PROSPECTUS
December 30, 1997,
as revised July 13, 1998
Putnam International Voyager Fund
Class A, B and M shares
INVESTMENT STRATEGY: GROWTH
This prospectus explains concisely what you should know before
investing in Putnam International Voyager Fund (the "fund"), a
portfolio of Putnam Investment Funds (the "Trust"). Please read
it carefully and keep it for future reference. You can find more
detailed information in the statement of additional
information (the "SAI") dated December 30, 1997, as revised March
18, 1998, as amended from time to time. For a free copy of the
SAI or other information, call Putnam Investor Services at 1-800-
225-1581. The SAI has been filed with the Securities and
Exchange Commission (the "Commission") and is incorporated into
this prospectus by reference. The Commission maintains a Web
site (http
://
www.sec.gov
) that contains the SAI, material
incorporated by reference into this prospectus and the SAI, and
other information regarding registrants that file electronically
with the Commission.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
BOSTON * LONDON * TOKYO<PAGE>
ABOUT THE FUND
Expenses summary
................................................................
This section describes the sales charges, management fees, and
annual operating expenses that apply to various classes of the
fund's shares. Use it to help you estimate the impact of
transaction costs and recurring expenses on your investment over
time.
Financial highlights
............................................................. ....
Study
these
tables
to see, among other things, how the fund
performed each year for the past 10 years or since it began
investment operations if it has been in operation for less than
10 years.
Objective
............................................................. ....
Read this section to make sure the fund's objective is consistent
with your own.
How the fund pursues its objective
.................................................................
This section explains in detail how the fund seeks its investment
objective.
How performance is shown
................................................................
This section describes and defines the measures used to assess
fund performance. All data are based on past investment results
and do not predict future performance.
How the fund is managed
.............................................................. ...
Consult this section for information about the fund's management,
allocation of its expenses, and how it
purchases
and
sells
securities.
Organization and history
................................................................
In this section, you will learn when the fund was introduced, how
it is organized, how it may offer shares, and who its Trustees
are.
ABOUT YOUR INVESTMENT
Alternative sales arrangements
................................................................
Read this section for descriptions of the classes of shares this
prospectus offers and for points you should consider when making
your choice.
How to buy shares
................................................................
This section describes the ways you may purchase shares and tells
you the minimum amounts required to open various types of
accounts. It explains how sales charges are determined and how
you may become eligible for reduced sales charges.
Distribution plans
................................................................
This section tells you what distribution fees are charged against
each class of shares.
How to sell shares
................................................................
In this section you can learn how to sell fund shares, either
directly to the fund or through an investment dealer.
How to exchange shares
................................................................
Find out in this section how you may exchange fund shares for
shares of other Putnam funds. The section also explains how
exchanges can be made without sales charges and the conditions
under which sales charges may be required.
How the fund values its shares
................................................................
This section explains how the fund determines the value of its
shares.
How
the fund makes distributions to shareholders; tax
information
.................................................................
This section describes the various options you have in choosing
how to receive fund dividends. It also discusses the tax status
of the payments and counsels you to seek specific advice about
your own situation.
ABOUT PUTNAM INVESTMENTS, INC.
................................................................
Read this section to learn more about the companies that provide
marketing, investment
management
and shareholder account services
to Putnam funds and their shareholders.
<PAGE>
About
the fund
EXPENSES
SUMMARY
Expenses are one of several factors to consider when investing.
The following table summarizes your maximum transaction costs
from investing in the fund and expenses based on the most recent
fiscal year. The examples show the cumulative expenses
attributable to a hypothetical $1,000 investment over specified
periods.
Class A Class B Class M
shares shares shares
Shareholder transaction
expenses
Maximum sales charge
imposed on purchases
(as a percentage of
offering price) 5.75% NONE* 3.50%*
Deferred sales charge 5.0% in the first
(as a percentage year, declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE** thereafter NONE
Annual
fund operating expenses
(as a percentage of average net assets)
Total fund
Management 12b-1 Other operating
fees+
fees expenses
expenses+
- ---------- ----- -------------------
Class A 1.02% 0.25% 0.83% 2.10%
Class B 1.02% 1.00% 0.83% 2.85%
Class M 1.02% 0.75% 0.83% 2.60%
+ after expense limitation
The table is provided to help you understand the expenses of
investing and your share of fund operating
expenses.
The expenses
shown in the table do not reflect the application of credits that
reduce fund expenses. In the absence of an expense limitation,
management fees and total fund operating expenses would have been
1.20% and 2.28%, respectively, for class A
shares, 1.20%
and
3.03%, respectively, for class B shares,
and 1.20%
and 2.78%,
respectively, for class M
shares. Expenses shown for class B and
M shares have been annualized.
Examples
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and, except as indicated, redemption at
the end of each period:
1 3 5 10
year years years years
Class A $78 $120 $164 $287
Class B $79 $118
$170
$300***
Class B (no redemption) $29 $ 88 $150
$300***
Class M $60 $113 $168 $318
The examples do not represent past or future expense levels.
Actual expenses may be greater or less than those shown. Federal
regulations require the examples to assume a 5% annual return,
but actual annual return varies.
* The higher 12b-1 fees borne by class B and class M shares
may cause long-term shareholders to pay more than the
economic equivalent of the maximum permitted front-end
sales charge on class A shares.
** A deferred sales charge of up to 1.00% is assessed on
certain redemptions of class A shares that were purchased
without an initial sales charge. See "How to buy shares -
Class A shares."
*** Reflects conversion of class B shares to class A shares
(which pay lower ongoing expenses) approximately eight
years after purchase. See "Alternative sales
arrangements."
FINANCIAL HIGHLIGHTS
The following
tables
present
per share financial information for
class A, B and M shares. This information has been audited and
reported on by the independent accountants. The "Report of
independent accountants" and financial statements included in the
fund's annual report to shareholders for the 1997 fiscal year are
incorporated by reference into this prospectus. The fund's
annual report, which contains additional unaudited performance
information, is available without charge upon request.
