Prospectus
August 30, 2000,
as revised Janaury 16, 2001
Putnam Mid Cap Value Fund
Class A, B, C and M shares
Investment Category: Growth and Income
This prospectus explains what you should know about this mutual fund
before you invest. Please read it carefully.
Putnam Investment Management, LLC (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
2 Performance information
4 Fees and expenses
5 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?
12 How do I sell fund shares?
14 How do I exchange fund shares?
15 Fund distributions and taxes
16 Financial highlights
[SCALE LOGO OMITTED]
Fund summary
GOAL
The fund seeks capital appreciation and, as a secondary objective, current
income.
MAIN INVESTMENT STRATEGIES -- VALUE STOCKS
We invest mainly in common stocks of U.S. companies, with a focus on value
stocks. Value stocks are those that we believe are currently under valued
by the market. We look for companies undergoing positive change. If we are
correct and other investors recognize the value of the company, the price
of the stock may rise. We invest mainly in midsized companies. These are
companies of a size similar to those in the Russell MidCap Value Index, an
index that measures the performance of midsized companies.
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 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 midsized 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 we invest perform. The market as a whole may not favor the types of
investments we make.
You can lose money by investing in the fund. The fund may not achieve its
goal, and is not intended as a complete investment program. An investment
in the fund is not a deposit 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 one of the fund's
classes of shares, class A shares. The table following the chart compares
the fund's performance to that of a broad measure of market performance. Of
course, a fund's past performance is not an indication of future
performance.
[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR CLASS A
SHARES]
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
2000 28.14%
Performance figures in the bar chart do not reflect the impact of sales
charges. If they did, performance would be less than that shown. During the
periods shown in the bar chart, the highest return for a quarter was 14.47%
(quarter ending 12/31/00) and the lowest return for a quarter was -0.15%
(quarter ending 3/31/00).
Average Annual Total Returns (for periods ending 12/31/00)
-------------------------------------------------------------------------------
Since
Past inception
1 year (11/1/99)
-------------------------------------------------------------------------------
Class A 20.74% 23.47%
Class B 22.17% 25.53%
Class C 26.17% 28.79%
Class M 22.95% 25.25%
Russell MidCap Value Index 19.18% 16.98%
-------------------------------------------------------------------------------
Unlike the bar chart, this performance information reflects the impact of
sales charges. Class A and class M share performance reflects the current
maximum initial sales charges; class B, and class C share performance
reflects the maximum applicable deferred sales charge if shares had been
redeemed on 12/31/00. For periods before the inception of class B shares,
class C shares and class M shares on January 16, 2001, performance shown
for these classes in the table is based on the performance of the fund's
class A shares, adjusted to reflect the appropriate sales charge and the
higher 12b-1 fees paid by the class B, class C and class M shares. The
fund's performance through 12/31/00 benefited from Putnam Management's
agreement since inception to limit the fund's expenses. The fund's
performance is compared to the Russell MidCap Value Index, is an index
composed of the 800 smallest companies in the Russell 1000 Index,
representing approximately 26% of the Russell 1000 total market
capitalization.
FEES AND EXPENSES
This table summarizes the fees and expenses you may pay if you invest in
the fund. Expenses represent estimates for the fund's current fiscal year
which ends on April 30, 2001.
Shareholder Fees (fees paid directly from your investment)
-------------------------------------------------------------------------------
Class A Class B Class C Class M
-------------------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed on
Purchases (as a percentage
of the offering price) 5.75% NONE NONE 3.50%
Maximum Deferred Sales
Charge (Load) (as a
percentage of the original
purchase price or
redemption proceeds,
whichever is lower) NONE* 5.00% 1.00% NONE
-------------------------------------------------------------------------------
Annual Fund Operating Expenses**
(expenses that are deducted from fund assets)
-------------------------------------------------------------------------------
Total
Annual
Fund
Management Distribution Other Operating Expense Net
Fees (12b-1) Fees Expenses Expenses Reimbursement Expenses
-------------------------------------------------------------------------------
Class A 0.70% 0.25% 0.50% 1.45% (0.20%) 1.25%
Class B 0.70% 1.00% 0.50% 2.20% (0.20%) 2.00%
Class C 0.70% 1.00% 0.50% 2.20% (0.20%) 2.00%
Class M 0.70% 0.75% 0.50% 1.95% (0.20%) 1.75%
-------------------------------------------------------------------------------
* A deferred sales charge of up to 1% may be imposed on certain redemptions
of class A shares bought without an initial sales charge.
