Prospectus
December 30, 1999, as revised January 30, 2000
Putnam International Voyager 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.
Putnam Investment Management, Inc. (Putnam Management), which has managed
mutual funds since 1937, manages the fund.
These securities have not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed upon the accuracy or
adequacy of this prospectus. Any statement to the contrary is a crime.
CONTENTS
2 Fund summary
2 Goal
2 Main investment strategies
2 Main risks
3 Performance information
4 Fees and expenses
4 What are the fund's main investment strategies and related risks?
8 Who manages the fund?
9 How does the fund price its shares?
9 How do I buy fund shares?
10 How do I sell fund shares?
10 How do I exchange fund shares?
11 Fund distributions and taxes
Putnam Defined Contribution Plans
[LOGO: BOSTON * LONDON * TOKYO]
Fund summary
GOAL
The fund seeks long-term capital appreciation.
MAIN INVESTMENT STRATEGIES -- INTERNATIONAL STOCKS
We normally invest mostly in common stocks of companies outside the United
States. We first select the countries and industries we believe are
attractive. We then seek stocks within those industries and countries that
we believe offer opportunity for gain. We look for companies with stock
prices lower than the value we place on the company. We also look for the
presence of factors we think will cause the stock price to increase toward
that value. We invest mainly in small and midsized companies, although we
can invest in companies of any size. Although we primarily invest in
developed countries, we may also invest in companies located in developing
(also known as emerging) markets.
MAIN RISKS
The main risks that could adversely affect the value of this fund's shares
and the total return on your investment include:
* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or reliable
information or unfavorable political or legal developments. These risks are
higher for investments in emerging markets.
* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to rise. Many factors can
adversely affect a stock's performance, including both general financial
market conditions and factors related to a specific company or industry.
This risk is generally greater for small and mid-sized companies, which
tend to be more vulnerable to adverse developments.
* The risk that movements in financial markets will adversely affect the
price of the fund's investments, regardless of how well the companies in
which the fund invests perform.
You can lose money by investing in the fund. The fund may not achieve its
goals, and is not intended as a complete investment program. An investment
in the fund is not a deposit in a bank and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the fund's risks. The
chart shows year-to-year changes in the performance of the fund's class Y
shares. The table following the chart compares the fund's performance to
that of a broad measure of market performance. Of course, a fund's past
performance is not an indication of future performance.
[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURN]
CALENDAR YEAR TOTAL RETURN
1996 20.08%
1997 16.48%
1998 27.12%
Year-to-date performance through 9/30/99 was 28.63%. During the period
shown in the bar chart, the highest return for a quarter was 20.00%
(quarter ending 3/31/98) and the lowest return for a quarter was -14.18%
(quarter ending 9/30/98).
Performance of class Y shares, which were not in existence during the
period, in the bar chart and table following the chart, is derived from the
historical performance of the fund's class A shares (not offered by this
prospectus). Performance of class Y shares does not reflect the initial
sales charge currently applicable to class A shares or differences in
operating expenses which, for class Y shares, are lower than the operating
expenses applicable to class A shares.
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Average Annual Total Returns (for periods ending 12/31/98)
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Since
Past inception
1 year (12/28/95)
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Class Y 19.78% 18.47%
MSCI EAFE Index 20.00% 9.00%
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The fund's performance through 8/31/97 benefited from Putnam Management's
agreement to limit expenses. The fund's perform ance is compared to Morgan
Stanley Capital International EAFE Index, an unmanaged 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 (with all values expressed in U.S. dollars).
FEES AND EXPENSES
This table summarizes the expenses you may pay if you buy and hold class Y
shares of the fund. Expenses are based on the fund's last fiscal year.
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Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
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Total Annual
Management Other Fund Operating
Fees Expenses Expenses
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Class Y 1.15% 0.38% 1.53%
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EXAMPLE
The example translates the expenses shown in the preceding table into
dollar amounts. By doing this, you can more easily compare the cost of
investing in the fund to the cost of investing in other mutual funds. The
example makes certain assumptions. It assumes that you invest $10,000 in
the fund for the time periods shown and then 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.
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1 year 3 years 5 years 10 years
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Class Y $156 $483 $834 $1,824
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What are the fund's main investment strategies and related risks?
Any investment carries with it some level of risk that generally reflects
its potential for reward. We pursue the fund's goal by investing mainly in
stocks issued by companies outside the United States. We will consider,
among other things, a company's financial strength, competitive position in
its industry, and projected future earnings, cash flows and dividends when
deciding which investments to buy or sell. A description of the risks
associated with the fund's main investment strategies follows.