<PAGE>
Financial highlights
(For a share outstanding throughout the period)
<TABLE> <CAPTION>
<S> <C> <C>
Per share For the period
operating performance December 28,
Year ended 1995+ to
Class A August 31 August 31
1997 1996
Net asset value, beginning
of period $9.47 $8.50
Net investment income (c)(d) .02 .04
Net realized and unrealized
gain on investments 2.28 .93
Total from investment operations 2.30 .97
Less distributions from:
Net investment income (.07) --
Net realized gain on investments (.04) --
Total distributions (.11) --
Net asset value, end of period $11.66 $9.47
Total investment return at net
asset value (%)(a) 24.44 11.41*
Net assets, end of period
(in thousands) $40,687 $2,429
Ratio of expenses to average net
assets (%) (b)(c) 2.10 1.26*
Ratio of net investment income
to average net assets (%)(c) .15 .44*
Portfolio turnover (%) 126.65 55.87*
Average commission rate paid $.0194 $.0181
<PAGE>
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service arrangements.
(c) Reflects an expense limitation in effect during the period. As a result of such
limitation, expenses for class A shares reflect a reduction of approximately $0.08
and $0.02 per share for the periods ended August 31, 1996 and 1997, respectively.
(d) Per share net investment income (loss) has been determined on the basis of the
weighted average number of shares outstanding during the period.
</TABLE>
Financial highlights
(For a share outstanding throughout the period)
<TABLE> <CAPTION>
<S> <C>
Per share
operating performance For the period
Oct. 30, 1996+ to
Class B August 31
1997
Net asset value, beginning
of period $9.82
Net investment income (c)(d) (.06)
Net realized and unrealized
gain on investments 1.94
Total from investment operations 1.88
Less distributions from:
Net investment income (.06)
Net realized gain on investments (.04)
Total distributions (.10)
Net asset value, end of period $11.60
Total investment return at net
asset value (%)(a) 19.35*
Net assets, end of period
(in thousands) $34,463
Ratio of expenses to average net
assets (%) (b) 2.39*
Ratio of net investment income
to average net assets (%) (.50)*
Portfolio turnover (%) 126.65
Average commission rate paid $.0194
<PAGE>
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service arrangements.
(c) Reflects an expense limitation in effect during the period. As a result of such
limitation, expenses for class B shares reflect a reduction of approximately $0.01
per share for the periods ended August 31, 1997.
(d) Per share net investment income (loss) has been determined on the basis of the
weighted average number of shares outstanding during the period.
</TABLE>
Financial highlights
(For a share outstanding throughout the period)
<TABLE> <CAPTION>
<S> <C>
Per share For the period
operating performance October 30,
1996+
Class M to August 31
1997
Net asset value, beginning
of period $9.82
Net investment income (c)(d) (.03)
Net realized and unrealized
gain on investments 1.93
Total from investment operations 1.90
Less distributions from:
Net investment income (.06)
Net realized gain on investments (.04)
Total distributions (.10)
Net asset value, end of period $11.62
Total investment return at net
asset value (%)(a) 19.56*
Net assets, end of period
(in thousands) $4,086
Ratio of expenses to average net
assets (%) (b) 2.18*
Ratio of net investment income
to average net assets (%) (.26)*
Portfolio turnover (%) 126.65
Average commission rate paid $.0194
<PAGE>
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service arrangements.
(c) Reflects an expense limitation in effect during the period. As a result of such
limitation, expenses for class M shares reflect a reduction of approximately $0.02
per share for the period ended August 31, 1997.
(d) Per share net investment income (loss) has been determined on the basis of the
weighted average number of shares outstanding during the period.
</TABLE>
OBJECTIVE
Putnam International Voyager Fund seeks long-term capital
appreciation. The fund is not intended to be a complete
investment program, and there is no assurance that the fund will
achieve its objective.
HOW THE FUND PURSUES ITS OBJECTIVE
Basic investment strategy
The fund will invest primarily in equity securities that
Putnam Investment Management, Inc., the fund's investment manager
("Putnam Management"), believes have above-average prospects for
capital appreciation. Putnam Management currently expects that,
under normal market conditions, substantially all of the fund's
assets, other than cash or short-term investments held pending
investment, will be invested in securities of companies whose
securities are principally traded on foreign markets. The fund
will normally diversify its investments among a number of
different countries and, except when investing for defensive
purposes as described below, will invest at least 65% of its
assets in securities of issuers located in at least three
different countries other than the United States. Equity
securities of smaller capitalization companies (including
companies with equity market capitalizations of less than $4
billion) are expected to represent a substantial portion of the
fund's investments.
The fund may invest in securities of issuers in emerging market
countries, as well as securities of issuers in more developed
countries. Investing in emerging market countries generally
involves special risks. See "Risk factors -- Foreign
investments."
The fund will consider an issuer of securities to be "located in
a country other than the United States" if it is organized under
the laws of a country outside the United States and has a
principal office outside the United States, or if it derives 50%
or more of its total revenues from business outside the United
States.
Common stocks and other equity securities are normally the fund's
main investments. However, the fund may purchase preferred
stock, debt securities and securities convertible into common
stock or other equity securities if Putnam Management believes
they would help achieve the fund's objective. The fund may also
hold a portion of its assets in cash or high-quality money market
instruments.
Because Putnam Management evaluates securities for the fund based
on their long-term potential for capital appreciation, the fund's
investments may not appreciate or yield significant income over
the shorter term, and, as a result, the fund's total return over
certain periods may be less than that of other equity mutual
funds.<PAGE>
Risk factors
Investments in securities of smaller capitalization
companies. The fund may invest in securities of smaller
capitalization companies. These securities may involve certain
special risks. Such companies may have limited product lines,
markets or financial resources, and may be dependent on a limited
management group. Such securities may trade less frequently and
in smaller volume than more widely held securities. The values
of these securities may fluctuate more sharply than those of
other securities, and the fund may experience some difficulty in
establishing or closing out positions in these securities at
prevailing market prices. There may be less publicly available
information about the issuers of these securities or less market
interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such
securities to reflect the full value of their issuers' underlying
earnings potential or assets.
Foreign
investments.
The fund may invest in securities of foreign issuers that are not
actively traded in U.S. markets. 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. The fund may engage in a variety of foreign
currency exchange transactions in connection with its foreign
investments, including transactions involving futures contracts,
forward contracts and options.
