the Federal
Deposit Insurance Corporation (FDIC)
or any other government agency.
PERFORMANCE INFORMATION
The following information provides
some indication of the fund's risks.
The chart shows year-to-year changes
in the performance of one of the
fund's classes of shares, class A
shares. The table following the chart
compares the fund's performance to
that of a broad measure of market
performance. Of course, the fund's
past performance is not an indication
of future performance.
CALENDAR YEAR TOTAL RETURNS FOR CLASS
A SHARES
1997 23.23%
1996 22.35%
1995 39.37%
1994 -3.77%
1993 17.45%
1993 17.85%
1991 37.23%
1990 -7.03%
1989 25.72%
1988 14.75%
Performance figures do not reflect
the impact of sales charges. If they
did, performance would be less than
that shown. The year-to-date returns
through June 30, 1998 were __%.
During the period shown, the highest
return for a quarter was 17.86%
(quarter ending 6/97) and the lowest
return for a quarter was -15.75%
(quarter ending 9/90).
Average annual total returns (for
periods ending 12/31/97)
Past
Past Past Since
Inception
1 year 5 years
10 years Inception Date
Class A 16.12% 17.47% 17.12% 11.21%
2/28/91
Russell
MidCap Index 29.01% 18.23% 17.67% NA
Russell Midcap
Growth Index 22.54% 15.98% 16.79% N/A
Class A share reflect the waiver of
sales charges for purchases through
eligible retirement plans. The fund's
performance is compared to the
Russell Midcap Index and the Russell
Midcap Growth Index. The Russell
Midcap Index is composed of the 800
smallest companies in the Russell
1000 Index, representing
approximately 35% of the Russell 1000
total market capitalization. The
Russell Midcap Growth Index is
composed of securities with greater-
than-average growth orientation
within the Russell Midcap Index.
Each security's growth orientation is
determined by a composite score of
the security's price-to-book ratio
and forecasted growth rate. Growth
stocks tend to have a higher price-to-
book ratios and forecasted growth
rates than value stocks. This index
is composed of approximately 450
companies from the Russell 1000
Growth Index, representing 20% of the
total market capitalization of the
Russell 1000 Growth Index.
FEES AND EXPENSES
This table summarizes the expenses
you may pay if you invest in class A
shares of the fund. Except as noted,
expenses are based on the fund's last
fiscal year.
Annual fund operating expenses
(expenses that are deducted from fund
assets)
Management Fees 0.49%
Distribution 12b-1 Fees 0.25%
Other expenses 0.24%
Total fund operating expenses 0.98%
Example
This example translates the "total
annual fund operating expenses" shown
in the preceding table into dollar
amounts. By doing this, you can more
easily compare the cost of investing
in the fund to the cost of investing
in other mutual funds. The example
makes certain assumptions. It
assumes that you invest $10,000 in
the fund for the time periods shown
and then, except as shown for class B
shares, redeem all your shares at the
end of those periods. It also
assumes a 5% return on your
investment each year and that the
fund's operating expenses remain the
same. The example is hypothetical;
your actual costs and returns may be
higher or lower.
1 year 3 years 5 years 10 years
$100 $312 $542 $1,201
What are the fund's main investment
strategies and related risks?
Any investment carries with it some
level of risk that generally reflects
its potential for reward. The fund
pursues its goal of seeking above
average capital growth by investing
mainly in common stocks, which
represent ownership interests in
companies. The fund generally invests
in growth stocks with above average
potential for capital appreciation.
In selecting investments, Putnam
Management will consider projected
future earnings potential,
competitive position in industry,
relative valuation vs. industry peers
and financial strength. Putnam
Management seeks to construct a
portfolio of securities that manages
the level and magnitude of risk
assumed by the fund. The fund may
sell securities in the portfolio when
Putnam Management believes that the
conditions underlying the decision to
purchase the security have changed.
O Common stocks. The value of a
company's stock may fall as a result
of factors which directly relate to
that company, such as decisions made
by its management or lower demand for
the company's products or services.
In addition, a stock's value may fall
as a result of factors which affect
the stocks industry as a whole. A
stock's value may also fall because
of factors affecting not just the
company, but companies in a number of
different industries, such as
increases in production costs. The
value of a company's stock may also
be affected by changes in financial
market conditions that are relatively
unrelated to the company or its
industry, such as changes in interest
rates or currency exchange rates. In
addition, a company's stock generally
pays dividends only after the company
makes required payments to holders of
its bonds and other debt. For this
reason, the value of the stock will
usually react more strongly than the
bonds and other debt to actual or
perceived changes in the company's
financial condition or prospects.
O Growth stocks. The fund may
invest in stocks of companies that
Putnam Management believes have
higher consistency of earnings and/or
better than average potential for
future earnings growth. These growth
stocks typically trade at prices
that, when compared to the earnings
of the company, represent a higher
price to earning ratio than other
companies. Therefore, the values of
growth stocks may be more sensitive
to changes in current or expected
earnings than the values of other
stocks.
O Smaller companies. The fund can
invest in small and relatively less
well-known companies, including
companies with market capitalizations
of less than $1 billion. These
companies are more likely than larger
companies to have limited product
lines, markets or financial
resources, or to depend on a small or
medium sized less-experienced
management group. Stocks of smaller
companies may trade less frequently
and in limited volume, and their
prices may fluctuate more than stocks
of other companies. Stocks of smaller
companies may therefore be more
vulnerable to adverse developments
than those of larger companies.
O Foreign investments. The fund
may invest without limit in
securities of foreign issuers that
are traded in U.S. public markets.
While the fund may also invest in
securities of foreign issuers that
are not traded in U.S. public
markets, it does not expect that such
investments will normally represent
more than 20% of its assets, although
they may occasionally exceed this
amount.
Foreign investments involve
certain special risks. For
example, their values may drop in
response to changes in currency
exchange rates, unfavorable
political and legal developments,
unreliable or untimely
information, and economic and
financial instability. In
addition, the liquidity of these
investments may be more limited
than domestic investments, which
means the fund may at times be
unable to sell them at desirable
prices. Foreign settlement
procedures may also involve
additional risks. These risks are
generally greater in the case of
"emerging markets" that typically
have less developed legal and
financial systems.
Certain of these risks may also
apply to some extent to domestic
investments that are denominated in
foreign currencies or that are
traded in foreign markets, or to
securities of U.S. companies that
have significant foreign
operations.
O Derivatives. The fund may engage
in a variety of transactions
involving derivatives, such as
futures, options, warrants and swaps.
Derivatives are financial instruments
whose value depends upon, or is
derived from, the value of an
underlying investment, pool of
investments, index or currency. The
fund's return on a derivative
typically depends on the change in
the value of the security, index or
currency specified in the derivative
instrument.
The fund may use derivatives for
hedging purposes. Derivatives
involve special risks and may
result in losses. The fund will be
dependent on Putnam Management's
ability to analyze and manage these
sophisticated instruments. For
further information about the risks
of derivatives see the Statement of
Additional Information.
O Frequent trading. The fund may
buy and sell investments relatively
often, which involves higher
expenses, including brokerage
commissions, and may increase the
amount of taxes payable by
shareholders.
O Other investments. In addition
to the main investment strategies
described above, the fund may also
make other types of investments, such
as investments in preferred stocks,
convertible securities, derivative
instruments or fixed income
securities, and, therefore, may be
subject to other risks.
O Alternative strategies. At times
Putnam Management may judge that
market conditions make pursuing the
fund's investment strategies
inconsistent with the best interests
of its shareholders. Putnam
Management then may temporarily use
alternative strategies that are
mainly designed to limit the fund's
losses. These strategies may cause
the fund to miss out on investment
opportunities, and may prevent the
fund from achieving its goal.
O Changes in policies. The fund's
Trustees also may change the fund's
goal, investment strategies and other
policies that are described above
without shareholder approval, except
as otherwise noted.
Who manages the fund?
The fund's Trustees oversee the
general conduct of the fund's
business. The Trustees have retained
Putnam Management to be the fund's
investment manager, responsible for
making investment decisions for the
fund and managing the fund's other
affairs and business. The fund pays
Putnam Management a quarterly
management fee for these services
based on the fund's average net
assets. The fund paid Putnam
Management a management fee of 0.51%
of average net assets for the fund's
last fiscal year. Putnam Management's
address is One Post Office Square,
Boston, MA 02109.
The following officers of Putnam
Management have had primary
responsibility for the day-to-day
management of the fund's portfolio
since the years shown below. Their
recent professional experience is
also shown.
Manager Since
Experience
Eric M. Wetlaufer1997 Employed as an
investment
professional by
Managing Director Putnam
Management since
November, 1997.Priot
to November, 1997,
Mr. Wetlaufer was a
Managing Director
and Portfolio
Manager at Cadence
Capital Management.
Margery C. Parker1998 Employed as an
investment
professional by
Senior Vice President Putnam
Management since
December, 1997.
Prior to December,
1997, Ms. Parker was
a Vice President and
Portfolio Manager at
Keystone
Investments.
David J. Santos 1996 Employed as an
investment
professional by
Senior Vice President Putnam
Management since
1986.
Anthony C. Santosus 1994 Employed
as an investment
professional
Senior Vice President Putnam
Management since
1985.
Year 2000 Issues
The fund could be adversely affected
if the computer systems used by
Putnam Management and the fund's
other service providers do not
properly process and calculate date-
related information relating to the
end of this century and the beginning
of the next. While year 2000 related
computer problems could have a
negative effect on the fund, both in
its operations and in its investors,
Putnam Management is working to avoid
such problems and to obtain
assurances from service providers
that they are taking similar steps.
No assurances, though, can be
provided that the fund will not be
adversely impacted by these matters.
How does the fund price its shares?
The price of the fund's shares is
based on its net asset value (NAV).
The NAV per share of each class
equals the total value of its assets,
less its liabilities, divided by the
number of its outstanding shares.
Shares are only valued as of the
close of regular trading on the New
York Stock Exchange each day the
exchange is open.
The fund values its investments for
which market quotations are readily
available at market value. It values
short-term investments that will
mature within 60 days at amortized
cost, which approximates market
value. It values all other
investments what it believes is the
current value. This is sometimes
called "fair value."
The fund translates prices for its
investments quoted in foreign
currencies into U.S. dollars at
current exchange rates. As a result,
changes in the value of those
currencies in relation to the U.S.
dollar may affect the fund's NAV.
Because foreign markets may be open
at different times than the New York
Stock Exchange, the value of the
fund's shares may change on days when
shareholders are not able to buy or
sell them. If events materially
affecting the values of the fund's
foreign investments occur between the
close of foreign markets and the
close of regular trading on the New
York Stock Exchange, these
investments will be valued at their
fair value.
How do I buy fund shares?
All orders to purchase shares must be
made through your employer's
retirement 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.
Putnam Mutual Funds Corp. (Putnam
Mutual Funds) generally must receive
your plan's completed buy order
before the close of regular trading
on the New York Stock Exchange for
shares to be bought at that day's
offering price.
To eliminate the need for
safekeeping, the fund will not issue
certificates for shares.
The fund may periodically close to
new purchases of shares or refuse any
order to buy shares if Putnam
Management determines that doing so
would be in the best interests of the
fund and its shareholders.
O Distribution (12b-1) plan. The
fund has adopted a distribution plan
to pay for the marketing of class A
shares and for services provided to
shareholders. The plan provides for
payments at annual rates (based on
average net assets) of up to 0.35%.
The Trustees currently limit payments
on class A shares to 0.25% of average
net assets. Because the fees are paid
out of the fund's assets on an
ongoing basis, they will increase the
cost of your investment.
O Eligible retirement plans. An
employer-sponsored retirement plan
for which Putnam Fiduciary Trust
Company or its affiliates provide
recordkeeping or other services in
connection with the purchase of class
A shares is eligible to purchase fund
shares through this prospectus if
O it initially invests at least
$20 million in Putnam funds and other
investments managed by Putnam
Management or its affiliates, or
O its dealer of record has, with
the consent of Putnam Mutual Funds,
waived its commission or agreed to
refund its commission to Putnam
Mutual Funds if the plan redeems 90%
or more of its cumulative purchases
within two years of its initial
purchase.
Other employer-sponsored retirement
plans, are eligible to purchase fund
shares through this prospectus if
O They invest at least $1 million
in class A shares, or have at least
200 eligible employees, and
O The dealer of record waives its
commission with the consent of Putnam
Mutual Funds.
Employer-sponsored retirement plans
participating in a "multi-fund"
program approved by Putnam Mutual
Funds may include amounts invested in
other participating mutual funds for
purposes of determining whether the
plan may purchase class A shares at
NAV. Employer-sponsored plans may
make additional investments of any
amount at any time.
How do I sell fund shares?
Subject to any restrictions imposed
by your employer's plan, you can sell
your shares through the plan back 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 the
plan may impose, please consult your
employer.
Your plan administrator must send a
signed letter of instruction to
Putnam Investor Services. The price
you will receive is the next NAV per
share calculated after the fund
receives the instruction in proper
form. In order to receive that day's
NAV, Putnam Investor Services must
receive the instruction before the
close of regular trading on the New
York Stock Exchange.
The fund generally sends you payment
for your shares the business day
after your request is received.
Under unusual circumstances, the fund
may suspend redemptions, or postpone
payment for more than seven days, as
permitted by federal securities law.
The fund will only redeem shares for
which it has received payment.
How do I exchange fund shares?
Subject to any restrictions your plan
imposes, you can exchange your fund
shares for shares of other Putnam
funds offered through your employer's
plan at NAV without any sales
charges. Contact your plan
administrator or Putnam Investor
Services for more information.
The exchange privilege is not
intended as a vehicle for short-term
trading. Excessive exchange activity
may interfere with portfolio
management and have an adverse effect
on all shareholders. In order to
limit excessive exchange activity and
otherwise promote the best interests
of the fund, the fund reserves the
right to revise or terminate the
exchange privilege, limit the amount
or number of exchanges or reject any
exchange. The fund into which you
would like to exchange may also
reject your exchange. These actions
may apply to all shareholders or only
to those shareholders whose exchanges
Putnam Management determines are
likely to have a negative effect on
the fund or other Putnam funds.
Fund distributions and taxes
The fund distributes any net
investment income and any net
realized capital gains at least once
a year.
The terms of your employer's plan
will govern how your employer's plan
may receive distributions from the
fund. Generally, periodic
distributions from the fund to your
employer's plan are reinvested in
additional fund shares, although your
employer's plan may permit you to
receive fund distributions from net
investment income in cash while
reinvesting capital gains
distributions in additional shares or
to receive all fund distributions in
cash. If another option is not
selected, all distributions will be
reinvested in additional fund shares.
Securities quoted in foreign
currencies are translated into U.S.
dollars at current exchange rated or
at such other rates as the Trustees
may determine in computing net asset
value. As a result, fluctuations in
the value of such currencies in
relation to the U.S. dollar may
affect the fund's net asset value
even though there had not been any
change in the values of its portfolio
securities as quoted in such foreign
currencies.
Generally, for federal income tax
purposes, fund distributions are
taxable as ordinary income, except
that any distributions of long-term
capital gains will be taxed as such
regardless of how long you have held
your shares. However, distributions
by the fund to retirement 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. You should consult your
tax advisor for more information on
your own tax situation, including
possible state and local taxes.
Financial highlights
The financial highlights table is
intended to help you understand the
fund's recent financial performance.
Certain information reflects
financial results for a single fund
share. The total returns represent
the rate that an investor would have
earned or lost on an investment in
the fund, assuming reinvestment of
all dividends and distributions. This
information has been audited by
PricewaterhouseCoopers LLP. Its
report and the fund's financial
statements are included in the fund's
annual report to shareholders, which
is available upon request.
FINANCIAL HIGHLIGHTS
CLASS A
Year ended July 31
1998 1997 1996 1995 1994
Net Asset Value,
Beginning of Period$12.52 $9.79$9.23$7.09 $7.47
Income From Investment Operations
Net Investment Income(loss)(.05)(c) (.03)(c) (.03) .02 .01
Net Gain or Losses on Securities
(both realized and unrealized) on
investments 1.98 3.43 1.45 2.18 .21
Total From Investment Operations 1.93 3.40 1.42 2.20 .22
Less Distributions:
Dividends (from net investment
Income) _ _ _ _ (.03)
Distributions (from (.96) (.67)(.86)(.06) (.55)
capital gains)
In Excess of Capital Gains _ _ _ _ (.01)
Total Distributions(.96)(.67)(.86)(.06)(.60)
Net Asset Value (NAV)
End of Period $13.49$12.52$9.79$9.23$7.09
Ratios/Supplemental Data
Total Return (a) 16.9036.25 16.6431.22 2.75
Net Assets, End of Period $3,279,628$2,626,464 $1,220,639
$859,403
$646,811
Ratio of Expenses to Average
Net Assets (%)(b) .98 1.04 1.10 1.07 1.09
Ratio of Income
to Average Net Assets (%) (.38)(.25)(.29) .26 .29
Portfolio Turnover Rate (%) 110.6082.91106.58 114.51 93.86
(a) Total investment return assumes dividend reinvestment and does
not reflect the effect of sales charges.
(b)The ratio of expenses to average net assets for periods ended
on or after July 31, 1996 includes amounts paid through expense offset
arrangements. Prior period ratios exclude these amounts.
(c) Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding during the period.
For More Information About Putnam Vista
Fund
The fund's
statement of
additional
information (SAI)
and annual and semi-
annual reports to
shareholders
include additional
information about
the fund. The SAI,
and the auditor's
report and
financial
statements included
in the fund's most
recent annual
report to its
shareholders, are
incorporated by
reference into this
prospectus, which
means they are part
of this prospectus
for legal purposes.
The fund's annual
report discusses
the market
conditions and
investment
strategies that
significantly
affected the fund's
performance during
its last fiscal
year. You may get
free copies of
these materials,
request other
information about
the fund and other
Putnam funds, or
make shareholder
inquiries, by
calling Putnam toll-
free at 1-800-225-
1581
You may review and copy information about
the fund, including its SAI, at the
Securities and Exchange Commission's
public reference room in Washington, D.C.
You may call the Commission at 1-800-SEC-
0330 for information about the operation
of the public reference room. You may
also access reports and other information
about the fund on the Commission's
Internet site at http://www.sec.gov. You
may get copies of this information, with
payment of a duplication fee, by writing
the Public Reference Section of the
Commission, Washington, D.C. 20549-6009.
You may need to refer to the fund's file
number.
PUTNAM INVESTMENTS
Putnam Defined Contribution
Plans
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-752-9894
Address correspondence to
Putnam Investor Services
P.O. Box 989
Boston, Massachusetts 02103
File No. 811-1561
www.putnaminv.com
Prospectus
November 30, 1998
Putnam Vista Fund
Class Y shares
Investment Category: Growth
This prospectus explains what you should
know about this mutual fund before you
invest. Please read it carefully. This
prospectus only offers class Y shares of
the fund without a sales charge to
eligible retirement plans.
Putnam Investment Management, Inc.
(Putnam Management), which has managed
mutual funds since 1937, manages the
fund.
As with all mutual funds, the U.S.
Securities and Exchange Commission (SEC)
does not guarantee that information in
this prospectus us accurate or complete
not had it judged this fund for
investment merit. Any statement to the
contrary is a crime.
CONTENTS
2 Fund summary
2 Goal
2 Main investment strategies
2 Main risks
2 Performance information
3 Fees and expenses
4 What are the fund's main
investment strategies
and related risks?
6 Who manages the fund?
7 How does the fund price its
shares?
7 How do I buy fund shares?
8 How do I sell fund shares?
8 How do I exchange fund
shares?
9 Fund distributions and taxes
9 Financial highlights
PUTNAM INVESTMENTS
Putnam Defined
Contribution
Plans
Fund summary
GOAL
The fund seeks capital appreciation.
MAIN INVESTMENT STRATEGIES
The fund is designed for investors
seeking above-average capital growth
potential, which involves certain risks.
Most of the stocks bought by the fund are
"growth" stocks that Putnam Management
believes have the potential for above-
average capital appreciation. The fund
mainly buys stocks of medium sized
companies, although the fund may invest
in companies of any size.
MAIN RISKS
The main risks that could adversely
affect the value of this fund's shares
and the total return on your investment
include
O The risk that the stock price of one
or more of the companies in the fund's
portfolio will fall, or will fail to
appreciate as anticipated by Putnam
Management. Many factors can adversely
affect a stock's performance. This risk
is greater for small and medium-sized
companies, which tend to be more
vulnerable to adverse developments.
O The risk that movements in the
securities markets will adversely affect
the value of the fund's investments,
regardless of how well the companies in
the fund's portfolio perform.
The fund's shares may rise and fall in
value, and you can lose money by
investing in the fund. The fund may not
achieve its goal, and is not intended as
a complete investment program. An
investment in the fund is not a deposit
of the bank and is not insured or
guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other
government agency.
PERFORMANCE INFORMATION
The bar chart that follows shows how the
performance of the fund's class Y shares
has varied. Of course, the fund's past
performance is not an indication of
future performance.
Performance of class Y shares for periods
prior to March 28, 1995 is derived from
the historical performance of class A
shares (which are not offered by this
prospectus). These returns have not been
adjusted to reflect the lower operating
expenses applicable to class Y shares.
CALENDAR YEAR TOTAL RETURNS FOR CLASS Y
SHARES
1997 23.45%
1996 22.85%
1995 39.63%
1994 -3.77%
1993 17.45%
1992 17.85%
1991 37.23%
1990 -7.03%
1989 25.72%
1988 14.75%
The year-to-date returns through June 30,
1998 was __%. During the period shown,
the highest return for a quarter was
17.93% (quarter ending 6/97) and the
lowest return for a quarter was -15.75%
(quarter ending 9/90).
Average annual total returns (for periods
ending 12/31/97)
Past
Past Past Since
Inception
1 year 5
years 10 years inception Date
Class Y 23.46%
19.07% 17.91% 11.46%
3/28/95
Russell Midcap
Index 29.01%
18.23% 17.67% NA
NA
Russell Midcap
Growth Index 22.54% 15.98%
16.79% N/A NA
* Inception date: class Y - 3/28/95
Class Y performance reflects the waiver
of sales charges for purchases through
eligible retirement plans. The fund's
performance is compared to the Russell
Midcap Index and the Russell Midcap
Growth Index. The Russell Midcap Index
is composed of the 800 smallest companies
in the Russell 1000 Index, representing
approximately 35% of the Russell 1000
total market capitalization. The Russell
Midcap Growth Index is composed of
securities with greater-than-average
growth orientation within the Russell
Midcap Index. Each security's growth
orientation is determined by a composite
score of the security's price-to-book
ratio and forecasted growth rate. Growth
stocks tend to have a higher price-to-
book ratios and forecasted growth rates
than value stocks. This index is
composed of approximately 450 companies
from the Russell 1000 Growth Index,
representing 20% of the total market
capitalization of the Russell 1000 Growth
Index.
FEES AND EXPENSES
This table summarizes the expenses you
may pay if you buy and hold class Y
shares of the fund. Except as noted,
expenses are based on the fund's last
fiscal year.
Annual fund operating expenses
(based on the fund's last fiscal year)
Management fees 0.49%
Other expenses 0.24%
Total fund operating expenses 0.73%
EXAMPLE
This example translates the "total annual
fund operating expenses" shown in the
preceding table into dollar amounts. By
doing this, you can more easily compare
the cost of investing in the fund to the
cost of investing in other mutual funds.
The example makes certain assumptions. It
assumes that you invest $10,000 in the
fund for the time periods shown and then
redeem all your shares at the end of
those periods. It also assumes a 5%
return on your investment each year and
that the fund's operating expenses remain
the same. The example is hypothetical;
your actual costs and returns may be
higher or lower.
1 year 3 years 5 years 10 years
$75 $233 $406 $906
What are the fund's main investment
strategies and related risks?
Any investment carries with it some level
of risk that generally reflects its
potential for reward. The fund pursues
its goal of seeking above average capital
growth by investing mainly in common
stocks, which represent ownership
interests in companies. The fund
generally invests in growth stocks with
above average potential for capital
appreciation. In selecting investments,
Putnam Management will consider projected
future earnings potential, competitive
position in industry, relative valuation
vs. industry peers and financial
strength. Putnam Management seeks to
construct a portfolio of securities that
manages the level and magnitude of risk
assumed by the fund. The fund may sell
securities in the portfolio when Putnam
Management believes that the conditions
underlying the decision to purchase the
security have changed.
O Common stocks. The value of a
company's stock may fall as a result of
factors which directly relate to that
company, such as decisions made by its
management or lower demand for the
company's products or services. In
addition, a stock's value may fall as a
result of factors which affect the stocks
industry as a whole. A stock's value may
also fall because of factors affecting
not just the company, but companies in a
number of different industries, such as
increases in production costs. The value
of a company's stock may also be affected
by changes in financial market conditions
that are relatively unrelated to the
company or its industry, such as changes
in interest rates or currency exchange
rates. In addition, a company's stock
generally pays dividends only after the
company makes required payments to
holders of its bonds and other debt. For
this reason, the value of the stock will
usually react more strongly than the
bonds and other debt to actual or
perceived changes in the company's
financial condition or prospects.
O Growth stocks. The fund may invest
in stocks of companies that Putnam
Management believes have higher
consistency of earnings and/or better
than average potential for future
earnings growth. These growth stocks
typically trade at prices that, when
compared to the earnings of the company,
represent a higher price to earning ratio
than other companies. Therefore, the
values of growth stocks may be more
sensitive to changes in current or
expected earnings than the values of
other stocks.
O Smaller companies. The fund can
invest in small and relatively less well-
known companies, including companies with
market capitalizations of less than $1
billion. These companies are more likely
than larger companies to have limited
product lines, markets or financial
resources, or to depend on a small or
medium sized less-experienced management
group. Stocks of smaller companies may
trade less frequently and in limited
volume, and their prices may fluctuate
more than stocks of other companies.
Stocks of smaller companies may therefore
be more vulnerable to adverse
developments than those of larger
companies.
O Foreign investments. The fund may
invest without limit in securities of
foreign issuers that are traded in U.S.
public markets. While the fund may also
invest in securities of foreign issuers
that are not traded in U.S. public
markets, it does not expect that such
investments will normally represent more
than 20% of its assets, although they may
occasionally exceed this amount.
Foreign investments involve certain sp
ecial risks. For example, their values
may drop in response to changes in
currency exchange rates, unfavorable
political and legal developments,
unreliable or untimely information,
and economic and financial
instability. In addition, the
liquidity of these investments may be
more limited than domestic
investments, which means the fund may
at times be unable to sell them at
desirable prices. Foreign settlement
procedures may also involve additional
risks. These risks are generally
greater in the case of "emerging
markets" that typically have less
developed legal and financial systems.
Certain of these risks may also apply
to some extent to domestic investments
that are denominated in foreign
currencies or that are traded in
foreign markets, or to securities of
U.S. companies that have significant
foreign operations.
O Derivatives. The fund may engage in
a variety of transactions involving
derivatives, such as futures, options,
warrants and swaps. Derivatives are
financial instruments whose value depends
upon, or is derived from, the value of an
underlying investment, pool of
investments, index or currency. The
fund's return on a derivative typically
depends on the change in the value of the
security, index or currency specified in
the derivative instrument.
The fund may use derivatives for hedgi
ng purposes. Derivatives involve
special risks and may result in
losses. The fund will be dependent on
Putnam Management's ability to analyze
and manage these sophisticated
instruments. For further information
about the risks of derivatives see the
Statement of Additional Information.
O Frequent trading. The fund may buy
and sell investments relatively often,
which involves higher expenses, including
brokerage commissions, and may increase
the amount of taxes payable by
shareholders.
O Other investments. In addition to
the main investment strategies described
above, the fund may also make other types
of investments, such as investments in
preferred stocks, convertible securities,
derivative instruments or fixed income
securities, and, therefor may be subject
to other risks.
O Alternative strategies. At times
Putnam Management may judge that market
conditions make pursuing the fund's
investment strategies inconsistent with
the best interests of its shareholders.
Putnam Management then may temporarily
use alternative strategies that are
mainly designed to limit the fund's
losses. These strategies may cause the
fund to miss out on investment
opportunities, and may prevent the fund
from achieving its goal.
O Changes in policies. The fund's
Trustees also may change the fund's goal,
investment strategies and other policies
that are described above without
shareholder approval, except as otherwise
noted.
Who manages the fund?
The fund's Trustees oversee the general
conduct of the fund's business. The
Trustees have retained Putnam Management
to be the fund's investment manager,
responsible for making investment
decisions for the fund and managing the
fund's other affairs and business. The
fund pays Putnam Management a quarterly
management fee for these services based
on the fund's average net assets. The
fund paid Putnam Management a management
fee of 0.49% of average net assets for
the fund's last fiscal year. Putnam
Management's address is One Post Office
Square, Boston, MA 02109.
The following officers of Putnam
Management have had primary
responsibility for the day-to-day
management of the fund's portfolio since
the years shown below. Their recent
professional experience is also shown.
Manager Since Experience
Eric M. Wetlaufer1997 Employed as an
investment professional
by
Managing Director Putnam Management
since November,
1997.Prior to November,
1997, Mr. Wetlaufer was
a Managing Director and
Portfolio Manager at
Cadence Capital
Management.
Margery C. Parker1998 Employed as an
investment professional
by
Senior Vice President Putnam
Management since
December, 1997. Prior
to December, 1997, Ms.
Parker was a Vice
President and Portfolio
Manager at Keystone
Investments.
David J. Santos 1996 Employed as an
investment professional
by
Senior Vice President Putnam
Management since 1986.
Anthony C. Santosus 1994 Employed as
an investment
professional
Senior Vice President Putnam
Management since 1985.
Year 2000 Issues
The fund could be adversely affected if
the computer systems used by Putnam
Management and the fund's other service
providers do not properly process and
calculate date-related information
relating to the end of this century and
the beginning of the next. While year
2000 related computer problems could have
a negative effect on the fund, both in
its operations and in its investors,
Putnam Management is working to avoid
such problems and to obtain assurances
from service providers that they are
taking similar steps. No assurances,
though, can be provided that the fund
will not be adversely impacted by these
matters.
How does the fund price its shares?
The net asset value (NAV) of shares of
each class equals the total value of its
assets, less its liabilities, divided by
the number of its outstanding shares.
Shares are only valued as of the close of
regular trading on the New York Stock
Exchange each day the exchange is open.
The fund values its investments for which
market quotations are readily available
at market value. It values short-term
investments that will mature within 60
days at amortized cost, which
approximates market value. It values all
other investments and assets at what it
believes is the current value. This is
sometimes called "fair value."
The fund translates prices for its
investments quoted in foreign currencies
into U.S. dollars at current exchange
rates. As a result, changes in the value
of those currencies in relation to the
U.S. dollar may affect the fund's NAV.
Because foreign markets may be open at
different times than the New York Stock
Exchange, the value of the fund's shares
may change on days when shareholders are
not able to buy or sell them. If events
materially affecting the values of the
fund's foreign investments occur between
the close of foreign markets and the
close of regular trading on the New York
Stock Exchange, these investments will be
valued at their fair value.
How do I buy fund shares?
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.
Putnam Mutual Funds Corp. (Putnam Mutual
Funds) generally must receive your plan's
completed buy order before the close of
regular trading on the New York Stock
Exchange for shares to be bought at that
day's offering price.
To eliminate the need for safekeeping,
the fund will not issue certificates for
shares.
The fund may periodically close to new
purchases of shares or refuse any order
to buy shares if Putnam Management
determines that doing so would be in the
best interests of the fund and its
shareholders.
O Eligible retirement plans. A
defined contribution plan is eligible to
purchase fund shares through this
prospectus if
O The plan, its sponsor and other
employee benefit plans managed by its
sponsor invest at least $250 million in
Putnam funds and other investments
managed by Putnam Management or its
affiliates, or
O the plan's sponsor confirms a good
faith expectation that investments in
Putnam-managed assets by the sponsor and
its employee benefit plans will attain
$250 million (using the higher of
purchase price or current market value)
within one year of initial purchase, and
agrees that class Y shares may be
redeemed and class A shares purchased if
that level is not attained.
How do I sell fund shares?
Subject to any restrictions imposed by
your employer's plan, you can sell your
shares through the plan back 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 the plan may impose, please consult
your employer.
Your plan administrator must send a
signed letter of instruction to Putnam
Investor Services. The price you will
receive is the next NAV per share
calculated after the fund receives the
instruction in proper form. In order to
receive that day's NAV, Putnam Investor
Services must receive the instruction
before the close of regular trading on
the New York Stock Exchange.
How do I exchange fund shares?
Subject to any restrictions your plan
imposes, you can exchange your fund
shares for shares of other Putnam funds
offered through your employer's plan at
NAV without any sales charges. Contact
your plan administrator or Putnam
Investor Services for more information.
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
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. These
actions may apply to all shareholders or
only to those shareholders whose
exchanges Putnam Management determines
are likely to have a negative effect on
the fund.
Fund distributions and taxes
The fund distributes any net investment
income and any net realized capital gains
at least once a year.
The terms of your employer's plan will
govern how your employer's plan may
receive distributions from the fund.
Generally, periodic distributions from
the fund to your employer's plan are
reinvested in additional fund shares,
although your employer's plan may permit
you to receive fund distributions from
net investment income in cash while
reinvesting capital gains distributions
in additional shares or to receive all
fund distributions in cash. If another
option is not selected, all distributions
will be reinvested in additional fund
shares.
Generally, for federal income tax
purposes, fund distributions are taxable
as ordinary income, except that any
distributions of long-term capital gains
will be taxed as such regardless of how
long you have held your shares. However,
distributions by the fund to retirement
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. You should consult your tax advisor
for more information on your own tax
situation, including possible state and
local taxes.