** Reflects Putnam Management's contractual obligation to limit fund expenses
through April 30, 2001.
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, except as shown for class B
and class C shares, redeem all your shares at the end of those periods. It
also assumes a 5% return on your investment each year and that the fund's
operating expenses remain the same. The example is hypothetical; your
actual costs and returns may be higher or lower.
-------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
-------------------------------------------------------------------------------
Class A $695 $989 $1,304 $2,194
Class B $703 $969 $1,361 $2,328*
Class B
(no redemption) $203 $669 $1,161 $2,328*
Class C $303 $669 $1,161 $2,518
Class C
(no redemption) $203 $669 $1,161 $2,518
Class M $522 $922 $1,347 $2,530
-------------------------------------------------------------------------------
* Reflects the conversion of class B shares to class A shares, which pay
lower 12b-1 fees. Conversion occurs no more than eight years after
purchase.
What are the fund's main investment strategies and related risks?
Any investment carries with it some level of risk that generally reflects
its potential for reward. We pursue the fund's goal by investing mainly in
value stocks. We will consider, among other factors, a company's financial
strength, competitive position in its industry, projected future earnings,
cash flows and dividends when deciding whether to buy or sell investments.
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
directly relating 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
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 markets that are relatively unrelated
to the company or its industry, such as changes in interest rates or
currency exchange rates. In addition, a company's stock generally pays
dividends only after the company invests in its own business and 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 its
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.
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 that we have placed on it.
* Small and midsized companies. These companies, some of which may have a
market capitalization 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 small
and midsized companies may therefore be more vulnerable to adverse
developments than those of larger companies. The fund invests mostly in
companies of a size similar to those in the Russell Mid Cap Value Index. As
of the date of this prospectus, the index was composed of companies having
a market capitalization of $500 million to $14 billion.
* Foreign investments. Foreign investments involve certain special risks.
For example, their values may decline in response to changes in currency
exchange rates, unfavorable political and legal developments, unreliable or
untimely information, and economic and financial instability. In addition,
the liquidity of these investments may be more limited than for most U.S.
investments, which means we may at times be unable to sell them at
desirable prices. Foreign settlement procedures may also involve additional
risks. These risks are generally greater in the case of developing (also
known as emerging) markets with less developed legal and financial systems.
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 investments in U.S.
companies that have significant foreign operations. Special U.S. tax
considerations may apply to the fund's 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 availability of suitable derivatives.
Derivatives involve special risks and may result in losses. The successful
use of derivatives depends on our ability to manage these sophisticated
instruments. The prices of derivatives may move in unexpected ways due to
the use of leverage or other factors, especially in unusual market
conditions, and may result in increased volatility. The 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).
* Other investments. In addition to the main investment strategies
described above, we may make other investments, such as investments in
preferred stocks, convertible securities and derivatives, which may be
subject to other risks, as described in the SAI.
* Alternative strategies. Under normal market conditions, we keep the
fund's portfolio fully invested, with minimal cash holdings. However, 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. 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 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, at the annual rate of 0.70% of the first $500
million of the fund's average net assets, 0.60% of the next $500 million,
0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the
next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5
billion, and 0.43% thereafter. Putnam Management's address is One Post
Office Square, Boston, MA 02109.
In order to limit the fund's expenses, Putnam Management has agreed to
limit its compensation (and, to the extent necessary, bear other expenses
of the fund) through April 30, 2001 to the extent that expenses of the fund
(exclusive of brokerage, interest, taxes, deferred organizational and
extraordinary expenses, and payments under the fund's distribution plans)
would exceed an annual rate of 1.00% of the fund's average net assets. For
the purpose of determining any such limitation on Putnam Management's
compensation, expenses of the fund do not reflect the application of
commissions or cash management credits that may reduce designated fund
expenses.
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.
------------------------------------------------------------------------------
Manager Since Experience
------------------------------------------------------------------------------
Edward T. Shadek 2000 March 1997 - Present Putnam management
Managing Director Before March 1997 Newbold's Asset
Management Co.