Investments in foreign securities may subject the fund to other
risks as well. For example, 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.
<PAGE>
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 or restrictions
on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments
that
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 are typically increased in connection
with investments in less developed and developing nations, which
are sometimes referred to as "emerging markets." For example,
political and economic structures in these countries may be in
their infancy and developing rapidly, causing instability. 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.
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 to
securities of U.S. issuers having significant foreign operations.
For more information about foreign securities and the risks
associated with investment in such securities, see the SAI.
Foreign currency exchange transactions
The fund may engage in foreign currency exchange transactions to
manage its exposure to foreign currencies. Putnam Management may
engage in foreign currency exchange transactions in connection
with the purchase and sale of portfolio securities ("transaction
hedging") and to protect against changes in the value of specific
portfolio positions ("position hedging"). It may also engage in
foreign currency transactions for non-hedging purposes, subject
to applicable law.
The fund may engage in transaction hedging to protect against a
change in foreign currency exchange rates between the date on
which the fund contracts to purchase or sell a security and the
settlement date, or to "lock in" the U.S. dollar equivalent of a
dividend or interest payment in a foreign currency. 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 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 foreign currency futures
contracts, foreign currency forward contracts and options on
foreign currency futures contracts and, on exchanges or in over-
the-counter markets, on foreign currencies. In connection with
position hedging, the fund may also purchase or sell foreign
currency on a spot basis.
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 will not assist the fund in meeting
its objective. 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 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.
<PAGE>
For a further discussion of the risks associated with purchasing
and selling futures contracts and options, see
"Futures and
Options."
The SAI also contains additional information
concerning the fund's use of foreign currency exchange
transactions.
Investments in fixed-income securities
The fund may invest in both higher-rated and lower-rated fixed-
income securities, and is not subject to any restrictions based
on credit rating. The values of fixed-income securities
generally fluctuate in response to changes in interest rates.
Thus, a decrease in interest rates will generally result in an
increase in the value of the fund's fixed-income securities.
Conversely, during periods of rising interest rates, the value
of the fund's fixed-income securities will generally decline.
The values of lower-rated fixed-income securities, commonly
known as "junk bonds," generally fluctuate more than those of
higher-rated fixed-income securities. Securities in the lower
rating categories may, depending on the rating, have large
uncertainties or major exposure to adverse conditions, and may
include securities in default.
The lower ratings of these securities reflect a greater
possibility that adverse changes in the financial condition of
their issuers, or in general economic conditions, or both, or
an unanticipated rise in interest rates, may impair the ability
of their issuers to make payments of interest and principal.
In addition, under such circumstances the values of such
securities may be more volatile, and the markets for such
securities may be less liquid, than those for higher-rated
securities, and the fund may as a result find it more difficult
to determine the fair value of such securities. When the fund
invests in securities in the lower ratings categories, the
achievement of the fund's goals is more dependent on Putnam
Management's ability than would be the case if the fund were
investing in securities in the higher rating categories.
Portfolio turnover
The length of time the fund has held a particular security is
not generally a consideration in investment decisions. A
change in the securities held by the fund is known as
"portfolio turnover." As a result of the fund's investment
policies, under certain market conditions its portfolio
turnover rate may be higher than that of other mutual funds.
Portfolio turnover generally involves some expense, including
brokerage commissions or dealer markups and other transaction
costs
in connection with
the sale of securities and
reinvestment in other securities. These transactions may
result in realization of taxable capital gains. Portfolio
turnover rates are shown in the section "Financial highlights."
<PAGE>
Futures and options
The fund may buy and sell stock index futures contracts. An
"index future" is a contract to buy or sell units of a
particular stock index at an agreed price on a specified future
date. Depending on the change in value of the index between
the time the fund enters into and terminates an index future
transaction, the fund realizes a gain or loss. In addition to
or as an alternative to purchasing or selling index futures,
the fund may buy and sell call and put options on index futures
or stock indexes. The fund may engage in index futures and
options transactions for hedging purposes and for
non-hedging
purposes, such as to adjust its exposure to relevant markets or
as a substitute for direct investment.
The use of index futures and related options involves certain
special risks. Futures and options transactions involve costs
and may result in losses.
Certain risks arise from the possibility of imperfect
correlations among movements in the prices of financial futures
and options purchased or sold by the fund, of the underlying
stock index, currencies or securities and, in the case of
hedging transactions, of the securities that are the subject of
the hedge. The successful use of the strategies described
above further depends on Putnam Management's ability to
forecast market movements correctly.
Other risks arise from the potential inability to close out
index futures or options positions. There can be no assurance
that a liquid secondary market will exist for any index future
or option at any particular time. The fund's ability to
terminate option positions established in the over-the-counter
market may be more limited than for exchange-traded options and
may also involve the risk that securities dealers participating
in such transactions would fail to meet their obligations to
the fund. Certain provisions of the Internal Revenue Code and
certain regulatory requirements may limit the use of index
futures and options transactions.
For a more detailed explanation of index futures and options
transactions, including the risks associated with them, see
the
SAI.
Other investment practices
The fund may also engage in the following investment practices,
each of which involves certain special risks. The SAI contains
more detailed information about these practices, including
limitations designed to reduce these risks.
Options. The fund may seek to increase its current return by
writing covered call and put options on securities it owns or
in which it may invest. The fund receives a premium from
writing a call or put option, which increases the return if the
option expires unexercised or is closed out at a net profit.
When the fund writes a call option, it gives up the opportunity
to profit from any increase in the price of a security above
the exercise price of the option; when it writes a put option,
it takes the risk that it will be required to purchase a
security from the option holder at a price above the current
market price of the security. The fund may terminate an option
that it has written prior to its expiration by entering into a
closing purchase transaction in which it purchases an option
having the same terms as the option written.
The fund may also buy and sell put and call options, including
combinations of put and call options on the same underlying
security. The use of these strategies may be limited by
applicable law.
Securities loans, repurchase agreements and forward
commitments. The fund
may
lend portfolio securities amounting
to not more than 25% of its assets to broker-dealers and may
enter into repurchase agreements on up to 25% of its assets.
These transactions must be fully collateralized at all times.