* Common stocks. Common stock represents an ownership interest in a
company. The value of a company's stock may fall as a result of factors
relating directly to that company, such as decisions made by its management
or lower demand for the company's products or services. A stock's value may
also fall because of factors affecting not just the company, but also other
companies in the same industry or 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 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 a company's stock will
usually react more strongly than bonds and other debt to actual or
perceived changes in the company's financial condition or prospects. Stocks
of smaller companies may be more vulnerable to adverse developments than
those of larger companies.
If we purchase a stock that trades at a higher multiple of current earnings
than other stocks, its value may be more sensitive to changes in current or
expected earnings than the value of other stocks. If our assessment of the
prospects for a company's earnings growth is wrong, or if our judgment of
how other investors will value the company's earnings growth is wrong, then
the price of the company's stock may fall or not approach the value we have
placed on it.
Companies whose stock we believe is undervalued by the market may have
experienced adverse business developments or may be subject to special
risks that have caused their stocks to be out of favor. If our assessment
of a company's prospects is wrong, or if other investors do not similarly
recognize the value of the company, then the price of the company's stock
may fall or may not approach the value we have placed on it.
* Foreign investments. We may invest without limit in securities of foreign
issuers. Foreign investments involve certain special risks, including:
* Unfavorable changes in currency exchange rates: Foreign investments are
typically issued and traded in foreign currencies. As a result, their
values are affected by changes in exchange rates between foreign currencies
and the U.S. dollar.
* Political and economic developments: Foreign investments may be subject
to the risks of seizure by a foreign government, imposition of restrictions
on the exchange or export of foreign currency, and tax increases.
* Unreliable or untimely information: There may be less publicly-available
information about a foreign company than about most U.S. companies, and
foreign companies are usually not subject to accounting, auditing and
financial reporting standards and practices as stringent as those in the
United States.
* Limited legal recourse: Legal remedies for investors may be more limited
than the remedies available in the United States.
* Limited markets: Certain foreign investments may be less liquid (harder
to buy and sell) and more volatile than U.S. investments, which means at
times we may be unable to sell these foreign investments at desirable
prices. For the same reason, we may at times find it difficult to value our
foreign investments to a high degree of accuracy.
* Trading practices: Brokerage commissions and other fees are generally
higher for foreign investments than for U.S. investments. The procedures
and rules governing foreign transactions and custody may involve delays in
payment, delivery or recovery of money or investments.
* Lower yield: Common stocks of foreign companies historically have offered
lower dividends than stocks of comparable U.S. companies. Foreign
withholding taxes may further reduce the amount of income available to
distribute to shareholders of the fund. The fund's yield is therefore
expected to be lower than the yields of most funds that invest mainly in
U.S. companies.
The risks of foreign investments are typically increased in less developed
countries, which are sometimes referred to as emerging markets. For
example, political and economic structures in these countries may be
changing rapidly, which can cause instability. These countries are also
more likely to experience high levels of inflation, deflation or currency
devaluation, which could hurt their economies and securities markets. For
these and other reasons, investments in emerging markets are often
considered speculative.
Certain of these risks may also apply to some extent to U.S. traded
investments that are denominated in foreign currencies, investments in U.S.
companies that are traded in foreign markets, or to investments in U.S.
companies that have significant foreign operations. Special U.S. tax
considerations may apply to our foreign investments.
* Derivatives. We may engage in a variety of transactions involving
derivatives, such as futures, options, warrants and swap contracts.
Derivatives are financial instruments whose value depends upon, or is
derived from, the value of something else, such as one or more underlying
investments, pools of investments, indexes or currencies. We may use
derivatives both for hedging and non-hedging purposes. However, we may also
choose not to use derivatives, based on our evaluation of market conditions
or the unavailability of suitable derivatives.
Derivatives involve special risks and may result in losses. The fund relies
on our ability to handle these sophisticated instruments. The prices of
derivatives may move in unexpected ways, especially in abnormal market
conditions. Some derivatives are "leveraged" and therefore may magnify or
otherwise increase investment losses. Our use of derivatives may also
increase the amount of taxes payable by shareholders.
Other risks arise from our potential inability to terminate or sell
derivatives positions. A liquid secondary market may not always exist for
the fund's derivatives positions at any time. In fact, many
over-the-counter instruments (investments not traded on an exchange) will
not be liquid. Over-the-counter instruments also involve the risk that the
other party to the derivative transaction will not meet its obligations.
For further information about the risks of derivatives, see the statement
of additional information (SAI).