------------------------------------------------------------------------------
Thomas J. Hoey 1999 1996 - Present Putnam management
Senior Vice President Prior to 1996 Driehaus Capital
Management
------------------------------------------------------------------------------
How does the fund price its shares?
The price of the fund's shares is based on its net asset value (NAV). The
NAV per share of each class equals the total value of its assets, less its
liabilities, divided by the number of its outstanding shares. Shares are
only valued as of the close of regular trading on the New York Stock
Exchange each day the exchange is open.
The fund values its investments for which market quotations are readily
available at market value. It values short-term investments that will
mature within 60 days at amortized cost, which approximates market value.
It values all other investments 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?
You can open a fund account with as little as $500 and make additional
investments at any time with as little as $50 ($25 through systematic
investing). The fund sells its shares at the offering price, which is the
NAV plus any applicable sales charge. Your financial advisor or Putnam
Investor Services generally must receive your completed buy order before
the close of regular trading on the New York Stock Exchange for your shares
to be bought at that day's offering price.
You can buy shares:
* Through a financial advisor. Your advisor will be responsible for
furnishing all necessary documents to Putnam Investor Services, and may
charge you for his or her services.
* Through systematic investing. You can make regular investments of $25 or
more per month through automatic deductions from your bank checking or
savings account. Application forms are available through your advisor or
Putnam Investor Services at 1-800-225-1581.
You may also complete an order form and write a check for the amount you
wish to invest, payable to the fund. Return the check and completed form to
Putnam Investor Services.
The fund may periodically close to new purchases of shares or refuse any
order to buy shares if the fund determines that doing so would be in the
best interests of the fund and its shareholders.
WHICH CLASS OF SHARES IS BEST FOR ME?
This prospectus offers you a choice of four classes of fund shares: A, B, C
and M. This allows you to choose among different types of sales charges and
different levels of ongoing operating expenses, as illustrated in the "Fees
and expenses" section. The class of shares that is best for you depends on
a number of factors, including the amount you plan to invest and how long
you plan to hold the shares. Here is a summary of the differences among the
classes of shares:
Class A shares
* Initial sales charge of up to 5.75%
* Lower sales charge for investments of $50,000 or more
* No deferred sales charge (except on certain redemptions of shares bought
without an initial sales charge)
* Lower annual expenses, and higher dividends, than class B, C or M shares
because of lower 12b-1 fee
Class B shares
* No initial sales charge; your entire investment goes to work for you
* Deferred sales charge of up to 5.00% if you sell shares within six years
of purchase
* Higher annual expenses, and lower dividends, than class A or M shares
because of higher 12b-1 fee
* Convert automatically to class A shares after about eight years, reducing
the future 12b-1 fee (and may convert sooner in some cases)
* Orders for class B shares for more than $250,000 are treated as orders
for class A shares or refused
Class C shares
* No initial sales charge; your entire investment goes to work for you
* Deferred sales charge of 1.00% if you sell shares within one year of
purchase
* Higher annual expenses, and lower dividends, than class A or M shares
because of higher 12b-1 fee
* No conversion to class A shares, so future 12b-1 fee does not decrease
Class M shares
* Initial sales charge of up to 3.50%
* Lower sales charge for investments of $50,000 or more
* No deferred sales charge
* Lower annual expenses, and higher dividends, than class B or C shares
because of lower 12b-1 fee
* Higher annual expenses, and lower dividends, than class A shares because
of higher 12b-1 fee
* No conversion to class A shares, so future 12b-1 fee does not decrease
Initial sales charges for class A and M shares
-------------------------------------------------------------------------------
Class A sales charge Class M sales charge
as a percentage of: as a percentage of:
-------------------------------------------------------------------------------
Amount of purchase Net amount Offering Net amount Offering
at offering price ($) invested price* invested price*
-------------------------------------------------------------------------------
Under 50,000 6.10% 5.75% 3.63% 3.50%
50,000 but under
100,000 4.71 4.50 2.56 2.50
100,000 but under
250,000 3.63 3.50 1.52 1.50
250,000 but under
500,000 2.56 2.50 1.01 1.00
500,000 but under
1,000,000 2.04 2.00 NONE NONE
1,000,000 and above NONE NONE NONE NONE
-------------------------------------------------------------------------------
* Offering price includes sales charge.