The fund may also purchase securities for future delivery,
which may increase its overall investment exposure and involves
a risk of loss if the value of the securities declines prior to
the settlement date. These transactions involve some risk if
the other party should default on its obligation and the fund
is delayed or prevented from recovering the collateral or
completing the transaction.
Defensive strategies
At times Putnam Management may judge that conditions in the
securities markets make pursuing the fund's basic investment
strategy inconsistent with the best interests of its
shareholders. At such times, Putnam Management may temporarily
use alternative strategies that are primarily designed to
reduce fluctuations in the value of fund assets.
In implementing these defensive strategies, the fund may invest
without limit in cash or money market instruments, preferred
stocks, debt securities issued by the U.S. government or any
foreign government or their agencies or instrumentalities, or
securities primarily traded in the U.S. markets, or in any
other securities Putnam Management considers consistent with
such defensive strategies.
It is impossible to predict when, or for how long, these
alternative strategies would be used.
Diversification
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.
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 this prospectus
and in the SAI.
Limiting investment risk
Specific investment restrictions help to limit investment risks
for the fund's shareholders. These restrictions prohibit the
fund, with respect to 75% of its total assets, from acquiring
more than 10% of the voting securities of any one issuer.*
They also prohibit the fund from investing more than:
(a) (with respect to 75% of its total assets) 5% of its total
assets in securities of any one issuer other than the U.S.
government, its agencies or instrumentalities;*
(b) 25% of its total assets in any one industry
(securities
of
the U.S. government, its agencies or
instrumentalities are not
considered to represent any industry);*
or
(c) 15% of its net assets in any combination of securities that
are not readily marketable, in securities restricted as to
resale (excluding securities determined by the Trustees (or the
person designated by the Trustees to make such determinations)
to be readily marketable), and
repurchase
agreements maturing
in more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. See the SAI for the full text
of these policies and other fundamental investment policies.
Except as otherwise
noted in the SAI,
all percentage
limitations described in this prospectus and the SAI will apply
at the time an investment is made, and will not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Except
for investment policies designated as fundamental in this
prospectus or the SAI, the investment policies described in
this prospectus and in the SAI are not fundamental policies.
The Trustees may change any non-fundamental investment policy
without shareholder approval. As a matter of policy, the
Trustees would not materially change the fund's investment
objective without shareholder approval.
HOW PERFORMANCE IS SHOWN
Fund advertisements may, from time to
time,
include performance
information. "Total
return" for the one-, five- and ten-year
periods (or for the life of the Fund, if shorter) through the
most recent calendar quarter represents the average annual
compounded rate of return on an investment of $1,000 in the
fund invested at the maximum public offering price (in the case
of class A and class M shares) or reflecting the deduction of
any applicable contingent deferred sales charge (in the case of
class B shares). Total return may also be presented for other
periods or based on investment at reduced sales charge levels.
Any quotation of investment performance not reflecting the
maximum initial sales charge or contingent deferred sales
charge would be reduced if the sales charge were used.
All data are based on past investment results and do not
predict future performance. Investment performance, which will
vary, is based on many factors, including market conditions,
portfolio composition, fund operating expenses and
the class
of
shares the investor purchases. Investment performance also
often reflects the risks associated with the fund's investment
objective and policies. These factors should be considered
when comparing the fund's investment results with those of
other mutual funds and other investment vehicles.
Quotations of investment performance for any period when an
expense limitation was in effect will be greater than if the
limitation had not been in effect. Fund performance may be
compared to that of various indexes. See the SAI.
HOW THE FUND IS MANAGED
The Trustees are responsible for generally overseeing the
conduct of fund business. Subject to such policies as the
Trustees may determine, Putnam Management furnishes a
continuing investment program for the fund and makes investment
decisions on its behalf. Subject to the control of the
Trustees, Putnam Management also manages the fund's other
affairs and business.
The fund pays Putnam Management a quarterly fee for these
services based on average net assets. See "Expenses summary"
and the SAI.
The following officers of Putnam Management have had primary
responsibility for the day-to-day management of the fund's
portfolio since the
years
stated below:
Business experience
Year (at least 5 years)
------- -------------------------
Joshua L. Byrne 1997 Employed as an investment
Vice President professional by Putnam
Management since 1993.
<PAGE>
Nigel P. Hart 1997 Employed as an investment
Vice President professional by Putnam
Management since 1997.
Prior to November, 1997, Mr.
Hart was employed as a vice-
president and portfolio
manager with IAI
International.
Omid
Kamshad 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since 1996.
Prior to January, 1996, Mr.
Kamshad was Director of
Investments at Lombard Odier
International and prior to
April, 1995, he was Director
at Baring Asset Management
Company.
Justin
M. Scott 1995 Employed as an investment
Managing Director professional by
Putnam Management since
1988.
The
fund pays all expenses not assumed by Putnam Management,
including Trustees'
fees,
auditing, legal, custodial, investor
servicing and shareholder reporting expenses and payments under
its distribution plans (which are in turn allocated to the
relevant class of shares). Expenses of the Trust directly
charged or attributable to the fund will be paid from the
assets of the fund. General expenses of the Trust will be
allocated among and charged to the assets of the fund and any
other portfolios of the Trust on a basis that the Trustees deem
fair and equitable, which may be based on the nature of the
services performed and relative applicability to, or the
relative assets of, the funds and such portfolios. The fund
also reimburses Putnam Management for the compensation and
related expenses of certain fund officers and their staff who
provide administrative services. The total reimbursement is
determined annually by the Trustees.
Putnam Management places all orders for purchases and sales of
fund securities. In selecting broker-dealers, Putnam
Management may consider research and brokerage services
furnished to it and its affiliates. Subject to seeking the
most favorable price and execution available, Putnam Management
may consider sales of fund shares (and, if permitted by law,
shares of the other Putnam funds) as a factor in the selection
of broker-dealers.
ORGANIZATION AND HISTORY
Putnam International Voyager
Fund is a
series of Putnam
Investment
Funds, a
Massachusetts business trust organized on
October 31, 1994. 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.
Prior to January 6, 1995, the Trust was known as Putnam Equity
Funds. Prior to October 4, 1996, the fund was known as Putnam
Genesis Fund.