* Smaller companies. We invest in smaller and mid-sized companies. These
companies, which may have market capitalizations of less than $1 billion,
are more likely than larger companies to have limited product lines,
markets or financial resources, or to depend on a small, inexperienced
management group. Stocks of these companies often trade less frequently and
in limited volume, and their prices may fluctuate more than stocks of
larger companies. Stocks of smaller companies may therefore be more
vulnerable to adverse developments than those of larger companies.
* Frequent trading. We may buy and sell investments relatively often, which
involves higher brokerage commissions and other expenses.
* Other investments. In addition to the main investment strategies
described above, we may also make other types of investments, such as
investments in preferred stocks, convertible securities and debt
securities, all of which may be subject to other risks, as described in the
SAI.
* Alternative strategies. At times we may judge that market conditions make
pursuing the fund's usual investment strategies inconsistent with the best
interests of its shareholders. We then may temporarily use alternative
strategies that are mainly designed to limit losses, including investing
solely in the United States. However, we may choose not to use these
strategies for a variety of reasons, even in very volatile market
conditions. These strategies may cause the fund to miss out on investment
opportunities, and may prevent the fund from achieving its goal.
* Changes in policies. The fund's Trustees may change the fund's goal,
investment strategies and other policies without shareholder approval,
except as otherwise indicated.
Who manages the fund?
The fund's Trustees oversee the general conduct of the fund's business. The
Trustees have retained Putnam Management to be the fund's investment
manager, responsible for making investment decisions for the fund and
managing the fund's other affairs and business. The fund pays Putnam
Management a quarterly management fee for these services based on the
fund's average net assets. The fund paid Putnam Management a management fee
of 1.15% 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 experience as portfolio managers or investment analysts over
at least the last five years is also shown.
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Manager Since Experience
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Joseph P. Joseph 1999 1994 - Present Putnam Management
Managing Director
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Omid Kamshad 1997 1996 - Present Putnam Management
Managing Director 1995 - 1996 Lombard Odier International
Prior to April 1995 Baring Asset Management
Company
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Joshua L. Byrne 1997 1993 - Present Putnam Management
Vice President
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Nigel P. Hart 1997 1997 - Present Putnam Management
Vice President Prior to Nov. 1997 IAI International
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* Year 2000 issues. The fund could be adversely affected if the computer
systems that we and the fund's other service providers use do not properly
process and calculate date-related information relating to the end of the
twentieth century and the beginning of the twenty-first. While year
2000-related computer problems could have a negative effect on the fund,
both in its operations and in its investments, we are 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 investments for which market quotations are readily
available at market value. It values short-term investments that will
mature within 60 days at amortized cost, which approximates market value.
It values all other investments and assets at their fair value.
The fund translates prices for its investments quoted in foreign currencies
into U.S. dollars at current exchange rates. As a result, changes in the
value of those currencies in relation to the U.S. dollar may affect the
fund's NAV. Because foreign markets may be open at different times than the
New York Stock Exchange, the value of the fund's shares may change on days
when shareholders are not able to buy or sell them. If events materially
affecting the values of the fund's foreign investments occur between the
close of foreign markets and the close of regular trading on the New York
Stock Exchange, these investments will be valued at their fair value.
How do I buy fund shares?
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.
* Eligible purchasers. A defined contribution plan (including a corporate
IRA) is eligible to purchase class Y shares if
* the plan, its sponsor and other employee benefit plans of the sponsor
invest at least $150 million in Putnam funds and other investments managed
by Putnam Management or its affiliates, or
* 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 $150 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
for you 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.
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 without a sales charge. 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 to promote the best interests of the fund,
the fund reserves the right to revise or terminate the exchange privilege,
limit the amount or number of exchanges or reject any exchange. The fund
into which you would like to exchange may also reject your exchange. These
actions may apply to all shareholders or only to those shareholders whose
exchanges Putnam Management determines are likely to have a negative effect
on the fund or other Putnam funds.
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 advisor 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 foreign, state
and local taxes.
The fund's investments in foreign securities may be subject to foreign
withholding taxes. In that case, the fund's return on those investments
would be decreased.
For more information
about Putnam International Voyager 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,
or make shareholder inquiries, by calling Putnam toll-free at
1-800-752-9894.
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.
P U T N A M I N V E S T M E N T S
Putnam Defined Contribution Plans
One Post Office Square
Boston, Massachusetts 02109
1-800-752-9894
Address correspondence to
Putnam Investor Services
P.O. Box 989
Boston, Massachusetts 02103
www.putnaminv.com
58367 1/00 File No. 811-7237