Deferred sales charges for class B, class C and certain class A shares
If you sell (redeem) class B shares within six years of purchase, you will
generally pay a deferred sales charge according to the following schedule.
Year after purchase 1 2 3 4 5 6 7+
-------------------------------------------------------------------------------
Charge 5% 4% 3% 3% 2% 1% 0%
A deferred sales charge of 1% will apply to class C shares if redeemed
within one year of purchase. A deferred sales charge of up to 1% may apply
to class A shares purchased without an initial sales charge if redeemed
within two years of purchase.
Deferred sales charges will be based on the lower of the shares' cost and
current NAV. Shares not subject to any charge will be redeemed first,
followed by shares held longest. You may sell shares acquired by
reinvestment of distributions without a charge at any time.
* You may be eligible for reductions and waivers of sales charges. Sales
charges may be reduced or waived under certain circumstances and for
certain groups. Information about reductions and waivers of sales charges
is included in the SAI. You may consult your financial advisor or Putnam
Retail Management for assistance.
* Distribution (12b-1) plans. The fund has adopted distribution plans to
pay for the marketing of fund shares and for services provided to
shareholders, although the fund is not currently making any payments
pursuant to the plan. The plans provide for payments at annual rates (based
on average net assets) of up to 0.35% on class A shares and 1.00% on class
B, class C and class M shares. The Trustees currently limit payments on
class A and class M shares to 0.25% and 0.75% of average net assets,
respectively. Because these fees are paid out of the fund's assets on an
ongoing basis, they will increase the cost of your investment. The higher
fees for class B, class C and class M shares may cost you more than paying
the initial sales charge for class A shares. Because class C and class M
shares, unlike class B shares, do not convert to class A shares, class C
and class M shares may cost you more over time than class B shares.
How do I sell fund shares?
You can sell your shares back to the fund any day the New York Stock
Exchange is open, either through your financial advisor or directly to the
fund. Payment for redemption may be delayed until the fund collects the
purchase price of shares, which may be up to 15 calendar days after the
purchase date.
* Selling shares through your financial advisor. Your advisor must receive
your request in proper form before the close of regular trading on the New
York Stock Exchange for you to receive that day's NAV, less any applicable
deferred sales charge. Your advisor will be responsible for furnishing all
necessary documents to Putnam Investor Services on a timely basis and may
charge you for his or her services.
* Selling shares directly to the fund. Putnam Investor Services must
receive your request in proper form before the close of regular trading on
the New York Stock Exchange in order to receive that day's NAV, less any
applicable sales charge.
By mail. Send a letter of instruction signed by all registered owners or
their legal representatives to Putnam Investor Services. If you have
certificates for the shares you want to sell, you must include them along
with completed stock power forms.
By telephone. You may use Putnam's telephone redemption privilege to redeem
shares valued at less than $100,000 unless you have notified Putnam
Investor Services of an address change within the preceding 15 days, in
which case other requirements may apply. Unless you indicate otherwise on
the account application, Putnam Investor Services will be authorized to
accept redemption instructions received by telephone.
The telephone redemption privilege is not available if there are
certificates for your shares. The telephone redemption privilege may be
modified or terminated without notice.
* Additional requirements. In certain situations, for example, if you sell
shares with a value of $100,000 or more, the signatures of all registered
owners or their legal representatives must be guaranteed by a bank,
broker-dealer or certain other financial institutions. In addition, Putnam
Investor Services usually requires additional documents for the sale of
shares by a corporation, partnership, agent or fiduciary, or a surviving
joint owner. For more information concerning Putnam's signature guarantee
and documentation requirements, contact Putnam Investor Services.
* When will the fund pay me? The fund generally sends you payment for your
shares the business day after your request is received. Under unusual
circumstances, the fund may suspend redemptions, or postpone payment for
more than seven days, as permitted by federal securities law.
* Redemption by the fund. If you own fewer shares than the minimum set by
the Trustees (presently 20 shares), the fund may redeem your shares without
your permission and send you the proceeds. The fund may also redeem shares
if you own more than a maximum amount set by the Trustees. There is
presently no maximum, but the Trustees could set a maximum that would apply
to both present and future shareholders.