The Trust is an open-end, diversified management investment
company with an unlimited number of authorized shares of
beneficial interest. The Trustees may, without shareholder
approval,
create two or more series of shares representing
separate investment portfolios. Any such series of shares may
be divided without shareholder approval into two or more
classes of shares having such preferences and special or
relative rights and privileges as the Trustees determine. Only
class A, B and M shares are offered by this prospectus. The
fund may also offer other classes of shares with different
sales charges and expenses. Because of these different sales
charges and expenses, the investment performance of the classes
will vary. For more information, including your eligibility to
purchase any other class of shares, contact your investment
dealer or Putnam Mutual Funds (at 1-800-225-1581).
Each share has one vote, with fractional shares voting
proportionally. Shares of all classes will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable,
are entitled to dividends as declared by the Trustees, and, if
the fund were liquidated, would receive the net assets of the
fund. The fund may suspend the sale of shares at any time and
may refuse any order to purchase shares. Although the fund is
not required to hold annual meetings of its shareholders,
shareholders holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
If you own fewer shares than the minimum set by the Trustees
(presently 20 shares), the fund may choose to redeem your
shares. You will receive at least 30 days' written notice
before the fund redeems your shares, and you may purchase
additional shares at any time to avoid a redemption. The fund
may also redeem shares if you own shares above a maximum amount
set by the Trustees. There is presently no maximum, but
the
Trustees
may, at any time,
establish
one
which could apply to
both present and future shareholders.
The Trust's Trustees: George Putnam,* Chairman. President of
the Putnam funds. Chairman and Director of Putnam Management
and Putnam Mutual Funds Corp. ("Putnam Mutual Funds").
Director, Marsh & McLennan Companies, Inc.; William F. Pounds,
Vice Chairman. Professor Emeritus of Management, Alfred P.
Sloan School of Management, Massachusetts Institute of
Technology; Jameson Adkins Baxter, President, Baxter
Associates, Inc.; Hans H. Estin, Vice Chairman, North American
Management Corp.; John A. Hill, Chairman and Managing Director,
First Reserve Corporation; Ronald J. Jackson, Former Chairman,
President and Chief Executive Officer of Fisher-Price,
Inc.,
Trustee of Salem Hospital and the Peabody Essex Museum;
Paul L.
Joskow,* Elizabeth and James Killian Professor of Economics and
Management and former Chairman of the Department of
Economivs at the Massachusetts Institute of Technology,
Director, New England Electric Systems, State Farm Indemnity
Company and Whitehead Institute for Biomedical Research;
Elizabeth
T. Kennan, President Emeritus and Professor, Mount
Holyoke College; Lawrence J. Lasser,* Vice President of the
Putnam funds. President, Chief Executive Officer and Director
of Putnam Investments, Inc. and Putnam Management. Director,
Marsh & McLennan Companies, Inc.;
John H. Mullin, III, Chairman
and CEO of Ridgeway Farm, Director of ACX Technologies, Inc.,
Alex. Brown Realty, Inc., The Liberty Corporation, and The
Ryland Group, Inc.; Robert
E. Patterson, President and
Trustee of Cabot Industrial Trust and Trustee of the SEA
Education Association; Donald S. Perkins,* Director of various
corporations, including Cummins Engine Company, Lucent
Technologies, Inc., Nanophase Technologies, Inc. and Springs
Industries, Inc. ; George Putnam, III,* President, New
Generation Research, Inc.; A.J.C. Smith,* Chairman and Chief
Executive Officer, Marsh & McLennan Companies, Inc.; W. Thomas
Stephens
President and Chief Executive Officer of MacMillan
Bloedel
Ltd. ,
Qwest
Communications,
and
New
Century Energies;
and W. Nicholas Thorndike, Director of
various corporations and charitable organizations, including
Data General Corporation, Bradley Real Estate, Inc. and
Providence Journal Co. Also, Trustee of Cabot Industrial
Trust, Massachusetts General Hospital and Eastern Utilities
Associates. The Trustees are also Trustees of the other Putnam
funds. Those marked with an asterisk (*) are or may be deemed
to be "interested persons" of the fund, Putnam Management or
Putnam Mutual Funds.
About Your Investment
ALTERNATIVE SALES ARRANGEMENTS
Class A shares. If you purchase class A shares, you will
generally pay a sales charge at the time of purchase, and, as a
result, will not have to pay any charges when you redeem these
shares. If you purchase class A shares at net asset value you
may have to pay a contingent deferred sales charge ("
CDSC
")
when you redeem those shares. Certain purchases of class A
shares qualify for reduced sales charges. Class A shares pay
lower 12b-1 fees than class B and class M shares. See "How to
buy shares -- Class A shares" and "Distribution plans."
Class B shares. If you purchase class B shares, you will not
pay an initial sales charge, but may have to pay a CDSC if you
redeem the shares within
six
years. Class B shares also bear a
higher 12b-1 fee than class A and class M shares. Class B
shares automatically convert into class A shares, based on
relative net asset value, approximately eight years after
purchase. For more information about the conversion of class B
shares, including information about how shares acquired through
reinvestment of distributions are treated and information about
certain circumstances under which class B shares may not
convert to class A shares, see the SAI. Class B shares provide
an investor the benefit of putting all of the investor's
dollars to work from the time the investment is made. Until
conversion, class B shares will have a higher expense ratio and
pay lower dividends than class A and class M shares because of
the higher 12b-1 fee. See "How to buy shares -- Class B
shares" and "Distribution plans."
Class M shares. If you purchase class M shares you will
generally pay a sales charge at the time of purchase that is
lower than the sales charge you would pay for class A shares.
Certain purchases of class M shares qualify for reduced sales
charges. Class M shares pay 12b-1 fees that are lower than
class B shares but higher than class A shares. You will not
have to pay any charges where you redeem class M shares, but
class M shares will not convert into any other class of shares.
See "How to buy shares -- Class M shares" and "Distribution
plans."
Which class is best for you? Which class of shares provides
the most suitable investment for you depends on a number of
factors, including the amount you intend to invest and how long
you intend to hold the shares. If your intended purchase
qualifies for reduced sales charges, you might consider class A
or class M shares. If you prefer not to pay a sales charge at
the time of purchase, you might consider class B shares. For
more information about these sales arrangements, consult your
investment dealer or Putnam Investor Services. Shares may only
be exchanged for shares of the same class of another Putnam
fund. See "How to exchange shares."