Financial highlights
The financial highlights table is
intended to help you understand the
fund's recent financial performance.
Certain information reflects financial
results for a single fund share. The
total returns represent the rate that an
investor would have earned or lost on an
investment in the fund, assuming
reinvestment of all dividends and
distributions. This information has been
audited by PricewaterhouseCoopers LLP.
Its report and the fund's financial
statements are included in the fund's
annual report to shareholders, which is
available upon request.
FINANCIAL HIGHLIGHTS
CLASS Y
Year ended July 31, 1998
1998 19971996 1995+
Net Asset Value,
Beginning of Period$12.61 $9.84
9.24 7.83
Income From Investment
Operations
Net Investment Income(loss)(.02)(c)
_(b) _ .01
Net Gain or Losses
(both realized and unrealized)
_
on investments2.01 3.441.46 1.47
Total from
Investment Operations 1.99 3.44
1.46 1.41
Less Distributions: _ _
_ _
Dividends (from net investment
Income)
Distributions (from capital
gains) (.96) (.67)(.86) _
In Excess of Capital Gains _
_ _ _
Total Distributions(.96) (.67) (.86)
_
Net Asset Value
End of Period$13.64 $12.61$9.84$9.2
4
Ratios/Supplemental Data
(a) 17.26 36.4917.0718.01*
Net Assets, End of Period
(in thousands)$288,593 $242,742$63,
330 $42,717
Ratio of Expenses to Average
Net Assets (%)(b) .73 .79 .81
.29*
Ratio of Net Income
to Average Net Assets (%) (.13)
.02 (.01) .10*
Portfolio Turnover Rate (%)110.60
82.91 106.58114.51
+For the period from the commencement
of operations from March 28, 1995 to
July 31, 1998.
*Not annualized.
(a) Total return assumes dividend
reinvestment and does not reflect
the effect of sales charges.
(b) The ratio of expenses to average
net assets for periods ended on or
after July 31, 1996 includes amounts
paid through expense offset
arrangements. Prior period ratios
exclude these amounts.
(c)Per share net investment income
has been determined on the basis of
the weighted average number of
shares outstanding during the
period.
For More Information About Putnam Vista Fund
The fund's statement of additional
information (SAI) and annual and semi-
annual reports to shareholders include
additional information about the fund. The
SAI, and the auditor's report and financial
statements included in the fund's most
recent annual report to its shareholders,
are incorporated by reference into this
prospectus, which means they are part of
this prospectus for legal purposes. The
fund's annual report discusses the market
conditions and investment strategies that
significantly affected the fund's
performance during its last fiscal year.
You may get free copies of these materials,
request other information about the fund
and other Putnam Funds, or make shareholder
inquiries, by contacting your investment
advisor or Putnam's Web site, or by calling
Putnam toll-free at 1-800-225-1581.
You may review and copy information
about the fund, including its
SAI, at the Securities and Exchange
Commission's public reference
room in Washington, D.C. You may call the
Commission at 1-800-SEC-0330 for information about the
operation of the public reference
room. You may also access reports and other information about the
fund on the Commission's Internet site at http://www.sec.gov. You
may get copies of this information, with payment of a duplication
fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the fund's
file number.
PUTNAM INVESTMENTS
Putnam Defined Contribution Plans
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-752-9894
File No. 811-1561
www.putnaminv.com
PUTNAM VISTA FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
November 30, ^ 1998
This SAI is not a prospectus and is only authorized for
distribution when accompanied or preceded by the prospectus of
the fund dated November 30, ^ 1998, as revised from time to time.
This SAI contains information which may be useful to investors
but which is not included in the prospectus. If the fund has
more than one form of current prospectus, each reference to the
prospectus in ^ this SAI ^ includes all of the fund's
prospectuses, unless otherwise noted. The SAI should be read
together with the applicable prospectus. Investors may obtain a
free copy of the applicable prospectus from Putnam Investor
Services, ^ P.O. Box 41203, Providence, RI 02940-1203.
Part I of this SAI contains specific information about the fund.
Part II includes information about the fund and the other Putnam
funds.
Certain disclosure has been incorporated by reference from the
fund's annual report. For a free copy of the fund's annual
report, call Putnam Investor Services at 1-800-225-1581.
Table of Contents
^ PART I
^ FUND HISTORY I-3
INVESTMENT RESTRICTIONS ^ I-5
CHARGES AND EXPENSES ^ I-7
INVESTMENT PERFORMANCE ^ I-14
ADDITIONAL OFFICERS ^ I-15
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS ^ I-16
Part II
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES ^ AND RISKS II-1
TAXES ^ II-29
MANAGEMENT ^ II-34
DETERMINATION OF NET ASSET VALUE ^ II-43
HOW TO BUY SHARES ^ II-44
DISTRIBUTION PLANS ^ II-55
INVESTOR SERVICES ^ II-56
SIGNATURE GUARANTEES ^ II-61
SUSPENSION OF REDEMPTIONS ^ II-62
SHAREHOLDER LIABILITY ^ II-62
STANDARD PERFORMANCE MEASURES ^ II-62
COMPARISON OF PORTFOLIO PERFORMANCE ^ II-64
SECURITIES RATINGS II-68
DEFINITIONS ^ II-73
SAI
PART I
^ FUND 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. A copy
of the Agreement and Declaration of Trust, which is governed by
Massachusetts law, is on file with the Secretary of State of The
Commonwealth of Massachusetts.
The fund is an open-end management investment company with an
unlimited number of authorized shares of beneficial interest
which 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 may also offer classes of shares with different sales
charges and expenses. Because of these different sales charges
and expenses, the investment performance of the classes will
vary. For more information, including your eligibility to
purchase certain classes of shares, contact your investment
dealer or Putnam Mutual Funds (at 1-800-225-1581).
The fund is a "diversified" investment company under the
Investment Company Act of 1940. This means that with respect to
75% of its total assets, the fund may not invest more than 5% of
its total assets in the securities of any one issuer (except U.S.
government securities). The remaining 25% of its total assets is
not subject to this restriction. To the extent the fund invests
a significant portion of its assets in the securities of a
particular issuer, it will be subject to an increased risk of
loss if the market value of such issuer's securities declines.
Each share has one vote, with fractional shares voting
proportionally. Shares of all classes will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
fund were liquidated, would receive the net assets of the fund.
The fund may suspend the sale of shares at any time and may
refuse any order to purchase shares. Although the fund is not
required to hold annual meetings of its shareholders,
shareholders holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
INVESTMENT RESTRICTIONSINVESTMENT RESTRICTIONSINVESTMENT
RESTRICTIONS
As fundamental investment restrictions, which may not be changed
without a vote of a majority of the outstanding voting
securities, the fund may not:
(1) With respect to 75% of its total assets, invest in the
securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the fund (taken at current
value) would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations
issued or guaranteed as to interest or principal by the U.S.
government or its agencies or instrumentalities.
(2) With respect to 75% of its total assets, acquire more than
10% of the outstanding voting securities of any issuer.
(3) Borrow money in excess of 10% of its net assets (taken at
current value) and then only as a temporary measure for
extraordinary or emergency reasons and not for investment
purposes. (The fund may borrow only from banks and immediately
after any such borrowings there must be an asset coverage (total
assets of the fund including the amount borrowed less liabilities
other than such borrowings) of at least 300% of the amount of all
borrowings. In the event that, due to market decline or other
reasons, such asset coverage should at any time fall below 300%,
the fund is required within three days not including Sundays and
holidays to reduce the amount of its borrowings to the extent
necessary to cause the asset coverage of such borrowings to be at
least 300%. If this should happen, the fund may have to sell
securities at a time when it would be disadvantageous to do so.)
(4) Make loans, except by purchase of debt obligations in which
the fund may invest consistent with its investment policies, by
entering into repurchase agreements , or by lending its portfolio
securities.
(5) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which
are secured by interests in real estate, and securities which
represent interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
(6) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(7) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a result of
such purchase, more than 25% of the fund's total assets would be
invested in any one industry.
(8) Purchase or sell commodities or commodity contracts, except
that the fund may purchase and sell financial futures and options
and may enter into foreign exchange contracts and other financial
transactions not involving physical commodities.
Although certain of the fund's fundamental investment
restrictions permit it to borrow money to a limited extent, the
fund does not currently intend to do so and did not do so last
year.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of the fund means
the affirmative vote of the lesser of (1) more than 50% of the
outstanding fund shares, or (2) 67% or more of the shares present
at a meeting if more than 50% of the outstanding fund shares are
represented at the meeting in person or by proxy.
It is contrary to the fund's present policy, which may be changed
without shareholder approval, to:
Invest in (a) securities which are not readily marketable, (b)
securities restricted as to resale (excluding securities
determined by the Trustees of the fund (or the person designated
by the Trustees of the fund to make such determinations) to be
readily marketable), and (c) repurchase agreements maturing in
more than seven days, if, as a result, more than 15% of the
fund's net assets (taken at current value) would then be invested
in the securities described in (a), (b) and (c) above.
--------------------------------
All percentage limitations on investments (other than pursuant to
the non-fundamental restriction) will apply at the time of the
making of an investment and shall not be considered violated
unless an excess or deficiency occurs or exists immediately after
and as a result of such investment.
----------------------------------
CHARGES AND EXPENSESCHARGES AND EXPENSESCHARGES AND EXPENSES
Management fees
Under a Management Contract dated November 20, 1996, the fund
pays a quarterly fee to Putnam Management based on the average
net assets of the fund, as determined at the close of each
business day during the quarter, at ^ the annual rate of 0.65% of
the first $500 million of the fund's average net assets, 0.55% of
the next $500 million, 0.50% of the next $500 million, 0.45% of
the next $5 billion, 0.425% of the next $5 billion, 0.405% of the
next $5 billion, 0.39% of the next $5 billion and 0.38% of any
amount over $21.5 billion. For the past three fiscal years,
pursuant to the Management Contract (and a management contract in
effect prior to November 20, 1996, under which the management fee
payable to Putnam Management was paid at the rate of 0.65% of the
first $500 million of average net assets, 0.55% of the next $500
million, 0.50% of the next $500 million and 0.45% of any amount
over $1.5 billion), the fund incurred the following fees:
Fiscal Management
year fee paid
1998 $ 22,974,521
1997 ^ $ 14,799,986
1996 ^ $ 8,346,339
Brokerage commissions
The following table shows brokerage commissions paid during the
fiscal periods indicated:
Fiscal Brokerage
year commissions
1998 $ 7,023,012
1997 ^ $ 4,684,653
1996 ^ $ 2,947,901
The following table shows transactions placed with brokers and
dealers during the most recent fiscal year to recognize research,
statistical and quotation services received by Putnam Management
and its affiliates:
Dollar value Percent of
of these total Amount of
transactions transactions commissions
$ 3,810,547,679 58.92% $4,374,123 ^
Administrative expense reimbursement
The fund reimbursed Putnam Management for administrative services
during fiscal ^ 1998, including compensation of certain fund
officers and contributions to the Putnam Investments, Inc. Profit
Sharing Retirement Plan for their benefit, as follows:
Portion of total
reimbursement for
Total compensation and
reimbursement contributions
^ $29,807 ^ $34,907
Trustee ^ responsibilities and fees
The Trustees generally oversee 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 oversight of the Trustees, Putnam
Management also manages the fund's other affairs and business.
Each Trustee receives a fee for his or her services. Each
Trustee also receives fees for serving as a Trustee of other
Putnam funds. The Trustees periodically review their fees to
assure that such fees continue to be appropriate in light of
their responsibilities as well as in relation to fees paid to
trustees of other mutual fund complexes. The Trustees meet
monthly over a two-day period, except in August. The
Compensation Committee, which consists solely of Trustees not
affiliated with Putnam Management and is responsible for
recommending Trustee compensation, estimates that Committee and
Trustee meeting time together with the appropriate preparation
requires the equivalent of at least three business days per
Trustee meeting. The following table shows the year each Trustee
was first elected a Trustee of the Putnam funds, the fees paid to
each Trustee by the fund for fiscal ^ 1998 and the fees paid to
each Trustee by all of the Putnam funds during calendar year ^
1997:
COMPENSATION TABLE
Pension or
Estimated Tot^ al
Aggregate retirementannual
benefits compens^ ation
compensation benefits accrued from
all^ from all
from the as part ofPutnam
f^ unds Putnam
Trustees/Year fund(1) fund expenses^ upon
retirement(2) ^ funds(3)
Jameson A. ^ Baxter/1994(4) $4,236 $831
$87,500 $176,000
Hans H. Estin/1972 ^ 3,637 1,714
87,500 175,000
John A. ^ Hill/1985(4) 3,594 643
87,500 175,000
Ronald J. ^ Jackson/1996(4) 4,076 421
87,500 176,000
Paul L. ^ Joskow/1997(4)(5) 2,791 47
87,500 25,500
Elizabeth T. Kennan/1992 ^ 4,076 916
87,500 174,000
Lawrence J. Lasser/1992 ^ 3,539 685
87,500 172,000
John H. Mullin, ^ III/1997(4)(5) 2,791 72
87,500 25,500
Robert E. Patterson/1984 ^ 3,616 515
87,500 176,000
Donald S. Perkins/1982 ^ 3,637 1,853
87,500 176,000
William F. ^ Pounds/1971(6) 4,255 1,926
98,000 201,000
George Putnam/1957 ^ 3,560 1,959
87,500 175,000
George Putnam, III/1984 ^ 3,609 339
87,500 174,000
A.J.C. Smith/1986 ^ 3,532 1,154
87,500 170,000
W. Thomas ^ Stephens/1997(4)(7) 3,39867 87,500 53,000
W. Nicholas Thorndike/1992 ^ 3,6371,315 87,500176,000
(1) Includes an annual retainer and an attendance fee for each
meeting attended.
(2)^ Assumes that each Trustee retires at the normal retirement
date. Estimated benefits for each Trustee are based on Trustee fee rates in
effect during calendar ^ 1997.
^(3) As of December 31, ^ 1997, there were ^ 101 funds in the
Putnam family.
(4) ^ Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amounts of deferred compensation
payable by the fund to ^ Messrs. Hill, Jackson, Joskow, Mullin, Stephens and
Baxter as of July 31, ^1998 were $11,546, $8,797, $2,332, $2.248, $3,466, and
$11,513 respectively, including income earned on such amounts.
(5) ^ Elected as a Trustee in ^ November 1997.
^(6) Includes additional compensation for service as Vice
Chairman of the Putnam funds.
(7) ^ Elected as a Trustee in September 1997.
^
Under a Retirement Plan for Trustees of the Putnam funds (the
"Plan"), each Trustee who retires with at least five years of service as a
Trustee of the funds is entitled to receive an annual retirement
benefit equal to one-half of the average annual compensation paid
to such Trustee for the last three years of service prior to
retirement.
This retirement benefit is payable during a Trustee's lifetime,
beginning the year following retirement, for a number of years
equal to such Trustee's years of service. A death benefit is also
available under the Plan which assures that the Trustee and his or her
beneficiaries will receive benefit payments for the lesser of an
aggregate period of (i) ten years or (ii) such Trustee's total
years of service.
The Plan Administrator (a committee comprised of Trustees that
are not "interested persons" of the fund, as defined in the
Investment Company Act of 1940) may terminate or amend the Plan
at any time, but no termination or amendment will result in a
reduction in the amount of benefits (i) currently being paid to a
Trustee at the time of such termination or amendment, or (ii) to
which a current Trustee would have been entitled ^ had he or she
retired immediately prior to such termination or amendment.
For additional information concerning the Trustees, see
"Management" in Part II of this SAI.
Share ownership
At ^ August 31, ^ 1998, the officers and Trustees of the fund as
a group owned less than 1% of the outstanding shares of each
class of the fund, and, ^ to the knowledge of the fund no person
owned of record or beneficially 5% or more of any class of shares
of the fund^.
Shareholder name Percentage
Class and address owned
^
Y First Chicago NBD Trustee ^48.83%
^ For Retirement Plans
^ 107 N. Cross St. Ste 2092
Wheaton, IL 60187
Y Hanford Contractors Multi-Employer7.60%
Savings Plan for HAMTC Represented
Employees
One Post Office Square
Boston, MA 02109
Y Hanford Operations and Engineering29.61%
Investment Plan
One Post Office Square
Boston, MA 02109
M White Law and Co.
5.10%
Attn: Trust Mutual Funds LOC #5312
P.O. Box 94777
Cleveland, OH 44101-4777
Distribution fees
During fiscal ^ 1998, the fund paid the following 12b-1 fees to
Putnam Mutual Funds:
Class A Class B Class M
^ $ 7,338,031 ^ $ 14,039,665 $ 851,519
Class A sales charges and contingent deferred sales charges
Putnam Mutual Funds received sales charges with respect to class
A shares in the following amounts during the periods indicated:
Sales charges
retained by Putnam Contingent
Total Mutual Funds deferred
front-end after sales
Fiscal year sales charges dealer concessions charges
1998 $8,106,654
$1,358,595 $64,037
1997 $13,413,739
$2,174,005 $40,749
1996 $6,157,639
$1,021,865 $10,428
^
Class B contingent deferred sales charges
Putnam Mutual Funds received contingent deferred sales charges
upon redemptions of class B shares in the following amounts
during the periods indicated:
Contingent deferred
Fiscal year sales charges
1998 $1,669,282
1997 $1,074,003
1996 ^ $400,476
Class M sales charges
Putnam Mutual Funds received sales charges with respect to class
M shares in the following amounts during the periods indicated:
Sales charges
retained by Putnam
Mutual Funds
Total after ^
Fiscal year sales charges dealer concessions
1998 $292,610 $47,844
1997 ^ $505,496 $88,240
1996 $226,131 $38,786
Investor servicing and custody fees and expenses
During the 1998 fiscal year, the fund incurred ^ $9,896,070 in
fees and out-of-pocket expenses for investor servicing and
custody services provided by Putnam Fiduciary Trust Company.
INVESTMENT PERFORMANCEINVESTMENT PERFORMANCEINVESTMENT
PERFORMANCE
Standard performance measures
(for periods ended July 31, ^ 1998)
Class A Class B Class M Class Y
Inception date: ^ 6/03/68 3/01/93 12/08/94 3/28/95
Average annual total return
^ 1 year 10.21% ^ 11.05% ^ 12.29% 17.26%
5 year 18.73% 19.04% 18.70% 20.39%
10 years ^ 17.12% 16.86% 16.73% 17.91%
Returns for class A and class M shares reflect the deduction of
the current maximum initial sales charges of 5.75% for class A
shares and 3.50% for class M shares.
Returns for class B shares reflect the deduction of the
applicable contingent deferred sales charge ("CDSC"), which is 5%
in the first year, declining to 1% in the sixth year, and is
eliminated thereafter.
Returns shown for class B, class M and class Y shares for periods
prior to their inception are derived from the historical
performance of class A shares, adjusted to reflect both the
deduction of the initial sales charge or CDSC, if any, currently
applicable to each class and^ the higher operating expenses
applicable to such shares.
Returns shown for class A shares have not been adjusted to
reflect payments under the class A distribution plan prior to its
implementation. All returns assume reinvestment of distributions
at net asset value and represent past performance; they do not
guarantee future results. Investment return and principal value
^ will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
See "Standard Performance measures" in Part II of this SAI for
information on how performance is calculated.
ADDITIONAL OFFICERSADDITIONAL OFFICERSADDITIONAL OFFICERS
In addition to the persons listed as fund officers in Part II of
this SAI, each of the following persons is also a Vice President
of the fund and certain of the other Putnam funds, the total
number of which is noted parenthetically. Officers of Putnam
Management hold the same offices in Putnam Management's parent
company, Putnam Investments, Inc.
^ Officer Name (Age) (Number of funds)
^ Eric Wetlaufer (Age 36) (2 funds). Managing Director of
Putnam Management. Prior to November, 1997, Mr. Wetlaufer was a
managing ^ Director and Portfolio Manager at Cadence Capital
Management.
Marjory C. Parker (Age 50 ) (1 fund). Senior Vice President of
Putnam Management. Prior to ^ December, 1997, Ms. Parker was a
Vice President and Portfolio Manager at Keystone Investments.
David J. Santos (Age 40) (4 funds). Senior Vice President of ^
Putnam Management. Employed as an investment professional by
Putnam Management since 1986.
Anthony C. Santosus ^(Age 40) (1 fund). Vice President of Putnam
Management. Employed as an investment professional by ^ Putnam
Management since 1985.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTSINDEPENDENT
ACCOUNTANTS AND FINANCIAL STATEMENTSINDEPENDENT ACCOUNTANTS AND
FINANCIAL STATEMENTS
PricewaterhouseCoopers LLP, One Post Office Square, Boston,
Massachusetts ^ 02109, are the fund's independent accountants,
providing audit services, tax return review and other tax
consulting services and assistance and consultation in connection
with the review of various Securities and Exchange Commission
filings. The Report of ^ Independent Accountants, financial
highlights and financial statements included in the fund's Annual
Report for the fiscal year ended July 31, ^ 1998, filed
electronically on ^ September 22, 1998 (File No. 811-1561), are
incorporated by reference into this SAI. The financial
highlights included in the prospectus and incorporated by
reference into this SAI and the financial statements incorporated
by reference into the prospectus and this SAI have been so
included and incorporated in reliance upon the report of the
independent accountants, given on their authority as experts in
auditing and accounting.
<PAGE>
II-49
4/21/98
TABLE OF CONTENTS
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS II-1
TAXES II-28
MANAGEMENT II-33
DETERMINATION OF NET ASSET VALUE
II-44
HOW TO BUY SHARES II-45
DISTRIBUTION PLANS II-58
INVESTOR SERVICES II-60
SIGNATURE GUARANTEES II-65
SUSPENSION OF REDEMPTIONS II-65
SHAREHOLDER LIABILITY II-65
STANDARD PERFORMANCE MEASURES II-66
COMPARISON OF PORTFOLIO PERFORMANCE II-67
SECURITIES RATINGS II-72
DEFINITIONS II-77
THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
PART II
As noted in the prospectus, in addition to the principal
investment strategies and the principal risks described in the
prospectus, the fund may employ other investment practices and
may be subject to other risks, which are described below.
Because the following is a combined description of investment
strategies of all of the Putnam funds, certain matters described
herein may not apply to your fund. Unless a strategy or
policy described below is specifically prohibited by the
investment restrictions explained in a fund ' s prospectus,
part I of this SAI or applicable law, the fund may engage in each
of the practices described below . Shareholders who purchase
shares at net asset value through employer-sponsored defined
contribution plans should also consult their employer for
information about the extent to which the matters described below
apply to them.
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICESMISCELLANEOUS
INVESTMENT PRACTICES AND RISKS
FOREIGN INVESTMENTS
The fund may invest in securities of foreign issuers. These
foreign investments involve certain special risks described
below.
Foreign securities are normally denominated and traded in foreign
currencies. As a result, the value of the fund's foreign
investments and the value of its shares may be affected favorably
or unfavorably by changes in currency exchange rates relative to
the U.S. dollar. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and
foreign issuers are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to
those in the United States. The securities of some foreign
issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. 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
investments in U.S. markets.
In addition, the fund's investments in foreign securities may be
subject to the risk of nationalization or expropriation of
assets, imposition of currency exchange controls, foreign
withholding taxes or restrictions on the repatriation of foreign
currency, confiscatory taxation, political or financial
instability and diplomatic developments which could affect the
value of the fund's investments in certain foreign countries.
Dividends or interest on, or proceeds from the sale of, foreign
securities may be subject to foreign withholding taxes, and
special U.S. tax considerations may apply.
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
organized under the laws of those foreign countries.
The risks described above, including the risks of nationalization
or expropriation of assets, are typically increased in connection
with investments in "emerging markets." For example, political
and economic structures in these countries may be in their
infancy and developing rapidly, and such countries may lack the
social, political and economic stability characteristic of more
developed countries. Certain of these countries have in the past
failed to recognize private property rights and have at times
nationalized and expropriated the assets of private companies.
High rates of inflation or currency devaluations may adversely
affect the economies and securities markets of such countries.
Investments in emerging markets may be considered speculative.
The currencies of certain emerging market countries have
experienced a steady devaluation relative to the U.S. dollar, and
continued devaluations may adversely affect the value of a fund's
assets denominated in such currencies. Many emerging market
companies have experienced substantial, and in some periods
extremely high, rates of inflation or deflation for many years,
and continued inflation may adversely affect the economies and
securities markets of such countries.
In addition, unanticipated political or social developments may
affect the value of the fund's investments in emerging markets
and the availability to the fund of additional investments in
these markets. The small size, limited trading volume and
relative inexperience of the securities markets in these
countries may make the fund's investments in securities traded in
emerging markets illiquid and more volatile than investments in
securities traded in more developed countries, and the fund may
be required to establish special custodial or other arrangements
before making investments in securities traded in emerging
markets. There may be little financial or accounting information
available with respect to issuers of emerging market securities,
and it may be difficult as a result to assess the value of
prospects of an investment in such securities.
Certain of the foregoing risks may also apply to some extent to
securities of U.S. issuers that are denominated in foreign
currencies or that are traded in foreign markets, or securities
of U.S. issuers having significant foreign operations.
FOREIGN CURRENCY TRANSACTIONS
The fund may engage without limit in currency exchange
transactions, including purchasing and selling foreign currency,
foreign currency options, foreign currency forward contracts and
foreign currency futures contracts and related options, to manage
its exposure to foreign currencies. In addition, the fund may
write covered call and put options on foreign currencies for the
purpose of increasing its current return.
Generally, the fund may engage in both "transaction hedging" and
"position hedging." The fund may also engage in foreign currency
transactions for non-hedging purposes, subject to applicable law.
When it engages in transaction hedging, the fund enters into
foreign currency transactions with respect to specific
receivables or payables, generally arising in connection with the
purchase or sale of portfolio securities. The fund will engage
in transaction hedging when it desires to "lock in" the U.S.
dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. By transaction hedging the fund will attempt
to protect itself against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and
the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the
dividend or interest payment is earned, and the date on which
such payments are made or received.
The fund may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with the
settlement of transactions in portfolio securities denominated in
that foreign currency. If conditions warrant, for transaction
hedging purposes the fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and purchase and sell foreign currency futures
contracts. A foreign currency forward contract is a negotiated
agreement to exchange currency at a future time at a rate or
rates that may be higher or lower than the spot rate. Foreign
currency futures contracts are standardized exchange-traded
contracts and have margin requirements. In addition, for
transaction hedging purposes the fund may also purchase or sell
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies.
The fund may also enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts") and
purchase and sell foreign currency futures contracts.
For transaction hedging purposes the fund may also purchase
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies. A
put option on a futures contract gives the fund the right to
assume a short position in the futures contract until the
expiration of the option. A put option on a currency gives the
fund the right to sell the currency at an exercise price until
the expiration of the option. A call option on a futures
contract gives the fund the right to assume a long position in
the futures contract until the expiration of the option. A call
option on a currency gives the fund the right to purchase the
currency at the exercise price until the expiration of the
option.
The fund may engage in position hedging to protect against a
decline in the value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated or
quoted (or an increase in the value of the currency in which the
securities the fund intends to buy are denominated, when the fund
holds cash or short-term investments). For position hedging
purposes, the fund may purchase or sell, on exchanges or in over-
the-counter markets, foreign currency futures contracts, foreign
currency forward contracts and options on foreign currency
futures contracts and on foreign currencies. In connection with
position hedging, the fund may also purchase or sell foreign
currency on a spot basis.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward
or futures contract. Accordingly, it may be necessary for the
fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of
the security or securities being hedged is less than the amount
of foreign currency the fund is obligated to deliver and a
decision is made to sell the security or securities and make
delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if
the market value of such security or securities exceeds the
amount of foreign currency the fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in
the underlying prices of the securities which the fund owns or
intends to purchase or sell. They simply establish a rate of
exchange which one can achieve at some future point in time.
Additionally, although these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the
increase in value of such currency. See "Risk factors in options
transactions."
The fund may seek to increase its current return or to offset
some of the costs of hedging against fluctuations in current
exchange rates by writing covered call options and covered put
options on foreign currencies. The fund receives a premium from
writing a call or put option, which increases the fund's current
return if the option expires unexercised or is closed out at a
net profit. 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's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for the fund. Cross hedging transactions by the fund involve the
risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in
the value of the currency or other asset or liability which is
the subject of the hedge.
The fund may also engage in non-hedging currency transactions.
For example, Putnam Management may believe that exposure to a
currency is in the fund's best interest but that securities
denominated in that currency are unattractive. In that case the
fund may purchase a currency forward contract or option in order
to increase its exposure to the currency. In accordance with SEC
regulations, the fund will segregate liquid assets in its
portfolio to cover forward contracts used for non-hedging
purposes.
The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic
factors applicable to the issuing country. In addition, the
exchange rates of foreign currencies (and therefore the values of
foreign currency options, forward contracts and futures
contracts) may be affected significantly, fixed, or supported
directly or indirectly by U.S. and foreign government actions.
Government intervention may increase risks involved in purchasing
or selling foreign currency options, forward contracts and
futures contracts, since exchange rates may not be free to
fluctuate in response to other market forces.
The value of a foreign currency option, forward contract or
futures contract reflects the value of an exchange rate, which in
turn reflects relative values of two currencies, the U.S. dollar
and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in
the exercise of foreign currency options, forward contracts and
futures contracts, investors may be disadvantaged by having to
deal in an odd-lot market for the underlying foreign currencies
in connection with options at prices that are less favorable than
for round lots. Foreign governmental restrictions or taxes could
result in adverse changes in the cost of acquiring or disposing
of foreign currencies.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot
transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.
The decision as to whether and to what extent the fund will
engage in foreign currency exchange transactions will depend on a
number of factors, including prevailing market conditions, the
composition of the fund's portfolio and the availability of
suitable transactions. Accordingly, there can be no assurance
that the fund will engage in foreign currency exchange
transactions at any given time or from time to time.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign
currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number
of days from the date of the contract as agreed by the parties,
at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right
to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage
for trades. A foreign currency futures contract is a
standardized contract for the future delivery of a specified
amount of a foreign currency at a price set at the time of the
contract. Foreign currency futures contracts traded in the
United States are designed by and traded on exchanges regulated
by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amount agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the fund either
may accept or make delivery of the currency specified in the
contract, or at or prior to maturity enter into a closing
transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to
the original forward contract. Closing transactions with respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed
out only on an exchange or board of trade which provides a
secondary market in such contracts. Although the fund intends to
purchase or sell foreign currency futures contracts only on
exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a secondary market
on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse
price movements, the fund would continue to be required to make
daily cash payments of variation margin.
FOREIGN CURRENCY OPTIONS. In general, options on foreign
currencies operate similarly to options on securities and are
subject to many of the risks described above. Foreign currency
options are traded primarily in the over-the-counter market,
although options on foreign currencies are also listed on several
exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Monetary Unit
("EMU"). The EMU is composed of amounts of a number of
currencies, and is the official medium of exchange of the
European Community's European Monetary System.
The fund will only purchase or write foreign currency options
when Putnam Management believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid
secondary market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all
of those factors which influence foreign exchange rates and
investments generally.
SETTLEMENT PROCEDURES. Settlement procedures relating to the
fund's investments in foreign securities and to the fund's
foreign currency exchange transactions may be more complex than
settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not
present in the fund's domestic investments. For example,
settlement of transactions involving foreign securities or
foreign currencies may occur within a foreign country, and the
fund may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay
any fees, taxes or charges associated with such delivery. Such
investments may also involve the risk that an entity involved in
the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers
do not charge a fee for currency conversion, they do realize a
profit based on the difference (the "spread") between prices at
which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the fund at one
rate, while offering a lesser rate of exchange should the fund
desire to resell that currency to the dealer.
OPTIONS ON SECURITIES
WRITING COVERED OPTIONS. The fund may write covered call options
and covered put options on optionable securities held in its
portfolio, when in the opinion of Putnam Management such
transactions are consistent with the fund's investment
objective(s) and policies. Call options written by the fund give
the purchaser the right to buy the underlying securities from the
fund at a stated exercise price; put options give the purchaser
the right to sell the underlying securities to the fund at a
stated price.
The fund may write only covered options, which means that, so
long as the fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option (or
comparable securities satisfying the cover requirements of
securities exchanges). In the case of put options, the fund will
hold cash and/or high-grade short-term debt obligations equal to
the price to be paid if the option is exercised. In addition,
the fund will be considered to have covered a put or call option
if and to the extent that it holds an option that offsets some or
all of the risk of the option it has written. The fund may write
combinations of covered puts and calls on the same underlying
security.
The fund will receive a premium from writing a put or call
option, which increases the fund's return on the underlying
security in the event the option expires unexercised or is closed
out at a profit. The amount of the premium reflects, among other
things, the relationship between the exercise price and the
current market value of the underlying security, the volatility
of the underlying security, the amount of time remaining until
expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security. By writing a call option, the fund limits its
opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option
but continues to bear the risk of a decline in the value of the
underlying security. By writing a put option, the fund assumes
the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current
market value, resulting in a potential capital loss unless the
security subsequently appreciates in value.
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 offsetting option. The fund realizes a
profit or loss from a closing transaction if the cost of the
transaction (option premium plus transaction costs) is less or
more than the premium received from writing the option. If the
fund writes a call option but does not own the underlying
security, and when it writes a put option, the fund may be
required to deposit cash or securities with its broker as
"margin," or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security
varies, the fund may have to deposit additional margin with the
broker. Margin requirements are complex and are fixed by
individual brokers, subject to minimum requirements currently
imposed by the Federal Reserve Board and by stock exchanges and
other self-regulatory organizations.