How do I exchange fund shares?
If you want to switch your investment from one Putnam fund to another, you
can exchange your fund shares for shares of the same class of another
Putnam fund at NAV. Not all Putnam funds offer all classes of shares or are
open to new investors. If you exchange shares subject to a deferred sales
charge, the transaction will not be subject to the deferred sales charge.
When you redeem the shares acquired through the exchange, the redemption
may be subject to the deferred sales charge, depending upon when you
originally purchased the shares. The deferred sales charge will be computed
using the schedule of any fund into or from which you have exchanged your
shares that would result in your paying the highest deferred sales charge
applicable to your class of shares. For purposes of computing the deferred
sales charge, the length of time you have owned your shares will be
measured from the date of original purchase and will not be affected by any
subsequent exchanges among funds.
To exchange your shares, complete an Exchange Authorization Form and send
it to Putnam Investor Services. The form is available from Putnam Investor
Services. A telephone exchange privilege is currently available for amounts
up to $500,000. The telephone exchange privilege is not available if the
fund issued certificates for your shares. Ask your financial advisor or
Putnam Investor Services for prospectuses of other Putnam funds. Some
Putnam funds are not available in all states.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive
exchange activity and otherwise 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. Consult Putnam Investor Services before
requesting an exchange.
Fund distributions and taxes
The fund normally distributes any net investment income quarterly and any
net realized capital gains annually. You may choose to:
* reinvest all distributions in additional shares;
* receive any distributions from net investment income in cash while
reinvesting capital gains distributions in additional shares; or
* receive all distributions in cash.
If you do not select an option when you open your account, all
distributions will be reinvested. If you do not cash a distribution check
within a specified period or notify Putnam Investor Services to issue a new
check, the distribution will be reinvested in the fund. You will not
receive any interest on uncashed distribution or redemption checks.
Similarly, if any correspondence sent by the fund or Putnam Investor
Services is returned as "undeliverable," fund distributions will
automatically be reinvested in the fund or in another Putnam fund.
For federal income tax purposes, distributions of investment income are
taxable as ordinary income. Taxes on distributions of capital gains are
determined by how long the fund owned the investments that generated them,
rather than how long you have owned your shares. Distributions are taxable
to you even if they are paid from income or gains earned by the fund before
your investment (and thus were included in the price you paid).
Distributions of gains from investments that the fund owned for more than
one year are taxable as capital gains. Distributions of gains from
investments that the fund owned for one year or less are taxable as
ordinary income. Distributions are taxable whether you receive them in cash
or reinvest them in additional shares.
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. Shareholders generally will not be entitled to claim a
credit or deduction with respect to foreign taxes. In addition, the fund's
investment in foreign securities or foreign currencies may increase the
amount of taxes payable by shareholders.
Any gain resulting from the sale or exchange of your shares will generally
also be subject to tax. You should consult your tax advisor for more
information on your own tax situation, including possible foreign, state
and local taxes.
Financial highlights
The financial highlights table is intended to help you understand a fund's
recent financial performance. Certain information reflects financial
results for a single fund share. The total returns represent the rate that
an investor would have earned or lost on an investment in the fund,
assuming reinvestment of all dividends and distributions. This information
has been derived from the fund's financial statements, which have been
audited by KPMG LLP. Its report and the fund's financial statements are
included in the fund's annual report to shareholders, which is available
upon request.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
For the period
November 1, 1999+
to April 30
------------------
2000
----------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $8.50
----------------------------------------------------------------------------
Investment operations
Net investment income ad .05
Net realized and unrealized gain
on investments .74
----------------------------------------------------------------------------
Total from investment operations .79
----------------------------------------------------------------------------
Less distributions:
From net investment income (.05)
----------------------------------------------------------------------------
Total distributions
----------------------------------------------------------------------------
Net asset value,
end of period $9.24
----------------------------------------------------------------------------
Ratios and supplemental data
Total return at
net asset value b 9.38*
Net assets, end of period
(in thousands) $8.846
----------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)cd .50*
Ratio of net investment income
(loss) to average net assets (%)d .62*
Portfolio turnover (%) 48.32*
----------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
a Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
b Total return assumes dividend reinvestment and does not reflect the effect
of sales charges.
c Includes amounts paid through expense offset arrangements.
d Reflects an expense limitation in effect during the period. As a result of
this limitation, expenses for class A shares for the periods ended April 30,
2000 reflect a reduction of $.03 per share.