HOW TO BUY SHARES
You can open a fund account with as little as $500 and make
additional investments at any time with as little as $50. You
can buy fund shares three ways - through most investment
dealers or other intermediaries, through Putnam Mutual Funds
(at
1-800-225-1581),
or through a systematic investment plan.
If you do not have a dealer, Putnam Mutual Funds can refer you
to one. Your dealer or other intermediary will be responsible
for furnishing all necessary documentation to Putnam Investor
Services and may charge you a transaction fee.
Buying shares through your investment dealer. Your dealer must
receive your order before the close of regular trading on the
New York Stock Exchange to receive that day's public offering
price.
Buying shares through Putnam Mutual Funds. Complete an order
form and write a check for the amount you wish to invest,
payable to the fund. Return the completed form and check to
Putnam Mutual Funds, which will act as your agent in purchasing
shares through your designated investment dealer.
Buying shares through systematic investing. You can make
regular investments of $25 or more per month through automatic
deductions from your bank checking or savings account.
Application forms are available from your investment dealer or
through Putnam Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive that
day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the
New York Stock Exchange.
Class A shares
The public offering price of class A shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase. The fund receives the net asset value. The
sales charge is allocated between your investment dealer and
Putnam Mutual Funds as shown in the following table, except
when Putnam Mutual Funds, in its discretion, allocates the
entire amount to your investment dealer.
Sales charge Amount of
as a percentage of: sales charge
------------------- reallowed to
Net dealers as a
Amount of transaction amount Offering percentage of
at offering price ($) invested price offering price
- -----------------------------------------------------------------
Under 50,000 6.10% 5.75% 5.00%
50,000 but under 100,000 4.71 4.50 3.75
100,000 but under 250,000 3.63 3.50 2.75
250,000 but under 500,000 2.56 2.50 2.00
500,000 but under 1,000,000 2.04 2.00 1.75
- -----------------------------------------------------------------
No initial sales charge applies to purchases of class A shares of
$1 million or more or to purchases by employer-sponsored
retirement plans that have at least 200 eligible employees.
However, a CDSC of 1.00% or
0.50%
is imposed on redemptions of
these shares within the first or second year, respectively, after
purchase, unless the dealer of record waived its commission with
Putnam Mutual Funds' approval, or unless the purchaser is a class
A qualified benefit plan (a 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).
Class A qualified benefit plans may also purchase class A shares
with no initial sales charge. However, except as stated below, a
CDSC of 0.75% of the total amount redeemed (1.00% in the case of
plans for which Putnam Mutual Funds and its affiliates do not act
as trustee or
recordkeeper) is
imposed on redemptions of these
shares 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 a plan is no longer liable for any CDSC. The
two year CDSC applicable to Class A qualified benefit plans for
which Putnam 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.
A class A qualified benefit plan participating in a "multi-fund"
program approved by Putnam Mutual Funds may include amounts
invested in other mutual funds participating in such program for
purposes of determining whether the plan may purchase class A
shares at net asset value. These investments will also be
included for purposes of the discount privileges and programs
described elsewhere in this prospectus and in the SAI.
As described in the SAI, Putnam Mutual Funds pays the dealer of
record a commission of up to 1% on sales to class A qualified
benefit plans. Putnam Mutual Funds pays dealers of record
commissions on sales of class A shares of $1 million or more and
sales of class A shares to employer-sponsored retirement plans
that have at least 200 eligible employees and that are not class
A qualified benefit plans based on an investor's cumulative
purchases 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
first $3 million of shares purchased, 0.50% of the next $47
million and 0.25% thereafter.
Class B shares
Class B shares are sold without an initial sales charge, although
a CDSC will be imposed if you redeem shares within a specified
period after purchase, as shown in the table below.
Year 1 2 3 4 5 6 7+
- -------------------------------------------------------------
Charge 5% 4% 3% 3% 2% 1% 0%
Putnam Mutual Funds pays a sales commission equal to 4.00% of the
amount invested to dealers who sell class B shares. These
commissions are not paid on exchanges from other Putnam funds or
on sales to investors exempt from the CDSC.
Class M shares
The public offering price of class M shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase. The fund receives the net asset value. The sales
charge is allocated between your investment dealer and Putnam
Mutual Funds as shown in the following table, except when Putnam
Mutual Funds, at its discretion, allocates the entire amount to
your investment dealer.
<PAGE>
Sales charge Amount of
as a percentage of: sales charge
------------------- reallowed to
Net dealers as a
Amount of transaction amount Offering percentage of
at offering price ($) invested price offering price
- -----------------------------------------------------------------
Under 50,000 3.63% 3.50% 3.00%
50,000 but under 100,000 2.56 2.50 2.00
100,000 but under 250,000 1.52 1.50 1.00
250,000 but under 500,000 1.01 1.00 1.00
500,000 and above NONE NONE NONE
Class M qualified benefit plans (retirement plans for which
Putnam Fiduciary Trust Company provides recordkeeping or other
services in connection with the purchase of class M shares) and
members of qualified groups may purchase class M shares without a
sales charge.
General
You may be eligible to buy fund shares at reduced sales charges
or to sell fund shares without a CDSC.
Consult your investment dealer or Putnam Mutual Funds for details
about Putnam's combined purchase privilege, cumulative quantity
discount, statement of intention, group sales plan,
employer-
sponsored retirement plans
and other plans. Descriptions are
also included in the order form and in the SAI.
The fund may sell class A, class B and class M shares at net
asset value without an initial sales charge or a CDSC to current
and retired Trustees (and their families), current and retired
employees (and their families) of Putnam Management and
affiliates, registered representatives and other employees (and
their families) of broker-dealers having sales agreements with
Putnam Mutual Funds, employees (and their families) of financial
institutions having sales agreements with Putnam Mutual Funds (or
otherwise having an arrangement with a broker-dealer or financial
institution with respect to sales of fund shares), financial
institution trust departments investing an aggregate of $1
million or more in Putnam funds, clients of certain
administrators of tax-qualified plans, tax-qualified plans when
proceeds from repayments of loans to participants are invested
(or reinvested) in Putnam funds, "wrap accounts" for the benefit
of clients of broker-dealers, financial institutions or financial
planners adhering to certain standards established by Putnam
Mutual
Funds
and investors meeting certain requirements who sold
shares of certain Putnam closed-end funds pursuant to a tender
offer by the closed-end fund.