PURCHASING PUT OPTIONS. The fund may purchase put options to
protect its portfolio holdings in an underlying security against
a decline in market value. Such protection is provided during
the life of the put option since the fund, as holder of the
option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be
profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the
premium and transaction costs. By using put options in this
manner, the fund will reduce any profit it might otherwise have
realized from appreciation of the underlying security by the
premium paid for the put option and by transaction costs.
PURCHASING CALL OPTIONS. The fund may purchase call options to
hedge against an increase in the price of securities that the
fund wants ultimately to buy. Such hedge protection is provided
during the life of the call option since the fund, as holder of
the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying
security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and
transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the fund's options strategies depends on
the ability of Putnam Management to forecast correctly interest
rate and market movements. For example, if the fund were to
write a call option based on Putnam Management's expectation that
the price of the underlying security would fall, but the price
were to rise instead, the fund could be required to sell the
security upon exercise at a price below the current market price.
Similarly, if the fund were to write a put option based on Putnam
Management's expectation that the price of the underlying
security would rise, but the price were to fall instead, the fund
could be required to purchase the security upon exercise at a
price higher than the current market price.
When the fund purchases an option, it runs the risk that it will
lose its entire investment in the option in a relatively short
period of time, unless the fund exercises the option or enters
into a closing sale transaction before the option's expiration.
If the price of the underlying security does not rise (in the
case of a call) or fall (in the case of a put) to an extent
sufficient to cover the option premium and transaction costs, the
fund will lose part or all of its investment in the option. This
contrasts with an investment by the fund in the underlying
security, since the fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on the fund's ability
to terminate option positions at times when Putnam Management
deems it desirable to do so. There is no assurance that the fund
will be able to effect closing transactions at any particular
time or at an acceptable price.
If a secondary market in options were to become unavailable, the
fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the
market for particular options or series of options. A market may
discontinue trading of a particular option or options generally.
In addition, a market could become temporarily unavailable if
unusual events -- such as volume in excess of trading or clearing
capability -- were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening
transactions. For example, if an underlying security ceases to
meet qualifications imposed by the market or the Options Clearing
Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options
market were to become unavailable, the fund as a holder of an
option would be able to realize profits or limit losses only by
exercising the option, and the fund, as option writer, would
remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options
purchased or sold by the fund could result in losses on the
options. If trading is interrupted in an underlying security,
the trading of options on that security is normally halted as
well. As a result, the fund as purchaser or writer of an option
will be unable to close out its positions until options trading
resumes, and it may be faced with considerable losses if trading
in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options
markets may impose exercise restrictions. If a prohibition on
exercise is imposed at the time when trading in the option has
also been halted, the fund as purchaser or writer of an option
will be locked into its position until one of the two
restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by
the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The fund,
as holder of such a put option, could lose its entire investment
if the prohibition remained in effect until the put option's
expiration.
Foreign-traded options are subject to many of the same risks
presented by internationally-traded securities. In addition,
because of time differences between the United States and various
foreign countries, and because different holidays are observed in
different countries, foreign options markets may be open for
trading during hours or on days when U.S. markets are closed. As
a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
Over-the-counter ("OTC") options purchased by the fund and assets
held to cover OTC options written by the fund may, under certain
circumstances, be considered illiquid securities for purposes of
any limitation on the fund's ability to invest in illiquid
securities.
INVESTMENTS IN MISCELLANEOUS FIXED-INCOME SECURITIES
If the fund may invest in inverse floating obligations, premium
securities, or interest-only or principal-only classes of
mortgage-backed securities (IOs and POs), it may do so without
limit. The fund, however, currently does not intend to invest
more than 15% of its assets in inverse floating obligations or
more than 35% of its assets in IOs and POs under normal market
conditions.
LOWER-RATED SECURITIES
The fund may invest in lower-rated fixed-income securities
(commonly known as "junk bonds"). The lower ratings of certain
securities held by the fund reflect a greater possibility that
adverse changes in the financial condition of the issuer or in
general economic conditions, or both, or an unanticipated rise in
interest rates, may impair the ability of the issuer to make
payments of interest and principal. The inability (or perceived
inability) of issuers to make timely payment of interest and
principal would likely make the values of securities held by the
fund more volatile and could limit the fund's ability to sell its
securities at prices approximating the values the fund had placed
on such securities. In the absence of a liquid trading market
for securities held by it, the fund at times may be unable to
establish the fair value of such securities.
Securities ratings are based largely on the issuer's historical
financial condition and the rating agencies' analysis at the time
of rating. Consequently, the rating assigned to any particular
security is not necessarily a reflection of the issuer's current
financial condition, which may be better or worse than the rating
would indicate. In addition, the rating assigned to a security
by Moody's Investors Service, Inc. or Standard & Poor's (or by
any other nationally recognized securities rating agency) does
not reflect an assessment of the volatility of the security's
market value or the liquidity of an investment in the security.
See "Securities ratings."
Like those of other fixed-income securities, the values of
lower-rated securities fluctuate in response to changes in
interest rates. A decrease in interest rates will generally
result in an increase in the value of the fund's assets.
Conversely, during periods of rising interest rates, the value of
the fund's assets will generally decline. The values of lower-
rated securities may often be affected to a greater extent by
changes in general economic conditions and business conditions
affecting the issuers of such securities and their industries.
Negative publicity or investor perceptions may also adversely
affect the values of lower-rated securities. Changes by
nationally recognized securities rating agencies in their ratings
of any fixed-income security and changes in the ability of an
issuer to make payments of interest and principal may also affect
the value of these investments. Changes in the value of
portfolio securities generally will not affect income derived
from these securities, but will affect the fund's net asset
value. The fund will not necessarily dispose of a security when
its rating is reduced below its rating at the time of purchase.
However, Putnam Management will monitor the investment to
determine whether its retention will assist in meeting the fund's
investment objective(s).
Issuers of lower-rated securities are often highly leveraged, so
that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest
rates may be impaired. Such issuers may not have more
traditional methods of financing available to them and may be
unable to repay outstanding obligations at maturity by
refinancing. The risk of loss due to default in payment of
interest or repayment of principal by such issuers is
significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior
indebtedness.
At times, a substantial portion of the fund's assets may be
invested in securities of which the fund, by itself or together
with other funds and accounts managed by Putnam Management or its
affiliates, holds all or a major portion. Although Putnam
Management generally considers such securities to be liquid
because of the availability of an institutional market for such
securities, it is possible that, under adverse market or economic
conditions or in the event of adverse changes in the financial
condition of the issuer, the fund could find it more difficult to
sell these securities when Putnam Management believes it
advisable to do so or may be able to sell the securities only at
prices lower than if they were more widely held. Under these
circumstances, it may also be more difficult to determine the
fair value of such securities for purposes of computing the
fund's net asset value. In order to enforce its rights in the
event of a default of such securities, the fund may be required
to participate in various legal proceedings or take possession of
and manage assets securing the issuer's obligations on such
securities. This could increase the fund's operating expenses
and adversely affect the fund's net asset value. In the case of
tax-exempt funds, any income derived from the fund's ownership or
operation of such assets would not be tax-exempt. The ability of
a holder of a tax-exempt security to enforce the terms of that
security in a bankruptcy proceeding may be more limited than
would be the case with respect to securities of private issuers.
In addition, the fund's intention to qualify as a "regulated
investment company" under the Internal Revenue Code may limit the
extent to which the fund may exercise its rights by taking
possession of such assets.
Certain securities held by the fund may permit the issuer at its
option to "call," or redeem, its securities. If an issuer were
to redeem securities held by the fund during a time of declining
interest rates, the fund may not be able to reinvest the proceeds
in securities providing the same investment return as the
securities redeemed.
The fund may invest without limit in so-called "zero-coupon"
bonds and "payment-in-kind" bonds. Zero-coupon bonds are issued
at a significant discount from their principal amount in lieu of
paying interest periodically. Payment-in-kind bonds allow the
issuer, at its option, to make current interest payments on the
bonds either in cash or in additional bonds. Because zero-coupon
and payment-in-kind bonds do not pay current interest in cash,
their value is subject to greater fluctuation in response to
changes in market interest rates than bonds that pay interest
currently. Both zero-coupon and payment-in-kind bonds allow an
issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater
credit risks than bonds paying interest currently in cash. The
fund is required to accrue interest income on such investments
and to distribute such amounts at least annually to shareholders
even though such bonds do not pay current interest in cash.
Thus, it may be necessary at times for the fund to liquidate
investments in order to satisfy its dividend requirements.
To the extent the fund invests in securities in the lower rating
categories, the achievement of the fund's goals is more dependent
on Putnam Management's investment analysis than would be the case
if the fund were investing in securities in the higher rating
categories. This may be particularly true with respect to tax-
exempt securities, as the amount of information about the
financial condition of an issuer of tax-exempt securities may not
be as extensive as that which is made available by corporations
whose securities are publicly traded.
LOAN PARTICIPATIONS
The fund may invest in "loan participations." By purchasing a
loan participation, the fund acquires some or all of the interest
of a bank or other lending institution in a loan to a particular
borrower. Many such loans are secured, and most impose
restrictive covenants which must be met by the borrower.
The loans in which the fund may invest are typically made by a
syndicate of banks, represented by an agent bank which has
negotiated and structured the loan and which is responsible
generally for collecting interest, principal, and other amounts
from the borrower on its own behalf and on behalf of the other
lending institutions in the syndicate and for enforcing its and
their other rights against the borrower. Each of the lending
institutions, including the agent bank, lends to the borrower a
portion of the total amount of the loan, and retains the
corresponding interest in the loan.
The fund's ability to receive payments of principal and interest
and other amounts in connection with loan participations held by
it will depend primarily on the financial condition of the
borrower. The failure by the fund to receive scheduled interest
or principal payments on a loan participation would adversely
affect the income of the fund and would likely reduce the value
of its assets, which would be reflected in a reduction in the
fund's net asset value. Banks and other lending institutions
generally perform a credit analysis of the borrower before
originating a loan or participating in a lending syndicate. In
selecting the loan participations in which the fund will invest,
however, Putnam Management will not rely solely on that credit
analysis, but will perform its own investment analysis of the
borrowers. Putnam Management's analysis may include
consideration of the borrower's financial strength and managerial
experience, debt coverage, additional borrowing requirements or
debt maturity schedules, changing financial conditions, and
responsiveness to changes in business conditions and interest
rates. Because loan participations in which the fund may invest
are not generally rated by independent credit rating agencies, a
decision by the fund to invest in a particular loan participation
will depend almost exclusively on Putnam Management's, and the
original lending institution's, credit analysis of the borrower.
Loan participations may be structured in different forms,
including novations, assignments, and participating interests.
In a novation, the fund assumes all of the rights of a lending
institution in a loan, including the right to receive payments of
principal and interest and other amounts directly from the
borrower and to enforce its rights as a lender directly against
the borrower. The fund assumes the position of a co-lender with
other syndicate members. As an alternative, the fund may
purchase an assignment of a portion of a lender's interest in a
loan. In this case, the fund may be required generally to rely
upon the assigning bank to demand payment and enforce its rights
against the borrower, but would otherwise be entitled to all of
such bank's rights in the loan. The fund may also purchase a
participating interest in a portion of the rights of a lending
institution in a loan. In such case, it will be entitled to
receive payments of principal, interest, and premium, if any, but
will not generally be entitled to enforce its rights directly
against the agent bank or the borrower, but must rely for that
purpose on the lending institution. The fund may also acquire a
loan participation directly by acting as a member of the original
lending syndicate.
The fund will in many cases be required to rely upon the lending
institution from which it purchases the loan participation to
collect and pass on to the fund such payments and to enforce the
fund's rights under the loan. As a result, an insolvency,
bankruptcy, or reorganization of the lending institution may
delay or prevent the fund from receiving principal, interest, and
other amounts with respect to the underlying loan. When the fund
is required to rely upon a lending institution to pay to the fund
principal, interest, and other amounts received by it, Putnam
Management will also evaluate the creditworthiness of the lending
institution.
The borrower of a loan in which the fund holds a participation
interest may, either at its own election or pursuant to terms of
the loan documentation, prepay amounts of the loan from time to
time. There is no assurance that the fund will be able to
reinvest the proceeds of any loan prepayment at the same interest
rate or on the same terms as those of the original loan
participation.
Corporate loans in which the fund may purchase a loan
participation are made generally to finance internal growth,
mergers, acquisitions, stock repurchases, leveraged buy-outs, and
other corporate activities. Under current market conditions,
most of the corporate loan participations purchased by the fund
will represent interests in loans made to finance highly
leveraged corporate acquisitions, known as "leveraged buy-out"
transactions. The highly leveraged capital structure of the
borrowers in such transactions may make such loans especially
vulnerable to adverse changes in economic or market conditions.
In addition, loan participations generally are subject to
restrictions on transfer, and only limited opportunities may
exist to sell such participations in secondary markets. As a
result, the fund may be unable to sell loan participations at a
time when it may otherwise be desirable to do so or may be able
to sell them only at a price that is less than their fair market
value.
Certain of the loan participations acquired by the fund may
involve revolving credit facilities under which a borrower may
from time to time borrow and repay amounts up to the maximum
amount of the facility. In such cases, the fund would have an
obligation to advance its portion of such additional borrowings
upon the terms specified in the loan participation. To the
extent that the fund is committed to make additional loans under
such a participation, it will at all times hold and maintain in a
segregated account liquid assets in an amount sufficient to meet
such commitments. Certain of the loan participations acquired by
the fund may also involve loans made in foreign currencies. The
fund's investment in such participations would involve the risks
of currency fluctuations described above with respect to
investments in the foreign securities.
FLOATING RATE AND VARIABLE RATE DEMAND NOTES
Certain funds may purchase floating rate and variable rate demand
notes and bonds. These securities may have a stated maturity in
excess of one year, but permit a holder to demand payment of
principal plus accrued interest upon a specified number of days
notice. Frequently, such obligations are secured by letters of
credit or other credit support arrangements provided by banks.
The issuer has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal of the
obligation plus accrued interest upon a specific number of days
notice to the holders. The interest rate of a floating rate
instrument may be based on a known lending rate, such as a bank's
prime rate, and is reset whenever such rate is adjusted. The
interest rate on a variable rate demand note is reset at
specified intervals at a market rate.
MORTGAGE RELATED AND ASSET-BACKED SECURITIES
The fund may invest in mortgage-backed securities, including
collateralized mortgage obligations ("CMOs") and certain stripped
mortgage-backed securities. CMOs and other mortgage-backed
securities represent a participation in, or are secured by,
mortgage loans.
The fund may also invest in asset-backed securities. Asset-backed
securities are structured like mortgage-backed securities, but
instead of mortgage loans or interests in mortgage loans, the
underlying assets may include such items as motor vehicle
installment sales or installment loan contracts, leases of
various types of real and personal property, and receivables from
credit card agreements. The ability of an issuer of asset-backed
securities to enforce its security interest in the underlying
assets may be limited.
Mortgage-backed securities have yield and maturity
characteristics corresponding to the underlying assets. Unlike
traditional debt securities, which may pay a fixed rate of
interest until maturity, when the entire principal amount comes
due, payments on certain mortgage-backed securities include both
interest and a partial repayment of principal. Besides the
scheduled repayment of principal, repayments of principal may
result from the voluntary prepayment, refinancing, or foreclosure
of the underlying mortgage loans. If property owners make
unscheduled prepayments of their mortgage loans, these
prepayments will result in early payment of the applicable
mortgage-related securities. In that event the fund may be
unable to invest the proceeds from the early payment of the
mortgage-related securities in an investment that provides as
high a yield as the mortgage-related securities. Consequently,
early payment associated with mortgage-related securities may
cause these securities to experience significantly greater price
and yield volatility than that experienced by traditional fixed-
income securities. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage
and other social and demographic conditions. During periods of
falling interest rates, the rate of mortgage prepayments tends to
increase, thereby tending to decrease the life of mortgage-
related securities. During periods of rising interest rates, the
rate of mortgage prepayments usually decreases, thereby tending
to increase the life of mortgage-related securities. If the life
of a mortgage-related security is inaccurately predicted, the
fund may not be able to realize the rate of return it expected.
Mortgage-backed and asset-backed securities are less effective
than other types of securities as a means of "locking in"
attractive long-term interest rates. One reason is the need to
reinvest prepayments of principal; another is the possibility of
significant unscheduled prepayments resulting from declines in
interest rates. These prepayments would have to be reinvested at
lower rates. As a result, these securities may have less
potential for capital appreciation during periods of declining
interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market value
during periods of rising interest rates. Prepayments may also
significantly shorten the effective maturities of these
securities, especially during periods of declining interest
rates. Conversely, during periods of rising interest rates, a
reduction in prepayments may increase the effective maturities of
these securities, subjecting them to a greater risk of decline in
market value in response to rising interest rates than
traditional debt securities, and, therefore, potentially
increasing the volatility of the fund.
Prepayments may cause losses on securities purchased at a
premium. At times, some of the mortgage-backed and asset-backed
securities in which the fund may invest will have higher than
market interest rates and therefore will be purchased at a
premium above their par value. Unscheduled prepayments, which are
made at par, will cause the fund to experience a loss equal to
any unamortized premium.
CMOs may be issued by a U.S. government agency or instrumentality
or by a private issuer. Although payment of the principal of,
and interest on, the underlying collateral securing privately
issued CMOs may be guaranteed by the U.S. government or its
agencies or instrumentalities, these CMOs represent obligations
solely of the private issuer and are not insured or guaranteed by
the U.S. government, its agencies or instrumentalities or any
other person or entity.
Prepayments could cause early retirement of CMOs. CMOs are
designed to reduce the risk of prepayment for investors by
issuing multiple classes of securities, each having different
maturities, interest rates and payment schedules, and with the
principal and interest on the underlying mortgages allocated
among the several classes in various ways. Payment of interest
or principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of
the risk of default on the underlying mortgages. CMOS of
different classes or series are generally retired in sequence as
the underlying mortgage loans in the mortgage pool are repaid.
If enough mortgages are repaid ahead of schedule, the classes or
series of a CMO with the earliest maturities generally will be
retired prior to their maturities. Thus, the early retirement of
particular classes or series of a CMO held by the fund would have
the same effect as the prepayment of mortgages underlying other
mortgage-backed securities. Conversely, slower than anticipated
prepayments can extend the effective maturities of CMOs,
subjecting them to a greater risk of decline in market value in
response to rising interest rates than traditional debt
securities, and, therefore, potentially increasing the volatility
of the fund.
Prepayments could result in losses on stripped mortgage-backed
securities. Stripped mortgage-backed securities are usually
structured with two classes that receive different portions of
the interest and principal distributions on a pool of mortgage
loans. The fund may invest in both the interest-only or "IO"
class and the principal-only or "PO" class. The yield to
maturity on an IO class of stripped mortgage-backed securities is
extremely sensitive not only to changes in prevailing interest
rates but also to the rate of principal payments (including
prepayments) on the underlying assets. A rapid rate of principal
prepayments may have a measurable adverse effect on the fund's
yield to maturity to the extent it invests in IOs. If the assets
underlying the IO experience greater than anticipated prepayments
of principal, the fund may fail to recoup fully its initial
investment in these securities. Conversely, POs tend to increase
in value if prepayments are greater than anticipated and decline
if prepayments are slower than anticipated.
The secondary market for stripped mortgage-backed securities may
be more volatile and less liquid than that for other mortgage-
backed securities, potentially limiting the fund's ability to buy
or sell those securities at any particular time.
STRUCTURED NOTES
A fund may be able to invest in so-called structured notes. These
securities are generally derivative instruments whose value is
tied to an underlying index or other security or asset class.
Such structured notes may include, for example, notes that allow
a fund to invest indirectly in certain foreign investments which
the fund would otherwise would not be able to directly invest
often because of restrictions imposed by local laws.
CONVERTIBLE SECURITIES
Convertible securities include bonds, debentures, notes,
preferred stocks and other securities that may be converted into
or exchanged for, at a specific price or formula within a
particular period of time, a prescribed amount of common stock or
other equity securities of the same or a different issuer.
Convertible securities entitle the holder to receive interest
paid or accrued on debt or dividends paid or accrued on preferred
stock until the security matures or is redeemed, converted or
exchanged.
The market value of a convertible security is a function of its
"investment value" and its "conversion value." A security's
"investment value" represents the value of the security without
its conversion feature (i.e., a nonconvertible fixed income
security). The investment value may be determined by reference
to its credit quality and the current value of its yield to
maturity or probable call date. At any given time, investment
value is dependent upon such factors as the general level of
interest rates, the yield of similar nonconvertible securities,
the financial strength of the issuer and the seniority of the
security in the issuer's capital structure. A security's
"conversion value" is determined by multiplying the number of
shares the holder is entitled to receive upon conversion or
exchange by the current price of the underlying security.
If the conversion value of a convertible security is
significantly below its investment value, the convertible
security will trade like nonconvertible debt or preferred stock
and its market value will not be influenced greatly by
fluctuations in the market price of the underlying security.
Conversely, if the conversion value of a convertible security is
near or above its investment value, the market value of the
convertible security will be more heavily influenced by
fluctuations in the market price of the underlying security.
The fund's investments in convertible securities may at times
include securities that have a mandatory conversion feature,
pursuant to which the securities convert automatically into
common stock or other equity securities at a specified date and a
specified conversion ratio, or that are convertible at the option
of the issuer. Because conversion of the security is not at the
option of the holder, the fund may be required to convert the
security into the underlying common stock even at times when the
value of the underlying common stock or other equity security has
declined substantially.
The fund's investments in convertible securities, particularly
securities that are convertible into securities of an issuer
other than the issuer of the convertible security, may be
illiquid. The fund may not be able to dispose of such securities
in a timely fashion or for a fair price, which could result in
losses to the fund.
PRIVATE PLACEMENTS
The fund may invest in securities that are purchased in private
placements and, accordingly, are subject to restrictions on
resale as a matter of contract or under federal securities laws.
Because there may be relatively few potential purchasers for such
investments, especially under adverse market or economic
conditions or in the event of adverse changes in the financial
condition of the issuer, the fund could find it more difficult to
sell such securities when Putnam Management believes it advisable
to do so or may be able to sell such securities only at prices
lower than if such securities were more widely held. At times,
it may also be more difficult to determine the fair value of such
securities for purposes of computing the fund's net asset value.
While such private placements may often offer attractive
opportunities for investment not otherwise available on the open
market, the securities so purchased are often "restricted
securities," i.e., securities which cannot be sold to the
public without registration under the Securities Act of 1933 or
the availability of an exemption from registration (such as
Rules 144 or 144A), or which are "not readily marketable" because
they are subject to other legal or contractual delays in or
restrictions on resale.
The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and
legal expenses, and it may be difficult or impossible for the
fund to sell them promptly at an acceptable price. The fund may
have to bear the extra expense of registering such securities for
resale and the risk of substantial delay in effecting such
registration. Also market quotations are less readily available.
The judgment of Putnam Management may at times play a greater
role in valuing these securities than in the case of unrestricted
securities.
Generally speaking, restricted securities may be sold only to
qualified institutional buyers, or in a privately negotiated
transaction to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of
time and other conditions are met pursuant to an exemption from
registration, or in a public offering for which a registration
statement is in effect under the Securities Act of 1933. The
funds may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933 when selling restricted securities to the
public, and in such event the fund may be liable to purchasers of
such securities if the registration statement prepared by the
issuer, or the prospectus forming a part of it, is materially
inaccurate or misleading.
FUTURES CONTRACTS AND RELATED OPTIONS
Subject to applicable law the fund may invest without limit in
futures contracts and related options for hedging and non-hedging
purposes, such as to manage the effective duration of the fund's
portfolio or as a substitute for direct investment. A financial
futures contract sale creates an obligation by the seller to
deliver the type of financial instrument called for in the
contract in a specified delivery month for a stated price. A
financial futures contract purchase creates an obligation by the
purchaser to take delivery of the type of financial instrument
called for in the contract in a specified delivery month at a
stated price. The specific instruments delivered or taken,
respectively, at settlement date are not determined until on or
near that date. The determination is made in accordance with the
rules of the exchange on which the futures contract sale or
purchase was made. Futures contracts are traded in the United
States only on commodity exchanges or boards of trade -- known as
"contract markets" -- approved for such trading by the Commodity
Futures Trading Commission (the "CFTC"), and must be executed
through a futures commission merchant or brokerage firm which is
a member of the relevant contract market.
Although futures contracts (other than index futures) by their
terms call for actual delivery or acceptance of commodities or
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific
type of financial instrument or commodity with the same delivery
date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid
the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale,
the seller realizes a loss. If the fund is unable to enter into
a closing transaction, the amount of the fund's potential loss is
unlimited. The closing out of a futures contract purchase is
effected by the purchaser's entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price,
the purchaser realizes a gain, and if the purchase price exceeds
the offsetting sale price, he realizes a loss. In general, 40%
of the gain or loss arising from the closing out of a futures
contract traded on an exchange approved by the CFTC is treated as
short-term gain or loss, and 60% is treated as long-term gain or
loss.
Unlike when the fund purchases or sells a security, no price is
paid or received by the fund upon the purchase or sale of a
futures contract. Upon entering into a contract, the fund is
required to deposit with its custodian in a segregated account in
the name of the futures broker an amount of liquid assets. This
amount is known as "initial margin." The nature of initial
margin in futures transactions is different from that of margin
in security transactions in that futures contract margin does not
involve the borrowing of funds to finance the transactions.
Rather, initial margin is similar to a performance bond or good
faith deposit which is returned to the fund upon termination of
the futures contract, assuming all contractual obligations have
been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance
margin," to and from the broker (or the custodian) are made on a
daily basis as the price of the underlying security or commodity
fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to
the market." For example, when the fund has purchased a futures
contract on a security and the price of the underlying security
has risen, that position will have increased in value and the
fund will receive from the broker a variation margin payment
based on that increase in value. Conversely, when the fund has
purchased a security futures contract and the price of the
underlying security has declined, the position would be less
valuable and the fund would be required to make a variation
margin payment to the broker.
The fund may elect to close some or all of its futures positions
at any time prior to their expiration in order to reduce or
eliminate a hedge position then currently held by the fund. The
fund may close its positions by taking opposite positions which
will operate to terminate the fund's position in the futures
contracts. Final determinations of variation margin are then
made, additional cash is required to be paid by or released to
the fund, and the fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
The fund does not intend to purchase or sell futures or related
options for other than hedging purposes, if, as a result, the sum
of the initial margin deposits on the fund's existing futures and
related options positions and premiums paid for outstanding
options on futures contracts would exceed 5% of the fund's net
assets.
OPTIONS ON FUTURES CONTRACTS. The fund may purchase and write
call and put options on futures contracts it may buy or sell and
enter into closing transactions with respect to such options to
terminate existing positions. In return for the premium paid,
options on futures contracts give the purchaser the right to
assume a position in a futures contract at the specified option
exercise price at any time during the period of the option. The
fund may use options on futures contracts in lieu of writing or
buying options directly on the underlying securities or
purchasing and selling the underlying futures contracts. For
example, to hedge against a possible decrease in the value of its
portfolio securities, the fund may purchase put options or write
call options on futures contracts rather than selling futures
contracts. Similarly, the fund may purchase call options or
write put options on futures contracts as a substitute for the
purchase of futures contracts to hedge against a possible
increase in the price of securities which the fund expects to
purchase. Such options generally operate in the same manner as
options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option
may terminate his position by selling or purchasing an offsetting
option. There is no guarantee that such closing transactions can
be effected.
The fund will be required to deposit initial margin and
maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements
similar to those described above in connection with the
discussion of futures contracts.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.
Successful use of futures contracts by the fund is subject to
Putnam Management's ability to predict movements in various
factors affecting securities markets, including interest rates.
Compared to the purchase or sale of futures contracts, the
purchase of call or put options on futures contracts involves
less potential risk to the fund because the maximum amount at
risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of
a call or put option on a futures contract would result in a loss
to the fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the
hedged investments. The writing of an option on a futures
contract involves risks similar to those risks relating to the
sale of futures contracts.
The use of options and futures strategies also involves the risk
of imperfect correlation among movements in the prices of the
securities underlying the futures and options purchased and sold
by the fund, of the options and futures contracts themselves,
and, in the case of hedging transactions, of the securities which
are the subject of a hedge. The successful use of these
strategies further depends on the ability of Putnam Management to
forecast interest rates and market movements correctly.
There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render
certain market clearing facilities inadequate, and thereby result
in the institution by exchanges of special procedures which may
interfere with the timely execution of customer orders.
To reduce or eliminate a position held by the fund, the fund may
seek to close out such position. The ability to establish and
close out positions will be subject to the development and
maintenance of a liquid secondary market. It is not certain that
this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there
may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series
of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or
series of contracts or options) would cease to exist, although
outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms.
U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. U.S.
Treasury security futures contracts require the seller to
deliver, or the purchaser to take delivery of, the type of U.S.
Treasury security called for in the contract at a specified date
and price. Options on U.S. Treasury security futures contracts
give the purchaser the right in return for the premium paid to
assume a position in a U.S. Treasury security futures contract at
the specified option exercise price at any time during the period
of the option.
Successful use of U.S. Treasury security futures contracts by the
fund is subject to Putnam Management's ability to predict
movements in the direction of interest rates and other factors
affecting markets for debt securities. For example, if the fund
has sold U.S. Treasury security futures contracts in order to
hedge against the possibility of an increase in interest rates
which would adversely affect securities held in its portfolio,
and the prices of the fund's securities increase instead as a
result of a decline in interest rates, the fund will lose part or
all of the benefit of the increased value of its securities which
it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the fund
has insufficient cash, it may have to sell securities to meet
daily maintenance margin requirements at a time when it may be
disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for particular
securities. For example, if the fund has hedged against a
decline in the values of tax-exempt securities held by it by
selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its
tax-exempt securities decrease, the fund would incur losses on
both the Treasury security futures contracts written by it and
the tax-exempt securities held in its portfolio.
INDEX FUTURES CONTRACTS. An index futures contract is a contract
to buy or sell units of an index at a specified future date at a
price agreed upon when the contract is made. Entering into a
contract to buy units of an index is commonly referred to as
buying or purchasing a contract or holding a long position in the
index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short
position. A unit is the current value of the index. The fund
may enter into stock index futures contracts, debt index futures
contracts, or other index futures contracts appropriate to its
objective(s). The fund may also purchase and sell options on
index futures contracts.
For example, the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500") is composed of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500
assigns relative weightings to the common stocks included in the
Index, and the value fluctuates with changes in the market values
of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500
were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no
delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the
difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if
the fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150
and the S&P 500 is at $154 on that future date, the fund will
gain $2,000 (500 units x gain of $4). If the fund enters into a
futures contract to sell 500 units of the stock index at a
specified future date at a contract price of $150 and the S&P 500
is at $152 on that future date, the fund will lose $1,000 (500
units x loss of $2).
There are several risks in connection with the use by the fund of
index futures. One risk arises because of the imperfect
correlation between movements in the prices of the index futures
and movements in the prices of securities which are the subject
of the hedge. Putnam Management will, however, attempt to reduce
this risk by buying or selling, to the extent possible, futures
on indices the movements of which will, in its judgment, have a
significant correlation with movements in the prices of the
securities sought to be hedged.
Successful use of index futures by the fund is also subject to
Putnam Management's ability to predict movements in the direction
of the market. For example, it is possible that, where the fund
has sold futures to hedge its portfolio against a decline in the
market, the index on which the futures are written may advance
and the value of securities held in the fund's portfolio may
decline. If this occurred, the fund would lose money on the
futures and also experience a decline in value in its portfolio
securities. It is also possible that, if the fund has hedged
against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices
increase instead, the fund will lose part or all of the benefit
of the increased value of those securities it has hedged because
it will have offsetting losses in its futures positions. In
addition, in such situations, if the fund has insufficient cash,
it may have to sell securities to meet daily variation margin
requirements at a time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
index futures and the portion of the portfolio being hedged, the
prices of index futures may not correlate perfectly with
movements in the underlying index due to certain market
distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors
may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures
market are less onerous than margin requirements in the
securities market, and as a result the futures market may attract
more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the
imperfect correlation between movements in the index and
movements in the prices of index futures, even a correct forecast
of general market trends by Putnam Management may still not
result in a profitable position over a short time period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are
similar to options on securities except that options on index
futures give the purchaser the right, in return for the premium
paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during
the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the index
futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the
option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the index
on which the future is based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES
As an alternative to purchasing call and put options on index
futures, the fund may purchase and sell call and put options on
the underlying indices themselves. Such options would be used in
a manner identical to the use of options on index futures.
INDEX WARRANTS
The fund may purchase put warrants and call warrants whose values
vary depending on the change in the value of one or more
specified securities indices ("index warrants"). Index warrants
are generally issued by banks or other financial institutions and
give the holder the right, at any time during the term of the
warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying index at the
time of exercise. In general, if the value of the underlying
index rises above the exercise price of the index warrant, the
holder of a call warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference
between the value of the index and the exercise price of the
warrant; if the value of the underlying index falls, the holder
of a put warrant will be entitled to receive a cash payment from
the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The
holder of a warrant would not be entitled to any payments from
the issuer at any time when, in the case of a call warrant, the
exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than
the value of the underlying index. If the fund were not to
exercise an index warrant prior to its expiration, then the fund
would lose the amount of the purchase price paid by it for the
warrant.
The fund will normally use index warrants in a manner similar to
its use of options on securities indices. The risks of the
fund's use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options,
however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only
by the credit of the bank or other institution which issues the
warrant. Also, index warrants generally have longer terms than
index options. Although the fund will normally invest only in
exchange-listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit the
fund's ability to exercise the warrants at such time, or in such
quantities, as the fund would otherwise wish to do.