</TABLE>
Make the most of your Putnam privileges
As a Putnam mutual fund shareholder, you have access to a number of services
that can help you build a more effective and flexible financial program. Here
are some of the ways you can use these privileges to make the most of your
Putnam mutual fund investment.
* SYSTEMATIC INVESTMENT PLAN
Invest as much as you wish ($25 or more) on any business day of the month
except for the 29th, 30th or 31st. The amount you choose will be
automatically transferred each month from your checking or savings account.
* SYSTEMATIC WITHDRAWAL
Make regular withdrawals of $50 or more monthly, quarterly, or semiannually
from your Putnam mutual fund account valued at $10,000 or more. Your
automatic withdrawal may be made on any business day of the month except for
the 29th, 30th or 31st.
* SYSTEMATIC EXCHANGE
Transfer assets automatically from one Putnam account to another on a
regular, prearranged basis. There is no additional charge for this service.
* FREE EXCHANGE PRIVILEGE
Exchange money between Putnam funds in the same class of shares without
charge. The exchange privilege allows you to adjust your investments as
your objectives change. A signature guarantee is required for exchanges
of more than $500,000 and shares of all Putnam funds may not be available
to all investors.
* DIVIDENDS PLUS
Diversify your portfolio by investing dividends and other distributions from
one Putnam fund automatically into another at net asset value.
* STATEMENT OF INTENTION
To reduce a front-end sales charge, you may agree to invest a minimum dollar
amount over 13 months. Depending on your fund, the minimum is $25,000,
$50,000, or $100,000. Whenever you make an investment under this arrangement,
you or your investment advisor should notify Putnam Investor Services that a
Statement of Intention is in effect.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange (into the fund) and system atic withdrawal
or exchange (out of the fund). These privileges are subject to change or
termination.
For more information about any of these services and privileges, call your
investment advisor or a Putnam customer service representative toll free at
1-800-225-1581.
Putnam Family of Funds a
PUTNAM GROWTH FUNDS
Putnam Asia Pacific Growth Fund
Putnam Capital Appreciation Fund
Putnam Capital Opportunities Fund
Putnam Emerging Markets Fund
Putnam Europe Growth Fund
Putnam Global Equity Fund
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
Putnam Growth Opportunities Fund
Putnam Health Sciences Trust
Putnam International Growth Fund
Putnam International New Opportunities Fund
Putnam International Voyager Fund
Putnam Investors Fund
Putnam New Century Growth Fund
Putnam New Opportunities Fund
Putnam OTC & Emerging Growth Fund
Putnam Research Fund
Putnam Tax Smart Equity Fund
Putnam Technology Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
PUTNAM GROWTH AND INCOME FUNDS
Putnam Balanced Fund
Putnam Balanced Retirement Fund
Putnam Classic Equity Fund
Putnam Convertible Income-Growth Trust
Putnam Equity Income Fund
The George Putnam Fund of Boston
Putnam Global Growth and Income Fund
The Putnam Fund for Growth and Income
Putnam International Growth and Income Fund
Putnam New Value Fund
Putnam Small Cap Value Fund
Putnam Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Putnam American Government Income Fund
Putnam Diversified Income Trust
Putnam Global Governmental Income Trust
Putnam High Yield Advantage Fund b
Putnam High Yield Trust b
Putnam High Yield Trust II
Putnam Income Fund
Putnam Intermediate U.S. Government Income Fund
Putnam Preferred Income Fund
Putnam Strategic Income Fund
Putnam U.S. Government Income Trust
PUTNAM TAX-FREE INCOME FUNDS
Putnam Municipal Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax-Free High Yield Fund
Putnam Tax-Free Insured Fund
Putnam State tax-free income funds c
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
LIFESTAGE SM FUNDS
Putnam Asset Allocation Funds-three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments
seeking to help maximize your return and reduce your risk.