In addition, the fund may sell shares at net asset value without
an initial sales charge or a CDSC in connection with the
acquisition by the fund of assets of an investment company or
personal holding company. The CDSC will be waived on redemptions
of shares arising out of the death or post-purchase disability of
a shareholder or settlor of a living trust account, and on
redemptions 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 SAI contains additional information about
purchasing shares at reduced sales charges.
In determining whether a CDSC is payable on any redemption,
shares not subject to any charge will be redeemed first, followed
by shares held longest during the CDSC period. Any CDSC will be
based on the lower of the shares' cost and net asset value. For
this purpose, the amount of any increase in a share's value above
its initial purchase price is not regarded as a share exempt from
the CDSC. Thus, when you redeem a share that has appreciated in
value during the CDSC period, a CDSC is assessed on its initial
purchase price. Shares acquired by reinvestment of distributions
may be redeemed without a CDSC at any time. For information on
how sales charges are calculated if you exchange your shares, see
"How to exchange shares." Putnam Mutual Funds receives the
entire amount of any CDSC you pay. See the SAI for more
information about the CDSC.
Shareholders of other Putnam funds may be entitled to exchange
their shares for, or reinvest distributions from their funds in,
fund shares at net asset value.
If you are considering redeeming shares or transferring shares to
another person shortly after purchase, you should pay for those
shares with a certified check to avoid any delay in redemption or
transfer.
Otherwise,
payment may be delayed until the purchase
price of those shares has been collected or, if you redeem by
telephone, until 15 calendar days after the purchase date. To
eliminate the need for safekeeping, certificates will not be
issued for your shares unless you request them.
Putnam Mutual Funds will from time to time, at its expense,
provide additional promotional incentives or payments to dealers
that sell shares of the Putnam funds. These incentives or
payments may include payments for travel expenses, including
lodging, incurred in connection with trips taken by invited
registered representatives and their guests to locations within
and outside the United States for meetings or seminars of a
business nature. In some instances, these incentives or payments
may be offered only to certain dealers who have sold or may sell
significant amounts of shares. Certain dealers may not sell all
classes of shares.
DISTRIBUTION PLANS
The fund has adopted distribution plans to compensate Putnam
Mutual Funds for services provided and expenses incurred by it as
principal underwriter of fund shares, including the payments to
dealers mentioned below. The plans provide for payments by the
fund to Putnam Mutual Funds at the annual rates (expressed as a
percentage of 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.
Putnam Mutual Funds compensates qualifying dealers (including,
for this purpose, certain financial institutions) for sales of
shares and the maintenance of shareholder accounts.
Putnam Mutual Funds makes quarterly payments to dealers at the
annual rate of up to 0.25% of the average net asset value of
class A shares for which such dealers are designated as the
dealer of record, except that payments to dealers for shares held
by class A qualified benefit plans are made at reduced rates, as
described in the SAI. No payments are made during the first year
after purchase on shares purchased at net asset value by
shareholders investing $1 million or more or by employer-
sponsored retirement plans that have at least 200 eligible
employees or that are class A qualified benefit plans, unless the
shareholder has made arrangements with Putnam Mutual Funds and
the dealer of record has waived the sales commission.
Putnam Mutual Funds makes quarterly payments to dealers at the
annual rates of 0.25% and 0.65% of the average net asset value of
class B and class M shares,
respectively, for which such dealers
are designated as the dealer of record.
Putnam Mutual Funds may suspend or modify its payments to
dealers. The payments are also subject to the continuation of
the relevant distribution plan, the terms of service agreements
between dealers and Putnam Mutual Funds, and any applicable
limits imposed by the National Association of Securities Dealers,
Inc.
HOW TO SELL SHARES
You can sell your shares to the fund any day the New York Stock
Exchange is open, either directly to the fund or through your
investment dealer. The fund will only redeem shares for which it
has received payment.
Selling shares directly to your fund. Send a signed letter of
instruction or stock power form to Putnam Investor Services,
along with any certificates that represent shares you want to
sell. The price you will receive is the next net asset value
calculated after the fund receives your request in proper form
less any applicable CDSC. In order to receive that day's net
asset value, Putnam Investor Services must receive your request
before the close of regular trading on the New York Stock
Exchange.
If you sell shares having a net asset value of $100,000 or more,
the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. See the SAI for more
information about where to obtain a signature guarantee. Stock
power forms are available from your investment dealer, Putnam
Investor Services and many commercial banks.
If you want your redemption proceeds sent to an address other
than your address as it appears on Putnam's records, a signature
guarantee is required. Putnam Investor Services usually requires
additional documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
Your 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.
You may use Putnam's Telephone Redemption Privilege to redeem
shares valued up to $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 act upon
redemption and transfer instructions received by telephone from
you, or any person claiming to act as your representative, who
can provide Putnam Investor Services with your account
registration and address as it appears on Putnam Investor
Services' records.
Putnam Investor Services will employ these and other reasonable
procedures to confirm that instructions communicated by telephone
are genuine; if it fails to employ reasonable procedures, Putnam
Investor Services may be liable for any losses due to
unauthorized or fraudulent instructions. For information,
consult Putnam Investor Services.
During periods of unusual market changes and shareholder
activity, you may experience delays in contacting Putnam Investor
Services by telephone. In this event, you may wish to submit a
written redemption request, as described above, or contact your
investment dealer, as described below. The Telephone Redemption
Privilege is not available if you were issued certificates for
shares that remain outstanding. The Telephone Redemption
Privilege may be modified or terminated without notice.
Selling shares through your investment dealer. Your dealer must
receive your request before the close of regular trading on the
New York Stock Exchange to receive that day's net asset value.
Your dealer will be responsible for furnishing all necessary
documentation to Putnam Investor Services, and may charge you for
its services.