SHORT-TERM TRADING
In seeking the fund's objective(s), Putnam Management will buy or
sell portfolio securities whenever Putnam Management believes it
appropriate to do so. In deciding whether to sell a portfolio
security, Putnam Management does not consider how long the fund
has owned the security. From time to time the fund will buy
securities intending to seek short-term trading profits. A
change in the securities held by the fund is known as "portfolio
turnover" and generally involves some expense to the fund. This
expense may include brokerage commissions or dealer markups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities. If sales of
portfolio securities cause the fund to realize net short-term
capital gains, such gains will be taxable as ordinary income. 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 rate for a fiscal
year is the ratio of the lesser of purchases or sales of
portfolio securities to the monthly average of the value of
portfolio securities -- excluding securities whose maturities at
acquisition were one year or less. The fund's portfolio turnover
rate is not a limiting factor when Putnam Management considers a
change in the fund's portfolio.
SECURITIES LOANS
The fund may make secured loans of its portfolio securities, on
either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional
income. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of
the securities or possible loss of rights in the collateral
should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to
agreements requiring that the loans be continuously secured by
collateral consisting of cash or short-term debt obligations at
least equal at all times to the value of the securities on loan,
"marked-to-market" daily. The borrower pays to the fund an
amount equal to any dividends or interest received on securities
lent. The fund retains all or a portion of the interest received
on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with
respect to the loaned securities may pass to the borrower, the
fund retains the right to call the loans at any time on
reasonable notice, and it will do so to enable the fund to
exercise voting rights on any matters materially affecting the
investment. The fund may also call such loans in order to sell
the securities.
REPURCHASE AGREEMENTS
The fund may enter into repurchase agreements. A repurchase
agreement is a contract under which the fund acquires a security
for a relatively short period (usually not more than one week)
subject to the obligation of the seller to repurchase and the
fund to resell such security at a fixed time and price
(representing the fund's cost plus interest). It is the fund's
present intention to enter into repurchase agreements only with
commercial banks and registered broker-dealers and only with
respect to obligations of the U.S. government or its agencies or
instrumentalities. Repurchase agreements may also be viewed as
loans made by the fund which are collateralized by the securities
subject to repurchase. Putnam Management will monitor such
transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total
amount of the repurchase obligation, including the interest
factor. If the seller defaults, the fund could realize a loss on
the sale of the underlying security to the extent that the
proceeds of the sale including accrued interest are less than the
resale price provided in the agreement including interest. In
addition, if the seller should be involved in bankruptcy or
insolvency proceedings, the fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal
and interest if the fund is treated as an unsecured creditor and
required to return the underlying collateral to the seller's
estate.
Pursuant to an exemptive order issued by the Securities and
Exchange Commission, the fund may transfer uninvested cash
balances into a joint account, along with cash of other Putnam
funds and certain other accounts. These balances may be invested
in one or more repurchase agreements and/or short-term money
market instruments.
RESTRICTED SECURITIES
The SEC Staff currently takes the view that any delegation by the
Trustees of the authority to determine that a restricted security
is readily marketable (as described in the investment
restrictions of the funds) must be pursuant to written procedures
established by the Trustees. It is the present intention of the
funds' Trustees that, if the Trustees decide to delegate such
determinations to Putnam Management or another person, they would
do so pursuant to written procedures, consistent with the Staff's
position. Should the Staff modify its position in the future,
the Trustees would consider what action would be appropriate in
light of the Staff's position at that time.
FORWARD COMMITMENTS
The fund may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time
("forward commitments") if the fund sets aside, on the books and
records of its custodian, liquid assets in an amount sufficient
to meet the purchase price, or if the fund enters into offsetting
contracts for the forward sale of other securities it owns. In
the case of to-be-announced ("TBA") purchase commitments, the
unit price and the estimated principal amount are established
when the fund enters into a contract, with the actual principal
amount being within a specified range of the estimate. Forward
commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in the value of the fund's other
assets. Where such purchases are made through dealers, the fund
relies on the dealer to consummate the sale. The dealer's
failure to do so may result in the loss to the fund of an
advantageous yield or price. Although the fund will generally
enter into forward commitments with the intention of acquiring
securities for its portfolio or for delivery pursuant to options
contracts it has entered into, the fund may dispose of a
commitment prior to settlement if Putnam Management deems it
appropriate to do so. The fund may realize short-term profits or
losses upon the sale of forward commitments.
The fund may enter into TBA sale commitments to hedge its
portfolio positions or to sell securities it owns under delayed
delivery arrangements. Proceeds of TBA sale commitments are not
received until the contractual settlement date. During the time
a TBA sale commitment is outstanding, equivalent deliverable
securities, or an offsetting TBA purchase commitment deliverable
on or before the sale commitment date, are held as "cover" for
the transaction. Unsettled TBA sale commitments are valued at
current market value of the underlying securities. If the TBA
sale commitment is closed through the acquisition of an
offsetting purchase commitment, the fund realizes a gain or loss
on the commitment without regard to any unrealized gain or loss
on the underlying security. If the fund delivers securities
under the commitment, the fund realizes a gain or loss from the
sale of the securities based upon the unit price established at
the date the commitment was entered into.
SWAP AGREEMENTS
The fund may enter into swap agreements and other types of over-
the-counter transactions with broker-dealers or other financial
institutions, in which its investment return will depend on the
change in value of a specified security or index. The fund would
typically receive from the counterparty the amount of any
increase, and pay to the counterparty the amount of any decrease,
in the value of the underlying security or index. The contracts
would thus, absent the failure of the counterparty to complete
its obligations, provide to the fund approximately the same
return as it would have realized if it had owned the security or
index directly.
The fund's ability to realize a profit from such transactions
will depend on the ability of the financial institutions with
which it enters into the transactions to meet their obligations
to the fund. Under certain circumstances, suitable transactions
may not be available to the fund, or the fund may be unable to
close out its position under such transactions at the same time,
or at the same price, as if it had purchased comparable publicly
traded securities.
DERIVATIVES
Certain of the instruments in which the fund may invest, such as
futures contracts, options and forward contracts, are considered
to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an
underlying asset, such as a security or an index. Further
information about these instruments and the risks involved in
their use is included elsewhere in the prospectus or in this SAI.
YEAR 2000
Like other financial and business organizations, the funds depend
on the proper function of their service providers' computer
systems. To the extent that the systems used by the funds or
their service providers cannot distinguish between the year 1900
and the year 2000 or have other operating difficulties as a
result of the year 2000, the operations of and services provided
to the funds and their shareholders could be adversely impacted.
Putnam Management and its affiliates have reported that each
expects to modify its systems, as necessary, to address this so-
called "year 2000 problem," and will, on behalf of the funds,
inquire as to the year 2000 compliance of the funds' other major
service providers. However, there can be no assurance that the
operations of and services provided to the funds and their
shareholders will not be adversely affected. Similarly,
companies in which the funds invest may also experience "year
2000 problems," which could ultimately result in losses to a fund
to the extent that the securities of any such company decline in
value as a result of a "year 2000 problem."
TAXESTAXES
TAXATION OF THE FUND. The fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order to
qualify for the special tax treatment accorded regulated
investment companies and their shareholders, the fund must, among
other things:
(a) Derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its
business of investing in such stock, securities, or currencies;
(b) distribute with respect to each taxable year at least 90% of
the sum of its taxable net investment income, its net tax-exempt
income, and the excess, if any, of net short-term capital gains
over net long-term capital losses for such year; and
(c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's
assets is represented by cash and cash items, U.S. government
securities, securities of other regulated investment companies,
and other securities limited in respect of any one issuer to a
value not greater than 5% of the value of the fund's total assets
and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any
one issuer or of two or more issuers which the fund controls and
which are engaged in the same, similar, or related trades or
businesses.
If the fund qualifies as a regulated investment company that is
accorded special tax treatment, the fund will not be subject to
federal income tax on income paid to its shareholders in the form
of dividends (including capital gain dividends).
If the fund failed to qualify as a regulated investment company
accorded special tax treatment in any taxable year, the fund
would be subject to tax on its taxable income at corporate rates,
and all distributions from earnings and profits, including any
distributions of net tax-exempt income and net long-term capital
gains, would be taxable to shareholders as ordinary income. In
addition, the fund could be required to recognize unrealized
gains, pay substantial taxes and interest and make substantial
distributions before requalifying as a regulated investment
company that is accorded special tax treatment.
If the fund fails to distribute in a calendar year substantially
all of its ordinary income for such year and substantially all of
its capital gain net income for the one-year period ending
October 31 (or later if the fund is permitted so to elect and so
elects), plus any retained amount from the prior year, the fund
will be subject to a 4% excise tax on the undistributed amounts.
A dividend paid to shareholders by the fund in January of a year
generally is deemed to have been paid by the fund on December 31
of the preceding year, if the dividend was declared and payable
to shareholders of record on a date in October, November or
December of that preceding year. The fund intends generally to
make distributions sufficient to avoid imposition of the 4%
excise tax.
FUND DISTRIBUTIONS. Distributions from the fund (other than
exempt-interest dividends, as discussed below) will be taxable to
shareholders as ordinary income to the extent derived from the
fund's investment income and net short-term gains. Pursuant to
the Taxpayer Relief Act of 1997, two different tax rates apply to
net capital gains (that is, the excess of net gains from capital
assets held more than one year over net losses from capital
assets held for not more than one year). One rate (generally
28%) applies to net gains on capital assets held for more than
one year but not more than 18 months ("28% gains") and a second,
preferred rate (generally 20%) applies to the balance of such net
capital gains ("20% gains"). Distributions of net capital gains
will be treated in the hands of shareholders as 28% gains to the
extent designated by the fund as deriving from net gains from
assets held for more than one year but not more than 18 months,
and the balance will be treated as 20% gains. Distributions of
28% gains and 20% gains will be taxable to shareholders as such,
regardless of how long a shareholder has held the shares in the
fund.
EXEMPT-INTEREST DIVIDENDS. The fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the
close of each quarter of the fund's taxable year, at least 50% of
the total value of the fund's assets consists of obligations the
interest on which is exempt from federal income tax.
Distributions that the fund properly designates as exempt-
interest dividends are treated as interest excludable from
shareholders' gross income for federal income tax purposes but
may be taxable for federal alternative minimum tax purposes and
for state and local purposes. If the fund intends to be
qualified to pay exempt-interest dividends, the fund may be
limited in its ability to enter into taxable transactions
involving forward commitments, repurchase agreements, financial
futures and options contracts on financial futures, tax-exempt
bond indices and other assets.
Part or all of the interest on indebtedness, if any, incurred or
continued by a shareholder to purchase or carry shares of a fund
paying exempt-interest dividends is not deductible. The portion
of interest that is not deductible is equal to the total interest
paid or accrued on the indebtedness, multiplied by the percentage
of the fund's total distributions (not including distributions
from net long-term capital gains) paid to the shareholder that
are exempt-interest dividends. Under rules used by the Internal
Revenue Service for determining when borrowed funds are
considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to
have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.
In general, exempt-interest dividends, if any, attributable to
interest received on certain private activity obligations and
certain industrial development bonds will not be tax-exempt to
any shareholders who are "substantial users" of the facilities
financed by such obligations or bonds or who are "related
persons" of such substantial users.
A fund which is qualified to pay exempt-interest dividends will
inform investors within 60 days of the fund's fiscal year-end of
the percentage of its income distributions designated as
tax-exempt. The percentage is applied uniformly to all
distributions made during the year. The percentage of income
designated as tax-exempt for any particular distribution may be
substantially different from the percentage of the fund's income
that was tax-exempt during the period covered by the
distribution.
HEDGING TRANSACTIONS. If the fund engages in hedging
transactions, including hedging transactions in options, futures
contracts, and straddles, or other similar transactions, it will
be subject to special tax rules (including constructive sale,
mark-to-market, straddle, wash sale, and short sale rules), the
effect of which may be to accelerate income to the fund, defer
losses to the fund, cause adjustments in the holding periods of
the fund's securities, convert long-term capital gains into short-
term capital gains or convert short-term capital losses into
long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
The fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best
interests of the fund.
Certain of the fund's hedging activities (including its
transactions, if any, in foreign currencies or foreign
currency-denominated instruments) are likely to produce a
difference between its book income and its taxable income. If
the fund's book income exceeds its taxable income, the
distribution (if any) of such excess will be treated as (i) a
dividend to the extent of the fund's remaining earnings and
profits (including earnings and profits arising from tax-exempt
income), (ii) thereafter as a return of capital to the extent of
the recipient's basis in the shares, and (iii) thereafter as gain
from the sale or exchange of a capital asset. If the fund's book
income is less than its taxable income, the fund could be
required to make distributions exceeding book income to qualify
as a regulated investment company that is accorded special tax
treatment.
RETURN OF CAPITAL DISTRIBUTIONS. If the fund makes a
distribution to you in excess of its current and accumulated
"earnings and profits" in any taxable year, the excess
distribution will be treated as a return of capital to the extent
of your tax basis in your shares, and thereafter as capital gain.
A return of capital is not taxable, but it reduces your tax basis
in your shares, thus reducing any loss or increasing any gain on
a subsequent taxable disposition by you of your shares.
Dividends and distributions on a fund's shares are generally
subject to federal income tax as described herein to the extent
they do not exceed the fund's realized income and gains, even
though such dividends and distributions may economically
represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares
purchased at a time when the fund's net asset value reflects
gains that are either unrealized, or realized but not
distributed.
SECURITIES ISSUED OR PURCHASED AT A DISCOUNT. The fund's
investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a
discount may) require the fund to accrue and distribute income
not yet received. In order to generate sufficient cash to make
the requisite distributions, the fund may be required to sell
securities in its portfolio that it otherwise would have
continued to hold.
CAPITAL LOSS CARRYOVER. Distributions from capital gains are
generally made after applying any available capital loss
carryovers. The amounts and expiration dates of any capital loss
carryovers available to the fund are shown in Note 1 (Federal
income taxes) to the financial statements included in Part I of
this SAI or incorporated by reference into this SAI.
FOREIGN CURRENCY-DENOMINATED SECURITIES AND RELATED HEDGING
TRANSACTIONS. The fund's transactions in foreign currencies,
foreign currency-denominated debt securities and certain foreign
currency options, futures contracts and forward contracts (and
similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the
value of the foreign currency concerned.
If more than 50% of the fund's assets at year end consists of the
securities of foreign corporations, the fund may elect to permit
shareholders to claim a credit or deduction on their income tax
returns for their pro rata portion of qualified taxes paid by the
fund to foreign countries in respect of foreign securities the
fund has held for at least the minimum period specified in the
Code. In such a case, shareholders will include in gross income
from foreign sources their pro rata shares of such taxes. A
shareholder's ability to claim a foreign tax credit or deduction
in respect of foreign taxes paid by the fund may be subject to
certain limitations imposed by the Code, as a result of which a
shareholder may not get a full credit or deduction for the amount
of such taxes. In particular, shareholders must hold their fund
shares (without protection from risk of loss) on the ex-dividend
date and for at least 15 additional days during the 30-day period
surrounding the ex-dividend date to be eligible to claim a
foreign tax credit with respect to a given dividend.
Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign
taxes.
Investment by the fund in "passive foreign investment companies"
could subject the fund to a U.S. federal income tax or other
charge on the proceeds from the sale of its investment in such a
company; however, this tax can be avoided by making an election
to mark such investments to market annually or to treat the
passive foreign investment company as a "qualified electing
fund."
A "passive foreign investment company" is any foreign
corporation: (i) 75 percent or more of the income of which for
the taxable year is passive income, or (ii) the average
percentage of the assets of which (generally by value, but by
adjusted tax basis in certain cases) that produce or are held for
the production of passive income is at least 50 percent.
Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties,
rents, annuities, the excess of gains over losses from certain
property transactions and commodities transactions, and foreign
currency gains. Passive income for this purpose does not include
rents and royalties received by the foreign corporation from
active business and certain income received from related persons.
SALE OR REDEMPTION OF SHARES. The sale, exchange or redemption
of fund shares may give rise to a gain or loss. In general, any
gain realized upon a taxable disposition of shares will be
treated as 28% gains if the shares have been held for more than
12 months but not more than 18 months, and as 20% gains if the
shares have been held for more than 18 months. Otherwise the
gain on the sale, exchange or redemption of fund shares will be
treated as short-term capital gain. In general, any loss
realized upon a taxable disposition of shares will be treated as
long-term loss if the shares have been held for more than 12
months, and otherwise as short-term capital loss. However, if a
shareholder sells shares at a loss within six months of purchase,
any loss will be disallowed for Federal income tax purposes to
the extent of any exempt-interest dividends received on such
shares. In addition, any loss (not already disallowed as
provided in the preceding sentence) realized upon a taxable
disposition of shares held for six months or less will be treated
as long-term, rather than short-term, to the extent of any long-
term capital gain distributions received by the shareholder with
respect to the shares. All or a portion of any loss realized
upon a taxable disposition of fund shares will be disallowed if
other shares of the same fund are purchased within 30 days before
or after the disposition. In such a case, the basis of the newly
purchased shares will be adjusted to reflect the disallowed loss.
SHARES PURCHASED THROUGH TAX-QUALIFIED PLANS. Special tax rules
apply to investments though defined contribution plans and other
tax-qualified plans. Shareholders should consult their tax
adviser to determine the suitability of shares of a fund as an
investment through such plans and the precise effect of an
investment on their particular tax situation.
BACKUP WITHHOLDING. The fund generally is required to withhold
and remit to the U.S. Treasury 31% of the taxable dividends and
other distributions paid to any individual shareholder who fails
to furnish the fund with a correct taxpayer identification number
(TIN), who has under-reported dividends or interest income, or
who fails to certify to the fund that he or she is not subject to
such withholding.
The Internal Revenue Service recently revised its regulations
affecting the application to foreign investors of the back-up
withholding and withholding tax rules described above. The new
regulations will generally be effective for payments made after
December 31, 1999 (although transition rules will apply). In
some circumstances, the new rules will increase the certification
and filing requirements imposed on foreign investors in order to
qualify for exemption from the 31% back-up withholding tax rates
under income tax treaties. Foreign investors in a fund should
consult their tax advisors with respect to the potential
application of these new regulations.
MANAGEMENTMANAGEMENT
TRUSTEES NAME (AGE)
*+GEORGE PUTNAM (72) , Chairman and President. Chairman
and Director of Putnam Management and Putnam Mutual Funds.
Director, Freeport Copper and Gold, Inc. (a mining and natural
resource company), Houghton Mifflin Company (a major publishing
company) and Marsh & McLennan Companies, Inc.
JOHN A. HILL (56) , Vice Chairman. Chairman and Managing
Director, First Reserve Corporation (a registered investment
adviser investing in companies in the world-wide energy industry
on behalf of institutional investors). Director of Snyder Oil
Corporation, TransMontaigne Oil Company, Weatherford Enterra,
Inc. (an oil field service company) and various private companies
owned by First Reserve Corporation, such as James River Coal and
Anker Coal Corporation, and various First Reserve Funds, such as
American Gas & Oil Investors, Ltd., AmGO II, L.P., First Reserve
Secured Energy Assets Fund, L.P., First Reserve Fund V., L.P.,
First Reserve Fund VI, L.P., and First Reserve Fund VII, L.P.
+WILLIAM F. POUNDS (70), Vice Chairman. Professor Emeritus of
Management, Alfred P. Sloan School of Management, Massachusetts
Institute of Technology. Director of IDEXX Laboratories, Inc. (a
provider of diagnostic products and services for the animal
health and food and environmental industries), Management
Sciences for Health, Inc. (a non-profit organization), and Sun
Company, Inc. (a petroleum refining and marketing company).
JAMESON A. BAXTER (55) , Trustee. President, Baxter
Associates, Inc. (a management and financial consulting firm).
Director of Avondale Federal Savings Bank, ASHTA Chemicals, Inc.
and Banta Corporation (printing and digital imaging). Chairman
Emeritus of the Board of Trustees, Mount Holyoke College.
+HANS H. ESTIN (70) , Trustee. Chartered Financial Analyst
and Vice Chairman, North American Management Corp. (a registered
investment adviser).
RONALD J. JACKSON (54) , Trustee. Former Chairman,
President and Chief Executive Officer of Fisher-Price, Inc. (a
major toy manufacturer).
* PAUL L. JOSKOW (51), Trustee. Professor Emeritus of
Economics and Management and former Chairman of the Department of
Economics, Massachusetts Institute of Technology. Director, New
England Electric System (a public utility holding company), State
Farm Indemnity Company (an automobile insurance company) and
Whitehead Institute for Biomedical Research (a non-profit
research institution).
ELIZABETH T. KENNAN (60) , Trustee. President Emeritus and
Professor, Mount Holyoke College. Director, Bell Atlantic (a
telecommunications company), the Kentucky Home Life Insurance
Companies, NYNEX Corporation, Northeast Utilities and Talbots (a
distributor of women's apparel).
*LAWRENCE J. LASSER (55) , Trustee and Vice President.
President, Chief Executive Officer and Director of Putnam
Investments, Inc. and Putnam Investment Management, Inc.
Director of Marsh & McLennan Companies, Inc. and the United Way
of Massachusetts Bay.
JOHN H. MULLIN, III (57) , Trustee. Chairman and CEO of
Ridgeway Farm, Director of ACX Technologies, Inc. (a company
engaged in the manufacture of industrial ceramics and packaging
products), Alex. Brown Realty, Inc. and The Liberty Corporation
(a company engaged in the life insurance and broadcasting
industries).
+ROBERT E. PATTERSON (53) , Trustee. President and Trustee
of Cabot Industrial Trust (a publicly traded real estate
investment trust). Director of Brandywine Trust Company.
*DONALD S. PERKINS (71), Trustee. Director of various
corporations, including AON Corp. (an insurance company), Cummins
Engine Company, Inc. (an engine and power generator manufacturer
and assembler), Parsons Group L.L.C. (a corporation providing
financial staffing services), LaSalle Street Fund, Inc. and
LaSalle U.S. Realty Income and Growth Fund, Inc. (real estate
investment trusts), Lucent Technologies Inc. (a global provider
of telecommunications equipment), Nanophase Technologies Inc. (a
producer of nano crystalline materials), Ryerson Tull, Inc.
(America's largest steel service corporation) and Springs
Industries, Inc. (a textile manufacturer).
* GEORGE PUTNAM III (47) , Trustee. President, New
Generation Research, Inc. (a publisher of financial advisory and
other research services relating to bankrupt and distressed
companies) and New Generation Advisers, Inc. (a registered
investment adviser). Director, Massachusetts Audubon Society and
The Boston Family Office, L.L.C. (a registered investment
advisor).
*A.J.C. SMITH (64), Trustee. Chairman and Chief Executive
Officer, Marsh & McLennan Companies, Inc. Director, Trident
Partnership (a $667 million 10-year limited partnership with over
30 institutional investors).
W. THOMAS STEPHENS (56) , Trustee. President and Chief
Executive Officer of MacMillan Bloedel Ltd. (a major forest
products company). Director, Qwest Communications (a fiber
optics manufacturer) and New Century Energies (a public utility
company).
W. NICHOLAS THORNDIKE (65) , Trustee. Director of various
corporations and charitable organizations, including Courier
Corporation (a book manufacturer), Data General Corporation (a
provider of customized computer solutions), Bradley Real Estate,
Inc., and Providence Journal Co.
OFFICERS NAME (AGE)
CHARLES E. PORTER (60) , Executive Vice President.
Managing Director of Putnam Investments, Inc. and Putnam
Management.
PATRICIA C. FLAHERTY (51) , Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Management.
WILLIAM N. SHIEBLER (56) , Vice President. Director and
Senior Managing Director of Putnam Investments, Inc. President
and Director of Putnam Mutual Funds.
GORDON H. SILVER (51) , Vice President. Director and
Senior Managing Director of Putnam Investments, Inc. and Putnam
Management.
BRETT C. BROWCHUK (35), Managing Director of Putnam Management.
Prior to April, 1994, Mr. Browchuk was Managing Director at
Fidelity Investments.
IAN C. FERGUSON (41) , Vice President. Senior Managing
Director of Putnam Investments, Inc. and Putnam Management.
JOHN R. VERANI (59) , Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Management.
JOHN D. HUGHES (63) , Senior Vice President and Treasurer.
BEVERLY MARCUS (54) , Clerk and Assistant Treasurer.
*Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund,
Putnam Management or Putnam Mutual Funds.
Messrs. Putnam, Lasser and Smith are deemed "interested
persons" by virtue of their positions as officers or shareholders
of the fund, or directors of Putnam Management, Putnam Mutual
Funds, or Marsh & McLennan Companies, Inc., the parent company of
Putnam Management and Putnam Mutual Funds.
Mr. George Putnam, III, Mr. Putnam ' s son, is also an
"interested person" of the fund, Putnam Management, and Putnam
Mutual Funds. Mr. Perkins may be deemed to be an "interested
person" of the fund because of his service as a director of a
certain publicly held company that includes registered broker-
dealer firms among its subsidiaries. Neither the fund nor any of
the other Putnam funds currently engages in any transactions with
such firms except that certain of such firms act as dealers in
the retail sale of shares of certain Putnam funds in the ordinary
course of their business. Mr. Joskow is not currently an
"interested person" of the fund but could be deemed by the
Securities and Exchange Commission to be an "interested person"
on account of his prior consulting relationship with National
Economic Research Associates, Inc., a wholly-owned subsidiary of
Marsh & McLennan Companies, Inc., which was terminated as of
August 31, 1998. The remaining Trustees are not "interested
persons."
+Members of the Executive Committee of the Trustees. The
Executive Committee meets between regular meetings of the
Trustees as may be required to review investment matters and
other affairs of the fund and may exercise all of the powers of
the Trustees.
-----------------
Certain other officers of Putnam Management are officers of the
fund. SEE "ADDITIONAL OFFICERS" IN PART I OF THIS SAI. The
mailing address of each of the officers and Trustees is One Post
Office Square, Boston, Massachusetts 02109.
Except as stated below, the principal occupations of the officers
and Trustees for the last five years have been with the employers
as shown above, although in some cases they have held different
positions with such employers. Prior to July, 1998, Mr. Joskow
was Chairman of the Department of Economics, Massachusetts
Institute of Technology, and , prior to September, 1998, he
was a consultant to National Economic Research Associates
. Prior to June, 1995, Ms. Kennan was President of Mount
Holyoke College. Prior to 1996, Mr. Stephens was Chairman of the
Board of Directors, President and Chief Executive Officer of
Johns Manville Corporation. Prior to April, 1996, Mr. Ferguson
was CEO at Hong Kong Shanghai Banking Corporation. Prior to
February, 1998, Mr. Patterson was Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership.
Each Trustee of the fund receives an annual fee and an additional
fee for each Trustees' meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings and for special services rendered
in that connection. All of the Trustees are Trustees of all the
Putnam funds and each receives fees for his or her services. FOR
DETAILS OF TRUSTEES' FEES PAID BY THE FUND AND INFORMATION
CONCERNING RETIREMENT GUIDELINES FOR THE TRUSTEES, SEE "CHARGES
AND EXPENSES" IN PART I OF THIS SAI.
The Agreement and Declaration of Trust of the fund provides that
the fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the
fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in
the best interests of the fund or that such indemnification would
relieve any officer or Trustee of any liability to the fund or
its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. The
fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
PUTNAM MANAGEMENT AND ITS AFFILIATES
Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced
portfolio managers and research analysts selects securities and
constantly supervises the fund's portfolio. By pooling an
investor's money with that of other investors, a greater variety
of securities can be purchased than would be the case
individually; the resulting diversification helps reduce
investment risk. Putnam Management has been managing mutual funds
since 1937. Today, the firm serves as the investment manager for
the funds in the Putnam Family, with nearly $182 billion in
assets in over 9 million shareholder accounts at December 31,
1997. An affiliate, The Putnam Advisory Company, Inc., manages
domestic and foreign institutional accounts and mutual funds,
including the accounts of many Fortune 500 companies. Another
affiliate, Putnam Fiduciary Trust Company, provides investment
advice to institutional clients under its banking and fiduciary
powers. At December 31, 1997, Putnam Management and its
affiliates managed over $235 billion in assets, including over
$19 billion in tax-exempt securities and over $57 billion in
retirement plan assets.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are, except for a minority stake owned by employees,
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.
Trustees and officers of the fund who are also officers of Putnam
Management or its affiliates or who are stockholders of Marsh &
McLennan Companies, Inc. will benefit from the advisory fees,
sales commissions, distribution fees, custodian fees and transfer
agency fees paid or allowed by the fund.
THE MANAGEMENT CONTRACT
Under a Management Contract between the fund and Putnam
Management, subject to such policies as the Trustees may
determine, Putnam Management, at its expense, furnishes
continuously an investment program for the fund and makes
investment decisions on behalf of the fund. Subject to the
control of the Trustees, Putnam Management also manages,
supervises and conducts the other affairs and business of the
fund, furnishes office space and equipment, provides bookkeeping
and clerical services (including determination of the fund's net
asset value, but excluding shareholder accounting services) and
places all orders for the purchase and sale of the fund's
portfolio securities. Putnam Management may place fund portfolio
transactions with broker-dealers which furnish Putnam Management,
without cost to it, certain research, statistical and quotation
services of value to Putnam Management and its affiliates in
advising the fund and other clients. In so doing, Putnam
Management may cause the fund to pay greater brokerage
commissions than it might otherwise pay.
FOR DETAILS OF PUTNAM MANAGEMENT'S COMPENSATION UNDER THE
MANAGEMENT CONTRACT, SEE "CHARGES AND EXPENSES" IN PART I OF THIS
SAI. Putnam Management's compensation under the Management
Contract may be reduced in any year if the fund's expenses exceed
the limits on investment company expenses imposed by any statute
or regulatory authority of any jurisdiction in which shares of
the fund are qualified for offer or sale. The term "expenses" is
defined in the statutes or regulations of such jurisdictions, and
generally excludes brokerage commissions, taxes, interest,
extraordinary expenses and, if the fund has a distribution plan,
payments made under such plan.
Under the Management Contract, Putnam Management may reduce its
compensation to the extent that the fund's expenses exceed such
lower expense limitation as Putnam Management may, by notice to
the fund, declare to be effective. The expenses subject to this
limitation are exclusive of brokerage commissions, interest,
taxes, deferred organizational and extraordinary expenses and, if
the fund has a distribution plan, payments required under such
plan. For the purpose of determining any such limitation on
Putnam Management's compensation, expenses of the fund shall not
reflect the application of commissions or cash management credits
that may reduce designated fund expenses. THE TERMS OF ANY
EXPENSE LIMITATION FROM TIME TO TIME IN EFFECT ARE DESCRIBED IN
THE PROSPECTUS AND/OR PART I OF THIS SAI.
In addition to the fee paid to Putnam Management, the fund
reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their assistants who
provide certain administrative services for the fund and the
other Putnam funds, each of which bears an allocated share of the
foregoing costs. The aggregate amount of all such payments and
reimbursements is determined annually by the Trustees.
THE AMOUNT OF THIS REIMBURSEMENT FOR THE FUND'S MOST RECENT
FISCAL YEAR IS INCLUDED IN "CHARGES AND EXPENSES" IN PART I OF
THIS SAI. Putnam Management pays all other salaries of officers
of the fund. The fund pays all expenses not assumed by Putnam
Management including, without limitation, auditing, legal,
custodial, investor servicing and shareholder reporting expenses.
The fund pays the cost of typesetting for its prospectuses and
the cost of printing and mailing any prospectuses sent to its
shareholders. Putnam Mutual Funds pays the cost of printing and
distributing all other prospectuses.
The Management Contract provides that Putnam Management shall not
be subject to any liability to the fund or to any shareholder of
the fund for any act or omission in the course of or connected
with rendering services to the fund in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties on the part of Putnam Management.
The Management Contract may be terminated without penalty by vote
of the Trustees or the shareholders of the fund, or by Putnam
Management, on 30 days' written notice. It may be amended only
by a vote of the shareholders of the fund. The Management
Contract also terminates without payment of any penalty in the
event of its assignment. The Management Contract provides that
it will continue in effect only so long as such continuance is
approved at least annually by vote of either the Trustees or the
shareholders, and, in either case, by a majority of the Trustees
who are not "interested persons" of Putnam Management or the
fund. In each of the foregoing cases, the vote of the
shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940.
PERSONAL INVESTMENTS BY EMPLOYEES OF PUTNAM MANAGEMENT
Employees of Putnam Management are permitted to engage in
personal securities transactions, subject to requirements and
restrictions set forth in Putnam Management's Code of Ethics.
The Code of Ethics contains provisions and requirements designed
to identify and address certain conflicts of interest between
personal investment activities and the interests of investment
advisory clients such as the funds. Among other things, the Code
of Ethics, consistent with standards recommended by the
Investment Company Institute's Advisory Group on Personal
Investing, prohibits certain types of transactions absent prior
approval, imposes time periods during which personal transactions
may not be made in certain securities, and requires the
submission of duplicate broker confirmations and quarterly
reporting of securities transactions. Additional restrictions
apply to portfolio managers, traders, research analysts and
others involved in the investment advisory process. Exceptions
to these and other provisions of the Code of Ethics may be
granted in particular circumstances after review by appropriate
personnel.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. Investment decisions for the fund and for
the other investment advisory clients of Putnam Management and
its affiliates are made with a view to achieving their respective
investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular
client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or
sold for other clients at the same time. Likewise, a particular
security may be bought for one or more clients when one or more
other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously
purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged
as to price and allocated between such clients in a manner which
in Putnam Management's opinion is equitable to each and in
accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on
other clients.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock
exchanges, commodities markets and futures markets and other
agency transactions involve the payment by the fund of negotiated
brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the
transaction. Transactions in foreign investments often involve
the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated
commission in the case of securities traded in the
over-the-counter markets, but the price paid by the fund usually
includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the fund includes a
disclosed, fixed commission or discount retained by the
underwriter or dealer. It is anticipated that most purchases and
sales of securities by funds investing primarily in tax-exempt
securities and certain other fixed-income securities will be with
the issuer or with underwriters of or dealers in those
securities, acting as principal. Accordingly, those funds would
not ordinarily pay significant brokerage commissions with respect
to securities transactions. SEE "CHARGES AND EXPENSES" IN PART I
OF THIS SAI FOR INFORMATION CONCERNING COMMISSIONS PAID BY THE
FUND.