The three portfolios:
Balanced Portfolio
Conservative Portfolio
Growth Portfolio
PUTNAM MONEY MARKET FUNDS d
Putnam Money Market Fund
Putnam California Tax Exempt Money Market Fund
Putnam New York Tax Exempt Money Market Fund
Putnam Tax Exempt Money Market Fund
a As of 9/30/00.
b New investments restricted; see your financial advisor for details.
c Not available in all states.
d Investments in money market funds are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although these funds seek to preserve an investment's net asset value at
$1.00 per share, it is possible to lose money by investing in them.
Please call your financial advisor or Putnam Investor Services to obtain a
prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Read it carefully before you invest or send
money.
Glossary of terms
Bond An IOU issued by a government or corporation
that usually pays interest.
Capital A rise in an investment's principal value.
appreciation Also used to describe the investment
objective of a mutual fund whose primary
criterion for choosing securities is the
potential to rise in value rather than to
provide dividend income.
Capital A profit or loss on the sale of securities
gain/loss (generally stocks or bonds).
Class A, B, C, M Types of shares, each class offering investors
shares a different way to pay sales charges and
distribution fees. A fund's prospectus
explains the availability and attributes of
each type.
Common A unit of ownership of a corporation.
stock
Contingent A charge applied at the time of redemption of
deferred sales certain mutual fund shares, rather than at the
charge time of purchase. A fund's CDSC generally
(CDSC) declines each year after purchase, until it no
longer applies.
Declaration The date on which the Trustees approve the
date amount of a mutual fund's next distribution.
Distribution A payment from a mutual fund to shareholders.
It may include interest from bonds and
dividends from stocks (dividend
distributions). It may also include profits
from the sale of securities from the fund's
portfolio (capital gains distributions).
Dividend For mutual fund shares, a payment derived
solely from dividends or interest paid on
securities held in the portfolio (i.e. not
including capital gains).
Equity Securities representing ownership in a
securities corporation. Common stock and preferred stock
are equity securities.
Ex-dividend The date on or after which a holder of
date newly-issued shares will not receive the
fund's next distribution. For Putnam funds, it
is the same as the record date.
Net asset The value of one share of a mutual fund
value (NAV) without regard to sales charges. Some bond
funds aim for a steady NAV, representing
stability; most stock funds aim to raise
NAV, representing growth in the value of an
investment.
Payable date The date on which a mutual fund pays its
distributions to shareholders.
Public The purchase price of one class A or class M
offering price share of a mutual fund, including the
(POP) applicable "front-end"sales charge.
Record date The date used to determine which shareholders
are entitled to a distribution. After the
record date, shares are sold "ex-dividend,"
or without the dividend. For Putnam funds,
the ex-dividend date is the same as the
record date.
Total return A measure of performance showing the change
in the value of an investment over a given
period, assuming all earnings are reinvested.
Yield The percentage rate at which a fund has earned
income from its investments over the indicated
period. "Dividend rate" is a current return
that includes interest and dividend income,
net of all fund expenses. "Distribution rate"
is a current return that includes short-term
capital gains, as well as net investment
income. "SEC yield" is a current return based
on net investment income over a recent
30-day period, computed on a yield-to-maturity
basis, which may differ from net investment
income as determined for financial reporting
purposes. All of these returns are calculated
by annualizing the dividends or distributions
over the indicated period and dividing by the
price of a share at the end of the period.
For more information
about Putnam Mid Cap
Value 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 independent accountant'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 any Putnam fund, or make shareholder inquiries, by
contacting your financial advisor, by visiting Putnam's Internet site, or
by calling Putnam toll-free at 1-800-225-1581.
You may review and copy information about a fund, including its SAI, at
the Securities and Exchange Commission's public reference room in
Washington, D.C. You may call the Commission at 1-202-942-8090 for
information about the operation of the public reference room. You may also
access reports and other information about the fund on the EDGAR Database
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
electronic request at the following E-mail address: [email protected], or
by writing the Commission's Public Reference Section, Washington, D.C.
20549-0102. You may need to refer to the fund's file number.
PUTNAM INVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
1-800-225-1581
Address correspondence to
Putnam Investor Services
P.O. Box 41203
Providence, Rhode Island 02940-1203
www.putnaminvestments.com
File No. 811-7237 NP075 68150 1/01