HOW TO EXCHANGE SHARES
You can exchange your shares for shares of the same class of
certain other Putnam funds at net asset
value.
Not all
Putnam
funds
offer all classes of shares. If you exchange shares
subject to a CDSC, the transaction will not be subject to the
CDSC. However, when you redeem the shares acquired through the
exchange, the redemption may be subject to the CDSC,
depending upon when you originally purchased the shares.
The CDSC 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 CDSC applicable to your class of shares.
For purposes of computing the CDSC, the length of time you have
owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services. The
form is available from Putnam Investor Services. For federal
income tax purposes, an exchange is treated as a sale of shares
and generally results in a capital gain or loss. A Telephone
Exchange Privilege is currently available for amounts up to
$500,000. Putnam Investor Services' procedures for telephonic
transactions are described above under "How to sell shares." The
Telephone Exchange Privilege is not available if you were issued
certificates for shares that remain outstanding. Ask your
investment dealer or Putnam Investor Services for prospectuses of
other Putnam funds. Shares of certain Putnam funds are not
available to residents of all states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
in other circumstances where Putnam Management or the Trustees
believe doing so would be in the best interests of your fund, the
fund reserves the right to revise or terminate the exchange
privilege, limit the amount or number of exchanges or reject any
exchange. Consult Putnam Investor Services before requesting an
exchange. See the SAI to find out more about the exchange
privilege.
HOW THE FUND VALUES ITS SHARES
The fund calculates the net asset value of a share of each class
by dividing the total value of its assets, less liabilities, by
the number of its shares outstanding. Shares are valued as of
the close of regular trading on the New York Stock Exchange each
day the Exchange is open.
Portfolio securities for which market quotations are readily
available are valued at market value.
Short-term investments that will mature in 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.
Securities quoted in foreign currencies are translated into U.S.
dollars at current exchange rates 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 has not been any change in the values of its
portfolio securities as quoted in such foreign currencies.
HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION
The fund distributes any net investment income and any net
realized capital gains at least annually. Distributions from net
investment income, if any, are expected to be small.
Distributions from capital gains are made after applying any
available capital loss carryovers.
Distributions
paid
on class A shares will generally be greater
than those paid on class B and class M shares because expenses
attributable to class B and class M shares will generally be
higher.
You can choose from three distribution options:
- - Reinvest all distributions in additional shares without a
sales charge;
- - Receive distributions from net investment income in cash
while reinvesting capital gains distributions in additional
shares without a sales charge; or
- - Receive all distributions in cash.
You can change your distribution option by notifying Putnam
Investor Services in writing. If you do not select an option
when you open your account, all distributions will be reinvested.
All distributions not paid in cash will be reinvested in shares
of the class on which the distributions are paid. You will
receive a statement confirming reinvestment of distributions in
additional fund shares (or in shares of other Putnam funds for
Dividends Plus accounts) promptly following the quarter in which
the reinvestment occurs.
If a check representing a fund distribution is not cashed within
a specified period, Putnam Investor Services will notify you that
you have the option of requesting another check or reinvesting
the distribution. If Putnam Investor Services does not receive
your election, the distribution will be reinvested in the fund.
Similarly, if correspondence sent by the fund or Putnam Investor
Services is returned as "undeliverable," fund distributions will
automatically be reinvested.
The fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements necessary for it to be relieved of federal taxes on
income and gains it distributes to shareholders. The fund will
distribute substantially all of its ordinary income and capital
gain net income on a current basis.
Fund distributions will be taxable to you as ordinary income to
the extent derived from the fund's investment income and net
short-term gains (that is, net gains from securities held for not
more than a year). Distributions designated by the fund as
deriving from net gains on securities held for more than one year
but not more than 18 months and from net gains on securities held
for more than 18 months will be taxable to you as such,
regardless of how long you have held the shares. Distributions
will be taxable as described above whether received in cash or in
shares through the reinvestment of distributions.
Fund investments in foreign securities may be subject to
withholding taxes at the source on dividend or interest payments.
In that case, the fund's yield on those securities would be
decreased.
If at the end of the fund's fiscal year more than 50% of the
value of its total assets represents securities of foreign
corporations, the fund intends to make an election permitted by
the Internal Revenue Code to treat any foreign taxes paid by it
as paid by its shareholders. In this case, shareholders who are
U.S. citizens, U.S. corporations and, in some cases, U.S.
residents generally will be required to include in U.S. taxable
income their pro rata share of such taxes, but may then generally
be entitled to claim a foreign tax credit or deduction (but not
both) for their share of such taxes.
Fund transactions in foreign currencies and hedging activities
may give rise to ordinary income or loss to the extent such
income or loss results from fluctuations in value of the foreign
currency concerned. In addition, such activities will likely
produce a difference between book income and taxable income.
This difference may cause a portion of the fund's income
distributions to constitute a return of capital for tax purposes
or require the fund to make distributions exceeding book income
to qualify as a regulated investment company for tax purposes.
Investment in an entity that qualifies as a "passive foreign
investment company" under the Internal Revenue Code could subject
the fund to a U.S. federal income tax or other charge on certain
"excess distributions" with respect to the investment, and on the
proceeds from disposition of the investment.
Early in each calendar year Putnam Investor Services will notify
you of the amount and tax status of distributions paid to you for
the preceding year.
The foregoing is a summary of certain federal income tax
consequences of investing in the fund. You should consult your
tax adviser to determine the precise effect of an investment in
the fund on your particular tax situation (including possible
liability for state and local taxes).
About Putnam Investments, Inc.
Putnam Management has been managing mutual funds since 1937.
Putnam Mutual Funds is the principal underwriter of the fund and
of other Putnam funds. Putnam Fiduciary Trust Company is the
custodian of the fund. Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, is the investor servicing and
transfer agent for the fund.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., which is
located at One Post Office Square, Boston, Massachusetts
02109 and, except for a minority stake owned by employees, are
owned by Marsh & McLennan Companies, Inc., a publicly-owned
holding company whose principal businesses are international
insurance and reinsurance brokerage, employee benefit consulting
and investment management.<PAGE>
PUTNAMINVESTMENTS
P.O. Box 989
Boston, Massachusetts 02103
Toll-free
1-800-225-1581
www.putnaminv.com
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