It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other
institutional investors to receive brokerage and research
services (as defined in the Securities Exchange Act of 1934, as
amended (the "1934 Act")) from broker-dealers that execute
portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements.
Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from
many broker-dealers with which Putnam Management places the
fund's portfolio transactions and from third parties with which
these broker-dealers have arrangements. These services include
such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as
to the purchase and sale of investments, newspapers, magazines,
pricing services, quotation services, news services and personal
computers utilized by Putnam Management's managers and analysts.
Where the services referred to above are not used exclusively by
Putnam Management for research purposes, Putnam Management, based
upon its own allocations of expected use, bears that portion of
the cost of these services which directly relates to their
non-research use. Some of these services are of value to Putnam
Management and its affiliates in advising various of their
clients (including the fund), although not all of these services
are necessarily useful and of value in managing the fund. The
management fee paid by the fund is not reduced because Putnam
Management and its affiliates receive these services even though
Putnam Management might otherwise be required to purchase some of
these services for cash.
Putnam Management places all orders for the purchase and sale of
portfolio investments for the fund and buys and sells investments
for the fund through a substantial number of brokers and dealers.
In so doing, Putnam Management uses its best efforts to obtain
for the fund the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable
price and execution, Putnam Management, having in mind the fund's
best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Management Contract, Putnam Management may cause the fund to pay
a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to Putnam Management an amount of
disclosed commission for effecting securities transactions on
stock exchanges and other transactions for the fund on an agency
basis in excess of the commission which another broker-dealer
would have charged for effecting that transaction. Putnam
Management's authority to cause the fund to pay any such greater
commissions is also subject to such policies as the Trustees may
adopt from time to time. Putnam Management does not currently
intend to cause the fund to make such payments. It is the
position of the staff of the Securities and Exchange Commission
that Section 28(e) does not apply to the payment of such greater
commissions in "principal" transactions. Accordingly Putnam
Management will use its best effort to obtain the most favorable
price and execution available with respect to such transactions,
as described above.
The Management Contract provides that commissions, fees,
brokerage or similar payments received by Putnam Management or an
affiliate in connection with the purchase and sale of portfolio
investments of the fund, less any direct expenses approved by the
Trustees, shall be recaptured by the fund through a reduction of
the fee payable by the fund under the Management Contract.
Putnam Management seeks to recapture for the fund soliciting
dealer fees on the tender of the fund's portfolio securities in
tender or exchange offers. Any such fees which may be recaptured
are likely to be minor in amount.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most
favorable price and execution available and such other policies
as the Trustees may determine, 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 to execute portfolio transactions for the fund.
PRINCIPAL UNDERWRITER
Putnam Mutual Funds is the principal underwriter of shares of the
fund and the other continuously offered Putnam funds. Putnam
Mutual Funds is not obligated to sell any specific amount of
shares of the fund and will purchase shares for resale only
against orders for shares. SEE "CHARGES AND EXPENSES" IN PART I
OF THIS SAI FOR INFORMATION ON SALES CHARGES AND OTHER PAYMENTS
RECEIVED BY PUTNAM MUTUAL FUNDS.
INVESTOR SERVICING AGENT AND CUSTODIAN
Putnam Investor Services, a division of Putnam Fiduciary Trust
Company ("PFTC"), is the fund's investor servicing agent
(transfer, plan and dividend disbursing agent), for which it
receives fees which are paid monthly by the fund as an expense of
all its shareholders. The fee paid to Putnam Investor Services
is determined on the basis of the number of shareholder accounts,
the number of transactions and the assets of the fund. Putnam
Investor Services won the DALBAR Quality Tested Service Seal in
1990, 1991, 1992, 1993, 1994, 1995 and 1997. Over 10,000 tests
of 38 separate shareholder service components demonstrated that
Putnam Investor Services tied for highest scores, with two other
mutual fund companies, in all categories.
PFTC is the custodian of the fund's assets. In carrying out its
duties under its custodian contract, PFTC may employ one or more
subcustodians whose responsibilities include safeguarding and
controlling the fund's cash and securities, handling the receipt
and delivery of securities and collecting interest and dividends
on the fund's investments. PFTC and any subcustodians employed
by it have a lien on the securities of the fund (to the extent
permitted by the fund's investment restrictions) to secure
charges and any advances made by such subcustodians at the end of
any day for the purpose of paying for securities purchased by the
fund. The fund expects that such advances will exist only in
unusual circumstances. Neither PFTC nor any subcustodian
determines the investment policies of the fund or decides which
securities the fund will buy or sell. PFTC pays the fees and
other charges of any subcustodians employed by it. The fund may
from time to time pay custodial expenses in full or in part
through the placement by Putnam Management of the fund's
portfolio transactions with the subcustodians or with a third-
party broker having an agreement with the subcustodians. The
fund pays PFTC an annual fee based on the fund's assets,
securities transactions and securities holdings and reimburses
PFTC for certain out-of-pocket expenses incurred by it or any
subcustodian employed by it in performing custodial services.
SEE "CHARGES AND EXPENSES" IN PART I OF THIS SAI FOR INFORMATION
ON FEES AND REIMBURSEMENTS FOR INVESTOR SERVICING AND CUSTODY
RECEIVED BY PFTC. THE FEES MAY BE REDUCED BY CREDITS ALLOWED BY
PFTC.
DETERMINATION OF NET ASSET VALUEDETERMINATION OF NET ASSET VALUE
The fund determines the net asset value per share of each class
of shares once each day the New York Stock Exchange (the
"Exchange") is open. Currently, the Exchange is closed
Saturdays, Sundays and the following holidays: New Year's Day,
Rev. Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving
and Christmas. The fund determines net asset value as of the
close of regular trading on the Exchange, currently 4:00 p.m.
However, equity options held by the fund are priced as of the
close of trading at 4:10 p.m., and futures contracts on U.S.
government and other fixed-income securities and index options
held by the fund are priced as of their close of trading at 4:15
p.m.
Securities for which market quotations are readily available are
valued at prices which, in the opinion of Putnam Management, most
nearly represent the market values of such securities.
Currently, such prices are determined using the last reported
sale price or, if no sales are reported (as in the case of some
securities traded over-the-counter), the last reported bid price,
except that certain securities are valued at the mean between the
last reported bid and asked prices. Short-term investments
having remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following
procedures approved by the Trustees. Liabilities are deducted
from the total, and the resulting amount is divided by the number
of shares of the class outstanding.
Reliable market quotations are not considered to be readily
available for long-term corporate bonds and notes, certain
preferred stocks, tax-exempt securities, and certain foreign
securities. These investments are valued at fair value on the
basis of valuations furnished by pricing services, which
determine valuations for normal, institutional-size trading units
of such securities using methods based on market transactions for
comparable securities and various relationships between
securities which are generally recognized by institutional
traders.
If any securities held by the fund are restricted as to resale,
Putnam Management determines their fair value following
procedures approved by the Trustees. The fair value of such
securities is generally determined as the amount which the fund
could reasonably expect to realize from an orderly disposition of
such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary
from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of
the restrictions on disposition of the securities (including any
registration expenses that might be borne by the fund in
connection with such disposition). In addition, specific factors
are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of
the same class, the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any
available analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign
securities) is substantially completed each day at various times
prior to the close of the Exchange. The values of these
securities used in determining the net asset value of the fund's
shares are computed as of such times. Also, because of the
amount of time required to collect and process trading
information as to large numbers of securities issues, the values
of certain securities (such as convertible bonds, U.S. government
securities, and tax-exempt securities) are determined based on
market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange which will
not be reflected in the computation of the fund's net asset
value. If events materially affecting the value of such
securities occur during such period, then these securities will
be valued at their fair value following procedures approved by
the Trustees. In addition, securities held by some of the funds
may be traded in foreign markets that are open for business on
days that a fund is not, and the trading of such securities on
those days may have an impact on the value of a shareholder's
investment at a time when the shareholder cannot buy and sell
shares of the fund.
Money market funds generally value their portfolio securities at
amortized cost according to Rule 2a-7 under the Investment
Company Act of 1940.
HOW TO BUY SHARESHOW TO BUY SHARES
GENERAL
The prospectus contains a general description of how investors
may buy shares of the fund and states whether the fund offers
more than one class of shares. This SAI contains additional
information which may be of interest to investors.
Class A shares and class M shares are generally sold with a sales
charge payable at the time of purchase (except for class A shares
and class M shares of money market funds). As used in this SAI
and unless the context requires otherwise, the term "class A
shares" includes shares of funds that offer only one class of
shares. The prospectus contains a table of applicable sales
charges. For information about how to purchase class A or class
M shares of a Putnam fund at net asset value through an employer-
sponsored retirement plan, please consult your employer. Certain
purchases of class A shares and class M shares may be exempt from
a sales charge or, in the case of class A shares, may be subject
to a contingent deferred sales charge ("CDSC"). See "General--
Sales without sales charges or contingent deferred sales
charges," "Additional Information About Class A and Class M
shares," and "Contingent Deferred Sales Charges--Class A shares."
Class B shares and class C shares are sold subject to a CDSC
payable upon redemption within a specified period after purchase.
The prospectus contains a table of applicable CDSCs.
Class B shares will automatically convert into class A shares no
later than the end of the month eight years after the purchase
date, and may, in the discretion of the Trustees, convert to
class A shares earlier. Class B shares acquired by exchanging
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 reinvestment 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
condition that such conversions will not constitute taxable
events for Federal tax purposes.
Class Y shares, which are not subject to sales charges or a CDSC,
are available only to certain defined contribution plans. See
the prospectus that offers class Y shares for more information.
Certain purchase programs described below are not available to
defined contribution plans. Consult your employer for
information on how to purchase shares through your plan.
The fund is currently making a continuous offering of its shares.
The fund receives the entire net asset value of shares sold. The
fund will accept unconditional orders for shares to be executed
at the public offering price based on the net asset value per
share next determined after the order is placed. In the case of
class A shares and class M shares, the public offering price is
the net asset value plus the applicable sales charge, if any. No
sales charge is included in the public offering price of other
classes of shares. In the case of orders for purchase of shares
placed through dealers, the public offering price will be based
on the net asset value determined on the day the order is placed,
but only if the dealer receives the order before the close of
regular trading on the Exchange. If the dealer receives the
order after the close of the Exchange, the price will be based on
the net asset value next determined. If funds for the purchase
of shares are sent directly to Putnam Investor Services, they
will be invested at the public offering price based on the net
asset value next determined after receipt. Payment for shares of
the fund must be in U.S. dollars; if made by check, the check
must be drawn on a U.S. bank.
Initial and subsequent purchases must satisfy the minimums stated
in the prospectus, except that (i) individual investments under
certain employee benefit plans or Tax Qualified Retirement Plans
may be lower, (ii) persons who are already shareholders may make
additional purchases of $50 or more by sending funds directly to
Putnam Investor Services (see "Your investing account" below),
and (iii) for investors participating in systematic investment
plans and military allotment plans, the initial and subsequent
purchases must be $25 or more. Information about these plans is
available from investment dealers or from Putnam Mutual Funds.
As a convenience to investors, shares may be purchased through a
systematic investment plan. Pre-authorized monthly bank drafts
for a fixed amount (at least $25) are used to purchase fund
shares at the applicable public offering price next determined
after Putnam Mutual Funds receives the proceeds from the draft.
A shareholder may choose any day of the month and, if a given
month (for example, February) does not contain that particular
date, or if the date falls on a weekend or holiday, the draft
will be processed on the next business day. Further information
and application forms are available from investment dealers or
from Putnam Mutual Funds.
Except for funds that declare a distribution daily, distributions
to be reinvested are reinvested without a sales charge in shares
of the same class as of the ex-dividend date using the net asset
value determined on that date, and are credited to a
shareholder's account on the payment date. Dividends for Putnam
money market funds are credited to a shareholder's account on the
payment date. Distributions for all other funds that declare a
distribution daily are reinvested without a sales charge as of
the last day of the period for which distributions are paid using
the net asset value determined on that date, and are credited to
a shareholder's account on the payment date.
PAYMENT IN SECURITIES. In addition to cash, the fund may accept
securities as payment for fund shares at the applicable net asset
value. Generally, the fund will only consider accepting
securities to increase its holdings in a portfolio security, or
if Putnam Management determines that the offered securities are a
suitable investment for the fund and in a sufficient amount for
efficient management.
While no minimum has been established, it is expected that the
fund would not accept securities with a value of less than
$100,000 per issue as payment for shares. The fund may reject in
whole or in part any or all offers to pay for purchases of fund
shares with securities, may require partial payment in cash for
such purchases to provide funds for applicable sales charges, and
may discontinue accepting securities as payment for fund shares
at any time without notice. The fund will value accepted
securities in the manner described in the section "Determination
of Net Asset Value" for valuing shares of the fund. The fund
will only accept securities which are delivered in proper form.
The fund will not accept options or restricted securities as
payment for shares. The acceptance of securities by certain
funds in exchange for fund shares is subject to additional
requirements. For federal income tax purposes, a purchase of
fund shares with securities will be treated as a sale or exchange
of such securities on which the investor will generally realize a
taxable gain or loss. The processing of a purchase of fund
shares with securities involves certain delays while the fund
considers the suitability of such securities and while other
requirements are satisfied. For information regarding procedures
for payment in securities, contact Putnam Mutual Funds.
Investors should not send securities to the fund except when
authorized to do so and in accordance with specific instructions
received from Putnam Mutual Funds.
SALES WITHOUT SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES.
The fund may sell shares without a sales charge or CDSC to:
(i) current and retired Trustees of the fund; officers of
the fund; directors and current and retired U.S. full-time
employees of Putnam Management, Putnam Mutual Funds, their
parent corporations and certain corporate affiliates;
family members of and employee benefit plans for the
foregoing; and partnerships, trusts or other entities in
which any of the foregoing has a substantial interest;
(ii) employer-sponsored retirement plans, for the
repurchase of shares in connection with repayment of plan
loans made to plan participants (if the sum loaned was
obtained by redeeming shares of a Putnam fund sold with a
sales charge) (not offered by tax-exempt funds);
(iii) clients of administrators of tax-qualified employer-
sponsored retirement plans which have entered into
agreements with Putnam Mutual Funds (not offered by
tax-exempt funds);
(iv) registered representatives and other employees of
broker-dealers having sales agreements with Putnam Mutual
Funds; employees of financial institutions having sales
agreements with Putnam Mutual Funds or otherwise having an
arrangement with any such broker-dealer or financial
institution with respect to sales of fund shares; and
their spouses and children under age 21 (Putnam Mutual
Funds is regarded as the dealer of record for all such
accounts);
(v) investors meeting certain requirements who sold shares
of certain Putnam closed-end funds pursuant to a tender
offer by such closed-end fund;
(vi) a trust department of any financial institution
purchasing shares of the fund in its capacity as trustee
of any trust, if the value of the shares of the fund and
other Putnam funds purchased or held by all such trusts
exceeds $1 million in the aggregate; and
(vii) "wrap accounts" maintained for clients of broker-
dealers, financial institutions or financial
intermediaries who have entered into agreements with
Putnam Mutual Funds with respect to such accounts, which
in all cases shall be subject to a wrap fee economically
comparable to a sales charge. Fund shares offered
pursuant to this waiver may not be advertised as "no
load," or otherwise offered for sale at NAV without a wrap
fee.
In addition, the fund may issue its shares at net asset value
without an initial sales charge or a CDSC in connection with the
acquisition of substantially all of the securities owned by other
investment companies or personal holding companies, and the CDSC
will be waived on redemptions of shares arising out of death or
post-purchase 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. The fund may sell class M
shares at net asset value to members of qualified groups. See
"Group purchases of class A and class M shares" below. Class A
shares are available without an initial sales charge to eligible
employer-sponsored retirement plans, as described below.
PAYMENTS TO DEALERS. Putnam Mutual Funds may, at its expense,
pay concessions in addition to the payments disclosed in the
prospectus to dealers which satisfy certain criteria established
from time to time by Putnam Mutual Funds relating to increasing
net sales of shares of the Putnam funds over prior periods, and
certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A AND CLASS M SHARES
The underwriter's commission is the sales charge shown in the
prospectus less any applicable dealer discount. Putnam Mutual
Funds will give dealers ten days' notice of any changes in the
dealer discount. Putnam Mutual Funds retains the entire sales
charge on any retail sales made by it.
Putnam Mutual Funds offers several plans by which an investor may
obtain reduced sales charges on purchases of class A shares and
class M shares. The variations in sales charges reflect the
varying efforts required to sell shares to separate categories of
purchasers. These plans may be altered or discontinued at any
time.
The public offering price of class A and class M shares is the
net asset value plus a sales charge that varies depending on the
size of your purchase. The fund receives the net asset value.
The sales charge is allocated between your investment dealer and
Putnam Mutual Funds as shown in the following table, except when
Putnam Mutual Funds, in its discretion, allocates the entire
amount to your investment dealer.
For Growth Funds, Growth and Income Funds and Asset Allocation
Funds only:
CLASS A CLASS M
AMOUNT OF AMOUNT OF
SALES CHARGE SALES CHARGE SALES
CHARGE SALES CHARGE
AS A REALLOWED TO AS A
REALLOWED TO
PERCENTAGE DEALERS AS A
PERCENTAGE DEALERS AS A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE OF OF
OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE PRICE
OFFERING PRICE
- -----------------------------------------------------------------
- ----------------------------------------------------
Under 50,000 5.75% 5.00% 3.50% 3.00%
50,000 but under 100,000 4.50 3.75 2.50 2.00
100,000 but under 250,000 3.50 2.75 1.50 1.00
250,000 but under 500,000 2.50 2.00 1.00 1.00
500,000 but under 1,000,000 2.00 1.75 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- -----------------------------------------------------------------
- ----------------------------------------------------
For Income Funds only (except for Putnam U.S. Government Income
Fund and Putnam Preferred Income Fund:
CLASS A CLASS M
AMOUNT OF AMOUNT OF
SALES CHARGE SALES CHARGE SALES
CHARGE SALES CHARGE
AS A REALLOWED TO AS A
REALLOWED TO
PERCENTAGE DEALERS AS A
PERCENTAGE DEALERS AS A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE OF OF
OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE PRICE
OFFERING PRICE
- -----------------------------------------------------------------
- ---------------------------------------------------
Under 50,000 4.75% 4.25% 3.25% 3.00%
50,000 but under 100,000 4.50 4.00 2.25 2.00
100,000 but under 250,000 3.50 3.00 1.50 1.25
250,000 but under 500,000 2.50 2.25 1.00 1.00
500,000 but under 1,000,000 2.00 1.75 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- -----------------------------------------------------------------
- ----------------------------------------------------
For Putnam Intermediate U.S. Government Income Fund and Putnam
Preferred Income Fund only:
CLASS A CLASS M
AMOUNT OF AMOUNT OF
SALES CHARGE SALES CHARGE SALES
CHARGE SALES CHARGE
AS A REALLOWED TO AS A
REALLOWED TO
PERCENTAGE DEALERS AS A
PERCENTAGE DEALERS AS A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE OF OF
OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE PRICE
OFFERING PRICE
- -----------------------------------------------------------------
- --------------------------------------------------- -
Under 100,000 3.25% 3.00% 2.00% 1.80%
100,000 but under 250,000 2.50 2.25 1.50 1.30
250,000 but under 500,000 2.00 1.75 1.00 1.00
500,000 but under 1,000,000 1.50 1.25 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- -----------------------------------------------------------------
- ----------------------------------------------------
For Tax Free Funds only:
CLASS A ONLY
AMOUNT OF
SALES CHARGE SALES
CHARGE
AS A REALLOWED TO
PERCENTAGE DEALERS AS
A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE
OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE
- -----------------------------------------------------------------
- ----------------------------------------------------
Under 25,000 4.75% 4.50%
25,000 but under 100,000 4.50 4.25
100,000 but under 250,000 3.75 3.50
250,000 but under 500,000 3.00 2.75
500,000 but under 1,000,000 2.00 1.85
1,000,000 and above NONE NONE
- -----------------------------------------------------------------
- ----------------------------------------------------
COMBINED PURCHASE PRIVILEGE. The following persons may qualify
for the sales charge reductions or eliminations shown in the
prospectus by combining into a single transaction the purchase of
class A shares or class M shares with other purchases of any
class of shares:
(i) an individual, or a "company" as defined in Section
2(a)(8) of the Investment Company Act of 1940 (which
includes corporations which are corporate affiliates of
each other);
(ii) an individual, his or her spouse and their children
under twenty-one, purchasing for his, her or their own
account;
(iii) a trustee or other fiduciary purchasing for a single
trust estate or single fiduciary account (including a
pension, profit-sharing, or other employee benefit trust
created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code of 1986, as amended (the
"Code"));
(iv) tax-exempt organizations qualifying under Section
501(c)(3) of the Internal Revenue Code (not including tax-
exempt organizations qualifying under Section 403(b)(7) (a
"403(b) plan") of the Code; and
(v) employee benefit plans of a single employer or of
affiliated employers, other than 403(b) plans.
A combined purchase currently may also include shares of any
class of other continuously offered Putnam funds (other than
money market funds) purchased at the same time through a single
investment dealer, if the dealer places the order for such shares
directly with Putnam Mutual Funds.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A
purchaser of class A shares or class M shares may qualify for a
cumulative quantity discount by combining a current purchase (or
combined purchases as described above) with certain other shares
of any class of Putnam funds already owned. The applicable sales
charge is based on the total of:
(i) the investor's current purchase; and
(ii) the maximum public offering price (at the close of
business on the previous day) of:
(a) all shares held by the investor in all of the
Putnam funds (except money market funds); and
(b) any shares of money market funds acquired by
exchange from other Putnam funds; and
(iii) the maximum public offering price of all shares
described in paragraph (ii) owned by another shareholder
eligible to participate with the investor in a "combined
purchase" (see above).
To qualify for the combined purchase privilege or to obtain the
cumulative quantity discount on a purchase through an investment
dealer, when each purchase is made the investor or dealer must
provide Putnam Mutual Funds with sufficient information to verify
that the purchase qualifies for the privilege or discount. The
shareholder must furnish this information to Putnam Investor
Services when making direct cash investments.
STATEMENT OF INTENTION. Investors may also obtain the reduced
sales charges for class A shares or class M shares shown in the
prospectus for investments of a particular amount by means of a
written Statement of Intention, which expresses the investor's
intention to invest that amount (including certain "credits," as
described below) within a period of 13 months in shares of any
class of the fund or any other continuously offered Putnam fund
(excluding money market funds). Each purchase of class A shares
or class M shares under a Statement of Intention will be made at
the public offering price applicable at the time of such purchase
to a single transaction of the total dollar amount indicated in
the Statement of Intention. A Statement of Intention may include
purchases of shares made not more than 90 days prior to the date
that an investor signs a Statement; however, the 13-month period
during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.
An investor may receive a credit toward the amount indicated in
the Statement of Intention equal to the maximum public offering
price as of the close of business on the previous day of all
shares he or she owns on the date of the Statement of Intention
which are eligible for purchase under a Statement of Intention
(plus any shares of money market funds acquired by exchange of
such eligible shares). Investors do not receive credit for
shares purchased by the reinvestment of distributions. Investors
qualifying for the "combined purchase privilege" (see above) may
purchase shares under a single Statement of Intention.
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount, and must be invested immediately. Class A shares or
class M shares purchased with the first 5% of such amount will be
held in escrow to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount
indicated is not purchased. When the full amount indicated has
been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been
purchased, the shares will be released from escrow only if the
investor pays the sales charge that, without regard to the
Statement of Intention, would apply to the total investment made
to date.
To the extent that an investor purchases more than the dollar
amount indicated on the Statement of Intention and qualifies for
a further reduced sales charge, the sales charge will be adjusted
for the entire amount purchased at the end of the 13-month
period, upon recovery from the investor's dealer of its portion
of the sales charge adjustment. Once received from the dealer,
which may take a period of time or may never occur, the sales
charge adjustment will be used to purchase additional shares at
the then current offering price applicable to the actual amount
of the aggregate purchases. These additional shares will not be
considered as part of the total investment for the purpose of
determining the applicable sales charge pursuant to the Statement
of Intention. No sales charge adjustment will be made unless and
until the investor's dealer returns any excess commissions
previously received.
To the extent that an investor purchases less than the dollar
amount indicated on the Statement of Intention within the 13-
month period, the sales charge will be adjusted upward for the
entire amount purchased at the end of the 13-month period. This
adjustment will be made by redeeming shares from the account to
cover the additional sales charge, the proceeds of which will be
paid to the investor's dealer and Putnam Mutual Funds in
accordance with the prospectus. If the account exceeds an amount
that would otherwise qualify for a reduced sales charge, that
reduced sales charge will be applied.
Statements of Intention are not available for certain employee
benefit plans.
Statement of Intention forms may be obtained from Putnam Mutual
Funds or from investment dealers. Interested investors should
read the Statement of Intention carefully.
GROUP PURCHASES OF CLASS A AND CLASS M SHARES. Members of
qualified groups may purchase class A shares of the fund at a
group sales charge rate of 4.50% of the public offering price
(4.71% of the net amount invested). The dealer discount on such
sales is 3.75% of the offering price. Members of qualified
groups may also purchase class M shares at net asset value.
To receive the class A or class M group rate, group members must
purchase shares through a single investment dealer designated by
the group. The designated dealer must transmit each member's
initial purchase to Putnam Mutual Funds, together with payment
and completed application forms. After the initial purchase, a
member may send funds for the purchase of shares directly to
Putnam Investor Services. Purchases of shares are made at the
public offering price based on the net asset value next
determined after Putnam Mutual Funds or Putnam Investor Services
receives payment for the shares. The minimum investment
requirements described above apply to purchases by any group
member. Only shares purchased under the class A group discount
are included in calculating the purchased amount for the purposes
of these requirements.
Qualified groups include the employees of a corporation or a sole
proprietorship, members and employees of a partnership or
association, or other organized groups of persons (the members of
which may include other qualified groups) provided that: (i) the
group has at least 25 members of which, with respect to the class
A discount only, at least 10 members participate in the initial
purchase; (ii) the group has been in existence for at least six
months; (iii) the group has some purpose in addition to the
purchase of investment company shares at a reduced sales charge;
(iv) the group's sole organizational nexus or connection is not
that the members are credit card holders of a company, policy
holders of an insurance company, customers of a bank or
broker-dealer, clients of an investment adviser or security
holders of a company; (v) with respect to the class A discount
only, the group agrees to provide its designated investment
dealer access to the group's membership by means of written
communication or direct presentation to the membership at a
meeting on not less frequently than an annual basis; (vi) the
group or its investment dealer will provide annual certification
in form satisfactory to Putnam Investor Services that the group
then has at least 25 members and, with respect to the class A
discount only, that at least ten members participated in group
purchases during the immediately preceding 12 calendar months;
and (vii) the group or its investment dealer will provide
periodic certification in form satisfactory to Putnam Investor
Services as to the eligibility of the purchasing members of the
group.
Members of a qualified group include: (i) any group which meets
the requirements stated above and which is a constituent member
of a qualified group; (ii) any individual purchasing for his or
her own account who is carried on the records of the group or on
the records of any constituent member of the group as being a
good standing employee, partner, member or person of like status
of the group or constituent member; or (iii) any fiduciary
purchasing shares for the account of a member of a qualified
group or a member's beneficiary. For example, a qualified group
could consist of a trade association which would have as its
members individuals, sole proprietors, partnerships and
corporations. The members of the group would then consist of the
individuals, the sole proprietors and their employees, the
members of the partnerships and their employees, and the
corporations and their employees, as well as the trustees of
employee benefit trusts acquiring class A shares for the benefit
of any of the foregoing.
A member of a qualified group may, depending upon the value of
class A shares of the fund owned or proposed to be purchased by
the member, be entitled to purchase class A shares of the fund at
non-group sales charge rates shown in the prospectus which may be
lower than the group sales charge rate, if the member qualifies
as a person entitled to reduced non-group sales charges. Such a
group member will be entitled to purchase at the lower rate if,
at the time of purchase, the member or his or her investment
dealer furnishes sufficient information for Putnam Mutual Funds
or Putnam Investor Services to verify that the purchase qualifies
for the lower rate.
Interested groups should contact their investment dealer or
Putnam Mutual Funds. The fund reserves the right to revise the
terms of or to suspend or discontinue group sales at any time.
QUALIFIED BENEFIT PLANS; INDIVIDUAL ACCOUNT PLANS. The terms
"class A qualified benefit plan" and "class M qualified benefit
plan" mean any employer-sponsored plan or arrangement, whether or
not tax-qualified, for which Putnam Fiduciary Trust Company or
its affiliates provide recordkeeping or other services in
connection with the purchase of class A shares or class M shares,
respectively. The term "affiliated employer" means employers who
are affiliated with each other within the meaning of Section
2(a)(3)(C) of the Investment Company Act of 1940. The term
"individual account plan" means any employee benefit plan whereby
(i) class A shares are purchased through payroll deductions or
otherwise by a fiduciary or other person for the account of
participants who are employees (or their spouses) of an employer,
or of affiliated employers, and (ii) a separate investing account
is maintained in the name of such fiduciary or other person for
the account of each participant in the plan.
The table of sales charges in the prospectus applies to sales to
employer-sponsored retirement plans that are not class A
qualified benefit plans, except that the fund may sell class A
shares at net asset value to employee benefit plans, including
individual account plans, of employers or of affiliated employers
which have at least 750 employees to whom such plan is made
available, in connection with a payroll deduction system of plan
funding (or other system acceptable to Putnam Investor Services)
by which contributions or account information for plan
participation are transmitted to Putnam Investor Services by
methods acceptable to Putnam Investor Services. The fund may
also sell class A shares at net asset value to employer-sponsored
retirement plans that initially invest at least $1 million in the
fund or that have at least 200 eligible employees. In addition,
the fund may sell class M shares at net asset value to class M
qualified benefit plans.
An employer-sponsored retirement plan participating in a "multi-
fund" program approved by Putnam Mutual Funds may include amounts
invested in the other mutual funds participating in such program
for purposes of determining whether the plan may purchase class A
shares at net asset value based on the size of the purchase.
These investments will also be included for purposes of the
discount privileges and programs described above.
Additional information about qualified benefit plans and
individual account plans is available from investment dealers or
from Putnam Mutual Funds.
CONTINGENT DEFERRED SALES CHARGES; COMMISSIONS
CLASS A SHARES. Except as described below, a CDSC of 0.75%
(1.00% in the case of plans for which Putnam Mutual Funds and its
affiliates do not act as trustee or record-keeper) of the total
amount redeemed is imposed on redemptions of shares purchased by
class A qualified benefit plans if, within two years of a plan's
initial purchase of class A shares, it redeems 90% or more of its
cumulative purchases. Thereafter, such plan is no longer liable
for any CDSC. The two-year CDSC applicable to class A qualified
benefit plans for which Putnam Mutual Funds or its affiliates
serve as trustee or recordkeeper ("full service plans") is 0.50%
of the total amount redeemed, for full service plans that
initially invest at least $5 million but less than $10 million in
Putnam funds and other investments managed by Putnam Management
or its affiliates ("Putnam Assets"), and is 0.25% of the total
amount redeemed for full service plans that initially invest at
least $10 million but less than $20 million in Putnam Assets.
Class A qualified benefit plans that initially invest at least
$20 million in Putnam Assets, or whose dealer of record has, with
Putnam Mutual Funds' approval, waived its commission or agreed to
refund its commission to Putnam Mutual Funds in the event a CDSC
would otherwise be applicable, are not subject to any CDSC.
Similarly, class A shares purchased at net asset value by any
investor other than a class A qualified benefit plan, including
purchases pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, are subject to a CDSC of
1.00% or 0.50%, respectively, if redeemed within the first or
second year after purchase, unless the dealer of record waived
its commission with Putnam Mutual Funds' approval. The class A
CDSC is imposed on the lower of the cost and the current net
asset value of the shares redeemed.
Except as described below for sales to class A qualified benefit
plans, Putnam Mutual Funds pays investment dealers of record
commissions on sales of class A shares of $1 million or more and
sales to employer-sponsored benefit plans that have at least 200
eligible employees and that are not class A qualified benefit
plans based on cumulative purchases of such shares, including
purchases pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, during the one-year
period beginning with the date of the initial purchase at net
asset value. Each subsequent one-year measuring period for these
purposes will begin with the first net asset value purchase
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 class A qualified benefit plan,
Putnam Mutual Funds pays commissions to the dealer of record at
the time of the sale on net monthly purchases at the following
rates: 1.00% of the first $1 million, 0.75% of the next $1
million, 0.50% of the next $3 million, 0.20% of the next $5
million, 0.15% of the next $10 million, 0.10% of the next $10
million and 0.05% thereafter, except that commissions on sales to
class A qualified benefit plans initially investing less than $20
million in Putnam funds and other investments managed by Putnam
Management or its affiliates pursuant to a proposal made by
Putnam Mutual Funds on or before April 15, 1997 are based on
cumulative purchases over a one-year measuring period at the rate
of 1.00% of the first $2 million, 0.80% of the next $1 million,
and 0.50% thereafter. On sales at net asset value to all other
class A qualified benefit plans receiving proposals from Putnam
Mutual Funds on or before April 15, 1997, Putnam Mutual Funds
pays commissions on the initial investment and on subsequent net
quarterly sales (gross sales minus gross redemptions during the
quarter) at the rate of 0.15%. Money market fund shares are
excluded from all commission calculations, except for determining
the amount initially invested by a qualified benefit plan.
Commissions on sales at net asset value to such plans are subject
to Putnam Mutual Funds' right to reclaim such commissions if the
shares are redeemed within two years.
Different CDSC and commission rates may apply to shares purchased
prior to December 1, 1995.
ALL SHARES. Investors who set up an Automatic Cash Withdrawal
Plan ("ACWP") for a share account (see "Plans available to
shareholders -- Automatic Cash Withdrawal Plan") may withdraw
through the ACWP up to 12% of the net asset value of the account
(calculated as set forth below) each year without incurring any
CDSC. Shares not subject to a CDSC (such as shares representing
reinvestment of distributions) will be redeemed first and will
count toward the 12% limitation. If there are insufficient
shares not subject to a CDSC, shares subject to the lowest CDSC
liability will be redeemed next until the 12% limit is reached.
The 12% figure is calculated on a pro rata basis at the time of
the first payment made pursuant to an ACWP and recalculated
thereafter on a pro rata basis at the time of each ACWP payment.
Therefore, shareholders who have chosen an ACWP based on a
percentage of the net asset value of their account of up to 12%
will be able to receive ACWP payments without incurring a CDSC.
However, shareholders who have chosen a specific dollar amount
(for example, $100 per month from a fund that pays income
distributions monthly) for their periodic ACWP payment should be
aware that the amount of that payment not subject to a CDSC may
vary over time depending on the net asset value of their account.
For example, if the net asset value of the account is $10,000 at
the time of payment, the shareholder will receive $100 free of
the CDSC (12% of $10,000 divided by 12 monthly payments).
However, if at the time of the next payment the net asset value
of the account has fallen to $9,400, the shareholder will receive
$94 free of any CDSC (12% of $9,400 divided by 12 monthly
payments) and $6 subject to the lowest applicable CDSC. This
ACWP privilege may be revised or terminated at any time.
No CDSC is imposed on shares of any class subject to a CDSC
("CDSC Shares") to the extent that the CDSC Shares redeemed (i)
are no longer subject to the holding period therefor, (ii)
resulted from reinvestment of distributions on CDSC Shares, or
(iii) were exchanged for shares of another Putnam fund, provided
that the shares acquired in such exchange or subsequent exchanges
(including shares of a Putnam money market fund) will continue to
remain subject to the CDSC, if applicable, until the applicable
holding period expires. In determining whether the CDSC applies
to each redemption of CDSC Shares, CDSC Shares not subject to a
CDSC are redeemed first.
The fund will waive any CDSC on redemptions, in the case of
individual, joint or Uniform Transfers to Minors Act accounts, in
the event of death or post-purchase disability of a shareholder,
for the purpose of paying benefits pursuant to tax-qualified
retirement plans ("Benefit Payments"), or, in the case of living
trust accounts, in the event of the death or post-purchase
disability of the settlor of the trust). Benefit payments
currently include, without limitation, (1) distributions from an
IRA due to death or disability, (2) a return of excess
contributions to an IRA or 401(k) plan, and (3) distributions
from retirement plans qualified under Section 401(a) of the Code
or from a 403(b) plan due to death, disability, retirement or
separation from service. These waivers may be changed at any
time. Additional waivers may apply to IRA accounts opened prior
to February 1, 1994.
DISTRIBUTION PLANSDISTRIBUTION PLANS
If the fund or a class of shares of the fund has adopted a
distribution plan, the prospectus describes the principal
features of the plan. This SAI contains additional information
which may be of interest to investors.
Continuance of a plan is subject to annual approval by a vote of
the Trustees, including a majority of the Trustees who are not
interested persons of the fund and who have no direct or indirect
interest in the plan or related arrangements (the "Qualified
Trustees"), cast in person at a meeting called for that purpose.
All material amendments to a plan must be likewise approved by
the Trustees and the Qualified Trustees. No plan may be amended
in order to increase materially the costs which the fund may bear
for distribution pursuant to such plan without also being
approved by a majority of the outstanding voting securities of
the fund or the relevant class of the fund, as the case may be.
A plan terminates automatically in the event of its assignment
and may be terminated without penalty, at any time, by a vote of
a majority of the Qualified Trustees or by a vote of a majority
of the outstanding voting securities of the fund or the relevant
class of the fund, as the case may be.
Putnam Mutual Funds pays service fees to qualifying dealers at
the rates set forth in the prospectus, except with respect to
shares held by class A qualified benefit plans. Putnam Mutual
Funds pays service fees to the dealer of record for plans for
which Putnam Fiduciary Trust or its affiliates serve as trustee
and recordkeeper at the following annual rates (expressed as a
percentage of the average net asset value (as defined below) of
the plan's class A shares): 0.25% of the first $5 million, 0.20%
of the next $5 million, 0.15% of the next $10 million, 0.10% of
the next $30 million, and 0.05% thereafter. For class A
qualified benefit plans for which Putnam Fiduciary Trust Company
or its affiliates provide some services but do not act as trustee
and recordkeeper, Putnam Mutual Funds will pay service fees to
the dealer of record of up to 0.25% of average net assets,
depending on the level of service provided by Putnam Fiduciary
Trust Company or its affiliates, by the dealer of record, and by
third parties. Service fees are paid quarterly to the dealer of
record for that quarter.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
Except as otherwise agreed between Putnam Mutual Funds and a
dealer, for purposes of determining the amounts payable to
dealers for shareholder accounts for which such dealers are
designated as the dealer of record, "average net asset value"
means the product of (i) the average daily share balance in such
account(s) and (ii) the average daily net asset value of the
relevant class of shares over the quarter.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
INVESTOR SERVICESINVESTOR SERVICES
SHAREHOLDER INFORMATION
Each time shareholders buy or sell shares, they will receive a
statement confirming the transaction and listing their current
share balance. (Under certain investment plans, a statement may
only be sent quarterly.) Shareholders 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. To help shareholders take full advantage of
their Putnam investment, they will receive a Welcome Kit and a
periodic publication covering many topics of interest to
investors. The fund also sends annual and semiannual reports
that keep shareholders informed about its portfolio and
performance, and year-end tax information to simplify their
recordkeeping. Easy-to-read, free booklets on special subjects
such as the Exchange Privilege and IRAs are available from Putnam
Investor Services. Shareholders may call Putnam Investor
Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m.
and 7:00 p.m. Boston time for more information, including account
balances.
YOUR INVESTING ACCOUNT
The following information provides more detail concerning the
operation of a Putnam Investing Account. For further information
or assistance, investors should consult Putnam Investor Services.
Shareholders who purchase shares through a defined contribution
plan should note that not all of the services or features
described below may be available to them, and they should contact
their employer for details.
A shareholder may reinvest a cash distribution without a
front-end sales charge or without the reinvested shares being
subject to a CDSC, as the case may be, by delivering to Putnam
Investor Services the uncashed distribution check, endorsed to
the order of the fund. Putnam Investor Services must receive the
properly endorsed check within 1 year after the date of the
check.
The Investing Account also provides a way to accumulate shares of
the fund. In most cases, after an initial investment of $500, a
shareholder may send checks to Putnam Investor Services for $50
or more, made payable to the fund, to purchase additional shares
at the applicable public offering price next determined after
Putnam Investor Services receives the check. Checks must be
drawn on a U.S. bank and must be payable in U.S. dollars.
Putnam Investor Services acts as the shareholder's agent whenever
it receives instructions to carry out a transaction on the
shareholder's account. Upon receipt of instructions that shares
are to be purchased for a shareholder's account, shares will be
purchased through the investment dealer designated by the
shareholder. Shareholders may change investment dealers at any
time by written notice to Putnam Investor Services, provided the
new dealer has a sales agreement with Putnam Mutual Funds.
Shares credited to an account are transferable upon written
instructions in good order to Putnam Investor Services and may be
sold to the fund as described under "How do I sell fund shares?"
in the prospectus. Money market funds and certain other funds
will not issue share certificates. A shareholder may send to
Putnam Investor Services any certificates which have been
previously issued for safekeeping at no charge to the
shareholder.
Putnam Mutual Funds, at its expense, may provide certain
additional reports and administrative material to qualifying
institutional investors with fiduciary responsibilities to assist
these investors in discharging their responsibilities.
Institutions seeking further information about this service
should contact Putnam Mutual Funds, which may modify or terminate
this service at any time.
Putnam Investor Services may make special services available to
shareholders with investments exceeding $1,000,000. Contact
Putnam Investor Services for details.
The fund pays Putnam Investor Services' fees for maintaining
Investing Accounts.
REINSTATEMENT PRIVILEGE
An investor who has redeemed shares of the fund may reinvest
(within 1 year) the proceeds of such sale in shares of the same
class of the fund, or may be able to reinvest (within 1 year) the
proceeds in shares of the same class of one of the other
continuously offered Putnam funds (through the exchange privilege
described in the prospectus), including, in the case of shares
subject to a CDSC, the amount of CDSC charged on the redemption.
Any such reinvestment would be at the net asset value of the
shares of the fund(s) the investor selects, next determined after
Putnam Mutual Funds receives a Reinstatement Authorization. The
time that the previous investment was held will be included in
determining any applicable CDSC due upon redemptions and, in the
case of class B shares, the eight-year period for conversion to
class A shares. Shareholders will receive from Putnam Mutual
Funds the amount of any CDSC paid at the time of redemption as
part of the reinstated investment, which may be treated as
capital gains to the shareholder for tax purposes. Exercise of
the Reinstatement Privilege does not alter the federal income tax
treatment of any capital gains realized on a sale of fund shares,
but to the extent that any shares are sold at a loss and the
proceeds are reinvested in shares of the fund, some or all of the
loss may be disallowed as a deduction. Consult your tax adviser.
Investors who desire to exercise the Reinstatement Privilege
should contact their investment dealer or Putnam Investor
Services.
EXCHANGE PRIVILEGE
Except as otherwise set forth in this section, by calling Putnam
Investor Services, investors may exchange shares valued up to
$500,000 between accounts with identical registrations, provided
that no certificates are outstanding for such shares and no
address change has been made within the preceding 15 days.
During periods of unusual market changes and shareholder
activity, shareholders may experience delays in contacting Putnam
Investor Services by telephone to exercise the Telephone Exchange
Privilege.
Putnam Investor Services also makes exchanges promptly after
receiving a properly completed Exchange Authorization Form and,
if issued, share certificates. If the shareholder is a
corporation, partnership, agent, or surviving joint owner, Putnam
Investor Services will require additional documentation of a
customary nature. Because an exchange of shares involves the
redemption of fund shares and reinvestment of the proceeds in
shares of another Putnam fund, completion of an exchange may be
delayed under unusual circumstances if the fund were to suspend
redemptions or postpone payment for the fund shares being
exchanged, in accordance with federal securities laws. Exchange
Authorization Forms and prospectuses of the other Putnam funds
are available from Putnam Mutual Funds or investment dealers
having sales contracts with Putnam Mutual Funds. The prospectus
of each fund describes its investment objective(s) and policies,
and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain Putnam funds are not available to residents of
all states. The fund reserves the right to change or suspend the
Exchange Privilege at any time. Shareholders would be notified
of any change or suspension. Additional information is available
from Putnam Investor Services.
Shareholders of other Putnam funds may also exchange their shares
at net asset value for shares of the fund, as set forth in the
current prospectus of each fund.
For federal income tax purposes, an exchange is a sale on which
the investor generally will realize a capital gain or loss
depending on whether the net asset value at the time of the
exchange is more or less than the investor's basis. The Exchange
Privilege may be revised or terminated at any time. Shareholders
would be notified of any such change or suspension.
DIVIDENDS PLUS
Shareholders may invest the fund's distributions of net
investment income or distributions combining net investment
income and short-term capital gains in shares of the same class
of another continuously offered Putnam fund (the "receiving
fund") using the net asset value per share of the receiving fund
determined on the date the fund's distribution is payable. No
sales charge or CDSC will apply to the purchased shares unless
the fund paying the distribution is a money market fund. The
prospectus of each fund describes its investment objective(s) and
policies, and shareholders should obtain a prospectus and
consider these objective(s) and policies carefully before
investing their distributions in the receiving fund. Shares of
certain Putnam funds are not available to residents of all
states.
The minimum account size requirement for the receiving fund will
not apply if the current value of your account in the fund paying
the distribution is more than $5,000.
Shareholders of other Putnam funds (except for money market
funds, whose shareholders must pay a sales charge or become
subject to a CDSC) may also use their distributions to purchase
shares of the fund at net asset value.
For federal tax purposes, distributions from the fund which are
reinvested in another fund are treated as paid by the fund to the
shareholder and invested by the shareholder in the receiving fund
and thus, to the extent comprised of taxable income and deemed
paid to a taxable shareholder, are taxable.
The Dividends PLUS program may be revised or terminated at any
time.
PLANS AVAILABLE TO SHAREHOLDERS
The plans described below are fully voluntary and may be
terminated at any time without the imposition by the fund or
Putnam Investor Services of any penalty. All plans provide for
automatic reinvestment of all distributions in additional shares
of the fund at net asset value. The fund, Putnam Mutual Funds or
Putnam Investor Services may modify or cease offering these plans
at any time.
AUTOMATIC CASH WITHDRAWAL PLAN ("ACWP"). An investor who owns or
buys shares of the fund valued at $10,000 or more at the current
public offering price may open an ACWP plan and have a designated
sum of money ($50 or more) paid monthly, quarterly, semi-annually
or annually to the investor or another person. (Payments from
the fund can be combined with payments from other Putnam funds
into a single check through a designated payment plan.) Shares
are deposited in a plan account, and all distributions are
reinvested in additional shares of the fund at net asset value
(except where the plan is utilized in connection with a
charitable remainder trust). Shares in a plan account are then
redeemed at net asset value to make each withdrawal payment.
Payment will be made to any person the investor designates;
however, if shares are registered in the name of a trustee or
other fiduciary, payment will be made only to the fiduciary,
except in the case of a profit-sharing or pension plan where
payment will be made to a designee. As withdrawal payments may
include a return of principal, they cannot be considered a
guaranteed annuity or actual yield of income to the investor.
The redemption of shares in connection with a plan generally will
result in a gain or loss for tax purposes. Some or all of the
losses realized upon redemption may be disallowed pursuant to the
so-called wash sale rules if shares of the same fund from which
shares were redeemed are purchased (including through the
reinvestment of fund distributions) within a period beginning 30
days before, and ending 30 days after, such redemption. In such
a case, the basis of the replacement shares will be increased to
reflect the disallowed loss. Continued withdrawals in excess of
income will reduce and possibly exhaust invested principal,
especially in the event of a market decline. The maintenance of
a plan concurrently with purchases of additional shares of the
fund would be disadvantageous to the investor because of the
sales charge payable on such purchases. For this reason, the
minimum investment accepted while a plan is in effect is $1,000,
and an investor may not maintain a plan for the accumulation of
shares of the fund (other than through reinvestment of
distributions) and a plan at the same time. The cost of
administering these plans for the benefit of those shareholders
participating in them is borne by the fund as an expense of all
shareholders. The fund, Putnam Mutual Funds or Putnam Investor
Services may terminate or change the terms of the plan at any
time. A plan will be terminated if communications mailed to the
shareholder are returned as undeliverable.
Investors should consider carefully with their own financial
advisers whether the plan and the specified amounts to be
withdrawn are appropriate in their circumstances. The fund and
Putnam Investor Services make no recommendations or
representations in this regard.
TAX QUALIFIED RETIREMENT PLANS; 403(B) AND SEP PLANS. (NOT
OFFERED BY FUNDS INVESTING PRIMARILY IN TAX-EXEMPT SECURITIES.)
Investors may purchase shares of the fund through the following
Tax Qualified Retirement Plans, available to qualified
individuals or organizations:
Standard and variable profit-sharing (including 401(k))
and money purchase pension plans; and
Individual Retirement Account Plans (IRAs).
Each of these Plans has been qualified as a prototype plan by the
Internal Revenue Service. Putnam Investor Services will furnish
services under each plan at a specified annual cost. Putnam
Fiduciary Trust Company serves as trustee under each of these
Plans.
Forms and further information on these Plans are available from
investment dealers or from Putnam Mutual Funds. In addition,
specialized professional plan administration services are
available on an optional basis; contact Putnam Defined
Contribution Plan Services at 1-800-225-2465, extension 8600.
A 403(b) Retirement Plan is available for employees of public
school systems and organizations which meet the requirements of
Section 501(c)(3) of the Internal Revenue Code. Forms and
further information on the 403(b) Plan are also available from
investment dealers or from Putnam Mutual Funds. Shares of the
fund may also be used in simplified employee pension (SEP) plans.
For further information on the Putnam prototype SEP plan, contact
an investment dealer or Putnam Mutual Funds.
Consultation with a competent financial and tax adviser regarding
these Plans and consideration of the suitability of fund shares
as an investment under the Employee Retirement Income Security
Act of 1974, or otherwise, is recommended.
SIGNATURE GUARANTEESSIGNATURE GUARANTEES
Redemption requests for shares having a net asset value of
$100,000 or more must be signed by the registered owners or their
legal representatives and must be guaranteed by a bank,
broker/dealer, municipal securities dealer or broker, government
securities dealer or broker, credit union, national securities
exchange, registered securities association, clearing agency,
savings association or trust company, provided such institution
is acceptable under and conforms with Putnam Fiduciary Trust
Company's signature guarantee procedures. A copy of such
procedures is available upon request. If you want your
redemption proceeds sent to an address other than your address as
it appears on Putnam's records, you must provide a signature
guarantee. 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.
SUSPENSION OF REDEMPTIONSSUSPENSION OF REDEMPTIONS
The fund may not suspend shareholders' right of redemption, or
postpone payment for more than seven days, unless the Exchange is
closed for other than customary weekends or holidays, or if
permitted by the rules of the Securities and Exchange Commission
during periods when trading on the Exchange is restricted or
during any emergency which makes it impracticable for the fund to
dispose of its securities or to determine fairly the value of its
net assets, or during any other period permitted by order of the
Commission for protection of investors.
SHAREHOLDER LIABILITYSHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the fund. However, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the
fund and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the fund or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of fund property for all loss
and expense of any shareholder held personally liable for the
obligations of the fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund would be unable to
meet its obligations. The likelihood of such circumstances is
remote.
STANDARD PERFORMANCE MEASURESSTANDARD PERFORMANCE MEASURES
Yield and total return data for the fund may from time to time be
presented in Part I of this SAI and in advertisements. In the
case of funds with more than one class of shares, all performance
information is calculated separately for each class. The data is
calculated as follows.
Total return for one-, five- and ten-year periods (or for such
shorter periods as the fund has been in operation or shares of
the relevant class have been outstanding) is determined by
calculating the actual dollar amount of investment return on a
$1,000 investment in the fund made at the beginning of the
period, at the maximum public offering price for class A shares
and class M shares and net asset value for other classes of
shares, and then calculating the annual compounded rate of return
which would produce that amount. Total return for a period of
one year is equal to the actual return of the fund during that
period. Total return calculations assume deduction of the fund's
maximum sales charge or CDSC, if applicable, and reinvestment of
all fund distributions at net asset value on their respective
reinvestment dates.
The fund's yield is presented for a specified thirty-day period
(the "base period"). Yield is based on the amount determined by
(i) calculating the aggregate amount of dividends and interest
earned by the fund during the base period less expenses for that
period, and (ii) dividing that amount by the product of (A) the
average daily number of shares of the fund outstanding during the
base period and entitled to receive dividends and (B) the per
share maximum public offering price for class A shares or class M
shares, as appropriate, and net asset value for other classes of
shares on the last day of the base period. The result is
annualized on a compounding basis to determine the yield. For
this calculation, interest earned on debt obligations held by the
fund is generally calculated using the yield to maturity (or
first expected call date) of such obligations based on their
market values (or, in the case of receivables-backed securities
such as the Government National Mortgage Association ("GNMAs"),
based on cost). Dividends on equity securities are accrued daily
at their stated dividend rates. The amount of expenses used in
determining the fund's yield includes, in addition to expenses
actually accrued by the fund, an estimate of the amount of
expenses that the fund would have incurred if brokerage
commissions had not been used to reduce such expenses.
If the fund is a money market fund, yield is computed by
determining the percentage net change, excluding capital changes,
in the value of an investment in one share over the seven-day
period for which yield is presented (the "base period"), and
multiplying the net change by 365/7 (or approximately 52 weeks).
Effective yield represents a compounding of the yield by adding 1
to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power
equal to 365/7, and subtracting 1 from the result.
If the fund is a tax-exempt fund, the tax-equivalent yield during
the base period may be presented for shareholders in one or more
stated tax brackets. Tax-equivalent yield is calculated by
adjusting the tax-exempt yield by a factor designed to show the
approximate yield that a taxable investment would have to earn to
produce an after-tax yield equal, for that shareholder, to the
tax-exempt yield. The tax-equivalent yield will differ for
shareholders in other tax brackets.
At times, Putnam Management may reduce its compensation or assume
expenses of the fund in order to reduce the fund's expenses. The
per share amount of any such fee reduction or assumption of
expenses during the fund's past five fiscal years (or for the
life of the fund, if shorter) is set forth in the footnotes to
the table in the section entitled "Financial highlights" in the
prospectus. Any such fee reduction or assumption of expenses
would increase the fund's yield and total return for periods
including the period of the fee reduction or assumption of
expenses.
All data are based on past performance and do not predict future
results.
COMPARISON OF PORTFOLIO PERFORMANCECOMPARISON OF PORTFOLIO
PERFORMANCE
Independent statistical agencies measure the fund's investment
performance and publish comparative information showing how the
fund, and other investment companies, performed in specified time
periods. Three agencies whose reports are commonly used for such
comparisons are set forth below. From time to time, the fund may
distribute these comparisons to its shareholders or to potential
investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED
ON THEIR OWN CRITERIA RATHER THAN ON THE STANDARDIZED PERFORMANCE
MEASURES DESCRIBED IN THE PRECEDING SECTION.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund
rankings monthly. The rankings are based on total return
performance calculated by Lipper, generally reflecting
changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a
variety of performance periods, including year-to-date,
1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset
category.
MORNINGSTAR, INC. distributes mutual fund ratings twice a
month. The ratings are divided into five groups:
highest, above average, neutral, below average and lowest.
They represent a fund's historical risk/reward ratio
relative to other funds in its broad investment class as
determined by Morningstar, Inc. Morningstar ratings cover
a variety of performance periods, including 1-year, 3-
year, 5-year, 10-year and overall performance. The
performance factor for the overall rating is a
weighted-average assessment of the fund's 1-year, 3-year,
5-year, and 10-year total return performance (if
available) reflecting deduction of expenses and sales
charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund. The
ratings are derived from a purely quantitative system that
does not utilize the subjective criteria customarily
employed by rating agencies such as Standard & Poor's and
Moody's Investor Service, Inc.
CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual
fund rankings and is distributed monthly. The rankings
are based entirely on total return calculated by
Weisenberger for periods such as year-to-date, 1-year,
3-year, 5-year and 10-year. Mutual funds are ranked in
general categories (e.g., international bond,
international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of
sales charges or fees.
Independent publications may also evaluate the fund's
performance. The fund may from time to time refer to results
published in various periodicals, including Barrons, Financial
World, Forbes, Fortune, Investor's Business Daily, Kiplinger's
Personal Finance Magazine, Money, U.S. News and World Report and
The Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may
be used to present a comparative benchmark of fund performance.
The performance figures of an index reflect changes in market
prices, reinvestment of all dividend and interest payments and,
where applicable, deduction of foreign withholding taxes, and do
not take into account brokerage commissions or other costs.
Because the fund is a managed portfolio, the securities it owns
will not match those in an index. Securities in an index may
change from time to time.
THE CONSUMER PRICE INDEX, prepared by the U.S. Bureau of
Labor Statistics, is a commonly used measure of the rate
of inflation. The index shows the average change in the
cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
THE DOW JONES INDUSTRIAL AVERAGE is an index of 30 common
stocks frequently used as a general measure of stock
market performance.
THE DOW JONES UTILITIES AVERAGE is an index of 15 utility
stocks frequently used as a general measure of stock
market performance.
CS FIRST BOSTON HIGH YIELD INDEX is a market-weighted
index including publicly traded bonds having a rating
below BBB by Standard & Poor's and Baa by Moody's.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX is an index
composed of securities from The Lehman Brothers
Government/Corporate Bond Index, The Lehman Brothers
Mortgage-Backed Securities Index and The Lehman Brothers
Asset-Backed Securities Index and is frequently used as a
broad market measure for fixed-income securities.
THE LEHMAN BROTHERS ASSET-BACKED SECURITIES INDEX is an
index composed of credit card, auto, and home equity
loans. Included in the index are pass-through, bullet
(noncallable), and controlled amortization structured debt
securities; no subordinated debt is included. All
securities have an average life of at least one year.
THE LEHMAN BROTHERS CORPORATE BOND INDEX is an index of
publicly issued, fixed-rate, non-convertible
investment-grade domestic corporate debt securities
frequently used as a general measure of the performance of
fixed-income securities.
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX is an
index of publicly issued U.S. Treasury obligations, debt
obligations of U.S. government agencies (excluding
mortgage-backed securities), fixed-rate, non-convertible,
investment-grade corporate debt securities and U.S.
dollar-denominated, SEC-registered non-convertible debt
issued by foreign governmental entities or international
agencies used as a general measure of the performance of
fixed-income securities.
THE LEHMAN BROTHERS INTERMEDIATE TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations with
maturities of up to ten years and is used as a general
gauge of the market for intermediate-term fixed-income
securities.
THE LEHMAN BROTHERS LONG-TERM TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations
(excluding flower bonds and foreign-targeted issues) that
are U.S. dollar-denominated and have maturities of 10
years or greater.
THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX
includes 15- and 30-year fixed rate securities backed by
mortgage pools of the Government National Mortgage
Association, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX is an index of
approximately 20,000 investment-grade, fixed-rate
tax-exempt bonds.
THE LEHMAN BROTHERS TREASURY BOND INDEX is an index of
publicly issued U.S. Treasury obligations (excluding
flower bonds and foreign-targeted issues) that are U.S.
dollar denominated, have a minimum of one year to
maturity, and are issued in amounts over $100 million.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an
index of approximately 1,482 equity securities listed on
the stock exchanges of the United States, Europe, Canada,
Australia, New Zealand and the Far East, with all values
expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS
INDEX is an index of approximately 1,100 securities
representing 20 emerging markets, with all values
expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX is an
index of approximately 1,045 equity securities issued by
companies located in 18 countries and listed on the stock
exchanges of Europe, Australia, and the Far East. All
values are expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX is
an index of approximately 627 equity securities issued by
companies located in one of 13 European countries, with
all values expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL PACIFIC INDEX is
an index of approximately 418 equity securities issued by
companies located in 5 countries and listed on the
exchanges of Australia, New Zealand, Japan, Hong Kong,
Singapore/Malaysia. All values are expressed in U.S.
dollars.
THE NASDAQ INDUSTRIAL AVERAGE is an index of stocks traded
in The Nasdaq Stock Market, Inc. National Market System.
THE RUSSELL 1000 INDEX is composed of the 1,000
largest companies in the Russell 3000 Index,
representing approximately 89% of the Russell 3000
total market capitalization. The Russell 3000 Index is
composed of the 3,000 largest U.S. companies ranked by
total market capitalization, representing approximately
98% of the U.S. investable equity market.
THE RUSSELL 2000 INDEXis composed of the 2,000 smallest
companies in the Russell 3000 Index, representing
approximately 11% of the Russell 3000 total market
capitalization.
THE RUSSELL MIDCAP INDEX is composed of the 800 smallest
companies in the Russell 1000 Index, representing
approximately 35% of the Russell 1000 total market
capitalization.
THE RUSSELL MIDCAP GROWTH INDEX is composed of securities
with greater-than-average growth orientation within the
Russell Midcap Index. Each security's growth orientation
is determined by a composite score of the security's price-
to-book ratio and forecasted growth rate. Growth stocks
tend to have a higher price-to-book ratios and forecasted
growth rates than value stocks. This index is composed of
approximately 450 companies from the Russell 1000 Growth
Index, representing 20% of the total market capitalization
of the Russell 1000 Growth Index.
THE SALOMON BROTHERS LONG-TERM HIGH-GRADE CORPORATE BOND
INDEX is an index of publicly traded corporate bonds
having a rating of at least AA by Standard & Poor's or Aa
by Moody's and is frequently used as a general measure of
the performance of fixed-income securities.
THE SALOMON BROTHERS LONG-TERM TREASURY INDEX is an index
of U.S. government securities with maturities greater than
10 years.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX is an
index that tracks the performance of the 14 government
bond markets of Australia, Austria, Belgium Canada,
Denmark, France, Germany, Italy, Japan, Netherlands,
Spain, Sweden, United Kingdom and the United States.
Country eligibility is determined by market capitalization
and investability criteria.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX (non
$U.S.) is an index of foreign government bonds calculated
to provide a measure of performance in the government bond
markets outside of the United States.
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX is an
index of common stocks frequently used as a general
measure of stock market performance.
STANDARD & POOR'S 40 UTILITIES INDEX is an index of 40
utility stocks.
STANDARD & POOR'S/BARRA VALUE INDEX is an index
constructed by ranking the securities in the Standard &
Poor's 500 Composite Stock Price Index by price-to-book
ratio and including the securities with the lowest price-
to-book ratios that represent approximately half of the
market capitalization of the Standard & Poor's 500
Composite Stock Price Index.
In addition, Putnam Mutual Funds may distribute to shareholders
or prospective investors illustrations of the benefits of
reinvesting tax-exempt or tax-deferred distributions over
specified time periods, which may include comparisons to fully
taxable distributions. These illustrations use hypothetical
rates of tax-advantaged and taxable returns and are not intended
to indicate the past or future performance of any fund.
SECURITIES RATINGS
THE FOLLOWING RATING SERVICES DESCRIBE RATED SECURITIES AS
FOLLOWS:
MOODY'S INVESTORS SERVICE, INC.
BONDS
AAA -- Bonds which are rated AAA are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
AA -- Bonds which are rated AA are judged to be of high quality
by all standards. Together with the AAA group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in AAA securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than
the AAA securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA -- Bonds which are rated BAA are considered as medium grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
BA -- Bonds which are rated BA are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
CAA -- Bonds which are rated CAA are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
CA -- Bonds which are rated CA represent obligations which are
speculative in a high degree. Such issues are often in default
or have other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
NOTES (FOR MONEY MARKET FUNDS ONLY)
MIG 1/VMIG 1 -- This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG 2/VMIG 2 -- This designation denotes high quality. Margins
of protection are ample although not so large as in the preceding
group.
COMMERCIAL PAPER (FOR MONEY MARKET FUNDS ONLY)
Issuers rated PRIME-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced
by the following characteristics:
- -- Leading market positions in well established industries.
- -- High rates of return on funds employed.
- -- Conservative capitalization structure with moderate
reliance on debt and ample asset protection.
- -- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- -- Well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers rated PRIME-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
STANDARD & POOR'S
BONDS
AAA -- An obligation rated AAA has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.
AA -- An obligation rated AA differs from the highest-rated
obligations only in small degree. The obligor's capacity to meet
its financial commitment on the obligation is very strong.
A -- An obligation rated A is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher-rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB -- An obligation rated BBB exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitment on the obligation.
Obligations rated BB, B, CCC, CC and C are regarded as having
significant speculative characteristics. BB indicates the lowest
degree of speculation and C the highest. While such obligations
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major exposures to
adverse conditions.
BB -- An obligation rated BB is less vulnerable to nonpayment
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B -- An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity
to meet its financial commitment on the obligations. Adverse
business, financial, or economic conditions will likely impair
the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC -- An obligation rated CCC is currently vulnerable to
nonpayment, and is dependent upon favorable business, financial,
and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business,
financial, or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated CC is currently highly vulnerable to
nonpayment.
C -- The C rating may be used to cover a situation where a
bankruptcy petition has been filed, or similar action has been
taken, but payments on this obligation are being continued.
D -- An obligation rated D is in payment default. The D rating
category is used when interest payments or principal payments are
not made on the date due even if the applicable grace period has
not expired, unless Standard & Poor's believes that such payments
will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition, or the taking of a
similar action if payments on an obligation are jeopardized.
NOTES (FOR MONEY MARKET FUNDS ONLY)
SP-1 -- Strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics
are given a plus (+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest.
SP-3 -- Speculative capacity to pay principal and interest.
COMMERCIAL PAPER (FOR MONEY MARKET FUNDS ONLY)
A-1 -- This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2 -- Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated `A-1'.
A-3 -- Issues carrying this designation have adequate capacity
for timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
DUFF & PHELPS CORPORATION
LONG-TERM DEBT
AAA -- Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA- -- High credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A+, A, A- -- Protection factors are average but adequate.
However, risk factors are more variable and greater in periods of
economic stress.
BBB+, BBB, BBB- -- Below-average protection factors but still
considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.
BB+, BB, BB- -- Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or
company fortunes. Overall quality may move up or down frequently
within this category.
B+, B, B- -- Below investment grade and possessing risk that
obligations will not be met when due. Financial protection
factors will fluctuate widely according to economic cycles,
industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a
higher or lower rating grade.
CCC -- Well below investment-grade securities. Considerable
uncertainty exists as to timely payment of principal, interest or
preferred dividends. Protection factors are narrow and risk can
be substantial with unfavorable economic/industry conditions,
and/or with unfavorable company developments.
DD -- Defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.
FITCH INVESTORS SERVICE, INC.
AAA -- Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.
AA -- Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds
rated AAA.
A -- Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.
BBB -- Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
BB -- Bonds considered to be speculative. The obligor's ability
to pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.
B -- Bonds are considered highly speculative. Bonds in this class
are lightly protected as to the obligor's ability to pay interest
over the life of the issue and repay principal when due.
CCC -- Bonds have certain characteristics which, with passing of
time, could lead to the possibility of default on either
principal or interest payments.
CC -- Bonds are minimally protected. Default in payment of
interest and/or principal seems probable.
C -- Bonds are in actual or imminent default in payment of
interest or principal.
DDD -- Bonds are in default and in arrears in interest and/or
principal payments. Such bonds are extremely speculative and
should be valued only on the basis of their value in liquidation
or reorganization of the obligor.
DEFINITIONSDEFINITIONS
"Putnam Management" -- Putnam Investment
Management, Inc., the fund's
investment manager.
"Putnam Mutual Funds" -- Putnam Mutual Funds Corp.,
the fund's principal
underwriter.
"Putnam Fiduciary Trust -- Putnam Fiduciary Trust
Company,
Company" the fund's custodian.
"Putnam Investor Services" -- Putnam Investor Services, a
division of Putnam Fiduciary
Trust Company, the fund's
investor servicing agent.
PUTNAM VISTA FUND
FORM N-1A
PART C
OTHER INFORMATION
Item ^ 23. Exhibits
1. ^ Agreement and Declaration of Trust^ dated August
13, 1982, as amended through November 3, 1989 -- Incorporated
by reference to Post-Effective Amendment No. 39 ^ Registrant's
Registration Statement.
2. By-Laws, as amended through February 1,
1994 -- Incorporated by reference to Post-
Effective Amendment No. 44 to the Registrant's
Registration Statement^.
^ 3a. Portions of ^ Agreement and
Declaration of Trust Relating to Shareholders'
Rights -- Incorporated by reference to Post-
Effective Amendment No. ^ 43 to the Registrant's
Registration Statement.
3b. Portions of By-Laws Relating to
Shareholders' Rights --
Incorporated by reference
to Post-Effective Amendment No. 44 to the Registrant's
Registration Statement.
4. Form of ^ Management Contract ^--
Incorporated by reference to Post-Effective
Amendment No. 46 to the Registrant's Registration
Statement.
^ 5a. Distributor's Contract dated May 6, 1994 --
Incorporated by reference to Post-Effective
Amendment No. 44 to the ^ Registrant's
Registration Statement.
^ 5b. Form of Specimen Dealer Sales
Contract - ^ Incorporated by reference to Post-
Effective Amendment No. 43 to the ^ Registrant's
Registration Statement.
^ 5c. Form of Specimen Financial
Institution Sales Contract - ^ Incorporated by
reference to Post-Effective Amendment No. 43 to
the ^ Registrant's Registration Statement.
^ 6. Trustee Retirement Plan dated October 4,
1996 --Incorporated by reference to Post-Effective
Amendment No. 46 to the ^ Registrant's
Registration Statement.
^ 7. Custodian Agreement with Putnam
Fiduciary Trust Company dated May 3, 1991, as
amended May 3, 1991 as amended July 13, 1992 --
Incorporated by reference to Post-Effective
Amendment No. 44 to the Registrant's Registration
Statement.
^ 8. Investor Servicing Agreement dated June
3, 1991 with Putnam Fiduciary Trust Company --
Incorporated by reference to Post-Effective
Amendment No. 40 to the Registrant's Registration
Statement.
^ 9. Opinion of Ropes & Gray, including
consent -- Incorporated by reference to Post-
Effective Amendment No. 43 to the Registrant's
Registration Statement.
^ 10. Not applicable.
^ 11. Not applicable.
^ 12. Investment Letter from Putnam
Investments, Inc. to the Registrant for Class B
shares -- Incorporated by reference to Post-
Effective Amendment No. 43 to the Registrant's
Registration Statement.
^ 13a. Class A Distribution Plan and
Agreement -- Incorporated by reference to Post-^
effective Amendment No. 43 to the Registrant's
Registration Statement.
^ 13b. Class B Distribution Plan and
Agreement - ^ Incorporated by reference to Post-
Effective Amendment No. 43 to the Registrant's
Registration Statement.
^ 13c. Class M Distribution Plan and
Agreement - ^ Incorporated by reference to Post-
Effective Amendment No. 44 to the Registrant's
Registration Statement.
^ 13d. Form of Specimen Dealer Service
Agreement - ^ Incorporated by reference to Post-
Effective Amendment No. 43 to the ^ Registrant's
Registration Statement.
^ 13e. Form of Specimen Financial
Institution Service Agreement -- ^ Incorporated by
reference to Post-Effective Amendment No. 43 to
the ^ Registrant's Registration Statement.
^ 14a. Financial Data Schedule for Class A shares --
Exhibit [1] ^
^ 14b. Financial Data Schedule for Class B shares --
Exhibit [2] ^
^ 14c. Financial Data Schedule for Class M shares --
Exhibit [3] ^
^ 14d. Financial Data Schedule for Class Y shares --
Exhibit [4] ^
^ 15. Rule 18f-3^ Plan -- Incorporated by reference to
Post-Effective Amendment No. 45 to the Registrant's
Registration Statement.
Item ^ 24. Persons Controlled by or under Common Control with
Registrant
None.
Item 25 ^. Indemnification
The information required by this item is incorporated
herein by reference from the Registrant's ^ initial Registration
Statement on Form N-^ 1A under the Investment Company Act of 1940
(File No. 811-1561).
Items 26 and 27.
<PAGE>
09/18/98 C-6
S:\FUNDS\REFERENC\USREDPTC.DOCThis redlined draft, generated by
CompareRite (TM) - The Instant Redliner, shows the differences
between -
original document : S:\FUNDS\REFERENC\
and revised document: S:\FUNDS\REFERENC\US918PTC.DOC
CompareRite found 154 change(s) in the text
Deletions appear as a Bold-Underline
Additions appear as Bold-Underline text
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT
ADVISE R
Except as set forth below, the directors and officers of the
REGISTRANT'S investment adviser have been engaged during
the past two fiscal years in no business, vocation or employment
of a substantial nature other than as directors or officers of
the investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is
ONE Post Office Square, Boston, Massachusetts 02109.
NAME NON-PUTNAM BUSINESS AND OTHER
CONNECTIONS
Michael J. Abata Prior to May, 1997, Assistant
ASSISTANT VICE PRESIDENT Vice President, Alliance Capital
Management Corp., 1345
Avenue of the Americas, New York,
NY 10020
BLAKE ANDERSON TRUSTEE, SALEM FEMALE CHARITABLE
MANAGING DIRECTOR SOCIETY, SALEM MA 01970
Barry R. Allen Prior to December, 1997,
VICE PRESENT Analyst/Director of Research,
Harbor Capital
Management, 125 High St., Boston,
MA 02110
Jennifer Antill Prior to November, 1996,
MANAGING DIRECTOR Director, IAI International/Hill
Samuel Investment
Advisors, 10 Fleet Place, London,
England
Nikesh Arora Prior to April, 1997, Chief
VICE PRESIDENT Financial Officer,
Fidelity Investments, 82
Devonshire St., Boston, MA 02110
Michael Arends Prior to MAY,
Senior Vice President 1997, MANAGING Director,
EQUITIES, PHOENIX DUFF & PHELPS,
56 PROSPECT ST., HARTFORD, CT
06101 ; Board Member,
DONALD L. ARENDS, INC.,
100 JORIE BLVD., OAKBROOK, ILL
60523
STEVEN E. ASHER TREASURER, THE HARVARD
Senior Vice President INDEPENDENT, INC. 501(C) (3)
CHARITABLE ORGANIZATION, CANADY
HALL, HARVARD YARD, CAMBRIDGE, MA
02138
MICHAEL J. ATKIN PRIOR TO JULY, 1997, DIRECTOR OF
SENIOR VICE PRESIDENT LATIN AMERICA INSTITUTE OF
INTERNATIONAL FINANCE, 2000
PENNSYLVANIA AVENUE, WASHINGTON,
D.C. 20006
JEFFREY B. AUGUSTINE PRIOR TO JANUARY, 1998, VICE
SENIOR VICE PRESIDENT PRESIDENT, INVESTMENT CONSULTING,
INVESTOR TOOLS, INC., 100 BRIDGE
ST. PLAZA, YORKVILLE, IL 60560
ROWLAND T. BANKES PRIOR TO JULY, 1997, SENIOR FIXED-
VICE PRESIDENT INCOME TRADER, JENNISON, JENNISON
ASSOCIATES CAPITAL CORP., ONE
FINANCIAL CENTER, BOSTON, MA
02110
ROBERT R. BECK DIRECTOR, CHARLES BRIDGE
SENIOR VICE PRESIDENT PUBLISHING, 85 MAIN ST.,
WATERTOWN, MA 02172; BOARD OF
OVERSEERS, BETH ISRAEL DEACONESS
MEDICAL CENTER, 330 BROOKLINE
AVE., BOSTON, MA 02215
CARL D. BELL PRIOR TO JANUARY, 1998,
VICE PRESIDENT PRINCIPAL, SMITH BREEDON
ASSOCIATION, 100 EUROPA DRIVE,
SUITE 200, CHAPEL HILL, NC 27514
GEOFFREY C. BLAISDELL PRIOR TO OCTOBER, 1997, VICE
SENIOR VICE PRESIDENT PRESIDENT, BLACKROCK FINANCIAL,
345 PARK AVENUE, NEW YORK, NY
10010
JEFFREY M. BRAY PRIOR TO OCTOBER, 1997, ANALYST,
VICE PRESIDENT LEHMAN BROTHERS, 3 WORLD
FINANCIAL CENTER, NEW YORK, NY
10285
DAVID J. BUCKLE PRIOR TO MARCH, 1998, VICE
VICE PRESIDENT PRESIDENT, J.P. MORGAN INVESTMENT
MANAGEMENT, 28 KING ST., LONDON,
ENGLAND SWI YXA
RONALD J. BUKOVAC PRIOR TO OCTOBER, 1997, SENIOR
VICE PRESIDENT MANAGER, VALUATION, PRICE
WATERHOUSE, 200 E. RANDOLPH
DRIVE, CHICAGO, IL 60601
ROBERT W. BURKE MEMBER-EXECUTIVE COMMITTEE, THE
SENIOR MANAGING DIRECTOR RIDGE CLUB, COUNTRY CLUB ROAD,
SANDWICH, MA 02563; MEMBER-
ADVISORY BOARD, CATHEDRAL HIGH
SCHOOL, 74 UNION PARK ST., SO.
BOSTON, MA 02118
JACK P. CHANG PRIOR TO JULY, 1997, VICE
VICE PRESIDENT PRESIDENT, COLUMBIA MANAGEMENT
COMPANY, 1300 S.W. 6TH AVE.,
PORTLAND, OR 97207
MARY CLAIRE CHASE PRIOR TO JANUARY, 1997, DIRECTOR
VICE PRESIDENT OF STAFF DEVELOPMENT, ARTHUR D.
LITTLE CO., 25 ACORN PARK,
CAMBRIDGE, MA 02140
C. BETH COTNER DIRECTOR, THE LYRIC STAGE
SENIOR VICE PRESIDENT THEATER, 140 CLARENDON ST.,
BOSTON, MA 02116
KEVIN M. CRONIN PRIOR TO FEBRUARY, 1997, VICE
MANAGING DIRECTOR PRESIDENT AND PORTFOLIO MANAGER,
MFS INVESTMENT MANAGEMENT, 500
BOYLSTON ST., BOSTON, MA 02117
JOHN R.S. CUTLER MEMBER, BURST MEDIA, L.L.C., 10
ASSISTANT VICE PRESIDENT NEW ENGLAND EXECUTIVE PARK,
BURLINGTON, MA 01803
KENNETH DALY PRESIDENT, ANDOVER RIVER RD. TMA,
MANAGING DIRECTOR RIVER ROAD TRANSPORTATION
MANAGEMENT ASSOCIATION, 7
SHATTUCK RD., ANDOVER, MA 01810
MICHAEL W. DAVIS PRIOR TO AUGUST, 1997,
VICE PRESIDENT TECHNICAL FINANCE CONSULTANT,
BANK OF AMERICA MORTGAGE, 50
CALIFORNIA ST., SAN FRANCISCO, CA
94111
JOHN C. DELANO PRIOR TO JULY, 1998, SENIOR
ASSISTANT VICE PRESIDENT FOREIGN EXCHANGE TRADER,
NATIONSBANK, 233 SO. WACKER
DRIVE, CHICAGO, IL 60606
EDWIN M. DENSON PRIOR TO NOVEMBER, 1997, VICE
VICE PRESIDENT PRESIDENT AND SENIOR ECONOMIST
PRIMARK DECISION ECONOMICS, 260
FRANKLIN ST., BOSTON, MA 02110
RALPH C. DERBYSHIRE PRIOR TO NOVEMBER, 1997, PARTNER,
SENIOR VICE PRESIDENT PALMER & DODGE, ONE BEACON
STREET, BOSTON, MA 02108; BOARD
MEMBER, MSPCC, 399 BOYLSTON ST.,
BOSTON, MA; BOARD MEMBER,
WINCHESTER AFTER SCHOOL PROGRAM,
SKILLINGS RD., WINCHESTER, MA
MICHAEL G. DOLAN CHAIRMAN-FINANCE COUNCIL, ST.
ASSISTANT VICE PRESIDENT MARY'S PARISH, 44 MYRTLE ST.,
MELROSE, MA 02176; MEMBER,
SCHOOL ADVISORY BOARD, ST. MARY'S
SCHOOL, 44 MYRTLE ST., MELROSE,
MA 02176
MARK E. DOW PRIOR TO NOVEMBER, 1997,
VICE PRESIDENT ECONOMIST, INTERNATIONAL MONETARY
FUND, WASHINGTON, DC
EMILY DURBIN BOARD OF DIRECTORS, FAMILY
VICE PRESIDENT SERVICE, INC., LAWRENCE, MA 01840
KARNIG H. DURGARIAN BOARD MEMBER, EBRI, SUITE 600,
MANAGING DIRECTOR 2121 K ST., N.W., WASHINGTON, DC
20037-1896. TRUSTEE, AMERICAN
ASSEMBLY, 122 C. ST., N.W., SUITE
350, WASHINGTON, DC 20001
NATHAN EIGERMAN TRUSTEE, FLOWER HILL TRUST, 298
VICE PRESIDENT MARLBOROUGH ST., #4, BOSTON, MA
02116
IRENE M. ESTEVES PRIOR TO JANUARY, 1997, VICE
MANAGING DIRECTOR PRESIDENT, MILLER BREWING CO.,
3939 WEST HIGHLAND BLVD.,
MILWAUKEE, WI 53210. BOARD OF
DIRECTOR MEMBER, AMERICAN
MANAGEMENT ASSOCIATION FINANCE
COUNCIL, 1601 BROADWAY, NEW YORK,
NY; BOARD OF DIRECTOR MEMBER,
FIRST NIGHT BOSTON, 20 PARK
PLAZA, SUITE 927, BOSTON, MA;
BOARD OF DIRECTOR MEMBER, SC
JOHNSON COMMERCIALMARKETS, 8310
16TH ST., STUTEVANT, WI 53177;
BOARD OF DIRECTOR MEMBER,
MASSACHUSETTS TAXPAYERS
FOUNDATION, 24 PROVINCE ST.,
BOSTON, MA; BOARD OF DIRECTOR
MEMBER, MRS. BAIRDS BAKERIES, 515
JONES ST., SUITE 200, FORT WORTH,
TEXAS 76102
IAN FERGUSON TRUSTEE, PARK SCHOOL, 171 GODDARD
SENIOR MANAGING DIRECTOR AVENUE, BROOKLINE, MA 02146
EDWARD R. FINCH PRIOR TO DECEMBER, 1997, MANAGING
VICE PRESIDENT DIRECTOR, M.A. WEATHERBIE & CO.,
265 FRANKLIN ST., BOSTON, MA
02110
KATE FLEISHER PRIOR TO JANUARY, 1998, DIRECTOR
VICE PRESIDENT OF HUMAN RESOURCES, LAURA ASHLEY,
6 ST., JAMES AVE. SUITE 410,
BOSTON, MA 02116
J. PETER GRANT TRUSTEE, THE DOVER CHURCH, DOVER,
SENIOR VICE PRESIDENT MA 02030
PATRICE GRAVIERE PRIOR TO MARCH, 1998, REGIONAL
SENIOR VICE PRESIDENT DIRECTOR FOR LATIN AMERICA, MFS
INTERNATIONAL, LTD, BUENOS AIRES,
BRAZIL
PAUL E. HAAGENSEN DIRECTOR, HAAGENSEN RESEARCH
SENIOR VICE PRESIDENT FOUNDATION, 630 WEST 168TH ST.,
NEW YORK, NY 10032
JAMES B. HAINES PRIOR TO FEBRUARY, 1997,
ASSISTANT VICE PRESIDENT ASSOCIATE, BENEFIT DEPARTMENT,
ROPES & GRAY, ONE INTERNATIONAL
PLACE, BOSTON, MA 02110
MARY S. HAPIJ PRIOR TO MARCH, 1997, RESEARCH
VICE PRESIDENT LIBERTY MANAGER, PIONEERING
MANAGEMENT CORP., 60 STATE
STREET, BOSTON, MA 02109
NIGEL P. HART PRIOR TO OCTOBER, 1997, SENIOR
VICE PRESIDENT VICE PRESIDENT AND PORTFOLIO
MANAGER, INVESTMENT ADVISERS,
3700 FIRST BANK PLACE,
MINNEAPOLIS, MN 55402
DEBORAH R. HEALEY CORPORATOR, NEW ENGLAND BAPTIST
SENIOR VICE PRESIDENT HOSPITAL, 125 PARKER HILL AVE.,
BOSTON, MA 02120; DIRECTOR, NEB
ENTERPRISES, 125 PARKET HILL
AVE., BOSTON, MA 02120
MARIANNE P. ISGUR PRIOR TO MARCH, 1998, EXECUTIVE
ASSISTANT VICE PRESIDENT RECRUITER, PROFESSIONS, 2 VILLA
RD., SO. HAMILTON, MA 01982;
PRESIDENT, EQUINE VENTURES, LTD.,
25 FELLOWS RD., IPSWICH, MA 01932
JEFFREY KAUFMAN PRIOR TO JULY, 1998, VICE
SENIOR VICE PRESIDENT PRESIDENT AND PORTFOLIO MANAGER,
MFS INVESTMNT MANAGEMENT, 500
BOYLSTON ST., BOSTON, MA 02116
IRA C. KALUS-BYSTRICKY PRIOR TO MARCH, 1998, CONSULTANT,
VICE PRESIDENT ARTHUR D. LITTLE, 25 ACORN PARK,
CAMBRIDGE, MA 02114
MARY E. KEARNEY TRUSTEE, MASSACHUSETTS EYE AND
MANAGING DIRECTOR EAR INFIRMARY, 243 CHARLES ST.,
BOSTON, MA 02114
KEVIN J. KELEHER PRIOR TO AUGUST, 1998, SUPPORT
ASSISTANT VICE PRESIDENT MANAGER, DIGITAL EQUIPMENT CO.,
111 POWDER MILL RD., MAYNARD, MA
01754
CATHERINE KENNEDY PRIOR TO SEPTEMBER, 1997,
VICE PRESIDENT PRINCIPAL, MORGAN STANLEY, 1585
BROADWAY, NEW YORK, NY 10036
JEFFREY K. KERRIGAN PRIOR TO JUNE, 1997, VICE
ASSISTANT VICE PRESIDENT PRESIDENT, FLEET INVESTMENTS, 75
STATE St., Boston, MA 02109
DAVID R. KING Prior to JUNE, 1997, Vice
VICE PRESIDENT President, FLEET INVESTMENTS, 75
STATE ST., BOSTON, MA 02109
WILLIAM P. KING PRIOR TO NOVEMBER, 1997,
VICE PRESIDENT PORTFOLIO MANAGER, TSA GLOBAL
ASSET MANAGEMENT, 700 SOUTH
FLOWER ST., LOS ANGELES, CA
90017
DEBORAH F. KUENSTNER PRIOR TO MARCH, 1997, SENIOR
MANAGING DIRECTOR PORTFOLIO MANAGER, DUPONT PENSION
FUND INVESTMENT, 1 RIGHT PARKWAY,
WILMINGTON, DE 19850; DIRECTOR,
BOARD OF PENSIONS, PRESBYTERIAN
CHURCH, 1001 MARKET ST.,
PHILADELPHIA, PA
THOMAS J. KUREY PRIOR TO AUGUST, 1997, VICE
VICE PRESIDENT PRESIDENT, EVERGREEN SECURITIES,
77 W. WACKER, Chicago, IL
60601
LINDA LANE MEMBER, AMERICAN SOCIETY FOR
ASSISTANT VICE PRESIDENT TRAINING & DEVELOPMENT, 27 GLEN
STREET, SUITE 4, STOUGHTON, MA
02072
KENNETH W. LANG Prior to April, 1997, VICE
VICE PRESIDENT PRESIDENT, MONTGOMERY SECURITIES,
600 MONTGOMERY ST., SAN
FRANCISCO, CA 94111
COLEMAN N. LANNUM, III PRIOR TO JUNE, 1997, DIRECTOR-
SENIOR VICE PRESIDENT INVESTOR RELATIONS, MALLINCKRODT,
INC., 7733 FORSYTH BLVD., ST.
LOUIS, MO 63105
LEONARD LAPORTA, JR. PRIOR TO MARCH, 1998, ASSISTANT
VICE PRESIDENT VICE PRESIDENT, STATE STREET
GLOBAL ADVISORS, TWO
INTERNATIONAL PLACE, BOSTON, MA
02110; BOARD OF OVERSEERS', USS
CONSTITUTION MUSEUM, CHARLESTON,
MA
LAWRENCE J. LASSER DIRECTOR, MARSH & MCLENNAN
PRESIDENT, DIRECTOR AND CHIEF COMPANIES, INC., 1221 AVENUE OF
EXECUTIVE THE AMERICAS, NEW YORK, NY
10020; BOARD OF GOVERNORS AND
EXECUTIVE COMMITTEE, INVESTMENT
COMPANY INSTITUTE, 1401 H. ST.,
N.W. SUITE 1200, WASHINGTON, DC
20005; BOARD OF OVERSEERS, MUSEUM
OF FINE ARTS, 465 HUNTINGTON,
AVE., BOSTON, MA 02115; TRUSTEE,
BETH ISRAEL DEACONESS MEDICAL
CENTER, 330 BROOKLINE AVE.,
BOSTON, MA; MEMBER OF THE COUNCIL
ON FOREIGN RELATIONS, 58 EAST
68TH ST., NEW YORK, NY 10021;
MEMBER OF THE BOARD OF DIRECTORS
OF THE UNITED WAY OF
MASSACHUSETTS BAY, 245 SUMMER
ST., SUITE 1401, BOSTON, MA
02110; TRUSTEE OF THE VINEYARD
OPEN LAND FOUNDATION, RFD BOX
319X, VINEYARD HAVEN, MA 02568.
JOAN M. LEARY PRIOR TO JANUARY, 1997, SENIOR
VICE PRESIDENT TAX MANAGER, KMPG, 99 HIGH
STREET, BOSTON, MA 02110
CRAIG S. LEWIS PRIOR TO JANUARY, 1998, ANALYST,
VICE PRESIDENT KEYSTONE INVESTMENTS, 200
BERKELEY STREET, BOSTON, MA
02101
GEIRULV LODE PRIOR TO JULY, 1997, VICE
VICE PRESIDENT PRESIDENT, CHANCELLOR LGT, ASSET
MANAGEMENT, 1166 AVENUE OF THE
AMERICAS, NEW YORK, NY 10036
ELIZABETH M. MACELWEE PRIOR TO JANUARY, 1998,
SENIOR VICE PRESIDENT PRINCIPAL, MORGAN STANLEY, 1155
BROADWAY, NEW YORK, NY 10036
DIANA R. MADONNA PRIOR TO JANUARY, 1997,
ASSISTANT VICE PRESIDENT LIBRARIAN, LIPPER ANALYTICAL
SERVICES, INC., 1380 LAWRENCE
ST., DENVER, CO 80204
SARA MALAK PRIOR TO OCTOBER, 1997,
VICE PRESIDENT CONSULTANT, THE BOSTON
CONSULTANT, EXCHANGE PLACE,
BOSTON, MA 02109
BRUCE D. MARTIN PRIOR TO APRIL, 1997, VICE
VICE PRESIDENT PRESIDENT, EATON VANCE, 29
BOSTON, MA 02110
KEVIN MALONEY INSTITUTIONAL DIRECTOR, FINANCIAL
MANAGING DIRECTOR MANAGEMENT ASSOCIATION,
UNIVERSITY OF SOUTH FLORIDA,
COLLEGE OF BUSINESS
ADMINISTRATION, SUITE 3331,
TAMPA, FL 33620
SCOTT M. MAXWELL PRIOR TO MARCH, 1997, CHIEF
MANAGING DIRECTOR FINANCIAL OFFICER-EQUITY
DIVISION, LEHMAN BROTHERS, 3
WORLD FINANCIAL CENTER, NEW YORK,
NY 10285
BRIDGET MCCAVOY PRIOR TO OCTOBER, 1997, SENIOR
ASSISTANT VICE PRESIDENT RECRUITER, BANKBOSTON, 100
FEDERAL ST., BOSTON, MA 02110;
PRIOR TO OCTOBER, 1996. EXECUTIVE
RECRUITER, HI HUNT & CO., 99
SUMMER ST., BOSTON, MA 02110
WILLIAM MCGUE BOARD MEMBER, SACRED HEART
MANAGING DIRECTOR ELEMENTARY SCHOOL, 75 COMMERCIAL
ST.,WEYMOUTH, MA 02188; BOARD OF
DIRECTORS MEMBER AND TREASURER,
WHITTEMORE SHORES CONDOMINIUM
ASSOCIATION, BRIDGEWATER, NH
03222
PAUL K. MICHAUD PRIOR TO DECEMBER, 1997,
VICE PRESIDENT ASSISTANT VICE PRESIDENT, UNION
BANK OF SWITZERLAND,
BAHNHOFSTRASSE 45, 8021 ZURICH,
SWITZERLAND
CAROL H. MILLER BOARD MEMBER, THE ROBBINS-DE
ASSISTANT VICE PRESIDENT BEAUMONT FOUNDATION, C/O SULLIVAN
& WORCESTER, ONE POST OFFICE
SQUARE, BOSTON, MA 02109; BOARD
MEMBER, BURKE MTN. ACADEMY, EAST
BURKE, VT; BOARD MEMBER, THE
LYRIC STAGE THEATER, 140
CLARENDON ST., BOSTON, MA 02116;
BOARD MEMBER, THE BOSTON MODERN
ORCHESTRA PROJECT, P.O. BOX
39134, CAMBRIDGE, MA 02139
CHRISTOPHER G. MILLER PRIOR TO JANUARY, 1998, Portfolio
VICE PRESIDENT Manager, ANALYTIC TSA
GLOBAL ASSET MANAGEMENT, 700 SO.
FLOWER ST., LOS ANGELES, CA 90017
WILLIAM H. MILLER PRIOR TO OCTOBER, 1997, VICE
SENIOR VICE PRESIDENT PRESIDENT AND ASSET PORTFOLIO
MANAGER, DELAWARE MANAGEMENT, ONE
COMMERCE SQUARE, PHILADELPHIA, PA
JEANNE L. MOCKARD TRUSTEE, THE BRYN MAWR SCHOOL,
SENIOR VICE PRESIDENT 109, W. MELROSE AVENUE,
BALTIMORE, MA 21210
GERARD I. MOORE PRIOR TO AUGUST, 1997, VICE
VICE PRESIDENT PRESIDENT/EQUITY RESEARCH, BOSTON
COMPANY ASSET MANAGEMENT, ONE
BOSTON PLACE, BOSTON, MA 02109
KELLY A. MORGAN PRIOR TO SEPTEMBER, 1996, SENIOR
SENIOR VICE PRESIDENT VICE PRESIDENT AND INTERNATIONAL
PORTFOLIO MANAGER, ALLIANCE
CAPITAL MANAGEMENT, 1345 AVENUE
OF THE AMERICAS, NEW YORK, NY
10020
DONALD E. MULLIN CORPORATE REPRESENTATIVE AND
SENIOR VICE PRESIDENT BOARD MEMBER, DELTA DENTAL PLAN
OF MASSACHUSETTS, 10 PRESIDENTS
LANDING, P.O. BOX 94104, MEDFORD,
MA 02155
GAYLE M. O'CONNELL PRIOR TO MARCH, 1997, ASSISTANT
ASSISTANT VICE PRESIDENT DIRECTOR OF HUMAN RESOURCES, ITT
SHERATON CORPORATION, 60 STATE
ST., BOSTON, MA 02109
STEPHEN S. OLER PRIOR TO JUNE, 1997, VICE
SENIOR VICE PRESIDENT PRESIDENT, TEMPLETON INVESTMENT
COUNSEL, 500 E. BROWARD BLVD.,
FT. LAUDERDALE, FL 33394
KERRY M. OWENS PRIOR TO JULY, 1998, MARKETING
ASSISTANT VICE PRESIDENT MANAGER, ABN AMRO, 199
BISHOPSGATE, LONDON, ENGLAND,
EC2M 3TY; PRIOR TO APRIL, 1997,
ASSISTANT MANAGER, CITIBANK, 336
STRAND, LONDON, ENGLAND, WC2
KIMBERLY A.M. PAGE PRIOR TO FEBRUARY, 1998, SENIOR
ASSISTANT VICE PRESIDENT CONSULTANT, ANDERSEN CONSULTING,
100 WILLIAMS ST., WELLESLEY, MA
02181
MARGERY C. PARKER PRIOR TO DECEMBER, 1997, VICE
SENIOR VICE PRESIDENT PRESIDENT AND PORTFOLIO MANAGER,
KEYSTONE INVESTMENTS 200 BERKELEY
STREET, BOSTON, MA 02101
CARMEL PETERS PRIOR TO APRIL, 1997, MANAGING
SENIOR VICE PRESIDENT DIRECTOR/CHIEF INVESTMENT ASIA
PACIFIC, WHELLOCK NATWEST
INVESTMENT MANAGEMENT, LTD,
NATWEST TOWER, TIMES SQUARE,
CAUSEWAY BAY, HONG KONG, CHINA
WILLIAM PERRY PRIOR TO SEPTEMBER, 1997, SENIOR
VICE PRESIDENT TRADER, FIDELITY MANAGEMENT &
RESEARCH, 82 DEVONSHIRE ST.,
BOSTON, MA 02110
KEITH PLAPINGER CHAIRMAN AND TRUSTEE, ADVENT
VICE PRESIDENT SCHOOL, 17 BRIMMER ST., BOSTON,
MA 02108
CHARLES E. PORTER TRUSTEE, ANATOLIA COLLEGE, 130
EXECUTIVE VICE PRESIDENT BOWDOIN ST., SUITE 1201, BOSTON,
MA 02108; GOVERNOR, HANDEL &
HAYDEN SOCIETY, HORTICULTURE
HALL, 300 MASSACHUSETTS AVE.,
BOSTON, MA 0215
GEORGE PUTNAM CHAIRMAN AND DIRECTOR, PUTNAM
CHAIRMAN AND DIRECTOR MUTUAL FUNDS CORP.; DIRECTOR, THE
BOSTON COMPANY, INC., ONE BOSTON
PLACE, BOSTON, MA 02108;
DIRECTOR, BOSTON SAFE DEPOSIT AND
TRUST COMPANY, ONE BOSTON PLACE,
BOSTON, MA 02108; DIRECTOR,
FREEPORT-MCMORAN, INC., 200 PARK
AVENUE, NEW YORK, NY 10166;
DIRECTOR, GENERAL MILLS, INC.,
9200 WAYZATA BOULEVARD,
MINNEAPOLIS, MN 55440; DIRECTOR,
HOUGHTON MIFFLIN COMPANY, ONE
BEACON STREET, BOSTON, MA 02108;
DIRECTOR, MARSH & MCLENNAN
COMPANIES, INC., 1221 AVENUE OF
THE AMERICAS, NEW YORK, NY
10020; DIRECTOR, ROCKEFELLER
GROUP, INC., 1230 AVENUE OF THE
AMERICAS, NEW YORK, NY 10020;
TRUSTEE, MASSACHUSETTS GENERAL
HOSPITAL, FRUIT STREET, BOSTON,
MA 02114; MCLEAN HOSPITAL 115
MILL ST., BELMONT,MA 02178; THE
COLONIAL WILLIAMSBURG FOUNDATION,
POST OFFICE BOX 1776,
WILLIAMSBURG, VA 23187; THE
MUSEUM OF FINE ARTS, 465
HUNTINGTON AVENUE, BOSTON, MA
02115; WGBH FOUNDATION, 125
WESTERN AVENUE,BOSTON, MA 02134;
THE NATURE CONSERVANCY, POST
OFFICE SQUARE BUILDING, 79 MILK
ST., SUITE 300, BOSTON, MA 02109;
TRUSTEE, THE JACKSON LABORATORY,
600 MAIN ST., BAR HARBOR, ME 04
ROBERT A. PIEPENBURG PRIOR TO DECEMBER, 1997,
VICE PRESIDENT ASSISTANT VICE PRESIDENT,
BANKBOSTON CORP./BOSTON SECURITY,
100 FEDERAL ST., BOSTON, MA
02106
ELIZABETH PRICE PRIOR TO JANUARY, 1998,
ASSISTANT VICE PRESIDENT INVESTMENT ANALYST, SCHRODER
INVESTMENT MANAGEMENT LIMITED, 33
GUTTER LANE, LONDON, EC2V 8AS,
ENGLAND
EDWARD QIAN PRIOR TO FEBRUARY, 1998, BACK BAY
VICE PRESIDENT ADVISORS, 399 BOYLSTON ST.,
BOSTON, MA 02116; PROR TO
SEPTEMBER, 1996, POST-DOCTORATE
RESEARCH, MASSACHUSETTS INSTITUTE
OF TECHNOLOGY, 77 MASSACHUSETTS
AVENUE, CAMBRIDGE, MA 02109
KEITH QUINTON DIRECTOR, ELEAZAR, INC., WEST
SENIOR VICE PRESIDENT WHEELOCK ST., HANOVER, NH 03755
THOMAS V. REILLY TRUSTEE, KNOX COLLEGE, 2 EAST
MANAGING DIRECTOR SOUTH ST., GALESBURG, IL 61401
MARC J. RITENHOUSE PRIOR TO JANUARY, 1998, DIRECTOR
VICE PRESIDENT OF FINANCE, FIDELITY INVESTMENTS,
INC., 82 DEVONSHIRE ST., BOSTON,
MA 02109
OLIVER RUDIGOZ PRIOR TO APRIL, 1998, PORTFOLIO
VICE PRESIDENT MANAGER, PARIBAS ASSET
Management, #3 Rue D'Antin,
Paris, France, 75002
Michael V. Salm Prior to November, 1997, Mortgage
VICE PRESIDENT Analyst, Blackrock Financial
345 Park Ave., New York,
NY 10010
Robert J. Schoen Prior to June, 1997, Sole
ASSISTANT VICE PRESIDENT Proprietor, Schoen Timing
Strategies, 315 E. 21st
, New York, NY 10010
Justin M. Scott Director, DSI PROPRIETIES
MANAGING DIRECTOR (Neja) Ltd., Epping Rd., Reydon,
Essex CM19 5RD
Max S. Senter General Partner, M.S. Senter &
SENIOR VICE PRESIDENT Sons Partnership, 4900
Fayetteville Rd., Raleigh,
NC 27611
Edward Shadek, Jr. Prior to March, 1997, Portfolio
VICE PRESIDENT Manager, Newhold Asset
Management, 950 Haverford Rd.,
Bryn Mawr, PA 19010
Raj Ken Sharma Prior to January, 1998, Vice
VICE PRESIDENT President and Portfolio Manager,
Fleet Financial, 75 State
Street, Boston, MA 02106
GORDON H. SILVER Trustee, Wang Center for
MANAGING DIRECTOR the Performing Arts, 270 Tremont
St., BOSTON, MA 02116
DAVID M. SILK MEMBER OF BOARD OF DIRECTORS,
SENIOR VICE PRESIDENT JOBS FOR BAY STATE GRADUATES, 451
ANDOVER ST., SUITE 305, NORTH
ANDOVER, MA 01845
Steven Spiegel Director, Ultra DIAMOND
SENIOR MANAGING DIRECTOR AND GOLD OUTLET., 29 East Madison
St., SUITE 1800, Chicago, IL
60602; DIRECTOR, FACES NEW YORK
UNIVERSITY MEDICAL CENTER, 550
FIRST AVENUE, NEW YORK, NY
10016; Trustee, Babson
College, One College Drive,
Wellesley, MA 02157;
Christopher A. Spurlock Prior to May, 1997, Sales Trader,
VICE PRESIDENT J.P. Morgan, 60 Wall St.,
New York, NY
Michael P. Stack Prior to November, 1997, Senior
SENIOR VICE PRESIDENT Vice President and Portfolio
Manager, Independence
Investment Associates, 53 State
St., Boston, MA 02109
Casey STRUMPFT Prior to January, 1997, Director,
SENIOR VICE PRESIDENT Blue Cross and Blue SHIRELD,
100 Summer St., Boston,
MA 02110
Prior to February, 1998, Vice
President, Corporate Research
Robert E. Sweeney Smith Barney, One New
VICE PRESIDENT York Plaza, New York, NY 10004
Judith H. Swirbalus Prior to January, 1998, Alex,
VICE PRESIDENT Brown & Sons, One South St.,
Baltimore, MD 21202
JOHN C. TALANIAN MEMBER OF BOARD OF DIRECTORS, THE
MANAGING DIRECTOR JAPAN SOCIETY OF BOSTON, ONE MILK
STREET, BOSSTON, MA 02109
Robert J. Toner Prior to September, 1998,
ASSISTANT VICE PRESIDENT Associate, Goodwin Procter &
Hoar, LLP, Exchange
Place, Boston, MA 02109
John R. Tonkin Prior to January, 1998, Analyst,
ASSISTANT VICE PRESIDENT Credit Suisse First Boston
Celtic Towers, The
Terrace Wellington, New
Zealand
Prior to September, 1997,
Staffing Lead, Cisco Systems, 250
Scott G. Vierra APOLIO Drive, Chelmsford,
VICE PRESIDENT MA 01824
David L. Waldman Prior to June, 1997, Senior
MANAGING DIRECTOR Portfolio Manager, Lazard Feres
Asset Management, 30
Rockefeller Center, New York, NY
10112
Paul C. Warren Prior to May, 1997, Director, IDS
SENIOR VICE PRESIDENT Fund Management, LT, One
Pacific Place, SQUENSWAY,
Hong Kong, China
DIERDRE WEST-SMITH TRUSTEE, ST. JAMES CONDO
ASSISTANT VICE PRESIDENT ASSOCIATION, 66 ST. JAMES ST.,
ROXBURY, MA 02119
Eric Wetlaufer PRESIDENT AND MEMBER OF
Managing Director BOARD OF DIRECTORS, THE BOSTON
SECURITY ANALYSTS SOCIETY, INC.,
100 BOYLSTON ST., SUITE 1050,
Boston, MA 02110
EDWARD F. WHALEN MEMBER OF THE BOARD OF DIRECTORS,
SENIOR VICE PRESIDENT HOCKOMOCK AREA YMCA, 300 ELMWOOD
ST., NORTH ATTLEBORO, MA 02760
Burton Wilson Prior to March, 1997, Associate
VICE PRESIDENT Investments Banking,
Robertson Stephens & Co.,
555 California St., Suite 2600,
San Francisco, CA 94104
RICHARD P. WYKE DIRECTOR, SALEM YMCA, ONE
Senior Vice President SEWALL ST., SALEM, MA 01970
Scott D. Zaleski Prior to May, 1997, Investment
ASSISTANT VICE PRESIDENT Officer, State Street Bank &
Trust, 1776 Heritage Dr.,
Quincy, MA 02171; Prior to
September, 1996, Investment
Associate Fidelity Investments,
82 Devonshire St., Boston, MA
02109
Michael P. Zeller Prior to July, 1997, Sales
VICE PRESIDENT MANGER, NYNEX Information
Resources, 35 Village
R., Middleton, MA 01949
ITEM 29. PRINCIPAL UNDERWRITER
(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:
Putnam American Government Income Fund, Putnam Arizona Tax Exempt
Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset
Allocation Funds, Putnam Balanced Retirement Fund, Putnam
California Tax Exempt Income Fund, Putnam California Tax Exempt
Money Market Fund, Putnam Capital OPPORTUNITITES Fund,
Putnam Convertible Income-Growth Trust, Putnam Diversified Equity
Trust, Putnam Diversified Income Trust, Putnam Equity
Income Fund, Putnam Europe Growth Fund, Putnam Florida
Tax Exempt Income Fund, Putnam Funds Trust, The George Putnam
Fund of Boston, Putnam Global Governmental Income Trust, Putnam
Global Growth Fund, Putnam Global Natural Resources Fund, The
Putnam Fund for Growth and Income, Putnam Growth and Income Fund
II, Putnam Health Sciences Trust, Putnam High Yield Trust, Putnam
High Yield Advantage Fund, Putnam High QUALITY BOND FUND,
Putnam Income Fund, Putnam Intermediate U.S. Government Income
Fund, PUTNAM INTERNATIONAL GROWTH FUND, Putnam Investment Funds,
Putnam Investors Fund, Putnam Massachusetts Tax Exempt Income
Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota
Tax Exempt Income Fund, Putnam Money Market Fund, Putnam
Municipal Income Fund, Putnam New Jersey Tax Exempt Income Fund,
Putnam New Opportunities Fund, Putnam New York Tax Exempt Income
Fund, Putnam New York Tax Exempt Money Market Fund, Putnam New
York Tax Exempt Opportunities Fund, Putnam Ohio Tax Exempt Income
Fund, Putnam OTC & Emerging Growth Fund, Putnam Pennsylvania Tax
Exempt Income Fund, Putnam Preferred Income Fund, PUTNAM
STRATEGIC INCOME FUND, Putnam Tax Exempt Income Fund, Putnam Tax
Exempt Money Market Fund, Putnam Tax-Free Income Trust, Putnam
U.S. Government Income Trust, Putnam Utilities Growth and Income
Fund, Putnam Variable Trust, Putnam Vista Fund, Putnam Voyager
Fund, Putnam Voyager Fund II.
(b) The directors and officers of the Registrant's principal
underwriter are listed below. The principal business address of
each person is One Post Office Square, Boston, MA 02109:
Name Positions and Positions and
Offices Offices
with Underwriter with Registrant
Aaron,Jeff F. Asst. Vice None
President
Adduci,John V. Vice President None
Albanese,Frank Vice President None
Alberts,Richard W. Asst. Vice None
President
Alden,Donald F. Vice President None
Alders,Christopher A. Senior Vice None
President
Alpaugh,Christopher S. Vice President None
Amisano,Paulette C. Vice President None
Andrews,Margaret Vice None
President
Arends,Michael K. Senior Vice None
President
Asher,Steven E. Senior Vice None
President
Avery,Scott A. Senior Vice None
President
Aymond,Christian E. Senior Vice None
President
Aymond,Colin C. Vice President None
Battit,Suzanne J Vice President None
Beatty,Steven M. Senior Vice None
President
Bent,John J. Vice President None
Beringer,Thomas VICE President None
C.
Berka,Sharon A. Senior Vice None
President
Boneparth,John F. Managing Director None
Bonfilio Jr.,Peter J. Asst. Vice None
President
Bouchard,Keith R. Senior Vice None
President
Bradford Jr.,Linwood Senior Vice None
E. President
Brennan,Mary Ann Asst. Vice None
President
Bresnahan,Leslee R. Senior Vice None
President
Brockelman,James D. Senior Vice None
President
Brookman,Joel S. Vice President None
Brown,Timothy K. Senior Vice None
President
Buckner,Gail D. Senior Vice None
President
Burke,Robert W. Sr Managing None
Director
Cabana,Susan D. Vice President None
Callahan,Thomas C. Asst. Vice None
President
Capone,Robert G. Senior Vice None
President
Cartwright,Patricia A. Asst. Vice None
President
Casey,David M. Vice President None
Castle Jr.,James R. Vice PRESIDENT NONE
CHAPMAN,THOMAS E. VICE President None
Chase,Mary Claire Vice President None
Chrostowski,Louis F. Senior Vice None
President
Church,Daniel J. Vice President None
Clark,Richard B. Senior Vice None
President
Clermont,Mary Asst. Vice None
President
Clinton,John C. Asst. Vice None
President
Collman,Kathleen M. Sr Managing None
Director
Commane,Karen L. Asst. Vice None
President
Coneeny,Mark L. Senior Vice None
President
Connelly, Senior Vice None
Donald A. President
Connolly,Karen E. Asst. Vice None
President
Conyers,Barry M. Vice President None
Corbett,Dennis Vice President None
Corvinus,F. Nicholas Senior Vice None
President
Cosmer,Thomas A. Senior Vice NONE
PRESIDENT
COTTO,STEPHEN P ASST. VICE None
President
Cristo,Chad H. Vice President None
Cropper,Joy Bacher Asst. Vice None
President
Crowley,Colleen J. Asst. Vice None
President
Curran,Peter J. Senior Vice None
President
Dahill,Jessica E. Vice President None
Daly,Kenneth L. Managing Director None
Dane,Edward H. Senior Vice None
President
Daylor,Donna M. Vice President None
Days,Nancy M. Asst. Vice None
President
De Oliveira- Asst. Vice None
Smith,Pamela President
Deluse,Laura R. Asst. Vice None
President
DeMont,Lisa M. Vice President None
Dennehy,Teresa F. Vice PRESIDENT NONE
DERBYSHIRE,RALPH C SENIOR VICE NONE
PRESIDENT
DEVIN,RENATE S. SENIOR VICE None
President
DiRe,Lisa M. Asst. Vice None
President
DiStasio,Karen E. Vice President None
Dolan,Michael G. Vice President None
Donaldson,Scott M. Vice President None
Duffy,Deirdre E. Senior Vice None
President
Durbin,Emily J. Vice PRESIDENT NONE
DURKEE,CHRISTINE ASST. VICE None
President
Edlin,David B. Managing Director None
Eisenkraft,Gail A. Managing Director None
English,James M. Senior Vice None
President
Esposito,Vincent Managing NONE
DIRECTOR
FARRELL,DEBORAH S. SENIOR VICE None
President
Feldman,Susan H. Senior Vice None
President
Fisher,C. Nancy Managing Director None
Fishman,Mitchell B. Senior Vice None
President
Fiumara,Joseph C. Vice President None
Flaherty,Patricia C. Senior Vice None
President
Fleisher,Kate Vice NONE
PRESIDENT
FOLEY,TIMOTHY P. VICE PRESIDENT NONE
FROST,KAREN T. SENIOR Vice None
President
Fullerton,Brian J. Senior Vice None
President
Gates,Judy S. Senior Vice None
President
Gennaco,Joseph P. Senior Vice NONE
PRESIDENT
GIBBS,STEPHEN C. VICE President None
Gindel,Caroline E. Asst. Vice None
President
Goodfellow,Mark D. Vice President None
Goodman,Robert Managing Director None
Gould,Carol J. Asst. Vice NONE
PRESIDENT
]GRACE,Anthony J. Asst. Vice None
President
Grace,Linda K. Vice PRESIDENT NONE
GREENWOOD,DANIEL W. VICE President None
Grossberg,Jill Asst. Vice None
President
Grove,Denise Vice President None
Guay,Timothy R. Asst. Vice None
President
Gubala,Jeffrey P. Vice President None
Guerin,Donnalee Asst. Vice None
President
Guerra,Salvatore F. Vice PRESIDENT NONE
HAINES,JAMES B. ASST. VICE None
President
Hall,Debra L. Vice President None
Halloran,James E. Vice President None
Halloran,Thomas W. Senior Vice None
President
Harbeck,John D. Vice President None
Harrington,Bruce D. Vice President None
Hartigan,Craig W. Vice President None
Hartley,Deborah M. Asst. Vice None
President
Hawkins III,Howard W. Vice President None
Hayes-Castro,Deanna R. Vice None
President
Hedstrom,Gayle A. Asst. Vice None
President
Heffernan,Paul P. Senior Vice None
President
Heimanson,Susan M. Senior Vice None
President
Holly Sr.,Jeremiah K. Vice President None
Holmes,Maureen A. Asst. Vice None
President
Hooley,Daniel F Jr. Asst. Vice None
President
Hoyt,Paula J. Asst. Vice None
President
Hurley,William J. Managing Director NONE
& CFO
HUTCHINS,ROBERT B. VICE PRESIDENT NONE
ISGUR,Marianne P. Asst. Vice None
President
Jacobsen,Dwight D. Managing NONE
DIRECTOR
JORDAN,Stephen R. Asst. Vice None
President
Kapinos,Peter J. Vice President None
Kay,Karen R. Senior Vice NONE
PRESIDENT
KELEHER,KEVIN J. ASST. VICE None
President
Kelley,Brian J. Vice President None
Kelly,A.Siobhan Asst. Vice None
President
Kennedy,Alicia C. Asst. Vice None
President
King,David L. MANAGING DIRECTOR NONE
KING,DAVID R. VICE PRESIDENT NONE
KINOSHITA,TAKASHI VICE President None
Kinsman,Anne Senior Vice None
President
Kirk,Deborah H. Senior Vice None
President
Koontz,Jill A. Senior Vice None
President
Kreutzberg,Howard H. Senior Vice None
President
Krieger,Marjorie B. Vice President None
Lacascia, VICE PRESIDENT NONE
CHARLES M.
LANDERS,BRUCE M. VICE President None
Lane,Linda Asst. Vice None
President
LaPierre,Christopher W Asst. Vice None
President
Lathrop,James D. Senior Vice None
President
Lawlor,Stephanie T. Asst. Vice None
President
Leary,Joan M. Vice President None
Ledbetter,Charles C. Vice President None
Leipsitz,Margaret Asst. Vice None
President
Lemire,Kevin Vice President None
Leonardo,Christine A. Vice President None
Levy,Eric S. Senior Vice NONE
PRESIDENT
LEVY,NORMAN S. VICE President None
Lewandowski Jr.,Edward Vice President None
V.
Lewandowski,Edward V. Senior Vice None
President
Li,Mei Asst. Vice None
President
Lieberman,Samuel L. Vice President None
Lifsitz,David M. Vice President None
Lilien,David R. Vice President None
Linehan,Ann-Marie Asst. Vice None
President
Litant,Lisa M. Asst. Vice None
President
Lockwood,Maura A. Senior Vice None
President
Lomba,Rufino R. Senior Vice None
President
Long,Gregory T. Vice President None
Lucey,Kevin J Vice President None
Lucey,Robert DIRECTOR NONE
F.
LUCEY, THOMAS PRESIDENT AND NONE
DIRECTOR
LYONS,Robert F. Asst. Vice None
President
Malatos,Ann Vice President None
Mallin,Bonnie J. Senior VICE NONE
PRESIDENT
MALOOF,RENEE L. ASST. Vice None
President
Mancini,Dana Asst. Vice NONE
PRESIDENT
MANNING,GEORGE J. VICE President None
Manthorne,Heather M. Asst. Vice None
President
Maravel,Alexi A. Asst. Vice None
President
Marius,Frederick S. Vice President None
McAvoy,Bridget Asst. Vice None
President
McCafferty,Karen A. Vice President None
McCarthy,Anne B. Asst. Vice None
President
McConville,Paul D. Senior Vice None
President
McCracken,Brian Asst. Vice None
President
McCutcheon,Bruce A Senior Vice None
President
McDermott,Daniel E. Asst. Vice None
President
McKenna,Mark J. Senior Vice None
President
McNamara,Laura Vice President None
McNamee,Mary G. Asst. VICE NONE
PRESIDENT
MEAGHER,DOROTHY B. ASST. Vice None
President
Metelmann,Claye A. Vice President None
Milgroom,Eric D. Asst. Vice None
President
Miller,Bart D. Senior Vice None
President
Miller, Managing Director None
Jeffrey M.
Mills,Ronald K. Vice President None
Minsk,Judith Asst. Vice None
President
Mintzer,Matthew P. Senior Vice None
President
Monahan,Kimberly A. Vice President None
Moody,Paul R. Vice PRESIDENT NONE
MOONIN,SARA R. ASST. VICE None
President
Moret,Mitchell L. Senior Vice None
President
Mosher,Barry L. Asst. Vice None
President
Mullen,Donald E. Senior Vice None
President
Murphy JR.,KENNETH W. ASST. VICE NONE
PRESIDENT
MURPHY,Paul G. Vice President None
Murray,Brendan R. Vice President None
Nadherny,Robert Senior Vice None
President
Natale,Ellen E. Asst. VICE NONE
PRESIDENT
NAUEN,KIMBERLY PAGE ASST. Vice None
President
Neary,Ellen R. Vice President None
Nelson,Alexander L. Managing Director None
Newell,Amy Jane Vice President None
Nickodemus,John P. Senior Vice None
President
Nickse,Gail A. Asst. Vice None
President
O'Brien,Lois C. Vice President None
O'Brien,Nancy E. Vice President None
O'Connell,Gayle M. Asst. Vice None
President
Onofrio,Ellen Asst. Vice NONE
PRESIDENT
OWENS,KERRY M. ASST. Vice None
President
Palmer,Patrick J. Vice President None
Palombo,Joseph R. Managing NONE
DIRECTOR
PANESSA,BRIAN VICE PRESIDENT NONE
PAPES,Scott A. Vice President None
Parr,Cynthia O. Vice President None
Pelletier,Dale M. Vice President None
Peterson,Jennifer H. Asst. Vice None
President
Peterson, VICE PRESIDENT NONE
KATHRYN L.
PETRALIA,RANDOLPH S. SENIOR VICE None
President
Phoenix,John G. Senior Vice None
President
Phoenix,Joseph Senior Vice None
President
Plapinger,Keith Senior Vice NONE
PRESIDENT
POWERS,BRIAN S. ASST. Vice None
President
Present,Howard B. Senior Vice None
President
Pulkrabek,Scott M. Vice President None
Putnam,George Director Chairman and
PRESIDENT
REZABEK,Joseph L. Asst. Vice None
President
Riley,Megan G. Asst. Vice None
President
Ritenhouse,Marc J. Vice President None
Rodammer,Kris Vice President None
Rogers,Deborah A. Vice President None
Rothman,Debra V. Vice President None
Rowe,Robert B. Vice None
President
Ruys de Perez,Charles Senior Vice None
A. President
Ryan,Carolyn M. Asst. Vice None
President
Ryan,Deborah A. Vice None
President
Saunders,Catherine A. Senior Vice None
President
Saunders,Robbin L. Vice President None
Saur,Karl W. Vice President None
Scanlon,Michael M. Vice President None
Schaefer,Jennifer L. Asst. Vice None
President
Schofield,Shannon D. Vice President None
Schroeder,Paul R. Asst. Vice None
President
Schultz,Mitchell D. Managing Director None
Scordato,Christine A. Senior Vice None
President
Scott,Joseph W. Asst. Vice None
President
Segers,Elizabeth R. Senior Vice None
President
Shamburg,John B. Vice President None
Sharpless,Kathy G. Managing NONE
DIRECTOR
SHIEBLER,WILLIAM N. DIRECTOR VICE PRESIDENT
SHORT,JONATHAN D. SENIOR VICE NONE
PRESIDENT
SILVER,GORDON H. SENIOR Managing Vice President
Director
Skistimas Jr,John J. Vice President None
Smith,Stuart C. Asst. Vice None
President
Southard,Peter J. Vice President None
Spiegel,Steven Sr Managing None
Director
Stack,Michael P. Senior Vice None
President
Stanojev,Nicholas T. Senior Vice NONE
PRESIDENT
STARR,LOREN M. MANAGING DIRECTOR NONE
STEINBERG,Lauren B. Asst. Vice None
President
Stern,Derek A. Asst. Vice None
President
Stickney,Paul R. Senior Vice None
President
Strumpf,Casey Senior Vice None
President
Sullivan,Brian L. Senior Vice None
President
Sullivan,Donna G Vice President None
Sullivan,Elaine M. Senior Vice None
President
Sullivan,Guy Managing Director None
Sullivan,Kevin J. Senior Vice None
President
Sullivan,Maryann Asst. Vice None
President
Sutherland,George C. Vice NONE
PRESIDENT
SWEENEY,JANET C. SENIOR VICE NONE
PRESIDENT
TALANIAN,JOHN C. MANAGING DIRECTOR NONE
TANNER,B Iris Vice President None
Tavares,April M. Asst. Vice None
President
Taylor,David S. Vice President None
Telling,John R. Senior Vice None
President
Tercha,Cynthia Vice President None
Thomas,Tracy ASST. Vice None
E. President
Tibbetts,Richard B. Managing Director None
Tirado,Patrice M. Vice PRESIDENT NONE
TONER,ROBERT J. ASST. VICE None
President
Tosi,Janet E. Vice President None
Troped,Bonnie L. Senior Vice None
President
Trowbridge,Wendy S. Asst. Vice None
President
Twigg,Christine M. Asst. Vice None
President
Vander Linde,Douglas Senior Vice None
J. President
Verani,John R. Senior Vice Vice President
President
Vierra,Scott G. Vice None
President
Waters,Mitchell J. Vice None
President
West-Smith,Deirdre Asst. Vice NONE
PRESIDENT
WHALEN,Brian Vice President None
Whalen,Edward F. Senior Vice None
President
Whitaker,J. Greg Vice President None
White,J. Bennett Vice None
President
Wolfson,Jane Senior Vice None
President
Woloshin,Benjamin I. Senior Vice None
President
Woolverton,William H. Managing Director None
Zeller,Michael P. Vice President None
Zografos,Laura J. Vice President None
Zukowski,Virginia A. Senior Vice None
President
Item ^ 28. Location of Accounts
and Records
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are Registrant's Clerk, Beverly Marcus;
Registrant's investment adviser, Putnam Investment Management,
Inc.; Registrant's principal underwriter, Putnam Mutual Funds
Corp.; Registrant's custodian, Putnam Fiduciary Trust Company
("PFTC"); and Registrant's transfer and dividend disbursing
agent, Putnam Investor Services, a division of PFTC. The address
of the Clerk, investment adviser, principal underwriter,
custodian and transfer and dividend disbursing agent is One Post
Office Square, Boston, Massachusetts 02109.
Item ^ 29. Management Services
None.
Item ^ 30. Undertakings
(a) The Registrant undertakes to furnish to each person
to whom a prospectus of the Registrant is delivered a copy of the
Registrant's latest annual report to shareholders, upon request
and without charge.
CONSENT OF INDEPENDENT ACCOUNTANTS
We ^ consent to the incorporation by reference in the
Prospectuses and Statement of Additional Information constituting
parts of ^ Post-Effective Amendment No. ^ 48 to the Registration
Statement of Putnam Vista Fund on Form N-1A (File No. 2-27664) ^
of our report dated September ^ 14, 1998, on our audit of the
financial statements and financial highlights appearing in the
July 31, ^ 1998 Annual Report of Putnam Vista Fund^ which is
incorporated by reference ^ in the Registration Statement. We
also consent to the references to ^ our firm under the ^ caption
"Independent Accountants and Financial Statements" in ^ the
Statement of Additional Information and under the heading
^"financial highlights" in such Prospectuses.
^ PricewaterhouseCoopers LLP
Boston, Massachusetts
September 28, 1998
--------------------------^
NOTICE
A copy of the Agreement and Declaration of Trust of ^
Vista Fund is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Registrant by an
officer of the Registrant as an officer and not individually and
the obligations of or arising out of this instrument are not
binding upon any of the Trustees, officers or shareholders
individually but are binding only upon the assets and property of
the Registrant.
^
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the ^ fund has duly
caused this Amendment to ^ its Registration Statement to be
signed on its behalf by the undersigned, ^ duly authorized, in
the City of Boston, and The Commonwealth of Massachusetts, on the
^ 29th day of September, 1998.
^ Putnam Vista Fund
By: Gordon H. Silver, Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement of Putnam Vista Fund
has been signed below by the following persons in the capacities
and on the dates indicated:
Signature Title
George Putnam President and Chairman of the
Board; Principal Executive
Officer; Trustee
John D. Hughes Senior Vice President;
Treasurer and Principal
Financial Officer
Paul G. Bucuvalas Assistant Treasurer and
Principal Accounting Officer
Jameson A. Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
^
Ronald J. Jackson Trustee
Paul L. Joskow Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
John H. Mullin, III Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
William F. Pounds Trustee
George Putnam, III Trustee
^
A.J.C. Smith Trustee
W. Thomas Stephens Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver,
as Attorney-in-Fact
September 29, 1998
Exhibit Index
14a. Financial Data Schedule for Class A shares -- Exhibit 1.
14b. Financial Data Schedule for Class B shares -- Exhibit 2.
14c. Financial Data Schedule for Class M shares -- Exhibit 3.
14d. Financial Data Schedule for Class Y shares -- Exhibit 4. ^
</R
></R
>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 1
<ARTICLE> 6
<LEGEND>
Putnam Vista Fund
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 4,160,288,302
<INVESTMENTS-AT-VALUE> 5,282,566,798
<RECEIVABLES> 84,606,347
<ASSETS-OTHER> 7,802,055
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,374,975,200
<PAYABLE-FOR-SECURITIES> 74,312,162
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,222,179
<TOTAL-LIABILITIES> 92,534,341
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,751,600,308
<SHARES-COMMON-STOCK> 243,102,380
<SHARES-COMMON-PRIOR> 209,859,387
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 408,562,055
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,122,278,496
<NET-ASSETS> 5,282,440,859
<DIVIDEND-INCOME> 18,960,253
<INTEREST-INCOME> 7,915,717
<OTHER-INCOME> 0
<EXPENSES-NET> 55,126,827
<NET-INVESTMENT-INCOME> (28,250,857)
<REALIZED-GAINS-CURRENT> 631,850,032
<APPREC-INCREASE-CURRENT> 127,375,274
<NET-CHANGE-FROM-OPS> 730,974,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (207,841,199)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 100,554,869
<NUMBER-OF-SHARES-REDEEMED> (84,813,029)
<SHARES-REINVESTED> 17,501,153
<NET-CHANGE-IN-ASSETS> 1,109,857,975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 142,216,686
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,974,521
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56,456,992
<AVERAGE-NET-ASSETS> 2,936,542,068
<PER-SHARE-NAV-BEGIN> 12.52
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 1.98
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.96)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.49
<EXPENSE-RATIO> .98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</R
>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 2
<ARTICLE> 6
<LEGEND>
Putnam Vista Fund
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 4,160,288,302
<INVESTMENTS-AT-VALUE> 5,282,566,798
<RECEIVABLES> 84,606,347
<ASSETS-OTHER> 7,802,055
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,374,975,200
<PAYABLE-FOR-SECURITIES> 74,312,162
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,222,179
<TOTAL-LIABILITIES> 92,534,341
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,751,600,308
<SHARES-COMMON-STOCK> 123,035,390
<SHARES-COMMON-PRIOR> 100,324,339
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 408,562,055
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,122,278,496
<NET-ASSETS> 5,282,440,859
<DIVIDEND-INCOME> 18,960,253
<INTEREST-INCOME> 7,915,717
<OTHER-INCOME> 0
<EXPENSES-NET> 55,126,827
<NET-INVESTMENT-INCOME> (28,250,857)
<REALIZED-GAINS-CURRENT> 631,850,032
<APPREC-INCREASE-CURRENT> 127,375,274
<NET-CHANGE-FROM-OPS> 730,974,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (102,991,533)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,912,944
<NUMBER-OF-SHARES-REDEEMED> (21,992,849)
<SHARES-REINVESTED> 8,790,956
<NET-CHANGE-IN-ASSETS> 1,109,857,975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 142,216,686
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,974,521
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56,456,992
<AVERAGE-NET-ASSETS> 1,405,684,594
<PER-SHARE-NAV-BEGIN> 12.09
<PER-SHARE-NII> (.14)
<PER-SHARE-GAIN-APPREC> 1.90
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.96)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.89
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 3
<ARTICLE> 6
<LEGEND>
Putnam Vista Fund
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> CLASS M
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 4,160,288,302
<INVESTMENTS-AT-VALUE> 5,282,566,798
<RECEIVABLES> 84,606,347
<ASSETS-OTHER> 7,802,055
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,374,975,200
<PAYABLE-FOR-SECURITIES> 74,312,162
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,222,179
<TOTAL-LIABILITIES> 92,534,341
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,751,600,308
<SHARES-COMMON-STOCK> 9,701,477
<SHARES-COMMON-PRIOR> 7,356,051
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 408,562,055
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,122,278,496
<NET-ASSETS> 5,282,440,859
<DIVIDEND-INCOME> 18,960,253
<INTEREST-INCOME> 7,915,717
<OTHER-INCOME> 0
<EXPENSES-NET> 55,126,827
<NET-INVESTMENT-INCOME> (28,250,857)
<REALIZED-GAINS-CURRENT> 631,850,032
<APPREC-INCREASE-CURRENT> 127,375,274
<NET-CHANGE-FROM-OPS> 730,974,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (8,092,094)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,570,124
<NUMBER-OF-SHARES-REDEEMED> (2,911,068)
<SHARES-REINVESTED> 686,370
<NET-CHANGE-IN-ASSETS> 1,109,857,975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 142,216,686
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,974,521
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56,456,992
<AVERAGE-NET-ASSETS> 113,606,783
<PER-SHARE-NAV-BEGIN> 12.34
<PER-SHARE-NII> (.11)
<PER-SHARE-GAIN-APPREC> 1.95
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.96)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.22
<EXPENSE-RATIO> 1.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 4
<ARTICLE> 6
<LEGEND>
Putnam Vista Fund
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> CLASS Y
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 4,160,288,302
<INVESTMENTS-AT-VALUE> 5,282,566,798
<RECEIVABLES> 84,606,347
<ASSETS-OTHER> 7,802,055
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,374,975,200
<PAYABLE-FOR-SECURITIES> 74,312,162
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,222,179
<TOTAL-LIABILITIES> 92,534,341
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,751,600,308
<SHARES-COMMON-STOCK> 21,157,165
<SHARES-COMMON-PRIOR> 19,243,869
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 408,562,055
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,122,278,496
<NET-ASSETS> 5,282,440,859
<DIVIDEND-INCOME> 18,960,253
<INTEREST-INCOME> 7,915,717
<OTHER-INCOME> 0
<EXPENSES-NET> 55,126,827
<NET-INVESTMENT-INCOME> (28,250,857)
<REALIZED-GAINS-CURRENT> 631,850,032
<APPREC-INCREASE-CURRENT> 127,375,274
<NET-CHANGE-FROM-OPS> 730,974,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (18,662,362)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,182,440
<NUMBER-OF-SHARES-REDEEMED> (5,909,265)
<SHARES-REINVESTED> 1,640,121
<NET-CHANGE-IN-ASSETS> 1,109,857,975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 142,216,686
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,974,521
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56,456,992
<AVERAGE-NET-ASSETS> 263,394,296
<PER-SHARE-NAV-BEGIN> 12.61
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 2.01
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.96)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.64
<EXPENSE-RATIO> .73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
